Exhibit 10.1


 


UNITED STATES DEPARTMENT OF THE TREASURY


LENDING AGREEMENT


 


CREDIT
AND SECURITY TERMS


 


1.0
SCOPE


 


1.1
This Agreement sets forth the terms under which an entity may, in accordance
with the Housing and Economic Recovery Act of 2008, borrow from and pledge
Collateral to the United States Department of the Treasury (Treasury).


 


2.0
DEFINED TERMS


 


Account means the
account described in section 3.2 of this Agreement.


 


Adverse
Claim has the meaning set forth in Section 9.1(d).


 


Application
Package means the Application Package, substantially in the form of
Appendix I, which the Borrower submitted in connection with its agreement to
this Agreement.


 


Borrower
means
an entity that incurs an Obligation to the Treasury.


 


Borrower-in-Custody
or BIC Arrangement means an arrangement whereby the Treasury
authorizes a Borrower, or an affiliate of the Borrower, to retain possession of
the Collateral, as described in Section 7 of this Agreement.


 


Business
Day means any day the Federal Reserve Bank of New York is open
for conducting all or substantially all its banking functions.


 


Certificate means the
certificate, substantially in the form set forth in the appropriate Application
Package, provided to the Treasury by the Borrower.


 


Collateral
means:


 


(i) all
the Borrower’s rights, title, and interest in property as described in section
7.0 (and any other property agreed to by Treasury) that is (a) identified
on a Collateral Schedule, (b) identified on the books or records of a
Reserve Bank as pledged to, or subject to a security interest in favor of, the
Treasury or (c) in the possession or control of, or maintained with, the
Treasury including;


 


(ii) all
documents, books and records, including programs, tapes, and related electronic
data processing software, evidencing or relating to any or all of the
foregoing; and


 


(iii) to
the extent not otherwise included, all proceeds and products of any and all of
the foregoing and all supporting obligations given by any person with respect
to any of the foregoing, including but not limited to interest, dividends,
insurance, rents and refunds.


 


Collateral
Schedule means the written, electronic or other statement(s) listing
Collateral in effect at any time. Each statement of Collateral shall be in the
form required by the Treasury and shall identify the items of Collateral with
the specificity required by the Treasury. The removal of an item from a
statement of Collateral will not be effective and will not affect the Treasury’s
security interest in the item unless such removal is made in accordance with
this Agreement and the Treasury’s procedures, including prior Treasury approval
or authorization.


 


Event
of Default means any of the following:


 


(i) the
Borrower fails to repay or satisfy any Obligation when due;


 


(ii) the
Borrower fails to perform or observe any of its obligations or agreements under
the Lending Agreement or under any other instrument or agreement delivered or
executed in connection with the Lending Agreement;


 


(iii) any
representation or warranty made or deemed to be made by the Borrower under or
in connection with the Lending Agreement, or that is contained in any
certificate, document, or financial or other statement delivered by it or in
connection with the Lending Agreement, is inaccurate in any material respect on
or as of the date made or deemed made;


 


(iv) the
Insolvency of the Borrower;


 

















 


(v) the
Lending Agreement or any other agreement delivered or executed in connection
with the Lending Agreement ceases, for any reason, to be in full force and
effect, or the Borrower so asserts or any security interest or lien created
hereby ceases to be enforceable or have the same effect and priority purported
to be created hereby;


 


(vi) the
creation of an encumbrance upon Collateral, or placement of a levy, judicial
seizure of, or an attachment upon Collateral;


 


(vii) whenever
the Secretary of the Treasury determines that Treasury’s position is insecure
with respect to the financial condition of the Borrower or the Borrower’s
ability to perform its Obligations.


 


Federal
Reserve Bank means any one of the Federal Reserve
Banks.


 


Insolvency means:


 


(i) the
condition of insolvency;


 


(ii) that
a proceeding relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to adjudicate an entity bankrupt or insolvent or seeking
reorganization, adjustment, dissolution, liquidation or other relief with
respect to the Borrower or the Borrower’s debt is commenced;


 


(iii) that
an assignment for the benefit of the Borrower’s creditors occurs;


 


(iv) that
a receiver, custodian, conservator, or the like is appointed for the Borrower
or for any of its United States or foreign branches or agencies;


 


(v) that
the Borrower has been closed by order of its supervisory authorities, or a
public officer has been appointed to take over such entity;


 


(vi) that
the Borrower ceases or refuses to make payments in the ordinary course of
business, or admits in a record its inability to pay its debt as they become
due;


 


(vii) the
Borrower’s business is suspended, or any party has presented or filed a
petition for winding-up or liquidating the Borrower; or


 


(viii) any
other circumstances that evince the Borrower’s inability to pay its debts when
due.


