Document:

EX-10.17

UNITED STATES DEPARTMENT OF THE TREASURY

LENDING AGREEMENT

CREDIT AND SECURITY TERMS

1.0 SCOPE

1.1 This Agreement sets forth the terms under which an entity may, in accordance with

the Housing and Economic Recovery Act of 2008, borrow from and pledge Collateral to

the United States Department of the Treasury (Treasury)

2.0 DEFINED TERMS

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

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

Application Package means the Application Package, substantially in the form of

Appendix I, which the Borrower submitted in connection with its agreement to this

Agreement.

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

Borrower-in-Custody or BIC Arrangement means an arrangement whereby the

Treasury authorizes a Borrower, or an affiliate of the Borrower, to retain possession of

the Collateral, as described in Section 7 of this Agreement.

Business Day means any day the Federal Reserve Bank of New York is open for

conducting all or substantially all its banking functions.

Certificate means the certificate, substantially in the form set forth in the appropriate

Application Package, provided to the Treasury by the Borrower.

Collateral means:

(i) all the Borrower’s rights, title, and interest in property as described in section 7.0 (and

any other property agreed to by Treasury) that is (a) identified on a Collateral Schedule,

(b) identified on the books or records of a Reserve Bank as pledged to, or subject to a

security interest in favor of, the Treasury or (c) in the possession or control of, or

maintained with, the Treasury including;

(ii) all documents, books and records, including programs, tapes, and related electronic

data processing software, evidencing or relating to any or all of the foregoing; and

(iii) to the extent not otherwise included, all proceeds and products of any and all of the

foregoing and all supporting obligations given by any person with respect to any of the

foregoing, including but not limited to interest, dividends, insurance, rents and refunds.

Collateral Schedule means the written, electronic or other statement(s) listing Collateral

in effect at any time. Each statement of Collateral shall be in the form required by the

Treasury and shall identify the items of Collateral with the specificity required by the

Treasury. The removal of an item from a statement of Collateral will not be effective and

will not affect the Treasury’s security interest in the item unless such removal is made in

accordance with this Agreement and the Treasury’s procedures, including prior Treasury

approval or authorization.

Event of Default means any of the following:

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

(ii) the Borrower fails to perform or observe any of its obligations or agreements under

the Lending Agreement or under any other instrument or agreement delivered or

executed in connection with the Lending Agreement;

(iii) any representation or warranty made or deemed to be made by the Borrower under

or in connection with the Lending Agreement, or that is contained in any certificate,

document, or financial or other statement delivered by it or in connection with the

Lending Agreement, is inaccurate in any material respect on or as of the date made or

deemed made;

(iv) the Insolvency of the Borrower;

(v) the Lending Agreement or any other agreement delivered or executed in connection

with the Lending Agreement ceases, for any reason, to be in full force and effect, or the

Borrower so asserts or any security interest or lien created hereby ceases to be

enforceable or have the same effect and priority purported to be created hereby;

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

seizure of, or an attachment upon Collateral;

(vii) whenever the Secretary of the Treasury determines that Treasury’s position is

insecure with respect to the financial condition of the Borrower or the Borrower’s ability

to perform its Obligations.

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

Insolvency means:

(i) the condition of insolvency;

(ii) that a proceeding relating to bankruptcy, insolvency, reorganization or relief of

debtors, seeking to adjudicate an entity bankrupt or insolvent or seeking reorganization,

adjustment, dissolution, liquidation or other relief with respect to the Borrower or the

Borrower’s debt is commenced;

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

(iv) that a receiver, custodian, conservator, or the like is appointed for the Borrower or for

any of its United States or foreign branches or agencies;

(v) that the Borrower has been closed by order of its supervisory authorities, or a public

officer has been appointed to take over such entity;

(vi) that the Borrower ceases or refuses to make payments in the ordinary course of

business, or admits in a record its inability to pay its debt as they become due;

(vii) the Borrower’s business is suspended, or any party has presented or filed a petition

for winding-up or liquidating the Borrower; or

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

due.

Lending Agreement means this Agreement, any Collateral Schedule, each document in

the Application Package executed or furnished to the Treasury by the Borrower, and any

other agreement or document executed by the Borrower in connection with this

Agreement, in each case as the same may be amended, supplemented or otherwise

modified from time to time.

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

Letter of Agreement means the Letter of Agreement, substantially in the form found in

Appendix I pursuant to which the Borrower agrees to be bound by the terms of this

Agreement.

Loan means an extension of credit to the Borrower.

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

interest thereon.

