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

Exhibit 10.38
 
 
[image1.jpg]ADVANCES, PLEDGE AND SECURITY AGREEMENT
 
This Advances, Pledge and Security Agreement (the "Advances Agreement"), dated
as of this 4th day of  May, 2011 is between Star Insurance Company with its
principal place of business at 26255 American Drive, Southfield, MI 48034 (the
"Member") and the Federal Home Loan Bank of Indianapolis, with its principal
place of business at 8250 Woodfield Crossing Boulevard, Indianapolis, Indiana
46240 (the "FHLBI").
 
WHEREAS, the FHLBI, subject to the provisions of the Federal Home Loan Bank Act
("Bank Act"), the Rules and Regulations of the Federal Housing Finance Board or
its legal successor ("FHFB Regulations"), the policies of the FHFB and the
FHLBP's Credit Policies (as hereinafter defined), is authorized to make
available Advances and Other Credit Products to its members; and
 
WHEREAS, Member desires from time to time to apply for such Advances and Other
Credit Products that may be available to it; and
 
WHEREAS, the FHLBI requires that such Advances and Other Credit Products
provided by the FHLBI be secured pursuant to this Advances Agreement, and Member
agrees to provide such security as requested by the FHLBI by the means set forth
in this Advances Agreement.
 
NOW THEREFORE, intending to be legally bound, the Member and the FHLBI agree as
follows:
 
1. General.
 
Section 1.01. Definitions.
As used herein, the following terms shall have the following meanings:
 
"Advance" or "Advances" means any and all loans or other extensions of credit
now or hereafter granted by the FHLBI to the Member, including all loans or
extensions of credit by the FHLBI to the Member prior to the date hereof.
 
"Advice of Credit" means one or more written confirmations to be executed by the
Member and the FHLBI specifying the type or category of Advance made, the terms
of repayment, the interest rate (which may be fixed or variable), and any other
pertinent terms and conditions, which shall evidence an Advance.
 
"Application for Advance" means one or more written or telephonic requests for
an Advance, in such form or forms as shall be specified by the FHLBI from time
to time, and which if executed by the FHLBI shall evidence an Advance.
 
"Bank Deposits" means all deposit accounts maintained by the Member with the
FHLBI (excluding safe-­keeping accounts expressly held for the benefit of a
third-party), all money, cash and checks, drafts, notices, bills, bills of
exchange and bonds deposited therein or credited thereto, including any
increases, renewals, extensions, substitutions and replacements, whether or not
such instruments have been posted to any such deposit account, and all
statements, certificates, passbooks and instruments representing any such
deposit account.
 
"Capital Stock" means all of the capital stock of the FHLBI owned by the Member,
and all payments which have been or hereafter are made on account of
subscriptions to, and all unpaid dividends on, such Capital Stock.
 
"CMS Account" means that certain Cash Management Service Account maintained by
the Member at the FHLBI.
 
 
-1-

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

 
 
"Collateral" means the following assets of the Member of any kind or nature
whatsoever, whether tangible or intangible, including without limitation, all
Capital Stock, Bank Deposits, Mortgage Collateral, Securities Collateral, and
Other Collateral, all cash and cash equivalents, all insurance proceeds, all tax
refunds, all proceeds of any of the foregoing, and all collections on any and
all of the foregoing, which are now or hereafter pledged to the FHLBI pursuant
to Section 3.01 hereof. "Collateral" also means any of the foregoing which have
previously been assigned, transferred or pledged to the FHLBI by the Member as
collateral for loans or other extensions of credit prior to the date hereof, all
of such assets in which a security interest is granted pursuant to the terms
hereof or in which a security interest is hereafter assigned, transferred,
granted or pledged pursuant to the terms hereof.
 
"Collateral Policy" means the FHLBI's Collateral Policy as stated in the Credit
Policy Manual, policy statements or operating circulars of the FHLBI, as in
effect from time to time.
 
"Collateral Requirement" means such aggregate Market Value (or unpaid principal
balance) of Eligible Collateral as is specified in the FHLBI's Collateral Policy
or as may be otherwise specified or adjusted in writing by the FHLBI from time
to time as being the collateral maintenance level the Member must maintain
hereunder. The FHLBI may increase or decrease the Collateral Requirement at any
time.
 
"Credit Policies" means the FHLBI's  Credit  Policy Manual, policy statements,
or operating circulars relating to Advances and Other Credit Products offered by
the FHLBI, ail as in effect from time to time.
 
"Eligible Collateral" means Collateral other than Capital Stock which: (I)
subject to the limitations set forth herein, meets the definition of Eligible
Collateral under the FHLBI's Collateral Policy, including without limitation
one-to-four family whole mortgage loans, home equity mortgage loans, commercial
real estate loans, government and agency securities, private mortgage-backed
securities, and Bank Deposits; (ii) is owned by the Member free and clear of any
liens, encumbrances or other interests other than the obligations the Member has
to its policyholders and the assignment to the FHLBI hereunder; (iii) has not
been in default within the most recent 12-month period, provided that in the
case of Mortgage Collateral, mortgage payments that are over- due by more than
sixty (60) days shall not be included within Eligible Collateral; (iv) in the
case of Mortgage Collateral, relates to residential real property which is
covered by fire, hazard, and where applicable, flood insurance in an amount at
least sufficient to discharge the mortgage loan in full in case of loss and as
to which all real estate taxes are current; and (vi) in the case of Mortgage
Collateral, does not secure an obligation on which any director, officer,
employee, attorney or agent of the Member or of any Federal Home Loan Bank is
personally liable. The FHLBI may change the definition of Eligible Collateral
from time to time, and the FHLBI's determination of Eligible Collateral shall be
conclusive. Notwithstanding any other provision herein, from the effective date
of this Advances Agreement until the FHLBI shall provide written notice to the
contrary, Eligible Collateral shall be limited to Securities Collateral and Bank
Deposits.
 
"Funding Agreement" means an agreement for an extension of secured credit that
authorizes the Member to accept funds from the FHLBI and that provides for an
accumulation of those funds for the purpose of making one or more payments at
future dates in amounts specifying the type or category of Advance made, the
terms of payment, the interest rate (which may be fixed or variable), and any
other pertinent terms and conditions, which shall evidence and constitute an
Advance.
 
"Market Value" means the market value of Collateral determined in a manner as
specified by the FHLBI from time to time. The FHLBI may change the method of
determining Market Value at any time in a manner which shall be consistently
applied to substantially all borrowers. The FHLBI's determination of Market
Value shall be conclusive.
 
"Mortgage Collateral" means whole mortgage loans, Mortgage Documents and all
security agreements, guaranties, insurance policies, certificates, binders,
commitments or reports relating thereto, including title insurance, private
mortgage insurance and hazard and liability insurance, surveys, bonds,
participations, purchase commitments, hedge contracts or other agreements to
purchase, guaranty or insure any mortgage loans or securities to be issued by
the Member. Mortgage Collateral also means any other agreement, instrument or
document pertaining to, affecting or obtained by the Member in connection with
the loans covered by the Mortgage Documents, financing statements perfecting the
Member's security interest in any of the foregoing, certificates, evidences of
recordation, applications, underwriting materials, appraisals, notices, opinions
of counsel, loan servicing data, files, correspondence, computer programs,
tapes, discs, cards, account records and all other electronically stored or
written records or materials relating to the loans covered by the Mortgage
Documents, including any and all rights, claims and chooses in action against or
with respect to any person or entity which has provided services to the Member
in connection with any other Mortgage Collateral, including without limitation,
surveyors, appraisers, environmental engineers, environmental assessment firms,
contractors and architects. Unless otherwise authorized by the FHLBI, Mortgage
Collateral shall not include mortgage securities or loan participations.
 