 


Lending
Agreement means this Agreement, any Collateral Schedule, each
document in the Application Package executed or furnished to the Treasury by
the Borrower, and any other agreement or document executed by the Borrower in
connection with this Agreement, in each case as the same may be amended,
supplemented or otherwise modified from time to time.


 


Lending
Documents has the meaning set forth in Section 8 of this
Agreement


 


Letter
of Agreement means the Letter of Agreement,
substantially in the form found in Appendix I pursuant to which the Borrower
agrees to be bound by the terms of this Agreement.


 


Loan means an
extension of credit to the Borrower.


 


Loan
Repayment Amount means the amount of a Loan, plus all
accrued and unpaid interest thereon.


 


Obligation, whether
now existing or hereafter incurred, means:


 


(i) Loan
Repayment Amounts;


 


(ii) any
other liabilities of the Borrower to the Treasury; and


 


(iv) any
expense the Treasury or its designee(s) may incur to: a. obtain, preserve
and/or enforce the Lending Agreement or the Treasury’s security interest in
Collateral and the Borrower’s Obligations under the Lending Agreement,


b.
collect any or all of the foregoing, or


c.
assemble, transport, maintain or preserve Collateral (including, without
limitation, taxes, assessments, insurance premiums, repairs, reasonable
attorneys’ fees, rent, transportation, storage costs, and expenses of sale).


 


Treasury means the
United States Department of the Treasury. For operational purposes, the term “Treasury”
includes a Federal Reserve Bank acting as fiscal agent to the Treasury.


 


UCC means the
Uniform Commercial Code.


 

















 


3.0
LOANS


 


3.1 A request
for a Loan shall be made to the Treasury in a form and time acceptable to the
Treasury. A Loan must be secured by Collateral acceptable to the Treasury. Upon
Treasury’s request, the Borrower shall submit a written application for a Loan.


 


3.2 The
Treasury’s approval of a request for a Loan shall be evidenced by, and the Loan
shall be deemed made at the time of, the Treasury’s record of the credit of the
amount of the Loan to an Account agreed upon by the Borrower and the Treasury.


 


3.3 Loans to
the Federal Home Loan Banks (FHLBs) or any FHLB under this Agreement shall be
joint and several obligations of all the FHLBs, issued under Section 11(a) of
the Federal Home Loan Bank Act, 12 U.S.C. § 1431(a), through the Office of Finance
as agent of the FHLBs, and therefore are consolidated obligations issued
pursuant to part 966 of the rules of the Federal Housing Finance Board, in
continuing force and effect under Section 1312 of the Housing and Economic
Recovery Act of 2008, and any successor rule of the Federal Housing
Finance Agency.


 


4.0
INTEREST


 


4.1 The
interest rate applicable to a Loan shall be the rate, as from time to time
established by the Treasury. Interest on a Loan shall accrue from the day the
Loan is credited to the Account and shall be payable at the applicable rate in
effect on that day, except that if the interest rate changes while a Loan is
outstanding, the new rate shall apply as of the day on which the rate change is
effective. Interest shall be computed on the basis of 365 days in a year.


 


4.2
If
all or any portion of a Loan Repayment Amount is not paid when due (whether by
acceleration or otherwise), interest on the unpaid portion of the Loan
Repayment Amount shall be calculated at a rate 500 basis points higher than the
applicable rate then in effect until the unpaid Loan Repayment Amount is paid
in full.


 


5.0
REPAYMENT OF LOAN


 


5.1 The
Borrower promises to pay a Loan Repayment Amount when due in actually and
finally collected funds. A Loan Repayment Amount is immediately due and payable


 


(a) on
demand;


 


(b) without
any demand, notice or other action on the due date and time specified by the Treasury
in writing (provided that if such date falls on a day that is not a Business
Day, the due date shall be extended to the next Business Day) or upon the
occurrence of any Event of Default described in clause (iv), (v) or (vii) of
the definition of such term.


 


5.2 The
Borrower waives any right to presentment, notice of dishonor, protest, and any
other notice of any kind except as expressly provided for herein.


 


5.3 Upon notice
to the Treasury at least 2 days in advance, the Borrower may prepay a Loan
Repayment Amount, in whole or in part, without penalty.


