[Federal Register Volume 76, Number 211 (Tuesday, November 1, 2011)]
[Notices]
[Pages 67440-67451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28250]
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FARM CREDIT ADMINISTRATION
Market Access Agreement
AGENCY: Farm Credit Administration.
ACTION: Notice of Draft Second Amended and Restated Market Access
Agreement; request for comments.
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SUMMARY: The Farm Credit Administration (FCA or we) is publishing for
comment the Draft Second Amended and Restated Market Access Agreement
(Draft Second Restated MAA) proposed to be entered into by all of the
banks of the Farm Credit System (System or FCS) and the Federal Farm
Credit Banks Funding Corporation (Funding Corporation). This Draft
Second Restated MAA is an update to and would replace the Amended and
Restated MAA (Amended and Restated MAA) approved by the FCA on January
9, 2003, and published in the Federal Register on January 15, 2003 (68
FR 2037). The Draft Second Restated MAA sets forth the rights and
responsibilities of each of the parties when the condition of a bank
falls below pre-established financial thresholds.
DATES: You may send comments on or before December 1, 2011.
ADDRESSES: There are several methods for you to submit your comments.
For accuracy and efficiency reasons, commenters are encouraged to
submit comments by email or through the FCA's Web site. As facsimiles
(faxes) are difficult for us to process and achieve compliance with
section 508 of the Rehabilitation Act, we are no longer accepting
comments submitted by fax. Regardless of the method you use, please do
not submit your comment multiple times via different methods. You may
submit comments by any of the following methods:
Email: Send us an email at [email protected].
FCA Web site: http://www.fca.gov. Select ``Public
Commenters,'' then ``Public Comments,'' and follow the directions for
``Submitting a Comment.''
Federal E-Rulemaking Web site: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Send mail to Gary K. Van Meter, Director, Office of
Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive,
McLean, VA 22102-5090.
You may review copies of comments we receive at our office in
McLean, Virginia, or on our Web site at http://www.fca.gov. Once you
are in the Web site, select ``Public Commenters,'' then ``Public
Comments,'' and follow the directions for ``Reading Submitted Public
Comments.'' We will show your comments as submitted, but for technical
reasons we may omit items such as logos and special characters.
Identifying information that you provide, such as phone numbers and
addresses, will be publicly available. However, we will attempt to
remove
[[Page 67441]]
email addresses to help reduce Internet spam.
FOR FURTHER INFORMATION CONTACT:
Thomas R. Risdal, Senior Policy Analyst, Office of Regulatory Policy,
Farm Credit Administration, McLean, VA 22102-5090, (703) 883-4257, TTY
(703) 883-4434, or
Rebecca S. Orlich, Senior Counsel, Office of General Counsel, Farm
Credit Administration, McLean, VA 22102-5090, (703) 883-4020, TTY (703)
883-4020.
SUPPLEMENTARY INFORMATION: System banks and the Funding Corporation
entered into the original Market Access Agreement (original MAA) on
September 1, 1994, to help control the risk of each System bank by
outlining each party's respective rights and responsibilities in the
event the condition of a System bank fell below certain financial
thresholds. As part of the original MAA, System banks and the Funding
Corporation agreed to periodic reviews of the terms of the MAA to
consider whether any amendments were appropriate. The original MAA was
updated by the parties in 2003 in the Amended and Restated MAA and
received FCA approval following notice and request for public comments
in the Federal Register.\1\
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\1\ 68 FR 19539 (April 21, 2003).
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On December 3, 2010, the FCA Board approved amendments to the
Amended and Restated MAA that would conform its provisions to the
System banks' proposed Joint and Several Liability Reallocation
Agreement (Reallocation Agreement) to ensure that the MAA provisions
did not impede operation of the Reallocation Agreement; the amendments
also provided that the MAA and the Reallocation Agreement are separate
agreements, and invalidation of one does not affect the other. The FCA
published these amendments in the Federal Register.\2\ The proposed
Reallocation Agreement is an agreement among the banks and the Funding
Corporation that establishes a procedure for non-defaulting banks to
pay maturing System-wide debt on behalf of defaulting banks prior to a
statutory joint and several call by the FCA under section 4.4 of the
Farm Credit Act of 1971, as amended (Act).\3\ The FCA Board approved
the proposed Reallocation Agreement on October 14, 2010, and notice of
the approval was published in the Federal Register.\4\ The System banks
have approved the Reallocation Agreement but have not yet executed it.
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\2\ 75 FR 76729 (December 9, 2010).
\3\ 12 U.S.C. 2155.
\4\ 75 FR 64727 (October 20, 2010).
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The Amended and Restated MAA has a termination date of December 31,
2011. The System banks and the Funding Corporation have requested the
FCA to approve the Draft Second Restated MAA at this time in order to
have it approved by the parties and in place when the current agreement
terminates. The FCA seeks public comment on the proposed agreement.
The Amended and Restated MAA establishes certain financial
thresholds at which conditions are placed on the activities of a bank
or restrictions are placed on a bank's access to participation in
System-wide and consolidated obligations. The MAA establishes three
categories, which are based on each bank's net collateral ratio,
permanent capital ratio, and scores under the Contractual Inter-bank
Performance Agreement, which is an agreement among the banks and the
Funding Corporation that establishes certain financial performance
criteria.
The proposed Second Restated MAA retains the same general framework
and most of the provisions of the Restated and Amended MAA, updated as
necessary. An important change is to section 1.05, which revises the
level of the net collateral ratio that would place a bank in Category
I. The revision takes into account that the FCA has increased the
minimum net collateral ratio for some banks to an amount higher than
the 103 percent stated in FCA regulation 12 CFR 615.5335. Revisions to
the sections that refer to the Reallocation Agreement clarify that such
agreement has not been executed. In addition, certain voting and quorum
procedures in Article II and Article VI of the proposed Second Restated
MAA will require consent or approval of all banks rather than a
majority of banks; this change recognizes that there are now only five
System banks and are likely to be only four System banks as of January
1, 2012.\5\
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\5\ CoBank, ACB and U.S. Agbank, FCB plan to merge as of January
1, 2012. The FCA has preliminarily approved the merger, and the
boards and stockholders of both banks have voted to approve the
merger.
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The Second Restated MAA, together with the recitals to the
amendment, is as follows:
Second Amended and Restated Market Access Agreement Among AgFirst Farm
Credit Bank, AgriBank, FCB, CoBank, ACB, Farm Credit Bank of Texas,
U.S. AgBank, FCB and Federal Farm Credit Banks Funding Corporation
This Second Amended and Restated Market Access Agreement (the
``Restated MAA'') is entered into among AgFirst Farm Credit Bank,
AgriBank, FCB, CoBank, ACB, the Farm Credit Bank of Texas, U.S. AgBank,
FCB (collectively, the ``Banks'') and the Federal Farm Credit Banks
Funding Corporation (``Funding Corporation'').
Whereas, the Banks and the Funding Corporation entered into that
certain Market Access Agreement dated September 1, 1994 and effective
as of November 23, 1994, (the ``Original Agreement'') for the reasons
stated therein; and
Whereas, the Original Agreement was subsequently amended by that
certain Amended and Restated Market Access Agreement, dated July 1,
2003, referred to herein as the ``First Restated MAA,'' for the reasons
stated therein; and
Whereas, pursuant to Sections 7.04 and 7.05 of the First Restated
MAA, the Banks and the Funding Corporation have reviewed the First
Restated MAA to consider whether an extension and any amendments to it
are appropriate; and
Whereas, representatives of the Banks and the Funding Corporation
met various times in connection with such review and recommended an
extension of the First Restated MAA and certain amendments for
presentation to the Committee; and
Whereas, the Committee met various times in connection with the
review and recommended an extension of the First Restated MAA and
certain amendments for presentation to the Banks and the Funding
Corporation; and
Whereas, the boards of directors of the Banks and of the Funding
Corporation approved this Restated MAA in principle; and
Whereas, thereafter, this Restated MAA was submitted to FCA for
approval and to the Insurance Corporation for an expression of support;
and
Whereas, FCA published this Restated MAA in the Federal Register
and sought comments thereon; and
Whereas, FCA approved this Restated MAA, subject to approval of
this Restated MAA by the boards of directors of the Banks and the
Funding Corporation, and a notice of such approval was published in the
Federal Register; and
Whereas, the Insurance Corporation expressed its support of this
Restated MAA; and
Whereas, the Parties are mindful of FCA's independent authority
under Section 5.17(a)(10) of the Act to ensure the safety and soundness
of Banks, FCA's independent authority under Sections 4.2 and 4.9 of the
Act to approve the terms of specific issuances
[[Page 67442]]
of Debt Securities, the Insurance Corporation's independent authority
under Section 5.61 of the Act to assist troubled Banks, and the Banks'
independent obligations under Section 4.3(c) of the Act to maintain
necessary collateral levels for Debt Securities; and
Whereas, the Banks are entering into this Restated MAA pursuant to,
inter alia, Section 4.2(c) and (d) of the Act; and
Whereas, the Funding Corporation is prepared to adopt as the
``conditions of participation'' that it understands to be required by
Section 4.9(b)(2) of the Act each Bank's compliance with the terms and
conditions of this Restated MAA; and
Whereas, the Funding Corporation believes the execution and
implementation of this Restated MAA will materially accomplish the
objectives which it has concluded are appropriate for a market access
program under Section 4.9(b)(2) of the Act; and
Whereas, prior to the adoption of the Original Agreement, the
Funding Corporation adopted and maintained in place a Market Access and
Risk Alert Program designed to fulfill what it understood to be its
responsibilities under Section 4.9(b)(2) of the Act with respect to
determining ``conditions of participation,'' which Program was
discontinued by the Funding Corporation in accordance with the terms of
the Original Agreement; and
Whereas, the Funding Corporation is entering into this Restated MAA
pursuant to, inter alia, Section 4.9(b)(2) of the Act; and
Whereas, the Parties believe that the execution and implementation
of this Restated MAA will accomplish the objectives intended to be
achieved by the Original Agreement,
Now therefore, in consideration of the foregoing, the mutual
promises and agreements herein contained, and other good and valuable
consideration, receipt of which is hereby acknowledged, the Parties,
intending to be legally bound hereby, agree as follows:
Article I--Categories
Section 1.01. Scorekeeper. The Scorekeeper, for purposes of this
Restated MAA, shall be the Funding Corporation.
