As filed with the Securities and Exchange Commission on
May 15, 1995
_______________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995.
Commission File Number 0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in
its charter)
Federally chartered instrumentality
of the United States 52-1578738
_______________________________ ______________________________
(State or other jurisdiction (I.R.S. employer identification
of incorporation or organization) number)
919 18th Street, N.W., Suite 200,
Washington, D.C. 20006
_________________________________ _____________________________
(Address of principal executive (Zip code)
offices)
(202) 872-7700
(Registrant's telephone number, including area code)
____________________________________________________
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or such shorter period that the
Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes [X] No
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the last
practicable date.
As of May 15, 1995, there were 670,000 shares of Class
A Voting Common Stock, 500,301 shares of Class B Voting
Common Stock, and 1,170,301 shares of Class C Non-Voting
Common Stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
The following interim consolidated financial statements
of the Federal Agricultural Mortgage Corporation (the
"Corporation" or "Farmer Mac") have been prepared, without
audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Such interim
consolidated financial statements reflect all normal and
recurring adjustments that are, in the opinion of
management, necessary to a fair statement of
the results for the interim periods presented. Certain
information and footnote disclosures normally included in
annual consolidated financial statements have been
condensed or omitted as permitted by such rules and
regulations. Management believes that the disclosures are
adequate to present fairly the consolidated financial
position, consolidated results of operations and
consolidated cash flows at the dates and for the
periods presented. These condensed financial statements
should be read in conjunction with the audited 1994
financial statements of Farmer Mac. Results for interim
periods are not necessarily indicative of those to be
expected for the fiscal year.
The following information concerning Farmer Mac's
financial statements as of March 31, 1995, December 31, 1994
and March 31, 1994 is included herein.
Consolidated Balance Sheets..........................3
Consolidated Statements of Operations................4
Consolidated Statements of Cash Flows................5
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, 1995 December 31, 1994
(unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents.. $ 637 $ 200
Interest receivable.......... 8,862 14,023
Guarantee fees receivable 330 454
Mortgage payments receivable. 4,732 1,196
Investments, net ............ 86,870 78,218
Mortgage portfolio, net ..... 378,048 382,833
Office equipment, net ....... 89 98
Prepaid expenses and other
assets.................... 309 216
TOTAL ASSETS....... $479,877 $ 477,238
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
<S> <C> <C>
Allowance for mortgage-
backed securities sold... $ 93 $ 81
Accounts payable and accrued
expenses................ 929 972
Accrued interest payable
on Medium-Term Notes.... 6,855 7,450
Debentures, notes and
bonds, net:
Due within one year.... 189,454 168,307
Due after one year..... 270,634 288,209
TOTAL LIABILITIES.... 467,965 465,019
STOCKHOLDERS' EQUITY:
Common stock:
Class A Voting, $1 par
value, no maximum
authorization, 670,000
shares issued and
outstanding.............. 670 670
Class B Voting, $1 par
value, no maximum
authorization, 500,301
shares issued and
outstanding............. 500 500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands) (Continued)
March 31, 1995 December 31, 1994
(unaudited)
<S> <C> <C>
Class C Non-Voting, $1
par value, no maximum
authorization, 1,170,301
shares issued and
outstanding............ 1,170 1,170
Additional paid in
capital................ 19,331 19,331
Accumulated deficit..... (9,759) (9,452)
TOTAL STOCKHOLDERS'
EQUITY........... 11,912 12,219
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY........ $ 479,877 $ 477,238
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended
March 31, 1995 March 31,1994
(unaudited) (unaudited)
INTEREST INCOME:
<S> <C> <C>
Investments and
cash equivalents....$ 1,220 $ 1,171
Mortgage portfolio.... 6,810 6,625
TOTAL INTEREST INCOME.. 8,030 7,796
INTEREST EXPENSE....... 7,763 7,637
NET INTEREST INCOME... 267 159
OTHER INCOME:
Guarantee fees......... 307 267
Miscellaneous 17 57
TOTAL OTHER INCOME.... 324 324
OTHER EXPENSES:
Compensation and
employee benefits..... 465 452
Professional fees...... 85 95
Insurance.............. 57 35
Rent................... 42 40
Regulatory fees........ 92 70
Board of Directors
fees and meeting
expenses............. 78 72
Administrative......... 79 96
TOTAL OTHER EXPENSES.. 898 860
NET LOSS................. $ (307) $ (377)
NET LOSS PER SHARE....... $ (0.13) $ (0.16)
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Three Months Ended
March 31, 1995 March 31, 1994
(unaudited) (unaudited)
_____________ ______________
CASH FLOWS FROM
OPERATING ACTIVITIES:
<S> <C> <C>
Loss from Operations........ $ (307) $ (377)
Adjustments to reconcile
loss to net cash provided
by operating activities:
Amortization of premium
on mortgage portfolio..... 1,719 1,737
Depreciation and
amortization............. 429 275
Decrease in guarantee
fees receivable.......... 124 309
Decrease in interest
receivable................ 5,161 6,548
Increase in mortgage
payments receivable....... (3,536) (4,413)
Increase in prepaid
expenses and other
assets.................... (93) (27)
Amortization of debt
issuance costs............ 50 79
(Decrease) increase in
accounts payable and
accrued expenses.......... (43) 274
Decrease in accrued
interest payable on
medium term notes......... (595) (580)
Provision for losses on
Farmer Mac I Program...... 29 25
Net cash provided by
operating activities...... 2,938 3,850
CASH FLOWS FROM
INVESTING ACTIVITIES:
Motgage purchases.......... (15,106) (12,991)
Purchases of investments... (223,905) (111,593)
Proceeds from maturity
of investments............ 216,218 91,500
Proceeds from mortgage
principal repayments...... 18,465 29,351
Purchases of office
equipment................. (2) (4)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands) (Continued)
Three Months Ended
March 31, 1995 March 31, 1994
(unaudited) (unaudited)
_____________ ______________
<S> <C> <C>
Net cash (used) provided
by investing activities... (4,330) (3,737)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from issuance
of Medium-Term Notes..... 9,989 -
Payments to redeem
Medium-Term Notes........ (7,185) 13,020)
Proceeds from issuance
of Discount Notes........ 306,525 134,028
Discount notes redeemed... (307,500) (122,000)
Net cash provided (used)
by financing activities.. 1,829 (992)
Net increase (decrease)
in cash and cash
equivalents.............. 437 (879)
Cash and cash equivalents
at beginning of period... 200 1,081
Cash and cash equivalents
at end of period......... $ 637 $ 202
Supplemental disclosures
of cash flow information:
Cash paid during the
three-month period for:
Interest.......... $ 6,577 $ 7,285
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
(a) Principles of Consolidation
Financial information at and for the three months
ended March 31, 1995 is consolidated to include the accounts
of Farmer Mac and its two wholly owned subsidiaries, Farmer
Mac Mortgage Securities Corporation and Farmer Mac
Acceptance Corporation. All material intercompany
transactions have been eliminated in consolidation.
(b) Reclassifications
Certain reclassifications of the 1994 information were made
to conform with the 1995 presentation.
NOTE 2. OFF-BALANCE SHEET FARMER MAC GUARANTEED SECURITIES
Farmer Mac is a party to transactions involving
financial instruments with off-balance sheet risk. These
transactions include guarantees by Farmer Mac of securities
not held in its portfolio. Farmer Mac issues guarantees in
the normal course of business to fulfill its statutory
purpose of increasing liquidity for agricultural mortgage
lenders. Farmer Mac guarantees the timely payment of
principal and interest on securities issued under the Farmer
Mac I and Farmer Mac II Programs. The following table sets
forth the outstanding principal balances of Farmer Mac
Guaranteed Securities issued under the Farmer Mac I and
Farmer Mac II Programs and not held in its portfolio.
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
(In Thousands)
<S> <C> <C>
Farmer Mac I......... $ 148,802 $ 84,407
Farmer Mac II........ $ 5,187 $ 7,902
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Farmer Mac's primary sources of liquidity are issuances
of debt obligations, and principal and interest payments
received on mortgages underlying securities purchased by
Farmer Mac under the Farmer Mac I and Farmer Mac II
Programs. Farmer Mac's Board has authorized the issuance of
up to $1.5 billion of Discount Notes and Medium-Term Notes.
Funds from the borrowings may be used in the Farmer Mac I
and Farmer Mac II Programs to cover transaction costs,
guarantee payments and the costs of purchasing Farmer Mac
Guaranteed Securities and Guaranteed Portions issued in the
Farmer Mac I and Farmer Mac II Programs and to retire
existing Notes. Funds from the borrowings also may be used
for liquidity purposes. At March 31, 1995, Farmer Mac had
460.1 million of Discount Notes and Medium-Term Notes (net
of unamortized debt issuance costs, discounts and premiums)
outstanding, a $3.6 million increase from December 31, 1994.
