Document:

EX-10.16

 

Exhibit 10.16

Federal Home Loan Bank of Pittsburgh

Supplemental Thrift Plan

Amended and Restated Effective June 26, 2007

 

 

Table of Contents

	 	 	 	 	 	 	 
	Article	 	 	 	Page	 
	 
	 	Preamble	 	 	1	 
	 
	 	 	 	 	 	 
	I.
	 	Definitions	 	 	2	 
	 
	 	 	 	 	 	 
	II.
	 	Participation and Vesting	 	 	5	 
	 
	 	 	 	 	 	 
	III.
	 	Deferral Elections; Employee Deferrals; Bank Deferrals	 	 	6	 
	 
	 	 	 	 	 	 
	IV.
	 	Accounts and Investment Vehicles	 	 	8	 
	 
	 	 	 	 	 	 
	V.
	 	Distribution of Benefits	 	 	9	 
	 
	 	 	 	 	 	 
	VI.
	 	Administration of the Plan	 	 	12	 
	 
	 	 	 	 	 	 
	VII.
	 	General Provisions	 	 	14	 

 

 

Preamble

The Federal Home Loan Bank of Pittsburgh (the “Bank”) participates in the Financial Institutions
Thrift Plan (the “Thrift Plan”), a retirement savings plan qualified under the Internal Revenue
Code (the “Code”) for employees of the Federal Home Loan Bank of Pittsburgh. The Thrift Plan
permits eligible employees to elect to reduce and defer a percentage of their compensation,
contributing the same to the Thrift Plan. The Bank matches employee contributions based on length
of service and the amount of employee contributions.

However, as a result of the limitations imposed upon the aggregate amount of contributions which
can be made to the Thrift Plan under Section 415 and other sections of the Code, such limitations
causing a reduction in the benefits otherwise provided to certain of the Bank’s executives, the
Bank has adopted this nonqualified, unfunded Supplemental Thrift Plan (the “Plan”). The purpose of
this Plan is to allow those employees whose benefits under the Thrift Plan would otherwise be
significantly restricted by the terms of the Thrift Plan itself or the Code to make elective pretax
deferrals and to receive the Bank match relating to such deferrals. Additionally, under the Plan,
the Bank will match 200 percent of such employee’s contributions; provided, however, that the
Bank’s matching contribution will not exceed the excess of 3 percent of the employee’s compensation
(as defined in the Plan) over the Bank’s contribution to the Thrift Plan.

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Article I

Definitions

	1.1	 	“Account” means the book reserve account established and maintained hereunder to record the
contributions deemed to be made by the Participant and the Bank, as well as the increase in
value attributable to the earnings thereon, all as described hereafter.
	 
	1.2	 	“Bank” means the Federal Home Loan Bank of Pittsburgh.
	 
	1.3	 	“Bank Deferral” means an amount allocated by the Bank to a Participant’s Account pursuant to
Section 3.3.
	 
	1.4	 	“Beneficiary” means the person or persons designated by a Participant under the provisions of
this Supplemental Thrift Plan to receive his/her benefits in the event of his/her death prior
to receipt of all benefits hereunder. If no person is designated by a Participant or the
designated person or persons do not survive the Participant, the Participant’s Beneficiary
shall be his/her estate. If a Beneficiary who is receiving payments from a Participant’s
Account dies before the entire Account has been distributed, the remaining payments shall be
made to the Beneficiary’s estate.
	 
	1.5	 	“Board” or “Board of Directors” means the Board of Directors of the Federal Home Loan Bank of
Pittsburgh.
	 
	1.6	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
	 
	1.7	 	“Compensation” means the annual base salary plus incentive compensation. The portion of any
incentive compensation award under a VIP (as defined below) that is included in “Compensation”
shall not exceed the maximum amount of incentive compensation that would have been included
for such Participant in that year if the Bank’s short-term incentive compensation plan in
effect as of June 25, 2007 continued in effect after 1/01/2008. Incentive compensation under
an LTI (as defined below) shall be excluded from the definition of “Compensation.”
	 
	1.8	 	“Deferral Election” means a Participant’s irrevocable election to defer a portion of his/her
Compensation.
	 
	1.9	 	“Deferral Period” means the period commencing with the date a Deferred Amount is first
credited to a Participant’s Account and continuing until payment of the final installment of a
Participant’s Deferred Amount.
	 
	1.10	 	“Deferred Amount” means the sum of all amounts deferred pursuant to a Participant’s Deferral
Election, plus the Bank match, plus investment earnings thereon, plus any increments thereof
credited to the Participant’s Account, less any benefit payments made from the Participant’s
Account.
	 
	1.11	 	“Disability” means with respect to eligibility for payment of a Participant’s vested benefit
under the Plan through December 31, 2004, a Participant’s total or partial disability as

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	 	 	determined by the Thrift Plan in accordance with the Thrift Plan in effect at October 3,
2004. With respect to eligibility for payment of a Participant’s vested benefit amounts
under the Plan after December 31, 2004, “Disability” means that the Participant is: a)
unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months; b) by reason of any medically
determinable physical or mental impairment, which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health
plan covering employees of the Bank; or c) determined to be totally disabled by the Social
Security Administration.
	 
	1.12	 	“Effective Date” means January 1, 1991.
	 
	1.13	 	“Employee Deferral” means an amount deferred by a Participant under the Plan.
	 
	1.14	 	“Human Resources Committee” means the Human Resources Committee of the Board.
	 
	1.15	 	“LTI” means any Long-Term Incentive Compensation Plan maintained by the Bank from time to
time.
	 
	1.16	 	“Participant” means an executive or other key employee who has been recommended by the
President, and confirmed by the Board, as eligible to participate in the Plan.
	 
	1.17	 	“Plan Administrator” means such officer(s) or manager of the Bank who has been appointed by
the Human Resources Committee to administer the Plan as set forth in Section 6.1 of the Plan.
The Human Resources Managing Director shall serve as the Plan Administrator unless the Board
shall appoint another Bank officer(s) or manager.
	 
	1.18	 	“Retention Incentive” means that portion of a Participant’s award under the Bank’s short-term
Variable Incentive Compensation Plan (“VIP”), if any, that is subject to forfeiture under the
terms of the VIP.
	 
	1.19	 	“Separation from Service” means the Participant’s death, retirement, the time at which the
Participant’s services performed for the Bank are permanently reduced to no more than 20
percent of the average level of services performed by the Participant over the preceding
36-month period, or other termination of employment all as set forth in applicable definitions
under 26 C.F.R. 1. 409A-1(h) and related and successor regulations as may be in effect from
time to time.
	 
	1.20	 	“Unforeseeable Emergency” means: a) a severe financial hardship to a Participant resulting
from an illness or accident of: (i) the Participant; (ii) the Participant’s spouse; (iii) the
Participant’s dependent as defined in Code Section 152(a)); or (iv) if the Participant is
already receiving payments under the Supplemental Thrift Plan, a severe financial hardship
resulting from illness or accident of the Beneficiary; b) loss of the Participant’s property
due to casualty; or c) other similar extraordinary and

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	 	 	unforeseeable circumstances arising as a result of events beyond the control of the
Participant.
	 
	1.21	 	“VIP” means the Bank’s short-term Variable Incentive Compensation Plan adopted by the Bank’s
Board of Directors effective January 1, 2008 under which annual incentive compensation awards
may be made.

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Article II

Participation and Vesting

	2.1	 	Eligibility to Participate. A Participant shall become eligible for Plan participation on
the later of the first day of the calendar month coincident with or next following the date
his/her participation is approved by the Board or the Effective Date. Once selected as a
Participant, the Participant shall continue as a Participant until the Board determines
otherwise. No Participant shall have the right to continue as a Participant in the Plan.
	 
	 	 	Upon designation as a Participant, each Participant will be given a copy of the Plan. Upon
becoming eligible to participate in the Plan, a Participant shall have the option to make a
Deferral Election to defer a portion of his/her annual Compensation.
	 
	2.2	 	Termination of Participation. No further Employee Deferrals or Bank Deferrals shall occur
with respect to a Participant after the Participant’s employment with the Bank terminates.
However, until the amounts in a Participant’s Account are fully paid out to the Participant
and/or his/her Beneficiary, the Participant’s Account shall continue to be notionally invested
as provided in Section 4.2, and the Participant (or his/her Beneficiary) shall continue to
have the right to change such investments by written notice to the Plan Administrator. Once a
Participant’s Account has been fully paid out, such Participant shall cease to be a
Participant in the Plan and neither the Participant nor his/her Beneficiary shall have any
further rights hereunder.
	 
	2.3	 	Vesting. All benefits under the Plan are fully vested at all times subject only to
Forfeiture for Cause as defined in Section 7.6. For all purposes of the Plan, earnings with
respect to amounts in a Participant’s Account which were vested as of December 31, 2004 (and
earnings on such earnings) shall be deemed to have been vested as of December 31, 2004 and all
other earnings with respect to amounts in a Participant’s Account shall be deemed not to have
been vested as of December 31, 2004.

5

 

Article III

Deferral Elections; Employee Deferrals; Bank Deferrals

	3.1	 	Deferral Elections. The Plan Administrator shall provide each Participant with a form on
which to make a Deferral Election within 10 days after such Participant becomes eligible to
participate in the Plan and at least 30 days prior to the end of each calendar year. Each
Participant shall execute and deliver the Deferral Election to the Plan Administrator no later
than the last business day of each calendar year with respect to Compensation to be earned and
amounts eligible pursuant to an LTI or VIP, excluding the Retention Incentive portion, to be
earned in the following calendar year.
	 
	 	 	An executive who becomes eligible to participate during a calendar year shall have the
option to execute a Deferral Election and deliver it to the Administrator within 30 days of
the date he/she becomes eligible to participate in the Plan. Such election shall apply only
to Compensation and amounts pursuant to an LTI or VIP, (if applicable) to be earned after
the date of the delivery of the Deferral Election to the Administrator and the Bank shall
defer such amounts on a prorated basis when applicable.
	 
	 	 	The Deferral Election will state the percentage of Compensation and amounts eligible to be
earned pursuant to an LTI or VIP (as applicable) which the Participant elects to defer for
the remainder of the first year of his/her eligibility or for the forthcoming calendar year,
as the case may be. In the case of the deferral of a VIP amount, it is expressly agreed
that the Retention Incentive portion of VIP incentive compensation is not subject to
deferral. A Deferral Election shall be irrevocable for the calendar year (or portion
thereof in the case of the first year of eligibility) for which the deferral is elected
unless an amendment of the Thrift Plan requires a new election by a Participant, and such a
new election is permissible under I.R.C. Section 409A and implementing regulations. If such
an event occurs, the Plan Administrator will communicate in writing with the Participant to
request a new Deferral Election. Notwithstanding an amendment of the Thrift Plan:

	 	(a)	 	(i) As to amounts earned in the first calendar year of participation, no
modification of a Deferral Election may be made more than thirty (30) days after a
Participant becomes eligible to participate in the Plan; and (ii) as to amounts earned
in the second and subsequent calendar years of participation, no modification of a
Deferral Election may be made after December 31 of the calendar year preceding the
calendar year in which the amounts are earned; and
	 
	 	(b)	 	as to amounts in a Participant’s Account which are not vested as of December
31, 2004, the last four sentences of Section 5.5 shall apply.

	3.2	 	Employee Deferrals. Once the Participant has made the maximum amount of employee
contributions allowable under the Thrift Plan in a calendar year, additional amounts shall be
deferred under this Plan in accordance with the Participant’s Deferral Election. Amounts
deferred under this Plan with respect to any calendar year may not exceed 80 percent of the
sum of the Participant’s Compensation and amounts earned pursuant to an LTI and VIP, if
applicable, during such calendar year less the

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	 	 	Participant’s contributions to the Thrift Plan. For this purpose, a Participant’s
contributions to the Thrift Plan shall include any after-tax contributions to the Thrift
Plan by such Participant.
	 
	3.3	 	Bank Deferrals. For each Employee Deferral, the Bank shall allocate a matching Bank Deferral
equal to 200 percent of the Employee Deferral; provided that, Bank Deferrals for each
Participant with respect to each calendar year shall not exceed the excess of (a) three
percent of the Participant’s Compensation over (b) the Bank’s matching contribution to the
Thrift Plan.

7

 

Article IV

Accounts and Investment Vehicles

	4.1	 	Accounts. The total of the Employee and Bank Deferrals shall be credited monthly to the
applicable Participant Account as the deferred amounts are earned and shall be recorded on the
financial books and records of the Bank as a liability owed to the Participant.
	 
	4.2	 	Notional Investments. Effective November 1, 2007, all Employee and Bank Deferrals credited
to a Participant’s Account will be assumed to be notionally invested in the investment funds
selected by Participant from time to time from a list provided to the Participant by the Bank
(such list is referred to as the “Eligible Investments”). Such Eligible Investments shall be
substantially similar to the investment choices available under the Thrift Plan from time to
time. Each Participant’s notional share in the investment funds shall be represented by
notional units in such funds. Each valuation day the number of new notional units credited to
a Participant in the investment funds will be determined by dividing the total amount of such
Participant’s Employee and Bank Deferrals notionally invested in the investment funds during
the month by the unit value of the investment funds as of the most recent valuation date. The
notional allocations of Employee and Bank Deferrals to the investment funds shall be as set
forth in the investment election forms completed by each Participant and submitted to the Plan
Administrator from time to time. Such election forms may be submitted in electronic form or,
at the option of the Participant in written form.
	 