Section 1.02. CIPA Oversight Body. The CIPA Oversight Body, for
purposes of this Restated MAA, shall be the same as the Oversight Body
under Section 5.1 of CIPA.
Section 1.03. CIPA Scores. Net Composite Scores and Average Net
Composite Scores, for purposes of this Restated MAA, shall be the same
as those determined under Article II of CIPA and the Model referred to
therein, as in effect on June 30, 2011, and as amended under CIPA or
replaced by successor provisions under CIPA in the future, to the
extent such future amendments or replacements are by agreement of all
the Banks.
Section 1.04. Net Collateral and Permanent Capital Ratios. Each
Bank shall report to the Scorekeeper within fifteen days after the end
of each month its Net Collateral Ratio and Permanent Capital Ratio as
of the last day of that month. Should any Bank later correct or revise,
or be required to correct or revise, any past financial data in a way
that would cause any Net Collateral Ratio or Permanent Capital Ratio
previously reported hereunder to have been different, the Bank shall
promptly report a revised Ratio to the Scorekeeper. Should the
Scorekeeper consider it necessary to verify any Net Collateral Ratio or
Permanent Capital Ratio, it shall so report to the Committee, or, if
the Committee is not in existence, to the CIPA Oversight Body, and the
Committee or the CIPA Oversight Body, as the case may be, may verify
the Ratios as it deems appropriate, through reviews of Bank records by
its designees (including experts or consultants retained by it) or
otherwise. The reporting Bank shall cooperate in any such verification,
and the other Banks shall provide such assistance in conducting any
such verification as the Committee or the CIPA Oversight Body, as the
case may be, may reasonably request.
Section 1.05. Category I. A Bank shall be in Category I if it (a)
has an Average Net Composite Score of 50.0 or more, but less than 60.0,
for the most recent calendar quarter for which an Average Net Composite
Score is available, (b) has a Net Composite Score of 45.0 or more, but
less than 60.0, for the most recent calendar quarter for which a Net
Composite Score is available, (c) has a Net Collateral Ratio of 103.00%
or more, but less than the greater of: (i) 104.00%, or (ii) 50 basis
points above the minimum set by FCA for the last day of the most recent
month, or (d) has a Permanent Capital Ratio of 7.00% or more, but less
than 8.00%, for the period ending on the last day of the most recent
month.
Section 1.06. Category II. A Bank shall be in Category II if it (a)
Has an Average Net Composite Score of 35.0 or more, but less than 50.0,
for the most recent calendar quarter for which an Average Net Composite
Score is available, (b) has a Net Composite Score of 30.0 or more, but
less than 45.0, for the most recent calendar quarter for which a Net
Composite Score is available, (c) has a Net Collateral Ratio of 102.00%
or more, but less than 103.00%, for the last day of the most recent
month, (d) has a Permanent Capital Ratio of 5.00% or more, but less
than 7.00%, for the period ending on the last day of the most recent
month, or (e) is in Category I and has failed to provide information to
the Committee as required by Article III within two Business Days after
receipt of written notice from the Committee of such failure.
Section 1.07. Category III. A Bank shall be in Category III if it
(a) has an Average Net Composite Score of less than 35.0 for the most
recent calendar quarter for which an Average Net Composite Score is
available, (b) has a Net Composite Score of less than 30.0 for the most
recent calendar quarter for which a Net Composite Score is available,
(c) has a Net Collateral Ratio of less than 102.00% for the last day of
the most recent month, (d) has a Permanent Capital Ratio of less than
5.00% for the period ending on the last day of the most recent month,
or (e) is in Category II and has failed to provide information to the
Committee as required by Article III within two Business Days after
receipt of written notice from the Committee of such failure.
Section 1.08. Highest Category. If a Bank would come within more
than one Category by reason of the various provisions of Sections 1.05
through 1.07, it shall be considered to be in the highest-numbered
Category for which it qualifies (e.g., Category III rather than
Category II).
Section 1.09. Notice by Scorekeeper. Within twenty days of the end
of each month, after receiving the reports due under Section 1.04
within fifteen days of the end of the prior month, the Scorekeeper
shall provide to all Banks, all Associations discounting with or
otherwise receiving funding from a Bank that is in Category I, Category
II or Category III, FCA, the Insurance Corporation, the Funding
Corporation, and either the CIPA Oversight Body or, if it is in
existence, the Committee a notice identifying the Banks, if any, that
are in Categories I, II and III, or stating that no Banks are in such
Categories.
Article II--The Committee
Section 2.01. Formation. A Monitoring and Advisory Committee (the
``Committee'') shall be formed at the instance of the CIPA Oversight
Body within seven days of the date that it receives a notice from the
Scorekeeper under Section 1.09 that any Bank is in Category I, Category
II or Category III (unless such a Committee is already in existence).
The Committee shall remain
[[Page 67443]]
in existence thereafter for so long as the most recent notice from the
Scorekeeper under Section 1.09 indicates that any Bank is in Category
I, Category II or Category III. If not already in existence, the
Committee may also be formed (a) At the instance of the CIPA Oversight
Body at any other time, in order to consider a Continued Access Request
that has been submitted or is expected to be submitted, (b) for
purposes of preparing the reports described in Section 7.05, and (c) as
provided for in Section 8.04(b).
Section 2.02. Composition. The Committee shall be made up of two
representatives of each Bank and two representatives of the Funding
Corporation. One of the representatives of each Bank shall be that
Bank's representative on the CIPA Oversight Body. The other
representative of each Bank shall be an individual designated by the
Bank's board of directors, who may be a member of the Bank's board of
directors or a senior officer of the Bank, in the discretion of the
Bank's board. One of the representatives of the Funding Corporation
shall be an outside director of the Funding Corporation designated by
the Funding Corporation board of directors. The other representative of
the Funding Corporation shall be designated by the board of directors
of the Funding Corporation from among the members of its board and/or
its senior officers. The removal and replacement of the Committee
members designated directly by Bank boards of directors and by the
Funding Corporation shall be in the sole discretion of each Bank board
and of the Funding Corporation, respectively. A replacement for a
member of the CIPA Oversight Body shall automatically replace such
member on the Committee.
Section 2.03. Authority and Responsibilities. The Committee shall
have the authority and responsibilities specified in this Article II,
in Sections 1.04, 3.01, 3.02, 3.05, 3.06, 4.02, 7.05, 8.04, and 8.08,
and in Article VI, and such incidental powers as are necessary and
appropriate to effectuating such authority and responsibilities.
Section 2.04. Meetings. Notwithstanding anything herein to the
contrary, at all times, the Banks entitled to vote on Committee
business shall be all Banks other than (i) Those in Category II and
Category III, as indicated in the most recent notice from the
Scorekeeper under Section 1.09, and (ii) in the case of a Bank
requesting a Continued Access Decision, such Bank. The initial meeting
of the Committee shall be held at the call of the Chairman of the CIPA
Oversight Body or a majority of the Parties entitled to vote on
Committee business. Thereafter, the Committee shall meet at such times
and such places at the call of the Chairman of the Committee or a
majority of the Parties entitled to vote on Committee business. For all
voting and quorum purposes each Party entitled to vote on Committee
business shall act through at least one of its representatives. Written
notice of each meeting shall be given to each member by the Chairman or
his or her designee not less than 48 hours prior to the time of the
meeting. A meeting may be held without such notice upon the signing of
a waiver of notice by all of the Parties entitled to vote on Committee
business. All of the Parties entitled to vote on Committee business
shall constitute a quorum for the conduct of business. A meeting may be
held by a telephone conference arrangement or similar communication
method allowing each speaker to be heard by all others in attendance at
the same time.
