As filed with the Securities and Exchange Commission on
- ----------------------------------------------------------------------------
November 14, 1997
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 September 30, 1997. Commission File
Number 0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its
charter)
Federally chartered
instrumentality 52-1578738
of the United
States
---------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
919 18th Street, N.W., Suite 200, 20006
Washington, D.C.
---------------------------------- ---------------------------------
(Address of principal executive (Zip code)
offices)
(202) 872-7700
(Registrant's telephone number, including
area code)
----------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
As of November 7, 1997, there were 996,350 shares of Class A Voting Common
Stock, 500,301 shares of Class B Voting Common Stock, 2,678,214 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 ("Farmer Mac" or the "Corporation") 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 1996 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 is
included herein.
Consolidated Balance Sheets at September 30, 1997 and December 31, 1996... 3
Consolidated Statements of Operations for the three and nine months
ended September 30, 1997 and 1996.................................... 4
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996........................................... 5
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September30, December 31,
1996 1997
------------- -------------
(unaudited)
ASSETS:
<S> <C> <C>
Cash and cash equivalents.....................$ 246,206 $ 68,912
Interest receivable............................ 14,841 14,821
Guarantee fees receivable...................... 1,031 745
Loans held for securitization.................. 23,821 12,999
Investments.................................... 647,993 85,799
Farmer Mac I and II Securities................. 436,531 416,839
Farmer Mac I and II payments receivable........ 2,102 2,421
Prepaid expenses and other assets.............. 1,628 568
----------- -------------
TOTAL ASSETS....................................$ 1,374,153 $ 603,104
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Debentures, notes and bonds, net:
Due within one year........................ $ 954,814 $ 259,164
Due after one year......................... 357,981 287,128
------------ -------------
Total Debentures, notes and bonds, net 1,312,795 546,292
Accrued interest payable................... 7,512 7,231
Accounts payable and accrued expenses...... 1,832 1,721
Reserve for loan losses on sold Guaranteed
Securities............................... 1,435 655
----------- -------------
TOTAL LIABILITIES............................ 1,323,574 555,899
----------- -------------
STOCKHOLDERS' EQUITY Common stock:
Class A Voting, $1 par value, 2,000,000
shares authorized, 995,950 and 990,000
shares issued and outstanding at September
30, 1997 and December 31, 1996, respectively.... 996 990
Class B Voting, $1 par value, 2,000,000
shares authorized, 500,301 and 593,401
shares issued and outstanding at September
30, 1997 and December 31, 1996, respectively.... 500 593
Class C Non-Voting, $1 par value, 4,000,000
shares authorized, 2,677,942 and 2,658,897
shares issued and outstanding at September
30, 1997 and December 31, 1996.................. 2,678 2,659
Additional paid in capital....................... 52,610 52,513
Note receivable for purchase of stock............ - (557)
Unrealized gain on securities
available-for-sale............................... 936 329
Accumulated deficit.............................. (7,141) (9,322)
---------- -------------
TOTAL STOCKHOLDERS' EQUITY......................... 50,579 47,205
---------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $ 1,374,153 $ 603,104
============= =============
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 Nine Months Ended
September 30, September 30,
-----------------------------------------------------
1997 1996 1997 1996
----------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
INTEREST INCOME:
<S> <C> <C> <C> <C>
Investments and cash
equivalents.............. $ 14,266 $ 1,348 $ 33,357 $ 4,813
Farmer Mac I and II
Securities............... 7,764 7,398 22,612 22,210
Loans held for
securitization........... 708 15 1,552 468
--------------------------------------- -------------
TOTAL INTEREST INCOME..... 22,738 8,761 57,521 27,491
INTEREST EXPENSE.......... 20,768 8,125 52,367 25,546
--------------------------------------- -------------
NET INTEREST INCOME....... 1,970 636 5,154 1,945
OTHER INCOME:
Guarantee fees............ 725 478 1,857 1,130
Gain on issuance of
mortgage-backed
securities, net.......... 592 - 2,111 913
Miscellaneous............. 16 4 233 55
-------------------------- ------------------------
TOTAL OTHER INCOME......... 1,333 482 4,201 2,098
------------------------- --------------------------
OTHER EXPENSES:
Compensation and
employee benefits......... 939 543 2,647 1,703
Professional fees.......... 486 277 1,175 618
Insurance.................. 51 56 169 161
Rent....................... 56 47 168 123
Regulatory fees............ 16 71 47 214
Board of Directors fees
and meeting expenses....... 72 68 251 236
Administrative.............. 199 209 667 408
Provision for losses........ 260 60 780 202
------------------------------------ -------------
TOTAL OTHER EXPENSES........ 2,079 1,331 5,904 3,665
----------------------------------- -------------
INCOME BEFORE
EXTRAORDINARY ITEM......... 1,224 (213) 3,451 378
Extraordinary gain from
early extinguishment
of debt.............. - 384 - 384
--------------------------------------- -------------
INCOME BEFORE INCOME
TAXES..................... 1,224 171 3,451 762
Provision for income
taxes................... 40 - 103 -
--------------------------------------- -------------
NET INCOME............... $ 1,184 $ 171 $ 3,348 $ 762
======================================= =============
</TABLE>
<TABLE>
EARNINGS PER SHARE BEFORE EXTRAODRINARY ITEM
<S> <C> <C> <C> <C> <C>
Classes A and B Voting
Common stock........... $ 0.12 $ (0.04) $ 0.33 $ 0.07
Class C Non-Voting
Common Stock........... $ 0.35 $ (0.12) $ 1.00 $ 0.22
EARNINGS PER SHARE
Classes A and B Voting
Common stock........... $ 0.12 $ 0.03 $ 0.33 $ 0.15
Class C Non-Voting
Common Stock.......... $ 0.35 $ 0.10 $ 1.00 $ 0.44
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Nine Months Ended
--------------------------
September 30, September 30,
1997 1996
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income from Operations.........................$ 3,348 $ 762
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization of premium on Farmer Mac I and
II Securities................................ 2,449 2,648
Discount Note amortization ................... 33,529 7,898
(Increase) decrease in guarantee fees
receivable................................... (286) 40
(Increase) decrease in interest receivable.... (20) 4,160
Decrease (increase) in Farmer Mac I and II
payments receivable.......................... 319 (6,724)
Increase in prepaid expenses and other assets. (1,025) (322)
Amortization and depreciation................. 126 72
Increase in accounts payable and accrued
expenses..................................... 111 652
Increase in loans held for securitization..... (10,822) (5,331)
Increase (decrease) in accrued interest
payable........................... 281 (2,163)
Provision for losses......................... 780 202
Extraordinary gain from early extinguishment
of debt..................................... - (384)
--------------------------
Net cash provided by operating activities....... 28,790 1,510
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Farmer Mac I and II purchases.................. (63,613) (59,270)
Purchases of investments....................... (608,060) (39,488)
Proceeds from maturity of investments.......... 46,466 27,005
Proceeds from Farmer Mac I and II principal
repayments..................................... 41,472 66,334
Purchases of office equipment.................. (65) (43)
--------------------------
Net cash used by investing activities........... (583,800) (5,462)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Medium-Term Notes.... 104,918 19,945
Payments to redeem Medium-Term Notes........... (26,820) (73,860)
Proceeds from issuance of Discount Notes....... 15,782,342 1,319,598
Discount Notes redeemed........................(15,127,555) (1,235,065)
Repurchase of Class B Common Stock............. (1,396) -
Proceeds from issuance of common stock......... 815 2,611
--------------------------
Net cash provided by financing activities....... 732,304 33,229
--------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS....... 177,294 29,277
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 68,912 8,336
==========================
CASH AND CASH EQUIVALENTS AT END OF PERIOD......$ 246,206 $ 37,613
==========================
Supplemental disclosures of cash flow information:
Cash paid during the nine-month period for:
Interest......................................$ 18,755 $ 19,758
Taxes.........................................$ 34 -
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Accounting Policies.
(a) Principles of Consolidation
Financial information at and for the three and nine months ended
September 30, 1997 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) Earnings Per Share
In computing earnings per share, the weighted average number of
shares outstanding includes the fully dilutive effect of common stock
equivalents and is adjusted to reflect the 3-to-1 dividend and liquidation
rights ratio applicable to each share of Class C Non-Voting Common Stock
relative to each share of Classes A and B Voting Common Stock. The weighted
average number of shares outstanding is set forth below for the periods
indicated.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1997 1996 1997 1996
----------------------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Class A Voting Common Stock.. 994 990 992 873
Class B Voting Common Stock.. 500 593 510 585
Class C Non-Voting Common
Stock...................... 2,857 1,261 2,850 1,227
</TABLE>
(c) Reclassifications
Certain reclassifications of the 1996 information were made to
conform to the 1997 presentation.
Note 2. Off-Balance Sheet Farmer Mac Guaranteed Securities.
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 II Programs and not held
in its portfolio.
<TABLE>
<CAPTION>
September 30, December 30,
1997 1996
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Farmer Mac I........... $ 364,561 $ 214,424
Farmer Mac II.......... $ 21,571 $ 11,606
</TABLE>
At September 30, 1997, the $364.6 million of Farmer Mac I Securities
included $316.2 million of agricultural mortgage-backed securities ("AMBS")
issued under Farmer Mac's expanded legislative authorities for which Farmer Mac
bears the risk of first loss. The remaining Farmer Mac I Securities were issued
prior to the enactment of those authorities and are supported by unguaranteed
subordinated interests, which represented 10% of the initial balance of the
loans underlying the securities. Loans underlying Farmer Mac II Securities are
backed by the "full faith and credit" of the United States by virtue of the
Secretary of Agriculture's guarantee of principal and interest on such loans.
For further information regarding outstanding Farmer Mac Guaranteed Securities,
including those held in portfolio, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Supplemental Information."
Note 3. Commitments.
At September 30, 1997, Farmer Mac had committed to purchase $11.3
million of Qualified Loans through the Farmer Mac I cash window. With respect to
outstanding commitments to purchase Qualified Loans and the $23.8 million in
loans held for securitization at September 30, 1997, Farmer Mac had committed to
sell forward $16.3 million of AMBS for future settlement. The $18.8 million net
purchase position at September 30, 1997 consisted of adjustable-rate and
fixed-rate loans not subject to forward sale commitments. The Corporation
currently manages interest-rate risk related to fixed-rate loans not offset by
forward sale commitments through the use of off-balance sheet derivative
financial instruments, such as futures contracts, as discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations
Financial Condition - Asset and Liability Management." For information regarding
commitments entered into during the period, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations Supplemental
Information."
Note 4. Interest-Rate Contracts and Hedge Instruments.
Interest-rate contracts, including interest-rate swaps and caps, are
entered into with the intent of synthetically creating interest-earning assets
and debt instruments. As such, the net differential received or paid is recorded
as an adjustment to interest income or expense of the associated assets or
liabilities, on an accrual basis. As of September 30, 1997, the notional balance
of interest-rate contracts outstanding was $278.6 million.
Hedge instruments, currently consisting solely of futures contracts,
are used by Farmer Mac to manage interest-rate risk exposure related to
commitments to purchase Qualified Loans and loans held for securitization. The
total notional balance of open futures contracts at September 30, 1997 was $800
thousand. Unrealized gains and losses on futures contracts are deferred as an
adjustment to the cost basis of the loans until realized. When the futures
contracts are terminated, the realized gains or losses is recognized as part of
gain on issuance of mortgage-backed securities, net.
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-Looking Statements
Farmer Mac regularly communicates information concerning its business
activities to investors, securities analysts, the news media and others as part
of its normal operations. Some of these communications include forward-looking
statements pertaining to management's current expectations as to Farmer Mac's
future business plans, results of operations and/or financial condition.
Forward-looking statements are typically accompanied by, and identified with,
such terms as "anticipates," "believes," "expects," "intends," "should" and
similar phrases. Management's expectations for the Corporation's future
necessarily involve a number of assumptions and estimates and various factors
could cause actual results to differ materially from these expectations.
The following management's discussion and analysis includes
forward-looking statements addressing the Corporation's prospects for earnings,
loan volume and securitization growth; trends in net interest income and
provision for losses; changes in capital position; and other business and
financial matters. Among the factors that could cause actual results to differ
from the expectations expressed herein are the following: substantial changes in
interest rates, agricultural land values, commodity prices and the general
economy; protracted adverse weather, market or other conditions affecting
particular geographic regions or particular commodities related to agricultural
mortgage loans backing Farmer Mac Guaranteed Securities; legislative or
regulatory developments or interpretations of Farmer Mac's statutory charter
that could adversely affect Farmer Mac or the ability of certain lenders to
participate in its programs or the terms of any such participation; legislative
or regulatory restrictions on Farmer Mac's investment authority; the
availability of debt funding in sufficient quantities and at attractive spreads
to support continued growth; the rate of growth in agricultural mortgage
indebtedness; the size of the agricultural mortgage market; borrower preferences
for fixed-rate agricultural mortgage indebtedness; the willingness of lenders to
sell agricultural mortgage loans to Farmer Mac; the willingness of investors to
invest in agricultural mortgage-backed securities versus other investments;
competition in the origination or purchase of agricultural mortgage loans and
the sale of agricultural mortgage-backed and debt securities; the imposition of
significant risk-based capital requirements; or changes in the Corporation's
status as a government-sponsored enterprise.
