As filed with the Securities and Exchange Commission on
- --------------------------------------------------------------------------------
August 12, 1999
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 June 30, 1999.
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,
Washington, D.C. 20006
(Address of principal executive (Zip code)
offices)
(202) 872-7700
(Registrant's telephone number, including
area code)
-----------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
As of August 6, 1999, there were 1,029,280 shares of Class A Voting Common
Stock, 500,301 shares of Class B Voting Common Stock and 9,320,901 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. These 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 financial statements should be read in conjunction with the
audited 1998 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 June 30, 1999 and December 31, 199.........3
Consolidated Statements of Operations for the three and six months ended
June 30, 1999 and 1998..................................................4
Consolidated Statements of Cash Flows for the six months ended June 30,
1999 and 1998...........................................................5
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- -------------
(in thousands)
<S> <C> <C>
Assets:
Cash and cash equivalents $ 546,399 $ 540,626
Investment securities 765,154 643,562
Farmer Mac guaranteed securities 1,111,027 552,205
Loans 99,371 168,064
Interest receivable 33,690 24,526
Guarantee fees receivable 2,898 2,135
Prepaid expenses and other assets 6,989 4,182
---------- -----------
Total Assets $2,565,528 $1,935,300
---------- -----------
Liabilities and Stockholders' Equity:
Liabilities:
Notes payable
Due within one year $1,969,721 $1,473,688
Due after one year 490,542 365,451
Accrued interest payable 11,471 7,132
Accounts payable and accrued expenses 4,551 4,856
Reserve for losses 4,915 3,259
----------- -----------
Total Liabilities 2,481,200 1,854,386
Stockholders' Equity:
Common stock:
Class A Voting, $1 par value, no maximum authorization,
1,028,680 and 1,024,680 shares issued and outstanding
at June 30, 1999 and December 31, 1998. 1,029 1,025
Class B Voting, $1 par value, no maximum authorization,
500,301 shares issued and outstanding at June 30, 1999
and December 31, 1998. 500 500
Class C Non-Voting, $1.00 par value, no maximum
authorization, 9,315,996 and 9,276,351 shares issued and
outstanding at June 30, 1999 and December 31, 1998 9,316 9,276
Additional paid-in capital 70,752 69,984
Accumulated other comprehensive (loss) income (422) 249
Retained earnings (deficit) 3,153 (120)
---------- -----------
Total Stockholders' Equity 84,328 80,914
---------- -----------
Total Liabilities and Stockholders' Equity $ 2,565,528 $1,935,300
---------- -----------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income:
Farmer Mac guaranteed securities $14,287 $ 8,113 $23,589 $15,977
Investments and cash equivalents 15,888 15,724 31,304 30,358
Loans 1,356 1,600 4,673 2,577
-------- -------- -------- --------
Total interest income 31,531 25,437 59,566 48,912
Interest expense 27,584 22,964 52,039 44,004
-------- -------- -------- --------
Net interest income 3,947 2,473 7,527 4,908
Other income:
Guarantee fees 1,644 841 3,109 1,597
Gain on sale of AMBS - 552 - 980
Miscellaneous 132 14 198 62
-------- -------- -------- --------
Total other income 1,776 1,407 3,307 2,639
-------- -------- -------- --------
Total revenues 5,723 3,880 10,834 7,547
Expenses:
Compensation and employee benefits 1,268 1,028 2,260 1,834
Professional fees 371 423 780 791
Board of Directors fees and expenses 113 100 187 176
Regulatory fees 142 165 210 331
General and administrative 402 333 777 731
-------- -------- -------- --------
Total operating expenses 2,296 2,049 4,214 3,863
Provision for losses 862 362 1,660 622
-------- -------- -------- --------
Total expenses 3,158 2,411 5,874 4,485
-------- -------- -------- --------
Income before income taxes 2,565 1,469 4,960 3,062
Income tax expense (benefit) 873 (306) 1,687 (458)
-------- -------- -------- --------
Net income $ 1,692 $ 1,775 $ 3,273 $ 3,520
-------- -------- -------- --------
Earnings per share:
Basic earnings per share $ 0.16 $ 0.16 $ 0.31 $ 0.33
Diluted earnings per share $ 0.15 $ 0.16 $ 0.29 $ 0.32
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Income from Operations $ 3,273 $ 3,520
Adjustments to reconcile net income to cash provided by
operating activities:
Amortization of investment premiums and discounts 2,407 884
Amortization of debt premiums, discounts and issurance costs 37,516 30,607
Provision for losses 1,660 622
Net (increase) decrease in other assets and liabilities (8,362) 277
---------- ----------
Net cash provided by operating activities 36,494 35,910
Cash flows from investing activities:
Purchases of available-for-sale investments (322,255) (213,905)
Purchases of investment securities (6,267) (4,017)
Purchases of Farmer Mac guaranteed securities (429,509) (45,758)
Purchases of loans (250,259) (150,648)
Proceeds from repayment of available-for-sale investments 163,352 193,477
Proceeds from repayment of investment securities 43,248 29,220
Proceeds from repayment of Farmer Mac guaranteed securities 181,393 19,178
Proceeds from repayment of loans 5,156 1,925
Proceeds from securitization of loans - 97,453
---------- ----------
Net cash used by investing activities (615,141) (73,075)
<S> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of discount notes 41,052,812 13,539,609
Proceeds from issuance of medium-term notes 147,581 14,960
Payments to redeem discount notes (40,587,985) (13,238,585)
Payments to redeem medium-term notes (28,800) (111,520)
Proceeds from common stock issuance 812 824
---------- ----------
Net cash provided by financing activities 584,420 205,288
---------- ----------
Net increase in cash and cash equivalents 5,773 168,123
Cash and cash equivalents at beginning of period 540,626 177,617
---------- ----------
Cash and cash equivalents at end of period $ 546,399 $ 345,740
---------- ----------
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ 13,143 $ 17,406
Income Taxes $ 2,737 $ 206
Non-cash activity:
Loans securitized and retained as Farmer Mac
guaranteed securities $ 313,801 $ -
Loans acquired in exchange for AMBS $ 73,597 $ 32,755
Real estate acquired through foreclosure $ 578 $ -
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies.
(a) Principles of Consolidation
Financial information at and for the three and six months ended June 30,
1999 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) Loans
At June 30, 1999, all loans held by Farmer Mac were held for investment
and carried at amortized cost.
(c) 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.
Hedge instruments, consisting solely of forward sale contracts involving
debt securities of other government-sponsored enterprises (GSEs) and futures
contracts involving U.S. Treasury securities, are used by Farmer Mac to manage
interest-rate risk exposure related to the purchase of loans and other assets
and the anticipated issuance of debt. Farmer Mac monitors the correlation of the
change in value of the hedge instrument and the change in value of the hedged
item to determine the effectiveness of the hedge instrument. Gains and losses on
effective hedge instruments that have been terminated or have matured are
deferred as an adjustment to the cost basis of the hedged item. Gains and losses
on ineffective hedge instruments are marked-to-market directly through income.
(d) Earnings Per Share
Class C earnings per share have been restated to reflect the three-for-one
Class C common stock split effective August 2, 1999, and the elimination of the
three-to-one dividend and liquidation preferences applicable to each share of
Class C stock relative to each share of Class A and Class B voting common stock.
Previously, Class C earnings per share were equal to three times the earnings
per share for Class A and Class B stock. As a result of the stock split and the
elimination of the dividend and liquidation preferences, earnings per share for
all classes of stock are the same.
Basic earnings per share are based on the weighted average shares
outstanding. Diluted earnings per share are based on the weighted average number
of common shares outstanding adjusted to include all dilutive potential common
stock. The following schedule reconciles basic and diluted earnings per share
for the three and six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
------------------------ ------------------------
Dilutive Dilutive
stock Diluted stock Diluted
Basic EPS options EPS Basic EPS options EPS
------------------------------------ -----------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Three months ended:
Net Income $ 1,692 $ - $ 1,692 $ 1,775 $ - $ 1,775
Weighted average shares 10,818 419 11,237 10,762 421 11,183
Earnings per share $ 0.16 $ 0.15 $ 0.16 $ 0.16
Six months ended:
Net Income $ 3,273 $ - $ 3,273 $ 3,520 $ - $ 3,520
Weighted average shares 10,810 399 11,209 10,752 421 11,173
Earnings per share $ 0.31 $ 0.29 $ 0.33 $ 0.32
</TABLE>
(e) Reclassifications
Certain reclassifications of prior period information were made to conform
to the current period presentation.
Note 2. Off-Balance Sheet Financial Instruments.
In the ordinary course of its business, Farmer Mac incurs off-balance
sheet risk in connection with the issuance of commitments to purchase and sell
loans, the issuance of its guarantee and the use of interest-rate contracts and
hedge instruments. At June 30, 1999, outstanding commitments to purchase
Qualified Loans totaled $12.1 million. There were no outstanding commitments to
sell Qualified Loans at June 30, 1999. For information regarding the off-balance
sheet risks associated with off-balance sheet guarantees, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations Risk
Management - Credit Risk." For information related to the use of interest rate
contracts and hedge instruments, see Note 1 (c) and "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Risk Management -
Interest Rate Risk."
Note 3. Comprehensive Income
Comprehensive income is comprised of net income plus other changes in
stockholders' equity not resulting from investments by or distributions to
stockholders. The following table sets forth comprehensive income for the three
and six months ended June 30, 1999 and 1998. Comprehensive income for the three
and six months ended June 30, 1999 is net of taxes of $577 thousand and $346
thousand, respectively.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- ------------------
1999 1998 1999 1998
--------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C>
Net income $ 1,692 $ 1,775 $ 3,273 $ 3,520
Change in unrealized gain (loss) on securities
available-for-sale, net of taxes (1,121) (458) (671) (430)
-------- -------- -------- --------
Comprehensive income $ 571 $ 1,317 $ 2,602 $ 3,090
-------- -------- -------- --------
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Special Note Regarding Forward-Looking Statements
Certain statements made in this Form 10-Q are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
pertaining to management's current expectations as to Farmer Mac's future
financial results, business prospects and business developments. Forward-looking
statements include, without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or achievements, and
typically are accompanied by, and identified with, such terms as "anticipates,"
"believes," "expects," "intends," "should" and similar phrases. The following
management's discussion and analysis includes forward-looking statements
addressing Farmer Mac's prospects for earnings and growth in loan purchase,
guarantee and securitization volume; trends in net interest income,
delinquencies and provision for losses; changes in capital position; year 2000
readiness efforts; and other business and financial matters. Management's
expectations for Farmer Mac's future necessarily involve a number of
assumptions, estimates and the evaluation of risks and uncertainties. Various
factors could cause Farmer Mac's actual results or events to differ materially
from the expectations as expressed or implied by the forward-looking statements,
including: uncertainties regarding the rate and direction of development of the
secondary market for agricultural mortgage loans; the possible establishment of
additional statutory or regulatory restrictions applicable to Farmer Mac, such
as the imposition of regulatory risk-based capital requirements in excess of
statutory minimum and critical capital levels or restrictions on Farmer Mac's
investment authority; substantial changes in interest rates, the agricultural
economy (including agricultural land values, commodity prices, export demand for
U.S. agricultural products and federal assistance to farmers) or 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; the non-compliance of
Farmer Mac's internal systems or the systems of critical vendors with respect to
the year 2000 date change; 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; the availability of debt funding in
sufficient quantities and at favorable rates 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 into the Farmer Mac secondary market; the willingness of investors to
invest in agricultural mortgage-backed securities; competition in the
origination or purchase of agricultural mortgage loans and the sale of
agricultural mortgage-backed and debt securities; or changes in Farmer Mac's
status as a government-sponsored enterprise.
The foregoing factors are not exhaustive. Other sections of this report
may include additional factors that could adversely impact Farmer Mac's business
and its financial performance. Furthermore, new risk factors emerge from time to
time and it is not possible for management to predict all such risk factors, nor
assess the impact of such factors on Farmer Mac's business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from the expectations expressed or implied by the forward-looking
statements. Given these potential risks and uncertainties, no undue reliance
should be placed on any forward-looking statements expressed in this report.