Section 2.05. Action Without a Meeting. Action may be taken by the
Committee without a meeting if each Bank and the Funding Corporation
consent in writing to consideration of a matter without a meeting and
all of the Parties entitled to vote on Committee business approve the
action in writing, which writings shall be kept with the minutes of the
Committee.
Section 2.06. Voting. The Funding Corporation and each Bank
entitled to vote on Committee business shall have one vote on Committee
business. Voting on Committee business (including recommendations on
Continued Access Decisions, but not the ultimate vote on Continued
Access Decisions, which is addressed in Article VI) shall be by
unanimity of the Parties entitled to vote on Committee business that
are present (physically, by telephone conference or similar
communication method allowing each speaker to be heard by all others in
attendance at the same time) through at least one representative. If a
Bank or the Funding Corporation has two representatives present, they
shall agree in casting the vote of the Bank or the Funding Corporation,
and if they cannot agree on a particular matter, that Bank or the
Funding Corporation shall not cast a vote on that matter, and, in
determining unanimity, shall not be counted as a Party entitled to vote
on that matter.
Section 2.07. Officers. The Committee shall elect from among its
members a Chairman, a Vice Chairman, a Secretary and such other
officers as it shall from time to time deem appropriate. The Chairman
shall chair the meetings of the Committee and have such other duties as
the Committee may delegate to him or her. The Vice Chairman shall
perform such duties of the Chairman as the Chairman is unable or fails
to perform, and shall have such other duties as the Committee may
delegate to him or her. The Secretary shall keep the minutes and
maintain the minute book of the Committee. Other officers shall have
such duties as the Committee may delegate to them. Should the Chairman
be a representative of either a Category II or Category III Bank, such
individual will no longer be eligible to serve as Chairman. The Vice
Chairman will thereafter perform the duties of Chairman, and if the
Vice Chairman is unable, the Committee may elect a new Chairman from
among its members.
Section 2.08. Retention of Staff, Consultants, and Experts. The
Committee shall be authorized to retain staff, consultants, and experts
as it deems necessary and appropriate in its sole discretion.
Section 2.09. Expenses. Any compensation of each member of the
Committee for time spent on Committee business and for his or her out-
of-pocket expenses, such as travel, shall be paid by the Party that
designated that member to the Committee or to the CIPA Oversight Body.
All other expenses incurred by the Committee shall be borne by the
Banks and assessed by the Funding Corporation based on the formula then
used by the Funding Corporation to allocate its operating expenses.
Section 2.10. Custody of Records. All information received by the
Committee pursuant to this Restated MAA, and all Committee minutes,
shall be lodged, while not in active use by the Committee, at the
Funding Corporation, and shall be deemed records of the Funding
Corporation for purposes of FCA examination. The Parties agree that
documents in active use by the Committee may also be examined by FCA.
Article III--Provision of Information
Section 3.01. Information To Be Provided By All Banks in Categories
I, II, and III. If a Bank is in Category I, Category II, or Category
III, as indicated in the most recent notice from the Scorekeeper under
Section 1.09, and if the prior monthly notice by the Scorekeeper did
not indicate that the Bank was in any Category, then the Bank shall
within thirty days of receipt of the latest notice provide to the
Committee: (a) A detailed explanation of the causes of its being in
that Category, (b) an action plan to improve its financial situation so
that it is no longer in any of the three Categories, (c) a timetable
for achieving that result, (d) at
[[Page 67444]]
the discretion of the Committee, the materials and information listed
in Attachment 1 hereto (in addition to fulfilling the other obligations
specified in Attachment 1 hereto), and (e) such other pertinent
materials and information as the Committee shall, within seven days of
receiving notice from the Scorekeeper, request in writing from the
Bank. Such Bank shall summarize, aggregate, or analyze data, as well as
provide raw data, in such manner as the Committee may request. Such
information shall be promptly updated (without any need for a request
by the Committee) whenever the facts significantly change, and shall
also be updated or supplemented as the Committee so requests in writing
of the Bank by such deadlines as the Committee may reasonably specify.
Section 3.02. Additional Information To Be Provided By Banks in
Categories II and III. If a Bank is in Category II or Category III, as
indicated in the most recent notice from the Scorekeeper under Section
1.09, and if the prior monthly notice by the Scorekeeper did not
indicate that the Bank was in Category II or Category III, then the
Bank shall within thirty days of receipt of the latest notice provide
to the Committee, in addition to the information required by Section
3.01, at the discretion of the Committee, the materials and information
listed in Attachment 2 hereto (in addition to fulfilling the other
obligations specified in Attachment 2 hereto). Such information shall
be promptly updated (without any need for a request by the Committee)
whenever the facts significantly change, and shall also be updated or
supplemented as the Committee so requests in writing of the Bank by
such deadlines as the Committee may reasonably specify.
Section 3.03. Documents or Information Relating to Communications
With FCA or the Insurance Corporation. Notwithstanding Sections 3.01
and 3.02, a Bank shall not disclose to the Committee any communications
between the Bank and FCA or the Insurance Corporation, as the case may
be, or documents describing such communications, except as consented to
by, and subject to such restrictive conditions as may be imposed by,
FCA or the Insurance Corporation, as the case may be. However, facts
regarding the Bank's condition or plans that pre-existed a
communication with FCA or the Insurance Corporation and then were
included in such a communication are not barred from disclosure by this
section. The Committee shall decide on a case-by-case basis whether to
request copies of such communications and documents from FCA or the
Insurance Corporation, as the case may be. Each Bank hereby consents to
the disclosure of such communications and documents to the Committee if
consented to by FCA or the Insurance Corporation, as the case may be.
Nothing in this section shall preclude a Bank from making disclosures
to the System Disclosure Agent necessary to allow the System Disclosure
Agent to comply with its obligations under the securities laws or other
applicable law or regulations with regard to disclosure to investors.
Section 3.04. Sources of Information; Certification. Information
provided to the Committee under Sections 3.01 and 3.02 shall, to the
extent applicable, be data used in the preparation of financial
statements in accordance with generally accepted accounting principles,
or data used in the preparation of call reports submitted to FCA
pursuant to 12 CFR part 621, as amended from time to time, or any
successor thereto. A Bank shall certify, through its chief executive
officer or, if there is no chief executive officer, a senior executive
officer, the completeness and accuracy of all information provided to
the Committee under Sections 3.01 and 3.02.
Section 3.05. Failure to Provide Information. If a Bank fails to
provide information to the Committee as and when required under
Sections 3.01 and 3.02, and does not correct such failure within two
Business Days of receipt of the written notice by the Committee of the
failure, then the Committee shall so advise the Scorekeeper.
Section 3.06. Provision of Information to Banks. Any information
provided to the Committee under Sections 3.01 and 3.02 shall be
provided by the Committee to any Bank upon request. A Bank shall not
have the right under this Restated MAA to obtain information directly
from another Bank.
Section 3.07. Cessation of Obligations. A Bank's obligation to
provide information to the Committee under Section 3.01 shall cease as
soon as the Bank is no longer in Category I, Category II, or Category
III, as indicated in the most recent notice from the Scorekeeper under
Section 1.09. A Bank's obligation to provide to the Committee
information under Section 3.02 shall cease as soon as the Bank is no
longer in Category II or Category III, as indicated in the most recent
notice from the Scorekeeper under Section 1.09.
Article IV--Restrictions on Market Access
Section 4.01. Final Restrictions. As of either,
(i) The tenth day after a Bank receives a notification from the
Scorekeeper that it is in Category II, as indicated in the most recent
notice from the Scorekeeper under Section 1.09, if it has not by said
tenth day submitted a Continued Access Request to the Committee; or
(ii) If the Bank has submitted a Continued Access Request to the
Committee by the tenth day after its receipt of notice from the
Scorekeeper that it is in Category II, the seventh day following the
day a submitted Continued Access Request is denied, a Bank in Category
II, as indicated in the most recent notice from the Scorekeeper under
Section 1.09, (a) shall be permitted to participate in issues of Debt
Securities only to the extent necessary to roll over the principal (net
of any original issue discount) of maturing debt, and (b) shall comply
with the Additional Restrictions.