 
-2-

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

 
 
"Mortgage Documents" means mortgages, deeds of trust or other security deeds in
land and interests in real property and the improvements and fixtures located
thereon (herein "mortgages") and all promissory notes, bonds or other
instruments evidencing loans secured thereby (herein "mortgage notes") and any
endorsement and assignments thereof to the Member.
 
"Obligation" means all obligations, liabilities or indebtedness of the Member to
the FHLBI, due or to become due, direct or indirect, absolute or contingent,
joint or several, now existing or hereafter at any time created, arising or
incurred under this Advances Agreement, or any Funding Agreement, Application
for Advance, Other Credit Product Agreements, Advances, Other Credit Products or
Bank Deposits, including any prepayment fees, overdraft charges or other fees or
charges in connection therewith. "Obligation" also means any obligations for any
other services (including without limitation, safekeeping, operating and other
correspondent services) provided by the FHLBI, including any applications,
commitments, other agreements or documents relating to the foregoing, any
amendments to any of the foregoing agreements or documents and any obligations
under indemnification provisions in any such agreements or documents, and any
renewal, extension or substitution of any such obligations, liabilities and
indebtedness, including attorneys' fees of the FHLBI in the collection thereof
and the enforcement of any remedies with respect to any Collateral.
 
"Other Collateral" means such items of tangible and intangible property, other
than Capital Stock, Bank Deposits, Mortgage Collateral and Securities
Collateral, which are offered as collateral by the Member to the FHLBI and which
the FHLBI in its discretion expressly accepts by written notice delivered to the
Member as collateral for Advances and Other Credit Products.
 
"Other Credit Product Agreement" means a writing or electronic transmission in
such form as shall be specified by the FHLBI, executed by the FHLBI and the
Member and setting forth the obligations of the FHLBI and Member, including
without limitation, any Affordable Housing Program transaction, any service
confirmation, any securities trading agreements, service contract, reimbursement
agreement, interest rate swap agreement, transaction, confirmation,
applications, notices, advice or other instruments between the FHLBI and the
Member.
 
"Other Credit Products" means any and all commitments or obligations under which
the FHLBI agrees to make Advances to the Member or payments on behalf of or for
the account of the Member, including without limitation, letters of credit,
guarantees, grants, subsidies, demand or CMS Account transactions, NOW account
processing, deposit overdrafts, item processing services, coin and currency
services, safekeeping services (including security lending programs), securities
trading services, Affordable Housing Program transactions, correspondent banking
service debits or service charges, or other arrangements intended to facilitate
transactions between or among the FHLBI, the Member and third parties, or under
which the FHLBI enters into a credit or financial accommodation agreement or
other arrangement with the Member, including without limitation, repurchase
agreements and interest rate exchange transactions (such as interest rate swap
agreements, cap, collar and floor agreements) and such other products or
services as may be offered by the FHLBI from time to time pursuant to its Credit
Policies and without regard to whether the FHLBI's obligation is contingent or
conditional.
 
"Outstanding Commitments" means, at any point in time, the maximum aggregate
principal amount of Advances or payments which the FHLBI may be obligated to
make to the Member (or other parties) under Advance Applications or Other Credit
Product Agreements then in effect.
 
 
-3-

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

 
 
"Securities Collateral" means all securities or certificates evidencing a direct
or indirect interest in a loan or a group of loans secured by mortgages,
including without limitation, mortgage-backed securities, collateralized
mortgage obligations and real estate mortgage investment conduits, including
Federal Home Loan Mortgage Corporation mortgage participation certificates,
Federal National Mortgage Association mortgage pass-through mortgage-backed
certificates and Government National Mortgage Association modified pass-through
mortgage-backed certificates, and all Mortgage Documents and items of Mortgage
Collateral owned or otherwise acquired by the Member relating to the loans
underlying such securities or certificates; consolidated obligations of the
Federal Home Loan Bank System; obligations of or guaranteed by the United
States; and obligations of or guaranteed by agencies or instrumentalities of the
United States.
 
2. Advances Documentation.
 
Section 2.01. Application for Advances.
 
The Member may apply for Advances or commitments by completing and submitting an
Application for Advance or requesting Other Credit Product services. The
preceding sentence notwithstanding, the FHLBI may in its discretion make an
Advance, make a commitment, or deliver Other Credit Products to the Member
pursuant to the Bank Act, FHFB Regulations, Credit Policies, and other FHLBI
procedures in effect from time to time, and by either (i) the receipt of an oral
or written application which is executed by the FHLBI without change, or (ii) in
the case of an application received, completed or modified by the FHLBI pursuant
to a telephonic or other unsigned communication by the Member, by an Advice of
Credit or other writing generated by the FHLBI. The Member shall be estopped
from asserting any claim or defense with respect to the terms applicable to an
Advance, commitment or Other Credit Product entered into pursuant to a telephone
application or other unsigned communication unless, within ten (10) business
days of receipt of the FHLBI's Advice of Credit or other writing, the Member
delivers to the FHLBI a written notice specifying the disputed term(s) or
condition(s). The FHLBI shall have the absolute right to rely upon the
procedures established hereby or pursuant to the terms hereof and shall have no
liability to the Member for any actions taken or omitted to be taken in
connection with such procedures. The Member agrees that it will hold the FHLBI
and each of its employees, officers, directors, agents, and representatives
harmless from any loss, .liability or damage which the Member may suffer,
including without limitation, lost profits and attorneys' fees and
disbursements, arising out of or in connection with such procedures, absent
fraud, willful misconduct, or recklessness on the part of the FHLBI.
 
Section 2.02. FHLBl's Receipt of Written Confirmations and Findings.
 
Unless disputed in accordance with Section 2.01 hereof, within ten (10) business
days of receipt, Member agrees to execute and provide any Advice of Credit,
Funding Agreement, confirmation or Other Credit Product Agreement to the FHLBI.
Upon request of the FHLBI, the Member shall sign and deliver to the FHLBI a
promissory note or notes in such form as the FHLBI may reasonably require
evidencing any Advance. Unless otherwise requested by the Member and approved by
the FHLBI, each Advance shall be funded by crediting the Member's CMS Account(s)
with the FHLBI.
 
Section 2.03. Interest Computations and Repayment of Advances and Other Credit
Products.
 
The Member agrees to repay each Advance or Other Credit Product in accordance
with this Advances Agreement and the terms and conditions of the Advice of
Credit, Funding Agreement or Other Credit Product Agreement. Each Advance,
Advice of Credit, Funding Agreement, Application for Advance, Other Credit
Product and Other Credit Product Agreement shall be subject to the terms of the
Credit Policies and applicable laws, regulations, and limitations, all as in
effect from time to time, including the Bank Act, the FHFB Regulations and the
statements of policy and guidelines of the FHFB, which shall be deemed to be
incorporated by reference into this Advances Agreement. Unless otherwise
specified in the FHLBI's Credit Policies or as may be otherwise specified in
writing by the FHLBI from time to time, interest shall be paid at the time of
each payment of all of the principal of each Advance on the amount of principal
so repaid, and shall be paid on the fifteenth (15th) day of each month (or the
FHLBI's next business day if the FHLBI is not open for business on the fifteenth
(15th)) on the daily outstanding principal amount of each Advance since the
previous interest payment date (other than principal amounts which have been
repaid in full since such interest payment date), in each case at the rate
applicable to such Advance as stated in the related Advice of Credit or Funding
Agreement. The Member shall pay to the FHLBI, immediately and without demand,
interest on any past due amount owing on any Advance or Other Credit Product at
the rate in effect and being charged by the Bank from time to time on defaults.
The default rate on past due payments of principal and interest may, at the
option of the FHLBI, be at a rate of five percent (5%) per annum in addition to
the then highest current rate being charged by the FHLBI for advances, not to
exceed the highest legal interest rate allowed under Indiana law. The Member
shall maintain in the Member's CMS Account with the FHLBI an amount at least
equal to the amounts then currently due and payable to the FHLBI on outstanding
Advances and Other Credit Products. The Member hereby authorizes the FHLBI to
debit the Member's CMS Account with the FHLBI for all amounts due and payable on
any Advance or Other Credit Product and for all other amounts due and payable
hereunder. In the event that the amount in the Member's CMS Account is, at any
time, insufficient to pay such due and payable amounts, the FHLBI may without
notice to the Member apply any Bank Deposits then in the possession of the FHLBI
to the payment of such due and payable amounts.
 