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 increased 74 percent to $1.7 million for second
quarter 1999, compared to $970 thousand for second quarter 1998 on a fully
taxable equivalent basis (see "Income Tax Expense/Benefit"). Net income totaled
$3.3 million for year-to-date 1999, compared to $2.0 million for the same period
in 1998 on a fully taxable equivalent basis, an increase of 62 percent. Diluted
earnings per share were $0.15 and $0.29 for the three and six months ended June
30, 1999, compared to $0.09 and 0.18 on a fully tax equivalent basis for the
same periods in 1998. Earnings per share reflect the three-for-one Class C stock
split and the elimination of the three to-one dividend and liquidation
preferences previously accorded to Class C common stock compared to Classes A
and B common stock. The stock split, which was announced during second quarter
1999, was effective on August 2, 1999. In addition, Farmer Mac's Class A and C
common stocks began trading on the New York Stock Exchange (NYSE) during second
quarter 1999. Management believes the NYSE listing and the three-for-one split
of the Class C stock will benefit Farmer Mac's stockholders through increased
price stability, greater trading liquidity, and access to a more efficient stock
trading system.
The steady growth in earnings reflects continued growth in loan volume.
Loans purchased through Farmer Mac's cash window, which excludes loans acquired
in exchange for guaranteed securities through "swap transactions" or loans
guaranteed through long-term standby purchase commitments, increased 35 percent
compared to second quarter 1998. Total loan purchases and guarantees for
year-to-date 1999 increased by $546.8 million compared to year-to-date 1998,
bringing total loans held or guaranteed by Farmer Mac to $2.0 billion at June
30, 1999. With Farmer Mac's market penetration in the multibillion dollar
agricultural mortgage market now at just over two percent, there is significant
potential for continued growth, notwithstanding certain conditions adversely
affecting the current agricultural economy. Management believes this growth
should be accomplished through the pursuit of Farmer Mac's business strategies
as its network of approved sellers, and the loan volume generated by the most
active sellers, continues to expand.
Post-1996 Act loan delinquencies declined during second quarter 1999 from
1.59 percent at March 31, 1999 to 1.03 percent at June 30, 1999, reflecting the
semi-annual and annual payment characteristics of most of the post-1996 Act
loans. Farmer Mac anticipates higher delinquencies in the third quarter due to
the number of loans having payments due on July 1 and adverse conditions in the
agricultural economy. Despite these factors, management believes that Farmer
Mac's exposure to potential credit losses is limited by the sound credit
underwriting standards applied to loans acquired by Farmer Mac and the adequacy
of Farmer Mac's loss reserves. See "Risk Management - Credit Risk." Adverse
economic conditions have also generated challenging opportunities for new
business, which Farmer Mac is pursuing vigorously, while remaining focused on
quality control in the underwriting process.
Set forth below is a more detailed discussion of Farmer Mac's results of
operations.
Net Interest Income. Net interest income for second quarter and
year-to-date 1999 was $3.9 million and $7.5 million, respectively, compared to
$2.5 million and $4.9 million for the same periods a year ago. The increases in
net interest income were primarily attributable to increases in the balance of
program assets (Farmer Mac guaranteed securities and loans), driven by Farmer
Mac's interim changeover to a retained portfolio strategy and the purchase of
$189.8 million of AMBS from capital market investors (see "Balance Sheet Review
- - Assets"). Management regularly evaluates whether to retain or sell AMBS based
on the present value of the net interest income earned over the life of the AMBS
if retained, compared to the up-front gain earned if sold to capital market
investors. Farmer Mac's assessment of the relative economic attractiveness of
each execution is determined primarily by market conditions, particularly the
relationship between Farmer Mac's debt securities' spreads and its AMBS spreads.
The following table provides information regarding the average balances
and rates of interest earning assets and funding for the six months ended June
30, 1999 and 1998. The increase in net interest yield between the two periods is
due to growth in program assets, which resulted in a shift in the composition of
interest earning assets from lower yielding non-program assets (cash and cash
equivalents and investments) to higher yielding program assets.
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------------------------------------
1999 1998
------------------------------------------------------------------
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
--------- --------- --------- --------- -------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Cash and cash equivalents $ 577,965 $ 14,222 4.92% $ 355,824 $ 9,808 5.51%
Investments 640,837 17,082 5.33% 683,018 20,550 6.02%
Farmer Mac guaranteed securities 723,232 23,589 6.52% 452,512 15,977 7.06%
Loans 143,941 4,673 6.49% 73,905 2,577 6.97%
--------- ---------- -------- --------- --------- --------
Total interest earning assets 2,085,975 59,566 5.71% 1,565,259 48,912 6.25%
--------- ---------
Funding:
Discount notes 1,560,659 37,475 4.80% 1,105,224 30,448 5.51%
Medium-term notes 457,886 14,564 6.36% 393,149 13,556 6.90%
--------- ---------- -------- --------- --------- --------
Total interest bearing liabilities 2,018,545 52,039 5.15% 1,498,373 44,004 5.87%
Net non-interest bearing funding 67,430 - 0.00% 66,886 - 0.00%
--------- ---------- -------- --------- --------- --------
Total funding $2,085,975 52,039 4.99% $1,565,259 44,004 5.62%
--------- ---------- -------- --------- --------- --------
Net interest income/yield $ 7,527 0.72% $ 4,908 0.63%
---------- -------- --------- --------
</TABLE>
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 changes in
volume (change in volume multiplied by old rate) and changes in rate (change in
rate multiplied by old volume). Combined rate/volume variances, a third element
of the calculation, are allocated based on their relative size.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 Compared to
Six Months Ended June 30, 1998
--------------------------------------------
Increase/(Decrease) Due to
--------------------------------------------
Rate Volume Total
------------ ---------- ------------
(in thousands)
<S> <C> <C> <C>
Income from interest earning assets:
Cash and cash equivalents $ (916) $ 5,330 $ 4,414
Investments (2,250) (1,218) (3,468)
Farmer Mac guaranteed securities (1,111) 8,723 7,612
Loans (164) 2,260 2,096
--------- ---------- ---------
Total (4,441) 15,095 10,654
Expense from interest bearing liabilities (4,362) 12,397 8,035
--------- ---------- ---------
Change in net interest income $ (79) $ 2,698 $ 2,619
--------- ---------- ---------
</TABLE>
Other Income. Other income, which is comprised of guarantee fee income,
gain on sale of AMBS and miscellaneous income, totaled $1.8 million for second
quarter 1999 and $3.3 million for year-to-date 1999, compared to $1.4 million
and $2.6 million, respectively, in 1998. Guarantee fee income increased from
$841 thousand for second quarter 1998 to $1.6 million for second quarter 1999.
Year-to-date 1999 guarantee fee income was $3.1 million compared to $1.6 million
for year-to-date 1998. The increase in guarantee fee income reflects continued
growth in outstanding guarantees, which have increased by 91 percent since
second quarter 1998 to a total outstanding balance of $1.9 billion at June 30,
1999. For year-to-date 1999, there was no gain on sale of AMBS as a consequence
of Farmer Mac's changeover to a retained portfolio strategy. During the same
period a year ago, Farmer Mac recognized a $980 thousand gain on the sale of
$97.4 million of AMBS. Miscellaneous income, which is comprised of program
related fees and gain on sale of assets, totaled $132 thousand and $198 thousand
for second quarter and year-to-date 1999, respectively, and $14 thousand and $62
thousand for the same periods in 1998.
Expenses. Operating expenses increased 12 percent, from $2.0 million for
second quarter 1998 to $2.3 million for second quarter 1999, compared to a 48
percent increase in total revenues during the same period. The increase in
operating expenses resulted from increased business volume, as well as the
payment of annual incentive compensation to management in June. For year-to-date
1999, operating expenses increased by 9 percent, compared to a 44 percent
increase in total revenues. Management anticipates expenses will increase at a
faster rate in the latter half of 1999 than that experienced in the first half
of 1999, but at a slower rate than the anticipated growth in total revenues.
Farmer Mac's provision for losses was $862 thousand for second quarter
1999 and $1.7 million for year-to-date 1999, compared to $362 thousand and $622
thousand, respectively, in 1998. The increase in the provision for losses
corresponds to growth in outstanding post-1996 Act loans held or guaranteed by
Farmer Mac, which totaled $1.4 billion at June 30, 1999. Farmer Mac's reserve
for principal and interest losses at June 30, 1999 totaled $4.9 million, or 0.34
percent of the outstanding post-1996 Act loans.
Income Tax Expense/Benefit. The provision for income taxes totaled $873
thousand for second quarter 1999 and $1.7 million for year-to-date 1999,
compared to tax benefits of $306 thousand and $458 thousand for the same periods
in 1998 due to the recognition of previously deferred tax benefits. As of June
30, 1998, all previously deferred tax benefits had been fully recognized. Had
Farmer Mac's effective tax rate equaled its statutory tax rate in 1998, it would
have reported income tax expense of $499 thousand and $1.0 million for second
quarter and year-to-date 1998, which would have resulted in reported net income
on a fully taxable equivalent basis of $970 thousand and $2.0 million,
respectively.
Business Volume. The following table sets forth the amount of loans
purchased or guaranteed, and AMBS issued by Farmer Mac during the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Purchase and guarantee volume:
Cash window $ 127,625 $ 94,704 $ 248,875 $ 150,576
Swap transactions - 32,755 73,597 32,800
LTSC - - 407,701 -
---------- ---------- ---------- ---------
Total loans purchased or
guaranteed $ 127,625 $ 127,459 $ 730,173 $ 183,376
---------- ---------- ---------- ---------
AMBS issuances:
Retained $ 45,415 $ - $ 313,801 $ -
Sold - 56,059 - 97,412
Swap transactions - 32,755 73,597 32,800
---------- ---------- ---------- ---------
Total AMBS issuances $ 45,415 $ 88,814 $ 387,398 $ 130,212
---------- ---------- ---------- ---------
</TABLE>
Total purchase and guarantee volume, which includes cash window purchases,
loans acquired in exchange for guaranteed securities through "swap transactions"
and loans guaranteed through long-term standby purchase commitments, increased
by $546.8 million in year-to-date 1999, from $183.4 million for the first six
months of 1998 to $730.2 million for the first six months of 1999. Second
quarter 1999 purchase and guarantee volume was relatively unchanged from second
quarter 1998. Cash window volume, which represents newly originated loans sold
to Farmer Mac by its network of approved Sellers, increased 65 percent during
the first six months of 1999 compared to the same period in 1998, and 35 percent
in second quarter 1999 compared to second quarter 1998.
Indicators of future purchase and guarantee volume, particularly cash
window activity, include outstanding commitments to purchase Farmer Mac I loans
and the total balance of loans submitted for approval or approved but not yet
purchased. Most purchase commitments entered into by Farmer Mac are mandatory
delivery commitments. If a Seller obtains a mandatory commitment and is unable
to deliver the loans required thereunder within the specified time period,
Farmer Mac requires the Seller to pay a fee to extend or cancel the commitment.
At June 30, 1999, outstanding commitments to purchase Farmer Mac I loans totaled
$12.1 million, compared to $31.7 million at June 30, 1998. Loans submitted for
approval or approved but not yet committed to purchase totaled $208.5 million at
June 30, 1999, compared to $148.2 million at June 30, 1998. Not all of these
loans are purchased, as some are denied for credit reasons or withdrawn by the
Seller.
While significant progress has been made in developing the secondary
market for agricultural mortgages, Farmer Mac continues to face the challenges
of establishing a new market where none previously existed. Acceptance of Farmer
Mac's programs is increasing among lenders, reflecting the competitive rates,
terms and products offered and the advantages we believe Farmer Mac's programs
provide. For Farmer Mac to succeed in realizing its business development and
profitability goals over the long term, however, agricultural mortgage lenders,
whether traditional or non-traditional, must value the benefits of selling loans
to Farmer Mac or otherwise obtaining the benefits of the Farmer Mac guarantee
and must be persuaded to modify their business practices accordingly.
Balance Sheet Review
Assets. At June 30, 1999, total assets were $2.6 billion compared to $1.9
billion at December 31, 1998. The increase in total assets was primarily due to
growth in program assets, which have increased $490.1 million since the end of
1998 to a total of $1.2 billion. During the first six months of 1999, Farmer Mac
purchased and retained $248.9 million of loans under its retained portfolio
strategy. In addition, Farmer Mac purchased $189.8 million of AMBS from capital
market investors and $69.4 million of Farmer Mac II securities. During the same
period, non-program assets, consisting of cash and cash equivalents and
investments, grew by $127.4 million.
Liabilities. Total liabilities increased by $626.8 million from December
31, 1998 to June 30, 1999. Most of Farmer Mac's liabilities are due within one
year since most of Farmer Mac's assets are short- or long-term floating rate
investments. Notes payable due after one year totaled $490.1 million at June 30,
1999, compared to $365.5 million at December 31, 1998.
Capital. Farmer Mac's capital totaled $84.3 million at June 30, 1999,
compared with $80.9 million at December 31, 1998. The increase was due to the
retention of net income earned during the first six months of 1999, offset by a
$671 thousand decrease in the value of available-for-sale securities. Those
capital balances were in excess of Farmer Mac's regulatory minimum capital
requirements, although the surplus over the fully phased-in regulatory minimum
capital requirement was reduced from $22.9 million at December 31, 1998 to $8.0
million at June 30, 1999. The reduction in surplus capital is attributable to
the growth in on-balance sheet program assets and off-balance sheet guarantees.
