As filed with the Securities and Exchange Commission on
May 15, 1996
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, 1996.
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
___________________________________
(State or other jurisdiction of
incorporation or organization)
52-1578738
_________________________________________
(I.R.S. employer of identification number)
919 18th Street, N.W., Suite 200,
Washington, D.C. 20006
_________________________________________ ____________________________
(Address of principal executive offices) (Zip code)
(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, 1996, there were 990,000 shares of Class A
Voting Common Stock, 593,401 shares of Class B Voting Common
Stock, and 1,214,463 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 1995 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, 1996, December 31, 1995 and March 31,
1995 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, December 31,
1996 1995
(unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 74,537 $ 8,336
Interest receivable 9,584 15,572
Guarantee fees receivable 333 573
Investment securities
Held-to-maturity 7,419 7,419
Available-for-sale 54,688 55,862
Farmer Mac I & II Securities 401,049 417,169
Other investments 13,985 2,340
Farmer Mac I & II payments receivable 10,970 4,939
Office equipment, net 59 65
Prepaid expenses and other assets 302 189
TOTAL ASSETS $ 572,926 $ 512,464
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Debentures, notes and bonds, net:
Due within one year $ 279,200 $ 207,422
Due after one year 274,857 284,084
Accrued interest payable 6,663 8,394
Accounts payable and accrued expenses 715 740
Allowance for sold Farmer Mac I & II
Securities 118 112
TOTAL LIABILITIES 561,553 500,752
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, 593,401
shares issued and outstanding 593 500
Class C Non-Voting, $1 par value, no
maximum authorization, 1,214,463 shares
issued and outstanding 1,214 1,170
Additional paid in capital 19,751 19,331
Loan receivable for purchase of stock (557) -
Unrealized (loss) gain on securities
available-for-sale (41) 140
Accumulated deficit (10,257) (10,099)
TOTAL STOCKHOLDERS' EQUI TY 11,373 11,712
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 572,926 $ 512,464
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Three months ended
March 31, March 31,
1996 1995
(unaudited)
<S> <C> <C>
INTEREST INCOME:
Investments and cash equivalents $ 1,469 $ 1,328
Farmer Mac I and II Securities 7,452 6,702
TOTAL INTEREST INCOME 8,921 8,030
INTEREST EXPENSE 8,394 7,763
NET INTEREST INCOME 527 267
OTHER INCOME:
Guarantee fees 303 307
Miscellaneous 35 17
TOTAL OTHER INCOME 338 324
OTHER EXPENSES:
Compensation and employee benefits 531 465
Professional fees 157 85
Insurance 51 57
Rent 41 42
Regulatory fees 71 92
Board of Directors fees and meeting
expenses 88 78
Administrative 84 79
TOTAL OTHER EXPENSES 1,023 898
NET LOSS $ (158) $ (307)
NET LOSS PER SHARE $ (0.06) $(0.13)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Three Months Ended
March 31, March 31,
1996 1995
(unaudited)
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Loss from Operations $ (158) $ (307)
Adjustments to reconcile net loss to
cash provided by operating activities:
Amortization of premium on Farmer Mac I
and II portfolio 942 1,403
Discount Note amortization 2,309 1,719
Decrease in guarantee fees receivable 240 124
Decrease in interest receivable 5,988 5,161
Increase in Farmer Mac I and II payments
receivable (6,031) (3,536)
Increase in prepaid expenses and
other assets (113) (93)
Amortization of debt issuance costs 45 50
Decrease in accounts payable and accrued
expenses (25) (43)
Decrease in accrued interest payable on
Medium-Term Notes (1,731) (595)
Provision for losses on Farmer Mac I
Program 27 29
Other (20) (10)
Net cash provided by operating activities 1,473 3,902
CASH FLOWS FROM
INVESTING ACTIVITIES:
Farmer Mac II purchases (15,033) (8,007)
Purchases of investments (11,645) (19,002)
Proceeds from maturity of investments 994 -
Proceeds from Farmer Mac I and II
principal repayments 30,190 18,465
Purchases of office equipment (3) (2)
Net cash provided (used) by investing
activities 4,503 (8,546)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from issuance of Medium-Term
Notes - 9,989
Payments to redeem Medium-Term Notes (29,280) (7,185)
Proceeds from issuance of Discount Notes 371,505 306,525
Discount Notes redeemed (282,000) (307,500)
Net cash provided by financing activities 60,225 1,829
Net increase (decrease) in cash and cash
equivalents 66,201 (2,815)
Cash and cash equivalents at beginning of
period 8,336 73,129
Cash and cash equivalents at end of
period $ 74,537 $70,314
Supplemental disclosures of cash flow
information:
Cash paid during the three-month period
for:
Interest $ 7,800 $ 6,577
See accompanying notes to consolidated financial statements.