 
-4-

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

 
 
Section 2.04. Payment of Prepayment Charges.
 
Any prepayment fees or charges for which provision is made, whether under the
Advice of Credit, Funding Agreement, Other Credit Product Agreement, or
otherwise, shall be payable at the time of any voluntary or involuntary payment
of the principal of such Advance or Other Credit Product prior to the originally
scheduled maturity thereof, including without limitation, payments that are made
as a part of a liquidation of the Member or that become due as a result of an
acceleration pursuant to Section 4.01 hereof, and whether such payment is made
by the Member, by a conservator, receiver, liquidator or trustee of or for the
Member, or by any successor to or any assignee of the Member. Each such
prepayment fee or charge shall constitute an Obligation hereunder. The method of
computation for the prepayment fee, unless expressly provided for in the
applicable credit documentation, is set forth in the Credit Policies of the
FHLBI and may be subject to change from time to time with prior notice to the
Member.
 
Section 2.05. Right of FHLBI to Make Payments with Respect to Outstanding
Commitments.
 
In the event that there are one or more Outstanding Commitments at the time of
an Event of Default under Section 4.01 hereof, the FHLBI may, at its option,
make any payments due thereunder from time to time by crediting a special
account with the FHLBI over which the FHLBI has sole dominion and control.
Amounts credited to such special accounts shall be deemed to have satisfied the
FHLBI's obligations under the Outstanding Commitments. When all such obligations
have been satisfied, the FHLBI shall disburse the balance, if any, in such
account first to the satisfaction of any amounts then due and owing by the
Member to the FHLBI and then to the Member or its successors in interest.
Payments made pursuant to this section shall be payable on demand and shall bear
interest at the rate specified for each applicable Advance (or if such rate is
not specified, at the rate in effect and being charged by the FHLBI from time to
time on variable rate advances), and shall include applicable prepayment fees.
The FHLBI shall not fund Outstanding Commitments previously made to the Member
whose access to Advances is restricted by its primary regulator, In addition,
the FHLBI shall not fund Outstanding Commitments previously made to the Member
whose access to Advances is subsequently restricted because it does not have
positive tangible capital or if the FHLBI deems itself insecure for any reason,
as determined by the FHLBI in its sole discretion.
 
 
-5-

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

 
 
3. Security Agreement.
 
Section 3.01. Creation of Security Interest.
 
As security for all Obligations, including without limitation all Advances and
Other Credit Products, the Member hereby assigns, transfers, and pledges to the
FHLBI and grants to the FHLBI a security interest in all Collateral, now or
hereafter owned by the Member, and all proceeds thereof, provided, however, that
Collateral that is encumbered or disposed of by the Member in conformity with
the requirements of Section 3.03(a) hereof shall not be subject to the security
interest created hereunder. Without limitation of the foregoing, all tangible
and intangible property heretofore assigned, transferred or pledged by the
Member to the FHLBI as Collateral for Advances and Other Credit Products prior
to the date hereof is hereby assigned, transferred and pledged to the FHLBI as
Collateral hereunder.
 
Section 3.02. Member's Representations and Warranties Concerning Collateral.
 
The Member represents and warrants to the FHLBI, as of the date hereof and as of
the date of all future Advances or Other Credit Products secured hereunder, the
following:
(a) The Member owns and has marketable title to the Collateral and has the right
and authority to grant a security interest in the Collateral and to subject all
of the Collateral to this Advances Agreement;
(b) The information contained in any certification, status report, schedule or
other information given from time to time by the Member as to each item of
Collateral is true, accurate and complete in all material respects;
(c) The Member maintains Eligible Collateral which has a Market Value (or unpaid
principal balance) that is at least equal to the then current Collateral
Requirement and which meets the standards and requirements from time to time
established by this Advances Agreement, the FHLBI's Collateral Policy, the Bank
Act and the FHFB Regulations, and all other applicable laws and regulations;
(d) The Member has not conveyed or otherwise created, and there does not
otherwise exist, any participation interest or other direct, indirect, legal, or
beneficial interest in any Collateral pledged under Sections 3.01 and 3.03 on
the part of any person or entity other than the obligations the Member has to
its policy holders, the FHLBI and the Member; except for Collateral that is
subject to a valid Subordination Agreement in favor of the FHLBI from the Member
and such other person or entity.
(e) Except as may be approved in writing by the FHLBI, no account debtor or
other obligor owing any obligation to the Member with respect to any item of
Mortgage Collateral or Other Collateral has or will have any defenses,
offsetting claims, or other rights affecting the right of the Member or the
FHLBI to enforce such mortgage, mortgage note or promissory obligation, and no
defaults (or conditions that, with the passage of time or the giving of notice
or both, would constitute a default) exist under any such writings; and
(f) No part of any real property or interest in real property that is the
subject of Collateral contains or is subject to the effects of toxins or
hazardous materials or other hazardous substances (including those defined in
any applicable state or local law; or applicable federal law, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 USC 9601 et seq; the Hazardous Materials Transportation Act, 49 USC
1801 et seq; the Resource Conservation and Recovery Act, 42 USC 6901 et seq; and
in the regulations adopted and publications promulgated pursuant to said laws),
the presence of which could subject the FHLBI to any liability under applicable
state or Federal law or local ordinance either at any time that such property is
pledged to the FHLBI or upon the enforcement by the FHLBI of its security
interest therein.
 
Section 3.03. Collateral Maintenance Requirement; Delivery of Collateral;
Physical Possession Requirements.
 

 
(a)
The Member shall at all times maintain an amount of Eligible Collateral which
has a Market Value (or unpaid principal balance, if applicable) that is at least
equal to the then current Collateral Requirement. The Member shall not assign,
pledge, transfer, create any security interest in, sell, or otherwise dispose of
any Collateral if (i) such Collateral is held by or on behalf of the FHLBI
pursuant to subsection (f) of this section, or (ii) at the time of or
immediately after such action, Member is not or would not be in compliance with
the Collateral Requirements or is or would be otherwise in default under this
Advances Agreement. So long as Member is not in default under this Agreement,
Member shall be at liberty to sell, use, commingle and dispose of the Collateral
or the proceeds of such Collateral without being required to account for the
proceeds or replace the Collateral, subject only to its obligation to maintain
the Collateral as herein provided.

 
 
-6-

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

 
 

 
(b)  
Until delivery of Collateral to the FHLBI or its custodian in accordance with
subsection (f) of this section:

 
I.
Collateral shall be held by the Member in trust for the benefit of the FHLBI and
subject to the FHLBI's direction and control, will not be commingled with assets
of the Member which are not Collateral, and will be physically safeguarded by
the Member in accordance with usual, customary and prudent commercial practices
but in any event with not less than the same degree of care which the Member
uses in physically safeguarding its other property and assets of like kind and
nature. Without limitation of the foregoing, Member shall take all action
necessary or desirable to protect and preserve the Collateral and the FHLBI's
interest therein, including without limitation, the maintaining of insurance on
property securing mortgages constituting Collateral (such policies and
certificates of insurance or guaranty relating to such mortgages are herein
called "insurance"), the collection of payments under all mortgages and under
all insurance, and otherwise assuring that the loans comprising the Mortgage
Collateral are serviced in accordance with the standards of a reasonable and
prudent mortgagee.