Section 4.02. Category II Interim Restrictions. From the day that a
Bank receives a notice from the Scorekeeper that it is in Category II
until: (a) Ten days thereafter, if the Bank does not by that day submit
a Continued Access Request to the Committee, or (b) if the Bank by such
tenth day after it has received a notice from the Scorekeeper that it
is in Category II does submit a Continued Access Request to the
Committee, the seventh day following the day that notice is received by
the Bank that the Continued Access Request is granted or denied, the
Bank (i) May participate in issues of Debt Securities only to the
extent necessary to roll over the principal (net of any original issue
discount) of maturing debt unless the Committee, taking into account
the criteria in Section 6.03, shall specifically authorize
participation to a greater extent, and (ii) shall comply with the
Additional Restrictions. Notwithstanding the foregoing, the Category II
Interim Restrictions shall not go into effect if a Continued Access
Request has already been granted in anticipation of the formal notice
that the Bank is in Category II.
Section 4.03. FCA Action. The Final Restrictions and the Category
II Interim Restrictions shall go into effect without the need for case-
by-case approval by FCA.
Section 4.04. Cessation of Restrictions. The Final Restrictions and
the Category II Interim Restrictions shall cease as soon as the Bank is
no longer in Category II, as indicated in the most recent notice from
the Scorekeeper under Section 1.09. The Bank shall continue, however,
to be subject to such other obligations under this Restated MAA as may
apply to it by reason of its being in another Category.
Section 4.05. Relationship to the Joint and Several Liability
Reallocation
[[Page 67445]]
Agreement. A Category II Bank shall not be subject to the Final
Restrictions and Category II Interim Restrictions, to the extent that
the Final Restrictions and Category II Interim Restrictions would
prohibit such Category II Bank from issuing debt required to fund such
Category II Bank's liabilities and obligations under the Joint and
Several Liability Reallocation Agreement, if and when the Joint and
Several Liability Reallocation Agreement is in effect among the
Parties.
Article V--Prohibition of Market Access
Section 5.01. Final Prohibition. As of either,
(i) The tenth day after a Bank receives a notification from the
Scorekeeper that it is in Category III, as indicated in the most recent
notice from the Scorekeeper under Section 1.09, if it has not by said
tenth day submitted a Continued Access Request to the Committee; or
(ii) If the Bank has submitted a Continued Access Request to the
Committee by the tenth day after its receipt of notice from the
Scorekeeper that it is in Category III, the seventh day following the
day a submitted Continued Access Request is denied, a Bank in Category
III, as indicated in the most recent notice from the Scorekeeper under
Section 1.09, (a) Shall be prohibited from participating in issues of
Debt Securities, and (b) shall comply with the Additional Restrictions.
Section 5.02. Category III Interim Restrictions. From the day that
a Bank receives a notice from the Scorekeeper that it is in Category
III until: (a) Ten days thereafter, if the Bank does not by that day
submit a Continued Access Request to the Committee, or (b) if the Bank
by such tenth day after it has received a notice from the Scorekeeper
that it is in Category III does submit a Continued Access Request to
the Committee, the seventh day following the day that notice is
received by the Bank that the Continued Access Request is granted or
denied, the Bank (i) May participate in issues of Debt Securities only
to the extent necessary to roll over the principal (net of any original
issue discount) of maturing debt, and (ii) shall comply with the
Additional Restrictions. Notwithstanding the foregoing, the Category
III Interim Restrictions shall not go into effect if a Continued Access
Request has already been granted in anticipation of the formal notice
that the Bank is in Category III.
Section 5.03. FCA Action. The Category III Interim Restrictions
shall go into effect without the need for case-by-case approval by FCA.
The Parties agree that the Final Prohibition shall go into effect
without the need for approval by FCA; provided, however, that FCA may
override the Final Prohibition, for such time period up to 60 days as
FCA may specify (or, if FCA does not so specify, for 60 days), by so
ordering before the date upon which the Final Prohibition becomes
effective pursuant to Section 5.01, and may renew such an override once
only, for such time period up to 60 additional days as FCA may specify
(or, if FCA does not so specify, for 60 days), by so ordering before
the expiration of the initial override period. If the Final Prohibition
is overridden by FCA, the Category III Interim Restrictions shall
remain in effect.
Section 5.04. Cessation of Restrictions. The Final Prohibition and
the Category III Interim Restrictions shall cease as soon as the Bank
is no longer in Category III, as indicated in the most recent notice
from the Scorekeeper under Section 1.09. The Bank shall continue,
however, to be subject to such other obligations under this Restated
MAA as may apply to it by reason of its being in another Category.
Section 5.05. Relationship to the Joint and Several Liability
Reallocation Agreement. A Category III Bank shall not be subject to the
Final Prohibition or Category III Interim Restrictions, to the extent
that the Final Prohibition or Category III Interim Restrictions would
prohibit such Category III Bank from issuing debt required to fund such
Category III Bank's liabilities and obligations under the Joint and
Several Liability Reallocation Agreement, if and when the Joint and
Several Liability Reallocation Agreement is in effect among the
Parties.
Article VI--Continued Access Decisions
Section 6.01. Process. The process for action on Continued Access
Requests shall be as follows:
(a) Submission of Request. A Bank may submit a Continued Access
Request for consideration by the Committee at any time, including (i)
Prior to formal notice from the Scorekeeper that it is in Category II
or Category III, if the Bank anticipates such notice, and (ii) prior to
the tenth day after a Bank receives a notification from the Scorekeeper
that it is in Category II or the tenth day after a Bank receives a
notification from the Scorekeeper that it is in Category III.
(b) Committee Recommendation. After a review of the Request, the
supporting information and any other pertinent information available to
the Committee, the Committee shall arrive at a recommendation regarding
the Request (including, if the recommendation is to grant the Request,
recommendations as to the expiration date of the Continued Access
Decision and as to any conditions to be imposed on the Decision). The
Funding Corporation, drawing upon its expertise and specialized
knowledge, shall provide to the Committee all pertinent information in
its possession (and the Banks authorize the Funding Corporation to
provide such information to the Committee for its use as provided
herein, and, to that limited extent only, waive their right to require
the Funding Corporation to maintain the confidentiality of such
information). The Committee shall send its recommendation and a
statement of the reasons therefor, including a description of any
considerations that were expressed for and against the recommendation
by members of the Committee during its deliberations, together with the
Request, the supporting information, a report of how the members of the
Committee voted on the recommendation, a report by the Funding
Corporation concerning its position on the recommendation, and any
other material information that was considered by the Committee, to all
Banks and the Funding Corporation by a nationally recognized overnight
delivery service within fourteen days after receiving the Request. If
the Committee fails to act within such fourteen-day period, the
Continued Access Request shall be deemed forwarded to all Banks
entitled to vote thereon for their consideration. If the Committee has
failed to act, the Funding Corporation shall send to all Banks, within
two days following the deadline for Committee action, a report
concerning the position of the Funding Corporation on the Continued
Access Request.
(c) Vote on the Request. Unless otherwise expressly stated herein,
the Banks entitled to vote on the Request shall be all Banks other than
those in Category II and Category III, as indicated in the most recent
notice from the Scorekeeper under Section 1.09, and other than the Bank
requesting the Continued Access Decision. Within ten days of receiving
the Committee's recommendation and the accompanying materials (or, if
the Committee failed to act within fourteen days, within ten days
following the fourteenth day), the board of directors of each Bank
entitled to vote on the Request, or its designee, after review of the
recommendation, the accompanying materials, the report of the Funding
Corporation, and any other pertinent information, shall vote to grant
or deny the Request (as modified or supplemented by any
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recommendations of the Committee as to the expiration date of the
Continued Access Decision and as to conditions to be imposed on the
Decision), and shall provide written notice of its vote to the
Committee. If the Committee has recommended in favor of a Continued
Access Decision, the vote of a Bank shall be either to accept or reject
the Committee's recommendation, including the recommended expiration
date and conditions; if the Committee has recommended against a
Continued Access Decision or has failed to act, the vote of a Bank
shall be either to grant the Continued Access Request on the terms
requested by the requesting Bank, or to deny it. Failure to vote within
the ten-day period shall be considered a ``no'' vote. A Continued
Access Request shall be granted only upon a 100% Vote within the ten-
day period, and shall be considered denied if a 100% Vote is not
forthcoming by that day.
(d) Notice. The Committee shall promptly provide written notice to
the Parties, FCA and the Insurance Corporation of the granting or
denial of the Continued Access Request, and, if the Continued Access
Request was granted, of all the particulars of the Continued Access
Decision.
Section 6.02. Provision of Information to FCA and the Insurance
Corporation. FCA and the Insurance Corporation shall be advised by the
Committee of the submission of a Continued Access Request, shall be
provided by the Committee with appropriate materials relating to the
Request, and shall be advised by the Committee of the recommendation
made by the Committee concerning the Request.