</TABLE>
<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, 1996 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 1995 information were
made to conform with the 1996 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>
March 31, 1996 December 31, 1995
(In Thousands)
<S> <C> <C>
Farmer Mac I............... $ 82,392 $ 94,763
Farmer Mac II.............. $ 4,544 $ 4,810
</TABLE>
NOTE 3. SUBSEQUENT EVENT.
On April 10, 1996, Farmer Mac sold 320,000 newly issued
shares of Class A Voting Common Stock to Zions First National
Bank ("Zions") at a price of $8.00 per share. This transaction
generated $2.6 million in new capital and increased the
outstanding shares of Class A Voting Common Stock to 990,000
shares, of which Zions owns approximately 33%.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RERSULTS 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 Guaranteed
Portions, Qualified Loans and Securities (including Farmer Mac
Guaranteed Securities backed by Guaranteed Portions and/or
Qualified Loans). Funds from the borrowings also may be used for
liquidity purposes. At March 31, 1996, Farmer Mac had $554.1
million of Discount Notes and Medium-Term Notes (net of
unamortized debt issuance costs, discounts and premiums)
outstanding, a $62.6 million increase from December 31, 1995.
During the first three months of 1996, Farmer Mac issued $371.5
million of Discount Notes (net of discount) and redeemed $282.0
million of Discount Notes and $29.3 million of Medium-Term Notes.
Farmer Mac did not issue any Medium-Term Notes during the first
three months of 1996.
The $66.2 million increase in cash and cash equivalents,
comprised largely of short-term commercial paper, from December
31, 1995 to March 31, 1996, was attributable primarily to Farmer
Mac's Discount Note issuance strategy. As a result of the
uncertainty associated with the legislative initiative at year
end 1995, Farmer Mac lowered the amount of its Discount Notes
outstanding at December 31, 1995. Following the enactment of the
legislation in the 1996 first quarter, Farmer Mac increased its
Discount Note issuances to reestablish its presence in that
market, resulting in a corresponding increase in its short-term
investment portfolio.
The $10.5 million increase in investments, comprised of
investment securities and other investments, from December 31,
1995 to March 31, 1996, primarily resulted from principal and
interest payments received on mortgage-backed securities
previously issued under the Corporation's Linked Portfolio
Strategy, and held in anticipation of payments due on the related
Notes. The payments received on the mortgage-backed securities
also largely accounted for the $16.1 million net reduction in
Farmer Mac I and II Securities and the $6.0 million decrease in
interest receivable.
Proceeds of any future Note issuances are expected to be
used by the Corporation primarily to fund purchases of Qualified
Loans, Guaranteed Portions and Securities under the Farmer Mac I
and Farmer Mac II Programs and to maintain Farmer Mac's liquidity
position.
At March 31, 1996, Farmer Mac's total loss allowance was
$414 thousand. Farmer Mac I and II Securities are shown net of
the applicable allowance of $296 thousand at March 31, 1996,
representing an increase of $16 thousand from year-end 1995; the
allowance for Farmer Mac Guaranteed Securities not held by Farmer
Mac was $118 thousand at March 31, 1996, representing an increase
of $6 thousand from year-end 1995. 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 existing Farmer Mac I Guaranteed
Securities. Before Farmer Mac is required to make a guarantee
payment on those 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. Under the new legislative authorities provided for in
the 1996 Act, Farmer Mac may issue "first loss guarantees" and
thus be subject to greater credit risk. Farmer Mac is evaluating
the appropriateness of its loan loss reserve policy, particularly
as a result of its new status as a first loss guarantor.