Given the foregoing potential risks and uncertainties, no undue reliance
should be placed on any forward-looking statements expressed herein.
Furthermore, Farmer Mac undertakes no obligation to publicly release the results
of revisions to any forward-looking statements that may be made to reflect any
future events or circumstances.
Results of Operations
Overview. Net income for the first nine months of 1997 totaled $3.3
million, compared to $0.8 million for the same period a year ago. For third
quarter 1997, Farmer Mac reported net income of $1.2 million, an increase of
$1.0 million compared to net income of $0.2 million for third quarter 1996. Net
income for the nine and three months ended September 30, 1996 includes a $0.4
million extraordinary gain from early extinguishment of debt.
Earnings per share for the nine months ended September 30, 1997 were $0.33
for Classes A and B common stock and $1.00 for Class C common stock, compared to
$0.15 and $0.44, respectively, for the nine months ended September 30, 1996.
Earnings per share for third quarter 1997 were $0.12 for Classes A and B common
stock and $0.35 for Class C common stock, compared to $0.03 and $0.10,
respectively, for third quarter 1996. Earnings per share are adjusted to reflect
the 3-to-1 dividend and liquidation preference accorded to Class C common stock
compared to Classes A and B common stock.
Net interest income has contributed significantly to Farmer Mac's improved
operating results for the three and nine months ended September 30, 1997. Net
interest income is comprised primarily of income from program investments
(Farmer Mac I and II Securities and loans held for securitization) and, to a
lesser extent, non-program investments (cash and cash equivalents and investment
securities). Of these components, the most significant contribution to the
recent increases in net interest income has been income from non-program
investments. Farmer Mac has increased the size of its non-program investment
portfolio (cash and cash equivalents and investment securities) as a result of
the implementation of its expanded debt issuance strategy, which is intended to
attract more investors to its debt and mortgage-backed securities and thereby
improve the liquidity of those securities and reduce its borrowing and
securitization costs. Since the strategy's implementation, the Corporation has
experienced a tightening of its AMBS spreads relative to other comparable agency
securities and anticipates continued improvements in pricing as liquidity and
investor recognition of Farmer Mac increase. The proceeds of these increased
debt issuances have been invested primarily in high quality, short- and
long-term floating rate investments, which have generated significant amounts of
net interest income. Farmer Mac's eventual objective for the proceeds of its
increased debt issuances is investment in the Farmer Mac I program through the
acquisition and securitization of Qualified Loans. During the phase-in of that
objective, the term of which is dependent upon growth in Farmer Mac's core
guarantee business, Farmer Mac expects to continue to invest in non-program
assets.
In addition to increased net interest income, Farmer Mac has also realized
increased guarantee fee income and gain on issuance of mortgage-backed
securities as a result of increased guarantee volumes since enactment of its
revised legislative authorities. During the first nine months of 1997, $171.9
million of AMBS, backed by loans acquired through the cash window, were issued
to capital market investors, in addition to the $148.2 million of AMBS issued in
1996. Since the enactment of Farmer Mac's revised authorities, over $545.6
million of loans have been submitted to Farmer Mac for approval, of which
approximately 59% ($320.1 million) have been securitized and sold, 4% ($23.8
million) have been purchased and are pending securitization, and 11% ($59.3
million) are in various stages of the pipeline. The remaining 26% ($142.4
million) of loans have been either denied by Farmer Mac for credit reasons or
withdrawn by the seller.
While Farmer Mac's financial condition has improved, future improvements in
operating results will depend largely upon growth in Farmer Mac's core business
(guarantee fee income and gain on issuance of mortgage-backed securities).
Growth in Farmer Mac's core business is dependent upon guarantee volume which,
in turn, depends upon the increase in the cumulative volume of loans acquired
through the Farmer Mac programs. Loan volume has not been increasing as rapidly
as management anticipated following the enactment of its revised legislative
authorities due, in part, to the longer than expected lead-time between
marketing initiatives and the realization of results. Notwithstanding the
slowness in loan volume growth, expenses have been increasing as management
seeks to attract more sellers and expand the level of their participation. In
that regard, Farmer Mac has begun to assemble a diverse network of sellers
ranging from community banks to regional financial institutions including, among
others, AgFirst Farm Credit Bank, Columbia, South Carolina; Firstar Bank,
Milwaukee, Wisconsin; First Union Bank of Virginia, Harrisonburg, Virginia;
Glendale Federal Bank, Glendale, California; Northwest Farm Credit Services,
ACA, Spokane, Washington; US Bank National Association, Minneapolis, Minnesota;
and Wells Fargo Bank, San Francisco, California. Farmer Mac also has begun to
attract the interest of non-traditional agricultural real estate lenders,
particularly mortgage bankers and agricultural supply and equipment companies,
for whom management believes the advantages of its programs would result in
diversification of income sources and more efficient utilization of their
existing facilities and personnel at low marginal costs through access to their
established customer base. In that regard, management has been advised by GMAC
Commercial Mortgage Corporation that it intends immediately to submit an
application to become an approved seller. The addition of mortgage bankers and
regional financial institutions should signficantly increase the number of
outlets offering Farmer Mac loans. Many of these institutions have undertaken,
or would be expected to undertake, marketing initiatives, utilizing various
media sources, to advertise the availability of Farmer Mac loans. Because most
of these institutions are, or will be, new to the Farmer Mac programs,
management cannot predict the timing or the level of volume likely to be
generated by them, although management does not anticipate any such volume prior
to 1998. Based on management's evaluation of the business potential of these and
other prospective participants, Farmer Mac will continue to add resources,
including additional field personnel and other employees dedicated to customer
service, to support these institutions' efforts in establishing and expanding a
secondary market presence in the areas they serve, and to attract more sellers
who offer the prospect of active participation in Farmer Mac's programs.
During the first nine months of 1997, Farmer Mac implemented a training
program through which it conducts "seller workshops" in various locations and at
various times throughout the country. Farmer Mac believes that these workshops
have contributed, and will continue to contribute, to an increased interest in
the Corporation's programs and improved the understanding of those programs by
participants. Since September 30, 1997, Farmer Mac has expanded its product line
with the announcement of additional loan products, including a "part-time
farmer" real estate loan, designed for borrowers who live on agricultural
properties but derive a significant portion of their income from off-farm
employment. This loan product is available for single-family, owner-occupied
detached residences located on agricultural production properties of at least 5
acres or with annual gross receipts of $5,000 from production of crops or
livestock. Other products added to Farmer Mac's existing line of 5- and 15-year,
fixed rate loans include a new three-year, and a refined one-year, adjustable
rate loan (ARM), both with features permitting conversion to fixed rates
and flexible prepayment terms, and a 10-year, fixed rate loan. During fourth
quarter 1997, Farmer Mac expects to consummate the first transaction under its
"swap" program, which allows lenders to exchange new or seasoned Qualified Loans
for Farmer Mac Guaranteed Securities. That transaction, which will involve the
exchange of approximately $1 million of newly originated Qualified Loans for
Farmer Mac Guaranteed Securities, is expected to serve as the model for future
swap transactions. Swap transactions, whether involving newly originated or
existing loans, offer certain advantages to lenders because the Farmer Mac
Guaranteed Securities received in exchange for the loans are accorded a lower
risk-weight than whole loans under risk-based capital guidelines and can be
pledged as collateral and used in repurchase transactions.
Notwithstanding the positive business and financial developments of 1996
and the first nine months of 1997, Farmer Mac still faces the challenge of
expanding its business in the highly static market for agricultural and rural
home mortgage loans. Having obtained the statutory authority to operate under
similar guidelines to those of Fannie Mae and Freddie Mac does not ensure the
long-term success of Farmer Mac's programs, which continue to receive only
gradual acceptance in the agricultural lending community, notwithstanding the
competitive rates, terms and products offered and the advantages Farmer Mac
believes its programs provide. For Farmer Mac to succeed over the long-term in
realizing its business development and profitability goals, agricultural
mortgage lenders, whether traditional or non-traditional, must be convinced of
the benefits of selling loans to Farmer Mac and must be willing to adapt their
business practices to sell loans into the agricultural mortgage secondary market
in significant volume.
Set forth below is a discussion of certain specific items of the income
statement and balance sheet.
Average Balances, Income and Expense, Yield and Rates. The following table
provides information regarding interest-earning assets and interest-bearing
liabilities for the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------------------------------
1997 1996
--------------------------------------------------------
(Dollars in Thousands)
Average Income/ Average Average Income/ Average
Balances Expense Yield/RateBalances Expense Yield/Rate
Assets
--------------------------------------------------------------------------------
Interest-earning assets:
Farmer Mac I and II
<S> <C> <C> <C> <C> <C> <C>
Securities.......... $ 423,817 $ 22,612 7.11% $ 407,872 $ 22,210 7.26%
Investments and cash
equivalents......... 700,019 33,357 6.35% 115,528 4,813 5.55%
Loans held for
securitization...... 24,234 1,552 8.54% 7,769 468 8.03%
--------------------------------------------------------
Total interest-
earning assets.... 1,148,070 $ 57,521 6.68% 531,169 $ 27,491 6.90%
Other assets.......... 47,685 23,363
--------------------------------------------------------
$1,195,755 $ 554,532
--------------------------------------------------------------------------------
Liabilities and
Stockholders' Equity
------------------------------------------------------------------------------
Interest-bearing
liabilities:
Debentures, notes and
bonds, net $1,121,911 $ 52,367 6.22% $ 517,850 $ 25,546 6.58%
Other liabilities.... 27,510 23,204
Stockholders' equity. 46,334 13,478
- --------------------------------------------------------------------------------
$1,195,755 $ 554,532
================================================================================
Net interest
income/spread..... $ 5,154 .46% $ 1,945 .32%
================================================================================
Net yield on
interest-earning
assets............ .60% .49%
================================================================================
</TABLE>
<PAGE>
Rate/Volume Analysis. The table below sets forth certain information
regarding the changes in the components of Farmer Mac's net interest income for
the periods indicated. For each category, information is provided on changes
attributable to (a) changes in volume (change in volume multiplied by old rate);
(b) changes in rate (change in rate multiplied by old volume); and (c) the
total. Combined rate/volume variances, a third element of the calculation, are
allocated based on their relative size.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
Compared to Nine Months Ended
September 30, 1996
----------------------------------------
Increase (Decrease) Due to
Rate Volume Total
------------- --------------------------
(In Thousands)
Income from interest-earning assets:
Farmer Mac I and II
<S> <C> <C> <C>
Securities........ $ (430) $ 832 $ 402
Investments and cash
equivalents....... 789 27,755 28,544
Loans held for
securitization..... 31 1,053 1,084
------------- --------------------------
Total income from
interest-earning
assets............. 390 29,640 30,030
Expense on interest-
bearing liabilities.. (1,297) 28,118 26,821
============= ==========================
Change in net interest
income................ $ 1,687 $ 1,522 $ 3,209
============= ==========================
</TABLE>
Net Interest Income. Net interest income totaled $5.2 million for the nine
months ended September 30, 1997, compared to $1.9 million for the same period in
1996. Net interest income totaled $2.0 million and $0.6 million for the three
months ended September 30, 1997 and 1996. The increases in net interest income
were due to an increase in the average balance of interest-earning assets
combined with an increase in net interest yield. The increase in the average
balance of interest-earning assets was primarily due to an increase in the
average balance of investments and cash equivalents resulting from the
implementation of Farmer Mac's expanded debt issuance strategy. The increase in
net interest yield was due to a shift in the composition of the investment
portfolio from short-term, highly liquid investments to longer-term
floating-rate investments, which generally have higher spreads. The shift toward
long-term floating-rate investments was primarily attributable to growth in
securities guaranteed by instrumentalities or agencies of the United States.
Other Income. Other income totaled $4.2 million and $1.3 million for the
nine and three months ended September 30, 1997, compared to $2.1 million and
$0.5 million, respectively, in 1996. The increases in other income were due to
increases in gain on issuance of AMBS, net of related expenses, and guarantee
fees.
During the first nine months of 1997, the Corporation issued $171.9
million of AMBS compared to $120.7 million during the same period a year ago.
