Document:

Exhibit 10.1

 

PURCHASE AND ASSUMPTION AGREEMENT

WHOLE BANK

ALL DEPOSITS 

AMONG

 

FEDERAL DEPOSIT INSURANCE CORPORATION,

RECEIVER OF MIRAE BANK,

LOS ANGELES, CALIFORNIA

 

FEDERAL DEPOSIT INSURANCE CORPORATION

and

WILSHIRE STATE BANK 

DATED AS OF

JUNE 26, 2009

 

	
  Module
  1 – Whole Bank w/ Loss Share – P&A

  	
   

  	
  Mirae Bank

  
	
  Version
  1.05

  	
   

  	
  Los Angeles, California

  
	
  June
  16, 2009

  	
   

  	
   

  

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  ASSUMPTION OF LIABILITIES

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Liabilities
  Assumed by Assuming Bank

  	
  8

  
	
  2.2

  	
  Interest
  on Deposit Liabilities

  	
  10

  
	
  2.3

  	
  Unclaimed
  Deposits

  	
  10

  
	
  2.4

  	
  Employee
  Plans

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  PURCHASE OF ASSETS

  	
  11

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Assets
  Purchased by Assuming Bank

  	
  11

  
	
  3.2

  	
  Asset
  Purchase Price

  	
  11

  
	
  3.3

  	
  Manner
  of Conveyance; Limited Warranty; Nonrecourse; Etc.

  	
  12

  
	
  3.4

  	
  Puts
  of Assets to the Receiver

  	
  12

  
	
  3.5

  	
  Assets
  Not Purchased by Assuming Bank

  	
  13

  
	
  3.6

  	
  Assets
  Essential to Receiver

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Continuation
  of Banking Business

  	
  16

  
	
  4.2

  	
  Agreement
  with Respect to Credit Card Business

  	
  16

  
	
  4.3

  	
  Agreement
  with Respect to Safe Deposit Business

  	
  16

  
	
  4.4

  	
  Agreement
  with Respect to Safekeeping Business

  	
  16

  
	
  4.5

  	
  Agreement
  with Respect to Trust Business

  	
  17

  
	
  4.6

  	
  Agreement
  with Respect to Bank Premises

  	
  17

  
	
  4.7

  	
  Agreement
  with Respect to Leased Data Processing Equipment

  	
  20

  
	
  4.8

  	
  Agreement
  with Respect to Certain Existing Agreements

  	
  21

  
	
  4.9

  	
  Informational
  Tax Reporting

  	
  21

  
	
  4.10

  	
  Insurance

  	
  21

  
	
  4.11

  	
  Office
  Space for Receiver and Corporation

  	
  22

  
	
  4.12

  	
  Agreement
  with Respect to Continuation of Group Health Plan Coverage for Former
  Employees

  	
  22

  
	
  4.13

  	
  Agreement
  with Respect to Interim Asset Servicing

  	
  23

  
	
  4.14

  	
  Reserved

  	
  23

  
	
  4.15

  	
  Agreement
  with Respect to Loss Sharing

  	
  23

  

 

ii

 

	
  ARTICLE V

  	
  DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK

  	
  23

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Payment
  of Checks, Drafts and Orders

  	
  23

  
	
  5.2

  	
  Certain
  Agreements Related to Deposits

  	
  24

  
	
  5.3

  	
  Notice
  to Depositors

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  RECORDS

  	
  24

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Transfer
  of Records

  	
  24

  
	
  6.2

  	
  Delivery
  of Assigned Records

  	
  25

  
	
  6.3

  	
  Preservation
  of Records

  	
  25

  
	
  6.4

  	
  Access
  to Records; Copies

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  FIRST LOSS TRANCHE

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  ADJUSTMENTS

  	
  26

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Pro
  Forma Statement

  	
  26

  
	
  8.2

  	
  Correction
  of Errors and Omissions; Other Liabilities

  	
   

  
	
  8.3

  	
  Payments

  	
  27

  
	
  8.4

  	
  Interest

  	
  27

  
	
  8.5

  	
  Subsequent
  Adjustments

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  CONTINUING COOPERATION

  	
  28

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  General
  Matters

  	
  28

  
	
  9.2

  	
  Additional
  Title Documents

  	
  28

  
	
  9.3

  	
  Claims
  and Suits

  	
  28

  
	
  9.4

  	
  Payment
  of Deposits

  	
  28

  
	
  9.5

  	
  Withheld
  Payments

  	
  29

  
	
  9.6

  	
  Proceedings
  with Respect to Certain Assets and Liabilities

  	
  29

  
	
  9.7

  	
  Information

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  CONDITION PRECEDENT

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  REPRESENTATIONS AND WARRANTIES OF THE ASSUMING BANK

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  INDEMNIFICATION

  	
  31

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Indemnification
  of Indemnitees

  	
  31

  
	
  12.2

  	
  Conditions
  Precedent to Indemnification

  	
  34

  
	
  12.3

  	
  No
  Additional Warranty

  	
  35

  
	
  12.4

  	
  Indemnification
  of Corporation and Receiver

  	
  35

  
	
  12.5

  	
  Obligations
  Supplemental

  	
  35

  

 

iii

 

	
  12.6

  	
  Criminal
  Claims

  	
  36

  
	
  12.7

  	
  Limited
  Guaranty of the Corporation

  	
  36

  
	
  12.8

  	
  Subrogation

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  MISCELLANEOUS

  	
  36

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Entire
  Agreement

  	
  36

  
	
  13.2

  	
  Headings

  	
  36

  
	
  13.3

  	
  Counterparts

  	
  37

  
	
  13.4

  	
  Governing
  Law

  	
  37

  
	
  13.5

  	
  Successors

  	
  37

  
	
  13.6

  	
  Modification;
  Assignment

  	
  37

  
	
  13.7

  	
  Notice

  	
  37

  
	
  13.8

  	
  Manner
  of Payment

  	
  38

  
	
  13.9

  	
  Costs,
  Fees and Expenses

  	
  39

  
	
  13.10

  	
  Waiver

  	
  39

  
	
  13.11

  	
  Severability

  	
  39

  
	
  13.12

  	
  Term
  of Agreement

  	
  39

  
	
  13.13

  	
  Survival
  of Covenants, Etc.

  	
  39

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Certain
  Liabilities Assumed

  	
  41

  
	
  2.1(a)

  	
  Excluded
  Deposit Liability Accounts

  	
  42

  
	
  3.1

  	
  Certain
  Assets Purchased

  	
  43

  
	
  3.2

  	
  Purchase
  Price of Assets or Assets

  	
  45

  
	
  3.5(l)

  	
  Excluded
  Private Label Assets-Backed Securities

  	
  47

  
	
  4.15A

  	
  Single
  Family Loss Share Loans

  	
  56

  
	
  4.15B

  	
  Non-Single
  Family Loss Share Loans

  	
  49

  
	
  7

  	
  Calculation
  of Deposit Premium

  	
  50

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2(c)

  	
  Valuation
  of Certain Qualified Financial Contracts

  	
  52

  
	
  4.13

  	
  Interim
  Asset Servicing Arrangement

  	
  54

  
	
  4.15A

  	
  Single
  Family Loss Share Agreement

  	
  56

  
	
  4.15B

  	
  Commercial Loss Share Agreement

  	
  92

  

 

iv

 

PURCHASE AND ASSUMPTION AGREEMENT

WHOLE BANK

ALL DEPOSITS

 

THIS AGREEMENT, made and entered into as
of the 26th day of June, 2009, by and among the FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER of Mirae Bank, Los
Angeles, California (the “Receiver”), Wilshire State Bank, organized under the laws of the State of
California, and having its principal place of business in Los Angeles, California (the “Assuming
Bank”), and the FEDERAL DEPOSIT INSURANCE
CORPORATION, organized under the laws of the United States of
America and having its principal office in Washington, D.C., acting in its
corporate capacity (the “Corporation”).

 

WITNESSETH:

 

WHEREAS, on Bank Closing, the Chartering Authority
closed Mirae Bank (the “Failed
Bank”) pursuant to applicable law and the Corporation was appointed Receiver
thereof; and

 

WHEREAS, the Assuming Bank desires to purchase
certain assets and assume certain deposit and other liabilities of the Failed
Bank on the terms and conditions set forth in this Agreement; and

 

WHEREAS, pursuant to 12 U.S.C.
Section 1823(c)(2)(A), the Corporation may provide assistance to the
Assuming Bank to facilitate the transactions contemplated by this Agreement,
which assistance may include indemnification pursuant to Article XII; and

 

WHEREAS, the Board of Directors of the Corporation
(the “Board”) has determined to provide assistance to the Assuming Bank on the
terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the Board has determined pursuant to 12
U.S.C. Section 1823(c)(4)(A) that such assistance is necessary to
meet the obligation of the Corporation to provide insurance coverage for the
insured deposits in the Failed Bank.

 

NOW THEREFORE, in consideration of the
mutual promises herein set forth and other valuable consideration, the parties
hereto agree as follows:

 

1

 

ARTICLE I

DEFINITIONS

 

Capitalized
terms used in this Agreement shall have the meanings set forth in this
Article I, or elsewhere in this Agreement. As used herein, words imparting
the singular include the plural and vice versa.

 

“Accounting Records” means the
general ledger and subsidiary ledgers and supporting schedules which support
the general ledger balances.

 

“Acquired Subsidiaries” means
Subsidiaries of the Failed Bank acquired pursuant to Section 3.1.

 

“Adversely Classified” means, with
respect to any Loan or security, a Loan or security which, as of the date of
the most recent pertinent data made available to the Assuming Bank as part of
the Information Package, has been designated in the most recent report of
examination as “Substandard,” “Doubtful” or “Loss” by the Failed Bank’s
appropriate Federal or State Chartering Authority or regulator.

 

“Affiliate” of any Person means any
director, officer, or employee of that Person and any other Person (i) who
is directly or indirectly controlling, or controlled by, or under direct or
indirect common control with, such Person, or (ii) who is an affiliate of
such Person as the term “affiliate” is defined in Section 2 of the Bank
Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841.

 

“Agreement” means this Purchase and
Assumption Agreement by and among the Assuming Bank, the Corporation and the
Receiver, as amended or otherwise modified from time to time.

 

“Assets” means all assets of the
Failed Bank purchased pursuant to Section 3.1. Assets owned by
Subsidiaries of the Failed Bank are not “Assets” within the meaning of this
definition.

 

“Assumed Deposits” means Deposits.

 

“Bank Closing” means the close of business
of the Failed Bank on the date on which the Chartering Authority closed such
institution.

 

“Bank Premises” means the banking houses,
drive-in banking facilities, and teller facilities (staffed or automated)
together with appurtenant parking, storage and service facilities and
structures connecting remote facilities to banking houses, and land on which
the foregoing are located, that are owned or leased by the Failed Bank and that
are occupied by the Failed Bank as of Bank Closing.

 

“Book Value” means, with respect to any
Asset and any Liability Assumed, the dollar amount thereof stated on the
Accounting Records of the Failed Bank. The Book Value of

 

2

 

any
item shall be determined as of Bank Closing after adjustments made by the
Receiver for differences in accounts, suspense items, unposted debits and
credits, and other similar adjustments or corrections and for setoffs, whether
voluntary or involuntary. The Book Value of a Subsidiary of the Failed Bank
acquired by the Assuming Bank shall be determined from the investment in
subsidiary and related accounts on the “bank only” (unconsolidated) balance
sheet of the Failed Bank based on the equity method of accounting. Without
limiting the generality of the foregoing, (i) the Book Value of a
Liability Assumed shall include all accrued and unpaid interest thereon as of
Bank Closing, and (ii) the Book Value of a Loan shall reflect adjustments
for earned interest, or unearned interest (as it relates to the “rule of
78s” or add-on-interest loans, as applicable), if any, as of Bank Closing,
adjustments for the portion of earned or unearned loan-related credit life
and/or disability insurance premiums, if any, attributable to the Failed Bank
as of Bank Closing, and adjustments for Failed Bank Advances, if any, in each
case as determined for financial reporting purposes. The Book Value of an Asset
shall not include any adjustment for loan premiums, discounts or any related deferred
income or fees, or general or specific reserves on the Accounting Records of
the Failed Bank.

 

“Business Day” means a day other than a
Saturday, Sunday, Federal legal holiday or legal holiday under the laws of the
State where the Failed Bank is located, or a day on which the principal office
of the Corporation is closed.

 

“Chartering Authority” means
(i) with respect to a national bank, the Office of the Comptroller of the
Currency, (ii) with respect to a Federal savings association or savings
bank, the Office of Thrift Supervision, (iii) with respect to a bank or
savings institution chartered by a State, the agency of such State charged with
primary responsibility for regulating and/or closing banks or savings
institutions, as the case may be, (iv) the Corporation in accordance with
12 U.S.C. Section 1821(c), with regard to self appointment, or
(v) the appropriate Federal banking agency in accordance with 12 U.S.C.
1821(c)(9).

 

“Commitment” means the unfunded portion
of a line of credit or other commitment reflected on the books and records of
the Failed Bank to make an extension of credit (or additional advances with
respect to a Loan) that was legally binding on the Failed Bank as of Bank
Closing, other than extensions of credit pursuant to the credit card business
and overdraft protection plans of the Failed Bank, if any.

 

“Credit Documents” mean the
agreements, instruments, certificates or other documents at any time evidencing
or otherwise relating to, governing or executed in connection with or as
security for, a Loan, including without limitation notes, bonds, loan
agreements, letter of credit applications, lease financing contracts, banker’s
acceptances, drafts, interest protection agreements, currency exchange
agreements, repurchase agreements, reverse repurchase agreements, guarantees,
deeds of trust, mortgages, assignments, security agreements, pledges,
subordination or priority agreements, lien priority agreements, undertakings,
security instruments, certificates, documents, legal opinions, participation
agreements and intercreditor agreements, and all amendments, modifications,
renewals, extensions, rearrangements, and substitutions with respect to any of
the foregoing.

 

3

 

“Credit File” means all Credit Documents
and all other credit, collateral, or insurance documents in the possession or
custody of the Assuming Bank, or any of its Subsidiaries or Affiliates,
relating to an Asset or a Loan included in a Put Notice, or copies of any
thereof.

 

“Data Processing Lease” means any
lease or licensing agreement, binding on the Failed Bank as of Bank Closing,
the subject of which is data processing equipment or computer hardware or
software used in connection with data processing activities. A lease or licensing
agreement for computer software used in connection with data processing
activities shall constitute a Data Processing Lease regardless of whether such
lease or licensing agreement also covers data processing equipment.

 

“Deposit” means a deposit as defined
in 12 U.S.C. Section 1813(l), including without limitation, outstanding
cashier’s checks and other official checks and all uncollected items included
in the depositors’ balances and credited on the books and records of the Failed
Bank; provided, that the term “Deposit” shall not include all or
any portion of those deposit balances which, in the discretion of the Receiver
or the Corporation, (i) may be required to satisfy it for any liquidated
or contingent liability of any depositor arising from an unauthorized or
unlawful transaction, or (ii) may be needed to provide payment of any
liability of any depositor to the Failed Bank or the Receiver, including the
liability of any depositor as a director or officer of the Failed Bank, whether
or not the amount of the liability is or can be determined as of Bank Closing.

 

“Equity Adjustment” means the
dollar amount resulting by subtracting the Book Value, as of Bank Closing, of
all Liabilities Assumed under this Agreement by the Assuming Bank from the Book
Value, as of Bank Closing, of all Assets acquired under this Agreement by the
Assuming Bank, which may be a positive or a negative number.

 

“Failed Bank Advances” means the
total sums paid by the Failed Bank to (i) protect its lien position,
(ii) pay ad valorem taxes and hazard insurance, and (iii) pay credit
life insurance, accident and health insurance, and vendor’s single interest
insurance.

 

“Fair Market Value” means
(i)(a) “Market Value” as defined in the regulation prescribing the
standards for real estate appraisals used in federally related transactions, 12
C. F. R. § 323.2 (g), and accordingly shall mean the most probable price which
a property should bring in a competitive and open market under all conditions
requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition is the consummation of a sale as of a specified
date and the passing of title from seller to buyer under conditions whereby:

 

(1)   Buyer and seller are
typically motivated;

(2)   Both parties are well
informed or well advised, and acting in what they consider their own best
interests;

(3)   A reasonable time is allowed
for exposure in the open market;

(4)   Payment is made in terms of
cash in U.S. dollars or in terms of financial arrangements comparable thereto;
and

 

4

 

(5)   The price represents the normal consideration
for the property sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale;

 

as
determined as of Bank Closing by an appraiser chosen by the Assuming Bank from
a list of acceptable appraisers provided by the Receiver; any costs and fees
associated with such determination shall be shared equally by the Receiver and
the Assuming Bank, and (b) which, with respect to Bank Premises (to the
extent, if any, that Bank Premises are purchased utilizing this valuation
method), shall be determined not later than sixty (60) days after Bank Closing
by an appraiser selected by the Receiver and the Assuming Bank within seven
(7) days after Bank Closing; or (ii) with respect to property other
than Bank Premises purchased utilizing this valuation method, the price
therefore as established by the Receiver and agreed to by the Assuming Bank, or
in the absence of such agreement, as determined in accordance with clause
(i)(a) above.

 

“First Loss Tranche” means the dollar
amount of liability that the Assuming Bank will incur prior to the commencement
of loss sharing, which is the sum of (i) the Assuming Bank’s asset premium
(discount) bid, as reflected on the Assuming Bank’s bid form, plus
(ii) the Assuming Bank’s Deposit premium bid, as reflected on the Assuming
Bank’s bid form, plus (iii) the Equity Adjustment. The First Loss Tranche
may be a positive or negative number.

 

“Fixtures” means those leasehold
improvements, additions, alterations and installations constituting all or a
part of Bank Premises and which were acquired, added, built, installed or
purchased at the expense of the Failed Bank, regardless of the holder of legal
title thereto as of Bank Closing.

 

“Furniture and Equipment” means the
furniture and equipment, other than motor vehicles, leased or owned by the
Failed Bank and reflected on the books of the Failed Bank as of Bank Closing,
including without limitation automated teller machines, carpeting, furniture,
office machinery (including personal computers), shelving, office supplies,
telephone, surveillance and security systems. Motor vehicles shall be
considered other assets and pass at Book Value.

 

“Indemnitees” means, except as provided
in paragraph (k) of Section 12.1, (i) the Assuming Bank,
(ii) the Subsidiaries and Affiliates of the Assuming Bank other  than
any Subsidiaries or Affiliates of the Failed Bank that are or become
Subsidiaries or Affiliates of the Assuming Bank, and (iii) the directors,
officers, employees and agents of the Assuming Bank and its Subsidiaries and
Affiliates who are not also present or former directors, officers,
employees or agents of the Failed Bank or of any Subsidiary or Affiliate of the
Failed Bank.

 

“Information Package” means the most
recent compilation of financial and other data with respect to the Failed Bank,
including any amendments or supplements thereto, provided to the Assuming Bank
by the Corporation on the web site used by the Corporation to market the Failed
Bank to potential acquirers.

 

5

 

“Legal Balance” means the amount of
indebtedness legally owed by an Obligor with respect to a Loan, including
principal and accrued and unpaid interest, late fees, attorneys’ fees and
expenses, taxes, insurance premiums, and similar charges, if any.

 

“Liabilities Assumed” has the meaning provided in Section 2.1.

 

“Lien” means any mortgage, lien,
pledge, charge, assignment for security purposes, security interest, or
encumbrance of any kind with respect to an Asset, including any conditional
sale agreement or capital lease or other title retention agreement relating to
such Asset.

 

“Loans” means all of the following
owed to or held by the Failed Bank as of Bank Closing:

 

(i)              loans (including
loans which have been charged off the Accounting Records of the Failed Bank in
whole or in part prior to the date of the most recent pertinent data made
available to the Assuming Bank as part of the Information Package),
participation agreements, interests in participations, overdrafts of customers
(including but not limited to overdrafts made pursuant to an overdraft
protection plan or similar extensions of credit in connection with a deposit
account), revolving commercial lines of credit, home equity lines of credit,
Commitments, United States and/or State-guaranteed student loans, and lease
financing contracts;

 

(ii)             all Liens, rights
(including rights of set-off), remedies, powers, privileges, demands, claims,
priorities, equities and benefits owned or held by, or accruing or to accrue to
or for the benefit of, the holder of the obligations or instruments referred to
in clause (i) above, including but not limited to those arising under or
based upon Credit Documents, casualty insurance policies and binders, standby
letters of credit, mortgagee title insurance policies and binders, payment
bonds and performance bonds at any time and from time to time existing with
respect to any of the obligations or instruments referred to in clause
(i) above; and

 

(iii)            all amendments,
modifications, renewals, extensions, refinancings, and refundings of or for any
of the foregoing.

 

“Obligor” means each Person liable
for the full or partial payment or performance of any Loan, whether such Person
is obligated directly, indirectly, primarily, secondarily, jointly, or
severally.

 

“Other Real Estate” means all
interests in real estate (other than Bank Premises and Fixtures) and loans on
“in substance foreclosure” status as of Bank Closing as recorded on the
Accounting Records of the Failed Bank, including but not limited to mineral
rights, leasehold rights, condominium and cooperative interests, air rights and
development rights that are owned by the Failed Bank.

 

6

 

“Person”
means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, or government or any
agency or political subdivision thereof, excluding the Corporation.

 

“Primary Indemnitor”
means any Person (other than the Assuming Bank or any of its Affiliates) who is
obligated to indemnify or insure, or otherwise make payments (including
payments on account of claims made against) to or on behalf of any Person in
connection with the claims covered under Article XII, including without
limitation any insurer issuing any directors and officers liability policy or
any Person issuing a financial institution bond or banker’s blanket bond.

 

“Proforma”
means producing a balance sheet that reflects a reasonably accurate financial
statement of the Failed bank through the date of closing. The Proforma
financial statements serve as a basis for the opening entries of both the
Assuming Bank and the Receiver.

 

“Put Date”
has the meaning provided in Section 3.4.

 

“Put Notice”
has the meaning provided in Section 3.4.

 

“Qualified
Financial Contract” means a qualified financial
contract as defined in 12 U.S.C. Section 1821(e)(8) (D).

 

“Record”
means any document, microfiche, microfilm and computer records (including but
not limited to magnetic tape, disc storage, card forms and printed copy) of the
Failed Bank generated or maintained by the Failed Bank that is owned by or in
the possession of the Receiver at Bank Closing.

 

“Related Liability”
with respect to any Asset means any liability existing and reflected on the
Accounting Records of the Failed Bank as of Bank Closing for
(i) indebtedness secured by mortgages, deeds of trust, chattel mortgages,
security interests or other liens on or affecting such Asset, (ii) ad
valorem taxes applicable to such Asset, and (iii) any other obligation
determined by the Receiver to be directly related to such Asset.

 

“Related Liability Amount”
with respect to any Related Liability on the books of the Assuming Bank, means
the amount of such Related Liability as stated on the Accounting Records of the
Assuming Bank (as maintained in accordance with generally accepted accounting
principles) as of the date as of which the Related Liability Amount is being
determined. With respect to a liability that relates to more than one asset,
the amount of such Related Liability shall be allocated among such assets for
the purpose of determining the Related Liability Amount with respect to any one
of such assets. Such allocation shall be made by specific allocation, where
determinable, and otherwise shall be pro rata based upon the dollar amount of
such assets stated on the Accounting Records of the entity that owns such
asset.

 

“Repurchase Price”
means, with respect to any Loan the Book Value, adjusted to reflect changes to
Book Value after Bank Closing, plus (ii) any advances and interest on such
Loan after Bank Closing, minus (iii) the total of amounts received by the
Assuming Bank for

 

7

 

such Loan, regardless of how applied, after Bank Closing, plus
(iv) advances made by Assuming Bank, plus (v) total disbursements of
principal made by Receiver that are not included in the Book Value.

 

“Safe Deposit
Boxes” means the safe deposit boxes of the Failed
Bank, if any, including the removable safe deposit boxes and safe deposit
stacks in the Failed Bank’s vault(s), all rights and benefits under rental
agreements with respect to such safe deposit boxes, and all keys and
combinations thereto.

 

“Settlement Date”
means the first Business Day immediately prior to the day which is one hundred
eighty (180) days after Bank Closing, or such other date prior thereto as may
be agreed upon by the Receiver and the Assuming Bank. The Receiver, in its
discretion, may extend the Settlement Date.

 

“Settlement
Interest Rate” means, for the first calendar
quarter or portion thereof during which interest accrues, the rate determined
by the Receiver to be equal to the equivalent coupon issue yield on twenty-six
(26)-week United States Treasury Bills in effect as of Bank Closing as
published in The Wall Street Journal; provided, that if no
such equivalent coupon issue yield is available as of Bank Closing, the
equivalent coupon issue yield for such Treasury Bills most recently published
in The Wall Street Journal prior to Bank Closing shall be used.
Thereafter, the rate shall be adjusted to the rate determined by the Receiver
to be equal to the equivalent coupon issue yield on such Treasury Bills in
effect as of the first day of each succeeding calendar quarter during which
interest accrues as published in The Wall Street Journal.

 

“Subsidiary”
has the meaning set forth in Section 3(w)(4) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1813(w)(4), as amended.

 

ARTICLE II

ASSUMPTION OF LIABILITIES

 

2.1              Liabilities
Assumed by Assuming Bank. The Assuming Bank expressly assumes at Book
Value (subject to adjustment pursuant to Article VIII) and agrees to pay,
perform, and discharge all of the following liabilities of the Failed Bank as
of Bank Closing, except as otherwise provided in this Agreement (such
liabilities referred to as “Liabilities Assumed”):

 

(a)           Assumed Deposits, except those Deposits
specifically listed on Schedule 2.1(a); provided, that as to any
Deposits of public money which are Assumed Deposits, the Assuming Bank agrees
to properly secure such Deposits with such of the Assets as appropriate which,
prior to Bank Closing, were pledged as security therefor by the Failed Bank, or
with assets of the Assuming Bank, if such securing Assets, if any, are
insufficient to properly secure such Deposits;

 

(b)           liabilities for indebtedness secured by
mortgages, deeds of trust, chattel mortgages, security interests or other liens
on or affecting any Assets, if any;

 

8

 

provided, that
the assumption of any liability pursuant to this paragraph shall be limited to
the market value of the Assets securing such liability as determined by the
Receiver;

 

(c)           borrowings from Federal Reserve Banks and
Federal Home Loan Banks, if any, provided, that the assumption of
any liability pursuant to this paragraph shall be limited to the market value
of the assets securing such liability as determined by the Receiver; and
overdrafts, debit balances, service charges, reclamations, and adjustments to
accounts with the Federal Reserve Banks as reflected on the books and records
of any such Federal Reserve Bank within ninety (90) days after Bank Closing, if
any;

 

(d)           ad
valorem taxes applicable to any Asset, if any; provided, that the
assumption of any ad valorem taxes pursuant to this paragraph shall be limited
to an amount equal to the market value of the Asset to which such taxes apply
as determined by the Receiver;

 

(e)           liabilities,
if any, for federal funds purchased, repurchase agreements and overdrafts in
accounts maintained with other depository institutions (including any accrued
and unpaid interest thereon computed to and including Bank Closing); provided,
that the assumption of any liability pursuant to this paragraph shall be
limited to the market value of the Assets securing such liability as determined
by the Receiver;

 

(f)            United
States Treasury tax and loan note option accounts, if any;

 

(g)           liabilities
for any acceptance or commercial letter of credit (other than “standby letters
of credit” as defined in 12 C.F.R. Section 337.2(a)); provided, that
the assumption of any liability pursuant to this paragraph shall be limited to
the market value of the Assets securing such liability as determined by the
Receiver;

 

(h)           duties
and obligations assumed pursuant to this Agreement including without limitation
those relating to the Failed Bank’s credit card business, overdraft protection
plans, safe deposit business, safekeeping business or trust business, if any;

 

(i)            liabilities,
if any, for Commitments;

 

(j)            liabilities,
if any, for amounts owed to any Subsidiary of the Failed Bank acquired under
Section 3.1;

 

(k)           liabilities,
if any, with respect to Qualified Financial Contracts;

 

9

 

(l)            duties
and obligations under any contract pursuant to which the Failed Bank provides
mortgage servicing for others, or mortgage servicing is provided to the Failed
Bank by others; and

 

(m)          all
asset-related offensive litigation liabilities and all asset-related defensive
litigation liabilities, but only to the extent such liabilities relate to
assets subject to a loss share agreement, and provided that all other defensive
litigation and any class actions with respect to credit card business are
retained by the Receiver.

 

Schedule 2.1 attached hereto and incorporated
herein sets forth certain categories of Liabilities Assumed and the aggregate
Book Value of the Liabilities Assumed in such categories. Such schedule is
based upon the best information available to the Receiver and may be adjusted
as provided in Article VIII.

 

2.2              Interest on
Deposit Liabilities. The Assuming Bank agrees that, from and after Bank
Closing, it will accrue and pay interest on Deposit liabilities assumed pursuant
to Section 2.1 at a rate(s) it shall determine; provided, that
for non-transaction Deposit liabilities such rate(s) shall not be less
than the lowest rate offered by the Assuming Bank to its depositors for
non-transaction deposit accounts. The Assuming Bank shall permit each depositor
to withdraw, without penalty for early withdrawal, all or any portion of such
depositor’s Deposit, whether or not the Assuming Bank elects to pay interest in
accordance with any deposit agreement formerly existing between the Failed Bank
and such depositor; and  further provided, that if such
Deposit has been pledged to secure an obligation of the depositor or other
party, any withdrawal thereof shall be subject to the terms of the agreement
governing such pledge. The Assuming Bank shall give notice to such depositors
as provided in Section 5.3 of the rate(s) of interest which it has
determined to pay and of such withdrawal rights.

 

2.3              Unclaimed
Deposits. If, within eighteen (18) months after Bank Closing, any
depositor of the Failed Bank does not claim or arrange to continue such
depositor’s Deposit assumed pursuant to Section 2.1 at the Assuming Bank,
the Assuming Bank shall, within fifteen (15) Business Days after the end of
such eighteen (18)-month period, (i) refund to the Corporation the full
amount of each such Deposit (without reduction for service charges),
(ii) provide to the Corporation a schedule of all such refunded Deposits
in such form as may be prescribed by the Corporation, and (iii) assign,
transfer, convey and deliver to the Receiver all right, title and interest of
the Assuming Bank in and to Records previously transferred to the Assuming Bank
and other records generated or maintained by the Assuming Bank pertaining to
such Deposits. During such eighteen (18)-month period, at the request of the
Corporation, the Assuming Bank promptly shall provide to the Corporation
schedules of unclaimed deposits in such form as may be prescribed by the
Corporation.

 

2.4              Employee Plans.
Except as provided in Section 4.12, the Assuming Bank shall have no
liabilities, obligations or responsibilities under the Failed Bank’s health
care, bonus, vacation, pension, profit sharing, deferred compensation, 401K or
stock purchase plans or similar plans, if any, unless the Receiver and the
Assuming Bank agree otherwise subsequent to the date of this Agreement.

