Exhibit 10.32

 

FHLBank

Topeka

 

Advance, Pledge & Security Agreement

(Blanket Pledge)

 

Institution:   TeamBank, N.A.

Address:       1 South Pearl

                     Paola, KS 66071

 

This Advance, Pledge & Security Agreement (Agreement) is made by and between the
Federal Home Loan Bank of Topeka (FHLBank) and the above-described institution
(Institution).

 

CONTENTS

 

 

DEFINITIONS

 

1.1

Defined Terms

 

 

ADVANCE AND OTHER INDEBTEDNESS

 

2.1

Advance Procedures: Demand Deposit Account

 

2.2

Estoppel

 

2.3

Obligation to Repay

 

2.4

Funding Commitments; Ineligibility

 

2.5

Stock Purchase

 

 

SECURITY AGREEMENT

 

3.1

Blanket Pledge; Required Collateral

 

3.2

Listed Collateral; Perfection

 

3.3

Listed Collateral; Deletion or Redelivery

 

3.4

Representations and Warranties

 

3.5

Reports, Audits and Access

 

3.6

FHLBank’s Responsibility as to Collateral

 

3.7

Application of Payments

 

 

DEFAULT; REMEDIES; POWER OF ATTORNEY

 

4.1

Events of Defaults; Acceleration

 

4.2

Remedies

 

4.3

Power of Attorney

 

4.4

Payment of Prepayments Charges

 

4.5

Default Rate

 

4.6

Sale of Collateral

 

 

MISCELLANEOUS

 

5.1

General Representations and Warranties

 

5.2

FIRREA Covenant

 

5.3

Good Faith; Liability of FHLBank

 

5.4

Assignment of Indebtedness

 

5.5

Discretion to Deny Advances

 

5.6

Access to FHLBank Records

 

5.7

Amendments; Waivers

 

5.8

Jurisdiction; Legal Fees

 

5.9

Applicable Law; Severability

 

5.10

Successors and Assigns

 

5.11

Notices

 

5.12

Content to Receive Information

 

5.13

Recorded Conversations

 

5.14

Entire Agreement

 

5.15

Counterparts

 

 

FHLBank and the Institution agree as follows:

 

DEFINITIONS

 

1.1                                 Defined Terms.  The following terms shall
have the following meanings:

 

a.               “Act” means the Federal Home Loan Bank Act, as amended, 12
U.S.C. 1421, et seq.

 

b.              “Advance” or “advances” means any and all loans or other
extensions of credit, including without limitation Interest Rate Exchange and
Option Transactions, letter of credit, credit enhancement obligations in
connection with acquired member assets, and guarantees or other arrangements
intended to facilitate transaction between the Institution and the third parties
(but excluding any obligations that FHLBank may now or hereafter have to honor
such as items or transfer orders under a depository or similar agreement between
the Institution and FHLBank), regardless of whether FHLBank’s obligations is
contingent upon the occurrence or nonoccurrence of any condition, and including
all loans or other extensions of credit by FHLBank to the Institution prior to
the date hereof.

 

c.               “Business Day” means any day that the Federal Reserve Bank of
Kansas City is open for business.

 

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d.              “Capital Stock” means all of the capital stock of FHLBank, of
any class or classes, owed by the Institution and all payments that have been or
hereafter are made on account of any subscription for such capital stock and all
unpaid dividends on such capital stock.

 

e.               “Collateral” means all assets and property, including the
proceeds thereof, assigned, transferred or pledged to FHLBank by the Institution
pursuant to Section 3.1 of the Agreement or otherwise.

 

f.                 “Commitment” or “Commitments” means any agreement under which
FHLBank is obligated to make an Advance to the Institution.

 

g.              “Confirmation” means a written or machine-readable electronic
transmission issued by FHLBank from time to time confirming an Advance,
including the notation of the Advance on the Institution’s demand deposit
account statement.

 

h.              “Member Products Policy” means the Member Products Policy of
FHLBank as published from time to time or, if FHLBank ceases to have a policy
with that title, any other policy or policies of FHLBank governing credit,
lending, collateral, pricing and acquired member assets.

 

i.                  “Eligible Collateral” means Collateral, other than Capital
Stock, which (1) qualifies as security for Advances under the terms and
conditions of the Act and the Regulations and satisfies the requirements that
may be established by FHLBank from time to time; and (2) is owned by the
Institution free and clear of any liens, encumbrances or interests other than
tie interest of FHLBank hereunder.

 

j.                  “Indebtedness” means all indebtedness of the Institution to
FHLBank, whether now outstanding or hereafter incurred, including all Advances
and any other sums owed by the Institution to FHLBank pursuant to any provision
hereof, and all other obligations and liabilities of the Institution to FHLBank.

 

k.               “Lending Value” means the value that FHLBank shall from time to
time, in its sole discretion, ascribe to the various types of Collateral.

