Market Access Agreement

FARM CREDIT ADMINISTRATION

Market Access Agreement

AGENCY: Farm Credit Administration.

ACTION: Notice of market access agreement; request for comments.

-----------------------------------------------------------------------

SUMMARY: The Farm Credit Administration (FCA) is publishing for comment

a Market Access Agreement (Agreement) to be entered into by all of the

banks of the Farm Credit System (System) and the Federal Farm Credit

Banks Funding Corporation (Funding Corporation). The Agreement is

designed to set forth the understanding of the parties and to represent

the legal obligation of each of the parties regarding their respective

rights and responsibilities when the financial condition of a bank

falls below specified levels. The Agreement is designed to establish an

orderly process for addressing such situations and to minimize the

possibility of market disruption or further risk to the other parties

to the Agreement. The FCA is seeking comments from the public on the

Agreement and will take into consideration those comments prior to

granting final approval to the Agreement.

DATES: Written comments must be received on or before June 16, 1994.

ADDRESSES: Comments should be submitted in writing, in triplicate, to

Jean Noonan, General Counsel, Office of General Counsel, Farm Credit

Administration, McLean, Virginia 22102-5090. Copies of all

communications received will be available for examination by interested

parties in the Office of General Counsel, Farm Credit Administration.

FOR FURTHER INFORMATION CONTACT:

Jean Noonan, General Counsel, Office of General Counsel, Farm Credit

Administration, McLean, VA 22102-5090, (703) 883-4020, TDD (703) 883-

4444, or

Gary L. Norton, Assistant General Counsel, Regulatory Operations

Division, Office of General Counsel, Farm Credit Administration,

McLean, VA 22102-5090, (703) 883-4020, TDD (703) 883-4444.

SUPPLEMENTARY INFORMATION: The Agreement sets forth the understanding

of the parties and will legally bind the signatories to the contract by

establishing each party's respective rights and responsibilities in the

event of the decline in the financial condition of one of the banks

beyond the levels specified in the Agreement. This Agreement is to be

entered into among each of the banks of the System and the Funding

Corporation. The Agreement provides that it will not be implemented

until it is approved by the FCA and the Farm Credit System Insurance

Corporation (FCSIC) expresses its support for the Agreement. Prior to

granting final approval to the Agreement, the FCA is publishing the

Agreement for comment by any interested member of the public. The FCA

will take these comments into consideration prior to approving the

Agreement.

The Agreement states that the parties propose to enter into the

Agreement based on their recognition of the joint and several liability

of the banks on Systemwide debt securities and because of their

ultimate responsibility and that of their affiliated associations to

make additional premium payments into the Farm Credit System Insurance

Fund if monies in the fund are used to pay the principal or interest on

Systemwide debt securities or assist financially troubled banks. In

light of that, each bank has a significant interest in controlling the

risk associated with the level of borrowing by any bank facing

financial difficulty. The banks further recognized that there is a need

to provide some flexibility for dealing with the specific facts and

circumstances that may face a bank that is in financial difficulty. The

parties also recognize that under the Farm Credit Act of 1971, as

amended, (Act) the Funding Corporation has the responsibility to

determine, subject to the approval of the FCA, the conditions of

participation by each of the several banks in each issue of Systemwide

debt securities and that the Funding Corporation has adopted a market

access and risk alert program to fulfill its understanding of its

responsibilities under the Act.

In addition, the parties recognize the authority of the FCA under

section 5.17(a)(10) of the Act to exercise its enforcement authorities

to ensure the safety and soundness of System institutions and the FCA's

authorities under sections 4.2 and 4.9 of the Act to approve the

issuance of Systemwide debt securities. The parties also recognize the

authority of the FCSIC under section 5.61 of the Act to assist

institutions experiencing financial difficulties.

In summary, the Agreement establishes certain financial thresholds

at which conditions are placed on the activities of a bank or the

bank's access to participation in Systemwide obligations is either

restricted or curtailed. The Agreement establishes three categories,

which are based on each bank's collateral position, permanent capital

position, and scores under the Contractual Inter-bank Performance

Agreement (CIPA).