During the first three months of 1995, Farmer Mac issued
$308.5 million of Discount Notes and $10 million of Medium-
Term Notes and redeemed $307.5 million of Discount Notes and
$ 7.2 million of Medium-Term Notes.
The $8.7 million increase in investments from December
31, 1994 to March 31, 1995 resulted from the increase in the
liquidity portfolio, comprised of short-term commercial
paper and U.S. agency securities. The $4.8 million
reduction in the mortgage portfolio largely resulted from
principal and interest payments received on the mortgage-
backed securities issued under the Corporation's Linked
Portfolio Strategy, net of the acquisition of Farmer Mac
Guaranteed Portions purchased under the Farmer Mac II
Program.
Proceeds of any future Note issuances are expected to
be used by the Corporation primarily to fund purchases of
Farmer Mac Guaranteed Securities and Guaranteed Portions
under the Farmer Mac I and Farmer Mac II Programs and to
maintain Farmer Mac's liquidity position.
At March 31, 1995, Farmer Mac's total loss allowance
was $322 thousand. The mortgage portfolio is shown net of
its applicable allowance of $229 thousand at March 31, 1995,
representing an increase of $16 thousand from year-end
1994; the allowance for Farmer Mac Guaranteed Securities
not held by Farmer Mac was $93 thousand at March 31, 1995,
representing an increase of $12 thousand from year-end 1994.
Future additions to this allowance will be charged to
earnings and the amounts in the allowance account will be
used to cover payments of claims under Farmer Mac
guarantees. Farmer Mac considers the amounts in the
allowance account to be adequate to cover its exposure'
to guarantee payments in the Farmer Mac I Program.
Before Farmer Mac is required to make a guarantee payment on
Farmer Mac I Securities, full recourse must be taken against
a reserve or subordinated interest initially established in
an amount equal to at least ten percent (10%) of the initial
pool balance.
At March 31, 1995, a total of three loans aggregating
$400 thousand were 90 days or more past due, two loans
totaling $300 thousand were in foreclosure and title to one
loan with an outstanding principal balance of $613 thousand
had been acquired by the trust in the Farmer Mac I Program.
The six loans combined represent 0.4% of the aggregate
principal amount of outstanding Farmer Mac I Securities at
March 31, 1995. Management believes that no losses will be
incurred by Farmer Mac as a result of the loans in
foreclosure or the real estate owned by the trust. No loss
allowance has been made specifically for the Farmer Mac II
Program because the Guaranteed Portions are backed by the
full faith and credit of the United States and are not
exposed to credit losses.
At March 31, 1995, Farmer Mac's regulatory required
minimum capital was $5.5 million and its actual capital
level was $11.9 million. At December 31, 1994, Farmer Mac's
regulatory required minimum capital was $4.8 million, and
its actual capital level was $12.2 million. Beginning in
December 1996, higher statutory minimum capital requirements
are scheduled to become effective, significantly increasing
the required amount of Farmer Mac's regulatory capital. If
those requirements had been in effect at March 31, 1995,
Farmer Mac's actual capital would have been $790 thousand
less than the total minimum capital required. As previously
reported, the Board has authorized and management is
actively pursuing a legislative initiative to revise the
Farmer Mac charter. That initiative, if successful, would,
among other things, delay beyond 1996 the implementation of
the higher regulatory capital requirements. Although draft
legislation has been submitted to various Congressional
Committees that have jurisdiction over Farmer Mac, no
specific bill has been introduced in Congress. There can be
no assurance that any such legislation, if introduced, will
be enacted by Congress, or that, if enacted, such
legislation will include any or all of the revisions Farmer
Mac seeks and not include revisions adverse to Farmer Mac's
business. In addition,there can be no assurance that, if
legislation is enacted, the volume of any business generated
under a revised charter will result in profitability for
Farmer Mac or that Farmer Mac will be able to raise capital,
either from retained earnings or from external financing
sources, such as an offering of common or preferred stock,
sufficient to allow Farmer Mac to comply with future capital
requirements.
If Farmer Mac were unable to satisfy the higher capital
requirements, whenever they became effective, the Director
of the Office of Secondary Market Oversight, Farmer Mac's
regulator, would be required to take the mandatory
supervisory measures and authorized to take the optional
supervisory measures previously reported, depending upon the
capital level in which Farmer Mac is then classified.
The imposition of supervisory measures could have a material
adverse impact on Farmer Mac's results of operations and its
ability to raise capital, borrow or engage in transactions
with third parties; thus, such measures could, in effect,
preclude Farmer Mac from complying with higher capital
standards. Ultimately, if a conservator were to be
appointed for Farmer Mac, stockholders could lose some or
all of the value of their equity investment in Farmer Mac,
and creditors could experience a reduced level of
recovery on their claims.
In the opinion of management, Farmer Mac has sufficient
liquidity and capital for the next twelve months.
RESULTS OF OPERATIONS
General. Farmer Mac reported a net loss for the three
months ended March 31, 1995 of $307 thousand, a decrease of
$70 thousand from the $377 thousand loss reported for the
three months ended March 31, 1994. The decrease in loss is
attributable to an increase in net interest income, largely
a result of increased yield maintenance income above the
accelerated level of premium amortization for the three
months ended March 31, 1995 as compared to the three months
ended March 31, 1994.
A number of factors have constrained participation in
Farmer Mac's programs, and caused its core business
activities to be unprofitable. Those factors include: the
excess liquidity of many agricultural lenders; the
attractiveness of loans (otherwise qualified under the
Farmer Mac programs) as investments; the disinclination of
lenders to offer, and the lack of borrower demand for, long-
term, fixed rate agricultural real estate loans as a result
of the higher profitability associated with short-term
lending; Farmer Mac's inability to control the pooling
process, particularly, the pooler's mix of loan products
and rates, marketing activities, and loan securitization
decisions; and the unfavorable capital treatment
afforded banks and Farm Credit institutions holding
subordinated securities created in Farmer Mac
transactions.
Improvements in Farmer Mac's operating results will
depend upon the volume of new guarantee transactions. While
the Agricultural Real Estate and Farmer Mac II Programs have
generated interest income and guarantee fee income, the
volume of guarantee transactions has not been sufficient to
generate income in excess of operating expenses, which has
required Farmer Mac to continue to use its capital to fund
operations. The use of capital to fund operations has
continued to reduce Farmer Mac's stockholders' equity, which
has decreased $307 thousand from December 31, 1994 to March
31, 1995.
With regard to the Prudential Securities/Equitable
Agri-Business open window program, Farmer Mac has been
informed by Equitable that it continues to have discussions
with prospective institutions regarding the continuation of
that program following the withdrawal of Prudential as
pooler, but that it has not yet contracted with one. The
final transaction under that program is expected to close
in the second quarter of 1995. Following that transaction,
Prudential will no longer be a pooler in the Farmer Mac
program.
With regard to the joint Fannie Mae, AgFirst (formerly,
the Farm Credit Bank of Columbia) and Farmer Mac rural
housing initiative, the parties are continuing to finalize
the legal documentation necessary to implement the program,
which is now scheduled to commence operations on August 1,
1995.
The Western Farm Credit Bank, in accordance with the
terms of its strategic alliance with Farmer Mac, is in the
process of finalizing the program documentation for its open
window program and commencing the formation of its
nationwide network of originators and sellers. Western
anticipates the program to be operational during the second
quarter of 1995.
While management believes that each of these programs,
if continued or commenced, as the case may be, will be
successful, there is no assurance that they will generate
sufficient volume to result in any Farmer Mac guarantee
transactions.
Farmer Mac's future profitability will be affected not
only by guarantee volume but also by any payments Farmer Mac
must make on its guarantees; payments it must make on its
Notes; the income it earns on its investment securities, its
mortgage portfolio and other funds it is holding; and its
administrative expenses. Losses, if any, on guarantees will
be affected by many circumstances, including agricultural
growing conditions, agricultural market conditions, changes
in government agricultural support policies and the general
economy. The primary sources of funding for the payment of
claims made under guarantees are the fees Farmer Mac charges
for providing its guarantees, together with Farmer Mac's
loss allowance, invested capital and the proceeds of any
other debt issuances.
Even if Farmer Mac's legislative initiative is
successful and Congress revises the Farmer Mac charter,
Farmer Mac's future will still be dependent upon continued,
more effective and significantly increased utilization of its
programs by its Class A and Class B stockholders.
Average Balances, Income and Expense, Yields and Rates.
The following table presents, for the periods indicated,
information regarding interest income on average interest
earning assets and related yields, as well as interest
expense on average interest bearing liabilities and related
rates paid. The average balances were calculated by
averaging month-end balances.
