PURCHASE AND ASSUMPTION AGREEMENT

WHOLE BANK

ALL DEPOSITS

AMONG

FEDERAL DEPOSIT INSURANCE CORPORATION,
RECEIVER OF COOPERATIVE BANK,
WILMINGTON, NORTH CAROLINA

FEDERAL DEPOSIT INSURANCE CORPORATION

and

FIRST BANK

DATED AS OF

JUNE 19, 2009

Module 1 – Whole Bank w/ Loss Share – P&A
COOPERATIVE BANK
Version 1.05
WILMINGTON, NORTH CAROLINA
June 16, 2009
 

 
 

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TABLE OF CONTENTS

ARTICLE I
DEFINITIONS
2
     
ARTICLE II
ASSUMPTION OF LIABILITIES
8
     
2.1
Liabilities Assumed by Assuming Bank
8
2.2
Interest on Deposit Liabilities
10
2.3
Unclaimed Deposits
10
2.4
Employee Plans
10
     
ARTICLE III
PURCHASE OF ASSETS
11
     
3.1
Assets Purchased by Assuming Bank
11
3.2
Asset Purchase Price
11
3.3
Manner of Conveyance; Limited Warranty; Nonrecourse; Etc.
12
3.4
Puts of Assets to the Receiver
12
3.5
Assets Not Purchased by Assuming Bank
13
3.6
Assets Essential to Receiver
15
     
ARTICLE IV
ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS
16
     
4.1
Continuation of Banking Business
16
4.2
Agreement with Respect to Credit Card Business
16
4.3
Agreement with Respect to Safe Deposit Business
16
4.4
Agreement with Respect to Safekeeping Business
16
4.5
Agreement with Respect to Trust Business
16
4.6
Agreement with Respect to Bank Premises
17
4.7
Agreement with Respect to Leased Data Processing Equipment
20
4.8
Agreement with Respect to Certain Existing Agreements
20
4.9
Informational Tax Reporting
21
4.10
Insurance
21
4.11
Office Space for Receiver and Corporation
22
4.12
Agreement with Respect to Continuation of Group Health Plan Coverage for Former
Employees
22
4.13
Agreement with Respect to Interim Asset Servicing
23

 
 
 
 
 
 
 

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COOPERATIVE BANK
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ARTICLE V
DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK
23
     
5.1
Payment of Checks, Drafts and Orders
23
5.2
Certain Agreements Related to Deposits
24
5.3
Notice to Depositors
24
     
ARTICLE VI
RECORDS
24
     
6.1
Transfer of Records
24
6.2
Delivery of Assigned Records
25
6.3
Preservation of Records
25
6.4
Access to Records; Copies
25
     
ARTICLE VII
FIRST LOSS TRANCHE
26
     
ARTICLE VIII
ADJUSTMENTS
26
     
8.1
Pro Forma Statement
26
8.2
Correction of Errors and Omissions; Other Liabilities
 
8.3
Payments
27
8.4
Interest
27
8.5
Subsequent Adjustments
27
     
ARTICLE IX
CONTINUING COOPERATION
28
     
9.1
General Matters
28
9.2
Additional Title Documents
28
9.3
Claims and Suits
28
9.4
Payment of Deposits
28
9.5
Withheld Payments
29
9.6
Proceedings with Respect to Certain Assets and Liabilities
29
9.7
Information
30
     
ARTICLE X
CONDITION PRECEDENT
30
     
ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF THE ASSUMING BANK
30
     
ARTICLE XII
INDEMNIFICATION
31
     
12.1
Indemnification of Indemnitees
31
12.2
Conditions Precedent to Indemnification
34
12.3
No Additional Warranty
35
12.4
Indemnification of Corporation and Receiver
35
12.5
Obligations Supplemental
35

 
 
 
 
 
 
 

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12.6
Criminal Claims
36
12.7
Limited Guaranty of the Corporation
36
12.8
Subrogation
36
     
ARTICLE XIII
MISCELLANEOUS
36
     
13.1
Entire Agreement
36
13.2
Headings
36
13.3
Counterparts
37
13.4
Governing Law
37
13.5
Successors
37
13.6
Modification; Assignment
37
13.7
Notice
37
13.8
Manner of Payment
38
13.9
Costs, Fees and Expenses
38
13.10
Waiver
38
13.11
Severability
39
13.12
Term of Agreement
39
13.13
Survival of Covenants, Etc.
39
     
SCHEDULES
         
2.1
Certain Liabilities Assumed
41
2.1(a)
Excluded Deposit Liability Accounts
42
3.1
Certain Assets Purchased
43
3.2
Purchase Price of Assets or Assets
44
3.5(l)
Excluded Private Label Assets-Backed Securities
46
4.15A
Single Family Loss Share Loans
53
4.15B
Non-Single Family Loss Share Loans
48
7
Calculation of Deposit Premium
49
           
EXHIBITS
         
4.13
Interim Asset Servicing Arrangement
51
4.15A
Single Family Loss Share Agreement
53
4.15B
Commercial Loss Share Agreement
88

 
 
 
 
 
 
 

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PURCHASE AND ASSUMPTION AGREEMENT

WHOLE BANK

ALL DEPOSITS

THIS AGREEMENT, made and entered into as of the 19th day of JUNE, 2009, by and
among the FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER of COOPERATIVE BANK,
WILMINGTON, NORTH CAROLINA (the "Receiver"), FIRST BANK, organized under the
laws of the United States of America, and having its principal place of business
in TROY, NORTH CAROLINA (the "Assuming Bank"), and the FEDERAL DEPOSIT INSURANCE
CORPORATION, organized under the laws of the United States of America and having
its principal office in Washington, D.C., acting in its corporate capacity (the
"Corporation").

WITNESSETH:

WHEREAS, on Bank Closing, the Chartering Authority closed COOPERATIVE BANK (the
"Failed Bank") pursuant to applicable law and the Corporation was appointed
Receiver thereof; and

WHEREAS, the Assuming Bank desires to purchase certain assets and assume certain
deposit and other liabilities of the Failed Bank on the terms and conditions set
forth in this Agreement; and

WHEREAS, pursuant to 12 U.S.C. Section 1823(c)(2)(A), the Corporation may
provide assistance to the Assuming Bank to facilitate the transactions
contemplated by this Agreement, which assistance may include indemnification
pursuant to Article XII; and

WHEREAS, the Board of Directors of the Corporation (the "Board") has determined
to provide assistance to the Assuming Bank on the terms and subject to the
conditions set forth in this Agreement; and

WHEREAS, the Board has determined pursuant to 12 U.S.C. Section 1823(c)(4)(A)
that such assistance is necessary to meet the obligation of the Corporation to
provide insurance coverage for the insured deposits in the Failed Bank.

NOW THEREFORE, in consideration of the mutual promises herein set forth and
other valuable consideration, the parties hereto agree as follows:

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COOPERATIVE BANK
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ARTICLE I
DEFINITIONS

Capitalized terms used in this Agreement shall have the meanings set forth in
this Article I, or elsewhere in this Agreement. As used herein, words imparting
the singular include the plural and vice versa.

"Accounting Records" means the general ledger and subsidiary ledgers and
supporting schedules which support the general ledger balances.

"Acquired Subsidiaries" means Subsidiaries of the Failed Bank acquired pursuant
to Section 3.1.

"Adversely Classified" means, with respect to any Loan or security, a Loan or
security which, as of the date of the most recent pertinent data made available
to the Assuming Bank as part of the Information Package, has been designated in
the most recent report of examination as "Substandard," "Doubtful" or "Loss" by
the Failed Bank's appropriate Federal or State Chartering Authority or
regulator.

"Affiliate" of any Person means any director, officer, or employee of that
Person and any other Person (i) who is directly or indirectly controlling, or
controlled by, or under direct or indirect common control with, such Person, or
(ii) who is an affiliate of such Person as the term "affiliate" is defined in
Section 2 of the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section
1841.

"Agreement" means this Purchase and Assumption Agreement by and among the
Assuming Bank, the Corporation and the Receiver, as amended or otherwise
modified from time to time.

"Assets" means all assets of the Failed Bank purchased pursuant to Section 3.1.
Assets owned by Subsidiaries of the Failed Bank are not "Assets" within the
meaning of this definition.

"Assumed Deposits" means Deposits.

"Bank Closing" means the close of business of the Failed Bank on the date on
which the Chartering Authority closed such institution.

"Bank Premises" means the banking houses, drive-in banking facilities, and
teller facilities (staffed or automated) together with appurtenant parking,
storage and service facilities and structures connecting remote facilities to
banking houses, and land on which the foregoing are located, that are owned or
leased by the Failed Bank and that are occupied by the Failed Bank as of Bank
Closing.

"Book Value" means, with respect to any Asset and any Liability Assumed, the
dollar amount thereof stated on the Accounting Records of the Failed Bank. The
Book Value of

 
 
 
 
 
 
 

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COOPERATIVE BANK
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any item shall be determined as of Bank Closing after adjustments made by the
Receiver for differences in accounts, suspense items, unposted debits and
credits, and other similar adjustments or corrections and for setoffs, whether
voluntary or involuntary. The Book Value of a Subsidiary of the Failed Bank
acquired by the Assuming Bank shall be determined from the investment in
subsidiary and related accounts on the "bank only" (unconsolidated) balance
sheet of the Failed Bank based on the equity method of accounting. Without
limiting the generality of the foregoing, (i) the Book Value of a Liability
Assumed shall include all accrued and unpaid interest thereon as of Bank
Closing, and (ii) the Book Value of a Loan shall reflect adjustments for earned
interest, or unearned interest (as it relates to the "rule of 78s" or
add-on-interest loans, as applicable), if any, as of Bank Closing, adjustments
for the portion of earned or unearned loan-related credit life and/or disability
insurance premiums, if any, attributable to the Failed Bank as of Bank Closing,
and adjustments for Failed Bank Advances, if any, in each case as determined for
financial reporting purposes. The Book Value of an Asset shall not include any
adjustment for loan premiums, discounts or any related deferred income or fees,
or general or specific reserves on the Accounting Records of the Failed Bank.

"Business Day" means a day other than a Saturday, Sunday, Federal legal holiday
or legal holiday under the laws of the State where the Failed Bank is located,
or a day on which the principal office of the Corporation is closed.

"Chartering Authority" means (i) with respect to a national bank, the Office of
the Comptroller of the Currency, (ii) with respect to a Federal savings
association or savings bank, the Office of Thrift Supervision, (iii) with
respect to a bank or savings institution chartered by a State, the agency of
such State charged with primary responsibility for regulating and/or closing
banks or savings institutions, as the case may be, (iv) the Corporation in
accordance with 12 U.S.C. Section 1821(c), with regard to self appointment, or
(v) the appropriate Federal banking agency in accordance with 12 U.S.C.
1821(c)(9).

"Commitment" means the unfunded portion of a line of credit or other commitment
reflected on the books and records of the Failed Bank to make an extension of
credit (or additional advances with respect to a Loan) that was legally binding
on the Failed Bank as of Bank Closing, other than extensions of credit pursuant
to the credit card business and overdraft protection plans of the Failed Bank,
if any.

"Credit Documents" mean the agreements, instruments, certificates or other
documents at any time evidencing or otherwise relating to, governing or executed
in connection with or as security for, a Loan, including without limitation
notes, bonds, loan agreements, letter of credit applications, lease financing
contracts, banker's acceptances, drafts, interest protection agreements,
currency exchange agreements, repurchase agreements, reverse repurchase
agreements, guarantees, deeds of trust, mortgages, assignments, security
agreements, pledges, subordination or priority agreements, lien priority
agreements, undertakings, security instruments, certificates, documents, legal
opinions, participation agreements and intercreditor agreements, and all
amendments, modifications, renewals, extensions, rearrangements, and
substitutions with respect to any of the foregoing.

 
 
 
 
 
 
 

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COOPERATIVE BANK
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"Credit File" means all Credit Documents and all other credit, collateral, or
insurance documents in the possession or custody of the Assuming Bank, or any of
its Subsidiaries or Affiliates, relating to an Asset or a Loan included in a Put
Notice, or copies of any thereof.

"Data Processing Lease" means any lease or licensing agreement, binding on the
Failed Bank as of Bank Closing, the subject of which is data processing
equipment or computer hardware or software used in connection with data
processing activities. A lease or licensing agreement for computer software used
in connection with data processing activities shall constitute a Data Processing
Lease regardless of whether such lease or licensing agreement also covers data
processing equipment.

"Deposit" means a deposit as defined in 12 U.S.C. Section 1813(l), including
without limitation, outstanding cashier's checks and other official checks and
all uncollected items included in the depositors' balances and credited on the
books and records of the Failed Bank; provided, that the term "Deposit" shall
not include all or any portion of those deposit balances which, in the
discretion of the Receiver or the Corporation, (i) may be required to satisfy it
for any liquidated or contingent liability of any depositor arising from an
unauthorized or unlawful transaction, or (ii) may be needed to provide payment
of any liability of any depositor to the Failed Bank or the Receiver, including
the liability of any depositor as a director or officer of the Failed Bank,
whether or not the amount of the liability is or can be determined as of Bank
Closing.

"Equity Adjustment" means the dollar amount resulting by subtracting the Book
Value, as of Bank Closing, of all Liabilities Assumed under this Agreement by
the Assuming Bank from the Book Value, as of Bank Closing, of all Assets
acquired under this Agreement by the Assuming Bank, which may be a positive or a
negative number.

"Failed Bank Advances" means the total sums paid by the Failed Bank to (i)
protect its lien position, (ii) pay ad valorem taxes and hazard insurance, and
(iii) pay credit life insurance, accident and health insurance, and vendor's
single interest insurance.

"Fair Market Value" means (i)(a) “Market Value” as defined in the regulation
prescribing the standards for real estate appraisals used in federally related
transactions, 12 C.F.R. § 323.2(g), and accordingly shall mean the most probable
price which a property should bring in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller each acting prudently
and knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a specified date
and the passing of title from seller to buyer under conditions whereby:

(1) Buyer and seller are typically motivated;
(2) Both parties are well informed or well advised, and acting in what they
consider their own best interests;
(3) A reasonable time is allowed for exposure in the open market;
(4) Payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and

 
 
 
 
 
 
 

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COOPERATIVE BANK
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(5) The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted by
anyone associated with the sale;

as determined as of Bank Closing by an appraiser chosen by the Assuming Bank
from a list of acceptable appraisers provided by the Receiver; any costs and
fees associated with such determination shall be shared equally by the Receiver
and the Assuming Bank, and (b) which, with respect to Bank Premises (to the
extent, if any, that Bank Premises are purchased utilizing this valuation
method), shall be determined not later than sixty (60) days after Bank Closing
by an appraiser selected by the Receiver and the Assuming Bank within seven (7)
days after Bank Closing; or (ii) with respect to property other than Bank
Premises purchased utilizing this valuation method, the price therefore as
established by the Receiver and agreed to by the Assuming Bank, or in the
absence of such agreement, as determined in accordance with clause (i)(a) above.

"First Loss Tranche" means the dollar amount of liability that the Assuming Bank
will incur prior to the commencement of loss sharing, which is the sum of (i)
the Assuming Bank’s asset premium (discount) bid, as reflected on the Assuming
Bank’s bid form, plus (ii) the Assuming Bank’s Deposit premium bid, as reflected
on the Assuming Bank’s bid form, plus (iii) the Equity Adjustment.  The First
Loss Tranche may be a positive or negative number.

"Fixtures" means those leasehold improvements, additions, alterations and
installations constituting all or a part of Bank Premises and which were
acquired, added, built, installed or purchased at the expense of the Failed
Bank, regardless of the holder of legal title thereto as of Bank Closing.

"Furniture and Equipment" means the furniture and equipment, other than motor
vehicles, leased or owned by the Failed Bank and reflected on the books of the
Failed Bank as of Bank Closing, including without limitation automated teller
machines, carpeting, furniture, office machinery (including personal computers),
shelving, office supplies, telephone, surveillance and security systems.  Motor
vehicles shall be considered other assets and pass at Book Value.

"Indemnitees" means, except as provided in paragraph (k) of Section 12.1, (i)
the Assuming Bank, (ii) the Subsidiaries and Affiliates of the Assuming Bank
other than any Subsidiaries or Affiliates of the Failed Bank that are or become
Subsidiaries or Affiliates of the Assuming Bank, and (iii) the directors,
officers, employees and agents of the Assuming Bank and its Subsidiaries and
Affiliates who are not also present or former directors, officers, employees or
agents of the Failed Bank or of any Subsidiary or Affiliate of the Failed Bank.

"Information Package" means the most recent compilation of financial and other
data with respect to the Failed Bank, including any amendments or supplements
thereto, provided to the Assuming Bank by the Corporation on the web site used
by the Corporation to market the Failed Bank to potential acquirers.

 
 
 
 
 
 
 

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COOPERATIVE BANK
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"Legal Balance" means the amount of indebtedness legally owed by an Obligor with
respect to a Loan, including principal and accrued and unpaid interest, late
fees, attorneys' fees and expenses, taxes, insurance premiums, and similar
charges, if any.

"Liabilities Assumed" has the meaning provided in Section 2.1.

"Lien" means any mortgage, lien, pledge, charge, assignment for security
purposes, security interest, or encumbrance of any kind with respect to an
Asset, including any conditional sale agreement or capital lease or other title
retention agreement relating to such Asset.

"Loans" means all of the following owed to or held by the Failed Bank as of Bank
Closing:

(i)           loans (including loans which have been charged off the Accounting
Records of the Failed Bank in whole or in part prior to the date of the most
recent pertinent data made available to the Assuming Bank as part of the
Information Package), participation agreements, interests in participations,
overdrafts of customers (including but not limited to overdrafts made pursuant
to an overdraft protection plan or similar extensions of credit in connection
with a deposit account), revolving commercial lines of credit, home equity lines
of credit, Commitments, United States and/or State-guaranteed student loans, and
lease financing contracts;

(ii)           all Liens, rights (including rights of set-off), remedies,
powers, privileges, demands, claims, priorities, equities and benefits owned or
held by, or accruing or to accrue to or for the benefit of, the holder of the
obligations or instruments referred to in clause (i) above, including but not
limited to those arising under or based upon Credit Documents, casualty
insurance policies and binders, standby letters of credit, mortgagee title
insurance policies and binders, payment bonds and performance bonds at any time
and from time to time existing with respect to any of the obligations or
instruments referred to in clause (i) above; and

(iii)           all amendments, modifications, renewals, extensions,
refinancings, and refundings of or for any of the foregoing.

"Obligor" means each Person liable for the full or partial payment or
performance of any Loan, whether such Person is obligated directly, indirectly,
primarily, secondarily, jointly, or severally.

"Other Real Estate" means all interests in real estate (other than Bank Premises
and Fixtures) and loans on "in substance foreclosure" status as of Bank Closing
as recorded on the Accounting Records of the Failed Bank, including but not
limited to mineral rights, leasehold rights, condominium and cooperative
interests, air rights and development rights that are owned by the Failed Bank.

 
 
 
 
 
 
 

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COOPERATIVE BANK
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"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, or
government or any agency or political subdivision thereof, excluding the
Corporation.

"Primary Indemnitor" means any Person (other than the Assuming Bank or any of
its Affiliates) who is obligated to indemnify or insure, or otherwise make
payments (including payments on account of claims made against) to or on behalf
of any Person in connection with the claims covered under Article XII, including
without limitation any insurer issuing any directors and officers liability
policy or any Person issuing a financial institution bond or banker's blanket
bond.

“Proforma” means producing a balance sheet that reflects a reasonably accurate
financial statement of the Failed bank through the date of closing. The Proforma
financial statements serve as a basis for the opening entries of both the
Assuming Bank and the Receiver.

"Put Date" has the meaning provided in Section 3.4.

"Put Notice" has the meaning provided in Section 3.4.

"Qualified Financial Contract" means a qualified financial contract as defined
in 12 U.S.C. Section 1821(e)(8)(D).

"Record" means any document, microfiche, microfilm and computer records
(including but not limited to magnetic tape, disc storage, card forms and
printed copy) of the Failed Bank generated or maintained by the Failed Bank that
is owned by or in the possession of the Receiver at Bank Closing.

"Related Liability" with respect to any Asset means any liability existing and
reflected on the Accounting Records of the Failed Bank as of Bank Closing for
(i) indebtedness secured by mortgages, deeds of trust, chattel mortgages,
security interests or other liens on or affecting such Asset, (ii) ad valorem
taxes applicable to such Asset, and (iii) any other obligation determined by the
Receiver to be directly related to such Asset.

"Related Liability Amount" with respect to any Related Liability on the books of
the Assuming Bank, means the amount of such Related Liability as stated on the
Accounting Records of the Assuming Bank (as maintained in accordance with
generally accepted accounting principles) as of the date as of which the Related
Liability Amount is being determined. With respect to a liability that relates
to more than one asset, the amount of such Related Liability shall be allocated
among such assets for the purpose of determining the Related Liability Amount
with respect to any one of such assets. Such allocation shall be made by
specific allocation, where determinable, and otherwise shall be pro rata based
upon the dollar amount of such assets stated on the Accounting Records of the
entity that owns such asset.

"Repurchase Price" means, with respect to any Loan the Book Value, adjusted to
reflect changes to Book Value after Bank Closing, plus (ii) any advances and
interest on such Loan after Bank Closing, minus (iii) the total of amounts
received by the Assuming Bank for

 
 
 
 
 
 
 

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such Loan, regardless of how applied, after Bank Closing, plus (iv) advances
made by Assuming Bank, plus (v) total disbursements of principal made by
Receiver that are not included in the Book Value.

"Safe Deposit Boxes" means the safe deposit boxes of the Failed Bank, if any,
including the removable safe deposit boxes and safe deposit stacks in the Failed
Bank's vault(s), all rights and benefits under rental agreements with respect to
such safe deposit boxes, and all keys and combinations thereto.

"Settlement Date" means the first Business Day immediately prior to the day
which is one hundred eighty (180) days after Bank Closing, or such other date
prior thereto as may be agreed upon by the Receiver and the Assuming Bank. The
Receiver, in its discretion, may extend the Settlement Date.

"Settlement Interest Rate" means, for the first calendar quarter or portion
thereof during which interest accrues, the rate determined by the Receiver to be
equal to the equivalent coupon issue yield on twenty-six (26)-week United States
Treasury Bills in effect as of Bank Closing as published in The Wall Street
Journal; provided, that if no such equivalent coupon issue yield is available as
of Bank Closing, the equivalent coupon issue yield for such Treasury Bills most
recently published in The Wall Street Journal prior to Bank Closing shall be
used. Thereafter, the rate shall be adjusted to the rate determined by the
Receiver to be equal to the equivalent coupon issue yield on such Treasury Bills
in effect as of the first day of each succeeding calendar quarter during which
interest accrues as published in The Wall Street Journal.

"Subsidiary" has the meaning set forth in Section 3(w)(4) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1813(w)(4), as amended.

ARTICLE II
ASSUMPTION OF LIABILITIES

2.1           Liabilities Assumed by Assuming Bank. The Assuming Bank expressly
assumes at Book Value (subject to adjustment pursuant to Article VIII) and
agrees to pay, perform, and discharge all of the following liabilities of the
Failed Bank as of Bank Closing, except as otherwise provided in this Agreement
(such liabilities referred to as "Liabilities Assumed"):

 
(a)
Assumed Deposits, except those Deposits specifically listed on Schedule 2.1(a);
provided, that as to any Deposits of public money which are Assumed Deposits,
the Assuming Bank agrees to properly secure such Deposits with such of the
Assets as appropriate which, prior to Bank Closing, were pledged as security
therefor by the Failed Bank, or with assets of the Assuming Bank, if such
securing Assets, if any, are insufficient to properly secure such Deposits;

 
(b)
liabilities for indebtedness secured by mortgages, deeds of trust, chattel
mortgages, security interests or other liens on or affecting any Assets, if any;

 
 
 
 
 
 
 

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provided, that the assumption of any liability pursuant to this paragraph shall
be limited to the market value of the Assets securing such liability as
determined by the Receiver;

 
(c)
borrowings from Federal Reserve Banks and Federal Home Loan Banks, if any,
provided, that the assumption of any liability pursuant to this paragraph shall
be limited to the market value of the assets securing such liability as
determined by the Receiver; and overdrafts, debit balances, service charges,
reclamations, and adjustments to accounts with the Federal Reserve Banks as
reflected on the books and records of any such Federal Reserve Bank within
ninety (90) days after Bank Closing, if any;

 
(d)
ad valorem taxes applicable to any Asset, if any; provided, that the assumption
of any ad valorem taxes pursuant to this paragraph shall be limited to an amount
equal to the market value of the Asset to which such taxes apply as determined
by the Receiver;

 
(e)
liabilities, if any, for federal funds purchased, repurchase agreements and
overdrafts in accounts maintained with other depository institutions (including
any accrued and unpaid interest thereon computed to and including Bank Closing);
provided, that the assumption of any liability pursuant to this paragraph shall
be limited to the market value of the Assets securing such liability as
determined by the Receiver;

(f)           United States Treasury tax and loan note option accounts, if any;

 
(g)
liabilities for any acceptance or commercial letter of credit (other than
"standby letters of credit" as defined in 12 C.F.R. Section 337.2(a)); provided,
that the assumption of any liability pursuant to this paragraph shall be limited
to the market value of the Assets securing such liability as determined by the
Receiver;

 
(h)
duties and obligations assumed pursuant to this Agreement including without
limitation those relating to the Failed Bank's credit card business, overdraft
protection plans, safe deposit business, safekeeping business or trust business,
if any;

(i)           liailities, if any, for Commitments;

 
(j)
liabilities, if any, for amounts owed to any Subsidiary of the Failed Bank
acquired under Section 3.1;

(k)           liabilities, if any, with respect to Qualified Financial
Contracts;

 
 
 
 
 
 
 

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(l)
duties and obligations under any contract pursuant to which the Failed Bank
provides mortgage servicing for others, or mortgage servicing is provided to the
Failed Bank by others; and

 
(m)
all asset-related offensive litigation liabilities and all asset-related
defensive litigation liabilities, but only to the extent such liabilities relate
to assets subject to a loss share agreement, and provided that all other
defensive litigation and any  class actions with respect to credit card business
are retained by the Receiver.

Schedule 2.1 attached hereto and incorporated herein sets forth certain
categories of Liabilities Assumed and the aggregate Book Value of the
Liabilities Assumed in such categories. Such schedule is based upon the best
information available to the Receiver and may be adjusted as provided in Article
VIII.

2.2           Interest on Deposit Liabilities.  The Assuming Bank agrees that,
from and after Bank Closing, it will accrue and pay interest on Deposit
liabilities assumed pursuant to Section 2.1 at a rate(s) it shall determine;
provided, that for non-transaction Deposit liabilities such rate(s) shall not be
less than the lowest rate offered by the Assuming Bank to its depositors for
non-transaction deposit accounts. The Assuming Bank shall permit each depositor
to withdraw, without penalty for early withdrawal, all or any portion of such
depositor's Deposit, whether or not the Assuming Bank elects to pay interest in
accordance with any deposit agreement formerly existing between the Failed Bank
and such depositor; and further provided, that if such Deposit has been pledged
to secure an obligation of the depositor or other party, any withdrawal thereof
shall be subject to the terms of the agreement governing such pledge.  The
Assuming Bank shall give notice to such depositors as provided in Section 5.3 of
the rate(s) of interest which it has determined to pay and of such withdrawal
rights.

2.3           Unclaimed Deposits. If, within eighteen (18) months after Bank
Closing, any depositor of the Failed Bank does not claim or arrange to continue
such depositor's Deposit assumed pursuant to Section 2.1 at the Assuming Bank,
the Assuming Bank shall, within fifteen (15) Business Days after the end of such
eighteen (18)-month period, (i) refund to the Corporation the full amount of
each such Deposit (without reduction for service charges), (ii) provide to the
Corporation a schedule of all such refunded Deposits in such form as may be
prescribed by the Corporation, and (iii) assign, transfer, convey and deliver to
the Receiver all right, title and interest of the Assuming Bank in and to
Records previously transferred to the Assuming Bank and other records generated
or maintained by the Assuming Bank pertaining to such Deposits. During such
eighteen (18)-month period, at the request of the Corporation, the Assuming Bank
promptly shall provide to the Corporation schedules of unclaimed deposits in
such form as may be prescribed by the Corporation.

2.4           Employee Plans. Except as provided in Section 4.12, the Assuming
Bank shall have no liabilities, obligations or responsibilities under the Failed
Bank's health care, bonus, vacation, pension, profit sharing, deferred
compensation, 401K or stock purchase plans or similar plans, if any, unless the
Receiver and the Assuming Bank agree otherwise subsequent to the date of this
Agreement.

 
 
 
 
 
 
 

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ARTICLE III
PURCHASE OF ASSETS

3.1           Assets Purchased by Assuming Bank. With the exception of certain
assets expressly excluded in Sections 3.5 and 3.6, the Assuming Bank hereby
purchases from the Receiver, and the Receiver hereby sells, assigns, transfers,
conveys, and delivers to the Assuming Bank, all right, title, and interest of
the Receiver in and to all of the assets (real, personal and mixed, wherever
located and however acquired) including all subsidiaries, joint ventures,
partnerships, and any and all other business combinations or arrangements,
whether active, inactive, dissolved or terminated, of the Failed Bank whether or
not reflected on the books of the Failed Bank as of Bank Closing.  Schedules 3.1
and 3.1a attached hereto and incorporated herein. sets forth certain categories
of Assets purchased hereunder. Such schedule is based upon the best information
available to the Receiver and may be adjusted as provided in Article
VIII.  Assets are purchased hereunder by the Assuming Bank subject to all
liabilities for indebtedness collateralized by Liens affecting such Assets to
the extent provided in Section 2.1.  The subsidiaries, joint ventures,
partnerships, and any and all other business combinations or arrangements,
whether active, inactive, dissolved or terminated being purchased by the
Assuming Bank includes, but is not limited to, the entities listed on Schedule
3.1a. Notwithstanding Section 4.8, the Assuming Bank specifically purchases all
mortgage servicing rights and obligations of the Failed Bank.

3.2           Asset Purchase Price.

(a)           All Assets and assets of the Failed Bank subject to an option to
purchase by the Assuming Bank shall be purchased for the amount, or the amount
resulting from the method specified for determining the amount, as specified on
Schedule 3.2, except as otherwise may be provided herein. Any Asset, asset of
the Failed Bank subject to an option to purchase or other asset purchased for
which no purchase price is specified on Schedule 3.2 or otherwise herein shall
be purchased at its Book Value. Loans or other assets charged off the Accounting
Records of the Failed Bank prior to the date of the most recent pertinent data
made available to the Assuming Bank as part of the Information Package shall be
purchased at a price of zero.

(b)  The purchase price for securities (other than the capital stock of any
Acquired Subsidiary) purchased under Section 3.1 by the Assuming Bank shall be
the market value thereof as of Bank Closing, which market value shall be (i) the
market price for each such security quoted at the close of the trading day
effective on Bank Closing as published electronically by Bloomberg, L.P., or
alternatively, at the discretion of the Receiver, IDC/Financial Times (FT)
Interactive Data; (ii) provided, that if such market price is not available for
any such security, the Assuming Bank will submit a bid  for each such security
within three days of notification/bid request by the Receiver (unless a
different time period is agreed to by the Assuming Bank and the Receiver) and
the Receiver, in its sole discretion will accept or reject each such bid; and
(iii) further provided in the absence of an acceptable bid from the Assuming
Bank, each such security shall not pass to the Assuming Bank and shall be deemed
to be an excluded asset hereunder.