 

10

 

ARTICLE III

PURCHASE OF ASSETS

 

3.1              Assets Purchased
by Assuming Bank. With the exception of certain assets expressly excluded
in Sections 3.5 and 3.6, the Assuming Bank hereby purchases from the Receiver,
and the Receiver hereby sells, assigns, transfers, conveys, and delivers to the
Assuming Bank, all right, title, and interest of the Receiver in and to all of
the assets (real, personal and mixed, wherever located and however acquired)
including all subsidiaries, joint ventures, partnerships, and any and all other
business combinations or arrangements, whether active, inactive, dissolved or
terminated, of the Failed Bank whether or not reflected on the books of the
Failed Bank as of Bank Closing. Schedules 3.1 and 3.1a attached hereto and
incorporated herein sets forth certain categories of Assets purchased
hereunder. Such schedule is based upon the best information available to the
Receiver and may be adjusted as provided in Article VIII. Assets are
purchased hereunder by the Assuming Bank subject to all liabilities for
indebtedness collateralized by Liens affecting such Assets to the extent
provided in Section 2.1. The subsidiaries, joint ventures, partnerships,
and any and all other business combinations or arrangements, whether active,
inactive, dissolved or terminated being purchased by the Assuming Bank
includes, but is not limited to, the entities listed on Schedule 3.1a.
Notwithstanding Section 4.8, the Assuming Bank specifically purchases all
mortgage servicing rights and obligations of the Failed Bank.

 

3.2              Asset Purchase
Price. 

 

(a)               All Assets and assets of the Failed Bank
subject to an option to purchase by the Assuming Bank shall be purchased for
the amount, or the amount resulting from the method specified for determining
the amount, as specified on Schedule 3.2, except as otherwise may be provided
herein. Any Asset, asset of the Failed Bank subject to an option to purchase or
other asset purchased for which no purchase price is specified on Schedule 3.2
or otherwise herein shall be purchased at its Book Value. Loans or other assets
charged off the Accounting Records of the Failed Bank prior to the date of the
most recent pertinent data made available to the Assuming Bank as part of the
Information Package shall be purchased at a price of zero.

 

(b)              The purchase price for securities (other
than the capital stock of any Acquired Subsidiary) purchased under
Section 3.1 by the Assuming Bank shall be the market value thereof as of
Bank Closing, which market value shall be (i) the market price for each
such security quoted at the close of the trading day effective on Bank Closing
as published electronically by Bloomberg, L. P., or alternatively, at the
discretion of the Receiver, IDC/Financial Times (FT) Interactive Data;
(ii) provided, that if such market price is not available
for any such security, the Assuming Bank will submit a bid for each such
security within three days of notification/bid request by the Receiver (unless
a different time period is agreed to by the Assuming Bank and the Receiver) and
the Receiver, in its sole discretion will accept or reject each such bid; and
(iii) further  provided in the absence of an acceptable bid
from the Assuming Bank, each such

 

11

 

 

security shall not pass to the Assuming Bank and shall be deemed to be
an excluded asset hereunder.

 

(c)               Qualified Financial Contracts shall be
purchased at market value determined in accordance with the terms of
Exhibit 3.2(c). Any costs associated with such valuation shall be shared
equally by the Receiver and the Assuming Bank.

 

3.3              Manner of
Conveyance; Limited Warranty; Nonrecourse; Etc. THE CONVEYANCE OF ALL
ASSETS, INCLUDING REAL AND PERSONAL PROPERTY INTERESTS, PURCHASED BY THE
ASSUMING BANK UNDER THIS AGREEMENT SHALL BE MADE, AS NECESSARY, BY RECEIVER’S
DEED OR RECEIVER’S BILL OF SALE, “AS IS”, “WHERE IS”, WITHOUT RECOURSE AND,
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, WITHOUT ANY
WARRANTIES WHATSOEVER WITH RESPECT TO SUCH ASSETS, EXPRESS OR IMPLIED, WITH
RESPECT TO TITLE, ENFORCEABILITY, COLLECTIBILITY, DOCUMENTATION OR FREEDOM FROM
LIENS OR ENCUMBRANCES (IN WHOLE OR IN PART), OR ANY OTHER MATTERS.

 

3.4              Puts of Assets to
the Receiver.

 

(a)               Puts
Prior to the Settlement Date.

 

(i)        During the period from Bank Closing to and
including the Business Day immediately preceding the Settlement Date, the
Assuming Bank shall be entitled to require the Receiver to purchase any Asset
which the Assuming Bank can establish is evidenced by forged or stolen
instruments as of Bank Closing; provided, that, the Assuming Bank
shall not have the right to require the Receiver to purchase any such
Asset with respect to which the Assuming Bank has taken any action referred to
in Section 3.4(a)(ii) with respect to such Asset.

 

(ii)       At the end of the thirty (30)-day period
following Bank Closing and at that time only, in accordance with this
Section 3.4, the Assuming Bank shall be entitled to require the Receiver
to purchase any remaining overdraft transferred to the Assuming Bank pursuant
to 3.1 which both was made after the “as of” the date of the most recent
pertinent data made available to the Assuming Bank as part of the Information
Package and was not made pursuant to an overdraft protection plan or similar
extension of credit.

 

The Assuming Bank shall transfer all such Assets to the Receiver
without recourse, and shall indemnify the Receiver against any and all claims
of any Person claiming by, through or under the Assuming Bank with respect to
any such Asset, as provided in Section 12.4.

 

(b)              Notices
to the Receiver. In the event that the Assuming Bank elects to
require the Receiver to purchase one or more Assets, the Assuming Bank shall
deliver to the Receiver a notice (a “Put Notice”) which shall include:

 

(i)            a list of all Assets that the Assuming Bank
requires the Receiver to purchase;

 

12

 

(ii)           a list of all Related Liabilities with
respect to the Assets identified pursuant to (i) above; and

 

(iii)          a statement of the estimated
Repurchase Price of each Asset identified pursuant to (i) above as of the
applicable Put Date.

 

Such notice shall be in the form prescribed by the Receiver or such
other form to which the Receiver shall consent. As provided in
Section 9.6, the Assuming Bank shall deliver to the Receiver such
documents, Credit Files and such additional information relating to the subject
matter of the Put Notice as the Receiver may request and shall provide to the
Receiver full access to all other relevant books and records.

 

(c)               Purchase by
Receiver. The Receiver
shall purchase Assets that are specified in the Put Notice and shall assume
Related Liabilities with respect to such Assets, and the transfer of such
Assets and Related Liabilities shall be effective as of a date determined by
the Receiver which date shall not be later than thirty (30) days after receipt
by the Receiver of the Put Notice (the “Put Date”).

 

(d)              Purchase Price
and Payment Date. Each
Asset purchased by the Receiver pursuant to this Section 3.4 shall be
purchased at a price equal to the Repurchase Price of such Asset less the
Related Liability Amount applicable to such Asset, in each case determined as
of the applicable Put Date. If the difference between such Repurchase Price and
such Related Liability Amount is positive, then the Receiver shall pay to the
Assuming Bank the amount of such difference; if the difference between such
amounts is negative, then the Assuming Bank shall pay to the Receiver the
amount of such difference. The Assuming Bank or the Receiver, as the case may
be, shall pay the purchase price determined pursuant to this Section 3.4(d) not
later than the twentieth (20th) Business Day following the applicable Put Date,
together with interest on such amount at the Settlement Interest Rate for the
period from and including such Put Date to and including the day preceding the
date upon which payment is made.

 

(e)               Servicing. The
Assuming Bank shall administer and manage any Asset subject to purchase by the
Receiver in accordance with usual and prudent banking standards and business
practices until such time as such Asset is purchased by the Receiver.

 

(f)               Reversals. In the event that the Receiver
purchases an Asset (and assumes the Related Liability) that it is not required
to purchase pursuant to this Section 3.4, the Assuming Bank shall
repurchase such Asset (and assume such Related Liability) from the Receiver at
a price computed so as to achieve the same economic result as would apply if
the Receiver had never purchased such Asset pursuant to this Section 3.4.

 

3.5              Assets Not
Purchased by Assuming Bank. The
Assuming Bank does not purchase, acquire or assume, or (except as otherwise
expressly provided in this Agreement) obtain an option to purchase, acquire or
assume under this Agreement:

 

13

 

(a)               any financial institution bonds,
banker’s blanket bonds, or public liability, fire, or extended coverage
insurance policy or any other insurance policy of the Failed Bank, or premium
refund, unearned premium derived from cancellation, or any proceeds payable
with respect to any of the foregoing;

 

(b)              any interest, right, action, claim, or
judgment against (i) any officer, director, employee, accountant,
attorney, or any other Person employed or retained by the Failed Bank or any
Subsidiary of the Failed Bank on or prior to Bank Closing arising out of any
act or omission of such Person in such capacity, (ii) any underwriter of
financial institution bonds, banker’s blanket bonds or any other insurance
policy of the Failed Bank, (iii) any shareholder or holding company of the
Failed Bank, or (iv) any other Person whose action or inaction may be
related to any loss (exclusive of any loss resulting from such Person’s failure
to pay on a Loan made by the Failed Bank) incurred by the Failed Bank; provided,
that for the purposes hereof, the acts, omissions or other events giving
rise to any such claim shall have occurred on or before Bank Closing,
regardless of when any such claim is discovered and regardless of whether any
such claim is made with respect to a financial institution bond, banker’s
blanket bond, or any other insurance policy of the Failed Bank in force as of
Bank Closing;

 

(c)               prepaid regulatory assessments of the
Failed Bank, if any;

 

(d)              legal or equitable interests in tax
receivables of the Failed Bank, if any, including any claims arising as a
result of the Failed Bank having entered into any agreement or otherwise being
joined with another Person with respect to the filing of tax returns or the
payment of taxes;

 

(e)               amounts reflected on the Accounting
Records of the Failed Bank as of Bank Closing as a general or specific loss
reserve or contingency account, if any;

 

(f)               leased or owned Bank Premises and leased
or owned Furniture and Equipment and Fixtures and data processing equipment
(including hardware and software) located on leased or owned Bank Premises, if
any; provided, that the Assuming Bank does obtain an option under
Section 4.6, Section 4.7 or Section 4.8, as the case may be,
with respect thereto;

 

(g)              owned Bank Premises which the Receiver,
in its discretion, determines may contain environmentally hazardous substances;

 

(h)              any “goodwill,” as such term is defined
in the instructions to the report of condition prepared by banks examined by
the Corporation in accordance with 12 C.F.R. Section 304.4, and other
intangibles;

 

(i)                any criminal restitution or forfeiture
orders issued in favor of the Failed Bank;

 

(j)                reserved;

 

(k)               assets essential to the Receiver in
accordance with Section 3.6; and

 

14

 

(l)                all private label asset-backed
securities, including, but not limited to, those listed on the attached
Schedule 3.5(l).

 

3.6              Retention or
Repurchase of Assets Essential to Receiver.

 

(a)               The Receiver may refuse to sell to the
Assuming Bank, or the Assuming Bank agrees, at the request of the Receiver set
forth in a written notice to the Assuming Bank, to assign, transfer, convey,
and deliver to the Receiver all of the Assuming Bank’s right, title and
interest in and to, any Asset or asset essential to the Receiver as determined
by the Receiver in its discretion (together with all Credit Documents
evidencing or pertaining thereto), which may include any Asset or asset that
the Receiver determines to be:

 

(i)       made to an officer,
director, or other Person engaging in the affairs of the Failed Bank, its
Subsidiaries or Affiliates or any related entities of any of the foregoing;

 

(ii)      the subject of any
investigation relating to any claim with respect to any item described in
Section 3.5(a) or (b), or the subject of, or potentially the subject
of, any legal proceedings;

 

(iii)    made to a Person who is an
Obligor on a loan owned by the Receiver or the Corporation in its corporate
capacity or its capacity as receiver of any institution;

 

(iv)    secured by collateral which
also secures any asset owned by the Receiver; or

 

(v)      related to any asset of the
Failed Bank not purchased by the Assuming Bank under this Article III or
any liability of the Failed Bank not assumed by the Assuming Bank under
Article II.

 

(b)              Each such Asset or asset purchased by the
Receiver shall be purchased at a price equal to the Repurchase Price thereof
less the Related Liability Amount with respect to any Related Liabilities
related to such Asset or asset, in each case determined as of the date of the
notice provided by the Receiver pursuant to Section 3.6(a). The Receiver
shall pay the Assuming Bank not later than the twentieth (20th) Business Day
following receipt of related Credit Documents and Credit Files together with
interest on such amount at the Settlement Interest Rate for the period from and
including the date of receipt of such documents to and including the day
preceding the day on which payment is made. The Assuming Bank agrees to
administer and manage each such Asset or asset in accordance with usual and
prudent banking standards and business practices until each such Asset or asset
is purchased by the Receiver. All transfers with respect to Asset or assets
under this Section 3.6 shall be made as provided in Section 9.6. The
Assuming Bank shall transfer all such Asset or assets and Related Liabilities
to the Receiver without recourse, and shall indemnify the Receiver against any
and all claims of any Person

 

15

 

claiming by, through or under the Assuming Bank with respect to any
such Asset or asset, as provided in Section 12.4.

 

ARTICLE IV

ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS

 

The Assuming Bank agrees with the Receiver and the Corporation as
follows:

 

4.1              Continuation of
Banking Business. For the period commencing the first banking business
day after Bank Closing and ending no earlier than the first anniversary of Bank
Closing, the Assuming Bank agrees to provide full service banking in the trade
area of the Failed Bank. Thereafter, the Assuming Bank may cease providing such
banking services in the trade area of the Failed Bank, provided the Assuming
Bank has received all necessary regulatory approvals. The trade area shall be
determined by the Receiver.

 

4.2              Agreement with
Respect to Credit Card Business. The Assuming Bank agrees to honor and
perform, from and after Bank Closing, all duties and obligations with respect
to the Failed Bank’s credit card business, and/or processing related to credit
cards, if any, and assumes all outstanding extensions of credit with respect
thereto.

 

4.3              Agreement with
Respect to Safe Deposit Business. The Assuming Bank assumes and agrees
to discharge, from and after Bank Closing, in the usual course of conducting a
banking business, the duties and obligations of the Failed Bank with respect to
all Safe Deposit Boxes, if any, of the Failed Bank and to maintain all of the
necessary facilities for the use of such boxes by the renters thereof during
the period for which such boxes have been rented and the rent therefore paid to
the Failed Bank, subject to the provisions of the rental agreements between the
Failed Bank and the respective renters of such boxes; provided, that
the Assuming Bank may relocate the Safe Deposit Boxes of the Failed Bank to any
office of the Assuming Bank located in the trade area of the Failed Bank. The
Safe Deposit Boxes shall be located and maintained in the trade area of the
Failed Bank for a minimum of one year from Bank Closing. Fees related to the
safe deposit business earned prior to the Bank Closing Date shall be for the
benefit of the Receiver and fees earned after the Bank Closing Date shall be
for the benefit of the Assuming Bank.

 

4.4              Agreement with
Respect to Safekeeping Business. The Receiver transfers, conveys and
delivers to the Assuming Bank and the Assuming Bank accepts all securities and
other items, if any, held by the Failed Bank in safekeeping for its customers
as of Bank Closing. The Assuming Bank assumes and agrees to honor and
discharge, from and after Bank Closing, the duties and obligations of the
Failed Bank with respect to such securities and items held in safekeeping. The
Assuming Bank shall be entitled to all rights and benefits heretofore accrued
or hereafter accruing with respect thereto. The Assuming Bank shall provide to
the Receiver written verification of all assets held by the Failed Bank for
safekeeping within sixty (60) days after Bank Closing. The assets held for
safekeeping by the Failed Bank shall be held and maintained by the Assuming
Bank in the trade area of the Failed Bank for a minimum of one year from Bank
Closing. Fees related to the safekeeping business earned prior to the Bank
Closing Date shall be for the benefit of the Receiver and fees earned after the
Bank Closing Date shall be for the benefit of the Assuming Bank.

 

16

 

4.5            Agreement with Respect to Trust Business.

 

(a)             The Assuming
Bank shall, without further transfer, substitution, act or deed, to the full
extent permitted by law, succeed to the rights, obligations, properties,
assets, investments, deposits, agreements, and trusts of the Failed Bank under
trusts, executorships, administrations, guardianships, and agencies, and other
fiduciary or representative capacities, all to the same extent as though the
Assuming Bank had assumed the same from the Failed Bank prior to Bank Closing; provided,
that any liability based on the misfeasance, malfeasance or nonfeasance
of the Failed Bank, its directors, officers, employees or agents with respect
to the trust business is not assumed hereunder.

 

(b)            The Assuming
Bank shall, to the full extent permitted by law, succeed to, and be entitled to
take and execute, the appointment to all executorships, trusteeships,
guardianships and other fiduciary or representative capacities to which the
Failed Bank is or may be named in wills, whenever probated, or to which the
Failed Bank is or may be named or appointed by any other instrument.

 

(c)             In the event
additional proceedings of any kind are necessary to accomplish the transfer of
such trust business, the Assuming Bank agrees that, at its own expense, it will
take whatever action is necessary to accomplish such transfer. The Receiver
agrees to use reasonable efforts to assist the Assuming Bank in accomplishing
such transfer.

 

(d)            The Assuming
Bank shall provide to the Receiver written verification of the assets held in
connection with the Failed Bank’s trust business within sixty (60) days after
Bank Closing.

 

4.6            Agreement with Respect to Bank Premises.

 

(a)             Option to
Purchase. Subject to Section 3.5,
the Receiver hereby grants to the Assuming Bank an exclusive option for the
period of ninety (90) days commencing the day after Bank Closing to purchase
any or all owned Bank Premises, including all Furniture, Fixtures and Equipment
located on the Bank Premises. The Assuming Bank shall give written notice to
the Receiver within the option period of its election to purchase or not to
purchase any of the owned Bank Premises. Any purchase of such premises shall be
effective as of the date of Bank Closing and such purchase shall be consummated
as soon as practicable thereafter, and in no event later than the Settlement
Date.

 

(b)            Option to
Lease. The Receiver hereby grants
to the Assuming Bank an exclusive option for the period of ninety (90) days
commencing the day after Bank Closing to cause the Receiver to assign to the
Assuming Bank any or all leases for leased Bank Premises, if any, which have
been continuously occupied by the Assuming Bank from Bank Closing to the date
it elects to accept an assignment of the leases with respect thereto to the
extent such leases can be assigned; provided, that the exercise
of this option with respect to any lease must be as to all premises or other
property subject to the lease. If an assignment cannot be made of any such
leases, the Receiver may, in its discretion, enter into subleases with the
Assuming Bank

 

17

 

containing
the same terms and conditions provided under such existing leases for such
leased Bank Premises or other property. The Assuming Bank shall give notice to
the Receiver within the option period of its election to accept or not to
accept an assignment of any or all leases (or enter into subleases or new
leases in lieu thereof). The Assuming Bank agrees to assume all leases assigned
(or enter into subleases or new leases in lieu thereof) pursuant to this
Section 4.6.

 

(c)             Facilitation. The Receiver agrees to facilitate the assumption,
assignment or sublease of leases or the negotiation of new leases by the
Assuming Bank; provided, that neither the Receiver nor the
Corporation shall be obligated to engage in litigation, make payments to the
Assuming Bank or to any third party in connection with facilitating any such
assumption, assignment, sublease or negotiation or commit to any other
obligations to third parties.

 

(d)            Occupancy. The Assuming Bank shall give the Receiver fifteen (15) days’ prior
written notice of its intention to vacate prior to vacating any leased Bank
Premises with respect to which the Assuming Bank has not exercised the option provided
in Section 4.6(b). Any such notice shall be deemed to terminate the
Assuming Bank’s option with respect to such leased Bank Premises.

 

(e)             Occupancy
Costs.

 

(i)            The Assuming
Bank agrees to pay to the Receiver, or to appropriate third parties at the
direction of the Receiver, during and for the period of any occupancy by it of
(x) owned Bank Premises the market rental value, as determined by the
appraiser selected in accordance with the definition of Fair Market Value, and
all operating costs, and (y) leased Bank Premises, all operating costs
with respect thereto and to comply with all relevant terms of applicable leases
entered into by the Failed Bank, including without limitation the timely
payment of all rent. Operating costs include, without limitation all taxes,
fees, charges, utilities, insurance and assessments, to the extent not included
in the rental value or rent. If the Assuming Bank elects to purchase any owned
Bank Premises in accordance with Section 4.6(a), the amount of any rent paid
(and taxes paid to the Receiver which have not been paid to the taxing
authority and for which the Assuming Bank assumes liability) by the Assuming
Bank with respect thereto shall be applied as an offset against the purchase
price thereof.

 

(ii)           The Assuming Bank
agrees during the period of occupancy by it of owned or leased Bank Premises,
to pay to the Receiver rent for the use of all owned or leased Furniture and
Equipment and all owned or leased Fixtures located on such Bank Premises for
the period of such occupancy. Rent for such property owned by the Failed Bank
shall be the market rental value thereof, as determined by the Receiver within
sixty (60) days after Bank Closing. Rent for such leased property shall be an
amount equal to any and all rent and other amounts which the Receiver incurs or
accrues as an obligation or is obligated to pay for such period of occupancy
pursuant to all leases and contracts with respect to such property. If the
Assuming Bank purchases any owned Furniture and Equipment or owned Fixtures in
accordance with Section 4.6(f) or 4.6(h), the amount of any rents
paid by the Assuming Bank with respect thereto shall be applied as an offset
against the purchase price thereof.

 

18

 

(f)             Certain Requirements as to Furniture, Equipment and Fixtures. If the Assuming Bank purchases owned Bank Premises
or accepts an assignment of the lease (or enters into a sublease or a new lease
in lieu thereof) for leased Bank Premises as provided in Section 4.6(a) or
4.6(b), or if the Assuming Bank does not exercise such option but within twelve
(12) months following Bank Closing obtains the right to occupy such premises
(whether by assignment, lease, sublease, purchase or otherwise), other than in
accordance with Section 4.6(a) or (b), the Assuming Bank shall
(i) effective as of the date of Bank Closing, purchase from the Receiver
all Furniture and Equipment and Fixtures owned by the Failed Bank at Fair
Market Value and located thereon as of Bank Closing, (ii) accept an
assignment or a sublease of the leases or negotiate new leases for all
Furniture and Equipment and Fixtures leased by the Failed Bank and located
thereon, and (iii) if applicable, accept an assignment or a sublease of
any ground lease or negotiate a new ground lease with respect to any land on
which such Bank Premises are located; provided, that the Receiver
shall not have disposed of such Furniture and Equipment and Fixtures or
repudiated the leases specified in clause (ii) or (iii).

 

(g)            Vacating
Premises.

 

(i)            If the Assuming
Bank elects not to purchase any owned Bank Premises, the notice of such
election in accordance with Section 4.6(a) shall specify the date
upon which the Assuming Bank’s occupancy of such premises shall terminate,
which date shall not be later than ninety (90) days after the date of the
Assuming Bank’s notice not to exercise such option. The Assuming Bank promptly
shall relinquish and release to the Receiver such premises and the Furniture
and Equipment and Fixtures located thereon in the same condition as at Bank
Closing, normal wear and tear excepted. By occupying any such premises after
the expiration of such ninety (90)-day period, the Assuming Bank shall, at the
Receiver’s option, (x) be deemed to have agreed to purchase such Bank
Premises, and to assume all leases, obligations and liabilities with respect to
leased Furniture and Equipment and leased Fixtures located thereon and any
ground lease with respect to the land on which such premises are located, and
(y) be required to purchase all Furniture and Equipment and Fixtures owned
by the Failed Bank and located on such premises as of Bank Closing.

 

(ii)           If the Assuming
Bank elects not to accept an assignment of the lease or sublease any leased
Bank Premises, the notice of such election in accordance with
Section 4.6(b) shall specify the date upon which the Assuming Bank’s
occupancy of such leased Bank Premises shall terminate, which date shall not be
later than the date which is one hundred eighty (180) days after Bank Closing.
Upon vacating such premises, the Assuming Bank shall relinquish and release to
the Receiver such premises and the Fixtures and the Furniture and Equipment
located thereon in the same condition as at Bank Closing, normal wear and tear
excepted. By failing to provide notice of its intention to vacate such premises
prior to the expiration of the option period specified in Section 4.6(b),
or by occupying such premises after the one hundred eighty (180)-day period
specified above in this paragraph (ii), the Assuming Bank shall, at the
Receiver’s option, (x) be deemed to have assumed all leases, obligations
and liabilities with respect to such premises (including any ground lease with
respect to the land on which premises are located), and leased Furniture and
Equipment and leased Fixtures located thereon in accordance with this
Section 4.6 (unless the Receiver previously repudiated any such lease),
and (y) be required to

 

19

 

purchase
all Furniture and Equipment and Fixtures owned by the Failed Bank at Fair
Market Value and located on such premises as of Bank Closing.

 

(h)            Furniture and Equipment and Certain Other Equipment. The Receiver hereby grants to the Assuming Bank an
option to purchase all Furniture and Equipment or any
telecommunications, data processing equipment (including hardware and software)
and check processing and similar operating equipment owned by the Failed Bank
at Fair Market Value and located at any leased Bank Premises that the Assuming
Bank elects to vacate or which it could have, but did not occupy, pursuant to
this Section 4.6; provided, that, the Assuming Bank shall
give the Receiver notice of its election to purchase such property at the time
it gives notice of its intention to vacate such Bank Premises or within ten
(10) days after Bank Closing for Bank Premises it could have, but did not,
occupy.

 

4.7            Agreement with Respect to Leased Data Processing Equipment

 

(a)             The Receiver
hereby grants to the Assuming Bank an exclusive option for the period of ninety
(90) days commencing the day after Bank Closing to accept an assignment from
the Receiver of any or all Data Processing Leases to the extent that such Data
Processing Leases can be assigned.

 

(b)            The Assuming Bank
shall (i) give written notice to the Receiver within the option period
specified in Section 4.7(a) of its intent to accept or decline an assignment or
sublease of any or all Data Processing Leases and promptly accept an assignment
or sublease of such Data Processing Leases, and (ii) give written notice
to the appropriate lessor(s) that it has accepted an assignment or
sublease of any such Data Processing Leases.

 

(c)             The Receiver
agrees to facilitate the assignment or sublease of Data Processing Leases or
the negotiation of new leases or license agreements by the Assuming Bank; provided,
that neither the Receiver nor the Corporation shall be obligated to
engage in litigation or make payments to the Assuming Bank or to any third
party in connection with facilitating any such assumption, assignment, sublease
or negotiation.

 

(d)            The Assuming Bank
agrees, during its period of use of any property subject to a Data Processing
Lease, to pay to the Receiver or to appropriate third parties at the direction
of the Receiver all operating costs with respect thereto and to comply with all
relevant terms of the applicable Data Processing Leases entered into by the
Failed Bank, including without limitation the timely payment of all rent,
taxes, fees, charges, utilities, insurance and assessments.

 

(e)             The Assuming Bank
shall, not later than fifty (50) days after giving the notice provided in
Section 4.7(b), (i) relinquish and release to the Receiver all
property subject to the relevant Data Processing Lease, in the same condition
as at Bank Closing, normal wear and tear excepted, or (ii) accept an
assignment or a sublease thereof or negotiate a new lease or license agreement
under this Section 4.7.

 

20

 

4.8            Agreement with Respect to Certain Existing Agreements.

 

(a)             Subject to the
provisions of Section 4.8(b), with respect to agreements existing as of
Bank Closing which provide for the rendering of services by or to the Failed
Bank, within ninety (90) days after Bank Closing, the Assuming Bank shall give
the Receiver written notice specifying whether it elects to assume or not to
assume each such agreement. Except as may be otherwise provided in this
Article IV, the Assuming Bank agrees to comply with the terms of each such
agreement for a period commencing on the day after Bank Closing and ending on:
(i) in the case of an agreement that provides for the rendering of
services by the Failed Bank, the date which is ninety (90) days after Bank
Closing, and (ii) in the case of an agreement that provides for the
rendering of services to the Failed Bank, the date which is thirty (30) days
after the Assuming Bank has given notice to the Receiver of its election not to
assume such agreement; provided, that the Receiver can reasonably
make such service agreements available to the Assuming Bank. The Assuming Bank
shall be deemed by the Receiver to have assumed agreements for which no
notification is timely given. The Receiver agrees to assign, transfer, convey,
and deliver to the Assuming Bank all right, title and interest of the Receiver,
if any, in and to agreements the Assuming Bank assumes hereunder. In the event
the Assuming Bank elects not to accept an assignment of any lease (or sublease)
or negotiate a new lease for leased Bank Premises under Section 4.6 and
does not otherwise occupy such premises, the provisions of this
Section 4.8(a) shall not apply to service agreements related to such
premises. The Assuming Bank agrees, during the period it has the use or benefit
of any such agreement, promptly to pay to the Receiver or to appropriate third
parties at the direction of the Receiver all operating costs with respect
thereto and to comply with all relevant terms of such agreement.

 

(b)            The provisions of
Section 4.8(a) regarding the Assuming Bank’s election to assume or
not assume certain agreements shall not apply to (i) agreements pursuant
to which the Failed Bank provides mortgage servicing for others or mortgage
servicing is provided to the Failed Bank by others, (ii) agreements that
are subject to Sections 4.1 through 4.7 and any insurance policy or bond
referred to in Section 3.5(a) or other agreement specified in
Section 3.5, and (iii) consulting, management or employment
agreements, if any, between the Failed Bank and its employees or other Persons.
Except as otherwise expressly set forth elsewhere in this Agreement, the
Assuming Bank does not assume any liabilities or acquire any rights under any
of the agreements described in this Section 4.8(b).

 

4.9            Informational Tax Reporting. The Assuming
Bank agrees to perform all obligations of the Failed Bank with respect to
Federal and State income tax informational reporting related to (i) the
Assets and the Liabilities Assumed, (ii) deposit accounts that were closed
and loans that were paid off or collateral obtained with respect thereto prior
to Bank Closing, (iii) miscellaneous payments made to vendors of the
Failed Bank, and (iv) any other asset or liability of the Failed Bank,
including, without limitation, loans not purchased and Deposits not assumed by
the Assuming Bank, as may be required by the Receiver.

 

4.10         Insurance. The Assuming
Bank agrees to obtain insurance coverage effective from and after Bank Closing,
including public liability, fire and extended coverage insurance acceptable to
the Receiver with respect to owned or leased Bank Premises that it occupies,
and all owned or leased Furniture and Equipment and Fixtures and leased data
processing equipment

 

21

 

(including
hardware and software) located thereon, in the event such insurance coverage is
not already in force and effect with respect to the Assuming Bank as the
insured as of Bank Closing. All such insurance shall, where appropriate (as
determined by the Receiver), name the Receiver as an additional insured.