As a result of the reduction in surplus capital and growth in program assets,
which generate higher returns on equity, return on equity has increased from 5.4
percent in 1998 to 7.9 percent for the first six months of 1999. Farmer Mac's
current surplus capital would support additional asset growth in amounts ranging
from $290 million of on-balance sheet assets to more than $1 billion of
off-balance sheet assets based on applicable minimum capital requirements.
Management believes Farmer Mac has sufficient capital to support anticipated
increases in business volume for at least the next twelve months in light of the
existing surplus capital and Farmer Mac's ability to replace on-balance sheet
non-program assets with on- and off-balance sheet program assets and,
ultimately, to sell on-balance sheet program assets to support increases in
off-balance sheet program assets.
In addition to the regulatory minimum capital requirement referred to
above, the Farm Credit System Reform Act of 1996 (the "1996 Act") directs the
Farm Credit Administration (the "FCA") to establish a risk-based capital test
for Farmer Mac, using stress-test parameters set forth in the 1996 Act. The FCA
has commenced the process of developing a risk-based capital test for Farmer
Mac, but has not advised Farmer Mac as to the possible level of risk-based
capital that may be required or whether it intends to propose risk-based capital
requirements significantly higher than the statutory minimum capital level. The
FCA has indicated that it anticipates publishing a notice of proposed rulemaking
setting forth a proposed risk-based capital test later this year. At this time,
Farmer Mac is unable to predict when the rulemaking process would likely
conclude and when a final regulation imposing a risk-based capital requirement
on Farmer Mac would become effective.
Off-Balance Sheet Farmer Mac Guarantees. At June 30, 1999, outstanding
off-balance sheet Farmer Mac guarantees totaled $824.2 million, compared to
$597.6 million at December 31, 1998. The increase in off-balance sheet
guarantees is attributable to the $407.7 million long-term standby purchase
commitment and the $73.6 million swap transaction closed during first quarter
1999, less the $189.8 million of AMBS purchased from capital market investors.
For further information regarding credit exposure related to off-balance sheet
guarantees, see "Risk Management - Credit Risk."
Risk Management
Interest Rate Risk. Farmer Mac's asset and liability management objective
is to limit the effect of changes in interest rates on its equity and earnings
to within acceptable risk tolerance levels. In doing so, Farmer Mac enters into
off-balance sheet derivative financial instruments. Farmer Mac uses these
instruments as an end-user and not for trading or speculative purposes.
Off-balance sheet derivative financial instruments used by Farmer Mac are
interest-rate contracts, including interest-rate swaps and caps, forward sale
contracts involving GSE debt securities and futures contracts involving U.S.
Treasury securities. Interest-rate contracts are used to synthetically alter the
interest rate characteristics of specific investments or debt such that the
interest rate characteristics of Farmer Mac's investments and debt are better
matched. At June 30, 1999, the notional amount of interest-rate contracts was
$544.7 million. Farmer Mac uses forward sale and futures contracts to reduce its
interest rate risk exposure to the purchase of loans and other assets and the
anticipated issuance of debt. At June 30, 1999, the notional amount of
outstanding forward sale and futures contracts totaled $228.0 million.
Farmer Mac monitors its exposure to interest rate risk by measuring
duration of equity and the sensitivity of its fair value of equity (FVE) to an
immediate and permanent parallel shift in the Treasury yield curve. Farmer Mac's
duration of equity at June 30, 1999 was approximately 5.2 years. The following
schedule summarizes the results of Farmer Mac's FVE sensitivity analysis at June
30, 1999:
<TABLE>
<CAPTION>
Percentage
Interest Rate Change in FVE
Scenario from Base Case
---------------- ----------------
<S> <C> <C>
+ 300 bp -18.9%
+ 200 bp -13.0%
+ 100 bp - 6.2%
- 100 bp 4.3%
- 200 bp 5.7%
- 300 bp 4.3%
</TABLE>
Farmer Mac was in compliance with its established policy limits for FVE
and duration gap at June 30, 1999.
Credit Risk. Farmer Mac is exposed to credit risk on loans it holds, as
well as on loans backing securities issued (or sold) to third parties because of
Farmer Mac's guarantee of the timely payment of principal, including any balloon
payments, and interest on the securities. Loans held or guaranteed by Farmer Mac
can be divided into three groups: (a) pre-1996 Act Farmer Mac I loans; (b)
post-1996 Act Farmer Mac I loans; and (c) Farmer Mac II loans. The outstanding
principal balance of those loans as of June 30, 1999 and December 31, 1998 is
summarized in the table below:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -------------
(in thousands)
<S> <C> <C>
Farmer Mac I loans:
Post-1996 Act $ 1,457,565 $ 788,905
Pre-1996 Act 142,842 174,783
Farmer Mac II loans 367,250 336,914
----------- ----------
Total $ 1,967,657 $ 1,300,602
----------- ----------
</TABLE>
For pre-1996 Act loans, Farmer Mac's credit risk exposure is mitigated by
subordinated interests. Before Farmer Mac incurs a credit loss, full recourse
must first be taken against the subordinated interest. Farmer Mac assumes 100
percent of the credit risk on post-1996 Act Farmer Mac I loans as a result the
1996 Act, which eliminated the subordinated interest requirement. Farmer Mac's
credit exposure on Farmer Mac II loans is covered by the "full faith and credit"
of the United States by virtue of the USDA guarantee of the principal and
interest on all Guaranteed Portions. Farmer Mac believes it has little or no
credit risk exposure to pre-1996 Act Farmer Mac I loans because of the
subordinated interests, or to Farmer Mac II loans because of the USDA guarantee.
For post-1996 Act loans, Farmer Mac regularly monitors agricultural
economic conditions and evaluates the credit quality of those loans. In the
Northeastern and Southeastern United States, the current drought is expected to
have little impact on Farmer Mac, considering its limited exposure to loans in
those regions. Nationwide, low commodity prices and weak export markets have
adversely affected agricultural economic conditions in 1998 and 1999 to date,
and may continue at least through the remainder of the year. Overall, Farmer Mac
believes that the credit quality of the post-1996 Act Farmer Mac I loans remains
strong, based on their compliance with Farmer Mac's standards at the time of
purchase or acquisition; their performance to date; and current agricultural
land values. A prolonged continuation or worsening of the adverse conditions
currently affecting the agricultural economy, without significant federal
assistance to farmers, could result in a deterioration of the credit quality,
and a possible decline in land values, of loans underlying Farmer Mac's
guarantee.
An indicator of the credit quality of loans underlying Farmer Mac's
guarantee is the level of defaulted loans and related credit losses. At June 30,
1999, post-1996 Act Farmer Mac I loans that were 90 days or more past due
(referred to as non-performing or "impaired" loans) totaled $15.1 million, or
1.03 percent of the total principal amount of all post-1996 Act loans. At
December 31, 1998 and June 30 ,1998, post-1996 Act Farmer Mac I loans that were
90 days or more past due totaled $5.5 million (0.70 percent delinquency rate)
and $3.9 million (0.70 percent delinquency rate), respectively. The increase in
the post-1996 Act loan delinquency rate compared to December 31, 1998 reflects
the semi-annual and annual payment characteristics of most post-1996 Act loans
resulting in a greater proportion of those loans having payments due on January
1 than any other day of the year. The increase relative to June 30, 1998
reflects the growing number of loans that are approaching their anticipated peak
default years and adverse conditions continuing to affect the agricultural
economy. In addition to aging of the portfolio and adverse agricultural economic
conditions, the higher delinquency rate is also attributable to the credit
quality of loans purchased in 1996 from two institutions operating in the
Northwest and Southwest regions. Farmer Mac no longer purchases loans from those
institutions. The effect of the aforementioned factors on the portfolio can be
seen in the following table, which segregates the delinquency rate of the
post-1996 Act loans at June 30, 1999 by year of origination, geographic region
and commodity.
<TABLE>
<CAPTION>
Distribution of
Post-1996 Act Delinquency
Loans Rate
----------------- --------------
<S> <C> <C>
By year of origination:
Pre-1995 27% 0.00%
1995 2% 0.44%
1996 11% 4.86%
1997 12% 1.91%
1998 26% 0.88%
1999 22% 0.00%
----------
Total 100% 1.03%
----------
By geographic region: (1)
Mid-north 12% 0.15%
Mid-south 4% 0.00%
Northeast 2% 0.00%
Northwest 52% 1.54%
Southeast 1% 0.00%
Southwest 29% 0.68%
----------
Total 100% 1.03%
----------
By commodity:
Crops 54% 0.92%
Livestock 21% 1.38%
Permanent plantings 22% 1.05%
Other 3% 0.34%
----------
Total 100% 1.03%
----------
(1)Geographic regions - Mid-North (IA,IL,IN,MI,MN,MO,WI); Mid-South (KS,OK,TX);
Northeast (CT,DE,KY,MA,MD,ME,NC,NH,NJ,NY,OH,PA,RI,TN,VA,VT,WV); Northwest (ID,
MT,ND,NE,OR,SD,WA,WY); Southeast (AL,AR,FL,GA,LA,MS,SC); and Southwest (AZ,CA,
CO,NM,NV,UT).
</TABLE>
Farmer Mac anticipates fluctuations in the delinquency rate of those loans
from quarter to quarter, with higher numbers likely to be reported during the
first and third quarters of each year due to the semi-annual payment
characteristics of most Farmer Mac loans, and with the average delinquency level
increasing during the later half of 1999 due to the aforementioned factors.
Farmer Mac maintains a reserve to cover credit losses incurred on
post-1996 Act loans. The following schedule summarizes the change in reserve for
loan losses for the three and six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C>
Beginning balance $ 4,016 $ 1,905 $ 3,259 $ 1,645
Provision for losses 862 362 1,660 622
Net recoveries (charge-offs) 37 - (4) -
-------- -------- -------- ---------
Ending balance $ 4,915 $ 2,267 $ 4,915 $ 2,267
</TABLE>
During first quarter 1999, Farmer Mac acquired a property through
foreclosure resulting in a loss of $41 thousand being recorded to the reserve.
During second quarter 1999, the property was sold and Farmer Mac recovered $37
thousand of the original loss recorded.
Although credit losses are expected to be incurred on the existing
post-1996 Act Farmer Mac I delinquencies, Farmer Mac expects those losses to be
within current reserve levels based on the collateral values supporting the
loans. The following table summarizes the post-1996 Act delinquencies by
original loan-to-value ratio:
<TABLE>
<CAPTION>
Distribution of
Post-1996 Act
Delinquencies
---------------
<S> <C>
By original loan-to-value ratio:
0.00% to 40.00% 2%
40.01% to 50.00% 6%
50.01% to 60.00% 29%
60.01% to 70.00% 63%
70.01% to 80.00% 0%
-----------
Total 100%
-----------
</TABLE>
As of June 30, 1999, the weighted average loan-to-value ratio of post-1996
Act loans (calculated by dividing the current loan principal balance by the
original appraised value) was approximately 50%.
Other Matters
Year 2000. The year 2000 problem relates to the inability of some computer
programs to process date-sensitive information due to the use of two digits
(rather than four) to define the applicable year. As a result, these computer
programs may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures. The year 2000
date change potentially could affect Farmer Mac's internal information
technology (IT) and non-IT systems, as well as systems utilized by its external
vendors. Farmer Mac's internal IT systems, which are "PC software-based," are
used to perform critical business processes including purchases of Qualified
Loans; sale of AMBS; issuance of debt securities; payments to debt security and
AMBS investors; and financial reporting to investors and stockholders. Certain
vendors also perform critical business processes by servicing the loans held or
securitized by Farmer Mac and administering the guaranteed securities issued by
Farmer Mac. Failure of IT and/or vendor systems to handle the year 2000 date
change could result in Farmer Mac being unable to perform critical business
processes and expose Farmer Mac to significant business risk. Less critical to
Farmer Mac's operations are non-IT systems, which include telephones, facsimile
machines and systems used to maintain building operations.
To manage the risks related to the year 2000 date change, Farmer Mac has
adopted a Year 2000 Compliance Plan. This Plan consists of four phases: system
inventory, system remediation, critical vendor testing and contingency planning.