	4.3	 	Records. The Plan Administrator shall maintain such records as it deems necessary to
administer this Plan and shall direct the calculation of amounts in the Participants’
Accounts. To this end, the Plan Administrator is authorized to use Bank employees, agents or
contractors to calculate the benefits due hereunder.

8

 

Article V

Distribution of Benefits

	5.1	 	Amount of Benefits. A Participant’s Account shall be valued as of the last day of the month
preceding each month with respect to which the Participant is entitled to receive a
distribution hereunder, assuming no contributions were made since the last day of the
preceding month. If a contribution was made since the last day of the preceding month, the
amount of such contribution shall be added to the value determined under the preceding
sentence.
	 
	5.2	 	Events Which Trigger Payment of Amounts Vested as of 12/31/04. The amounts in a
Participant’s Account which are vested as of December 31, 2004, including all earnings
thereon, shall become payable to him/her pursuant to Section 5.3 as of the earliest of the
date of his/her termination of employment with the Bank, including termination due to death,
his/her Disability, or his/her retirement or other Separation from Service as defined above.
With respect to amounts in a Participant’s Account which are vested as of December 31, 2004,
notwithstanding any deferral election previously made, a Participant may at any time submit a
request, through the Plan Administrator, to the Human Resources Committee seeking a
distribution of part or all of such amounts for reasons of severe financial hardship or other
reasons as permitted under the provisions of the Thrift Plan in its form as of October 3,
2004. The Human Resources Committee may, in its absolute discretion, grant or refuse any such
request. It is the intention of the Board that hardship and other withdrawals of amounts in a
Participant’s Account which are vested as of December 31, 2004 shall be available for the same
reasons as such withdrawals are available from the Thrift Plan (in its form as of October 3,
2004) and that the Participant shall provide such proof and documentation as is required for
hardship and other withdrawals from the Thrift Plan.
	 
	5.3	 	Amounts Vested as of 12/31/04 – Form and Timing of Payment. When a Participant’s Account is
payable pursuant to Section 5.2, it shall be paid in a lump sum within 90 days following the
applicable payment event set forth in Section 5.2. Alternatively, if the Participant has so
elected, the Participant’s Account shall be paid in from two to ten annual installments. In
the case of installment payments, the first installment payment shall be made within 90 days
of the applicable payment event set forth in Section 5.2 and each remaining annual installment
shall be paid no later than March 31 of each succeeding year. The amount of the installment
payment to be distributed in each calendar year shall be the amount calculated by dividing the
value of the Participant’s Account as of the immediately preceding month-end by the number of
remaining installment payments, including the one whose value is being calculated. The
elections and any changes to an election which are permitted hereunder will become effective
on the first January 1 which is at least twelve months after the date of the election.
Failure to make an election shall result in a lump sum payment within 90 days of the
triggering payment event.
	 
	5.4	 	Events Which Trigger Payment of Amounts Not Vested as of 12/31/04. The amount in a
Participant’s Account which is not vested as of December 31, 2004, including all

9

 

	 	 	earnings thereon, shall become payable to him/her pursuant to Section 5.5 as of the earliest
of the date of his/her termination of employment with the Bank (including retirement or
other Separation from Service as defined above), his/her Disability or his/her death. With
respect to amounts in a Participant’s Account which are not vested as of December 31, 2004,
notwithstanding any deferral election previously made, in the event that a Participant
suffers an Unforeseeable Emergency, the Participant may submit a request, through the Plan
Administrator, to the Human Resources Committee seeking a distribution of part or all of the
amount credited to such Participant’s Account. The Human Resources Committee may, in its
absolute discretion, grant or refuse any such request. The amount of a distribution that
the Bank may make hereunder in response to such a Participant request shall be limited to
the amount needed to satisfy the Unforeseeable Emergency plus taxes reasonably anticipated
as a result of the distribution. Distributions shall not be allowed to the extent that the
Unforeseeable Emergency may be relieved through reimbursement or compensation by insurance
or otherwise, or by liquidation of a Participant’s assets (to the extent such liquidation
would not itself cause a severe financial hardship).
	 
	5.5	 	Amounts Not Vested as of 12/31/04 – Form of Payment. When a Participant’s Account is payable
pursuant to Section 5.4, it shall be paid in a lump sum within 90 days following the
applicable payment event set forth in Section 5.4. Alternatively, if the Participant has so
elected, the Participant’s Account shall be paid in from two to ten annual installments.
Failure to make an election at any time shall result in a lump sum payment. Any change in an
installment payment election, from an installment payment election to a lump sum election or
from a lump sum election to an installment payment election (“Revised Election”) will become
effective on the first January 1 which is at least twelve months after the date of the
election. In addition, with respect to any such Revised Election which changes the timing of
any payment, each payment to be made to the Participant shall be deferred by a date which is
at least 5 years after the date on which such payment would have been made; provided that, for
this purpose, a series of installment payments shall be treated as the entitlement to a single
payment on the date of the first payment. A Revised Election which changes an Existing
Election from installment payments to a lump sum payment shall require that the date of such
lump sum payment shall be a date that is at least 5 years from the date the initial
installment payment would have been made. Notwithstanding the foregoing or any provision in
this Plan, a Revised Election may not cause the impermissible acceleration of any payment,
within the meaning of Internal Revenue Code Section 409A or its implementing regulations.
	 
	5.6	 	Amounts Not Vested as of 12/31/04 – Timing and Calculation of Installment Payments.
Installment payments under this Plan shall be made as follows: the first payment shall be made
within 90 days of the payment event with each remaining annual installment paid no later than
March 31 of each succeeding year. The amount of the installment payment to be distributed in
each calendar year shall be the amount calculated by dividing the value of the Participant’s
Account as of the immediately preceding month end by the number of remaining installment
payments, including the one whose value is being calculated.

10

 

	5.7	 	Amounts Not Vested as of 12/31/04 – Revision of Existing Payment Election Prior to 12/31/07.
The Plan is hereby amended to permit each Participant, on or before December 31, 2007, to
amend his/her current payment election as in effect on June 25, 2007, covering amounts not
vested as of December 31, 2004. Such a revised payment election shall be referred to as a
“Transition Election.” Provided that such Transition Election does not result in a payment in
2007, such Transition Election shall become effective upon receipt by the Plan Administrator
and shall not be subject to the terms of Section 5.5. Any Transition Election shall be
subject to the requirements of I.R.S. Notice 2006-79.
	 
	5.8	 	Death Benefits. In the event of a Participant’s death prior to the payment of all amounts in
the Participant’s Account, the amount then held in the Participant’s Account shall become
payable to his/her Beneficiary in the same manner as such amount would have been paid to the
Participant had he/she not died.
	 
	5.9	 	Loans. No loans are available from the Plan.

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Article VI

Administration of the Plan

	6.1	 	Human Resources Committee. The Board has delegated to the Human Resources Committee
authority over, and responsibility for, the interpretation and administration of the Plan;
except that the power to determine eligibility for participation in the Plan pursuant to
Section 2.1 is reserved to the Board. The Human Resources Committee shall interpret and
construe the Plan and have the responsibility to ensure that its provisions are carried out.
The Human Resources Committee shall exercise such power and responsibilities in its sole and
absolute discretion. The Human Resources Committee shall designate the Plan Administrator.
	 
	6.2	 	Plan Administration. The Plan Administrator shall:

	 	(a)	 	act as the point of contact for submission of claims for benefits due under the Plan;
	 
	 	(b)	 	calculate the benefits due under the Plan or arrange for the calculation of
benefits;
	 
	 	(c)	 	inform Participants of the terms of the Plan and respond to their questions
regarding the Plan;
	 
	 	(d)	 	review and process claims for the payment of benefits under the Plan;
	 
	 	(e)	 	provide necessary reporting to Bank management, Participants, the Human
Resources Committee, the Board, and others as necessary; and
	 
	 	(f)	 	take such other action as is required to perform the tasks listed hereunder or
otherwise administer the terms of the Plan. In fulfilling the responsibilities in this
section, the Plan Administrator may use other Bank staff, other agents or engage
contractors.

	6.3	 	Claims Procedure. All claims for benefits shall be in writing and shall be filed with the
Plan Administrator. If the Plan Administrator wholly or partially denies a Participant’s or
Beneficiary’s claim for benefits, the Plan Administrator shall, within 90 days after the
Plan’s receipt of the claim, give the claimant written notice setting forth in understandable
language:

	 	(a)	 	the specific reason(s) for the denial;
	 
	 	(b)	 	specific reference to pertinent Plan provisions on which the denial is based;
	 
	 	(c)	 	a description of any additional material or information which must be submitted
to perfect the claim, and an explanation of why such material or information is
necessary; and

12

 

	 	(d)	 	an explanation of the Plan’s review procedure.

The claimant shall have 60 days after the day on which such written notice of denial is
handed or mailed to him/her in which to apply (in person or by authorized representative) to
the Human Resources Committee, in writing, for a full and fair review of the denial of this
claim. In connection with such review, the claimant (or this representative) shall be
afforded a reasonable opportunity to review pertinent documents and may submit issues and
comments in writing.

The Human Resources Committee shall issue its decision on review promptly and within 60 days
after the Plan’s receipt of the request for review, unless special circumstances require an
extension to not later than 120 days after receipt of the request for review. (Written
notice of any such extension shall be furnished to the claimant before the commencement of
such extension.) The decision shall be in writing and shall set forth in understandable
language specific reasons for the decision and specific references to pertinent Plan
provisions on which the decision is based.

13

 

Article VII

General Provisions

	7.1	 	Rights to Employment. The establishment of the Plan, and selection of an executive for
inclusion as a Participant in the Plan, shall not be construed as conferring any legal rights
upon any Participant or other person for the continuation of employment; nor shall it
interfere with the rights of the Bank to discharge any Participant and to treat him/her
without regard to the effect such treatment might have upon him/her as a Participant in the
Plan.
	 
	7.2	 	Source of Funding–Participant as General Creditor. The Bank has not established any form of
trust or funded account for the purpose of providing benefits under this Plan. In the event
that the Bank establishes a rabbi trust or other similar arrangement, such arrangement shall
preserve this Plan’s status under the Internal Revenue Code as an unfunded nonqualified
deferred compensation plan and the assets of the Bank held pursuant to any such arrangement
shall remain subject to the claims of the Bank’s general creditors. Any Participant who may
have or claim any interest in or right to any amount payable hereunder shall rely solely upon
the unsecured promise of the Bank, as set forth herein, for the payment of the claim. Nothing
herein contained should be construed to give to or vest in any Participant, now or at any time
in the future, any right, title, interest or claim in or to any specific asset, fund, reserve,
account or property of any kind whatever owned by the Bank, or in which the Bank may have any
right, title or interest, now or at any time in the future. The Plan is not intended to be a
qualified plan within the meaning of Section 401(a) of the Code and the Bank shall not be
required to qualify the Plan under the Code.
	 
	7.3	 	Incapacity. In the event that the Human Resources Committee shall find that a Participant is
unable to care for his/her affairs because of illness or accident, the Human Resources
Committee may direct that any payment due him/her, unless claim shall have been made therefor
by a duly appointed legal representative, be paid to his/her spouse, a child, a parent or
other blood relative, or to a person with whom he/she resides, and any such payment so made
shall be a complete discharge of the liabilities of the Plan therefor.
	 
	7.4	 	Reporting and Withholding of Taxes. The Bank shall file Form W-2 and other applicable tax
documents as required under applicable federal and state law, including, without limitation,
required annual federal tax filings of a Participant’s accrued benefits under the Plan. The
Bank shall have the right to deduct from each payment to be made under the Plan any required
withholding taxes and shall withhold or cause to be withheld from all payments or accruals of
benefits under the Plan (if applicable), all federal, state or local taxes required to be
withheld by law. The Participant shall be liable for the payment of all taxes on the benefits
under the Plan that are the Participant’s responsibility under the laws establishing such
taxes.
	 
	7.5	 	Alienation of Benefits under the Plan. Benefits payable under this Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, whether voluntary or involuntary, including any such liability which is for alimony or
other payments for the support of a spouse or former spouse, or

14

 

	 	 	for any other relative of the Participant, prior to actually being received by the person
entitled to the benefits under the terms of the Plan, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor
shall any such distribution or payment be in any way liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person entitled to such distribution or
payment. If any Participant or Beneficiary is adjudicated bankrupt or purports to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any such
distribution or payment voluntarily or involuntarily, the Bank, in its discretion, may hold
or cause to be held or applied such distribution or payment or any part thereof to or for
the benefit of such Participant or Beneficiary in such manner as the Bank shall direct.
	 
	7.6	 	Forfeiture for Cause. The Bank Deferrals and the earnings on the Bank Deferrals
otherwise payable by the Plan may be subject to forfeiture for cause at any time. “Cause”
shall mean:

	 	(a)	 	the perpetration by a Participant of a defalcation involving the Bank or any
affiliate;
	 
	 	(b)	 	willful, reckless or grossly negligent conduct of a Participant entailing a
substantial violation of any material provision of the laws, rules, regulations or
orders of any governmental agency applicable to the Bank or an affiliate;
	 
	 	(c)	 	the repeated and deliberate failure by a Participant to comply with reasonable
policies or directives of the Board of Directors; or
	 
	 	(d)	 	the breach by a Participant of a noncompetitive covenant or agreement with the
Bank or affiliate.

Whether the facts in any given case amount to “Cause” shall be determined by the Board of
Directors.

	7.7	 	Compliance with Laws. The provisions of the Plan shall be construed, administered and
governed under the laws of the United States including, without limitation, Internal Revenue
Code Section 409A and implementing regulations and, to the extent they defer to state law, the
laws of the Commonwealth of Pennsylvania.
	 