 

4.11         Office
Space for Receiver and Corporation. For the period commencing on
the day following Bank Closing and ending on the one hundred eightieth (180th)
day thereafter, the Assuming Bank agrees to provide to the Receiver and the
Corporation, without charge, adequate and suitable office space (including
parking facilities and vault space), furniture, equipment (including
photocopying and telecopying machines), email accounts, network access and
technology resources (such as shared drive) and utilities (including local
telephone service and fax machines) at the Bank Premises occupied by the
Assuming Bank for their use in the discharge of their respective functions with
respect to the Failed Bank. In the event the Receiver and the Corporation determine
that the space provided is inadequate or unsuitable, the Receiver and the
Corporation may relocate to other quarters having adequate and suitable space
and the costs of relocation and any rental and utility costs for the balance of
the period of occupancy by the Receiver and the Corporation shall be borne by
the Assuming Bank. Additionally, the Assuming Bank agrees to pay such bills and
invoices on behalf of the Receiver and Corporation as the Receiver or
Corporation may direct for the period beginning on the date of Bank Closing and
ending on Settlement Date. Assuming Bank shall submit it requests for
reimbursement of such expenditures pursuant to Article VIII of this
Agreement.

 

4.12         Agreement
with Respect to Continuation of Group Health Plan Coverage for Former Employees
of the Failed Bank.

 

(a)             The Assuming
Bank agrees to assist the Receiver, as provided in this Section 4.12, in
offering individuals who were employees or former employees of the Failed Bank,
or any of its Subsidiaries, and who, immediately prior to Bank Closing, were
receiving, or were eligible to receive, health insurance coverage or health
insurance continuation coverage from the Failed Bank (“Eligible Individuals”),
the opportunity to obtain health insurance coverage in the Corporation’s FIA
Continuation Coverage Plan which provides for health insurance continuation
coverage to such Eligible Individuals who are qualified beneficiaries of the
Failed Bank as defined in Section 607 of the Employee Retirement Income
Security Act of 1974, as amended (respectively, “qualified beneficiaries” and
“ERISA”). The Assuming Bank shall consult with the Receiver and not later than
five (5) Business Days after Bank Closing shall provide written notice to
the Receiver of the number (if available), identity (if available) and
addresses (if available) of the Eligible Individuals who are qualified
beneficiaries of the Failed Bank and for whom a “qualifying event” (as defined
in Section 603 of ERISA) has occurred and with respect to whom the Failed
Bank’s obligations under Part 6 of Subtitle B of Title I of ERISA have not
been satisfied in full, and such other information as the Receiver may
reasonably require. The Receiver shall cooperate with the Assuming Bank in
order to permit it to prepare such notice and shall provide to the Assuming
Bank such data in its possession as may be reasonably required for purposes of
preparing such notice.

 

22

 

(b)            The Assuming
Bank shall take such further action to assist the Receiver in offering the
Eligible Individuals who are qualified beneficiaries of the Failed Bank the
opportunity to obtain health insurance coverage in the Corporation’s FIA
Continuation Coverage Plan as the Receiver may direct. All expenses incurred and
paid by the Assuming Bank (i) in connection with the obligations of the
Assuming Bank under this Section 4.12, and (ii) in providing health
insurance continuation coverage to any Eligible Individuals who are hired by
the Assuming Bank and such employees’ qualified beneficiaries shall be borne by
the Assuming Bank.

 

(c)             This
Section 4.12 is for the sole and exclusive benefit of the parties to this
Agreement, and for the benefit of no other Person (including any former
employee of the Failed Bank or any Subsidiary thereof or qualified beneficiary
of such former employee). Nothing in this Section 4.12 is intended by the
parties, or shall be construed, to give any Person (including any former
employee of the Failed Bank or any Subsidiary thereof or qualified beneficiary
of such former employee) other than the Corporation, the Receiver and the
Assuming Bank any legal or equitable right, remedy or claim under or with
respect to the provisions of this Section.

 

4.13         Agreement
with Respect to Interim Asset Servicing. At any time
after Bank Closing, the Receiver may establish on its books an asset
pool(s) and may transfer to such asset pool(s) (by means of
accounting entries on the books of the Receiver) all or any assets and
liabilities of the Failed Bank which are not acquired by the Assuming Bank,
including, without limitation, wholly unfunded Commitments and assets and
liabilities which may be acquired, funded or originated by the Receiver
subsequent to Bank Closing. The Receiver may remove assets (and liabilities)
from or add assets (and liabilities) to such pool(s) at any time in its
discretion. At the option of the Receiver, the Assuming Bank agrees to service,
administer, and collect such pool assets in accordance with and for the term
set forth in Exhibit 4.13 “Interim Asset Servicing Arrangement”.

 

4.14         Reserved.

 

4.15         Agreement
with Respect to Loss Sharing. The Assuming
Bank shall be entitled to require reimbursement from the Receiver for loss
sharing on certain loans in accordance with the Single Family Shared-Loss
Agreement attached hereto as Exhibit 4.15A and the Non-SF Shared-Loss
Agreement attached hereto as Exhibit 4.15B, collectively, the “Shared-Loss
Agreements.” The Loans that shall be subject to the Shared-Loss Agreements are
identified on the Schedule of Loans 4.15A and 4.15B attached hereto.

 

ARTICLE V

DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK

 

5.1            Payment of Checks, Drafts and Orders. Subject to Section 9.5, the Assuming Bank
agrees to pay all properly drawn checks, drafts and withdrawal orders of
depositors of the Failed Bank presented for payment, whether drawn on the check
or draft forms provided by the Failed Bank or by the Assuming Bank, to the
extent that the Deposit balances to the credit of the

 

23

 

respective
makers or drawers assumed by the Assuming Bank under this Agreement are
sufficient to permit the payment thereof, and in all other respects to
discharge, in the usual course of conducting a banking business, the duties and
obligations of the Failed Bank with respect to the Deposit balances due and
owing to the depositors of the Failed Bank assumed by the Assuming Bank under
this Agreement.

 

5.2            Certain Agreements Related to Deposits. Subject to Section 2.2, the Assuming Bank agrees
to honor the terms and conditions of any written escrow or mortgage servicing
agreement or other similar agreement relating to a Deposit liability assumed by
the Assuming Bank pursuant to this Agreement.

 

5.3            Notice to Depositors.

 

(a)             Within seven (7) days
after Bank Closing, the Assuming Bank shall give (i) notice to depositors
of the Failed Bank of its assumption of the Deposit liabilities of the Failed
Bank, and (ii) any notice required under Section 2.2, by mailing to
each such depositor a notice with respect to such assumption and by advertising
in a newspaper of general circulation in the county or counties in which the
Failed Bank was located. The Assuming Bank agrees that it will obtain prior
approval of all such notices and advertisements from counsel for the Receiver
and that such notices and advertisements shall not be mailed or published until
such approval is received.

 

(b)            The Assuming Bank
shall give notice by mail to depositors of the Failed Bank concerning the
procedures to claim their deposits, which notice shall be provided to the
Assuming Bank by the Receiver or the Corporation. Such notice shall be included
with the notice to depositors to be mailed by the Assuming Bank pursuant to
Section 5.3(a).

 

(c)             If the Assuming
Bank proposes to charge fees different from those charged by the Failed Bank
before it establishes new deposit account relationships with the depositors of
the Failed Bank, the Assuming Bank shall give notice by mail of such changed
fees to such depositors.

 

ARTICLE VI

RECORDS

 

6.1            Transfer of Records.

 

(a)             In accordance
with Section 3.1, the Receiver assigns, transfers, conveys and delivers to
the Assuming Bank the following Records pertaining to the Deposit liabilities
of the Failed Bank assumed by the Assuming Bank under this Agreement, except as
provided in Section 6.4:

 

(i)             signature cards, orders, contracts between the
Failed Bank and its depositors and Records of similar character;

 

24

 

(ii)          passbooks of depositors held by the Failed Bank,
deposit slips, cancelled checks and withdrawal orders representing charges to
accounts of depositors; 

 

and
the following Records pertaining to the Assets:

 

(iii)       records of deposit balances carried with other
banks, bankers or trust companies;

 

(iv)      Loan and
collateral records and Credit Files and other documents;

 

(v)         deeds,
mortgages, abstracts, surveys, and other instruments or records of title
pertaining to real estate or real estate mortgages;

 

(vi)      signature
cards, agreements and records pertaining to Safe Deposit Boxes, if any; and

 

(vii)   records
pertaining to the credit card business, trust business or safekeeping business
of the Failed Bank, if any.

 

(b)            The Receiver,
at its option, may assign and transfer to the Assuming Bank by a single blanket
assignment or otherwise, as soon as practicable after Bank Closing, any other
Records not assigned and transferred to the Assuming Bank as provided in this
Agreement, including but not limited to loan disbursement checks, general ledger
tickets, official bank checks, proof transactions (including proof tapes) and
paid out loan files.

 

6.2            Delivery of Assigned Records. The Receiver shall deliver
to the Assuming Bank all Records described in
(i) Section 6.1(a) as soon as practicable on or after the date
of this Agreement, and (ii) Section 6.1(b) as soon as
practicable after making any assignment described therein.

 

6.3            Preservation of Records. The Assuming Bank agrees
that it will preserve and maintain for the joint benefit of the Receiver, the
Corporation and the Assuming Bank, all Records of which it has custody for such
period as either the Receiver or the Corporation in its discretion may require,
until directed otherwise, in writing, by the Receiver or Corporation.
The Assuming Bank shall have the primary responsibility to respond to
subpoenas, discovery requests, and other similar official inquiries with
respect to the Records of which it has custody.

 

6.4            Access to Records; Copies. The Assuming Bank agrees
to permit the Receiver and the Corporation access to all Records of which the
Assuming Bank has custody, and to use, inspect, make extracts from or request
copies of any such Records in the manner and to the extent requested, and to
duplicate, in the discretion of the Receiver or the Corporation, any Record in
the form of microfilm or microfiche pertaining to Deposit account
relationships; provided, that in the event that the Failed Bank
maintained one or more duplicate copies of such microfilm or microfiche
Records, the Assuming Bank hereby assigns, transfers, and conveys to the
Corporation one such duplicate copy of each such Record without cost to the
Corporation,

 

25

 

and
agrees to deliver to the Corporation all Records assigned and transferred to
the Corporation under this Article VI as soon as practicable on or after
the date of this Agreement. The party requesting a copy of any Record shall
bear the cost (based on standard accepted industry charges to the extent
applicable, as determined by the Receiver) for providing such duplicate
Records. A copy of each Record requested shall be provided as soon as
practicable by the party having custody thereof.

 

ARTICLE VII

FIRST LOSS TRANCHE

 

The
Assuming Bank has submitted to the Receiver an asset premium (discount) bid of
($ 35,990,000.00) and a Deposit
premium bid of 1.1%. The Deposit
premium bid will be applied to the total of all Assumed Deposits except for
brokered, CDARS, and any market place or similar subscription services
Deposits. The First Loss Tranche shall be determined by adding (i) the
asset premium (discount) bid, (ii) the Deposit premium bid, and
(iii) the Equity Adjustment. If the First Loss Tranche is a positive
number, then this is the Losses on Single Family Shared-Loss Loans and Net
Charge-offs on Shared Loss Assets that the Assuming Bank will incur before
loss-sharing commences under Exhibits 4.15A and 4.15B. If the First Loss
Tranche is a negative number, the Corporation shall pay such amount by wire
transfer to the Assuming Bank by the end of the first business day following
Bank Closing and loss sharing shall commence immediately.

 

ARTICLE VIII

ADJUSTMENTS

 

8.1 Pro Forma Statement. The Receiver, as soon as
practicable after Bank Closing, in accordance with the best information then
available, shall provide to the Assuming Bank a pro forma statement reflecting
any adjustments of such liabilities and assets as may be necessary. Such pro
forma statement shall take into account, to the extent possible,
(i) liabilities and assets of a nature similar to those contemplated by
Section 2.1 or Section 3.1, respectively, which at Bank Closing were
carried in the Failed Bank’s suspense accounts, (ii) accruals as of Bank
Closing for all income related to the assets and business of the Failed Bank
acquired by the Assuming Bank hereunder, whether or not such accruals were
reflected on the Accounting Records of the Failed Bank in the normal course of
its operations, and (iii) adjustments to determine the Book Value of any
investment in an Acquired Subsidiary and related accounts on the “bank only”
(unconsolidated) balance sheet of the Failed Bank based on the equity method of
accounting, whether or not the Failed Bank used the equity method of accounting
for investments in subsidiaries, except that the resulting amount cannot be
less than the Acquired Subsidiary’s recorded equity as of Bank Closing as
reflected on the Accounting Records of the Acquired Subsidiary. Any Loan
purchased by the Assuming Bank pursuant to Section 3.1 which the Failed
Bank charged off during the period following the date of the most recent
pertinent data made available to the Assuming Bank as part of the Information
Package to Bank Closing shall

 

26

 

be
deemed not to be charged off for the purposes of the pro forma statement, and
the purchase price shall be determined pursuant to Section 3.2.

 

8.2            Correction of Errors and Omissions; Other
Liabilities.

 

(a)             In the event
any bookkeeping omissions or errors are discovered in preparing any pro forma
statement or in completing the transfers and assumptions contemplated hereby,
the parties hereto agree to correct such errors and omissions, it being
understood that, as far as practicable, all adjustments will be made consistent
with the judgments, methods, policies or accounting principles utilized by the
Failed Bank in preparing and maintaining Accounting Records, except that
adjustments made pursuant to this Section 8.2 (a) are not intended to
bring the Accounting Records of the Failed Bank into accordance with generally
accepted accounting principles.

 

(b)            If the Receiver
discovers at any time subsequent to the date of this Agreement that any claim
exists against the Failed Bank which is of such a nature that it would have been
included in the liabilities assumed under Article II had the existence of
such claim or the facts giving rise thereto been known as of Bank Closing, the
Receiver may, in its discretion, at any time, require that such claim be
assumed by the Assuming Bank in a manner consistent with the intent of this
Agreement. The Receiver will make appropriate adjustments to the pro forma
statement provided by the Receiver to the Assuming Bank pursuant to
Section 8.1 as may be necessary.

 

8.3            Payments. The Receiver agrees
to cause to be paid to the Assuming Bank, or the Assuming Bank agrees to pay to
the Receiver, as the case may be, on the Settlement Date, a payment in an
amount which reflects net adjustments (including any costs, expenses and fees
associated with determinations of value as provided in this Agreement) made
pursuant to Section 8.1 or Section 8.2, plus interest as provided in
Section 8.4. The Receiver and the Assuming Bank agree to effect on the
Settlement Date any further transfer of assets to or assumption of liabilities
or claims by the Assuming Bank as may be necessary in accordance with
Section 8.1 or Section 8.2.

 

8.4            Interest. Any amounts paid under Section 8.3 or
Section 8.5, shall bear interest for the period from and including the day
following Bank Closing to and including the day preceding the payment at the
Settlement Interest Rate.

 

8.5            Subsequent Adjustments. In the event
that the Assuming Bank or the Receiver discovers any errors or omissions as
contemplated by Section 8.2 or any error with respect to the payment made
under Section 8.3 after the Settlement Date, the Assuming Bank and the
Receiver agree to promptly correct any such errors or omissions, make any
payments and effect any transfers or assumptions as may be necessary to reflect
any such correction plus interest as provided in Section 8.4.

 

27

 

 

ARTICLE IX

CONTINUING COOPERATION

 

9.1          General
Matters.  The parties hereto agree
that they will, in good faith and with their best efforts, cooperate with each
other to carry out the transactions contemplated by this Agreement and to
effect the purposes hereof.

 

9.2          Additional
Title Documents.  The Receiver, the
Corporation and the Assuming Bank each agree, at any time, and from time to
time, upon the request of any party hereto, to execute and deliver such
additional instruments and documents of conveyance as shall be reasonably
necessary to vest in the appropriate party its full legal or equitable title in
and to the property transferred pursuant to this Agreement or to be transferred
in accordance herewith. The Assuming Bank shall prepare such instruments and
documents of conveyance (in form and substance satisfactory to the Receiver) as
shall be necessary to vest title to the Assets in the Assuming Bank. The
Assuming Bank shall be responsible for recording such instruments and documents
of conveyance at its own expense.

 

9.3          Claims and
Suits.

 

(a)           The Receiver
shall have the right, in its discretion, to (i) defend or settle any claim
or suit against the Assuming Bank with respect to which the Receiver has
indemnified the Assuming Bank in the same manner and to the same extent as
provided in Article XII, and (ii) defend or settle any claim or suit
against the Assuming Bank with respect to any Liability Assumed, which claim or
suit may result in a loss to the Receiver arising out of or related to this
Agreement, or which existed against the Failed Bank on or before Bank Closing.
The exercise by the Receiver of any rights under this Section 9.3
(a) shall not release the Assuming Bank with respect to any of its
obligations under this Agreement.

 

(b)           In the event
any action at law or in equity shall be instituted by any Person against the
Receiver and the Corporation as codefendants with respect to any asset of the
Failed Bank retained or acquired pursuant to this Agreement by the Receiver,
the Receiver agrees, at the request of the Corporation, to join with the
Corporation in a petition to remove the action to the United States District
Court for the proper district. The Receiver agrees to institute, with or
without joinder of the Corporation as coplaintiff, any action with respect to
any such retained or acquired asset or any matter connected therewith whenever
notice requiring such action shall be given by the Corporation to the Receiver.

 

9.4          Payment of
Deposits.  In the event any depositor
does not accept the obligation of the Assuming Bank to pay any Deposit
liability of the Failed Bank assumed by the Assuming Bank pursuant to this
Agreement and asserts a claim against the Receiver for all or any portion of
any such Deposit liability, the Assuming Bank agrees on demand to provide to
the Receiver funds sufficient to pay such claim in an amount not in excess of
the Deposit liability reflected on the books of the Assuming Bank at the time
such claim is made. Upon payment by the Assuming Bank to the Receiver of such amount,
the Assuming Bank shall be discharged from any further obligation under this
Agreement to pay to any such depositor the amount of such Deposit liability
paid to the Receiver.

 

28

 

9.5          Withheld
Payments.  At any time, the Receiver or
the Corporation may, in its discretion, determine that all or any portion of
any deposit balance assumed by the Assuming Bank pursuant to this Agreement
does not constitute a “Deposit” (or otherwise, in its discretion, determine
that it is the best interest of the Receiver or Corporation to withhold all or
any portion of any deposit), and may direct the Assuming Bank to withhold
payment of all or any portion of any such deposit balance. Upon such direction,
the Assuming Bank agrees to hold such deposit and not to make any payment of
such deposit balance to or on behalf of the depositor, or to itself, whether by
way of transfer, set-off, or otherwise. The Assuming Bank agrees to maintain
the “withheld payment” status of any such deposit balance until directed in
writing by the Receiver or the Corporation as to its disposition. At the
direction of the Receiver or the Corporation, the Assuming Bank shall return
all or any portion of such deposit balance to the Receiver or the Corporation,
as appropriate, and thereupon the Assuming Bank shall be discharged from any
further liability to such depositor with respect to such returned deposit
balance. If such deposit balance has been paid to the depositor prior to a
demand for return by the Corporation or the Receiver, and payment of such
deposit balance had not been previously withheld pursuant to this Section, the
Assuming Bank shall not be obligated to return such deposit balance to the
Receiver or the Corporation. The Assuming Bank shall be obligated to reimburse
the Corporation or the Receiver, as the case may be, for the amount of any
deposit balance or portion thereof paid by the Assuming Bank in contravention
of any previous direction to withhold payment of such deposit balance or return
such deposit balance the payment of which was withheld pursuant to this
Section.

 

9.6          Proceedings
with Respect to Certain Assets and Liabilities.

 

(a)           In connection
with any investigation, proceeding or other matter with respect to any asset or
liability of the Failed Bank retained by the Receiver, or any asset of the
Failed Bank acquired by the Receiver pursuant to this Agreement, the Assuming
Bank shall cooperate to the extent reasonably required by the Receiver.

 

(b)           In addition to
its obligations under Section 6.4, the Assuming Bank shall provide
representatives of the Receiver access at reasonable times and locations
without other limitation or qualification to (i) its directors, officers,
employees and agents and those of the Subsidiaries acquired by the Assuming
Bank, and (ii) its books and records, the books and records of such
Subsidiaries and all Credit Files, and copies thereof. Copies of books, records
and Credit Files shall be provided by the Assuming Bank as requested by the Receiver
and the costs of duplication thereof shall be borne by the Receiver.

 

(c)           Not later than
ten (10) days after the Put Notice pursuant to Section 3.4 or the
date of the notice of transfer of any Loan by the Assuming Bank to the Receiver
pursuant to Section 3.6, the Assuming Bank shall deliver to the Receiver
such documents with respect to such Loan as the Receiver may request, including
without limitation the following: (i) all related Credit Documents (other
than certificates, notices and other ancillary documents), (ii) a
certificate setting forth the principal amount on the date of the transfer and
the amount of interest, fees and other charges then accrued and unpaid thereon,
and any restrictions on transfer to which any such Loan is subject, and (iii) all
Credit Files, and all documents, microfiche, microfilm and computer

 

29

 

records
(including but not limited to magnetic tape, disc storage, card forms and
printed copy) maintained by, owned by, or in the possession of the Assuming
Bank or any Affiliate of the Assuming Bank relating to the transferred Loan.

 

9.7          Information.  The Assuming
Bank promptly shall provide to the Corporation such other information,
including financial statements and computations, relating to the performance of
the provisions of this Agreement as the Corporation or the Receiver may request
from time to time, and, at the request of the Receiver, make available
employees of the Failed Bank employed or retained by the Assuming Bank to assist
in preparation of the pro forma statement pursuant to Section 8.1.

 

ARTICLE X

CONDITION PRECEDENT

 

The obligations of the parties to this Agreement are subject to the
Receiver and the Corporation having received at or before Bank Closing evidence
reasonably satisfactory to each of any necessary approval, waiver, or other
action by any governmental authority, the board of directors of the Assuming
Bank, or other third party, with respect to this Agreement and the transactions
contemplated hereby, the closing of the Failed Bank and the appointment of the
Receiver, the chartering of the Assuming Bank, and any agreements, documents,
matters or proceedings contemplated hereby or thereby.

 

ARTICLE XI

REPRESENTATIONS AND WARRANTIES OF THE ASSUMING BANK

 

The Assuming Bank represents and warrants to the Corporation and the
Receiver as follows:

 

(a)           Corporate
Existence and Authority.  The Assuming Bank
(i) is duly organized, validly existing and in good standing under the
laws of its Chartering Authority and has full power and authority to own and
operate its properties and to conduct its business as now conducted by it, and
(ii) has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The Assuming Bank has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement and the performance of the transactions contemplated hereby.

 

 

(b)           Third Party
Consents.  No governmental authority or
other third party consents (including but not limited to approvals, licenses,
registrations or declarations) are required in connection with the execution,
delivery or performance by the Assuming Bank of this Agreement, other than such
consents as have been duly obtained and are in full force and effect.

 

(c)           Execution
and Enforceability.  This Agreement has been duly
executed and delivered by the Assuming Bank and when this Agreement has been
duly authorized, executed and delivered by the Corporation and the Receiver,
this Agreement will constitute the legal, valid and binding obligation of the
Assuming Bank, enforceable in accordance with its terms.

 

30

 

(d)           Compliance
with Law.

 

(i)            Neither the
Assuming Bank nor any of its Subsidiaries is in violation of any statute,
regulation, order, decision, judgment or decree of, or any restriction imposed
by, the United States of America, any State, municipality or other political
subdivision or any agency of any of the foregoing, or any court or other tribunal
having jurisdiction over the Assuming Bank or any of its Subsidiaries or any
assets of any such Person, or any foreign government or agency thereof having
such jurisdiction, with respect to the conduct of the business of the Assuming
Bank or of any of its Subsidiaries, or the ownership of the properties of the
Assuming Bank or any of its Subsidiaries, which, either individually or in the
aggregate with all other such violations, would materially and adversely affect
the business, operations or condition (financial or otherwise) of the Assuming
Bank or the ability of the Assuming Bank to perform, satisfy or observe any
obligation or condition under this Agreement.

 

(ii)           Neither the
execution and delivery nor the performance by the Assuming Bank of this Agreement
will result in any violation by the Assuming Bank of, or be in conflict with,
any provision of any applicable law or regulation, or any order, writ or decree
of any court or governmental authority.

 

e)             Representations Remain True.  The Assuming Bank represents
and warrants that it has executed and delivered to the Corporation a Purchaser
Eligibility Certification and Confidentiality Agreement and that all
information provided and representations made by or on behalf of the Assuming
Bank in connection with this Agreement and the transactions contemplated
hereby, including, but not limited to, the Purchaser Eligibility Certification
and Confidentiality Agreement (which are affirmed and ratified hereby) are and
remain true and correct in all material respects and do not fail to state any
fact required to make the information contained therein not misleading.

 

ARTICLE XII

INDEMNIFICATION

 

12.1        Indemnification
of Indemnitees.  From and after Bank Closing
and subject to the limitations set forth in this Section and
Section 12.6 and compliance by the Indemnitees with Section 12.2, the
Receiver agrees to indemnify and hold harmless the Indemnitees against any and
all costs, losses, liabilities, expenses (including attorneys’ fees) incurred
prior to the assumption of defense by the Receiver pursuant to paragraph
(d) of Section 12.2, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with claims against any
Indemnitee based on liabilities of the Failed Bank that are not assumed by the
Assuming Bank pursuant to this Agreement or subsequent to the execution hereof
by the Assuming Bank or any Subsidiary or Affiliate of the Assuming Bank for
which indemnification is provided hereunder in (a) of this
Section 12.1, subject to certain exclusions as provided in (b) of
this Section 12.1:

 

31

 

(a)           

 

(1)           claims based on
the rights of any shareholder or former shareholder as such of (x) the
Failed Bank, or (y) any Subsidiary or Affiliate of the Failed Bank;

 

(2)           claims based on
the rights of any creditor as such of the Failed Bank, or any creditor as such
of any director, officer, employee or agent of the Failed Bank, with respect to
any indebtedness or other obligation of the Failed Bank arising prior to Bank
Closing;

 

(3)           claims based on
the rights of any present or former director, officer, employee or agent as
such of the Failed Bank or of any Subsidiary or Affiliate of the Failed Bank;

 

(4)           claims based on
any action or inaction prior to Bank Closing of the Failed Bank, its directors,
officers, employees or agents as such, or any Subsidiary or Affiliate of the
Failed Bank, or the directors, officers, employees or agents as such of such
Subsidiary or Affiliate;

 

(5)           claims based on
any malfeasance, misfeasance or nonfeasance of the Failed Bank, its directors,
officers, employees or agents with respect to the trust business of the Failed
Bank, if any;

 

(6)           claims based on
any failure or alleged failure (not in violation of law) by the Assuming Bank
to continue to perform any service or activity previously performed by the
Failed Bank which the Assuming Bank is not required to perform pursuant to this
Agreement or which arise under any contract to which the Failed Bank was a
party which the Assuming Bank elected not to assume in accordance with this
Agreement and which neither the Assuming Bank nor any Subsidiary or Affiliate
of the Assuming Bank has assumed subsequent to the execution hereof;

 

(7)           claims arising
from any action or inaction of any Indemnitee, including for purposes of this
Section 12.1 (a)(7) the former officers or employees of the Failed
Bank or of any Subsidiary or Affiliate of the Failed Bank that is taken upon
the specific written direction of the Corporation or the Receiver, other
than any action or inaction taken in a manner constituting bad faith,
gross negligence or willful misconduct; and

 

(8)           claims based on
the rights of any depositor of the Failed Bank whose deposit has been accorded
“withheld payment” status and/or returned to the Receiver or Corporation in
accordance with Section 9.5 and/or has become an “unclaimed deposit” or
has been returned to the Corporation or the Receiver in accordance with
Section 2.3;

 

(b)           provided, that,
with respect to this Agreement, except for paragraphs (7) and (8) of
Section 12.1 (a), no indemnification will be provided under this Agreement
for any:

 

(1)           judgment or fine
against, or any amount paid in settlement (without the written approval of the
Receiver) by, any Indemnitee in connection with any action that seeks damages
against any Indemnitee (a “counterclaim”) arising with respect to any Asset and
based on any action or inaction of either the Failed Bank, its directors,
officers, employees or agents as such prior to Bank Closing, unless any such
judgment, fine or amount paid in settlement exceeds the

 

32

 

greater
of (i) the Repurchase Price of such Asset, or (ii) the monetary
recovery sought on such Asset by the Assuming Bank in the cause of action from
which the counterclaim arises; and in such event the Receiver will provide
indemnification only in the amount of such excess; and no indemnification will
be provided for any costs or expenses other than any costs or expenses
(including attorneys’ fees) which, in the determination of the Receiver, have
been actually and reasonably incurred by such Indemnitee in connection with the
defense of any such counterclaim; and it is expressly agreed that the Receiver
reserves the right to intervene, in its discretion, on its behalf and/or on
behalf of the Receiver, in the defense of any such counterclaim;

 

(2)           claims with
respect to any liability or obligation of the Failed Bank that is expressly
assumed by the Assuming Bank pursuant to this Agreement or subsequent to the
execution hereof by the Assuming Bank or any Subsidiary or Affiliate of the
Assuming Bank;

 

(3)           claims with
respect to any liability of the Failed Bank to any present or former employee
as such of the Failed Bank or of any Subsidiary or Affiliate of the Failed
Bank, which liability is expressly assumed by the Assuming Bank pursuant to
this Agreement or subsequent to the execution hereof by the Assuming Bank or
any Subsidiary or Affiliate of the Assuming Bank;

 

(4)           claims based on
the failure of any Indemnitee to seek recovery of damages from the Receiver for
any claims based upon any action or inaction of the Failed Bank, its directors,
officers, employees or agents as fiduciary, agent or custodian prior to Bank
Closing;

 

(5)           claims based on
any violation or alleged violation by any Indemnitee of the antitrust,
branching, banking or bank holding company or securities laws of the United
States of America or any State thereof;

 

(6)           claims based on
the rights of any present or former creditor, customer, or supplier as such of
the Assuming Bank or any Subsidiary or Affiliate of the Assuming Bank;

 

(7)           claims based on
the rights of any present or former shareholder as such of the Assuming Bank or
any Subsidiary or Affiliate of the Assuming Bank regardless of whether any such
present or former shareholder is also a present or former shareholder of the
Failed Bank;

 

(8)           claims, if the
Receiver determines that the effect of providing such indemnification would be
to (i) expand or alter the provisions of any warranty or disclaimer
thereof provided in Section 3.3 or any other provision of this Agreement,
or (ii) create any warranty not expressly provided under this Agreement;

 

(9)           claims which
could have been enforced against any Indemnitee had the Assuming Bank not
entered into this Agreement;

 

(10)         claims based on
any liability for taxes or fees assessed with respect to the consummation of
the transactions contemplated by this Agreement, including without limitation

 

33

 

any
subsequent transfer of any Assets or Liabilities Assumed to any Subsidiary or
Affiliate of the Assuming Bank;

 

(11)         except as
expressly provided in this Article XII, claims based on any action or
inaction of any Indemnitee, and nothing in this Agreement shall be construed to
provide indemnification for (i) the Failed Bank, (ii) any Subsidiary
or Affiliate of the Failed Bank, or (iii) any present or former director,
officer, employee or agent of the Failed Bank or its Subsidiaries or
Affiliates; provided, that the Receiver, in its discretion, may
provide indemnification hereunder for any present or former director, officer,
employee or agent of the Failed Bank or its Subsidiaries or Affiliates who is
also or becomes a director, officer, employee or agent of the Assuming Bank or
its Subsidiaries or Affiliates;

 

(12)         claims or
actions which constitute a breach by the Assuming Bank of the representations
and warranties contained in Article XI;

 

(13)         claims arising
out of or relating to the condition of or generated by an Asset arising from or
relating to the presence, storage or release of any hazardous or toxic
substance, or any pollutant or contaminant, or condition of such Asset which
violate any applicable Federal, State or local law or regulation concerning
environmental protection; and

 

(14)         claims based
on, related to or arising from any asset, including a loan, acquired or
liability assumed by the Assuming Bank, other than pursuant to this Agreement.