(c)           Qualified Financial Contracts shall be purchased at book value.

 
 
 
 
 
 
 

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3.3           Manner of Conveyance; Limited Warranty; Nonrecourse; Etc. THE
CONVEYANCE OF ALL ASSETS, INCLUDING REAL AND PERSONAL PROPERTY INTERESTS,
PURCHASED BY THE ASSUMING BANK UNDER THIS AGREEMENT SHALL BE MADE, AS NECESSARY,
BY RECEIVER'S DEED OR RECEIVER'S BILL OF SALE, "AS IS", "WHERE IS", WITHOUT
RECOURSE AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
WITHOUT ANY WARRANTIES WHATSOEVER WITH RESPECT TO SUCH ASSETS, EXPRESS OR
IMPLIED, WITH RESPECT TO TITLE, ENFORCEABILITY, COLLECTIBILITY, DOCUMENTATION OR
FREEDOM FROM LIENS OR ENCUMBRANCES (IN WHOLE OR IN PART), OR ANY OTHER MATTERS.

3.4           Puts of Assets to the Receiver.

                (a)           Puts Prior to the Settlement Date.

(i) During the period from Bank Closing to and including the Business Day
immediately preceding the Settlement Date, the Assuming Bank shall be entitled
to require the Receiver to purchase any Asset which the Assuming Bank can
establish is evidenced by forged or stolen instruments as of Bank Closing;
provided, that, the Assuming Bank shall not have the right to require the
Receiver to purchase any such Asset with respect to which the Assuming Bank has
taken any action referred to in Section 3.4(a)(ii) with respect to such Asset.

(ii) At the end of the thirty (30)-day period following Bank Closing and at that
time only, in accordance with this Section 3.4, the Assuming Bank shall be
entitled to require the Receiver to purchase any remaining overdraft transferred
to the Assuming Bank pursuant to 3.1 which both was made after the "as of" the
date of the most recent pertinent data made available to the Assuming Bank as
part of the Information Package and was not made pursuant to an overdraft
protection plan or similar extension of credit.

The Assuming Bank shall transfer all such Assets to the Receiver without
recourse, and shall indemnify the Receiver against any and all claims of any
Person claiming by, through or under the Assuming Bank with respect to any such
Asset, as provided in Section 12.4.

(b)           Notices to the Receiver. In the event that the Assuming Bank
elects to require the Receiver to purchase one or more Assets, the Assuming Bank
shall deliver to the Receiver a notice (a "Put Notice") which shall include:

 
(i)
a list of all Assets that the Assuming Bank requires the Receiver to purchase;

 
(ii)
a list of all Related Liabilities with respect to the Assets identified pursuant
to (i) above; and

 
(iii)
a statement of the estimated Repurchase Price of each Asset identified pursuant
to (i) above as of the applicable Put Date.

 
 
 
 
 
 
 

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Such notice shall be in the form prescribed by the Receiver or such other form
to which the Receiver shall consent. As provided in Section 9.6, the Assuming
Bank shall deliver to the Receiver such documents, Credit Files and such
additional information relating to the subject matter of the Put Notice as the
Receiver may request and shall provide to the Receiver full access to all other
relevant books and records.

(c)           Purchase by Receiver. The Receiver shall purchase Assets that are
specified in the Put Notice and shall assume Related Liabilities with respect to
such Assets, and the transfer of such Assets and Related Liabilities shall be
effective as of a date determined by the Receiver which date shall not be later
than thirty (30) days after receipt by the Receiver of the Put Notice (the "Put
Date").

(d)           Purchase Price and Payment Date.  Each Asset purchased by the
Receiver pursuant to this Section 3.4 shall be purchased at a price equal to the
Repurchase Price of such Asset less the Related Liability Amount applicable to
such Asset, in each case determined as of the applicable Put Date. If the
difference between such Repurchase Price and such Related Liability Amount is
positive, then the Receiver shall pay to the Assuming Bank the amount of such
difference; if the difference between such amounts is negative, then the
Assuming Bank shall pay to the Receiver the amount of such difference. The
Assuming Bank or the Receiver, as the case may be, shall pay the purchase price
determined pursuant to this Section 3.4(d) not later than the twentieth (20th)
Business Day following the applicable Put Date, together with interest on such
amount at the Settlement Interest Rate for the period from and including such
Put Date to and including the day preceding the date upon which payment is made.

(e)           Servicing. The Assuming Bank shall administer and manage any Asset
subject to purchase by the Receiver in accordance with usual and prudent banking
standards and business practices until such time as such Asset is purchased by
the Receiver.

(f)           Reversals. In the event that the Receiver purchases an Asset (and
assumes the Related Liability) that it is not required to purchase pursuant to
this Section 3.4, the Assuming Bank shall repurchase such Asset (and assume such
Related Liability) from the Receiver at a price computed so as to achieve the
same economic result as would apply if the Receiver had never purchased such
Asset pursuant to this Section 3.4.

3.5           Assets Not Purchased by Assuming Bank. The Assuming Bank does not
purchase, acquire or assume, or (except as otherwise expressly provided in this
Agreement) obtain an option to purchase, acquire or assume under this Agreement:

(a)           any financial institution bonds, banker's blanket bonds, or public
liability, fire, or extended coverage insurance policy or any other insurance
policy of the Failed Bank, or premium refund, unearned premium derived from
cancellation, or any proceeds payable with respect to any of the foregoing;

(b)           any interest, right, action, claim, or judgment against (i) any
officer, director, employee, accountant, attorney, or any other Person employed
or retained by the Failed Bank or

 
 
 
 
 
 
 

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any Subsidiary of the Failed Bank on or prior to Bank Closing arising out of any
act or omission of such Person in such capacity, (ii) any underwriter of
financial institution bonds, banker's blanket bonds or any other insurance
policy of the Failed Bank, (iii) any shareholder or holding company of the
Failed Bank, or (iv) any other Person whose action or inaction may be related to
any loss (exclusive of any loss resulting from such Person's failure to pay on a
Loan made by the Failed Bank) incurred by the Failed Bank; provided, that for
the purposes hereof, the acts, omissions or other events giving rise to any such
claim shall have occurred on or before Bank Closing, regardless of when any such
claim is discovered and regardless of whether any such claim is made with
respect to a financial institution bond, banker's blanket bond, or any other
insurance policy of the Failed Bank in force as of Bank Closing;

(c)           prepaid regulatory assessments of the Failed Bank, if any;

(d)           legal or equitable interests in tax receivables of the Failed
Bank, if any, including any claims arising as a result of the Failed Bank having
entered into any agreement or otherwise being joined with another Person with
respect to the filing of tax returns or the payment of taxes;

(e)           amounts reflected on the Accounting Records of the Failed Bank as
of Bank Closing as a general or specific loss reserve or contingency account, if
any;

(f)           leased or owned Bank Premises and leased or owned Furniture and
Equipment and Fixtures and data processing equipment (including hardware and
software) located on leased or owned Bank Premises, if any; provided, that the
Assuming Bank does obtain an option under Section 4.6, Section 4.7 or Section
4.8, as the case may be, with respect thereto;

(g)           owned Bank Premises which the Receiver, in its discretion,
determines may contain environmentally hazardous substances;

(h)           any "goodwill," as such term is defined in the instructions to the
report of condition prepared by banks examined by the Corporation in accordance
with 12 C.F.R. Section 304.4, and other intangibles;

(i)           any criminal restitution or forfeiture orders issued in favor of
the Failed Bank;

(j)           reserved;

(k)           assets essential to the Receiver in accordance with Section 3.6;
and

(l)           all private label asset-backed securities, including, but not
limited to, those listed on the attached Schedule 3.5(l).

 
 
 
 
 
 
 

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3.6           Retention or Repurchase of Assets Essential to Receiver.

(a)           The Receiver may refuse to sell to the Assuming Bank, or the
Assuming Bank agrees, at the request of the Receiver set forth in a written
notice to the Assuming Bank, to assign, transfer, convey, and deliver to the
Receiver all of the Assuming Bank's right, title and interest in and to, any
Asset or asset essential to the Receiver as determined by the Receiver in its
discretion (together with all Credit Documents evidencing or pertaining
thereto), which may include any Asset or asset that the Receiver determines to
be:

 
(i)
made to an officer, director, or other Person engaging in the affairs of the
Failed Bank, its Subsidiaries or Affiliates or any related entities of any of
the foregoing;

 
(ii)
the subject of any investigation relating to any claim with respect to any item
described in Section 3.5(a) or (b), or the subject of, or potentially the
subject of, any legal proceedings;

 
(iii)
made to a Person who is an Obligor on a loan owned by the Receiver or the
Corporation in its corporate capacity or its capacity as receiver of any
institution;

 
(iv)
secured by collateral which also secures any asset owned by the Receiver; or

 
(v)
related to any asset of the Failed Bank not purchased by the Assuming Bank under
this Article III or any liability of the Failed Bank not assumed by the Assuming
Bank under Article II.

(b)           Each such Asset or asset purchased by the Receiver shall be
purchased at a price equal to the Repurchase Price thereof less the Related
Liability Amount with respect to any Related Liabilities related to such Asset
or asset, in each case determined as of the date of the notice provided by the
Receiver pursuant to Section 3.6(a). The Receiver shall pay the Assuming Bank
not later than the twentieth (20th) Business Day following receipt of related
Credit Documents and Credit Files together with interest on such amount at the
Settlement Interest Rate for the period from and including the date of receipt
of such documents to and including the day preceding the day on which payment is
made. The Assuming Bank agrees to administer and manage each such Asset or asset
in accordance with usual and prudent banking standards and business practices
until each such Asset or asset is purchased by the Receiver. All transfers with
respect to Asset or assets under this Section 3.6 shall be made as provided in
Section 9.6. The Assuming Bank shall transfer all such Asset or assets and
Related Liabilities to the Receiver without recourse, and shall indemnify the
Receiver against any and all claims of any Person claiming by, through or under
the Assuming Bank with respect to any such Asset or asset, as provided in
Section 12.4.

 
 
 
 
 
 
 

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ARTICLE IV
ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS

The Assuming Bank agrees with the Receiver and the Corporation as follows:

4.1           Continuation of Banking Business. For the period commencing the
first banking business day after Bank Closing and ending no earlier than the
first anniversary of Bank Closing, the Assuming Bank agrees to provide full
service banking in the trade area of the Failed Bank.   Thereafter, the Assuming
Bank may cease providing such banking services in the trade area of the Failed
Bank, provided the Assuming Bank has received all necessary regulatory
approvals.  The trade area shall be determined by the Receiver.

4.2           Agreement with Respect to Credit Card Business. The Assuming Bank
agrees to honor and perform, from and after Bank Closing, all duties and
obligations with respect to the Failed Bank's credit card business, and/or
processing related to credit cards, if any, and assumes all outstanding
extensions of credit with respect thereto.

4.3           Agreement with Respect to Safe Deposit Business. The Assuming Bank
assumes and agrees to discharge, from and after Bank Closing, in the usual
course of conducting a banking business, the duties and obligations of the
Failed Bank with respect to all Safe Deposit Boxes, if any, of the Failed Bank
and to maintain all of the necessary facilities for the use of such boxes by the
renters thereof during the period for which such boxes have been rented and the
rent therefore paid to the Failed Bank, subject to the provisions of the rental
agreements between the Failed Bank and the respective renters of such boxes;
provided, that the Assuming Bank may relocate the Safe Deposit Boxes of the
Failed Bank to any office of the Assuming Bank located in the trade area of the
Failed Bank. The Safe Deposit Boxes shall be located and maintained in the trade
area of the Failed Bank for a minimum of one year from Bank Closing. Fees
related to the safe deposit business earned prior to the Bank Closing Date shall
be for the benefit of the Receiver and fees earned after the Bank Closing Date
shall be for the benefit of the Assuming Bank.
4.4           Agreement with Respect to Safekeeping Business. The Receiver
transfers, conveys and delivers to the Assuming Bank and the Assuming Bank
accepts all securities and other items, if any, held by the Failed Bank in
safekeeping for its customers as of Bank Closing. The Assuming Bank assumes and
agrees to honor and discharge, from and after Bank Closing, the duties and
obligations of the Failed Bank with respect to such securities and items held in
safekeeping. The Assuming Bank shall be entitled to all rights and benefits
heretofore accrued or hereafter accruing with respect thereto. The Assuming Bank
shall provide to the Receiver written verification of all assets held by the
Failed Bank for safekeeping within sixty (60) days after Bank Closing.  The
assets held for safekeeping by the Failed Bank shall be held and maintained by
the Assuming Bank in the trade area of the Failed Bank for a minimum of one year
from Bank Closing.  Fees related to the safekeeping business earned prior to the
Bank Closing Date shall be for the benefit of the Receiver and fees earned after
the Bank Closing Date shall be for the benefit of the Assuming Bank.

4.5           Agreement with Respect to Trust Business.

 
 
 
 
 
 
 

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(a)           The Assuming Bank shall, without further transfer, substitution,
act or deed, to the full extent permitted by law, succeed to the rights,
obligations, properties, assets, investments, deposits, agreements, and trusts
of the Failed Bank under trusts, executorships, administrations, guardianships,
and agencies, and other fiduciary or representative capacities, all to the same
extent as though the Assuming Bank had assumed the same from the Failed Bank
prior to Bank Closing; provided, that any liability based on the misfeasance,
malfeasance or nonfeasance of the Failed Bank, its directors, officers,
employees or agents with respect to the trust business is not assumed hereunder.

(b)           The Assuming Bank shall, to the full extent permitted by law,
succeed to, and be entitled to take and execute, the appointment to all
executorships, trusteeships, guardianships and other fiduciary or representative
capacities to which the Failed Bank is or may be named in wills, whenever
probated, or to which the Failed Bank is or may be named or appointed by any
other instrument.

(c)           In the event additional proceedings of any kind are necessary to
accomplish the transfer of such trust business, the Assuming Bank agrees that,
at its own expense, it will take whatever action is necessary to accomplish such
transfer. The Receiver agrees to use reasonable efforts to assist the Assuming
Bank in accomplishing such transfer.

(d)           The Assuming Bank shall provide to the Receiver written
verification of the assets held in connection with the Failed Bank's trust
business within sixty (60) days after Bank Closing.

4.6           Agreement with Respect to Bank Premises.

            (a)           Option to Purchase. Subject to Section 3.5, the
Receiver hereby grants to the Assuming Bank an exclusive option for the period
of ninety (90) days commencing the day after Bank Closing to purchase any or all
owned Bank Premises, including all Furniture, Fixtures and Equipment located on
the Bank Premises. The Assuming Bank shall give written notice to the Receiver
within the option period of its election to purchase or not to purchase any of
the owned Bank Premises. Any purchase of such premises shall be effective as of
the date of Bank Closing and such purchase shall be consummated as soon as
practicable thereafter, and in no event later than the Settlement Date.

(b)           Option to Lease. The Receiver hereby grants to the Assuming Bank
an exclusive option for the period of ninety (90) days commencing the day after
Bank Closing to cause the Receiver to assign to the Assuming Bank any or all
leases for leased Bank Premises, if any, which have been continuously occupied
by the Assuming Bank from Bank Closing to the date it elects to accept an
assignment of the leases with respect thereto to the extent such leases can be
assigned; provided, that the exercise of this option with respect to any lease
must be as to all premises or other property subject to the lease. If an
assignment cannot be made of any such leases, the Receiver may, in its
discretion, enter into subleases with the Assuming Bank containing the same
terms and conditions provided under such existing leases for such leased Bank
Premises or other property. The Assuming Bank shall give notice to the Receiver
within the option period of its election to accept or not to accept an
assignment of any or all leases (or

 
 
 
 
 
 
 

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enter into subleases or new leases in lieu thereof). The Assuming Bank agrees to
assume all leases assigned (or enter into subleases or new leases in lieu
thereof) pursuant to this Section 4.6.

(c)           Facilitation. The Receiver agrees to facilitate the assumption,
assignment or sublease of leases or the negotiation of new leases by the
Assuming Bank; provided, that neither the Receiver nor the Corporation shall be
obligated to engage in litigation, make payments to the Assuming Bank or to any
third party in connection with facilitating any such assumption, assignment,
sublease or negotiation or commit to any other obligations to third parties.

(d)           Occupancy. The Assuming Bank shall give the Receiver fifteen (15)
days' prior written notice of its intention to vacate prior to vacating any
leased Bank Premises with respect to which the Assuming Bank has not exercised
the option provided in Section 4.6(b). Any such notice shall be deemed to
terminate the Assuming Bank's option with respect to such leased Bank Premises.

(e)           Occupancy Costs.

(i)           The Assuming Bank agrees to pay to the Receiver, or to appropriate
third parties at the direction of the Receiver, during and for the period of any
occupancy by it of (x) owned Bank Premises the market rental value, as
determined by the appraiser selected in accordance with the definition of Fair
Market Value, and all operating costs, and (y) leased Bank Premises, all
operating costs with respect thereto and to comply with all relevant terms of
applicable leases entered into by the Failed Bank, including without limitation
the timely payment of all rent. Operating costs include, without limitation all
taxes, fees, charges, utilities, insurance and assessments, to the extent not
included in the rental value or rent. If the Assuming Bank elects to purchase
any owned Bank Premises in accordance with Section 4.6(a), the amount of any
rent paid (and taxes paid to the Receiver which have not been paid to the taxing
authority and for which the Assuming Bank assumes liability) by the Assuming
Bank with respect thereto shall be applied as an offset against the purchase
price thereof.
 
(ii)           The Assuming Bank agrees during the period of occupancy by it of
owned or leased Bank Premises, to pay to the Receiver rent for the use of all
owned or leased Furniture and Equipment and all owned or leased Fixtures located
on such Bank Premises for the period of such occupancy. Rent for such property
owned by the Failed Bank shall be the market rental value thereof, as determined
by the Receiver within sixty (60) days after Bank Closing. Rent for such leased
property shall be an amount equal to any and all rent and other amounts which
the Receiver incurs or accrues as an obligation or is obligated to pay for such
period of occupancy pursuant to all leases and contracts with respect to such
property. If the Assuming Bank purchases any owned Furniture and Equipment or
owned Fixtures in accordance with Section 4.6(f) or 4.6(h), the amount of any
rents paid by the Assuming Bank with respect thereto shall be applied as an
offset against the purchase price thereof.

(f)           Certain Requirements as to Furniture, Equipment and Fixtures. If
the Assuming Bank purchases owned Bank Premises or accepts an assignment of the
lease (or enters into a sublease or a new lease in lieu thereof) for leased Bank
Premises as provided in Section

 
 
 
 
 
 
 

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4.6(a) or 4.6(b), or if the Assuming Bank does not exercise such option but
within twelve (12) months following Bank Closing obtains the right to occupy
such premises (whether by assignment, lease, sublease, purchase or otherwise),
other than in accordance with Section 4.6(a) or (b), the Assuming Bank shall
(i) effective as of the date of Bank Closing, purchase from the Receiver all
Furniture and Equipment and Fixtures owned by the Failed Bank at Fair Market
Value and located thereon as of Bank Closing, (ii) accept an assignment or a
sublease of the leases or negotiate new leases for all Furniture and Equipment
and Fixtures leased by the Failed Bank and located thereon, and (iii) if
applicable, accept an assignment or a sublease of any ground lease or negotiate
a new ground lease with respect to any land on which such Bank Premises are
located; provided, that the Receiver shall not have disposed of such Furniture
and Equipment and Fixtures or repudiated the leases specified in clause (ii) or
(iii).

(g)           Vacating Premises.

(i)           If the Assuming Bank elects not to purchase any owned Bank
Premises, the notice of such election in accordance with Section 4.6(a) shall
specify the date upon which the Assuming Bank's occupancy of such premises shall
terminate, which date shall not be later than ninety (90) days after the date of
the Assuming Bank's notice not to exercise such option. The Assuming Bank
promptly shall relinquish and release to the Receiver such premises and the
Furniture and Equipment and Fixtures located thereon in the same condition as at
Bank Closing, normal wear and tear excepted. By occupying any such premises
after the expiration of such ninety (90)-day period, the Assuming Bank shall, at
the Receiver's option, (x) be deemed to have agreed to purchase such Bank
Premises, and to assume all leases, obligations and liabilities with respect to
leased Furniture and Equipment and leased Fixtures located thereon and any
ground lease with respect to the land on which such premises are located, and
(y) be required to purchase all Furniture and Equipment and Fixtures owned by
the Failed Bank and located on such premises as of Bank Closing.

(ii)           If the Assuming Bank elects not to accept an assignment of the
lease or sublease any leased Bank Premises, the notice of such election in
accordance with Section 4.6(b) shall specify the date upon which the Assuming
Bank's occupancy of such leased Bank Premises shall terminate, which date shall
not be later than the date which is one hundred eighty (180) days after Bank
Closing. Upon vacating such premises, the Assuming Bank shall relinquish and
release to the Receiver such premises and the Fixtures and the Furniture and
Equipment located thereon in the same condition as at Bank Closing, normal wear
and tear excepted. By failing to provide notice of its intention to vacate such
premises prior to the expiration of the option period specified in Section
4.6(b), or by occupying such premises after the one hundred eighty (180)-day
period specified above in this paragraph (ii), the Assuming Bank shall, at the
Receiver's option, (x) be deemed to have assumed all leases, obligations and
liabilities with respect to such premises (including any ground lease with
respect to the land on which premises are located), and leased Furniture and
Equipment and leased Fixtures located thereon in accordance with this Section
4.6 (unless the Receiver previously repudiated any such lease), and (y) be
required to purchase all Furniture and Equipment and Fixtures owned by the
Failed Bank at Fair Market Value and located on such premises as of Bank
Closing.

 
 
 
 
 
 
 

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(h)           Furniture and Equipment and Certain Other Equipment. The Receiver
hereby grants to the Assuming Bank an option to purchase all Furniture and
Equipment or any telecommunications, data processing equipment (including
hardware and software) and check processing and similar operating equipment
owned by the Failed Bank at Fair Market Value and located at any leased Bank
Premises that the Assuming Bank elects to vacate or which it could have, but did
not occupy, pursuant to this Section 4.6; provided, that, the Assuming Bank
shall give the Receiver notice of its election to purchase such property at the
time it gives notice of its intention to vacate such Bank Premises or within ten
(10) days after Bank Closing for Bank Premises it could have, but did not,
occupy.

4.7           Agreement with Respect to Leased Data Processing Equipment

(a)           The Receiver hereby grants to the Assuming Bank an exclusive
option for the period of ninety (90) days commencing the day after Bank Closing
to accept an assignment from the Receiver of any or all Data Processing Leases
to the extent that such Data Processing Leases can be assigned.

(b)           The Assuming Bank shall (i) give written notice to the Receiver
within the option period specified in Section 4.7(a) of its intent to accept or
decline an assignment or sublease of any or all Data Processing Leases and
promptly accept an assignment or sublease of such Data Processing Leases, and
(ii) give written notice to the appropriate lessor(s) that it has accepted an
assignment or sublease of any such Data Processing Leases.

(c)           The Receiver agrees to facilitate the assignment or sublease of
Data Processing Leases or the negotiation of new leases or license agreements by
the Assuming Bank; provided, that neither the Receiver nor the Corporation shall
be obligated to engage in litigation or make payments to the Assuming Bank or to
any third party in connection with facilitating any such assumption, assignment,
sublease or negotiation.

(d)           The Assuming Bank agrees, during its period of use of any property
subject to a Data Processing Lease, to pay to the Receiver or to appropriate
third parties at the direction of the Receiver all operating costs with respect
thereto and to comply with all relevant terms of the applicable Data Processing
Leases entered into by the Failed Bank, including without limitation the timely
payment of all rent, taxes, fees, charges, utilities, insurance and assessments.

(e)           The Assuming Bank shall, not later than fifty (50) days after
giving the notice provided in Section 4.7(b), (i) relinquish and release to the
Receiver all property subject to the relevant Data Processing Lease, in the same
condition as at Bank Closing, normal wear and tear excepted, or (ii) accept an
assignment or a sublease thereof or negotiate a new lease or license agreement
under this Section 4.7.

4.8           Agreement with Respect to Certain Existing Agreements.

                (a)           Subject to the provisions of Section 4.8(b), with
respect to agreements existing as of Bank Closing which provide for the
rendering of services by or to the Failed Bank, within ninety (90) days after
Bank Closing, the Assuming Bank shall give the Receiver written notice

 
 
 
 
 
 
 

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specifying whether it elects to assume or not to assume each such agreement.
Except as may be otherwise provided in this Article IV, the Assuming Bank agrees
to comply with the terms of each such agreement for a period commencing on the
day after Bank Closing and ending on: (i) in the case of an agreement that
provides for the rendering of services by the Failed Bank, the date which is
ninety (90) days after Bank Closing, and (ii) in the case of an agreement that
provides for the rendering of services to the Failed Bank, the date which is
thirty (30) days after the Assuming Bank has given notice to the Receiver of its
election not to assume such agreement; provided, that the Receiver can
reasonably make such service agreements available to the Assuming Bank. The
Assuming Bank shall be deemed by the Receiver to have assumed agreements for
which no notification is timely given. The Receiver agrees to assign, transfer,
convey, and deliver to the Assuming Bank all right, title and interest of the
Receiver, if any, in and to agreements the Assuming Bank assumes hereunder. In
the event the Assuming Bank elects not to accept an assignment of any lease (or
sublease) or negotiate a new lease for leased Bank Premises under Section 4.6
and does not otherwise occupy such premises, the provisions of this Section
4.8(a) shall not apply to service agreements related to such premises. The
Assuming Bank agrees, during the period it has the use or benefit of any such
agreement, promptly to pay to the Receiver or to appropriate third parties at
the direction of the Receiver all operating costs with respect thereto and to
comply with all relevant terms of such agreement.

(b)           The provisions of Section 4.8(a) regarding the Assuming Bank’s
election to assume or not assume certain agreements shall not apply to (i)
agreements pursuant to which the Failed Bank provides mortgage servicing for
others or mortgage servicing is provided to the Failed Bank by others, (ii)
agreements that are subject to Sections 4.1 through 4.7 and any insurance policy
or bond referred to in Section 3.5(a) or other agreement specified in Section
3.5, and (iii) consulting, management or employment agreements, if any, between
the Failed Bank and its employees or other Persons. Except as otherwise
expressly set forth elsewhere in this Agreement, the Assuming Bank does not
assume any liabilities or acquire any rights under any of the agreements
described in this Section 4.8(b).

4.9           Informational Tax Reporting. The Assuming Bank agrees to perform
all obligations of the Failed Bank with respect to Federal and State income tax
informational reporting related to (i) the Assets and the Liabilities Assumed,
(ii) deposit accounts that were closed and loans that were paid off or
collateral obtained with respect thereto prior to Bank Closing, (iii)
miscellaneous payments made to vendors of the Failed Bank, and (iv) any other
asset or liability of the Failed Bank, including, without limitation, loans not
purchased and Deposits not assumed by the Assuming Bank, as may be required by
the Receiver.

4.10           Insurance. The Assuming Bank agrees to obtain insurance coverage
effective from and after Bank Closing, including public liability, fire and
extended coverage insurance acceptable to the Receiver with respect to owned or
leased Bank Premises that it occupies, and all owned or leased Furniture and
Equipment and Fixtures and leased data processing equipment (including hardware
and software) located thereon, in the event such insurance coverage is not
already in force and effect with respect to the Assuming Bank as the insured as
of Bank Closing. All such insurance shall, where appropriate (as determined by
the Receiver), name the Receiver as an additional insured.

 
 
 
 
 
 
 

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4.11           Office Space for Receiver and Corporation.  For the period
commencing on the day following Bank Closing and ending on the one hundred
eightieth (180th) day thereafter, the Assuming Bank agrees to provide to the
Receiver and the Corporation, without charge, adequate and suitable office space
(including parking facilities and vault space), furniture, equipment (including
photocopying and telecopying machines), email accounts, network access and
technology resources (such as shared drive) and utilities (including local
telephone service and fax machines) at the Bank Premises occupied by the
Assuming Bank for their use in the discharge of their respective functions with
respect to the Failed Bank. In the event the Receiver and the Corporation
determine that the space provided is inadequate or unsuitable, the Receiver and
the Corporation may relocate to other quarters having adequate and suitable
space and the costs of relocation and any rental and utility costs for the
balance of the period of occupancy by the Receiver and the Corporation shall be
borne by the Assuming Bank.  Additionally, the Assuming Bank agrees to pay such
bills and invoices on behalf of the Receiver and Corporation as the Receiver or
Corporation may direct for the period beginning on the date of Bank Closing and
ending on Settlement Date.  Assuming Bank shall submit it requests for
reimbursement of such expenditures pursuant to Article VIII of this Agreement.

4.12           Agreement with Respect to Continuation of Group Health Plan
Coverage for Former Employees of the Failed Bank.

(a)           The Assuming Bank agrees to assist the Receiver, as provided in
this Section 4.12, in offering individuals who were employees or former
employees of the Failed Bank, or any of its Subsidiaries, and who, immediately
prior to Bank Closing, were receiving, or were eligible to receive, health
insurance coverage or health insurance continuation coverage from the Failed
Bank ("Eligible Individuals"), the opportunity to obtain health insurance
coverage in the Corporation's FIA Continuation Coverage Plan which provides for
health insurance continuation coverage to such Eligible Individuals who are
qualified beneficiaries of the Failed Bank as defined in Section 607 of the
Employee Retirement Income Security Act of 1974, as amended (respectively,
"qualified beneficiaries" and "ERISA"). The Assuming Bank shall consult with the
Receiver and not later than five (5) Business Days after Bank Closing shall
provide written notice to the Receiver of the number (if available), identity
(if available) and addresses (if available) of the Eligible Individuals who are
qualified beneficiaries of the Failed Bank and for whom a "qualifying event" (as
defined in Section 603 of ERISA) has occurred and with respect to whom the
Failed Bank's obligations under Part 6 of Subtitle B of Title I of ERISA have
not been satisfied in full, and such other information as the Receiver may
reasonably require. The Receiver shall cooperate with the Assuming Bank in order
to permit it to prepare such notice and shall provide to the Assuming Bank such
data in its possession as may be reasonably required for purposes of preparing
such notice.

(b)           The Assuming Bank shall take such further action to assist the
Receiver in offering the Eligible Individuals who are qualified beneficiaries of
the Failed Bank the opportunity to obtain health insurance coverage in the
Corporation's FIA Continuation Coverage Plan as the Receiver may direct. All
expenses incurred and paid by the Assuming Bank (i) in connection with the
obligations of the Assuming Bank under this Section 4.12, and (ii) in providing
health insurance continuation coverage to any Eligible Individuals who are hired
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the Assuming Bank and such employees' qualified beneficiaries shall be borne by
the Assuming Bank.

(c)           This Section 4.12 is for the sole and exclusive benefit of the
parties to this Agreement, and for the benefit of no other Person (including any
former employee of the Failed Bank or any Subsidiary thereof or qualified
beneficiary of such former employee). Nothing in this Section 4.12 is intended
by the parties, or shall be construed, to give any Person (including any former
employee of the Failed Bank or any Subsidiary thereof or qualified beneficiary
of such former employee) other than the Corporation, the Receiver and the
Assuming Bank any legal or equitable right, remedy or claim under or with
respect to the provisions of this Section.