	7.8	 	Construction. Whenever any words are used herein in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases where they would
so apply, and whenever any words are used herein in the singular form, they shall be construed
as though they were also used in the plural form in all cases where they would so apply.
Titles of Articles and Sections hereof are for convenience of reference only and are not to be
taken into account in construing the provisions of this Plan. In case any provision of the
Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if
said illegal and invalid provision had never been inserted herein.

15

 

	7.9	 	Amendment and Termination. The Bank specifically reserves the right, in the sole and
unfettered discretion of its Board, at any time, to amend, in whole or in part, any or all of
the provisions of the Plan and to terminate the Plan in whole or in part; provided, however,
that no such amendment or termination shall reduce or eliminate the rights of a Participant
accrued hereunder to the date of such amendment or termination. Provided further, that no
such termination shall result in an impermissible acceleration of any amount deferred under
this Plan that would violate the provisions of Internal Revenue Code Section 409A(a)(3) or
Treasury Regulation Section 1.409A-3(j) or any successor regulations.
	 
	7.10	 	Binding on Successors. The Plan shall be binding upon and inure to the benefit of the Bank
and its successors and assigns. The Plan shall also be binding upon and inure to the benefit
of any successor organization succeeding to substantially all of the assets and business of
the Bank. Nothing in the Plan shall preclude the Bank from merging or consolidating into or
with, or transferring all or substantially all of its assets to, another organization which
assumes the Plan and all obligations of the Bank hereunder. The Bank agrees that it will make
appropriate provision for the preservation of Participants’ rights under the Plan in any
agreement or plan which it may enter into to effect any merger, consolidation, reorganization
or transfer of assets. Upon such a merger, consolidation, reorganization, or transfer of
assets and assumption of Plan obligations of the Bank, the term “Bank” shall refer to such
other organization and the Plan shall continue in full force and effect.
	 
	7.11	 	Permissible Payment Acceleration. In the event of an Internal Revenue Code Section 409A Plan
failure that results in income inclusion to a Participant, payment of Participant’s benefits
under this Plan shall be accelerated; provided that, the amount of the accelerated payment
shall not exceed the amount required to be included in Participant’s income due to the Plan
failure.

16EX-10.17

 

Exhibit
10.17

MORTGAGE PARTNERSHIP FINANCE®

SERVICES AGREEMENT

     This MORTGAGE PARTNERSHIP FINANCE (“MPF®”) Services Agreement (the
“Agreement”) is entered into as of the 31st day of August, 2007, and is executed
by the FEDERAL HOME LOAN BANK OF PITTSBURGH (the “Pittsburgh Bank”), a corporation
organized and existing under the laws of the United States of America, having its principal office
at 601 Grant Street, Pittsburgh, PA 15219, and the FEDERAL HOME LOAN BANK OF CHICAGO (the
“MPF Provider”), a corporation organized and existing under the laws of the United
States of America, having its principal office at 111 East Wacker Drive, Suite 800, Chicago,
Illinois 60601.

RECITALS:

     WHEREAS, the MPF Provider and Pittsburgh Bank are Federal Home Loan Banks
(“FHLBs”) established under the authority of the Federal Home Loan Bank Act, 12 U.S.C. §
1421 et seq., to carry out a housing finance mission which includes supporting mortgage finance in
a safe and sound manner;

     WHEREAS, in support of its housing finance mission, the MPF Provider has developed
the MPF Program, a financial services product whereby the MPF Provider funds
Program Loans through its PFIs acting as agents of the MPF Provider, or whereby the
MPF Provider purchases Program Loans from its PFIs, pursuant to a separate MPF Program
Participating Financial Institution Agreement (“PFI Agreement”) with each PFI;

     WHEREAS, the Pittsburgh Bank wishes (i) to provide its members and housing associates access
to the MPF Program, (ii) to acquire Program Loans from or through its PFIs pursuant to the
MPF Program, and (iii) to have the MPF Provider operate and maintain the MPF
Program for the benefit of the Pittsburgh Bank and its PFIs, in addition to the MPF
Provider and any other MPF Banks that participate in the MPF Program;

     WHEREAS, the MPF Provider is willing (i) to make the MPF Program available
to those Pittsburgh Bank PFIs designated by the Pittsburgh Bank, and (ii) to operate and maintain
the MPF Program for the benefit of the Pittsburgh Bank as well as itself and other MPF
Banks, subject to the terms and conditions set forth in this Agreement; and

     WHEREAS, the parties wish to replace the Mortgage Partnership Finance Services Agreement dated
April 30, 2006 (the “Prior Services Agreement”) between the parties with this Agreement.

     NOW THEREFORE, in consideration of the foregoing recitals, for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged and the mutual covenants
and conditions herein contained, the parties hereto hereby agree as follows:

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I. CERTAIN DEFINITIONS

     As used herein, the following terms shall have the following respective meanings:

     “Active MPF Bank” shall mean an MPF Bank that has entered into an MPF Services
Agreement substantially in the form of this Agreement and such MPF Services Agreement has not been
terminated.

     “Annual Percentage Fee” shall have the meaning set forth in Exhibit A attached hereto.

     “Annual Percentage Rate” shall have the meaning set forth in Exhibit A attached
hereto.

     “Borrower” shall mean the obligor or obligors under any Program Loan.

     “Business Day” shall mean any day that the MPF Provider is open for business.

     “Clearing Account” shall mean the Pittsburgh Bank’s deposit account or accounts at the
MPF Provider, pursuant to the MPF Provider standard agreement for such account(s)
from time to time, for the clearing of debits and credits between the MPF Provider and the
Pittsburgh Bank.

     “Consult” and “Consultation” shall mean, with respect to any references to
“consult with” or “consultation with” the MPF Banks or Active MPF Banks, that the MPF Provider
shall provide the MPF Banks or Active MPF Banks, as applicable, reasonable opportunity to review
and comment on any proposed action or documents, and shall reasonably consider such comments in
determining the appropriate action or preparing or revising such documents.

     “Custodian” shall mean, at any time, a custodian to which the MPF Provider
delegates its duties and obligations under the MPF Program to hold the Loan Documents
pertaining to Program Loans, including but not limited to the MPF Custodian.

     “Custody Agreement” shall have the meaning set forth in Section 5.1.

     “Custody Addendum” shall have the meaning set forth in Section 5.1. and shall be
substantially in the form of Exhibit B.

     “Customized Enhancement” shall mean a technical enhancement to the MPF
Program system made at the request of one or more MPF Banks that primarily benefits
such MPF Bank(s).

     “DDA” shall mean a transactional account with an MPF Bank or the MPF Provider.

     “FHFB” shall mean the Federal Housing Finance Board or any successor regulatory
agency.

     “FHLB Guide” shall mean the Guide for the MPF Banks published by the MPF
Provider detailing policy and procedures among the MPF Banks for their participation
in the MPF Program, and detailing the Services that will be provided by the MPF Provider,
as the same may be amended as provided in Section 8.9, which FHLB Guide is hereby incorporated by
reference into this Agreement.

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     “Guides” shall mean, collectively, the MPF Origination Guide and the MPF Servicing
Guide, and all constituent guides, manuals, forms and exhibits, promulgated by the MPF
Provider for the MPF Program as the MPF Provider may revise them from time to time
after consultation with the Active MPF Banks as provided for in the FHLB Guide.

     “Large Master Commitment” shall mean a Master Commitment of Five Hundred Million
Dollars ($500,000,000) or greater.

     “Liquidity Option Notice” shall mean a notice to MPF Provider that the Pittsburgh Bank
elects to not issue Delivery Commitments for the balance of the Business Day.

     “Loan Documents” shall mean, for any Program Loan, the note, the mortgage or other
security documents executed and delivered by the applicable Borrower and all other documents
evidencing or securing such Program Loan, as the same may be amended, supplemented, modified or
restated from time to time.

     “Loan Recoveries” shall mean all payments and any other sums received with respect to
a Program Loan, including, but not limited to, from the disposition of any collateral for such
Program Loan.

     “LOMPA” shall mean that certain MPF Program Liquidity Option and Master Participation
Agreement dated as of September 15, 2000, as amended from time to time, or such successor
participation agreement as may be substituted by the parties.

     “MPF Banks” shall mean the Pittsburgh Bank, any other FHLB that has entered
into an agreement with the MPF Provider to offer the MPF Program to its members
and housing associates, and the MPF Provider in its capacity as an investor in Program Loans.

     “MPF Custodian” shall mean the institution to which the MPF Provider delegates certain
of its Master Custodian duties and obligations from time to time, the name of which shall be
published in the Guides as the MPF Custodian for the MPF Program.

     “MPF Master Servicer” shall mean the institution to which the MPF Provider delegates
certain of its Master Servicer duties and obligations from time to time, the name of which shall be
published in the Guides as the MPF Master Servicer for the MPF Program.

     “Master Commitment” shall mean an agreement between an MPF Bank and its PFI
pursuant to which the PFI agrees to originate Program Loans for, or sell Program Loans to such
MPF Bank, credit enhance and service such Program Loans thereafter, in accordance with the
Guides.

     “Master Servicer” shall mean the MPF Provider as the master servicer of the
Program Loans under the MPF Program.

     “Master Servicing Agreement” shall have the meaning set forth in Section 5.2.

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     “MPF Program” shall mean the Mortgage Partnership
Finance® Program of the MPF Provider, which is based upon the Guides, the
PFI Agreements and the Master Commitments.

     “MPF Program Center” shall have the meaning set forth in Section 5.7.

     “Note” shall mean, for any Program Loan, the promissory note from the Borrower
evidencing such Program Loan.

     “Operational Matters” shall mean the following activities and functions involving
contact with PFIs that are performed by the MPF Provider and are necessary for the normal operation
of the MPF Program:

a) providing pricing for Delivery Commitments;

b) transacting Delivery Commitments for PFIs;

c) providing for PFI funding and credit enhancing of Program Loans;

d) coordinating and correcting electronic communications, including
providing for data delivery, integrity and security;

e) monitoring and coordinating PFI custodial compliance, fees and custodial waivers;

f) monitoring and supporting servicing of Program Loans, such as
remittance processing, investor reporting including delinquency
reporting, reconciliation of custodial accounts, repurchase of
ineligible loans, current loan and defaulted loan management, such as
workouts, forbearance plans,
presales, deeds-in-lieu and foreclosure bidding instructions;

g) monitoring loss mitigation, insurance claim settlement and REO disposition;

h) reviewing and coordinating servicing sales or transfers;

i) operating the MPF Program Center, including providing the Service
Center and a customer support
desk;

j) performing quality control reviews and providing follow-up on
quality control findings and
remedies;

k) providing general information about the MPF Program at trade shows;

l) monitoring and supporting MPF Shared Funding® acquisitions and servicing; and

m) any other service as shall be added to the FHLB Guide from time to
time with the consent of the majority of Active MPF Banks.

     “Participation Share” shall mean a Participant’s pro rata participation interest in
the Program Loans the Pittsburgh Bank funds or purchases under the MPF Program.

     “Participant” shall mean an entity who acquires an ownership or a participation
interest in some or all of the Program Loans delivered or serviced by a PFI to or for the
Pittsburgh Bank.

     “PFI” shall mean a member or housing associate of the MPF Bank that is a
“participating financial institution” which elects to participate in the MPF Program by
executing a PFI Agreement with the MPF Bank.

     “Prior Services Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

     “Program Loan” shall mean a residential loan to a Borrower that is evidenced by a
promissory note and secured by a mortgage lien, deed of trust, security deed or other security
instrument either made or acquired by a PFI or originated by a PFI for an MPF Bank.

4

 

     “Service Center” shall have the meaning set forth in Section 5.7.

     “Servicer” shall have the meaning set forth in the PFI Agreement.

     “Services” shall mean the operational systems as outlined in Article IV and the
services outlined in Article V, including but not limited to the Operational Matters, and more
particularly described in the FHLB Guide, provided by the MPF Provider.

     “Servicing Transfer Agreements” shall mean those certain Mortgage Partnership Finance
Servicing Transfer Agreements dated September 19, 2000 and May 30, 2001.

     “Termination Core Services Fee” shall have the meaning set forth in Section 2 of
Exhibit A attached hereto.

     “Trigger Event” shall mean any of the following: (a) a court of competent
jurisdiction determines that the FHLBs do not have the authority to offer the MPF Program;
(b) the FHFB orders or otherwise causes the MPF Banks to stop offering the MPF
Program; (c) legislation is enacted which withdraws the FHLBs’ authority to offer the MPF
Program; (d) the MPF Program is conclusively determined to violate consumer or other
federal or relevant state laws or otherwise does not comply with applicable law in a manner that
materially affects the structure or processes of the MPF Program; or (e) if the Pittsburgh
Bank’s PFIs fail to deliver any Program Loans under the MPF Program for a period of twenty-four
(24) continuous months occurring after the date of this Agreement, the MPF Provider shall have the
right to treat this occurrence as a Trigger Event.

     “Transaction Services Fee” shall mean, at any time, the fee charged by the MPF
Provider to the MPF Banks for Services provided by the MPF Provider in
connection with Program Loans owned by such MPF Banks.

     “TSF Floor” shall mean the minimum amount, in the aggregate, of Transaction Services
Fee payable by the Pittsburgh Bank in a calendar year.

     “TSF Loans” shall mean the Pittsburgh Bank’s retained interest in the Program Loans it
funds or purchases on or after May 1, 2006, excluding, however, any Program Loans that the parties
agree in writing to not treat as TSF Loans.