 

12.2        Conditions
Precedent to Indemnification. It shall be a condition
precedent to the obligation of the Receiver to indemnify any Person pursuant to
this Article XII that such Person shall, with respect to any claim made or
threatened against such Person for which such Person is or may be entitled to
indemnification hereunder:

 

(a)           give written
notice to the Regional Counsel (Litigation Branch) of the Corporation in the
manner and at the address provided in Section 13.7 of such claim as soon
as practicable after such claim is made or threatened; provided, that
notice must be given on or before the date which is six (6) years from the
date of this Agreement;

 

(b)           provide to the
Receiver such information and cooperation with respect to such claim as the
Receiver may reasonably require;

 

(c)           cooperate and
take all steps, as the Receiver may reasonably require, to preserve and protect
any defense to such claim;

 

(d)           in the event
suit is brought with respect to such claim, upon reasonable prior notice,
afford to the Receiver the right, which the Receiver may exercise in its sole
discretion, to conduct the investigation, control the defense and effect
settlement of such claim, including without limitation the right to designate
counsel and to control all negotiations, litigation, arbitration, settlements,
compromises and appeals of any such claim, all of which shall be at the expense
of the Receiver; provided, that the Receiver shall have notified
the Person claiming

 

34

 

indemnification
in writing that such claim is a claim with respect to which the Person claiming
indemnification is entitled to indemnification under this Article XII;

 

(e)           not incur any
costs or expenses in connection with any response or suit with respect to such
claim, unless such costs or expenses were incurred upon the written direction
of the Receiver; provided, that the Receiver shall not be
obligated to reimburse the amount of any such costs or expenses unless such
costs or expenses were incurred upon the written direction of the Receiver;

 

(f)            not release or
settle such claim or make any payment or admission with respect thereto, unless
the Receiver consents in writing thereto, which consent shall not be
unreasonably withheld; provided, that the Receiver shall not be
obligated to reimburse the amount of any such settlement or payment unless such
settlement or payment was effected upon the written direction of the Receiver;
and

 

(g)           take reasonable
action as the Receiver may request in writing as necessary to preserve, protect
or enforce the rights of the indemnified Person against any Primary Indemnitor.

 

12.3        No
Additional Warranty. Nothing in this
Article XII shall be construed or deemed to (i) expand or otherwise
alter any warranty or disclaimer thereof provided under Section 3.3 or any
other provision of this Agreement with respect to, among other matters, the
title, value, collectibility, genuineness, enforceability or condition of any
(x) Asset, or (y) asset of the Failed Bank purchased by the Assuming
Bank subsequent to the execution of this Agreement by the Assuming Bank or any
Subsidiary or Affiliate of the Assuming Bank, or (ii) create any warranty
not expressly provided under this Agreement with respect thereto.

 

12.4        Indemnification
of Receiver and Corporation. From and after Bank
Closing, the Assuming Bank agrees to indemnify and hold harmless the
Corporation and the Receiver and their respective directors, officers,
employees and agents from and against any and all costs, losses, liabilities,
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with any of the
following:

 

(a)           claims based on
any and all liabilities or obligations of the Failed Bank assumed by the
Assuming Bank pursuant to this Agreement or subsequent to the execution hereof
by the Assuming Bank or any Subsidiary or Affiliate of the Assuming Bank,
whether or not any such liabilities subsequently are sold and/or transferred,
other than any claim based upon any action or inaction of any Indemnitee as
provided in paragraph (7) or (8) of Section 12.1 (a); and

 

(b)           claims based on
any act or omission of any Indemnitee (including but not limited to claims of
any Person claiming any right or title by or through the Assuming Bank with
respect to Assets transferred to the Receiver pursuant to Section 3.4 or
3.6), other than any action or inaction of any Indemnitee as provided in
paragraph (7) or (8) of Section 12.1 (a).

 

12.5        Obligations
Supplemental. The obligations of the
Receiver, and the Corporation as guarantor in accordance with
Section 12.7, to provide indemnification under this Article XII are
to supplement any amount payable by any Primary Indemnitor to the Person
indemnified

 

35

 

under
this Article XII. Consistent with that intent, the Receiver agrees only to
make payments pursuant to such indemnification to the extent not payable by a
Primary Indemnitor. If the aggregate amount of payments by the Receiver, or the
Corporation as guarantor in accordance with Section 12.7, and all Primary
Indemnitors with respect to any item of indemnification under this
Article XII exceeds the amount payable with respect to such item, such
Person being indemnified shall notify the Receiver thereof and, upon the
request of the Receiver, shall promptly pay to the Receiver, or the Corporation
as appropriate, the amount of the Receiver’s (or Corporation’s) payments to the
extent of such excess.

 

12.6        Criminal
Claims.  Notwithstanding any
provision of this Article XII to the contrary, in the event that any
Person being indemnified under this Article XII shall become involved in
any criminal action, suit or proceeding, whether judicial, administrative or
investigative, the Receiver shall have no obligation hereunder to indemnify
such Person for liability with respect to any criminal act or to the extent any
costs or expenses are attributable to the defense against the allegation of any
criminal act, unless (i) the Person is successful on the merits or otherwise
in the defense against any such action, suit or proceeding, or (ii) such
action, suit or proceeding is terminated without the imposition of liability on
such Person.

 

12.7        Limited
Guaranty of the Corporation. The Corporation
hereby guarantees performance of the Receiver’s obligation to indemnify the
Assuming Bank as set forth in this Article XII. It is a condition to the
Corporation’s obligation hereunder that the Assuming Bank shall comply in all
respects with the applicable provisions of this Article XII. The
Corporation shall be liable hereunder only for such amounts, if any, as the
Receiver is obligated to pay under the terms of this Article XII but shall
fail to pay. Except as otherwise provided above in this Section 12.7,
nothing in this Article XII is intended or shall be construed to create
any liability or obligation on the part of the Corporation, the United States
of America or any department or agency thereof under or with respect to this
Article XII, or any provision hereof, it being the intention of the
parties hereto that the obligations undertaken by the Receiver under this
Article XII are the sole and exclusive responsibility of the Receiver and
no other Person or entity.

 

12.8        Subrogation. Upon payment by the Receiver, or the Corporation as
guarantor in accordance with Section 12.7, to any Indemnitee for any
claims indemnified by the Receiver under this Article XII, the Receiver,
or the Corporation as appropriate, shall become subrogated to all rights of the
Indemnitee against any other Person to the extent of such payment.

 

ARTICLE XIII

MISCELLANEOUS

 

13.1        Entire
Agreement.  This Agreement embodies the
entire agreement of the parties hereto in relation to the subject matter herein
and supersedes all prior understandings or agreements, oral or written, between
the parties.

 

13.2        Headings.  The headings
and subheadings of the Table of Contents, Articles and Sections contained in
this Agreement, except the terms identified for definition in Article I
and

 

36

 

elsewhere
in this Agreement, are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or any provision hereof.

 

13.3        Counterparts. This Agreement
may be executed in any number of counterparts and by the duly authorized
representative of a different party hereto on separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same Agreement.

 

13.4        GOVERNING
LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAW
OF THE UNITED STATES OF AMERICA, AND IN THE ABSENCE OF CONTROLLING FEDERAL LAW,
IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MAIN OFFICE OF THE FAILED
BANK IS LOCATED.

 

13.5        Successors. All terms and
conditions of this Agreement shall be binding on the successors and assigns of
the Receiver, the Corporation and the Assuming Bank. Except as otherwise
specifically provided in this Agreement, nothing expressed or referred to in
this Agreement is intended or shall be construed to give any Person other than
the Receiver, the Corporation and the Assuming Bank any legal or equitable
right, remedy or claim under or with respect to this Agreement or any
provisions contained herein, it being the intention of the parties hereto that
this Agreement, the obligations and statements of responsibilities hereunder,
and all other conditions and provisions hereof are for the sole and exclusive
benefit of the Receiver, the Corporation and the Assuming Bank and for the
benefit of no other Person.

 

13.6        Modification;
Assignment. No amendment or other
modification, rescission, release, or assignment of any part of this Agreement
shall be effective except pursuant to a written agreement subscribed by the
duly authorized representatives of the parties hereto.

 

13.7        Notice. Any notice,
request, demand, consent, approval or other communication to any party hereto
shall be effective when received and shall be given in  writing, and
delivered in person against receipt therefore, or sent by certified mail,
postage prepaid, courier service, telex, facsimile transmission or email to
such party (with copies as indicated below) at its address set forth below or at
such other address as it shall hereafter furnish in writing to the other
parties. All such notices and other communications shall be deemed given on the
date received by the addressee.

 

37

 

Assuming
Bank

 

Wilshire
State Bank

3200
Wilshire Blvd.

Suite 1400

Los
Angeles, California 90010

 

 

	
  Attention:
  

  	
   

  	
  Alex
  Ko

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Joanne
  Kim

  
	
   

  	
   

  	
  3200
  Wilshire Blvd.

  
	
   

  	
   

  	
  Suite 1400

  
	
   

  	
   

  	
  Los
  Angeles, California 90010

  
					

 

Receiver
and Corporation

 

Federal
Deposit Insurance Corporation,

Receiver
of Mirae Bank

40
Pacifica

Irvine,
California 92618

 

Attention:
Settlement Manager

 

	
  with
  copy to:

  	
  Federal
  Deposit Insurance Corporation

  
	
   

  	
  Receiver
  of Mirae Bank

  
	
   

  	
  1601
  Bryan St., Suite 1700

  
	
   

  	
  Dallas,
  Texas 75201

  
	
   

  	
  Attention:
  Regional Counsel (Litigation Branch)

  

 

and
with respect to notice under Article XII:

 

Federal
Deposit Insurance Corporation

Receiver
of Mirae Bank

1601
Bryan Street, Suite 1700

Dallas,
Texas 75201

Attention:
Regional Counsel (Litigation Branch)

 

13.8        Manner
of Payment. All payments due under this Agreement shall
be in lawful money of the United States of America in immediately available
funds as each party hereto may specify to the other parties; provided, that in the event
the Receiver or the Corporation is obligated to make any payment hereunder in
the amount of $25,000.00 or less, such payment may be made by check.

 

38

 

13.9        Costs,
Fees and Expenses. Except as otherwise specifically provided herein,
each party hereto agrees to pay all costs, fees and expenses which it has
incurred in connection with or incidental to the matters contained in this
Agreement, including without limitation any fees and disbursements to its
accountants and counsel; provided, that the Assuming Bank shall
pay all fees, costs and expenses (other than attorneys’ fees incurred by the
Receiver) incurred in connection with the transfer to it of any Assets or
Liabilities Assumed hereunder or in accordance herewith.

 

13.10      Waiver. Each of the
Receiver, the Corporation and the Assuming Bank may waive its respective
rights, powers or privileges under this Agreement; provided, that
such waiver shall be in writing; and  further  provided, that
no failure or delay on the part of the Receiver, the Corporation or the
Assuming Bank to exercise any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor will any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
by the Receiver, the Corporation, or the Assuming Bank under this Agreement,
nor will any such waiver operate or be construed as a future waiver of such
right, power or privilege under this Agreement.

 

13.11      Severability. If any
provision of this Agreement is declared invalid or unenforceable, then, to the
extent possible, all of the remaining provisions of this Agreement shall remain
in full force and effect and shall be binding upon the parties hereto.

 

13.12      Term  of
Agreement. This Agreement shall continue in full force and
effect until the sixth (6th) anniversary of Bank Closing; provided, that
the provisions of Section 6.3 and 6.4 shall survive the expiration of the
term of this Agreement. Provided, however, the receivership of the Failed Bank
may be terminated prior to the expiration of the term of this Agreement; in
such event, the guaranty of the Corporation, as provided in and in accordance
with the provisions of Section 12.7 shall be in effect for the remainder
of the term. Expiration of the term of this Agreement shall not affect any
claim or liability of any party with respect to any (i) amount which is
owing at the time of such expiration, regardless of when such amount becomes
payable, and (ii) breach of this Agreement occurring prior to such
expiration, regardless of when such breach is discovered.

 

13.13      Survival
of  Covenants, Etc. The covenants,
representations, and warranties in this Agreement shall survive the execution
of this Agreement and the consummation of the transactions contemplated
hereunder.

 

[Signature Page Follows]

 

39

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their duly authorized representatives
as of the date first above written.

 

 

	
   

  	
  FEDERAL
  DEPOSIT INSURANCE CORPORATION,

  
	
   

  	
  RECEIVER
  OF MIRAE BANK

  
	
   

  	
  LOS
  ANGELES, CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ 

  	
  Martha
  C. Duncan

  
	
   

  	
  NAME:

  	
  Martha
  C. Duncan

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE:

  	
  Receiver-in-Charge

  
	
   

  	
   

  
	
  Attest:
  /s/ Terry Berg

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FEDERAL
  DEPOSIT INSURANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ 

  	
  Martha
  C. Duncan

  
	
   

  	
  NAME:

  	
  Martha
  C. Duncan 

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE:

  	
  Attorney-in-Fact

  
	
   

  	
   

  
	
  Attest:
  /s/ Terry Berg

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILSHIRE
  STATE BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ 

  	
  Joanne
  Kim

  
	
   

  	
  NAME:

  	
  Joanne
  Kim

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE:

  	
  CEO

  
	
   

  	
   

  	
   

  
	
  Attest:
  /s/ Alex Ko

  	
   

  

 

40

 

SCHEDULE 2.1 - Certain Liabilities Assumed by the
Assuming Bank

 

41

 

SCHEDULE 2.1(a) – Excluded Deposit Liability Accounts

 

MIRAE Bank

Los Angeles, California

 

Mirae
Bank has deposits associated with the Depository Organization (DO)
Cede & Co as Nominee for DTC. The DO accounts will pass to the Assuming Bank and are not excluded from the transaction as
described in section 2.1 of the P&A Agreement. The attached Schedule 2.1.a
DO Detail Report identifies the DO accounts as of the date of the deposit
download. This schedule will be updated post closing with data as of Bank
Closing date.

 

	
  TOTAL ACCOUNTS:

  	
   

  	
  17

  	
   

  	
  $

  	
  73,749,305.73

  	
   

  
	
  EXT. FAMILY NUMBER OF ACCOUNTS:

  	
   

  	
   

  	
   

  	
  17

  	
   

  
	
  EXT. FAMILY TOTAL AMOUNT:

  	
   

  	
   

  	
   

  	
  $

  	
  73,749,305.73

  	
   

  
	
  TOTAL ACCOUNTS:

  	
   

  	
   

  	
   

  	
  17

  	
   

  
	
  TOTAL GROUPS:

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  TOTAL EXTENDED FAMILIES:

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  TOTAL P & I:

  	
   

  	
   

  	
   

  	
  $

  	
  73,749,305.73

  	
   

  
	
  TOTAL INSURED P & I:

  	
   

  	
   

  	
   

  	
  $

  	
  250,000.00

  	
   

  
	
  TOTAL UNINSURED P & I:

  	
   

  	
   

  	
   

  	
  $

  	
  73,499,305.73

  	
   

  
	
  BROKERED P & I:

  	
   

  	
   

  	
   

  	
  $

  	
  0.00

  	
   

  

 

PRELIMINARY

 

42

 

SCHEDULE 3.1 - Certain Assets Purchased

 

SEE ATTACHED LIST

 

THE LIST(S) ATTACHED TO THIS SCHEDULE (OR SUBSCHEDULE(S))
AND THE INFORMATION THEREIN, IS AS OF THE DATE OF THE MOST RECENT PERTINENT
DATA MADE AVAILABLE TO THE ASSUMING BANK AS PART OF THE INFORMATION
PACKAGE. IT WILL BE ADJUSTED TO REFLECT THE COMPOSITION AND BOOK VALUE OF THE
LOANS AND ASSETS AS OF THE DATE OF BANK CLOSING. THE LIST(S) MAY NOT
INCLUDE ALL LOANS AND ASSETS (E.G., CHARGED OFF LOANS). THE
LIST(S) MAY BE REPLACED WITH A MORE ACCURATE LIST POST CLOSING.

 

43

 

SCHEDULE 3.1a – Subsidiary and Other Business
Combination Entities Acquired

 

SEE ATTACHED LIST

 

THE LIST(S) ATTACHED TO THIS SCHEDULE (OR
SUBSCHEDULE(S)) AND THE INFORMATION THEREIN, IS AS OF BANK CLOSING.

 

	
  Name

  	
   

  	
  TIN

  	
   

  	
  Active/Inactive/Dissolved/Terminated

  

 

[THIS SCHEDULE IS TO BE REMOVED IF SCHEDULE IS NOT
COMPLETED]

 

44

 

SCHEDULE 3.2 - Purchase Price of Assets or
assets

 

	
  (a)

  	
   

  	
  cash and receivables from depository institutions, including cash
  items in the process of collection, plus interest thereon:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  securities (exclusive of the capital stock of Acquired Subsidiaries),
  plus interest thereon:

  	
   

  	
  As provided in Section 3.2(b)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  federal funds sold and repurchase agreements, if any, including
  interest thereon:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Loans:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  credit card business, if any, including all outstanding extensions of
  credit and offensive litigation, but excluding any class action lawsuits
  related to the credit card business:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  Safe Deposit Boxes and related business, safekeeping business and
  trust business, if any:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  Records and other documents:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  capital stock of any Acquired Subsidiaries:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  amounts owed to the Failed Bank by any Acquired Subsidiary:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  assets securing Deposits of public money, to the extent not otherwise
  purchased hereunder:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (k)

  	
   

  	
  Overdrafts of customers:

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (l)

  	
   

  	
  rights, if any, with respect to Qualified Financial Contracts.

  	
   

  	
  As provided in Section 3.2(c)

  

 

45

 

	
  (m)

  	
   

  	
  rights of the Failed Bank to provide mortgage servicing for others
  and to have mortgage servicing provided to the Failed Bank by others and
  related contracts.

  	
   

  	
  Book Value

  

 

assets
subject to an option to purchase:

 

	
  (a)

  	
   

  	
  Bank Premises:

  	
   

  	
  Fair Market Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Furniture and Equipment:

  	
   

  	
  Fair Market Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Fixtures:

  	
   

  	
  Fair Market Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Other Equipment:

  	
   

  	
  Fair Market Value

  

 

46

 

SCHEDULE 3.5(l) – Excluded Private Label
Asset-Backed Securities

 

47

 

SCHEDULE 4.15A

 

LOANS SUBJECT TO LOSS SHARING UNDER THE

SINGLE FAMILY SHARED-LOSS AGREEMENT

 

48

 

SCHEDULE 4.15B

 

LOANS SUBJECT TO LOSS SHARING UNDER THE

NON-SINGLE FAMILY SHARED-LOSS AGREEMENT

 

49

 

SCHEDULE 7 -Accounts Excluded from
Calculation of Deposit Franchise Bid Premium

 

MIRAE Bank

Los Angeles, California

 

The accounts identified below will pass to the Assuming Bank (unless
otherwise noted). When calculating the premium to be paid on Assumed Deposits
in a P&A transaction, the FDIC will exclude the following categories of
deposit accounts:

 

	
  Category

  	
   

  	
  Description

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Non- DO Brokered Deposits

  	
   

  	
  $

  	
  0

  	
   

  
	
  II

  	
   

  	
  CDARS

  	
   

  	
  $

  	
  6,211,115

  	
   

  
	
  III

  	
   

  	
  Market Place Deposits

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
  Total deposits excluded from Calculation of premium

  	
   

  	
  $

  	
  6,211,115

  	
   

  

 

Category
Description

 

I
Brokered Deposits

 

Brokered deposit accounts are accounts for which the “depositor of
record” is an agent, nominee, or custodian who deposits funds for a principal
or principals to whom “pass-through” deposit insurance coverage may be
extended. The FDIC separates brokered deposit accounts into 2 categories: 1)
Depository Organization (DO) Brokered Deposits and 2) Non-Depository
Organization (Non-DO) Brokered Deposits. This distinction is made by the FDIC
to facilitate our role as Receiver and Insurer. These terms will not appear on
other “brokered deposit” reports generated by the institution.

 

Non-DO Brokered Deposits pass
to the Assuming Bank, but are excluded from Assumed Deposits when the deposit
premium is calculated. Please see the attached “Schedule 7 Non-DO Broker
Deposit Detail Report” for a listing of these accounts. This list will be
updated post closing with balances as of Bank Closing date.

 

If this institution had any DO
Brokered Deposits (Cede & Co as Nominee for DTC), they are NOT excluded from Assumed Deposits in
this P&A transaction. A list of these accounts is provided on “Schedule 2.1
DO Brokered Deposit Detail Report”.

 

II
CDARS

 

CDARS deposits pass to the
Assuming Bank, but are excluded from Assumed Deposits when the deposit premium
is calculated.

 

Mirae Bank did participate in the
CDARS program as of the date of the deposit download. If CDARS deposits are
taken between the date of the deposit download and the Bank Closing Date, they
will be identified post closing and made part of Schedule 7 to the P&A
Agreement.

 

III
Market Place Deposits

 

“Market Place Deposits” is a
description given to deposits that may have been solicited via a money desk,
internet subscription service (for example, Qwickrate), or similar programs.

 

 

50

 

Mirae Bank does not have Qwickrate deposits as
identified above. The Qwickrate deposits are reported as time deposits in the
Call Report

 

This schedule provides account
categories and balances as of the date of the deposit download, or as
indicated. The deposit franchise bid premium will be calculated using account
categories and balances as of Bank Closing Date that are reflected in the
general ledger or subsystem as described above. The final numbers for Schedule
7 will be provided post closing.

 

51

 

EXHIBIT 3.2(c) — VALUATION OF CERTAIN

QUALIFIED FINANCIAL CONTRACTS

 

A.                         Scope

 

Interest Rate
Contracts - All interest rate swaps, forward rate agreements, interest rate
futures, caps, collars and floors, whether purchased or written.

 

Option
Contracts - All put and call option contracts, whether purchased or written, on
marketable securities, financial futures, foreign currencies, foreign exchange
or foreign exchange futures contracts.

 

Foreign
Exchange Contracts - All contracts for future purchase or sale of foreign
currencies, foreign currency or cross currency swap contracts, or foreign
exchange futures contracts.

 

B.                           Exclusions

 

All financial
contracts used to hedge assets and liabilities that are acquired by the
Assuming Bank but are not subject to adjustment from Book Value.

 

C.                           Adjustment

 

The difference
between the Book Value and market value as of Bank Closing.

 

D.                          Methodology

 

1.                                            The price
at which the Assuming Bank sells or disposes of Qualified Financial Contracts
will be deemed to be the fair market value of such contracts, if such sale or
disposition occurs at prevailing market rates within a predefined timetable as
agreed upon by the Assuming Bank and the Receiver.

 

2.                                            In valuing
all other Qualified Financial Contracts, the following principles will apply:

 

(i)                                     All
known cash flows under swaps or forward exchange contracts shall be present
valued to the swap zero coupon interest rate curve.

 

(ii)                                All valuations shall
employ prices and interest rates based on the actual frequency of rate reset or
payment.

 

(iii)                             Each tranche of amortizing
contracts shall be separately valued. The total value of such amortizing
contract shall be the sum of the values of its component tranches.

 

52

 

(iv)                              For
regularly traded contracts, valuations shall be at the midpoint of the bid and
ask prices quoted by customary sources (e.g., The Wall Street Journal,
Telerate, Reuters or other similar source) or regularly traded exchanges.

 

(v)                                 For
all other Qualified Financial Contracts where published market quotes are
unavailable, the adjusted price shall be the average of the bid and ask price
quotes from three (3) securities dealers acceptable to the Receiver and
Assuming Bank as of Bank Closing. If quotes from securities dealers cannot be
obtained, an appraiser acceptable to the Receiver and the Assuming Bank will
perform a valuation based on modeling, correlation analysis, interpolation or
other techniques, as appropriate.]

 

53

 

EXHIBIT 4.13

INTERIM ASSET SERVICING ARRANGEMENT

 

(a)                                  with
respect to each asset (or liability) designated from time to time by the
Receiver to be serviced by the Assuming Bank pursuant to this Arrangement (such
being designated as “Pool Assets”), during the term of this Arrangement, the
Assuming Bank shall:

 

(i)                    Promptly
apply payments received with respect to any Pool Assets;

 

(ii)                 Reverse
and return insufficient funds checks;

 

(iii)              Pay
(A) participation payments to participants in Loans, as and when received; and
(B) tax and insurance bills on Pool Assets as they come due, out of escrow
funds maintained for purposes;

 

(iv)             Maintain
accurate records reflecting (A) the payment history of Pool Assets, with
updated information received concerning changes in the address or identity of
the obligors and (B) usage of data processing equipment and employee services
with respect to servicing duties;

 

(v)                Send
billing statements to obligors on Pool Assets to the extent that such
statements were sent by the Failed Bank;

 

(vi)             Send
notices to obligors who are in default on Loans (in the same manner as the
Failed Bank);

 

(vii)          Send
to the Receiver, Attn: Managing Liquidator, at the address provided in Section
13.7 of the Agreement, via  overnight  delivery: (A) on a weekly
basis, weekly reports for the Pool Assets, including, without limitation,
reports reflecting collections and the trial balances, transaction journals and
loan histories for Pool Assets having activity, together with copies of (1)
checks received, (2) insufficient funds checks returned, (3) checks for payment
to participants or for taxes and insurance, (4) pay-off requests, (5) notices
to defaulted obligors, and (6) data processing and employee logs and (B) any
other reports, copies or information as may be periodically or from time to
time requested;

 

(viii)       Remit on a weekly basis to
the Receiver, Attn: Division of Finance, Cashier Unit, Operations, at the
address in (vii), via  wire  transfer to the account
designated by the Receiver, all payments received on Pool Assets managed by the
Assuming Bank or at such time and place and in such manner as may be directed
by the Receiver;

 

(ix)               prepare
and timely file all information reports with appropriate tax authorities, and,
if required by the Receiver, prepare and file tax returns and pay taxes due on
or before the due date, relating to the Pool Assets; and

 

(x)                  provide
and furnish such other services, operations or functions as may be required
with regard to Pool Assets, including, without limitation, as may be required
with

 

54

 

regard to any business,
enterprise or agreement which is a Pool Asset, all as may be required by the
Receiver.

 

Notwithstanding anything to the
contrary in this Section, the Assuming Bank shall not be required to initiate
litigation or other collection proceedings against any obligor or any
collateral with respect to any defaulted Loan. The Assuming Bank shall promptly
notify the Receiver, at the address provided above in subparagraph (a)(vii), of
any claims or legal actions regarding any Pool Asset.

 

(b)                                 The
Receiver agrees to reimburse the Assuming Bank for actual, reasonable and
necessary expenses incurred in connection with the performance of duties
pursuant to this Arrangement, including expenses of photocopying, postage and
express mail, and data processing and employee services (based upon the number
of hours spent performing servicing duties).

 

(c)                                  The
Assuming Bank shall provide the services described herein for an initial period
of ninety (90) days after Bank Closing. At the option of the Receiver,
exercisable by notice given not later than ten (10) days prior to the end of
such initial period or a renewal period, the Assuming Bank shall continue to
provide such services for such renewal period(s) as designated by the Receiver,
up to the Settlement Date.

 

(d)                                 At
any time during the term of this Arrangement, the Receiver may, upon written
notice to the Assuming Bank, remove one or more Pool Assets from the Pool, at
which time the Assuming Bank's responsibility with respect thereto shall
terminate.

 

(e)                                  At
the expiration of this Agreement or upon the termination of the Assuming Bank's
responsibility with respect to any Pool Asset pursuant to paragraph (d) hereof,
the Assuming Bank shall:

 

(i)             deliver
to the Receiver (or its designee) all of the Credit Documents and Pool Records
relating to the Pool Assets; and

 

(ii)          cooperate
with the Receiver to facilitate the orderly transition of managing the Pool
Assets to the Receiver (or its designee).

 

(f)                                    At
the request of the Receiver, the Assuming Bank shall perform such transitional
services with regard to the Pool Assets as the Receiver may request.
Transitional services may include, without limitation, assisting in any due
diligence process deemed necessary by the Receiver and providing to the
Receiver or its designee(s) (x) information and data regarding the Pool Assets,
including, without limitation, system reports and data downloads sufficient to
transfer the Pool Assets to another system or systems, and (y) access to
employees of the Assuming Bank involved in the management of, or otherwise
familiar with, the Pool Assets.

 

55

 

EXHIBIT 4.15A

SINGLE FAMILY SHARED-LOSS AGREEMENT

 

This agreement for the reimbursement of loss sharing on certain single
family residential mortgage loans (the “Single Family Shared-Loss Agreement”)
shall apply when the Assuming Bank purchases Single Family Shared-Loss Loans as
that term is defined herein. The terms hereof shall modify and supplement, as
necessary, the terms of the Purchase and Assumption Agreement to which this
Single Family Shared-Loss Agreement is attached as Exhibit 4.15A and
incorporated therein. To the extent any inconsistencies may arise between the
terms of the Purchase and Assumption Agreement and this Single Family
Shared-Loss Agreement with respect to the subject matter of this Single Family
Shared-Loss Agreement, the terms of this Single Family Shared-Loss Agreement
shall control. References in this Single Family Shared- Loss Agreement to a
particular Section shall be deemed to refer to a Section in this Single Family
Shared-Loss Agreement, unless the context indicates that it is intended to be a
reference to a Section of the Purchase and Assumption Agreement.

 

ARTICLE
I – DEFINITIONS

 

The
capitalized terms used in this Single Family Shared-Loss Agreement that are not
defined in this Single Family Shared-Loss Agreement are defined in the Purchase
and Assumption Agreement. In addition to the terms defined above, defined below
are certain additional terms relating to loss-sharing, as used in this Single
Family Shared-Loss Agreement.

 

“Accounting Records”
means the subsidiary system of record on which the loan history and balance of
each Single Family Shared-Loss Loan is maintained; individual loan files
containing either an original or copies of documents that are customary and
reasonable with respect to loan servicing, including management and disposition
of Other Real Estate; the records documenting alternatives considered with
respect to loans in default or for which a default is reasonably foreseeable;
records of loss calculations and supporting documentation with respect to line
items on the loss calculations; and, monthly delinquency reports and other
performance reports customarily utilized by the Assuming Bank in management of
loan portfolios.