 
II.
The Member (or its agent), acting on behalf of the FHLBI, shall collect all
payments when due on all Collateral. If the FHLBI requires under Section 3.12,
the Member shall hold such collections separate from its other monies and apply
them to the reduction of Obligations as they become due; otherwise, the Member
shall be entitled to use and dispose of all such collections in the ordinary
course of its business and in compliance with all laws, rules, and regulations.

 
(c)  
If any Collateral that was Eligible Collateral ceases to be Eligible Collateral,
the Member shall promptly notify the FHLBI in writing of that fact and, if so
requested by the FHLBI, of the reason that the Collateral has ceased to be
Eligible Collateral. The Member shall promptly deliver other Eligible Collateral
having at least the same Market Value as the Collateral required to be
withdrawn.

 
(d)  
The FHLBI may review the form and sufficiency of all documents pertaining to the
Collateral. Such documents must be satisfactory to the FHLBI and, if not, such
Collateral may not be acceptable as Eligible Collateral or may have a Market
Value applied thereto that is less than the Market Value otherwise applicable
under the FHLBI's Collateral Policy, or as the FHLBI may specify. The FHLBI may
require that the Member make any or all documents pertaining to the Collateral
available to the FHLBI for its inspection and approval.

 
(e)  
If so requested by the FHLBI, Member agrees to (i) provide a specific listing of
the Eligible Collateral to FHLBI, (ii) physically segregate Mortgage Documents
and Other Collateral which are a part of such specified Collateral from all
other property of the Member in a manner satisfactory to the FHLBI, and/or (iii)
hold each Mortgage Document which is a part of Mortgage Collateral in a separate
file folder with each file folder clearly labeled with the loan identification
number and the name of the borrower(s). Immediately upon the written request of
the FHLBI, the Member further agrees to clearly and legibly mark or stamp each
Mortgage Document and each file folder containing Mortgage Documents with the
following statement (or a substantially similar statement which has been
approved in writing by the FHLBI): "The Mortgage/ Deed Of Trust And Note
Relating To This Loan Have Been Assigned To And Represent Collateral Of The
Federal Home Loan Bank Of Indianapolis And Its Successors And Assigns" or such
other statement as may be required by the FHLBI from time to time.

 
(f)  
The Member shall promptly on a schedule acceptable to the FHLBI deliver to the
FHLBI, or to a custodian designated by the FHLBI, all Collateral including such
Eligible Collateral as may be necessary so that the Market Value of Eligible
Collateral held by the FHLBI, or such custodian, meets or exceeds the Collateral
Requirement at all times, and take any and all other action as may be specified
by the FHLBI to further evidence the perfection of the FHLBI's security interest
in the Collateral and to otherwise effectuate the transactions contemplated
hereby, including the signature and filing of financing statements. Collateral
delivered to the FHLBI shall be endorsed or assigned in recordable form by the
Member to the FHLBI as directed by the FHLBI. With respect to Mortgage
Collateral that is to be delivered hereunder, the Member shall deliver the
Mortgage Documents with necessary endorsements and assignments relating thereto,
unless otherwise directed by the FHLBI. Concurrently with the initial delivery
of Collateral and at such other times as provided in the Collateral Policy or as
the FHLBI may otherwise request, the Member will deliver to the FHLBI a status
report and accompanying schedules, all in form and substance satisfactory to the
FHLBI and dated as of the then most recent valuation date, describing the
Collateral held by the FHLBI or its custodian.

 
 
-7-

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

 
 

 
(g)  
The Member authorizes the FHLBI to execute and file one or more financing
statements, this Agreement, and any other documents, instruments, or statements
of any kind on its behalf and without the signature of the Member in those
public offices deemed necessary by the FHLBI in its sole discretion to perfect
and continue the perfection of its security interest in the Collateral and to
protect, defend and further assure the grant, validity and perfection thereof.
In addition, the Member will, at its expense, deliver or cause to be delivered
such other documents as the FHLBI may request to secure the Obligations referred
to herein or to further perfect, protect, and defend the security interest
granted herein.

 
(h)  
With respect to uncertificated securities pledged to the FHLBI as Securities
Collateral or Other Collateral hereunder, the delivery requirements contained in
this Advances Agreement shall be satisfied by the transfer of such securities to
the FHLBI, such transfer to be effected in such manner and to be evidenced by
such documents as shall be specified by the FHLBI.

 
(i)  
The Member agrees to pay to the FHLBI such reasonable fees and charges as may be
assessed by the FHLBI to cover the FHLBI's overhead and other costs relating to
the receipt, holding, redelivery and reassignment of Collateral and to reimburse
the FHLBI upon request for all recording fees and advances incurred or made by
the FHLBI in connection therewith including the reasonable compensation and the
expenses and disbursements of any custodian that may be appointed by the FHLBI
hereunder, and the agents and legal counsel of the FHLBI and of such custodian.

 
(j)   
The Member shall, upon request of the FHLBI, immediately take such other actions
as the FHLBI shall deem necessary or appropriate to perfect the FHLBI's security
interest in the Collateral or otherwise to obtain, preserve, protect, enforce or
collect the Collateral.

 

Section 3.04. [Reserved]
 
Section 3.05. Withdrawal or Reassignment of Collateral.
 
Upon receipt by the FHLBI of writings in form and substance satisfactory to the
FHLBI constituting (i) a request from the Member for the withdrawal or
reassignment of Collateral which has been delivered pursuant to Section 3.03
hereof, or as to which the FHLBI has otherwise perfected its security interest,
and (ii) a detailed listing of the Collateral to be withdrawn or reassigned,
provided that the FHLBl's valuation of such delivered Collateral confirms that
the Member's Collateral Requirement will be satisfied after such withdrawal or
reassignment, then the FHLBI shall redeliver or reassign to the Member the
Collateral specified in Member's request. Notwithstanding anything to the
contrary herein contained, while an Event of Default hereunder shall have
occurred and be continuing, or at any time that the FHLBI in good faith deems
itself insecure, the Member may not obtain any such withdrawal or reassignment.
 
Section 3.06. Additional Collateral.
 
The FHLBI may at any time require the Member to maintain and deliver to the
FHLBI additional Collateral over that amount of Eligible Collateral required to
meet the Member's Collateral Requirement or substitutions of Collateral. The
Member expressly agrees to maintain and deliver such additional Collateral or
substitutions of Collateral as the FHLBI shall require.
 
 
-8-

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

 
 
Section 3.07. Reports; Collateral Audit; Access.
 

 
(a)  
In accordance with the Collateral Policy and at such other times as the FHLBI
may request, the Member shall furnish to the FHLBI, in a format satisfactory to
the FHLBI, a report so that the FHLBI may verify that the Member maintains
Eligible Collateral with a Market Value (or unpaid principal balance, if so
required by the FHLBI) sufficient to meet the Collateral Requirement. If the
Market Value or unpaid principal balance of Eligible Collateral owned by the
Member, free and clear of any liens or encumbrances, shall at any time fall
below the Collateral Requirement, the Member shall immediately notify the FHLBI.