Section 6.03. Criteria. The Committee, in arriving at its
recommendation on a Continued Access Request, and the voting Banks, in
voting on a Continued Access Request, shall consider (a) The present
financial strength of the Bank in issue, (b) the prospects for
financial recovery of the Bank in issue, (c) the probable costs of
particular courses of action to the Banks and the Insurance Fund, (d)
any intentions expressed by the Insurance Corporation with regard to
assisting or working with the Bank in issue, (e) any existing lending
commitments and any particular high-quality new lending opportunities
of the Bank, (f) seasonal variations in the borrowing needs of the
Bank, (g) whether the Bank's independent public accountants have
included a Going Concern Qualification in the most recent combined
financial statements of the Bank and its constituent Associations, and
(h) any other matters deemed pertinent.
Section 6.04. Expiration Date. A Continued Access Decision shall
have such expiration date as the Committee recommends and is approved
by a 100% Vote. If the Committee recommends against or fails to act on
a Continued Access Request, and it is subsequently approved by a 100%
Vote, the expiration date of the Continued Access Decision shall be the
earlier of the date requested by the Bank or 180 days from the date the
Request is granted. A Continued Access Decision may be terminated prior
to that date, or renewed for an additional term, upon a new
recommendation by the Committee and 100% Vote.
Section 6.05. Conditions. A Continued Access Decision shall be
subject to such conditions as the Committee recommends and are approved
by a 100% Vote. If specifically approved by a 100% Vote, administration
of the details of the conditions and ongoing refinement of the
conditions to take account of changing circumstances can be left to the
Committee or such subcommittee as it may establish for that purpose.
Among the conditions that may be imposed on a Continued Access Decision
are (a) A requirement of remedial action by the Bank, failing which the
Continued Access Decision will terminate, (b) a requirement of other
appropriate conduct on the part of the Bank (such as compliance with
the Additional Restrictions), failing which the Continued Access
Decision will terminate, and (c) specific restrictions on continued
borrowing by the Bank, such as a provision allowing a Bank in Category
II to borrow only for specified types of business in addition to
rolling over the principal of maturing debt, or allowing such a Bank
only to roll over interest on maturing debt in addition to rolling over
the principal of maturing debt, or a provision allowing a Bank in
Category III to roll over a portion of its maturing debt. The Committee
shall be responsible for monitoring and determining compliance with
conditions, and shall promptly advise the Parties of any failure by a
Bank to comply with conditions. The Committee's determination with
respect to compliance with conditions shall be final, until and unless
overturned or modified in arbitration pursuant to Section 7.08.
Section 6.06. FCA Action. The Parties agree that a Continued Access
Decision shall go into effect without the need for approval by FCA, but
that FCA may override the Continued Access Decision, for such time
period as FCA may specify (or, if FCA does not so specify, until a new
Continued Access Decision is made pursuant to a recommendation of the
Committee and a 100% Vote, in which case it is again subject to
override by FCA), by so ordering at any time.
Section 6.07. Notice to FCA of Intent to File Continued Access
Request. A Bank that receives notice that it is in Category III shall
advise FCA, within ten days of receiving such notice, whether it
intends to file a Continued Access Request.
Article VII--Other
Section 7.01. Conditions Precedent. This Restated MAA shall go into
effect on January 1, 2012, provided, however, that on or before January
15, 2012 each Party has executed a certificate in substantially the
form of Attachment 3 hereto that all of the following conditions
precedent have been satisfied: (a) The delivery to the Banks of an
opinion by an outside law firm reasonably acceptable to all of the
Parties and in substantially the form of Attachment 4 hereto, (b) the
delivery to the Funding Corporation of an opinion by an outside law
firm reasonably acceptable to all of the Parties and in substantially
the form of Attachment 5 hereto, (c) adoption by each of the Banks and
the Funding Corporation of a resolution in substantially the form of
Attachment 6 hereto, (d) action by the Insurance Corporation, through
its board, expressing its support for this Restated MAA, and (e) action
by FCA, through its board, approving this Restated MAA pursuant to
Section 4.2(c) and Section 4.2(d) of the Act, and (without necessarily
expressing any view as to the proper interpretation of Section
4.9(b)(2) of the Act) approving this Restated MAA pursuant to Section
4.9(b)(2) of the Act insofar as such approval may be required, which
action shall (i) Indicate that the entry into and compliance with this
Restated MAA by the Funding Corporation fully satisfy such obligations
as the Funding Corporation may have with respect to establishing
``conditions of participation'' for market access under Section
4.9(b)(2), and (ii) contain no reservations or other conditions or
qualifications except for those which may be specifically agreed to by
the Funding Corporation's board of directors and the other Parties.
Upon execution of its certificate, each Party shall forward a copy
to the Funding Corporation, attn. General Counsel, which shall advise
all other Parties when a complete set of certificates is received.
If this Restated MAA becomes effective in accordance with this
Section 7.01, the First Restated MAA shall be amended and restated by
this Restated MAA as of that date without further
[[Page 67447]]
action of the Parties. If any term, provision, covenant or restriction
of this Restated MAA is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Restated MAA
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. If any term, provision, covenant or
restriction of this Restated MAA that purports to amend a term,
provision, covenant or restriction of the Original Agreement or the
First Restated MAA is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such term,
provision, covenant or restriction of the Original Agreement or the
First Restated MAA shall be considered to have continued and to be
continuing in full force and effect at all times since this Restated
MAA has purported to be in effect. The Parties agree that
notwithstanding the occurrence of any of the foregoing events they will
treat, to the maximum extent permitted by law, all actions theretofore
taken pursuant to this Restated MAA as valid and binding actions of the
Parties.
Section 7.02. Representations and Warranties. Each Party represents
and warrants to the other Parties that (a) It has duly executed and
delivered this Restated MAA, (b) its performance of this Restated MAA
in accordance with its terms will not conflict with or result in the
breach of or violation of any of the terms or conditions of, or
constitute (or with notice or lapse of time or both constitute) a
default under any order, judgment or decree applicable to it, or any
instrument, contract or other agreement to which it is a party or by
which it is bound, (c) it is duly constituted and validly existing
under the laws of the United States, (d) it has the corporate and other
authority, and has obtained all necessary approvals, to enter into this
Restated MAA and perform all of its obligations hereunder, and (e) its
performance of this Restated MAA in accordance with its terms will not
conflict with or result in the breach of or violation of any of the
terms or conditions of, or constitute (or with notice or lapse of time
or both constitute) a default under its charter (with respect to the
Banks), or its bylaws.
Section 7.03. Additional Covenants.
(a) Each Bank agrees to notify the other Parties and the
Scorekeeper if, at any time, it anticipates that within the following
three months it will come to be in Category I, Category II or Category
III, or will move from one Category to another.
(b) Whenever a Bank is subject to Final Restrictions, a Final
Prohibition, Category II Interim Restrictions, Category III Interim
Restrictions, or a Continued Access Decision, the Committee shall
promptly so notify the Funding Corporation, and the Funding Corporation
shall take all necessary steps to ensure that the Bank participates in
issues of Debt Securities only to the extent permitted thereunder. The
Funding Corporation may rely on the determination of the Committee as
to whether a Bank has complied with a condition to a Continued Access
Decision.
(c) Each Bank agrees that it will not at any time that it is in
Category I, Category II or Category III, as indicated in the most
recent notice from the Scorekeeper under Section 1.09, and will not
without twelve months' prior notice to all other Banks and the Funding
Corporation at any other time, either (i) Withdraw, or (ii) modify, in
a fashion that would impede the issuance of Debt Securities, the
funding resolution it has adopted pursuant to Section 4.4(b) of the
Act. Should a violation of this covenant be asserted, and should the
Bank deny same, the funding resolution shall be deemed still to be in
full effect, without modification, until arbitration of the matter is
completed, and each Bank, by entering into this Restated MAA, consents
to emergency injunctive relief to enforce this provision. Nothing in
this Restated MAA shall be construed to restrict any Party's ability to
take the position that a Bank's withdrawal or modification of its
funding resolution is not authorized by law.
(d) Each Bank agrees that it will not at any time that it is in
Category I, Category II or Category III, as indicated in the most
recent notice from the Scorekeeper under Section 1.09, and will not
without twelve months' prior notice to all other Banks and the System
Disclosure Agent at any other time, fail to report information to the
System Disclosure Agent pursuant to the Disclosure Program for the
issuance of Debt Securities and for the System Disclosure Agent to have
a reasonable basis for making disclosures pursuant to the Disclosure
Program. Should the System Disclosure Agent assert a violation of this
covenant, and should the Bank deny same, the Bank shall furnish such
information as the System Disclosure Agent shall request until
arbitration of the matter is completed, and each Bank, by entering into
this Restated MAA, consents to emergency injunctive relief to enforce
this provision. Nothing in this Restated MAA shall be construed to
restrict the ability of the System Disclosure Agent to comply with its
obligations under the securities laws or other applicable law or
regulations with regard to disclosure to investors.