 

l.                  “Listed Collateral” means all individual items of Collateral
which (1) the Institution has specifically identified as Collateral in a written
or electronic communication to FHLBank (including the description of any
individual item of Collateral in a financing statement or similar document); or
(2) the Institution has delivered or caused to be delivered to FHLBank or to a
bailee, custodian or agent acting on FHLBank’s behalf.

 

m.            “Regulations” means the regulations of the Federal Housing Finance
Board or its successor, as needed, 12 CFR Chapter IX.

 

n.              “Required Collateral Amount” means the aggregate dollar amount
that FHLBank may specify from time to time may increase or decrease the Required
Collateral Amount at any time.

 

o.              “Interest Rate Exchange and Option Transactions” or “Interest
Rate Exchange and Option Transactions” means any and all interest rate swaps,
interest rate caps, floors or collars, options, futures, forward contracts,
currency exchange transactions, or similar transactions entered into between
FHLBank and the Institution.

 

ADVANCES AND OTHER INDEBTEDNESS

 

2.1         Advances Procedures: Demand Deposit Account.   All advances are
subject to and governed by the Member Products Policy, which is incorporated in
and made part of this Agreement.  Periodically, the Institution may apply to
FHLBank for Advances in accordance with the procedures established by FHLBank. 
Unless otherwise agreed to in writing by FHLBank, each Advance shall be
evidenced by a Confirmation and shall be made by crediting a demand deposit
account of the Institution with FHLBank, and payments of interest, principal or
other amounts owed to FHLBank shall be made by debiting such account.  The
institution shall maintain sufficient available balances in the account to fund
all payments due to FHLBank.

 

2.2         Estoppel.  Failure of the Institution to deliver a written notice to
FHLBank specifying any disputed term or condition of an Advance within ten
(10) Business Days after FHLBank mails by first-class mail or transmits
electronically a Confirmation to the Institution shall constitute the agreement
and acknowledgment by the Institution that the terms and conditions of the
Advance as stated in the Confirmation are valid and are those that the
Institution requested and by which the Institution agreed to be bound.  The
Institution shall thereof be estopped from asserting any claim or defense with
respect to the repayment of such Advance and all interest, fees and other
charges thereon or in connection therewith.

 

2.3         Obligation to Repay.  The Institution unconditionally agrees to
repay all Advances and other indebtedness, together with all interest and any
fees, costs and expenses in connection therewith, at the applicable interest
rate per annum provided in the Confirmation pertaining thereto, all upon the
terms and conditions stated in the applicable Confirmation, FHLBank’s Member
product Policy for such type of Advance or Indebtedness and as otherwise
specified herein.  Accrued interest on each Advance shall be due and payable at
the time specified in FHLBank’s Member Product policy, Confirmation or as
otherwise specified in writing by FHLBank.

 

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2.4         Funding Commitments; Ineligibility.  In the event the Institution’s
access to Advances is restricted by any applicable law or regulatory directive,
FHLBank shall not fund outstanding Commitments to the Institution.  The
Institution shall immediately notify FHLBank if it becomes ineligible for
Advances under any applicable law or regulatory directive.

 

2.5         Stock Purchase.  The Institution unconditionally agrees that
whenever it receives an Advance or transacts any other business with FHLBank, it
shall purchase Capital Stock as and when required by FHLBank’s Capital Plan,
Member Product Policy, and any applicable laws, Regulations, resolutions of
FHLBank’s board of directors and provisions of FHLBank’s Organization
Certificate or bylaws, all as in effect at the time the Advance or other
transaction is entered into (or, if at that time FHLBank does not have a Capital
Plan, any other plans or policies of FHLBank governing Capital Stock and capital
structure).  The Institution authorizes FHLBank to effect purchase by exchanging
shares of classes of Capital Stock held by the Institution and/or debiting the
Institution’s accounts at FHLBank in accordance with such Capital plan, Member
Product Policy, and any applicable laws, Regulations, resolutions of FHLBank’s
board of directors and provisions of FHLBank’s Organization Certificate or
bylaws, as amended.

 

SECURITY AGREEMENT

 

3.1                                 Blanket Pledge; Required Collateral.

 

a.               As security for all present and future Indebtedness, the
Institution hereby assigns, transfers and pledges to FHLBank, and grants to
FHLBank a security interest in, all assets and properties now owned or hereafter
acquired by the Institution, wherever located, including, without limitation,
all (1) Capital Stock; (2) instruments (including without limitation, all notes,
promissory notes, and all other instruments evidencing a debt, and any mortgage,
deed of trust, title or other document securing a debt); (3) investment property
(including, without limitation, mortgage-backed securities, other securities,
share certificates or other participation interests in any securities trust, and
mortgage loan participation certificates); (4) chattel paper; (5) choses in
action; (6) general intangibles; (7) certificates of deposit; (8) accounts and
deposit accounts (including, without limitation, deposit accounts of the
Institution held by FHLBank; and (9) proceeds of all of the foregoing.