At March 31, 1996, a total of five loans aggregating $4.9
million were 90 days or more past due, four loans totaling $1.5
million were in foreclosure and title to two loans with an
outstanding principal balance of $709 thousand had been acquired
by the trust in the Farmer Mac I Program. The 11 loans combined
represent 2.2% of the aggregate principal amount of outstanding
Farmer Mac I Securities at March 31, 1996. 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, 1996, Farmer Mac's regulatory required minimum
capital was $6.5 million and its actual capital level was $11.4
million. At December 31, 1995, Farmer Mac's regulatory required
minimum capital was $4.7 million, and its actual capital level
was $11.7 million. As previously reported, the 1996 Act phases
in higher capital requirements over a three-year transition
period following the enactment of the 1996 Act. Certain levels
of enforcement are given to the FCA depending upon Farmer Mac's
compliance with these capital levels. See "Recent Legislative
Revisions to Farmer Mac's Statutory Charter _ Summary of
Statutory Changes _ Capital" and "Government Regulation of Farmer
Mac _ Regulation _ Capital Standards" in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995. If the
fully phased-in (highest) standard under the 1996 Act had been in
effect at March 31, 1996, Farmer Mac's actual capital would have
been less than the total minimum capital required by
$5.0 million.
In the opinion of management, Farmer Mac has sufficient
liquidity and capital for the next twelve months.
Results of Operations
Overview. As previously reported, Farmer Mac is in the
process of implementing its new legislative authorities by
following a two-phased approach. Work on Phase I -- development
of an "economic risk model" for pricing loans to be acquired
either for cash (through its "cash window") or in exchange for
Farmer Mac-guaranteed securities (through its "swap" program) --
is nearing completion. This economic risk model consists of
several interrelated "modules," including a loss (guarantee fee)
module, securitization module, operating expense module and
capital module. The model is currently being evaluated, tested
and verified by an independent consultant and is expected to be
available for Farmer Mac's use during the 1996 second quarter.
Phase II of the implementation planning process -- development of
new policies and procedures necessary to implement a direct
pooling (individual loan commitments, rate locks and loan
purchases) program -- also is underway and is targeted for
completion prior to the commencement of the fall agricultural
lending season.
Farmer Mac anticipates closing the first transaction under
its new authorities during the 1996 second quarter. That
transaction is expected to involve the purchase from AgFunding
(Western Farm Credit Bank's "National AgriMortgage Funding"
program) of approximately $100 million in loans, which Farmer Mac
would use as collateral to support the issuance soon thereafter
of guaranteed securities to be sold to capital markets investors.
In addition to preparing for the foregoing loan purchase,
Farmer Mac is pursuing swap transactions with portfolio holders
of agricultural loans. While Farmer Mac believes there are many
benefits to holders through the exchange of loans for Farmer Mac-
guaranteed securities, there is no assurance that any such
portfolio swap transactions actually will be consummated.
Although Farmer Mac's new authorities give it the statutory
flexibility to devise programs that operate under guidelines
similar to those of Fannie Mae and Freddie Mac, that flexibility
does not ensure the success of Farmer Mac's programs. As
previously reported, a number of factors have constrained
participation in Farmer Mac's programs to date and caused its
core business activities to be unprofitable. Those factors have
included: the excess liquidity of many agricultural lenders; the
attractiveness of loans (otherwise qualified under the Farmer Mac
programs) as investments for their originators; the
disinclination of many lenders to offer intermediate-term
adjustable rate and long-term fixed rate agricultural real estate
loans, as a result of the higher profitability associated with
short-term lending; the lack of borrower demand for intermediate-
term and long-term loans due to the lower interest rates
generally associated with shorter term loans; various restrictive
provisions in Farmer Mac's charter; and the unfavorable
regulatory capital treatment afforded banks and System
Institutions holding subordinated securities created in Farmer
Mac transactions. Even though the 1996 Act has removed those
charter provisions that Farmer Mac had concluded were
constraining the operation of the secondary market, most of the
other enumerated factors, over which Farmer Mac has little, if
any, control, may continue to exist as Farmer Mac seeks to
implement its new authorities. If those factors persist, they
will affect Farmer Mac's ability to generate the volume of
business necessary to achieve profitability and ultimately comply
with the requirement to raise capital to higher levels by
February 1998. Several positive developments have come from the
legislation, including significant increases in AgFunding's loan
volume and lender network, as well as the purchase of a
substantial portion of Farmer Mac's Voting Common Stock by Zions
First National Bank during the 1996 second quarter. Despite
these positive developments, and Farmer Mac's ongoing efforts to
implement its new authorities under the 1996 Act, Farmer Mac's
ability to operate profitably in the future remains uncertain.