 
(b)  
The Member shall permit the FHLBI to annually audit the Member's collateral to
verify that the Member owns, free and clear of any liens or encumbrances (except
for obligations the Member has to FHLBI's or a third party that has executed and
delivered a Subordination Agreement in favor of the FHLBI), Eligible Collateral
with a Market Value (or unpaid principal balance, if so required by the FHLBI)
at least equal to the Collateral Requirement, and shall provide an explanation
for any exceptions or qualifications found by the FHLBI during such audit. The
FHLBI reserves the right to waive the audit requirement if Member's Collateral
is in the physical possession of the FHLBI or in the FHLBI's sole discretion,
based on particular circumstances.

 
(c)  
The Member agrees that the FHLBI shall have access at all reasonable times to
the Collateral in the Member's possession or control and to the Member's books
and records of account relating to such Collateral. The Member shall permit the
FHLBI to examine, inspect, audit and take copies or make extracts from its books
and records and to discuss its affairs with its independent auditor (or other
representative) as often as the FHLBI may reasonably request.

 
(d)  
The Member agrees that examination reports prepared by local, state or federal
authorities may be furnished by such authorities to the FHLBI upon its request,
and by this Advances Agreement the Member authorizes and directs such
authorities to deliver such reports to the FHLBI and waives any objections or
restrictions thereto which it may lawfully waive. Member agrees that upon
request of the FHLBI, it will take any and all steps necessary to assist the
FHLBI in obtaining such reports from such authorities. The FHLBI agrees that to
the extent such reports or the information contained therein are confidential,
the Bank will use the same degree of care in keeping such reports confidential
as it applies to the FHLBI's own confidential information and will not knowingly
disclose any confidential information contained therein unless required to do so
by law, rules, regulations, or judicial or regulatory process applicable to the
FHLBI.

 
(e)  
If requested by the FHLBI, the Member shall furnish to the FHLBI a written
report covering such matters regarding the Collateral as the FHLBI may require,
including listings of mortgages, securities, and unpaid principal balances
thereof, and certifications concerning the status of payments on mortgages and
of taxes and insurance on property securing mortgages.

 
(f)  
The Member agrees to promptly report to the FHLBI any event which reduces the
principal balance of any pledged Collateral by ten percent (10%) or more,
whether by prepayment, foreclosure sale, property and casualty insurance payment
or guaranty payment or otherwise provided, however, that the foregoing reporting
requirement shall not apply to Securities Collateral.

 
(g)  
All Collateral and the satisfaction by the Member of the Collateral Requirement
shall be subject to audit and verification by or on behalf of the FHLBI. Such
audits and verifications may occur without notice during the Member's normal
business hours or upon reasonable notice at such other times as the FHLBI may
reasonably request. The Member shall provide to the representatives or agents of
the FHLBI, for purposes of such audits and verifications, access to all books
and records related to transactions whether made or contemplated under this
Advances Agreement. Further, Member shall provide adequate working facilities,
at Member's expense, for the FHLBI to conduct such audits or verifications. The
Member agrees to pay to the FHLBI such reasonable fees and charges as may be
assessed by the FHLBI to cover overhead and other costs relating to such audit
and verification. The Member further agrees that it will prepare and deliver
promptly upon request of the FHLBI inquiries to Member's outside auditors,
outside counsel, customers (including depositors or borrowers), and any other
person that the FHLBI may reasonably request, to provide such information to the
FHLBI as it may reasonably request in connection with such audit and
verification.

 
 
-9-

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

 
 
Section 3.08. Additional Documentation and Status Reports.
 
The Member shall at its expense make, execute, record and deliver to the FHLBI
such financing statements, assignments, listings, powers, notices and other
documents with respect to the Collateral and the FHLBl 's security interest
therein as directed by the FHLBI and in form and substance satisfactory to the
FHLBI. Upon request, Member agrees to give FHLBI verbal or written reports
concerning the financial condition or status of any regulatory action maintained
against the Member, its holding company, or any affiliated entity or affiliated
person,
 
Section 3.09. FHLBl's Responsibilities as to Collateral.
 
The FHLBI's duty as to the Collateral shall be solely to use reasonable care in
the custody and preservation of the Collateral in its possession, which shall
not include any steps necessary to preserve rights against prior parties nor the
duty to send notices, perform services, or take any action in connection with
the management of the Collateral. The FHLBI shall not have any responsibility or
liability for the form, sufficiency, correctness, genuineness or legal effect of
any instrument or document constituting a part of the Collateral, or any
signature thereon or the description or mis-description, or value of property
represented, or purported to be represented, by any such document or instrument.
The Member agrees that any and all Collateral may be removed by the FHLBI from
the state or location where situated, and may there be dealt with by the FHLBI
as provided in this Advances Agreement.
 
Section 3.10. FHLBl's Rights as to Collateral; Power of Attorney.
 
At any time or times, at the expense of the Member, the FHLBI may, at its
discretion, before or after the occurrence of an Event of Default as defined in
Section 4.01 hereof, in its own name or in the name of its nominee or of the
Member, do any or all things and take any and all actions that are pertinent to
the protection of the FHLBI's interests hereunder and which are lawful under the
laws of the State of Indiana, or the laws of any jurisdiction under which the
FHLBI may be exercising its rights hereunder, including the following:
(a) Terminate any consent given hereunder;
(b) With prior notice to Member (or its legal successor), notify obligors on any
Collateral to make payments thereon directly to the FHLBI;
(c) Endorse any Collateral in the Member's name;
(d) Enter into any extension, compromise, settlement or other agreement relating
to or affecting any Collateral;
(e) Take any action the Member is required to take or which is otherwise
necessary to: (i) sign and record a financing statement or otherwise perfect a
security interest in any or all of the Collateral; or (ii) obtain, preserve,
protect, enforce or collect the Collateral;
(f) Take control of any funds or other proceeds generated by the Collateral and
use the same to reduce the Obligations as they become due; and
(g) Cause the Collateral to be transferred to its name or the name of its
nominee.
 
The Member hereby appoints the FHLBI as its true and lawful attorney, with full
power of substitution, for and on behalf of the Member and in its name, place
and stead, to prepare, execute and record endorsements and assignments to the
FHLBI of all or any item of Collateral, giving or granting to the FHLBI, as such
attorney, full power and authority to do or perform every lawful act necessary
or proper in connection therewith as fully as the Member might or could do. The
Member hereby ratifies and confirms all that the FHLBI shall lawfully do or
cause to be done by virtue of this special power of attorney. This special power
of attorney is granted for a period commencing on the date hereof and continuing
until the discharge of all Obligations of the Member hereunder regardless of any
default by the Member. This special power of attorney is coupled with an
interest and is irrevocable for the period granted.
 
 
-10-

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

 
 
Section 3.11. Subordination of Other Loans to Mortgage Collateral.
 
The Member hereby agrees that all mortgage notes which are part of the Mortgage
Collateral and any notes secured by personal property ("personalty notes") which
may become part of the Other Collateral shall have priority in right and remedy
over any claims, however evidenced, for other loans, whether made before or
after the date of such mortgage or personalty notes which are secured by the
mortgages or security agreements securing such mortgage or personalty notes but
are not part of the Collateral, and shall be satisfied out of the property
covered by such mortgages or security agreements before recourse to such
property may be obtained for the repayment of such other loans. To this end, the
Member hereby subordinates the lien of such mortgages and security agreements
with respect to such other loans to the lien of such mortgages and security
agreements with respect to such mortgage and personalty notes. The Member
further agrees to retain possession of any promissory notes evidencing such
other loans and not to pledge, assign or transfer the same, except that the same
may be pledged to the FHLBI as part of the Collateral. The Member, for itself
and for any other person or entity claiming by or through the Member, waives any
and all rights which it or such other person or entity may have to require the
FHLBI to marshal the assets of the Member or to otherwise prioritize or sequence
any class or category of Collateral with respect to which the FHLBI may pursue
its rights and remedies.
 