     “TSF Notice” shall mean a written notice delivered by the MPF Provider to all MPF
Banks setting forth the Annual Percentage Rate for the TSF Loans acquired in a calendar year and
the TSF Floor or formula for determining the TSF Floor for that calendar year.

     Other terms used herein shall be defined as set forth in this Agreement. Any capitalized term
used herein, which is not so defined, shall have the meaning ascribed to such term in the Guides,
the LOMPA or Servicing Transfer Agreements. The singular shall include the plural as the context
may require.

5

 

     II. TERM AND FEES 

2.1. Term of Agreement. (a) Unless terminated earlier as provided in Article VII,
this Agreement shall continue in force until terminated by either party giving the other one
hundred eighty (180) days’ written notice.

(b) Notwithstanding the termination of this Agreement for any reason, the obligations of the
parties shall continue with respect to all Program Loans funded or purchased under this
Agreement pursuant to Delivery Commitments issued prior to such termination, including,
without limitation, the MPF Provider shall provide the Services for each Program Loan
acquired by the Pittsburgh Bank, and the Pittsburgh Bank shall pay the applicable
Transaction Services Fees, continuously from the date of such termination until the earliest
of:

     (1) the Program Loan’s principal and interest have been paid in full in accordance with
the requirements of the PFI Agreement; or

     (2) the Program Loan has been foreclosed or liquidated, the security property therefor
properly disposed of, and the claim settled with the PFI; or

     (3) in accordance with the procedures set forth in the FHLB Guide, the MPF Provider’s
obligations are (i) transferred to a third party by agreement of the Pittsburgh Bank and the
MPF Provider, (ii) transferred to a third party on written direction of the FHFB or (iii)
with the consent of the MPF Provider, assumed by the Pittsburgh Bank.

(c) Upon the termination of this Agreement for any reason, the Pittsburgh Bank agrees to use
commercially reasonable efforts to promptly return to the MPF Provider all
marketing and operational materials previously provided by the MPF Provider, and no
longer needed by the Pittsburgh Bank to fulfill its remaining obligations hereunder, unless
other mutually acceptable arrangements have been made.

     2.2. Transaction Services Fee. Commencing September 1, 2007, the Pittsburgh Bank
shall pay a monthly Transaction Services Fee to the MPF Provider as compensation for the
Services to be provided to the Pittsburgh Bank. The rate and amount of the Transaction
Services Fee shall be determined as set forth in Exhibit A attached hereto and made a part
hereof.

     2.3. Additional Services Fees. In the event the Pittsburgh Bank requests the MPF
Provider to provide any additional services other than the Services specified in the FHLB
Guide as regular or standard Services, the Pittsburgh Bank shall pay the fees for such
additional Services as provided in the FHLB Guide or as may be agreed to between the parties.
The fees for additional services listed in the FHLB Guide may only be increased on not less
than ninety (90) days’ prior written notice.

III. MARKETING TO PITTSBURGH BANK PFIs AND TRAINING

     3.1. Designation of Pittsburgh Bank PFIs. Any marketing of the MPF Program to the
members and housing associates of the Pittsburgh Bank shall be done by the Pittsburgh Bank. The
Pittsburgh Bank may authorize the MPF Provider’s marketing staff to participate in marketing
activities in accordance with the FHLB Guide. The Pittsburgh Bank agrees that the

6

 

MPF Provider’s officers and employees may contact officers and employees of Pittsburgh Bank PFIs for
Operational Matters contemplated by this Agreement or any PFI Agreement.

     3.2. Operational Training. From time to time, the MPF Provider will provide
training for Pittsburgh Bank employees who will have responsibility for completing and
administering PFI Agreements and Master Commitments in conjunction with the MPF Provider,
and as needed when new products or product or system enhancements are introduced or other
significant changes are made to the MPF Program. The training shall take place as provided for in
the FHLB Guide.

IV. OPERATIONAL SYSTEMS

     4.1. Loan Funding and Reporting Systems. The MPF Provider shall work with
the Pittsburgh Bank to maintain an appropriate interface or method for receiving or sending data
transmissions and reports to or from the MPF Provider, and the Pittsburgh Bank’s PFIs
shall have use of the same systems for accessing the MPF Program, including Internet access, as the
MPF Provider makes available to its own PFIs. Data regarding the Pittsburgh Bank PFIs and the
Program Loans serviced by its PFIs will be processed on the same system the MPF Provider
uses to process its own MPF Program data.

     4.2. Deliverables. The MPF Provider shall provide the following reports, inquiry
capabilities, and electronic data transmission to the Pittsburgh Bank or its PFIs, as applicable:

     4.2.1. PFI Reports. Subject to the timely receipt of accurate data from the
Pittsburgh Bank’s PFIs, the MPF Provider shall provide the same reports to the
Pittsburgh Bank’s PFIs as the MPF Provider supplies to the MPF Provider’s
PFIs. These reports are generally described in the Guides. Any supplemental reports will
be made available to the Pittsburgh Bank’s PFIs in the same way that they are made available
to the MPF Provider’s PFIs.

     4.2.2. Management Reports. The MPF Provider shall provide such
reports to the Pittsburgh Bank as are described and with the frequency set forth in the FHLB
Guide.

     4.2.3. On-Line Inquiry. Access to certain information in the MPF Program
system will be made available through on-line inquiry by the Pittsburgh Bank. The method
for making inquiry and the nature of the available data is set forth in the FHLB Guide.

     4.2.4. Electronic Data Transmission. Certain accounting and PFI transaction
account data shall be transmitted by the MPF Provider to the Pittsburgh Bank the
evening of each Business Day to enable the Pittsburgh Bank to post such data to its general
ledger and to the Pittsburgh Bank’s PFIs’ DDA’s with the Pittsburgh Bank. The method for
transmission has been developed with the cooperation of the Pittsburgh Bank and the specific
types of data to be transmitted are set forth in the FHLB Guide.

7

 

     4.3. Program Enhancements.

     4.3.1. System Review. The MPF Provider shall hold periodic meetings
to discuss possible changes and enhancements to the MPF Program system and to
prioritize the scheduling of any such enhancements. Such meetings will be open to all
Active MPF Banks, who can attend in person or telephonically. The MPF Provider will give the Active
MPF Banks at least thirty (30) day’s notice prior to implementing any material MPF Program
system enhancements, modifications or other changes unless a shorter period is mandated by
the FHFB or applicable law or regulation.

     4.3.2. Customized Enhancements. The Pittsburgh Bank may request Customized
Enhancements which shall be handled in accordance with the provisions of the FHLB Guide.

     4.3.3. Reimbursement by Other FHLBs. If, during the term of this Agreement,
other MPF Banks adopt any Customized Enhancements paid for by the Pittsburgh Bank, the FHLB
Guide shall provide a method for sharing such costs. The MPF Provider will use commercially
reasonable efforts to facilitate such cost sharing.

V. PARTICIPATION IN MPF PROGRAM

5.1. Services of the Custodian. (a) The MPF Provider shall act as the
custodian for the Pittsburgh Bank with respect to all Program Loans funded or purchased by
the Pittsburgh Bank pursuant to the MPF Program. The MPF Provider may
discharge this duty by entering into a custody agreement (a “Custody Agreement”)
with the MPF Custodian or any other entity which the MPF Provider deems qualified
to act as a Custodian. The MPF Provider shall have direct and primary
responsibility to the Pittsburgh Bank for the performance of the duties of the MPF Custodian
under the Custody Agreement, subject, however, in connection with the use of a Custodian
other than the MPF Custodian, to the terms of each addendum to be executed by the parties
substantially in the form attached hereto as Exhibit B (each, a “Custody Addendum”).

(b) The MPF Provider shall perform or cause to be performed the following
custodial duties for the Pittsburgh Bank’s Program Loans, which shall be done in compliance
with the provisions of the PFI Agreements, the Guides and the FHLB Guide:

(i) To hold the Loan Documents and any other documents or papers relating to a
Program Loan deposited with the Custodian as an agent for and bailee of the Pittsburgh
Bank in the same manner as the MPF Provider holds Loan Documents pertaining to its own
Program Loans;

(ii) To review the documents received with respect to a Program Loan to confirm
whether they comply with the MPF Program requirements;

(iii) To provide exception reports and status reports regarding Loan Documents as
provided for in the FHLB Guide;

(iv) Upon the payment in full or the purchase by a PFI of a Program Loan, or as
needed for servicing or foreclosure purposes, to release the Loan Documents to the
Servicer or notify the Servicer that the Loan Documents are no longer held by the
Custodian; and

(v) To maintain or cause each Custodian to maintain customary fidelity and other
insurance in connection with the performance of its obligations under the

8

 

Custody Agreement, and, upon request of the Pittsburgh Bank, to provide a copy of a Custodian’s
annual officer’s certificate or, if the MPF Provider has copies of the Custodian’s
insurance certificates, a copy of such certificates.

As part of its custodial duties hereunder, the MPF Provider, for the benefit of the
Pittsburgh Bank, shall use commercially reasonable efforts to enforce the obligations of
each Custodian under its Custody Agreement. Such enforcement shall be in such form and
carried out to such an extent and at such time as the MPF Provider, in its good faith
business judgment, would require if it were the owner of the related Program Loans. Subject
to the terms of each Custody Addendum and notwithstanding the terms of any Custody
Agreement, no delegation of custodial obligations to a Custodian pursuant to such Custody
Agreement shall relieve the MPF Provider from its custodial obligations hereunder, and the
MPF Provider shall remain obligated and primarily liable to the Pittsburgh Bank for the
custody of the Program Loans in accordance with the provisions of this Agreement.

(c) In the event that a Custodian fails to produce a Loan Document when requested by the
Servicer or the MPF Provider (on behalf of the Pittsburgh Bank), and provided that (i) each
Custodian previously acknowledged in writing that it had possession of such Loan Document,
(ii) such Loan Document is not outstanding pursuant to a prior request for release from the
Servicer, and (iii) such Loan Document was held by the Custodian on behalf of the Pittsburgh
Bank (a “Custodial Delivery Failure”), then the MPF Provider shall, with respect to
any missing Loan Document, furnish or cause the Custodian to furnish a lost Loan Document
affidavit in a form reasonably satisfactory to the Pittsburgh Bank and to indemnify (such
indemnification to survive any termination of the Custody Agreement) the Pittsburgh Bank and
the Servicer, and their respective designees, harmless against any and all direct
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements, including reasonable attorneys’ fees, that may be imposed on,
incurred by, or asserted against it or them in any way relating to or arising out of such
Custodial Delivery Failure, provided that neither the MPF Provider nor the
Custodian shall be liable for consequential damages. 

(d) Each Custodian shall acknowledge that it holds the Loan Documents pertaining to Program
Loans owned or held by the Pittsburgh Bank which come into its possession for the benefit of
the Pittsburgh Bank, and shall dispose of the same only in accordance with instructions
furnished by the MPF Provider on behalf of the Pittsburgh Bank. The Custodian shall
not, however, be required to verify the validity, sufficiency or genuineness of any Loan
Document. With respect to any Custodian other than the MPF Custodian that is a custodian for
Program Loans owned by the Pittsburgh Bank, the MPF Provider, upon the request of the
Pittsburgh Bank, will provide to the Pittsburgh Bank a summary report of any audits of such
Custodian performed directly or through a vendor, by the MPF Provider. Further, upon the
request and at the expense of the Pittsburgh Bank, the MPF Provider shall request the
Custodian to provide the Pittsburgh Bank a certification that lists of all Program Loans
owned by the Pittsburgh Bank for which the Custodian holds Loan Documents.

5.2. Services of the MPF Master Servicer. (a) The MPF Provider shall act
as the Master Servicer for the Pittsburgh Bank with respect to all Program Loans funded or

9

 

purchased by the Pittsburgh Bank pursuant to the MPF Program. The MPF
Provider may discharge this duty by entering into a master servicing agreement (a
“Master Servicing Agreement”) with any entity which the MPF Provider deems
qualified to act as the MPF Master Servicer. The MPF Provider shall have direct and primary responsibility to
the Pittsburgh Bank for the performance of the duties of the MPF Master Servicer under the
Master Servicing Agreement.

     (b) The MPF Provider shall perform or cause to be performed the following master
servicing duties, which shall be done in compliance with the provisions of the PFI
Agreements, the Guides, and the Servicing Agreements:

(i) To supervise, monitor and oversee the servicing of the Program Loans and the
performance of each Servicer of its services, duties and obligations under the
Servicing Guide;

(ii) To receive and review all reports and data that are provided and are
deliverable under the Servicing Guide by each Servicer;

(iii) To collect information, reconcile such information with each Servicer, and
submit reports pertaining to the Program Loans and any funds due with respect
thereto, to the Pittsburgh Bank as provided for in the FHLB Guide;

(iv) To recommend to the Pittsburgh Bank corrective action to be taken relative to
any Servicer that fails to comply with the terms and conditions of the Servicing
Guide with respect to defaulted Program Loans or the property encumbered as security
for Program Loans;

(v) To notify the Pittsburgh Bank in the event a Servicer has materially or
consistently defaulted under the PFI Agreement or Servicing Guide and to advise the
Pittsburgh Bank of its recommended response to the default;

(vi) To maintain or cause the MPF Master Servicer to maintain customary fidelity and
other insurance in connection with the performance of the obligations under the
Master Servicing Agreement, and, upon request of the Pittsburgh Bank, to provide a
copy of insurance certificates indicating such insurance is in effect or a copy of
an officer’s certificate of the MPF Master Servicer certifying that such insurance
coverage is in full force and effect;

(vii) To make its books and records relating to the services performed under the
Master Servicing Agreement or those of the MPF Master Servicer accessible for
inspection and copying by the supervisory agents and examiners of the FHFB at any
time during normal business hours, and by the Pittsburgh Bank as arranged and
coordinated by the MPF Provider.