 


5.4 The
appropriate Federal Reserve Bank, acting on behalf of the Treasury, will debit
the Borrower’s Account for the Loan Repayment Amount and all other Obligations
when due.


 


6.0
GRANT OF SECURITY INTEREST


 


For
value received and in consideration of the Treasury permitting the Borrower to
obtain Loans, the Borrower hereby transfers and assigns to the Treasury and
grants to the Treasury a continuing security interest in and lien on the
Collateral as collateral security for the timely and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all Obligations.


 


7.0
COLLATERAL


 


7.1
The
Borrower shall ensure that the Collateral meets the requirements set forth in
this section or as the Treasury may otherwise from time to time prescribe.


 


7.2 Acceptable
Collateral consists of Federal Home Loan Bank advances to member financial
institutions that have been collateralized in accordance with Federal Home Loan
Bank standards (FHLB advances) and mortgage backed securities issued by the
Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation.


 

















 


7.3 Acceptable
FHLB advances shall be valued with a 13% haircut applied to the outstanding
principal amount of the asset on the balance sheet of the Federal Home Loan
Bank. Haircuts may also be applied to the value of mortgage backed securities
as determined by Treasury.


 


7.4 FHLB
advances pledged as Collateral under this Agreement may be held under a BIC
Arrangement subject to section 7.10 herein. FHLB advances must be
prepositioned, in an amount acceptable to the Treasury, before a Federal Home
Loan Bank is eligible to receive a Loan under this Agreement. MBS pledged as
Collateral under this Agreement must be held in a custodial National Book Entry
System account established though the Federal Reserve Bank of New York. MBS
pledged hereunder may be repositioned from an investment account into the
custodial account on a same-day basis.


 


7.5 On a weekly
basis, Borrower must submit to the Federal Reserve Bank of New York acting as
fiscal agent of the Treasury, a Collateral Schedule listing the Collateral
pledged to Treasury under this Agreement, including the outstanding principal
amount of any FHLB advances.


 


7.6 The
Treasury may at any time request the Borrower to replace any item of Collateral
or to grant a lien and security interest in additional assets of a type and in
an amount acceptable to the Treasury, and the Borrower shall promptly do so.


 


7.7 Unless
otherwise specified by the Treasury in writing, the Borrower shall promptly
withdraw from the Collateral Schedule:


 


(a) any
Collateral that has a payment of principal or interest past due, in whole or in
part, for more than 30 days;


 


(b) any
Collateral that has been paid in full by the obligor; or


 


(c) any
Collateral if the obligor on such Collateral becomes insolvent, or if a
receiver, custodian, or the like is appointed for the obligor. Prior to such
withdrawal, however, the Borrower shall update any relevant Collateral Schedule
and pledge substitute Collateral acceptable to the Treasury by submitting an
updated Collateral Schedule or otherwise pledging such Collateral to the
Treasury.


 


7.8 The
Treasury has no duty to collect any income accruing on Collateral or to
preserve any rights relating to Collateral.


 


7.9 The
Borrower hereby:


 


(a) authorizes
the Treasury at any time to file or record in any filing office in any
jurisdiction which the Treasury determines appropriate to perfect the security
interests set forth hereunder, financing statements, and any amendments or
continuation statements related thereto without the signature of the Borrower
therein that describes the Collateral and the Borrower shall, promptly at the
Treasury’s request, provide any additional information required by Article 9
of the UCC, as in effect in any relevant jurisdiction, for the sufficiency or
acceptability of any financing statement;


 


(b) ratifies
its authorization for the Treasury to have filed any financing statement,
including any amendment or continuation statement related thereto, in any
jurisdiction, where the same has been filed prior to the date on which the
Letter of Agreement is signed by the Borrower;


 


(c) authorizes
the Treasury at any time, to take any and all other actions that may be
necessary or, in the Treasury’s sole discretion, desirable to obtain, preserve,
perfect or enforce the Treasury’s security interest in the Collateral;


 


(d) authorizes
the Treasury to endorse or assign as the Borrower’s agent any item of
Collateral, to inspect Collateral held by the Borrower, and copy any relevant
records and/or documents.


 


7.10 Treasury
will keep all information regarding the identity of borrowers identified in any
collateral documentation confidential and such information will not be
disclosed except to as authorized or necessary to effectuate the terms of this
Agreement.