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
economy, both domestic and international. Farmer Mac's future is
still dependent upon continued, more effective and significantly
increased utilization of its programs by its Class A and Class B
stockholders.
General. Farmer Mac reported a net loss for the three
months ended March 31, 1996 of $158 thousand, a decrease of $149
thousand from the $307 thousand loss reported for the three
months ended March 31, 1995. The decrease in loss is largely
attributable to an increase in net interest income, due to a
decrease in the cost of interest-bearing liabilities over the
comparable period in 1995.
<PAGE>
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>
Three Months Ended March 31,
(Dollars in Thousands)
1996 1995
_________________________ __________________________
(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:
Farmer Mac I and II
Securities $ 411,025 $ 7,452 7.25% $ 370,210 $ 6,702 7.24%
Investments and cash
equivalents 106,441 1,469 5.52% 93,776 1,328 5.66%
Total earning assets 517,466 8,921 6.90% 463,986 8,030 6.92%
Other assets 14,838 11,220
$ 532,304 $ 475,206
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities
Debentures, notes and
bonds, net $ 513,960 $ 8,394 6.53% $ 456,572 $ 7,763 6.80%
Other liabilities 6,771 6,594
Stockholders' equity 11,573 12,040
$ 532,304 $ 475,206
Net interest income/
spread $ 527 0.37% $ 267 0.12%
Net yield on interest
earning assets 0.41% 0.23%
</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>
Three Months Ended March 31, 1996
Compared to Three Months Ended March 31, 1995
Increase or (Decrease) Due to
Rate Volume Total
(in thousands)
<S> <C> <C> <C>
Income from interest-earning assets:
Farmer Mac I and II Securities $ 10 $ 740 $ 750
Investments and cash equivalents (33) 174 141
Total income from interest-earning
assets (23) 914 891
Expense on interest-bearing
liabilities (289) 920 631
Change in net interest income $ 266 $ (6) $ 260
</TABLE>
<PAGE>
PERIOD ENDED MARCH 31, 1996
COMPARED TO PERIOD ENDED MARCH 31, 1995
Net Interest Income. Net interest income totaled $527
thousand for the three months ended March 31, 1996, a $260
thousand increase from the three months ended March 31, 1995.
The increase in net interest income is attributable to the 25
basis point (0.25%) increase in the net interest spread,
primarily a result of the decrease in the cost of interest-
bearing liabilities from the three months ended March 31, 1995 to
the three months ended March 31, 1996.
Interest Income. Interest income totaled $8.9 million and
$8.0 million for the three months ended March 31, 1996 and 1995,
respectively. The $891 thousand increase is attributable to the
increase in the average balance of interest-earning assets which
more than offset the slight decline in the average rate of
interest-earning assets. The increase in the average balance of
interest-earning assets is attributable to the increases in the
average balance of Guaranteed Portions and Securities issued
under the Farmer Mac II Program and the average balance of
investments.
Interest Expense. Interest expense for the three months
ended March 31, 1996 and 1995 totaled $8.4 million and $7.8
million, respectively. The $631 thousand increase in interest
expense is attributable to the increase in the average balance of
interest-bearing liabilities, offset by the decrease in the
average cost of those liabilities. The average balance of
interest-bearing liabilities increased $57.4 million from $456.6
million at March 31,1995 to $514.0 million at March 31, 1996.
Other Income. Other income totaled $338 thousand and $324
thousand for the three months ended March 31, 1996 and 1995,
respectively. Guarantee fee income, the principal component of
other income, decreased $4 thousand from $307 thousand for the
three months ended March 31, 1995 to $303 thousand for the three
months ended March 31, 1996, a result of the reduction in total
Guaranteed Securities outstanding from the comparable period in
1995.