     As part of its master servicing duties hereunder, the MPF Provider, for the benefit of
the Pittsburgh Bank, shall use commercially reasonable efforts to enforce the obligations of
the MPF Master Servicer under the Master Servicing Agreement in the same manner as the MPF
Provider would act if the MPF Provider were the owner of the related Program Loans.
Notwithstanding the MPF Provider’s delegation of master servicing obligations to
the MPF Master Servicer pursuant to the Master Servicing Agreement, the MPF
Provider shall not be relieved from its master servicing obligations hereunder, and the
MPF Provider shall remain obligated and primarily liable to the Pittsburgh Bank for
the master servicing of the Program Loans in accordance with the provisions of this
Agreement, provided, however, that the MPF Provider’s liability

10

 

arising from or related to its master servicing obligations under this Section 5.2 shall be limited solely to liability
resulting from the MPF Provider’s or MPF Master Servicer’s negligence or willful misconduct.

     5.3. Approval of Pittsburgh Bank PFIs. The Pittsburgh Bank
shall provide the MPF Provider with a copy of each member’s or housing associate’s PFI application,
or portion thereof as specified in the FHLB Guide, upon the approval of a PFI. After obtaining the
consent of the majority of the Active MPF Banks as provided in the FHLB Guide, the MPF Provider may
pass through to the Active MPF Banks outside counsel fees incurred in connection with the
development or drafting of PFI documents or matters generally affecting the MPF Program
prospectively, provided, however, that the MPF Provider may pass through to the Active MPF Banks
such outside counsel fees which do not exceed $5,000 without prior consultation. After consultation
with the MPF Banks as provided in the FHLB Guide, the MPF Provider may pass through to the MPF
Banks outside counsel fees incurred in connection with matters generally affecting the MPF Program
on a programmatic basis, provided, however, that the MPF Provider may pass through to the MPF Banks
such outside counsel fees which do not exceed $5,000 without prior consultation. The Pittsburgh
Bank agrees to administer its PFI Agreements in accordance with their terms, including the Guides
and all incorporated documents. The Pittsburgh Bank hereby acknowledges that the MPF
Provider and other MPF Banks have an interest in consistent implementation of the MPF Program,
and as the drafter of the MPF Program documents, the MPF Provider can provide an
authoritative interpretation of such documents in the event of conflict with a PFI over their
meaning. The obligations of the Pittsburgh Bank under this Section 5.3 shall survive termination of
this Agreement.

     5.4. Creditworthiness of PFIs. The Pittsburgh Bank shall be responsible for
evaluating the creditworthiness of each of its PFIs to provide the credit enhancement required of a
PFI under the MPF Program. However, any MPF Bank that has acquired or acquires a participation in
Pittsburgh Bank Program Loans or acquires Program Loans from Pittsburgh Bank PFIs shall be
responsible for its own credit decision with respect to its investment in such assets. Consistent
with applicable law and regulation and as provided in the FHLB Guide, the Pittsburgh Bank shall
promptly provide notice to the MPF Provider of any material adverse changes in the financial
condition of any Pittsburgh Bank PFIs of which it becomes aware and that the Pittsburgh Bank
reasonably believes could result in the PFI’s breach of the PFI Agreement.

     5.5. Training of Pittsburgh Bank PFIs. The Pittsburgh Bank shall have primary
responsibility for the training of its PFIs. The MPF Provider may provide training to
personnel of the Pittsburgh Bank’s PFIs and the costs and expenses for providing such training
shall be paid as provided in the FHLB Guide. All PFI training materials shall be supplied by or
reviewed by the MPF Provider.

     5.6. MPF Program Materials. Any MPF Bank may submit requests for revisions
to the PFI Agreements, the Guides and other MPF Program documents at any time. The MPF
Provider may revise the form of the PFI Agreements, the Guides or any other MPF
Program document at any time, provided that the MPF Provider consult with the Active MPF Banks
with respect to any material revisions to the PFI Agreements and the Guides as provided in the FHLB
Guide.

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     5.7. Support of Pittsburgh Bank PFIs. The MPF Provider shall be responsible
for providing the Operational Matters support to all MPF Banks’ PFIs by establishing an
MPF Program Center (“MPF Program Center”) which shall include the MPF Service
Center (“Service Center”) and a customer support desk. The MPF Program Center and Service
Center operations are described in the FHLB Guide. The MPF Provider shall ensure that the
MPF Program Center is adequately staffed to service the Pittsburgh Bank PFIs in a commercially reasonable manner and with
no less service than the MPF Provider is providing to its own PFIs. The MPF Provider shall
provide the data transmissions and reports as required by the FHLB Guide.

     5.8. Execution of Master Commitments. The Pittsburgh Bank will enter into each Master
Commitment in accordance with the FHLB Guide. The MPF Program Center’s personnel will be
responsible for entering each Master Commitment into the MPF Program system. Excluding
Master Commitments or Program Loans that are subject to waivers approved by the Pittsburgh Bank,
the MPF Provider shall determine the Actual Credit Enhancement for each Master Commitment using a
methodology that complies with the requirements of 12 C.F.R. § 955.3, as amended or superseded.

     5.9. Delivery Commitments; Pricing.

     5.9.1. Pricing of Loans. (a) Pursuant to the delegation of pricing authority
as permitted by the FHFB at 12 CFR Part 955.5(c), the Pittsburgh Bank, except as set forth
in subsection (b) hereof, has elected to utilize the pricing methodology developed by the
MPF Provider, provided that such methodology shall not be modified without prior notice to
the Pittsburgh Bank. Thus, the MPF Provider shall be responsible for the calculation and
publication of the prices for the Pittsburgh Bank applicable to all Program Loans.

(b) The Pittsburgh Bank may, with respect to any or all of its Large Master Commitments,
request that the MPF Provider permit the Pittsburgh Bank to set prices for all the Delivery
Commitments issued under such Large Master Commitment in accordance with and subject to the
procedures and limitations the MPF Provider may publish in the FHLB Guide. Upon the
Pittsburgh Bank utilizing such procedures, then the MPF Provider shall employ the prices
communicated by the Pittsburgh Bank in the issuance of Delivery Commitments under the Large
Master Commitment. The MPF Provider’s facilitation of any special prices for Large Master
Commitments is excluded from the MPF Provider’s representations and warranties provided in
Section 6.6 of this Agreement.

     5.9.2. Delivery Commitments. (a) As provided in the Guides, the MPF Program
Center will publish Rate and Fee Schedules for all Program Loans. Rate and Fee Schedules are
subject to change as provided for in the Guides. Delivery Commitments will be managed as
specified in the Guides and the FHLB Guide. The MPF Program Center will provide reports and
loan data transmissions concerning all Delivery Commitment activities of the Pittsburgh Bank
PFIs to the Pittsburgh Bank at the times and in the manner provided in the FHLB Guide. The
funding and purchasing of Program Loans will be processed through a PFI’s DDA with the
Pittsburgh Bank. The MPF Program Center shall compute any Pairoff Fees (or any similar fees)
that are owed to the Pittsburgh Bank by any PFI and will report these amounts to the
Pittsburgh Bank. The

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Pittsburgh Bank shall be responsible for collecting Pairoff Fees (or
any similar fees) from its PFIs and disbursing the same to itself and via deposit to its
Clearing Account, to its Participants (including the MPF Provider), as applicable.

(b) On any Business Day, the Pittsburgh Bank may give a Liquidity Option Notice to the MPF
Provider as provided for in the FHLB Guide. Upon receipt, the MPF
Provider shall set the MPF Program system so that no Delivery Commitments will be issued to the
Pittsburgh Bank’s PFIs until the next Business Day.

(c) Pittsburgh Bank not open on a Business Day. In the event that the Pittsburgh
Bank is not opened for business on or closes prior to the scheduled close of business during
any Business Day, Delivery Commitments may be issued in accordance with the FHLB Guide if
any Participant(s) is willing to acquire, in the aggregate, a 100% Participation Share
therein. Such Delivery Commitments shall be deemed Designated Delivery Commitments as
defined in, and governed by, the LOMPA, except that the Pittsburgh Bank hereby agrees that
its signature is not needed on any notice or direction to the MPF Provider for the
Participation Shares to be effective with respect to such Designated Delivery Commitments.

     5.10. Quality Control and Loss Mitigation. The MPF Provider will perform the
same level of quality control review and loss mitigation oversight for the Pittsburgh Bank’s
Program Loans as it performs for its own Program Loans which will be performed as provided in the
FHLB Guide. If requested and paid for by the Pittsburgh Bank, the MPF Provider will use
commercially reasonable efforts to provide additional quality control reviews. MPF Provider agrees
to re-evaluate its quality control practices, including sampling adequacy, when business conditions
warrant such re-evaluation, to ensure that MPF practices comply with industry and regulatory
standards. Nothing in this Section 5.10 shall limit the Pittsburgh Bank from conducting its own
quality control reviews or exercising oversight of its PFI’s origination and servicing functions to
the extent the Pittsburgh Bank is required to do so under applicable law or regulation or otherwise
directed to do so by the FHFB.

     5.11. Transactional Relationships.

     5.11.1. Maintenance of Accounts at the MPF Provider. The Pittsburgh
Bank will establish and maintain the Clearing Account with the MPF Provider.

     5.11.2. Funding of Payment Obligations. The MPF Provider hereby consents to the
Pittsburgh Bank withdrawing funds from the Clearing Account from time to time to satisfy the
MPF Provider’s payment obligations under this Agreement. The Pittsburgh Bank hereby consents
to the MPF Provider withdrawing funds from the Clearing Account from time to time
to satisfy the Pittsburgh Bank’s obligations to pay any fees and any other payment
obligation under this Agreement.

     5.11.3. Interest on Clearing Account. In accordance with the Master
Transactions Agreement between the MPF Provider and the Pittsburgh Bank, the
MPF Provider will credit to the Pittsburgh Bank’s Clearing Account interest on the
outstanding balance thereof from time to time in accordance with the Master Transactions
Agreement, at the rate of interest paid by the MPF Provider to all MPF Banks under
the MPF Program, as

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the same is published in the FHLB Guide from time to time (the
“MPF Bank Rate”). In the event that any withdrawal from the Pittsburgh
Bank’s Clearing Account shall cause the balance in such account to become negative, such
deficit shall be deemed a loan from the MPF Provider to the Pittsburgh Bank,
payable upon demand and bearing interest at the rate charged by the MPF Provider to
all MPF Banks under the MPF Program, as the same is published in the FHLB Guide
from time to time (the “MPF Bank Default Rate”). If at any time the MPF Bank Default Rate is not published in the FHLB Guide, the
MPF Bank Default Rate, for any day, shall be equal to the MPF Bank Rate
for that day plus 200 basis points (2.0%).

5.12. Relationship of the Parties; Restrictions on Transfers. (a) The Pittsburgh
Bank will receive and hold all receipts and collections with respect to the Program Loans
funded through or purchased from the Pittsburgh Bank PFIs, for the benefit of itself and any
other Participants who may invest therein, in accordance with their respective interests in
the Program Loans. Except to the extent of its obligations under Section 5.1(a), the MPF
Provider shall have no fiduciary duty to the Pittsburgh Bank. Except to the extent of its
obligations under Sections 6.4.1. and 7.3., the Pittsburgh Bank shall have no fiduciary duty
to the MPF Provider.

(b) Notwithstanding the foregoing, the Pittsburgh Bank agrees that it will not sell or
transfer any of its interests in Program Loans or its rights under this Agreement, or any
portion of any thereof, except (i) to another FHLB or member or housing associate of an
FHLB, (ii) to an institutional third party investor approved of in writing by the MPF
Provider, which approval shall not be unreasonably withheld, or (iii) to the PFIs
providing the credit enhancement for such Program Loans, provided, however, servicing must
be provided by a PFI or an MPF Program approved Servicer, and unless such covenants and
obligations have been assigned to another MPF Bank or other approved investor in such
Program Loans, the Pittsburgh Bank shall continue to monitor the creditworthiness of its
PFIs and, when appropriate to protect the interests of the holders of the Program Loans,
obtain a perfected security interest in collateral to secure any of its PFIs’ obligations
under their respective PFI Agreements. The MPF Provider will continue to provide reports
defined by Master Commitment.

(c) Participation Shares in the Program Loans, whether previously acquired by the MPF
Provider pursuant to the Prior Services Agreement or acquired by any MPF Bank during the
term of this Agreement, shall be deemed to be pursuant to and governed by the terms of the
LOMPA.

     5.13. Memo Spread Account/First Loss Account Allocations. The MPF Provider and the
Pittsburgh Bank shall each maintain its own respective loan loss reserves with respect to the
Program Loans. The Spread Account/First Loss Account (which is a memorandum account used for
tracking purposes) for any Master Commitment in which there are Participants will be allocated
between or among the parties as provided for in the LOMPA.

     5.14. Rescission of Payments. For all Program Loans in which a Participant owns an
interest, the LOMPA shall govern the situation in which all or part of any payment of Loan
Recoveries or other amounts paid to the Pittsburgh Bank is rescinded or must otherwise be returned
for any reason.

