Exhibit 10.2


LOAN AGREEMENT


          THIS
LOAN AGREEMENT (“Loan Agreement”) is made and entered into as of the day of
______________, 2008, by and between the Compensation Committee of the Board of
Directors of Auburn Savings Bank, as trustee (the “Trustee”), of the trust (“Borrower”) established under
Article VIII, and which forms a part, of the Auburn Savings Bank, FSB
Employee Stock Ownership Plan and Trust (“ESOP”), and Auburn Bancorp, Inc. (“Lender”), a corporation organized
and existing
under the laws of the United States of America.


WITNESSETH


          WHEREAS,
the Borrower is authorized to purchase shares of common stock (“Common Stock”)
of Auburn Savings Bank, FSB, either directly from Auburn Savings Bank, FSB or
in open market purchases in an amount not to exceed Three and 43/100th
percent (3.43%)of the number of
shares of Common Stock issued in the offering (including shares issued to
Auburn Bancorp, MHC).


          WHEREAS,
the Borrower is authorized to borrow funds from the Lender for the purpose of
financing authorized purchases of Common Stock; and


          WHEREAS,
the Lender is willing to make
a loan to the Borrower for such purpose:


          NOW, THEREFORE, the parties agree hereto as follows:



ARTICLE I


DEFINITIONS


          The following definitions shall apply for purposes of
this Loan
Agreement, except to the extent that a different meaning is plainly
indicated by the context:


          BUSINESS
DAY means any day other than a Saturday, Sunday or other day on
which banks are authorized or required to close under federal or local law.


          CODE means
the Internal Revenue Code of 1986, as amended (including the corresponding
provisions of any succeeding law).


          DEFAULT
means an event or condition which would constitute an Event of Default. The determination as to whether an event
or condition would constitute an Event of Default shall be determined
without regard to any applicable requirements of notice or lapse of time.


          ERISA means
the Employee Retirement Income Security Act of 1974, as amended
(including the corresponding provisions of any succeeding law).


          EVENT
OF DEFAULT means an event or condition described in Article V. 








          LOAN
means the loan described in section 2.1.


          LOAN
DOCUMENTS means, collectively, the Loan Agreement, the Promissory Note and the
Pledge Agreement and all other documents now or hereafter executed and
delivered in connection with such documents, including all amendments,
modifications and supplements of or to all such documents.


          PLEDGE
AGREEMENT means the agreement described in section 2.8(a).


          PRINCIPAL
AMOUNT means the face amount of the Promissory Note, determined as set forth in
section 2.1(c).


          PROMISSORY
NOTE means the promissory note
described in section 2.3. 


          REGISTER means the register described in section
2.9.


ARTICLE II


THE LOAN; PRINCIPAL AMOUNT;

INTEREST; SECURITY.


          SECTION
2.1 THE LOAN; PRINCIPAL AMOUNT.


          (a)      The
Lender hereby agrees to lend to the Borrower such amount, and at such time, as
shall be determined under this Section 2.1; provided, however, that in no event
shall the aggregate amount lent under this Loan Agreement from time to time
exceed the aggregate amount paid by the Borrower to purchase up to [insert number of shares] shares of Common
Stock.


          (b)      Subject
to the limitations of Section 2.1(a), the Borrower shall determine the amounts
borrowed under this Agreement, and the time at which such borrowings are affected. Each such determination
shall be evidenced in a writing which
shall set forth the amount to be borrowed and the date on which the Lender
shall disburse such amount, and such writing
shall be furnished to the Lender by notice from the Borrower. The Lender
shall disburse to the Borrower the amount specified in each such notice on the
date specified therein or, if later, as promptly
as practicable following the Lender’s receipt of such notice; provided,
however, that the Lender shall have no obligation to disburse funds pursuant to
this Agreement following the occurrence of a Default or an Event of Default
until such time as such Default or Event of Default shall have been cured.


          (c)      For
all purposes of this Loan Agreement, the Principal Amount on any date shall be
equal to the excess, if any, of:


	
 

	
 

	
 


	
 

	
(i)       the
  aggregate amount disbursed by the Lender pursuant to section 2.1(b) on or
  before such date; over


	
 

	
 

	
 


	
 

	
(ii)      the
  aggregate amount of any repayments of such amounts made before such date.





2






The Lender
shall maintain on the Register a record of, and shall record in the Promissory
Note, the Principal Amount, any changes in the Principal Amount and the
effective date of any changes in the Principal Amount.


          SECTION
2.2 INTEREST.


          (a)      The
Borrower shall pay to the Lender interest on the Principal Amount, for the period commencing with the first
disbursement of funds under this Loan Agreement and continuing until the
Principal Amount shall be paid in full, at the rate of [insert prime rate as published in The Wall Street
Journal on the date of the offering] percent (___%) per annum. Interest payable under
this Agreement shall be computed on the
basis of a year of 365 days and actual days elapsed (including the first
day but excluding the last) occurring during the period to which the
computation relates, unless otherwise specified in the amortization schedule.