 

b.              The Institution shall at all time have granted FHLBank a
security interest in an amount of Eligible Collateral that has a Lending Value
at least equal to the Required Collateral Amount applicable to the Institution.

 

c.               While the Institution may, except as provided below, retain the
documents evidencing any Collateral it has pledged to FHLBank, it is
specifically understood and agreed that the Institution holds such documents
solely for the benefit, and subject to the direction and control, of FHLBank. 
The Institution shall at all times retain (or deliver to a custodian or other
bailee to hold for the exclusive benefit of the Institution) the original,
executed notes, mortgages and any assignments and amendments thereof for all
mortgage loans that the Institution represents to be Eligible Collateral (by
including their value in any report of Eligible Collateral or otherwise), unless
it delivers such originals to FHLBank.

 

d.              The Institution may use, commingle and dispose of the Collateral
and collect, compromise and dispose of the proceeds of the Collateral, and any
transferee of such Collateral shall take free and clear of any security or other
interest granted to FHLBank in Section 3.1(a) hereof, subject only to the
Institution’s obligation to maintain the Collateral as provided in
Section 3.1(b); however, that this Section 3.1(d) shall not apply to Listed
Collateral.

 

e.               FHLBank may take such steps as it reasonably deems necessary to
protect its security interest in Collateral including, without limitation,
filing financing statements, requiring delivery, and requiring the pledging
and/or perfection of additional collateral whether or not such additional
collateral is Eligible Collateral.

 

3.2                                 Listed Collateral; Perfection.

 

a.                Immediately upon FHLBank’s request, and from time to time
thereafter, the Institution shall provide FHLBank an amount of Listed Collateral
which is also Eligible Collateral that has a Lending Value at all times at least
equal to the Required Collateral Amount applicable to the Institution.  The
Institution shall take all actions as FHLBank shall reasonably deem necessary or
appropriate to perfect FHLBank’s security interest in the Listed Collateral,
including but not limited to the making, execution and delivery to FHLBank of
such assignments, listings, powers, financing statements or other instruments
and documents as FHLBank may require.  The Institution shall not assign, pledge,
transfer, create any security interest in, sell or otherwise dispose of any
Listed Collateral without the prior written consent of FHLBank.

 

b.               The Institution agrees to pay to FHLBank upon demand such fees
and charges as may be assessed by FHLBank to cover overhead and other costs
relating to the perfection of FHLBank’s security interest in the Listed
Collateral (including without limitation the receipt, holding and redelivery of
Collateral and to reimburse FHLBank upon request for all recording fees) and
other reasonable expenses, disbursements and advances incurred or made by
FHLBank in connection therewith (including the reasonable compensation and the
expenses and disbursements of any bailee that may be appointed by FHLBank
hereunder, and the agents and legal counsel of FHLBank and of such bailee).

 

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c.                In the event any Listed Collateral that was Eligible
Collateral ceases to be Eligible Collateral, the Institution will promptly
notify FHLBank in writing of the reason such Listed Collateral has ceased to be
Eligible Collateral and request the deletion or delivery of such Listed
Collateral pursuant to Section 3.4.

 

d.               The form and sufficiency of all documents pertaining to the
Listed Collateral shall be satisfactory to FHLBank.  Any Listed Collateral that
is not satisfactory to FHLBank may be rejected by FHLBank or may have a Lending
Value ascribed thereto shall be less than the value normally ascribed thereto
under FHLBank’s Member Product Policy. Or as FHLBank may otherwise specify.

 

3.3                                 Listed Collateral; Deletion or Delivery. 
Upon receipt by FHLBank of a written request from the Institution asking for the
deletion on redelivery of any Listed Collateral, FHLBank shall promptly
redeliver to the Institution, at the Institution’s expense, or acknowledge the
deletion of, the Listed Collateral specified in said written request. 
Notwithstanding anything to the contrary herein, while an Event of Default shall
have occurred and be continuing, or at any time that FHLBank’s records indicate
that such deletion or redelivery would reduce the Lending Value of the
Institution’s Eligible Collateral below the Required Collateral Amount, or at
any time that FHLBank reasonably and in good faith deems itself insecure,
FHLBank may refuse such request.

 

3.4                                 Representations and Warranties.  The
Institution represents and warrants to FHLBank, as of the date hereof and as of
each date on which there shall be any outstanding Indebtedness or Commitment, as
follow:

 

a.               The Institution owns and has title to all Collateral and has
the right and authority to grant a security interest to FHLBank in all
Collateral and to subject all Collateral to this Agreement.

 

b.              All Listed Collateral, and all other Collateral that the
Institution represents to be Eligible Collateral (by including its value in any
report of Eligible Collateral or otherwise), meets the standards and
requirements for Eligible Collateral from time to time established by FHLBank,
the Act and the Regulations.