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     5.15. Product Development. The MPF Provider shall receive submissions from the
Pittsburgh Bank which may be made in conjunction with other MPF Banks, for new products to be
offered under the MPF Program, as provided for in the FHLB Guide.

     5.16. Financial Reporting and Controls. The MPF Provider shall provide an annual Type
II SAS 70 audit report of its internal controls pertaining to the Services and shall consult with
the Active MPF Banks prior to the engagement of the auditor concerning the terms of the audit,
including the time period covered, the form, scope and content of the audit report, and when the
audit reports are to be provided to the MPF Banks, in accordance with the procedures set forth in
the FHLB Guide. For the period between the end of the audit period and December 31st of
each year, the MPF Provider shall provide the Pittsburgh Bank with a letter, on or before the date
specified in the FHLB Guide, stating whether the MPF Provider implemented, during that period that
is not covered by the audit reports, any material changes to the MPF Program systems which impact
the operating effectiveness of controls covered by the SAS 70 audit report and, if so, containing
such certifications as specified in the FHLB Guide.

     5.17. Service Level Commitments. The MPF Provider agrees that it shall perform the
Services in accordance with the service levels set forth in the FHLB Guide.

VI.      REPRESENTATIONS AND COVENANTS

     6.1. Participation Share and Management of Assets.
—

        6.1.1. Participation Share. The MPF Provider shall be able to rely on the
written direction of the Pittsburgh Bank delivered in accordance with the FHLB Guide to
confirm to any Participant participating in Program Loans acquired by the Pittsburgh Bank
that such Participant is vested in its Participation Share in each such Program Loan upon
its acquisition by the Pittsburgh Bank, without the need for further documentation, upon the
deposit of funds equal to the Participant’s Participation Share to the Pittsburgh Bank’s
Clearing Account.

        6.1.2. Management of Assets. The PFIs are obligated under the terms of the PFI
Agreements to perform all customary servicing functions, including loss mitigation and
property disposition, with respect to the Program Loans. The Pittsburgh Bank shall have the
responsibility for exercising commercially reasonable efforts to enforce the terms of the
PFI Agreement and PFIs’ compliance with the Guides, on behalf of itself and such other
parties identified in the FHLB Guide.

     6.2. Risk of Loss. The Pittsburgh Bank assumes all risk of loss in connection with
its investment in Program Loans, and its execution of each PFI Agreement and each Master Commitment
except for any losses arising directly from the negligence or willful misconduct of the MPF
Provider in its provision of the Services pursuant to this Agreement or breach of its
fiduciary duties specified in Section 5.1(a); provided, however, that such assumption of risk is
not intended to waive or release the liability of any person or entity that is not a party to this
Agreement. The Pittsburgh Bank acknowledges that it is familiar with the Guides and the FHLB Guide
and the operation of the MPF Program as described therein.

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     6.3. Default by PFIs; Enforcement. Each of the parties is entitled to assume that no
PFI default or event which, with the giving of notice or lapse of time, or both, would constitute
such a default, has occurred and is continuing unless such party (i) has actual knowledge of such
default or event, or (ii) has been notified in writing that such a default or event has occurred.

     6.4. Pittsburgh Bank’s Covenants. The Pittsburgh Bank covenants and agrees as follows:

     6.4.1. Collateral for Credit Enhancement. In accordance with the FHLB Guide the
Pittsburgh Bank shall obtain a perfected security interest in collateral and the proceeds of
all collateral provided from time to time by each Pittsburgh Bank PFI under its PFI
Agreement or any other credit agreement, securing the PFI’s obligations under its PFI
Agreement.

     6.4.2. Use of Intellectual Property. The MPF Provider hereby licenses
to the Pittsburgh Bank the limited right to use the trademarks “Mortgage Partnership
Finance,” “MPF,” “eMPF,” “MPF Shared Funding,” the “Mortgage
Partnership Finance” logo and “MPF” logo (individually, a “Mark” and together, the
“Marks”) in connection with the exercise of the Pittsburgh Bank’s rights and
responsibilities under this Agreement including, without limitation, the acquisition of
Program Loans from its PFIs, the promotion and marketing of the MPF Program to its members
and housing associates, and instruction and training of its members and housing associates
concerning the MPF Program, subject to the following terms and conditions:

     (i) The term of this license shall be the same as this Agreement. Upon termination of
this license, all rights in and to the Marks shall automatically revert to the MPF
Provider.

     (ii) When using any of the Marks in any external communications, including letters,
agreements, program descriptions and marketing materials, the Pittsburgh Bank agrees to
adhere to the standards governing the use of the Marks set forth in the FHLB Guide.

     (iii) The MPF Provider reserves the right to inspect or monitor the
use of the Marks and the services provided in connection with the Marks to assure
compliance with this Agreement and the FHLB Guide.

     (iv) The Pittsburgh Bank hereby recognizes the value of the goodwill
associated with the Marks and acknowledges that all rights in and to the Marks
belong exclusively to the MPF Provider and that the Marks may have acquired
secondary meaning in the mind of the public. The Pittsburgh Bank agrees, during the
term of this Agreement and thereafter, never to attack or assist anyone else in
attacking the rights of the MPF Provider in the Marks or the validity of
the license of the Marks being granted herein.

     6.5. Authorization and Enforceability Representations. Each of the parties
hereby represents to the other party hereto that (i) all necessary corporate and other action
has been taken to authorize it to execute, and to perform its obligations under, this Agreement,
and (ii) all

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necessary regulatory approvals to engage in the MPF Program have been obtained and (iii)
this Agreement is the legal, valid and binding obligation of such party, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, reorganization pursuant to the
Federal Home Loan Bank Act, as amended, moratorium and other similar laws affecting the rights of
creditors generally and general equitable principles.

     6.6. MPF Provider Representations and Warranties. In addition to the above
representations, the MPF Provider represents and warrants that it shall timely perform the Services
in a commercially reasonable manner and with the same care, skill, prudence and diligence with
which it services and administers in its own portfolio of Mortgages. Further, the MPF Provider
represents to the Pittsburgh Bank and warrants that the MPF Program is compliant with all
applicable state and federal laws, including consumer laws, and rules and regulations,
provided, however, that the MPF Provider makes no representations or warranties with
respect to actions taken at the direction of, or matters within the control of, the Pittsburgh Bank
including, but not limited to, transactions customized at the request or direction of the
Pittsburgh Bank. Further, the MPF Provider represents to the Pittsburgh Bank and warrants
that all copyrights, trademarks, service marks, patents and other intellectual property rights used
in the MPF Program do not infringe upon the rights of any third parties.

     6.7. Pittsburgh Bank’s Indemnification Obligation. The Pittsburgh Bank acknowledges
that the ability to participate in the MPF Program will be based upon its representations
and warranties set forth above, and the Pittsburgh Bank agrees to indemnify, defend and hold
harmless the MPF Provider, its affiliates and each stockholder, director, officer,
employee and agent, if any, thereof from and against any and all loss, damage, liability or
expense, including (without limitation) costs and reasonable attorneys’ fees and expenses, to which
it may be put or which it may incur by reason of, or in connection with, any misrepresentation made
by the Pittsburgh Bank in this Agreement, or any breach by Pittsburgh Bank of its warranties set
forth in this Agreement. The Pittsburgh Bank’s indemnification under this section does not include
any loss, damage, liability or expense arising out of any litigation challenging the authority of
the MPF Provider to engage in the MPF Program.

     6.8.
MPF
Provider’s Indemnification Obligation. The MPF Provider
agrees to indemnify, defend and hold harmless the Pittsburgh Bank, its affiliates and each
stockholder, director, officer, employee and agent, if any, thereof from and against any and all
loss, damage, liability or expense, including (without limitation) costs and reasonable attorney’s
fees and expenses, to which it may be put or which it may incur by reason of, or in connection
with, any misrepresentation made by the MPF Provider in this Agreement, or any breach by
MPF Provider of its warranties set forth in this Agreement. The indemnification under
this section does not include any loss, damage, liability or expense arising out of any litigation
challenging the authority of the MPF Provider to engage in the MPF Program.

     6.9. Review of Accounting Books and Records. From time to time upon reasonable
advance request, either party shall be entitled to review, at its cost, the accounting books and
records of the other party with respect to the Pittsburgh Bank’s participation in the MPF Program.
Both parties agree and acknowledge that the other party need not provide copies of or information
pertaining to confidential bank examiner’s reports.

     6.10. Press Releases and Media Relations. (a) The MPF Provider agrees that
during the

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term of this Agreement, it will provide the Pittsburgh Bank advance notice and opportunity
for review and comment in accordance with the terms of the FHLB Guide, of all press releases
and written communications with the media, concerning the Pittsburgh Bank’s or Pittsburgh
Bank PFIs’ involvement with the MPF Program

(b)      The Pittsburgh Bank agrees that during the term of this Agreement, it will provide the
MPF Provider advance notice and opportunity for review and comment in accordance
with the terms of the FHLB Guide, of all press releases and written communications with the
media, concerning the MPF Program.

     6.11.      Use of Proprietary Information and Confidentiality. Each of the parties has
been and may hereafter be furnished with certain materials and information relating to the MPF
Program (including, without limitation, information about Pittsburgh Bank members and housing
associates that apply or are approved as PFIs) that are confidential and proprietary information of
the other party (collectively, the “Confidential Information”). Each of the parties agrees
(i) to keep the Confidential Information confidential using reasonable means, not less than those
used to protect its own proprietary material, (ii) to not disclose the Confidential Information,
without the prior written approval of the other party, to anyone other than to its officers or
employees who have a need to know its contents to perform their duties in connection with the MPF
Program, to any member of its Board of Directors, to its regulators, to any Participant or approved
investor in Program Loans acquired from the Pittsburgh Bank or its PFIs, or to those third party
agents who agree to be bound by the terms of this Section 6.11, as evidenced by a written statement
or agreement in form and substance reasonably satisfactory to the other party, and (iii) upon
completion of its use of the Confidential Information or at any time upon the other party’s
request, to promptly return the Confidential Information, including all copies made thereof in any
format and all notes pertaining to the same. For purposes of this Section 6.11, when transmitting
or providing access to “nonpublic personal information” (as that term is defined in Title V of the
Gramm-Leach-Bliley Act (15 U.S.C. § 6809)), each of the parties shall use a secure method that is
generally accepted as preventing unauthorized access such as encrypted transmission or providing
secure, password protected web-access. Each of the parties further agrees that if it is served
with process or any other governmental or regulatory request for the Confidential Information
(excluding an examination request by the FHFB), it will immediately notify the General Counsel of
the other party, prior to complying with such process, order or request, unless prohibited by
applicable law, regulation or court order.

     6.12. Equal Treatment of MPF Banks. The MPF Program is a cooperative program among the
MPF Banks and the MPF Provider. Consequently, the MPF Provider agrees that any amendment or
modification to MPF Services Agreement offered to any Active MPF Bank shall be promptly offered to
all other Active MPF Banks.

     6.13.      Role of the MPF Banks. It is the intent of the MPF Provider and the MPF Banks
that the Active MPF Banks shall have more responsibility for the advancement of the MPF Program and
a defined role in the material decisions impacting the direction of the MPF Program. Therefore, the
parties to this Agreement agree to meet (in person or telephonically) with the other Active MPF
Banks regularly, but not less than once a month, beginning in September, 2007 and continuously
thereafter until an agreement regarding governance of the MPF Program (“MPF Governance
Agreement”) is executed or as may otherwise be agreed to by the parties. The Pittsburgh Bank
and the MPF Provider agree to negotiate the terms of an MPF

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Governance Agreement in good faith. It is understood that if an MPF Governance Agreement is not
executed by the parties on or before August 31, 2008, notwithstanding the provisions of Section 2
of Exhibit A, and if not later than October 1, 2008, the Pittsburgh Bank exercises its right to
terminate this Agreement pursuant to Section 2.1(a), then the Pittsburgh Bank shall continue to pay
the Transaction Services Fee but the minimum amount of the annual Transaction Services Fee shall be
the Termination Core Services Fee or the TSF Floor, whichever is less, and therefore such TSF Floor
will never be increased to more than the amount of the TSF Floor for the calendar year 2010
specified in Exhibit A.

VII. TERMINATION

     7.1.      Events of Default. It shall be an Event of Default under this Agreement if
either party fails to perform its obligations or breaches any of its covenants under this Agreement
and such failure to perform or breach is not cured (i) within sixty (60) days from the date the
non-breaching party gives written notice of such default, if the default is capable of being cured
within such time limit, or (ii) within a reasonable time after notice if the cure is commenced
within the sixty (60) day period and diligently pursued thereafter.

     7.2.      Termination and Other Remedies.

     7.2.1.      Remedies for the Pittsburgh Bank’s Default. Without limiting the effect
of Section 6.7, upon the occurrence of an Event of Default caused by the Pittsburgh Bank,
(i) the MPF Provider shall have the right, subject to the requirements of Section
2.1(b), to terminate this Agreement, and (ii) the Pittsburgh Bank shall pay to the MPF
Provider an amount equal to the MPF Provider’s actual and direct damages arising from and
accruing during the continuance of the Event of Default, but the Pittsburgh Bank shall have
no responsibility for any consequential or punitive damages.

