Document:

LOAN AGREEMENT

Exhibit
10.1

LOAN AGREEMENT (BROKER-DEALER VRDN FACILITY)

     THIS LOAN AGREEMENT (BROKER-DEALER VRDN FACILITY) (this “Agreement”) is made and
entered into as of September 30, 2008, by and between: PIPER JAFFRAY & CO., a Delaware corporation
(“Borrower”); and U.S. BANK NATIONAL ASSOCIATION, a national banking association
(“Lender”); and has reference to the following facts and circumstances:

     A. Borrower has applied for a revolving line of credit from Lender in the principal amount of
up to $250,000,000.00 which shall be secured by certain variable rate demand notes.

     B. Lender is willing to make said revolving line of credit available to Borrower upon, and
subject to, the terms, provisions and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender
covenant and agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the
following respective meanings (and such meanings shall be equally applicable to both the singular
and plural form of the terms defined, as the context may require):

     Advance shall mean each loan advance made hereunder by Lender to Borrower.

     Applicable Margin shall have the meaning described in Exhibit C attached
hereto.

     Banking Day shall mean any day on which Lender is open for business at its principal
offices in St. Louis, Missouri and Minneapolis, Minnesota.

     BONYM shall mean The Bank of New York Mellon, formerly known as The Bank of New York,
a New York banking corporation.

     Borrowing Base shall mean the sum of the values of the following: (a) Pledged
Securities consisting of Variable Rate Demand Notes on Borrower’s books as determined in accordance
with generally accepted accounting principles, multiplied by the applicable percentage(s)
described in Exhibit B attached hereto; and (b) Pledged Securities consisting of Other
Eligible Securities on Borrower’s books as determined in accordance with generally accepted
accounting principles, multiplied by the applicable percentage(s) described in Exhibit
B attached hereto.

     Collateral Pledge Agreement shall have the meaning set forth in Section 9(c).

     Collateral Summary shall have the meaning set forth in Section 9(a).

     Control Agreement shall mean the Collateral Account Control Agreement dated September
9, 2007, executed by Lender, as Pledgor, and BONYM, as Securities Intermediary, as amended.

     Cost of Funds Rate shall mean the rate at which Lender would be able to borrow
overnight funds of in the Money Markets, adjusted for any reserve requirement and any subsequent
costs arising from a change in government regulation; such rate rounded up to the nearest
one-eighth percent; and the term.

     Credit Documents shall have the meaning set forth in Section 11(a).

     Event of Default shall have the meaning set forth in Section 12.

     Facility Amount shall mean Two Hundred Fifty Million Dollars ($250,000,000.00).

     FOCUS Report shall mean each Financial and Operational Combined Uniform Single (FOCUS)
Report (Securities and Exchange Commission form X-17A-5).

 

 

     Money Market” shall mean one or more wholesale funding markets available to and
selected by Lender, including negotiable certificates of deposit, commercial paper, Eurodollar
deposits, bank notes, federal funds, interest rate swaps or others.

     New York Banking Day means any day (other than a Saturday or Sunday) on which
commercial banks are open for business in New York, New York.

     Note shall mean the Revolving Credit Note (Broker-Dealer VRDN Facility) dated the date
hereof, executed by Borrower and payable to the order of Lender in the principal amount of up to
$250,000,000.00, in the form attached hereto and incorporated by reference as Exhibit A.

     Other Eligible Securities shall mean the securities held by BONYM as “Collateral” in
the “Account” (as those terms are defined in the Control Agreement) and the categories of which are
described on the schedule attached hereto as Exhibit B, which such Exhibit B shall
be amended upon the mutual agreement of Borrower and Lender.

     Pledged Securities shall mean, collectively, at any time, all Variable Rate Demand
Notes and Other Eligible Securities described in any Collateral Summary(ies) or in which a security
interest is otherwise granted to Lender under any provision of the Collateral Pledge Agreement;
provided that (a) all Pledged Securities consisting of Variable Rate Demand Notes
shall have credit enhancements consisting of letters of credit or standby bond purchase agreements
provided either by Lender or by other credit enhancement providers acceptable to Lender as
described in Exhibit B attached hereto; and (b) Lender reserves the right at anytime to
require Borrower to substitute any Pledged Securities with replacement Pledged Securities
acceptable to Lender in its sole discretion if such Pledged Securities have lost value as the
result of market conditions.