          (b)      Accrued
interest on the Principal Amount shall be payable by the Borrower on the dates
set forth in Schedule A to the Promissory Note. All interest on the Principal Amount shall be paid by the Borrower in immediately
available funds.


          (c)      Anything
in the Loan Agreement or the Promissory Note to the contrary notwithstanding,
the obligation of the Borrower to make payments of interest shall be subject to
the limitation that payments of interest shall not be required to be made to
the Lender to the extent that the Lender’s receipt thereof would not be
permissible under the law or laws applicable to the Lender limiting rates of
interest which may be charged or collected by the Lender. Any such payment referred to in the preceding sentence
shall be made by the Borrower to the Lender on the earliest interest
payment date or dates on which the receipt thereof would be permissible under
the laws applicable to the Lender limiting
rates of interest which may be charged or collected by the Lender. Such
deferred interest shall not bear interest.


          SECTION
2.3 PROMISSORY NOTE.


          The
Loan shall be evidenced by the Promissory Note of the Borrower attached hereto.


          SECTION
2.4 PAYMENT OF TRUST LOAN.


          The
Principal Amount of the Loan shall be repaid in accordance with Schedule A to the Promissory Note on the dates
specified therein until fully paid.


          SECTION
2.5 PREPAYMENT.


          The
Borrower shall be entitled to prepay the Loan in whole or in part, at any time and from time to time; provided, however,
that the Borrower shall give notice to the Lender of any such
prepayment; and provided, further, that any partial prepayment of the Loan
shall be in an amount not less than $1,000. Any such prepayment shall be: (a)
permanent and irrevocable; (b) accompanied by all accrued interest through the date of such prepayment; (c) made without
premium or penalty; and (d) applied on the inverse order of the maturity
of the installment thereof unless the Lender and the Borrower agree to apply
such prepayments in some other order.


3






          SECTION
2.6 METHOD OF PAYMENTS.


          (a)      All
payments of principal, interest, other charges (including indemnities) and other amounts payable by the
Borrower hereunder shall be made in lawful money of the United States,
in immediately available funds, to the Lender at the address specified in or
pursuant to this Loan Agreement for notices to the Lender, on the date on which
such payment shall become due. Any such payment made on such date but after
such time shall, if the amount paid bears interest, and except as expressly
provided to the contrary herein, be deemed to have been made on, and interest
shall continue to accrue and be payable thereon until, the next succeeding
Business Day. If any payment of principal or interest becomes due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day, and when paid, such payment shall include interest to the day on
which payment is in fact made.


          (b)      Notwithstanding
anything to the contrary contained in this Loan Agreement or the Promissory
Note, the Borrower shall not be obligated to make any payment, repayment or
prepayment on the Promissory Note if doing so would cause the ESOP to cease to
be an employee stock ownership plan within the meaning of section 4975(e)(7) of
the Code or qualified under section 401(a) of the Code or cause the trust
established under Article VIII, and which forms a part, of the ESOP to cease to
be a tax exempt trust under section 501(a) of the Code or if such act or
failure to act would cause the Borrower to engage in any “prohibited
transaction” as such term is defined in the section 4975(c) of the Code and the
regulations promulgated thereunder which is not exempted by section 4975(c)(2)
or (d) of the Code and the regulations promulgated thereunder or in section 406
of ERISA and the regulations promulgated thereunder which is not exempted by
section 408(b) of ERISA and the regulations promulgated thereunder; provided,
however, that in each case, the Borrower, may act or refrain from acting
pursuant to this section 2.6(b) on the basis of an opinion of counsel, and any
opinion of such counsel. The Borrower may consult with counsel, and any opinion
of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such opinion of
counsel. Nothing contained in this section
2.6(b) shall be construed as imposing a duty on the Borrower to consult
with counsel. Any obligation of the Borrower to make any payment, repayment or
prepayment on the Promissory Note or refrain from taking any other act
hereunder or under the Promissory Note which is excused pursuant to this section 2.6(b) shall be considered a binding
obligation of the Borrower for the purposes of determining whether a
Default or Event of Default has occurred hereunder or under the Promissory Note
and nothing in this section 2.6(b) shall be construed as providing a defense to
any remedies otherwise available upon a
Default or an Event of Default hereunder (other than the remedy of
specific performance).


          SECTION
2.7 USE OF PROCEEDS OF LOAN.


          The
entire proceeds of the Loan shall be used solely for acquiring shares of Common
Stock, and for no other purpose whatsoever.


4






          SECTION
2.8 SECURITY.


          (a)      In order
to secure the due payment and performance
by the Borrower of all of its obligations under this Loan Agreement,
simultaneously with the execution and delivery of this Loan Agreement by the
Borrower, the Borrower shall: 


	
 

	
 

	
 


	
 

	
 

	
(i)       pledge
  to the Lender as Collateral (as defined in the Pledge Agreement), and grant
  to the Lender a first priority lien on and security
  interest in, the Common Stock purchased with the Principal Amount, by
  the execution and delivery to the Lender of the Pledge Agreement attached
  hereto as an exhibit; and 


	
 

	
 

	
 


	
 

	
 

	
(ii)      execute
  and deliver, or cause to be executed and delivered, such other agreement,
  instruments and documents as the Lender may reasonably require in order to
  effect the purposes of the Pledge Agreement and this Loan Agreement.