Obligation, whether now existing or hereafter incurred, means:

(i) Loan Repayment Amounts;

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

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

a. obtain, preserve and/or enforce the Lending Agreement or the Treasury’s security

interest in Collateral and the Borrower’s Obligations under the Lending Agreement,

b. collect any or all of the foregoing, or

c. assemble, transport, maintain or preserve Collateral (including, without limitation,

taxes, assessments, insurance premiums, repairs, reasonable attorneys’ fees, rent,

transportation, storage costs, and expenses of sale).

Treasury means the United States Department of the Treasury. For operational

purposes, the term “Treasury” includes a Federal Reserve Bank acting as fiscal agent to

the Treasury.

UCC means the Uniform Commercial Code.

3.0 LOANS

3.1 A request for a Loan shall be made to the Treasury in a form and time acceptable to

the Treasury. A Loan must be secured by Collateral acceptable to the Treasury. Upon

Treasury’s request, the Borrower shall submit a written application for a Loan.

3.2 The Treasury’s approval of a request for a Loan shall be evidenced by, and the Loan

shall be deemed made at the time of, the Treasury’s record of the credit of the amount of

the Loan to an Account agreed upon by the Borrower and the Treasury.

3.3 Loans to the Federal Home Loan Banks (FHLBs) or any FHLB under this Agreement

shall be joint and several obligations of all the FHLBs, issued under Section 11(a) of the

Federal Home Loan Bank Act, 12 U.S.C. § 1431(a), through the Office of Finance as

agent of the FHLBs, and therefore are consolidated obligations issued pursuant to part

966 of the rules of the Federal Housing Finance Board, in continuing force and effect

under Section 1312 of the Housing and Economic Recovery Act of 2008, and any

successor rule of the Federal Housing Finance Agency.

4.0 INTEREST

4.1 The interest rate applicable to a Loan shall be the rate, as from time to time

established by the Treasury. Interest on a Loan shall accrue from the day the Loan is

credited to the Account and shall be payable at the applicable rate in effect on that day,

except that if the interest rate changes while a Loan is outstanding, the new rate shall

apply as of the day on which the rate change is effective. Interest shall be computed on

the basis of 365 days in a year.

4.2 If all or any portion of a Loan Repayment Amount is not paid when due (whether by

acceleration or otherwise), interest on the unpaid portion of the Loan Repayment

Amount shall be calculated at a rate 500 basis points higher than the applicable rate

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

5.0 REPAYMENT OF LOAN

5.1 The Borrower promises to pay a Loan Repayment Amount when due in actually and

finally collected funds. A Loan Repayment Amount is immediately due and payable

(a) on demand;

(b) without any demand, notice or other action on the due date and time specified by the

Treasury in writing (provided that if such date falls on a day that is not a Business Day,

the due date shall be extended to the next Business Day) or upon the occurrence of any

Event of Default described in clause (iv), (v) or (vii) of the definition of such term.

5.2 The Borrower waives any right to presentment, notice of dishonor, protest, and any

other notice of any kind except as expressly provided for herein.

5.3 Upon notice to the Treasury at least 2 days in advance, the Borrower may prepay a

Loan Repayment Amount, in whole or in part, without penalty.

5.4 The appropriate Federal Reserve Bank, acting on behalf of the Treasury, will debit

the Borrower’s Account for the Loan Repayment Amount and all other Obligations when

due.

6.0 GRANT OF SECURITY INTEREST

For value received and in consideration of the Treasury permitting the Borrower to obtain

Loans, the Borrower hereby transfers and assigns to the Treasury and grants to the

Treasury a continuing security interest in and lien on the Collateral as collateral security

for the timely and complete payment and performance when due (whether at stated

maturity, by acceleration or otherwise) of all Obligations.

7.0 COLLATERAL

7.1 The Borrower shall ensure that the Collateral meets the requirements set forth in this

section or as the Treasury may otherwise from time to time prescribe.

7.2 Acceptable Collateral consists of Federal Home Loan Bank advances to member

financial institutions that have been collateralized in accordance with Federal Home

Loan Bank standards (FHLB advances) and mortgage backed securities issued by the

Federal National Mortgage Association or the Federal Home Loan Mortgage

Corporation.

7.3 Acceptable FHLB advances shall be valued with a 13% haircut applied to the

outstanding principal amount of the asset on the balance sheet of the Federal Home

Loan Bank. Haircuts may also be applied to the value of mortgage backed securities as

determined by Treasury.

7.4 FHLB advances pledged as Collateral under this Agreement may be held under a

BIC Arrangement subject to section 7.10 herein. FHLB advances must be prepositioned,

in an amount acceptable to the Treasury, before a Federal Home Loan Bank

is eligible to receive a Loan under this Agreement. MBS pledged as Collateral under this

Agreement must be held in a custodial National Book Entry System account established

though the Federal Reserve Bank of New York. MBS pledged hereunder may be repositioned from an
investment account into the custodial account on a same-day basis.