Farmer Mac has completed all phases of the plan and believes that its systems,
as well as those of its critical vendors, will be able to perform critical
business functions after December 31, 1999. In the event of a system failure,
Farmer Mac has developed contingency plans, which primarily rely on instituting
manual procedures, to complete critical business processes. Farmer Mac will test
its contingency plans related to critical business processes during third
quarter 1999. In addition, Farmer Mac will continue to monitor the compliance
status of its internal systems and the status of its critical vendors throughout
the remainder of 1999.
Currently, management believes that the year 2000 date change does not
expose Farmer Mac to significant business risk or material loss of revenue, if
any, based on its assessment of Farmer Mac's internal systems and critical
vendors. In addition, Farmer Mac expects total direct costs to complete its year
2000 readiness efforts not to exceed $150 thousand. This amount includes the use
of outside consultants to help Farmer Mac evaluate the readiness of internal IT
systems and critical vendors. Costs incurred to date have totaled approximately
$100 thousand.
Supplemental Information
The following tables set forth quarterly activity regarding: commitments to
purchase loans; purchases and guarantees of loans; AMBS issuances;
delinquencies; and outstanding guarantees.
<TABLE>
<CAPTION>
Commitments to Purchase or Guarantee Farmer Mac I Loans (1) (2)
--------------------------------------------------------------------------
Long-Term 5 and 7 Year
Fixed Rate Balloons ARMs Total Outstanding
------------ -------------- ------ --------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
For the quarter ended:
June 30, 1999 $ 56,010 $ 17,025 $ 48,791 $ 121,826 $ 12,069
March 31, 1999 137,200 14,774 45,249 197,223 22,501
December 31, 1998 170,233 13,020 380,394 563,647 431,544
September 30, 1998 50,446 7,333 26,830 84,609 23,611
June 30, 1998 49,154 22,095 36,731 107,980 31,718
For the year ended:
December 31, 1998 302,227 48,412 502,283 852,922 431,544
December 31, 1997 102,773 100,972 33,103 236,848 10,800
</TABLE>
<TABLE>
<CAPTION>
Purchases and Guarantees of Farmer Mac I Loans (1) (2)
--------------------------------------------------------
Long-Term 5 and 7 year
Fixed Rate Balloons ARMs Total
------------- ---------- -------- ----------
(in thousands)
<S> <C> <C> <C> <C>
For the quarter ended:
June 30, 1999 $ 58,406 $ 16,975 $ 52,244 $ 127,625
March 31, 1999 257,632 15,817 329,099 602,548
December 31, 1998 50,280 10,634 93,020 153,934
September 30, 1998 46,713 12,782 27,454 86,949
June 30, 1998 41,772 18,571 67,116 127,459
For the year ended:
December 31, 1998 164,436 48,086 211,737 424,259
December 31, 1997 103,335 100,874 26,304 230,513
</TABLE>
<TABLE>
<CAPTION>
Farmer Mac I AMBS Issuances (1) (3)
--------------------------------------------------
Long-Term 5 and 7 year
Fixed Rate Balloons ARMs Total
------------ ---------- -------- --------
(in thousands)
<S> <C> <C> <C> <C>
For the quarter ended:
June 30, 1999 $ 1,018 $ - $ 44,397 $ 45,415
March 31, 1999 134,405 16,271 191,307 341,983
December 31, 1998 44,448 8,448 51,566 104,462
September 30, 1998 53,635 13,337 - 66,972
June 30, 1998 35,503 20,555 32,756 88,814
For the year ended:
December 31, 1998 165,383 51,941 84,322 301,646
December 31, 1997 132,383 65,121 - 197,504
</TABLE>
<TABLE>
<CAPTION>
Farmer Mac I Delinquencies (4) (5)
--------------------------------------
Post-1996
Act Pre-1996 Act Total
----------- -------------- -------
<S> <C> <C> <C>
As of:
June 30, 1999 1.03% 1.44% 1.07%
March 31, 1999 1.59% 3.71% 1.81%
December 31, 1998 0.70% 3.77% 1.31%
September 30, 1998 0.85% 0.47% 0.76%
June 30, 1998 0.70% 0.74% 0.71%
</TABLE>
<TABLE>
<CAPTION>
Outstanding Guarantees (5)
---------------------------------------------------------------------------------------
Farmer Mac I
------------------------------------
Post-1996 Act Pre-1996 Farmer Held in
-----------------------
AMBS LTSC Act Mac II Total Portfolio (6)
-------- ---------- --------- ---------- --------- ---------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of:
June 30, 1999 $ 984,538 $ 375,915 $ 142,842 $ 367,250 $ 1,870,545 $ 1,046,303
March 31, 1999 946,011 390,520 157,710 345,927 1,840,168 800,669
December 31, 1998 621,169 - 174,783 336,914 1,132,866 535,290
September 30, 1998 524,527 - 189,169 323,608 1,037,304 479,828
June 30, 1998 462,987 - 203,230 313,668 979,885 454,904
</TABLE>
(footnotes to Supplemental Information tables)
(1)Includes loans guaranteed by Farmer Mac through swap transactions. Such
transactions totaled $73.6 million in first quarter 1999, $51.6 million in
fourth quarter 1998, and $32.8 million in second quarter 1998 (committed to
in first quarter 1998).
(2)Includes a guarantee transaction committed to in fourth quarter 1998 and
executed in first quarter 1999 covering a pool of loans totaling $407.7
million. The transaction, referred to as a long-term standby purchase
commitment (LTSC), obligates Farmer Mac to purchase loans within the pool at
par when they become four or more months delinquent. In exchange, Farmer Mac
receives an annual commitment fee on the outstanding balance of the pool over
the life of the loans.
(3)Includes AMBS issued and retained by Farmer Mac. Such transactions totaled
$45.4 million in second quarter 1999, $268.4 million in first quarter 1999,
$52.9 million in fourth quarter 1998 and $22.7 million in third quarter 1998.
(4)Includes loans 90 days or more past due, in foreclosure or in bankruptcy.
(5)Pre-1996 Act loans back securities that are supported by unguaranteed
subordinated interests representing approximately 10 percent of the balance
of the loans. Farmer Mac assumes 100 percent of the credit risk on post-1996
Act loans. Farmer Mac II loans are guaranteed by the U.S. Department of
Agriculture.
(6) Included in total outstanding guarantees.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The registrant is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
(a) Effective August 2, 1999, after obtaining the consent of the holders
of its Class C Non-Voting Common Stock, Farmer Mac amended its Bylaws
to eliminate the three-to-one preference with respect to dividends
and liquidation proceeds which had been applicable to each share of
Class C Non-Voting Common Stock relative to each share of Voting
Common Stock. In conjunction with this Bylaw amendment, Farmer Mac
effected a three-for-one split of its Class C Non-Voting Common
Stock.
(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 sold an aggregate
of 3,000 shares of Class A Common Stock to seven financial
institutions in the quarter ended June 30, 1999. The aggregate
offering price for the sales was approximately $51,100.
Pursuant to Farmer Mac's policy 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 April 13, 1999, Farmer Mac issued
an aggregate of 195 shares of its Class C Non-Voting Common Stock at
an issue price of $52.625 per share to the 10 Directors who elected to
receive such stock in lieu of their cash retainers.
On June 3, 1999, Farmer Mac issued an aggregate 9,008 shares of its
Class C Non-Voting Common Stock at an issue price of $66.25 per share
to the officers of Farmer Mac as incentive compensation.
On May 1, 1999, Farmer Mac issued 200 shares of its Class C Non-Voting
Common Stock at an issue price of $56.625 per share to one non-officer
employee of Farmer Mac as incentive compensation.
(d) Not applicable.
<PAGE>
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Stockholders.
A. Annual Meeting.
(a) Farmer Mac's Annual Meeting of Stockholders was held on June 3,
1999.
(b) See paragraph (c)(1) below.
(c) (1) Election of Directors - Class A Nominees
<TABLE>
<CAPTION>
Number of Shares
For Withheld
<S> <C> <C>
Hemingway 697,756 2,700
Johnson 697,356 3,100
Mulder 697,756 2,700
Nolan 697,356 3,100
Paul 697,756 2,700
</TABLE>
<TABLE>
<CAPTION>
Class B Nominees
Number of Shares
For Withheld
<S> <C> <C>
Graff 463,415 0
McCarthy 463,415 0
Nelson 463,415 0
Raines 463,315 100
Winters 463,315 100
</TABLE>
(2) Selection of Independent Auditors (Arthur Andersen LLP)
Class A Stockholders:
<TABLE>
<CAPTION>
Number of Shares
<S> <C>
For 691,006
Against 3,300
Abstain 6,150
</TABLE>
<PAGE>
Class B Stockholders:
<TABLE>
<CAPTION>
Number of Shares
<S> <C>
For 463,415
Against 0
Abstain 0
</TABLE>
(d) Not applicable.
B. Stockholder consent to Bylaws change.
(a) Pursuant to a solicitation dated June 1, 1999 requesting written
consent of holders of Class C Non-Voting Common Stock by July 15, 1999, the
Class C stockholders approved the amendment to Farmer Mac's Bylaws as described
in Item 2 above. A total of 2,358,069 votes were cast in favor of the amendment;
288,182 votes were cast against the amendment; the holders of 1,200 shares
returned their ballots and abstained from the vote; and the holders of 446,607
shares abstained from the vote by not returning their ballots.
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.
+* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1 to
Form 10-Q filed November 10, 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).
+* 10.1.2- 1996 Stock Option Plan (Form 10-Q filed November 10, 1996).
+** 10.1.3- Amended and Restated 1997 Stock Option Plan.
_______________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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 November 10, 1996).
+* 10.2.6- Amendment No. 6 dated as of August 7, 1997 to Employment
Contract between Henry D. Edelman and the Registrant
(Form 10-Q filed November 14,1997).
+* 10.2.7- Amendment No. 7 dated as of June 4, 1998 to Employment Contract
between Henry D. Edelman and the Registrant
(Form 10-Q filed August 14,1998).
+** 10.2.8- Amendment No. 8 dated as of June 3, 1999 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).
+* 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).
_______________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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 November 10, 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 November 10, 1996).
+* 10.3.9- Amendment No. 9 dated as of August 7, 1997 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Form 10-Q filed November 14, 1997).
+* 10.3.10- Amendment No. 10 dated as of June 4, 1998 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Form 10-Q filed August 14, 1998).
+** 10.3.11- Amendment No. 11 dated as of June 3, 1999 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 November 10, 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 November 10, 1996).
+* 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment
Contract between Thomas R. Clark and the Registrant (Form 10-Q
filed November 14, 1997).
+* 10.4.9 - Amendment No. 9 dated as of June 4, 1998 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-Q filed
August 14, 1998).
+** 10.4.10- Amendment No. 10 dated as of June 3, 1999 to Employment
Contract between Thomas R. Clark and the Registrant.
+* 10.5 - Employment Contract dated as of September 1, 1997 between
Tom D. Stenson and the Registrant (Previously filed as Exhibit
10.8 to Form 10-Q filed November 14, 1997).
_______________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 10.5.1 - Amendment No. 1 dated as of June 4, 1998 to Employment
Contract between Tom D. Stenson and the Registrant (Previously
filed as Exhibit 10.8.1 to Form 10-Q filed August 14, 1998).
+** 10.5.2 - Amendment No. 2 dated as of June 3, 1999 to Employment Contract
between Tom D. Stenson and the Registrant.
+* 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 November 10, 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 November 10, 1996).
+* 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Michael T. Bennett and the Registrant
(Form 10-Q filed November 14, 1997).
+** 10.6.9 - Amendment No. 9 dated as of June 3, 1999 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 November 10, 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 November 10, 1996).
+* 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Christopher A. Dunn and the Registrant (Form
10-Q filed November 14, 1997).
* 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).
* 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).
_______________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
(b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during the
quarter ended June 30, 1999.
<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
August 12, 1999
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>
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
August 12, 1999
By:
--------------------------------------------------
Henry D. Edelman
President and Chief Executive Officer
(Principal Executive Officer)
--------------------------------------------------
Nancy E. Corsiglia
Vice President - Treasurer and Chief Financial Officer
(Principal Financial Officer)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-Q
UNDER
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
<PAGE>
Exhibit Description
** 3.2 - Amended and restated Bylaws of the Registrant.
+** 10.1.3- Amended and Restated 1997 Stock Option Plan.
+** 10.2.8 - Amendment No. 8 dated as of June 3, 1999 to Employment Contract
between Henry D. Edelman and the Registrant.
+** 10.3.11- Amendment No. 11 dated as of June 3, 1999 to Employment Contract
between Nancy E. Corsiglia and the Registrant.
+** 10.4.10- Amendment No. 10 dated as of June 3, 1999 to Employment Contract
between Thomas R. Clark and the Registrant.
+** 10.5.2 - Amendment No. 2 dated as of June 3, 1999 to Employment Contract
between Tom D. Stenson and the Registrant.