     Regulatory Capital shall mean “Net Capital” as calculated by Borrower, and set forth
on line 10 of the “Computation of Net Capital” section of Part II of each monthly FOCUS Report of
Borrower.

     Termination Date shall mean the earlier of September 25, 2009, or the date on which
this Agreement is terminated pursuant to Section 12.

     Variable Rate Demand Notes shall mean variable rate demand notes held or to be
purchased by Borrower.

     2. Credit Facility. Borrower may request Advances and unless an Event of Default has
occurred and is continuing, Lender shall make the Advances so requested, from time to time during
the period from the date hereof until the Termination Date. Interest shall accrue on each Advance
as described in Section 6 below. Lender will refuse to make any requested Advance to Borrower that
would cause the aggregate principal amount of: (a) the Advances outstanding hereunder to exceed
the Facility Amount; (b) the Advances outstanding hereunder secured by (i) Variable Rate Demand
Notes which have credit enhancements provided by credit enhancement providers other than Lender
and/or (ii) Other Eligible Securities, to exceed $125,000,000; and (c) the Advances outstanding
hereunder to exceed the limits set forth the Borrowing Base; provided that in no
instance shall the principal amount of the Advances exceed the amount permitted under any
applicable law, regulation, rule or direction of any applicable regulatory authority. Borrower
may, upon five (5) Banking Days’ prior written notice to Lender, terminate the credit facility
hereunder at any time, or reduce the Facility Amount from time to time; provided,
however, that at no time shall the Facility Amount be reduced to an amount less than the
aggregate principal balance of all outstanding Advances, and any such termination or reduction
shall be permanent and Borrower shall have no right to thereafter reinstate or increase, as the
case may be, the credit facility hereunder or the Facility Amount.

     3. Procedures for Advances. The following provisions shall govern certain aspects of
any Advance that Borrower may request under this Agreement:

     (a) Requests for Advances. Borrower may request an Advance by written notice or by
telephonic, facsimile or electronic notice. All requests for Advances shall be directed to the
individuals designated for such purpose by Lender from time to time. Each request by Borrower for
an Advance shall be accompanied by further documents or information as required by Lender,
including but not limited to, documents that evidence that the applicable Pledged Securities have
been assigned or transferred to Borrower and that Borrower is the current owner of such Pledged
Securities, and that such Pledged Securities have been delivered to Lender, or are in the
possession of or registered in the name of The Depository Trust Company or other clearing
corporation or a custodian bank or nominee thereof (including BONYM).

 

 

     (b) Authorized Persons. Upon request, Borrower shall provide Lender with the names,
titles and signatures of all individuals designated by Borrower to request Advances under this
Agreement Borrower shall immediately notify Lender if any designated individuals of Borrower are
no longer employed by Borrower, or are no longer authorized to request Advances under this
Agreement; and if any new and/or additional individuals are designated by Borrower to request
Advances under this Agreement.

     (c) Disbursements. Lender shall disburse the amount of each Advance by crediting the
amount of that Advance to deposit account no. 150250032516 maintained by Borrower at Lender or by
the transfer of immediately available funds, or otherwise, all as instructed by Borrower in its
request for the Advance.

     4. The Note. Borrower’s obligation to repay all Advances shall be evidenced by the
Note which shall be duly executed by Borrower and delivered to Lender.

     5. Payment of Principal and Prepayments. The unpaid principal balance of the Note
shall be due and payable in full on the Termination Date. Borrower may prepay all or any part of
the Note at any time, without premium or penalty, but any voluntary prepayment must include
interest on the amount prepaid.