 


7.11 If the
Treasury approves, the Borrower may hold certain Collateral in a BIC
Arrangement (“BIC-held Collateral”) subject to the following:


 


(a) BIC-held
Collateral shall be prominently identified as Pledged to the Treasury and
subject exclusively to the Treasury’s written instructions. At the Treasury’s
request, the Borrower shall, without delay, prominently and conspicuously affix
a legend to items of BIC-held Collateral indicating that such items are subject
to a security interest in favor of the Treasury.


 

















 


(b) The
Borrower shall mark its records to show that BIC-held Collateral has been
pledged to the Treasury and is subject exclusively to the Treasury’s written
instructions. Any computer generated list or report containing BIC-held
Collateral must incorporate a legend indicating that such Collateral is pledged
to the Treasury.


 


(c) Upon
the Treasury’s request, the Borrower shall at all times segregate BIC-held
Collateral from its own assets or the assets of any other party and shall hold
Collateral in such location(s) approved by the Treasury. BIC-held
Collateral shall not be removed from such location(s) without the prior
written approval of the Treasury.


 


(d) The
Borrower may withdraw or replace BIC-held Collateral only with the approval of
the Treasury and on terms acceptable to the Treasury.


 


(e) The
Treasury may from time to time notify Borrower of additional requirements on
BIC-held Collateral. The Borrower’s failure to comply with such requirements
may disqualify the Borrower from participation in the BIC Arrangement.


 


7.12 With
respect to any item of Collateral not delivered or transferred to the Treasury
or its agent or custodian, including BIC-held Collateral, the Borrower shall
hold such item of Collateral in trust for the Treasury until the Collateral is
delivered or transferred in accordance with the Treasury’s instructions. The
Borrower bears the risk of loss for any Collateral held in the Borrower’s
possession, at any custodian, maintained in an account at a securities
intermediary other than a Reserve Bank, or in transit to or from the Reserve
Bank. The Borrower also bears the risk of any accidental loss or damage to
Collateral in the possession of the Treasury or its agent to the extent the
Treasury exercised reasonable care.


 


7.13 Unless an Event
of Default occurs or the Treasury expressly directs otherwise, any proceeds,
dividend, interest, rent, proceeds of redemption, and/or any other payment
received by the Borrower regarding any Collateral may be retained by the
Borrower. If the Treasury directs that any of the foregoing be paid to the
Treasury, the Borrower shall remit those payments, or cause such payments to be
remitted, promptly to the Treasury and, until receipt by the Treasury, such
payments are deemed to be held in trust for the Treasury.


 


7.14 The
Treasury is under no obligation to allow for the withdrawal of any item of Collateral
from the pledge to the Treasury, or to allow the removal of any item of Collateral
from the Collateral Schedule or otherwise release its security interest in any
item of Collateral unless:


 


(a) the
Borrower has provided substitute Collateral acceptable to the Treasury; or


 


(b) the
Treasury has verified, in accordance with its normal customs and procedures,
that all Obligations have been unconditionally repaid in full and that the
Borrower is not currently in default under another agreement with the Treasury.


 


7.15 Borrower
shall submit a written certification to Treasury including the following
information and attestations: (i) the location of all supporting
documentation or records; (ii) a statement that all supporting
documentation or records are complete, controlled, and protected; (iii) a
description of the Borrower’s asset valuation criteria; (iv) a description
of the Borrower’s internal loan-rating system; (v) a description of how
Collateral is marked as pledged to the Treasury; and (vi) where
applicable, a statement that Borrower’s Financial Statement including its
portfolio of FHLB advances is audited in accordance with applicable auditing
standards. This certification is only required on a one-time basis, however,
Borrower shall notify Treasury if any of the information contained in the
certification changes or is no longer accurate.


 


8.0
MAINTENANCE OF LENDING DOCUMENTS


 


The
documents specified below must be maintained continuously as official records
of the Borrower. The documents listed in subparagraph (a) shall at all
times be kept together in one place, while the document listed in subparagraph (b) may
be kept in any accessible and secure location on the Borrower’s premises.


 


(a) a
copy of the Lending Agreement; and


 


(b) a
current statement of outstanding Loans.