Gains resulting from those issuances totaled $2.1 million and $0.9 million,
respectively. The gain on issuance for the nine months ended September 30, 1996
is net of accrued expenses related to a dispute with Western Farm Credit Bank
("WFCB"), which was subsequently resolved. During third quarter 1997, Farmer Mac
issued $50.9 million of AMBS resulting in a $0.6 million gain on issuance.
There were no AMBS issuances in third quarter 1996.
Guarantee fee income totaled $1.9 million and $0.7 million for the nine
and three months ended September 30, 1997, compared to $1.1 million and $0.5
million, respectively, in 1996. The increases in guarantee fee income were due
to an increase in the balance of outstanding guaranteed securities and the 25
basis point increase in the guarantee fee rate charged on AMBS issued under
Farmer Mac's revised legislative authorities. At September 30, 1997, Farmer Mac
had $813.5 million of guaranteed securities outstanding (including Farmer Mac I
and II Securities held in portfolio) as compared to $598.2 million at September
30, 1996. Of those amounts, $316.2 million and $120.6 million were issued under
the revised authorities as of September 30, 1997 and 1996.
Other Expenses. Other expenses totaled $5.9 million and $2.1 million for
the nine and three months ended September 30, 1997, as compared to $3.7 million
and $1.3 million for the nine and three months ended September 30, 1996. The
increases in other expenses were primarily attributable to increased
compensation, including annual incentive compensation paid to senior management
in June 1997, and other costs related to expanded operations under Farmer Mac's
revised legislative authorities. Included in other expenses is the provision for
losses, which totaled $780 thousand and $260 thousand for the nine and three
months ended September 30, 1997, compared to $202 thousand and $60 thousand,
respectively, in 1996. This increase was due to an increase in the outstanding
balance of AMBS.
Income Tax Expense. As a result of the utilization of net operating loss
carryforwards, Farmer Mac's tax expense was limited to $103 thousand and $40
thousand for the nine and three months ended September 30, 1997. No income tax
expense was recognized during the nine or three months ended September 30, 1996.
Should profits continue at current levels, Farmer Mac will utilize all of its
remaining net operating loss carryforwards in 1998, resulting in a higher
effective tax rate for 1998.
Financial Condition and Capital
At September 30, 1997, total assets were $1.4 billion compared to $603.1
million at December 31, 1996. Similarly, discount notes and medium-term notes
(net of unamortized debt issuance costs, discounts and premiums) increased by
$766.5 million from $546.3 million at December 31, 1996 to $1.3 billion at
September 30, 1997. These increases were largely attributable to the
implementation of the Corporation's expanded debt issuance strategy resulting in
a $739.5 million increase in cash and cash equivalents and investments, which
were funded by discount notes with similar terms to maturity or rate resets.
Credit Risk. 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 balance of guaranteed
securities issued under these programs.
<TABLE>
<CAPTION>
September 30, December 30,
1997 1996
------------ ------------
(Dollars in thousands)
Farmer Mac I
<S> <C> <C>
AMBS................... $ 316,214 $ 148,918
Other.................. 234,085 271,341
Farmer Mac II........... 263,228 211,024
</TABLE>
Farmer Mac I AMBS represent securities issued under Farmer Mac's revised
legislative authorities and for which Farmer Mac bears the risk of first loss.
The remaining Farmer Mac I Securities were issued prior to the 1996 enactment of
those authorities and are supported by unguaranteed subordinated interests,
which represented 10% of the initial balance of the loans underlying the
security at the time of issuance. The loans underlying Farmer Mac II Securities
are backed by the "full faith and credit" of the United States by virtue of the
Secretary of Agriculture's guarantee of principal and interest on such loans.
For further information regarding the outstanding balance of Farmer Mac
Guaranteed Securities, see "- Supplemental Information."
At September 30, 1997, loans 90 days or more past due and loans in
foreclosure or bankruptcy represented 0.29% of the principal balance of all
loans backing Farmer Mac I AMBS. For further information on delinquencies, see
"- Supplemental Information."
Farmer Mac maintains an allowance for loan losses to cover anticipated
losses on Farmer Mac I AMBS. No loss allowance has been made for Farmer Mac I
Securities issued prior to the 1996 revised legislative authorities because of
the unguaranteed subordinated interests, or for Farmer Mac II Securities because
of the Secretary of Agriculture's guarantee. At September 30, 1997, the
allowance for losses on AMBS totaled $1.4 million, compared to $0.7 million at
December 31, 1996. This increase was attributable to an increase in the
outstanding balance of AMBS sold to investors.
Management evaluates the adequacy of the allowance for loan losses on a
quarterly basis and considers a number of factors, including: historical
charge-off and recovery activity (noting any particular trends in preceding
periods); trends in delinquencies, bankruptcies and non-performing loans; trends
in loan volume and size of credit risks; current and anticipated economic
conditions; the condition of agricultural segments and geographic areas
experiencing or expected to experience particular economic adversities,
particularly areas where Farmer Mac may have a geographic or commodity
concentration; the degree of risk inherent in the composition of the guaranteed
portfolio; quality control reviews; and underwriting standards. Farmer Mac
considers the amounts in the allowance account to be adequate to cover its
exposure to guarantee payments in the Farmer Mac I Program.
Asset and Liability Management. Farmer Mac's asset liability management
objective is to limit the effect of changes in interest rates on the
Corporation's market value of equity and net interest income to within
acceptable risk tolerance levels. In doing so, Farmer Mac enters into
off-balance sheet derivative financial instruments. The Corporation uses these
instruments as an end-user and not for trading or speculative purposes.
The primary off-balance sheet derivative financial instruments used by
Farmer Mac are interest-rate contracts, including interest-rate swaps and caps.
These contracts are used to synthetically create debt instruments and
interest-earning assets. When combined with the underlying liability or asset,
the interest-rate contracts synthetically create debt and investments that
should produce lower effective debt costs or higher effective asset yields than
those available through direct debt issuances or investment purchases. At
September 30, 1997, the notional amount of interest-rate contracts outstanding
was $278.6 million.
To a lesser extent, the Corporation uses futures contracts to reduce its
exposure to interest-rate risk related to outstanding commitments to purchase
Qualified Loans and loans held for securitization. From the purchase commitment
date to the sale commitment date, Farmer Mac is subject to the risk that
interest rate changes during that period may materially affect the value of the
Qualified Loan. To mitigate that risk, the Corporation enters into futures
contracts. As of September 30, 1997, Farmer Mac had entered into futures
contracts totaling $800 thousand.
While derivative financial instruments reduce Farmer Mac's exposure to
interest-rate risk, they increase its exposure to credit risk. Credit risk
arises from the possibility that a counterparty will be unable to perform
according to the terms of the contract, and is equal to the fair value gain on
the instrument. Credit risk exposure related to off-balance sheet derivative
financial instruments is normally a small percentage of the notional amount and
fluctuates as interest rates move up or down. Farmer Mac mitigates this risk by
subjecting the transactions to the same approval and monitoring process as is
used for on-balance sheet credit transactions, by dealing in the national market
with highly rated counterparties, by using International Swaps and Derivatives
Association documentation and by requiring the posting of securities as
collateral under certain circumstances to reduce exposure. Either party delivers
collateral when the fair value of a particular transaction on a net basis
exceeds an acceptable threshold of exposure. The threshold level is determined
based on the strength of the individual counterparty.
Capital. At September 30, 1997, Farmer Mac's stockholders' equity totaled
$50.6 million, an increase of $3.4 million from December 31, 1996. Certain
transactions related to the settlement with WFCB, which affected stockholders'
equity during the first half of 1997, included: the repurchase (and subsequent
cancellation) of 93,100 shares of Class B Voting Common Stock; the issuance of
18,784 shares of Class C Non-Voting Common Stock to WFCB pursuant to the
exercise of warrants previously issued to WFCB; and the repayment of the $557
thousand note receivable due from WFCB with interest. Farmer Mac also commenced
a direct stock purchase program to offer approximately 100,000 shares of Class A
Voting Common Stock to interested eligible investors pursuant to which
approximately 5,950 shares had been issued as of September 30, 1997. By statute,
Farmer Mac's Class A Voting Common Stock can only be held by banks, insurance
companies and other financial entities that are not members of the Farm Credit
System.
On November 12, 1997, Farmer Mac announced its intention to issue an
additional 300,000 shares of its Class C Non-Voting Common Stock in an
underwritten public offering. Management believes that market conditions make
this an attractive time to raise additional capital and enhance the liquidity of
its Class C Non-Voting Common Stock. Currently, Farmer Mac has no specific plans
for the net proceeds from the offering other than to use them for working
capital and other general corporate purposes.
At September 30, 1997 and December 31, 1996, Farmer Mac's regulatory
required minimum capital was $32.6 million and $7.4 million, compared with
actual capital of $50.6 million and $47.2 million.
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. There is no preference between
holders of the Classes A and B Voting Common Stock and Class C Non-Voting Common
Stock relating to dividends. The ratio of dividends paid on each share of Class
C Non-Voting Common Stock to each share of Classes A and B Voting Common Stock,
however, will be three-to-one. If dividends are to be paid to holders of the
Voting Common Stock, such per share dividends to holders of Class A and Class B
Voting Common Stock will be equal.
<PAGE>
Supplemental Information
The following tables set forth quarterly activity regarding: mandatory
commitments to purchase loans; purchases of loans; AMBS issuances;
delinquencies; and outstanding guaranteed securities issued under the Farmer Mac
I and II Programs.
<TABLE>
Mandatory Commitments to Purchase
- ----------------------------------------------------------------------------
Fixed Rate Loans
-----------------------------------
10 and 7 Year 5 Year 1,3 and 5
15 Year Balloon Balloon Year ARMs Total
----------------------- ----------- ----------------------
(Dollars in Thousands)
For the quarter ended:
<S> <C> <C> <C> <C> <C>
September 30, 1997 $ 23,066 $ - $ 18,116 $ 5,982 $ 47,164
June 30, 1997 19,196 2,485 54,980 9,283 85,944
March 31, 1997 37,471 - 14,234 3,325 55,030
December 31, 1996 15,417 - 11,693 - 27,110
September 30, 1996 13,457 - 7,986 - 21,443
------------ ----------- ----------- ----------------------
$ 108,607 $ 2,485 $107,009 $18,590 $236,691
</TABLE>
<TABLE>
<CAPTION>
Purchases of Loans
- ----------------------------------------------------------------------------
Fixed Rate Loans
-----------------------------------
10 and 7 Year 5 Year 1,3 and 5
15 Year Balloon Balloon Year ARMs Total
----------------------- ----------- ----------------------
(Dollars in Thousands)
For the quarter
ended:
<S> <C> <C> <C> <C> <C>
September 30,1997 $ 19,300 $ - $ 19,978 $ 6,800 $ 46,078
June 30, 1997 26,325 2,485 53,483 8,990 91,283
March 31, 1997 29,647 - 13,678 840 44,165
December 31, 1996 22,299 - 14,006 - 36,305
September 30, 1996 2,331 - 3,000 - 5,331
----------- ----------- ----------- ----------------------
$ 99,902 $ 2,485 $ 104,145 $ 16,630 $ 223,162
</TABLE>
<TABLE>
<CAPTION>
AMBS Issuances
- ----------------------------------------------------------------------------
Fixed Rate Loans
-----------------------------------
10 and 7 Year 5 Year 1,3 and 5
15 Year Balloon Balloon Year ARMs Total
----------------------- ----------- ----------------------
(Dollars in Thousands)
For the quarter
ended:
<S> <C> <C> <C> <C> <C>
September 30, 1997 $ 26,186 $ - $ 24,697 $ $ 50,883
June 30, 1997 57,569 2,485 11,578 - 71,632
March 31, 1997 32,255 - 17,105 - 49,360
December 31, 1996 16,766 - 10,702 - 27,468
September 30, 1996 - - - - -
------------ ----------- ----------- ----------------------
$ 132,776 $ 2,485 $ 64,082 $ - $199,343
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Delinquencies (1)
- ------------------------------------------------------------
Farmer Mac I
---------------------------
As of: AMBS Other (2) Total
------------- ------------- -------------
<S> <C> <C> <C>
September 30, 1997 0.29% 0.93% 0.57%
June 30, 1997 - 0.21% 0.10%
March 31, 1997 - 0.66% 0.39%
December 31, 1996 - 1.11% 0.73%
September 30, 1996 - 2.84% 2.04%
</TABLE>
(1) Includes loans 90 days or more past due, in foreclosure or in bankruptcy.
(2) Includes loans underlying securities issued prior to the 1996 enactment
of the Corporation's revised legislative authorities. These securities are
supported by unguaranteed subordinated interests, which represented 10% of
the initial balance of the loans underlying the securities at issuance.