4.13         Agreement with Respect to Interim Asset Servicing. At any time
after Bank Closing, the Receiver may establish on its books an asset pool(s) and
may transfer to such asset pool(s) (by means of accounting entries on the books
of the Receiver) all or any assets and liabilities of the Failed Bank which are
not acquired by the Assuming Bank, including, without limitation, wholly
unfunded Commitments and assets and liabilities which may be acquired, funded or
originated by the Receiver subsequent to Bank Closing. The Receiver may remove
assets (and liabilities) from or add assets (and liabilities) to such pool(s) at
any time in its discretion. At the option of the Receiver, the Assuming Bank
agrees to service, administer, and collect such pool assets in accordance with
and for the term set forth in Exhibit 4.13 "Interim Asset Servicing
Arrangement".

 
4.14
Reserved.

4.15       Agreement with Respect to Loss Sharing.  The Assuming Bank shall be
entitled to require reimbursement from the Receiver for loss sharing on certain
loans in accordance with the Single Family Shared-Loss Agreement attached hereto
as Exhibit 4.15A and the Non-SF Shared-Loss Agreement attached hereto as Exhibit
4.15B, collectively, the “Shared-Loss Agreements.”  The Loans that shall be
subject to the Shared-Loss Agreements are identified on the Schedule of Loans
4.15A and 4.15B attached hereto.

ARTICLE V
DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK

5.1           Payment of Checks, Drafts and Orders. Subject to Section 9.5, the
Assuming Bank agrees to pay all properly drawn checks, drafts and withdrawal
orders of depositors of the Failed Bank presented for payment, whether drawn on
the check or draft forms provided by the Failed Bank or by the Assuming Bank, to
the extent that the Deposit balances to the credit of the respective makers or
drawers assumed by the Assuming Bank under this Agreement are sufficient to
permit the payment thereof, and in all other respects to discharge, in the usual
course of conducting a banking business, the duties and obligations of the
Failed Bank with respect to the Deposit balances due and owing to the depositors
of the Failed Bank assumed by the Assuming Bank under this Agreement.

 
 
 
 
 
 
 

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5.2           Certain Agreements Related to Deposits. Subject to Section 2.2,
the Assuming Bank agrees to honor the terms and conditions of any written escrow
or mortgage servicing agreement or other similar agreement relating to a Deposit
liability assumed by the Assuming Bank pursuant to this Agreement.

5.3           Notice to Depositors.

(a)           Within seven (7) days after Bank Closing, the Assuming Bank shall
give (i) notice to depositors of the Failed Bank of its assumption of the
Deposit liabilities of the Failed Bank, and (ii) any notice required under
Section 2.2, by mailing to each such depositor a notice with respect to such
assumption and by advertising in a newspaper of general circulation in the
county or counties in which the Failed Bank was located. The Assuming Bank
agrees that it will obtain prior approval of all such notices and advertisements
from counsel for the Receiver and that such notices and advertisements shall not
be mailed or published until such approval is received.

(b)           The Assuming Bank shall give notice by mail to depositors of the
Failed Bank concerning the procedures to claim their deposits, which notice
shall be provided to the Assuming Bank by the Receiver or the Corporation. Such
notice shall be included with the notice to depositors to be mailed by the
Assuming Bank pursuant to Section 5.3(a).

(c)           If the Assuming Bank proposes to charge fees different from those
charged by the Failed Bank before it establishes new deposit account
relationships with the depositors of the Failed Bank, the Assuming Bank shall
give notice by mail of such changed fees to such depositors.

ARTICLE VI
RECORDS

6.1           Transfer of Records.

(a)           In accordance with Section 3.1, the Receiver assigns, transfers,
conveys and delivers to the Assuming Bank the following Records pertaining to
the Deposit liabilities of the Failed Bank assumed by the Assuming Bank under
this Agreement, except as provided in Section 6.4:

 
(i)
signature cards, orders, contracts between the Failed Bank and its depositors
and Records of similar character;

(ii)            passbooks of depositors held by the Failed Bank, deposit slips,
cancelled checks and withdrawal orders representing charges to accounts of
depositors; and the following Records pertaining to the Assets:

 
(iii)
records of deposit balances carried with other banks, bankers or trust
companies;

 
 
 
 
 
 
 

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(iv)
Loan and collateral records and Credit Files and other documents;

 
(v)
deeds, mortgages, abstracts, surveys, and other instruments or records of title
pertaining to real estate or real estate mortgages;

 
(vi)
signature cards, agreements and records pertaining to Safe Deposit Boxes, if
any; and

 
(vii)
records pertaining to the credit card business, trust business or safekeeping
business of the Failed Bank, if any.

(b)           The Receiver, at its option, may assign and transfer to the
Assuming Bank by a single blanket assignment or otherwise, as soon as
practicable after Bank Closing, any other Records not assigned and transferred
to the Assuming Bank as provided in this Agreement, including but not limited to
loan disbursement checks, general ledger tickets, official bank checks, proof
transactions (including proof tapes) and paid out loan files.

6.2           Delivery of Assigned Records. The Receiver shall deliver to the
Assuming Bank all Records described in (i) Section 6.1(a) as soon as practicable
on or after the date of this Agreement, and (ii) Section 6.1(b) as soon as
practicable after making any assignment described therein.

6.3           Preservation of Records. The Assuming Bank agrees that it will
preserve and maintain for the joint benefit of the Receiver, the Corporation and
the Assuming Bank, all Records of which it has custody for such period as either
the Receiver or the Corporation in its discretion may require, until directed
otherwise, in writing, by the Receiver or Corporation. The Assuming Bank shall
have the primary responsibility to respond to subpoenas, discovery requests, and
other similar official inquiries with respect to the Records of which it has
custody.

6.4           Access to Records; Copies. The Assuming Bank agrees to permit the
Receiver and the Corporation access to all Records of which the Assuming Bank
has custody, and to use, inspect, make extracts from or request copies of any
such Records in the manner and to the extent requested, and to duplicate, in the
discretion of the Receiver or the Corporation, any Record in the form of
microfilm or microfiche pertaining to Deposit account relationships; provided,
that in the event that the Failed Bank maintained one or more duplicate copies
of such microfilm or microfiche Records, the Assuming Bank hereby assigns,
transfers, and conveys to the Corporation one such duplicate copy of each such
Record without cost to the Corporation, and agrees to deliver to the Corporation
all Records assigned and transferred to the Corporation under this Article VI as
soon as practicable on or after the date of this Agreement. The party requesting
a copy of any Record shall bear the cost (based on standard accepted industry
charges to the extent applicable, as determined by the Receiver) for providing
such duplicate Records. A copy of each Record requested shall be provided as
soon as practicable by the party having custody thereof.

 
 
 
 
 
 
 

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ARTICLE VII
FIRST LOSS TRANCHE

            The Assuming Bank has submitted to the Receiver an asset premium
(discount) bid of ($123,000,000) and a Deposit premium bid of 0%.  The Deposit
premium bid will be applied to the total of all Assumed Deposits except for
brokered, CDARS, and any market place or similar subscription services
Deposits.  The First Loss Tranche shall be determined by adding (i) the asset
premium (discount) bid, (ii) the Deposit premium bid, and (iii) the Equity
Adjustment.  If the First Loss Tranche is a positive number, then this is the
Losses on Single Family Shared-Loss Loans and Net Charge-offs on Shared Loss
Assets that the Assuming Bank will incur before loss-sharing commences under
Exhibits 4.15A and 4.15B.  If the First Loss Tranche is a negative number, the
Corporation shall pay such amount by wire transfer to the Assuming Bank by the
end of the first business day following Bank Closing and loss sharing shall
commence immediately.

ARTICLE VIII
ADJUSTMENTS

8.1 Pro Forma Statement. The Receiver, as soon as practicable after Bank
Closing, in accordance with the best information then available, shall provide
to the Assuming Bank a pro forma statement reflecting any adjustments of such
liabilities and assets as may be necessary. Such pro forma statement shall take
into account, to the extent possible, (i) liabilities and assets of a nature
similar to those contemplated by Section 2.1 or Section 3.1, respectively, which
at Bank Closing were carried in the Failed Bank's suspense accounts, (ii)
accruals as of Bank Closing for all income related to the assets and business of
the Failed Bank acquired by the Assuming Bank hereunder, whether or not such
accruals were reflected on the Accounting Records of the Failed Bank in the
normal course of its operations, and (iii) adjustments to determine the Book
Value of any investment in an Acquired Subsidiary and related accounts on the
"bank only" (unconsolidated) balance sheet of the Failed Bank based on the
equity method of accounting, whether or not the Failed Bank used the equity
method of accounting for investments in subsidiaries, except that the resulting
amount cannot be less than the Acquired Subsidiary's recorded equity as of Bank
Closing as reflected on the Accounting Records of the Acquired Subsidiary. Any
Loan purchased by the Assuming Bank pursuant to Section 3.1 which the Failed
Bank charged off during the period following the date of the most recent
pertinent data made available to the Assuming Bank as part of the Information
Package to Bank Closing shall be deemed not to be charged off for the purposes
of the pro forma statement, and the purchase price shall be determined pursuant
to Section 3.2.

 
 
 
 
 
 
 

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8.2           Correction of Errors and Omissions; Other Liabilities.

           (a)           In the event any bookkeeping omissions or errors are
discovered in preparing any pro forma statement or in completing the transfers
and assumptions contemplated hereby, the parties hereto agree to correct such
errors and omissions, it being understood that, as far as practicable, all
adjustments will be made consistent with the judgments, methods, policies or
accounting principles utilized by the Failed Bank in preparing and maintaining
Accounting Records, except that adjustments made pursuant to this Section 8.2(a)
are not intended to bring the Accounting Records of the Failed Bank into
accordance with generally accepted accounting principles.

(b)           If the Receiver discovers at any time subsequent to the date of
this Agreement that any claim exists against the Failed Bank which is of such a
nature that it would have been included in the liabilities assumed under Article
II had the existence of such claim or the facts giving rise thereto been known
as of Bank Closing, the Receiver may, in its discretion, at any time, require
that such claim be assumed by the Assuming Bank in a manner consistent with the
intent of this Agreement. The Receiver will make appropriate adjustments to the
pro forma statement provided by the Receiver to the Assuming Bank pursuant to
Section 8.1 as may be necessary.

8.3           Payments. The Receiver agrees to cause to be paid to the Assuming
Bank, or the Assuming Bank agrees to pay to the Receiver, as the case may be, on
the Settlement Date, a payment in an amount which reflects net adjustments
(including any costs, expenses and fees associated with determinations of value
as provided in this Agreement) made pursuant to Section 8.1 or Section 8.2, plus
interest as provided in Section 8.4. The Receiver and the Assuming Bank agree to
effect on the Settlement Date any further transfer of assets to or assumption of
liabilities or claims by the Assuming Bank as may be necessary in accordance
with Section 8.1 or Section 8.2.

8.4           Interest. Any amounts paid under Section 8.3 or Section 8.5, shall
bear interest for the period from and including the day following Bank Closing
to and including the day preceding the payment at the Settlement Interest Rate.

8.5           Subsequent Adjustments. In the event that the Assuming Bank or the
Receiver discovers any errors or omissions as contemplated by Section 8.2 or any
error with respect to the payment made under Section 8.3 after the Settlement
Date, the Assuming Bank and the Receiver agree to promptly correct any such
errors or omissions, make any payments and effect any transfers or assumptions
as may be necessary to reflect any such correction plus interest as provided in
Section 8.4.

 
 
 
 
 
 
 

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ARTICLE IX
CONTINUING COOPERATION

9.1           General Matters. The parties hereto agree that they will, in good
faith and with their best efforts, cooperate with each other to carry out the
transactions contemplated by this Agreement and to effect the purposes hereof.

9.2           Additional Title Documents. The Receiver, the Corporation and the
Assuming Bank each agree, at any time, and from time to time, upon the request
of any party hereto, to execute and deliver such additional instruments and
documents of conveyance as shall be reasonably necessary to vest in the
appropriate party its full legal or equitable title in and to the property
transferred pursuant to this Agreement or to be transferred in accordance
herewith. The Assuming Bank shall prepare such instruments and documents of
conveyance (in form and substance satisfactory to the Receiver) as shall be
necessary to vest title to the Assets in the Assuming Bank. The Assuming Bank
shall be responsible for recording such instruments and documents of conveyance
at its own expense.

9.3           Claims and Suits.

(a)           The Receiver shall have the right, in its discretion, to (i)
defend or settle any claim or suit against the Assuming Bank with respect to
which the Receiver has indemnified the Assuming Bank in the same manner and to
the same extent as provided in Article XII, and (ii) defend or settle any claim
or suit against the Assuming Bank with respect to any Liability Assumed, which
claim or suit may result in a loss to the Receiver arising out of or related to
this Agreement, or which existed against the Failed Bank on or before Bank
Closing. The exercise by the Receiver of any rights under this Section 9.3(a)
shall not release the Assuming Bank with respect to any of its obligations under
this Agreement.

(b)           In the event any action at law or in equity shall be instituted by
any Person against the Receiver and the Corporation as codefendants with respect
to any asset of the Failed Bank retained or acquired pursuant to this Agreement
by the Receiver, the Receiver agrees, at the request of the Corporation, to join
with the Corporation in a petition to remove the action to the United States
District Court for the proper district. The Receiver agrees to institute, with
or without joinder of the Corporation as coplaintiff, any action with respect to
any such retained or acquired asset or any matter connected therewith whenever
notice requiring such action shall be given by the Corporation to the Receiver.

9.4           Payment of Deposits. In the event any depositor does not accept
the obligation of the Assuming Bank to pay any Deposit liability of the Failed
Bank assumed by the Assuming Bank pursuant to this Agreement and asserts a claim
against the Receiver for all or any portion of any such Deposit liability, the
Assuming Bank agrees on demand to provide to the Receiver funds sufficient to
pay such claim in an amount not in excess of the Deposit liability reflected on
the books of the Assuming Bank at the time such claim is made. Upon payment by
the Assuming Bank to the Receiver of such amount, the Assuming Bank shall be
discharged from any further

 
 
 
 
 
 
 

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obligation under this Agreement to pay to any such depositor the amount of such
Deposit liability paid to the Receiver.

9.5           Withheld Payments. At any time, the Receiver or the Corporation
may, in its discretion, determine that all or any portion of any deposit balance
assumed by the Assuming Bank pursuant to this Agreement does not constitute a
"Deposit" (or otherwise, in its discretion, determine that it is the best
interest of the Receiver or Corporation to withhold all or any portion of any
deposit), and may direct the Assuming Bank to withhold payment of all or any
portion of any such deposit balance. Upon such direction, the Assuming Bank
agrees to hold such deposit and not to make any payment of such deposit balance
to or on behalf of the depositor, or to itself, whether by way of transfer,
set-off, or otherwise. The Assuming Bank agrees to maintain the "withheld
payment" status of any such deposit balance until directed in writing by the
Receiver or the Corporation as to its disposition. At the direction of the
Receiver or the Corporation, the Assuming Bank shall return all or any portion
of such deposit balance to the Receiver or the Corporation, as appropriate, and
thereupon the Assuming Bank shall be discharged from any further liability to
such depositor with respect to such returned deposit balance. If such deposit
balance has been paid to the depositor prior to a demand for return by the
Corporation or the Receiver, and payment of such deposit balance had not been
previously withheld pursuant to this Section, the Assuming Bank shall not be
obligated to return such deposit balance to the Receiver or the Corporation. The
Assuming Bank shall be obligated to reimburse the Corporation or the Receiver,
as the case may be, for the amount of any deposit balance or portion thereof
paid by the Assuming Bank in contravention of any previous direction to withhold
payment of such deposit balance or return such deposit balance the payment of
which was withheld pursuant to this Section.

9.6           Proceedings with Respect to Certain Assets and Liabilities.

(a)           In connection with any investigation, proceeding or other matter
with respect to any asset or liability of the Failed Bank retained by the
Receiver, or any asset of the Failed Bank acquired by the Receiver pursuant to
this Agreement, the Assuming Bank shall cooperate to the extent reasonably
required by the Receiver.

(b)           In addition to its obligations under Section 6.4, the Assuming
Bank shall provide representatives of the Receiver access at reasonable times
and locations without other limitation or qualification to (i) its directors,
officers, employees and agents and those of the Subsidiaries acquired by the
Assuming Bank, and (ii) its books and records, the books and records of such
Subsidiaries and all Credit Files, and copies thereof. Copies of books, records
and Credit Files shall be provided by the Assuming Bank as requested by the
Receiver and the costs of duplication thereof shall be borne by the Receiver.

(c)           Not later than ten (10) days after the Put Notice pursuant to
Section 3.4 or the date of the notice of transfer of any Loan by the Assuming
Bank to the Receiver pursuant to Section 3.6, the Assuming Bank shall deliver to
the Receiver such documents with respect to such Loan as the Receiver may
request, including without limitation the following: (i) all related Credit
Documents (other than certificates, notices and other ancillary documents), (ii)
a certificate setting forth the principal amount on the date of the transfer and
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other charges then accrued and unpaid thereon, and any restrictions on transfer
to which any such Loan is subject, and (iii) all Credit Files, and all
documents, microfiche, microfilm and computer records (including but not limited
to magnetic tape, disc storage, card forms and printed copy) maintained by,
owned by, or in the possession of the Assuming Bank or any Affiliate of the
Assuming Bank relating to the transferred Loan.

9.7           Information. The Assuming Bank promptly shall provide to the
Corporation such other information, including financial statements and
computations, relating to the performance of the provisions of this Agreement as
the Corporation or the Receiver may request from time to time, and, at the
request of the Receiver, make available employees of the Failed Bank employed or
retained by the Assuming Bank to assist in preparation of the pro forma
statement pursuant to Section 8.1.

ARTICLE X
CONDITION PRECEDENT

The obligations of the parties to this Agreement are subject to the Receiver and
the Corporation having received at or before Bank Closing evidence reasonably
satisfactory to each of any necessary approval, waiver, or other action by any
governmental authority, the board of directors of the Assuming Bank, or other
third party, with respect to this Agreement and the transactions contemplated
hereby, the closing of the Failed Bank and the appointment of the Receiver, the
chartering of the Assuming Bank, and any agreements, documents, matters or
proceedings contemplated hereby or thereby.

ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF THE ASSUMING BANK

The Assuming Bank represents and warrants to the Corporation and the Receiver as
follows:

(a)           Corporate Existence and Authority. The Assuming Bank (i) is duly
organized, validly existing and in good standing under the laws of its
Chartering Authority and has full power and authority to own and operate its
properties and to conduct its business as now conducted by it, and (ii) has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The Assuming Bank has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the performance of the transactions contemplated hereby.

(b)           Third Party Consents. No governmental authority or other third
party consents (including but not limited to approvals, licenses, registrations
or declarations) are required in connection with the execution, delivery or
performance by the Assuming Bank of this Agreement, other than such consents as
have been duly obtained and are in full force and effect.

(c)           Execution and Enforceability. This Agreement has been duly
executed and delivered by the Assuming Bank and when this Agreement has been
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and delivered by the Corporation and the Receiver, this Agreement will
constitute the legal, valid and binding obligation of the Assuming Bank,
enforceable in accordance with its terms.

(d)           Compliance with Law.

(i)           Neither the Assuming Bank nor any of its Subsidiaries is in
violation of any statute, regulation, order, decision, judgment or decree of, or
any restriction imposed by, the United States of America, any State,
municipality or other political subdivision or any agency of any of the
foregoing, or any court or other tribunal having jurisdiction over the Assuming
Bank or any of its Subsidiaries or any assets of any such Person, or any foreign
government or agency thereof having such jurisdiction, with respect to the
conduct of the business of the Assuming Bank or of any of its Subsidiaries, or
the ownership of the properties of the Assuming Bank or any of its Subsidiaries,
which, either individually or in the aggregate with all other such violations,
would materially and adversely affect the business, operations or condition
(financial or otherwise) of the Assuming Bank or the ability of the Assuming
Bank to perform, satisfy or observe any obligation or condition under this
Agreement.

(ii)           Neither the execution and delivery nor the performance by the
Assuming Bank of this Agreement will result in any violation by the Assuming
Bank of, or be in conflict with, any provision of any applicable law or
regulation, or any order, writ or decree of any court or governmental authority.

(e)           Representations Remain True.  The Assuming Bank represents and
warrants that it has executed and delivered to the Corporation a Purchaser
Eligibility Certification and Confidentiality Agreement and that all information
provided and representations made by or on behalf of the Assuming Bank in
connection with this Agreement and the transactions contemplated hereby,
including, but not limited to, the Purchaser Eligibility Certification and
Confidentiality Agreement (which are affirmed and ratified hereby) are and
remain true and correct in all material respects and do not fail to state any
fact required to make the information contained therein not misleading.

ARTICLE XII
INDEMNIFICATION

12.1            Indemnification of Indemnitees. From and after Bank Closing and
subject to the limitations set forth in this Section and Section 12.6 and
compliance by the Indemnitees with Section 12.2, the Receiver agrees to
indemnify and hold harmless the Indemnitees against any and all costs, losses,
liabilities, expenses (including attorneys' fees) incurred prior to the
assumption of defense by the Receiver pursuant to paragraph (d) of Section 12.2,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with claims against any Indemnitee based on liabilities of the
Failed Bank that are not assumed by the Assuming Bank pursuant to this Agreement
or subsequent to the execution hereof by the Assuming Bank or any Subsidiary or
Affiliate of the Assuming Bank for which indemnification is provided hereunder
in (a) of this Section 12.1, subject to certain exclusions as provided in (b) of
this Section 12.1:

 
 
 
 
 
 
 

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(a)

(1) claims based on the rights of any shareholder or former shareholder as such
of (x) the Failed Bank, or (y) any Subsidiary or Affiliate of the Failed Bank;

(2) claims based on the rights of any creditor as such of the Failed Bank, or
any creditor as such of any director, officer, employee or agent of the Failed
Bank, with respect to any indebtedness or other obligation of the Failed Bank
arising prior to Bank Closing;

(3) claims based on the rights of any present or former director, officer,
employee or agent as such of the Failed Bank or of any Subsidiary or Affiliate
of the Failed Bank;

(4) claims based on any action or inaction prior to Bank Closing of the Failed
Bank, its directors, officers, employees or agents as such, or any Subsidiary or
Affiliate of the Failed Bank, or the directors, officers, employees or agents as
such of such Subsidiary or Affiliate;

(5) claims based on any malfeasance, misfeasance or nonfeasance of the Failed
Bank, its directors, officers, employees or agents with respect to the trust
business of the Failed Bank, if any;

(6) claims based on any failure or alleged failure (not in violation of law) by
the Assuming Bank to continue to perform any service or activity previously
performed by the Failed Bank which the Assuming Bank is not required to perform
pursuant to this Agreement or which arise under any contract to which the Failed
Bank was a party which the Assuming Bank elected not to assume in accordance
with this Agreement and which neither the Assuming Bank nor any Subsidiary or
Affiliate of the Assuming Bank has assumed subsequent to the execution hereof;

(7) claims arising from any action or inaction of any Indemnitee, including for
purposes of this Section 12.1(a)(7) the former officers or employees of the
Failed Bank or of any Subsidiary or Affiliate of the Failed Bank that is taken
upon the specific written direction of the Corporation or the Receiver, other
than any action or inaction taken in a manner constituting bad faith, gross
negligence or willful misconduct; and

(8) claims based on the rights of any depositor of the Failed Bank whose deposit
has been accorded "withheld payment" status and/or returned to the Receiver or
Corporation in accordance with Section 9.5 and/or has become an "unclaimed
deposit" or has been returned to the Corporation or the Receiver in accordance
with Section 2.3;

(b)           provided, that, with respect to this Agreement, except for
paragraphs (7) and (8) of Section 12.1(a), no indemnification will be provided
under this Agreement for any:

(1) judgment or fine against, or any amount paid in settlement (without the
written approval of the Receiver) by, any Indemnitee in connection with any
action that seeks damages

 
 
 
 
 
 
 

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against any Indemnitee (a "counterclaim") arising with respect to any Asset and
based on any action or inaction of either the Failed Bank, its directors,
officers, employees or agents as such prior to Bank Closing, unless any such
judgment, fine or amount paid in settlement exceeds the greater of (i) the
Repurchase Price of such Asset, or (ii) the monetary recovery sought on such
Asset by the Assuming Bank in the cause of action from which the counterclaim
arises; and in such event the Receiver will provide indemnification only in the
amount of such excess; and no indemnification will be provided for any costs or
expenses other than any costs or expenses (including attorneys' fees) which, in
the determination of the Receiver, have been actually and reasonably incurred by
such Indemnitee in connection with the defense of any such counterclaim; and it
is expressly agreed that the Receiver reserves the right to intervene, in its
discretion, on its behalf and/or on behalf of the Receiver, in the defense of
any such counterclaim;

(2) claims with respect to any liability or obligation of the Failed Bank that
is expressly assumed by the Assuming Bank pursuant to this Agreement or
subsequent to the execution hereof by the Assuming Bank or any Subsidiary or
Affiliate of the Assuming Bank;

(3) claims with respect to any liability of the Failed Bank to any present or
former employee as such of the Failed Bank or of any Subsidiary or Affiliate of
the Failed Bank, which liability is expressly assumed by the Assuming Bank
pursuant to this Agreement or subsequent to the execution hereof by the Assuming
Bank or any Subsidiary or Affiliate of the Assuming Bank;

(4) claims based on the failure of any Indemnitee to seek recovery of damages
from the Receiver for any claims based upon any action or inaction of the Failed
Bank, its directors, officers, employees or agents as fiduciary, agent or
custodian prior to Bank Closing;

(5) claims based on any violation or alleged violation by any Indemnitee of the
antitrust, branching, banking or bank holding company or securities laws of the
United States of America or any State thereof;

(6) claims based on the rights of any present or former creditor, customer, or
supplier as such of the Assuming Bank or any Subsidiary or Affiliate of the
Assuming Bank;

(7) claims based on the rights of any present or former shareholder as such of
the Assuming Bank or any Subsidiary or Affiliate of the Assuming Bank regardless
of whether any such present or former shareholder is also a present or former
shareholder of the Failed Bank;

(8) claims, if the Receiver determines that the effect of providing such
indemnification would be to (i) expand or alter the provisions of any warranty
or disclaimer thereof provided in Section 3.3 or any other provision of this
Agreement, or (ii) create any warranty not expressly provided under this
Agreement;

(9) claims which could have been enforced against any Indemnitee had the
Assuming Bank not entered into this Agreement;

 
 
 
 
 
 
 

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(10) claims based on any liability for taxes or fees assessed with respect to
the consummation of the transactions contemplated by this Agreement, including
without limitation any subsequent transfer of any Assets or Liabilities Assumed
to any Subsidiary or Affiliate of the Assuming Bank;

(11) except as expressly provided in this Article XII, claims based on any
action or inaction of any Indemnitee, and nothing in this Agreement shall be
construed to provide indemnification for (i) the Failed Bank, (ii) any
Subsidiary or Affiliate of the Failed Bank, or (iii) any present or former
director, officer, employee or agent of the Failed Bank or its Subsidiaries or
Affiliates; provided, that the Receiver, in its discretion, may provide
indemnification hereunder for any present or former director, officer, employee
or agent of the Failed Bank or its Subsidiaries or Affiliates who is also or
becomes a director, officer, employee or agent of the Assuming Bank or its
Subsidiaries or Affiliates;

(12) claims or actions which constitute a breach by the Assuming Bank of the
representations and warranties contained in Article XI;

(13) claims arising out of or relating to the condition of or generated by an
Asset arising from or relating to the presence, storage or release of any
hazardous or toxic substance, or any pollutant or contaminant, or condition of
such Asset which violate any applicable Federal, State or local law or
regulation concerning environmental protection; and

(14) claims based on, related to or arising from any asset, including a loan,
acquired or liability assumed by the Assuming Bank, other than pursuant to this
Agreement.

           12.2           Conditions Precedent to Indemnification. It shall be a
condition precedent to the obligation of the Receiver to indemnify any Person
pursuant to this Article XII that such Person shall, with respect to any claim
made or threatened against such Person for which such Person is or may be
entitled to indemnification hereunder:

(a)            give written notice to the Regional Counsel (Litigation Branch)
of the Corporation in the manner and at the address provided in Section 13.7 of
such claim as soon as practicable after such claim is made or threatened;
provided, that notice must be given on or before the date which is six (6) years
from the date of this Agreement;

(b)           provide to the Receiver such information and cooperation with
respect to such claim as the Receiver may reasonably require;

(c)           cooperate and take all steps, as the Receiver may reasonably
require, to preserve and protect any defense to such claim;

(d)           in the event suit is brought with respect to such claim, upon
reasonable prior notice, afford to the Receiver the right, which the Receiver
may exercise in its sole discretion, to conduct the investigation, control the
defense and effect settlement of such claim, including without limitation the
right to designate counsel and to control all negotiations, litigation,
arbitration, settlements, compromises and appeals of any such claim, all of
which shall be at the

 
 
 
 
 
 
 

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expense of the Receiver; provided, that the Receiver shall have notified the
Person claiming indemnification in writing that such claim is a claim with
respect to which the Person claiming indemnification is entitled to
indemnification under this Article XII;

(e)           not incur any costs or expenses in connection with any response or
suit with respect to such claim, unless such costs or expenses were incurred
upon the written direction of the Receiver; provided, that the Receiver shall
not be obligated to reimburse the amount of any such costs or expenses unless
such costs or expenses were incurred upon the written direction of the Receiver;

(f)           not release or settle such claim or make any payment or admission
with respect thereto, unless the Receiver consents in writing thereto, which
consent shall not be unreasonably withheld; provided, that the Receiver shall
not be obligated to reimburse the amount of any such settlement or payment
unless such settlement or payment was effected upon the written direction of the
Receiver; and

(g)           take reasonable action as the Receiver may request in writing as
necessary to preserve, protect or enforce the rights of the indemnified Person
against any Primary Indemnitor.

12.3           No Additional Warranty. Nothing in this Article XII shall be
construed or deemed to (i) expand or otherwise alter any warranty or disclaimer
thereof provided under Section 3.3 or any other provision of this Agreement with
respect to, among other matters, the title, value, collectibility, genuineness,
enforceability or condition of any (x) Asset, or (y) asset of the Failed Bank
purchased by the Assuming Bank subsequent to the execution of this Agreement by
the Assuming Bank or any Subsidiary or Affiliate of the Assuming Bank, or (ii)
create any warranty not expressly provided under this Agreement with respect
thereto.

12.4           Indemnification of Receiver and Corporation. From and after Bank
Closing, the Assuming Bank agrees to indemnify and hold harmless the Corporation
and the Receiver and their respective directors, officers, employees and agents
from and against any and all costs, losses, liabilities, expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with any of the following:

(a)           claims based on any and all liabilities or obligations of the
Failed Bank assumed by the Assuming Bank pursuant to this Agreement or
subsequent to the execution hereof by the Assuming Bank or any Subsidiary or
Affiliate of the Assuming Bank, whether or not any such liabilities subsequently
are sold and/or transferred, other than any claim based upon any action or
inaction of any Indemnitee as provided in paragraph (7) or (8) of Section
12.1(a); and

(b)           claims based on any act or omission of any Indemnitee (including
but not limited to claims of any Person claiming any right or title by or
through the Assuming Bank with respect to Assets transferred to the Receiver
pursuant to Section 3.4 or 3.6), other than any action or inaction of any
Indemnitee as provided in paragraph (7) or (8) of Section 12.1(a).