As a bank's financial condition declines, it moves into Category I

then Category II and finally Category III. When a bank reaches Category

I, it is required to provide certain information to a committee of bank

and Funding Corporation representatives established under the

Agreement, the Monitoring and Advisory Committee, including information

as to how it is going to improve its financial condition. When a bank

reaches Category II, in addition to being required to provide

additional information, the bank's access to the markets is limited to

only those amounts necessary for the bank to be able to roll over its

debt. When the bank reaches Category III, the bank is precluded from

joining in the issuance of Systemwide obligations.

The Agreement includes provisions that enable a bank in Category II

or III to request the opportunity to continue its access to the market.

The Agreement also provides that the FCA may override a decision to

impose Category III prohibitions on access to the market for a period

of 60 days, which may be renewed for an additional 60-day period.

In February 1993 the boards of directors of the banks and the

Funding Corporation approved a draft Agreement and submitted the

Agreement to the FCA and the FCSIC for approval. On September 9, 1993

the FCA Board granted preliminary approval to the Agreement subject to

certain conditions. The conditions in the preliminary approval required

the Agreement to be modified as follows:

1. Provide for the periodic review of the Agreement by the parties.

2. Include at least one of the independent directors of the Funding

Corporation on the Monitoring and Advisory Committee and as part of the

decision group.

3. Provide that a decision to deny market access because of a

Category III trigger is effective only if the FCA does not veto the

decision within 30 days from the end of the forbearance process and

that the FCA and the FCSIC have been so notified.

4. Provide that no bank could challenge a conservatorship or

receivership on the grounds that market access had been restricted or

denied pursuant to the Agreement.

5. Clarify that the Agreement does not apply to a bank in

conservatorship or receivership, thereby ensuring that the FCSIC, when

acting as receiver or conservator, would be able to access the market

to the same extent as if the Agreement were not in place.

6. Preclude the banks from gaining access to information involving

communications with the FCA or the FCSIC without the consent of the

affected agency.

7. Require that all information provided pursuant to the Agreement

and the minutes of the Monitoring and Advisory Committee be retained by

the Funding Corporation to facilitate their review by the FCA or the

FCSIC.

8. Make clear that the FCA's approval of the agreement in no way

restricts the statutory rights of the FCA or the FCSIC.

9. Delete the FCA and the FCSIC as parties to the Agreement.

In addition, the FCA provided that the Agreement would be published

in the Federal Register for public comment before final approval.

Following the FCA's conditional preliminary approval, the System

banks and the Funding Corporation modified the Agreement to bring the

Agreement into conformance with the FCA's conditions. The FCA reviewed

the Agreement as revised, and agrees that it complies with the FCA's

conditions. Thereafter, the boards of directors of each of the banks

and of the Funding Corporation adopted a resolution whereby each party

agrees to enter into the Agreement in the form submitted to the FCA,

subject to the FCA's approval. The resolution of each party provides

that if the FCA requires modifications to the Agreement in response to

public comments, the resolutions shall be ineffective and each Board

shall consider what further action to take.

Based on the foregoing, the FCA is now seeking public comment on

the Agreement as set forth below:

MARKET ACCESS AGREEMENT

AMONG

AGRIBANK, FCB,

FARM CREDIT BANK OF BALTIMORE,

FARM CREDIT BANK OF COLUMBIA,

FARM CREDIT BANK OF OMAHA,

FARM CREDIT BANK OF SPOKANE,

FARM CREDIT BANK OF SPRINGFIELD,

FARM CREDIT BANK OF TEXAS,

FARM CREDIT BANK OF WICHITA,

NATIONAL BANK FOR COOPERATIVES (COBANK),

ST. PAUL BANK FOR COOPERATIVES,

SPRINGFIELD BANK FOR COOPERATIVES,

WESTERN FARM CREDIT BANK

AND

FEDERAL FARM CREDIT BANKS FUNDING CORPORATION

This MARKET ACCESS AGREEMENT is entered into among Agribank, FCB,

the Farm Credit Bank of Baltimore, the Farm Credit Bank of Columbia,

the Farm Credit Bank of Omaha, the Farm Credit Bank of Spokane, the

Farm Credit Bank of Springfield, the Farm Credit Bank of Texas, the

Farm Credit Bank of Wichita, the National Bank for Cooperatives

(CoBank), the St. Paul Bank for Cooperatives, the Springfield Bank for

Cooperatives, the Western Farm Credit Bank and the Federal Farm Credit

Banks Funding Corporation.

Whereas, the Banks concur that, because of their joint and several

liability on Systemwide Debt Securities, and because of their ultimate

responsibility, and that of their constituent Associations, to make

additional premium payments into the Insurance Fund if monies in the

Insurance Fund are used to pay principal or interest on Systemwide Debt

Securities or assist financially troubled Banks, each Bank has a

significant stake in the financial strength of the others and a

significant interest in controlling the risks associated with the level

of borrowing by Banks facing financial difficulty; and

Whereas, the Parties also recognize that it is important to take

account of the unique facts and circumstances in each actual instance

of a Bank's facing financial difficulty; and

Whereas, Section 4.9(b)(2) of the Act provides that, subject to the

approval of FCA, the Funding Corporation, acting for the Banks, ``shall

determine the * * * conditions of participation by the several banks in

each issue'' of Systemwide Debt Securities; and

Whereas, certain Parties have taken differing positions on whether

Section 4.9(b)(2) of the Act authorizes, and whether it requires, the

Funding Corporation to put in place a program for restricting or

prohibiting Banks under certain circumstances from participating in

issues of Systemwide Debt Securities; and

Whereas, the Funding Corporation has adopted and maintained in

place a Market Access and Risk Alert Program designed to fulfill what

it has understood to be its responsibilities under Section 4.9(b)(2) of

the Act with respect to determining conditions of participation; and

Whereas, the Banks and the Funding Corporation have been desirous

of arriving at an agreement regarding market access that would render

it unnecessary to resolve the aforementioned differing views of Section

4.9(b)(2) of the Act; and

Whereas, an Ad Hoc Committee consisting of a director and an

executive officer of each Bank met on December 4, 1992 and adopted

guidelines for such an agreement and appointed a Work Group (the ``Work

Group'') to prepare a draft agreement; and

Whereas, the Work Group deliberated during December 1992 and

January 1993, and presented a draft agreement to the Presidents'

Planning Committee on January 15, 1993; and

Whereas, the Presidents' Planning Committee suggested certain

revisions to that draft agreement, and the Work Group revised the draft

agreement and submitted it to the Ad Hoc Committee; and

Whereas, the Ad Hoc Committee met on January 23, 1993 and approved

the revised draft agreement for presentation to the Banks and the

Funding Corporation; and

Whereas, the boards of directors of the Banks and of the Funding

Corporation approved the revised draft agreement in principle at

meetings in February 1993; and

Whereas, thereafter, the revised draft agreement was considered by

FCA and the Insurance Corporation; and

Whereas, on September 9, 1993, FCA granted preliminary approval to

the revised draft agreement subject to certain conditions, and on

September 16, 1993, the Insurance Corporation expressed its support for

FCA's action; and

Whereas, the Work Group proposed certain further revisions to the

revised draft agreement to address the concerns reflected in FCA's

conditions; and

Whereas, FCA has stated that it intends to publish the Agreement in

the Federal Register and seek comments thereon; 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 of Systemwide 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 Systemwide Debt Securities; and

Whereas, the Banks are entering into this Agreement pursuant to,

inter alia, Section 4.2(d) of the Act; and

Whereas, the Funding Corporation believes the execution and

implementation of this Agreement 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, subject to the approval of FCA as described in Section

7.01(f) and the conditions set forth in Section 7.03(f), the Funding

Corporation is prepared (i) 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 this Agreement, (ii) to become a

party to this Agreement, and (iii) on the date this Agreement becomes

effective, to discontinue the Market Access and Risk Alert Program as

described in Section 7.03(f); and

Whereas, the Funding Corporation is entering into this Agreement

pursuant to, inter alia, Section 4.9(b)(2) of the Act,

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

Agreement, shall be the same as the Scorekeeper under Section 4.1 of

CIPA, as amended from time to time, or any successor thereto.