Miscellaneous income, composed primarily of transaction fees
generated from the Farmer Mac II Program, increased $18 thousand
from $17 thousand for the three months ended March 31, 1995 to
$35 thousand for the three months ended March 31, 1996. The
increase in transaction fees resulted from the increased level of
issuances under the Farmer Mac II Program. Farmer Mac issued
$15.0 million of Farmer Mac II Securities in the three months
ended March 31, 1996, as compared to $4.4 million of Farmer Mac
II Securities and $3.5 million of Guaranteed Portions purchased
during the three months ended March 31, 1995.
Other Expenses. Other expenses totaled $1.0 million for the
three months ended March 31, 1996, an increase of $125 thousand
from the three months ended March 31, 1995. The increase in
other expenses is attributable to the increases in professional
fees and compensation and employee benefits, which were partially
offset by the decrease in regulatory fees.
Professional fees, comprised of fees for legal, accounting
and consulting services, increased $72 thousand from the three
months ended March 31, 1995 to the three months ended March 31,
1996. These increases were largely the result of legal and
consulting fees incurred during the 1996 first quarter. Farmer
Mac incurred legal fees in connection with negotiating the
documentation to effect the purchase by Zions First National Bank
of Class A Voting Common Stock. Farmer Mac utilized consultants
to assist with the Corporation's legislative initiative, to
develop the economic risk model and to advise the Board of
Directors on executive compensation.
Regulatory fees decreased $21 thousand from the three months
ended March 31, 1995 to the three months ended March 31, 1996, a
result of the decrease in Farmer Mac's assessment from $368
thousand for the 1994-95 FCA fiscal year to $285 thousand for the
1995-96 FCA fiscal year.
Compensation and employee benefits increased $66 thousand
from the three months ended March 31, 1995 to the three months
ended March 31, 1996, a result of an increase in staffing from
the comparable periods in 1995, and a change in the officer
compensation structure. Farmer Mac added two additional
employees, one in the second quarter of 1995 and one in the
fourth quarter of 1995, to assist with the Farmer Mac II Program
and portfolio analysis. The Board of Directors worked with a
compensation consultant to establish a new compensation structure
for officers, which included incorporating the former initial
level of targeted annual incentive compensation into annual base
salary and devising a long-term incentive compensation program
involving the use of non-qualified stock options. No options
have been granted under this new structure, although target
levels have been established.
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 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. Dividends paid 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 VIII of the Farm Credit Act of 1971, as most
recently amended by the Farm Credit System Reform Act of 1996,
P.L. 104-105 (Form 10-K filed March 29, 1996).
** 3.2 - 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>
+* 10.1.1 - Amendment No. 1 to Stock Option Plan Previously filed
as Exhibit 10.2 to Form 10-Q filed August 16, 1993).
+* 10.2 - 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).
+* 10.2.1 - Amendment No. 1 dated January 10, 1991 to Employment
Agreement between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.4 to Form 10-K filed
April 1, 1991).
+* 10.2.2 - Amendment to Employment Contract dated as of June 1, 1993
between Henry D. Edelman and the Registrant (Previously
filed as Exhibit 10.5 to Form 10-Q filed November 15, 1993).
+* 10.2.3 - Amendment No. 3 dated as of June 1, 1994 to Employment
Contract between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.5 to Form 10-Q filed
November 15, 1994).
+* 10.2.4 - Amendment No. 4 dated as of February 8, 1996 to Employment
Contract between Henry D. Edelman and the Registrant (Form
10-K filed March 29, 1996).
+* 10.3 - 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).
+* 10.3.1 - 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).
+* 10.3.2 - 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).
___________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
+* 10.3.3 - 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).
+* 10.3.4 - Amendment No. 4 dated June 1, 1993 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Previously
filed as Exhibit 10.11 to Form 10-K filed March 30, 1994).
+* 10.3.5 - Amendment No. 5 dated as of June 1, 1994 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.12 to Form 10-Q filed
August 15, 1994).