 


9.0
REPRESENTATIONS AND WARRANTIES


 


9.1 The
Borrower represents and warrants that:


 


(a) (i) the
Borrower has the power and authority, and the legal right, to make, deliver and
perform the Lending Agreement and to obtain a Loan; (ii) the Borrower has
taken all necessary organizational action to authorize the 


 

















 


execution,
delivery and performance of the Lending Agreement and to authorize the
obtaining of a Loan on the terms and conditions of the Lending Agreement; (iii) no
consent or authorization of, filing with, notice to or other act by or in
respect of, any governmental authority or any other person is required in
connection with the obtaining of Loans hereunder or with the execution,
delivery, performance, validity or enforceability of the Lending Agreement; and
(iv) the Lending Agreement has been duly executed and delivered on behalf
of the Borrower;


 


(b) the
Borrower is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and is not in violation of any
laws or regulations in any respect which could have any adverse effect
whatsoever upon the validity, performance or enforceability of any of the terms
of the Lending Agreement;


 


(c) the
Lending Agreement constitutes a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms;


 


(d) the
Borrower has rights in Collateral sufficient to grant an enforceable security
interest to the Treasury and its rights in Collateral are free of any assertion
of a property right that would adversely affect the Treasury’s right to
Collateral, including but not limited to any claim, lien, security interest,
encumbrance, preference or priority arrangement or restriction on the transfer
or pledge of Collateral (an “Adverse Claim”), except as created by, or
otherwise permitted under, the Lending Agreement or by the Treasury;


 


(e) all
information set forth on the Certificate is accurate and complete and there has
been no change in such information since the date of the Certificate;


 


(f) (i) the
Lending Agreement is effective to create in favor of the Treasury a legal,
valid, and enforceable security interest in the Collateral described in the
Lending Agreement and proceeds thereof; (ii) when financing statements are
filed in the state filing offices located in the jurisdictions specified on the
Certificate, those security interests shall constitute a fully and validly
perfected lien on, and security interest in, all rights, title and interest of
the Borrower in such Collateral as to which perfection can be obtained by
filing, as security for the Obligations, in each case prior and superior in
right to any other person (except for liens that arise by operation of law);
and (iii) no financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except such as have been filed in favor of the Treasury pursuant to the Lending
Agreement, are permitted by the Lending Agreement, or are otherwise permitted
by the Treasury;


 


9.2
Each
time the Borrower requests a Loan or grants a security interest in any
Collateral to Treasury, the Borrower is deemed to make all of the foregoing
representations and warranties on and as of the date such Loan is incurred or
security granted. Such representations and warranties shall be true on and as
of such date and shall remain true and correct so long as the Lending Agreement
remains in effect, any Obligation remains outstanding, or any other amount is
owing to the Treasury.


 


10.0
COVENANTS


 


The
Borrower covenants that so long as the Lending Agreement remains in effect or
any Obligation remains outstanding or any other amount is owing to the
Treasury:


 


(a) except
for the security interest herein granted or otherwise permitted hereunder or by
the Treasury, the Borrower shall have rights in the Collateral free from any
Adverse Claim, and shall maintain the security interest created hereby with the
priority set forth in Section 9.1(f) and shall take all actions
necessary or prudent to defend against Adverse Claims;


 


(b) except
as otherwise permitted hereunder or by the Treasury, the Borrower shall not (i) sell
or otherwise dispose of, or offer to sell or otherwise dispose of, the
Collateral or any interest therein, or (ii) pledge, mortgage, or create,
or permit the existence of any right of any person in or claim to, the
Collateral other than the security interest granted herein;


 


(c) the
Borrower shall not perform any act with respect to any Collateral that would
impair the Treasury’s rights or interests therein, nor will the Borrower fail
to perform any act that would reasonably be expected to prevent such impairment
or that is necessary to preserve the Treasury’s rights;


 


(d) the
Borrower shall promptly notify the Treasury if the Borrower fails or is about
to fail to meet the capital requirements required by regulations applicable to
the Borrower.


 


(e) the
Borrower shall renew or keep in full force and effect its organizational
existence or take all reasonable action to maintain all rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of its
business;


 


(f) in
any BIC Arrangement, the Borrower shall provide for periodic audits of BIC-held
Collateral pledged to the Treasury, shall notify the Treasury immediately of
any irregularities discovered during any audits, and shall certify
periodically, as determined by the Treasury, that it is complying with the
requirements of the BIC Arrangement;


 

















 


(g) without
providing at least 30 days’ prior written notice to the Treasury and submitting
an updated Certificate to the Treasury, the Borrower shall not cause or permit
any of the information provided in the Certificate, including its jurisdiction
of organization, to become untrue;


 


(h) the
Borrower shall promptly notify the Treasury of the occurrence or impending
occurrence of any Event of Default; and


 


(i) the
Borrower shall promptly notify the Treasury of any change in applicable law,
the regulations or policies of its chartering and/or licensing authority, or
its charter, bylaws, or other governing documents, or any legal or regulatory
process asserted against the Borrower, that materially affects or may
materially affect the Borrower’s authority or ability to lawfully perform its
obligations under the Lending Agreement.