          (b)      The
Lender shall release from encumbrance under the Pledge Agreement and transfer
to the Borrower, as of the date on which any payment or repayment of the
Principal Amount is made, a number of shares of Common Stock held as Collateral
determined pursuant to the applicable provisions of the ESOP.


          SECTION
2.9 REGISTRATION OF THE PROMISSORY NOTE.


          (a)      The
Lender shall maintain a Register providing for the registration of the Principal Amount and any stated interest and
of transfer and exchange of the Promissory Note. Transfer of the
Promissory Note may be effected only by the surrender
of the old instrument and either the reissuance by the Borrower of the
old instrument to the new holder or the issuance by the Borrower of a new
instrument to the new holder. The old Promissory Note so surrendered shall be
canceled by the Lender and returned to the Borrower after such cancellation.


          (b)      Any
new Promissory Note issued pursuant to section 2.9(a) shall carry the same
rights to interest (unpaid and to accrue) carried by the Promissory Note so
transferred or exchanged so that there will not be any loss or gain of interest on the note surrender. Such new
Promissory Note shall be subject to all of the provisions and entitled
to all of the benefits of this Agreement. Prior to due presentment for registration or transfer, the Borrower may deem
and treat the registered holder of any Promissory Note as the holder
thereof for purposes of payment and other purposes. A notation shall be made on
each new Promissory Note of the amount of
all payments of principal and interest theretofore paid.


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF THE BORROWER


          The
Borrower hereby represents and warrants to the Lender as follows: 




5







          SECTION
3.1 POWER, AUTHORITY, CONSENTS.


          The
Borrower has the power to execute, deliver and perform this Loan Agreement, the
Promissory Note and Pledge Agreement, all of which have been duly authorized by
all necessary and proper corporate or other action.


          SECTION
3.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.


          Each
of the Loan Documents, including, without limitation, this Loan Agreement, the Promissory Note and the Pledge
Agreement, has been duly executed and delivered by the Borrower; and
each constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms.


          SECTION
3.3 PROPERTIES, PRIORITY OF LIENS.


          The
liens which have been created and granted by the Pledge Agreement constitute valid, first liens on the properties
and assets covered by the Pledge Agreement, subject to no prior or equal
lien.


          SECTION
3.4 NO DEFAULTS, COMPLIANCE WITH LAWS.


          The
Borrower is not in default in any material respect under any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to
which it is a party or by which it is bound, or any other agreement or other
instrument by which any of the properties or assets owned by it is materially
affected.


          SECTION
3.5 PURCHASE OF COMMON STOCK.


          Upon consummation
of any purchase of Common Stock by the Borrower with the proceeds of the Loan,
the Borrower shall acquire valid, legal and marketable title to all of the
Common Stock so purchased, free and clear of any liens, other than a pledge to
the Lender of the Common Stock so purchased pursuant to the Pledge Agreement.
Neither the execution and delivery of the Loan Documents nor the performance of
any obligation thereunder violates any provisions of law or conflicts with or
results in a breach of or creates (with or without the giving of notice of
lapse of time, or both) a default under any agreement to which the Borrower is
a party or by which it is bound or any of its properties is affected. No
consent of any federal, state, or local governmental authority, agency, or
other regulatory body, the absence of which could have a materially adverse effect on the Borrower is or was required
to be obtained in connection with the
execution, delivery, or performance of the Loan Documents and the
transaction contemplated therein or in connection therewith, including without
limitation, with respect to the transfer of the shares of Common Stock
purchased with the proceeds of the Loan pursuant thereto.


          SECTION
3.6 ESOP; CONTRIBUTIONS.


          The ESOP
has been or will be duly created, organized and maintained in compliance with
all applicable laws, regulations and rulings. The ESOP is intended to qualify
as an “employee stock ownership plan” as defined in section 4975(e)(7) of the
Code. The ESOP provides that the


6









ESOP sponsor may make contributions to the ESOP in an amount necessary to
enable the Borrower or the Trustee to amortize the Loan in accordance with the
terms of the Promissory Note; provided, however, that no such contributions
shall be required if they would adversely affect the qualification of the ESOP
under section 401(a) of the Code.




          SECTION
3.7 TRUSTEE.


          The Trustee has been duly appointed in accordance with
the
terms of the ESOP. 


          SECTION
3.8 COMPLIANCE WITH LAWS; ACTIONS.