+** 10.6.9 - Amendment No. 9 dated as of June 3, 1999 to Employment Contract
between Michael T. Bennett and the Registrant.
EXHIBIT 3.2
BY-LAWS OF THE
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
("FARMER MAC")
as amended by the Board of Directors
through July 30, 1999
<PAGE>
Table of Contents
ARTICLE I
NAME AND LOCATION OF OFFICES
Section 1. Name ....................................................1
Section 2. Principal Office and Other Offices ......................1
Section 3. Seal ....................................................1
Section 4. Service of Process. .....................................1
Section 5. Fiscal Year .............................................1
ARTICLE II
PURPOSES
Section 1. Statutory Purposes ..................................... 2
Section 2. Ancillary Purposes ..................................... 2
ARTICLE III
OFFICERS AND EMPLOYEES
Section 1. Number and Type .........................................2
Section 2. Appointment and Confirmation. ...........................2
Section 3. Removal .................................................3
Section 4. Vacancies ...............................................3
Section 5. The President ...........................................3
Section 6. The Secretary ...........................................3
Section 7. The Treasurer ...........................................4
Section 8. The Controller ..........................................4
Section 9. Employee Conduct ........................................4
Section 10. Outside or Private Employment ...........................4
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Powers ..................................................5
Section 2. Number and Type of Directors ............................6
Section 3. Meetings and Waiver of Notice ...........................6
Section 4. Meetings by Telephone ...................................6
Section 5. Quorum ..................................................7
Section 6. Action Without a Meeting ................................7
Section 7. Compensation ............................................7
<PAGE>
Section 8. Chairman and Vice Chairman ..............................7
Section 9. Standing Committees .....................................8
(a) Audit Committee ................................8
(b) Compensation Committee .........................9
(c) Executive Committee ............................9
(c) Finance Committee. .............................10
(d) Program Development Committee ..................10
(e) Public Policy Committee ........................11
Section 10. Ad Hoc Committees .......................................11
ARTICLE V
SHAREHOLDERS
Section 1. Special Meeting .........................................11
Section 2. Annual Meeting ..........................................11
Section 3. Notice ..................................................12
Section 4. Waiver of Notice ........................................12
Section 5. Record Date .............................................12
Section 6. Voting Lists ............................................12
Section 7. Quorum ..................................................13
Section 8. Proxies .................................................13
Section 9. Organization ............................................14
Section 10. Voting of Shares ........................................14
Section 11. Inspectors of Votes .....................................14
ARTICLE VI
SHARES OF STOCK
Section 1. Issuance and Conditions .................................15
Section 2. Common Stock ............................................15
Section 3. Redemption ..............................................16
Section 4. Dividends on Voting Common Stock and Non-Voting
Common Stock ............................................16
Section 5. Preferred Stock .........................................16
Section 6. Dividends, Redemption, Conversion of Preferred Shares ...16
Section 7. Preference on Liquidation ...............................17
Section 8. Purchase of Own Shares ..................................17
Section 9. Consideration for Shares ................................17
Section 10. Stated Capital ..........................................17
Section 11. No Preemptive Rights ....................................18
Section 12. Liability of Shareholders ...............................18
Section 13. Reclassifications, Etc. .................................18
<PAGE>
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates ............................................19
Section 2. Contents 19
Section 3. Transfer 20
Section 4. Records 20
ARTICLE VIII
INDEMNIFICATION
Section 1. Authorization ........................................... 21
Section 2. Procedure ............................................... 21
Section 3. Advance Payments ........................................ 22
Section 4. Other Rights to Indemnification ......................... 22
Section 5. Indemnification Insurance ............................... 22
ARTICLE IX
CONTRACTS, LOANS, CHECKS, DEPOSITS AND INVESTMENTS
Section 1. Contracts ............................................... 21
Section 2. Loans ................................................... 23
Section 3. Checks, Drafts, etc. .................................... 23
Section 4. Deposits .................................................23
Section 5. Investments ............................................. 23
ARTICLE X
FACSIMILE SIGNATURES...................... 23
ARTICLE XI
AMENDMENTS....................... 24
<PAGE>
BY-LAWS OF THE FEDERAL AGRICULTURAL MORTGAGE CORPORATION
As Amended Through July 30, 19991
ARTICLE I
NAME AND LOCATION OF OFFICES
Section 1. Name
The Corporation shall do business as the Federal Agricultural Mortgage
Corporation.
Section 2. Principal Office and Other Offices
The principal office of the Corporation shall be located in Washington,
D.C. The Corporation may establish other offices in such other places, within or
without the District of Columbia, as the Board of Directors shall, from time to
time, deem useful for the conduct of the Corporation's business.
Section 3. Seal
The seal of the Corporation shall be of such design as shall be
approved and adopted from time to time by the Board of Directors, and may be
affixed to any document by impression, by printing, by rubber stamp, or
otherwise.
Section 4. Service of Process(2)
The Corporate Secretary or any Assistant Secretary of the Corporation
shall be agents of the Corporation upon whom any process, notice or demand
required or permitted by law to be served upon the Corporation may be served.
Section 5. Fiscal Year(3)
The fiscal year of the Corporation shall end on the thirty-first day of
December of each year.
ARTICLE II
PURPOSES
Section 1. Statutory Purposes
The Corporation is organized pursuant to its governing statute, Title
VIII of the Farm Credit Act of 1971, as amended, to provide a secondary market
for agricultural real estate mortgage loans and to enhance the ability of
individuals in small rural communities to obtain financing for moderate-priced
homes and to undertake such other activities authorized by such Act as may be
necessary and appropriate to further the availability of funds for agricultural
real estate mortgage loans and housing in small rural communities.
Section 2. Ancillary Purposes
The Corporation is further organized to engage in such other related
activities that are not prohibited and as the Board of Directors shall from time
to time determine to be in the furtherance of its statutory purposes.
ARTICLE III
OFFICERS AND EMPLOYEES(4)
Section 1. Number and Type
The officers of the Corporation shall be a President, one or more Vice
Presidents (the number thereof to be determined by the Board of Directors), a
Secretary, a Treasurer, and a Controller, each of whom shall be appointed by the
Chairman of the Board of Directors subject to confirmation by resolution of the
Board of Directors. Such other officers and assistant officers as may be deemed
necessary may be appointed by the Chairman subject to confirmation by resolution
of the Board of Directors. Any of the above offices may be held by the same
person, except the offices of President and Secretary.
Section 2. Appointment and Confirmation
The initial officers of the Corporation shall be appointed and
confirmed at such time as may be appropriate. Thereafter, the officers shall be
appointed and confirmed annually at the first meeting of the Board of Directors
held after each annual meeting of the shareholders. If the selection of officers
is not held at such meeting, such selection shall be held as soon thereafter as
practicable. Each officer shall hold office until his successor shall have been
duly appointed and confirmed or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. Section 3. Removal
Any officer may be removed by a majority of the Board of Directors,
whenever in its judgment the best interests of the Corporation would be served
thereby, but such removal shall be without prejudice to the contract rights, if
any, of the persons so removed. Appointment or confirmation of an officer shall
not of itself create contract rights.
Section 4. Vacancies
A vacancy in an office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Chairman of the Board of
Directors, subject to confirmation by the Board of Directors at the meeting next
following the appointment, for the unexpired portion of the term.
Section 5. The President
The President shall be the principal executive officer of the
Corporation and, subject to the control of the Board of Directors, shall in
general supervise and control all of the business and affairs of the
Corporation. He may sign, singly or with the Secretary or any other proper
officer of the Corporation authorized by the Board of Directors, certificates
for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation, or shall
be required to be otherwise signed or executed, and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. The Secretary
The Secretary shall: (a) keep the minutes of the shareholders' and of
the Board of Directors' meetings in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the provisions of
these By-laws; (c) be the custodian of the corporate records and of the seal of
the Corporation and see that the Seal of the Corporation is affixed to all
documents, the execution of which on behalf of the Corporation under its seal is
duly authorized; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general control of the stock transfer books of the
Corporation; and (g) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
Section 7. The Treasurer
The Treasurer shall: (a) have charge and custody of and be responsible
for all funds and securities of the Corporation, receive and give receipts for
monies due and payable to the Corporation from any source whatsoever, and
deposit all such monies in the name of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance with a
resolution of the Board of Directors; and (b) in general, perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 8. The Controller
The Controller shall: (a) keep full and accurate accounts of all
assets, liabilities, commitments, receipts, disbursements, and other financial
transactions of the Corporation; (b) certify vouchers for payment by the
Treasurer or his designee, and designate, with the written concurrence of the
Chairman of the Board, such other officers, agents, and employees, severally,
who may so certify; and (c) in general, perform all the duties ordinarily
incident to the office of Controller and such other duties as may be assigned to
him by the Board of Directors or by the Chairman of the Board.
Section 9. Employee Conduct
No officer or employee shall engage, directly or indirectly, in any
personal business transaction or private arrangement for personal profit which
arises from or is based upon his official position or authority or upon
confidential information which he gains by reason of such position or authority,
and he shall reasonably restrict his personal business affairs so as to avoid
conflicts of interest with his official duties. No officer or employee shall
divulge confidential information to any unauthorized person, or release any such
information in advance of authorization for its release, nor shall he accept,
directly or indirectly, any valuable gift favor or service from any person with
whom he transacts business on behalf of the Corporation.
Section 10. Outside Private Employment
No officer or employee shall have any outside or private employment or
affiliation with any firm or organization incompatible with his concurrent
employment by the Corporation and he shall not accept or perform any outside or
private employment which the President of the Corporation determines will
interfere with the efficient performance of his official duties. Any officer or
employee who intends to perform services for compensation or to engage in any
business shall report his intention to do so to the President of the Corporation
prior to such acceptance or performance.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Powers
Except as otherwise provided in these By-Laws, the powers of the
Corporation shall be exercised by the Board of Directors, which shall have all
powers granted to it by the Corporation's governing statute, as may be amended
from time to time, and such other powers including, but not limited to, the
power:
a. to determine the general policies that shall govern the operations of
the Corporation;
b. to issue stock in the manner provided in Section 8.4 of TitleVIII of the
Farm Credit Act of 1971, as amended;
c. to adopt, alter and use a corporate seal, which shall be judicially
noted;
d. to provide for a president, one or more vice presidents, secretary,
treasurer, and such other officers, employees and agents, as may be necessary
and define their duties and compensation levels, all without regard to title 5,
United States Code, and require surety bonds or make other provisions against
losses occasioned by acts of the aforementioned persons;
e. to provide guarantees in the manner provided under Section 8.6 of Title
VIII of the Farm Credit Act of 1971, as amended;
f. to have succession until dissolved by law enacted by the Congress;
g. to prescribe such standards as may be necessary to carry out Title VIII
of the Farm Credit Act of 1971, as amended;
h. to enter into contracts and make payments with respect to the contracts;
i. to sue and be sued in its corporate capacity and to complain and defend
in any action brought by or against the Corporation in any state or federal
court of competent jurisdiction;
j. to make and perform contracts, agreements, and commitments with persons
and entities both inside and outside the Farm Credit System;
k. to acquire, hold, lease, mortgage or dispose of, at public or private
sale, real and personal property, purchase or sell any securities or
obligations, and otherwise exercise all the usual incidents of ownership of
property necessary and convenient to the business of the Corporation;
1. to conduct its business, carry on its operations, and have officers and
exercise the power granted by the governing statute in any state without regard
to any qualification or similar statute in any such state;
m. to accept gifts or donations of services, of property, real, personal or
mixed, tangible or intangible; and
n. to exercise such other incidental powers as are necessary to carry out
the powers, duties, and functions of the Corporation in accordance with the
governing statute.
Section 2. Number and Type of Directors
The Board of Directors shall consist of those directors appointed or
elected as provided in Section 8.2 of Title VIII of the Farm Credit Act of 1971,
as amended.
Section 3. Meetings and Waiver of Notice
The Board of Directors shall meet at the call of the Chairman or a
majority of its members.5 Notice shall be given to each member by the Secretary
at the direction of the calling authority. Such notice shall be by letter,
telegram, cable, or radiogram delivered for transmission not later than during
the third day immediately preceding the day of the meeting or by word of mouth,
telephone, or radio phone, received not later than during the second day
immediately preceding the day of the meeting. Notice of any such meeting may be
waived in writing signed by the person or persons entitled thereto either before
or after the time of the meeting. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Directors need be specified in the
notice or waiver of notice of the meeting.
Section 4. Meetings by Telephone
Any meeting of the Board of Directors or any meeting of a Board
committee may be held with the members of the Board or such committee
participating in such meeting by telephone or by any other means of
communication by which all such members participating in the meeting are able to
speak to and hear one another.