Section 1.02. CIPA Oversight Body. The CIPA Oversight Body, for

purposes of this Agreement, shall be the same as the Oversight Body

under Section 6.1 of CIPA, as amended from time to time, or any

successor thereto.

Section 1.03. CIPA Scores. Net Composite Scores and Average Net

Composite Scores, for purposes of this Agreement, shall be the same as

those determined under Article II of CIPA, the Model referred to

therein, and Section 1.2(f)(i) of CIPA, as in effect on January 1,

1994, 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. Collateral and Permanent Capital Figures. Each Bank

shall report to the Scorekeeper within fifteen days after the end of

each month its Collateral Figure as of the last day of that month. Each

Bank shall report to the Scorekeeper within fifteen days after the end

of each quarter its Permanent Capital Figure as of the last day of that

quarter, except that any Bank that is in Category I, II or III, as

indicated in the most recent notice from the Scorekeeper, shall report

to the Scorekeeper within fifteen days after the end of each month its

Permanent Capital Figure 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 Collateral or

Permanent Capital Figure previously reported hereunder to have been

different, the Bank shall promptly report a revised Figure to the

Scorekeeper. Should the Scorekeeper consider it necessary to verify any

Collateral or Permanent Capital Figure, 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 Figures 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 35.0 or more, but less than 45.0,

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 40.0, for the most recent calendar quarter for which a Net

Composite Score is available, (c) has both a Collateral Figure of

102.00 percent or more, but less than 103.00 percent, for the last day

of the most recent month, and an Average Net Composite Score of less

than 55.0 for the most recent calendar quarter for which an Average Net

Composite Score is available, or (d) has a Permanent Capital Figure of

5.50 percent or more, but less than 8.00 percent, for the period ending

on the last day of the most recent month. Clause (c) of the preceding

sentence shall not apply if a Bank (i) has the unconditional legal

right, not terminable without the Bank's consent, to require its

constituent Associations to make additional investments in the Bank,

and provides to the Scorekeeper an opinion of counsel confirming that

it has such right, and (ii) the capital available to the Bank through

this means would, if called upon, be sufficient to cause the Bank to

have a Collateral Figure of 103.00 percent or more.

Section 1.06. Category II. A Bank shall be in Category II if it:

(a) Has an Average Net Composite Score of 25.0 or more, but 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 20.0 or

more, but less than 30.0, for the most recent calendar quarter for

which a Net Composite Score is available, (c) would come within the

provisions of Section 1.07(a) or (b) if the parenthetical phrases were

omitted therefrom, (d) has a Collateral Figure of 101.00 percent, or

more, but less than 102.00 percent, for the last day of the most recent

month, (e) has a Permanent Capital Figure of 3.50 percent or more, but

less than 5.50 percent, for the period ending on the last day of the

most recent month, or (f) is in Category I and has failed to provide

information to the Committee as required by Article III within two

Business Days after 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 (computed without making any

Liquidity Deficiency Deduction) of less than 25.0 for the most recent

calendar quarter for which an Average Net Composite Score is available,

(b) has a Net Composite Score (computed without making any Liquidity

Deficiency Deduction) of less than 20.0 for the most recent calendar

quarter for which a Net Composite Score is available, (c) has an Excess

Collateral Figure of less than 101.00 percent for the last day of the

most recent month, (d) has a Permanent Capital Figure of less than 3.50

percent 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

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, FCA, the Insurance Corporation, the Funding

Corporation if it is not the Scorekeeper, 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,

referred to herein as ``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, II or III (unless such a Committee is already in

existence). The Committee shall remain 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, II or 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

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 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. 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 (with

each Party acting through at least one of its representatives).