     6. Interest. Borrower shall pay interest to Lender on the aggregate unpaid principal
amount of all Advances from time to time outstanding at an annual rate equal to the Applicable
Margin plus the Cost of Funds Rate. Lender’s internal records of applicable interest rates
shall be determinative in the absence of manifest error. The amount of interest accrued on the
Note in each month shall be payable on the first Banking Day of the next month and also on the
Termination Date. After the Termination Date or during the continuance of an Event of Default,
Borrower shall pay interest to Lender on the aggregate and unpaid principal amount of all Advances
from time to time outstanding at an annual rate equal to Two Percent (2%) over the applicable
interest rate(s). Borrower agrees to pay to Lender as additional interest hereunder, upon demand,
the amount of any increased cost or reduced rate of return applicable to the Advances resulting
from change or change in application to Lender of any law, rule, regulation or direction of any
regulatory agency, including without limitation tax, duty, reserve (including, without limitation,
any such item imposed by the Board of Governors of the Federal Reserve System) or similar
requirement imposed on Lender, its assets or any deposits or credit extended by or to Lender.

     7. Commitment Fee. From and including the date of this Agreement to but excluding the
Termination Date, Borrower shall pay a nonrefundable commitment fee as described in Exhibit
C attached hereto.

     8. Payments. All payments under the Note shall be made in immediately available
funds, by debiting a deposit account of Borrower at Lender, by wire transfer or otherwise. All
payments by Borrower and all proceeds of any Pledged Securities that are foreclosed on by Lender
shall be applied first to costs of collection, next to any other amounts owed under Section 13
below, next to accrued interest on the Note and finally to the principal balance of the Note. If
any payment of principal of or interest on the Note, or any amount payable under Section 13 below,
becomes due and payable on a day which is not a Banking Day, such payment shall be made on the next
succeeding Banking Day and such extension of time shall in such case be included in computing
interest in connection with such payment.

     9. Security.

     (a) Upon any request for an Advance, Borrower will simultaneously deliver to Lender a summary
of the Pledged Securities in form and substance satisfactory to Lender (a “Collateral
Summary”), which shall identify the Pledged Securities, shall include the values of such
Pledged Securities (as initially determined by Borrower), and which shall be sufficient to enable
Lender to objectively determine the identity of the Pledged Securities. The total value of the
Pledged Securities as summarized shall be such that the aggregate principal amount of the Advances,
before and after giving effect to the requested Advance, shall not exceed the Borrowing Base. By
requesting an Advance, Borrower shall be deemed to represent and covenant that the summarized
Pledged Securities are held by Borrower, free and clear of any lien, claim or encumbrance other
than any security interest in favor of Lender.

 

 

     (b) Borrower agrees that in all instances the total value of the Pledged Securities will be
sufficient to support the outstanding Advances. If a change in market conditions or the status of
an issuer reduces the total
value of any Pledged Securities below the level necessary to collateralize the Advances,
Borrower shall immediately either (i) pledge additional Pledged Securities (acceptable to Lender in
its sole discretion) sufficient to restore the total value of the Pledged Securities to a level
such that the Borrowing Base equals or exceeds the aggregate amount of outstanding Advances, or
(ii) pay the Advances to the extent required to reduce the aggregate amount of outstanding Advances
to an amount not in excess of the Borrowing Base. If any Variable Rate Demand Notes have been
pledged and delivered to Lender for more than fourteen (14) days, such Variable Rate Demand Notes
shall no longer be included in the Borrowing Base, and Borrower shall immediately either (a) pledge
substitute Pledged Securities (acceptable to Lender in its sole discretion) sufficient to maintain
the total value of the Pledged Securities at a level such that the Borrowing Base equals or exceeds
the aggregate amount of outstanding Advances, or (b) pay the applicable Advance(s) to the extent
required to reduce the aggregate amount of outstanding Advances to an amount not in excess of the
Borrowing Base.

     (c) The security interests granted by Borrower to Lender and Borrower’s duties with respect
thereto are set forth in more detail in the Collateral Pledge Agreement (Broker-Dealer VRDN
Facility) dated as of the date hereof (the “Collateral Pledge Agreement”).

     10. Minimum Regulatory Capital. Borrower shall at all times have Regulatory Capital
of at least $180,000,000 and shall have fifteen (15) days from the date of receipt of any FOCUS
Report which indicates that there is a violation of this covenant to cure such violation;
provided however no cure period shall exist if any such violation is the direct
result of a decrease in total ownership equity (as reflected in Part II, line 30 of any such FOCUS
Report).