12.5           Obligations Supplemental. The obligations of the Receiver, and
the Corporation as guarantor in accordance with Section 12.7, to provide
indemnification under this Article XII

 
 
 
 
 
 
 

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are to supplement any amount payable by any Primary Indemnitor to the Person
indemnified under this Article XII. Consistent with that intent, the Receiver
agrees only to make payments pursuant to such indemnification to the extent not
payable by a Primary Indemnitor. If the aggregate amount of payments by the
Receiver, or the Corporation as guarantor in accordance with Section 12.7, and
all Primary Indemnitors with respect to any item of indemnification under this
Article XII exceeds the amount payable with respect to such item, such Person
being indemnified shall notify the Receiver thereof and, upon the request of the
Receiver, shall promptly pay to the Receiver, or the Corporation as appropriate,
the amount of the Receiver's (or Corporation's) payments to the extent of such
excess.

12.6           Criminal Claims. Notwithstanding any provision of this Article
XII to the contrary, in the event that any Person being indemnified under this
Article XII shall become involved in any criminal action, suit or proceeding,
whether judicial, administrative or investigative, the Receiver shall have no
obligation hereunder to indemnify such Person for liability with respect to any
criminal act or to the extent any costs or expenses are attributable to the
defense against the allegation of any criminal act, unless (i) the Person is
successful on the merits or otherwise in the defense against any such action,
suit or proceeding, or (ii) such action, suit or proceeding is terminated
without the imposition of liability on such Person.

12.7           Limited Guaranty of the Corporation.  The Corporation hereby
guarantees performance of the Receiver's obligation to indemnify the Assuming
Bank as set forth in this Article XII. It is a condition to the Corporation's
obligation hereunder that the Assuming Bank shall comply in all respects with
the applicable provisions of this Article XII. The Corporation shall be liable
hereunder only for such amounts, if any, as the Receiver is obligated to pay
under the terms of this Article XII but shall fail to pay. Except as otherwise
provided above in this Section 12.7, nothing in this Article XII is intended or
shall be construed to create any liability or obligation on the part of the
Corporation, the United States of America or any department or agency thereof
under or with respect to this Article XII, or any provision hereof, it being the
intention of the parties hereto that the obligations undertaken by the Receiver
under this Article XII are the sole and exclusive responsibility of the Receiver
and no other Person or entity.

12.8           Subrogation. Upon payment by the Receiver, or the Corporation as
guarantor in accordance with Section 12.7, to any Indemnitee for any claims
indemnified by the Receiver under this Article XII, the Receiver, or the
Corporation as appropriate, shall become subrogated to all rights of the
Indemnitee against any other Person to the extent of such payment.

ARTICLE XIII
MISCELLANEOUS

13.1           Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto in relation to the subject matter herein and supersedes all
prior understandings or agreements, oral or written, between the parties.

13.2           Headings. The headings and subheadings of the Table of Contents,
Articles and Sections contained in this Agreement, except the terms identified
for definition in Article I and

 
 
 
 
 
 
 

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elsewhere in this Agreement, are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or any provision hereof.

13.3           Counterparts. This Agreement may be executed in any number of
counterparts and by the duly authorized representative of a different party
hereto on separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement.

13.4           GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAW
OF THE UNITED STATES OF AMERICA, AND IN THE ABSENCE OF CONTROLLING FEDERAL LAW,
IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MAIN OFFICE OF THE FAILED
BANK IS LOCATED.

13.5           Successors. All terms and conditions of this Agreement shall be
binding on the successors and assigns of the Receiver, the Corporation and the
Assuming Bank. Except as otherwise specifically provided in this Agreement,
nothing expressed or referred to in this Agreement is intended or shall be
construed to give any Person other than the Receiver, the Corporation and the
Assuming Bank any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provisions contained herein, it being the
intention of the parties hereto that this Agreement, the obligations and
statements of responsibilities hereunder, and all other conditions and
provisions hereof are for the sole and exclusive benefit of the Receiver, the
Corporation and the Assuming Bank and for the benefit of no other Person.

13.6           Modification; Assignment. No amendment or other modification,
rescission, release, or assignment of any part of this Agreement shall be
effective except pursuant to a written agreement subscribed by the duly
authorized representatives of the parties hereto.

13.7           Notice. Any notice, request, demand, consent, approval or other
communication to any party hereto shall be effective when received and shall be
given in writing, and delivered in person against receipt therefore, or sent by
certified mail, postage prepaid, courier service, telex, facsimile transmission
or email to such party (with copies as indicated below) at its address set forth
below or at such other address as it shall hereafter furnish in writing to the
other parties. All such notices and other communications shall be deemed given
on the date received by the addressee.

Assuming Bank

First Bank
341 North Main Street
PO Box 508
Troy, NC 27371

 
 
 
 
 
 
 

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Receiver and Corporation

Federal Deposit Insurance Corporation,
Receiver of COOPERATIVE BANK
1601 Bryan Street, Suite 1700
Dallas, Texas 75201

Attention: Settlement Manager

with copy to: Regional Counsel (Litigation Branch)

and with respect to notice under Article XII:

Federal Deposit Insurance Corporation
Receiver of COOPERATIVE BANK
1601 Bryan Street, Suite 1700
Dallas, Texas 75201
Attention: Regional Counsel (Litigation Branch)

13.8           Manner of Payment. All payments due under this Agreement shall be
in lawful money of the United States of America in immediately available funds
as each party hereto may specify to the other parties; provided, that in the
event the Receiver or the Corporation is obligated to make any payment hereunder
in the amount of $25,000.00 or less, such payment may be made by check.

13.9           Costs, Fees and Expenses. Except as otherwise specifically
provided herein, each party hereto agrees to pay all costs, fees and expenses
which it has incurred in connection with or incidental to the matters contained
in this Agreement, including without limitation any fees and disbursements to
its accountants and counsel; provided, that the Assuming Bank shall pay all
fees, costs and expenses (other than attorneys' fees incurred by the Receiver)
incurred in connection with the transfer to it of any Assets or Liabilities
Assumed hereunder or in accordance herewith.

13.10         Waiver. Each of the Receiver, the Corporation and the Assuming
Bank may waive its respective rights, powers or privileges under this Agreement;
provided, that such waiver shall be in writing; and further provided, that no
failure or delay on the part of the Receiver, the Corporation or the Assuming
Bank to exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor will any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege by the
Receiver, the Corporation, or the Assuming Bank under this Agreement, nor will
any such waiver operate or be construed as a future waiver of such right, power
or privilege under this Agreement.

 
 
 
 
 
 
 

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13.11           Severability. If any provision of this Agreement is declared
invalid or unenforceable, then, to the extent possible, all of the remaining
provisions of this Agreement shall remain in full force and effect and shall be
binding upon the parties hereto.

13.12           Term of Agreement. This Agreement shall continue in full force
and effect until the sixth (6th) anniversary of Bank Closing; provided, that the
provisions of Section 6.3 and 6.4 shall survive the expiration of the term of
this Agreement. Provided, however, the receivership of the Failed Bank may be
terminated prior to the expiration of the term of this Agreement; in such event,
the guaranty of the Corporation, as provided in and in accordance with the
provisions of Section 12.7 shall be in effect for the remainder of the term.
Expiration of the term of this Agreement shall not affect any claim or liability
of any party with respect to any (i) amount which is owing at the time of such
expiration, regardless of when such amount becomes payable, and (ii) breach of
this Agreement occurring prior to such expiration, regardless of when such
breach is discovered.

13.13           Survival of Covenants, Etc. The covenants, representations, and
warranties in this Agreement shall survive the execution of this Agreement and
the consummation of the transactions contemplated hereunder.

[Signature Page Follows]

 
 
 
 
 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.

 
FEDERAL DEPOSIT INSURANCE CORPORATION,
 
RECEIVER OF COOPERATIVE BANK
 
WILMINGTON, NORTH CAROLINA
             
BY:
/s/ Michael W. Lamb
   
MICHAEL W. LAMB
   
RECEIVER-IN-CHARGE
Attest:
         
/s/ Craig C. Ostrander
   
Craig C. Ostrander, FDIC-DRR
     
FEDERAL DEPOSIT INSURANCE CORPORATION
             
BY:
/s/ Michael W. Lamb
   
MICHAEL W. LAMB
   
ATTORNEY-IN-FACT
Attest:
               
/s/ Craig C. Ostrander
   
Craig C. Ostrander, FDIC-DRR
           
FIRST BANK
             
BY:
/s/ Jerry L. Ocheltree
   
JERRY L. OCHELTREE
   
PRESIDENT
     
Attest:
               
/s/ Teresa C. Nixon
   
EVP
   

 
 
 
 
 
 
 

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SCHEDULE 2.1 - Certain Liabilities Assumed by the Assuming Bank

Schedule Omitted.

 
 
 
 
 
 
 

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SCHEDULE 2.1(a) – Excluded Deposit Liability Accounts

Schedule Omitted.

 
 
 
 
 
 
 

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SCHEDULE 3.1 - Certain Assets Purchased

SEE ATTACHED LIST

THE  LIST(S) ATTACHED TO THIS SCHEDULE (OR SUBSCHEDULE(S)) AND THE INFORMATION
THEREIN, IS AS OF THE DATE OF THE MOST RECENT PERTINENT DATA MADE AVAILABLE TO
THE ASSUMING BANK AS PART OF THE INFORMATION PACKAGE.  IT WILL BE ADJUSTED TO
REFLECT THE COMPOSITION AND BOOK VALUE OF THE LOANS AND ASSETS AS OF THE DATE OF
BANK CLOSING. THE LIST(S) MAY NOT INCLUDE ALL LOANS AND ASSETS (E.G., CHARGED
OFF LOANS). THE LIST(S) MAY BE REPLACED WITH A MORE ACCURATE LIST POST CLOSING.

 
 
 
 
 
 
 

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SCHEDULE 3.2 - Purchase Price of Assets or assets

(a)    cash and receivables from depository institutions, including cash items
in the process of collection, plus interest thereon:
Book Value

(b)   securities (including, but not limited to FHLB stock, but exclusive of the
capital stock of Acquired Subsidiaries), plus interest thereon:
As provided in Section 3.2(b)

(c)    federal funds sold and repurchase agreements, if any, including interest
thereon:
Book Value

(d)    Loans:
Book Value

(e)   credit card business, if any, including all outstanding extensions of
credit and offensive litigation, but excluding any class action lawsuits related
to the credit card business:
Book Value
   
(f)    Safe Deposit Boxes and related business, safekeeping business and trust
business, if any:
Book Value

(g)   Records and other documents:
Book Value

(h)   capital stock of any Acquired Subsidiaries:
Book Value

(i)    amounts owed to the Failed Bank by any Acquired Subsidiary:
Book Value
   
(j)    assets securing Deposits of public money, to the extent not otherwise
purchased hereunder:
Book Value
   
(k)    Overdrafts of customers:
Book Value

(l)    rights, if any, with respect to Qualified Financial Contracts.
As provided in Section 3.2(c)
 
 

 
 
 
 
 
 
 

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(m)   Rights of the Failed Bank to provide mortgage servicing for others and to
have mortgage servicing provided to the Failed Bank by others and related
contracts:
Book Value
   
(n)   Interests in automobiles and airplanes:
Book Value

assets subject to an option to purchase:

(a)    Bank Premises:
Fair Market Value

(b)           Furniture and Equipment:
Fair Market Value
 
(c)           Fixtures:
Fair Market Value

(d)           Other Equipment:
Fair Market Value

 
 
 
 
 
 
 

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SCHEDULE 3.5(l) – Excluded Private Label Asset-Backed Securities

Schedule Omitted.

 
 
 
 
 
 
 

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SCHEDULE 4.15A

LOANS SUBJECT TO LOSS SHARING UNDER THE
SINGLE FAMILY SHARED-LOSS AGREEMENT

Schedule Omitted.

 
 
 
 
 
 
 

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SCHEDULE 4.15B

LOANS SUBJECT TO LOSS SHARING UNDER THE
NON-SINGLE FAMILY SHARED-LOSS AGREEMENT

Schedule Omitted.

 
 
 
 
 
 
 

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SCHEDULE 7 -Accounts Excluded from Calculation of Deposit Franchise Bid Premium

The accounts identified below will pass to the Assuming Bank (unless otherwise
noted).   When calculating the premium to be paid on Assumed Deposits in a P&A
transaction, the FDIC will exclude the following categories of deposit accounts:

Category
Description
 
Amount
I
Non- DO Brokered Deposits
 
$_,___,___.__
II
CDARS
 
$_,___,___.__
III
Market Place Deposits
 
$__,___,___.__
 
Total deposits excluded from Calculation of premium
$__,___,___.__
     

Category Description

 I  Brokered Deposits
Brokered deposit accounts are accounts for which the “depositor of record” is an
agent, nominee, or custodian who deposits funds for a principal or principals to
whom “pass-through” deposit insurance coverage may be extended.  The FDIC
separates brokered deposit accounts into 2 categories:  1) Depository
Organization (DO) Brokered Deposits and 2) Non-Depository Organization (Non-DO)
Brokered Deposits.  This distinction is made by the FDIC to facilitate our role
as Receiver and Insurer.  These terms will not appear on other “brokered
deposit” reports generated by the institution.

Non-DO Brokered Deposits pass to the Assuming Bank, but are excluded from
Assumed Deposits when the deposit premium is calculated.  Please see the
attached “Schedule 7 Non-DO Broker Deposit Detail Report” for a listing of these
accounts.  This list will be updated post closing with balances as of Bank
Closing date.

If this institution had any DO Brokered Deposits (Cede & Co as Nominee for DTC),
they are excluded from Assumed Deposits in the P&A transaction.  A list of these
accounts is provided on “Schedule 2.1 DO Brokered Deposit Detail Report”.

II CDARS
CDARS deposits pass to the Assuming Bank, but are excluded from Assumed Deposits
when the deposit premium is calculated.

__________ did not participate in the CDARS program as of the date of the
deposit download.  If CDARS deposits are taken between the date of the deposit
download and the Bank Closing Date, they will be identified post closing and
made part of Schedule 7 to the P&A Agreement.

III  Market Place Deposits
“Market Place Deposits” is a description given to deposits that may have been
solicited via a money desk, internet subscription service (for example,
Qwickrate), or similar programs.

__________ does have Qwickrate deposits as identified above.  The Qwickrate
deposits are reported as time deposits in the Call Report.  _________ uses
“Branch 4” on their system to identify both brokered and Qwickrate
deposits.  Please see the attached Schedule 7 – Qwickrate Deposit Detail Report
for a listing of

 
 
 
 
 
 
 

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these accounts as of _____ __, 200__.  This list will be updated post closing
with balances as of Bank Closing date.

This schedule provides account categories and balances as of the date of the
deposit download, or as indicated.  The deposit franchise bid premium will be
calculated using account categories and balances as of Bank Closing Date that
are reflected in the general ledger or subsystem as described above.  The final
numbers for Schedule 7 will be provided post closing.

 
 
 
 
 
 
 

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EXHIBIT 4.13
INTERIM ASSET SERVICING ARRANGEMENT

           (a)           With respect to each asset (or liability) designated
from time to time by the Receiver to be serviced by the Assuming Bank pursuant
to this Arrangement (such being designated as "Pool Assets"), during the term of
this Arrangement, the Assuming Bank shall:

            (i) Promptly apply payments received with respect to any Pool
Assets;

(ii) Reverse and return insufficient funds checks;

(iii) Pay (A) participation payments to participants in Loans, as and when
received; and (B) tax and insurance bills on Pool Assets as they come due, out
of escrow funds maintained for purposes;

(iv) Maintain accurate records reflecting (A) the payment history of Pool
Assets, with updated information received concerning changes in the address or
identity of the obligors and (B) usage of data processing equipment and employee
services with respect to servicing duties;

 (v) Send billing statements to obligors on Pool Assets to the extent that such
statements were sent by the Failed Bank;

(vi) Send notices to obligors who are in default on Loans (in the same manner as
the Failed Bank);

           (vii) Send to the Receiver, Attn: Managing Liquidator, at the address
provided in Section 13.7 of the Agreement, via overnight delivery: (A) on a
weekly basis, weekly reports for the Pool Assets, including, without limitation,
reports reflecting collections and the trial balances, transaction journals and
loan histories for Pool Assets having activity, together with copies of (1)
checks received, (2) insufficient funds checks returned, (3) checks for payment
to participants or for taxes and insurance, (4) pay-off requests, (5) notices to
defaulted obligors, and (6) data processing and employee logs and (B) any other
reports, copies or information as may be periodically or from time to time
requested;

                        (viii) Remit on a weekly basis to the Receiver, Attn:
Division of Finance, Cashier Unit, Operations, at the address in (vii), via wire
transfer to the account designated by the Receiver, all payments received on
Pool Assets managed by the Assuming Bank or at such time and place and in such
manner as may be directed by the Receiver;

(ix) prepare and timely file all information reports with appropriate tax
authorities, and, if required by the Receiver, prepare and file tax returns and
pay taxes due on or before the due date, relating to the Pool Assets; and

(x)  provide and furnish such other services, operations or functions as may be
required with regard to Pool Assets, including, without limitation, as may be
required with

 
 
 
 
 
 
 

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regard to any business, enterprise or agreement which is a Pool Asset, all as
may be required by the Receiver.

Notwithstanding anything to the contrary in this Section, the Assuming Bank
shall not be required to initiate litigation or other collection proceedings
against any obligor or any collateral with respect to any defaulted Loan. The
Assuming Bank shall promptly notify the Receiver, at the address provided above
in subparagraph (a)(vii), of any claims or legal actions regarding any Pool
Asset.

(b)           The Receiver agrees to reimburse the Assuming Bank for actual,
reasonable and necessary expenses incurred in connection with the performance of
duties pursuant to this Arrangement, including expenses of photocopying, postage
and express mail, and data processing and employee services (based upon the
number of hours spent performing servicing duties).

(c)           The Assuming Bank shall provide the services described herein for
an initial period of ninety (90) days after Bank Closing. At the option of the
Receiver, exercisable by notice given not later than ten (10) days prior to the
end of such initial period or a renewal period, the Assuming Bank shall continue
to provide such services for such renewal period(s) as designated by the
Receiver, up to the Settlement Date.

(d)           At any time during the term of this Arrangement, the Receiver may,
upon written notice to the Assuming Bank, remove one or more Pool Assets from
the Pool, at which time the Assuming Bank's responsibility with respect thereto
shall terminate.

(e)           At the expiration of this Agreement or upon the termination of the
Assuming Bank's responsibility with respect to any Pool Asset pursuant to
paragraph (d) hereof, the Assuming Bank shall:

(i) deliver to the Receiver (or its designee) all of the Credit Documents and
Pool Records relating to the Pool Assets; and

(ii) cooperate with the Receiver to facilitate the orderly transition of
managing the Pool Assets to the Receiver (or its designee).

(f)           At the request of the Receiver, the Assuming Bank shall perform
such transitional services with regard to the Pool Assets as the Receiver may
request. Transitional services may include, without limitation, assisting in any
due diligence process deemed necessary by the Receiver and providing to the
Receiver or its designee(s) (x) information and data regarding the Pool Assets,
including, without limitation, system reports and data downloads sufficient to
transfer the Pool Assets to another system or systems, and (y) access to
employees of the Assuming Bank involved in the management of, or otherwise
familiar with, the Pool Assets.

 
 
 
 
 
 
 

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EXHIBIT 4.15A
 
SINGLE FAMILY SHARED-LOSS AGREEMENT
 
This agreement for the reimbursement of loss sharing on certain single family
residential mortgage loans (the “Single Family Shared-Loss Agreement”) shall
apply when the Assuming Bank purchases Single Family Shared-Loss Loans as that
term is defined herein. The terms hereof shall modify and supplement, as
necessary, the terms of the Purchase and Assumption Agreement to which this
Single Family Shared-Loss Agreement is attached as Exhibit 4.15A and
incorporated therein. To the extent any inconsistencies may arise between the
terms of the Purchase and Assumption Agreement and this Single Family
Shared-Loss Agreement with respect to the subject matter of this Single Family
Shared-Loss Agreement, the terms of this Single Family Shared-Loss Agreement
shall control. References in this Single Family Shared-Loss Agreement to a
particular Section shall be deemed to refer to a Section in this Single Family
Shared-Loss Agreement, unless the context indicates that it is intended to be a
reference to a Section of the Purchase and Assumption Agreement.
 

 
ARTICLE I -- DEFINITIONS
 
The capitalized terms used in this Single Family Shared-Loss Agreement that are
not defined in this Single Family Shared-Loss Agreement are defined in the
Purchase and Assumption Agreement. In addition to the terms defined above,
defined below are certain additional terms relating to loss-sharing, as used in
this Single Family Shared-Loss Agreement.
 
“Accounting Records” means the subsidiary system of record on which the loan
history and balance of each Single Family Shared-Loss Loan is maintained;
individual loan files containing either an original or copies of documents that
are customary and reasonable with respect to loan servicing, including
management and disposition of Other Real Estate; the records documenting
alternatives considered with respect to loans in default or for which a default
is reasonably foreseeable; records of loss calculations and supporting
documentation with respect to line items on the loss calculations; and, monthly
delinquency reports and other performance reports customarily utilized by the
Assuming Bank in management of loan portfolios.
 
“Accrued Interest” means, with respect to Single Family Shared-Loss Loans, the
amount of earned and unpaid interest at the note rate specified in the
applicable loan documents, limited to 90 days.
 
“Affiliate” shall have the meaning set forth in the Purchase and Assumption
Agreement; provided, that, for purposes of this Single Family Shared-Loss
Agreement, no Third Party Servicer shall be deemed to be an Affiliate of the
Assuming Bank.

 
“Commencement Date” means the first calendar day following the Bank Closing.
 

 
 
 
 
 
 
 

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“Commercial Shared-Loss Agreement” means the Commercial and Other Assets
Shared-Loss Agreement attached to the Purchase and Assumption Agreement as
Exhibit 4.15B.
 
“Cumulative Loss Amount” means the sum of the Monthly Loss Amounts less the sum
of all Recovery Amounts.
 
“Cumulative Shared-Loss Amount” means the excess, if any, of the Cumulative Loss
Amount over the First Loss Tranche.
 
“Customary Servicing Procedures” means procedures (including collection
procedures) that the Assuming Bank (or, to the extent a Third Party Servicer is
engaged, the Third Party Servicer) customarily employs and exercises in
servicing and administering mortgage loans for its own accounts and the
servicing procedures established by FNMA or FHLMC (as in effect from time to
time), which are in accordance with accepted mortgage servicing practices of
prudent lending institutions.
 
“Deficient Valuation” means the determination by a court in a bankruptcy
proceeding that the value of the collateral is less than the amount of the loan
in which case the loss will be the difference between the then unpaid principal
balance (or the NPV of a modified loan that defaults) and the value of the
collateral so established.
 
“Examination Criteria” means the loan classification criteria employed by, or
any applicable regulations of, the Assuming Bank’s Chartering Authority at the
time such action is taken, as such criteria may be amended from time to time.
 
“Home Equity Loans” means loans or funded portions of lines of credit secured by
mortgages on one-to four-family residences or stock of cooperative housing
associations, where the Failed Bank did not have a first lien on the same
property as collateral.
 
“Final Shared-Loss Month” means the calendar month in which the tenth
anniversary of the Commencement Date occurs.
 
“Final Shared-Loss Recovery Month” means the calendar month in which the tenth
anniversary of the Commencement Date occurs.
 
“Foreclosure Loss” means the loss realized when the Assuming Bank has completed
the foreclosure on a Single Family Shared-Loss Loan and realized final recovery
on the collateral through liquidation and recovery of all insurance
proceeds.  Each Foreclosure Loss shall be calculated in accordance with the form
and methodology specified in Exhibit 2a or Exhibit 2a(1).
 
“Investor-Owned Residential Loans” means Loans, excluding advances made pursuant
to Home Equity Loans, that are secured by mortgages on one- to four family
residences or stock of cooperative housing associations that are not
owner-occupied. These loans can be treated as Restructured Loans on a
commercially reasonable basis and can be a restructured under terms separate
from the Exhibit 5 standards.  Please refer to Exhibit 2b for guidance in
Calculation of Loss for Restructured Loans.
 

 
 
 
 
 
 
 

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“Loss” means a Foreclosure Loss, Restructuring Loss, Short Sale Loss, Portfolio
Loss, Modification Default Loss or Deficient Valuation.
 
“Loss Amount” means the dollar amount of loss incurred and reported on the
Monthly Certificate for a Single Family Shared-Loss Loan.
 
“Modification Default Loss” means the loss calculated in Exhibits 2a(1) and
2c(1) for single family loans modified under this part of the agreement that
default and result in a foreclosure or short sale.
 
“Modification Guidelines” has the meaning provided in Section 2.1(a) of this
Single Family Shared-Loss Agreement.
 
“Monthly Certificate” has the meaning provided in Section 2.1(b) of this Single
Family Shared-Loss Agreement.
 
“Monthly Loss Amount” means the sum of all Foreclosure Losses, Restructuring
Losses, Short Sale Losses, Portfolio Losses, Modification Default Losses and
losses in connection with Deficient Valuations realized by the Assuming Bank for
any Shared Loss Month.
 
“Monthly Shared-Loss Amount” means the change in the Cumulative Shared-Loss
Amount from the beginning of each month to the end of each month.
 
“Neutral Member” has the meaning provided in Section 2. 1(f)(ii) of this Single
Family Shared-Loss Agreement.
 
 “Portfolio Loss” means the loss realized on either (i) a portfolio sale of
Single Family Shared-Loss Loans in accordance with the terms of Article IV or
(ii) the sale of a loan with the consent of the Receiver as provided in Section
2.7.
 
“Recovery Amount” means, with respect to any period prior to the Termination
Date, the amount of collected funds received by the Assuming Bank that (i) are
applicable against a Foreclosure Loss which has previously been paid to the
Assuming Bank by the Receiver or (ii) gains realized from a Section 4.1 sale of
Single Family Shared-Loss Loans for which the Assuming Bank has previously
received a Restructuring Loss payment from the Receiver (iii) or any incentive
payments from national programs paid to an investor or borrower on loans that
have been modified or otherwise treated (short sale or foreclosure) in
accordance with Exhibit 5.
 
“Restructuring Loss” means the loss on a modified or restructured loan measured
by the difference between (a) the principal, Accrued Interest, tax and insurance
advances, third party or other fees due on a loan prior to the modification or
restructuring, and (b) the net present value of estimated cash flows on the
modified or restructured loan, discounted at the Then-Current Interest Rate.
Each Restructuring Loss shall be calculated in accordance with the form and
methodology attached as Exhibit 2b, as applicable.
 
“Restructured Loan” means a Single Family Shared-Loss Loan for which the
 

 
 
 
 
 
 
 

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Assuming Bank has received a Restructuring Loss payment from the Receiver.  This
applies to owner occupied and investor owned residences.
 
“Servicing Officer” has the meaning provided in Section 2.1(b) of this Single
Family Shared-Loss Agreement.
 
“Shared Loss Payment Trigger” means when the sum of the Cumulative Loss Amount
under this Single Family Shared-Loss Agreement and the Shared-Loss Amount under
the Commercial and Other Assets Shared-Loss Agreement, exceeds the First Loss
Tranche.  If the First Loss Tranche is zero or a negative number, the Shared
Loss Payment Trigger shall be deemed to have been reached upon Bank Closing.
 
“Shared-Loss Month” means each calendar month between the Commencement Date and
the last day of the month in which the tenth anniversary of the Commencement
Date occurs, provided that, the first Shared-Loss Month shall begin on the
Commencement Date and end on the last day of that month.
 
“Short-Sale Loss” means the loss resulting from the Assuming Bank’s agreement
with the mortgagor to accept a payoff in an amount less than the balance due on
the loan (including the costs of any cash incentives to borrower to agree to
such sale or to maintain the property pending such sale), further provided, that
each Short-Sale Loss shall be calculated in accordance with the form and
methodology specified in Exhibit 2c or Exhibit 2c(1).
 
“Single Family Shared-Loss Loans” means the single family one-to-four
residential mortgage loans (whether owned by the Assuming Bank or any
Subsidiary) identified on Schedule 4.15A of the Purchase and Assumption
Agreement.
 
“Stated Threshold” means total losses under the shared loss agreements in the
amount of $303,000,000.00.
 
“Termination Date” means the last day of the Final Shared-Loss Recovery Month.
 
“Then-Current Interest Rate” means the most recently published Freddie Mac
survey rate for 30-year fixed-rate loans.
 
“Third-Party Servicer” means any servicer appointed from time to time by the
Assuming Bank or any Affiliate of the Assuming Bank to service the Shared-Loss
Loans on behalf of the Assuming Bank, the identity of which shall be given to
the Receiver prior to or concurrent with the appointment thereof.
 
ARTICLE II -- SHARED-LOSS ARRANGEMENT
 
2.1           Shared-Loss Arrangement.
 
(a)           Loss Mitigation and Consideration of Alternatives. For each Single
Family Shared-Loss Loan in default or for which a default is reasonably
foreseeable, the
 

 
 
 
 
 
 
 

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Assuming Bank shall undertake reasonable and customary loss mitigation efforts,
in accordance with any of the following programs selected by Assuming Bank in
its sole discretion, Exhibit 5 (FDIC Mortgage Loan Modification Program), the
United States Treasury's Home Affordable Modification Program Guidelines or any
other modification program approved by the United States Treasury Department,
the Corporation, the Board of Governors of the Federal Reserve System or any
other governmental agency (it being understood that the Assuming Bank can select
different programs for the various Single Family Shared-Loss Loans) (such
program chosen, the “Modification Guidelines”). After selecting the applicable
Modification Guideline for any such Single Family Shared-Loss Loan, the Assuming
Bank shall document its consideration of foreclosure, loan restructuring under
such Modification Guideline chosen, and short-sale (if short-sale is a viable
option) alternatives and shall select the alternative the Assuming Bank
believes, based on its estimated calculations, will result in the least
Loss.  Losses on Home Equity Loans shall be shared under the charge-off policies
of the Assuming Bank’s Examination Criteria as if they were Single Family
Shared-Loss Loans with respect to the calculation of the Stated
Threshold.  Assuming Bank shall retain its calculations of the estimated loss
under each alternative, such calculations to be provided to the Receiver upon
request.  For the avoidance of doubt and notwithstanding anything herein to the
contrary, (i) the Assuming Bank is not required to modify or restructure any
Single Family Shared-Loss Loan on more than one occasion and (ii) the Assuming
Bank is not required to consider any alternatives with respect to any
Shared-Loss Loan in the process of foreclosure as of the Bank Closing and shall
be entitled to continue such foreclosure measures and recover the Foreclosure
Loss as provided herein, and (iii)  the Assuming Bank shall have a transition
period of up to 90 days after Bank Closing to implement the Modification
Guidelines, during which time, the Assuming Bank may submit claims under such
guidelines as may be in place at the Failed Bank.
 
(b)           Monthly Certificates.
 