 

c.               The Institution has not conveyed or otherwise created, and
there does not otherwise exist, any participation interest (except as permitted
by the Member Product Policy) or other direct, indirect, legal or beneficial
interest, lien or encumbrance, in any Listed Collateral or any other Collateral
that the Institution represents to be Eligible Collateral, in favor of any
person or entity other than FHLBank and the Institution, except as specifically
communicated in writing to FHLBank.

 

3.5                                 Reports, Audits and Access.

 

a.               The Institution shall provide FHLBank with written periodic
reports containing such information on the Collateral as FHLBank shall require
from time to time, including listings of mortgages and securities, unpaid
principal balances thereof and certifications concerning the status of payments
of mortgages and of taxes and insurance on property securing mortgages.  The
Institution shall give FHLBank access at all reasonable times to Collateral in
the possession of the Institution and to the books and records of account of the
Institution relating to the Collateral for the purpose of permitting FHLBank to
examine, verify or reconcile the Collateral and the reports of the Institution
to FHLBank thereon.

 

b.              All Collateral and the satisfaction by the Institution of the
Required Collateral Amount shall be subject to periodic audit and verification
by or on behalf of FHLBank.  Such audits and verifications may occur without
notice during the Institution’s normal business hours or upon reasonable notice
at such other times as FHLBank may reasonably request.  The Institution shall
provide access to, and shall make adequate working facilities available to, the
representatives or agents of FHLBank for purposes of such audits and
verifications.  The Institution agrees to pay to FHLBank such reasonable fees
and charges as may be assessed by FHLBank to cover overhead and other costs
relating to such audits and verifications.

 

c.               The Institution shall furnish to FHLBank, if FHLBank requests,
an audit report prepared by an external independent auditor of the Institution
in such form as FHLBank may require certifying the accuracy of any or all
information required to be given to FHLBank by the Institution with respect to
the Collateral, and copies of any available audited financial statements,
management letters and directors’ exams in regard to the Institution.

 

d.              In order for FHLBank to adequately assess and monitor the
financial and business condition of the Institution, the Institution authorizes
FHLBank to obtain all information, examination reports and all other reports,
and any regulatory notices, actions or orders, in paper or electronic form,
concerning or relating to the Institution or its affiliates and prepared or
issued by or for any agency or other governmental subdivision, department,
division, office, board, bureau or other instrumentality that regulates or
examines the Institution.  FHLBank shall take reasonable precautions to maintain
the confidentiality of all information, reports and other documents obtained
under this Section 3.5.

 

e.               If the Lending Value of the Eligible Collateral owned by the
Institution shall at any time fall below the Required Collateral Amount, the
Institution shall immediately notify FHLBank.

 

3.6                                 FHLBank’s Responsibility as to Collateral. 
In the event that FHLBank shall take possession of any Collateral hereunder,
FHLBank’s duty as to such Collateral shall be solely to use reasonable care in
the custody and preservation of the Collateral in its possession.  This duty
shall not require FHLBank to take any steps necessary to preserve rights against
prior parties or the duty to send notices, perform services or take any action
in connection

 

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with the management of the Collateral.  The Institution shall make and maintain
copies, microfilm or other recordings of all Collateral delivered to FHLBank.

 

3.7                                 Application of Payments.  FHLBank may, in
its sole discretion, apply any payments by or recovery from the Institution,
which are received by FHLBank without any designation from the Institution (at
the time of such payment or recovery) as to the intended application thereof, at
such time and in such manner and order of priority as FHLBank shall deem
appropriate

 

DEFAULT; REMEDIES; POWER OF ATTORNEY

 

4.1                                 Events of Default; Acceleration.  Upon the
occurrence of and during the continuation of any of the following events or
conditions (Event of Default), FHLBank may at its option and notwithstanding any
other provision hereof, by a notice to the Institution, declare all
Indebtedness, including but not limited to any accrued interest and any
prepayment charges that are provided for upon payment of an Advance before the
date(s) scheduled for repayment, to be immediately due and payable. Without
presentment, demand, protest or any further notices:

 

a.               Failure of the Institution to keep sufficient available
balances on deposit with FHLBank to pay any interest principal or other amount
then due and owing to FHLBank one (1) business Day after FHLBank gives notice to
the Institution that its available balances on deposit with FHLBank are
insufficient to pay amounts then due and owing; or

 

b.              Continued failure of the Institution to perform any promise or
obligation or to satisfy any condition or liability contained in this Agreement
for five (5) Business Days after FHLBank gives notice to the Institution of such
failure; or

 

c.               Continued failure of the Institution to provide adequate
Eligible Collateral as required by FHLBank for three (3) Business Days after
FHLBank gives notice to the Institution of such failure unless the Institution
shall reduce its Required Collateral Amount during such three (3) Business Days
period such that the Institution has sufficient Eligible Collateral; or