Section 3.12. Proceeds of Collateral.
 
Until delivery of Collateral to the FHLBI or its custodian in accordance with
Section 3.03(e), the Member shall collect all payments when due on all
Collateral. If the FHLBI so requires, the Member, as the FHLBI's agent, shall
hold such collections separate from its other monies in one or more designated
cash collateral accounts maintained at the FHLBI and apply them to the reduction
of Obligations as they become due; otherwise, the Member shall be entitled to
use and dispose of all such collections in the ordinary course of its business
and in compliance with all laws, rules, and regulations.
 
4. Default; Remedies.
 
Section 4.01. Events of Default; Acceleration.
In the event of the occurrence of any of the following events or conditions of
default ("Event of Default"), the FHLBI may at its option, by a notice to the
Member, declare all Obligations and accrued interest thereon, including any
prepayment fees (including without limitation, those fees charged pursuant to
Section 2.03 and 2.04), or charges which are payable in connection with the
payment prior to the originally scheduled maturity of any Obligations, to be
immediately due and payable without presentment, demand, protest or any further
notice:

 
(a)  
Failure of the Member to pay any interest within 5 Business Days of the date
such amount becomes due and payable or failure to pay when due any principal of
any Advance or any amount payable in connection with any Other Credit Product;
or

 
(b)  
Failure of the Member to perform within 5 Business Days, any promise or
obligation or to satisfy any condition or liability contained herein, in an
Application for Advance, Advice of Credit, Funding Agreement, or in any Other
Credit Product Agreement to which the Member and the FHLBI are parties; or

 
(c)  
Any representation, statement or warranty made or furnished in any manner to the
FHLBI by or on behalf of the Member in connection with any Advance or Other
Credit Product or any certification of the Market Value (or unpaid principal
balance, if so required by the FHLBI) of Eligible Collateral shall have been
false or misleading in any material respect when made or furnished; or

 
(d)  
Failure of the Member to maintain Eligible Collateral which has a Market Value
(or unpaid principal balance, if applicable) that is at least equal to the then
current Collateral Requirement (under the physical possession requirements of
Section 3.03 or under section 3.06) free of any encumbrances or claims as
required herein; or

 
(e)  
The issuance of any tax levy, seizure, attachment, garnishment, levy of
execution, or other process with respect to the Collateral; or

 
(f)
Any failure to pay or suspension of payment by the Member to any creditor of
sums due, within 5 Business Days of the date such amount becomes due and
payable, or the occurrence of any event which results in another creditor having
the right to accelerate the maturity of any Obligations of the Member under any
security agreement, indenture, loan agreement, or comparable undertaking; or 

 
(g)
Application for or appointment of a conservator, receiver, or trustee for the
Member or of any affiliate or subsidiary of the Member or the Member's property,
entry of a judgment or decree adjudicating the Member or any affiliate or
subsidiary of Member insolvent or bankrupt, or an assignment by the Member or
any affiliate or subsidiary of the Member for the benefit of creditors; or

 
 
-11-

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

 
 

 
(h)  
Sale by the Member of all or a material part of the Member's assets or the
taking of any other action by the Member to liquidate or dissolve; or

 
(i)  
Termination of the Member's membership in the FHLBI, or the Member's ceasing to
be a type of financial institution that is eligible under the Bank Act to borrow
or apply for membership in the FHLBI; or

 
(j) 
Merger, consolidation or other combination of the Member with an entity which is
not a member of the FHLBI if the nonmember entity is the surviving entity; or 

 
(k) 
Member threatens or initiates legal action to challenge an otherwise legally
enforceable provision under this Advances Agreement in an attempt to make the
FHLBI insecure under this Advances Agreement; or

 
(l)  
The FHLBI in good faith determines that a material adverse change has occurred
in the financial condition of the Member (including its holding company or other
affiliates); or

 
(m)  
Member fails to comply with the FHLBI's Credit Policies within 30 Business Days
or other applicable policies including the requirement of creditworthiness as
determined by the FHLBI at its sole discretion.

 
Section 4.02. Remedies; Set Off; Specific Performance.
 
(a) Upon the occurrence of any Event of Default, the FHLBI shall have all of the
rights and remedies provided by applicable law, which shall include, but not be
limited to, all of the remedies of a secured party under the Uniform Commercial
Code as in effect in the State of Indiana, Section 10 of the Bank Act (12 USC
1430), and other applicable federal law. In addition, the FHLBI may take
immediate possession of any of the Collateral or any part thereof, wherever the
same may be found, without judicial process. The FHLBI may require the Member to
assemble the Collateral and make it available to the FHLBI at a place designated
by the FHLBI which is reasonably convenient to both parties. The FHLBI may sell,
assign and deliver the Collateral or any part thereof at public or private sale
for such price as the FHLBI deems appropriate without any liability for any loss
due to decrease in the market value of the Collateral during the period held.
The FHLBI shall have the right to purchase all or part of the Collateral at such
sale. If the Collateral includes insurance or securities which will be redeemed
by the issuer upon surrender, or any accounts or deposits in the possession of
the FHLBI, the FHLBI may realize upon such Collateral without notice to the
Member. If any notification of intended disposition of any of the Collateral is
required by applicable law, such notification shall be deemed reasonable and
properly given if mailed, postage prepaid, at least five (5) days before any
such disposition to the address of the Member appearing on the records of the
FHLBI. The proceeds of any sale shall be applied in the order that the FHLBI, in
its sole discretion, may choose. The Member agrees to pay all the costs and
expenses of the FHLBI in the collection of the Obligations and enforcement of
the FHLBI's rights and remedies in case of default, including, without
limitation, reasonable attorneys' fees. The FHLBI shall, to the extent required
by law, apply any surplus after (i) payment of the Obligations, (ii) provision
for repayment to the FHLBI of any amounts to be paid or advanced under
Outstanding Commitments, and (iii) all costs of collection and enforcement, to
third parties claiming a secondary or other security interest in the Collateral,
with any remaining surplus paid to the Member. The Member shall be liable to the
FHLBI for any deficiency remaining.
(b) If the Obligations, accrued interest thereon and other amounts or charges
owing by the Member shall have become due and payable (by acceleration or
otherwise), the FHLBI shall have the right, at any time or from time to time to
the fullest extent permitted by law. in addition to all other rights and
remedies available to it, without prior notice to the Member, to set off against
and to appropriate and apply to such due and payable amounts any debt owing to,
and any other funds held in any manner for the account of, the Member by the
FHLBI, including without limitation, all Bank Deposits now or hereafter
maintained by the Member with the FHLBI but excluding safekeeping accounts
expressly held for the benefit of a third party. Such right shall exist whether
or not such debt owing to, or funds held for the account of, the Member is
matured by its terms or is accelerated by the FHLBI, and regardless of the
existence or adequacy of any collateral, guaranty or any other security, right
or remedy available to the FHLBI. The Member hereby consents to and confirms the
foregoing arrangements and confirms the FHLBI's rights of banker's lien and
setoff. Nothing in this Advances Agreement shall be deemed a waiver or
prohibition of or restriction on the FHLBI's rights of banker's lien or setoff.
 
 
-12-

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

 
 
(c)The Member acknowledges that the breach by the Member of the provisions of
this Agreement and in particular Section 3.03 hereof would cause irreparable
injury to the FHLBI and that remedies at law for any such breach will be
inadequate, and consents and agrees that the FHLBI shall be entitled, without
the necessity of proof of actual damage, to specific performance of the terms of
this Agreement and to injunctive relief in any proceedings which may be brought
to enforce the provisions of this Agreement, The Member waives the right to
assert the defense that such breach or violation can be compensated adequately
in damages in an action of law.
 