Thereafter, the Committee shall meet at the call of the Chairman of the

Committee or a majority of the Parties entitled to vote on Committee

business (with each Party acting 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 (with each Party acting through

at least one of its representatives). A majority of the Parties

entitled to vote on Committee business (with each Party acting through

at least one of its representatives) shall constitute a quorum for the

conduct of business, provided, however, that if a quorum cannot be

raised after seven days of efforts, the Parties that attend a meeting

upon proper notice thereafter shall constitute a quorum. A meeting may

be held by a telephone conference arrangement allowing each speaker to

be heard by all others in attendance.

Section 2.05. Action Without a Meeting. Action may be taken by the

Committee without a meeting if each Bank and the Funding Corporation

(with each Party acting through at least one of its representatives)

consents in writing to consideration of a matter without a meeting and

a majority of the Parties entitled to vote on Committee business (with

each Party acting through at least one of its representatives) approves

the action in writing, which writings shall be kept with the minutes of

the Committee.

Section 2.06. Voting. Each Bank and the Funding Corporation 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 a simple majority of the Parties entitled to

vote on Committee business that are present (physically or by

telephone) 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

the necessary majority (but not in determining a quorum), 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 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.

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 to carry out its functions.

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 in such shares as the Committee shall from time to time

determine.

Section 2.10. Custody of Records. All information received by the

Committee pursuant to this Agreement, 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, II or 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

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, and (d) 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 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 III, then the Bank shall within thirty

days provide to the Committee, in addition to the information required

by Section 3.01, the following information: (a) copies of its complete

Business Plan, as revised to take account of the financial difficulties

the Bank is facing, (b) a report as to the status of any Bank

discussions with the Insurance Corporation concerning possible

assistance to the Bank or other steps to improve the Bank's financial

condition, and (c) a detailed list of all materials provided by the

Bank to the Insurance Corporation. 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. Such Bank shall also allow

designees of the Committee (including experts or consultants retained

by the Committee) to conduct on-site inspections of credit and

financial files, examination reports (if inspection of such reports is

permitted by law), auditors' letters, and other Bank documents. The

Committee may draw upon the resources of the other Banks in conducting

such inspections.

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, or documents

describing such communications, except as consented to by, and subject

to such restrictive conditions as may be imposed by, whichever of FCA

or the Insurance Corporation was involved in the communication.

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. 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, subpart B, 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 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 Agreement 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, II or 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

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 the Effective Date, 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 Systemwide 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) 10 days thereafter, if the Bank does not by that day submit a

Continued Access Request to the Committee, or (b) if the Bank does by

that day submit a Continued Access Request to the Committee, the

seventh day following the day that notice is received that the Request

is granted or denied, the Bank (i) may participate in issues of

Systemwide 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 Agreement as may

apply to it by reason of its being in another Category.

Article V--Prohibition of Market Access

Section 5.01. Final Prohibition. As of the Effective Date, 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 Systemwide 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) 25 days thereafter, if the Bank does not by that day

submit a Continued Access Request to the Committee, or (b) if the Bank

does by that day submit a Continued Access Request to the Committee,

the seventh day following the day that notice is received that the

Request is granted or denied, the Bank (i) may participate in issues of

Systemwide 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 Effective Date, 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 Agreement

as may apply to it by reason of its being in another Category.

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 III, if the Bank anticipates such notice, and (ii) subsequent to the

Effective Date of Final Restrictions or a Final Prohibition.

(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 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. The Banks entitled to vote on the Request

shall be all Banks other than those in Category II and 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 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 75

percent Vote within the ten-day period, and shall be considered denied

if a 75 percent 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 Request, and, if the 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 75 percent Vote. If the Committee recommends against or fails to

act on a Continued Access Request, and it is subsequently approved by a

75 percent 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 75 percent Vote. A Continued

Access Decision (including any conditions to which it may be subject)

will terminate automatically as soon as the Bank is no longer in the

same Category as it was when it requested the Decision, as indicated in

the most recent notice from the Scorekeeper under Section 1.09.