     7.2.2.      Remedies for the MPF Provider’s Default. Without limiting the
effect of Section 6.8, upon the occurrence of an Event of Default caused by the MPF
Provider, the Pittsburgh Bank shall have the right, subject to the requirements of Section
2.1(b), to terminate this Agreement. Until the MPF Provider’s obligations to provide the
Services terminates as provided in Section 2.1(b), the Pittsburgh Bank shall continue to pay
the Transaction Services Fee for the Services, provided, however, that the
Transaction Services Fee payable by the Pittsburgh Bank shall not exceed the Pittsburgh
Bank’s pro rata portion of the MPF Provider’s costs of providing the Services to all the
MPF Banks, based on the aggregate unpaid principal balance of the Pittsburgh Bank’s retained
interest in Program Loans as compared to the aggregate unpaid principal balance of all the
Program Loans in the MPF Program. Further, the MPF Provider shall pay to the Pittsburgh Bank
an amount equal to the Pittsburgh Bank’s actual and direct damages arising from the Event of
Default, but the MPF Provider shall have no responsibility for any consequential or punitive
damages.

     7.2.3.      Trigger Event. Upon the occurrence of a Trigger Event, this Agreement
shall terminate as directed, and the provisions of Section 2.1(b) shall apply.

     7.3.      Obligations Regarding PFIs; Support for Program Loans. (a) The Pittsburgh
Bank’s covenant to monitor the credit and maintain collateral to secure its

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PFIs’ obligations set forth in Section 6.4.1. and the Pittsburgh Bank’s obligations set
forth in this Section 7.3. shall apply and shall survive the expiration or termination of
this Agreement as well as the sale of the Program Loans by the Pittsburgh Bank unless such
covenants and obligations have been assigned to another MPF Bank or other approved investor
in such Program Loans in accordance with Section 5.12 of this Agreement.

(b)
The Pittsburgh Bank agrees (i) to notify the MPF Provider of any material
adverse changes, of which it becomes aware, in the financial condition of those PFIs who
service or provide credit enhancements for any Program Loans in which any other MPF
Bank has an interest and authorizes the MPF Provider to share such information with the
relevant MPF Banks or other Participants, and (ii) to share relevant credit assessments and
information on those PFIs with the MPF Provider.

(c)
The Pittsburgh Bank agrees to obtain a perfected security interest in collateral for
the benefit of itself and any Participants and/or Owner Banks, except when prohibited by
law, as the Pittsburgh Bank reasonably determines may be necessary to secure the obligations
of the Pittsburgh Bank PFIs under their respective PFI Agreements.

(d)
Without limiting the rights of the MPF Provider and any other MPF Bank under the LOMPA,
the Servicing Transfer Agreements, and the Custody Addendum, the MPF Provider shall not have
an interest in any (i) other property taken as security for any other credit, loan or
financial accommodation made or furnished to any PFI by the Pittsburgh Bank in which the
Participant has no participation interest; (ii) property now or hereafter in the Pittsburgh
Bank’s possession or under the Pittsburgh Bank’s control other than by reason of any PFI
Agreement; or (iii) deposits or other indebtedness which may be or might become security for
performance or payment of any obligations and liabilities of any PFI under the PFI Agreement
by reason of the general description contained in any instrument other than the PFI
Agreement held by the Pittsburgh Bank or by reason of any right of setoff, counterclaim,
banker’s lien or otherwise.

     7.4.
Costs of Enforcement. Each party agrees to bear its own share of any and all
liabilities, costs, expenses and disbursements (including, without limitation, reasonable
attorneys’ fees and other legal expenses) incurred by it in any effort to collect any amounts
payable hereunder to it by the other party.

     7.5.
Exculpation of Parties. Neither party nor any of its shareholders, directors,
officers, employees or agents shall be liable to the other for any obligation, undertaking, act,
omission or judgment of any Borrower, any PFI, any guarantor or any other person, or be bound to
ascertain or inquire as to the performance or observance by any PFI of any provision of any PFI
Agreement, Master Commitment, the Guides, any Program Loan or any of the Loan Documents.

     7.6.
Survival. Without limiting any other express survival provisions contained in
this Agreement, all representations and warranties and the indemnifications contained in this
Agreement shall survive the termination of this Agreement.

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VIII. MISCELLANEOUS

     8.1. Notices. Whenever notice is required under this Agreement or by applicable law,
it must be given as provided in the FHLB Guide, unless otherwise expressly provided in this
Agreement.

     8.2. The Guides and Other Documents. Copies of the Guides, including (without
limitation) any amendments or supplements, or of any changes or pronouncements with respect
thereto, shall be provided by the MPF Provider as provided in the FHLB Guide.

     8.3. Addresses. For purposes of this Agreement, the address, telephone and facsimile
numbers for the Pittsburgh Bank and the electronic transmission information for the Pittsburgh Bank
are as set forth below its signature to this Agreement. For purposes of this Agreement, the
address, telephone and facsimile numbers for the MPF Provider and the electronic
transmission information for the MPF Provider are as set forth in the FHLB Guide. Any
change in notice addresses must be given in writing and given as provided in the FHLB Guide, but
such change shall be effective only upon actual receipt.

     8.4. Effect of Agreement. The MPF Provider will have no obligation or
responsibility to the Pittsburgh Bank except as specifically stated herein. This Agreement
constitutes the entire agreement among the parties, and no representation, promise, inducement or
statement of intent has been made by the MPF Provider to the Pittsburgh Bank which is not
embodied in this Agreement or the incorporated FHLB Guide. This Agreement replaces and supersedes
the Prior Services Agreement. In addition, the parties agree that this Agreement is supplemented
by the LOMPA. Without limiting the foregoing, this Agreement is also supplemented by the Custody
Addendum, the Servicing Transfer Agreements and that certain Confidentiality Agreement with respect
to LEVELS information.

     8.5. Execution in Counterparts; Facsimile Execution Permitted. This Agreement may be
executed in any number of counterparts and by the parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be deemed an original and all of which, taken
together, shall constitute but one and the same agreement. The parties further agree that this
Agreement and signature pages thereof may be transmitted between them by facsimile machine and that
counterpart facsimile copies are included in this Agreement. The parties intend that faxed
signatures may constitute original signatures and that a faxed signature page containing the
signature (original or faxed) of all parties is binding on the parties.

     8.6. Governing Law. This Agreement shall be construed and enforced in accordance with
the statutory and common law of the United States of America. To the extent federal law
incorporates or defers to state law, the relevant state law shall be the law of the state of
Illinois (without regard to conflicts of law principles) applicable to agreements to be performed
in the state of Illinois.

     8.7. Severability of Provisions. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other jurisdiction.

     8.8. Successors and Assigns. Subject to the terms of Section 5.12, this Agreement
shall be binding upon and inure to the benefit of the MPF Provider and the Pittsburgh Bank
and

21

 

their respective successors and permitted assigns. Nothing contained in this Agreement shall limit
the right of the MPF Provider to transfer participation interests in its Participation
Share in Program Loans that were funded or purchased under PFI Agreements with the Pittsburgh Bank.

     8.9. Waivers and Amendments. No delay on the part of either party in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial
exercise by one party of any right, power or remedy preclude other or further exercise thereof, or
the exercise of any other right, power or remedy. No amendment to, modification or waiver of, or
consent with respect to, any provision of this Agreement shall be effective unless in writing and
executed and delivered by the MPF Provider and the Pittsburgh Bank, provided, however,
that the FHLB Guide may be amended or supplemented generally from time to time after consultation
with the Active MPF Banks, by the issuance of revised or additional pages by the MPF Provider or by
other written or electronic communications from the MPF Provider to the MPF Banks. Unless otherwise
agreed to, any amendment to the FHLB Guide shall be issued in accordance with the FHLB Guide and
shall apply to Master Commitments and Delivery Commitments entered into on or after the effective
date of such amendment.

     8.10. References to Sections, Exhibits and Agreement; Captions. Unless otherwise
indicated either expressly or by context, any reference in this Agreement to a “Section” or
“Exhibit” shall be deemed to refer to a Section of or Exhibit to this Agreement. All references
herein to this “Agreement” shall, as of any time after the date hereof, be deemed to include all
amendments hereto, which have been made prior to such time in accordance with Section 8.9. Article
and Section captions used in this Agreement are for convenience only, and shall not affect the
construction of this Agreement.

     8.11. Specific Performance. The parties hereto recognize and agree that it may be
impossible to measure in money the damages which will accrue to any party hereto or its successors
or assigns by reason of a failure to perform any of the obligations arising under this Agreement.
Therefore, if a party or its successors or assigns shall institute any action or proceeding to
enforce any provision hereof, any party against whom such action or proceeding is brought hereby
agrees that specific performance may be sought and obtained for any breach of this Agreement,
without the necessity of providing actual damages.

8.12. Mediation of Disputes; Jurisdiction and Venue. (a) Neither the Pittsburgh
Bank nor the MPF Provider shall institute a proceeding before any tribunal to resolve any
controversy or claim arising out of or relating to the Agreement, or the breach, termination
or invalidity thereof (a “Dispute”), before such party has sought to resolve the
dispute through mediation. If the parties do not promptly agree on a mediator, either party
may request the then Chairman of the Board of the FHFB to appoint a mediator. All mediation
proceedings under this Agreement shall be held in Washington, D.C. or such other location as
the parties may agree upon. If the mediator is unable to facilitate a settlement of the
Dispute within a reasonable time, as determined by the mediator, the mediator shall issue a
written statement to the parties to that effect and the complaining party may then pursue
any other remedy available to it at law or in equity. The fees and expenses of the mediator
shall be paid by the party initiating mediation, unless the parties agree otherwise, but the
paying party shall be entitled to a judgment for reimbursement of such fees and expenses if
it prevails against the other party on all material issues in a judicial proceeding.

22

 

(b) The Pittsburgh Bank hereby consents to the exercise of jurisdiction over its
person and its property by any court of competent jurisdiction situated in the City of
Chicago, State of Illinois (whether it be a court of the State of Illinois or a court of the
United States of America situated in Illinois) for the enforcement of this Agreement or in
any other controversy, dispute or question arising hereunder, and the Pittsburgh Bank hereby
waives any and all personal or other rights to object to such jurisdiction for such
purposes. The Pittsburgh Bank, for itself and its successors and assigns, hereby waives any
objection which it may have to the laying of venue of any such action, suit or proceeding in
any such court; provided, that the provisions of this paragraph shall not be deemed to
preclude any other appropriate forum. If such litigation is commenced at any time, the
parties agree that service of process may be made, and personal jurisdiction over either
party obtained, by service of a copy of the summons, complaint and other pleadings required
to commence such litigation by United States certified or registered mail, return receipt
requested, addressed to such party at its address for notices as provided in this Agreement.
The Pittsburgh Bank and MPF Provider waive all claims of lack of effectiveness or error by
reason of any such service.

23

 

     IN WITNESS WHEREOF, each of the MPF Provider and the Pittsburgh Bank has caused this
Agreement to be executed by its duly authorized officers, as of the date first above written.

MPF PROVIDER:

FEDERAL HOME LOAN BANK OF CHICAGO

	 	 	 	 	 
	By:

	 	/s/ Eric S. Schambow	 	 
	 

	 	 

Eric S. Schambow, Senior Vice President
	 	 
	 
	 	 	 	 
	Pittsburgh BANK:	 	 
	 
	FEDERAL HOME LOAN BANK OF PITTSBURGH	 	 

	 	 	 	 	 	 	 
	By:

	 	/s/ John R. Price
	 	By:
	 	/s/ Craig C. Howie
	 

	 	 
	 	 	 	 
	 

	 	John R. Price, President and CEO
	 	 	 	Craig C. Howie, Group Director

	 	 	 
	Address:

	 	601 Grant Street

Pittsburgh, Pennsylvania 15219-4455

Attention: Margaret Stemmler
	 
	 	 
	 

	 	Facsimile No.: (412) 288-7318
	 

	 	Electronic Transmission: mstemmler@fhlb-pgh.com

“Mortgage
Partnership Finance,” “MPF” and “eMPF” are registered trademarks of the Federal Home Loan
Bank of Chicago.

24

 

EXHIBIT A

TRANSACTION SERVICES FEES 

1.      TRANSACTION SERVICES FEES.

(a)
The Transaction Services Fee shall initially be a percentage fee payable and
calculated each month by multiplying, for each Annual Percentage Rate, (x) one-twelfth
of such Annual Percentage Rate by (y) the aggregate outstanding balance of the
Pittsburgh Bank’s applicable TSF Loans at the end of the previous month as reported by
the Master Servicer, and then, if there are more than one Annual Percentage Rate,
totaling the results for all the TSF Loans (aggregated for the calendar year, the
“Annual Percentage Fee”), provided, however, that commencing with
calendar year 2008, and for each subsequent calendar year, the Transaction Services Fee
for such year shall be equal to (i) the Annual Percentage Fee or (ii) the Pittsburgh
Bank’s TSF Floor, whichever is greater. If the Annual Percentage Fee for the
Pittsburgh Bank is less than its TSF Floor in any year, the difference between the two
amounts shall be paid as part of the December payment of Transaction Services Fees.

(b) The Annual Percentage Rate applicable to TSF Loans acquired by the Pittsburgh Bank
prior to January 1, 2009 is five basis points (0.05%), which rate will not be changed
during the life of such TSF Loans, and (notwithstanding the TSF Notice dated June 30,
2007) the TSF Floor for 2008 for the Pittsburgh Bank is $250,000, for 2009 is $375,000
and for 2010 is $500,000.

(c) “Annual Percentage Rate” shall mean the annual rate used to determine the
Annual Percentage Fee payable with respect to the TSF Loans acquired by the Pittsburgh
Bank in any calendar year, for the life of such TSF Loans, which rate is specified in
Section 1 (b) of Exhibit A for calendar years prior to 2009 and shall be as set forth
in the TSF Notice for each subsequent calendar year.