Not later than fifteen (15) days after the end of each Shared-Loss Month,
beginning with the month in which the Commencement Date occurs and ending in the
month in which the tenth anniversary of the Commencement Date occurs, the
Assuming Bank shall deliver to the Receiver a certificate, signed by an officer
of the Assuming Bank involved in, or responsible for, the administration and
servicing of the Single Family Shared-Loss Loans whose name appears on a list of
servicing officers furnished by the Assuming Bank to the Receiver, (a “Servicing
Officer”) setting forth in such form and detail as the Receiver may reasonably
specify (a “Monthly Certificate”):
 
 
(i)
(A)
a schedule substantially in the form of Exhibit 1 listing:

 
(i) each Single Family Shared-Loss Loan for which a Loss Amount (calculated in
accordance with the applicable Exhibit) is being claimed, the related Loss
Amount for each Single Family Shared-Loss Loan, and the total Monthly Loss
Amount for all Single Family Shared-Loss Loans;
 
(ii) each Single Family Shared-Loss Loan for which a Recovery Amount was
received, the Recovery Amount for each Single Family Shared-Loss Loan, and the
total Recovery Amount for all
 

 
 
 
 
 
 
 

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Single Family Shared-Loss Loans;
 
(iii) the total Monthly Loss Amount for all Single Family Shared-Loss Loans
minus the total monthly Recovery Amount for all Single Family Shared-Loss Loans;
 
(iv) the Cumulative Shared-Loss Amount as of the beginning and end of the month;
 
(v) the Monthly Shared Loss Amount;
 
(vi) the result obtained in (v) times 80%, or times 95% if the Stated Threshold
has been reached, which in either case is the amount to be paid under Section
2.1(d) of this Single Family Shared-Loss Agreement by the Receiver to the
Assuming Bank if the amount is a positive number, or by the Assuming Bank to the
Receiver if the amount is a negative number;
 
 
(ii)
(B)
for each of the Single Family Shared-Loss Loans for which a Loss is claimed for
that Shared-Loss Month, a schedule showing the calculation of the Loss Amount
using the form and methodology shown in Exhibit 2a, Exhibit 2b, or Exhibit 2c,
as applicable.

 
 
(iii)
(C)
For each of the Restructured Loans where a gain or loss is realized in a sale
under Section 4.1 or 4.2, a schedule showing the calculation using the form and
methodology shown in Exhibit 2d.

 
 
(iv)
(D)
a portfolio performance and summary schedule substantially in the form shown in
Exhibit 3.

 
(c)           Monthly Data Download. Not later than fifteen (15) days after the
end of each month, beginning with the month in which the Commencement Date
occurs and ending with the Final Shared-Loss Recovery Month, Assuming Bank shall
provide Receiver:
 
 
(v)
(i)
the servicing file in machine-readable format including but not limited to the
following fields for each outstanding Single Family Shared-Loss Loan, as
applicable:

 
 
(A)
Loan number

 
(B)
FICO score

 
(C)
Origination date

 
(D)
Original principal amount

 
(E)
Maturity date

 
(F)
Paid-to date

 
(G)
Last payment date

 
(H)
Loan status (bankruptcy, in foreclosure, etc.)

 
(I)
Delinquency counters

 
 
 
 
 
 
 

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(J)
Current principal balance

 
(K)
Current escrow account balance

 
(L)
Current Appraisal/BPO value

 
(M)
Current Appraisal/BPO date

 
(N)
Interest rate

 
(O)
Monthly principal and interest payment amount

 
(P)
Monthly escrow payment for taxes and insurance

 
(Q)
Interest rate type (fixed or adjustable)

 
(R)
If adjustable: index, margin, next interest rate reset date

 
(S)
Payment/Interest rate cap and/or floor

 
(T)
Underwriting type (Full doc, Alt Doc, No Doc)

 
(U)
Lien type (1st, 2nd)

 
(V)
Amortization type (amortizing or I/O)

 
(W)
Property address, including city, state, zip code

 
(X)
A code indicating whether the Mortgaged Property is owner occupied

 
(Y)
Property type (single-family detached, condominium, duplex, etc.)

 
(vi)
(ii)
An Excel file for ORE held as a result of foreclosure on a Single Family
Shared-Loss Loan listing:

 
 
(A)
Foreclosure date

 
(B)
Unpaid loan principal balance

 
(C)
Appraised value or BPO value, as applicable

 
(D)
Projected liquidation date

Notwithstanding the foregoing, the Assuming Bank shall not be required to
provide any of the foregoing information to the extent it is unable to do so as
a result of the Failed Bank’s or Receiver’s failure to provide information
required to produce the information set forth in this Section 2.1(c); provided,
that the Assuming Bank shall, consistent with Customary Servicing Procedures
seek to produce any such missing information or improve any inaccurate
information previously provided to it.
(d)           Payments With Respect to Shared-Loss Assets.
 
(i)           Losses Under the Stated Threshold. After the Shared Loss Payment
Trigger is reached, not later than fifteen (15) days after the date on which the
Receiver receives the Monthly Certificate, the Receiver shall pay to the
Assuming Bank, in immediately available funds, an amount equal to eighty percent
(80%) of the Monthly Shared-Loss Amount reported on the Monthly Certificate. If
the total Monthly Shared-Loss Amount reported on the Monthly Certificate is a
negative number, the Assuming Bank shall pay to the Receiver in immediately
available funds eighty percent (80%) of that amount.
 
(ii)           Losses in Excess of the Stated Threshold. In the event that the
sum of the Cumulative Loss Amount under this Single Family Shared-Loss Agreement
and the Stated Loss Amount under the Commercial Shared-Loss Agreement meets or
exceeds the Stated Threshold, the loss/recovery sharing percentages set forth
herein shall change from 80/20 to 95/5
 

 
 
 
 
 
 
 

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and thereafter the Receiver shall pay to the Assuming Bank, in immediately
available funds, an amount equal to ninety-five percent (95%) of the Monthly
Shared-Loss Amount reported on the Monthly Certificate. If the Monthly
Shared-Loss Amount reported on the Monthly Certificate is a negative number, the
Assuming Bank shall pay to the Receiver in immediately available funds
ninety-five percent (95%) of that amount.
 
(e)           Limitations on Shared-Loss Payment. The Receiver shall not be
required to make any payments pursuant to Section 2.1(d) with respect to any
Foreclosure Loss, Restructuring Loss, Short Sale Loss or Portfolio Loss that the
Receiver determines, based upon the criteria set forth in this Single Family
Shared-Loss Agreement (including the analysis and documentation requirements of
Section 2.1(a)) or Customary Servicing Procedures, should not have been effected
by the Assuming Bank; provided, however, (x) the Receiver must provide notice to
the Assuming Bank detailing the grounds for not making such payment, (y) the
Receiver must provide the Assuming Bank with a reasonable opportunity to cure
any such deficiency and (z) (1) to the extent curable, if cured, the Receiver
shall make payment with respect to the properly effected Loss, and (2) to the
extent not curable, notwithstanding the foregoing, the Receiver shall make a
payment as to all Losses (or portion of Losses) that were effected which would
have been payable as a Loss if the Assuming Bank had properly effected such
Loss. In the event that the Receiver does not make any payment with respect to
Losses claimed pursuant to Section 2.1(d), the Receiver and Assuming Bank shall,
upon final resolution, make the necessary adjustments to the Monthly Shared-Loss
Amount for that Monthly Certificate and the payment pursuant to Section 2.1(d)
above shall be adjusted accordingly.
 
(f)           Payments by Wire-Transfer. All payments under this Single Family
Shared-Loss Agreement shall be made by wire-transfer in accordance with the
wire-transfer instructions on Exhibit 4.
 
2.2           Auditor Report; Right to Audit
 
(a)           Within ninety (90) days after the end of each calendar year during
which the Receiver makes any payment to the Assuming Bank under this Single
Family Shared-Loss Agreement, the Assuming Bank shall deliver to the Receiver a
report signed by its independent public accountants stating that they have
reviewed the terms of this Single Family Shared-Loss Agreement and that, in the
course of their annual audit of the Assuming Bank’s books and records, nothing
has come to their attention suggesting that any computations required to be made
by the Assuming Bank during such calendar year pursuant to this Article II were
not made by the Assuming Bank in accordance herewith. In the event that the
Assuming Bank cannot comply with the preceding sentence, it shall promptly
submit to the Receiver corrected computations together with a report signed by
its independent public accountants stating that, after giving effect to such
corrected computations, nothing has come to their attention suggesting that any
computations required to be made by the Assuming Bank during such year pursuant
to this Article II were not made by the Assuming Bank in accordance herewith. In
such event, the Assuming Bank and the Receiver shall make all such accounting
adjustments and payments as may be necessary to give effect to each correction
reflected in such corrected computations, retroactive to the date on which the
corresponding incorrect computation was made.
 
(b)           The Receiver or the FDIC in its corporate capacity (“Corporation”)
may
 

 
 
 
 
 
 
 

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perform an audit or audits to determine the Assuming Bank’s compliance with the
provisions of this Single Family Shared-Loss Agreement, including this Article
II, by providing not less than ten (10) Business Days’ prior written notice.
Assuming Bank shall provide access to pertinent records and proximate working
space in Assuming Bank’s facilities. The scope and duration of any such audit
shall be within the reasonable discretion of the Receiver or the Corporation,
but shall in no event be administered in a manner that unreasonably interferes
with the operation of the Assuming Bank’s business. The Receiver or the
Corporation, as the case may be, shall bear the expense of any such audit. In
the event that any corrections are necessary as a result of such an audit or
audits, the Assuming Bank and the Receiver shall make such accounting
adjustments and payments as may be necessary to give retroactive effect to such
corrections.
 
2.3           Withholdings. Notwithstanding any other provision in this Article
II, the Receiver, upon the direction of the Director (or designee) of the
Federal Deposit Insurance Corporation’s Division of Resolutions and
Receiverships, may withhold payment for any amounts included in a Monthly
Certificate delivered pursuant to Section 2.1, if in its good faith and
reasonable judgment there is a reasonable basis under the requirements of this
Single Family Shared-Loss Agreement for denying the eligibility of an item for
which reimbursement or payment is sought under such Section. In such event, the
Receiver shall provide a written notice to the Assuming Bank detailing the
grounds for withholding such payment. At such time as the Assuming Bank
demonstrates to the satisfaction of the Receiver, in its reasonable judgment,
that the grounds for such withholding of payment, or portion of payment, no
longer exist or have been cured, then the Receiver shall pay the Assuming Bank
the amount withheld which the Receiver determines is eligible for payment,
within fifteen (15) Business Days.  
 
2.4           Books and Records. The Assuming Bank shall at all times during the
term of this Single Family Shared-Loss Agreement keep books and records
sufficient to ensure and document compliance with the terms of this Single
Family Shared-Loss Agreement, including but not limited to (a) documentation of
alternatives considered with respect to defaulted loans or loans for which
default is reasonably foreseeable, (b) documentation showing the calculation of
loss for claims submitted to the Receiver, (c) retention of documents that
support each line item on the loss claim forms, and (d) documentation with
respect to the Recovery Amount on loans for which the Receiver has made a
loss-share payment
 
2.5           Information. The Assuming Bank shall promptly provide to the
Receiver such other information, including but not limited to, financial
statements, computations, and bank policies and procedures, relating to the
performance of the provisions of this Single Family Shared-Loss Agreement, as
the Receiver may reasonably request from time to time.
 
2.6           Tax Ruling. The Assuming Bank shall not at any time, without the
Receiver’s prior written consent, seek a private letter ruling or other
determination from the Internal Revenue Service or otherwise seek to qualify for
any special tax treatment or benefits associated with any payments made by the
Receiver pursuant to this Single Family Shared-Loss Agreement.
 
2.7           Sale of Single Family Shared-Loss Loans. The Receiver shall be
relieved of its obligations with respect to a Single Family Shared-Loss Loan
upon payment of a Foreclosure Loss amount or a Short Sale Loss amount with
respect to such Single Family Shared-Loss Loan or upon the sale of a Single
Family Shared-Loss Loan by Assuming Bank to a person or entity
 

 
 
 
 
 
 
 

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that is not an Affiliate; provided, however, that if the Receiver consents to
the sale of any such Single Family Shared-Loss Loan, any loss on such sale shall
be a Portfolio Loss.  The Assuming Bank shall provide the Receiver with timely
notice of any such sale. Notwithstanding the foregoing, a sale of the Single
Family Shared-Loss Loan, for purposes of this Section 2.7, shall not be deemed
to have occurred as the result of (i) any change in the ownership or control of
Assuming Bank or the transfer of any or all of the Single Family Shared-Loss
Loan(s) to any Affiliate of Assuming Bank, (ii) a merger by Assuming Bank with
or into any other entity, (iii) a sale by Assuming Bank of all or substantially
all of its assets.
 
ARTICLE III -- RULES REGARDING THE ADMINISTRATION OF SINGLE FAMILY
SHARED-LOSS LOANS
 
3.1           Agreement with Respect to Administration. The Assuming Bank shall
(and shall cause any of its Affiliates to which the Assuming Bank transfers any
Single Family Shared-Loss Loans to) manage, administer, and collect the Single
Family Shared-Loss Loans while owned by the Assuming Bank or any Affiliate
thereof during the term of this Single Family Shared-Loss Agreement in
accordance with the rules set forth in this Article III. The Assuming Bank shall
be responsible to the Receiver in the performance of its duties hereunder and
shall provide to the Receiver such reports as the Receiver reasonably deems
advisable, including but not limited to the reports required by Sections 2.1,
2.2 and 3.3 hereof, and shall permit the Receiver to monitor the Assuming Bank’s
performance of its duties hereunder.
 
3.2           Duties of the Assuming Bank. (a) In performance of its duties
under this Article III, the Assuming Bank shall:
 
(i) manage and administer each Single Family Shared-Loss Loan in accordance with
Assuming Bank’s usual and prudent business and banking practices and Customary
Servicing Procedures;
 
(ii) exercise its best business judgment in managing, administering and
collecting amounts owed on the Single Family Shared-Loss Loans;
 
(iii) use commercially reasonable efforts to maximize Recoveries with respect to
Losses on Single Family Shared-Loss Loans without regard to the effect of
maximizing collections on assets held by the Assuming Bank or any of its
Affiliates that are not Single Family Shared-Loss Loans;
 
(iv) retain sufficient staff (in Assuming Bank’s discretion) to perform its
duties hereunder; and
 
(v) other than as provided in Section 2.1(a), comply with the terms of the
Modification Guidelines for any Single Family Shared-Loss Loans meeting the
requirements set forth therein. For the avoidance of doubt, the Assuming Bank
may propose exceptions to Exhibit 5 (the FDIC Loan Modification Program) for a
group of Loans with similar characteristics, with the objectives of (1)
minimizing the loss to the Assuming Bank and the FDIC and (2) maximizing the
opportunity for qualified homeowners to remain in their homes with affordable
mortgage payments.
 
(b)           Any transaction with or between any Affiliate of the Assuming Bank
with respect to any Single Family Shared-Loss Loan including, without
limitation, the execution of
 

 
 
 
 
 
 
 

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any contract pursuant to which any Affiliate of the Assuming Bank will manage,
administer or collect any of the Single Family Shared-Loss Loans will be
provided to FDIC for informational purposes and if such transaction is not
entered into on an arm’s length basis on commercially reasonable terms such
transaction shall be subject to the prior written approval of the Receiver.
 
3.3           Shared-Loss Asset Records and Reports. The Assuming Bank shall
establish and maintain such records as may be appropriate to account for the
Single Family Shared-Loss Loans in such form and detail as the Receiver may
reasonably require, and to enable the Assuming Bank to prepare and deliver to
the Receiver such reports as the Receiver may from time to time request
regarding the Single Family Shared-Loss Loans and the Monthly Certificates
required by Section 2.1 of this Single Family Shared-Loss Agreement.
 
3.4           Related Loans.
 
(a)           Assuming Bank shall use its best efforts to determine which loans
are “Related Loans”, as hereinafter defined. The Assuming Bank shall not manage,
administer or collect any “Related Loan” in any manner that would have the
effect of increasing the amount of any collections with respect to the Related
Loan to the detriment of the Single Family Shared-Loss Loan to which such loan
is related. A “Related Loan” means any loan or extension of credit held by the
Assuming Bank at any time on or prior to the end of the Final Shared-Loss Month
that is made to an Obligor of a Single Family Shared-Loss Loan.
 
(b)           The Assuming Bank shall prepare and deliver to the Receiver with
the Monthly Certificates for the calendar months ending June 30 and December 31,
a schedule of all Related Loans on the Accounting Records of the Assuming Bank
as of the end of each such semi-annual period.
 
3.5           Legal Action; Utilization of Special Receivership Powers. The
Assuming Bank shall notify the Receiver in writing (such notice to be given in
accordance with Article V below and to include all relevant details) prior to
utilizing in any legal action any special legal power or right which the
Assuming Bank derives as a result of having acquired an asset from the Receiver,
and the Assuming Bank shall not utilize any such power unless the Receiver shall
have consented in writing to the proposed usage. The Receiver shall have the
right to direct such proposed usage by the Assuming Bank and the Assuming Bank
shall comply in all respects with such direction. Upon request of the Receiver,
the Assuming Bank will advise the Receiver as to the status of any such legal
action. The Assuming Bank shall immediately notify the Receiver of any judgment
in litigation involving any of the aforesaid special powers or rights.
 
3.6           Third-Party Servicer. The Assuming Bank may perform any of its
obligations and/or exercise any of its rights under this Single Family
Shared-Loss Agreement through or by one or more Third-Party Servicers, who may
take actions and make expenditures as if any such Third-Party Servicer was the
Assuming Bank hereunder (and, for the avoidance of doubt, such expenses incurred
by any such Third Party Servicer on behalf of the Assuming Bank shall be
included in calculating Losses to the extent such expenses would be included in
such calculation if the expenses were incurred by Assuming Bank); provided,
however, that the use thereof by the Assuming Bank shall not release the
Assuming Bank of any obligation or liability hereunder.
 

 
 
 
 
 
 
 

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ARTICLE IV – PORTFOLIO SALE
 
4.1           Assuming Bank Portfolio Sales of Remaining Single Family
Shared-Loss Loans. The Assuming Bank shall have the right with the concurrence
of the Receiver to liquidate for cash consideration, from time to time in one or
more transactions, all or a portion of Single Family Shared-Loss Loans held by
the Assuming Bank at any time prior to the Termination Date (“Portfolio Sales”).
If the Assuming Bank exercises its option under this Section 4.1, it must give
thirty (30) days notice in writing to the Receiver setting forth the details and
schedule for the Portfolio Sale which shall be conducted by means of sealed bid
sales to third parties, not including any of the Assuming Bank’s affiliates,
contractors, or any affiliates of the Assuming Bank’s contractors. Sales of
Restructured Loans shall be sold in a separate pool from Single Family
Shared-Loss Loans not restructured. The Receiver’s review of the Assuming Bank’s
proposed Portfolio Sale will be considered in a timely fashion and approval will
not be unreasonably withheld, delayed or conditioned.
 
4.2           Assuming Bank’s Liquidation of Remaining Single Family Shared-Loss
Loans. In the event that the Assuming Bank does not conduct a Portfolio Sale
pursuant to Section 4.1, the Receiver shall have the right, exercisable in its
sole and absolute discretion, to require the Assuming Bank to liquidate for cash
consideration, any Single Family Shared-Loss Loans held by the Assuming Bank at
any time after the date that is six months prior to the Termination Date. If the
Receiver exercises its option under this Section 4.2, it must give notice in
writing to the Assuming Bank, setting forth the time period within which the
Assuming Bank shall be required to liquidate the Single Family Shared-Loss
Loans. The Assuming Bank will comply with the Receiver’s notice and must
liquidate the Single Family Shared-Loss Loans as soon as reasonably practicable
by means of sealed bid sales to third parties, not including any of the Assuming
Bank’s affiliates, contractors, or any affiliates of the Assuming Bank’s
contractors. The selection of any financial advisor or other third party broker
or sales agent retained for the liquidation of the remaining Single Family
Shared-Loss Loans pursuant to this Section shall be subject to the prior
approval of the Receiver, such approval not to be unreasonably withheld, delayed
or conditioned.
 
4.3           Calculation of Sale Gain or Loss. For Single Family Shared-Loss
Loans that are not Restructured Loans gain or loss on the sales under Section
4.1 or Section 4.2 will be calculated as the sale price received by the Assuming
Bank less the unpaid principal balance of the remaining Single Family
Shared-Loss Loans. For any Restructured Loan included in the sale gain or loss
on sale will be calculated as (a) the sale price received by the Assuming Bank
less (b) the net present value of estimated cash flows on the Restructured Loan
that was used in the calculation of the related Restructuring Loss plus (c) Loan
principal payments collected by the Assuming Bank from the date the Loan was
restructured to the date of sale. (See Exhibit 2d for example calculation).
 
ARTICLE V -- LOSS-SHARING NOTICES GIVEN TO RECEIVER AND PURCHASER
 
All notices, demands and other communications hereunder shall be in writing and
shall be delivered by hand, or overnight courier, receipt requested, addressed
to the parties as follows:
 

 
 
 
 
 
 
 

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If to Receiver, to:
Federal Deposit Insurance Corporation as Receiver for COOPERATIVE BANK

 
Division of Resolutions and Receiverships

 
550 17th Street, N.W.

 
Washington, D.C. 20429

 
Attention: Ralph Malami, Manager, Capital Markets

 
 
with a copy to:
Federal Deposit Insurance Corporation

 
as Receiver for COOPERATIVE BANK

 
Room E7056

 
3501 Fairfax Drive, Arlington, VA 2226

 
Attn: Special Issues Unit

 
With respect to a notice under Section 3.5 of this Single Family Shared-Loss
Agreement, copies of such notice shall be sent to:
 
 
Federal Deposit Insurance Corporation

 
Legal Division 1601 Bryan Street

 
Dallas, Texas 75201

 
Attention: Regional Counsel

 
If to Assuming Bank, to:

 
First Bank
341 North Main Street
PO Box 508
Troy, NC 27371

 
Such Persons and addresses may be changed from time to time by notice given
pursuant to the provisions of this Article V. Any notice, demand or other
communication delivered pursuant to the provisions of this Article IV shall be
deemed to have been given on the date actually received.
 

 
ARTICLE VI -- MISCELLANEOUS
 
6.1.           Expenses.  Except as otherwise expressly provided herein, all
costs and expenses incurred by or on behalf of a party hereto in connection with
this Single Family Shared-Loss Agreement shall be borne by such party whether or
not the transactions contemplated herein shall be consummated.
 
6.2            Successors and Assigns; Specific Performance.  All terms and
provisions of this Single Family Shared-Loss Agreement shall be binding upon and
shall inure to the benefit of the parties hereto only; provided, however, that,
Receiver may assign or otherwise transfer this Single Family Shared-Loss
Agreement (in whole or in part) to the Federal Deposit Insurance Corporation in
its corporate capacity without the consent of Assuming Bank.  Notwithstanding
anything to the contrary contained in this Single Family Shared-Loss Agreement,
except as is
 

 
 
 
 
 
 
 

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expressly permitted in this Section 6.2, Assuming Bank may not assign or
otherwise transfer this Single Family Shared-Loss Agreement (in whole or in
part) without the prior written consent of the Receiver, which consent may be
granted or withheld by the Receiver in its sole discretion, and any attempted
assignment or transfer in violation of this provision shall be void ab initio. 
For the avoidance of doubt, a merger or consolidation of the Assuming Bank with
and into another financial institution, the sale of all or substantially all of
the assets of the Assuming Bank to another financial institution constitutes the
transfer of this Single Family Shared-Loss Agreement which requires the consent
of the Receiver.  No Loss shall be recognized as a result of any accounting
adjustments that are made due to any such merger, consolidation or sale
consented to by the FDIC.
 
6.3           Governing Law. This Single Family Shared-Loss Agreement shall be
construed in accordance with federal law, or, if there is no applicable federal
law, the laws of the State of New York, without regard to any rule of conflict
of law that would result in the application of the substantive law of any
jurisdiction other than the State of New York.
 
6.4           WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN OR TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF OR RELATING TO
OR IN CONNECTION WITH THIS SINGLE FAMILY SHARED-LOSS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
 
6.5           Captions. All captions and headings contained in this Single
Family Shared-Loss Agreement are for convenience of reference only and do not
form a part of, and shall not affect the meaning or interpretation of, this
Single Family Shared-Loss Agreement.
 
6.6           Entire Agreement; Amendments. This Single Family Shared-Loss
Agreement, along with the Commercial Shared-Loss Agreement and the Purchase and
Assumption Agreement, including the Exhibits and any other documents delivered
pursuant hereto or thereto, embody the entire agreement of the parties with
respect to the subject matter hereof, and supersede all prior representations,
warranties, offers, acceptances, agreements and understandings, written or oral,
relating to the subject matter herein. This Single Family Shared-Loss Agreement
may be amended or modified or any provision thereof waived only by a written
instrument signed by both parties or their respective duly authorized agents.
 
6.7           Severability. Whenever possible, each provision of this Single
Family Shared-Loss Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Single
Family Shared-Loss Agreement is held to be prohibited by or invalid, illegal or
unenforceable under applicable law, such provision shall be construed and
enforced as if it had been more narrowly drawn so as not to be prohibited,
invalid, illegal or unenforceable, and the validity, legality and enforceability
of the remainder of such provision and the remaining provisions of this Single
Family Shared-Loss Agreement shall not in any way be affected or impaired
thereby.
 
6.8           No Third Party Beneficiary. This Single Family Shared-Loss
Agreement and
 

 
 
 
 
 
 
 

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the Exhibits hereto are for the sole and exclusive benefit of the parties hereto
and their respective permitted successors and permitted assigns and there shall
be no other third party beneficiaries, and nothing in this Single Family
Shared-Loss Agreement or the Exhibits shall be construed to grant to any other
Person any right, remedy or Claim under or in respect of this Single Family
Shared-Loss Agreement or any provision hereof.
 
6.9             Counterparts. This Single Family Shared-Loss Agreement may be
executed separately by Receiver and Assuming Bank in any number of counterparts,
each of which when executed and delivered shall be an original, but such
counterparts shall together constitute one and the same instrument.
 
6.10           Consent. Except as otherwise provided herein, when the consent of
a party is required herein, such consent shall not be unreasonably withheld or
delayed.
 
6.11           Rights Cumulative. Except as otherwise expressly provided herein,
the rights of each of the parties under this Single Family Shared-Loss Agreement
are cumulative, may be exercised as often as any party considers appropriate and
are in addition to each such party’s rights under the Purchase and Sale
Agreement and any of the related agreements or under law. Except as otherwise
expressly provided herein, any failure to exercise or any delay in exercising
any of such rights, or any partial or defective exercise of such rights, shall
not operate as a waiver or variation of that or any other such right.
 

 
ARTICLE VII
DISPUTE RESOLUTION
 
7.1           Dispute Resolution Procedures.
 
(a)           In the event a dispute arises about the interpretation,
application, calculation of Loss, or calculation of payments or otherwise with
respect to this Single Family Shared-Loss Agreement (“SF Shared-Loss Dispute
Item”), then the Receiver and the Assuming Bank shall make every attempt in good
faith to resolve such items within sixty (60) days following the receipt of a
written description of the SF Shared-Loss Dispute Item, with notification of the
possibility of taking the matter to arbitration (the date on which such 60-day
period expires, or any extension of such period as the parties hereto may
mutually agree to in writing, herein called the “Resolution Deadline Date”). If
the Receiver and the Assuming Bank resolve all such items to their mutual
satisfaction by the Resolution Deadline Date, then within thirty (30) days
following such resolution, any payment arising out such resolution shall be made
arising from the settlement of the SF Shared-Loss Dispute.
 
(b)           If the Receiver and the Assuming Bank fail to resolve any
outstanding SF Shared-Loss Dispute Items by the Resolution Deadline Date, then
either party may notify the other of its intent to submit the SF Shared-Loss
Dispute Item to arbitration pursuant to the provisions of this Article VII.
Failure of either party to notify the other of its intent to submit any
unresolved SF Shared-Loss Dispute Item to arbitration within thirty (30) days
following the Resolution Deadline Date (the date on which such thirty (30) day
period expires is herein called the “Arbitration Deadline Date”) shall be deemed
an acceptance of such SF Shared-Loss Dispute not
 

 
 
 
 
 
 
 

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submitted to arbitration, as well as a waiver of the submitting party’s right to
dispute such non-submitted SF Shared-Loss Dispute Item but not a waiver of any
similar claim which may arise in the future.
 
(c)           If a SF Shared-Loss Dispute Item is submitted to arbitration, it
shall be governed by the rules of the American Arbitration Association (the
“AAA”), except as otherwise provided herein. Either party may submit a matter
for arbitration by delivering a notice, prior to the Arbitration Deadline Date,
to the other party in writing setting forth:
 
(i)           A brief description of each SF Shared-Loss Dispute Item submitted
for arbitration;
 
(ii)           A statement of the moving party’s position with respect to each
SF Shared-Loss Dispute Item submitted for arbitration;
 
(iii)           The value sought by the moving party, or other relief requested
regarding each SF Shared-Loss Dispute Item submitted for arbitration, to the
extent reasonably calculable; and
 
(iv)           The name and address of the arbiter selected by the moving party
(the “Moving Arbiter”), who shall be a neutral, as determined by the AAA.
 
Failure to adequately include any information above shall not be deemed to be a
waiver of the parties right to arbitrate so long as after notification of such
failure the moving party cures such failure as promptly as reasonably
practicable.
 
(d)           The non-moving party shall, within thirty (30) days following
receipt of a notice of arbitration pursuant to this Section 6.1, deliver a
notice to the moving party setting forth:
 
(i)           The name and address of the arbiter selected by the non-moving
party (the “Respondent Arbiter”), who shall be a neutral, as determined by the
AAA;
 
(ii)           A statement of the position of the respondent with respect to
each Dispute Item; and
 
(iii)           The ultimate resolution sought by the respondent or other
relief, if any, the respondent deems is due the moving party with respect to
each SF Shared-Loss Dispute Item.
 
Failure to adequately include any information above shall not be deemed to be a
waiver of the non-moving party’s right to defend such arbitration so long as
after notification of such failure the non-moving party cures such failure as
promptly as reasonably practicable
 
(e)           The Moving Arbiter and Respondent Arbiter shall select a third
arbiter from a list furnished by the American Arbitration Association (the
“AAA”). In accordance with the rules of the AAA, the three (3) arbiters shall
constitute the arbitration panel for resolution of each SF Loss-Share Dispute
Item. The concurrence of any two (2) arbiters shall be deemed to be the decision
of the arbiters for all purposes hereunder. The arbitration shall proceed on
such time schedule and in accordance with the Rules of Commercial Arbitration of
the AAA then in effect, as modified by this Section 7.1. The arbitration
proceedings shall take place at such location as the parties thereto may
mutually agree, but if they cannot agree, then they will take place at the
offices of the Corporation in Washington, DC, or Arlington, Virginia.
 

 
 
 
 
 
 
 

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(f)           The Receiver and Assuming Bank shall facilitate the resolution of
each outstanding SF Shared-Loss Dispute Item by making available in a prompt and
timely manner to one another and to the arbiters for examination and copying, as
appropriate, all documents, books, and records under their respective control
and that would be discoverable under the Federal Rules of Civil Procedure.
 
(g)           The arbiters designated pursuant to subsections (c), (d) and (e)
hereof shall select, with respect to each Dispute Item submitted to arbitration
pursuant to this Section 7.1, either (i) the position and relief submitted by
the Assuming Bank with respect to each SF Shared-Loss Dispute Item, or (ii) the
position and relief submitted by the Receiver with respect to each SF
Shared-Loss Dispute Item, in either case as set forth in its respective notice
of arbitration. The arbiters shall have no authority to select a value for each
Dispute Item other than the determination set forth in Section 7.1(c) and
Section 7.1(d). The arbitration shall be final, binding and conclusive on the
parties.
 