 

“Accrued Interest”
means, with respect to Single Family Shared-Loss Loans, the amount of earned
and unpaid interest at the note rate specified in the applicable loan
documents, limited to 90 days.

 

“Affiliate”
shall have the meaning set forth in the Purchase and Assumption Agreement; provided,
that, for purposes of this Single Family Shared-Loss Agreement, no Third
Party Servicer shall be deemed to be an Affiliate of the Assuming Bank.

 

“Commencement Date”
means the first calendar day following the Bank Closing.

 

“Commercial Shared-Loss Agreement”
means the Commercial and Other Assets Shared-Loss Agreement attached to the
Purchase and Assumption Agreement as Exhibit

 

56

 

4.15 B.

 

“Cumulative
Loss Amount”
means the sum of the Monthly Loss Amounts less the sum of all Recovery Amounts.

 

“Cumulative
Shared-Loss Amount”
means the excess, if any, of the Cumulative Loss Amount over the First Loss
Tranche.

 

“Customary
Servicing Procedures”
means procedures (including collection procedures) that the Assuming Bank (or,
to the extent a Third Party Servicer is engaged, the Third Party Servicer)
customarily employs and exercises in servicing and administering mortgage loans
for its own accounts and the servicing procedures established by FNMA or FHLMC
(as in effect from time to time), which are in accordance with accepted
mortgage servicing practices of prudent lending institutions.

 

“Deficient
Valuation” means the determination by a court in a bankruptcy
proceeding that the value of the collateral is less than the amount of the loan
in which case the loss will be the difference between the then unpaid principal
balance (or the NPV of a modified loan that defaults) and the value of the
collateral so established.

 

“Examination
Criteria” means the loan classification criteria
employed by, or any applicable regulations of, the Assuming Bank’s Chartering
Authority at the time such action is taken, as such criteria may be amended
from time to time.

 

“Home
Equity Loans”
means loans or funded portions of lines of credit secured by mortgages on
one-to four-family residences or stock of cooperative housing associations,
where the Failed Bank did not have a first lien on the same property as
collateral.

 

“Final
Shared-Loss Month”
means the calendar month in which the tenth anniversary of the Commencement
Date occurs.

 

“Final
Shared-Loss Recovery Month” means the calendar month in which the tenth anniversary of the
Commencement Date occurs.

 

“Foreclosure
Loss” means
the loss realized when the Assuming Bank has completed the foreclosure on a
Single Family Shared-Loss Loan and realized final recovery on the collateral
through liquidation and recovery of all insurance proceeds. Each Foreclosure
Loss shall be calculated in accordance with the form and methodology specified
in Exhibit 2a or Exhibit 2a (1).

 

“Investor-Owned
Residential Loans”
means Loans, excluding advances made pursuant to Home Equity Loans, that are
secured by mortgages on one- to four family residences or stock of cooperative
housing associations that are not owner-occupied. These loans can be treated as
Restructured Loans on a commercially reasonable basis and can be a restructured
under terms separate from the Exhibit 5 standards. Please refer to
Exhibit 2b for guidance in Calculation of Loss for Restructured Loans.

 

“Loss” means a
Foreclosure Loss, Restructuring Loss, Short Sale Loss, Portfolio

 

57

 

Loss, Modification Default Loss or Deficient Valuation.

 

“Loss
Amount”
means the dollar amount of loss incurred and reported on the Monthly
Certificate for a Single Family Shared-Loss Loan.

 

“Modification
Default Loss”
means the loss calculated in Exhibits 2a(1) and 2c(1) for single
family loans modified under this part of the agreement that default and result
in a foreclosure or short sale.

 

“Modification
Guidelines” has
the meaning provided in Section 2.1(a) of this Single Family
Shared-Loss Agreement.

 

“Monthly
Certificate”
has the meaning provided in Section 2.1(b) of this Single Family
Shared-Loss Agreement.

 

“Monthly
Loss Amount”
means the sum of all Foreclosure Losses, Restructuring Losses, Short Sale
Losses, Portfolio Losses, Modification Default Losses and losses in connection
with Deficient Valuations realized by the Assuming Bank for any Shared Loss
Month.

 

“Monthly
Shared-Loss Amount”
means the change in the Cumulative Shared-Loss Amount from the beginning of
each month to the end of each month.

 

“Neutral
Member” has
the meaning provided in Section 2.1(f)(ii) of this Single Family
Shared-Loss Agreement.

 

“Portfolio
Loss” means
the loss realized on either (i) a portfolio sale of Single Family
Shared-Loss Loans in accordance with the terms of Article IV or
(ii) the sale of a loan with the consent of the Receiver as provided in
Section 2.7.

 

“Recovery
Amount”
means, with respect to any period prior to the Termination Date, the amount of
collected funds received by the Assuming Bank that (i) are applicable
against a Foreclosure Loss which has previously been paid to the Assuming Bank
by the Receiver or (ii) gains realized from a Section 4.1 sale of
Single Family Shared-Loss Loans for which the Assuming Bank has previously received
a Restructuring Loss payment from the Receiver (iii) or any incentive
payments from national programs paid to an investor or borrower on loans that
have been modified or otherwise treated (short sale or foreclosure) in
accordance with Exhibit 5.

 

“Restructuring
Loss” means
the loss on a modified or restructured loan measured by the difference between
(a) the principal, Accrued Interest, tax and insurance advances, third
party or other fees due on a loan prior to the modification or restructuring,
and (b) the net present value of estimated cash flows on the modified or
restructured loan, discounted at the Then-Current Interest Rate. Each
Restructuring Loss shall be calculated in accordance with the form and
methodology attached as Exhibit 2b, as applicable.

 

“Restructured
Loan” means
a Single Family Shared-Loss Loan for which the Assuming Bank has received a
Restructuring Loss payment from the Receiver. This applies to 

 

58

 

owner occupied and investor owned residences.

 

“Servicing
Officer” has the meaning provided in Section 2.1(b) of
this Single Family Shared-Loss Agreement.

 

“Shared
Loss Payment Trigger” means when the sum of the Cumulative Loss
Amount under this Single Family Shared-Loss Agreement and the Shared-Loss
Amount under the Commercial and Other Assets Shared-Loss Agreement, exceeds the
First Loss Tranche. If the First Loss Tranche is zero or a negative number, the
Shared Loss Payment Trigger shall be deemed to have been reached upon Bank
Closing.

 

“Shared-Loss
Month” means each calendar month between the Commencement Date
and the last day of the month in which the tenth anniversary of the
Commencement Date occurs, provided that, the first Shared-Loss Month shall
begin on the Commencement Date and end on the last day of that month.

 

“Short-Sale
Loss” means the loss resulting from the Assuming Bank’s
agreement with the mortgagor to accept a payoff in an amount less than the
balance due on the loan (including the costs of any cash incentives to borrower
to agree to such sale or to maintain the property pending such sale), further provided,
that each Short-Sale Loss shall be calculated in accordance with the
form and methodology specified in Exhibit 2c or Exhibit 2c(1).

 

“Single
Family Shared-Loss Loans” means the single family one-to-four
residential mortgage loans (whether owned by the Assuming Bank or any
Subsidiary) identified on Schedule 4.15A of the Purchase and Assumption
Agreement.

 

“Stated
Threshold” means total losses under the shared loss agreements
in the amount of $83,000,000.00.

 

“Termination Date”
means the last day of the Final Shared-Loss Recovery Month.

 

“Then-Current
Interest Rate” means the most recently published Freddie Mac
survey rate for 30-year fixed-rate loans.

 

“Third
Party Servicer” means any servicer appointed from time to time
by the Assuming Bank or any Affiliate of the Assuming Bank to service the
Shared-Loss Loans on behalf of the Assuming Bank, the identity of which shall
be given to the Receiver prior to or concurrent with the appointment thereof.

 

ARTICLE
II – SHARED-LOSS ARRANGEMENT

 

2.1                     Shared-Loss
Arrangement.

 

(a)                        Loss Mitigation and Consideration of Alternatives. For
each Single Family Shared-Loss Loan in default or for which a default is
reasonably foreseeable, the Assuming Bank shall undertake reasonable and
customary loss mitigation efforts, in accordance

 

59

 

with any of the following programs selected by Assuming Bank in its
sole discretion, Exhibit 5 (FDIC Mortgage Loan Modification Program), the
United States Treasury’s Home Affordable Modification Program Guidelines or any
other modification program approved by the United States Treasury Department,
the Corporation, the Board of Governors of the Federal Reserve System or any
other governmental agency (it being understood that the Assuming Bank can
select different programs for the various Single Family Shared-Loss Loans)
(such program chosen, the “Modification Guidelines”). After selecting the
applicable Modification Guideline for any such Single Family Shared-Loss Loan,
the Assuming Bank shall document its consideration of foreclosure, loan
restructuring under such Modification Guideline chosen, and short-sale (if
short-sale is a viable option) alternatives and shall select the alternative
the Assuming Bank believes, based on its estimated calculations, will result in
the least Loss. Losses on Home Equity Loans shall be shared under the
charge-off policies of the Assuming Bank’s Examination Criteria as if they were
Single Family Shared-Loss Loans with respect to the calculation of the Stated
Threshold. Assuming Bank shall retain its calculations of the estimated loss
under each alternative, such calculations to be provided to the Receiver upon
request. For the avoidance of doubt and notwithstanding anything herein to the
contrary, (i) the Assuming Bank is not required to modify or restructure
any Single Family Shared-Loss Loan on more than one occasion and (ii) the
Assuming Bank is not required to consider any alternatives with respect to any
Shared-Loss Loan in the process of foreclosure as of the Bank Closing and shall
be entitled to continue such foreclosure measures and recover the Foreclosure
Loss as provided herein, and (iii) the Assuming Bank shall have a transition
period of up to 90 days after Bank Closing to implement the Modification
Guidelines, during which time, the Assuming Bank may submit claims under such
guidelines as may be in place at the Failed Bank.

 

(b)                       Monthly Certificates.

 

Not later than fifteen (15) days after the
end of each Shared-Loss Month, beginning with the month in which the
Commencement Date occurs and ending in the month in which the tenth anniversary
of the Commencement Date occurs, the Assuming Bank shall deliver to the
Receiver a certificate, signed by an officer of the Assuming Bank involved in,
or responsible for, the administration and servicing of the Single Family
Shared-Loss Loans whose name appears on a list of servicing officers furnished
by the Assuming Bank to the Receiver, (a “Servicing Officer”) setting forth in
such form and detail as the Receiver may reasonably specify (a “Monthly
Certificate”):

 

(i)                                     (A)                              a schedule substantially
in the form of Exhibit 1 listing:

 

(i)             each Single Family Shared-Loss Loan for
which a Loss Amount (calculated in accordance with the applicable Exhibit) is
being claimed, the related Loss Amount for each Single Family Shared-Loss Loan,
and the total Monthly Loss Amount for all Single Family Shared-Loss Loans;

 

(ii)          each Single Family Shared-Loss Loan for which
a Recovery Amount was received, the Recovery Amount for each Single Family
Shared-Loss Loan, and the total Recovery Amount for all Single Family
Shared-Loss Loans;

 

60

 

(iii)       the total Monthly Loss Amount for all Single
Family Shared-Loss Loans minus the total monthly Recovery Amount for all Single
Family Shared-Loss Loans;

 

(iv)      the Cumulative Shared-Loss Amount as of the
beginning and end of the month;

 

(v)         the Monthly Shared Loss Amount;

 

(vi)      the result obtained in (v) times 80%, or
times 95% if the Stated Threshold has been reached, which in either case is the
amount to be paid under Section 2.1(d) of this Single Family
Shared-Loss Agreement by the Receiver to the Assuming Bank if the amount is a
positive number, or by the Assuming Bank to the Receiver if the amount is a
negative number;

 

(ii)                                  (B)                              for
each of the Single Family Shared-Loss Loans for which a Loss is claimed for
that Shared-Loss Month, a schedule showing the calculation of the Loss Amount
using the form and methodology shown in Exhibit 2a, Exhibit 2b, or
Exhibit 2c, as applicable.

 

(iii)                               (C)                                For each of the
Restructured Loans where a gain or loss is realized in a sale under
Section 4.1 or 4.2, a schedule showing the calculation using the form and
methodology shown in Exhibit 2d.

 

(iv)                              (D)                               a
portfolio performance and summary schedule substantially in the form shown in
Exhibit 3.

 

(c)                                  Monthly Data Download. Not later than fifteen (15) days
after the end of each month, beginning with the month in which the Commencement
Date occurs and ending with the Final Shared-Loss Recovery Month, Assuming Bank
shall provide Receiver:

 

(v)                                 (i)                                     the servicing file
in machine-readable format including but not limited to the following fields
for each outstanding Single Family Shared-Loss Loan, as applicable:

 

(A)               Loan number

(B)                 FICO score

(C)                 Origination date

(D)                Original principal amount

(E)                  Maturity date

(F)                  Paid-to date

(G)                 Last payment date

(H)                Loan status (bankruptcy, in
foreclosure, etc.)

(I)                     Delinquency counters

(J)                    Current principal balance

(K)                Current escrow account balance

 

61

 

(L)                  Current Appraisal/BPO value

(M)             Current Appraisal/BPO date

(N)                Interest rate

(O)                Monthly principal and
interest payment amount

(P)                  Monthly escrow payment for
taxes and insurance

(Q)                Interest rate type (fixed or
adjustable)

(R)                 If adjustable: index, margin,
next interest rate reset date

(S)                  Payment/Interest rate cap
and/or floor

(T)                 Underwriting type (Full doc,
Alt Doc, No Doc)

(U)                Lien type (1st, 2nd)

(V)                 Amortization type
(amortizing or I/O)

(W)            Property address, including
city, state, zip code

(X)                A code indicating whether
the Mortgaged Property is owner occupied

(Y)                 Property type (single-family
detached, condominium, duplex, etc.)

 

(vi)                                  (ii)                    An Excel file for ORE held
as a result of foreclosure on a Single Family Shared-Loss Loan listing:

 

(A)               Foreclosure date

(B)                 Unpaid loan principal
balance

(C)                 Appraised value or BPO
value, as applicable

(D)                Projected liquidation date

 

Notwithstanding the foregoing, the Assuming Bank
shall not be required to provide any of the foregoing information to the extent
it is unable to do so as a result of the Failed Bank’s or Receiver’s failure to
provide information required to produce the information set forth in this
Section 2.1(c); provided, that the Assuming Bank shall, consistent
with Customary Servicing Procedures seek to produce any such missing
information or improve any inaccurate information previously provided to it.

 

(d)                                     Payments With Respect to Shared-Loss Assets.

 

(i)                                         Losses Under the Stated Threshold. After the Shared Loss
Payment Trigger is reached, not later than fifteen (15) days after the date on
which the Receiver receives the Monthly Certificate, the Receiver shall pay to
the Assuming Bank, in immediately available funds, an amount equal to eighty
percent (80%) of the Monthly Shared-Loss Amount reported on the Monthly
Certificate. If the total Monthly Shared-Loss Amount reported on the Monthly
Certificate is a negative number, the Assuming Bank shall pay to the Receiver
in immediately available funds eighty percent (80%) of that amount.

 

(ii)                                      Losses in Excess of the Stated Threshold. In the event
that the sum of the Cumulative Loss Amount under this Single Family Shared-Loss
Agreement and the Stated Loss Amount under the Commercial Shared-Loss Agreement
meets or exceeds the Stated Threshold, the loss/recovery sharing percentages
set forth herein shall change from 80/20 to 95/5 and thereafter the Receiver
shall pay to the Assuming Bank, in immediately available funds, an amount equal
to ninety-five percent (95%) of the Monthly Shared-Loss Amount reported on the

 

62

 

Monthly
Certificate. If the Monthly Shared-Loss Amount reported on the Monthly
Certificate is a negative number, the Assuming Bank shall pay to the Receiver
in immediately available funds ninety-five percent (95%) of that amount.

 

(e)                                           Limitations on Shared-Loss Payment. The Receiver shall not be
required to make any payments pursuant to Section 2.1(d) with respect
to any Foreclosure Loss, Restructuring Loss, Short Sale Loss or Portfolio Loss
that the Receiver determines, based upon the criteria set forth in this Single
Family Shared-Loss Agreement (including the analysis and documentation
requirements of Section 2.1(a)) or Customary Servicing Procedures, should
not have been effected by the Assuming Bank; provided, however, (x) the
Receiver must provide notice to the Assuming Bank detailing the grounds for not
making such payment, (y) the Receiver must provide the Assuming Bank with
a reasonable opportunity to cure any such deficiency and (z) (1) to
the extent curable, if cured, the Receiver shall make payment with respect to
the properly effected Loss, and (2) to the extent not curable,
notwithstanding the foregoing, the Receiver shall make a payment as to all
Losses (or portion of Losses) that were effected which would have been payable
as a Loss if the Assuming Bank had properly effected such Loss. In the event
that the Receiver does not make any payment with respect to Losses claimed
pursuant to Section 2.1(d), the Receiver and Assuming Bank shall, upon
final resolution, make the necessary adjustments to the Monthly Shared-Loss
Amount for that Monthly Certificate and the payment pursuant to
Section 2.1(d) above shall be adjusted accordingly.

 

(f)                                             Payments by Wire-Transfer. All payments under this Single
Family Shared-Loss Agreement shall be made by wire-transfer in accordance with
the wire-transfer instructions on Exhibit 4.

 

2.2                     Auditor
Report; Right to Audit

 

(a)                                           Within ninety
(90) days after the end of each calendar year during which the Receiver makes
any payment to the Assuming Bank under this Single Family Shared-Loss
Agreement, the Assuming Bank shall deliver to the Receiver a report signed by
its independent public accountants stating that they have reviewed the terms of
this Single Family Shared-Loss Agreement and that, in the course of their
annual audit of the Assuming Bank’s books and records, nothing has come to
their attention suggesting that any computations required to be made by the
Assuming Bank during such calendar year pursuant to this Article II were
not made by the Assuming Bank in accordance herewith. In the event that the
Assuming Bank cannot comply with the preceding sentence, it shall promptly
submit to the Receiver corrected computations together with a report signed by
its independent public accountants stating that, after giving effect to such
corrected computations, nothing has come to their attention suggesting that any
computations required to be made by the Assuming Bank during such year pursuant
to this Article II were not made by the Assuming Bank in accordance
herewith. In such event, the Assuming Bank and the Receiver shall make all such
accounting adjustments and payments as may be necessary to give effect to each
correction reflected in such corrected computations, retroactive to the date on
which the corresponding incorrect computation was made.

 

(b)                                          The Receiver or
the FDIC in its corporate capacity (“Corporation”) may perform an audit or
audits to determine the Assuming Bank’s compliance with the provisions of this
Single Family Shared-Loss Agreement, including this Article II, by
providing not less than

 

63

 

ten
(10) Business Days’ prior written notice. Assuming Bank shall provide
access to pertinent records and proximate working space in Assuming Bank’s
facilities. The scope and duration of any such audit shall be within the
reasonable discretion of the Receiver or the Corporation, but shall in no event
be administered in a manner that unreasonably interferes with the operation of
the Assuming Bank’s business. The Receiver or the Corporation, as the case may
be, shall bear the expense of any such audit. In the event that any corrections
are necessary as a result of such an audit or audits, the Assuming Bank and the
Receiver shall make such accounting adjustments and payments as may be
necessary to give retroactive effect to such corrections.

 

2.3                               Withholdings. Notwithstanding
any other provision in this Article II, the Receiver, upon the direction
of the Director (or designee) of the Federal Deposit Insurance Corporation’s
Division of Resolutions and Receiverships, may withhold payment for any amounts
included in a Monthly Certificate delivered pursuant to Section 2.1, if in
its good faith and reasonable judgment there is a reasonable basis under the
requirements of this Single Family Shared-Loss Agreement for denying the
eligibility of an item for which reimbursement or payment is sought under such
Section. In such event, the Receiver shall provide a written notice to the
Assuming Bank detailing the grounds for withholding such payment. At such time
as the Assuming Bank demonstrates to the satisfaction of the Receiver, in its
reasonable judgment, that the grounds for such withholding of payment, or
portion of payment, no longer exist or have been cured, then the Receiver shall
pay the Assuming Bank the amount withheld which the Receiver determines is
eligible for payment, within fifteen (15) Business Days.

 

2.4                               Books and
Records. The Assuming Bank shall at all times during
the term of this Single Family Shared-Loss Agreement keep books and records
sufficient to ensure and document compliance with the terms of this Single
Family Shared-Loss Agreement, including but not limited to
(a) documentation of alternatives considered with respect to defaulted
loans or loans for which default is reasonably foreseeable,
(b) documentation showing the calculation of loss for claims submitted to
the Receiver, (c) retention of documents that support each line item on
the loss claim forms, and (d) documentation with respect to the Recovery
Amount on loans for which the Receiver has made a loss-share payment

 

2.5                               Information. The Assuming
Bank shall promptly provide to the Receiver such other information, including
but not limited to, financial statements, computations, and bank policies and
procedures, relating to the performance of the provisions of this Single Family
Shared-Loss Agreement, as the Receiver may reasonably request from time to
time.

 

2.6                               Tax Ruling. The Assuming
Bank shall not at any time, without the Receiver’s prior written consent, seek
a private letter ruling or other determination from the Internal Revenue
Service or otherwise seek to qualify for any special tax treatment or benefits
associated with any payments made by the Receiver pursuant to this Single
Family Shared-Loss Agreement.

 

2.7                               Sale of
Single Family Shared-Loss Loans. The Receiver shall be
relieved of its obligations with respect to a Single Family Shared-Loss Loan
upon payment of a Foreclosure Loss amount or a Short Sale Loss amount with
respect to such Single Family Shared-Loss Loan or upon the sale of a Single
Family Shared-Loss Loan by Assuming Bank to a person or entity that is not an
Affiliate; provided, however, that if the Receiver consents to the sale of any
such Single Family Shared-Loss Loan, any loss on such sale shall be a Portfolio
Loss. The Assuming

 

64

 

Bank
shall provide the Receiver with timely notice of any such sale. Notwithstanding
the foregoing, a sale of the Single Family Shared-Loss Loan, for purposes of
this Section 2.7, shall not be deemed to have occurred as the result of
(i) any change in the ownership or control of Assuming Bank or the
transfer of any or all of the Single Family Shared-Loss Loan(s) to any
Affiliate of Assuming Bank, (ii) a merger by Assuming Bank with or into
any other entity, (iii) a sale by Assuming Bank of all or substantially
all of its assets.

 

ARTICLE III - RULES REGARDING THE ADMINISTRATION OF
SINGLE FAMILY

SHARED-LOSS LOANS

 

3.1                               Agreement
with Respect to Administration. The Assuming Bank shall (and
shall cause any of its Affiliates to which the Assuming Bank transfers any
Single Family Shared-Loss Loans to) manage, administer, and collect the Single
Family Shared-Loss Loans while owned by the Assuming Bank or any Affiliate
thereof during the term of this Single Family Shared-Loss Agreement in
accordance with the rules set forth in this Article III. The Assuming
Bank shall be responsible to the Receiver in the performance of its duties
hereunder and shall provide to the Receiver such reports as the Receiver
reasonably deems advisable, including but not limited to the reports required
by Sections 2.1, 2.2 and 3.3 hereof, and shall permit the Receiver to monitor
the Assuming Bank’s performance of its duties hereunder.

 

3.2                               Duties of
the Assuming Bank. (a) In performance of its duties
under this Article III, the Assuming Bank shall:

 

(i) manage and administer each Single Family Shared-Loss Loan in
accordance with Assuming Bank’s usual and prudent business and banking
practices and Customary Servicing Procedures;

 

(ii) exercise its best business judgment in managing,
administering and collecting amounts owed on the Single Family Shared-Loss
Loans;

 

(iii) use commercially reasonable efforts to maximize Recoveries
with respect to Losses on Single Family Shared-Loss Loans without regard to the
effect of maximizing collections on assets held by the Assuming Bank or any of
its Affiliates that are not Single Family Shared-Loss Loans;

 

(iv) retain sufficient staff (in Assuming Bank’s discretion) to
perform its duties hereunder; and

 

(v) other than as provided in Section 2.1(a), comply with the
terms of the Modification Guidelines for any Single Family Shared-Loss Loans
meeting the requirements set forth therein. For the avoidance of doubt, the
Assuming Bank may propose exceptions to Exhibit 5 (the FDIC Loan
Modification Program) for a group of Loans with similar characteristics, with
the objectives of (1) minimizing the loss to the Assuming Bank and the
FDIC and (2) maximizing the opportunity for qualified homeowners to remain
in their homes with affordable mortgage payments.

 

(b)                                 Any transaction
with or between any Affiliate of the Assuming Bank with respect to any Single
Family Shared-Loss Loan including, without limitation, the execution of any
contract pursuant to which any Affiliate of the Assuming Bank will manage,
administer or collect any of the Single Family Shared-Loss Loans will be
provided to FDIC for informational

 

65

 

purposes
and if such transaction is not entered into on an arm’s length basis on
commercially reasonable terms such transaction shall be subject to the prior
written approval of the Receiver.

 

3.3                               Shared-Loss
Asset Records and Reports. The Assuming Bank shall
establish and maintain such records as may be appropriate to account for the
Single Family Shared-Loss Loans in such form and detail as the Receiver may
reasonably require, and to enable the Assuming Bank to prepare and deliver to
the Receiver such reports as the Receiver may from time to time request
regarding the Single Family Shared-Loss Loans and the Monthly Certificates
required by Section 2.1 of this Single Family Shared-Loss Agreement.

 

3.4                               Related Loans.

 

(a)                                                Assuming Bank
shall use its best efforts to determine which loans are “Related Loans”, as
hereinafter defined. The Assuming Bank shall not manage, administer or collect
any “Related Loan” in any manner that would have the effect of increasing the amount
of any collections with respect to the Related Loan to the detriment of the
Single Family Shared-Loss Loan to which such loan is related. A “Related Loan”
means any loan or extension of credit held by the Assuming Bank at any time on
or prior to the end of the Final Shared-Loss Month that is made to an Obligor
of a Single Family Shared-Loss Loan.

 

(b)                                               The Assuming
Bank shall prepare and deliver to the Receiver with the Monthly Certificates
for the calendar months ending June 30 and December 31, a schedule of
all Related Loans on the Accounting Records of the Assuming Bank as of the end
of each such semi-annual period.

 

3.5                               Legal
Action; Utilization of Special
Receivership Powers. The Assuming Bank shall
notify the Receiver in writing (such notice to be given in accordance with
Article V below and to include all relevant details) prior to utilizing in
any legal action any special legal power or right which the Assuming Bank
derives as a result of having acquired an asset from the Receiver, and the
Assuming Bank shall not utilize any such power unless the Receiver shall have
consented in writing to the proposed usage. The Receiver shall have the right
to direct such proposed usage by the Assuming Bank and the Assuming Bank shall
comply in all respects with such direction. Upon request of the Receiver, the
Assuming Bank will advise the Receiver as to the status of any such legal
action. The Assuming Bank shall immediately notify the Receiver of any judgment
in litigation involving any of the aforesaid special powers or rights.

 

3.6                               Third Party
Servicer. The Assuming Bank may perform any of its
obligations and/or exercise any of its rights under this Single Family
Shared-Loss Agreement through or by one or more Third Party Servicers, who may
take actions and make expenditures as if any such Third Party Servicer was the Assuming Bank hereunder (and, for
the avoidance of doubt, such expenses incurred by any such Third Party Servicer
on behalf of the Assuming Bank shall be included in calculating Losses to the
extent such expenses would be included in such calculation if the expenses were
incurred by Assuming Bank); provided, however, that the use thereof by the
Assuming Bank shall not release the Assuming Bank of any obligation or
liability hereunder.

 

66

 

ARTICLE IV — PORTFOLIO SALE

 

4.1                               Assuming
Bank Portfolio Sales of Remaining Single Family Shared-Loss Loans. The Assuming
Bank shall have the right with the concurrence of the Receiver to liquidate for
cash consideration, from time to time in one or more transactions, all or a
portion of Single Family Shared-Loss Loans held by the Assuming Bank at any
time prior to the Termination Date (“Portfolio Sales”). If the Assuming Bank
exercises its option under this Section 4.1, it must give thirty (30) days
notice in writing to the Receiver setting forth the details and schedule for
the Portfolio Sale which shall be conducted by means of sealed bid sales to
third parties, not including any of the Assuming Bank’s affiliates, contractors,
or any affiliates of the Assuming Bank’s contractors. Sales of Restructured
Loans shall be sold in a separate pool from Single Family Shared-Loss Loans not
restructured. The Receiver’s review of the Assuming Bank’s proposed Portfolio
Sale will be considered in a timely fashion and approval will not be
unreasonably withheld, delayed or conditioned.

 

4.2                               Assuming
Bank’s Liquidation of Remaining Single Family Shared-Loss Loans. In the event
that the Assuming Bank does not conduct a Portfolio Sale pursuant to
Section 4.1, the Receiver shall have the right, exercisable in its sole
and absolute discretion, to require the Assuming Bank to liquidate for cash
consideration, any Single Family Shared-Loss Loans held by the Assuming Bank at
any time after the date that is six months prior to the Termination Date. If
the Receiver exercises its option under this Section 4.2, it must give
notice in writing to the Assuming Bank, setting forth the time period within
which the Assuming Bank shall be required to liquidate the Single Family
Shared-Loss Loans. The Assuming Bank will comply with the Receiver’s notice and
must liquidate the Single Family Shared-Loss Loans as soon as reasonably
practicable by means of sealed bid sales to third parties, not including any of
the Assuming Bank’s affiliates, contractors, or any affiliates of the Assuming
Bank’s contractors. The selection of any financial advisor or other third party
broker or sales agent retained for the liquidation of the remaining Single
Family Shared-Loss Loans pursuant to this Section shall be subject to the
prior approval of the Receiver, such approval not to be unreasonably withheld,
delayed or conditioned.

 

4.3                               Calculation
of Sale Gain or Loss. For Single Family
Shared-Loss Loans that are not Restructured Loans gain or loss on the sales
under Section 4.1 or Section 4.2 will be calculated as the sale price
received by the Assuming Bank less the unpaid principal balance of the
remaining Single Family Shared-Loss Loans. For any Restructured Loan included
in the sale gain or loss on sale will be calculated as (a) the sale price
received by the Assuming Bank less (b) the net present value of estimated
cash flows on the Restructured Loan that was used in the calculation of the
related Restructuring Loss plus (c) Loan principal payments collected by
the Assuming Bank from the date the Loan was restructured to the date of sale.
(See Exhibit 2d for example calculation).