(d) Commencing with calendar year 2009, and for each subsequent calendar year, the MPF
Provider may change the Annual Percentage Rate by delivering the same TSF Notice to all
Active MPF Banks on or before the preceding June 30th. In addition,
commencing with calendar year 2011, and for each subsequent calendar year, the MPF
Provider may change the TSF Floor as specified in the TSF Notice to the MPF Banks.
Failure by the MPF Provider to issue a TSF Notice for any calendar year shall result in
the continued use of the Annual Percentage Rate and TSF Floor from the previous
calendar year. The MPF Provider agrees not to increase the Annual Percentage Rate for
any year to a rate greater than a half of one basis point (0.005%) more than the prior
year’s Annual Percentage Rate. (For example, the Annual Percentage Rate for 2009 TSF
Loans cannot exceed 0.055% (5.5 basis points)). Subject to the limit specified in
Section 1 (e) of Exhibit A, the aggregate TSF Floor for all the MPF Banks shall be set
by the MPF Provider in accordance with the procedures specified in Section 1(g) of
Exhibit A, and shall not exceed the MPF Provider’s projected aggregate costs of
providing the Services to the Pittsburgh Bank and to the other MPF Banks for such year.

25

 

(e) The TSF Floor specified in the TSF Notice for any calendar year may be increased
for such year by an amount determined by multiplying the CPI Increase (as defined
below) effective for such TSF Notice by the current year’s TSF Floor.

The CPI Increase shall be calculated by comparing the Consumer Price Index for All
Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100 (the
“CPI”) for the month of April of the prior year to the CPI for the month of
April of the current year (or the closest calendar month prior to April for which the
CPI is published if the April CPI is not published by May 31st). The increase in the
CPI indicated by such comparison, stated as a percentage, shall be defined herein with
respect to each year’s TSF Floor published in the TSF Notice as the “CPI
Increase.”

If, during the term of this Agreement, the CPI is no longer published, the MPF Provider
shall, for the purposes of computation of the maximum increase to the TSF Floor,
substitute such other Index as is then generally recognized as most comparable to the
CPI and accepted for similar determinations. If sufficient data is unavailable for the
MPF Provider to make the determination specified in this Section 1 (e) for any TSF
Notice, the TSF Floor for the prior calendar year shall remain in effect. As soon as
the necessary data becomes available, the MPF Provider shall determine the new limit on
the TSF Floor and the MPF Provider may increase the TSF Floor for the applicable year’s
TSF Loans up to that limit if it so desires.

The following example illustrates the computation of percent change:

	 	 	 
	CPI for current period
	 	136.0
	Less CPI for previous period
	 	129.9
	Equals index point change
	 	6.1
	Divided by previous period CPI
	 	129.9
	Equals
	 	0.047
	Result multiplied by 100
	 	0.047 x 100
	Equals percent change
	 	4.7

(f) Excluding the TSF Floor and the Termination Core Services Fee, it is
understood that Program Loans acquired by the Pittsburgh Bank before May 1, 2006 will
not be subject to a Transaction Services Fee for the life of such Program Loans.

(g) The MPF Provider agrees to provide all Active MPF Banks with a report not later
than May 31st of each year commencing 2008, containing a break down of the
MPF Provider’s costs for the Services for all MPF Banks for the prior calendar year,
the budget for such costs for the current year and pro forma projection of such costs
for the following three years. If requested by the Active MPF Banks in writing, the MPF
Provider agrees to provide reasonable types of documentation to support its budget and
pro forma projections excluding, however, any privileged or confidential information.
The MPF Provider agrees to consult with the Active MPF Banks regarding the projected
costs of the Services for the following calendar year prior to issuing the TSF Notice
for such calendar year.

26

 

2. TRANSACTION SERVICES FEES FOLLOWING TERMINATION.

(a) If this Agreement is terminated by the Pittsburgh Bank pursuant to Section 2.1(a), or if
this Agreement is terminated pursuant to Section 7.2.1 or Section 7.2.3, the Pittsburgh Bank
shall continue to pay the Transaction Services Fees as provided in Section 1 of Exhibit A,
provided, however, that commencing the first calendar year after termination, in lieu of the
TSF Floor, the minimum amount of the Transaction Services Fees for the year shall not be less
than the Termination Core Services Fee (as defined below).

(b) If this Agreement is terminated by the MPF Provider pursuant to Section 2.1(a), the
Pittsburgh Bank shall continue to pay the Transaction Services Fees as provided in Section 1
of Exhibit A, provided, however, that commencing the first calendar year after termination,
the minimum amount of the Transaction Services Fees for the year shall be the TSF Floor or the
Termination Core Services Fee, whichever is less.

(c) The Pittsburgh Bank’s “Termination Core Services Fee” for the calendar year
following termination, and each year thereafter, shall be the sum of the following items based
on the actual expenses incurred for that calendar year by the MPF Provider:

1. The Pittsburgh Bank’s pro rata portion of the MPF Master Servicer’s fees for all Program
Loans based on the aggregate unpaid principal balance of the Pittsburgh Bank’s retained
interest in the Program Loans as compared to the aggregate unpaid principal balance of all the
Program Loans in the MPF Program;

2. The Pittsburgh Bank’s pro rata portion of the MPF Master Custodian’s fees for all Program
Loans based on the aggregate unpaid principal balance of the Pittsburgh Bank’s retained
interest in the Program Loans as compared to the aggregate unpaid principal balance of all the
Program Loans in the MPF Program; and

3. The MPF Provider’s annual licensing fees for S&P’s LEVELS® for the Pittsburgh
Bank’s license.

27

 

EXHIBIT B

CUSTODY ADDENDUM TO

Mortgage Partnership Finance®

SERVICES AGREEMENT

THIS CUSTODY ADDENDUM TO SERVICES AGREEMENT (the “Custody Addendum”) is made as of the
31st day of August, 2007 between the FEDERAL HOME LOAN BANK OF CHICAGO (the
“MPF® Provider”) and the FEDERAL HOME LOAN BANK OF PITTSBURGH (the
“MPF Bank”).

RECITALS:

WHEREAS, the MPF Bank and the MPF Provider are concurrently entering into the Mortgage
Partnership Finance Services Agreement of even date herewith (the “Services
Agreement”) pursuant to which the parties agreed, among other things, to make the Mortgage
Partnership Finance Program available to members and housing associates of the MPF Bank; and

WHEREAS, the MPF Provider is the custodian for the MPF Bank under the terms of the Services
Agreement and has engaged a vendor to perform its custodial duties thereunder, which vendor is
named as the MPF Program Custodian (the “MPF Custodian”) in the Guides; and

WHEREAS, the parties desire to accommodate members and housing associates of the MPF Bank that are
participating financial institutions in the MPF Program (individually, “Subject PFI” and
collectively, the “Subject PFIs”), that may from time to time request the MPF Bank to
permit an entity other than the MPF Custodian (as applicable to each Subject PFI, the
“Custodian”) to serve as custodian for required loan document files (the “Collateral
Files”) for those Program Loans which the Subject PFI will deliver to or service for the MPF
Bank (the “Subject Mortgages”) under the PFI Agreement between the Subject PFI and the MPF
Bank (the “Subject PFI Agreement”); and

WHEREAS, pursuant to the FHLB Guide, the MPF Bank will submit a request or notice (the
“Custodian Request”) advising the MPF Provider that (i) the Subject PFI has requested
permission to use the Custodian for the Collateral Files for the Subject Mortgages, and (ii) the
MPF Bank is granting permission to the Subject PFI, if the Custodian is approved by the MPF
Provider, to use the Custodian for the Collateral Files for the Subject Mortgages; and

WHEREAS, upon the MPF Provider’s approval of such Custodian’s MPF Custodian Application, the MPF
Provider (i) will notify the Subject PFI of the approval of its request and ask the Subject PFI to
sign an acknowledgment (“Custodian Acknowledgement”) that after the date specified in such
notice, the Guides require the Subject PFI to be responsible for the payment of the Custodian’s
fees as well as for the performance by the Custodian of its custodial obligations, and (ii) subject
to the Subject PFI’s signing the Custodian Acknowledgement, will engage the Custodian as a vendor
pursuant to a Custody Agreement (the “Custody Agreement”) to perform the MPF Provider’s
obligations as Custodian for the Collateral Files. Any capitalized terms used but not defined in
this Custody Addendum shall have the meaning assigned to them in the Services Agreement or the
Subject PFI Agreement, as applicable.

NOW THEREFORE, in consideration of the foregoing recitals and the covenants contained herein, the
parties agree as follows:

1. The MPF Bank must provide the MPF Provider with a Custodian Request with respect to a Subject
PFI and its requested Custodian before the MPF Provider will execute a Custody Agreement with the
Custodian.

2. Following its review and approval of the Custodian’s MPF Custodian Application, which shall not
be unreasonably denied or delayed, the MPF Provider shall notify the Subject PFI of the approval of
its request for the Custodian to serve as custodian for the Collateral Files subject to the Subject
PFI signing the Custodian Acknowledgement which, among other provisions, shall require the Subject
PFI to acknowledge: (a) that a breach by the Custodian of the Custody Agreement shall constitute a
breach by the Subject PFI of the Subject PFI Agreement, and (b) that the obligations of the
Custodian under the Custody Agreement shall be secured in the same manner as all PFI obligations
arising under the Subject PFI Agreement. The MPF Provider shall provide the MPF Bank with a copy of
its notice to the Subject PFI and, upon receipt by the MPF Provider, a copy of the Custodian
Acknowledgement when signed by the Subject PFI.

28

 

3. The MPF Provider and MPF Bank agree and acknowledge that the terms and conditions of this Custody
Addendum will be extended to each and every Subject PFI for which a separate Custodian Request is
submitted to the MPF Provider by the MPF Bank, upon the PFI’s signing and causing the Custodian
Acknowledgement to be returned to the MPF Provider with respect to the Custodian selected by the
Subject PFI.

4. If the MPF Bank determines for any reason that the Custodian selected by a Subject PFI should
not continue to serve as an approved MPF custodian, the MPF Bank may request that the Custodian’s
custodial duties be terminated, but in any event will provide the MPF Provider with relevant
information. The MPF Provider will terminate the Custody Agreement with respect to any Subject
Mortgages upon receipt of such request. In the event the Custody Agreement is terminated by the
MPF Provider solely because of the request of the MPF Bank, the MPF Bank will reimburse the MPF
Provider for any actual out-of-pocket costs which the MPF Provider may incur as a result of such
termination for which the MPF Provider is not made whole by the Custodian.

5. The MPF Bank agrees that with respect to each Subject PFI, should a custody default as
determined by the MPF Provider occur with respect to the Subject Mortgages due to a breach of the
Custodian’s obligations under the Custody Agreement, the MPF Bank shall first enforce the terms of
the Subject PFI Agreement with respect to such breach of the Custody Agreement. The MPF Bank shall
pursue such enforcement efforts in the same manner and with the same diligence as it would exercise
for any obligation of the Subject PFI to the MPF Bank. Although the MPF Bank is not required to
exhaust all available remedies, its enforcement effort should include the most appropriate of the
full range of remedies available under the Subject PFI Agreement which include, without limitation,
realizing upon collateral pledged by the Subject PFI. In the event that such enforcement efforts
do not result in full recovery, the MPF Bank shall look to the MPF Provider for indemnification
with respect to a default by the Custodian, and the MPF Provider shall remain liable to the MPF
Bank for such indemnification under the Services Agreement (as amended by this Custody Addendum)

6. If the Custody Agreement with any Custodian is terminated or such Custodian is removed for any
reason, upon the transfer of all Collateral Files to a successor custodian to the MPF Provider’s
reasonable satisfaction, (i) the terms and conditions set forth in this Custody Addendum, including
the enforcement of the Subject PFI Agreement upon a custody default as provided in Paragraph 5
hereof, shall automatically terminate with respect to such Custodian, and shall thereafter apply to
the successor custodian to such Custodian; and (ii) the indemnification provisions of the Services
Agreement shall continue to be in full force and effect and unamended with respect to the Subject
PFI and its Custodian as if this Custody Addendum had never been executed by the parties.

7. The MPF Provider shall provide the MPF Bank with an MPF Provider Officer Attestation that based
upon the MPF Provider’s review, the Custodian has met the requirements to be approved as an
alternate custodian as set forth in the Custody Manual. Further, the MPF Provider agrees that, if
requested by the MPF Bank, staff of the MPF Bank may participate in the MPF Provider’s periodic
on-site reviews of the Collateral Files or the Custodian’s custodial operations with respect to the
Subject Mortgages and any other access by the MPF Bank must be arranged and coordinated by the MPF
Provider.

8. Except for the terms of this Custody Addendum, the Services Agreement remains unmodified and in
full force and effect.

IN WITNESS WHEREOF, the parties have caused this Custody Addendum to be executed by their duly
authorized officers as of the date first above written.

	 	 	 	 	 	 	 
	FEDERAL HOME LOAN BANK	 	FEDERAL HOME LOAN BANK
	     OF CHICAGO	 	 OF PITTSBURGH
	 
	 	 	 	 	 	 
	By:

	 	/s/ Eric S. Schambow
	 	By:
	 	/s/ John R. Price
	 

	 	 
	 	 	 	 
	 

	 	Eric S. Schambow, Senior Vice President
	 	 	 	John R. Price, President and CEO
	 
	 

	 	 	 	By:
	 	/s/ Craig C. Howie
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Craig C. Howie, Group Director

“Mortgage Partnership Finance” and “MPF” are registered trademarks of the Federal Home Loan Bank of

Chicago.

29

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