Section 6.05. Conditions. A Continued Access Decision shall be

subject to such conditions as the Committee recommends and are approved

by a 75 percent Vote. If specifically approved by a 75 percent 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 75 percent 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 Agreement shall go into

effect upon the execution by each Party of a certificate in

substantially the form of Attachment A hereto that all of the following

conditions precedent have been satisfied: (a) the delivery to the Banks

of an opinion of Covington & Burling in substantially the form of

Attachment B hereto [re authority, enforceability, compliance with

Section 4.9(b)(2) by the Funding Corporation], (b) the delivery to the

Funding Corporation of an opinion of Sutherland, Asbill & Brennan in

substantially the form of Attachment C hereto [re same], (c) adoption

by each of the Banks of a resolution in substantially the form of

Attachment D hereto; (d) adoption by the Funding Corporation of a

resolution substantially in the form of Attachment E hereto, (e) action

by the Insurance Corporation, through its board, expressing its support

for this Agreement, and (f) action by FCA, through its board, approving

this Agreement pursuant to 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 Agreement pursuant to

Section 4.9(b)(2) of the Act insofar as such approval may be required,

which action shall (i) be taken after interested parties have been

given notice and afforded the opportunity to comment to FCA on whether

this Agreement should be approved, (ii) indicate that the entry into

and compliance with this Agreement 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 (iii) 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 Farm Credit Bank of Springfield, attn.

Allan Kantrowitz, General Counsel, which shall advise all other Parties

when a complete set of certificates is received.

Section 7.02. Representations and Warranties. Each Party represents

and warrants to the other Parties that (a) it has duly executed and

delivered this Agreement, (b) its performance of this Agreement 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

Agreement and perform all of its obligations hereunder, and (e) its

performance of this Agreement 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

Party 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, II or 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 Systemwide 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, II or 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 Systemwide 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 Agreement, consents to

emergency injunctive relief to enforce this provision. Nothing in this

Agreement 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, II or 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 Systemwide 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 Agreement,

consents to emergency injunctive relief to enforce this provision.

Nothing in this Agreement 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 Agreement 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 Agreement.

This provision shall not be construed to preclude judicial actions

under the U.S. Arbitration Act, 9 U.S.C. 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, promptly following the

date this Agreement becomes effective, it will discontinue the Market

Access and Risk Alert Program, and that it will thereafter adopt no

similar such program for so long as (i) this Agreement 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

Agreement. Should the condition described in clause (ii) no longer

apply and the Funding Corporation adopt a market access program, this

Agreement 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 Agreement shall not

be construed as waiving such right.

(g) It is expressly agreed that this Agreement and FCA approval

hereof 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, 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 Agreement or FCA's approval of this Agreement; 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 Agreement shall terminate on

December 31, 2011, or at an earlier date if so agreed in writing by 75

percent of all the Banks. Commencing a year before December 31, 2011,

the Parties shall meet to consider its extension. It is understood that

the termination of this Agreement shall not affect any rights and

obligations of the Funding Corporation under Section 4.9(b)(2) of the

Act.

Section 7.05. Periodic Review. During the years 2000 and 2006, and

at such more frequent intervals as the Parties may agree, the Banks and

the Funding Corporation, through their boards of directors, shall

review this Agreement 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 Agreement and recommend any

amendments it considers appropriate.

Section 7.06. Confidentiality. The Parties may disclose this

Agreement and any amendments to it and any actions taken pursuant to

this Agreement to restrict or prohibit borrowing by a Bank. All other

information relating to this Agreement shall be kept confidential and

shall be used solely for purposes of this Agreement, 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 Agreement shall execute a written undertaking to preserve the

confidentiality of any information received in connection with this

Agreement. Notwithstanding the foregoing, nothing in this Agreement

shall prevent Parties from disclosing information to FCA or the

Insurance Corporation.