 

ARTICLE V — LOSS-SHARING NOTICES GIVEN TO RECEIVER AND
PURCHASER

 

All
notices, demands and other communications hereunder shall be in writing and
shall be delivered by hand, or overnight courier, receipt requested, addressed
to the parties as follows:

 

	
  If
  to Receiver, to:

  	
   

  	
  Federal
  Deposit Insurance Corporation as Receiver for Mirae Bank

  
	
   

  	
   

  	
  Division
  of Resolutions and Receiverships

  
	
   

  	
   

  	
  550
  17th Street, N. W.

  

 

67

 

	
   

  	
   

  	
  Washington,
  D.C. 20429

  
	
   

  	
   

  	
  Attention:
  Ralph Malami, Manager, Capital Markets

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Federal
  Deposit Insurance Corporation as Receiver for Mirae Bank

  
	
   

  	
   

  	
  Room E7056

  
	
   

  	
   

  	
  3501
  Fairfax Drive, Arlington, VA 2226 

  
	
   

  	
   

  	
  Attn:
  Special Issues Unit

  
	
   

  	
   

  	
   

  
	
  With
  respect to a notice under Section 3.5 of this Single Family Shared-Loss
  Agreement, copies of such notice shall be sent to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Federal
  Deposit Insurance Corporation

  
	
   

  	
   

  	
  Legal
  Division 1601 Bryan St.

  
	
   

  	
   

  	
  Dallas,
  Texas 75201

  
	
   

  	
   

  	
  Attention:
  Regional Counsel (Litigation Branch)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to Assuming Bank, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Wilshire
  State Bank 

  
	
  3200
  Wilshire Blvd.

  
	
  Suite 1400

  
	
  Los
  Angeles, California 90010

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Alex
  Ko

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Joanne
  Kim

  
	
   

  	
   

  	
  3200
  Wilshire Blvd.

  
	
   

  	
   

  	
  Suite
  1400

  
	
   

  	
   

  	
  Los
  Angeles, California 90010

  

 

Such
Persons and addresses may be changed from time to time by notice given pursuant
to the provisions of this Article V. Any notice, demand or other
communication delivered pursuant to the provisions of this Article IV
shall be deemed to have been given on the date actually received.

 

ARTICLE VI — MISCELLANEOUS

 

6.1.                            Expenses. Except as
otherwise expressly provided herein, all costs and expenses incurred by or on
behalf of a party hereto in connection with this Single Family Shared-Loss
Agreement shall be borne by such party whether or not the transactions
contemplated herein shall be consummated.

 

6.2                               Successors
and Assigns; Specific Performance. All terms and provisions of this Single
Family Shared-Loss Agreement shall be binding upon and shall inure to the
benefit of the

 

68

 

parties
hereto only; provided, however, that, Receiver may assign or
otherwise transfer this Single Family Shared-Loss Agreement (in whole or in
part) to the Federal Deposit Insurance Corporation in its corporate capacity
without the consent of Assuming Bank. Notwithstanding anything to the contrary
contained in this Single Family Shared-Loss Agreement, except as is expressly
permitted in this Section 6.2, Assuming Bank may not assign or otherwise
transfer this Single Family Shared-Loss Agreement (in whole or in part) without
the prior written consent of the Receiver, which consent may be granted or
withheld by the Receiver in its sole discretion, and any attempted assignment
or transfer in violation of this provision shall be void ab initio. For the avoidance of doubt, a
merger or consolidation of the Assuming Bank with and into another financial
institution, the sale of all or substantially all of the assets of the Assuming
Bank to another financial institution constitutes the transfer of this Single
Family Shared-Loss Agreement which requires the consent of the Receiver. No
Loss shall be recognized as a result of any accounting adjustments that are
made due to any such merger, consolidation or sale consented to by the FDIC.

 

6.3                               Governing Law. This Single Family Shared-Loss Agreement
shall be construed in accordance with federal law, or, if there is no
applicable federal law, the laws of the State of New York, without regard to
any rule of conflict of law that would result in the application of the
substantive law of any jurisdiction other than the State of New York.

 

6.4                               WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN OR TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, ACTION, PROCEEDING OR
COUNTERCLAIM, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF
OR RELATING TO OR IN CONNECTION WITH THIS SINGLE FAMILY SHARED-LOSS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

6.5                               Captions. All captions
and headings contained in this Single Family Shared-Loss Agreement are for
convenience of reference only and do not form a part of, and shall not affect
the meaning or interpretation of, this Single Family Shared-Loss Agreement.

 

6.6                               Entire Agreement; Amendments. This Single Family
Shared-Loss Agreement, along with the Commercial Shared-Loss Agreement and the
Purchase and Assumption Agreement, including the Exhibits and any other
documents delivered pursuant hereto or thereto, embody the entire agreement of
the parties with respect to the subject matter hereof, and supersede all prior
representations, warranties, offers, acceptances, agreements and
understandings, written or oral, relating to the subject matter herein. This
Single Family Shared-Loss Agreement may be amended or modified or any provision
thereof waived only by a written instrument signed by both parties or their
respective duly authorized agents.

 

6.7                               Severability. Whenever possible, each provision of this
Single Family Shared-Loss Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Single Family Shared-Loss Agreement is held to be prohibited by or invalid,
illegal or unenforceable under applicable law, such provision shall be
construed and enforced as if it had been more narrowly drawn so as not to be
prohibited, invalid, illegal or unenforceable, and the validity, legality and
enforceability of the remainder of such provision

 

69

 

and
the remaining provisions of this Single Family Shared-Loss Agreement shall not
in any way be affected or impaired thereby.

 

6.8                               No Third Party Beneficiary. This Single Family
Shared-Loss Agreement and the Exhibits hereto are for the sole and exclusive
benefit of the parties hereto and their respective permitted successors and
permitted assigns and there shall be no other third party beneficiaries, and
nothing in this Single Family Shared-Loss Agreement or the Exhibits shall be
construed to grant to any other Person any right, remedy or Claim under or in
respect of this Single Family Shared-Loss Agreement or any provision hereof.

 

6.9                               Reserved.

 

6.10                        Consent. Except as otherwise provided herein, when the
consent of a party is required herein, such consent shall not be unreasonably
withheld or delayed.

 

6.11                        Rights Cumulative. Except as otherwise
expressly provided herein, the rights of each of the parties under this Single
Family Shared-Loss Agreement are cumulative, may be exercised as often as any
party considers appropriate and are in addition to each such party’s rights
under the Purchase and Sale Agreement and any of the related agreements or
under law. Except as otherwise expressly provided herein, any failure to
exercise or any delay in exercising any of such rights, or any partial or
defective exercise of such rights, shall not operate as a waiver or variation
of that or any other such right.

 

ARTICLE VII

DISPUTE RESOLUTION

 

Section 7.1                                   Dispute Resolution Procedures.

 

(a)                                  In the event a
dispute arises about the interpretation, application, calculation of Loss, or
calculation of payments or otherwise with respect to this Single Family
Shared-Loss Agreement (“SF Shared-Loss Dispute Item”), then the Receiver and
the Assuming Bank shall make every attempt in good faith to resolve such items
within sixty (60) days following the receipt of a written description of the SF
Shared-Loss Dispute Item, with notification of the possibility of taking the
matter to arbitration (the date on which such 60-day period expires, or any
extension of such period as the parties hereto may mutually agree to in
writing, herein called the “Resolution Deadline Date”). If the Receiver and the
Assuming Bank resolve all such items to their mutual satisfaction by the
Resolution Deadline Date, then within thirty (30) days following such resolution,
any payment arising out such resolution shall be made arising from the
settlement of the SF Shared-Loss Dispute.

 

(b)                                 If the Receiver
and the Assuming Bank fail to resolve any outstanding SF Shared-Loss Dispute
Items by the Resolution Deadline Date, then either party may notify the other
of its intent to submit the SF Shared-Loss Dispute Item to arbitration pursuant
to the provisions of this Article VII. Failure of either party to notify
the other of its intent to submit any unresolved SF Shared-Loss Dispute Item to
arbitration within thirty (30) days following the Resolution Deadline Date (the
date on which such thirty (30) day period expires is herein called the

 

70

 

“Arbitration
Deadline Date”) shall be deemed an acceptance of such SF Shared-Loss Dispute
not submitted to arbitration, as well as a waiver of the submitting party’s
right to dispute such non-submitted SF Shared-Loss Dispute Item but not a
waiver of any similar claim which may arise in the future.

 

(c)                                  If a SF
Shared-Loss Dispute Item is submitted to arbitration, it shall be governed by
the rules of the American Arbitration Association (the “AAA”), except as
otherwise provided herein. Either party may submit a matter for arbitration by
delivering a notice, prior to the Arbitration Deadline Date, to the other party
in writing setting forth:

 

(i)                                     A brief description of each
SF Shared-Loss Dispute Item submitted for arbitration;

 

(ii)                                  A statement of
the moving party’s position with respect to each SF Shared-Loss Dispute Item
submitted for arbitration;

 

(iii)                               The value
sought by the moving party, or other relief requested regarding each SF
Shared-Loss Dispute Item submitted for arbitration, to the extent reasonably
calculable; and

 

(iv)                              The name and
address of the arbiter selected by the moving party (the “Moving Arbiter”), who
shall be a neutral, as determined by the AAA.

 

Failure
to adequately include any information above shall not be deemed to be a waiver
of the parties right to arbitrate so long as after notification of such failure
the moving party cures such failure as promptly as reasonably practicable.

 

(d)                                 The non-moving
party shall, within thirty (30) days following receipt of a notice of
arbitration pursuant to this Section 6.1, deliver a notice to the moving
party setting forth:

 

(i)                                     The name and
address of the arbiter selected by the non-moving party (the “Respondent
Arbiter”), who shall be a neutral, as determined by the AAA;

 

(ii)                                  A statement of
the position of the respondent with respect to each Dispute Item; and

 

(iii)                               The ultimate
resolution sought by the respondent or other relief, if any, the respondent
deems is due the moving party with respect to each SF Shared-Loss Dispute Item.

 

Failure
to adequately include any information above shall not be deemed to be a waiver
of the non-moving party’s right to defend such arbitration so long as after
notification of such failure the non-moving party cures such failure as
promptly as reasonably practicable

 

(e)                                  The Moving
Arbiter and Respondent Arbiter shall select a third arbiter from a list
furnished by the American Arbitration Association (the “AAA”). In accordance
with the rules of the AAA, the three (3) arbiters shall constitute
the arbitration panel for resolution of each SF Loss-Share Dispute Item. The
concurrence of any two (2) arbiters shall be deemed to be the decision of
the arbiters for all purposes hereunder. The arbitration shall proceed on such
time schedule and in accordance with the Rules of Commercial Arbitration
of the AAA then in effect, as modified by this Section 7.1. The
arbitration proceedings shall take place at such location as the parties
thereto may mutually agree, but if they cannot agree, then they will take place
at the

 

71

 

offices
of the Corporation in Washington, DC, or Arlington, Virginia.

 

(f)                                    The Receiver
and Assuming Bank shall facilitate the resolution of each outstanding SF
Shared-Loss Dispute Item by making available in a prompt and timely manner to
one another and to the arbiters for examination and copying, as appropriate,
all documents, books, and records under their respective control and that would
be discoverable under the Federal Rules of Civil Procedure.

 

(g)                                 The arbiters
designated pursuant to subsections (c), (d) and (e) hereof shall
select, with respect to each Dispute Item submitted to arbitration pursuant to
this Section 7.1, either (i) the position and relief submitted by the
Assuming Bank with respect to each SF Shared-Loss Dispute Item, or (ii) the
position and relief submitted by the Receiver with respect to each SF
Shared-Loss Dispute Item, in either case as set forth in its respective notice
of arbitration. The arbiters shall have no authority to select a value for each
Dispute Item other than the determination set forth in
Section 7.1(c) and Section 7.1(d). The arbitration shall be
final, binding and conclusive on the parties.

 

(h)                                 Any amounts
ultimately determined to be payable pursuant to such award shall bear interest
at the Settlement Interest Rate from and including the date specified for the
arbiters decisions specified in this Section 7.1, without regard to any
extension of the finality of such award, to but not including the date paid.
All payments required to be made under this Section 7.1 shall be made by
wire transfer.

 

(i)                                     For the
avoidance of doubt, to the extent any notice of a SF Shared-Loss Dispute
Item(s) is provided prior to the Termination Date, the terms of this
Single Family Shared-Loss Agreement shall remain in effect with respect to the
Single Family Shared-Loss Loans that are the subject of such SF Shared-Loss
Dispute Item(s) until such time as any such dispute is finally resolved.

 

Section 7.2                                   Fees and Expenses of Arbiters. The aggregate
fees and expenses of the arbiters shall be shall be borne equally by the
parties. The parties shall the aggregate fees and expenses within thirty (30)
days after receipt of the written decision of the arbiters (unless the arbiters
agree in writing on some other payment schedule).

 

Exhibit 1

 

Monthly Certificate

 

SEE FOLLOWING PAGE

 

72

 

	
  PART 1 - CURRENT MONTH NET
  LOSS

  	
   

  
	
   

  	
   

  
	
  MONTH ENDED:

  	
  [Input report month]

  
	
   

  	
   

  
	
  Losses

  	
   

  
	
   

  	
   

  
			

 

	
  Loan
  No.

  	
   

  	
  Loss
  Type

  	
   

  	
  Loss

  Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  XX

  	
   

  	
  A

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Recoveries

 

	
   

  	
   

  	
  Recovery

  	
   

  	
  Loss

  	
   

  	
  Loss

  	
   

  	
   

  	
   

  
	
  Loan No.

  	
   

  	
  Amount

  	
   

  	
  Amount

  	
   

  	
  Month

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  XX

  	
   

  	
  B

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Losses

  (Recoveries)

  	
   

  	
  XX

  	
   

  	
  C = A - B

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  PART 2
  - FIRST LOSS TEST

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Col. D - Col.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Col. D

  	
   

  	
  Col. E

  	
   

  	
  E

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cumulative

  	
   

  	
   

  	
   

  	
  Cumulative

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Loss

  	
   

  	
  First Loss

  	
   

  	
  Shared-Loss

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount

  	
   

  	
  Tranche

  	
   

  	
  Amount

  	
   

  	
   

  	
   

  
	
  Balance, beginning of
  month

  	
   

  	
  XX

  	
   

  	
  XX

  	
   

  	
  XX

  	
   

  	
  F

  	
   

  
	
  Current month Net
  Losses (from Part 1)

  	
   

  	
  XX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Balance, end of month

  	
   

  	
  XX

  	
   

  	
  XX

  	
   

  	
  XX

  	
   

  	
  G

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shared Loss Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  XX

  	
   

  	
  G - F

  	
   

  
	
  Times Loss Share percentage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  80

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amount due from (to)
  FDIC as Receiver

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  XX

  	
   

  	
   

  	
   

  

 

73

 

	
  Pursuant to Section 2.1 of the Single Family
  Shared-Loss Agreement, the undersigned hereby certifies the information on
  this Certificate is true, complete and correct.

  
	
  OFFICER SIGNATURE

  
	
  OFFICER NAME:

  	
  TITLE

  

 

74

 

Exhibit 2a

 

This exhibit contains three
versions of the loss share calculation for foreclosure, plus explanatory notes.

 

Exhibit 2a(1)

 

CALCULATION OF FORECLOSURE LOSS

Foreclosure Occurred Prior to Loss Share Agreement

 

	
  1

  	
   

  	
  Shared-Loss
  Month

  	
   

  	
  May-09

  	
   

  
	
  2

  	
   

  	
  Loan no:

  	
   

  	
  364574

  	
   

  
	
  3

  	
   

  	
  REO #

  	
   

  	
  621

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Foreclosure
  date

  	
   

  	
  12/18/08

  	
   

  
	
  5

  	
   

  	
  Liquidation
  date

  	
   

  	
  4/12/09

  	
   

  
	
  6

  	
   

  	
  Note
  Interest rate

  	
   

  	
  8.100

  	
  %

  
	
  7

  	
   

  	
  Most
  recent BPO

  	
   

  	
  228,000

  	
   

  
	
  8

  	
   

  	
  Most
  recent BPO date

  	
   

  	
  1/21/09

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Foreclosure Loss calculation

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  Book
  value at date of Loss Share agreement

  	
   

  	
  244,900

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10
  

  	
   

  	
  Accrued
  interest, limited to 90 days or days from failure  to sale,
  whichever is less 

  	
   

  	
  3,306
  

  	
   

  
	
  11

  	
   

  	
  Costs
  incurred after Loss Share agreement in place:

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Attorney’s
  fees

  	
   

  	
  0

  	
   

  
	
  13
  

  	
   

  	
  Foreclosure
  costs, including title search, filing fees,  advertising,
  etc. 

  	
   

  	
  0
  

  	
   

  
	
  14

  	
   

  	
  Property
  protection costs, maint. and repairs

  	
   

  	
  6,500

  	
   

  
	
  15

  	
   

  	
  Tax
  and insurance advances

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
  Other
  Advances

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  Appraisal/Broker’s
  Price Opinion fees

  	
   

  	
  0

  	
   

  
	
  17

  	
   

  	
  Inspections

  	
   

  	
  0

  	
   

  
	
  18

  	
   

  	
  Other

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  Gross
  balance recoverable by Purchaser

  	
   

  	
  254,706

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash Recoveries:

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  Net
  liquidation proceeds (from HUD-1 settl stmt)

  	
   

  	
  219,400

  	
   

  
	
  21

  	
   

  	
  Hazard
  Insurance proceeds

  	
   

  	
  0

  	
   

  
	
  22

  	
   

  	
  Mortgage
  Insurance proceeds

  	
   

  	
  0

  	
   

  
	
  23

  	
   

  	
  T &
  I escrow account balances, if positive

  	
   

  	
  0

  	
   

  
	
  24

  	
   

  	
  Other
  credits, if any (itemize)

  	
   

  	
  0

  	
   

  
	
  25

  	
   

  	
  Total
  Cash Recovery

  	
   

  	
  219,400

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  Loss Amount

  	
   

  	
  35,306

  	
   

  

 

75

 

Exhibit 2a(2)

CALCULATION
OF FORECLOSURE LOSS

No
Preceeding Loan Mod under Loss Share

 

	
  1

  	
   

  	
  Shared-Loss Month

  	
   

  	
  May-09

  	
   

  
	
  2

  	
   

  	
  Loan no:

  	
   

  	
  292334

  	
   

  
	
  3

  	
   

  	
  REO #

  	
   

  	
  477

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Interest
  paid-to-date

  	
   

  	
  4/30/08

  	
   

  
	
  5

  	
   

  	
  Foreclosure
  date

  	
   

  	
  1/15/09

  	
   

  
	
  6

  	
   

  	
  Liquidation
  date

  	
   

  	
  4/12/09

  	
   

  
	
  7

  	
   

  	
  Note
  Interest rate

  	
   

  	
  8.000

  	
  %

  
	
  8

  	
   

  	
  Owner
  occupied?

  	
   

  	
  Yes

  	
   

  
	
  9

  	
   

  	
  If
  owner-occupied:

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Borrower
  current gross annual income

  	
   

  	
  42,000

  	
   

  
	
  11

  	
   

  	
  Estimated
  NPV of loan mod

  	
   

  	
  195,000

  	
   

  
	
  12

  	
   

  	
  Most
  recent BPO

  	
   

  	
  235,000

  	
   

  
	
  13

  	
   

  	
  Most
  recent BPO date

  	
   

  	
  1/21/09

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Foreclosure Loss calculation

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  Loan
  Principal balance after last paid installment

  	
   

  	
  300,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  Accrued
  interest, limited to 90 days

  	
   

  	
  6,000

  	
   

  
	
  18

  	
   

  	
  Attorney’s
  fees

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19
  

  	
   

  	
  Foreclosure
  costs, including title search, filing fees,  advertising,
  etc. 

  	
   

  	
  4,000
  

  	
   

  
	
  20

  	
   

  	
  Property
  protection costs, maint. and repairs

  	
   

  	
  5,500

  	
   

  
	
  21

  	
   

  	
  Tax
  and insurance advances

  	
   

  	
  1,500

  	
   

  
	
   

  	
   

  	
  Other
  Advances

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  Appraisal/Broker’s
  Price Opinion fees

  	
   

  	
  0

  	
   

  
	
  23

  	
   

  	
  Inspections

  	
   

  	
  50

  	
   

  
	
  24

  	
   

  	
  Other

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  Gross
  balance recoverable by Purchaser

  	
   

  	
  317,050

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash Recoveries:

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  Net
  liquidation proceeds (from HUD-1 settl stmt)

  	
   

  	
  205,000

  	
   

  
	
  27

  	
   

  	
  Hazard
  Insurance proceeds

  	
   

  	
  0

  	
   

  
	
  28

  	
   

  	
  Mortgage
  Insurance proceeds

  	
   

  	
  0

  	
   

  
	
  29

  	
   

  	
  T &
  I escrow account balances, if positive

  	
   

  	
  0

  	
   

  
	
  30

  	
   

  	
  Other
  credits, if any (itemize)

  	
   

  	
  0

  	
   

  
	
  31

  	
   

  	
  Total
  Cash Recovery

  	
   

  	
  205,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32

  	
   

  	
  Loss Amount

  	
   

  	
  112,050

  	
   

  

 

76

 

Exhibit 2a(3)

CALCULATION
OF FORECLOSURE LOSS

Foreclosure
after a Covered Loan Mod

 

	
  1

  	
   

  	
  Shared-Loss Month

  	
   

  	
  May-09

  	
   

  
	
  2

  	
   

  	
  Loan no:

  	
   

  	
  138554

  	
   

  
	
  3

  	
   

  	
  REO #

  	
   

  	
  843

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Loan
  mod date

  	
   

  	
  1/17/08

  	
   

  
	
  5

  	
   

  	
  Interest
  paid-to-date

  	
   

  	
  4/30/08

  	
   

  
	
  6

  	
   

  	
  Foreclosure
  date

  	
   

  	
  1/15/09

  	
   

  
	
  7

  	
   

  	
  Liquidation
  date

  	
   

  	
  4/12/09

  	
   

  
	
  8

  	
   

  	
  Note
  Interest rate

  	
   

  	
  4.000

  	
  %

  
	
  9

  	
   

  	
  Most
  recent BPO

  	
   

  	
  210,000

  	
   

  
	
  10

  	
   

  	
  Most
  recent BPO date

  	
   

  	
  1/20/09

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Foreclosure Loss calculation

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  NPV
  of projected cash flows at loan mod

  	
   

  	
  285,000

  	
   

  
	
  12

  	
   

  	
  Less:
  Principal payments between loan mod and deliquency

  	
   

  	
  2,500

  	
   

  
	
  13

  	
   

  	
  Plus:

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Attorney’s
  fees

  	
   

  	
  0

  	
   

  
	
  15
  

  	
   

  	
  Foreclosure
  costs, including title search, filing fees, advertising,  etc. 

  	
   

  	
  4,000
  

  	
   

  
	
  16

  	
   

  	
  Property
  protection costs, maint. and repairs

  	
   

  	
  7,000

  	
   

  
	
  17

  	
   

  	
  Tax
  and insurance advances

  	
   

  	
  2,000

  	
   

  
	
  18

  	
   

  	
  Other
  Advances

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  Appraisal/Broker’s
  Price Opinion fees

  	
   

  	
  0

  	
   

  
	
  20

  	
   

  	
  Inspections

  	
   

  	
  0

  	
   

  
	
  21

  	
   

  	
  Other

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  Gross
  balance recoverable by Purchaser

  	
   

  	
  295,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash Recoveries:

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  Net
  liquidation proceeds (from HUD-1 settl stmt)

  	
   

  	
  201,000

  	
   

  
	
  24

  	
   

  	
  Hazard
  Insurance proceeds

  	
   

  	
  0

  	
   

  
	
  25

  	
   

  	
  Mortgage
  Insurance proceeds

  	
   

  	
  0

  	
   

  
	
  26

  	
   

  	
  T &
  I escrow account balances, if positive

  	
   

  	
  0

  	
   

  
	
  27

  	
   

  	
  Other
  credits, if any (itemize)

  	
   

  	
  0

  	
   

  
	
  28

  	
   

  	
  Total
  Cash Recovery

  	
   

  	
  201,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
  Loss Amount

  	
   

  	
  94,500

  	
   

  

 

77

 

Notes to
Exhibit 2a (foreclosure)

 

1.               The data shown are for
illustrative purpose. The figures will vary for actual restructurings.

 

2.               The covered loss is the
difference between the gross balance recoverable by Purchaser and the total
cash recovery. There are three methods of calculation for covered losses from
foreclosures, depending upon the circumstances. They are shown below:

 

a.               If foreclosure occurred
prior to the beginning of the Loss Share agreement, use Exhibit 2a(1).
This version uses the book value of the REO as the starting point for the
covered loss.

 

b.              If foreclosure occurred
after the Loss Share agreement was in place, and if the loan was not
restructured when the Loss Share agreement was in place, use
Exhibit 2a(2). This version uses the unpaid balance of the loan as of the
last payment as the starting point for the covered loss.

 

c.               If the loan was restructured
when the Loss Share agreement was in place, and then foreclosure occurred, use
Exhibit 2a(3). This version uses the Net Present Value (NPV) of the
modified loan as the starting point for the covered loss.

 

3.               For Exhibit 2a(1), the
gross balance recoverable by the purchaser is calculated as the sum of lines 9 –
18; it is shown in line 19. For Exhibit 2a(2), the gross balance recoverable
by the purchaser is calculated as the sum of lines 16 – 24; it is shown in line
25. For Exhibit 2a(3), the gross balance recoverable by the purchaser is
calculated as line 11 minus line 12 plus lines 13 – 21; it is shown in line 22.

 

4.               For Exhibit 2a(1), the
total cash recovery is calculated as the sum of lines 20 – 24; it is shown in
line 25. For Exhibit 2a(2), the total cash recovery is calculated as the
sum of lines 26 – 30; it is shown in line 31. For Exhibit 2a(3), the total
cash recovery is calculated as the sum of lines 23 – 27; it is shown in line
28.

 

5.               Reasonable and customary
third party attorney’s fees and expenses incurred by or on behalf of Assuming
Bank in connection with any enforcement procedures, or otherwise with respect
to such loan, are reported under Attorney’s fees.

 

6.               Assuming Bank’s (or Third
Party Servicer’s) reasonable and customary out-of-pocket costs paid to either a
third party or an affiliate (if affiliate is pre-approved by the FDIC) for
foreclosure, property protection and maintenance costs, repairs, assessments,
taxes, insurance and similar items are treated as part of the gross recoverable
balance, to the extent they are not paid from funds in the borrower’s escrow
account. Allowable costs are limited to amounts per Freddie Mac and Fannie Mae
guidelines (as in effect from time to time), where applicable, provided that
this limitation shall not apply to costs or expenses relating to environmental
conditions.

 

7.               Do not include late fees,
prepayment penalties, or any similar lender fees or charges by the Failed Bank
or Assuming Bank to the loan account, any allocation of Assuming Bank’s
servicing costs, or any allocations of Assuming Bank’s general and
administrative (G&A) or other operating costs.

 

8.               If
Exhibit 2a(3) is used, then no accrued interest may be included as a
covered loss. Otherwise, the amount of accrued interest that may be included as
a covered loss is limited to the minimum of:

 

a.               90 days

b.              The number of days that the
loan is delinquent when the property was sold

 

78

 

c.               The number of days between
the resolution date and the date when the property was sold

 

To calculate accrued
interest, apply the note interest rate that would have been in effect if the loan
were performing to the principal balance after application of the last payment
made by the borrower.

 

79

 

Exhibit 2b

 

This exhibit contains the
loss share calculation for restructuring (loan mod), plus explanatory notes.

 

Exhibit 2b

 

CALCULATION OF RESTRUCTURING LOSS

 

	
  1

  	
   

  	
  Shared-Loss Month

  	
   

  	
  May-09

  	
   

  
	
  2

  	
   

  	
  Loan no:

  	
   

  	
  123456

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Loan before Restructuring

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Original
  loan amount

  	
   

  	
  500,000

  	
   

  
	
  4

  	
   

  	
  Current
  unpaid principal balance

  	
   

  	
  450,000

  	
   

  
	
  5

  	
   

  	
  Remaining
  term

  	
   

  	
  298

  	
   

  
	
  6

  	
   

  	
  Interest
  rate

  	
   

  	
  7.500

  	
  %

  
	
  7

  	
   

  	
  Interest
  Paid-To-Date

  	
   

  	
  2/29/08

  	
   

  
	
  8

  	
   

  	
  Monthly
  payment - P&I

  	
   

  	
  3,333

  	
   

  
	
  9

  	
   

  	
  Monthly
  payment - T&I

  	
   

  	
  1,000

  	
   

  
	
  10

  	
   

  	
  Total
  monthly payment

  	
   

  	
  4,333

  	
   

  
	
  11

  	
   

  	
  Loan
  type (fixed-rate, ARM, I/O, Option ARM, etc.)

  	
   

  	
  Option
  ARM

  	
   

  
	
  12

  	
   

  	
  Borrower
  current annual income

  	
   

  	
  82,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Terms of Modified/Restructured Loan

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Closing
  date on modified/restructured loan

  	
   

  	
  4/19/09

  	
   

  
	
  14

  	
   

  	
  New
  Principal balance

  	
   

  	
  461,438

  	
   

  
	
  15

  	
   

  	
  Remaining
  term

  	
   

  	
  313

  	
   

  
	
  16

  	
   

  	
  Interest
  rate

  	
   

  	
  3.500

  	
  %

  
	
  17

  	
   

  	
  Monthly
  payment - P&I

  	
   

  	
  1,346

  	
   

  
	
  18

  	
   

  	
  Monthly
  payment - T&I

  	
   

  	
  800

  	
   

  
	
  19

  	
   

  	
  Total
  monthly payment

  	
   

  	
  2,146

  	
   

  
	
  20

  	
   

  	
  Loan
  type (fixed-rate, ARM, I/O, Option ARM, etc.)

  	
   

  	
  IO
  Hybrid

  	
   

  
	
  21

  	
   

  	
  Lien
  type (1st, 2nd)

  	
   

  	
  1st

  	
   

  
	
   

  	
   

  	
  If
  adjustable:

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  Initial
  interest rate

  	
   

  	
  3.500

  	
  %

  
	
  23

  	
   

  	
  Term
  - initial interest rate

  	
   

  	
  60
  Months

  	
   

  
	
  24

  	
   

  	
  Initial
  payment amount

  	
   

  	
  2,146

  	
   

  
	
  25

  	
   

  	
  Term-initial
  payment amount

  	
   

  	
  60
  Months

  	
   

  
	
  26

  	
   

  	
  Negative
  amortization?