     11. Conditions Precedent to Advances. In addition to requirements for the making of
any Advance set forth elsewhere in this Agreement, and without limiting the discretion of Lender to
make or refuse to make any Advance, Lender shall not make any Advance hereunder unless and until
Lender has received all of the following, in form and substance satisfactory to Lender:

     (a) This Agreement, the Note, the Collateral Pledge Agreement, and the Control Agreement
(collectively, along with the UCC Financing Statement referred to below, the “Credit
Documents”), all properly executed;

     (b) A Uniform Commercial Code Financing Statement in a form acceptable for filing with the
Delaware Secretary of State;

     (c) The following organizational information of Borrower: (i) a copy of the resolutions
adopted by the board of directors of Borrower, authorizing the execution, delivery and performance
of the Credit Documents and certified by the Secretary of Borrower; (ii) copies of the Certificate
of Incorporation and By-Laws of Borrower, certified by its Secretary as being true and correct
copies thereof; (iii) a certificate signed by the Secretary of Borrower as to the incumbency and
signature of the person or persons authorized to execute and deliver the Credit Documents and all
other documents referred to in this Agreement and make requests for advances hereunder; and (iv) a
certificate of good standing issued by the Delaware Secretary of State;

     (d) UCC search results for Borrower from the Delaware Secretary of State;

     (e) An opinion of counsel from Faegre & Benson LLP, counsel for Borrower;

     (f) Payment to Lender of an advisory fee as described in Exhibit C attached hereto; and

     (g) Such other documents and information as reasonably requested by Lender.

 

 

     12. Events of Default; Remedies. The occurrence of any one of the following shall
constitute a default (each an “Event of Default”) by Borrower under this Agreement: (a) if
Borrower shall fail to pay any (i) principal amount of any Advance, when due and payable, or
declared due and payable, or (ii) interest on any Advance within five (5) days after the date on
which such payment of interest shall become due and payable, or declared due and payable; (b) if
Borrower shall fail to pledge additional Pledged Securities as required under Section 9(b) above;
(c) if Borrower shall default in the performance or observance of any other of its obligations
under this Agreement or any of the other Credit Documents, and such default shall remain uncured
for a period of fifteen (15) days after notice from Lender; (d) if any representation, warranty,
statement, report or certificate made or delivered by Borrower, or any of its officers, employees
or agents, to Lender is not true and correct in any material respect when made or deemed made; (e) If Borrower shall (i) become insolvent, (ii)
not be paying its debts generally as such debts become due, (iii) make an assignment for the
benefit of creditors or cause or suffer any of their respective assets to come within the
possession of any receiver, trustee or custodian, (iv) have a petition filed by or against Borrower
under the Bankruptcy Reform Act of 1978, as amended, or any similar law or regulation, (v) have any
of its assets attached, seized or levied upon, or (vi) otherwise become the subject of any
insolvency or creditor enforcement proceedings, provided however, that any
involuntary petition or other proceeding against Borrower shall not be an Event of Default unless
an order for relief is entered or such proceeding remains undismissed for at least sixty (60) days;
(f) if Borrower shall default in the payment, when due, whether by acceleration or otherwise, of
any indebtedness of Borrower in excess of $1,000,000, and such default is declared and is not cured
within the time, if any, specified there for in any agreement governing the same, or any event or
condition shall occur which results in the acceleration of the maturity of any such Indebtedness of
Borrower; (g) if one or more judgments or decrees shall be entered against Borrower involving,
individually, or in the aggregate, a liability of $1,000,000 or more and such judgments or decrees
shall not have been satisfied, vacated, discharged or stayed pending appeal within thirty (30) days
after the entry thereof; or (h) if this Agreement, the Note, or any other Credit Documents executed
by Borrower at any time after their respective execution and delivery, shall cease to be in full
force and effect, shall be declared null and void, shall be revoked or terminated or shall be
subject to any contest by Borrower as to their validity and/or enforceability, for any reason, or
if Borrower shall for any reason deny any further liability to Lender hereunder and thereunder.
Upon the occurrence and during the continuance of any Event of Default, Borrower may not request
any Advance under this Agreement, Lender may then forthwith cease making Advances to or for the
benefit of Borrower under this Agreement without any notice to Borrower, and Lender may terminate
this Agreement; provided that this Agreement shall automatically terminate, and all amounts
Borrower owes Lender hereunder and under the Note shall become due, without any notice should an
order for relief be entered with respect to Borrower under the United States Bankruptcy Code. Upon
an Event of Default, with notice by Lender to or demand by Lender of Borrower, Lender may declare
all Advances to be immediately due and payable. Lender, in its sole discretion, upon the
occurrence of and during the continuance of an Event of Default may exercise one or more of the
rights and remedies accruing to Lender under this Agreement or the other Credit Documents, and/or
applicable law upon default by Borrower, including, without limitation, the right to set off and/or
reduce to cash and apply to the payment of any of Borrower’s obligations, any monies, reserves,
deposits, certificates of deposit, deposit accounts and interest and dividends thereon, securities,
investment property, cash and other property in the possession of or under the control of Lender or
any of Lender’s affiliates.