Section 7.07. Amendments. This Agreement 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 Agreement shall be submitted to final and

binding arbitration pursuant to the U.S. Arbitration Act, 9 U.S.C. 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.

Section 7.09. Governing Law. This Agreement shall be governed by

and construed in accordance with the Federal law of the United States

of America to the extent applicable, and, to the extent that Federal

law is not applicable, in accordance with the law of the State of New

York.

Section 7.10. Notices. Notices under this Agreement shall be in

writing, shall be sent both by facsimile transmission and by overnight

delivery service, and shall be deemed received on the Business Day

after they are sent. Notices shall be addressed as follows unless such

address is changed by written notice hereunder:

To AgriBank, FCB:

AgriBank, FCB, 375 Jackson Street, St. Paul, MN 55101.

ATTENTION: ____________

Telecopier: 612-282-8666

To the Farm Credit Bank of Baltimore:

Farm Credit Bank of Baltimore, Farm Credit Building, 14114 York

Road, Sparks, MD 21152.

ATTENTION: ____________

Telecopier: 410-329-5705

To the Farm Credit Bank of Columbia:

Farm Credit Bank of Columbia, Farm Credit Bank Building, 1401

Hampton Street, Columbia, SC 29201.

ATTENTION: ____________

Telecopier: 803-254-1776

To the Farm Credit Bank of Omaha:

Farm Credit Bank of Omaha, Farm Credit Building, 206 South 19th

Street, Omaha, NB 68102-1755.

ATTENTION: ____________

Telecopier: 402-348-3699

To the Farm Credit Bank of Spokane:

Farm Credit Bank of Spokane, W. 601 First Avenue, Spokane, WA

99204.

ATTENTION: ____________

Telecopier: 509-838-9445

To the Farm Credit Bank of Springfield:

Farm Credit Bank of Springfield, 67 Hunt Street, Agawam, MA

01001.

ATTENTION: ____________

Telecopier: 413-789-0140

To the Farm Credit Bank of Texas:

Farm Credit Bank of Texas, La Costa Office Park, 6210 Highway

290 East, Austin, TX 78723.

ATTENTION: ____________

Telecopier: 512-465-0675

To the Farm Credit Bank of Wichita:

Farm Credit Bank of Wichita, 245 North Waco, Wichita, KS 67202.

ATTENTION: ____________

Telecopier: 316-266-5121

To National Bank for Cooperatives:

National Bank for Cooperatives, 5500 South Quebec Street,

Englewood, CO 80111.

ATTENTION: ____________

Telecopier: 303-740-4002

To St. Paul Bank for Cooperatives:

St. Paul Bank for Cooperatives, 375 Jackson Street, St. Paul, MN

55101.

ATTENTION: ____________

Telecopier: 612-282-8201

To Springfield Bank for Cooperatives:

Springfield Bank for Cooperatives, 67 Hunt Street, Agawam, MA

01001.

ATTENTION: ____________

Telecopier: 413-789-0140

To Western Farm Credit Bank:

Western Farm Credit Bank, 3636 American River Drive, Sacramento,

CA 95864-5996.

ATTENTION: ____________

Telecopier: 916-971-2837

To Federal Farm Credit Banks Funding Corporation:

Federal Farm Credit Banks Funding Corporation, Suite 1401, 10

Exchange Place, Jersey City, NJ 07302,

ATTENTION: ____________

Telecopier: 201-200-8109

To the Farm Credit System Insurance Corporation:

Farm Credit System Insurance Corporation, 1501 Farm Credit

Drive, McLean, Virginia 22102-0826,

ATTENTION: ____________

Telecopier: 703-734-5784

To the Farm Credit Administration:

Farm Credit Administration, 1501 Farm Credit Drive, McLean,

Virginia 22102-5090.

ATTENTION: ____________

Telecopier: 703-734-5784

To the CIPA Oversight Body:

At such address and telecopier number 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 and telecopier number as shall be supplied by

the Committee, which the Committee shall promptly transmit to each

Party.