Section 5. Quorum
The presence, in person or otherwise, in accordance with Section 6 of
this Article, of eight of the then incumbent members of the Board of Directors
or of a majority of the then incumbent members of a Board committee, as
applicable, at the time of any meeting of the Board or such committee, shall
constitute a quorum for the transaction of business. The act of the majority of
such members present at a meeting at which a quorum is present shall be the act
of the Board of Directors or committee, as applicable, unless the act of a
greater number is required by these By-Laws. Members may not be represented by
proxy at any meeting of the Board of Directors or committee thereof.
Section 6. Action Without a Meeting
Any action required to be taken by the Board of Directors at a meeting,
or by a committee of the Board at a meeting can be taken without a meeting, if a
consent in writing, setting forth the actions so taken, is later signed by a
majority of the directors, or a majority of the members of the committee, as the
case may be. Such consent shall have the same effect as a majority vote of the
Board of Directors or committee, as the case may be. Written notice of any
action taken pursuant to this section by a majority of the directors, or members
of a committee, as the case may be, shall, within 10 days of such action, be
given to all directors or members of a committee not consenting to the action.
Section 7. Compensation(6)
Each director shall be paid such compensation as may be fixed from time
to time by resolution of the Board of Directors, and each director shall also be
reimbursed for his or her travel and subsistence expenses incurred while
attending meetings of the Board of Directors or committees thereof.
Section 8. Chairman and Vice Chairman(7)
Under the authority of the Corporation's governing statute, the
President of the United States shall designate one director from among those
directors appointed by the President as provided in Section 8.2 of the Farm
Credit Act of 1971, as amended, to be Chairman of the Board of Directors. The
Chairman shall preside over meetings of the Board of Directors.
The Board of Directors shall select a Vice Chairman from among the
directors appointed by the President of the United States who shall have all the
rights, duties and obligations of the Chairman at any time when the incumbent
Chairman is absent, unable or unwilling so to act, and at any time when there is
a vacancy in the office of Chairman. The Vice Chairman shall serve at the
pleasure of the Board and shall be selected no less frequently than annually for
a term expiring on December 31 of each year.
Section 9. Standing Committees(8)
The Standing Committees described in this Section shall have such
responsibilities and authority as are set forth herein, together with such other
responsibilities and authority as may from time to time be provided in
resolutions adopted by the Board of Directors. The Board of Directors shall
designate members of the Standing Committees from among its members.
(a) Audit Committee
The Audit Committee shall select and engage independent
accountants to audit the books, records and accounts of the Corporation
and its subsidiaries, if any, and to perform such other duties as the
Committee may from time to time prescribe. The Committee shall review
the scope of audits as recommended by the public accountants to ensure
that the recommended scope is sufficiently comprehensive. The Audit
Committee's selection of accountants shall be made annually in advance
of the Annual Meeting of Stockholders and shall be submitted for
ratification or rejection at such meeting.
The Audit Committee shall receive a special report from the
independent accountants, prior to the public accountants' report on the
published financial statements. The special report shall, among other
things, point out and describe each material item affecting the
financial statements of the Corporation which might in the opinion of
the independent public accountants receive, under generally accepted
accounting principles, treatment varying from that proposed for such
statements. The Committee shall decide in its discretion upon the
treatment to be accorded such items and shall take such other action in
respect of the special report as the Committee may deem appropriate. A
copy of the special report shall be transmitted to the Compensation
Committee, together with the Audit Committee's decision.
(b) Compensation Committee
The Compensation Committee shall make recommendations to the
Board on the salaries and benefit plans of all corporate directors and
officers. The Committee shall recommend a framework to the Board for
all compensation plans and shall have authority to act within the
framework approved by the Board. The Committee shall have exclusive
jurisdiction on behalf of the Corporation to make recommendations to
the full Board to approve, disapprove, modify or amend all pla ns to
compensate employees eligible for incentive compensation.
The Compensation Committee shall review and approve, prior to
implementation, any employee benefit plan and any amendment or
modification thereof submitted to the Board to the extent such plan or
amendment or modification affects employees under its jurisdiction.
(c) Executive Committee(9)
The Executive Committee shall, during the intervals between
meetings of the Board, have and may exercise the powers of the Board,
other than those assigned to the Audit and Compensation Committees, and
except that it shall not have the authority to take any of the
following actions:
o the submission to stockholders of any action requiring
stockholders'authorization;
o the filling of vacancies on the Board of Directors or on the
Executive Committee;
o the fixing of compensation of directors for serving on
the Board or on the Executive Committee;
o the removal of any director, the President or any Vice
President,except that vacancies in established management
positions may be filled subject to ratification by the Board
of Directors;
o the amendment or repeal of the By-Laws or the adoption of
new by-laws;
o the amendment or repeal of any resolution of the Board which,
by its terms, is notso amendable or repealable; o the
declaration of dividends; and o any action which the
Chairman or Vice Chairman of the Board of Directors (in the
event that the Vice Chairman is the Chairman of the Board
due to the absence, inability or unwillingness of the
Chairman so to act) or the President shall, by written
instrument filed with the Secretary, designate as a matter
which should be considered by the Board of Directors.
The Executive Committee shall include the Chairman of the
Board (or the Vice Chairman, who shall be deemed a member of the
Committee at any time when the incumbent Chairman is absent, unable or
unwilling so to act), who shall be the Chairman of the Committee, and
one representative from each of the Corporation's two elected classes
of directors. The designation of such Committee and the delegation
thereto of authority shall not relieve any director of any duty he or
she owes to the Corporation. The Executive Committee shall meet at the
call of its chairman or a majority of its members and all three members
of the Committee shall constitute a quorum. The action of the majority
of the members of the Committee present at a duly convened meeting
shall be the action of the Committee. Members of the Committee may not
be represented by proxy at any meeting of the Committee. In connection
with each regular meeting of the Board of Directors, the minutes of all
meetings of the Executive Committee since the last meeting of the Board
shall be distributed to the Board, and the Board shall take such
action, if any, as the Board may deem appropriate, to approve, alter or
rescind actions, if any, previously taken by the Committee, provided
that rights or acts of third parties vested or taken in reliance on
such action prior to any such alteration or rescission shall not be
adversely affected thereby.
(d) Finance Committee
The Finance Committee shall be responsible for determining the
financial policies of the Corporation and managing the Corporation's
financial affairs, except those financial policies and affairs that are
assigned to the Audit and Compensation Committees.
The guarantee fee policies of the Corporation shall be
reviewed and approved by the Finance Committee and recommended to the
Board for its approval. All capital expenditures of the Corporation
shall be approved by the Committee, except that it may authorize the
President to approve expenditures which do not involve the Corporation
in a new line of business. All action taken by the Finance Committee
shall be reported to the Board and shall be subject to revision by the
Board, provided that no acts or rights of third parties shall be
affected thereby.
(e) Program Development Committee(10)
The Program Development Committee shall have primary
responsibility for reviewing and approving all policy matters relating
to changes, additions or deletions to the Securities Guide, including
the forms and appendices thereto and any other forms or documents used
in the Corporation's programs. The Committee shall make recommendations
to the Board with respect to commencement of new programs and
modification or discontinuance of existing programs. (f) Public Policy
Committee(11)
The Public Policy Committee shall consider matters of public
policy referred to it by the Board or the Chairman including: (i) the
Corporation's relationship with and policies regarding Borrowers; (ii)
the Corporation's relationship with and policies regarding Congress and
governmental agencies and instrumentalities; and (iii) matters which
generate actual or apparent conflicts of interest between the
Corporation and one or more of its directors. The Committee shall
report the outcome of its evaluation of matters under preceding clause
(iii) within a reasonable time after reference is made.
Section 10. Ad Hoc Committees(12)
The Board of Directors may, by resolution adopted by a majority of its
members, designate from among its members one or more ad hoc committees, each of
which to the extent provided in the resolution and in these By-Laws shall have
and may exercise all the authority of the Board of Directors. No such ad hoc
committee shall have the authority of the Board of Directors in reference to any
powers reserved to the full Board of Directors by the resolution or these
By-Laws.
ARTICLE V
SHAREHOLDERS
Section 1. Special Meeting
Special meetings of the shareholders shall be held upon the call of
either the Chairman or a majority of the directors of the Corporation, and shall
be called by the Chairman upon the written request of holders of at least
one-third of the shares of the Corporation having voting power. A special
meeting may be called for any purpose or purposes for which shareholders may
legally meet, and shall be held, within or without the District of Columbia, at
such place as may be determined by the Chairman or a majority of the directors
of the Corporation, whichever shall call the meeting.
Section 2. Annual Meeting
An annual meeting of the shareholders shall be held each year at such
date and at such time as designated by the Board of Directors. At the meeting,
the shareholders entitled to vote shall elect directors and transact such other
business as may properly be brought before the meeting.
Section 3. Notice
Written or printed notice stating the place, day and hour of any
meeting and, in the case of a special meeting, the purpose for which the meeting
is called, shall be delivered not less than 10 nor more than 50 days before the
date of the meeting, either personally or by mail, by or at the direction of the
Chairman of the Board, or the Secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail with postage thereon prepaid, addressed to the shareholder at his
address as it appears on the stock transfer books of the Corporation or such
other address as the shareholder has in writing instructed the Secretary.
Section 4. Waiver of Notice
Attendance by a shareholder at a shareholders' meeting, whether in
person or by proxy, without objection to the notice or lack thereof, shall
constitute a waiver of notice of the meeting. Any shareholder may, either before
or after the time of the meeting, execute a waiver of notice of such meeting.
Section 5. Record Date
For the purpose of determining shareholders entitled to notice or to
vote at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of Directors shall fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than 60 days, in the case of a meeting of
shareholders, not less than 10 days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If the Board
of Directors fails to designate such a date, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividends is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a date is set for the
determination of shareholders entitled to vote at any meeting of shareholders,
such determination shall apply to any adjournment thereof.
Section 6. Voting Lists
The officer or agent having charge of the stock transfer books for
shares of the Corporation shall make a complete record of the shareholders
entitled to vote at each meeting of the shareholders or any adjournment thereof,
arranged in alphabetical order, with the address and the number of shares held
by each. Such officer or agent shall also prepare two separate lists of such
shareholders, one indicating in alphabetical order which shareholders are
financial institutions not members of the Farm Credit System and another
indicating in alphabetical order which shareholders are member institutions of
the Farm Credit System. Such records shall be produced and kept open at the time
and place of the meeting and shall be subject to inspection by any shareholder
during the whole time of the meeting for the purposes thereof.
Section 7. Quorum
A majority of the outstanding shares of the Corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn a
meeting from time to time without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. Shares of its own stock belonging to
the Corporation shall not be counted in determining the total number of
outstanding shares at any given time.
Section 8. Proxies
At all meetings of shareholders, a shareholder entitled to vote may
vote by proxy executed in writing by the shareholder or by its duly authorized
attorney in fact. Shares standing in the name of another corporation may be
voted by such officer, agent or proxy as the by-laws of such corporation may
prescribe, or, in the absence of such provisions, as the board of directors of
such corporation may determine. All proxies shall be filed with the Secretary of
the Corporation before or at the time of the meeting, and shall be revocable, if
such revocation be in writing, until exercised. No proxy shall be valid after
eleven months from the date of its executions unless otherwise provided in the
proxy.
The Board of Directors may solicit proxies from shareholders to be
voted by such person or persons as shall be designated by resolution of the
Board of Directors. The Corporation shall assume the expense of solicitations
undertaken by the Board.
Any solicitation of proxies by the Corporation shall contain the names
of all persons the Corporation proposes to nominate for directorships to be
filled at the next meeting, their business addresses, and a brief summary of
their business experience during the last five years. Each proxy solicitation
shall be accompanied by a copy of the most recent annual report of the
Corporation which report, to the satisfaction of the Board of Directors, shall
reasonably represent the financial situation of the Corporation as of the time
of its preparation.
If any shareholder entitled to vote at a meeting of shareholders shall
seek a list of shareholders for the purpose of soliciting proxies from any other
shareholders, the Corporation may, at its option, either (a) provide the
soliciting shareholder with a complete and current list containing the names of
all shareholders of the Corporation entitled to vote at such meeting; and their
addresses as they appear on the transfer books of the Corporation; or (b) mail
such proxy solicitations on behalf of the soliciting shareholders, upon being
furnished the material to be mailed and the reasonable cost of the mailing.
Section 9. Organization
Meetings of the shareholders shall be presided over by the Chairman of
the Board of Directors. The Secretary of the Corporation shall act as secretary
of every meeting and, if the Secretary is not present, the meeting shall choose
any person present to act as secretary of the meeting.