(e) Without implying that suit may be brought on any other matter,
each Bank and the Funding Corporation specifically agree not to bring
suit to challenge this Restated MAA or to challenge any Final
Prohibition, Final Restrictions, Category II Interim Restrictions,
Category III Interim Restrictions, Continued Access Decision, denial of
a Continued Access Request or recommendation of the Committee with
respect to a Continued Access Request arrived at in accordance with
this Restated MAA. This provision shall not be construed to preclude
judicial actions under the U.S. Arbitration Act, 9 U.S.C. sections 1-
15, to enforce or vacate arbitration decisions rendered pursuant to
Section 7.08, or for an order that arbitration proceed pursuant to
Section 7.08.
(f) The Funding Corporation agrees that it will not reinstitute the
Market Access and Risk Alert Program, or adopt a similar such program
for so long as both (i) This Restated MAA is in effect and (ii) Section
4.9(b)(2) of the Act is not amended in a manner which would require,
nor is there any other change in applicable law or regulations which
would require, the Funding Corporation to establish ``conditions of
participation'' different from those contained in this Restated MAA.
Should the condition described in (ii) no longer apply and the Funding
Corporation adopt a market access program, this Restated MAA shall be
deemed terminated. All Banks reserve the right to argue, if the
conditions described in clauses (i) or (ii) of the preceding sentence
should no longer apply and the Funding Corporation should adopt such a
program, that any such program adopted by the Funding Corporation is
contrary to law, either because Section 4.9(b)(2) of the Act does not
authorize such a program, or for any other reason, and the entry by any
Bank into this Restated MAA shall not be construed as waiving such
right.
(g) It is expressly agreed that the Original Agreement, FCA
approval of the Original Agreement, the First Restated MAA and FCA
approval of this Restated MAA do not provide any grounds for
challenging FCA or Insurance Corporation actions with respect to the
creation of or the conduct of receiverships or conservatorships.
Without limiting the preceding statement, each Bank specifically and
expressly agrees and acknowledges that it cannot, and agrees that it
shall not,
[[Page 67448]]
attempt to challenge FCA's appointment of a receiver or conservator for
itself or any other System institution or FCA's or the Insurance
Corporation's actions in the conduct of any receivership or
conservatorship (i) On the basis of this Restated MAA or FCA's approval
of this Restated MAA; or (ii) on the grounds that Category II Interim
Restrictions, Final Restrictions, Category III Interim Restrictions, or
Final Prohibitions were or were not imposed, whether by reason of FCA's
or the Insurance Corporation's action or inaction or otherwise. The
Banks jointly and severally agree that they shall indemnify and hold
harmless FCA and the Insurance Corporation against all costs, expenses,
and damages, including without limitation, attorneys' fees and
litigation costs, resulting from any such challenge by any Party.
Section 7.04. Termination. This Restated MAA shall terminate upon
the earliest of (i) December 31, 2025, (ii) an earlier date if so
agreed in writing by 100% Vote of the Banks, or (iii) in the event that
all Banks shall be in either Category II or Category III. Commencing a
year before December 31, 2025, the Parties shall meet to consider its
extension. Except as provided in Section 7.03(f), it is understood that
the termination of this Restated MAA shall not affect (i) Any rights
and obligations of the Funding Corporation under Section 4.9(b)(2) of
the Act, and (ii) any Bank's rights pursuant to any Final Restrictions,
a Final Prohibition, Category II Interim Restrictions, Category III
Interim Restrictions, or a Continued Access Decision then-in-effect.
Section 7.05. Periodic Review. Commencing every third anniversary
of the effective date of this Restated MAA, beginning January 1, 2015,
and at such more frequent intervals as the Parties may agree, the Banks
and the Funding Corporation, through their boards of directors, shall
conduct a formal review of this Restated MAA and consider whether any
amendments to it are appropriate. In connection with such review, the
Committee shall report to the boards on the operation of the Restated
MAA and recommend any amendments it considers appropriate.
Section 7.06. Confidentiality. The Parties may disclose this
Restated MAA and any amendments to it and any actions taken pursuant to
this Restated MAA to restrict or prohibit borrowing by a Bank. All
other information relating to this Restated MAA shall be kept
confidential and shall be used solely for purposes of this Restated
MAA, except that, to the extent permitted by applicable law and
regulations, such information may be disclosed by (a) The System
Disclosure Agent under the Disclosure Program, (b) a Bank, upon
coordination of such disclosure with the System Disclosure Agent, as
the Bank deems appropriate for purposes of the Bank's disclosures to
borrowers or shareholders; (c) a Bank as deemed appropriate for
purposes of disclosure to transacting parties (subject, to the extent
the Bank reasonably can obtain such agreement, to such a transacting
party's agreeing to keep the information confidential) of material
information relating to that Bank, or (d) any Party in order to comply
with legal or regulatory obligations. Notwithstanding the preceding
sentence, the Parties shall make every effort, to the extent consistent
with legal requirements, securities disclosure obligations and other
business necessities, to preserve the confidentiality of information
provided to the Committee by a Bank and designated as ``Proprietary and
Confidential.'' Any expert or consultant retained in connection with
this Restated MAA shall execute a written undertaking to preserve the
confidentiality of any information received in connection with this
Restated MAA. Notwithstanding the foregoing, nothing in this Restated
MAA shall prevent Parties from disclosing information to FCA or the
Insurance Corporation.
Section 7.07. Amendments. This Restated MAA may be amended only by
the written agreement of all the Parties.
Section 7.08. Dispute Resolution. All disputes between or among
Parties relating to this Restated MAA shall be submitted to final and
binding arbitration pursuant to the U.S. Arbitration Act, 9 U.S.C.
sections 1-15, provided, however, that any recommendation by the
Committee regarding a Continued Access Request (including, if the
recommendation is to grant the Request, recommendations as to the
expiration date of the Continued Access Decision and as to any
conditions to be imposed on the Decision), and any vote by a Bank on a
Continued Access Request, shall be final and not subject to
arbitration. Arbitrations shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association before a
single arbitrator. An arbitrator shall be selected within fourteen days
of the initiation of arbitration by any Party, and the arbitrator shall
render a decision within thirty days of his or her selection, or as
otherwise agreed to by the parties thereto.
Section 7.09. Governing Law. This Restated MAA shall be governed by
and construed in accordance with the Federal laws of the United States
of America, and, to the extent of the absence of Federal law, in
accordance with the laws of the State of New York excluding any
conflict of law provisions that would cause the law of any jurisdiction
other than New York to be applied; provided, however, that in the event
of any conflict between the U.S. Arbitration Act and applicable Federal
or New York law, the U.S. Arbitration Act shall control.
Section 7.10. Notices. Any notices required or permitted under this
Restated MAA shall be in writing and shall be deemed given if delivered
in person, by email, by fax or by a nationally recognized overnight
courier, in each case addressed as follows, unless such address is
changed by written notice hereunder:
To AgFirst Farm Credit Bank: AgFirst Farm Credit Bank, Farm Credit Bank
Building, 1401 Hampton Street, Columbia, SC 29201, Attention: President
and Chief Executive Officer, Fax: (803) 254-1776, Email: [OMITTED].
To AgriBank, FCB: AgriBank, FCB, 375 Jackson Street, St. Paul, MN
55101, Attention: President and Chief Executive Officer, Fax: (651)
282-8494, Email: [OMITTED].
To CoBank, ACB: CoBank, ACB, 5500 South Quebec Street, Greenwood
Village, CO 80111, Attention: President and Chief Executive Officer,
Fax: (303) 740-4002, Email: [OMITTED].
To the Farm Credit Bank of Texas: Farm Credit Bank of Texas, 4801 Plaza
on the Lake Drive, Austin, TX 78746, Attention: President and Chief
Executive Officer, Fax: (512) 465-0775, Email: [OMITTED].
To U.S. AgBank, FCB: U.S. AgBank, FCB, Farm Credit Bank Building, 245
North Waco, Wichita, KS 67202, Attention: President and Chief Executive
Officer, Fax: (316) 266-5126, Email: [OMITTED].
To Federal Farm Credit Banks Funding Corporation: Federal Farm Credit
Banks Funding Corporation, 10 Exchange Place, Suite 1401, Jersey City,
NJ 07302, Attention: President and Chief Executive Officer, Fax: (201)
200-8109, Email: [OMITTED].
To the Farm Credit System Insurance Corporation: Farm Credit System
Insurance Corporation, 1501 Farm Credit Drive, McLean, Virginia 22102,
Attention: Chairman, Fax: (703) 790-9088, Email: [OMITTED].
To the Farm Credit Administration: Farm Credit Administration, 1501
Farm Credit Drive, McLean, Virginia 22102-5090, Attention: Chairman,
[[Page 67449]]
Fax: (703) 734-5784, Email: [OMITTED].
To the CIPA Oversight Body: At such address, fax number and email
address as shall be supplied to the Parties from time to time by the
Chairman of the CIPA Oversight Body.
To the Committee: At such address, fax number and email address as
shall be supplied by the Committee, which the Committee shall promptly
transmit to each Party.