(h)           Any amounts ultimately determined to be payable pursuant to such
award shall bear interest at the Settlement Interest Rate from and including the
date specified for the arbiters decisions specified in this Section 7.1, without
regard to any extension of the finality of such award, to but not including the
date paid. All payments required to be made under this Section 7.1 shall be made
by wire transfer.
 
(i)           For the avoidance of doubt, to the extent any notice of a SF
Shared-Loss Dispute Item(s) is provided prior to the Termination Date, the terms
of this Single Family Shared-Loss Agreement shall remain in effect with respect
to the Single Family Shared-Loss Loans that are the subject of such SF
Shared-Loss Dispute Item(s) until such time as any such dispute is finally
resolved.
 
7.2           Fees and Expenses of Arbiters.  The aggregate fees and expenses of
the arbiters shall be shall be borne equally by the parties.  The parties shall
the aggregate fees and expenses within thirty (30) days after receipt of the
written decision of the arbiters (unless the arbiters agree in writing on some
other payment schedule).
 
Exhibit 1
 
Monthly Certificate
 
SEE FOLLOWING PAGE
 

 
 
 
 
 
 
 

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Pursuant to Section 2.1 of the Single Family Shared-Loss Agreement, the
undersigned hereby certifies the information on this Certificate is true,
complete and correct.
OFFICER SIGNATURE
OFFICER NAME:
TITLE

 
 
 
 
 
 
 
 
 
 

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Exhibit 2a
 
This exhibit contains three versions of the loss share calculation for
foreclosure, plus explanatory notes.

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Notes to Exhibit 2a (foreclosure)

 
1.
The data shown are for illustrative purpose.  The figures will vary for actual
restructurings.

 
2.
The covered loss is the difference between the gross balance recoverable by
Purchaser and the total cash recovery.  There are three methods of calculation
for covered losses from foreclosures, depending upon the circumstances.  They
are shown below:

 
a.
If foreclosure occurred prior to the beginning of the Loss Share agreement, use
Exhibit 2a(1).  This version uses the book value of the REO as the starting
point for the covered loss.

 
b.
If foreclosure occurred after the Loss Share agreement was in place, and if the
loan was not restructured when the Loss Share agreement was in place, use
Exhibit 2a(2).  This version uses the unpaid balance of the loan as of the last
payment as the starting point for the covered loss.

 
c.
If the loan was restructured when the Loss Share agreement was in place, and
then foreclosure occurred, use Exhibit 2a(3).  This version uses the Net Present
Value (NPV) of the modified loan as the starting point for the covered loss.

 
3.
For Exhibit 2a(1), the gross balance recoverable by the purchaser is calculated
as the sum of lines 9 – 18; it is shown in line 19. For Exhibit 2a(2), the gross
balance recoverable by the purchaser is calculated as the sum of lines 16 – 24;
it is shown in line 25. For Exhibit 2a(3), the gross balance recoverable by the
purchaser is calculated as line 11 minus line 12 plus lines 13 – 21; it is shown
in line 22.

 
4.
For Exhibit 2a(1), the total cash recovery is calculated as the sum of lines 20
– 24; it is shown in line 25. For Exhibit 2a(2), the total cash recovery is
calculated as the sum of lines 26 – 30; it is shown in line 31. For Exhibit
2a(3), the total cash recovery is calculated as the sum of lines 23 – 27; it is
shown in line 28.

 
5.
Reasonable and customary third party attorney’s fees and expenses incurred by or
on behalf of Assuming Bank in connection with any enforcement procedures, or
otherwise with respect to such loan, are reported under Attorney’s fees.

 
6.
Assuming Bank’s (or Third Party Servicer’s) reasonable and customary
out-of-pocket costs paid to either a third party or an affiliate (if affiliate
is pre-approved by the FDIC) for foreclosure, property protection and
maintenance costs, repairs, assessments, taxes, insurance and similar items are
treated as part of the gross recoverable balance, to the extent they are not
paid from funds in the borrower’s escrow account.  Allowable costs are limited
to amounts per Freddie Mac and Fannie Mae guidelines (as in effect from time to
time), where applicable, provided that this limitation shall not apply to costs
or expenses relating to environmental conditions.

 
7.
Do not include late fees, prepayment penalties, or any similar lender fees or
charges by the Failed Bank or Assuming Bank to the loan account, any allocation
of Assuming Bank’s servicing costs, or any allocations of Assuming Bank’s
general and administrative (G&A) or other operating costs.

 
8.
If Exhibit 2a(3) is used, then no accrued interest may be included as a covered
loss.  Otherwise, the amount of accrued interest that may be included as a
covered loss is limited to the minimum of:

 
a.
90 days

 
b.
The number of days that the loan is delinquent when the property was sold

 
 
 
 
 
 
 

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c.
The number of days between the resolution date and the date when the property
was sold

To calculate accrued interest, apply the note interest rate that would have been
in effect if the loan were performing to the principal balance after application
of the last payment made by the borrower.
 
 

 

 
 
 
 
 
 
 

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Exhibit 2b

This exhibit contains the loss share calculation for restructuring (loan mod),
plus explanatory notes.
 
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Notes to Exhibit 2b (restructuring)

 
1.
The data shown are for illustrative purpose.  The figures will vary for actual
restructurings.

 
2.
For purposes of loss sharing, losses on restructured loans are calculated as the
difference between:

 
a.
The principal, accrued interest, advances due on the loan, and allowable 3rd
party fees prior to restructuring (lines 36-39), and

 
b.
The Net Present Value (NPV) of the estimated cash flows (line 43). The cash
flows should assume no default or prepayment for 10 years, followed by
prepayment in full at the end of 10 years (120 months).

 
3.
For owner-occupied residential loans, the NPV is calculated using the most
recently published Freddie Mac survey rate on 30-year fixed rate loans as of the
restructure date.

 
4.
For investor owned or non-owner occupied residential loans, the NPV is
calculated using commercially reasonable rate on 30-year fixed rate loans as of
the restructure date.

 
5.
If the new loan is an adjustable-rate loan, interest rate resets and related
cash flows should be projected based on the index rate in effect at the date of
the loan restructuring.  If the restructured loan otherwise provides for
specific charges in monthly P&I payments over the term of the loan, those
changes should be reflected in the projected cash flows.  Assuming Bank must
retain supporting schedule of projected cash flows as required by Section 2.1 of
the Single Family Shared-Loss Agreement and provide it to the FDIC if requested
for a sample audit.

 
6.
Do not include late fees, prepayment penalties, or any similar lender fees or
charges by the Failed Bank or Assuming Bank to the loan account, any allocation
of Assuming Bank’s servicing costs, or any allocations of Assuming Bank’s
general and administrative (G&A) or other operating costs.

 
7.
The amount of accrued interest that may be added to the balance of the loan is
limited to the minimum of:

 
a.
90 days

 
b.
The number of days that the loan is delinquent at the time of restructuring

 
c.
The number of days between the resolution date and the restructuring

To calculate accrued interest, apply the note interest rate that would have been
in effect if the loan were performing to the principal balance after application
of the last payment made by the borrower.

 
 
 
 
 
 
 

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Exhibit 2c

This exhibit contains two versions of the loss share calculation for short
sales, plus explanatory notes.
 
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Notes to Exhibit 2c (short sale)

 
1.
The data shown are for illustrative purpose.  The figures will vary for actual
short sales.

 
2.
The covered loss is the difference between the gross balance recoverable by
Purchaser and the total cash recovery.  There are two methods of calculation for
covered losses from short sales, depending upon the circumstances.  They are
shown below:

 
a.
If the loan was restructured when the Loss Share agreement was in place, and
then the short sale occurred, use Exhibit 2c(2).  This version uses the Net
Present Value (NPV) of the modified loan as the starting point for the covered
loss.

 
b.
Otherwise, use Exhibit 2c(1).  This version uses the unpaid balance of the loan
as of the last payment as the starting point for the covered loss.

 
3.
For Exhibit 2c(1), the gross balance recoverable by the purchaser is calculated
as the sum of lines 12 – 17; it is shown in line 18. For Exhibit 2a(2), the
gross balance recoverable by the purchaser is calculated as line 11 minus line
12 plus lines 13 – 16; it is shown in line 17.

 
4.
For Exhibit 2c(1), the total cash recovery is calculated as the sum of lines 19
– 21; it is shown in line 22. For Exhibit 2c(2), the total cash recovery is
calculated as the sum of lines 18 – 20; it is shown in line 21.

 
5.
Reasonable and customary third party attorney’s fees and expenses incurred by or
on behalf of Assuming Bank in connection with any enforcement procedures, or
otherwise with respect to such loan, are reported under Attorney’s fees.

 
6.
Do not include late fees, prepayment penalties, or any similar lender fees or
charges by the Failed Bank or Assuming Bank to the loan account, any allocation
of Assuming Bank’s servicing costs, or any allocations of Assuming Bank’s
general and administrative (G&A) or other operating costs.

 
7.
If Exhibit 2c(2) is used, then no accrued interest may be included as a covered
loss.  Otherwise, the amount of accrued interest that may be included as a
covered loss is limited to the minimum of:

 
d.
90 days

 
e.
The number of days that the loan is delinquent when the property was sold

 
f.
The number of days between the resolution date and the date when the property
was sold

To calculate accrued interest, apply the note interest rate that would have been
in effect if the loan were performing to the principal balance after application
of the last payment made by the borrower.

 
 
 
 
 
 
 

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Exhibit 2d
 
Shared-Loss Month:
 
[input month]
 
Loan no.:
 
[input loan no.)
                 
NOTE
     
The calculation of recovery on a loan for which a Restructuring Loss has been
paid will only apply if the loan is sold.
       
EXAMPLE CALCULATION
             
Restructuring Loss Information
     
Loan principal balance before restructuring
 
$200,000    
A
NPV, restructured loan
 
  165,000
B
Loss on restructured loan
 
$   35,000
A – B
Times FDIC applicable loss share % (80% or 95%)
 
     80%
 
Loss share payment to purchaser
 
$  28,000
C
       
Calculation – Recovery amount due to Receiver
     
Loan sales price
 
$190,000
 
NPV of restructured loan at mod date
 
  165,000
 
Gain - step 1
 
    25,000
D
PLUS
     
Loan UPB after restructuring
(1)
      200,000
 
Loan UPB at liquidation date
 
  192,000
 
Gain - step 2 (principal collections after restructuring)
 
   8,000
E
Recovery amount
 
     33,000
D + E
Times FDIC loss share %
 
     80%
 
Recovery due to FDIC
 
$26,400
F
       
Net loss share paid to purchaser (C – F)
 
$   1,600
         
Proof Calculation
(2)
   
Loan principal balance
 
$200,000
G
       
Principal collections on loan
 
   8,000
 
Sales price for loan
 
  190,000
 
Total collections on loan
 
  198,000
H
Net loss on loan
 
$    2,000
G – H
Times FDIC applicable loss share % (80% or 95%)
 
     80%
 
Loss share payment to purchaser
 
$   1,600
                 
(1)    This example assumes that the FDIC loan modification program as shown in
Exhibit 5 is applied and the loan restructuring does not result in a reduction
in the loan principal balance due from the borrower.
(2)   This proof calculation is provided to illustrate the concept and the
Assuming Bank is not required to provide this with its Recovery calculations.

 
 
 
 
 
 
 

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Exhibit 3
 
Portfolio Performance and Summary Schedule
 
SHARED-LOSS LOANS
PORTFOLIO PERFORMANCE AND SUMMARY SCHEDULE
MONTH ENDED:
[input report month]
                   
POOL SUMMARY
         
#
$
   
Loans at Sale Date
xx
xx
             
Loans as of this month-end
xx
xx
                       
STATED THRESHOLD TRACKING
#
$
   
Stated Threshold amount
     
A
         
Cumulative loss payments, prior month
       
Loss payment for current month
       
Cumulative loss payment, this month
       
Cumulative Commercial & Other Loans Net Charge-Offs
               
B
Remaining to Stated Threshold
     
A - B
                 
Percent of Total
PORTFOLIO PERFORMANCE STATUS
#
$
 
#
Current
       
30 – 59 days past due
       
60 – 89 days past due
       
90 – 119 days past due
       
120 and over days past due
       
In foreclosure
       
ORE
       
Total
                 
Memo Item:
       
Loans in process of restructuring – total
       
Loans in bankruptcy
                 
Loans in process of restructuring by delinquency status
       
Current
       
30 - 59 days past due
       
60 - 89 days past due
       
90 - 119 days past due
       
120 and over days past due In foreclosure
       
Total
                 

 
 
 
 
 
 
 

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List of Loans Paid Off During Month
       
Loan #
Principal Balance
               
List of Loans Sold During Month
                 
Loan #
Principal Balance
                         

 
 
 
 
 
 
 

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Exhibit 4
 
Wire Transfer Instructions
 
PURCHASER WIRING INSTRUCTIONS
 
BANK RECEIVING WIRE
     
9 DIGIT ABA ROUTING NUMBER
     
ACCOUNT NUMBER
     
NAME OF ACCOUNT
     
ATTENTION TO WHOM
     
PURPOSE OF WIRE
     
FDIC RECEIVER WIRING INSTRUCTIONS
   
BANK RECEIVING WIRE
     
SHORT NAME
     
ADDRESS OF BANK RECEIVING WIRE
     
9 DIGIT ABA ROUTING NUMBER
     
ACCOUNT NUMBER
     
NAME OF ACCOUNT
     
ATTENTION TO WHOM
     
PURPOSE OF WIRE
     

 
 
 
 
 
 
 

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EXHIBIT 5
 
FDIC MORTGAGE LOAN MODIFICATION PROGRAM
 
Objective
 
The objective of this FDIC Mortgage Loan Modification Program (“Program”) is to
modify the terms of certain residential mortgage loans so as to improve
affordability, increase the probability of performance, allow borrowers to
remain in their homes and increase the value of the loans to the FDIC and
assignees. The Program provides for the modification of Qualifying Loans (as
defined below) by reducing the borrower’s monthly housing debt to income ratio
(“DTI Ratio”) to no more than 31% at the time of the modification and
eliminating adjustable interest rate and negative amortization features.
 
Qualifying Mortgage Loans
 
In order for a mortgage loan to be a Qualifying Loan it must meet all of the
following criteria, which must be confirmed by the lender:
 
 
·
The collateral securing the mortgage loan is owner-occupied and the owner’s
primary residence; and

 
·
The mortgagor has a first priority lien on the collateral; and

 
·
Either the borrower is at least 60 days delinquent or a default is reasonably
foreseeable.

Modification Process
 
The lender shall undertake a review of its mortgage loan portfolio to identify
Qualifying Loans. For each Qualifying Loan, the lender shall determine the net
present value of the modified loan and, if it will exceed the net present value
of the foreclosed collateral upon disposition, then the Qualifying Loan shall be
modified so as to reduce the borrower’s monthly DTI Ratio to no more than 31% at
the time of the modification. To achieve this, the lender shall use a
combination of interest rate reduction, term extension and principal
forbearance, as necessary.
 
The borrower’s monthly DTI Ratio shall be a percentage calculated by dividing
the borrower’s monthly income by the borrower’s monthly housing payment
(including principal, interest, taxes and insurance). For these purposes, (1)
the borrower’s monthly income shall be the amount of the borrower’s (along with
any co-borrowers’) documented and verified gross monthly income, and (2) the
borrower’s monthly housing payment shall be the amount required to pay monthly
principal and interest plus one-twelfth of the then current annual amount
required to pay real property taxes and homeowner’s insurance with respect to
the collateral.
 
In order to calculate the monthly principal payment, the lender shall capitalize
to the outstanding principal balance of the Qualifying Loan the amount of all
delinquent interest, delinquent taxes, past due insurance premiums, third party
fees and (without duplication) escrow advances (such amount, the “Capitalized
Balance”).
 

 
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In order to achieve the goal of reducing the DTI Ratio to 31%, the lender shall
take the following steps in the following order of priority with respect to each
Qualifying Loan:
 
 
1.
Reduce the interest rate to the then current Freddie Mac Survey Rate for 30-year
fixed rate mortgage loans, and adjust the term to 30 years.

 
 
2.
If the DTI Ratio is still in excess of 31%, reduce the interest rate further,
but no lower than 3%, until the DTI ratio of 31% is achieved.

 
 
3.
If the DTI Ratio is still in excess of 31% after adjusting the interest rate to
3%, extend the remaining term of the loan by 10 years.

 
 
4.
If the DTI Ratio is still in excess of 31%, calculate a new monthly payment (the
“Adjusted Payment Amount”) that will result in the borrower’s monthly DTI Ratio
not exceeding 31%. After calculating the Adjusted Payment Amount, the lender
shall bifurcate the Capitalized Balance into two portions – the amortizing
portion and the non-amortizing portion. The amortizing portion of the
Capitalized Balance shall be the mortgage amount that will fully amortize over a
40-year term at an annual interest rate of 3% and monthly payments equal to the
Adjusted Payment Amount. The non-amortizing portion of the Capitalized Balance
shall be the difference between the Capitalized Balance and the amortizing
portion of the Capitalized Balance. If the amortizing portion of the Capitalized
Balance is less than 75% of the current estimated value of the collateral, then
the lender may choose not to restructure the loan.  If the lender chooses to
restructure the loan, then the lender shall forbear on collecting the
non-amortizing portion of the Capitalized Balance, and such amount shall be due
and payable only upon the earlier of (i) maturity of the modified loan, (ii) a
sale of the property or (iii) a pay-off or refinancing of the loan. No interest
shall be charged on the non-amortizing portion of the Capitalized Balance, but
repayment shall be secured by a first lien on the collateral.

 
Special Note:
 
The net present value calculation used to determine whether a loan should be
modified based on the modification process above is distinct and different from
the net present value calculation used to determine the covered loss if the loan
is modified.  Please refer only to the net present value calculation described
in this exhibit for the modification process, with its separate assumptions,
when determining whether to provide a modification to a borrower.  Separate
assumptions may include, without limitation, Assuming Bank’s determination of a
probability of default without modification, a probability of default with
modification, home price forecasts, prepayment speeds, and event timing.  These
assumptions are applied to different projected cash flows over the term of the
loan, such as the projected cash flow of the loan performing or defaulting
without modification and the projected cash flow of the loan performing or
defaulting with modification.
 
By contrast, the net present value for determining the covered loss is based on
a 10 year period.  While the assumptions in the net present value calculation
used in the modification process may change, the net present value calculation
for determining the covered loss remains constant.
 

 
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EXHIBIT 4.15B

COMMERCIAL AND OTHER ASSETS SHARED-LOSS AGREEMENT

This agreement for reimbursement of loss sharing expenses on certain loans and
other assets (the “Commercial Shared-Loss Agreement”) shall apply when the
Assuming Bank purchases Shared-Loss Assets as that term is defined herein.  The
terms hereof shall modify and supplement, as necessary, the terms of the
Purchase and Assumption Agreement to which this Commercial Shared-Loss Agreement
is attached as Exhibit 4.15B and incorporated therein. To the extent any
inconsistencies may arise between the terms of the Purchase and Assumption
Agreement and this Commercial Shared-Loss Agreement with respect to the subject
matter of this Commercial Shared-Loss Agreement, the terms of this Commercial
Shared-Loss Agreement shall control.  References in this Commercial Shared-Loss
Agreement to a particular Section shall be deemed to refer to a Section in this
Commercial Shared-Loss Agreement unless the context indicates that a Section of
the Purchase and Assumption Agreement is intended.

ARTICLE I -- DEFINITIONS

Capitalized terms used in this Commercial Shared-Loss Agreement that are not
defined in this Commercial Shared-Loss Agreement are defined in the Purchase and
Assumption Agreement  In addition to the terms defined above, defined below are
certain additional terms relating to loss-sharing, as used in this Commercial
Shared-Loss Agreement.

“AAA” means the American Arbitration Association as provided in Section
2.1(f)(iii) of this Commercial Shared-Loss Agreement.

“Accrued Interest” means, with respect to any Shared-Loss Loan, Permitted
Advance or Shared-Loss Loan Commitment Advance at any time, the amount of earned
and unpaid interest, taxes, credit life and/or disability insurance premiums (if
any) payable by the Obligor accrued on or with respect to such Shared-Loss Loan,
Permitted Advance or Shared-Loss Loan Commitment Advance, all as reflected on
the Accounting Records of the Failed Bank or the Assuming Bank (as applicable);
provided, that Accrued Interest shall not include any amount that accrues on or
with respect to any Shared-Loss Loan, Permitted Advance or Shared-Loss Loan
Commitment Advance after that Asset has been placed on non-accrual or
nonperforming status by either the Failed Bank or the Assuming Bank (as
applicable).

“Additional ORE” means Shared-Loss Loans that become Other Real Estate after
Bank Closing Date.

“Affiliate” shall have the meaning set forth in the Purchase and Assumption
Agreement; provided, that, for purposes of this Commercial Shared-Loss
Agreement, no Third Party Servicer shall be deemed to be an Affiliate of the
Assuming Bank.

“Applicable Anniversary of the Commencement Date” means the fifth (5th)
anniversary of the Commencement Date.

 
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“Calendar Quarter” means a quarterly period (a) for the first such period,
beginning on the Commencement Date and ending on the last calendar day of either
March, June, September or December, whichever is the first to occur after the
Commencement Date, and (b) for quarterly periods thereafter, beginning on the
first calendar day of the calendar month immediately after the month that ended
the prior period and ending on the last calendar day of each successive
three-calendar-month period thereafter (i.e., each March, June, September and
December, starting in the applicable order depending on the ending date of first
such period) of any year.

“Capitalized Expenditures” means those expenditures that (i) would be
capitalized under generally accepted accounting principles, and (ii) are
incurred with respect to Shared-Loss Loans, Other Real Estate, Additional ORE or
Subsidiary ORE. Capitalized Expenditures shall not include expenses related to
environmental conditions including, but not limited to, remediation, storage or
disposal of any hazardous or toxic substances or any pollutant or contaminant.

“Charge-Offs” means, with respect to any Shared-Loss Assets for any period, an
amount equal to the aggregate amount of loans or portions of loans classified as
“Loss” under the Examination Criteria, including (a) charge-offs of (i) the
principal amount of such assets net of unearned interest (including write-downs
associated with Other Real Estate, Additional ORE, Subsidiary ORE or loan
modification(s)) (ii) Accrued Interest, and (iii) Capitalized Expenditures plus
(b) Pre-Charge-Off Expenses incurred on the respective Shared-Loss Loans, all as
effected by the Assuming Bank during such period and reflected on the Accounting
Records of the Assuming Bank; provided, that: (i) the aggregate amount of
Accrued Interest (including any reversals thereof) for the period after Bank
Closing that shall be included in determining the amount of Charge-Offs for any
Shared-Loss Loan shall not exceed ninety (90) days’ Accrued Interest; (ii) no
Charge-Off shall be taken with respect to any anticipated expenditure by the
Assuming Bank until such expenditure is actually incurred; (iii) any financial
statement adjustments made in connection with the purchase of any Assets
pursuant to this Purchase and Assumption Agreement or any future purchase,
merger, consolidation or other acquisition of the Assuming Bank shall not
constitute “Charge-Offs”; and (iv) except for Portfolio Sales or any other sales
or dispositions consented to by the Receiver, losses incurred on the sale or
other disposition of Shared-Loss Assets to any Person (other than the sale or
other disposition of Other Real Estate, Additional ORE or Subsidiary ORE to a
Person other than an Affiliate of the Assuming Bank which is conducted in a
commercially reasonable and prudent manner) shall not constitute Charge-Offs.

“Commencement Date” means the first calendar day following Bank Closing.

“Consumer Loans” means Loans to individuals for household, family and other
personal expenditures (including United States and/or State-guaranteed student
loans and extensions of credit pursuant to a credit card plan or debit card
plan).

“Environmental Assessment” means an assessment of the presence, storage or
release of any hazardous or toxic substance, pollutant or contaminant with
respect to the collateral securing a Shared-Loss Loan that has been fully or
partially charged off.

 
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“Examination Criteria” means the loan classification criteria employed by, or
any applicable regulations of, the Assuming Bank’s Chartering Authority at the
time such action is taken, as such criteria may be amended from time to time.

“Failed Bank Charge-Offs/Write-Downs” means, with respect to any Shared-Loss
Asset, an amount equal to the aggregate amount of reversals or charge-offs of
Accrued Interest and charge-offs and write-downs of principal effected by the
Failed Bank with respect to that Shared-Loss Asset as reflected on the
Accounting Records of the Failed Bank.

“Fair Value” means the fair value of a Shared Loss MTM Asset as determined in
accordance with FAS 157 as in effect on Bank Closing.

“FDIC Party” has the meaning provided in Section 2.1(f)(ii) of this Commercial
Shared-Loss Agreement.

 “Net Charge-Offs” means, with respect to any period, an amount equal to the
aggregate amount of Charge-Offs for such period less the amount of Recoveries
for such period.

“Neutral Member” has the meaning provided in Section 2.1(f)(ii) of this
Commercial Shared-Loss Agreement.

“New Shared-Loss Loans” means loans that would otherwise be subject to loss
sharing under this Commercial Shared-Loss Agreement that were originated after
the Information Package Date and before Bank Closing.

“Notice of Dispute” has the meaning provided in Section 2.1(f)(iii) of this
Commercial Shared-Loss Agreement.

“ORE Subsidiary” means any Subsidiary of the Assuming Bank that engages solely
in holding, servicing, managing or liquidating interests of a type described in
clause (A) of the definition of “Other Real Estate,” which interests have arisen
from the collection or settlement of a Shared-Loss Loan.

“Other Real Estate” means all of the following (including any of the following
fully or partially charged off the books and records of the Failed Bank or the
Assuming Bank) that (i) are owned by the Failed Bank as of Bank Closing and are
purchased pursuant to the  Purchase and Assumption Agreement or (ii) have arisen
subsequent to Bank Closing from the collection or settlement by the Assuming
Bank of a Shared-Loss Loan:

(A)           all interests in real estate (other than Bank Premises and
Fixtures), including but not limited to min­eral rights, lease­­­hold rights,
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(B)           all other assets (whether real or personal property) acquired by
foreclosure or in full or partial satisfaction of judgments or indebtedness.

“Permitted Advance” means an advance of funds by the Assuming Bank with respect
to a Shared-Loss Loan, or the making of a legally binding commitment by the
Assuming Bank to advance funds with respect to a Shared-Loss Loan, that (i) in
the case of such an advance, is actually made, and, in the case of such a
commitment, is made and all of the proceeds thereof actually advanced, within
one (1) year after the Commencement Date, (ii) does not cause the sum of (A) the
book value of such Shared-Loss Loan as reflected on the Accounting Records of
the Assuming Bank after any such advance has been made by the Assuming Bank plus
(B) the unfunded amount of any such commitment made by the Assuming Bank related
thereto, to exceed 110% of the Book Value of such Shared-Loss Loan, (iii) is not
made with respect to a Shared-Loss Loan with respect to which (A) there exists a
related Shared-Loss Loan Commitment or (B) the Assuming Bank has taken a
Charge-Off and (iv) is made in good faith, is supported at the time it is made
by documentation in the Credit Files and conforms to and is in accordance with
the applicable requirements set forth in Article III of this Commercial
Shared-Loss Agreement and with the then effective written internal credit policy
guidelines of the Assuming Bank; provided, that the limitations in subparagraphs
(i), (ii) and (iii) of this definition shall not apply to any such action (other
than to an advance or commitment related to the remediation, storage or final
disposal of any hazardous or toxic substance, pollutant or contaminant) that is
taken by Assuming Bank in its reasonable discretion to preserve or secure the
value of the collateral for such Shared-Loss Loan.

“Permitted Amendment” means, with respect to any Shared-Loss Loan Commitment or
Shared-Loss Loan, any amendment, modification, renewal or extension thereof, or
any waiver of any term, right, or remedy thereunder, made by the Assuming Bank
in good faith and otherwise in accordance with the applicable requirements set
forth in Article III of this Commercial Shared-Loss Agreement and the then
effective written internal credit policy guidelines of the Assuming Bank;
provided, that:

(i) with respect to a Shared-Loss Loan Commitment or a Shared-Loss Loan that is
not a revolving line of credit, no such amendment, modification, renewal,
extension, or waiver, except as allowed under the definition of Permitted
Advance, shall operate to increase the amount of principal (A) then remaining
available to be advanced by the Assuming Bank under the Shared-Loss Loan
Commitment or (B) then outstanding under the Shared-Loss Loan;

(ii) with respect to a Shared-Loss Loan Commitment or a Shared-Loss Loan that is
a revolving line of credit, no such amendment, modification, renewal, extension,
or waiver, except as allowed under the definition of Permitted Advance, shall
operate to increase the maximum amount of principal authorized as of Bank
Closing to be outstanding at any one time under the underlying revolving line of
credit relationship with the debtor (regardless of the extent to which such
revolving line of credit may have been funded as of Bank Closing or may
subsequently have been funded and/or repaid); and

(iii) no such amendment, modification, renewal, extension or waiver shall extend
the term of such Shared-Loss Loan Commitment or Shared-Loss Loan beyond the end
of the final Shared-Loss Quarter unless the term of such Shared-Loss Loan
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Loan as existed on Bank Closing was beyond the end of the final Shared-Loss
Quarter, in which event no such amendment, modification, renewal, extension or
waiver shall extend such term beyond the term as existed as of Bank Closing.

“Pre-Charge-Off Expenses” means those expenses incurred in the usual and prudent
management of  a Shared-Loss Loan that would qualify as a Reimbursable Expense
or Recovery Expense if incurred after a Charge-Off of the related Shared-Loss
Asset had occurred.

“Quarterly Certificate” has the meaning provided in Section 2.1(a)(i) of this
Commercial Shared-Loss Agreement.

“Recoveries” (I)(A) In addition to any sums to be applied as Recoveries pursuant
to subparagraph (II) below, “Recoveries” means, with respect to any period, the
sum of (without duplication):

(i) the amount of collections during such period by the Assuming Bank on
Charge-Offs of Shared-Loss Assets effected by the Assuming Bank prior to the end
of the final Shared-Loss Quarter; plus

(ii) the amount of collections during such period by the Assuming Bank on Failed
Bank Charge-Offs/Write-Downs; plus

(iii) the amount of gain on any sale or other disposition during such period by
the Assuming Bank of Shared Loss Loans, Other Real Estate, Additional ORE or
Subsidiary ORE (provided, that the amount of any such gain included in
Recoveries shall not exceed the aggregate amount of the related Failed Bank
Charge-Offs/Write-Downs and Charge-Offs taken and any related Reimbursable
Expenses and Recovery Expenses); plus

(iv) the amount of collections during such period by the Assuming Bank of any
Reimbursable Expenses or Recovery Expenses; plus

(v) the amount of any fee or other consideration received by the Assuming Bank
during or prior to such period in connection with any amendment, modification,
renewal, extension, refinance, restructure, commitment or other similar action
taken by the Assuming Bank with respect to a Shared-Loss Asset with respect to
which there exists a Failed Bank Charge-Off/Write-Down or a Shared-Loss Loan as
to which a Charge-Off has been effected by the Assuming Bank during or prior to
such period (provided, that the amount of any such fee or other consideration
included in Recoveries shall not exceed the aggregate amount of the related
Failed Bank Charge-Offs/Write-Downs and Charge-Offs taken and any related
Reimbursable Expenses and Recovery Expenses).