+* 10.3.6 - Amendment No. 6 dated as of June 1, 1995 to Employment
Contract between Nancy E. Corsiglia and the Registrant (Form
10-Q filed August 14, 1995).
+* 10.3.7 - Amendment No. 7 dated as of February 8, 1996 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Form 10-K filed March 29, 1996).
+* 10.4 - Employment Agreement dated June 13, 1989 between Thomas R.
Clark and the Registrant (Previously filed as Exhibit 10.6
to Form 10-K filed April 1, 1990).
+* 10.4.1 - 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).
+* 10.4.2 - 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).
+* 10.4.3 - Amendment No. 3 dated June 1, 1993 to Employment
Contract between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.16 to Form 10-K filed
March 30,1994).
_________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
* 10.4.4 - Amendment No. 4 dated as of June 1, 1994 to Employment
Contract between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.17 to Form 10-Q filed
August 15, 1994).
+* 10.4.5 - Amendment No. 5 dated as of June 1, 1995 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-Q filed August 14, 1995).
+* 10.4.6 - Amendment No. 6 dated as of February 8, 1996 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-K filed March 29, 1996).
+* 10.5 - Employment Agreement dated April 29, 1994 between Charles M.
Lewis and the Registrant (Previously filed as Exhibit 10.18
to Form 10-Q filed August 15, 1994).
+* 10.5.1 - Amendment No. 1 dated as of June 1, 1995 to Employment
Contract between Charles M. Lewis and the Registrant (Form
10-Q filed August 14, 1995).
+* 10.5.2 - Amendment No. 2 dated as of February 8, 1996 to Employment
Contract between Charles M. Lewis and the Registrant (Form
10-K filed March 29, 1996).
+* 10.6 - 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).
+* 10.6.1 - 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).
+* 10.6.2 - Amendment No. 2 dated June 1, 1993 to Employment Contract
between Michael T. Bennett and the Registrant (Previously
filed as Exhibit 10.21 to Form 10-K filed March 30, 1994).
+* 10.6.3 - Amendment No. 3 dated June 1, 1994 to Employment Contract
between Michael T. Bennett and the Registrant (Previously
filed as Exhibit 10.22 to Form 10-K filed August 15, 1994).
__________________
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
+* 10.6.4 - Amendment No. 4 dated as of June 1, 1995 to Employment
Contract between Michael T. Bennett and the Registrant
(Form 10-Q filed August 14, 1995).
+* 10.6.5 - Amendment No. 5 dated as of February 8, 1996 to Employment
Contract between Michael T. Bennett and the Registrant
(Form 10-K filed March 29, 1996).
+* 10.7 - 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).
+* 10.7.1 - 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).
+* 10.7.2 - Amendment No. 2 dated June 1, 1993 to Employment Contract
between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.25 to Form 10-K filed
March 30, 1994).
+* 10.7.3 - Amendment No. 3 dated as of June 1, 1994 toEmployment
Contract between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.26 to Form 10-Q filed
August 15, 1994).
+* 10.7.4 - Amendment No. 4 dated as of June 1, 1995 to Employment
Contract between Christopher A. Dunn and the Registrant
(Form 10-Q filed August 14, 1995).
+* 10.7.5 - Amendment No. 5 dated as of February 8, 1996 to Employment
Contract between Christopher A. Dunn and the Registrant
(Form 10-K filed March 29, 1996).
* 10.8 - 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>
* 10.9 - Strategic Alliance Agreement, dated November 15, 1994
between Western Farm Credit Bank and the Registrant, as
amended January 1, 1995 (Previously filed as Exhibit
10.28 to Form 10-K filed March 31, 1995).
* 10.9.1 - Amendment No. 2 dated as of December 15, 1995 to Strategic
Alliance Agreement between Western Farm Credit Bank and the
Registrant (Form 10-K filed March 29, 1996).
** 10.9.2 - Amendment No. 3 dated as of March 15, 1996 to Strategic
Alliance Agreement between Western Farm Credit Bank and
the Registrant.
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 filed a report on Form 8-K on February 10,
1996 to report the amendment of its charter through the enactment
of the Farm Credit System Reform Act, P.L. 104-105, 110 Stat. 162
(1996). The charter, as amended, was included with the
Registrant's Form 10-K filed March 29, 1996 as Exhibit 3.1.