          Neither
the execution and delivery by the Borrower of this Loan Agreement or any instruments
required thereby, nor compliance with the terms and provisions of any such
documents by the lender, constitutes a violation of any provision of any law or any regulation, order, writ, injunction or
decree or any court or governmental instrumentality, or an event of
default under any agreement, to which the
Borrower is a party of which the Borrower is bound or to which the
Borrower is subject, which violation or event of default would have a material
adverse effect on the Borrower. There is no action or proceeding pending or
threatened against either the ESOP or the Borrower before any court or
administrative agency.


ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF THE LENDER


          The Lender
hereby represents and warrants to the Borrower and Trustee as follows:


          SECTION
4.1 POWER, AUTHORITY, CONSENTS.


          The
Lender has the power to execute, deliver and perform this Loan Agreement, the
Pledge Agreement and all documents executed by the Lender in connection with
the Loan, all of which have been duly authorized by all necessary and proper
corporate or other action. No consent, authorization or approval or other action by any governmental authority or regulatory
body, and no notice by the Lender to, or filing by the Lender with any governmental authority or regulatory body is
required for the due execution, delivery and performance of this Loan
Agreement.


          SECTION
4.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.


          This
Loan Agreement and the Pledge
Agreement have been duly executed and delivered by the Lender, and each
constitutes a valid and legally binding obligation of the Lender, enforceable
in accordance with its terms. 


7






ARTICLE V


EVENTS OF DEFAULT


          SECTION
5.1 EVENTS OF DEFAULT UNDER LOAN AGREEMENT.


          Each
of the following events shall constitute an “Event of Default” hereunder: 


          (a)
          Failure to make any
payment or mandatory prepayment of principal of the Promissory Note when due,
or failure to make any payment of interest on the Promissory Note not later
than five (5) Business Days after the date when due. 


          (b)
          Failure by the
Borrower to perform or observe any term, condition or covenant of this Loan
Agreement or of any of the other Loan Documents, including without limitation,
the Promissory Note and the Pledge Agreement. 


          (c)
          Any representation
or warranty made in writing to the Lender in any of the Loan Documents, or any
certificate, statement or report made or delivered in compliance with this Loan
Agreement, shall have been false or misleading in any material respect when
made or delivered. 


          SECTION
5.2 LENDER’S RIGHTS UPON EVENT OF DEFAULT. 


          If
an Event of Default under this Loan Agreement shall occur and be continuing,
the Lender shall have no rights to assets of the Borrower or the ESOP
(including the trust established under Article VIII, and which forms a part, of
the ESOP) other than: (a) contributions (other than contributions of Common
Stock) that are made by the ESOP sponsor to enable the Borrower to meet its
obligations pursuant to this Loan Agreement and earnings attributable to the
investment of such contributions and (b) “Eligible Collateral” (as defined in
the Pledge Agreement); provided, however, that: (i) the value of the Borrower’s
assets transferred to the Lender following an Event of Default in satisfaction
of the due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any acceleration of the
Loan); (ii) the Borrower’s assets shall be transferred to the Lender following
an Event of Default only to the extent of the failure of the Borrower to meet
the payment schedule of the Loan; and (iii) all rights of the Lender to the
Common Stock purchased with the proceeds of the Loan covered by the Pledge
Agreement following an Event of Default shall be governed by the terms of the
Pledge Agreement. 


ARTICLE VI


MISCELLANEOUS PROVISIONS


          SECTION
6.1 PAYMENTS DUE TO THE LENDER. 


          If
any amount is payable by the Borrower to the Lender pursuant to any indemnity
obligation contained herein, then the Borrower shall pay, at the time or times provided
therefor, any such amount and shall indemnify the Lender against and hold it
harmless from any loss of damage resulting from or arising out of the
nonpayment or delay in payment of any such amount. If any amounts as to which
the Borrower has so indemnified the Lender hereunder shall be


8






assessed or
levied against the Lender, the Lender may notify the Borrower and make
immediate payment thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive immediate
reimbursement therefor from the Borrower together with interest on each such
amount as provided in section 2.2(c). Notwithstanding any other provision
contained in this Loan Agreement, the covenants and agreements of the Borrower
contained in this section 6.1 shall survive payment of the Promissory Note and
termination of this Loan Agreement. 




          SECTION
6.2 PAYMENTS. 


          All
payments hereunder and under the Promissory Note shall be made without set-off
or counterclaim and in such amounts as may be necessary in order that all such
payments shall not be less than the amounts otherwise specified to be paid
under this Loan Agreement and the Promissory Note, subject to any applicable
tax withholding requirements. Upon payment in full of the Promissory Note, the
Lender shall mark such Promissory Note “Paid” and return it to the Borrower. 


          SECTION
6.3 SURVIVAL. 


          All
agreements, representations and warranties made herein shall survive the
delivery of this Loan Agreement and the Promissory Note. 


          SECTION
6.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT. 


          No
modification, amendment or waiver of or with respect to any provision of this
Loan Agreement, the Promissory Note, the Pledge Agreement, or any of the other
Loan Documents, nor consent to any departure from any of the terms or
conditions thereof, shall in any event be effective unless it shall be in
writing and signed by the party against whom enforcement thereof is sought. Any
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in
similar or other circumstances. This Loan Agreement embodies the entire
agreement and understanding between the Lender and the Borrower and supersedes
all prior agreements and understandings relating to the subject matter hereof. 