7.5 On a weekly basis, Borrower must submit to the Federal Reserve Bank of New York

acting as fiscal agent of the Treasury, a Collateral Schedule listing the Collateral pledged

to Treasury under this Agreement, including the outstanding principal amount of any

FHLB advances.

7.6 The Treasury may at any time request the Borrower to replace any item of Collateral

or to grant a lien and security interest in additional assets of a type and in an amount

acceptable to the Treasury, and the Borrower shall promptly do so.

7.7 Unless otherwise specified by the Treasury in writing, the Borrower shall promptly

withdraw from the Collateral Schedule:

(a) any Collateral that has a payment of principal or interest past due, in whole or in part,

for more than 30 days;

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

(c) any Collateral if the obligor on such Collateral becomes insolvent, or if a receiver,

custodian, or the like is appointed for the obligor.

Prior to such withdrawal, however, the Borrower shall update any relevant Collateral

Schedule and pledge substitute Collateral acceptable to the Treasury by submitting an

updated Collateral Schedule or otherwise pledging such Collateral to the Treasury.

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

any rights relating to Collateral.

7.9 The Borrower hereby:

(a) authorizes the Treasury at any time to file or record in any filing office in any

jurisdiction which the Treasury determines appropriate to perfect the security interests

set forth hereunder, financing statements, and any amendments or continuation

statements related thereto without the signature of the Borrower therein that describes

the Collateral and the Borrower shall, promptly at the Treasury’s request, provide any

additional information required by Article 9 of the UCC, as in effect in any relevant

jurisdiction, for the sufficiency or acceptability of any financing statement;

(b) ratifies its authorization for the Treasury to have filed any financing statement,

including any amendment or continuation statement related thereto, in any jurisdiction,

where the same has been filed prior to the date on which the Letter of Agreement is

signed by the Borrower;

(c) authorizes the Treasury at any time, to take any and all other actions that may be

necessary or, in the Treasury’s sole discretion, desirable to obtain, preserve, perfect or

enforce the Treasury’s security interest in the Collateral;

(d) authorizes the Treasury to endorse or assign as the Borrower’s agent any item of

Collateral, to inspect Collateral held by the Borrower, and copy any relevant records

and/or documents.

7.10 Treasury will keep all information regarding the identity of borrowers identified in

any collateral documentation confidential and such information will not be disclosed

except to as authorized or necessary to effectuate the terms of this Agreement.

7.11 If the Treasury approves, the Borrower may hold certain Collateral in a BIC

Arrangement (“BIC-held Collateral”) subject to the following:

(a) BIC-held Collateral shall be prominently identified as Pledged to the Treasury and

subject exclusively to the Treasury’s written instructions. At the Treasury’s request, the

Borrower shall, without delay, prominently and conspicuously affix a legend to items of

BIC-held Collateral indicating that such items are subject to a security interest in favor of

the Treasury.

(b) The Borrower shall mark its records to show that BIC-held Collateral has been

pledged to the Treasury and is subject exclusively to the Treasury’s written instructions.

Any computer generated list or report containing BIC-held Collateral must incorporate a

legend indicating that such Collateral is pledged to the Treasury.

(c) Upon the Treasury’s request, the Borrower shall at all times segregate BIC-held

Collateral from its own assets or the assets of any other party and shall hold Collateral in

such location(s) approved by the Treasury. BIC-held Collateral shall not be removed

from such location(s) without the prior written approval of the Treasury.

(d) The Borrower may withdraw or replace BIC-held Collateral only with the approval of

the Treasury and on terms acceptable to the Treasury.

(e) The Treasury may from time to time notify Borrower of additional requirements on

BIC-held Collateral. The Borrower’s failure to comply with such requirements may

disqualify the Borrower from participation in the BIC Arrangement.

7.12 With respect to any item of Collateral not delivered or transferred to the Treasury or

its agent or custodian, including BIC-held Collateral, the Borrower shall hold such item of

Collateral in trust for the Treasury until the Collateral is delivered or transferred in

accordance with the Treasury’s instructions. The Borrower bears the risk of loss for any

Collateral held in the Borrower’s possession, at any custodian, maintained in an account

at a securities intermediary other than a Reserve Bank, or in transit to or from the

Reserve Bank. The Borrower also bears the risk of any accidental loss or damage to

Collateral in the possession of the Treasury or its agent to the extent the Treasury

exercised reasonable care.