<TABLE>
<CAPTION>
Outstanding Guaranteed Mortgage Securities
- ---------------------------------------------------------------------------
Farmer Mac I Farmer
----------------------- Held in
As of: AMBS Other (1) Mac II Total Portfolio(2)
---------------------------------- ----------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
September 30, 1997 $ 316,214 $ 234,085 $ 263,228 $ 813,527 $ 427,395
June 30, 1997 266,838 243,775 244,502 755,115 418,002
March 31, 1997 195,792 252,134 224,197 672,123 403,685
December 31, 1996 148,918 271,341 211,024 631,283 405,253
September 30, 1996 120,559 287,334 190,269 598,162 395,728
</TABLE>
(1)Includes securities issued prior to the 1996 enactment of the Corporation's
revised legislative authorities. These securities are supported by
unguaranteed subordinated interests, which represented at 10% of the initial
balance of the loans underlying the securities at issuance.
(2) Included in total outstanding guaranteed mortgage securities.
<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.
(a) Not applicable.
(b) Not Applicable.
(c) Farmer Mac is a federally chartered instrumentality of the United
States and its Common Stock is exempt from registration pursuant to
Section 3(a)(2) of the Securities Act of 1933.
Under the direct stock purchase program pursuant to which Farmer Mac
is offering approximately 100,000 shares of Class A Voting Common
Stock to interested eligible investors, Farmer Mac issued the
following shares through September 30, 1997:
<TABLE>
<CAPTION>
Number of
Date Shares Price per Share
<S> <C> <C>
April 11, 1997 100 $ 25.125
April 24, 1997 100 22.50
April 28, 1997 100 22.50
April 29, 1997 300 22.50
May 27, 1997 250 23.00
June 4, 1997 500 22.875
June 9, 1997 100 22.875
July 2, 1997 400 19.50
July 8, 1997 300 16.00
July 8, 1997 300 18.50
July 25, 1997 200 16.125
July 31, 1997 2,000 15.625
August 12, 1997 300 15.625
August 29, 1997 300 15.625
September 9, 1997 200 15.50
September 11, 1997 300 15.25
September 16, 1997 100 15.50
September 24, 1997 100 16.00
</TABLE>
Pursuant to Farmer Mac's plan which permits Directors of Farmer Mac to
elect to receive shares of Class C Non-Voting Common Stock in lieu of
their annual cash retainers, on July 16, 1997, Farmer Mac issued an
aggregate 61 shares of its Class C Non-Voting Common Stock at an issue
price of $36.25 per share to the nine Directors who elected to receive
such stock in lieu of cash retainer.
(d) Not applicable.
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.
* 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 (Form 10-K filed
March 27, 1997).
+* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1 to Form
10-Q filed August 14, 1992).
+* 10.1.1 - Amendment No. 1 to Stock Option Plan (Previously filed as
Exhibit 10.2 to Form 10-Q filed August 16, 1993).
- ------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed August 14, 1996).
+* 10.1.3 - 1997 Stock Option Plan (Form 10-Q filed May 15, 1997).
+* 10.1.4 - Amended and Restated 1997 Incentive Plan (Form10-Q filed
August 14, 1997).
+** 10.1.5 - Amended and Restated 1997 Incentive Plan.
+* 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 as of January 10, 1991 to
Employment Contract 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 September
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 September 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).
+* 10.2.5 - Amendment No. 5 dated as of September 13, 1996 to
Employment Contract between Henry D. Edelman and the Registrant
(Form 10-Q filed August 14, 1996).
+** 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment
Contract between Henry D. Edelman and the Registrant.
+* 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).
- -----------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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).
+* 10.3.3 - Amendment to Employment Contract dated as of September
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 September 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 September 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 September 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).
+* 10.3.8 - Amendment No. 8 dated as of September 13, 1996 to
Employment Contract between Nancy E. Corsiglia and the
Registrant (Form 10-Q filed August 14, 1996).
+** 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment
Contract between Nancy E. Corsiglia and the Registrant.
+* 10.4 - Employment Agreement dated September 13, 1989 between Thomas R.
Clark and the Registrant (Previously filed as Exhibit 10.6 to
Form 10-K filed April 1, 1990).
- -------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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 September
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 September 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).
+* 10.4.4 - Amendment No. 4 dated as of September 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 September 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).
+* 10.4.7 - Amendment No. 7 dated as of September 13, 1996 to Employment
Contract between Thomas R. Clark and the Registrant (Form 10-Q
filed August 14, 1996).
+** 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment
Contract between Thomas R. Clark and the Registrant.
+* 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 September 1, 1995 to Employment
Contract between Charles M. Lewis and the Registrant (Form 10-Q
filed August 14, 1995).
- ------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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).
+* 10.5.3 - Amendment No. 3 dated as of September 13, 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 September
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 September 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 September 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).
+* 10.6.4 - Amendment No. 4 dated as of September 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).
+* 10.6.6 - Amendment No. 6 dated as of September 13, 1996 to
Employment Contract between Michael T. Bennett and the
Registrant (Form 10-Q filed August 14, 1996).
+** 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Michael T. Bennett and the Registrant.
- ------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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 September
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 September 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 September 1, 1994 to Employment
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 September 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).
+* 10.7.6 - Amendment No. 6 dated as of September 13, 1996 to
Employment Contract between Christopher A. Dunn and the
Registrant (Form 10-Q filed August 14, 1996).
+** 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Christopher A. Dunn and the Registrant.
+** 10.8 - Employment Contract dated as of September 1, 1997 between Tom
D. Stenson and the Registrant.
* 10.9 - 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.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
* 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 (Secretary of
Agriculture's) Regions (Previously filed as Exhibit 1.1 to Form
10-K filed April 1, 1991).
(b) Reports on Form 8-K.
The Registrant has not filed any reports on Form 8-K during the quarter
ended September 30, 1997.
- ---------------------
* 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
November 14, 1997
By: /s/ Henry D. Edelman
--------------------------------------------------
Henry D. Edelman
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Nancy E. Corsiglia
--------------------------------------------------
Nancy E. Corsiglia
Vice President - Treasurer and Chief Financial
Officer
(Principal Financial Officer)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
EXHIBITS
TO
FORM 10-Q
UNDER
THE SECURITIES EXCHANGE ACT FO 1934
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
<PAGE>
Exhibit Description
+** 10.1.5 - Amended and Restated 1997 Incentive Plan.
+** 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment
Contract between Henry D. Edelman and the Registrant.
+** 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment
Contract between Nancy E. Corsiglia and the Registrant.
+** 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment
Contract between Thomas R. Clark and the Registrant.
+** 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Michael T. Bennett and the Registrant.
+** 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Christopher A. Dunn and the Registrant.
+** 10.8 - Employment Contract dated as of September 1, 1997 between Tom
D. Stenson and the Registrant.
- ----------------
** Filed herewith.
+ Management contract or compensatory plan.
EXHIBIT 10.1.5
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
AMENDED AND RESTATED 1997 INCENTIVE PLAN
1. Purpose of the Plan
The purposes of this Amended and Restated 1997 Incentive Plan (the "Plan")
are to encourage stock ownership by directors, officers, and key employees of
the Federal Agricultural Mortgage Corporation (the "Company") and its
subsidiaries, to provide an incentive for such individuals to expand and improve
the profits and prosperity of the Company and its subsidiaries, and to assist
the Company and its subsidiaries in attracting and retaining directors and key
personnel through the grant of Options (as defined herein) to purchase shares of
the Company's Class C nonvoting common stock, par value $1.00 per share (the
"Common Stock").
2. Persons Eligible Under Plan
Any person who is an officer or employee of the Company or any subsidiary
(as defined in Sections 424(f) and 424(g) of the Internal Revenue Code of 1986,
as amended (a "Subsidiary"), shall be eligible for awards under the Plan (a
"Participant"). Any member of the Board of Directors (the "Board") of the
Company (a "Director") who is not also an employee of the Company shall be
eligible to receive any awards only under Section 15 of the Plan ("Director
Options").
3. Stock Subject to Plan
Subject to Section 10, the maximum number of shares that may be the
subject of awards under the Plan shall be 250,000 shares of the Company's Common
Stock, which shall be made available either from authorized but unissued Common
Stock or from Common Stock reacquired by the Company, including shares purchased
in the open market. If any award granted under the Plan is canceled, forfeited,
or otherwise terminates or expires for any reason without having been exercised
in full, the shares of Common Stock allocable to the unexercised portion of such
award may again be the subject of grants under the Plan.
4. Administration of Plan
(a) Except for the provisions of Section 15 (which to the maximum extent
feasible shall be self-effectuating), the Plan shall be administered by (i) the
Board of Directors for any purpose under the Plan, (ii) a committee of the Board
consisting of two or more Directors, each of whom is a "Non-Employee Director"
under Securities Exchange Act Rule 16b-3, for any purpose under the Plan, or
(iii) a committee of the Board consisting of two or more Directors (whether or
not any such Director is a "Non-Employee Director") for purposes of any award
under the Plan to an employee other than an officer subject to Section 16 of the
Securities Exchange Act of 1934 (it being understood and agreed that references
herein to the "Committee" shall mean the Board or either committee referred to
above, as the case may be).
(b) Subject to the express provisions of the Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of the Plan, including, without limitation, the
following:
(i) interpret and construe the Plan and the terms and conditions
of any award hereunder;
(ii) adopt, amend, and rescind rules and regulations for the
administration of the Plan;
(iii) determine which persons meet the eligibility requirements of
Section 2 hereof and to which of such eligible persons, if any, awards
will be granted hereunder;
(iv) grant awards to eligible persons and determine the terms and
conditions thereof, including, but not limited to, the number of shares of
Common Stock issuable pursuant thereto, the time not more than 10 years
after the date of an award at which time the award shall expire or (if not
vested) terminate, and the conditions upon which awards become
exerciseable or vest or shall expire or terminate, and the consideration,
if any, to be paid upon receipt, exercise or vesting of awards;
(v) determine whether, and the extent to which, adjustments are
required pursuant to Section 10 hereof;
(vi) determine the circumstances under which, consistent with the
provisions of Section 11, any outstanding award may be amended;
(vii) exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and
(viii) generally, exercise such powers and perform such acts as
deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
(c) Any action taken by, or inaction of the Company, the Board, or the
Committee relating or pursuant to the Plan, shall be within the absolute
discretion of that entity or body and shall be conclusive and binding upon all
persons. No member of the Board or officer of the Company shall be liable for
any such action or inaction of: (i) the entity or body; (ii) another person; or
(iii) except in circumstances involving bad faith, himself or herself. In making
any determination or in taking or not taking any action under the Plan, the
Board and the Committee may obtain and may rely upon the advice of experts,
including professional advisors to the Company.
(d) The Committee may delegate ministerial, non-discretionary functions to
individuals who are officers or other employees of the Company.
5. Awards
(a) Awards under the Plan shall consist of options ("Options") to purchase
the Common Stock of the Company and shall be evidenced by agreements (the "Award
Agreements") in such form as the Committee shall approve.
(b) The exercise price per share shall be 100% of the Fair Market Value of
one share of Common Stock on the date immediately preceding the date the Option
is granted (the "Exercise Price"), subject to adjustment only as provided in
Section 10 of the Plan. As used in the Plan, the term "Fair Market Value" shall
mean the closing price of the Company's Common Stock as reported on the National
Association of Securities Dealers Automated Quotations system ("NASDAQ"), or
such other market on which the Common Stock may be listed or traded, as
determined by the Committee. If there is not a closing price quotation for the
date as of which Fair Market Value is to be determined, then the Fair Market
Value shall be determined by reference to the closing price quotation for the
next preceding day on which a closing price quotation is available.
6. Exercise of Options
(a) Options may be exercised in whole or in part at such time or times as
shall be determined by the Committee and set forth in the applicable Award
Agreement. A Participant electing to exercise an Option shall give written
notice to the Company of such election and of the number of shares he or she has
elected to purchase, and shall at the time of exercise tender the full Exercise
Price for those shares.
(b) The Exercise Price shall be payable in cash or by check; provided,
however, that to the extent provided in the applicable Award Agreement, the
Participant may pay the Exercise Price in whole or in part (i) by delivering to
the Company shares of the Common Stock owned by him and having a Fair Market
Value on the date of exercise equal to the Exercise Price of the Option or (ii)
by reducing the number of shares of Common Stock issuable or payable upon the
exercise of an Option by the number of shares of Common Stock having a Fair
Market Value on the date of exercise equal to the Exercise Price of the Option.
In addition, the Options may be exercised through a registered broker-dealer
pursuant to such cashless exercise procedures (other than share withholding)
which are, from time to time, deemed acceptable. No fractional shares of Common
Stock shall be issued upon exercise of an Option and the number of shares of
Common Stock that may be purchased upon exercise shall be rounded to the nearest
number of whole shares.