 

d.              Any suspension of payment by the Institution to any creditor of
sums due or the occurrence of any event that results (or which with the giving
of notice or passage of time or both will result) in acceleration of the
maturity of any indebtedness of the Institution to others under any security
agreement, indenture, loan agreement or other undertaking, provided that such
indebtedness is a material amount with respect to the Institution and is not
subject to a good faith dispute, or the Institution’s admission that it is
unable to pay its debts as they mature; or

 

e.               Appointment of a trustee, conservator, receiver, liquidator,
custodian or similar official for the Institution, or for substantially all of
the Institution insolvent or bankrupt, or the commencement of proceedings
seeking any of the foregoing of such proceedings have not been dismissed within
30 calendar days; or

 

f.                 Sale by the Institution of all or substantially all of the
Institution’s assets or the taking of any action by the Institution to liquidate
or dissolve; or

 

g.              Termination of the Institution’s Membership in FHLBank or the
Institution’s ceasing to be a type of financial institution that is eligible
under the Act to become a member of the FHLBank; or

 

h.              Merger, consolidation or other combination of the Institution
with an entity that is not a member of FHLBank if the nonmember entity is the
surviving entity in such transaction; or

 

i.                  FHLBank determines that any representation or warranty made
or furnished by the Institution, its employees or other representatives to
FHLBank, in this Agreement or in any other manner, in connection with any
Advance or other Indebtedness or Collateral, is incorrect or misleading in any
material respect; or

 

j.                  FHLBank reasonably and in good faith determines that a
material adverse change has occurred in the financial condition of the
Institution that materially impairs its ability to pay its debts as they mature.

 

4.2                                 Remedies.  Upon the occurrence of any Event
of Default, FHLBank shall have all of rights and remedies provided by applicable
law, which shall include, but not be limited to, all of the remedies of a
secured party under the Uniform Commercial Code as in effect in the State of
Kansas.  In addition, FHLBank may take immediate possession of any of the
Collateral or any part thereof whenever the same may be found.  FHLBank may
sell, assign and deliver the Collateral or any part thereof to public or private
sale for such price as FHLBank deems appropriate without any liability for any
loss due to decrease in the market value of the Collateral during the period
held.  FHLBank shall have the right to purchase all or part of the Collateral at
such sale.  If the Collateral includes instruments or securities that will be
redeemed by the issuer upon surrender, or any accounts or deposits in the
possession of FHLBank, FHLBank may realize upon such Collateral without notice
to the Institution.  If any notification of intended disposition of any of the
Collateral is required by applicable law, such notification shall be deemed
reasonable and properly given if mailed, postage prepaid, at least five
(5) Business Days before any such disposition to the address of the Institution
appearing on the records of FHLBank.  Upon the occurrence of any Event of
Default, FHLBank may, in its sole discretion, apply any payment by or recovery
from the Institution or any sum realized from Collateral, at such time and in
such manner and order of priority ad FHLBank shall deem fit, regardless of any

 

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manifestation of any contrary intention or desire on the part of the Institution
of the provisions of any other agreement between FHLBank and the Institution. 
The Institution agrees that FHLBank may exercise its right of setoff upon the
occurrence of an Even of Default in the same manner as if the Advances and
Commitments were unsecured.  Notwithstanding any other provision hereof, upon
the occurrence of any Event of Default at any time when all or part of the
obligations of the Institution to FHLBank hereunder shall be the subject of any
guarantee by a third party for FHLBank’s benefit and there shall be other
outstanding obligations of the Institution to FHLBank that are not so guaranteed
but that are secured by the Collateral, than any sums realized by FHLBank from
the Collateral, or from any other Collateral pledged or furnished to FHLBank by
the Institution under any other agreement, shall be applied first to the
satisfaction of such other non-guaranteed obligations and then to the
Institution’s guaranteed obligations hereunder.  The Institution agrees to pay
all the costs and expenses of FHLBank in the collection of the Indebtedness and
enforcement and preservation of FHLBank’s right and remedies in case of default,
including, without limitation, reasonable attorney’s fees.  FHLBank in its
discretion may apply any surplus after payment of Indebtedness, provision for
repayment to FHLBank of any amounts to be paid under outstanding Commitments and
all costs of collection and enforcement, to third parties claiming a secondary
security interest in the Collateral, with any remaining surplus paid to the
Institution.  The Institution shall be liable to FHLBank for any deficiency
remaining.