5. Miscellaneous.
 
Section 5.01. General Representations, Warranties and Indemnifications by the
Member.
 
The Member hereby represents and warrants that, as of the date hereof and the
date of each Advance or Other Credit Product hereunder:
(a) The Member will truly and accurately represent and warrant the purpose of
any Advance or Other Credit Product on any Application for Advance or Other
Credit Product Agreement between Member and the FHLBI.
(b) The Member will promptly furnish any financial, collateral or other
information requested by the FHLBI in connection with any Advance or Other
Credit Product.
(c) The Member is not, and neither the execution of nor the performance of any
transactions or obligations of the Member under any Advice of Credit, Funding
Agreement, Application for Advance, Other Credit Product Agreement or this
Advances Agreement shall, with the passage of time, the giving of notice or
otherwise, cause the Member to be: (i) in violation of its charter or articles
of incorporation or association, bylaws, the Bank Act, the FHFB Regulations, any
other law or administrative regulation, agreement or any court decree; or (ii)
in default or in breach of any indenture, contract or other instrument or
agreement to which the Member is a party or by which it or any of its property
is bound or any default under, breach of, or failure to comply with any
judgment, order, decree, regulatory directive or other process of any court or
agency having jurisdiction of or which is binding upon the Member.
(d) The Member is not in default under any Advice of Credit, Funding Agreement
or Other Credit Product Agreement with the FHLBI.
(e) The Member has full power and authority and has received all corporate and
governmental authorizations and approvals (including without limitation, those
required under the Bank Act and the FHFB Regulations or by Member's principal
regulator) as may be required to enter into and perform its obligations under
any Advice of Credit, Funding Agreement. Application for Advance, Other Credit
Product Agreement or this Advances Agreement, and to obtain Advances and Other
Credit Products. The Member is a corporation organized and existing under the
laws of the State of MI, and is an MI domiciled Stock insurance company,
licensed to transact the business of a PROPERTY  and CASUALTY insurer in all .50
states and the District of Columbia.
(f) The information given by the Member in any writing provided, electronic
transmission or in any oral statement made, in connection with any Application
for Advance or Other Credit Product Agreement, is at all relevant times true,
accurate and complete in all material respects.
(g) The Member will at all times maintain and accurately reflect the terms of
this Advances Agreement (including the FHLBI's security interest in the
Collateral) and all Advances and Other Credit Products hereunder on its books
and records, including evidence of necessary authorizations to effectuate
transactions under this Agreement.
(h) The Member and its successors and assigns (collectively referred to in this
Section 5.01(h) as "Member") shall indemnify and hold the FHLBI harmless from
and against any and all costs, claims, expenses, damages and liabilities with
respect to any action which may be instituted by any person or entity against
the FHLBI as a result of any transaction, including without limitation, FHLBI
credit extensions, services, and Other Credit Products contemplated by this
Advances Agreement or action or non-action arising from this Advances Agreement,
except where the same results solely from the recklessness or willful misconduct
of the FHLBI. In addition, the Member shall indemnify and hold the FHLBI
harmless from and against any and all costs, claims, expenses, damages and
liabilities resulting in any way from the presence or effects of any toxic or
hazardous substances or materials in, on, or under any real property or interest
in real property that is subject to or included in the Collateral. The Member
also agrees to reimburse the FHLBI for such reasonable fees and charges as may
be assessed by the FHLBI to cover provision or in the administration of this
Advances Agreement, any Advice of Credit, Funding Agreement or Other Credit
Product Agreement.
 
 
-13-

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

 
 
Section 5.02. Assignment.
 
The FHLBI may assign or negotiate to any other Federal Home Loan Bank or to any
other person or entity, with or without recourse, any Obligations of the Member
or sell participations therein, and the FHLBI may assign or transfer all or any
part of the FHLBI's right, title and interest in and to this Advances Agreement
and may assign and deliver the whole or any part of the Collateral to the
transferee, which shall succeed to all the powers and rights and duties of the
FHLBI in respect thereof, and the FHLBI shall thereafter be forever relieved and
fully discharged from any liability or responsibility with respect to the
transferred Collateral. The Member may not assign or transfer any of its rights
or obligations hereunder (by operation of taw, the appointment of a
receivership, or otherwise) without the express prior written consent of the
FHLBI.
 
Section 5.03. Discretion of FHLBI to Grant or Deny Advances and Other Credit
Products.
 
Nothing contained herein or in any documents or oral representations describing
or setting forth the FHLBl's credit programs or Credit Policies shall be
construed as an agreement or commitment on the part of the FHLBI to grant
Advances or extend Other Credit Products hereunder, the right and power of the
FHLBI in its discretion to either grant or deny any Advance or Other Credit
Product requested hereunder being expressly reserved.
 
Section 5.04. Amendment; Waivers.
 
No modification, amendment or waiver of any provision of this Advances Agreement
or consent to any departure therefrom shall be effective unless executed by the
party against whom such change is asserted and shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the Member in any case shall entitle the Member to any other or further notice
or demand in the same, or similar or other circumstances. Any forbearance,
failure or delay by the FHLBI in exercising any right, power or remedy hereunder
shall not be deemed to be a waiver thereof, and any single or partial exercise
by the FHLBI of any right, power or remedy hereunder shall not preclude the
further exercise thereof. Every right, power and remedy of the FHLBI shall
continue in full force and effect until specifically waived by the FHLBI in
writing. Any suit based upon the breach of an obligation of a party under this
Advances Agreement must be commenced within one (1) year of the date of such
breach.
 
Section 5.05. Jurisdiction; Legal Fees.
 
In any action or proceeding brought by the FHLBI or the Member in order to
enforce any right or remedy under this Advances Agreement, the parties hereby
consent to, and agree that they will submit to, the jurisdiction of the United
States District Court for the Southern District of Indiana or, if such action or
proceeding may not be brought in federal court, the jurisdiction of any state
court located within the Southern District of Indiana. Each party agrees that,
if any action or proceeding is brought by one party seeking to obtain any legal
or equitable relief against the other under or arising out of this Advances
Agreement or any transaction contemplated hereby, and such relief is not granted
by the final decision, after any and all appeals, of a court of competent
jurisdiction, the losing party shall promptly pay upon demand all attorneys'
fees and other costs incurred by the winning party in connection therewith.
 
Section 5.06. Waiver of Jury Trial.
 
To the extent allowed by law, the Member hereby waives the right to a jury trial
in any action or proceeding brought by or against the Member regarding this
Advances Agreement, the Collateral, Other Credit Products, or the credit
facilities contemplated hereby.
 
 
-14-

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

 
 
Section 5.07. Notices.
 
Except as provided in the last sentence of this Section 5.07, any written
notice, advice, request, consent or direction given, made or withdrawn pursuant
to this Agreement shall be either in writing or transmitted electronically and
reproduced mechanically by the addressee and shall be given by first class mail,
postage prepaid, or by telecopy or other facsimile transmission, or by private
courier or delivery service. Except for notices made under Section 4.02, all
non-oral notices shall be deemed given when actually received at the principal
office of the FHLBI or the Member, as appropriate. All notices shall be
designated to the attention of an office or section of the FHLBI or of the
Member if the FHLBI or the Member has made a request for the notice to be so
addressed. Any notice by the FHLBI to the Member pursuant to Sections 2.01, 3.03
or 3.05 hereof may be oral and shall be deemed to have been duly given to and
received by the Member at the time of the oral communication.
 
Section 5.08. Signatures of Member; Acceptance by FHLBI.
 