  	
   

  	
  No

  	
   

  
	
  27

  	
   

  	
  Rate
  reset frequency after first adjustment

  	
   

  	
  6
  Months

  	
   

  
	
  28

  	
   

  	
  Next
  reset date

  	
   

  	
  5/1/14

  	
   

  
	
  29

  	
   

  	
  Index

  	
   

  	
  LIBOR

  	
   

  
	
  30

  	
   

  	
  Margin

  	
   

  	
  2.750

  	
  %

  
	
  31

  	
   

  	
  Cap
  per adjustment

  	
   

  	
  2.000

  	
  %

  
	
  32

  	
   

  	
  Lifetime
  Cap

  	
   

  	
  9.500

  	
  %

  
	
  33

  	
   

  	
  Floor

  	
   

  	
  2.750

  	
  %

  
	
  34

  	
   

  	
  Front
  end DTI

  	
   

  	
  31

  	
  %

  
	
  35

  	
   

  	
  Back
  end DTI

  	
   

  	
  45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Restructuring Loss Calculation

  	
   

  	
   

  	
   

  
	
  36

  	
   

  	
  Loan
  Principal balance before restructuring

  	
   

  	
  450,000

  	
   

  
	
  37

  	
   

  	
  Accrued
  interest, limited to 90 days

  	
   

  	
  8,438

  	
   

  
	
  38

  	
   

  	
  Tax
  and insurance advances

  	
   

  	
  3,000

  	
   

  
	
  39

  	
   

  	
  3rd
  party fees due

  	
   

  	
  —

  	
   

  
	
  40

  	
   

  	
  Total
  loan balance due before restructuring

  	
   

  	
  461,438

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Assumptions for NPV Calculation, Restructured Loan:

  	
   

  	
   

  	
   

  
	
  41

  	
   

  	
  Discount
  rate for projected cash flows

  	
   

  	
  5.530

  	
  %

  
	
  42

  	
   

  	
  Loan
  prepayment in full

  	
   

  	
  120
  Months

  	
   

  
	
  43

  	
   

  	
  NPV
  of projected cash flows

  	
   

  	
  403,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  44

  	
   

  	
  Loss Amount

  	
   

  	
  58,438

  	
   

  

 

80

 

Notes to
Exhibit 2b (restructuring)

 

1.               The data shown are for
illustrative purpose. The figures will vary for actual restructurings.

 

2.               For purposes of loss
sharing, losses on restructured loans are calculated as the difference between:

 

a.               The principal, accrued
interest, advances due on the loan, and allowable 3rd party fees
prior to restructuring (lines 36-39), and 

 

b.              The Net Present Value (NPV)
of the estimated cash flows (line 43). The cash flows should assume no default
or prepayment for 10 years, followed by prepayment in full at the end of 10
years (120 months).

 

3.               For owner-occupied
residential loans, the NPV is calculated using the most recently published
Freddie Mac survey rate on 30-year fixed rate loans as of the restructure date.

 

4.               For investor owned or
non-owner occupied residential loans, the NPV is calculated using commercially
reasonable rate on 30-year fixed rate loans as of the restructure date.

 

5.               If the new loan is an
adjustable-rate loan, interest rate resets and related cash flows should be
projected based on the index rate in effect at the date of the loan
restructuring. If the restructured loan otherwise provides for specific charges
in monthly P&I payments over the term of the loan, those changes should be
reflected in the projected cash flows. Assuming Bank must retain supporting
schedule of projected cash flows as required by Section 2.1 of the Single
Family Shared-Loss Agreement and provide it to the FDIC if requested for a
sample audit.

 

6.               Do not include late fees,
prepayment penalties, or any similar lender fees or charges by the Failed Bank
or Assuming Bank to the loan account, any allocation of Assuming Bank’s
servicing costs, or any allocations of Assuming Bank’s general and
administrative (G&A) or other operating costs.

 

7.               The amount of accrued
interest that may be added to the balance of the loan is limited to the minimum
of: 

 

a.               90 days 

b.              The number of days that the
loan is delinquent at the time of restructuring 

c.               The number of days between
the resolution date and the restructuring 

 

To calculate accrued
interest, apply the note interest rate that would have been in effect if the
loan were performing to the principal balance after application of the last
payment made by the borrower.

 

81

 

Exhibit 2c

 

This exhibit contains two
versions of the loss share calculation for short sales, plus explanatory notes.

 

Exhibit 2c(1)

 

CALCULATION OF LOSS FOR SHORT SALE LOANS 

No Preceeding Loan Mod under Loss Share

 

	
  1

  	
   

  	
  Shared-Loss
  Month:

  	
   

  	
  May-09

  	
   

  
	
  2

  	
   

  	
  Loan
  #

  	
   

  	
  58776

  	
   

  
	
  3

  	
   

  	
  RO
  #

  	
   

  	
  542

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Interest
  paid-to-date

  	
   

  	
  7/31/08

  	
   

  
	
  5

  	
   

  	
  Short
  Payoff Date

  	
   

  	
  4/17/09

  	
   

  
	
  6

  	
   

  	
  Note
  Interest rate

  	
   

  	
  7.750

  	
  %

  
	
  7

  	
   

  	
  Owner
  occupied?

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
  If
  so:

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Borrower
  current gross annual income

  	
   

  	
  38,500

  	
   

  
	
  9

  	
   

  	
  Estimated
  NPV of loan mod

  	
   

  	
  200,000

  	
   

  
	
  10

  	
   

  	
  Most
  recent BPO

  	
   

  	
  380,000

  	
   

  
	
  11

  	
   

  	
  Most
  recent BPO date

  	
   

  	
  1/31/06

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Short-Sale Loss calculation

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Loan
  Principal balance

  	
   

  	
  375,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Accrued
  interest, limited to 90 days

  	
   

  	
  7,266

  	
   

  
	
  14

  	
   

  	
  Attorney’s
  fees

  	
   

  	
  0

  	
   

  
	
  15

  	
   

  	
  Tax
  and insurance advances

  	
   

  	
  0

  	
   

  
	
  16

  	
   

  	
  3rd
  party fees due

  	
   

  	
  2,800

  	
   

  
	
  17

  	
   

  	
  Incentive
  to borrower

  	
   

  	
  2,000

  	
   

  
	
  18

  	
   

  	
  Gross
  balance recoverable by Purchaser

  	
   

  	
  387,066

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  Amount
  accepted in Short-Sale

  	
   

  	
  255,000

  	
   

  
	
  20

  	
   

  	
  Hazard
  Insurance

  	
   

  	
  0

  	
   

  
	
  21

  	
   

  	
  Mortgage
  Insurance

  	
   

  	
  0

  	
   

  
	
  22

  	
   

  	
  Total
  Cash Recovery

  	
   

  	
  255,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  Loss Amount

  	
   

  	
  132,066

  	
   

  

 

82

 

Exhibit 2c(2)

CALCULATION
OF LOSS FOR SHORT SALE LOANS

Short Sale
after a Covered Loan Mod

 

	
  1

  	
   

  	
  Shared-Loss
  Month:

  	
   

  	
  May-09

  	
   

  
	
  2

  	
   

  	
  Loan
  #

  	
   

  	
  20076

  	
   

  
	
  3

  	
   

  	
  REO
  #

  	
   

  	
  345

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Loan
  mod date

  	
   

  	
  5/12/08

  	
   

  
	
  5

  	
   

  	
  Interest
  paid-to-date

  	
   

  	
  9/30/08

  	
   

  
	
  6

  	
   

  	
  Short
  Payoff Date

  	
   

  	
  4/2/09

  	
   

  
	
  7

  	
   

  	
  Note
  Interest rate

  	
   

  	
  7.500

  	
  %

  
	
  8

  	
   

  	
  Most
  recent BPO

  	
   

  	
  230,000

  	
   

  
	
  9

  	
   

  	
  Most
  recent BPO date

  	
   

  	
  1/21/09

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Short-Sale Loss calculation

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  NPV
  of projected cash flows at loan mod

  	
   

  	
  311,000

  	
   

  
	
  12

  	
   

  	
  Less:
  Principal payments between loan mod and deliquency

  	
   

  	
  1,000

  	
   

  
	
   

  	
   

  	
  Plus:

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Attorney’s
  fees

  	
   

  	
  0

  	
   

  
	
  14

  	
   

  	
  Tax
  and insurance advances

  	
   

  	
  1,500

  	
   

  
	
  15

  	
   

  	
  3rd
  party fees due

  	
   

  	
  2,600

  	
   

  
	
  16

  	
   

  	
  Incentive
  to borrower

  	
   

  	
  3,500

  	
   

  
	
  17

  	
   

  	
  Gross
  balance recoverable by Purchaser

  	
   

  	
  317,600

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  Amount
  accepted in Short-Sale

  	
   

  	
  234,000

  	
   

  
	
  19

  	
   

  	
  Hazard
  Insurance

  	
   

  	
  0

  	
   

  
	
  20

  	
   

  	
  Mortgage
  Insurance

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  Total
  Cash Recovery

  	
   

  	
  234,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  Loss Amount

  	
   

  	
  83,600

  	
   

  

 

83

 

Notes to
Exhibit 2c (short sale)

 

1.               The data shown are for
illustrative purpose. The figures will vary for actual short sales. 

 

2.               The covered loss is the
difference between the gross balance recoverable by Purchaser and the total
cash recovery. There are two methods of calculation for covered losses from
short sales, depending upon the circumstances. They are shown below: 

 

a.               If the loan was restructured
when the Loss Share agreement was in place, and then the short sale occurred,
use Exhibit 2c(2). This version uses the Net Present Value (NPV) of the
modified loan as the starting point for the covered loss. 

 

b.              Otherwise, use
Exhibit 2c(1). This version uses the unpaid balance of the loan as of the
last payment as the starting point for the covered loss.

 

3.               For Exhibit 2c(1), the
gross balance recoverable by the purchaser is calculated as the sum of lines 12–17;
it is shown in line 18. For Exhibit 2a(2), the gross balance recoverable
by the purchaser is calculated as line 11 minus line 12 plus lines 13–16; it is
shown in line 17.

 

4.               For Exhibit 2c(1), the
total cash recovery is calculated as the sum of lines 19–21; it is shown in
line 22. For Exhibit 2c(2), the total cash recovery is calculated as the
sum of lines 18–20; it is shown in line 21.

 

5.               Reasonable and customary
third party attorney’s fees and expenses incurred by or on behalf of Assuming
Bank in connection with any enforcement procedures, or otherwise with respect
to such loan, are reported under Attorney’s fees.

 

6.               Do not include late fees,
prepayment penalties, or any similar lender fees or charges by the Failed Bank
or Assuming Bank to the loan account, any allocation of Assuming Bank’s
servicing costs, or any allocations of Assuming Bank’s general and
administrative (G&A) or other operating costs.

 

7.               If
Exhibit 2c(2) is used, then no accrued interest may be included as a
covered loss. Otherwise, the amount of accrued interest that may be included as
a covered loss is limited to the minimum of: 

 

d.              90 days 

e.               The number of days that the
loan is delinquent when the property was sold 

f.                 The number of days between
the resolution date and the date when the property was sold 

 

To calculate accrued
interest, apply the note interest rate that would have been in effect if the
loan were performing to the principal balance after application of the last
payment made by the borrower.

 

84

 

Exhibit 2d

 

	
  Shared-Loss Month:

  	
   

  	
  [input
  month]

  	
   

  	
   

  	
   

  
	
  Loan no.:

  	
   

  	
  [input
  loan no.)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NOTE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The
  calculation of recovery on a loan for which a Restructuring Loss has been
  paid will only apply if the loan is sold.

  

 

	
  EXAMPLE CALCULATION

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Restructuring
  Loss Information

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loan
  principal balance before restructuring

  	
   

  	
   

  	
   

  	
  $

  	
  200,000

  	
   

  	
  A

  	
   

  
	
  NPV,
  restructured loan

  	
   

  	
   

  	
   

  	
  165,000

  	
   

  	
  B

  	
   

  
	
  Loss
  on restructured loan

  	
   

  	
   

  	
   

  	
  $

  	
  35,000

  	
   

  	
  A – B

  	
   

  
	
  Times
  FDIC applicable loss share % (80% or 95%)

  	
   

  	
   

  	
   

  	
  80

  	
  %

  	
   

  	
   

  
	
  Loss share payment to purchaser

  	
   

  	
   

  	
   

  	
  $

  	
  28,000

  	
   

  	
  C

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Calculation – Recovery amount due to
  Receiver

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loan
  sales price

  	
   

  	
   

  	
   

  	
  $

  	
  190,000

  	
   

  	
   

  	
   

  
	
  NPV
  of restructured loan at mod date

  	
   

  	
   

  	
   

  	
  165,000

  	
   

  	
   

  	
   

  
	
  Gain
  - step 1

  	
   

  	
   

  	
   

  	
  25,000

  	
   

  	
  D

  	
   

  
	
  PLUS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loan
  UPB after restructuring

  	
   

  	
  (1)

  	
   

  	
  200,000

  	
   

  	
   

  	
   

  
	
  Loan
  UPB at liquidation date

  	
   

  	
   

  	
   

  	
  192,000

  	
   

  	
   

  	
   

  
	
  Gain
  - step 2 (principal collections after restructuring)

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
  E

  	
   

  
	
  Recovery
  amount

  	
   

  	
   

  	
   

  	
  33,000

  	
   

  	
  D + E

  	
   

  
	
  Times
  FDIC loss share %

  	
   

  	
   

  	
   

  	
  80

  	
  %

  	
   

  	
   

  
	
  Recovery due to FDIC

  	
   

  	
   

  	
   

  	
  $

  	
  26,400

  	
   

  	
  F

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net loss share paid to purchaser (C – F)

  	
   

  	
   

  	
   

  	
  $

  	
  1,600

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Proof Calculation

  	
   

  	
  (2)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loan
  principal balance

  	
   

  	
   

  	
   

  	
  $

  	
  200,000

  	
   

  	
  G

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal
  collections on loan

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
   

  	
   

  
	
  Sales
  price for loan

  	
   

  	
   

  	
   

  	
  190,000

  	
   

  	
   

  	
   

  
	
  Total
  collections on loan

  	
   

  	
   

  	
   

  	
  198,000

  	
   

  	
  H

  	
   

  
	
  Net
  loss on loan

  	
   

  	
   

  	
   

  	
  $

  	
  2,000

  	
   

  	
  G – H

  	
   

  
	
  Times
  FDIC applicable loss share % (80% or 95%)

  	
   

  	
   

  	
   

  	
  80

  	
  %

  	
   

  	
   

  
	
  Loss share payment to purchaser

  	
   

  	
   

  	
   

  	
  $

  	
  1,600

  	
   

  	
   

  	
   

  

 

	
  (1)

  	
   

  	
  This example assumes that
  the FDIC loan modification program as shown in Exhibit 5 is applied and
  the loan restructuring does not result in a reduction in the loan principal
  balance due from the borrower.

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  This proof calculation is
  provided to illustrate the concept and the Assuming Bank is not required to
  provide this with its Recovery calculations.

  

 

85

 

Exhibit 3

Portfolio Performance and Summary Schedule

 

	
  SHARED-LOSS LOANS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PORTFOLIO PERFORMANCE AND SUMMARY SCHEDULE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MONTH ENDED:

  	
  [input
  report month]

  	
   

  	
   

  	
   

  

 

	
  POOL SUMMARY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  #

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  Loans
  at Sale Date

  	
  xx

  	
   

  	
  xx

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loans
  as of this month-end

  	
  xx

  	
   

  	
  xx

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  STATED THRESHOLD TRACKING

  	
  #

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  Stated
  Threshold amount

  	
   

  	
   

  	
   

  	
   

  	
  A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  loss payments, prior month

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loss
  payment for current month

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  loss payment, this month

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  Commercial & Other Loans Net Charge-Offs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  B

  	
   

  
	
  Remaining
  to Stated Threshold

  	
   

  	
   

  	
   

  	
   

  	
  A
  - B

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Percent
  of Total

  	
   

  
	
  PORTFOLIO PERFORMANCE STATUS

  	
  #

  	
   

  	
  $

  	
   

  	
  #

  	
   

  
	
  Current

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30
  – 59
  days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  60
  – 89
  days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  90
  – 119
  days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  120
  and over days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In
  foreclosure

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ORE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Memo
  Item:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loans
  in process of restructuring – total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loans
  in bankruptcy

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Loans
  in process of restructuring by delinquency status

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Current

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30
  - 59 days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  60
  - 89 days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  90
  - 119 days past due

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  120
  and over days past due In foreclosure

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

86

 

List of Loans Paid Off During Month

 

	
  Loan #

  	
   

  	
  Principal

  Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

List of Loans Sold During Month

 

	
  Loan #

  	
   

  	
  Principal

  Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

87

 

Exhibit 4

Wire Transfer Instructions

 

PURCHASER WIRING INSTRUCTIONS

 

	
  BANK RECEIVING WIRE

  	
   

  
	
   

  	
   

  
	
  9 DIGIT ABA ROUTING NUMBER

  	
   

  
	
   

  	
   

  
	
  ACCOUNT NUMBER

  	
   

  
	
   

  	
   

  
	
  NAME OF ACCOUNT

  	
   

  
	
   

  	
   

  
	
  ATTENTION TO WHOM

  	
   

  
	
   

  	
   

  
	
  PURPOSE OF WIRE

  	
   

  
	
   

  	
   

  
	
  FDIC RECEIVER WIRING INSTRUCTIONS

  
	
   

  
	
  BANK RECEIVING WIRE

  	
   

  
	
   

  	
   

  
	
  SHORT NAME

  	
   

  
	
   

  	
   

  
	
  ADDRESS OF BANK RECEIVING WIRE

  	
   

  
	
   

  	
   

  
	
  9 DIGIT ABA ROUTING NUMBER

  	
   

  
	
   

  	
   

  
	
  ACCOUNT NUMBER

  	
   

  
	
   

  	
   

  
	
  NAME OF ACCOUNT

  	
   

  
	
   

  	
   

  
	
  ATTENTION TO WHOM

  	
   

  
	
   

  	
   

  
	
  PURPOSE OF WIRE

  	
   

  

 

88

 

EXHIBIT 5

 

FDIC MORTGAGE LOAN MODIFICATION PROGRAM

 

Objective

 

The
objective of this FDIC Mortgage Loan Modification Program (“Program”) is to
modify the terms of certain residential mortgage loans so as to improve
affordability, increase the probability of performance, allow borrowers to
remain in their homes and increase the value of the loans to the FDIC and
assignees. The Program provides for the modification of Qualifying Loans (as
defined below) by reducing the borrower’s monthly housing debt to income ratio
(“DTI Ratio”) to no more than 31% at the time of the modification and
eliminating adjustable interest rate and negative amortization features.

 

Qualifying
Mortgage Loans

 

In
order for a mortgage loan to be a Qualifying Loan it must meet all of the
following criteria, which must be confirmed by the lender:

 

·                  The collateral securing the
mortgage loan is owner-occupied and the owner’s primary residence; and

 

·                  The mortgagor has a first
priority lien on the collateral; and

 

·                  Either the borrower is at
least 60 days delinquent or a default is reasonably foreseeable.

 

Modification
Process

 

The
lender shall undertake a review of its mortgage loan portfolio to identify
Qualifying Loans. For each Qualifying Loan, the lender shall determine the net
present value of the modified loan and, if it will exceed the net present value
of the foreclosed collateral upon disposition, then the Qualifying Loan shall
be modified so as to reduce the borrower’s monthly DTI Ratio to no more than
31% at the time of the modification. To achieve this, the lender shall use a
combination of interest rate reduction, term extension and principal
forbearance, as necessary.

 

The
borrower’s monthly DTI Ratio shall be a percentage calculated by dividing the
borrower’s monthly income by the borrower’s monthly housing payment (including
principal, interest, taxes and insurance). For these purposes, (1) the
borrower’s monthly income shall be the amount of the borrower’s (along with any
co-borrowers’) documented and verified gross monthly income, and (2) the
borrower’s monthly housing payment shall be the amount required to pay monthly
principal and interest plus one-twelfth of the then current annual amount
required to pay real property taxes and homeowner’s insurance with respect to
the collateral.

 

In
order to calculate the monthly principal payment, the lender shall capitalize
to the outstanding principal balance of the Qualifying Loan the amount of all
delinquent interest, delinquent taxes, past due insurance premiums, third party
fees and (without duplication) escrow advances (such

 

89

 

amount,
the “Capitalized Balance”).

 

In
order to achieve the goal of reducing the DTI Ratio to 31%, the lender shall
take the following steps in the following order of priority with respect to
each Qualifying Loan:

 

1.               Reduce the interest rate to
the then current Freddie Mac Survey Rate for 30-year fixed rate mortgage loans,
and adjust the term to 30 years.

 

2.               If the DTI Ratio is still in
excess of 31%, reduce the interest rate further, but no lower than 3%, until the
DTI ratio of 31% is achieved.

 

3.               If the DTI Ratio is still in
excess of 31% after adjusting the interest rate to 3%, extend the remaining
term of the loan by 10 years.

 

4.               If the DTI Ratio is still in
excess of 31%, calculate a new monthly payment (the “Adjusted Payment Amount”)
that will result in the borrower’s monthly DTI Ratio not exceeding 31%. After
calculating the Adjusted Payment Amount, the lender shall bifurcate the
Capitalized Balance into two portions — the amortizing portion and the non-amortizing
portion. The amortizing portion of the Capitalized Balance shall be the
mortgage amount that will fully amortize over a 40-year term at an annual
interest rate of 3% and monthly payments equal to the Adjusted Payment Amount.
The non-amortizing portion of the Capitalized Balance shall be the difference
between the Capitalized Balance and the amortizing portion of the Capitalized
Balance. If the amortizing portion of the Capitalized Balance is less than 75%
of the current estimated value of the collateral, then the lender may choose
not to restructure the loan. If the lender chooses to restructure the loan,
then the lender shall forbear on collecting the non-amortizing portion of the
Capitalized Balance, and such amount shall be due and payable only upon the
earlier of (i) maturity of the modified loan, (ii) a sale of the
property or (iii) a pay-off or refinancing of the loan. No interest shall
be charged on the non-amortizing portion of the Capitalized Balance, but
repayment shall be secured by a first lien on the collateral.

 

Special
Note:

 

The
net present value calculation used to determine whether a loan should be
modified based on the modification process above is distinct and different from
the net present value calculation used to determine the covered loss if the
loan is modified. Please refer only to the net present value calculation
described in this exhibit for the modification process, with its separate
assumptions, when determining whether to provide a modification to a borrower.
Separate assumptions may include, without limitation, Assuming Bank’s
determination of a probability of default without modification, a probability
of default with modification, home price forecasts, prepayment speeds, and
event timing. These assumptions are applied to different projected cash flows
over the term of the loan, such as the projected cash flow of the loan
performing or defaulting without modification and the projected cash flow of
the loan performing or defaulting with modification.

 

90

 

By
contrast, the net present value for determining the
covered loss is based on a 10 year period. While the assumptions in the
net present value calculation used in the modification process may change,
the net present value calculation for determining the covered loss remains
constant.

 

91

 

EXHIBIT 4.15B

COMMERCIAL AND OTHER ASSETS SHARED-LOSS AGREEMENT

 

This
agreement for reimbursement of loss sharing expenses on certain loans and other
assets (the “Commercial Shared-Loss Agreement”) shall apply when the Assuming
Bank purchases Shared-Loss Assets as that term is defined herein. The terms
hereof shall modify and supplement, as necessary, the terms of the Purchase and
Assumption Agreement to which this Commercial Shared-Loss Agreement is attached
as Exhibit 4.15B and incorporated therein. To the extent any
inconsistencies may arise between the terms of the Purchase and Assumption
Agreement and this Commercial Shared-Loss Agreement with respect to the subject
matter of this Commercial Shared-Loss Agreement, the terms of this Commercial
Shared-Loss Agreement shall control. References in this Commercial Shared-Loss
Agreement to a particular Section shall be deemed to refer to a Section in
this Commercial Shared-Loss Agreement unless the context indicates that a
Section of the Purchase and Assumption Agreement is intended.

 

ARTICLE I — DEFINITIONS

 

Capitalized
terms used in this Commercial Shared-Loss Agreement that are not defined in this
Commercial Shared-Loss Agreement are defined in the Purchase and Assumption
Agreement In addition to the terms defined above, defined below are certain
additional terms relating to loss-sharing, as used in this Commercial
Shared-Loss Agreement.

 

“AAA” means the American
Arbitration Association as provided in Section 2.1(f)(iii) of this
Commercial Shared-Loss Agreement.

 

“Accrued Interest” means, with
respect to any Shared-Loss Loan, Permitted Advance or Shared-Loss Loan
Commitment Advance at any time, the amount of earned and unpaid interest,
taxes, credit life and/or disability insurance premiums (if any) payable by the
Obligor accrued on or with respect to such Shared-Loss Loan, Permitted Advance
or Shared- Loss Loan Commitment Advance, all as reflected on the Accounting
Records of the Failed Bank or the Assuming Bank (as applicable); provided,
that Accrued Interest shall not include any amount that accrues on or with
respect to any Shared-Loss Loan, Permitted Advance or Shared-Loss Loan
Commitment Advance after that Asset has been placed on non-accrual or
nonperforming status by either the Failed Bank or the Assuming Bank (as
applicable).

 

“Additional ORE” means Shared-Loss Loans
that become Other Real Estate after Bank Closing Date.

 

“Affiliate” shall have the meaning set
forth in the Purchase and Assumption Agreement; provided, that,
for purposes of this Commercial Shared-Loss Agreement, no Third Party Servicer
shall be deemed to be an Affiliate of the Assuming Bank.

 

92

 

“Applicable Anniversary of the Commencement Date” means the
fifth (5th) anniversary of the Commencement Date.

 

“Calendar Quarter” means a
quarterly period (a) for the first such period, beginning on the
Commencement Date and ending on the last calendar day of either March, June,
September or December, whichever is the first to occur after the
Commencement Date, and (b) for quarterly periods thereafter, beginning on
the first calendar day of the calendar month immediately after the month that
ended the prior period and ending on the last calendar day of each successive
three-calendar-month period thereafter (i. e., each March, June,
September and December, starting in the applicable order depending on the
ending date of first such period) of any year.

 

“Capitalized Expenditures” means those
expenditures that (i) would be capitalized under generally accepted
accounting principles, and (ii) are incurred with respect to Shared-Loss
Loans, Other Real Estate, Additional ORE or Subsidiary ORE. Capitalized
Expenditures shall not include expenses related to environmental conditions
including, but not limited to, remediation, storage or disposal of any
hazardous or toxic substances or any pollutant or contaminant.

 

“Charge-Offs” means, with respect to any
Shared-Loss Assets for any period, an amount equal to the aggregate amount of
loans or portions of loans classified as “Loss” under the Examination Criteria,
including (a) charge-offs of (i) the principal amount of such assets
net of unearned interest (including write-downs associated with Other Real
Estate, Additional ORE, Subsidiary ORE or loan modification (s))
(ii) Accrued Interest, and (iii) Capitalized Expenditures plus
(b) Pre-Charge-Off Expenses incurred on the respective Shared-Loss Loans,
all as effected by the Assuming Bank during such period and reflected on the
Accounting Records of the Assuming Bank; provided, that:
(i) the aggregate amount of Accrued Interest (including any reversals
thereof) for the period after Bank Closing that shall be included in
determining the amount of Charge-Offs for any Shared-Loss Loan shall not exceed
ninety (90) days’ Accrued Interest; (ii) no Charge-Off shall be taken with
respect to any anticipated expenditure by the Assuming Bank until such
expenditure is actually incurred; (iii) any financial statement
adjustments made in connection with the purchase of any Assets pursuant to this
Purchase and Assumption Agreement or any future purchase, merger, consolidation
or other acquisition of the Assuming Bank shall not constitute “Charge-Offs”;
and (iv) except for Portfolio Sales or any other sales or dispositions
consented to by the Receiver, losses incurred on the sale or other disposition
of Shared-Loss Assets to any Person (other than the sale or other disposition of
Other Real Estate, Additional ORE or Subsidiary ORE to a Person other than an
Affiliate of the Assuming Bank which is conducted in a commercially reasonable
and prudent manner) shall not constitute Charge-Offs.

 

“Commencement Date” means the
first calendar day following Bank Closing.

 

“Consumer Loans” means Loans to individuals
for household, family and other personal expenditures (including United States
and/or State-guaranteed student loans and

 

93

 

extensions
of credit pursuant to a credit card plan or debit card plan).

 

“Environmental Assessment” means an
assessment of the presence, storage or release of any hazardous or toxic
substance, pollutant or contaminant with respect to the collateral securing a Shared-Loss
Loan that has been fully or partially charged off.

 

“Examination Criteria” means the loan
classification criteria employed by, or any applicable regulations of, the
Assuming Bank’s Chartering Authority at the time such action is taken, as such criteria
may be amended from time to time.

 

“Failed Bank Charge-Offs/Write-Downs” means, with
respect to any Shared-Loss Asset, an amount equal to the aggregate amount of
reversals or charge-offs of Accrued Interest and charge-offs and write-downs of
principal effected by the Failed Bank with respect to that Shared-Loss Asset as
reflected on the Accounting Records of the Failed Bank.

 

“Fair Value” means the fair value of a
Shared Loss MTM Asset as determined in accordance with FAS 157 as in effect on
Bank Closing.

 

“FDIC Party” has the meaning provided in
Section 2.1(f)(ii) of this Commercial Shared-Loss Agreement.

 

“Net Charge-Offs” means, with
respect to any period, an amount equal to the aggregate amount of Charge-Offs
for such period less the amount of Recoveries for such period.

 

“Neutral Member” has the meaning provided in
Section 2.1(f)(ii) of this Commercial Shared-Loss Agreement.

 

“New Shared-Loss Loans” means loans
that would otherwise be subject to loss sharing under this Commercial
Shared-Loss Agreement that were originated after the Information Package Date
and before Bank Closing.

 

“Notice of Dispute” has the
meaning provided in Section 2.1(f)(iii) of this Commercial
Shared-Loss Agreement.

 

“ORE Subsidiary” means any Subsidiary of the
Assuming Bank that engages solely in holding, servicing, managing or
liquidating interests of a type described in clause (A) of the definition
of “Other Real Estate,” which interests have arisen from the collection or
settlement of a Shared-Loss Loan.

 

“Other Real Estate” means all of
the following (including any of the following fully or partially charged off
the books and records of the Failed Bank or the Assuming Bank) that
(i) are owned by the Failed Bank as of Bank Closing and are purchased
pursuant to the Purchase and Assumption Agreement or (ii) have arisen
subsequent to Bank Closing from the collection or settlement by the Assuming
Bank of a Shared-Loss Loan:

 

94

 

(A)               all interests in
real estate (other than Bank Premises and Fixtures), including but not limited
to mineral rights, leasehold rights, condominium and cooperative interests, air
rights and development rights; and

 

(B)               all other assets
(whether real or personal property) acquired by foreclosure or in full or
partial satisfaction of judgments or indebtedness.