 


11.0
WAIVER OF IMMUNITY; SUBMISSION TO JURISDICTION


 


11.1 If the
Borrower or its property is now, or in the future becomes, entitled to any
immunity, whether characterized as sovereign or otherwise (including, without
limitation, immunity from set-off, from service of process, from jurisdiction
of any court or tribunal, from attachment in aid of execution, from attachment
prior to the entry of a judgment, or from execution upon a judgment) in any
legal proceeding in Federal or State court then the Borrower expressly and
irrevocably waives, to the maximum extent permitted by law, any such immunity.
To the extent the Borrower receives any such entitlement in the future, the
Borrower shall promptly notify the Treasury of such entitlement.


 


11.2 The
Borrower submits in any legal action or proceeding relating to or arising out
of the Lending Agreement, or the conduct of any party with respect therefor or
for recognition and enforcement of any judgment in respect thereof, to the
nonexclusive general jurisdiction of the Federal District Court for the
District of Columbia and any appellate court thereof. The Borrower agrees that
service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the address provided in the Letter of
Agreement; and agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the venue of any such suit, action, or proceeding brought in any such
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum. The Borrower also agrees that
a final judgment in any such suit, action, or proceeding brought in such court
shall be conclusive and binding upon the Borrower. The foregoing does not
diminish or otherwise affect any rights the Treasury may have under law.


 


12.0
REMEDIES UPON DEFAULT


 


12.1 Upon the
occurrence of, and at any time during the continuance of, an Event of Default,
the Treasury may pursue any of the following remedies, separately,
successively, or concurrently:


 


(a) cause
the Borrower’s Account to be debited in an amount up to the Borrower’s unpaid
Obligations;


 


(b) set
off any Obligation against any amount owed by the Treasury to the Borrower,
whether or not such amount owed is then due and payable;


 


(c) exercise
any right of set-off or banker’s lien provided by applicable law against the
Borrower’s property in the possession or control of, or maintained with, the
Treasury, including but not limited to items in process of collection and their
proceeds and any balance to the credit of the Borrower with the Treasury;


 


(d) take
possession of any Collateral not already in Treasury’s possession, without
demand and without legal process. Upon the Treasury’s demand, the Borrower
shall assemble and make Collateral available to the Treasury as the Treasury
directs. The Borrower grants to the Treasury the right, for this purpose to
enter into or on any premises where Collateral may be located; and


 


(e) pursue
any other remedy available to collect, enforce, or satisfy any Obligation,
including exercising its rights as a secured creditor to collect income on the
Collateral, or to sell, assign, transfer, lease or otherwise dispose of
Collateral whether or not Collateral is in the Treasury’s possession, or to
take action against any other property or assets of the Borrower whether or not
pledged to Treasury as Collateral. Where the Borrower is a FHLB, pursue any and
all remedies available to collect, enforce, or satisfy any Loan Repayment
Amount against any other FHLB on the basis that the Loan Repayment Amount is a
consolidated obligation as described in section 3.3. In the event that a FHLB
other than the Borrower satisfies a Loan Repayment Amount owed by the Borrower
pursuant to this subsection, Treasury will release any collateral remaining
upon satisfaction of all Obligations of the Borrower in accordance with
instructions provided by the Office of Finance.


 


12.2 If the
Treasury exercises its rights in Collateral upon an Event of Default:


 

















 


(a) the
Treasury may sell, assign, transfer, and deliver, at the Treasury’s option, all
or any part of Collateral at private or public sale, at such prices as the
Treasury may, in good faith, deem best, without advertisement, and the Borrower
waives notice of the time and place of the sale, except any notice that is
required by law and may not be waived;


 


(b) the
Treasury has no obligation to prepare Collateral for sale, and the Treasury may
sell Collateral and disclaim any warranties without adversely affecting the
commercial reasonableness of the sale;


 


(c) the
Treasury has no obligation to collect from any third party or to marshal any
assets in favor of the Borrower to satisfy any Obligation; and


 


(d) the
Treasury may purchase any or all of Collateral and pay for it by applying the
purchase price to reduce amounts owed by the Borrower to the Treasury.