(I)(B) For the purpose of determining the amounts to be applied as Recoveries
pursuant to subparagraph (I)(A) above, the Assuming Bank shall apply amounts
received on the Assets that are not otherwise applied to reduce the book value
of principal of a Shared-Loss Loan (or, in the case of Other Real Estate,
Additional ORE, Subsidiary ORE and Capitalized Expenditures, that are not
otherwise applied to reduce the book value thereof) in the following order:
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Charge-Offs and Failed Bank Charge-Offs/Write Downs; then to Reimbursable
Expenses and Recovery Expenses; then to interest income; and then to other
expenses incurred by the Assuming Bank.

(II) If there occurs an amendment, modification, renewal, extension, refinance,
restructure, commitment, sale or other similar action with respect to a
Shared-Loss Loan as to which there exists a Failed Bank Charge-Off/Write Down or
as to which a Charge-Off has been effected by the Assuming Bank during or prior
to such period, and if, as a result of such occurrence, the Assuming Bank
recognizes any interest income for financial accounting purposes on that
Shared-Loss Loan, then “Recoveries” shall also include the portion of the total
amount of any such interest income recognized by the Assuming Bank which is
derived by multiplying:

(A) the total amount of any such interest income recognized by the Assuming Bank
during such period with respect to that Shared-Loss Loan as described above, by

(B) a fraction, the numerator of which is the aggregate principal amount
(excluding reversals or charge-offs of Accrued Interest) of all such Failed Bank
Charge-Offs/Write-Downs and Charge-Offs effected by the Assuming Bank with
respect to that Shared-Loss Loan plus the principal amount of that Shared-Loss
Loan that has not yet been charged-off but has been placed on nonaccrual status,
all of which occurred at any time prior to or during the period in which the
interest income referred to in subparagraph (II)(A) immediately above was
recognized, and the denominator of which is the total amount of principal
indebtedness (including all such prior Failed Bank Charge-Offs/Write-Downs and
Charge-Offs as described above) due from the Obligor on that Shared-Loss Loan as
of the end of such period;

provided, however, that the amount of any interest income included as Recoveries
for a particular Shared-Loss Loan shall not exceed the aggregate amount of (a)
Failed Bank Charge-Offs/Write-Downs, (b) Charge-Offs effected by the Assuming
Bank during or prior to the period in which the amount of Recoveries is being
determined, plus (c) any Reimbursable Expenses and Recovery Expenses paid to the
Assuming Bank pursuant to this Commercial Shared-Loss Agreement during or prior
to the period in which the amount of Recoveries is being determined, all with
respect to that particular Shared-Loss Loan; and, provided, further, that any
collections on any such Shared-Loss Loan that are not applied to reduce book
value of principal or recognized as interest income shall be applied pursuant to
subparagraph (I) above.

(III) Notwithstanding subparagraphs (I) and (II) above, the term “Recoveries”
shall not include: (a) any amounts paid to the Assuming Bank by the Receiver
pursuant to Section 2.1 of this Commercial Shared-Loss Agreement, (b) amounts
received with respect to Charge-Offs effected by the Assuming Bank after the
final Shared-Loss Quarter, (c) after the final Shared-Loss Quarter, income
received by the Assuming Bank from the operation of, and any gains recognized by
the Assuming Bank on the disposition of, Other Real Estate, Additional ORE or
Subsidiary ORE (such income and gains being hereinafter together referred to as
“ORE Income”), except to the extent that aggregate ORE Income exceeds the
aggregate expenses paid to third parties by or on behalf of the Assuming Bank
after the final Shared-Loss Quarter to manage, operate and maintain Other Real
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expenses being hereinafter referred to as “ORE Expenses”). In determining the
extent aggregate ORE Income exceeds aggregate ORE Expenses for any Recovery
Quarter as set forth immediately above in subparagraph (c), the Assuming Bank
will subtract (i) ORE Expenses paid to third parties during such Recovery
Quarter (provided, that, in the case of the final Recovery Quarter only, the
Assuming Bank will subtract ORE Expenses paid to third parties from the
beginning of the final Recovery Quarter up to the date the Assuming Bank is
required to deliver the final Quarterly Certificate pursuant to this Commercial
Shared-Loss Agreement) from (ii) ORE Income received during such Recovery
Quarter, to calculate net ORE income (“Net ORE Income”) for that Recovery
Quarter. If the amount of Net ORE Income so calculated for a Recovery Quarter is
positive, such amount shall be reported as Recoveries on the Quarterly
Certificate for such Recovery Quarter. If the amount of Net ORE Income so
calculated for a Recovery Quarter is negative (“Net ORE Loss Carryforward”),
such amount shall be added to any ORE Expenses paid to third parties in the next
succeeding Recovery Quarter, which sum shall then be subtracted from ORE Income
for that next succeeding Recovery Quarter, for the purpose of determining the
amount of Net ORE Income (or, if applicable, Net ORE Loss Carryforward) for that
next succeeding Recovery Quarter. If, as of the end of the final Recovery
Quarter, a Net ORE Loss Carryforward exists, then the amount of the Net ORE Loss
Carryforward that does not exceed the aggregate amount of Net ORE Income
reported as Recoveries on Quarterly Certificates for all Recovery Quarters may
be included as a Recovery Expense on the Quarterly Certificate for the final
Recovery Quarter.

“Recovery Amount” has the meaning provided in Section 2.1(b)(ii) of this
Commercial Shared-Loss Agreement.

“Recovery Expenses” means, for any Recovery Quarter, the amount of actual,
reasonable and necessary out-of-pocket expenses (other than Capitalized
Expenditures) paid to third parties (other than Affiliates of the Assuming Bank)
by or on behalf of the Assuming Bank, as limited by Sections 3.2(c) and (d) of
Article III to this Commercial Shared-Loss Agreement, to recover amounts owed
with respect to (i) any Shared-Loss Asset as to which a Charge-Off was effected
prior to the end of the final Shared-Loss Quarter (provided that such amounts
were incurred no earlier than the date the first Charge-Off on such Shared-Loss
Asset could have been reflected on the Accounting Records of the Assuming Bank),
and (ii) Failed Bank Charge-Offs/Write-Downs (including, in each case, all costs
and expenses related to an Environmental Assessment and any other costs or
expenses related to any environmental conditions with respect to the Shared-Loss
Assets (it being understood that any remediation expenses for any such pollutant
or contaminant are not recoverable if in excess of $200,000 per Shared-Loss
Asset, without the Assuming Bank having obtained the prior consent of the
Receiver for such expenses); provided, that, so long as income with respect to a
Shared-Loss Loan is being prorated pursuant to the arithmetical formula in
subsection (II) of the definition of “Recoveries”, the term “Recovery Expenses”
shall not include that portion of any such expenses paid during such Recovery
Quarter to recover any amounts owed on that Shared-Loss Loan that is derived by:

subtracting (1) the product derived by multiplying:

(A) the total amount of any such expenses paid by or on behalf of the Assuming
Bank during such Recovery Quarter with respect to that Shared-Loss Loan, by

 
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(B) a fraction, the numerator of which is the aggregate principal amount
(excluding reversals or charge-offs of Accrued Interest) of all such Failed Bank
Charge-Offs/Write-Downs and Charge-Offs effected by the Assuming Bank with
respect to that Shared-Loss Loan plus the principal amount of that Shared-Loss
Loan that has not yet been charged-off but has been placed on nonaccrual status,
all of which occurred at any time prior to or during the period in which the
interest income referred to in subparagraph (II)(A) of the definition of
“Recoveries” was recognized, and the denominator of which is the total amount of
principal indebtedness (including all such prior Failed Bank
Charge-Offs/Write-Downs and Charge-Offs as described above) due from the Obligor
on that Shared-Loss Loan as of the end of such period;

from (2) the total amount of any such expenses paid during that Recovery Quarter
with respect to that Shared-Loss Loan.

“Recovery Quarter” has the meaning provided in Section 2.1(a)(ii) of this
Commercial Shared-Loss Agreement.

“Reimbursable Expenses” means, for any Shared-Loss Quarter, the amount of
actual, reasonable and necessary out-of-pocket expenses (other than Capitalized
Expenditures), paid to third parties (other than Affiliates of the Assuming
Bank) by or on behalf of the Assuming Bank, as limited by Sections 3.2(c) and
(d) of Article III of this Commercial Shared-Loss Agreement, to:

(i) recover amounts owed with respect to any Shared-Loss Asset as to which a
Charge-Off has been effected prior to the end of the final Shared-Loss Quarter
(provided that such amounts were incurred no earlier than the date the first
Charge-Off on such Shared-Loss Asset could have been reflected on the Accounting
Records of the Assuming Bank) and recover amounts owed with respect to Failed
Bank Charge-Offs/Write-Downs (including, in each case, all costs and expenses
related to an Environmental Assessment and any other costs or expenses related
to any environmental conditions with respect to the Shared-Loss Assets (it being
understood that any such remediation expenses for any such pollutant or
contaminant are not recoverable if in excess of $200,000 per Shared-Loss Asset,
without the Assuming Bank having obtained the prior consent of the Receiver for
such expenses); provided, that, so long as income with respect to a Shared-Loss
Loan is being pro-rated pursuant to the arithmetical formula in subsection (II)
of the definition of “Recoveries”, the term “Reimbursable Expenses” shall not
include that portion of any such expenses paid during such Shared-Loss Quarter
to recover any amounts owed on that Shared-Loss Loan that is derived by:

subtracting (1) the product derived by multiplying:

(A) the total amount of any such expenses paid by or on behalf of the Assuming
Bank during such Shared-Loss Quarter with respect to that Shared-Loss Loan, by

 
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(B) a fraction, the numerator of which is the aggregate principal amount
(excluding reversals or charge-offs of Accrued Interest) of all such Failed Bank
Charge-Offs/Write-Downs and Charge-Offs effected by the Assuming Bank with
respect to that Shared-Loss Loan plus the principal amount of that Shared-Loss
Loan that has not yet been charged-off but has been placed on nonaccrual status,
all of which occurred at any time prior to or during the period in which the
interest income referred to in subparagraph (II)(A) of the definition of
“Recoveries” was recognized, and the denominator of which is the total amount of
principal indebtedness (including all such prior Failed Bank
Charge-Offs/Write-Downs and Charge-Offs as described above) due from the Obligor
on that Shared-Loss Loan as of the end of such period;

from (2) the total amount of any such expenses paid during that Shared-Loss
Quarter with respect to that Shared-Loss Loan; and

(ii) manage, operate or maintain Other Real Estate, Additional ORE or Subsidiary
ORE less the amount of any income received by the Assuming Bank during such
Shared-Loss Quarter with respect to such Other Real Estate, Additional ORE or
Subsidiary ORE (which resulting amount under this clause (ii) may be negative).

“Review Board” has the meaning provided in Section 2.1(f)(i) of this Commercial
Shared-Loss Agreement.

“Shared-Loss Amount” has the meaning provided in Section 2.1(b)(i) of this
Commercial Shared-Loss Agreement.

“Shared-Loss Asset Repurchase Price” means, with respect to any Shared-Loss
Asset, the principal amount thereof plus any other fees or penalties due from an
Obligor (including, subject to the limitations discussed below, the amount of
any Accrued Interest) stated on the Accounting Records of the Assuming Bank, as
of the date as of which the Shared-Loss Asset Repur­chase Price is being
determined (regardless, in the case of a Shared-Loss Loan, of the Legal Balance
thereof) plus all Reimbursable Expenses and Recovery Expenses incurred up to and
through the date of consummation of purchase of such Shared-Loss Asset;
provided, that (i) in the case of a Shared-Loss Loan there shall be excluded
from such amount the amount of any Accrued Interest accrued on or with respect
to such Shared-Loss Loan prior to the ninety (90)-day period ending on the day
prior to the purchase date determined pursuant to Sections 2.1(e)(i) or
2.1(e)(iii) of this Commercial Shared-Loss Agreement, except to the extent such
Accrued Interest was included in the Book Value of such Shared-Loss Loan, and
(ii) any collections on a Shared-Loss Loan received by the Assuming Bank after
the purchase date applicable to such Shared-Loss Loan shall be applied (without
duplication) to reduce the Shared-Loss Asset Repurchase Price of such
Shared-Loss Loan on a dollar-for-dollar basis. For purposes of determining the
amount of unpaid interest which accrued during a given period with respect to a
variable-rate Shared-Loss Loan, all collections of interest shall be deemed to
be applied to unpaid interest in the chronological order in which such interest
accrued.

 
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“Shared-Loss Assets” means Shared-Loss Loans, Other Real Estate purchased by the
Assuming Bank, Additional ORE, Subsidiary ORE and Capitalized Expenditures, but
does not include Shared Loss MTM Assets.

“Shared-Loss Loan Commitment” means:

(i) any Commitment to make a further extension of credit or to make a further
advance with respect to an existing Shared-Loss Loan; and

(ii) any Shared-Loss Loan Commitment (described in subparagraph (i) immediately
preceding) with respect to which the Assuming Bank has made a Permitted
Amendment.

“Shared-Loss Loan Commitment Advance” means an advance pursuant to a Shared-Loss
Loan Commitment with respect to which the Assuming Bank has not made a Permitted
Advance.

“Shared-Loss Loans” means:

(i)(A) Loans purchased by the Assuming Bank pursuant to the Purchase and
Assumption Agreement set forth on Exhibit 4.15(b) to the Purchase and Assumption
Agreement, (B) New Shared-Loss Loans purchased by the Assuming Bank pursuant to
the Purchase and Assumption Agreement, (C) Permitted Advances and (D)
Shared-Loss Loan Commitment Advances, if any; provided, that Shared-Loss Loans
shall not include Loans, New Shared-Loss Loans, Permitted Advances and
Shared-Loss Loan Commitment Advances with respect to which an Acquired
Subsidiary, or a constituent Subsidiary thereof, is an Obligor; (E) Loans owned
by any Subsidiary which are not Shared-Loss Loans under the Single Family
Shared-Loss Agreement; and (F) Consumer Loans; and

(ii) any Shared-Loss Loans (described in subparagraph (i) immediately preceding)
with respect to which the Assuming Bank has made a Permitted Amendment.

“Shared-Loss MTM Assets” means those securities and other assets listed on
Exhibit 4.15(C).

“Shared-Loss Payment Trigger” means when the sum of the Cumulative Loss Amount
under the Single Family Shared-Loss Agreement and the cumulative Net Charge-Offs
under this Commercial Shared-Loss Agreement, exceeds the First Loss Tranche.  If
the First Loss Tranche is zero or a negative number, the Shared-Loss Payment
Trigger shall be deemed to have been reached upon Bank Closing.

“Shared-Loss Quarter” has the meaning provided in Section 2.1(a)(i) of this
Commercial Shared-Loss Agreement.

“Stated Threshold” means total losses under the shared loss agreements in the
amount of $303,000,000.00.

 
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“Subsidiary ORE” means all assets owned by ORE Subsidiaries that would
constitute Additional ORE if such assets were on the books of the Assuming Bank.

“Termination Date” means the eighth (8th) anniversary of the Commencement Date.

“Third-Party Servicer” means any servicer appointed from time to time by the
Assuming Bank or any Affiliate of the Assuming Bank to service the Shared-Loss
Assets on behalf of the Assuming bank, the identity of which shall be given to
the Receiver prior to or concurrent with the appointment thereof.

ARTICLE II -- SHARED-LOSS ARRANGEMENT

2.1           Shared-Loss Arrangement.

(a)           Quarterly Certificates. (i) Not later than thirty (30) days after
the end of each Calendar Quarter from and including the initial Calendar Quarter
to and including the Calendar Quarter in which the Applicable Anniversary of the
Commencement Date falls (each of such Calendar Quarters being referred to herein
as a “Shared-Loss Quarter”), the Assuming Bank shall deliver to the Receiver a
certificate, signed by the Assuming Bank’s chief executive officer and its chief
financial officer, setting forth in such form and detail as the Receiver may
specify (a “Quarterly Certificate”):

(A)           the amount of Charge-Offs, the amount of Recoveries and the amount
of Net Charge-Offs (which amount may be negative) during such Shared-Loss
Quarter with respect to the Shared-Loss Assets (and for Recoveries, with respect
to the Assets for which a charge-off was effected by the Failed Bank prior to
Bank Closing); and

(B)           the aggregate amount of Reimbursable Expenses (which amount may be
negative) during such Shared-Loss Quarter; and

(C)           net realized loss on the Shared Loss MTM Assets determined
pursuant to FAS 115, expressed as a positive number (MTM Net Realized Loss), or
net realized gain on the Shared Loss MTM assets, expressed as a negative number
(MTM Net Realized Gain); and

(D)           any other than temporary impairment of the Shared Loss MTM Assets,
determined pursuant to FAS 115, expressed as a positive number (“OTTI Loss”) or
reversals of OTTI Loss, expressed as a negative number (for the avoidance of
doubt, normal and customary unrealized mark-to-market changes by reason of the
application of fair value accounting do not qualify for loss sharing payments).

 
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(ii)           Not later than thirty (30) days after the end of each Calendar
Quarter from and including the first Calendar Quarter following the final
Shared-Loss Quarter to and including the Calendar Quarter in which the
Termination Date falls (each of such Calendar Quarters being referred to herein
as a “Recovery Quarter”), the Assuming Bank shall deliver to the Receiver a
Quarterly Certificate setting forth, in such form and detail as the Receiver may
specify

(A)           the amount of Recoveries and Recovery Expenses during such
Recovery Quarter. On the Quarterly Certificate for the first Recovery Quarter
only, the Assuming Bank may report as a separate item, in such form and detail
as the Receiver may specify, the aggregate amount of any Reimbursable Expenses
that: (a) were incurred prior to or during the final Shared-Loss Quarter, and
(b) had not been included in any Quarterly Certificate for any Shared-Loss
Quarter because they had not been actually paid by or on behalf of the Assuming
Bank (in accordance with the terms of this Commercial Shared-Loss Agreement)
during any Shared-Loss Quarter and (c) were actually paid by or on behalf of the
Assuming Bank (in accordance with the terms of this Commercial Shared-Loss
Agreement) during the first Recovery Quarter; and

(B)           net realized gain on the Shared Loss MTM Assets.

(b)           Payments With Respect to Shared-Loss Assets.

(i)           For purposes of this Section 2.1(b), the Assuming Bank shall
initially record the Shared-Loss Assets on its Accounting Records at Book Value,
and initially record the Shared Loss MTM Assets on its Accounting Records at
Fair Value, and adjust such amounts as such values may change after the Bank
Closing. If the amount of all Net Charge-Offs during any Shared-Loss Quarter
plus Reimbursable Expenses, plus  MTM Net Realized Gain or MTM Net Realized
Loss, plus OTTI Loss during such Shared-Loss Quarter (the “Shared-Loss Amount”)
is positive, then, except as provided in Sections 2.1(c) and (e) below, and
subject to the provisions of Section 2.1(b)(vi) below, not later than fifteen
(15) days after the date on which the Receiver receives the Quarterly
Certificate with respect to such Shared-Loss Quarter, the Receiver shall pay to
the Assuming Bank an amount equal to eighty percent (80%) of the Shared-Loss
Amount for such Shared-Loss Quarter. If the Shared-Loss Amount during any
Shared-Loss Quarter is negative, the Assuming Bank shall pay to the Receiver an
amount equal to eighty percent (80%) of the Shared-Loss Amount for such
Shared-Loss Quarter, which payment shall be delivered to the Receiver together
with the Quarterly Certificate for such Shared-Loss Quarter.  When the
cumulative Shared-Loss Amounts for all Shared-Loss Quarters plus the Cumulative
Loss Amount under the Single Family Shared-Loss Agreement equals or exceeds the
Stated Threshold, the Receiver shall pay to the Assuming Bank an amount equal to
ninety-five percent ((95%) of the Shared-Loss Amount for each Shared-Loss
Quarter, until such time as the cumulative Shared-Loss Amount for all
Shared-Loss Quarters is less than the Stated Threshold, when the percentage
shall revert back to eighty percent (80%).

(ii)           If the amount of gross Recoveries during any Recovery Quarter
less Recovery Expenses during such Recovery Quarter plus net realized gains or
reversals of OTTI Loss on Shared Loss MTM Assets (the “Recovery Amount”) is
positive, then, simultaneously with its delivery of the Quarterly Certificate
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Assuming Bank shall pay to the Receiver an amount equal to eighty percent (80%)
of the Recovery Amount for such Recovery Quarter. If the Recovery Amount is
negative, then such negative amount shall be subtracted from the amount of gross
Recoveries during the next succeeding Recovery Quarter in determining the
Recovery Amount in such next succeeding Recovery Quarter; provided, that this
Section 2.1(b)(ii) shall operate successively in the event that the Recovery
Amount (after giving effect to this Section 2.1(b)(ii)) in such next succeeding
Recovery Quarter is negative. The Assuming Bank shall specify, in the Quarterly
Certificate for the final Recovery Quarter, the aggregate amount for all
Recovery Quarters only, as of the end of, and including, the final Recovery
Quarter of (A) Recoveries plus net realized gains or reversals of OTTI Loss on
Shared Loss MTM Assets (“Aggregate Recovery Period Recoveries”), (B) Recovery
Expenses (“Aggregate Recovery Expenses”), and (C) only those Recovery Expenses
that have been actually “offset” against Aggregate Recovery Period Recoveries
(including those so “offset” in that final Recovery Quarter) (“Aggregate Offset
Recovery Expenses”); as used in this sentence, the term “offset” means the
amount that has been applied to reduce gross Recoveries in any Recovery Quarter
pursuant to the methodology set forth in this Section 2.1(b)(ii).  If, at the
end of the final Recovery Quarter the amount of Aggregate Recovery Expenses
exceeds the amount of Aggregate Recovery Period Recoveries, the Receiver shall
have no obligation to pay to the Assuming Bank all or any portion of such
excess. Subsequent to the Assuming Bank’s calculation of the Recovery Amount (if
any) for the final Recovery Quarter, the Assuming Bank shall also show on the
Quarterly Certificate for the final Recovery Quarter the results of the
following three mathematical calculations: (i) Aggregate Recovery Period
Recoveries minus Aggregate Offset Recovery Expenses; (ii) Aggregate Recovery
Expenses minus Aggregate Offset Recovery Expenses; and (iii) the lesser of the
two amounts calculated in (i) and (ii) immediately above (“Additional Recovery
Expenses”) multiplied by 80% (the amount so calculated in (iii) being defined as
the “Additional Recovery Expense Amount”). If the Additional Recovery Expense
Amount is greater than zero, then the Assuming Bank may request in the Quarterly
Certificate for the final Recovery Quarter that the Receiver reimburse the
Assuming Bank the amount of the Additional Recovery Expense Amount and the
Receiver shall pay to the Assuming Bank the Additional Recovery Expense Amount
within fifteen (15) days after the date on which the Receiver receives that
Quarterly Certificate. On the Quarterly Certificate for the final Recovery
Quarter only, the Assuming Bank may include, in addition to any Recovery
Expenses for that Recovery Quarter that were paid by or on behalf of the
Assuming Bank in that Recovery Quarter, those Recovery Expenses that: (a) were
incurred prior to or during the final Recovery Quarter, and (b) had not been
included in any Quarterly Certificate for any Recovery Quarter because they had
not been actually paid by or on behalf of the Assuming Bank (in accordance with
the terms of this Commercial Shared-Loss Agreement) during any Recovery Quarter,
and (c) were actually paid by or on behalf of the Assuming Bank (in accordance
with the terms of this Commercial Shared-Loss Agreement) prior to the date the
Assuming Bank is required to deliver that final Quarterly Certificate to the
Receiver under the terms of Section 2.1(a)(ii).

(iii)           With respect to each Shared-Loss Quarter and Recovery Quarter,
collections by or on behalf of the Assuming Bank on any charge-off effected by
the Failed Bank prior to Bank Closing on an Asset other than a Shared-Loss Asset
or Shared-Loss MTM Assets shall be reported as Recoveries under this Section 2.1
only to the extent such collections exceed the Book Value of such Asset, if any.
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which collections by or on behalf of the Assuming Bank on such Asset are applied
to both Book Value and to a charge-off effected by the Failed Bank prior to Bank
Closing, the amount of expenditures incurred by or on behalf of the Assuming
Bank attributable to the collection of any such Asset, that shall be considered
a Reimbursable Expense or a Recovery Expense under this Section 2.1 will be
limited to a proportion of such expenditures which is equal to the proportion
derived by dividing (A) the amount of collections on such Asset applied to a
charge-off effected by the Failed Bank prior to Bank Closing, by (B) the total
collections on such Assets.

(iv)           If the Assuming Bank has duly specified an amount of Reimbursable
Expenses on the Quarterly Certificate for the first Recovery Quarter as
described above in the last sentence of Section 2.1(a)(ii), then, not later than
fifteen (15) days after the date on which the Receiver receives that Quarterly
Certificate, the Receiver shall pay to the Assuming Bank an amount equal to
eighty percent (80%) (or, if the Cumulative Loss Amount under the Single Family
Shared-Loss Agreement plus the cumulative Shared-Loss Amount for all Shared-Loss
Quarters equals or exceeds the Stated Threshold, ninety-five percent (95%)) of
the amount of such Reimbursable Expenses.

(v)           If the First Loss Tranche as determined under the Purchase and
Assumption Agreement is a positive number, Receiver has no obligation to make
payment for any Shared Loss Quarters until the Shared-Loss Payment Trigger is
satisfied.

(c)           Limitation on Shared-Loss Payment. The Receiver shall not be
required to make any payments pursuant to this Section 2.1 with respect to any
Charge-Off of a Shared-Loss Asset that the Receiver or the Corporation
determines, based upon the Examination Criteria, should not have been effected
by the Assuming Bank; provided, (x) the Receiver must provide notice to the
Assuming Bank detailing the grounds for not making such payment, (y) the
Receiver must provide the Assuming Bank with a reasonable opportunity to cure
any such deficiency and (z) (1) to the extent curable, if cured, the Receiver
shall make payment with respect to any properly effected Charge-Off and (2) to
the extent not curable, the Receiver shall make a payment as to all Charge-Offs
(or portion of Charge-Offs) that were effected which would have been payable as
a Charge-Off if the Assuming Bank had properly effected such Charge-Off. In the
event that the Receiver does not make any payments with respect to any
Charge-Off of a Shared-Loss Asset pursuant to this Section 2.1 or determines
that a payment was improperly made, the Assuming Bank and the Receiver shall,
upon final resolution, make such accounting adjustments and payments as may be
necessary to give retroactive effect to such corrections.

(d)           Sale of, or Additional Advances or Amendments with Respect to,
Shared-Loss Loans and Administration of Related Loans. No Shared-Loss Loan shall
be treated as a Shared-Loss Asset pursuant to this Section 2.1 (i) if the
Assuming Bank sells or otherwise transfers such Shared-Loss Loan or any interest
therein (whether with or without recourse) to any Person, (ii) after the
Assuming Bank makes any additional advance, commitment or increase in the amount
of a commitment with respect to such Shared-Loss Loan that does not constitute a
Permitted Advance or a Shared-Loss Loan Commitment Advance, (iii) after the
Assuming Bank makes any amendment, modification, renewal or extension to such
Shared-Loss Loan that does not constitute a Permitted Amendment, or (iv) after
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Bank has managed, administered or collected any “Related Loan” (as such term is
defined in Section 3.4 of Article III of this Commercial Shared-Loss Agreement)
in any manner which would have the effect of increasing the amount of any
collections with respect to the Related Loan to the detriment of such
Shared-Loss Asset to which such loan is related; provided, that  any such
Shared-Loss Loan that has been the subject of Charge-Offs prior to the taking of
any action described in clause (i), (ii), or  (iii) or (iv) of this Section
2.1(d) by the Assuming Bank shall be treated as a Shared-Loss Asset pursuant to
this Section 2.1 solely for the purpose of treatment of Recoveries on such
Charge-Offs until such time as the amount of Recoveries with respect to such
Shared-Loss Asset equals such Charge-Offs.

  (e)           Option to Purchase.

                      (i)           In the event that the Assuming Bank
determines that there is a substantial likelihood that continued efforts to
collect a Shared-Loss Asset or an Asset for which a charge-off was effected by
the Failed Bank with, in either case, a Legal Balance of $500,000 or more on the
Accounting Records of the Assuming Bank will result in an expenditure, after
Bank Closing, of funds by on behalf of the Assuming Bank to a third party for a
specified purpose (the expenditure of which, in its best judgment, will maximize
collections), which do not constitute Reimbursable Expenses or Recovery
Expenses, and such expenses will exceed ten percent (10%) of the then book value
thereof as reflected on the Accounting Records of the Assuming Bank, the
Assuming Bank shall (i) promptly so notify the Receiver and (ii) request that
such expenditure be treated as a Reimbursable Expense or Recovery Expense for
purposes of this Section 2.1. (Where the Assuming Bank determines that there is
a substantial likelihood that the previously mentioned situation exists with
respect to continued efforts to collect a Shared-Loss Asset or an Asset for
which a charge-off was effected by the Failed Bank with, in either case, a Legal
Balance of less than $1,000,000 on the Accounting Records of the Assuming Bank,
the Assuming Bank may so notify the Receiver and request that such expenditure
be treated as a Reimbursable Expense or Recovery Expense.) Within thirty (30)
days after its receipt of such a notice, the Receiver will advise the Assuming
Bank of its consent or denial, that such expenditures shall be treated as a
Reimbursable Expense or Recovery Expense, as the case may be. Notwithstanding
the failure of the Receiver to give its consent with respect to such
expenditures, the Assuming Bank shall continue to administer such Shared-Loss
Asset in accordance with Section 2.2, except that the Assuming Bank shall not be
required to make such expenditures. At any time after its receipt of such a
notice and on or prior to the Termination Date the Receiver shall have the right
to purchase such Shared-Loss Asset or Asset as provided in Section 2.1(e)(iii),
notwithstanding any consent by the Receiver with respect to such expenditure.
 

(ii)            During the period prior to the Termination Date, the Assuming
Bank shall notify the Receiver within fifteen (15) days after any of the
following becomes fully or partially charged-off:

(A) a Shared-Loss Loan having a Legal Balance (or, in the case of more than one
(1) Shared-Loss Loan made to the same Obligor, a combined Legal Balance) of
$500,000 or more in circumstances in which the legal claim against the relevant
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(B) a Shared-Loss Loan to a director, an “executive officer” as defined in 12
C.F.R.  215.2(d), a “principal shareholder” as defined in 12 C.F.R.  215.2(l),
or an Affiliate of the Assuming Bank.

(iii)           If the Receiver determines in its discretion that the Assuming
Bank is not diligently pursuing collection efforts with respect to any
Shared-Loss Asset which has been fully or partially charged-off or written-down
(including any Shared-Loss Asset which is identified or required to be
identified in a notice pursuant to Section 2.1(e)(ii)) or any Asset for which
there exists a Failed Bank Charge-Off/Write-Down, the Receiver may at its
option, exercisable at any time on or prior to the Termination Date, require the
Assuming Bank to assign, transfer and convey such Shared-Loss Asset or Asset to
and for the sole benefit of the Receiver for a price equal to the Shared-Loss
Asset Repurchase Price thereof less the Related Liability Amount with respect to
any Related Liabilities related to such Shared-Loss Asset or Asset.