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
(Dollars in Thousands)
Average Income/ Average Average Income/ Average
Balances Expense Rate Balances Expense Rate
Assets
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Mortgage-backed securities $ 377,416 $ 6,810 7.22% $ 396,719 $ 6,625 6.68%
Investments and cash
equivalents 86,570 1,220 5.64% 107,790 1,171 4.34%
Total earning assets 463,986 8,030 6.92% 504,509 7,796 6.18%
Other assets 11,220 11,502
$ 475,206 $ 516,011
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Debentures, notes
and bonds, net $ 456,572 $ 7,763 6.80% $ 495,424 $ 7,637 6.17%
Other liabilities 6,594 7,062
Stockholders' equity 12,040 13,525
$ 475,206 $ 516,011
Net interest income/spread $ 267 0.12% $ 159 0.01%
Net yield on interest
earning assets 0.23% 0.13%
</TABLE>
<PAGE>
Rate/Volume Analysis. The table below sets forth
certain information regarding the changes in the components
of Farmer Mac's net interest income for the periods
indicated. For each category, information is provided on
changes attributable to (a) changes in volume (change in
volume multiplied by old rate); (b) changes in rate (change
in rate multiplied by old volume); and (c) the total.
Combined rate/volume variances, a third element of the
calculation, are allocated based on their relative
size.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1995
Compared to Three Months Ended March 31, 1994
Increase or (Decrease) Due to
Rate Volume Total
(in thousands)
<S> <C> <C> <C>
Income from interest-earning assets:
Mortgage Portfolio $ 468 $ (283) $ 185
Investments 146 (97) 49
Total income from interest-earning
assets 614 (380) 234
Expense on interest-bearing
liabilities 528 (402) 126
Change in net interest income $ 86 $ 22 $ 108
</TABLE>
PERIOD ENDED MARCH 31, 1995
COMPARED TO PERIOD ENDED MARCH 31, 1994
Net Interest Income. Net interest income totaled $267
thousand for the three months ended March 31, 1995, a $108
thousand increase from the three months ended March 31,
1994. The increase in net interest income is the result of
the 11 basis point (0.11%) increase in the net interest
spread, largely a result of an increase in yield maintenance
income above the accelerated level of premium amortization
for March 31, 1995 as compared to March 31, 1994.
Interest Income. Interest income totaled $8.0 million
and $7.8 million for the three months ended March 31, 1995
and 1994, respectively. The $234 thousand increase is
attributable to the increase in the average rate of
interest-earning assets which more than offset the decline
in the average balances of interest-earning assets. The
increase in the average rate of interest-earning assets is
attributable to the overall increase in the rate of
Guaranteed Portions and Securities issued under the
Farmer Mac II Program, a result of rate adjustments in
January 1995, and the increased level of yield maintenance
income above the accelerated level of premium amortization.
During the three months ended March 31, 1995,
prepayments of mortgage loans underlying the Farmer Mac I
Securities totaled $8.2 million, as compared to $11.6
million for the three months ended March 31, 1994. As a
result of these prepayments, Farmer Mac recognized $357
thousand of interest income from yield maintenance payments
in the three months ended March 31, 1995, as compared to
$240 thousand in the three months ended March 31, 1994, and
accelerated the level of premium amortization by $297
thousand in the three months ended March 31, 1995, as
compared to $455 thousand in the three months ended March
31, 1994.
Interest Expense. Interest expense for the three months
ended March 31, 1995 and 1994 amounted to $7.8 million and
$7.6 million, respectively, an increase of $126 thousand.
The increase in interest expense is attributable to the 63
basis point (0.63%) increase in the average cost of
interest-bearing liabilities, a result of the increase in
short-term interest rates from March 31, 1994 to March 31,
1995. As of March 31, 1995, the Corporation had outstanding
$125.1 million of Discount Notes with a weighted average
rate of 6.05% as compared to $115.5 million of Discount
Notes with a weighted average rate of 3.38% at March 31,
1994.
Other Income. Other income totaled $324 thousand for
the three months ended March 31, 1995 and 1994. Guarantee
fee income, the principal component of other income,
increased $40 thousand from $267 thousand for the three
months ended March 31, 1994 to $307 thousand for the three
months ended March 31, 1995. The increase is largely
attributable to the issuance of $98.1 million of Farmer Mac
I Securities in the third quarter of 1994 and the first
quarter of 1995 and to the $31.6 million growth in the
Farmer Mac II Program since March 31, 1994.
Miscellaneous income, composed primarily of transaction
fees generated from the Farmer Mac II Program, decreased $40
thousand from $57 thousand for the three months ended March
31, 1994 to $17 thousand for the three months ended March
31, 1995. The decrease in transaction fees results from the
level of issuances of Farmer Mac II Securities and purchases
of Guaranteed Portions under the Farmer Mac II Program for
the comparable periods. Farmer Mac issued $4.4 million of
Farmer Mac II Securities and purchased $3.5 million of
Guaranteed Portions for the three months ended March 31,
1995, as compared to $14.2 million of issuances of Farmer
Mac II Securities for the three months ended March 31, 1994.
Other Expenses. Other expenses totaled $898 thousand
for the three months ended March 31, 1995, an increase of
$38 thousand from the three months ended March 31, 1994.
The increase in other expenses is attributable to the
increase in insurance expense, regulatory fees and
compensation and employee benefits, which were partially
offset by the decrease in administrative expenses.
Insurance expense increased $22 thousand from the three
months ended March 31, 1994 to the three months ended March
31, 1995, a result of an increase in the amount of Directors
and Officers Liability insurance coverage.
Regulatory fees increased $22 thousand from the three
months ended March 31, 1994 to the three months ended March
31, 1995, a result of the increase in Farmer Mac's
assessment from $326 thousand for the 1993-94 fiscal year
(subsequently reduced by a $34 thousand refund from the
1992-93 fiscal year) to $368 thousand for the 1994-95 fiscal
year.
Compensation and employee benefits increased $13
thousand from the three months ended March 31, 1994 to the
three months ended March 31, 1995, a result of an increase
in staffing during the comparable periods. During the first
quarter of 1994, Farmer Mac added an additional employee
to assume legal responsibilities for the Farmer Mac II
Program, previously performed by an outside law
firm.
Administrative expenses decreased $17 thousand from the
three months ended March 31, 1994 to the three months ended
March 31, 1995, a result of a reduction in travel related
expenses and advertising costs, both of which resulted from
less pooler activity.
Dividends. Farmer Mac has not paid and does not
expect to pay dividends on its common stock in the near
future. Dividends on the common stock are subject to
determination and declaration by the Board. In February
1992, the Board adopted a policy stating that no dividends
would be paid on Farmer Mac Voting or Non-Voting Common
Stock until such time as Farmer Mac's stockholders' equity
is at least equal to $22 million (the amount of gross
proceeds raised by Farmer Mac in its initial common stock
offering). Thereafter, up to 50% of accumulated net
earnings may be paid out as dividends, provided that
stockholders' equity remains at least equal to $22 million.
No preference between holders of the Voting Common Stock and
Class C Non-Voting Common Stock has been established
relating to dividends. The ratio of dividends paid on each
share of Class C Non-Voting Common Stock to each share of
Voting Common Stock, however, will be three-to-one. If
dividends are to be paid to holders of the Voting Common
Stock, such per share dividends to holders of Class A and
Class B Voting Common Stock will be equal.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The registrant is not a party to any pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Stockholders.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Description
* 3.1 - Title VII of Public Law 100-233 (Form 10 filed January 24, 1989).
* 3.2 - Section 1839 of the Food, Agriculture, Conservation and Trade
Act of 1990 (P.L. 101-624) (Form 10-K filed April 1, 1991).
* 3.3 - Section 503 of the Food, Agriculture, Conservation, and Trade
Act Amendments of 1991 (P.L. 102-237) (Form 10-K filed March 30,
1992).
** 3.4 - Amended and restated Bylaws of the registrant.
+* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1 to Form
10-Q filed August 14, 1992).
___________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 10.2 - Amendment No. 1 to Stock Option Plan (Form 10-Q filed
August 16, 1993).
+* 10.3 - Employment Agreement dated May 5, 1989 between Henry D.
Edelman and the Registrant (Previously filed as Exhibit 10.4
to Form 10-K filed February 14, 1990).
+* 10.4 - Amendment No. 1, dated January 10, 1991, to Employment
Agreement between Henry D. Edelman and the Registrant
(Form 10-K filed April 1, 1991).
+* 10.5 - Amendment to Employment Contract dated as of June 1, 1993
between Henry D. Edelman and the Registrant (Form 10-Q filed
November 15, 1993).
+* 10.6 - Amendment No. 3, dated as of June 1, 1994, to Employment
Contract between Henry D. Edelman and the Registrant (Form
10-Q filed August 15, 1994).
+* 10.7 - Employment Agreement dated May 11, 1989 between Nancy E.
Corsiglia and the Registrant (Previously filed as Exhibit
10.5 to Form 10-K filed February 14, 1990).
+*10.8 - Amendment dated December 14, 1989 to Employment Agreement
between Nancy E. Corsiglia and the Registrant (Previously
filed as Exhibit 10.5 to Form 10-K filed February 14, 1990).
+* 10.9 - Amendment No. 2 dated February 14, 1991, to Employment
Agreement between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.7 to Form 10-K filed
April 1, 1991).