(a) For purposes of this Advances Agreement, documents shall be deemed signed by
the Member when a signature of an authorized signatory or an authorized
facsimile thereof appears on the document. The FHLBI may rely on any signature
or facsimile thereof which reasonably appears to the FHLBI to be the signature
of an authorized person, including signatures appearing on documents transmitted
electronically to and reproduced mechanically at the FHLBI. The Secretary, the
Cashier, the Assistant Secretaries, or the Assistant Cashiers of the Member
shall from time to time certify to the FHLBI on forms provided by the FHLBI the
names and titles of the persons authorized to apply on behalf of the Member to
the FHLBI for Advances and Other Credit Products. Such certifications are
incorporated herein and made a part of this Advances Agreement and shall
continue in effect until expressly revoked by the Member notwithstanding that
subsequent certifications may authorize additional persons to act for and on
behalf of Member.
(b) This Advances Agreement shall only be binding upon the FHLBI when accepted
and executed by the FHLBI by two duly authorized officers and shall be deemed
accepted by and delivered to the FHLBI at its home office in Indianapolis,
Indiana.
(c) This Advances Agreement may be executed in any number of counterparts, each
of which when so executed and delivered, shall be deemed an original and all of
which shall constitute one and the same instrument.
 
Section 5.09. Applicable Law; Severability.
 
In addition to the terms and conditions specifically set forth herein and in any
Advice of Credit, Funding Agreement or Other Credit Product Agreement between
the FHLBI and the Member, this Advances Agreement and all Advances and Other
Credit Products extended hereunder shall be governed by the statutory and common
law of the United States and, to the extent federal law incorporates or defers
to state law, the laws (exclusive of the choice of law provisions) of the State
of Indiana, including the Uniform Commercial Code as in effect in the State of
Indiana. In the event that any portion of this Advances Agreement conflicts with
applicable law or the Credit Policies, such conflict shall not affect other
provisions of this Advances Agreement which can be given effect without the
conflicting provisions, and to this end the provisions of this Advances
Agreement are declared to be severable.
 
Section 5.10. Interest Rate Limitations.
 
Notwithstanding anything contained herein to the contrary, the obligation of the
Member to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the FHLBI to the extent
that its receipt thereof would not be permissible under the law or laws
applicable to the FHLBI limiting rates of interest which may be charged or
collected by the FHLBI. Any such payments of interest which are not made as a
result of the limitation referred to in the preceding sentence shall be made by
the Member to the FHLBI on the earliest interest payment date or dates on which
the receipt thereof would be permissible under the laws applicable to the FHLBI
limiting rates of interest which may be charged or collected by the FHLBI.
 
 
-15-

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

 
 
Section 5.11. Successors and Assigns.
 
This Advances Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Member and the FHLBI, provided that the Member may
not assign any of its rights or obligations hereunder (by operation of law, the
appointment of a receivership, or otherwise) without the prior written consent
of the FHLBI. The FHLBI may sell, transfer or assign or grant participations in
Advances or Other Credit Products.
 
Section 5.12. Remedies Cumulative.
 
All rights and remedies provided herein or otherwise at law or in equity shall
be cumulative, and are in addition to, and not exclusive of, any rights or
remedies provided by law, including without limitation, the rights and remedies
of a secured party under federal law and the Uniform Commercial Code as it is in
effect from time to time in Indiana, including the right of the FHLBI to retain
the Collateral in satisfaction of the Obligations. The exercise of one or more
rights or remedies shall not preclude, or be deemed an election of remedies
against, any other remedy, right or privilege contained herein or provided to
the FHLBI by law, rule or regulation or at equity.
 
Section 5.13. Records of FHLBI Presumed Accurate.
 
The books and records of the FHLBI with respect to the Obligations, the Member's
accounts or any other obligations of the Member hereunder or otherwise owing to
the FHLBI shall be presumed to be accurate, complete and binding upon the
Member, absent fraud or willful misconduct on the part of the FHLBI with respect
to such account or obligation.
 
Section 5.14. Entire Agreement.
 
This Advances Agreement and the other documents referenced herein relating to
Advances and Other Credit Products embody the entire Agreement and understanding
between the parties hereto relating to the subject matter hereof. This Advances
Agreement amends, restates and supersedes all prior agreements between such
parties which relate to such subject matter, and all Advances and Other Credit
Products made by the FHLBI to the Member prior to the execution of this Advances
Agreement shall be governed by the terms of this Advances Agreement and not by
the terms of the prior agreement. The Agreement and the other documents
contemplated hereby or delivered in connection herewith shall be construed
consistently with each other in order to best effectuate the intent of the
Member and the FHLBI in entering into the relationships contemplated by all
these agreements. The agreements referenced herein constitute the sole and
entire agreement of the parties and no statement or promise has been made with
respect to the subject matter of these agreements other than as expressed
herein. In the event of a conflict between the terms of this Agreement and any
of the other such documents, the provisions of this Agreement shall control,
except with respect to any note, whose respective terms shall control.
 
Section 5.15. Confidentiality.
 
Except where disclosure is required for legal., accounting," or regulatory
purposes, the Member and the FHLBI agree that all information, items, records,
data and other material provided pursuant to or in connection with the Advances
Agreement, any Other Credit Product Agreement or any of the services provided
hereunder or thereunder, shall be kept in strict confidence, shall be used only
for the purposes of such Agreements, and shall not be disclosed by either party,
its agents or employees, without, in each instance, the prior written consent of
the other party; provided, however, that the Member may disclose generally the
fact of its membership and participation in the programs and services of the
FHLBI without consent. Each party agrees to take all necessary precautions to
prevent the unauthorized disclosure of such information, including complying
with security procedures deemed necessary by the FHLBI. All computer programs,
Manuals, materials, forms, facilities, ideas, concepts, techniques, and know-how
used, prepared or developed by the FHLBI, and any improvements extensions or
modifications thereof, are and shall remain the exclusive property of the FHLBI.
and  may not be used by the Member, its agents, employees or others, without the
FHLBI's prior written consent. In certain circumstances, the FHLBI may require
the Member to enter into licensing or use agreements with regard to any software
programs provided by or through the FHLBI for the Member's use in receiving any
services; and the Member hereby agrees to enter into such licensing or use
agreements, Any Manuals, software programs, disks, magnetic tape, forms, or
other materials provided by the FHLBI to the Member for the purposes of this
Advances Agreement, shall be immediately returned by the Member to the FHLBI
upon termination of this Advances Agreement.
 
 
-16-

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

 
 
IN WITNESS WHEREOF, the Member and the FHLBI have caused this Advances Agreement
to be signed in their names by their duly authorized officers as of the date
first above mentioned
 
Member.
 
By:
/s/ Robert S. Cubbin
   
Robert S. Cubbin
 
Its:
Chairman
       
By:
/s/ Karen M. Spaun
   
Karen M. Spaun
 
Its:
Vice President
       
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
 
By:
/s/ Jon Griffin
   
Jon Griffin
 
Its:
Credit Service Director, 1st VP
       
By:
/s/ D. Scott Stansberry
   
D. Scott Stansberry
 
Its:
Collateral Manager. VP
 

 
 
 
-17-

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

 
 
FEDERAL HOME LOAN BANK OF INDIANAPOLIS
MEMBER ACKNOWLEDGEMENT
AND NOTARIZATION
 

State of Michigan )     ) SS: County of Oakland) )

 
On this 4th day of May , 2011, before me personally came Robert S. Cubbin and
Karen M. Spaun, to me known, who, being by me duly sworn, did depose and state
that they are the Chairman and Vice President of said Member; and that they
signed their names thereto by order of the Board of Directors or other governing
body of said Member and that said Chairman and Vice President are duly
authorized and acknowledge the execution of said instrument to be the voluntary
act and deed of sad Member.
 
[image03.jpg]
 
 
-18-

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