 


12.3 The
Borrower appoints the Treasury with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Borrower, to endorse, assign, transfer, and deliver Collateral
to any party, and to take any action deemed necessary or advisable by the
Treasury either to protect the Treasury’s interests or exercise its rights
under the Lending Agreement, including taking any action to perfect or maintain
the Treasury’s security interest (including but not limited to recording an
assignment of a mortgage or filing a financing statement). This power of
attorney is coupled with an interest and as such is irrevocable and full power
of substitution is granted to the assignee or holder. As attorney-in-fact, the
Treasury may take any lawful action to collect all sums due in connection with
Collateral, the Treasury may release any Collateral, instruments or agreements
securing or evidencing the Obligations as fully as the Borrower could do if
acting for itself, and the Treasury may take any action set forth in Section 7.9,
but the Treasury has no obligation to take any such actions or any other action
in respect of the Collateral.


 


12.4 The
proceeds realized by the Treasury upon selling or disposing of Collateral, to
the extent actually received in cash by the Treasury will be applied toward
satisfaction of the Obligations. The Treasury shall apply such proceeds first
to any fees, other charges, penalties, indemnities, and costs and expenses of,
collection, or realizing on interests in Collateral (including reasonable
attorneys’ fees), next to accrued but unpaid interest, and last to the unpaid
principal balance. The Treasury will account to the Borrower for any surplus
amount realized upon such sale or other disposition, and the Borrower shall
remain liable for any deficiency.


 


12.5 No delay or
failure by the Treasury to exercise any right or remedy accruing upon an Event
of Default shall impair any right or remedy, waive any default or operate as an
acquiescence to the Event of Default, or affect any subsequent Event of Default
of the same or of a different nature.


 


12.6 On
complying with the provisions of the Lending Agreement and applicable law, the
Treasury is fully discharged from any liability or responsibility to any person
regarding Collateral.


 


13.0
INDEMNIFICATION


 


13.1 The
Borrower shall indemnify the Treasury and its officers, directors, employees
and agents (each, an “Indemnified Party”) for any loss, claim, damage,
liability, and expense (including, without limitation, reasonable attorneys’
fees, court costs and expenses of litigation) incurred by an Indemnified Party
in the course of or arising out of the performance of the Lending Agreement,
any action related to Collateral, or any action to which an Indemnified Party
may become subject in connection with the Treasury’s exercise, enforcement or
preservation of any right or remedy granted to it under the Lending Agreement,
except to the extent that such loss, claim, damage, liability, or expense results,
as determined by a court, from the Treasury’s gross negligence or willful
misconduct.


 


13.2 The
Treasury will give the Borrower written notice of any claim that the Treasury
or any other person may have under this indemnity. The Borrower is not liable
for any claim that is compromised or settled by the Treasury or such persons
without the Borrower’s prior written consent, provided that the Borrower
responded promptly and in the Treasury’s judgment, adequately, to the Treasury’s
notice of such claim. This indemnity remains an obligation of the Borrower
notwithstanding termination of the Lending Agreement, and is binding on the
Borrower’s successors and assigns. Upon written demand from the Treasury, the
Borrower shall pay promptly amounts owed under this indemnity, free and clear
of any right of offset, counterclaim or other deduction, and the Treasury’s
reasonable determination of amounts owing hereunder is binding. If not promptly
paid by the Borrower, such obligation becomes an Obligation secured under the
Lending Agreement.


 

















 


14.0
MISCELLANEOUS


 


14.1 The
Treasury is not obligated by the Lending Agreement or otherwise to make,
increase, renew, or extend any Loan to the Borrower.


 


14.2 The
Borrower’s obligations under the Lending Agreement shall be performed by it at
its own cost and expense.


 


14.3 Unless
expressly agreed otherwise by the Treasury, Eastern Time shall be used to
determine any deadline hereunder, including the time a Loan Repayment Amount is
due and payable.


 


14.4 The
Treasury or a Federal Reserve Bank acting on behalf of the Treasury may record
telephone communications with the Borrower and such recordings may be submitted
in evidence to any court or in any proceeding for the purpose of establishing
any matters pertinent to the Lending Agreement.


 


14.5
The
Treasury’s rights and remedies under the Lending Agreement are in addition to
any others agreed to by the Borrower or that may exist at law or in equity.


 


14.6 Any
provision of the Lending Agreement that is unenforceable or invalid under any
law in any jurisdiction is ineffective to the extent of such unenforceability
or invalidity without affecting the enforceability or validity of any other
provision, and any such unenforceability or invalidity shall not invalidate or
render unenforceable such provision in any other jurisdiction.