+* 10.10 - Amendment to Employment Contract dated as of June 1, 1993
between Nancy E. Corsiglia and the Registrant (Previously
filed as Exhibit 10.9 to Form 10-Q filed November 15,
1993).
_________________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
+* 10.11 - Amendment No. 4 dated June 1, 1993 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-K
filed March 30, 1994).
+* 10.12 - Amendment No. 5, dated as of June 1, 1994, to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Form 10-Q filed August 15, 1994).
+* 10.13 - Employment Agreement dated June 13, 1989 between Thomas R.
Clark and the Registrant (Previously filed as Exhibit 10.6
to Form 10-K filed February 14, 1990).
+* 10.14 - Amendment No. 1 dated February 14, 1991 to Employment
Agreement between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.9 to Form 10-K filed
April 1, 1991).
+* 10.15 - Amendment to Employment Contract dated as of June 1, 1993
between Thomas R. Clark and the Registrant (Previously
filed as Exhibit 10.12 to Form 10-Q filed November 15,
1993).
+* 10.16 - Amendment No. 3 dated June 1, 1993 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-K filed
March 30, 1994).
+* 10.17 - Amendment No. 4, dated as of June 1, 1994, to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-Q filed August 15, 1994).
+* 10.18 - Employment Agreement dated April 29, 1994 between Charles
M. Lewis and the Registrant (Form 10-Q filed August 15,
1994).
+* 10.19 - Employment Agreement dated October 7, 1991 between Michael
T. Bennett and the Registrant (Previously filed as Exhibit
10.16 to Form 10-K filed March 30, 1992).
_____________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
+* 10.20 - Amendment to Employment Contract dated as of June 1, 1993
between Michael T. Bennett and the Registrant (Previously
filed as Exhibit 10.17 to Form 10-Q filed November 15, 1993).
+* 10.21 - Amendment No. 2 dated June 1, 1993 to Employment Contract
between Michael T. Bennett and the Registrant (Form 10-K
filed March 30, 1994).
+* 10.22 - Amendment No. 3, dated as of June 1, 1994, to Employment
Contract between Michael T. Bennett and the Registrant
(Form 10-Q filed August 15, 1994).
+* 10.23 - Employment Agreement dated March 15, 1993 between Christopher
A. Dunn and the Registrant (Previously filed as Exhibit
10.17 to Form 10-Q filed May 17, 1993).
+* 10.24 - Amendment to Employment Contract dated as of June 1, 1993
between Christopher A. Dunn and the Registrant (Previously
filed as Exhibit 10.19 to Form 10-Q filed November 15, 1993).
+* 10.25 - Amendment No. 2 dated June 1, 1993 to Employment Contract
between Christopher A. Dunn and the Registrant (Form 10-K
filed March 30, 1994).
+* 10.26 - Amendment No. 3, dated as of June 1, 1994, to Employment
Contract between Christopher A. Dunn and the Registrant
(Form 10-Q filed August 15, 1994).
* 10.27 - Lease Agreement, dated September 30, 1991 between 919
Eighteenth Street, N.W., Associates Limited Partnership
and the Registrant (Previously filed as Exhibit 10.20 to
Form 10-K filed March 30, 1992).
________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
* 10.28 - Strategic Alliance Agreement, dated November 15, 1994,
between Western Farm Bank and the Registrant, as amended
January 1, 1995 (Form 10-K filed March 31, 1995).
21 - Subsidiaries.
21.1 - Farmer Mac Mortgage Securities Corporation, a Delaware
corporation.
21.2 - Farmer Mac Acceptance Corporation, a Delaware corporation.
* 99.1 - Map of U.S. Department of Agriculture (USDA) Regions
(Previously filed as Exhibit 1.1 to Form 10-K filed
April 1, 1991).
(b) Reports on Form 8-K.
The Registrant has not filed any reports on Form 8-K
during the quarter ended March 31, 1995.
_________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
aused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
May 15, 1995
By:/s/ Henry D. Edelman
__________________________________________
Henry D. Edelman
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Nancy E. Corsiglia
_________________________________
Nancy E. Corsiglia
Vice President - Treasurer and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
EXHIBITS
TO
FORM 10-Q
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
____________________________________
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
<PAGE>
Exhibit Description
** 3.4 Amended and restated Bylaws of the Registrant.
___________________
** Filed Herewith.
BY-LAWS OF THE
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
("FARMER MAC")
as amended by the Board of Directors
on May 11, 1995
<PAGE>
Table of Contents
ARTICLE I
NAME AND LOCATION OF OFFICES
Section 1. Name..................................... 1
Section 2. Principal Office and Other Offices........1
Section 3. Seal......................................1
Section 4. Service of Process........................1
Section 5. Fiscal Year...............................1
ARTICLE II
PURPOSES
Section 1. Statutory Purposes........................1
Section 2. Ancillary Purposes........................2
ARTICLE III
OFFICERS AND EMPLOYEES
Section 1. Number and Type...........................2
Section 2. Appointment and Confirmation..............2
Section 3. Removal...................................2
Section 4. Vacancies.................................2
Section 5. The President.............................3
Section 6. The Secretary.............................3
Section 7. The Treasurer.............................3
Section 8. The Controller............................3
Section 9. Employee Conduct..........................4
Section 10. Outside or Private Employment.............4
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Powers....................................4
Section 2. Number and Type of Directors..............5
Section 3. Meetings and Waiver of Notice.............6
Section 4. Meetings by Telephone.....................6
Section 5. Quorum....................................6
Section 6. Action Without a Meeting..................6
Section 7. Compensation..............................7
Section 8. Chairman and Vice Chairman................7
Section 9. Standing Committees.......................7
(a) Audit Committee......................7
(b) Compensation Committee...............8
(c) Executive Committee .................8
(d) Finance Committee....................9
(e) Program Development Committee.......10
(f) Public Policy Committee.............10
Section 10. Ad Hoc Committees........................10
ARTICLE V
SHAREHOLDERS
Section 1. Special Meeting..........................10
Section 2. Annual Meeting...........................11
Section 3. Notice...................................11
Section 4. Waiver of Notice.........................11
Section 5. Record Date..............................11
Section 6. Voting Lists.............................12
Section 7. Quorum...................................12
Section 8. Proxies..................................12
Section 9. Organization.............................13
Section 10. Voting of Shares.........................13
Section 11. Inspectors of Votes......................14
ARTICLE VI
SHARES OF STOCK
Section 1. Issuance and Conditions..................14
Section 2. Common Stock.............................14
Section 3. Redemption...............................15
Section 4. Dividends on Voting Common Stock and
Non-Voting Common Stock..................15
Section 5. Preferred Stock..........................15
Section 6. Dividends, Redemption, Conversion of
Preferred Shares.........................16
Section 7. Preference on Liquidation................16
Section 8. Purchase of Own Shares...................16
Section 9. Consideration for Shares.................16
Section 10. Stated Capital...........................16
Section 11. No Preemptive Rights.....................17
Section 12. Liability of Shareholders................17
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates.............................17
Section 2. Contents.................................18
Section 3. Transfer.................................18
Section 4. Records..................................19
ARTICLE VIII
INDEMNIFICATION
Section 1. Authorization............................19
Section 2. Procedure................................20
Section 3. Advance Payments.........................20
Section 4. Other Rights to Indemnification..........20
Section 5. Indemnification Insurance................20
ARTICLE IX
CONTRACTS, LOANS, CHECKS, DEPOSITS AND INVESTMENTS
Section 1. Contracts................................21
Section 2. Loans....................................21
Section 3. Checks, Drafts, etc......................21
Section 4. Deposits.................................21
Section 5. Investments..............................21
ARTICLE X
FACSIMILE SIGNATURES.................21
ARTICLE XI
AMENDMENTS....................22
<PAGE>
ARTICLE I
NAME AND LOCATION OF OFFICES
Section 1. Name
The Corporation shall do business as the Federal
Agricultural Mortgage Corporation.
Section 2. Principal Office and Other Offices
The principal office of the Corporation shall be
located in Washington, D.C. The Corporation may establish
ther offices in such other places, within or without the
District of Columbia, as the Board of Directors shall, from
time to time, deem useful for the conduct of the
Corporation's business.
Section 3. Seal
The seal of the Corporation shall be of such design as
shall be approved and adopted from time to time by the Board
of Directors, and may be affixed to any document by
impression, by printing, by rubber stamp, or otherwise.
Section 4. Service of Process
The Corporate Secretary or any Assistant Secretary of
the Corporation shall be agents of the Corporation upon whom
any process, notice or demand required or permitted by law
to be served upon the Corporation may be served.
Section 5. Fiscal Year
The fiscal year of the Corporation shall end on the
thirty-first day of December of each year.