7.13 Unless an Event of Default occurs or the Treasury expressly directs otherwise, any

proceeds, dividend, interest, rent, proceeds of redemption, and/or any other payment

received by the Borrower regarding any Collateral may be retained by the Borrower. If

the Treasury directs that any of the foregoing be paid to the Treasury, the Borrower shall

remit those payments, or cause such payments to be remitted, promptly to the Treasury

and, until receipt by the Treasury, such payments are deemed to be held in trust for the

Treasury.

7.14 The Treasury is under no obligation to allow for the withdrawal of any item of

Collateral from the pledge to the Treasury, or to allow the removal of any item of

Collateral from the Collateral Schedule or otherwise release its security interest in any

item of Collateral unless:

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

(b) the Treasury has verified, in accordance with its normal customs and procedures,

that all Obligations have been unconditionally repaid in full and that the Borrower is not

currently in default under another agreement with the Treasury.

7.15 Borrower shall submit a written certification to Treasury including the following

information and attestations: (i) the location of all supporting documentation or records;

(ii) a statement that all supporting documentation or records are complete, controlled,

and protected; (iii) a description of the Borrower’s asset valuation criteria; (iv) a

description of the Borrower’s internal loan-rating system; (v) a description of how

Collateral is marked as pledged to the Treasury; and (vi) where applicable, a statement

that Borrower’s Financial Statement including its portfolio of FHLB advances is audited

in accordance with applicable auditing standards. This certification is only required on a

one-time basis, however, Borrower shall notify Treasury if any of the information

contained in the certification changes or is no longer accurate.

8.0 MAINTENANCE OF LENDING DOCUMENTS

The documents specified below must be maintained continuously as official records of

the Borrower. The documents listed in subparagraph (a) shall at all times be kept

together in one place, while the document listed in subparagraph (b) may be kept in any

accessible and secure location on the Borrower’s premises.

(a) a copy of the Lending Agreement; and

(b) a current statement of outstanding Loans.

9.0 REPRESENTATIONS AND WARRANTIES

9.1 The Borrower represents and warrants that:

(a) (i) the Borrower has the power and authority, and the legal right, to make, deliver and

perform the Lending Agreement and to obtain a Loan; (ii) the Borrower has taken all

necessary organizational action to authorize the execution, delivery and performance of

the Lending Agreement and to authorize the obtaining of a Loan on the terms and

conditions of the Lending Agreement; (iii) no consent or authorization of, filing with,

notice to or other act by or in respect of, any governmental authority or any other person

is required in connection with the obtaining of Loans hereunder or with the execution,

delivery, performance, validity or enforceability of the Lending Agreement; and (iv) the

Lending Agreement has been duly executed and delivered on behalf of the Borrower;

(b) the Borrower is duly organized, validly existing and in good standing under the laws

of the jurisdiction of its organization and is not in violation of any laws or regulations in

any respect which could have any adverse effect whatsoever upon the validity,

performance or enforceability of any of the terms of the Lending Agreement;

(c) the Lending Agreement constitutes a legal, valid and binding obligation of the

Borrower, enforceable against the Borrower in accordance with its terms;

(d) the Borrower has rights in Collateral sufficient to grant an enforceable security

interest to the Treasury and its rights in Collateral are free of any assertion of a property

right that would adversely affect the Treasury’s right to Collateral, including but not

limited to any claim, lien, security interest, encumbrance, preference or priority

arrangement or restriction on the transfer or pledge of Collateral (an “Adverse Claim”),

except as created by, or otherwise permitted under, the Lending Agreement or by the

Treasury;

(e) all information set forth on the Certificate is accurate and complete and there has

been no change in such information since the date of the Certificate;

(f) (i) the Lending Agreement is effective to create in favor of the Treasury a legal, valid,

and enforceable security interest in the Collateral described in the Lending Agreement

and proceeds thereof; (ii) when financing statements are filed in the state filing offices

located in the jurisdictions specified on the Certificate, those security interests shall

constitute a fully and validly perfected lien on, and security interest in, all rights, title and

interest of the Borrower in such Collateral as to which perfection can be obtained by

filing, as security for the Obligations, in each case prior and superior in right to any other

person (except for liens that arise by operation of law); and (iii) no financing statement or

other public notice with respect to all or any part of the Collateral is on file or of record in

any public office, except such as have been filed in favor of the Treasury pursuant to the

Lending Agreement, are permitted by the Lending Agreement, or are otherwise

permitted by the Treasury;

9.2 Each time the Borrower requests a Loan or grants a security interest in any

Collateral to Treasury, the Borrower is deemed to make all of the foregoing

representations and warranties on and as of the date such Loan is incurred or security

granted. Such representations and warranties shall be true on and as of such date and

shall remain true and correct so long as the Lending Agreement remains in effect, any

Obligation remains outstanding, or any other amount is owing to the Treasury.