___________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ 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 caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
May 15, 1996
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 - Business Development,
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
** 3.2 Amended and restated Bylaws of the Registrant.
** 10.9.2 Amendment No. 3 dated as of March 15, 1996 to
Strategic Alliance Agreement between Western Farm
Credit Bank and the Registrant.
___________________
** Filed Herewith.
<PAGE>
EXHIBIT 3.2
<PAGE>
EXHIBIT 10.9.2
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 be responsible for determining
the financial policies of the Corporation and managing the
Corporation's financial affairs, except those financial policies
and affairs that are assigned to the Audit and Compensation
Committees.
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. The aggregate number of shares of non-voting
common stock outstanding shall at no time exceed one hundred
and ten percent (110%) of the aggregate number of shares of
voting common stock then outstanding, each as recorded in the
Corporation's books and records (after giving effect to any
changes in the Corporation's capital structure, including but
not limited to any stock splits or reverse stock splits).
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 each share of non-voting
common stock to any dividends paid on each share of 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.
AMENDMENT NO. 3 to
STRATEGIC ALLIANCE AGREEMENT between
FEDERAL AGRICULTURAL MORTGAGE CORPORATION and
WESTERN FARM CREDIT BANK
Dated as of March 15, 1996
AMENDMENT NO. 3, dated as of March 15, 1996, to
Strategic Alliance Agreement, dated as of November
15, 1994, as amended by Amendment No. 1 thereto dated
as of January 1, 1995, and Amendment No. 2 thereto dated
as of December 15, 1995 (the "Strategic Alliance
Agreement"), between the FEDERAL AGRICULTURAL MORTGAGE
CORPORATION, a federally chartered instrumentality
of the United States ("Farmer Mac") and the
WESTERN FARM CREDIT BANK, a federally chartered farm
credit bank ("WFCB").
RECITALS
WHEREAS, Farmer Mac and WFCB have entered into
the Strategic Alliance Agreement providing, among other
things, for the establishment and operation by WFCB of
the Business in order to facilitate further the
development of a secondary market for agricultural real
estate loans;
WHEREAS, under the Strategic Alliance Agreement,
WFCB has the right to sell to Farmer Mac from time to time
up to an aggregate of $1.5 million of its Notes, the
proceeds from the sale of which are to be used by WFCB to
pay or reimburse itself and Farmer Mac for expenses
incurred in operating the Business;
WHEREAS, under the Strategic Alliance Agreement,
the interest rate to be borne by the Notes is determined
by a reference to interest rates on certain treasury
bills,
WHEREAS, WFCB and Farmer Mac desire to amend
the Strategic Alliance Agreement to simplify the
calculation of the Discount Rate applicable to the Notes
and to correct an error in the reference to 30 day
treasury bills contained in the Strategic Alliance
Agreement;
WHEREAS, capitalized terms used but not defined
herein have the meanings given to them in the Strategic
Alliance Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual agreements herein contained, and intending
to be legally bound hereby, Farmer Mac and WFCB hereby
agree as follows:
Section 1. Certain Definitions. The
definition of "Discount Rate" in Article 1 of the
Strategic Alliance Agreement is hereby replaced with
the following new definition:
"Discount Rate" with respect to any quarterly
interest period commencing on each February 1, May
1, August 1 and November 1 during the Term shall
mean the per annum rate (expressed on a bond
equivalent basis and applied on a daily basis) for 91-
day treasury bills determined at the first
treasury auction held during such quarterly
interest period as published by the Board of
Governors of the Federal Reserve System or as
reported by the Department of the Treasury.
Section 2. Counterparts. This Amendment may
be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which shall
constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused
this Amendment to be duly executed on its behalf as of
the day and year first above written.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
/s/ Henry D. Edelman
__________________________________________
By: Henry D. Edelman
Its: President and Chief Executive Officer
WESTERN FARM CREDIT BANK
/s/ James M. Cirona
____________________________________________
By: James M. Cirona
Its: President and Chief Executive Officer
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<PERIOD-END> MAR-31-1996
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0
0
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