     13. Fees and Expenses. Borrower agrees, whether or not any Advance is made under this
Agreement, to pay Lender upon demand for (a) all out-of-pocket costs and expenses and all
reasonable attorneys’ fees incurred by Lender in connection with the preparation, documentation,
negotiation and/or execution of this Agreement and the other Credit Documents, (b) all recording,
filing and search fees and expenses incurred by Lender in connection with this Agreement and the
other Credit Documents, (c) all out-of-pocket costs and expenses and all reasonable attorneys’ fees
incurred by Lender in connection with (i) the preparation, documentation, negotiation and execution
of any amendment, modification, extension, renewal or restatement of this Agreement and/or any
other Credit Document, and (ii) the preparation of any waiver or consent under this Agreement
and/or under any other Credit Document, and (d) if an Event of Default occurs, all out-of-pocket
costs and expenses and all reasonable attorneys’ fees incurred by Lender in connection with such
Event of Default and collection and other enforcement proceedings resulting therefrom. Borrower’s
obligations under this Section 11 shall survive the Termination Date.

     14. Reporting Requirements and Inspections. Until the Termination Date and thereafter
until the Note and all other obligations of Borrower under this Agreement are paid in full, in
addition to the Collateral Summaries and other information described in Section 8 above, Borrower
will provide to Lender: (a) at Lender’s request, an updated, detailed list of the Pledged
Securities; (b) within ten (10) days after filing, copies of all monthly FOCUS Reports of Borrower;
(c) within ninety (90) days after the end of its fiscal year, audited financial statements of
Borrower, its parent and their subsidiaries which shall include, but not be limited to, a balance
sheet, income and expense statement and statement of retained earnings; and (d) from time to time
such other information and reports as Lender may reasonably request. Borrower shall, at all times,
maintain accurate books and records covering all collateral subject to the Collateral Pledge
Agreement, and Lender shall have the right by or through any of its representatives, attorneys or
accountants to audit those books and records, upon reasonable notice to Borrower.

 

 

     15. Miscellaneous. The following provisions shall also be applicable to Borrower’s
obligations to Lender under this Agreement and the Note:

     (a) Amendments; Waivers. No amendment or waiver of any provision of this Agreement,
nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by Lender and Borrower, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given. No
failure on Lender’s part to exercise, and no delay in Lender’s exercising, any right under this
Agreement, the Note, the Collateral Pledge Agreement or any other Credit Document shall operate as
a waiver thereof; nor shall any single or any partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right. The remedies provided in this
Agreement are cumulative and not exclusive of any remedies provided by law.

     (b) Governing Law; Binding Effect. This Agreement shall be deemed to be made under
and shall be governed by and construed in accordance with the internal law, and not the law of
conflicts, of the State of Minnesota. This Agreement shall be binding on Borrower, its
representatives, successors and assigns, and shall inure to the benefit of, and be enforceable by,
Lender, its successors, transferees and assigns. Notwithstanding the foregoing, Borrower may not
assign or otherwise transfer any of its rights or delegate any of its obligations or duties under
this Agreement without the prior written consent of Lender.

     (c) Lender Records. Lender shall maintain records as to advances and payments made,
and interest accrued on, the Note, and said records shall be presumed accurate until the contrary
shall have been established.

     (d) Captions. The captions or headings in this Agreement are for convenience only and
in no way define, limit or describe the scope or intent of any provision of this Agreement.