To a Scorekeeper other than the Funding Corporation:

At such address and telecopier number as shall be supplied by

such Scorekeeper, which such Scorekeeper shall promptly transmit to

each Party.

Section 7.11. Headings; Conjunctive/Disjunctive; Singular/Plural.

The headings of any article or section of this Agreement are for

convenience only and shall not be used to interpret any provision of

the Agreement. 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 Agreement

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 Agreement, and any document

provided for hereunder, may be executed in one or more counterparts.

Section 7.14. Waiver. Any provision of this Agreement may be

waived, but only if such waiver is in writing and is signed by all

Parties to this Agreement.

Section 7.15. Entire Agreement. Except as provisions of CIPA are

cited in this Agreement (which provisions are expressly incorporated

herein by reference), this Agreement 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 Agreement 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, and to replace the CIPA Oversight Body

for purposes of continued administration of this Agreement.

Section 7.17. Third Parties. Except as provided in Sections 2.10,

3.03, 7.03(g), 7.21 and 7.22, this Agreement 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 Agreement.

Section 7.19. Statutory Collateral Requirement. Nothing in this

Agreement shall be construed to permit a Bank to participate in issues

of Systemwide 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

Agreement 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 Agreement, 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 Agreement 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 Agreement 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.

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 Agreement. 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 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 so to 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 Agreement.

Section 8.06. No Rights in Third Parties. This Agreement 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 Agreement:

Act means the Farm Credit Act of 1971, 12 U.S.C. 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 Systemwide 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 Systemwide 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 of the Farm Credit System, other than (except

where noted) any bank in conservatorship or receivership.

Banks means the banks of the Farm Credit System, other than (except

where noted) any banks in conservatorship or receivership.

Business Day means any day other than a Saturday, Sunday or Federal

holiday.

Business Plan means the business plan required under 12 CFR

618.8440, as amended from time to time, or any successors thereto.

CIPA means that certain ``Contractual Interbank Performance

Agreement Among the Banks of the Farm Credit System, the Farm Credit

System Financial Assistance Corporation and the Federal Farm Credit

Banks Funding Corporation, the Scorekeeper, Dated as of January 1,

1992,'' as amended from time to time.

CIPA Oversight Body is defined in Section 1.02.

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.

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.

Collateral Figure means a Bank's Collateral, divided by its

Collateralized Obligations, times 100 percent.

Collateralized Obligations means obligations required by Section

4.3(c) of the Act to be backed by collateral as set forth therein.

The Committee is defined in Section 2.01.

Continued Access Decision 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.

Disclosure Program means the program established, pursuant to

resolutions of the Banks and the Funding Corporation adopted in 1987

and revised in 1989, for disclosure at the Systemwide level of

financial and other information in connection with the issuance of

Systemwide Debt Securities, as amended from time to time, or any

successor thereto.

The Effective Date is (a) the tenth day after a Bank receives a

notification from the Scorekeeper that it is in Category II or the

twenty-fifth day after a Bank receives a notification from the

Scorekeeper that it is in Category III, in each case if the Bank does

not by that day submit a Continued Access Request to the Committee, or

(b) if the Bank does by that day submit a Continued Access Request to

the Committee, the seventh day following the day that notice is

received that the Request is denied.

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.

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.

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.

Net Composite Score is defined in Section 1.03.

Parties means the parties to this Agreement. A bank in

conservatorship or receivership is not a party to this Agreement.

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 Figure 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.

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.

Seventy-five (75) Percent Vote means an affirmative vote, through

each voting Bank's board of directors or its designee, of 75 percent of

those Banks that are entitled to vote on a matter.

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.

Systemwide Debt Securities means Systemwide obligations issued

through the Funding Corporation, within the meaning of Sections 4.2(d)

and 4.9 of the Act.

Dated: May 11, 1994.

Curtis M. Anderson,

Secretary, Farm Credit Administration Board.

[FR Doc. 94-11907 Filed 5-16-94; 8:45 am]

BILLING CODE 6705-01-P