ARTICLE II
PURPOSES
Section 1. Statutory Purposes
The Corporation is organized pursuant to its governing
statute, Title VIII of the Farm Credit Act of 1971, as
amended, to provide a secondary market for agricultural real
estate mortgage loans and to enhance the ability of
individuals in small rural communities to obtain financing
for moderate-priced homes and to undertake such other
activities authorized by such Act as may be necessary
and appropriate to further the availability of funds
for agricultural real estate mortgage loans and housing
in small rural communities.
Section 2. Ancillary Purposes
The Corporation is further organized to engage in such
other related activities that are not prohibited and as the
Board of Directors shall from time to time determine to be
in the furtherance of its statutory purposes.
ARTICLE III
OFFICERS AND EMPLOYEES
Section 1. Number and Type
The officers of the Corporation shall be a President,
one or more Vice Presidents (the number thereof to be
determined by the Board of Directors), a Secretary, a
Treasurer, and a Controller, each of whom shall be appointed
by the Chairman of the Board of Directors subject to
confirmation by resolution of the Board of Directors. Such
other officers and assistant officers as may be deemed
necessary may be appointed by the Chairman subject to
confirmation by resolution of the Board of Directors. Any of
the above offices may be held by the same person, except the
offices of President and Secretary.
Section 2. Appointment and Confirmation
The initial officers of the Corporation shall be
appointed and confirmed at such time as may be appropriate.
Thereafter, the officers shall be appointed and confirmed
annually at the first meeting of the Board of Directors held
after each annual meeting of the shareholders. If the
selection of officers is not held at such meeting, such
selection shall be held as soon thereafter as practicable.
Each officer shall hold office until his successor shall
have been duly appointed and confirmed or until his death or
until he shall resign or shall have been removed in the
manner hereinafter provided.
Section 3. Removal
Any officer may be removed by a majority of the Board
of Directors, whenever in its judgment the best interests of
the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any,
of the persons so removed. Appointment or confirmation of an
officer shall not of itself create contract rights.
Section 4. Vacancies
A vacancy in an office because of death, resignation,
removal, disqualification or otherwise, may be filled by the
Chairman of the Board of Directors, subject to confirmation
by the Board of Directors at the meeting next following the
appointment, for the unexpired portion of the term.
Section 5. The President
The President shall be the principal executive officer
of the Corporation and, subject to the control of the Board
of Directors, shall in general supervise and control all of
the business and affairs of the Corporation. He may sign,
singly or with the Secretary or any other proper officer of
the Corporation authorized by the Board of Directors,
certificates for shares of the Corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the
Board of Directors has authorized to be executed, except
where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or
agent of the Corporation, or shall be required to be
otherwise signed or executed, and in general shall perform
all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors
from time to time.
Section 6. The Secretary
The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one
or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of
these By-laws; (c) be the custodian of the corporate records
and of the seal of the Corporation and see that the Seal of
the Corporation is affixed to all documents, the execution
of which on behalf of the Corporation under its seal is duly
authorized; (d) keep a register of the post office address
of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President,
certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board
of Directors; (f) have general control of the stock transfer
books of the Corporation; and (g) in general, perform all
duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the
President or by the Board of Directors.
Section 7. The Treasurer
The Treasurer shall: (a) have charge and custody of and
be responsible for all funds and securities of the
Corporation, receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, and
deposit all such monies in the name of the Corporation in
such banks, trust companies or other depositories as shall
be selected in accordance with a resolution of the Board of
Directors; and (b) in general, perform all of the duties
incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the President or
by the Board of Directors.
Section 8. The Controller
The Controller shall: (a) keep full and accurate
accounts of all assets, liabilities, commitments, receipts,
disbursements, and other financial transactions of the
Corporation; (b) certify vouchers for payment by the
Treasurer or his designee, and designate, with the written
concurrence of the Chairman of the Board, such other
officers, agents, and employees, severally, who may so
certify; and (c) in general, perform all the duties
ordinarily incident to the office of Controller and such
other duties as may be assigned to him by the Board of
Directors or by the Chairman of the Board.
Section 9. Employee Conduct
No officer or employee shall engage, directly or
indirectly, in any personal business transaction or private
arrangement for personal profit which arises from or is
based upon his official position or authority or upon
confidential information which he gains by reason of such
position or authority, and he shall reasonably restrict his
personal business affairs so as to avoid conflicts of
interest with his official duties. No officer or employee
shall divulge confidential information to any unauthorized
person, or release any such information in advance of
authorization for its release, nor shall he accept, directly
or indirectly, any valuable gift favor or service from any
person with whom he transacts business on behalf of the
Corporation.
Section 10. Outside Private Employment
No officer or employee shall have any outside or
private employment or affiliation with any firm or
organization incompatible with his concurrent employment by
the Corporation and he shall not accept or perform any
outside or private employment which the President of the
Corporation determines will interfere with the efficient
performance of his official duties. Any officer or employee
who intends to perform services for compensation or to
engage in any business shall report his intention to do so
to the President of the Corporation prior to such acceptance
or performance.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Powers
Except as otherwise provided in these By-Laws, the
powers of the Corporation shall be exercised by the Board
of Directors, which shall have all powers granted to it by
the Corporation's governing statute, as may be amended from
time to time, and such other powers including, but not
limited to, the power:
a. to determine the general policies
that shall govern the operations of the Corporation;
b. to issue stock in the manner provided
in Section 8.4 of TitleVIII of the Farm Credit Act of
1971, as amended;
c. to adopt, alter and use a corporate seal, which
shall be judicially noted;
d. to provide for a president, one or more
vice presidents, secretary, treasurer, and such other
officers, employees and agents, as may be necessary and
define their duties and compensation levels, all without
regard to title 5, United States Code, and require
surety bonds or make other provisions against losses
occasioned by acts of the aforementioned persons;
e. to provide guarantees in the manner provided
under Section 8.6 of Title VIII of the Farm Credit Act
of 1971, as amended;
f. to have succession until dissolved by law
enacted by the Congress;
g. to prescribe such standards as may be
necessary to carry out Title VIII of the Farm Credit
Act of 1971, as amended;
h. to enter into contracts and make payments
with respect to the contracts;
i. to sue and be sued in its corporate capacity
and to complain and defend in any action brought by or
against the Corporation in any state or federal court of
competent jurisdiction;
j. to make and perform contracts, agreements,
and commitments with persons and entities both inside and
outside the Farm Credit System;
k. to acquire, hold, lease, mortgage or dispose
of, at public or private sale, real and personal property,
purchase or sell any securities or obligations, and otherwise
exercise all the usual incidents of ownership of property
l. to conduct its business, carry on its operations,
and have officers and exercise the power granted by the
governing statute in any state without regard to any
qualification or similar statute in any such state;
m. to accept gifts or donations of services, of
property, real, personal or mixed, tangible or intangible;
and
n. to exercise such other incidental powers as are
necessary to carry out the powers, duties, and functions
of the Corporation in accordance with the governing statute.
Section 2. Number and Type of Directors
The Board of Directors shall consist of those directors
appointed or elected as provided in Section 8.2 of Title
VIII of the Farm Credit Act of 1971, as amended.
Section 3. Meetings and Waiver of Notice
The Board of Directors shall meet at the call of the
Chairman or a majority of its members. Notice shall be given
to each member by the Secretary at the direction of the
calling authority. Such notice shall be by letter, telegram,
cable, or radiogram delivered for transmission not later
than during the third day immediately preceding the day of
the meeting or by word of mouth, telephone, or radio phone,
received not later than during the second day immediately
preceding the day of the meeting. Notice of any such
meeting may be waived in writing signed by the person or
persons entitled thereto either before or after the time of
the meeting. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Directors need
be specified in the notice or waiver of notice of the
meeting.
Section 4. Meetings by Telephone
Any meeting of the Board of Directors or any meeting of
a Board committee may be held with the members of the Board
or such committee participating in such meeting by telephone
or by any other means of communication by which all such
members participating in the meeting are able to speak to
and hear one another.
Section 5. Quorum
The presence, in person or otherwise, in accordance
with Section 6 of this Article, of eight of the then
incumbent members of the Board of Directors or of a majority
of the then incumbent members of a Board committee, as
applicable, at the time of any meeting of the Board or such
committee, shall constitute a quorum for the transaction of
business. The act of the majority of such members present
at a meeting at which a quorum is present shall be the act
of the Board of Directors or committee, as applicable,unless
the act of a greater number is required by these By-Laws.
Members may not be represented by proxy at any meeting of
the Board of Directors or committee thereof.
Section 6. Action Without a Meeting
Any action required to be taken by the Board of
Directors at a meeting, or by a committee of the Board at a
meeting can be taken without a meeting, if a consent in
writing, setting forth the actions so taken, is later signed
by a majority of the directors, or a majority of the members
of the committee, as the case may be. Such consent shall
have the same effect as a majority vote of the Board of
Directors or committee, as the case may be. Written notice
of any action taken pursuant to this section by a majority
of the directors, or members of a committee, as the case may
be, shall, within 10 days of such action, be given to all
directors or members of a committee not consenting to the
action.