     (e) Regulations T and U. Borrower is subject to the provisions of Regulation T
promulgated by the Board of Governors of the Federal Reserve System and does not extend or maintain
credit to or for customers except in accordance with the provisions of such Regulation T. Borrower
is an “exempted borrower” as defined by Regulation U. Upon request, Borrower shall provide to Bank
a Certificate confirming that Borrower is in compliance with the provisions of Regulation T and U.

     (f) Compliance With Other Regulations: Borrower shall at all times comply with all
present and future laws, rules and regulations applicable to it in the operation of its business,
including but not limited to all rules and regulations of the Securities and Exchange Commission,
the National Association of Securities Dealers, the Securities Investor Protection Corporation and
any self-regulatory organization of which Borrower is a member. Borrower shall deliver to Bank,
immediately upon its receipt or transmission thereof, any notices to or from any such organization
that Borrower is in violation of any applicable net capital rule, including but not limited to Rule
15c3-1 of the Securities and Exchange Commission.

     (g) Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, e-mail, telecopier or similar writing) and shall be given
to such party at its address or telecopier number set forth on the signature pages hereof or such
other address or telecopier number as such party may hereafter specify. Each such notice, request
or other communication shall be effective (a) if given by telecopier, when such telecopier is
transmitted to the telecopier number specified in this Section and the appropriate answerback is
received, (b) if given by mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (c) if given by any other means, when
delivered at the address specified in this Section.

     (h) Entire Agreement. The Credit Documents embody the entire agreement and
understanding between Lender and Borrower with respect to the subject matter hereof, and supersede
all prior agreements and understandings relating to the subject matter hereof.

     16. Termination. Unless terminated sooner by Lender pursuant to Section 12 above,
this Agreement will terminate on September 25, 2009.

 

 

     17. Consent to Jurisdiction; Waiver of Jury Trial. BORROWER HEREBY IRREVOCABLY (a)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MINNESOTA STATE COURT SITTING IN THE COUNTY OF
HENNEPIN, OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE DISTRICT OF MINNESOTA, AS LENDER MAY
ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
RELATED LOAN DOCUMENT, (b) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY
BE HELD AND DETERMINED IN ANY OF SUCH
COURTS, (c) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH BORROWER MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT, (d) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM AND (e) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH
BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT DOMICILES. BORROWER AND
LENDER HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH
BORROWER AND LENDER ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY RELATED LOAN DOCUMENTS.

     IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be duly executed by
their duly authorized officers as of the date first written hereinabove.

(SIGNATURES ON FOLLOWING PAGE)

 

 

SIGNATURE PAGE-

LOAN AGREEMENT (BROKER-DEALER VRDN FACILITY)

	 	 	 	 	 
	 

	 	Borrower:
	 
	 	 
	 

	 	PIPER JAFFRAY & CO.
	 
	 	 
	 

	 	By: /s/ Debbra L. Schoneman
	 

	 	 
	 

	 	Debbra L. Schoneman, Chief Financial Officer
	 
	 	 
	 

	 	By: /s/ Timothy L. Carter
	 

	 	 
	 

	 	Timothy L. Carter, Treasurer
	 
	 	 
	 

	 	800 Nicollet Mall, J09S04
	 

	 	Minneapolis, Minnesota 55402
	 

	 	Attention: Treasury
	 

	 	(612) 303-1316 (FAX)
	 

	 	firmfund@pjc.com (e-mail)

	 	 	 	 	 
	 

	 	Lender:
	 
	 	 
	 

	 	U.S. BANK NATIONAL ASSOCIATION
	 
	 	 
	 

	 	By: /s/ Katherine K. Miller
	 

	 	 
	 

	 	Katherine K. Miller, Senior Vice President
	 
	 	 
	 

	 	One US Bank Plaza (Mail Code SL-TW-11SI)
	 

	 	St. Louis, Missouri 63101
	 

	 	Attention: Broker Dealer Division
	 

	 	(314) 418-8394 (FAX)
	 

	 	katherine.k.miller@usbank.com (e-mail)Ex-10.4

Exhibit 10.4

UNITED STATES DEPARTMENT OF THE TREASURY

LENDING AGREEMENT

CREDIT AND SECURITY TERMS

1.0 SCOPE

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

2.0 DEFINED TERMS

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

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

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

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

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

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

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

Collateral means:

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

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

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

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

Event of Default means any of the following:

 

 

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

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

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

(iv) the Insolvency of the
Borrower;

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

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

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

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

Insolvency means:

(i) the condition of insolvency;

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

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

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

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

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

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

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

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

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

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

 

 

Loan means an extension of credit to the Borrower.