(c) At such times as a Participant recognizes taxable income in connection
with the receipt of shares of Common Stock hereunder (a "Taxable Event"), the
Participant shall pay to the Company the amount of taxes required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance of such shares. In satisfaction of the obligation
to pay the Withholding Taxes to the Company, the Participant may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the shares of Common
Stock then issuable to him or her having an aggregate Fair Market Value equal to
the Withholding Taxes.
7. Right of First Refusal
The Committee may, in its discretion, include in any Award Agreement
relating to an Option granted under the Plan a condition that the Participant
shall agree to grant the Company a Right of First Refusal, which, if so
included, shall have the following terms and conditions:
(a) The Participant shall give the Company written notice (the "Offer
Notice") of the Participant's intention to sell any shares of Common Stock
acquired (or to be acquired) upon exercise of an Option (the "Offered Shares").
The Company shall have three business days (the "Exercise Period") following
receipt of the Offer Notice to determine whether to exercise its Right of First
Refusal, which may be exercised either as to all or as to none of the Offered
Shares. By the end of the Exercise Period, the Company shall have given written
notice to the Participant of its election to exercise (the "Acceptance notice")
or not to exercise (the "Rejection Notice") its Right of First Refusal. The
Participant shall tender the Offered Shares to the Company within 10 business
days after receipt of an Acceptance Notice. Upon receipt of a Rejection Notice,
the Participant may sell the Offered Shares free and clear of such Right of
First Refusal.
(b) The price to be paid by the Company for the Offered Shares shall be
the average of the closing price of the Company's Common Stock as reported on
NASDAQ (or such other market on which the Common Stock may be listed or traded,
as determined by the Committee) for the three business days immediately
preceding the date of the Company's receipt of the Offer Notice or, if no such
transactions occurred on those days, the average of the bid and asked prices for
the Common Stock on such days.
8. Transfer Restrictions
Unless otherwise permitted in the applicable Award Agreement, any Option
granted under the Plan shall not be transferable other than by will or the laws
of descent and distribution or pursuant to a domestic relations order, and
during a Participant's lifetime shall be exercisable only by the Participant or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the legal representatives, heirs and
successors of the Participant.
9. Termination of Employment
(a) Except as provided in the Award Agreement and as provided in Sections
9(b), (c) or (d) below, if a Participant ceases for any reason to be employed by
the Company or any of its Subsidiaries (unless such termination of employment
was for "Cause"), the Participant may, at any time within 90 days after the
effective date of such termination of employment, exercise his or her Options to
the extent that he or she would be entitled to exercise them on such date, but
in no event shall any Option be exercisable more than 10 years from the date it
was granted; provided, however, that the Committee shall have the discretion to
determine whether Options not yet exercisable at the date of termination of
employment shall become immediately exercisable for 90 days thereafter. The
Committee shall determine, subject to applicable law, whether a leave of absence
shall constitute a termination of service.
(b) If a Participant ceases to be employed by the Company or any of its
Subsidiaries for "Cause," the Participant's unexercised Options shall terminate
immediately. For purposes of this Section 9, "Cause" shall be defined as in the
employment agreement, if any, between the Company and such Participant, or, if
there is no employment agreement, shall mean (i) the willful failure of the
Participant substantially to perform his or her duties, other than any such
failure resulting from incapacity due to physical or mental illness or (ii) the
willful engagement by the Participant in activities contrary to the best
interests of the Company.
(c) Unless otherwise provided in the Award Agreement, if a Participant
dies while employed by the Company or any of its Subsidiaries, or within 90 days
after having retired with the consent of the Company, the shares which the
Participant was entitled to exercise on the date of the Participant's death
under an Option or Options granted under the Plan may be exercised at any time
after the Participant's death by the Participant's beneficiary; provided,
however, that no Option may be exercised after the earlier of (i) one (1) year
after the Participant's death or (ii) the expiration date specified for the
particular Option in the Award Agreement.
(d) Unless otherwise provided in the Award Agreement, if a Participant
terminates employment by reason of Disability (as defined below), any
unexercised Option held by the Participant shall expire one (1) year after the
Participant has a termination of employment because of such "Disability" and
such Option may only be exercised by the Participant or his or her beneficiary
to the extent that the Option was exercisable on the date of termination of
employment because of such "Disability;" provided, however, no Option may be
exercised after the expiration date specified for the particular Option in the
Award Agreement. "Disability" shall mean (a) in the case of a Participant whose
employment with the Company or a Subsidiary is subject to the terms of an
employment agreement between such Participant and the Company or Subsidiary,
which employment agreement includes a definition of "Disability", the term
"Disability" as used in this Plan or any Award Agreement shall have the meaning
set forth in such employment agreement during the period that such employment
agreement remains in effect; and (b) in all other cases, the term "Disability"
as used in this Plan or any Award Agreement shall mean a physical or mental
infirmity which impairs the Participant's ability to perform substantially his
or her duties for a period of one hundred eighty (180) consecutive days.
10. Adjustments
(a) In the event of a Change in Capitalization (as defined below) of the
Company, the Committee shall conclusively make equitable and appropriate
adjustments, if any, to (i) the maximum number and class of shares of Common
Stock or other stock or securities with respect to which Options may be granted
under the Plan, (ii) the maximum number and class of shares of Common Stock or
other stock or securities with respect to which Options may be granted to any
Participant during the term of the Plan, (iii) the number and class of shares of
Common Stock or other stock or securities which are subject to outstanding
Options granted under the Plan and the purchase price therefor, if applicable
and (iv) the number and class of shares of Common Stock or other securities in
respect of which Director Options are to be granted under Section 15 hereof.
(b) If, by reason of a Change in Capitalization, a Participant shall be
entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the shares of Common Stock subject to the
Option prior to such Change in Capitalization.
(c) No adjustment of the number of shares of Common Stock available under
the Plan or to which any Option relates that would otherwise be required under
this Section 10 shall be made unless and until such adjustment either by itself
or with other adjustments not previously made under this Section 10 would
require an increase or decrease of at least 1% in the number of shares of Common
Stock available under the Plan or to which any Option relates immediately prior
to the making of such adjustment (the "Minimum Adjustment"). Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment together with other adjustments required by
this Section 10 and not previously made would result in a Minimum Adjustment.
Notwithstanding the foregoing, any adjustment required by this Section 10 which
otherwise would not result in a Minimum Adjustment shall be made with respect to
shares of Common Stock relating to any Option immediately prior to exercise of
such Option. No fractional shares of Common Stock or units of other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share.
(d) "Change in Capitalization" means any increase or reduction in the
number of shares of Common Stock, or any change (including, but not limited to,
a change in value) in the shares of Common Stock or exchange of shares of Common
Stock for a different number or kind of shares or other securities of the
Company or another corporation, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend in excess of earnings, property dividend,
combination or exchange of shares, change in corporate structure or other
substantially similar event.
11. Amendment and Termination of Plan
The Board or the Committee, by resolution, may terminate, amend, or revise
the Plan with respect to any shares as to which Options have not been granted.
Neither the Board nor the Committee may, without the consent of a Participant,
alter or impair any award previously granted under the Plan, except as
authorized herein. To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law. Unless sooner terminated, the Plan shall remain
in effect for a period of 10 years from the date of the Plan's adoption by the
Board. Termination of the Plan shall not affect any Option previously granted.
12. Effective Date of Plan
This Plan shall be effective on the date upon which it is approved by the
Board.
13. Governing Law
(a) Except as to matters of federal law, the Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the District of Columbia, without giving effect to conflicts of laws
principles thereof.
(b) The obligation of the Company to sell or deliver the shares of Common
Stock with respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(c) Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares of Common Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
the issuance of the shares of Common Stock, no Options shall be granted or
payment made or shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
14. Multiple Agreements
The terms of each Option may differ from other Options granted under the
Plan at the same time, or at some other time. The Committee may also grant more
than one Option to a given Participant during the term of the Plan, either in
addition to, or in substitution for, one or more Options previously granted to
that individual.
15. Director Options
(a) Awards relating to the Common Stock authorized under the Plan shall be
made under this section only to Directors.
(b) Annually, on the date of the Annual Meeting of Stockholders,
commencing with the Annual Meeting in 1998, there shall be granted automatically
(without any action by the Committee or the Board) a Director Option to each
Director then elected to office to purchase 2,000 shares of Common Stock.
(c) The Exercise Price for shares under each Director Option shall be
equal to 100% of the Fair Market Value of a share of Common Stock on the date
immediately preceding the date the Director Option is granted, determined in
accordance with Section 5(b) hereof. The Exercise Price of any Director Option
granted shall be paid in full at the time of each purchase (a) in cash and/or
(b)(i) by delivering to the Company shares of the Common Stock owned by the
Director and having a Fair Market Value on the date of exercise equal to the
Exercise Price of the Director Option, or (ii) by reducing the number of Shares
of Common Stock issuable or payable upon the exercise of a Director Option by
the number of shares of Common Stock having a Fair Market Value on the date of
exercise equal to the Exercise Price of the Director Option. In addition, the
Options may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures (other than share withholding) which are, from time
to time, deemed acceptable. No fractional shares of Common Stock shall be issued
upon exercise of an Option and the number of shares of Common Stock that may be
purchased upon exercise shall be rounded to the nearest number of whole shares.
Each Director Option shall be subject to the Right of First Refusal, as set
forth in Section 7.
(d) At such times as a Director recognizes taxable income in connection
with the receipt of shares of Common Stock hereunder (a "Taxable Event"), the
Director shall pay to the Company the amount of taxes required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance of such shares. In satisfaction of the obligation
to pay the Withholding Taxes to the Company, the Director may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the shares of Common
Stock then issuable to him or her having an aggregate Fair Market Value equal to
the Withholding Taxes.
(e) An annual Director Option grant under Section 15(b) shall become fully
vested and exercisable at the rate of one third of the Shares (rounded down to
the nearest whole share number) immediately on the date of grant and one third
on May 31 of each of the following two years if the Director who is an optionee
under the Director Option continues to serve as a Director as of such date.
(f) Each Director Option shall terminate on the date which is the tenth
anniversary of the date of grant, unless terminated earlier as follows:
(i) If a Director's service as a member of the Board terminates for
any reason other than Disability, death or Cause (as defined below), the
Director may for a period of three (3) months after such termination
exercise his or her Option to the extent, and only to the extent, that
such Option was vested and exercisable as of the date the Director's
service as a member of the Board terminated, after which time the Option
shall automatically terminate in full.
(ii) If a Director's service as a member of the Board terminates by
reason of the Director's resignation or removal from the Board due to
Disability (as defined in Section 9(d)), the Director may, for a period of
one (1) year after such termination, exercise his or her Option to the
extent, and only to the extent, that such Option was vested and
exercisable, as of the date the Director's service as a member of the
Board terminated, after which time the Option shall automatically
terminate in full.
(iii) If a Director's service as a member of the Board terminates
for Cause, the Option granted to the Director hereunder shall immediately
terminate in full and no rights thereunder may be exercised. For purposes
of this Section 15, "Cause" shall mean (i) fraud or intentional
misrepresentation, (ii) embezzlement, misappropriation or conversion of
assets or opportunities of the Company, (iii) conviction of a felony or
(iv) willful engagement by the Director in activities contrary to the
bests interests of the Company.
(iv) If a Director dies while a member of the Board or within three
(3) months after termination of service as a Director as described in
clause (i) of this Section 15(f) or within twelve (12) months after
termination of service as a Director as described in clause (ii) of this
Section 15(f), the Option granted to the Director may be exercised at any
time within twelve (12) months after the Director's death by the person or
persons to whom such rights under the Option shall pass by will, or by the
laws of descent or distribution, after which time the Option shall
terminate in full; provided, however, that an Option may be exercised to
the extent, and only to the extent, that the Option was exercisable on the
date of death or earlier termination of the Director's service as a member
of the Board.
(g) If there shall occur any event described in Section 10, then in
addition to the matters contemplated thereby, the Director Options then
outstanding and future grants thereof shall be automatically adjusted as
contemplated by Section 10.
(h) The provisions of Sections 1, 2, 3, 7, 8, 10, 11, 12 and 13 are
incorporated herein by this reference. Unless the context otherwise requires,
the provisions of this Section 15 shall be construed as a separate plan.