 


14.7 The Lending
Agreement is binding on the receivers, administrators, permitted assignees and
successors, and legal representatives of the Borrower and inures to the benefit
of the Treasury, its assignees and successors.


 


14.8 The
Borrower may not assign its rights or obligations hereunder.


 


14.9 The
Treasury is not required to provide a written advice to the Borrower for any
Loan or Loan Repayment Amount.


 


14.10 The
Treasury has no liability for acting in reliance upon any communication
(including a fax, telex, electronic communication, or similar communication)
reasonably believed by the Treasury to be genuine or to be sent by an
individual acting on behalf of the Borrower.


 


14.11 The Section headings
used herein are for convenience only and are not to affect the construction
hereof or be taken into consideration in the construction hereof.


 


15.0
AMENDMENT


 


The
Treasury, in its sole discretion, may amend the Lending Agreement without prior
notice at any time. The Treasury shall notify the Borrower of any such
amendment and, thereafter, any pledge of Collateral, request for any Loan or
incurrence of any other Obligation shall constitute the Borrower’s agreement to
such amendment as of the effective date of such amendment. An amendment does
not modify the terms of an outstanding Loan.


 


16.0
NOTICE


 


16.1 Any and all
notices, statements, demands or other communications hereunder may be given by
a party to the other by mail, facsimile, telegraph, messenger or otherwise to
the address specified in Appendix I hereto, or so sent to such party at any
other place specified in a notice of change of address hereafter received by
the other. All notices, demands and requests hereunder may be made orally, to
be confirmed promptly in writing, or by other communication as specified in the
preceding sentence.


 


16.2 If sent to
the Treasury, the notice must be addressed as specified by the Treasury.


 


17.0
TERMINATION


 


17.1 The Lending
Agreement shall terminate on December 31, 2009 but shall remain in effect
as to any Loan outstanding on that date. Notwithstanding any other provision of
this Agreement, the Borrower may terminate its consent to be bound by the
Lending Agreement prior to that time by giving written notice to the Treasury
in the manner specified by Treasury, so long as no Loan is then outstanding.
Termination does not release the Borrower or affect the Treasury’s rights,
remedies, powers, security interests or liens against Collateral in existence
prior to the termination or 


 

















 


to
Treasury’s receipt of the notice of termination, nor does termination affect
any provision of the Lending Agreement which by its terms survives termination
of the Lending Agreement.


 


17.2 Upon
termination, the Treasury may retain Collateral until the Treasury has had a
reasonable opportunity to verify, in accordance with its normal customs and
procedures, that all of the Borrower’s Obligations, contingent or otherwise, to
the Treasury have been fully satisfied and discharged.


 


18.0
GOVERNING LAW


 


The
Lending Agreement, including any Loan or any other transaction entered into
pursuant thereto, is governed by federal law or to the extent no applicable
federal law exists by the laws of the State of New York. The Lending Agreement
is a security agreement for purposes of the UCC, as in effect in any relevant
jurisdiction, and other applicable law.


 


19.0
WAIVER OF JURY TRIAL


 


THE
BORROWER AND THE TREASURY EACH HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM, OR CROSS
CLAIM ARISING IN CONNECTION WITH, OUT OF, OR OTHERWISE RELATING TO THE LENDING
AGREEMENT, THE COLLATERAL, OR ANY TRANSACTION OR AGREEMENT ARISING THEREFROM OR
RELATED THERETO.


 


LETTER OF AGREEMENT


 


September 9,
2008


 


Mr. Gary
Grippo


Deputy
Assistant Secretary for Fiscal Operations and Policy


Domestic
Finance


United
States Department of the Treasury


Room 2112


1500
Pennsylvania Avenue, NW


Washington,
DC. 20220


 


Dear
Mr. Grippo:


 


In
consideration of being able to request Loans from you and in consideration of
your making Loans to us we agree to the provisions of your Lending Agreement,
as amended and supplemented from time to time (capitalized terms used but not
defined herein shall have the meaning specified in the Lending Agreement).


 


Any
notices required under the Lending Agreement may be directed to the following
department:


 


Legal
Department


Attn:
General Counsel


Federal
Home Loan Bank of Boston


111
Huntington Avenue


Boston,
MA 02199


 


Federal
Home Loan Bank of Boston


 


	
  By:

  	
  /s/
  Michael A. Jessee

  	
   

  
	
  Michael
  A. Jessee

  	
   

  
	
  President
  and Chief Executive Officer