          SECTION
6.5 CUMULATIVE. 


          Each
and every right granted to the Lender hereunder or under any other document
delivered hereunder or in connection herewith, or allowed it by law or equity,
shall be cumulative and may be exercised from time to time. No failure on the
part of the Lender or the holder of the Promissory Note to exercise, and no
delay in exercising, any right shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude any other or future exercise
thereof or the exercise of any other right. The due payment and performance of
the obligations under the Loan Documents shall be without regard to any
counterclaim, right of offset or any other claim whatsoever which the Borrower
or the Trustee may have against the Lender and without regard to any other obligation
of any nature whatsoever which the Lender may have to the Borrower or the
Trustee, and no such counterclaim or offset shall be asserted by



9






the Borrower
or the Trustee in any action, suit or proceeding instituted by the Lender for
payment or performance of such obligations. 




          SECTION
6.6 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS. 


          At
any time and from time to time, upon the request of the Lender, the Borrower
shall execute, deliver and acknowledge or cause to be executed, delivered and
acknowledged, such further documents and instruments and do such other acts and
things as the Lender may reasonably request in order to fully effect the terms
of this Loan Agreement, the Promissory Note, the Pledge Agreement, the other
Loan Documents and any other agreements, instruments and documents delivered
pursuant hereto or in connection with the Loan. 


          SECTION
6.7 NOTICES. 


          Except
as otherwise specifically provided for herein, all notice, requests, reports
and other communications pursuant to this Loan Agreement shall be in writing,
either by letter (delivered by hand or commercial messenger service or sent by
registered or certified mail, return receipt requested, except for routine
reports delivered in compliance with Article VI hereof which may be sent by
ordinary first-class mail) or fax addressed as follows: 


	
 

	
 

	
 


	
 

	
(a) 

	
If to the
 Borrower:


	
 

	
 

	
 


	
 

	
 

	
Trustee of
 the Auburn Savings Bank,


	
 

	
 

	
FSB Employee
 Stock Ownership Plan and Trust 

 c/o Compensation Committee of the Board of Directors of 

 Auburn Savings Bank 

 256 Court Street, P.O. Box 3157 

 Auburn, Maine 04210


	
 

	
 

	
 


	
 

	
(b) 

	
If to the
 Lender:


	
 

	
 

	
 


	
 

	
 

	
Auburn
 Bancorp, Inc. 

 256 Court Street, P.O. Box 3157 

 Auburn, Maine 04210





Any notice,
request or communication hereunder shall be deemed to have been given on the
day on which it is delivered by hand or by commercial messenger service, or
sent by facsimile, to such party at its address specified above, or, if sent by
mail, on the third Business Day after the day deposited in the mail, postage
prepaid, addressed as aforesaid. Any party may change the person or address to
whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given only when actually received by the party to whom it is addressed. 


          SECTION
6.8 COUNTERPARTS. 


          This
Loan Agreement may be signed in any number of counterparts which, when taken
together, shall constitute one and the same document. 


10






          SECTION
6.9 CONSTRUCTION; GOVERNING LAW. 


          The
headings used in the table of contents and in this Loan Agreement are for
convenience only and shall not be deemed to constitute a part hereof. All uses
herein of any gender or of singular or plural terms shall be deemed to include
uses of the other genders or plural or singular terms, as the context may
require. All references in this Loan Agreement of an Article or section shall
be to an Article or section of this Loan Agreement, unless otherwise specified.
This Loan Agreement, the Promissory Note, the Pledge Agreement and the other
Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the Commonwealth of Massachusetts. 


          SECTION
6.10 SEVERABILITY. 


          Wherever
possible, each provision of this Loan Agreement shall be interpreted in such
manner as to be effective and valid under applicable law; however, the
provisions of this Loan Agreement are severable, and if any clause of provision
hereof shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provisions in this Loan Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Loan Agreement
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other. The Borrower shall not take any
action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement. 


          SECTION
6.11 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION. 


          This
Loan Agreement shall be binding upon and inure to the benefit of the Borrower
and its successors and the Lender and its successors and assigns. The rights
and obligations of the Borrower under this Agreement shall not be assigned or
delegated without the prior written consent of the Lender, and any purported
assignment or delegation without such consent shall be void. 


          IN
WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed as
of the date first written above. 


	
 

	
 

	
 


	
 

	
Auburn Savings
 Bank, FSB Bank Employee

 Stock Ownership Plan and Trust


	
 

	
 


	
 

	
By:


	
 

	
 


	
 

	



	
 

	
Its Trustee


	
 

	
 


	
 

	
Auburn
 Bancorp, Inc.