Originally adopted: February 13, 1997
First Amendment: June 12, 1997
Second Amendment: August 7, 1997
<PAGE>
EXHIBIT 10.2.6
AMENDMENT NO. 6 TO EMPLOYMENT CONTRACT
AGREED, as of the 7th day of August 1997, between the Federal
Agricultural Mortgage Corporation (FAMC) and Henry D. Edelman (you), that the
existing employment contract between the parties hereto, dated May 5, 1989, as
amended by Employment Agreement Amendment No. 1 dated January 10, 1991,
Amendment to Employment Agreement dated as of June 1, 1993, Amendment No. 3 to
Employment Contract dated as of June 1, 1994, Amendment No. 4 to Employment
Contract dated as of February 8, 1996 and Amendment No. 5 to Employment Contract
dated as of June 13, 1996 (collectively, the Agreement), be and hereby is
amended as follows:
Sections 1, 4 (a) and 9 (a) (iii) of the Agreement are replaced in their
entirety with the following new sections:
1. Term. The Term of this Agreement shall continue until June 1, 2001 or
any earlier effective date of termination pursuant to Paragraph 9 hereof (the
"Term").
4 (a). Base Salary. You will be paid a base salary (the Base Salary)
during the Term of Three Hundred Twenty-Seven Thousand Six Hundred Dollars
($327,600) per year, payable in arrears on a bi-weekly basis; and
9 (a) (iii). Farmer Mac may terminate the employment of the Employee
without "cause" at any time. Such termination shall become effective on the
earlier of June 1, 2001 or two years from the date of notice of such
termination.
Section 7 of the Agreement is hereby amended by replacing the
penultimate sentence thereof with the following new sentence: "All of the
foregoing is subject to the limitation that the total cost thereof will not
exceed twenty-five percent (25%) of your Base Salary, exclusive of
administrative expense."
Section 9(a)(ii) is hereby amended by adding the following at the end thereof:
"For purposes of this subsection, no act, or failure to act on your part, shall
be considered "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or omission was in the best
interests of Farmer Mac."
The following new sections are hereby added as sections 12, 13, and 14
of the Agreement:
12. Agreement Not to Compete with Farmer Mac.
Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of your employment, for a period of two years
thereafter, you shall not, without the prior written consent of Farmer Mac,
directly or indirectly, engage in any business or activity, whether as
principal, agent, officer, director, partner, employee, independent contractor,
consultant, stockholder or otherwise, alone or in association with any other
person, firm, corporation or other business organization, that directly or
indirectly competes with any of the businesses of Farmer Mac in any manner,
including without limitation, the acquisition and securitization (for capital
market sale) of agricultural mortgage loans or USDA "guaranteed portions"
(hereinafter referred to as "Farmer Mac Qualified Loans"); provided, however,
that such prohibited activity shall not include the ownership of up to 20% of
the common stock in a public company.
13.Agreement Not to Use Confidential or Proprietary Information.
Farmer Mac and you both recognize that you have access to and acquire,
and may assist in developing, confidential and proprietary information relating
to the business and operations of Farmer Mac as a result of your employment or
association with Farmer Mac. You hereby covenant and agree that you will retain
all "Confidential Information" (as defined below) in trust for the sole benefit
of Farmer Mac and its successors and assigns. You hereby covenant further that,
in addition to your fiduciary responsibilities as an officer not to disclose
certain information of or relating to Farmer Mac, you will not, at any time
during or after the term of this Agreement, without the prior written consent of
Farmer Mac, directly or indirectly communicate or divulge any such Confidential
Information to any person, firm, corporation or other business organization, or
use any such Confidential Information for your own account or for the account of
any other person, except as required in connection with the performance of your
services hereunder. The term "Confidential Information" shall mean any trade
secret, data or other confidential or proprietary information related to the
business and activities of Farmer Mac. Notwithstanding the foregoing,
Confidential Information shall not include any information that is or becomes a
part of the public domain or generally available to the public (unless such
availability occurs as a result of any breach by you of this Section 11), or
becomes available to you on a non-confidential basis from a source (other than
Farmer Mac) that is not bound by a confidentiality agreement and does not breach
his or her fiduciary responsibilities. The provisions of this Section 13 shall
survive the termination of this Agreement and the termination of your employment
hereunder.
14.Agreement Not to Solicit Farmer Mac Employees.
For a period of two years after the termination of your employment
hereunder, you shall not, directly or indirectly, induce any employee of Farmer
Mac who is a "member of management" (as defined below) or is directly involved
in the acquisition and securitization (for capital market sale) of Farmer Mac
Qualified Loans to engage in any activity in which you are prohibited from
engaging in under this Agreement, or to terminate such person's employment with
Farmer Mac. You shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ, offer employment to,
lure, entice away or assist others in recruiting or hiring any person who is or
was employed by Farmer Mac unless such person shall have ceased to be employed
by Farmer Mac for a period of at least six months and is not subject to any
non-compete covenants substantially similar in nature to those contained in
Section 12 hereof. "Member of management" means the President, any Senior Vice
President, Vice President or the Controller of Farmer Mac.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: _____________________________ __________________________
Chairman of the Board
<PAGE>
EXHIBIT 10.3.9
AMENDMENT NO. 9 TO EMPLOYMENT CONTRACT
AGREED, as of the 7th day of August 1997, between the Federal
Agricultural Mortgage Corporation (FAMC) and Nancy E. Corsiglia (you) that the
existing employment contract between the parties hereto, dated May 11, 1989, as
amended by letter dated December 14, 1989, Employment Agreement Amendment No. 2
dated February 14, 1991, Amendment to Employment Agreement dated as of June 1,
1993, Amendment No. 4 to Employment Contract dated as of June 1, 1993, Amendment
No. 5 to Employment Contract dated as of June 1, 1994, Amendment No. 6 to
Employment Contract dated as of June 1, 1995, Amendment No. 7 to Employment
Contract dated as of February 8, 1996 and Amendment No. 8 to Employment Contract
dated as of June 13, 1996 (collectively, the Agreement), be and hereby is
amended as follows:
Sections 1, 3 (a) and 8 (a) (iii) of the Agreement are replaced in their
entirety with the following new sections:
1. Term. The Term of this Agreement shall continue until June 1, 2000 or
any earlier effective date of termination pursuant to Paragraph 8 hereof (the
"Term").
3 (a). Base Salary. You will be paid a base salary (the Base Salary)
during the Term of One Hundred Ninety-Three Thousand Five Hundred and forty-Four
Dollars ($193,544) per year, payable in arrears on a bi-weekly basis; and
8 (a) (iii). Farmer Mac may terminate your employment without "cause"
at any time. Such termination shall become effective on the earlier of June 1,
2000, or two years from the date of notice of such termination.
Section 8(a)(ii) is hereby amended by adding the following at the end thereof:
"For purposes of this subsection, no act, or failure to act on your part, shall
be considered "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or omission was in the best
interests of Farmer Mac."
The following new sections are hereby added as sections 12, 13, and 14
of the Agreement:
12. Agreement Not to Compete with Farmer Mac.
Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of your employment, for a period of two years
thereafter, you shall not, without the prior written consent of Farmer Mac,
directly or indirectly, engage in any business or activity, whether as
principal, agent, officer, director, partner, employee, independent contractor,
consultant, stockholder or otherwise, alone or in association with any other
person, firm, corporation or other business organization, that directly or
indirectly competes with any of the businesses of Farmer Mac in any manner,
including without limitation, the acquisition and securitization (for capital
market sale) of agricultural mortgage loans or USDA "guaranteed portions"
(hereinafter referred to as "Farmer Mac Qualified Loans"); provided, however,
that such prohibited activity shall not include the ownership of up to 20% of
the common stock in a public company.
13.Agreement Not to Use Confidential or Proprietary Information.
Farmer Mac and you both recognize that you have access to and acquire,
and may assist in developing, confidential and proprietary information relating
to the business and operations of Farmer Mac as a result of your employment or
association with Farmer Mac. You hereby covenant and agree that you will retain
all "Confidential Information" (as defined below) in trust for the sole benefit
of Farmer Mac and its successors and assigns. You hereby covenant further that,
in addition to your fiduciary responsibilities as an officer not to disclose
certain information of or relating to Farmer Mac, you will not, at any time
during or after the term of this Agreement, without the prior written consent of
Farmer Mac, directly or indirectly communicate or divulge any such Confidential
Information to any person, firm, corporation or other business organization, or
use any such Confidential Information for your own account or for the account of
any other person, except as required in connection with the performance of your
services hereunder. The term "Confidential Information" shall mean any trade
secret, data or other confidential or proprietary information related to the
business and activities of Farmer Mac. Notwithstanding the foregoing,
Confidential Information shall not include any information that is or becomes a
part of the public domain or generally available to the public (unless such
availability occurs as a result of any breach by you of this Section 11), or
becomes available to you on a non-confidential basis from a source (other than
Farmer Mac) that is not bound by a confidentiality agreement and does not breach
his or her fiduciary responsibilities. The provisions of this Section 13 shall
survive the termination of this Agreement and the termination of your employment
hereunder.
14.Agreement Not to Solicit Farmer Mac Employees.
For a period of two years after the termination of your employment
hereunder, you shall not, directly or indirectly, induce any employee of Farmer
Mac who is a "member of management" (as defined below) or is directly involved
in the acquisition and securitization (for capital market sale) of Farmer Mac
Qualified Loans to engage in any activity in which you are prohibited from
engaging in under this Agreement, or to terminate such person's employment with
Farmer Mac. You shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ, offer employment to,
lure, entice away or assist others in recruiting or hiring any person who is or
was employed by Farmer Mac unless such person shall have ceased to be employed
by Farmer Mac for a period of at least six months and is not subject to any
non-compete covenants substantially similar in nature to those contained in
Section 12 hereof. "Member of management" means the President, any Senior Vice
President, Vice President or the Controller of Farmer Mac.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: _____________________________ __________________________
President
<PAGE>
EXHIBIT 10.4.8
AMENDMENT NO. 8 TO EMPLOYMENT CONTRACT
AGREED, as of the 7th day of August 1997, between the Federal
Agricultural Mortgage Corporation (FAMC) and Thomas R. Clark (you), that the
existing employment contract between the parties hereto, dated June 13, 1989, as
amended by Employment Agreement Amendment No. 1 dated February 14, 1991 and
Amendment to Employment Contract dated as of June 1, 1993, Amendment No. 3 to
Employment Contract dated as of June 1, 1993, Amendment No. 4 to Employment
Contract dated as of June 1, 1994, Amendment No. 5 to Employment Contract dated
as of June 1, 1995, Amendment No. 6 to Employment Contract dated as of February
8, 1996 and Amendment No. 7 to Employment Contract dated as of June 13, 1996
(collectively, the Agreement), be and hereby is amended as follows:
Sections 1, 3 (a), 7 (a) (iii) and 7(a)(ii)(B) of the Agreement are
replaced in their entirety with the following new sections:
1. Term. The Term of your employment shall continue until June 1, 2000
or any earlier effective date of termination pursuant to Paragraph 7 hereof (the
"Term").
3 (a). Base Salary. You will be paid a base salary (the Base Salary)
during the Term of One Hundred Ninety-Three Thousand Five Hundred and Forty-Four
Dollars ($193,544) per year, payable in arrears on a bi-weekly basis; and
7 (a) (iii). Farmer Mac may terminate your employment without "cause"
at any time. Such termination shall become effective on the earlier of June 1,
2000, or two years from the date of notice of such termination.
7(a)(ii)(B). "your willful engagement in activities contrary to the
best interests of Farmer Mac."
The following new sections are hereby added as sections 10, 11, and 12
of the Agreement:
10. Agreement Not to Compete with Farmer Mac.
Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of your employment, for a period of two years
thereafter, you shall not, without the prior written consent of Farmer Mac,
directly or indirectly, engage in any business or activity, whether as
principal, agent, officer, director, partner, employee, independent contractor,
consultant, stockholder or otherwise, alone or in association with any other
person, firm, corporation or other business organization, that directly or
indirectly competes with any of the businesses of Farmer Mac in any manner,
including without limitation, the acquisition and securitization (for capital
market sale) of agricultural mortgage loans or USDA "guaranteed portions"
(hereinafter referred to as "Farmer Mac Qualified Loans"); provided, however,
that such prohibited activity shall not include the ownership of up to 20% of
the common stock in a public company.
11.Agreement Not to Use Confidential or Proprietary Information.
Farmer Mac and you both recognize that you have access to and acquire,
and may assist in developing, confidential and proprietary information relating
to the business and operations of Farmer Mac as a result of your employment or
association with Farmer Mac. You hereby covenant and agree that you will retain
all "Confidential Information" (as defined below) in trust for the sole benefit
of Farmer Mac and its successors and assigns. You hereby covenant further that,
in addition to your fiduciary responsibilities as an officer not to disclose
certain information of or relating to Farmer Mac, you will not, at any time
during or after the term of this Agreement, without the prior written consent of
Farmer Mac, directly or indirectly communicate or divulge any such Confidential
Information to any person, firm, corporation or other business organization, or
use any such Confidential Information for your own account or for the account of
any other person, except as required in connection with the performance of your
services hereunder. The term "Confidential Information" shall mean any trade
secret, data or other confidential or proprietary information related to the
business and activities of Farmer Mac. Notwithstanding the foregoing,
Confidential Information shall not include any information that is or becomes a
part of the public domain or generally available to the public (unless such
availability occurs as a result of any breach by you of this Section 11), or
becomes available to you on a non-confidential basis from a source (other than
Farmer Mac) that is not bound by a confidentiality agreement and does not breach
his or her fiduciary responsibilities. The provisions of this Section 11 shall
survive the termination of this Agreement and the termination of your employment
hereunder.