Any notice sent by the courier shall be deemed given one Business
Day after depositing with the overnight courier. Any notice given in
person, by email, or by fax shall be deemed given instantaneously.
Section 7.11. Headings; Conjunctive/Disjunctive; Singular/Plural.
The headings of any article or section of this Restated MAA are for
convenience only and shall not be used to interpret any provision of
the Restated MAA. Uses of the conjunctive include the disjunctive, and
vice versa, unless the context clearly requires otherwise. Uses of the
singular include the plural, and vice versa, unless the context clearly
requires otherwise.
Section 7.12. Successors and Assigns. Except as provided in the
definitions of ``Bank'' and ``Banks'' in Article IX, this Restated MAA
shall inure to the benefit of and be binding upon the successors and
assigns of the Parties, including entities resulting from the merger or
consolidation of one or more Banks.
Section 7.13. Counterparts. This Restated MAA, and any document
provided for hereunder, may be executed in one or more counterparts.
Transmission by facsimile or other form of electronic transmission of
an executed counterpart of this Restated MAA shall be deemed to
constitute due and sufficient delivery of such counterpart.
Section 7.14. Waiver. Any provision of this Restated MAA may be
waived, but only if such waiver is in writing and is signed by all
Parties to this Restated MAA.
Section 7.15. Entire Agreement. Except as provisions of CIPA are
cited in this Restated MAA (which provisions are expressly incorporated
herein by reference), this Restated MAA sets forth the entire agreement
of the Parties and supersedes all prior understandings or agreements,
oral or written, among the Parties with respect to the subject matter
hereof.
Section 7.16. Relation to CIPA. This Restated MAA and CIPA are
separate agreements, and invalidation of one does not affect the other.
Should CIPA be invalidated or terminated, the Parties will take the
necessary steps to maintain those aspects of CIPA that are referred to
in Sections 1.01, 1.02 and 1.03 of this Restated MAA, and to replace
the CIPA Oversight Body for purposes of continued administration of
this Restated MAA.
Section 7.17. Third Parties. Except as provided in Sections 2.10,
3.03, 7.03(g), 7.21 and 7.22, this Restated MAA is for the benefit of
the Parties and their respective successors and assigns, and no rights
are intended to be, or are, created hereunder for the benefit of any
third party.
Section 7.18. Time Is Of The Essence. Time is of the essence in
interpreting and performing this Restated MAA.
Section 7.19. Statutory Collateral Requirement. Nothing in this
Restated MAA shall be construed to permit a Bank to participate in
issues of Debt Securities or other obligations if it does not satisfy
the collateral requirements of Section 4.3(c) of the Act. For purposes
of this Section, ``Bank'' shall include any System bank in
conservatorship or receivership.
Section 7.20. Termination of System Status. Nothing in this
Restated MAA shall be construed to preclude a Bank from terminating its
status as a System institution pursuant to Section 7.10 of the Act, or
from at that time withdrawing, as from that time forward, the funding
resolution it has adopted pursuant to Section 4.4(b) of the Act. A Bank
that terminates its System status shall cease to have any rights or
obligations under this Restated MAA, except that it shall continue to
be subject to Article VIII with respect to claims accruing through the
date of such termination of System status.
Section 7.21. Restrictions Concerning Subsequent Litigation. It is
expressly agreed by the Banks that (a) Characterization or
categorization of Banks, (b) information furnished to the Committee or
other Banks, and (c) discussions or decisions of the Banks or Committee
under this Restated MAA shall not be used in any subsequent litigation
challenging FCA's or the Insurance Corporation's action or inaction.
Section 7.22. Effect of this Agreement. Neither this Restated MAA
nor FCA approval hereof shall in any way restrict or qualify the
authority of FCA or the Insurance Corporation to exercise any of the
powers, rights, or duties granted by law to FCA or the Insurance
Corporation.
Section 7.23. Relationship to the Joint and Several Liability
Reallocation Agreement. This Restated MAA and the Joint and Several
Liability Reallocation Agreement are separate agreements, and
invalidation of one does not affect the other.
Article VIII--Indemnification
Section 8.01. Definitions. As used in this Article VIII:
(a) ``Indemnified Party'' means any Bank, the Funding Corporation,
the Committee, the Scorekeeper, or any of the past, present or future
directors, officers, stockholders, employees or agents of the
foregoing.
(b) ``Damages'' means any and all losses, costs, liabilities,
damages and expenses, including, without limitation, court costs and
reasonable fees and expenses of attorneys expended in investigation,
settlement and defense (at the trial and appellate levels and
otherwise), which are incurred by an Indemnified Party as a result of
or in connection with a claim alleging liability to any non-Party for
actions taken pursuant to or in connection with this Restated MAA.
Except to the extent otherwise provided in this Article VIII, Damages
shall be deemed to have been incurred by reason of a final settlement
or the dismissal with prejudice of any such claim, or the issuance of a
final nonappealable order by a court of competent jurisdiction which
ultimately disposes of such a claim, whether favorably or unfavorably.
Section 8.02. Indemnity. To the extent consistent with governing
law, the Banks, jointly and severally, shall indemnify and hold
harmless each Indemnified Party against and in respect of Damages,
provided, however, that an Indemnified Party shall not be entitled to
indemnification under this Article VIII in connection with conduct of
such Indemnified Party constituting gross negligence, willful
misconduct, intentional tort or criminal act, or in connection with
civil money penalties imposed by FCA. In addition, the Banks, jointly
and severally, shall indemnify an Indemnified Party for all costs and
expenses (including, without limitation, fees and expenses of
attorneys) incurred reasonably and in good faith by an Indemnified
Party in connection with the successful enforcement of rights under any
provision of this Article VIII.
Section 8.03. Advancement of Expenses. The Banks, jointly and
severally, shall advance to an Indemnified Party, as and when incurred
by the Indemnified Party, all reasonable expenses, court costs and
attorneys' fees incurred by such Indemnified Party in defending any
proceeding involving a claim against such Indemnified Party based upon
or alleging any matter that constitutes, or if sustained would
constitute, a matter
[[Page 67450]]
in respect of which indemnification is provided for in Section 8.02, so
long as the Indemnified Party provides the Banks with a written
undertaking to repay all amounts so advanced if it is ultimately
determined by a court in a final nonappealable order or by agreement of
the Banks and the Indemnified Party that the Indemnified Party is not
entitled to be indemnified under Section 8.02.
Section 8.04. Assertion of Claim.
(a) Promptly after the receipt by an Indemnified Party of notice of
the assertion of any claim or the commencement of any action against
him, her or it in respect of which indemnity may be sought against the
Banks hereunder (an ``Assertion''), such Indemnified Party shall
apprise the Banks, through a notice to each of them, of such Assertion.
The failure to so notify the Banks shall not relieve the Banks of
liability they may have to such Indemnified Party hereunder, except to
the extent that failure to give such notice results in material
prejudice to the Banks.
(b) Any Bank receiving a notice under paragraph (a) Shall forward
it to the Committee (which, if not in existence, shall be formed at the
instance of such Bank to consider the matter). The Banks, through the
Committee, shall be entitled to participate in, and to the extent the
Banks, through the Committee, elect in writing on thirty days' notice,
to assume, the defense of an Assertion, at their own expense, with
counsel chosen by them and satisfactory to the Indemnified Party.
Notwithstanding that the Banks, through the Committee, shall have
elected by such written notice to assume the defense of any Assertion,
such Indemnified Party shall have the right to participate in the
investigation and defense thereof, with separate counsel chosen by such
Indemnified Party, but in such event the fees and expenses of such
separate counsel shall be paid by such Indemnified Party and shall not
be subject to indemnification by the Banks unless (i) The Banks,
through the Committee, shall have agreed to pay such fees and expenses,
(ii) the Banks shall have failed to assume the defense of such
Assertion and to employ counsel satisfactory to such Indemnified Party,
or (iii) in the reasonable judgment of such Indemnified Party, based
upon advice of his, her or its counsel, a conflict of interest may
exist between the Banks and such Indemnified Party with respect to such
Assertion, in which case, if such Indemnified Party notifies the Banks,
through the Committee, that such Indemnified Party elects to employ
separate counsel at the Banks' expense, the Banks shall not have the
right to assume the defense of such Assertion on behalf of such
Indemnified Party. Notwithstanding anything to the contrary in this
Article VIII, neither the Banks, through the Committee, nor the
Indemnified Party shall settle or compromise any action or consent to
the entering of any judgment (x) without the prior written consent of
the other, which consent shall not be unreasonably withheld, and (y)
without obtaining, as an unconditional term of such settlement,
compromise or consent, the delivery by the claimant or plaintiff to
such Indemnified Party of a duly executed written release of such
Indemnified Party from all liability in respect of such Assertion,
which release shall be satisfactory in form and substance to counsel to
such Indemnified Party. The Funding Corporation shall not be entitled
to vote on actions by the Committee under this paragraph (b) or Section
8.08.