(iv)           Not later than ten (10) days after the date upon which the
Assuming Bank receives notice of the Receiver’s intention to purchase or require
the assignment of any Shared-Loss Asset or Asset pursuant to Section 2.1(e)(i)
or (iii), the Assuming Bank shall transfer to the Receiver such Shared-Loss
Asset or Asset and any Credit Files relating thereto and shall take all such
other actions as may be necessary and appropriate to adequately effect the
transfer of such Shared-Loss Asset or Asset from the Assuming Bank to the
Receiver. Not later than fifteen (15) days after the date upon which the
Receiver receives such Shared-Loss Asset or Asset and any Credit Files relating
thereto, the Receiver shall pay to the Assuming Bank an amount equal to the
Shared-Loss Asset Repurchase Price of such Shared-Loss Asset or Asset less the
Related Liability Amount.

(v)           The Receiver shall assume all Related Liabilities with respect to
any Shared-Loss Asset or Asset set forth in the notice described in Section
2.1(e)(iv).

(f)           Dispute Resolution.

(i) (A) Any dispute as to whether a Charge-Off of a Shared-Loss Asset was made
in accordance with Examination Criteria shall be resolved by the Assuming Bank’s
Chartering Authority. (B) With respect to any other dispute arising under the
terms of this Commercial Shared-Loss Agreement which the parties hereto cannot
resolve after having negotiated such matter, in good faith, for a thirty (30)
day period, other than a dispute the Corporation is not permitted to submit to
arbitration under the Administrative Dispute Resolution Act of 1996 (“ADRA”), as
amended, such other dispute shall be resolved by determination of a review board
(a “Review Board”) established pursuant to Section 2.1(f). Any Review Board
under this Section 2.1(f) shall follow the provisions of the Federal Arbitration
Act and shall follow the provisions of the ADRA. (C) Any determination by the
Assuming Bank’s Chartering Authority or by a Review Board shall be conclusive
and binding on the parties hereto and not subject to further dispute, and
judgment may be entered on said determination in accordance with applicable
arbitration law in any court having jurisdiction thereof.

 
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(ii)           A Review Board shall consist of three (3) members, each of whom
shall have such expertise as the Corporation and the Assuming Bank agree is
relevant. As appropriate, the Receiver or the Corporation (the “FDIC Party”)
will select one member, one member will be selected by the Assuming Bank and the
third member (the “Neutral Member”) will be selected by the other two members.
The member of the Review Board selected by a party may be removed at any time by
such party upon two (2) days’ written notice to the other party of the selection
of a replacement member. The Neutral Member may be removed by unanimous action
of the members appointed by the FDIC Party and the Assuming Bank after two (2)
days’ prior written notice to the FDIC Party and the Assuming Bank of the
selection of a replacement Neutral Member.  In addition, if a Neutral Member
fails for any reason to serve or continue to serve on the Review Board, the
other remaining members shall so notify the parties to the dispute and the
Neutral Member in writing that such Neutral Member will be replaced, and the
Neutral Member shall thereafter be replaced by the unanimous action of the other
remaining members within twenty (20) business days of that notification.

(iii)           No dispute may be submitted to a Review Board by any of the
parties to this Commercial Shared-Loss Agreement unless such party has provided
to the other party a written notice of dispute (“Notice of Dispute”). During the
forty-five (45)-day period following the providing of a Notice of Dispute, the
parties to the dispute will make every effort in good faith to resolve the
dispute by mutual agreement. As part of these good faith efforts, the parties
should consider the use of less formal dispute resolution techniques, as judged
appropriate by each party in its sole discretion. Such techniques may include,
but are not limited to, mediation, settlement conference, and early neutral
evaluation. If the parties have not agreed to a resolution of the dispute by the
end of such forty-five (45)-day period, then, subject to the discretion of the
Corporation and the written consent of the Assuming Bank as set forth in Section
2.1(f)(i)(B) above, on the first day following the end of such period, the FDIC
Party and the Assuming Bank shall notify each other of its selection of its
member of the Review Board and such members shall be instructed to promptly
select the Neutral Member of the Review Board. If the members appointed by the
FDIC Party and the Assuming Bank are unable to promptly agree upon the initial
selection of the Neutral Member, or a timely replacement Neutral Member as set
forth in Section 2.1(f)(ii) above, the two appointed members shall apply to the
American Arbitration Association (“AAA”), and such Neutral Member shall be
appointed in accordance with the Commercial Arbitration Rules of the AAA.

(iv)           The resolution of a dispute pursuant to this Section 2.1(f) shall
be governed by the Commercial Arbitration Rules of the AAA to the extent that
such rules are not inconsistent with this Section 2.1(f). The Review Board may
modify the procedures set forth in such rules from time to time with the prior
approval of the FDIC Party and the Assuming Bank.

(v)           Within fifteen (15) days after the last to occur of the final
written submissions of both parties, the presentation of witnesses, if any, and
oral presentations, if any, the Review Board shall adopt the position of one of
the parties and shall present to the parties a written award regarding the
dispute. The determination of any two (2) members of a Review Board will
constitute the determination of such Review Board.

(vi)           The FDIC Party and the Assuming Bank will each pay the fees and
expenses of the member of the Review Board selected by it. The FDIC Party and
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Bank will share equally the fees and expenses of the Neutral Member. No such
fees or expenses incurred by or on behalf of the Assuming Bank shall be subject
to reimbursement by the FDIC Party under this Commercial Shared-Loss Agreement
or otherwise.

(vii)           Each party will bear all costs and expenses incurred by it in
connection with the submission of any dispute to a Review Board. No such costs
or expenses incurred by or on behalf of the Assuming Bank shall be subject to
reimbursement by the FDIC Party under this Commercial Shared-Loss Agreement or
otherwise. The Review Board shall have no authority to award costs or expenses
incurred by either party to these proceedings.

                (viii)         Any dispute resolution proceeding held pursu­ant
to this Section 2.1(f) shall not be public. In addi­tion, each party and each
member of any Review Board shall strictly maintain the confidentiality of all
issues, dis­putes, arguments, positions and interpretations of any such
proceeding, as well as all information, attachments, enclosures, exhibits,
sum­maries, compilations, studies, analyses, notes, documents, statements,
schedules and other similar items associated therewith, except as the parties
agree in writing or such disclosure is required pursuant to law, rule or
regulation. Pursuant to ADRA, dispute resolution communications may not be
disclosed either by the parties or by any member of the Review board unless:

(1) all parties to the dispute resolution proceeding agree in writing;
(2) the communication has already been made public;
(3) the communication is required by statute, rule or regulation to be made
public; or
(4) a court determines that such testimony or disclosure is necessary to prevent
a manifest injustice, help establish a violation of the law or prevent harm to
the public health or safety, or of sufficient magnitude in the particular case
to outweigh the integrity of dispute resolution proceedings in general by
reducing the confidence of parties in future cases that their communications
will remain confidential.

(ix)           Any dispute resolution proceeding pursuant to this Section 2.1(f)
(whether as a matter of good faith negotiations, by resort to a Review Board, or
otherwise) is a compromise negotiation for purposes of the Federal Rules of
Evidence and state rules of evidence. The parties agree that all proceedings,
including any statement made or document prepared by any party, attorney or
other participants are privileged and shall not be disclosed in any subsequent
proceeding or document or construed for any purpose as an admission against
interest. Any document submitted and any statements made during any dispute
resolution proceeding are for settlement purposes only. The parties further
agree not to subpoena any of the members of the Review Board or any documents
submitted to the Review Board. In no event will the Neutral Member voluntarily
testify on behalf of any party.

(x)           No decision, interpretation, determination, analysis, statement,
award or other pronouncement of any Review Board shall constitute precedent as
regards any sub­sequent proceeding (whether or not such proceeding involves
dispute resolution under this Commercial Shared-Loss Agreement) nor shall any
Review Board be bound to follow any decision, interpreta­tion, determination,
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previous Review Board or any other previous dispute resolution panel which may
have convened in connection with a transaction involving other failed financial
institutions or Federal assistance transactions.

(xi)           The parties may extend any period of time in this Section 2.1(f)
by mutual agreement. Notwithstanding anything above to the contrary, no dispute
shall be submitted to a Review Board until each member of the Review Board, and
any substitute member, if applicable, agrees to be bound by the provisions of
this Section 2.1(f) as applicable to members of a Review Board. Prior to the
commencement of the Review Board proceedings, or, in the case of a substitute
Neutral Member, prior to the re-commencement of such proceedings subsequent to
that substitution, the Neutral Member shall provide a written oath of
impartiality.

(xii)           For the avoidance of doubt, and notwithstanding anything herein
to the contrary, in the event any notice of dispute is provided to a party under
this Section 2.1(g) prior to the Termination Date, the terms of this Commercial
Shared-Loss Agreement shall remain in effect with respect to any such items set
forth in such notice until such time as any such dispute with respect to such
item is finally resolved.

2.2           Administration of Shared-Loss Assets. The Assuming Bank shall at
all times prior to the Termination Date comply with the Rules Regarding the
Administration of Shared-Loss Assets as set forth in Article III of this
Commercial Shared-Loss Agreement.

2.3           Auditor Report; Right to Audit.

(a)           Within ninety (90) days after the end of each fiscal year from and
including the fiscal year during which Bank Closing falls to and including the
calendar year during which the Termination Date falls, the Assuming Bank shall
deliver to the Corporation and to the Receiver a report signed by its
independent public accountants stating that they have reviewed the terms of this
Commercial Shared-Loss Agreement and that, in the course of their annual audit
of the Assuming Bank’s books and records, nothing has come to their attention
suggesting that any computations required to be made by the Assuming Bank during
such calendar year by this Article II were not made by the Assuming Bank in
accordance herewith. In the event that the Assuming Bank cannot comply with the
preceding sentence, it shall promptly submit to the Receiver corrected
computations together with a report signed by its independent public accountants
stating that, after giving effect to such corrected computations, nothing has
come to their attention suggesting that any computations required to be made by
the Assuming Bank during such year by this Article II were not made by the
Assuming Bank in accordance herewith. In such event, the Assuming Bank and the
Receiver shall make all such accounting adjustments and payments as may be
necessary to give effect to each correction reflected in such corrected
computations, retroactive to the date on which the corresponding incorrect
computation was made.

(b)           The Assuming Bank shall perform on an annual basis an internal
audit of its compliance with the provisions of this Article II and shall provide
the Receiver and the Corporation with copies of the internal audit reports and
access to internal audit workpapers related to such internal audit.

 
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(c)           The Receiver or the Corporation may perform an audit to determine
the Assuming Bank’s compliance with the provisions of this Commercial
Shared-Loss Agreement, including this Article II, at any time by providing not
less than ten (10) Business Days prior written notice. The scope and duration of
any such audit shall be within the discretion of the Receiver or the
Corporation, as the case may be, but shall in no event be administered in a
manner that unreasonably interferes with the operation of the Assuming Bank’s
business. The Receiver or the Corporation, as the case may be, shall bear the
expense of any such audit. In the event that any corrections are necessary as a
result of such an audit, the Assuming Bank and the Receiver shall make such
accounting adjustments and payments as may be necessary to give retroactive
effect to such corrections.

2.4           Withholdings.  Notwithstanding any other provision in this Article
II, the Receiver, upon the direction of the Director (or designee) of the
Corporation’s Division of Resolutions and Receiverships, may withhold payment
for any amounts included in a Quarterly Certificate delivered pursuant to
Section 2.1, if, in its judgment, there is a reasonable basis under the terms of
this Commercial Shared-Loss Agreement for denying the eligibility of an item for
which reimbursement or payment is sought under such Section. In such event, the
Receiver shall provide a written notice to the Assuming Bank detailing the
grounds for withholding such payment. At such time as the Assuming Bank
demonstrates to the satisfaction of the Receiver that the grounds for such
withholding of payment, or portion of payment, no longer exist or have been
cured, then the Receiver shall pay the Assuming Bank the amount withheld which
the Receiver determines is eligible for payment, within fifteen (15) Business
Days. In the event the Receiver or the Assuming Bank elects to submit the issue
of the eligibility of the item for reimbursement or payment for determination
under the dispute resolution procedures of Section 2.1(f), then (i) if the
dispute is settled by the mutual agreement of the parties in accordance with
Section 2.1(f)(iii), the Receiver shall pay the amount withheld (to the extent
so agreed) within fifteen (15) Business Days from the date upon which the
dispute is determined by the parties to be resolved by mutual agreement, and
(ii) if the dispute is resolved by the determination of a Review Board, the
Receiver shall pay the amount withheld (to the extent so determined) within
fifteen (15) Business Days from the date upon which the Receiver is notified of
the determination by the Review Board of its obligation to make such payment.
Any payment by the Receiver pursuant to this Section 2.4 shall be made together
with interest on the amount thereof from the date the payment was agreed or
determined otherwise to be due, at the interest rate per annum determined by the
Receiver to be equal to the coupon equivalent of the three (3)-month U.S.
Treasury Bill Rate in effect as of the first Business Day of each Calendar
Quarter during which such interest accrues as reported in the Federal Reserve
Board’s Statistical Release for Selected Interest Rates H.15 opposite the
caption “Auction Average - 3-Month” or, if not so reported for such day, for the
next preceding Business Day for which such rate was so reported.

2.5           Books and Records.  The Assuming Bank shall at all times during
the term of this Commercial Shared-Loss Agreement keep books and records which
fairly present all dealings and transactions carried out in connection with its
business and affairs. Except as otherwise provided for in the Purchase and
Assumption Agreement or this Commercial Shared-Loss Agreement, all financial
books and records shall be kept in accor­dance with gen­erally accepted
accounting principles, consistently applied for the periods involved and in a
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such that information neces­sary to determine compliance with any requirement of
the Purchase and Assumption Agreement or this Commercial Shared-Loss Agreement
will be readily obtainable, and in a manner such that the purposes of the
Purchase and Assumption Agreement or this Commercial Shared-Loss Agreement may
be effectively accomplished. With­out the prior written approval of the
Corporation, the Assuming Bank shall not make any change in its accounting
prin­ciples adversely affecting the value of the Shared-Loss Assets except as
required by a change in generally accepted accounting principles. The Assuming
Bank shall notify the Corporation of any change in its accounting principles
affecting the Shared-Loss Assets which it believes are required by a change in
generally accepted accounting principles.

2.6           Information.  The Assuming Bank shall promptly pro­vide to the
Corporation such other information, including finan­cial statements and
computa­tions, relating to the perfor­mance of the provisions of the Purchase
and Assumption Agreement or otherwise relating to its business and affairs or
this Commercial Shared-Loss Agreement, as the Corporation or the Receiver may
request from time to time.

2.7            Tax Ruling.  The Assuming Bank shall not at any time, without the
Corporation’s prior written consent, seek a private letter ruling or other
determination from the Internal Revenue Service or otherwise seek to qualify for
any special tax treat­ment or benefits associated with any payments made by the
Corpo­ration pursuant to the Purchase and Assumption Agreement or this
Commercial Shared-Loss Agreement.

ARTICLE III -- RULES REGARDING THE ADMINISTRATION OF SHARED-LOSS
ASSETS AND SHARED-LOSS MTM ASSETS

3.1           Agreement with Respect to Administration. The Assuming Bank shall
(and shall cause any of its Affiliates to which the Assuming Bank transfers any
Shared-Loss Assets or Shared-Loss MTM Assets) to, or a Third Party Servicer to,
manage, administer, and collect the Shared-Loss Assets and Shared-Loss MTM
Assets while owned by the Assuming Bank or any Affiliate thereof during the term
of this Commercial Shared-Loss Agreement in accor­dance with the rules set forth
in this Article III (“Rules”). The Assuming Bank shall be responsible to the
Receiver and the Corporation in the performance of its duties hereunder and
shall provide to the Receiver and the Corporation such reports as the Receiver
or the Corporation reasonably deems advisable, including but not limited to the
reports required by Section 3.3 hereof, and shall permit the Receiver and the
Corporation at all times to monitor the Assuming Bank’s performance of its
duties hereunder.

3.2           Duties of the Assuming Bank with Respect to Shared-Loss Assets.

(a)  In performance of its duties under these Rules, the Assuming Bank shall:

(i) manage, administer, collect and effect Charge-Offs and Recoveries with
respect to each Shared-Loss Asset in a manner con­sis­tent with (A) usual and
prudent business and banking practices; (B) the Assuming Bank’s (or, in the case
a Third Party Servicer is engaged, the Third Party Servicer’s) practices and
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the then-effective written internal credit policy guidelines of the Assuming
Bank, with respect to the management, administration and collec­tion of and
taking of charge-offs and write-downs with respect to loans, other real estate
and repossessed collateral that do not constitute Shared Loss Assets;

(ii) exercise its best business judgment in managing, administering, collecting
and effecting Charge-Offs with respect to Shared-Loss Assets;

(iii) use its best efforts to maximize collections with respect to Shared-Loss
Assets and, if applicable for a particular Shared-Loss Asset, without regard to
the effect of maximizing collections on assets held by the Assuming Bank or any
of its Affiliates that are not Shared-Loss Assets;

(iv) adopt and implement accounting, reporting, record-keeping and similar
systems with respect to the Shared-Loss Assets, as provided in Section 3.4
hereof;

(v) retain sufficient staff to perform its duties hereunder;

(vi) provide written notification in accordance with Article IV of this
Commercial Shared-Loss Agreement immediately after the execution of any contract
pursuant to which any third party (other than an Affiliate of the Assuming Bank)
will manage, administer or collect any of the Shared-Loss Assets, together with
a copy of that contract.

(b)  Any transaction with or between any Affiliate of the Assuming Bank with
respect to any Shared-Loss Asset including, without limitation, the execution of
any contract pursuant to which any Affiliate of the Assuming Bank will manage,
administer or collect any of the Shared-Loss Assets, or any other action
involving self-dealing, shall be subject to the prior written approval of the
Receiver or the Corporation.

(c)  The following categories of expenses shall not be deemed to be Reimbursable
Expenses or Recovery Expenses:

(i)  Federal, State, or local income taxes and expenses related thereto;

 
(ii) salaries or other compensation and related benefits of Assuming Bank
employees and the employees of its Affiliates including, without limitation, any
bonus, commission or severance arrange­ments, training, payroll taxes, dues, or
travel- or relocation-related expenses,;

(iii) the cost of space occupied by the Assuming Bank, any Affiliate thereof and
their staff, the rental of and maintenance of furni­ture and equipment, and
expenses for data processing including the purchase or enhancement of data
processing systems;

(iv) except as otherwise provided herein, fees for accounting and other
independent professional consultants (other than consultants retained to assess
the presence, storage or release of any hazardous or toxic substance, or any
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respect to the collateral securing a Shared-Loss Loan that has been fully or
partially charged-off); provided, that for purposes of this Section 3.2(c)(iv),
fees of attorneys and appraisers engaged as necessary to assist in collections
with respect to Shared-Loss Assets shall not be deemed to be fees of other
independent consultants;

(v)  allocated portions of any other overhead or general and administrative
expense other than any fees relating to specific assets, such as appraisal fees
or environmental audit fees, for services of a type the Assuming Bank does not
normally perform internally;

(vi) any expense not incurred in good faith and with the same degree of care
that the Assuming Bank normally would exercise in the collection of troubled
assets in which it alone had an interest; and

(vii) any expense incurred for a product, service or activity that is of an
extravagant nature or design.

(d)  Subject to Section 3.7, the Assuming Bank shall not contract with third
parties to provide services the cost of which would be a Reimbursable Expense or
Recovery Expense if the Assuming Bank would have provided such services itself
if the relevant Shared-Loss Assets were not subject to the loss-sharing
provisions of Section 2.1 of this Commercial Shared-Loss Agreement.

3.3           Duties of the Assuming Bank with Respect to Shared-Loss MTM
Assets.

(a)  In performance of its duties under these Rules, the Assuming Bank shall:

(i) manage, administer, collect and each Shared-Loss MTM Asset in a manner
consistent with (A) usual and prudent business and banking practices; (B) the
Assuming Bank’s practices and procedures including, without limitation, the
then-effective written internal credit policy guidelines of the Assuming Bank,
with respect to the management, administration and collec­tion of similar assets
that are not Shared-Loss MTM Assets;

(ii) exercise its best business judgment in managing, administering, collecting
and effecting Charge-Offs with respect to Shared-Loss MTM Assets;

(iii) use its best efforts to maximize collections with respect to Shared-Loss
MTM Assets and, if applicable for a particular Shared-Loss MTM Asset, without
regard to the effect of maximizing collections on assets held by the Assuming
Bank or any of its Affiliates that are not Shared-Loss MTM Assets, provided
that, any sale of a Shared-Loss MTM Asset shall only be made with the prior
approval of the Receiver or the Corporation;

(iv) adopt and implement accounting, reporting, record-keeping and similar
systems with respect to the Shared-Loss MTM Assets, as provided in Section 3.4
hereof;

(v) retain sufficient staff to perform its duties hereunder;

 
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(vi) provide written notification in accordance with Article IV of this
Commercial Shared-Loss Agreement immediately after the execution of any contract
pursuant to which any third party (other than an Affiliate of the Assuming Bank)
will manage, administer or collect any of the Shared-Loss MTM Assets, together
with a copy of that contract.

(b)  Any transaction with or between any Affiliate of the Assuming Bank with
respect to any Shared-Loss MTM Asset including, without limitation, the
execution of any contract pursuant to which any Affiliate of the Assuming Bank
will manage, administer or collect any of the Shared-Loss Assets, or any other
action involving self-dealing, shall be subject to the prior written approval of
the Receiver or the Corporation.

(c)   The Assuming Bank shall not contract with third parties to provide
services the cost of which would be a Reimbursable Expense or Recovery Expense
if the Assuming Bank would have provided such services itself if the relevant
Shared-Loss Assets were not subject to the loss-sharing provisions of Section
2.1 of this Commercial Shared-Loss Agreement.

3.4           Records and Reports. The Assuming Bank shall establish and
maintain records on a separate general ledger, and on such subsidiary ledgers as
may be appropriate to account for the Shared-Loss Assets and the Shared-Loss MTM
Assets, in such form and detail as the Receiver or the Corporation may require,
to enable the Assuming Bank to prepare and deliver to the Receiver or the
Corporation such reports as the Receiver or the Corporation may from time to
time request regarding the Shared-Loss Assets, the Shared-Loss MTM Assets and
the Quarterly Certificates required by Section 2.1 of this Commercial
Shared-Loss Agreement.

3.5           Related Loans.

(a)           The Assuming Bank shall not manage, administer or collect any
“Related Loan” in any manner which would have the effect of increasing the
amount of any collections with respect to the Related Loan to the detriment of
the Shared-Loss Asset to which such loan is related. A “Related Loan” means any
loan or extension of credit held by the Assuming Bank at any time on or prior to
the end of the final Recovery Quarter that is: (i) made to the same Obligor with
respect to a Loan that is a Shared-Loss Asset or with respect to a Loan from
which Other Real Estate, Additional ORE or Subsidiary ORE derived, or (ii)
attributable to the same primary Obligor with respect to any Loan described in
clause (i) under the rules of the Assuming Bank’s Chartering Authority
concerning the legal lending limits of financial institutions organized under
its jurisdic­tion as in effect on the Commencement Date, as applied to the
Assuming Bank.

(b)           The Assuming Bank shall prepare and deliver to the Receiver with
the Quarterly Certificates for the Calendar Quarters ending June 30 and December
31 for all Shared-Loss Quarters and Recovery Quarters, a schedule of all Related
Loans which are commercial loans or commercial real estate loans with Legal
Balances of $500,000 or more on the Accounting Records of the Assuming Bank as
of the end of each such semi-annual period, and all other commercial loans or
commercial real estate loans attributable to the same Obligor on such loans of
$500,000 or more.

 
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3.6           Legal Action; Utilization of Special Receivership Powers. The
Assuming Bank shall notify the Receiver in writing (such notice to be given in
accordance with Article IV below and to include all relevant details) prior to
utilizing in any legal action any special legal power or right which the
Assuming Bank derives as a result of having acquired a Shared-Loss Asset from
the Receiver, and the Assuming Bank shall not utilize any such power unless the
Receiver shall have consented in writing to the proposed usage. The Receiver
shall have the right to direct such proposed usage by the Assuming Bank and the
Assuming Bank shall comply in all respects with such direction. Upon request of
the Receiver, the Assuming Bank will advise the Receiver as to the status of any
such legal action. The Assuming Bank shall immediately notify the Receiver of
any judgment in litigation involving any of the aforesaid special powers or
rights.

3.7           Third-Party Servicer.  The Assuming Bank may perform any of its
obligations and/or exercise any of its rights under this Commercial Shared-Loss
Agreement through or by one or more Third-Party Servicers, who may take actions
and make expenditures as if any such Third-Party Servicer was the Assuming Bank
hereunder (and, for the avoidance of doubt, such expenses incurred by any such
Third-Party Servicer on behalf of the Assuming Bank shall be Reimbursable
Expenses or Recovery Expenses, as the case may be, to the same extent such
expenses would so qualify if incurred by the Assuming Bank); provided, however,
that the use thereof by the Assuming Bank shall not release the Assuming Bank of
any obligation or liability hereunder.

ARTICLE IV -- PORTFOLIO SALE
 
4.1           Assuming Bank Portfolio Sales of Remaining Shared-Loss
Assets.  The Assuming Bank shall have the right with the concurrence of the
Receiver, commencing as of the first day of the third to last Shared-Loss
Quarter, to liquidate for cash consideration, in one or more transactions, all
or a portion of Shared-Loss Assets held by the Assuming Bank (“Portfolio
Sales”).  If the Assuming Bank exercises its option under this Section 4.1, it
must give thirty (30) days notice in writing to the Receiver setting forth the
details and schedule for the Portfolio Sale which shall be conducted by means of
sealed bid sales to third parties, not including any of the Assuming Bank’s
affiliates, contractors, or any affiliates of the Assuming Bank’s contractors.
 
4.2           Calculation of Sale Gain or Loss.  For Shared-Loss Assets gain or
loss on the sales under Section 4.1 will be calculated as the sale price
received by the Assuming Bank less the book value of the remaining Shared-Loss
Assets.
 

 
ARTICLE V -- LOSS-SHARING NOTICES GIVEN TO CORPORATION AND/OR RECEIVER
 
As a supplement to the notice provisions contained in Section 13.7 of the
Purchase and Assumption Agreement, any notice, request, demand, consent,
approval, or other communication (a “Notice”) given to the Corporation and/or
the Receiver in the loss-sharing context shall be given as follows:
 
5.1           With respect to a Notice under Section 2 and Sections 3.1-3.5 of
this Commercial Shared-Loss Agreement:
 

 
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Federal Deposit Insurance Corporation
Division of Resolutions and Receiverships
550 17th Street, N.W.
Washington, D.C.  20429
Attention: Assistant Director, Franchise and Asset Marketing
 
5.2           With respect to a Notice under Section 3.6 of this Commercial
Shared-Loss Agreement:
 
Federal Deposit Insurance Corporation Legal Division
1601 Bryan Street
Dallas, Texas 75201
Attention: Regional Counsel
 
with a copy to:
 
Federal Deposit Insurance Corporation Legal Division
550 17th Street, N.W.
Washington, D.C.  20429
Attention: Senior Counsel (Special Issues Group)
 

 
ARTICLE VI – MISCELLANEOUS
 

 
6.1    Expenses.  Except as otherwise expressly provided herein, all costs and
expenses incurred by a party hereto in connection with this Commercial
Shared-Loss Agreement shall be borne by such party whether or not the
transactions contemplated herein shall be consummated.
 
6.2            Successors and Assigns; Specific Performance.  All terms and
provisions of this Commercial Shared-Loss Agreement shall be binding upon and
shall inure to the benefit of the parties hereto only; provided, however, that,
Receiver may assign or otherwise transfer this Commercial Shared-Loss Agreement
(in whole or in part) to the Federal Deposit Insurance Corporation in its
corporate capacity without the consent of Assuming Bank.  Notwithstanding
anything to the contrary contained in this Commercial Shared-Loss Agreement,
except as is expressly permitted in this Section 6.2, Assuming Bank may not
assign or otherwise transfer this Commercial Shared-Loss Agreement (in whole or
in part) without the prior written consent of the Receiver, which consent may be
granted or withheld by the Receiver in its sole discretion, and any attempted
assignment or transfer in violation of this provision shall be void ab initio. 
For the avoidance of doubt, a merger or consolidation of the Assuming Bank with
and into another financial institution, the sale of all or substantially all of
the assets of the Assuming Bank to another financial institution constitutes the
transfer of this Commercial Shared-Loss Agreement which requires the consent of
the Receiver.
 

 
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6.3    Governing Law. This Commercial Shared-Loss Agreement shall be construed
in accordance with federal law, or, if there is no applicable federal law, the
laws of the State of New York, without regard to any rule of conflict of law
that would result in the application of the substantive law of any jurisdiction
other than the State of New York.
 
6.4    WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN OR TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF OR RELATING TO
OR IN CONNECTION WITH THIS COMMERCIAL SHARED-LOSS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
 
6.5    Captions. All captions and headings contained in this Commercial
Shared-Loss Agreement are for convenience of reference only and do not form a
part of, and shall not affect the meaning or interpretation of, this Commercial
Shared-Loss Agreement.
 
6.6            Entire Agreement; Amendments. This Commercial Shared-Loss
Agreement, along with the Single Family Shared-Loss Agreement and the Purchase
and Assumption Agreement, including the Exhibits and any other documents
delivered pursuant hereto, embody the entire agreement of the parties with
respect to the subject matter hereof, and supersede all prior representations,
warranties, offers, acceptances, agreements and understandings, written or oral,
relating to the subject matter herein. This Commercial Shared-Loss Agreement may
be amended or modified or any provision thereof waived only by a written
instrument signed by both parties or their respective duly authorized agents.
 
6.7           Severability. Whenever possible, each provision of this Commercial
Shared-Loss Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Commercial Shared-Loss
Agreement is held to be prohibited by or invalid, illegal or unenforceable under
applicable law, such provision shall be construed and enforced as if it had been
more narrowly drawn so as not to be prohibited, invalid, illegal or
unenforceable, and the validity, legality and enforceability of the remainder of
such provision and the remaining provisions of this Commercial Shared-Loss
Agreement shall not in any way be affected or impaired thereby.
 
6.8           No Third Party Beneficiary. This Commercial Shared-Loss Agreement
and the Exhibits hereto are for the sole and exclusive benefit of the parties
hereto and their respective permitted successors and permitted assigns and there
shall be no other third party beneficiaries, and nothing in Commercial
Shared-Loss Agreement or the Exhibits shall be construed to grant to any other
Person any right, remedy or claim under or in respect of this Commercial
Shared-Loss Agreement or any provision hereof.
 
6.9           Consent. Except as otherwise provided herein, when the consent of
a party is required herein, such consent shall not be unreasonably withheld or
delayed.
 

 
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6.10    Rights Cumulative. Except as otherwise expressly provided herein, the
rights of each of the parties under this Commercial Shared-Loss Agreement are
cumulative, may be exercised as often as any party considers appropriate and are
in addition to each such party’s rights under the Purchase and Sale Agreement
and any of the related agreements or under law. Except as otherwise expressly
provided herein, any failure to exercise or any delay in exercising any of such
rights, or any partial or defective exercise of such rights, shall not operate
as a waiver or variation of that or any other such right.
 

 
 
 

 

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