Section 7. Compensation
Each director shall be paid such compensation as may be
fixed from time to time by resolution of the Board of
Directors, and each director shall also be reimbursed for
his or her travel and subsistence expenses incurred while
attending meetings of the Board of Directors or committees
thereof.
Section 8. Chairman and Vice Chairman
Under the authority of the Corporation's governing
statute, the President of the United States shall designate
one director from among those directors appointed by the
President as provided in Section 8.2 of the Farm Credit Act
of 1971, as amended, to be Chairman of the Board of
Directors. The Chairman shall preside over meetings of the
Board of Directors.
The Board of Directors shall select a Vice Chairman
from among the directors appointed by the President of the
United States who shall have all the rights, duties and
obligations of the Chairman at any time when the incumbent
Chairman is absent, unable or unwilling so to act, and at
any time when there is a vacancy in the office of Chairman.
The Vice Chairman shall serve at the pleasure of the Board
and shall be selected no less frequently than annually for a
term expiring on December 31 of each year.
Section 9. Standing Committees
The Standing Committees described in this Section shall
have such responsibilities and authority as are set forth
herein, together with such other responsibilities and
authority as may from time to time be provided in
resolutions adopted by the Board of Directors. The Board of
Directors shall designate members of the Standing Committees
from among its members.
(a) Audit Committee
The Audit Committee shall select and engage independent
accountants to audit the books, records and accounts of the
Corporation and its subsidiaries, if any, and to perform
such other duties as the Committee may from time to time
prescribe. The Committee shall review the scope of audits as
recommended by the public accountants to ensure that the
recommended scope is sufficiently comprehensive. The Audit
Committee's selection of accountants shall be made annually
in advance of the Annual Meeting of Stockholders and shall
be submitted for ratification or rejection at such meeting.
The Audit Committee shall receive a special report from
the independent accountants, prior to the public accountants'
report on the published financial statements. The special report
shall, among other things, point out and describe each material
item affecting the financial statements of the Corporation which
might in the opinion of the independent public accountants
receive, under generally accepted accounting principles,
treatment varying from that proposed for such statements.
The Committee shall decide in its discretion upon the treatment
to be accorded such items and shall take such other action in
respect of the special report as the Committee may deem
appropriate. A copy of the special report shall be transmitted
to the Compensation Committee, together with the Audit
Committee's decision.
(b) Compensation Committee
The Compensation Committee shall make recommendations
to the Board on the salaries and benefit plans of all
corporate directors and officers. The Committee shall
recommend a framework to the Board for all compensation
plans and shall have authority to act within the framework
approved by the Board. The Committee shall have exclusive
jurisdiction on behalf of the Corporation to make
recommendations to the full Board to approve, disapprove,
modify or amend all plans to compensate employees eligible
for incentive compensation.
The Compensation Committee shall review and approve,
prior to implementation, any employee benefit plan and any
amendment or modification thereof submitted to the Board to
the extent such plan or amendment or modification affects
employees under its jurisdiction.
(c) Executive Committee
The Executive Committee shall, during the intervals
between meetings of the Board, have and may exercise the
powers of the Board, other than those assigned to the Audit
and Compensation Committees, and except that it shall not
have the authority to take any of the following actions:
* the submission to stockholders of any action requiring
stockholders' authorization;
* the filling of vacancies on the Board of Directors or
on the Executive Committee;
* the fixing of compensation of directors for serving on
the Board or on the Executive Committee;
* the removal of any director, the President or any Vice
President, except that vacancies in established
management positions may be filled subject to
ratification by the Board of Directors;
* the amendment or repeal of the By-Laws or the adoption
of new by-laws;
* the amendment or repeal of any resolution of the Board
which, by its terms, is not so amendable or repealable;
* the declaration of dividends; and
any action which the Chairman or Vice Chairman of the
Board of Directors (in the event that the Vice Chairman
is the Chairman of the Board due to the absence,
inability or unwillingness of the Chairman so to act)
the President shall, by written instrument filed with
the Secretary, designate as a matter which should be
considered by the Board of Directors; and it is further
The Executive Committee shall include the Chairman of
the Board (or the Vice Chairman, who shall be deemed a
member of the Committee at any time when the incumbent
Chairman is absent, unable or unwilling so to act), who
shall be the Chairman of the Committee, and one
representative from each of the Corporation's two elected
classes of directors. The designation of such Committee and
the delegation thereto of authority shall not relieve any
director of any duty he or she owes to the Corporation. The
Executive Committee shall meet at the call of its chairman
or a majority of its members and all three members of the
Committee shall constitute a quorum. The action of the
majority of the members of the Committee present at a duly
convened meeting shall be the action of the Committee.
Members of the Committee may not be represented by proxy
at any meeting of the Committee. In connection with each
regular meeting of the Board of Directors, the minutes of
all meetings of the Executive Committee since the last
meeting of the Board shall be distributed to the Board, and
the Board shall take such action, if any, as the Board may
deem appropriate, to approve, alter or rescind actions, if
any, previously taken by the Committee, provided that rights
or acts of third parties vested or taken in reliance on such
action prior to any such alteration or rescission shall not
be adversely affected thereby.
(d) Finance Committee
The Finance Committee shall include the Chairman of the
Board, who shall be chairman of the Committee. During the
intervals between meetings of the Board, the Committee shall
have and may exercise the powers of the Board, except those
assigned to the Audit and Compensation Committees, in the
determination of the financial policies of the Corporation
and in the management of the financial affairs of the
Corporation.
The guarantee fee policies of the Corporation shall be
reviewed and approved by the Finance Committee and
recommended to the Board for its approval. All capital
expenditures of the Corporation shall be approved by the
Committee, except that it may authorize the President to
approve expenditures which do not involve the Corporation in
a new line of business. All action taken by the Finance
Committee shall be reported to the Board and shall be
subject to revision by the Board, provided that no acts or
rights of third parties shall be affected thereby.
(e) Program Development Committee
The Program Development Committee shall have primary
responsibility for reviewing and approving all policy
matters relating to changes, additions or deletions to the
Securities Guide, including the forms and appendices thereto
and any other forms or documents used in the Corporation's
programs. The Committee shall make recommendations to the
Board with respect to commencement of new programs and
modification or discontinuance of existing programs.
(f) Public Policy Committee
The Public Policy Committee shall consider matters of
public policy referred to it by the Board or the Chairman
including: (i) the Corporation's relationship with and
policies regarding Borrowers; (ii) the Corporation's
relationship with and policies regarding Congress and
governmental agencies and instrumentalities; and (iii)
matters which generate actual or apparent conflicts of
interest between the Corporation and one or more of its
directors. The Committee shall report the outcome of its
evaluation of matters under preceding clause (iii)
within a reasonable time after reference is made.
Section 10. Ad Hoc Committees
The Board of Directors may, by resolution adopted by a
majority of its members, designate from among its members
one or more ad hoc committees, each of which to the extent
provided in the resolution and in these By-Laws shall have
and may exercise all the authority of the Board of
Directors. No such ad hoc committee shall have the authority
of the Board of Directors in reference to any powers
reserved to the full Board of Directors by the resolution or
these By-Laws.
ARTICLE V
SHAREHOLDERS
Section 1. Special Meeting
Special meetings of the shareholders shall be held upon
the call of either the Chairman or a majority of the
directors of the Corporation, and shall be called by the
Chairman upon the written request of holders of at least
one-third of the shares of the Corporation having voting
power. A special meeting may be called for any purpose or
purposes for which shareholders may legally meet, and shall
be held, within or without the District of Columbia, at such
place as may be determined by the Chairman or a majority of
the directors of the Corporation, whichever shall call the
meeting.
Section 2. Annual Meeting
An annual meeting of the shareholders shall be held
each year at such date and at such time as designated by the
Board of Directors. At the meeting, the shareholders
entitled to vote shall elect directors and transact such
other business as may properly be brought before the
meeting.
Section 3. Notice
Written or printed notice stating the place, day and
hour of any meeting and, in the case of a special meeting,
the purpose for which the meeting is called, shall be
delivered not less than 10 nor more than 50 days before the
date of the meeting, either personally or by mail, by or at
the direction of the Chairman of the Board, or the
Secretary, or the officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail with postage
thereon prepaid, addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation
or such other address as the shareholder has in writing
instructed the Secretary.
Section 4. Waiver of Notice
Attendance by a shareholder at a shareholders' meeting,
whether in person or by proxy, without objection to the
notice or lack thereof, shall constitute a waiver of notice
of the meeting. Any shareholder may, either before or after
the time of the meeting, execute a waiver of notice of such
meeting.
Section 5. Record Date
For the purpose of determining shareholders entitled to
notice or to vote at any meeting of shareholders or any
adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of
Directors shall fix in advance a date as the record date
for any such determination of shareholders, such date in any
case to be not more than 60 days, in the case of a meeting
of shareholders, not less than 10 days prior to the date on
which the particular action requiring such determination of
shareholders is to be taken. If the Board of Directors fails
to designate such a date, the date on which notice of the
meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividends is adopted, as
the case may be, shall be the record date for such
determination of shareholders. When a date is set for the
determination of shareholders entitled to vote at any
meeting of shareholders, such determination shall apply to
any adjournment thereof.