 

4.3                                 Power of Attorney.  After the occurrence of
an Event of Default, FHLBank may in its discretion, in its own name or in the
name of its nominee or of the Institution, do any and all things and take any
and all actions that are pertinent to the protection of FHLBank’s interest
hereunder and, if such actions are subject to the laws of a state, are lawful
under the laws of the State of Kansas, including the following:

 

a.               Terminate any consent given hereunder;

 

b.              Notify obligors on any Collateral to make payments thereon
directly to FHLBank;

 

c.               Endorse any Collateral that is in the Institution’s name or
that has been endorsed by others to the Institution’s name;

 

d.              Enter into any extension, compromise, settlement or other
agreement relating to or affecting any Collateral;

 

e.               Take any action the Institution is required to take or that is
otherwise necessary to: (1) sign and record a financing statement or otherwise
perfect a security interest in any or all of the Collateral; or (2) to obtain,
preserve, protect, enforce or collect the Collateral;

 

f.                 Take control of any funds or proceeds generated by or arising
from the Collateral and use the same to reduce Indebtedness as it becomes due;
and

 

g.              Cause the Collateral to be transferred to FHLBank’s name or the
name of its nominee.

 

The Institution hereby appoints FHLBank as its true and lawful attorney, for and
on behalf of the Institution and in its name, place and stead, to prepare,
execute and record endorsements and assignments to FHLBank of all or any item of
Collateral (including the identification and listing, by exhibit prepared by
FHLBank or otherwise, of mortgage loans constituting such Collateral), giving or
granting to FHLBank, as such attorney, full power and authority to do or perform
every lawful act necessary or proper in connection therewith as fully as the
Institution could or might do.  The Institution hereby ratifies and confirms all
that FHLBank shall lawfully do or cause to be done by virtue of this special
power of attorney.  This special power of attorney (i) is granted for a period
commencing on the date of the Event of Default and continuing until the
discharge of all Indebtedness and all obligations of the Institution hereunder,
(ii) is coupled with an interest, and (iii) is irrevocable for the period
granted.  As the Institution’s true and lawful attorney-in-fact, FHLBank shall
have no responsibility to take any steps necessary to preserve rights against
other parties or the duty to send notices, perform services or take any action
in connection with the managements of the Collateral.

 

4.4                                 Payment of Prepayment Charges.  Any
prepayment fees or charges for which provision is made, whether under a
Confirmation or otherwise, with respect to any Advance shall be payable at the
time of any voluntary or involuntary payment of the principal of such Advance
prior to the originally scheduled maturity thereof.  This shall include, without
limitation, payments that are made in connection with the liquidation of the
Institution or that become due as a result of an acceleration by FHLBank
pursuant to Section 4.1, whether such payment is made by the Institution, by a
trustee, conservator, receiver, liquidator, custodian or similar official, of or
for the Institution, or by any successor to or any assignee of the Institution. 
The Institution acknowledges and agrees that the damages incurred by FHLBank due
to a prepayment of an Advance will be difficult to ascertain at the time of such
prepayment and, in lieu thereof, the Institution and FHLBank agree that the
formula for calculation for the prepayment fee (or for calculation of the fee
payable upon prepayment of a non-prepayable Advance) set forth in the
Confirmation or in the Member Products Policy at the time the Advance is issued
constitutes a fair, reasonable and good faith estimate of the damages suffered
by FHLBank because of such prepayment and is therefore payable as a prepayment
fee or charge.

 

4.5                                 Default Rate.  Any payment of principal or
interest or any other sum due hereunder if not made when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest, to the maximum
extent permitted by applicable

 

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law, at a rate per annum for each day during the period commencing on the due
date thereof until such amount shall be paid in full equal to 315 basis points
above the previous business day’s daily effective federal funds rate as provided
in Federal Reserve Statistical Release H.15 and daily updates thereto, or any
equivalent successor rate, release or publication, or as otherwise set forth in
the Member Products policy.

 

4.6                                 Sale of Collateral.  In view of the
possibility that federal and state securities and other laws may impose certain
restrictions on the method by which sale of the Collateral may be effected,
FHLBank and the Institution agree that any sale of the Collateral as a result of
an Event of Default shall be deemed “commercially reasonable” regardless of
whether the notice or manner of such sale contains provisions or imposes, or is
subject to , conditions or restrictions deemed appropriate to comply with the
Securities Act of 1933 or any other applicable federal or state securities or
other law.  It is further agreed that from time to time FHLBank may attempt to
sell the Collateral by means of private placement.  In so doing, FHLBank may
restrict the bidders and prospective purchasers to those who will represent and
agree that they are purchasing for investment only and not for distribution, or
otherwise impose restrictions deemed appropriate by FHLBank for the purpose of
complying with the requirements of applicable securities laws.  FHLBank may
solicit offers to buy such Collateral, for cash or otherwise, from a limited
member of investors deemed by FHLBank to be responsible parties who might be
interested in purchasing such Collateral.  If FHLBank solicits offers from at
least three (3) such investors, then the acceptance by FHLBank of the highest
offer obtained therefrom (whether or not three (3) offers are obtained) shall be
deemed to be a commercially reasonable method of disposing of the Collateral.