Section 10. Voting of Shares
Except as provided in this Section, at every meeting of the
shareholders, every holder of common stock entitled to vote on a matter coming
before such meeting shall be entitled to one vote for each share of common stock
registered in its name on the stock transfer books of the Corporation at the
close of the record date.
At each election of directors, the Chairman of the meeting shall inform
the shareholders present of the persons appointed by the President of the United
States to be the appointed directors of the Corporation. The shareholders
entitled to vote for the election of directors which are institutions of the
Farm Credit System shall constitute a single class and shall then proceed to
elect five directors. Following the election of directors by shareholders which
are institutions of the Farm Credit System, the shareholders entitled to vote
for the election of directors which are financial institutions and are not
institutions of the Farm Credit System shall constitute a single class and shall
proceed to elect five directors.
Every holder of common stock entitled to vote for the election of
directors shall have the right to cast the number of votes that is equal to the
product of the number of shares owned by it multiplied by the number of
directors to be elected of the class for which it may vote, and it may cast all
such votes for one person or may distribute them evenly or unevenly among any
number of persons not greater than the number of such directors of such class to
be elected, at its option. Shares of its own stock belonging to the Corporation
shall not be eligible to vote on any matter.
Section 11. Inspectors of Votes
The Board of Directors, in advance of any meeting of shareholders, may
appoint one or more Inspectors of Votes to act at the meeting or any adjournment
thereof. In case any person so appointed resigns or fails to act, the vacancy
may be filled by appointment by the Chairman of the meeting. The Inspectors of
Votes shall determine all questions concerning the qualification of voters, the
validity of proxies, the acceptance or rejection of votes and, with respect to
each vote by ballot, shall collect and count the ballots and report in writing
to the secretary of the meeting the result of the vote. The Inspectors of Votes
need not be shareholders of the Corporation. No person who is an officer or
director of the Corporation, or who is a candidate for election as a director,
shall be eligible to be an Inspector of Votes.
ARTICLE VI
SHARES OF STOCK
Section 1. Issuance and Conditions
The Board of Directors shall have the power in accordance with the
provisions of the governing statute to authorize the issuance of voting common,
non-voting common and preferred shares of stock. The Board of Directors may by
resolution impose a stock purchase requirement as a prerequisite to
participation in any program of the Corporation. Any stock purchase requirement
shall not apply to any participant who is prohibited by law from acquiring stock
of the Corporation, provided such participant undertakes to make such purchase
when such legal restrictions are alleviated, or to such otherwise eligible
participants as the Board may by resolution provide.
Section 2. Common Stock
The Corporation shall have voting common stock having such par value as
may be fixed by the Board of Directors, which may only be issued to institutions
which are authorized to be issued such shares pursuant to Title VIII of the Farm
Credit Act of 1971, as amended.
The Corporation may issue non-voting common stock having such par value
as may be fixed by the Board of Directors, which may be issued without
limitations as to the status of the holders thereof.(13)
Except as otherwise provided in these By-Laws, the powers, preferences
and relative and other special rights and the qualifications, limitations and
restrictions applicable to all shares of common stock, whether voting common
stock or non-voting common stock, shall be identical in every respect.
Except as provided in this Section, the voting common stock and the
non-voting common stock of the Corporation shall be fully transferable, except
that, as to the Corporation, they shall be transferred only on the books of the
Corporation.
Section 3. Redemption
Whenever the Corporation shall determine that any shares of the voting
common stock of the Corporation are held by a person, including a partnership,
joint venture, trust, corporation or any other association, not eligible to
acquire such shares under the provisions of Title VIII of the Farm Credit Act of
1971, as amended, the Corporation shall notify such person in writing that such
shares are to be disposed of to a person eligible to acquire such shares within
a period of not more than 30 days. If the Corporation determines that the shares
have not been transferred within 30 days of such notice, the Corporation may
redeem such shares at the lesser of the fair market value thereof or the book
value thereof at the date established for such redemption.
The power to redeem voting common stock found to be held by ineligible
persons granted by this Section shall not be deemed to limit the right of the
Corporation, at its discretion, to pursue any other lawful remedy against such
ineligible person.
Section 4. Dividends on Voting Common Stock and Non-Voting Common
Stock(14)
To the extent that income is earned and realized, the Board of
Directors may from time to time declare and the Corporation shall pay, dividends
on the voting common stock and the non-voting common stock, except that no such
dividends shall be payable with respect to any share that has been called for
redemption after the date established for such redemption. No dividend shall be
declared or paid on any share of voting common stock or non-voting common stock
at any time when any dividend is due on the shares of preferred stock and has
not been paid.
Section 5. Preferred Stock
The Corporation may issue shares of preferred stock having such par
value, and such other powers, preferences and relative and other special rights,
and qualifications, limitations and restrictions applicable thereto, as may be
fixed by the Board of Directors. Such shares shall be freely transferable,
except that, as to the Corporation, such shares shall be transferred only on the
books of the Corporation.
Section 6. Dividends, Redemption, Conversion of Preferred Shares
The holders of the preferred shares shall be entitled to such rate of
cumulative dividends, and such shares shall be subject to such redemption or
conversion provisions, as may be provided for at the time of issuance. Such
dividends shall be paid out of the net income of the Corporation, to the extent
earned and realized.
Section 7. Preference on Liquidation(15)
In the event of any liquidation, dissolution, or winding up of the
Corporation's business, the holders of shares of preferred stock shall be paid
in full at par value thereof, plus all accrued dividends, before the holders of
the voting common stock and non-voting common stock receive any payment.
Section 8. Purchase of Own Shares
The Corporation shall have the right, pursuant to resolution by the
Board of Directors, to purchase, take, receive or otherwise acquire its own
shares, but purchases, whether direct or indirect, shall be made only to the
extent of unreserved and unrestricted earned or capital surplus available
therefor.
Section 9. Consideration for Shares
The Corporation shall issue shares of stock for such consideration,
expressed in dollars, but not less than the par value thereof, as shall be fixed
from time to time by the Board of Directors. That part of the surplus of the
Corporation which is transferred to stated capital upon issuance of shares as a
share dividend shall be deemed to be the consideration for the shares so issued.
The consideration for the issuance of shares may be paid, in whole or
in part, in cash or other property acceptable to the Board of Directors, except
that a promissory note shall not constitute payment or partial payment for the
issuance of shares of the Corporation.
Section 10. Stated Capital
The consideration received upon the issuance of any share of stock
shall constitute stated capital to the extent of the par value of such shares
and the excess, if any, of such consideration shall constitute capital surplus.
The stated capital of the Corporation may be increased from time to time by
resolution of the Board of Directors directing that all or a part of the surplus
of the Corporation be transferred to stated capital. The Board of Directors may
direct that the amount of the surplus so transferred shall be deemed to be
stated capital in respect of any designated class of shares.
The Board of Directors may, by resolution from time to time, reduce the
stated capital of the Corporation but only in the amount of the aggregate par
value of any shares of the Corporation which shall have been reacquired and
canceled. Any surplus created by virtue of a reduction of stated capital shall
be deemed to be capital surplus.
Section 11. No Preemptive Rights
No holder of the shares of the Corporation of any class, now or
hereafter authorized, shall as such holder have any preemptive or preferential
rights to subscribe to, purchase, or receive any shares of the Corporation of
any class, now or hereafter authorized, or any rights or options for any such
shares or any rights or options to subscribe to or purchase any such shares or
other securities convertible into or exchangeable for or carrying rights or
options to purchase shares of any class or other securities, which may at any
time be issued, sold or offered for sale by the Corporation or subjected to the
rights or options to purchase granted by the Corporation.
Section 12. Liability of Shareholders
A holder of shares of the Corporation shall be under no obligation to
the Corporation with respect to such shares other than the obligation to pay to
the Corporation the full consideration for which such shares were or are to be
issued.
Any person becoming a transferee of shares in good faith and without
notice or knowledge that the full consideration thereof had not been paid shall
not be personally liable to the Corporation for any unpaid portion of such
consideration.
Section 13. Reclassifications, Etc.(16)
No class of outstanding voting or non-voting common stock may be
subdivided, combined, reclassified or otherwise changed unless contemporaneously
therewith all other classes of outstanding common stock are subdivided,
combined, reclassified or otherwise changed in the same proportion and in the
same manner.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates
The interest of each shareholder of the Corporation shall be evidenced
by certificates representing shares of stock of the Corporation, certifying the
number of shares represented thereby, and shall be in such form not inconsistent
with the governing statute of the Corporation as the Board of Directors may from
time to time prescribe.
The certificates of stock shall be signed by the Chairman of the Board of
Directors or the President and by the Secretary or Assistant Secretary and
sealed with the corporate seal or an engraved or printed facsimile thereof.(17)
The signatures of such officers upon a certificate may be facsimile if the
certificate is manually signed on behalf of a transfer agent or a registrar
other than the Corporation itself or one of its employees. In the event that any
officer who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate is issued, it
may be issued by the Corporation with the same effect as if such officer had not
ceased to be such at the time of the issue.
Each certificate or share shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be canceled, and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that in the case of a
lost, destroyed or mutilated certificate, a new certificate may be issued upon
such terms and with indemnity to the Corporation as the Board of Directors may
prescribe.
Section 2. Contents
Each certificate representing shares shall state:
a. That the Corporation is organized pursuant to an Act
of Congress;
b. The name of the person to whom issued;
c. The number and class of shares, and the designation
of the series, if any, which such certificate
represents;
d. The par value of each share represented
by such certificate;
e. The provisions by which such shares may be
redeemed; and
f. That the shares represented shall not have any
preemptive rights to purchase unissued or
treasury shares of the Corporation.
Each certificate representing shares of preferred stock shall state
upon the face thereof the annual dividend rate for such shares, and shall state
upon the reverse side thereof the powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions applicable
to such shares of preferred stock.
No certificate shall be issued for any share until such share is fully
paid.
Section 3. Transfer
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of the authority to
transfer, or by his attorney thereto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, and on surrender for
cancellation of the certificate for such shares.
The person in whose name shares stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
Section 4. Records
The Corporation shall keep at its principal place of business, or at
the office of its transfer agent or registrar, a record of its shareholders,
giving the names and addresses of all shareholders and the number of shares held
by each. Any person who shall be the holder of at least five percent of the
aggregate number of shares of any class of common stock of the Corporation shall
upon written demand stating the purpose therefor, have the right to examine, in
person, or by agent or attorney, duly authorized in writing, at any reasonable
time or times, for any proper purpose, the Corporation's record of shareholders
and minutes of meetings of the shareholders and the Board of Directors, and to
make extracts therefrom.
ARTICLE VIII
INDEMNIFICATION(18)
Section 1. Authorization
The Corporation shall, to the extent permitted by law, indemnify any
person who was or is a party, whether as a plaintiff acting with the approval of
the Board of Directors or as a defendant, or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. Any such person shall be indemnified by the Corporation to
the extent he or she is successful in the action, suit or proceeding. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
Section 2. Procedure
Any indemnification under this Article shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification is proper in the circumstances because the officer, director,
employee or agent has met the applicable standard of conduct set forth in this
Article. Such determination shall be made by a majority vote of the members of
the Board of Directors who were not parties to such action, suit or proceeding.
If all members of the Board of Directors were parties to such action, suit or
proceeding, such determination shall be made either (a) by legal counsel or (b)
by the shareholders at the next meeting of shareholders. In any case under this
Article, the Board or shareholders are authorized to obtain the opinion of
independent legal counsel.
Section 3. Advance Payments
Expenses, including attorneys' fees, incurred in defending a civil,
criminal, administrative or investigative action, suit or proceeding, whether
formal or informal, shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in section 2 of this Article upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount only if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation.
Section 4. Other Rights to Indemnification
The indemnification provided in this Article shall not be deemed
exclusive of any other rights to which the director, officer, employee or agent
may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors or otherwise. The indemnification provided by this
Article shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 5. Indemnification Insurance
The Corporation, pursuant to a resolution of the Corporation, may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or her in any such capacity or
arising out of his status as such whether or not the Corporation would have the
power to indemnify him or her against such liability under the provisions of
this Article.
ARTICLE IX
CONTRACTS, LOANS, CHECKS, DEPOSITS AND STATEMENTS
Section 1. Contracts
The Board of Directors may authorize the Chairman or officers of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.19
Section 2. Loans
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
Section 3. Checks, Drafts, etc.
All checks, drafts or other orders for the payment of money, notes or
other evidence of indebtedness issued in the name of the Corporation shall be
signed by the Chairman or officers of the Corporation and in such manner as
shall from time to time be determined by a resolution of the Board of
Directors.20
Section 4. Deposits
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation at such banks, trust
companies or other depositories as the Board of Directors may select.