Section 6. Voting Lists
The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make a
complete record of the shareholders entitled to vote at each
meeting of the shareholders or any adjournment thereof,
arranged in alphabetical order, with the address and the
number of shares held by each. Such officer or agent shall
also prepare two separate lists of such shareholders, one
indicating in alphabetical order which shareholders are
financial institutions not members of the Farm Credit System
and another indicating in alphabetical order which
shareholders are member institutions of the Farm Credit
System. Such records shall be produced and kept open at the
time and place of the meeting and shall be subject to
nspection by any shareholder during the whole time of the
meeting for the purposes thereof.
Section 7. Quorum
A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less
than a majority of the outstanding shares are represented at
a meeting, a majority of the shares so represented may
adjourn a meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which
might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to
leave less than a quorum. Shares of its own stock belonging
to the Corporation shall not be counted in determining the
total number of outstanding shares at any given time.
Section 8. Proxies
At all meetings of shareholders, a shareholder entitled
to vote may vote by proxy executed in writing by the
shareholder or by its duly authorized attorney in fact.
Shares standing in the name of another corporation may be
voted by such officer, agent or proxy as the by-laws of such
corporation may prescribe, or, in the absence of such
provisions, as the board of directors of such corporation
may determine. All proxies shall be filed with the Secretary
of the Corporation before or at the time of the meeting, and
shall be revocable, if such revocation be in writing, until
exercised. No proxy shall be valid after eleven months from
the date of its executions unless otherwise provided in the
proxy.
The Board of Directors may solicit proxies from
shareholders to be voted by such person or persons as shall
be designated by resolution of the Board of Directors. The
Corporation shall assume the expense of solicitations
undertaken by the Board.
Any solicitation of proxies by the Corporation shall
contain the names of all persons the Corporation proposes to
nominate for directorships to be filled at the next meeting,
their business addresses, and a brief summary of their
business experience during the last five years. Each proxy
solicitation shall be accompanied by a copy of the most
recent annual report of the Corporation which report, to the
satisfaction of the Board of Directors, shall reasonably
represent the financial situation of the Corporation as of
the time of its preparation.
If any shareholder entitled to vote at a meeting of
shareholders shall seek a list of shareholders for the
purpose of soliciting proxies from any other shareholders,
the Corporation may, at its option, either (a) provide the
soliciting shareholder with a complete and current list
containing the names of all shareholders of the Corporation
entitled to vote at such meeting; and their addresses as
they appear on the transfer books of the Corporation; or (b)
mail such proxy solicitations on behalf of the soliciting
shareholders, upon being furnished the material to be mailed
and the reasonable cost of the mailing.
Section 9. Organization
Meetings of the shareholders shall be presided over by
the Chairman of the Board of Directors. The Secretary of the
Corporation shall act as secretary of every meeting and, if
the Secretary is not present, the meeting shall choose any
person present to act as secretary of the meeting.
Section 10. Voting of Shares
Except as provided in this Section, at every meeting of
the shareholders, every holder of common stock entitled to
vote on a matter coming before such meeting shall be
entitled to one vote for each share of common stock
registered in its name on the stock transfer books of the
Corporation at the close of the record date.
At each election of directors, the Chairman of the
meeting shall inform the shareholders present of the persons
appointed by the President of the United States to be
the appointed directors of the Corporation. The shareholders
entitled to vote for the election of directors which are
institutions of the Farm Credit System shall constitute a
single class and shall then proceed to elect five directors.
Following the election of directors by shareholders which
are institutions of the Farm Credit System, the shareholders
entitled to vote for the election of directors which are
financial institutions and are not institutions of the Farm
Credit System shall constitute a single class and shall
proceed to elect five directors.
Every holder of common stock entitled to vote for the
election of directors shall have the right to cast the
number of votes that is equal to the product of the number
of shares owned by it multiplied by the number of directors
to be elected of the class for which it may vote, and it may
cast all such votes for one person or may distribute them
evenly or unevenly among any number of persons not greater
than the number of such directors of such class to be
elected, at its option. Shares of its own stock belonging to
the Corporation shall not be eligible to vote on any matter.
Section 11. Inspectors of Votes
The Board of Directors, in advance of any meeting of
shareholders, may appoint one or more Inspectors of Votes to
act at the meeting or any adjournment thereof. In case any
person so appointed resigns or fails to act, the vacancy may
be filled by appointment by the Chairman of the meeting. The
Inspectors of Votes shall determine all questions concerning
the qualification of voters, the validity of proxies, the
acceptance or rejection of votes and, with respect to each
vote by ballot, shall collect and count the ballots and
report in writing to the secretary of the meeting the result
of the vote. The Inspectors of Votes need not be
shareholders of the Corporation. No person who is an officer
or director of the Corporation, or who is a candidate for
election as a director, shall be eligible to be an Inspector
of Votes.
ARTICLE VI
SHARES OF STOCK
Section 1. Issuance and Conditions
The Board of Directors shall have the power in
accordance with the provisions of the governing statute to
authorize the issuance of voting common, non-voting common
and preferred shares of stock. The Board of Directors may
by resolution impose a stock purchase requirement as a
prerequisite to participation in any program of the
Corporation. Any stock purchase requirement shall not apply
to any participant who is prohibited by law from acquiring
stock of the Corporation, provided such participant
undertakes to make such purchase when such legal
restrictions are alleviated, or to such otherwise eligible
participants as the Board may by resolution provide.
Section 2. Common Stock
The Corporation shall have voting common stock having
such par value as may be fixed by the Board of Directors,
which may only be issued to institutions which are
authorized to be issued such shares pursuant to Title VIII
of the Farm Credit Act of 1971, as amended.
The Corporation may issue non-voting common stock
having such par value as may be fixed by the Board of
Directors, which may be issued without limitations as to the
status of the holders thereof.
Except as otherwise provided in these By-Laws, the
powers, preferences and relative and other special rights
and the qualifications, limitations and restrictions
applicable to all shares of common stock, whether voting
common stock or non-voting common stock, shall be identical
in every respect.
Except as provided in this Section, the voting common
stock and the non-voting common stock of the Corporation
shall be fully transferable, except that, as to the
Corporation, they shall be transferred only on the books of
the Corporation.
Section 3. Redemption
Whenever the Corporation shall determine that any
shares of the voting common stock of the Corporation are
held by a person, including a partnership, joint venture,
trust, corporation or any other association, not eligible to
acquire such shares under the provisions of Title VIII of
the Farm Credit Act of 1971, as amended, the Corporation
shall notify such person in writing that such shares are to
be disposed of to a person eligible to acquire such shares
within a period of not more than 30 days. If the
Corporation determines that the shares have not been
transferred within 30 days of such notice, the Corporation
may redeem such shares at the lesser of the fair market
value thereof or the book value thereof at the date
established for such redemption.
The power to redeem voting common stock found to be
held by ineligible persons granted by this Section shall not
be deemed to limit the right of the Corporation, at its
discretion, to pursue any other lawful remedy against such
ineligible person.
Section 4. Dividends on Voting Common Stock and
Non-Voting Common Stock
To the extent that income is earned and realized, the
Board of Directors may from time to time declare and the
Corporation shall pay, dividends on the voting common stock
and the non-voting common stock, except that no such
dividends shall be payable with respect to any share that
has been called for redemption after the date established
for such redemption. No dividend shall be declared or paid
on any share of voting common stock or non-voting common
stock at any time when any dividend is due on the shares of
preferred stock and has not been paid.
The ratio of any dividends paid on the non-voting
common stock to any dividends paid on the voting common
stock shall be three-to-one. Dividends to the holders of the
non-voting common stock and the voting common stock are to
be paid concurrently. Such ratio may be decreased only by
the affirmative vote of the holders of two-thirds of
the outstanding shares of the non-voting common stock.
Section 5. Preferred Stock
The Corporation may issue shares of preferred stock
having such par value, and such other powers, preferences
and relative and other special rights, and qualifications,
limitations and restrictions applicable thereto, as may be
fixed by the Board of Directors. Such shares shall be
freely transferable, except that, as to the Corporation,
such shares shall be transferred only on the books of the
Corporation.
Section 6. Dividends, Redemption, Conversion of
Preferred Shares
The holders of the preferred shares shall be entitled
to such rate of cumulative dividends, and such shares shall
be subject to such redemption or conversion provisions,
as may be provided for at the time of issuance. Such
dividends shall be paid out of the net income of the
Corporation, to the extent earned and realized.