 

MISCELLANEOUS

 

5.1                                 General Representation and Warranties.  The
Institution hereby represents and warrants that to the best of its knowledge as
of the date hereof and as each date on which there shall be any outstanding
Indebtedness or Commitment:

 

a.               The Institution is not now, and neither the execution of nor
the performance of any of the transactions or obligations of the Institution
under this Agreement shall, with the passage of time, the giving of notice, or
otherwise, cause the Institution to be: (1) in violation of its charter or
articles of incorporation, by-laws, the Act of the Regulations, any other law or
administrative regulation, any court decree or any order of any regulatory
authority, or (2) in default under or in breach of any indenture, contract or
other instrument or agreement to which the Institution is a party or by which
the Institution or any its property may be bound; in each case so as to
materially affect the Institution’s ability to perform its obligations under
this Agreement.

 

b.              The Institution has full corporate power and authority and has
received all corporate and governmental authorizations and approvals as may be
required to enter into and perform its obligations under this Agreement and to
borrow each Advance.

 

c.               The information given by the Institution in any document
provided, or in any oral statement made, in connection with an application or
request for an Advance or a Commitment, or a pledge, specification or delivery
of Collateral, is true, accurate and complete in all material respects.

 

5.2                                 FIRREA Covenant.  If the Institution is an
insured depository institution, it further represents and warrants to and
covenants and agrees with, FHLBank that the necessary action to authorize the
delivery of this Agreement and the performance of its obligations hereunder
includes all authorizations required for insured depository institutions under
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as
amended, and the Institution will at all times during the term of this Agreement
continuously include and maintain this Agreement, including all exhibits,
attachments, supplements, Confirmation incorporated herein and evidence of all
approvals, as part of its official written books and records.  In addition to
any other remedies which FHLBank may have under this Agreement or otherwise, if
the Institution breaches or defaults on any of its obligations set forth in this
paragraph, FHLBank shall be entitled to apply to any court of competent
jurisdiction for an order requiring specific performance by the Institution of
such obligations, and the Institution shall not contest any such application and
shall comply with any such order.

 

5.3                                 Good Faith; Liability of FHLBank . The
Institution and FHLBank shall have an obligation of good faith in the
performance and enforcement of every duty or right imposed or granted by this
Agreement, and any other actions or inactions taken or not taken with respect to
this Agreement.  “Good Faith” shall mean honesty in fact (i.e., and objective
standard rather that a subject standard).  FHLBank shall not be liable for any
costs, expenses, damages, liabilities or claims (including attorneys’ and
accountants’ fees) incurred by the Institution, except those costs, expenses,
damages, liabilities or claims arising out of the gross negligence or willful
misconduct of FHLBank or any of its employees or duly appointed agents.  In no
event shall FHLBank be liable to the Institution or any third party for special,
indirect or consequential damages, or lost profits or loss of business, arising
under or in connection with this Agreement, even if previously informed of the
possibility of such damages and regardless of the form of action.

 

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5.4                                 Assignment of Indebtedness.  The Institution
hereby gives FHLBank the full right, power and authority to pledge or assign to
any party all or part of the Indebtedness, together with a proportionate amount
of the Collateral, as security for Consolidated Federal Home Loan Bank
Obligations issued pursuant to the provisions of the Act or for any other
purpose authorized by the Act, the Regulations or the Federal Housing Finance
Board.  In the case of any such pledge or assignment, FHLBank shall have no
further responsibility with respect to Collateral transferred to the pledge or
assignee, and all references herein to “FHLBank” shall be read to refer instead
to the pledge or assignee with respect to such Collateral.  The Institution may
not voluntarily or involuntarily or by operation of law or otherwise assign or
transfer any of its rights or obligations hereunder or with respect to any
Indebtedness or Commitments without the express prior written consent of
FHLBank.

 

5.5                                 Discretion to Deny Advances.  Nothing
contained herein or in any documents describing or setting forth FHLBank’s
Member Product Policy or other policies shall be construed as an agreement or
commitment on the part of FHLBank to grant Advances hereunder, or to enter into
any other transaction, the right and power of FHLBank in its discretion to
either grant (with or without conditions) or deny any Advance or other
transaction requested hereunder being expressly reserved.

 

5.6                                 Access to FHLBank Records.    The FHLBank
shall grant to all governmental regulatory agencies having jurisdiction over the
Institution, independent public accountants (to be named by written notice
delivered to FHLBank) and to the Institution’s internal auditors the right at
any reasonable time to examine and audit the Institution’s records in FHLBank’s
possession, the right to request directly from FHLBank any reports, summaries or
information of FHLBank relating to the Institution and the right to observe the
processing of reports or examine  the Institution’s documents at FHLBank;
provided, however, FHLBank’s obligations hereunder shall not apply to the extent
that the records, reports, summaries, information or documents sought or
requested are contained in or derived from data not provided by FHLBank to the
Institution or by the Institution to FHLBank pursuant to this Agreement.