12.Agreement Not to Solicit Farmer Mac Employees.
For a period of two years after the termination of your employment
hereunder, you shall not, directly or indirectly, induce any employee of Farmer
Mac who is a "member of management" (as defined below) or is directly involved
in the acquisition and securitization (for capital market sale) of Farmer Mac
Qualified Loans to engage in any activity in which you are prohibited from
engaging in under this Agreement, or to terminate such person's employment with
Farmer Mac. You shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ, offer employment to,
lure, entice away or assist others in recruiting or hiring any person who is or
was employed by Farmer Mac unless such person shall have ceased to be employed
by Farmer Mac for a period of at least six months and is not subject to any
non-compete covenants substantially similar in nature to those contained in
Section 10 hereof. "Member of management" means the President, any Senior Vice
President, Vice President or the Controller of Farmer Mac.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: _____________________________ __________________________
President
<PAGE>
EXHIBIT 10.6.7
AMENDMENT NO. 7 TO EMPLOYMENT CONTRACT
AGREED, as of the 7th day of August 1997, between the Federal
Agricultural Mortgage Corporation (FAMC) and Michael T. Bennett (the employee),
that the existing employment contract between the parties hereto, dated October
7, 1991, as amended by Amendment to Employment Contract dated as of June 1,
1993, Amendment No. 2 to Employment Contract dated as of January 6, 1994 and
Amendment No. 3 dated as of June 1, 1994, Amendment No. 4 dated as of June 1,
1995, Amendment No. 5 dated as of February 8, 1996 and Amendment No. 6 to
Employment Contract dated as of June 13, 1996 (collectively, the Agreement), be
and hereby is amended as follows:
Sections 1, 3 (a) and 7 (a) (3) of the Agreement are replaced in their
entirety with the following new sections:
1. Term. The Term of this Agreement shall continue until June 1, 2000 or
any earlier effective date of termination pursuant to Paragraph 7 hereof (the
"Term").
3 (a). Base Salary. You will be paid a base salary (the Base Salary)
during the Term of One Hundred Ninety-Three Thousand Eight Hundred and Fifty-Six
Dollars ($193,856) per year, payable in arrears on a bi-weekly basis; and
7 (a) (3). Farmer Mac may terminate your employment without "cause" at
any time. Such termination shall become effective on the earlier of June 1,
2000, or two years from the date of notice of such termination.
Section 6 of the Agreement is hereby amended by replacing the
penultimate sentence thereof with the following new sentence: "All of the
foregoing is subject to the limitation that the total cost thereof will not
exceed twenty-five percent (25%) of your Base Salary, exclusive of
administrative expense."
Section 7(a)(2) is hereby amended by adding the following at the end thereof:
"For purposes of this subsection, no act, or failure to act on your part, shall
be considered "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or omission was in the best
interests of Farmer Mac."
The following new sections are hereby added as sections 10, 11, and 12
of the Agreement:
10. Agreement Not to Compete with Farmer Mac.
Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of your employment, for a period of two years
thereafter, you shall not, without the prior written consent of Farmer Mac,
directly or indirectly, engage in any business or activity, whether as
principal, agent, officer, director, partner, employee, independent contractor,
consultant, stockholder or otherwise, alone or in association with any other
person, firm, corporation or other business organization, that directly or
indirectly competes with any of the businesses of Farmer Mac in any manner,
including without limitation, the acquisition and securitization (for capital
market sale) of agricultural mortgage loans or USDA "guaranteed portions"
(hereinafter referred to as "Farmer Mac Qualified Loans"); provided, however,
that such prohibited activity shall not include the ownership of up to 20% of
the common stock in a public company.
11.Agreement Not to Use Confidential or Proprietary Information.
Farmer Mac and you both recognize that you have access to and acquire,
and may assist in developing, confidential and proprietary information relating
to the business and operations of Farmer Mac as a result of your employment or
association with Farmer Mac. You hereby covenant and agree that you will retain
all "Confidential Information" (as defined below) in trust for the sole benefit
of Farmer Mac and its successors and assigns. You hereby covenant further that,
in addition to your fiduciary responsibilities as an officer not to disclose
certain information of or relating to Farmer Mac, you will not, at any time
during or after the term of this Agreement, without the prior written consent of
Farmer Mac, directly or indirectly communicate or divulge any such Confidential
Information to any person, firm, corporation or other business organization, or
use any such Confidential Information for your own account or for the account of
any other person, except as required in connection with the performance of your
services hereunder. The term "Confidential Information" shall mean any trade
secret, data or other confidential or proprietary information related to the
business and activities of Farmer Mac. Notwithstanding the foregoing,
Confidential Information shall not include any information that is or becomes a
part of the public domain or generally available to the public (unless such
availability occurs as a result of any breach by you of this Section 11), or
becomes available to you on a non-confidential basis from a source (other than
Farmer Mac) that is not bound by a confidentiality agreement and does not breach
his or her fiduciary responsibilities. The provisions of this Section 11 shall
survive the termination of this Agreement and the termination of your employment
hereunder.
12.Agreement Not to Solicit Farmer Mac Employees.
For a period of two years after the termination of your employment
hereunder, you shall not, directly or indirectly, induce any employee of Farmer
Mac who is a "member of management" (as defined below) or is directly involved
in the acquisition and securitization (for capital market sale) of Farmer Mac
Qualified Loans to engage in any activity in which you are prohibited from
engaging in under this Agreement, or to terminate such person's employment with
Farmer Mac. You shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ, offer employment to,
lure, entice away or assist others in recruiting or hiring any person who is or
was employed by Farmer Mac unless such person shall have ceased to be employed
by Farmer Mac for a period of at least six months and is not subject to any
non-compete covenants substantially similar in nature to those contained in
Section 10 hereof. "Member of management" means the President, any Senior Vice
President, Vice President or the Controller of Farmer Mac.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: _____________________________ __________________________
President
<PAGE>
AMENDMENT NO. 7 TO EMPLOYMENT CONTRACT
AGREED, as of the 7th day of August 1997, between the Federal
Agricultural Mortgage Corporation (FAMC) and Christopher A. Dunn (you), that the
existing employment contract between the parties hereto, dated March 15, 1993,
as amended by Amendment to Employment Contract dated as of June 1, 1993,
Amendment No. 2 to Employment Contract dated as of June 1, 1993, Amendment No. 3
to Employment Contract dated as of June 1, 1994, Amendment No. 4 to Employment
Contract dated as of June 1, 1995, Amendment No. 5 to Employment Contract dated
as of February 8, 1996 and Amendment No. 6 to Employment Contract dated as of
June 13, 1996 (collectively, the Agreement), be and hereby is amended as
follows:
Sections 1, 3 (a) and 7 (a) (iii) of the Agreement are replaced in their
entirety with the following new sections:
1. Term. The Term of this Agreement shall continue until June 1, 2000 or
any earlier effective date of termination pursuant to Paragraph 7 hereof (the
"Term").
3 (a). Base Salary. You will be paid a base salary (the Base Salary)
during the Term of One Hundred Eighty-Seven Thousand Seven Hundred and Twenty
Dollars ($187,720) per year, payable in arrears on a bi-weekly basis; and
7 (a) (iii). Farmer Mac may terminate your employment without "cause"
at any time. Such termination shall become effective on the earlier of June 1,
2000 or two years from the date of notice of such termination.
Section 6 of the Agreement is hereby amended by replacing the
penultimate sentence thereof with the following new sentence: "All of the
foregoing is subject to the limitation that the total cost thereof will not
exceed twenty-five percent (25%) of your Base Salary, exclusive of
administrative expense."
Section 7(a)(ii) is hereby amended by adding the following at the end thereof:
"For purposes of this subsection, no act, or failure to act on your part, shall
be considered "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or omission was in the best
interests of Farmer Mac."
The following new sections are hereby added as sections 10, 11, and 12
of the Agreement:
10. Agreement Not to Compete with Farmer Mac.
Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of your employment, for a period of two years
thereafter, you shall not, without the prior written consent of Farmer Mac,
directly or indirectly, engage in any business or activity, whether as
principal, agent, officer, director, partner, employee, independent contractor,
consultant, stockholder or otherwise, alone or in association with any other
person, firm, corporation or other business organization, that directly or
indirectly competes with any of the businesses of Farmer Mac in any manner,
including without limitation, the acquisition and securitization (for capital
market sale) of agricultural mortgage loans or USDA "guaranteed portions"
(hereinafter referred to as "Farmer Mac Qualified Loans"); provided, however,
that such prohibited activity shall not include the ownership of up to 20% of
the common stock in a public company.
11. Agreement Not to Use Confidential or Proprietary Information.
Farmer Mac and you both recognize that you have access to and acquire,
and may assist in developing, confidential and proprietary information relating
to the business and operations of Farmer Mac as a result of your employment or
association with Farmer Mac. You hereby covenant and agree that you will retain
all "Confidential Information" (as defined below) in trust for the sole benefit
of Farmer Mac and its successors and assigns. You hereby covenant further that,
in addition to your fiduciary responsibilities as an officer not to disclose
certain information of or relating to Farmer Mac, you will not, at any time
during or after the term of this Agreement, without the prior written consent of
Farmer Mac, directly or indirectly communicate or divulge any such Confidential
Information to any person, firm, corporation or other business organization, or
use any such Confidential Information for your own account or for the account of
any other person, except as required in connection with the performance of your
services hereunder. The term "Confidential Information" shall mean any trade
secret, data or other confidential or proprietary information related to the
business and activities of Farmer Mac. Notwithstanding the foregoing,
Confidential Information shall not include any information that is or becomes a
part of the public domain or generally available to the public (unless such
availability occurs as a result of any breach by you of this Section 11), or
becomes available to you on a non-confidential basis from a source (other than
Farmer Mac) that is not bound by a confidentiality agreement and does not breach
his or her fiduciary responsibilities. The provisions of this Section 11 shall
survive the termination of this Agreement and the termination of your employment
hereunder.
12.Agreement Not to Solicit Farmer Mac Employees.
For a period of two years after the termination of your employment
hereunder, you shall not, directly or indirectly, induce any employee of Farmer
Mac who is a "member of management" (as defined below) or is directly involved
in the acquisition and securitization (for capital market sale) of Farmer Mac
Qualified Loans to engage in any activity in which you are prohibited from
engaging in under this Agreement, or to terminate such person's employment with
Farmer Mac. You shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ, offer employment to,
lure, entice away or assist others in recruiting or hiring any person who is or
was employed by Farmer Mac unless such person shall have ceased to be employed
by Farmer Mac for a period of at least six months and is not subject to any
non-compete covenants substantially similar in nature to those contained in
Section 10 hereof. "Member of management" means the President, any Senior Vice
President, Vice President or the Controller of Farmer Mac.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: _____________________________ __________________________
President
<PAGE>
EXHIBIT 10.8
EMPLOYMENT CONTRACT
AGREED, as of the 1st day of September 1997, between the Federal
Agricultural Mortgage Corporation ("Farmer Mac") and Tom D. Stenson ("Employee"
or "you"), that the following terms and conditions shall apply to the employment
relationship between the parties:
1. Term. The term of your employment shall continue until June 1, 1999 or any
earlier effective date of termination pursuant to Paragraph 7 hereof (the
"Term").
2. Scope of Authority and Employment. You will report directly to the
President of Farmer Mac. You will have responsibility for the agricultural
finance activities of Farmer Mac under business plans submitted by management
to, and approved by, the Board of Directors of Farmer Mac. You shall be an
officer of Farmer Mac, with the title of Vice President - Agricultural Finance.
You will devote your best efforts and substantially all your time and
endeavor to your duties hereunder, and you will not engage in any other gainful
occupation without the prior written consent of Farmer Mac; provided, however,
that this provision will not be construed to prevent you from personally, and
for your own account or that of members of your immediate family, investing or
trading in real estate, stocks, bonds, securities, commodities, or other forms
of investment, so long as such investing or trading is not in conflict with the
best interests of Farmer Mac. You will be employed to perform your duties at the
principal office of Farmer Mac. Notwithstanding this, it is expected that you
will be required to travel a reasonable amount of time in the performance of
your duties under this Agreement.