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

Obligation, whether now existing or hereafter incurred, means:

(i) Loan Repayment Amounts;

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

(iv) any expense the Treasury
or its designee(s) may incur to:

a. obtain, preserve and/or enforce the Lending Agreement or
the Treasury’s security interest in Collateral and the Borrower’s Obligations under the
Lending Agreement,

b. collect any or all of the foregoing, or

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

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

UCC means the Uniform Commercial Code.

3.0 LOANS

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

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

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

4.0 INTEREST

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

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

 

 

then in effect until the unpaid Loan Repayment Amount is paid in full.

5.0 REPAYMENT OF LOAN

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

(a) on demand;

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

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

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

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

6.0 GRANT OF SECURITY INTEREST

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

7.0 COLLATERAL

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

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

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

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

 

 

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

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

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

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

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

(c) any Collateral if the obligor on such Collateral becomes insolvent, or if a
receiver, custodian, or the like is appointed for the obligor.

Prior to such withdrawal, however, the Borrower shall update any relevant Collateral Schedule
and pledge substitute Collateral acceptable to the Treasury by submitting an updated Collateral
Schedule or otherwise pledging such Collateral to the Treasury.

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

7.9 The Borrower hereby:

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

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

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

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

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

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

(a) BIC-held Collateral shall be prominently
identified as Pledged to the Treasury and subject exclusively to the Treasury’s written
instructions. At the Treasury’s request, the

 

 

Borrower shall, without delay, prominently and conspicuously affix a legend to items of BIC-held
Collateral indicating that such items are subject to a security interest in favor of the Treasury.

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

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

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

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

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

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

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

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

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

7.15 Borrower shall submit a written certification to Treasury including the following
information and attestations: (i) the location of all supporting documentation or records; (ii) a
statement that all supporting documentation or records are complete, controlled, and protected;
(iii) a description of the Borrower’s asset valuation criteria; (iv) a description of the
Borrower’s internal loan-rating system; (v) a description of how Collateral is marked as pledged
to the Treasury; and (vi) where applicable, a statement that Borrower’s Financial Statement
including its portfolio of FHLB advances is audited

 

 

in accordance with applicable auditing standards. This certification is only required on a
one-time basis, however, Borrower shall notify Treasury if any of the information contained in
the certification changes or is no longer accurate.

8.0 MAINTENANCE OF LENDING DOCUMENTS

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

(a) a copy of the Lending Agreement; and

(b) a current statement of outstanding
Loans.

9.0 REPRESENTATIONS AND WARRANTIES

9.1 The Borrower represents and warrants that:

(a) (i) the Borrower has the power and authority, and the legal right, to make, deliver and perform
the Lending Agreement and to obtain a Loan; (ii) the Borrower has taken all necessary
organizational action to authorize the execution, delivery and performance of the Lending Agreement
and to authorize the obtaining of a Loan on the terms and conditions of the Lending Agreement;
(iii) no consent or authorization of, filing with, notice to or other act by or in respect of, any
governmental authority or any other person is required in connection with the obtaining of Loans
hereunder or with the execution, delivery, performance, validity or enforceability of the Lending
Agreement; and (iv) the Lending Agreement has been duly executed and delivered on behalf of the
Borrower;

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

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

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

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

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

 

 

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

10.0 COVENANTS

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

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

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

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

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

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

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

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

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

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

11.0 WAIVER OF IMMUNITY; SUBMISSION TO JURISDICTION

11.1 If the Borrower or its property is now, or in the future becomes, entitled to any immunity,
whether characterized as sovereign or otherwise (including, without limitation, immunity from
set-off, from service of process, from jurisdiction of any court or tribunal, from attachment in
aid of execution, from attachment prior to the entry of a judgment, or from execution upon a
judgment) in any legal proceeding in Federal or State court then

 

 

the Borrower expressly and irrevocably waives, to the maximum extent permitted by law, any such
immunity. To the extent the Borrower receives any such entitlement in the future, the Borrower
shall promptly notify the Treasury of such entitlement.