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	






11






FORM OF 

PLEDGE AGREEMENT


          THIS
PLEDGE AGREEMENT (“Pledge Agreement”) is made as of the ____ day of ______________
2008, by and between the Compensation Committee of the Board of Directors of
Auburn Savings Bank, as trustee (the “Trustee”), of the trust (“Borrower”)
established under Article VIII, and which forms a part, of the Auburn Savings
Bank, FSB Employee Stock Ownership Plan and Trust (“Pledgor”), and Auburn
Bancorp, Inc., a corporation organized and existing under the laws of the
United States of America (“Pledgee”). 


WITNESSETH


          WHEREAS,
this Pledge Agreement is being executed and delivered to the Pledgee pursuant
to the terms of a Loan Agreement (“Loan Agreement”), by and between the Pledgor
and the Pledgee; 


          NOW,
THEREFORE, in consideration of the mutual agreements contained herein and in
the Loan Agreement, the parties hereto do hereby covenant and agree as follows:



SECTION 1. 

DEFINITIONS


          The
following definitions shall apply for purposes of this Pledge Agreement, except
to the extent that a different meaning is plainly indicated by the context; all
capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Loan Agreement: 


          COLLATERAL
shall mean the Pledged Shares and, subject to section 5 hereof, and to the
extent permitted by applicable law, all rights with respect thereto, and all
proceeds of such Pledged Shares and rights. 


          ESOP
shall mean the Auburn Savings Bank, FSB Employee Stock Ownership Plan and
Trust. 


          EVENT
OF DEFAULT shall mean an event so defined in the Loan Agreement. 


          LIABILITIES
shall mean all the obligations of the Pledgor to the Pledgee, howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under the Loan
Agreement and the Promissory Note. 


          PLEDGED
SHARES shall mean all the Shares of Common Stock of the Pledgee purchased by
the Pledgor with the proceeds of the loan made by the Pledgee to the Pledgor
pursuant to the Loan Agreement, but excluding any such shares previously released
pursuant to section 4. 






SECTION 2. 

PLEDGE


          To
secure the payment of and performance of all the Liabilities, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee, a security interest
in, and lien upon, the Collateral. 


SECTION 3. 

REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR


          The
Pledgor represents, warrants, and covenants to the Pledgee as follows: 


          (a)     
the execution, delivery and performance of this Pledge Agreement and the
pledging of the Collateral hereunder do not and will not conflict with, result
in a violation of, or constitute a default under, any agreement binding upon
the Pledgor; 


          (b)     
the Pledged Shares are and will continue to be owned by the Pledgor free and
clear of any liens or rights of any other person except the lien hereunder and
under the Loan Agreement in favor of the Pledgee, and the security interest of
the Pledgee in the Pledged Shares and the proceeds thereof is and will continue
to be prior to and senior to the rights of all others; 


          (c)     
this Pledge Agreement is the legal, valid, binding and enforceable obligation
of the Pledgor in accordance with its terms; 


          (d)     
the Pledgor shall, from time to time, upon request of the Pledgee, promptly
deliver to the Pledgee such stock powers, proxies, and similar documents,
satisfactory in form and substance to the Pledgee, with respect to the
Collateral as the Pledgee may reasonably request; and 


          (e)     
subject to the first sentence of section 4(b), the Pledgor shall not, so long
as any Liabilities are outstanding, sell, assign, exchange, pledge or otherwise
transfer or encumber any of its rights in and to any of the Collateral. 


SECTION 4. 

ELIGIBLE COLLATERAL


          (a)     
As used herein the term “Eligible Collateral” shall mean the amount of
Collateral which has an aggregate fair market value equal to the amount by
which the Pledgor is in default (without regard to any amounts owing solely as
the result of an acceleration of the Loan Agreement) or such lesser amount of
Collateral as may be permissible under the qualification and exemption
requirements referenced in Section 13 of this Pledge Agreement. 


          (b)     
The Pledged Shares shall be released from this Pledge Agreement in a manner
conforming to the requirements of Labor Regulation 2550.408b-3(h) and Treasury
Regulation section 54.4975-7(b)(8), as the same may be from time to time
amended or supplemented, and the applicable provisions of the ESOP. Subject to
the qualification and exemption requirements referenced in Section 13 of this
Pledge Agreement, the Pledgee may from time to time, after any Default or Event
of Default, and without prior notice to the Pledgor, transfer all or any part
of the 




- 2 -







Eligible Collateral in the name of the Pledgee or its nominee, without
disclosing that such Eligible Collateral is subject to any rights of the
Pledgor and may from time to time, whether before or after any of the
Liabilities shall become due and payable, without notice to the Pledgor, take
all or any of the following actions: (i) notify the parties obligated on any of
the Eligible Collateral to make payment to the Pledgee of any amounts due or
due to become due thereunder, (ii) release or exchange all or any part of the
Eligible Collateral, or compromise or extend or renew for any period (whether
or not longer than the original period) any obligations of any nature of any
party with respect thereto, and (iii) take control of any proceeds of the
Eligible Collateral. 


SECTION 5. 