Section 7. Preference on Liquidation
In the event of any liquidation, dissolution, or
winding up of the Corporation's business,
(a) the holders of shares of preferred
stock shall be paid in full at par value thereof,
plus all accrued dividends, before the holders of
the voting common stock and non-voting common
stock receive any payment; and
(b) the ratio of any distributions to
the holders of non-voting common stock to any
distributions to the holders of voting common stock
shall be three-to-one. Such ratio may be decreased
only by the affirmative vote of the holders of
two-thirds of the outstanding shares of the non-voting
common stock.
Section 8. Purchase of Own Shares
The Corporation shall have the right, pursuant to
resolution by the Board of Directors, to purchase, take,
receive or otherwise acquire its own shares, but purchases,
whether direct or indirect, shall be made only to the extent
of unreserved and unrestricted earned or capital surplus
available therefor.
Section 9. Consideration for Shares
The Corporation shall issue shares of stock for such
consideration, expressed in dollars, but not less than the
par value thereof, as shall be fixed from time to time by
the Board of Directors. That part of the surplus of the
Corporation which is transferred to stated capital upon
issuance of shares as a share dividend shall be deemed to be
the consideration for the shares so issued.
The consideration for the issuance of shares may be
paid, in whole or in part, in cash or other property
acceptable to the Board of Directors, except that a
promissory note shall not constitute payment or partial
payment for the issuance of shares of the Corporation.
Section 10. Stated Capital
The consideration received upon the issuance of any
share of stock shall constitute stated capital to the extent
of the par value of such shares and the excess, if any, of
such consideration shall constitute capital surplus. The
stated capital of the Corporation may be increased from time
to time by resolution of the Board of Directors directing
that all or a part of the surplus of the Corporation be
transferred to stated capital. The Board of Directors may
direct that the amount of the surplus so transferred shall
be deemed to be stated capital in respect of any designated
class of shares.
The Board of Directors may, by resolution from time to
time, reduce the stated capital of the Corporation but only
in the amount of the aggregate par value of any shares
of the Corporation which shall have been reacquired and
canceled. Any surplus created by virtue of a reduction of
stated capital shall be deemed to be capital surplus.
Section 11. No Preemptive Rights
No holder of the shares of the Corporation of any
class, now or hereafter authorized, shall as such holder
have any preemptive or preferential rights to subscribe to,
purchase, or receive any shares of the Corporation of any
class, now or hereafter authorized, or any rights or options
for any such shares or any rights or options to subscribe to
or purchase any such shares or other securities convertible
into or exchangeable for or carrying rights or options to
purchase shares of any class or other securities, which may
at any time be issued, sold or offered for sale by the
Corporation or subjected to the rights or options to
purchase granted by the Corporation.
Section 12. Liability of Shareholders
A holder of shares of the Corporation shall be under no
obligation to the Corporation with respect to such shares
other than the obligation to pay to the Corporation the full
consideration for which such shares were or are to be
issued.
Any person becoming a transferee of shares in good
faith and without notice or knowledge that the full
consideration thereof had not been paid shall not be
personally liable to the Corporation for any unpaid portion
of such consideration.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates
The interest of each shareholder of the Corporation
shall be evidenced by certificates representing shares of
stock of the Corporation, certifying the number of
shares represented thereby, and shall be in such form not
inconsistent with the governing statute of the Corporation
as the Board of Directors may from time to time prescribe.
The certificates of stock shall be signed by the
President and by the Secretary or Assistant Secretary and
sealed with the corporate seal or an engraved or printed
facsimile thereof. The signatures of such officers upon a
certificate may be facsimile if the certificate is manually
signed on behalf of a transfer agent or a registrar other
than the Corporation itself or one of its employees. In the
event that any officer who has signed or whose facsimile
signature has been placed upon such certificate shall have
ceased to be such before such certificate is issued, it may
be issued by the Corporation with the same effect as if such
officer had not ceased to be such at the time of the issue.
Each certificate or share shall be consecutively
numbered or otherwise identified. The name and address of
the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall
be entered on the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer
shall be canceled, and no new certificate shall be issued
until the former certificate for a like number of shares
shall have been surrendered and canceled, except that in the
case of a lost, destroyed or mutilated certificate, a new
certificate may be issued upon such terms and with indemnity
to the Corporation as the Board of Directors may prescribe.
Section 2. Contents
Each certificate representing shares shall state:
a. That the Corporation is organized pursuant
to an Act of Congress;
b. The name of the person to whom issued;
c. The number and class of shares, and the
designation of the series, if any, which such
certificate represents;
d. The par value of each share represented by such
certificate;
e. The provisions by which such shares may be
redeemed; and
f. That the shares represented shall not have any
preemptive rights to purchase unissued or treasury
shares of the Corporation.
Each certificate representing shares of preferred stock
shall state upon the face thereof the annual dividend rate
for such shares, and shall state upon the reverse side
thereof the powers, preferences and relative and other
special rights and the qualifications, limitations and
restrictions applicable to such shares of preferred stock.
No certificate shall be issued for any share until such
hare is fully paid.
Section 3. Transfer
Transfer of shares of the Corporation shall be made
only on the stock transfer books of the Corporation by the
holder of record thereof or by his legal representative, who
shall furnish proper evidence of the authority to transfer,
or by his attorney thereto authorized by power of attorney
duly executed and filed with the Secretary of the
Corporation, and on surrender for cancellation of the
certificate for such shares.
The person in whose name shares stand on the books of
the Corporation shall be deemed by the Corporation to be the
owner thereof for all purposes.
Section 4. Records
The Corporation shall keep at its principal place of
business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names
and addresses of all shareholders and the number of shares
held by each. Any person who shall be the holder of at least
five percent of the aggregate number of shares of any class
of common stock of the Corporation shall upon written demand
stating the purpose therefor, have the right to examine, in
person, or by agent or attorney, duly authorized in writing,
at any reasonable time or times, for any proper purpose, the
Corporation's record of shareholders
and minutes of meetings of the shareholders and the Board of
directors, and to make extracts therefrom.
ARTICLE VIII
INDEMNIFICATION
Section 1. Authorization
The Corporation shall, to the extent permitted by law,
indemnify any person who was or is a party, whether as a
plaintiff acting with the approval of the Board of Directors
or as a defendant, or is threatened to be made a party to
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal, by reason of
the fact that he or she is or was a director, officer,
employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her
in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. Any such person
shall be indemnified by the Corporation to the extent he or
she is successful in the action, suit or proceeding. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with
respect to any criminal proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 2. Procedure
Any indemnification under this Article shall be made by
the Corporation only as authorized in the specific case upon
a determination that indemnification is proper in the
circumstances because the officer, director, employee or
agent has met the applicable standard of conduct set forth
in this Article. Such determination shall be made by a
majority vote of the members of the Board of Directors who
were not parties to such action, suit or proceeding. If all
members of the Board of Directors were parties to such
action, suit or proceeding, such determination shall be made
either (a) by legal counsel or (b) by the shareholders at
the next meeting of shareholders. In any case under this
Article, the Board or shareholders are authorized to obtain
the opinion of independent legal counsel.
Section 3. Advance Payments
Expenses, including attorneys' fees, incurred in
defending a civil, criminal, administrative or investigative
action, suit or proceeding, whether formal or informal,
shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized
in the manner provided in section 2 of this Article upon
receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount only if it
shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation.
Section 4. Other Rights to Indemnification
The indemnification provided in this Article shall not
be deemed exclusive of any other rights to which the
director, officer, employee or agent may be entitled under
any by-law, agreement, vote of shareholders or disinterested
directors or otherwise. The indemnification provided by this
Article shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of the heirs, executors, and administrators of such
a person.
Section 5. Indemnification Insurance
The Corporation, pursuant to a resolution of the
Corporation, may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
or her in any such capacity or arising out of his status as
such whether or not the Corporation would have the power to
indemnify him or her against such liability under the
provisions of this Article.
ARTICLE IX
CONTRACTS, LOANS, CHECKS, DEPOSITS AND STATEMENTS
Section 1. Contracts
The Board of Directors may authorize the Chairman or
officers of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general
or confined to specific instances.
Section 2. Loans
No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued
in its name unless authorized by a resolution of the Board
of Directors. Such authority may be general or confined to
specific instances.
Section 3. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of
money, notes or other evidence of indebtedness issued in the
name of the Corporation shall be signed by the Chairman or
officers of the Corporation and in such manner as shall from
time to time be determined by a resolution of the Board of
Directors.
Section 4. Deposits
All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the
Corporation at such banks, trust companies or other
depositories as the Board of Directors may select.
Section 5. Investments
The Board of Directors may authorize the Chairman or
officers of the Corporation to invest the funds of the
Corporation in such securities and in such manner as shall
from time to time be determined by a resolution of the Board
of Directors.
ARTICLE X
FACSIMILE SIGNATURES
The Board of Directors may by resolution authorize the
use of facsimile signatures in lieu of manual signatures.
ARTICLE XI
AMENDMENTS
These By-Laws may be altered, amended or repealed and
new by-laws, consistent with the governing statute, may be
adopted by the majority vote of the Board of Directors.
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