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

12.0 REMEDIES UPON DEFAULT

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

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

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

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

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

(e) pursue any other remedy
available to collect, enforce, or satisfy any Obligation, including exercising its rights as a
secured creditor to collect income on the Collateral, or to sell, assign, transfer, lease or
otherwise dispose of Collateral whether or not Collateral is in the Treasury’s possession, or to
take action against any other property or assets of the Borrower whether or not pledged to Treasury
as Collateral.

Where the Borrower is a FHLB, pursue any and all remedies available to collect, enforce, or
satisfy any Loan Repayment Amount against any other FHLB on the basis that the Loan Repayment
Amount is a consolidated obligation as described in section 3.3.. In the event that a FHLB other
than the Borrower satisfies a Loan Repayment Amount owed by the Borrower pursuant to this
subsection, Treasury will release any collateral remaining upon satisfaction of all Obligations
of the Borrower in accordance with instructions provided by the Office of Finance.

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

 

 

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

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

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

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

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

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

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

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

13.0 INDEMNIFICATION

13.1 The Borrower shall indemnify the Treasury and its officers, directors, employees and agents
(each, an “Indemnified Party”) for any loss, claim, damage, liability, and expense (including,
without limitation, reasonable attorneys’ fees, court costs and expenses of litigation) incurred
by an Indemnified Party in the course of or arising out of

 

 

the performance of the Lending Agreement, any action related to Collateral, or any action to
which an Indemnified Party may become subject in connection with the Treasury’s exercise,
enforcement or preservation of any right or remedy granted to it under the Lending Agreement,
except to the extent that such loss, claim, damage, liability, or expense results, as
determined by a court, from the Treasury’s gross negligence or willful misconduct.

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

14.0 MISCELLANEOUS

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

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

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

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

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

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

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

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

 

 

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

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

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

15.0 AMENDMENT

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

16.0 NOTICE

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

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

17.0 TERMINATION

17.1 The Lending Agreement shall terminate on December 31, 2009 but shall remain in effect as to
any Loan outstanding on that date. Notwithstanding any other provision of this Agreement, the
Borrower may terminate its consent to be bound by the Lending Agreement prior to that time by
giving written notice to the Treasury in the manner specified by Treasury, so long as no Loan is
then outstanding. Termination does not release the Borrower or affect the Treasury’s rights,
remedies, powers, security interests or liens against Collateral in existence prior to the
termination or to Treasury’s receipt of the notice of termination, nor does termination affect any
provision of the Lending Agreement which by its terms survives termination of the Lending
Agreement.

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

18.0 GOVERNING LAW

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

 

 

19.0 WAIVER OF JURY TRIAL

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

[Appendix Omitted]

 

September 18, 2008

Gary Grippo

Deputy Assistant Secretary for Fiscal Operations and Policy

U.S. Department of the Treasury

Domestic Finance

Room 2112,1500 Pennsylvania Avenue NW

Washington, DC 20220

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

Enclosed are (1) certified copies of the Certificate, (2) the original authorization, and (3)
documents containing the name, title, and signature of those persons authorized to request Loans
from and to pledge our assets to you.

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

Federal National Mortgage Association

c/o Federal Housing Finance Authority

1700 G Street, NW

Washington, DC 20552

Attention: General Counsel

with a copy to each of the following:

Federal National Mortgage Association

4000 Wisconsin Avenue, NW

Washington, DC 20016

Attention: Trading Desk

Federal National Mortgage Association

4000 Wisconsin Avenue, NW

Washington, DC 20016

Attention: Vice President for Capital Markets Operations

[Signature Page Follows]

 

 

FEDERAL NATIONAL MORTGAGE ASSOCIATION

	 	 	 	 	 
	By:

	 	/s/ Herb M. Allison, Jr.
	 	 
	 

	 	 	 	 
	 

	 	Name: Herb M. Allison, Jr.	 	 
	 

	 	Title: Chief Executive Officer and President

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