DELIVERY


          (a)     
The Pledgor shall deliver to the Pledgee upon execution of this Pledge
Agreement (i) either (A) certificates for the Pledged Shares, each certificate
duly signed in blank by the Pledgor or accompanied by a stock transfer power
duly signed in blank by the Pledgor and each such certificate accompanied by
all required documentary or stock transfer tax stamps or (B) if the Trustee
does not yet have possession of the Pledged Shares, an assignment by the
Pledgor of all the Pledgor’s rights to and interest in the Pledged Shares and
(ii) an irrevocable proxy, in form and substance satisfactory to the Pledgee,
signed by the Pledgor with respect to the Pledged Shares. 


          (b)     
So long as no Default or Event of Default shall have occurred and be
continuing, (i) the Pledgor shall be entitled to exercise any and all voting
and other rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Pledge Agreement, and (ii) the
Pledgor shall be entitled to receive any and all cash dividends or other
distributions paid in respect of the Collateral. 


SECTION 6. 

EVENTS OF DEFAULT


          (a)     
If a Default or Event Default shall be existing, in addition to the rights it
may have under the Loan Agreement, the Promissory Note, and this Pledge
Agreement, or by virtue of any other instrument, (i) the Pledgee may exercise,
with respect to the Eligible Collateral, from time to time, any rights and
remedies available to it under the Uniform Commercial Code as in effect from
time to time in the Commonwealth of Massachusetts or otherwise available to it
and (ii) the Pledgee shall have the right, for and in the name, place and stead
of the Pledgor, to execute endorsement, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or any of the
Eligible Collateral. Written notification of intended disposition of any of the
Eligible Collateral shall be given by the Pledgee to the Pledgor at least three
(3) Business Days before such disposition. Subject to section 13 below, any
proceeds of any disposition of Eligible Collateral may be applied by the
Pledgee to the payment of expenses in connection with the Eligible Collateral,
including, without limitation, reasonable attorneys’ fees and legal expenses,
and any balance of such proceeds may be applied by the Pledgee toward the
payment of such of the Liabilities as are in Default, and in such order of
application, as the Pledgee may from time to time elect. No action of the
Pledgee permitted hereunder shall impair or affect its rights in and to the
Eligible Collateral. All rights and remedies of the Pledgee expressed 



- 3 -






hereunder
are in addition to all other rights and remedies possessed by it, including,
without limitation, those contained in the documents referred to in the
definition of Liabilities in section 1 hereof.




          (b)     
In any sale of any of the Eligible Collateral after a Default or an Event of
Default shall have occurred, the Pledgee is hereby authorized to comply with
any limitation or restriction in connection with such sale as it may be advised
by counsel if necessary in order to avoid violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers or further restrict such
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Eligible Collateral), or in order to obtain
such required approval of the sale or of the purchase by any governmental
regulatory authority or official, and the Pledgor further agrees that such
compliance shall not result in such sale’s being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Pledgee be
liable or accountable to the Pledgor for any discount allowed by reason of the
fact that such Eligible Collateral is sold in compliance with any such
limitation or restriction. 


SECTION 7. 

PAYMENT IN FULL


          Upon
the payment in full of all outstanding Liabilities, this Pledge Agreement shall
terminate and the Pledgee shall forthwith assign, transfer and deliver to the
Pledgor, against receipt and without recourse to the Pledgee, all Collateral then
held by the Pledgee pursuant to the Pledge Agreement. 


SECTION 8. 

NO WAIVER


          No
failure or delay in the part of the Pledgee in exercising any right or remedy
hereunder or under any other document which confers or grants any rights to the
Pledgee in respect of the Liabilities shall operate as a waiver thereof nor
shall any single or partial exercise of any such rights or remedy preclude any
other or further exercise thereof or the exercise of any other right or remedy
of the Pledgee. 


SECTION 9. 

BINDING EFFECT; NO ASSIGNMENT OR DELEGATION


          This
Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the
Pledgor may not assign or transfer its rights hereunder without the prior
written consent of the Pledgee (which consent shall not unreasonably be
withheld). Each duty or obligation of the Pledgor to the Pledgee pursuant to
the provisions of this Pledge Agreement shall be performed in favor of any person or
entity designated by the Pledgee, and any duty or obligation of the Pledgee to
the Pledgor may be performed by any other person or entity designated by the
Pledgee. 


- 4 -






SECTION 10. 

GOVERNING LAW


          This
Pledge Agreement shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts applicable to agreements to be performed
wholly within the Commonwealth of Massachusetts. 


SECTION 11. 

NOTICES


          All
notices, requests, instructions or documents hereunder shall be in writing and
delivered personally or sent by United States mail, registered or certified,
return receipt requested, with proper postage prepaid as follows: 


	
 

	
 

	
 

	
 


	
 

	
(a)

	
If to the
 Pledgee:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Auburn
 Bancorp, Inc.