3. Compensation. Farmer Mac will pay to you the following aggregate
compensation for all services rendered by you under this Agreement:
(a) Base Salary. You will be paid a base salary (the "Base Salary")
during the Term of One Hundred Fifty-Seven Thousand Five Hundred Dollars
($157,500) per year, payable in arrears on a bi-weekly basis;
(b) Incentive Compensation. In addition to your Base Salary, you will be
paid additional payments during the term of this Agreement in respect of the
work performed by you during the preceding "Planning Year" (June 1 through
May 31), or portion thereof as follows: on June 1 of each year through and
including the effective date of termination, an additional payment in an
amount at the sole discretion of the Board of Directors if it determines that
you have performed in an extraordinary manner your duties, pursuant to
business plans proposed by management and approved by the Board of Directors,
during the preceding Planning Year.
4. Expenses. Farmer Mac will reimburse you for your reasonable and necessary
expenses incurred in carrying out your duties under this Agreement, including,
without limitation, expenses for: travel; attending approved business meetings,
conventions and similar gatherings; and business entertainment. Reimbursement
will be made to you within ten (10) days after presentation to Farmer Mac of an
itemized accounting and documentation of such expenses. You will notify the
President of Farmer Mac prior to incurring any such expenses of an extraordinary
or unusual nature.
5. Vacation and Sick Leave. You will be entitled to three (3) weeks of paid
vacation from the date hereof until May 31, 1998 and four (4) weeks of paid
vacation for each full Planning Year thereafter during the Term of this
Agreement, to be taken in spans not exceeding two (2) weeks each. Vacation
rights must be exercised within two months after the end of the Planning Year or
forfeited. You will be entitled to reasonable and customary amounts of sick
leave.
6. Employee Benefits. Farmer Mac will provide you with all employee benefits
regularly provided to employees of Farmer Mac and the following other (or
upgraded) benefits: the best level of personal and family health insurance
obtainable by Farmer Mac on reasonable terms; an annual medical examination;
business travel and personal accident insurance; life insurance in the amount of
Two Hundred Fifty Thousand Dollars ($250,000); disability benefits at least
equal to statutory benefits in the District of Columbia; participation in the
Farmer Mac Pension Plan; and participation in a savings plan established under
Paragraph 401(k) of the Internal Revenue Code. The providers of any insurance
will be listed in Best's Insurance Guide. All of the foregoing is subject to the
limitation that the total cost thereof will not exceed twenty five percent (25%)
of your Base Salary, exclusive of administrative expense. In the event that such
cost limitation would be exceeded in any year, you may be required to select
from among the foregoing a group of benefits within that cost limitation.
7. Termination.
(a) Events of Termination. This Agreement will be terminated and the
employment relationship between you and Farmer Mac will be severed as set
forth below:
(1) Farmer Mac may terminate your employment effective upon notice
to you if you die or are incapacitated or disabled by accident,
sickness or otherwise so as to render you (in the opinion of an
independent medical consultant on the full-time faculty of Georgetown
University School of Medicine) mentally or physically incapable of
performing the services required to be performed by you under the terms
of this Agreement for a period of at least sixty (60) consecutive days,
or for sixty (60) days (whether consecutive or not) during any
six-month period.
(2) Farmer Mac may terminate your employment effective upon notice
to you at any time for "cause." For the purposes of this subsection,
"cause" will mean only: (A) your willful failure to perform
substantially your duties hereunder, other than any such failure
resulting from your incapacity due to physical or mental illness; or
(B) your willful engagement in activities contrary to the best
interests of Farmer Mac. For purposes of this subsection, no act, or
failure to act on your part, shall be considered "willful" unless done,
or omitted to be done, by you not in good faith and without reasonable
belief that your action or omission was in the best interests of Farmer
Mac.
(3) Farmer Mac may terminate your employment without "cause" at
any time. Such termination shall become effective on the earlier of
June 1, 1999 or two years from the date of notice of such termination.
(4) Notwithstanding the provisions of subsection 7(a)(3) above,
Farmer Mac may terminate your employment at any time after the passage
by the Board of Directors of Farmer Mac of a resolution authorizing the
dissolution of Farmer Mac. Such termination of your employment shall
become effective on the later of eighteen (18) months after notice of
termination or the date that such dissolution of Farmer Mac becomes
final as a matter of law, provided, however, that neither of the
following shall be deemed to be a dissolution for the purposes of this
Agreement: (i) dissolution of Farmer Mac which becomes final as a
matter of law more than twelve (12) months after adoption of the
resolution of dissolution; or (ii) incorporation, organization or
reorganization of a corporation or other business entity which is
substantially similar to Farmer Mac and which uses substantially the
same assets or equity as Farmer Mac, within twelve (12) months after
adoption of the resolution of dissolution. As used herein, the term
"reorganization" shall have the same meaning as in Section 368(a) of
the Internal Revenue Code of 1986.
(b) Payment of Accrued Compensation.
(1) Upon termination of this Agreement pursuant to preceding
subsection (a), you (or your estate or heirs, as the case may be) will
be entitled to receive all Base Salary, Incentive Compensation, expense
reimbursements, vacation pay, and similar amounts accrued and unpaid as
of the date of such termination. The obligations of Farmer Mac under
this subsection (b) will survive any termination of this Agreement.
(2) In the event of your voluntary termination of employment
hereunder, Farmer Mac will not be obligated to make any further
compensation payments to you beyond those accrued prior to the
effective date of such termination.
(c) Disability Pay. Upon termination of this Agreement pursuant to the
preceding subsection (a)(1), Farmer Mac, in its discretion, will either:
(1) continue to pay you (or your estate or heirs, as the case may
be) for the lesser of two (2) years or the balance of the Term the
difference between your current Base Salary and the amount of
disability insurance payments received by you under insurance policies
provided by Farmer Mac in accordance with this Agreement; or
(2) pay you (or your estate or heirs, as the case may be) the
present value of the payments described in preceding subsection (c)(1),
discounted at a rate equal to the yield then available for two-year
U.S. Treasury Notes, plus 50 basis points (0.50%).
(d) Severance Pay. Upon termination of this Agreement pursuant to
preceding subsection 7(a)(3) or 7(a)(4), Farmer Mac will pay you within
thirty (30) days after such termination an aggregate amount in cash equal to
one hundred percent (100%) of all Base Salary scheduled to be paid and not
yet paid to you under this Agreement for the balance of the Term.
In the event of Farmer Mac's severance of your employment pursuant
to preceding subsection 7(a)(1), (3), or (4), the amount to be paid by Farmer
Mac to you hereunder will not be mitigated by any subsequent earnings by you
from any source.
(e) Constructive Termination. You may, at your option, deem this
Agreement to have been terminated by Farmer Mac in the event of its breach,
including prospective breach, of any term hereof unremedied for thirty (30) days
after notice thereof to Farmer Mac. Upon notice to Farmer Mac of your exercise
of this option, you will have the same rights under such a constructive
termination as if Farmer Mac had terminated your employment pursuant to
preceding subsection (a)(3).
8. Agreement Not to Compete with Farmer Mac.
Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of your employment, for a period of two years
thereafter, you shall not, without the prior written consent of Farmer Mac,
directly or indirectly, engage in any business or activity, whether as
principal, agent, officer, director, partner, employee, independent contractor,
consultant, stockholder or otherwise, alone or in association with any other
person, firm, corporation or other business organization, that directly or
indirectly competes with any of the businesses of Farmer Mac in any manner,
including without limitation, the acquisition and securitization (for capital
market sale) of agricultural mortgage loans or USDA "guaranteed portions"
(hereinafter referred to as "Farmer Mac Qualified Loans"); provided, however,
that such prohibited activity shall not include the ownership of up to 20% of
the common stock in a public company.
9. Agreement Not to Use Confidential or Proprietary Information.
Farmer Mac and you both recognize that you have access to and acquire,
and may assist in developing, confidential and proprietary information relating
to the business and operations of Farmer Mac as a result of your employment or
association with Farmer Mac. You hereby covenant and agree that you will retain
all "Confidential Information" (as defined below) in trust for the sole benefit
of Farmer Mac and its successors and assigns. You hereby covenant further that,
in addition to your fiduciary responsibilities as an officer not to disclose
certain information of or relating to Farmer Mac, you will not, at any time
during or after the term of this Agreement, without the prior written consent of
Farmer Mac, directly or indirectly communicate or divulge any such Confidential
Information to any person, firm, corporation or other business organization, or
use any such Confidential Information for your own account or for the account of
any other person, except as required in connection with the performance of your
services hereunder. The term "Confidential Information" shall mean any trade
secret, data or other confidential or proprietary information related to the
business and activities of Farmer Mac. Notwithstanding the foregoing,
Confidential Information shall not include any information that is or becomes a
part of the public domain or generally available to the public (unless such
availability occurs as a result of any breach by you of this Section 11), or
becomes available to you on a non-confidential basis from a source (other than
Farmer Mac) that is not bound by a confidentiality agreement and does not breach
his or her fiduciary responsibilities. The provisions of this Section 9 shall
survive the termination of this Agreement and the termination of your employment
hereunder.
10. Agreement Not to Solicit Farmer Mac Employees.
For a period of two years after the termination of your employment
hereunder, you shall not, directly or indirectly, induce any employee of Farmer
Mac who is a "member of management" (as defined below) or is directly involved
in the acquisition and securitization (for capital market sale) of Farmer Mac
Qualified Loans to engage in any activity in which you are prohibited from
engaging in under this Agreement, or to terminate such person's employment with
Farmer Mac. You shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ, offer employment to,
lure, entice away or assist others in recruiting or hiring any person who is or
was employed by Farmer Mac unless such person shall have ceased to be employed
by Farmer Mac for a period of at least six months and is not subject to any
non-compete covenants substantially similar in nature to those contained in
Section 8 hereof. "Member of management" means the President, any Senior Vice
President, Vice President or the Controller of Farmer Mac.
11. Notices. Any notice given under this Agreement will be sufficient if in
writing and either: (a) mailed postage prepaid by registered or certified mail,
return receipt requested; or (b) delivered by hand to, in the case of Farmer
Mac, 919 18th Street, N.W., Washington, D.C. 20006, attention President or, in
the case of the Employee, 13906 Warm Springs Court, Clifton, VA 20124 (or to
such other addresses as may be from time to time designated by notice from the
recipient party to the other). Any such notice will be effective upon actual
receipt or refusal thereof.
12. Miscellaneous.
(a) Governing Law. This Agreement will be governed by, and interpreted
and enforced in accordance with, the laws of the District of Columbia.
(b) Waiver. The waiver by any party of a breach of any provision of
this Agreement will not operate as a waiver of any other breach of any
provision of this Agreement by any party.
(c) Entire Agreement. This Agreement sets forth the entire
understanding of the parties concerning the subject matter hereof, and may
not be changed or modified except by a written instrument duly executed by or
on behalf of the parties hereto.
(d) Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective, successors,
heirs, personal representatives and assigns. This subsection is not to be
construed to permit you to assign your obligation to perform the duties of
your employment hereunder. This subsection permits Farmer Mac the right to
assign this Agreement to a successor entity.
(e) Severability. If any term, condition, or provision of this
Agreement or the application thereof to any party or circumstances will, at
any time or to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such term, condition or provision to parties
or circumstances other than those to which it is held invalid or
unenforceable, will not be affected thereby, and each term, condition and
provision of this Agreement will be valid and enforceable to the fullest
extent permitted by law.
(f) Action by Farmer Mac. Except as expressly provided otherwise in
this Agreement, reference to actions, decisions, determinations or similar
occurrences by Farmer Mac (other than the execution of this Agreement and any
modifications hereto or notices given hereunder) will mean the action,
decision or determination of the Board of Directors or the President of
Farmer Mac.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
By: Henry D. Edelman
President and Chief Executive Officer
EMPLOYEE
Tom D. Stenson
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> Primary and fully diluted EPS shown are for
Class C shares. Primary and fully diluted EPS
for Classes A and B shares are $0.12 and $0.12.
</LEGEND>
<CIK> 0000845877
<NAME> Federal Agricultural Mortgage Corporation
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 246,206
<SECURITIES> 1,084,524
<RECEIVABLES> 17,974
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 265,808
<PP&E> 120
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,374,153
<CURRENT-LIABILITIES> 965,593
<BONDS> 357,981
0
0
<COMMON> 4,174
<OTHER-SE> 46,405
<TOTAL-LIABILITY-AND-EQUITY> 1,374,153
<SALES> 24,071
<TOTAL-REVENUES> 24,071
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,079
<LOSS-PROVISION> 260
<INTEREST-EXPENSE> 20,768
<INCOME-PRETAX> 1,224
<INCOME-TAX> 40
<INCOME-CONTINUING> 1,184
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,184
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