 

5.7                                 Amendments; Waivers.  No modifications,
amendment or waiver of any provision of this Agreement or consent to any
departure therefrom shall be effective unless executed by the party against whom
much change is asserted and shall be effective only in the specific instance and
for the purpose for which given.  No notice to or demand on the Institution in
any case shall entitle the Institution to any other or further notice or demand
in the same, or similar or other circumstance.  Any forbearance, failure or
delay by FHLBank in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver thereof, and any single or partial exercise by FHLBank of
any right, power or remedy hereunder shall not preclude the further exercise
thereof.  Every right, power and remedy of FHLBank shall continue in full force
and effect until specifically waived by FHLBank in writing.

 

5.8                                 Jurisdiction:  Legal Fees.  In any action or
proceeding brought by FHLBank or the Institution to enforce any right or remedy
under this Agreement, the parties consent to, and agree that they will submit to
, the jurisdiction of the United States District Court for the District of
Kansas, or if such action or proceeding may not be brought in federal court, the
jurisdiction of the District Court of the County of Shawnee, State of Kansas, to
the exclusion of all other courts.  The Institution agrees that if any action or
proceeding is brought by the Institution seeking to obtain any legal or
equitable relief against FHLBank under or arising out of this Agreement or any
transaction contemplated hereby, and such relief is not granted by the final
decision, after any and all appeals, of a court of competent jurisdiction, the
Institution will pay all attorneys’ fees and other costs incurred by FHLBank in
connection therewith.  The Institution agrees to reimburse FHLBank for all costs
and expenses (including reasonable fees and out-of-pocket expenses of counsel
for FHLBank) incurred by FHLBank in connection with the enforcement or
preservation of FHLBank’s rights under this Agreement including, but not limited
to, its rights in respect of any Collateral and the audit or possession thereof.

 

5.9                                 Applicable Law; Severablility.   This
Agreement and all Advances granted under this Agreement shall be governed by the
statutory and common law of the United States and, to the extent federal law
incorporates or defers to state law, the laws (exclusive of choice of law
provisions) of the State of Kansas.  In the event that any portion of this
Agreement conflicts with applicable law, such conflict shall not affect other
provisions of the Agreement that can be given effect without the conflicting
provision, and to this end the provisions of the Agreement shall be severable.

 

5.10                           Successors and Assigns.   This Agreement shall be
binding upon and more to the benefit of the successors and permitted assignees
of the Institution and FHLBank.

 

5.11                           Notices.   Any notice, advice, request, consent
or direction given, made or withdrawn pursuant to this Agreement shall be in
writing or by machine-readable electronic transmission, and shall be deemed to
have been duly given to and received by a party hereto three (3) Business Days
after it shall have been mailed to such party at its address herein provided, if
delivered by first-class mail, or if delivered by hand or by machine-readable
electronic transmission, when actually received by such party at its principal
office.

 

5.12                           Consent to Receive Information.  By executing
this Agreement the Institution grants permission to FHLBank to send to the
Institution from time to time notices, announcements, press releases and other
communications, some of which may be deemed advertisements, concerning FHLBank
and its products and services and other information

 

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which FHLBank believes may be of interest or benefit to its members, by mail,
delivery service or e-mail, or facsimile to the facsimile number(s) set forth
below the Institution’s signature, or to such other facsimile number(s) as the
Institution shall indicate from time to time.

 

5.13                           Recorded Conversations.  Each party authorizes
the other, in its discretion, to record telephone conversations between
employees or other representatives of the parties concerning any proposed or
actual Advances or other transactions between the parties.  Such recorded
conversations shall be admissible evidence of the terms and conditions of such
transactions and the parties waive any right to object to the admission of such
evidence on the ground that it is not in writing.  The parties shall not be
obligated to inform the other party of such recording at any time.

 

5.14                           Entire Agreement.  This Agreement embodies the
entire agreement and understanding between the parties hereto relating to the
subject matter hereof and supersedes all prior agreements between such parties,
and all oral and written statements by either party, that relate to such subject
matter.  Notwithstanding the above, Advances made by FHLBank to the Institution
prior to the execution of this Agreement shall continue to be governed by the
terms of the Confirmation pursuant to which such Advances were made, and
otherwise by the terms and conditions of this Agreement.

 

5.15                           Counterparts.  This Agreement may be executed in
one or more counterparts, all of which shall constitute but one Agreement.

 

IN WITHNESS WHEREOF,  FHLBank and the Institution have caused this Agreement to
be signed in their names by their duly authorized officers.

 

INSTITUTION

 

Federal Home Loan Bank of Topeka

 

 

 

One Security Benefit Place, Suite 100

 

 

 

Topeka, KS 66606-2444

 

 

 

 

By:

Steve Cowman

 

By:

Matt Boatwright

 

Senior Vice President  & Cashier

 

 

VP

 

 

 

 

 

Attest:

Glora Mathews

 

Date:

11-25-2003

 

Secretary

 

 

 

 

 

 

 

 

 

 

 

Attest:

Tad Kramar

Fax No(s): 913-557-4233

 

 

Asst. Secretary

 

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