	
 

	
 

	
 

	
256 Court
 Street


	
 

	
 

	
 

	
Auburn,
 Maine 04210


	
 

	
 

	
 

	
 


	
 

	
(b)

	
If to the
 Pledgor:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Trustee of
 the Auburn Savings Bank,


	
 

	
 

	
 

	
FSB Employee
 Stock Ownership Plan and Trust


	
 

	
 

	
 

	
c/o
 Compensation Committee of the Board of Directors of


	
 

	
 

	
 

	
Auburn
 Savings Bank


	
 

	
 

	
 

	
256 Court
 Street


	
 

	
 

	
 

	
Auburn,
 Maine 04210





or at such
other address as either of the parties may designate by written notice to the
other party. If delivered personally, the date on which a notice, request,
instruction or document is delivered shall be the date on which such delivery
is made, and, if delivered by mail, the date on which such notice, request,
instruction, or document is deposited in the mail shall be the date of
delivery. Each notice, request, instruction or document shall bear the date on
which it is delivered. 


SECTION 12. 

INTERPRETATION


          Wherever
possible each provision of this Pledge Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
herein shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
hereof.


- 5 -






SECTION 13. 

CONSTRUCTION


          All
provisions hereof shall be construed so as to maintain (a) the ESOP as a
qualified leveraged employee stock ownership plan under section 401(a) and
4975(e)(7) of the Internal Revenue Code of 1986 (the “Code”), (b) the Trust as
exempt from taxation under section 501(a) of the Code and (c) the Trust Loan as
an exempt loan under section 54.4975-7(b) of the Treasury Regulations and as
described in Department of Labor Regulation section 2550.408b-3. 


          IN
WITNESS WHEREOF, this Pledge Agreement has been duly executed by the parties
hereto as of the day and year first above written. 


	
 

	
 

	
 


	
 

	
Auburn
 Savings Bank, FSB Employee Stock

 Ownership Plan and Trust (Pledgor)


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Trustee


	
 

	
 

	
 


	
 

	
Auburn
 Bancorp, Inc. (Pledgee)


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	






- 6 -






FORM OF 

PROMISSORY NOTE


          FOR
VALUE RECEIVED, the undersigned, Auburn Savings Bank, FSB Employee Stock
Ownership Plan and Trust (the “Borrower”), hereby promises to pay to the order
of Auburn Savings Bank, FSB (the “Lender”) up to [$__________] payable in
accordance with the Loan Agreement made and entered into between the Borrower
and the Lender of even date herewith (“Loan Agreement”) pursuant to which this
Promissory Note is issued. 


          The
Principal Amount of this Promissory Note shall be payable in accordance with
the attached Schedule A. 


          This
Promissory Note shall bear interest at the rate per annum established under the
Loan Agreement, and shall be payable in fifteen (15) annual installments of
principal and interest accordance with Schedule A. 


          Anything
herein to the contrary notwithstanding, the obligation of the Borrower to make
payments of interest shall be subject to the limitation that payments of
interest shall not be required to be made to the Lender to the extent that the
Lender’s receipt thereof would not be permissible under the law or laws
applicable to the Lender limiting rates on interest which may be charged or
collected by the Lender. Any such payments on interest which are not made as a
result of the limitation referred to in the preceding sentence shall be made by
the Borrower to the Lender on the earliest interest payment date or dates on
which the receipt thereof would be permissible under the laws applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender. Such deferred interest shall not bear interest. 


          Payments
of both principal and interest on this Promissory Note are to be made at the
principal office of the Lender or such other place as the holder hereof shall
designate to the Borrower in writing, in lawful money of the United States of
America in immediately available funds. 


          Failure
to make any payments of principal on this Promissory Note when due, or failure
to make any payment of interest on this Promissory Note not later than five (5)
Business Days after the date when due, shall constitute a default hereunder,
whereupon the principal amount of accrued interest on this Promissory Note
shall immediately become due and payable in accordance with the terms of the
Loan Agreement. 


          This
Promissory Note is secured by a Pledge Agreement between the Borrower and the
Lender of even date herewith and is entitled to the benefits thereof. 


	
 

	
 

	
 


	
 

	
Auburn
 Savings Bank, FSB Employee Stock

 Ownership Plan and Trust


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	



	
 

	
 

	
Trustee











	
 

	
 

	
 

	
 


	
Schedule A


	
 

	
 

	
 


	
Installment No. 

	
Date Due 

	
Amount 


	


	


	



	
 


	
1.

	
 

	
 

	
 


	
 


	
2.

	
 

	
 

	
 


	
 


	
3.

	
 

	
 

	
 


	
 


	
4.

	
 

	
 

	
 


	
 


	
5.

	
 

	
 

	
 


	
 


	
6.

	
 

	
 

	
 


	
 


	
7.

	
 

	
 

	
 


	
 


	
8.

	
 

	
 

	
 


	
 


	
9.

	
 

	
 

	
 


	
 


	
10.

	
 

	
 

	
 


	
 


	
11.

	
 

	
 

	
 


	
 


	
12.

	
 

	
 

	
 


	
 


	
13.

	
 

	
 

	
 


	
 


	
14.

	
 

	
 

	
 


	
 


	
15.