Section 5. Investments
The Board of Directors may authorize the Chairman orofficers of the
Corporation to invest the funds of the Corporation in such securities and
in such manner as shall from time to time be determined by a resolution of
the Board of Directors.21
ARTICLE X
FACSIMILE SIGNATURES
The Board of Directors may by resolution authorize the use of facsimile
signatures in lieu of manual signatures.
ARTICLE XI
AMENDMENTS
These By-Laws may be altered, amended or repealed and new by-laws,
consistent with the governing statute, may be adopted by the majority vote of
the Board of Directors.
- --------
(1) These by-laws were originally adopted by the interim Board of Directors at
its second meeting on July 15, 1988, several months after the Corporation's
enabling statute was signed into law. They have since been amended by
resolutions of the Board of Directors on: November 17, 1988; April 7, 1989;
November 10, 1989; April 13, 1990; September 6, 1990; August 11, 1994;
March 9, 1995; May 11, 1995; March 11, 1996; November 14, 1996; December
19, 1996; and April 12, 1999.
(2) This section was added by resolution of April 7, 1989.
(3) This section was added by resolution of April 7, 1989.
(4) This article was added by resolution of April 7, 1989.
(5) This sentence was modified by resolution of November 10, 1989 to delete the
word "interim" before the phrase "Board of Directors."
(6) Section 7 originally was captioned "Conflicts of Interest" and specified
the circumstances under which a transaction between the Corporation and one
or more of its directors or an entity in which one or more of its directors
were directors or officers could be deemed not to be a conflict of interest
if certain specified conditions were met. This section was repealed by
resolution of September 6, 1990 and the subsequent "Compensation" section
was renumbered Section 7.
(7) Following the removal of the Corporation's first Board Chairman by the
President of the United States in July 1994, this section was added by
resolution of August 11, 1994 to provide for the existence of a permanent
Vice Chairman to perform the duties of the Chairman in the absence of a
Presidentially appointed Chairman.
(8) This section, with the exception of subsection (c), was added by resolution
of September 6, 1990; the mission statements for the Audit, Compensation
and Finance Committees were adopted by the Board by resolutions of July 14,
1989, but not formally incorporated into the by-laws until September 6,
1990.
(9) This subsection was added by resolution of March 9, 1995.
(10) This subsection was added by resolution of April 13, 1990; a previously
existing committee, known as the "Shareholder / Government Relations
Committee," was terminated also by resolution of April 13, 1990.
(11) This subsection was added by resolution of April 13, 1990.
(12) This section was modified by resolution of September 6, 1990 to add the
words "ad hoc" in the section heading and in the second and fourth lines
before the word "committees" and "committee," respectively.
(13) By resolution of March 11, 1996, a second sentence was added to this
paragraph providing that the aggregate number of shares of non-voting
common stock outstanding could not at any time exceed one 110% of the
aggregate number of shares of voting common stock then outstanding. By
resolution of November 14, 1996, this sentence was eliminated in connection
with the offering in November 1996 of additional shares of non-voting
common stock.
(14) By resolution of November 17, 1988, a second paragraph was added to this
section providing that the ratio of dividends paid on the non-voting common
stock relative to those paid on the voting common stock would be 3-to-1 and
specifying that that ratio could be decreased only by the affirmative vote
of the holders of two-thirds of the outstanding non-voting stock. By
resolution of April 12, 1999, that provision was deleted, subject to the
requisite vote of the non-voting stockholders, which was obtained as of
July 15, 1999.
(15) By resolution of November 17, 1988, a second paragraph (labeled "(b)") was
added to this section providing that the ratio of distributions on the
non-voting common stock relative to distributions on the voting common
stock would be 3-to-1 and specifying that that ratio could be decreased
only by the affirmative vote of the holders of two-thirds of the
outstanding non-voting stock. By resolution of April 12, 1999, that
paragraph was deleted, subject to the requisite vote of the non-voting
stockholders, which was obtained as of July 15, 1999.
(16) This section was added by resolution of April 12, 1999.
(17) By resolution of December 19, 1996, the phrase "Chairman of the Board of
Directors or" was inserted in this sentence.
(18) By resolution of May 11, 1995, the following changes were made to this
article: the phrase ", whether as a plaintiff acting with the approval of
the Board of Directors or as a defendant," was inserted in the second line
of Section 1; the phrase "and whether formal or informal," was inserted in
the fifth line of section 1; the sentence "Any such person shall be
indemnified by the Corporation to the extent he or she is successful in the
action, suit or proceeding" was inserted as the new penultimate sentence of
the section 1; the phrase "a majority vote of the members of" was inserted
in the second sentence of section 2 and the phrase "by a majority vote of a
quorum consisting of directors" was deleted after "Board of Directors" in
that same sentence; the phrase "criminal, administrative or investigative
action, suit or proceeding, whether formal or informal, shall" was
substituted for the phrase "criminal action, suit or proceeding, may" in
section 3; and the phrase "only if" was substituted for "unless" and the
word "not" was inserted in the last line of that section.
(19) By resolution of November 10, 1989, the phrase "officers of the
Corporation" was inserted in lieu of the phrase "agent or agents" in the
first line. 20 By resolution of November 10, 1989, the phrase "officers of
the Corporation" was inserted in lieu of the phrase "agent or agents" in
the third line. 21 By resolution of November 10, 1989, the phrase "officers
of the Corporation" was inserted in lieu of the phrase "agent or agents" in
the first line.
EXHIBIT 10.1.3
Amended and Restated 1997 Stock Option Plan.
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 3,750,000 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 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 composite 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 composite 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 composite closing price quotation for the next
preceding day on which a composite closing price quotation is available.
(c) In connection with establishing the level of Option awards under
the Plan, the value of an Option shall be calculated by an independent third
party acceptable to the Committee (the "Compensation Consultant") and shall be
based on the "Black-Scholes" method of option valuation, as determined by the
Compensation Consultant. In calculating the Black-Scholes value of an Option,
the average of the composite closing prices of the Company's Common Stock as
reported by NASDAQ, or such other market on which the Common Stock may be listed
or traded, as determined by the Committee, for the 90-day period preceding such
calculation shall be the used by the Compensation Consultant as the "current
market price" and "exercise price" inputs to such Black-Scholes calculation,
irrespective of the Fair Market Value of a share of Common Stock on the date of
calculation. Notwithstanding the foregoing, the Exercise Price of any Option
awarded under the Plan shall be the Fair Market Value of one share of Common
Stock on the date the Option is granted, as provided in subsection (b) above.
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
(a) 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.
(b) Notwithstanding the foregoing, the Committee may, in its
discretion, authorize all or a portion of the Options to be granted to an
Optionee to be transferred to: (i) the spouse, siblings, parents, children or
grandchildren of the Optionee ("Immediate Family Members"); (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members; or (iii) a
partnership in which such Immediate Family Members are the only partners;
provided, however, that (x) there may be no consideration for any such transfer,
(y) the Award Agreement pursuant to which the Options are granted must expressly
provide for transferability in a manner consistent with this Section 8 and (z)
subsequent transfers of transferred Options shall be prohibited, except those in
accordance with the subsection (a) above. Following transfer, any such Options
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that the term "Optionee" shall be deemed
to refer to the transferee.
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; and provided, further, that any
unvested Option or Options shall immediately vest upon the death of a
Participant while employed by the Company and may be exercised as provided in
this Section 9(c).
(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, if unvested, immediately vest
and 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 condition that (in the opinion of an independent medical
consultant) has rendered the Participant mentally or physically incapable of
performing the services required to be performed by the Participant and has
resulted in the termination of the directorship or employment relationship, as
the case may be.
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
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 fifth
anniversary of the date of grant (the "Option Termination Date"), unless
terminated earlier as follows:
(i) If a Director's service as a member of the Board
terminates for any reason other than death or Cause (as defined below),
the Director may for a period of up to two years after such termination
(but not later than the Option Termination Date) 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 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.
(iii) If a Director dies while a member of the Board or within
24 months after termination of service as a Director as described in
clause (i) 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 (but not later than the Option Termination Date) 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; and provided, further,
that any unvested Option or Options shall immediately vest upon the
death of a Director while 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.
<PAGE>
(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
Third Amendment: February 5, 1998
Fourth Amendment: June 4, 1998
Fifth Amendment: April 12, 1999
Sixth Amendment: August 2, 1999
EXHIBIT 10.2.8
AMENDMENT NO. 8 TO EMPLOYMENT CONTRACT
Agreed, as of the 3rd day of June 1999, 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, Amendment No. 5 to Employment Contract
dated as of June 13, 1996, Amendment No. 6 to Employment Contract dated as of
August 7, 1997 and Amendment No. 7 to Employment Contract dated as of June 4,
1998 (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,
2003 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 Ninety-Six Thousand Seven Hundred and
Twenty Dollars ($396,720) 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, 2003 or two years from the date of notice of such
termination.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: /s/ C. Eugene Branstool /s/ Henry D. Edelman
------------------------- ----------------------
Chairman of the Board
EXHIBIT 10.3.11
AMENDMENT NO. 11 TO EMPLOYMENT CONTRACT
Agreed, as of the 3rd day of June 1999, 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, Amendment No. 8 to Employment Contract
dated as of June 13, 1996, Amendment No. 9 to Employment Contract dated as of
August 7, 1997 and Amendment No. 10 to Employment Contract dated as of June 4,
1998 (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,
2002 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 Two Hundred Ten Thousand Nine Hundred and Fifty-One
Dollars ($210,951) 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, 2002, or two years from the date of notice of such termination.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: /s/ Henry D. Edelman /s/ Nancy E. Corsiglia
------------------------ -------------------------
President
EXHIBIT 10.4.10
AMENDMENT NO. 10 TO EMPLOYMENT CONTRACT
Agreed, as of the 3rd day of June 1999, 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, Amendment No. 7 to Employment Contract dated as of June 13, 1996,
Amendment No. 8 to Employment Contract dated as of August 7, 1997 and Amendment
No. 9 to Employment Contract dated as of June 4, 1998 (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 your employment shall continue until June 1,
2002 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 Two Hundred Ten Thousand Nine Hundred and Fifty-One
Dollars ($210,951) 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, 2002, or two years from the date of notice of such termination.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: /s/ Henry D. Edelman /s/ Thomas R. Clark
----------------------------------- ---------------------------
President
EXHIBIT 10.5.2
AMENDMENT NO. 2 TO EMPLOYMENT CONTRACT
Agreed, as of the 3rd day of June 1999, between the Federal
Agricultural Mortgage Corporation (FAMC) and Tom D. Stenson (the employee), that
the existing employment contract between the parties hereto, dated as of
September 1, 1997, as amended by Amendment No. 1 to Employment Contract dated as
of June 4, 1998 (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,
2001 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 Two Hundred Eight Thousand Three Hundred Sixty
Dollars ($208,360) per year, payable in arrears on a bi-weekly basis.
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,
2001, or two years from the date of notice of such termination.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
By: /s/ Henry D. Edelman /s/ Tom Stenson
___________________________________ ____________________
President
EXHIBIT 10.6.9
AMENDMENT NO. 9 TO EMPLOYMENT CONTRACT
Agreed, as of the 3rd day of June 1999, 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, Amendment No. 6 to
Employment Contract dated as of June 13, 1996, Amendment No. 7 to Employment
Contract dated as of August 7, 1997, and Amendment No. 8 to Employment Contract
dated as of June 4, 1998 (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,
2002 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 Two Hundred Eleven Thousand Two Hundred and
Ninety-One Dollars ($211,291) per year, payable in arrears on a bi-weekly basis.
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,
2002, or two years from the date of notice of such termination.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage Corporation Employee
/s/ Henry D. Edelman /s/ Michael T. Bennett
By: _______________________________ ________________________
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Jun-30-1999
<CASH> 546,399
<SECURITIES> 1,876,181
<RECEIVABLES> 43,577
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 589,687
<PP&E> 289
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,565,528
<CURRENT-LIABILITIES> 1,985,743
<BONDS> 490,542
0
0
<COMMON> 4,634
<OTHER-SE> 79,694
<TOTAL-LIABILITY-AND-EQUITY> 2,565,528
<SALES> 59,566
<TOTAL-REVENUES> 62,873
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,214
<LOSS-PROVISION> 1,660
<INTEREST-EXPENSE> 52,039
<INCOME-PRETAX> 4,960
<INCOME-TAX> 1,687
<INCOME-CONTINUING> 3,273
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,273
<EPS-BASIC> .31
<EPS-DILUTED> .29
</TABLE>