10.0 COVENANTS

The Borrower covenants that so long as the Lending Agreement remains in effect or any

Obligation remains outstanding or any other amount is owing to the Treasury:

(a) except for the security interest herein granted or otherwise permitted hereunder or by

the Treasury, the Borrower shall have rights in the Collateral free from any Adverse

Claim, and shall maintain the security interest created hereby with the priority set forth in

Section 9.1(f) and shall take all actions necessary or prudent to defend against Adverse

Claims;

(b) except as otherwise permitted hereunder or by the Treasury, the Borrower shall not

(i) sell or otherwise dispose of, or offer to sell or otherwise dispose of, the Collateral or

any interest therein, or (ii) pledge, mortgage, or create, or permit the existence of any

right of any person in or claim to, the Collateral other than the security interest granted

herein;

(c) the Borrower shall not perform any act with respect to any Collateral that would

impair the Treasury’s rights or interests therein, nor will the Borrower fail to perform any

act that would reasonably be expected to prevent such impairment or that is necessary

to preserve the Treasury’s rights;

(d) the Borrower shall promptly notify the Treasury if the Borrower fails or is about to fail

to meet the capital requirements required by regulations applicable to the Borrower.

(e) the Borrower shall renew or keep in full force and effect its organizational existence

or take all reasonable action to maintain all rights, privileges, licenses and franchises

necessary or desirable in the normal conduct of its business;

(f) in any BIC Arrangement, the Borrower shall provide for periodic audits of BIC-held

Collateral pledged to the Treasury, shall notify the Treasury immediately of any

irregularities discovered during any audits, and shall certify periodically, as determined

by the Treasury, that it is complying with the requirements of the BIC Arrangement;

(g) without providing at least 30 days’ prior written notice to the Treasury and submitting

an updated Certificate to the Treasury, the Borrower shall not cause or permit any of the

information provided in the Certificate, including its jurisdiction of organization, to

become untrue;

(h) the Borrower shall promptly notify the Treasury of the occurrence or impending

occurrence of any Event of Default; and

(i) the Borrower shall promptly notify the Treasury of any change in applicable law, the

regulations or policies of its chartering and/or licensing authority, or its charter, bylaws,

or other governing documents, or any legal or regulatory process asserted against the

Borrower, that materially affects or may materially affect the Borrower’s authority or

ability to lawfully perform its obligations under the Lending Agreement.

1

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.

2

3Unassociated Document

     

    Exhibit
10.12

    

    [Letterhead]

    

    September
2, 2008

    

    Mr. Steve
Swift, CEO

    WellQuest
Medical & Wellness Centers

    3400 S.E.
Macy Road, #18

    Bentonville,
AR 72712

    

    RE:  Financial
Covenant Compliance Waiver

    

    Dear Mr.
Swift:

    

    This
letter memorializes that WellQuest Medical & Wellness Centers (“WellQuest”)
is in default of a certain financial covenant, and that, conditioned upon your
acknowledgement below, ONB will waive the same and establish more frequent
testing of future financial covenants.

    

    As
otherwise conditioned herein, ONB Bank and Trust Company (“ONB”), as lender for
the Small Business Administration, hereby waives the Company’s compliance with
the Debt Service Coverage (“DSC”) requirement of the Loan Agreement which
requires the Company maintain a minimum Debt Service Coverage ratio, calculated
as of the last day of each calendar year, of not less than 1.00 to 1.00 at
December 31, 2006 and not less than 1.5:1 beginning December 31,
2007.  ONB also waives the requirement of the Company to maintain a
DSC of 1.5:1 by June 30, 2008 as described in a waiver letter dated January 25,
2008.

    

    This
waiver is solely for the years ending December 31, 2006, 2007, and 2008 and is
limited to this requirement only.  No other provisions are
waived.  Beginning September 30, 2008 and continuing on a quarterly
basis thereafter, WellQuest will provide ONB with sufficient financial
information to determine its DSC, and WellQuest will establish and maintain a
DSC of 1.5:1 by March 31, 2009.

    

    ONB
retains all rights and remedies it has pursuant to the loan
agreements.

    

    Sincerely,

    

    /s/ Casey
Stowe

    Casey
Stowe, Vice President

    ONB Bank
and Trust Company

    

    Acknowledged
by:

    

    /s/ Steve
Swift

    Steve
Swift, CEO

    

    Date:  September
2, 2008

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