Section 8.05. Remedies; Survival. The indemnification, rights and
remedies provided to an Indemnified Party under this Article VIII shall
be (i) In addition to and not in substitution for any other rights and
remedies to which any of the Indemnified Parties may be entitled, under
any other agreement with any other Person, or otherwise at law or in
equity, and (ii) provided prior to and without regard to any other
indemnification available to any Indemnified Party. This Article VIII
shall survive the termination of this Restated MAA.
Section 8.06. No Rights in Third Parties. This Restated MAA shall
not confer upon any Person other than the Indemnified Party any rights
or remedies of any nature or kind whatsoever under or by reason of the
indemnification provided for in this Article VIII.
Section 8.07. Subrogation; Insurance. Upon the payment by the Banks
to an Indemnified Party of any amounts for which an Indemnified Party
shall be entitled to indemnification under this Article VIII, if the
Indemnified Party shall also have the right to recover such amount
under any commercial insurance, the Banks shall be subrogated to such
rights to the extent of the indemnification actually paid. Where
coverage under such commercial insurance may exist, the Indemnified
Party shall promptly file and diligently pursue a claim under said
insurance. Any amounts paid pursuant to such claim shall be refunded to
the Banks to the extent the Banks have provided indemnification
payments under this Article VIII, provided, however, that recovery
under such insurance shall not be deemed a condition precedent to the
indemnification obligations of the Banks under this Article VIII.
Section 8.08. Sharing in Costs. The Banks shall share in the costs
of any indemnification payment hereunder as the Committee shall
determine.
Article IX--Definitions
The following definitions are used in this Restated MAA:
``Act'' means the Farm Credit Act of 1971, 12 U.S.C. section 2001,
et seq., as amended from time to time, or any successors thereto.
The ``Additional Restrictions'' are that a Bank (a) Shall manage
its asset/liability mix so as not to increase, and, to the extent
possible, so as to reduce or eliminate, any Interest-Rate Sensitivity
Deduction in its Net Composite Score, and (b) shall not increase the
dollar amount of any liabilities, or take any action giving rise to a
lien or pledge on its assets, senior to its liability on Debt
Securities other than (i) Tax liabilities and secured liabilities
arising in the ordinary course of business through activities other
than borrowing, such as mechanic's liens or judgment liens, and (ii)
secured liabilities, or an action giving rise to such a lien or pledge,
incurred in the ordinary course of business as the result of issuing
secured debt or entering into repurchase agreements, provided, however,
that such debt issuances and agreements may be undertaken to the extent
that the proceeds therefrom are used to repay the principal of
outstanding Debt Securities and the value of the collateral securing
the debt issuances or the agreements (computed in the same manner as
provided under Section 4.3(c) of the Act) does not exceed the amount of
principal so repaid.
``Associations'' means agricultural credit associations, federal
land bank associations, federal land credit associations and production
credit associations.
``Average Net Composite Score'' is defined in Section 1.03.
``Bank'' means a bank (including its consolidated subsidiaries) of
the Farm Credit System, other than (except where noted) any bank in
conservatorship or receivership (and its consolidated subsidiaries).
``Banks'' means the banks (including their consolidated
subsidiaries) of the Farm Credit System, other than (except where
noted) any banks in conservatorship or receivership (and their
consolidated subsidiaries).
``Business Day'' means any day other than a Saturday, Sunday or
Federal holiday.
[[Page 67451]]
``Business Plan'' means the business plan required under 12 CFR
618.8440, as amended from time to time, or any successors thereto.
``Category'' means Category I, Category II, or Category III, as the
circumstances require.
``Category I'' is defined in Section 1.05.
``Category II'' is defined in Section 1.06.
``Category II Interim Restrictions'' means the requirements set
forth in Section 4.02.
``Category III'' is defined in Section 1.07.
``Category III Interim Restrictions'' means the requirements set
forth in Section 5.02.
``CIPA'' means that certain Amended and Restated Contractual
Interbank Performance Agreement among the Banks of the Farm Credit
System and the Federal Farm Credit Banks Funding Corporation, the
Scorekeeper, dated as of June 30, 2011, as amended from time to time,
or any successor thereto.
``CIPA Oversight Body'' is defined in Section 1.02.
``Collateral'' is defined as in Section 4.3(c) of the Act and the
regulations thereunder, as amended from time to time, or any successors
thereto.
The ``Committee'' is defined in Section 2.01.
``Continued Access Decision(s)'' means a decision, subject to the
procedures, terms and conditions described in Article VI, that Final
Restrictions or a Final Prohibition not go into effect, or be lifted.
``Continued Access Request'' means a request for a Continued Access
Decision.
``Days'' means calendar days, unless the term Business Days is
used.
``Debt Securities'' means Systemwide and consolidated obligations
issued through the Funding Corporation, within the meaning of Sections
4.2(c), 4.2(d) and 4.9 of the Act.
``Disclosure Program'' means the program established, pursuant to
resolutions of the Banks and the Funding Corporation adopted in 1987
and last substantively revised in 1994, for disclosure at the
Systemwide level of financial and other information in connection with
the issuance of Debt Securities, as amended from time to time, or any
successor thereto.
``FCA'' means the Farm Credit Administration.
``Final Prohibition'' means the requirements set forth in Section
5.01.
``Final Restrictions'' means the requirements set forth in Section
4.01.
``First Restated MAA'' means that certain Amended and Restated
Market Access Agreement, dated July 1, 2003, among the Banks and the
Funding Corporation.
``Funding Corporation'' means the Federal Farm Credit Banks Funding
Corporation.
``Going Concern Qualification'' means a qualification expressed
pursuant to Statement of Auditing Standards No. 59, ``The Auditor's
Consideration of an Entity's Ability to Continue As a Going Concern.''
``Insurance Corporation'' means the Farm Credit System Insurance
Corporation.
``Insurance Fund'' means the Farm Credit Insurance Fund maintained
by the Insurance Corporation pursuant to Section 5.60 of the Act.
``Interest-Rate Sensitivity Deduction'' is defined as in Article II
of CIPA, and the Model referred to therein, as amended from time to
time, or any successor thereto.
``Joint and Several Liability Reallocation Agreement'' means that
certain Joint and Several Liability Reallocation Agreement among the
Banks and the Funding Corporation.
``Liquidity Deficiency Deduction'' is defined as in Article II of
CIPA, and the Model referred to therein, as amended from time to time,
or any successor thereto.
``Model'' means the term Model as it is defined in the CIPA.
``Net Collateral'' means a Bank's collateral as defined in 12 CFR
615.5050, as amended from time to time, or any successors thereto
(except that eligible investments as described in 12 CFR 615.5140, as
amended from time to time, or any successors thereto, are to be valued
at their amortized cost), less an amount equal to that portion of the
allocated investments of affiliated Associations that is not counted as
permanent capital by the Bank.
``Net Collateral Ratio'' means a Bank's Net Collateral divided by
Bank-only total liabilities (i.e., the total liabilities used to
compute the net collateral ratio defined in 12 CFR 615.5301(d), as
amended from time to time or any successors thereto).
``Net Composite Score'' is defined in Section 1.03.
``100% Vote'' means an affirmative vote, through each voting Bank's
board of directors or its designee, of all Banks that are entitled to
vote on a matter.
``Original Agreement'' means that certain Market Access Agreement,
dated September 1, 1994 and effective as of November 23, 1994, among
the Banks and the Funding Corporation.
``Parties'' mean the parties to this Restated MAA. A bank in
conservatorship or receivership is not a party to this Restated MAA.
``Permanent Capital'' is defined as in Section 4.3A(a)(1) of the
Act and the regulations thereunder, as amended from time to time, or
any successors thereto.
``Permanent Capital Ratio'' means a Bank's Permanent Capital as a
percentage of its Risk-Adjusted Asset Base.
``Person'' means any human being, partnership, association, joint
venture, corporation, legal representative or trust, or any other
entity.
``Ratio(s)'' means either the Net Collateral Ratio, or Permanent
Capital Ratio, as the circumstances require.
``Risk-Adjusted Asset Base'' is defined as in 12 CFR 615.5210(e),
as amended from time to time, or any successor thereto.
``Scorekeeper'' is defined in Section 1.01.
``System'' means the Farm Credit System.
``System Disclosure Agent'' means the Funding Corporation or such
other disclosure agent as all Banks shall unanimously agree upon, to
the extent permitted by law or regulation. For purposes of this
definition, ``Banks'' shall include any System bank in conservatorship
or receivership.
Date: October 27, 2011.
Mary Alice Donner,
Acting Secretary, Farm Credit Administration Board.
[FR Doc. 2011-28250 Filed 10-31-11; 8:45 am]
BILLING CODE 6705-01-P