 

“Permitted Advance” means an
advance of funds by the Assuming Bank with respect to a Shared-Loss Loan, or
the making of a legally binding commitment by the Assuming Bank to advance
funds with respect to a Shared-Loss Loan, that (i) in the case of such an
advance, is actually made, and, in the case of such a commitment, is made and
all of the proceeds thereof actually advanced, within one (1) year after
the Commencement Date, (ii) does not cause the sum of (A) the book
value of such Shared-Loss Loan as reflected on the Accounting Records of the
Assuming Bank after any such advance has been made by the Assuming Bank plus
(B) the unfunded amount of any such commitment made by the Assuming Bank
related thereto, to exceed 110% of the Book Value of such Shared-Loss Loan,
(iii) is not made with respect to a Shared-Loss Loan with respect to which
(A) there exists a related Shared-Loss Loan Commitment or (B) the
Assuming Bank has taken a Charge-Off and (iv) is made in good faith, is
supported at the time it is made by documentation in the Credit Files and
conforms to and is in accordance with the applicable requirements set forth in
Article III of this Commercial Shared-Loss Agreement and with the then
effective written internal credit policy guidelines of the Assuming Bank; provided,
that the limitations in subparagraphs (i), (ii) and (iii) of
this definition shall not apply to any such action (other than to an advance or
commitment related to the remediation, storage or final disposal of any
hazardous or toxic substance, pollutant or contaminant) that is taken by
Assuming Bank in its reasonable discretion to preserve or secure the value of
the collateral for such Shared-Loss Loan.

 

“Permitted Amendment” means, with
respect to any Shared-Loss Loan Commitment or Shared-Loss Loan, any amendment,
modification, renewal or extension thereof, or any waiver of any term, right,
or remedy thereunder, made by the Assuming Bank in good faith and otherwise in
accordance with the applicable requirements set forth in Article III of
this Commercial Shared-Loss Agreement and the then effective written internal
credit policy guidelines of the Assuming Bank; provided, that:

 

(i) with respect to a Shared-Loss Loan Commitment or a
Shared-Loss Loan that is not a revolving line of credit, no such amendment,
modification, renewal, extension, or waiver, except as allowed under the
definition of Permitted Advance, shall operate to increase the amount of
principal (A) then remaining available to be advanced by the Assuming Bank
under the Shared-Loss Loan Commitment or (B) then outstanding under the
Shared-Loss Loan;

 

(ii) with respect to a Shared-Loss Loan Commitment or a
Shared-Loss Loan that is a revolving line of credit, no such amendment,
modification, renewal, extension, or waiver, except as allowed under the
definition of Permitted Advance, shall operate to increase the maximum amount
of principal authorized as of Bank Closing to be outstanding at any one time
under the underlying revolving line of credit relationship with the debtor
(regardless of the extent to which

 

95

 

such
revolving line of credit may have been funded as of Bank Closing or may
subsequently have been funded and/or repaid); and

 

(iii) no
such amendment, modification, renewal, extension or waiver shall extend the
term of such Shared-Loss Loan Commitment or Shared-Loss Loan beyond the end of
the final Shared-Loss Quarter unless the term of such Shared-Loss Loan
Commitment or Shared-Loss Loan as existed on Bank Closing was beyond the end of
the final Shared-Loss Quarter, in which event no such amendment, modification,
renewal, extension or waiver shall extend such term beyond the term as existed
as of Bank Closing.

 

“Pre-Charge-Off Expenses” means those
expenses incurred in the usual and prudent management of a Shared-Loss Loan
that would qualify as a Reimbursable Expense or Recovery Expense if incurred
after a Charge-Off of the related Shared-Loss Asset had occurred.

 

“Quarterly Certificate” has the
meaning provided in Section 2.1(a)(i) of this Commercial Shared-Loss
Agreement.

 

“Recoveries” (I)(A) In addition to
any sums to be applied as Recoveries pursuant to subparagraph (II) below,
“Recoveries” means, with respect to any period, the sum of (without
duplication):

 

(i) the
amount of collections during such period by the Assuming Bank on Charge-Offs of
Shared-Loss Assets effected by the Assuming Bank prior to the end of the final
Shared-Loss Quarter; plus

 

(ii) the
amount of collections during such period by the Assuming Bank on Failed Bank
Charge-Offs/Write-Downs; plus

 

(iii) the
amount of gain on any sale or other disposition during such period by the
Assuming Bank of Shared Loss Loans, Other Real Estate, Additional ORE or
Subsidiary ORE (provided, that the amount of any such gain
included in Recoveries shall not exceed the aggregate amount of the related
Failed Bank Charge-Offs/Write-Downs and Charge-Offs taken and any related
Reimbursable Expenses and Recovery Expenses); plus

 

(iv) the amount of collections during such period by the Assuming
Bank of any Reimbursable Expenses or Recovery Expenses; plus

 

(v) the amount of any fee or other consideration received by the
Assuming Bank during or prior to such period in connection with any amendment,
modification, renewal, extension, refinance, restructure, commitment or other
similar action taken by the Assuming Bank with respect to a Shared-Loss Asset
with respect to which there exists a Failed Bank Charge-Off/Write-Down or a
Shared-Loss Loan as to which a Charge-Off has been effected by the Assuming
Bank during or prior to such period (provided, that the amount of
any such fee or other consideration included in Recoveries shall not exceed the
aggregate amount of the related Failed Bank Charge-Offs/Write-Downs and
Charge-Offs taken and any related Reimbursable

 

96

 

Expenses
and Recovery Expenses).

 

(I)(B) For
the purpose of determining the amounts to be applied as Recoveries pursuant to
subparagraph (I)(A) above, the Assuming Bank shall apply amounts received
on the Assets that are not otherwise applied to reduce the book value of
principal of a Shared-Loss Loan (or, in the case of Other Real Estate,
Additional ORE, Subsidiary ORE and Capitalized Expenditures, that are not
otherwise applied to reduce the book value thereof) in the following order:
first to Charge-Offs and Failed Bank Charge-Offs/Write Downs; then to
Reimbursable Expenses and Recovery Expenses; then to interest income; and then
to other expenses incurred by the Assuming Bank.

 

(II) If
there occurs an amendment, modification, renewal, extension, refinance,
restructure, commitment, sale or other similar action with respect to a
Shared-Loss Loan as to which there exists a Failed Bank Charge-Off/Write Down
or as to which a Charge-Off has been effected by the Assuming Bank during or
prior to such period, and  if, as a result of such occurrence, the
Assuming Bank recognizes any interest income for financial accounting purposes
on that Shared-Loss Loan, then “Recoveries” shall also include the
portion of the total amount of any such interest income recognized by the
Assuming Bank which is derived by multiplying:

 

(A) the total amount of any such interest income recognized by the
Assuming Bank during such period with respect to that Shared-Loss Loan as
described above, by

 

(B) a fraction, the numerator of which is the aggregate
principal amount (excluding reversals or charge-offs of Accrued Interest) of
all such Failed Bank Charge-Offs/Write-Downs and Charge-Offs effected by the
Assuming Bank with respect to that Shared-Loss Loan plus the principal amount
of that Shared-Loss Loan that has not yet been charged-off but has been placed
on nonaccrual status, all of which occurred at any time prior to or during the
period in which the interest income referred to in subparagraph
(II)(A) immediately above was recognized, and the denominator of
which is the total amount of principal indebtedness (including all such prior
Failed Bank Charge-Offs/Write-Downs and Charge-Offs as described above) due
from the Obligor on that Shared-Loss Loan as of the end of such period;

 

provided, however,
that the amount of any interest income included as Recoveries for a
particular Shared-Loss Loan shall not exceed the aggregate amount of
(a) Failed Bank Charge-Offs/Write-Downs, (b) Charge-Offs effected by
the Assuming Bank during or prior to the period in which the amount of
Recoveries is being determined, plus (c) any Reimbursable Expenses and
Recovery Expenses paid to the Assuming Bank pursuant to this Commercial
Shared-Loss Agreement during or prior to the period in which the amount of
Recoveries is being determined, all with respect to that particular Shared-Loss
Loan; and, provided, further, that any collections on any
such Shared-Loss Loan that are not applied to reduce book value of
principal or recognized as interest income shall be applied pursuant to
subparagraph (I) above.

 

(III) Notwithstanding
subparagraphs (I) and (II) above, the term “Recoveries” shall not
include: (a) any amounts paid to the Assuming Bank by the Receiver
pursuant to Section 2.1 of

 

97

 

this
Commercial Shared-Loss Agreement, (b) amounts received with respect to
Charge-Offs effected by the Assuming Bank after the final Shared-Loss Quarter,
(c) after the final Shared-Loss Quarter, income received by the Assuming
Bank from the operation of, and any gains recognized by the Assuming Bank on the
disposition of, Other Real Estate, Additional ORE or Subsidiary ORE (such
income and gains being hereinafter together referred to as “ORE Income”), except
to the extent that aggregate ORE Income exceeds the aggregate expenses paid to
third parties by or on behalf of the Assuming Bank after the final Shared-Loss
Quarter to manage, operate and maintain Other Real Estate, Additional ORE or
Subsidiary ORE (such expenses being hereinafter referred to as “ORE Expenses”).
In determining the extent aggregate ORE Income exceeds aggregate ORE Expenses
for any Recovery Quarter as set forth immediately above in subparagraph (c),
the Assuming Bank will subtract (i) ORE Expenses paid to third parties
during such Recovery Quarter (provided, that, in the case of the final Recovery
Quarter only, the Assuming Bank will subtract ORE Expenses paid to third
parties from the beginning of the final Recovery Quarter up to the date the
Assuming Bank is required to deliver the final Quarterly Certificate pursuant
to this Commercial Shared-Loss Agreement) from (ii) ORE Income
received during such Recovery Quarter, to calculate net ORE income (“Net ORE
Income”) for that Recovery Quarter. If the amount of Net ORE Income so
calculated for a Recovery Quarter is positive, such amount shall be reported as
Recoveries on the Quarterly Certificate for such Recovery Quarter. If the
amount of Net ORE Income so calculated for a Recovery Quarter is negative (“Net
ORE Loss Carryforward”), such amount shall be added to any ORE Expenses paid to
third parties in the next succeeding Recovery Quarter, which sum shall then be
subtracted from ORE Income for that next succeeding Recovery Quarter, for the
purpose of determining the amount of Net ORE Income (or, if applicable, Net ORE
Loss Carryforward) for that next succeeding Recovery Quarter. If, as of the end
of the final Recovery Quarter, a Net ORE Loss Carryforward exists, then the
amount of the Net ORE Loss Carryforward that does not exceed the
aggregate amount of Net ORE Income reported as Recoveries on Quarterly
Certificates for all Recovery Quarters may be included as a Recovery
Expense on the Quarterly Certificate for the final Recovery Quarter.

 

“Recovery Amount” has the
meaning provided in Section 2.1(b)(ii) of this Commercial Shared-Loss
Agreement.

 

“Recovery Expenses” means, for any
Recovery Quarter, the amount of actual, reasonable and necessary out-of-pocket
expenses (other than Capitalized Expenditures) paid to third parties (other
than Affiliates of the Assuming Bank) by or on behalf of the Assuming Bank, as
limited by Sections 3.2(c) and (d) of Article III to this
Commercial Shared-Loss Agreement, to recover amounts owed with respect to
(i) any Shared-Loss Asset as to which a Charge-Off was effected prior to
the end of the final Shared-Loss Quarter (provided that such amounts were
incurred no earlier than the date the first Charge-Off on such Shared-Loss
Asset could have been reflected on the Accounting Records of the Assuming
Bank), and (ii) Failed Bank Charge-Offs/Write-Downs (including, in each
case, all costs and expenses related to an Environmental Assessment and any
other costs or expenses related to any environmental conditions with respect to
the Shared-Loss Assets (it being understood that any remediation expenses for
any such pollutant or contaminant are not recoverable if in excess of $200,000
per Shared-Loss Asset, without the Assuming Bank having obtained the prior
consent of the Receiver for such

 

98

 

expenses);
provided, that, so long as income with respect to a Shared-Loss
Loan is being prorated pursuant to the arithmetical formula in subsection
(II) of the definition of “Recoveries”, the term “Recovery Expenses” shall
not include that portion of any such expenses paid during such Recovery
Quarter to recover any amounts owed on that Shared-Loss Loan that is derived
by:

 

subtracting (1) the
product derived by multiplying:

 

(A) the total amount of any such expenses paid by or on behalf of
the Assuming Bank during such Recovery Quarter with respect to that Shared-Loss
Loan, by

 

(B) a fraction, the numerator of which is the aggregate
principal amount (excluding reversals or charge-offs of Accrued Interest) of
all such Failed Bank Charge-Offs/Write-Downs and Charge-Offs effected by the
Assuming Bank with respect to that Shared-Loss Loan plus the principal amount
of that Shared-Loss Loan that has not yet been charged-off but has been placed
on nonaccrual status, all of which occurred at any time prior to or during the
period in which the interest income referred to in subparagraph (II)(A) of
the definition of “Recoveries” was recognized, and the denominator of
which is the total amount of principal indebtedness (including all such prior
Failed Bank Charge-Offs/Write-Downs and Charge-Offs as described above) due
from the Obligor on that Shared-Loss Loan as of the end of such period;

 

from (2) the
total amount of any such expenses paid during that Recovery Quarter with
respect to that Shared-Loss Loan.

 

“Recovery Quarter” has the
meaning provided in Section 2.1(a)(ii) of this Commercial Shared-Loss
Agreement.

 

“Reimbursable Expenses” means, for any
Shared-Loss Quarter, the amount of actual, reasonable and necessary
out-of-pocket expenses (other than Capitalized Expenditures), paid to third
parties (other than Affiliates of the Assuming Bank) by or on behalf of the
Assuming Bank, as limited by Sections 3.2(c) and (d) of
Article III of this Commercial Shared-Loss Agreement, to:

 

(i) recover
amounts owed with respect to any Shared-Loss Asset as to which a Charge-Off has
been effected prior to the end of the final Shared-Loss Quarter (provided that
such amounts were incurred no earlier than the date the first Charge-Off on
such Shared-Loss Asset could have been reflected on the Accounting Records of
the Assuming Bank) and recover amounts owed with respect to Failed Bank
Charge-Offs/Write-Downs (including, in each case, all costs and expenses
related to an Environmental Assessment and any other costs or expenses related
to any environmental conditions with respect to the Shared-Loss Assets (it
being understood that any such remediation expenses for any such pollutant or
contaminant are not recoverable if in excess of $200,000 per Shared-Loss Asset,
without the Assuming Bank having obtained the prior consent of the Receiver for
such expenses); provided, that, so long as income

 

99

 

with
respect to a Shared-Loss Loan is being pro-rated pursuant to the arithmetical
formula in subsection (II) of the definition of “Recoveries”, the term
“Reimbursable Expenses” shall not include that portion of any such
expenses paid during such Shared-Loss Quarter to recover any amounts owed on
that Shared-Loss Loan that is derived by:

 

subtracting (1) the
product derived by multiplying:

 

(A) the total amount of any such expenses paid by or on behalf of
the Assuming Bank during such Shared-Loss Quarter with respect to that
Shared-Loss Loan, by

 

(B) a fraction, the numerator of which is the aggregate
principal amount (excluding reversals or charge-offs of Accrued Interest) of
all such Failed Bank Charge-Offs/Write-Downs and Charge-Offs effected by the
Assuming Bank with respect to that Shared-Loss Loan plus the principal amount
of that Shared-Loss Loan that has not yet been charged-off but has been placed
on nonaccrual status, all of which occurred at any time prior to or during the
period in which the interest income referred to in subparagraph (II)(A) of
the definition of “Recoveries” was recognized, and the denominator of
which is the total amount of principal indebtedness (including all such prior
Failed Bank Charge-Offs/Write-Downs and Charge-Offs as described above) due
from the Obligor on that Shared-Loss Loan as of the end of such period;

 

from (2) the
total amount of any such expenses paid during that Shared-Loss Quarter with
respect to that Shared-Loss Loan; and

 

(ii) manage,
operate or maintain Other Real Estate, Additional ORE or Subsidiary ORE less
the amount of any income received by the Assuming Bank during such Shared-Loss
Quarter with respect to such Other Real Estate, Additional ORE or Subsidiary
ORE (which resulting amount under this clause (ii) may be negative).

 

“Review Board” has the meaning provided in
Section 2.1(f)(i) of this Commercial Shared-Loss Agreement.

 

“Shared-Loss Amount” has the
meaning provided in Section 2.1(b)(i) of this Commercial Shared-Loss
Agreement.

 

“Shared-Loss Asset Repurchase Price” means, with
respect to any Shared-Loss Asset, the principal amount thereof plus any other
fees or penalties due from an Obligor (including, subject to the limitations
discussed below, the amount of any Accrued Interest) stated on the Accounting
Records of the Assuming Bank, as of the date as of which the Shared-Loss Asset
Repurchase Price is being determined (regardless, in the case of a Shared-Loss
Loan, of the Legal Balance thereof) plus all Reimbursable Expenses and Recovery
Expenses incurred up to and through the date of consummation of purchase of
such Shared-Loss Asset; provided, that (i) in the case of a
Shared-Loss Loan there shall be excluded from such amount the amount of any
Accrued Interest accrued on or with respect to such Shared-Loss Loan prior to
the ninety

 

100

 

(90)-day
period ending on the day prior to the purchase date determined pursuant to
Sections 2.1(e)(i) or 2.1(e)(iii) of this Commercial Shared-Loss
Agreement, except to the extent such Accrued Interest was included in the Book
Value of such Shared-Loss Loan, and (ii) any collections on a Shared-Loss
Loan received by the Assuming Bank after the purchase date applicable to such
Shared-Loss Loan shall be applied (without duplication) to reduce the
Shared-Loss Asset Repurchase Price of such Shared-Loss Loan on a
dollar-for-dollar basis. For purposes of determining the amount of unpaid
interest which accrued during a given period with respect to a variable-rate
Shared-Loss Loan, all collections of interest shall be deemed to be applied to
unpaid interest in the chronological order in which such interest accrued.

 

“Shared-Loss Assets” means
Shared-Loss Loans, Other Real Estate purchased by the Assuming Bank, Additional
ORE, Subsidiary ORE and Capitalized Expenditures, but does not include Shared
Loss MTM Assets.

 

“Shared-Loss Loan Commitment” means:

 

(i) any
Commitment to make a further extension of credit or to make a further advance
with respect to an existing Shared-Loss Loan; and

 

(ii) any Shared-Loss Loan Commitment (described in subparagraph
(i) immediately preceding) with respect to which the Assuming Bank has
made a Permitted Amendment.

 

“Shared-Loss Loan Commitment Advance” means an
advance pursuant to a Shared-Loss Loan Commitment with respect to which the
Assuming Bank has not made a Permitted Advance.

 

“Shared-Loss Loans” means:

 

(i)(A) Loans
purchased by the Assuming Bank pursuant to the Purchase and Assumption
Agreement set forth on Exhibit 4.15(b) to the Purchase and Assumption
Agreement, (B) New Shared-Loss Loans purchased by the Assuming Bank
pursuant to the Purchase and Assumption Agreement, (C) Permitted Advances
and (D) Shared-Loss Loan Commitment Advances, if any; provided, that
Shared-Loss Loans shall not include Loans, New Shared-Loss Loans, Permitted
Advances and Shared-Loss Loan Commitment Advances with respect to which an
Acquired Subsidiary, or a constituent Subsidiary thereof, is an Obligor;
(E) Loans owned by any Subsidiary which are not Shared-Loss Loans under
the Single Family Shared-Loss Agreement; and (F) Consumer Loans; and

 

(ii) any
Shared-Loss Loans (described in subparagraph (i) immediately preceding)
with respect to which the Assuming Bank has made a Permitted Amendment.

 

“Shared-Loss MTM Assets” means those
securities and other assets listed on Exhibit 4.15(C).

 

“Shared-Loss Payment Trigger” means when the
sum of the Cumulative Loss

 

101

 

Amount
under the Single Family Shared-Loss Agreement and the cumulative Net
Charge-Offs under this Commercial Shared-Loss Agreement, exceeds the First Loss
Tranche. If the First Loss Tranche is zero or a negative number, the
Shared-Loss Payment Trigger shall be deemed to have been reached upon Bank
Closing.

 

“Shared-Loss Quarter” has the
meaning provided in Section 2.1(a)(i) of this Commercial Shared-Loss
Agreement.

 

“Stated Threshold” means total
losses under the shared loss agreements in the amount of $83,000,000.00.

 

“Subsidiary ORE” means all assets owned by
ORE Subsidiaries that would constitute Additional ORE if such assets were on
the books of the Assuming Bank.

 

“Termination Date” means the
eighth (8th) anniversary of the Commencement Date.

 

“Third Party Servicer” means any
servicer appointed from time to time by the Assuming Bank or any Affiliate of
the Assuming Bank to service the Shared-Loss Assets on behalf of the Assuming
bank, the identity of which shall be given to the Receiver prior to or
concurrent with the appointment thereof.

 

ARTICLE II — SHARED-LOSS ARRANGEMENT

 

2.1          Shared-Loss
Arrangement.

 

(a)           Quarterly
Certificates. (i) Not later than thirty (30)
days after the end of each Calendar Quarter from and including the initial
Calendar Quarter to and including the Calendar Quarter in which the Applicable
Anniversary of the Commencement Date falls (each of such Calendar Quarters
being referred to herein as a “Shared-Loss Quarter”), the Assuming Bank shall
deliver to the Receiver a certificate, signed by the Assuming Bank’s chief
executive officer and its chief financial officer, setting forth in such form
and detail as the Receiver may specify (a “Quarterly Certificate”):

 

(A)          the amount of Charge-Offs, the amount of Recoveries and the
amount of Net Charge-Offs (which amount may be negative) during such
Shared-Loss Quarter with respect to the Shared-Loss Assets (and for Recoveries,
with respect to the Assets for which a charge-off was effected by the Failed
Bank prior to Bank Closing); and

 

(B)           the aggregate amount of Reimbursable Expenses (which
amount may be negative) during such Shared-Loss Quarter; and

 

(C)           net realized loss on the Shared Loss MTM Assets determined

 

102

 

pursuant to FAS 115, expressed as a positive number (MTM Net Realized
Loss), or net realized gain on the Shared Loss MTM assets, expressed as a
negative number (MTM Net Realized Gain); and

 

(D) any other than
temporary impairment of the Shared Loss MTM Assets, determined pursuant to FAS
115, expressed as a positive number (“OTTI Loss”) or reversals of OTTI Loss,
expressed as a negative number (for the avoidance of doubt, normal and
customary unrealized mark-to-market changes by reason of the application of
fair value accounting do not qualify for loss sharing payments).

 

(ii)           Not later than
thirty (30) days after the end of each Calendar Quarter from and including the
first Calendar Quarter following the final Shared-Loss Quarter to and including
the Calendar Quarter in which the Termination Date falls (each of such Calendar
Quarters being referred to herein as a “Recovery Quarter”), the Assuming Bank
shall deliver to the Receiver a Quarterly Certificate setting forth, in such
form and detail as the Receiver may specify

 

(A)          the amount of Recoveries and Recovery Expenses during such
Recovery Quarter. On the Quarterly Certificate for the first Recovery
Quarter only, the Assuming Bank may report as a separate item, in such form
and detail as the Receiver may specify, the aggregate amount of any
Reimbursable Expenses that: (a) were incurred prior to or during the final
Shared-Loss Quarter, and (b) had not been included in any
Quarterly Certificate for any Shared-Loss Quarter because they had not been
actually paid by or on behalf of the Assuming Bank (in accordance with the
terms of this Commercial Shared-Loss Agreement) during any Shared-Loss Quarter and
(c) were actually paid by or on behalf of the Assuming Bank (in accordance
with the terms of this Commercial Shared-Loss Agreement) during the first
Recovery Quarter; and

 

(B)           net realized gain on the Shared Loss MTM Assets.

 

(b)           Payments
With Respect to Shared-Loss Assets.

 

(i)            For purposes of
this Section 2.1(b), the Assuming Bank shall initially record the
Shared-Loss Assets on its Accounting Records at Book Value, and initially
record the Shared Loss MTM Assets on its Accounting Records at Fair Value, and
adjust such amounts as such values may change after the Bank Closing. If the
amount of all Net Charge-Offs during any Shared-Loss Quarter plus
Reimbursable Expenses, plus MTM Net Realized Gain or MTM Net Realized
Loss, plus OTTI Loss during such Shared-Loss Quarter (the “Shared-Loss
Amount”) is positive, then, except as provided in Sections 2.1(c) and
(e) below, and subject to the provisions of
Section 2.1(b)(vi) below, not later than fifteen (15) days after the
date on which the Receiver receives the Quarterly Certificate with respect to
such Shared-Loss Quarter, the Receiver shall pay to the Assuming Bank an amount
equal to eighty percent (80%) of the Shared-Loss Amount for such Shared-Loss
Quarter. If the Shared-Loss Amount during any Shared-Loss Quarter is

 

103

 

negative,
the Assuming Bank shall pay to the Receiver an amount equal to eighty percent
(80%) of the Shared-Loss Amount for such Shared-Loss Quarter, which payment
shall be delivered to the Receiver together with the Quarterly Certificate for
such Shared-Loss Quarter. When the cumulative Shared-Loss Amounts for all
Shared-Loss Quarters plus the Cumulative Loss Amount under the Single Family
Shared-Loss Agreement equals or exceeds the Stated Threshold, the Receiver
shall pay to the Assuming Bank an amount equal to ninety-five percent ((95%) of
the Shared-Loss Amount for each Shared-Loss Quarter, until such time as the
cumulative Shared-Loss Amount for all Shared-Loss Quarters is less than the
Stated Threshold, when the percentage shall revert back to eighty percent
(80%).

 

(ii)           If the amount of
gross Recoveries during any Recovery Quarter less Recovery Expenses
during such Recovery Quarter plus net realized gains or reversals of OTTI Loss
on Shared Loss MTM Assets (the “Recovery Amount”) is positive, then,
simultaneously with its delivery of the Quarterly Certificate with respect to
such Recovery Quarter, the Assuming Bank shall pay to the Receiver an amount
equal to eighty percent (80%) of the Recovery Amount for such Recovery Quarter.
If the Recovery Amount is negative, then such negative amount shall be
subtracted from the amount of gross Recoveries during the next succeeding
Recovery Quarter in determining the Recovery Amount in such next succeeding
Recovery Quarter; provided, that this
Section 2.1(b)(ii) shall operate successively in the event that the
Recovery Amount (after giving effect to this Section 2.1(b)(ii)) in such
next succeeding Recovery Quarter is negative. The Assuming Bank shall specify,
in the Quarterly Certificate for the final Recovery Quarter, the aggregate
amount for all Recovery Quarters only, as of the end of, and including, the
final Recovery Quarter of (A) Recoveries plus net realized gains or
reversals of OTTI Loss on Shared Loss MTM Assets (“Aggregate Recovery Period
Recoveries”), (B) Recovery Expenses (“Aggregate Recovery Expenses”), and
(C) only those Recovery Expenses that have been actually “offset”
against Aggregate Recovery Period Recoveries (including those so “offset” in
that final Recovery Quarter) (“Aggregate Offset Recovery Expenses”); as used in
this sentence, the term “offset” means the amount that has been applied to
reduce gross Recoveries in any Recovery Quarter pursuant to the methodology set
forth in this Section 2.1(b)(ii). If, at the end of the final Recovery
Quarter the amount of Aggregate Recovery Expenses exceeds the amount of
Aggregate Recovery Period Recoveries, the Receiver shall have no obligation to
pay to the Assuming Bank all or any portion of such excess. Subsequent to the
Assuming Bank’s calculation of the Recovery Amount (if any) for the final
Recovery Quarter, the Assuming Bank shall also show on the Quarterly
Certificate for the final Recovery Quarter the results of the following three
mathematical calculations: (i) Aggregate Recovery Period Recoveries minus
Aggregate Offset Recovery Expenses; (ii) Aggregate Recovery Expenses minus
Aggregate Offset Recovery Expenses; and (iii) the lesser of the two
amounts calculated in (i) and (ii) immediately above (“Additional
Recovery Expenses”) multiplied by 80% (the amount so calculated in
(iii) being defined as the “Additional Recovery Expense Amount”). If the
Additional Recovery Expense Amount is greater than zero, then the Assuming Bank
may request in the Quarterly Certificate for the final Recovery Quarter that
the Receiver reimburse the Assuming Bank the amount of the Additional Recovery
Expense Amount and the Receiver shall pay to the Assuming Bank the Additional
Recovery Expense Amount within fifteen (15) days after the date on which the
Receiver receives that Quarterly Certificate. On the Quarterly Certificate for
the final Recovery Quarter only, the Assuming Bank

 

104

 

may
include, in addition to any Recovery Expenses for that Recovery Quarter that
were paid by or on behalf of the Assuming Bank in that Recovery Quarter, those
Recovery Expenses that: (a) were incurred prior to or during the final
Recovery Quarter, and (b) had not been included in any
Quarterly Certificate for any Recovery Quarter because they had not been
actually paid by or on behalf of the Assuming Bank (in accordance with the
terms of this Commercial Shared-Loss Agreement) during any Recovery Quarter, and
(c) were actually paid by or on behalf of the Assuming Bank (in accordance
with the terms of this Commercial Shared-Loss Agreement) prior to the date the
Assuming Bank is required to deliver that final Quarterly Certificate to the
Receiver under the terms of Section 2.1(a)(ii).

 

(iii)          With respect to
each Shared-Loss Quarter and Recovery Quarter, collections by or on behalf of
the Assuming Bank on any charge-off effected by the Failed Bank prior to Bank
Closing on an Asset other than a Shared-Loss Asset or Shared-Loss MTM Assets
shall be reported as Recoveries under this Section 2.1 only to the extent
such collections exceed the Book Value of such Asset, if any. For any
Shared-Loss Quarter or Recovery Quarter in which collections by or on behalf of
the Assuming Bank on such Asset are applied to both Book Value and to a
charge-off effected by the Failed Bank prior to Bank Closing, the amount of
expenditures incurred by or on behalf of the Assuming Bank attributable to the
collection of any such Asset, that shall be considered a Reimbursable Expense
or a Recovery Expense under this Section 2.1 will be limited to a
proportion of such expenditures which is equal to the proportion derived by
dividing (A) the amount of collections on such Asset applied to a charge-off
effected by the Failed Bank prior to Bank Closing, by (B) the total
collections on such Assets.

 

(iv)          If the Assuming
Bank has duly specified an amount of Reimbursable Expenses on the Quarterly
Certificate for the first Recovery Quarter as described above in the last
sentence of Section 2.1(a)(ii), then, not later than fifteen (15) days
after the date on which the Receiver receives that Quarterly Certificate, the
Receiver shall pay to the Assuming Bank an amount equal to eighty percent (80%)
(or, if the Cumulative Loss Amount under the Single Family Shared-Loss
Agreement plus the cumulative Shared-Loss Amount for all Shared-Loss Quarters
equals or exceeds the Stated Threshold, ninety-five percent (95%)) of the
amount of such Reimbursable Expenses.

 

(v)           If the First
Loss Tranche as determined under the Purchase and Assumption Agreement is a
positive number, Receiver has no obligation to make payment for any Shared Loss
Quarters until the Shared-Loss Payment Trigger is satisfied.

 

(c)           Limitation
on Shared-Loss Payment. The Receiver
shall not be required to make any payments pursuant to this Section 2.1
with respect to any Charge-Off of a Shared-Loss Asset that the Receiver or the
Corporation determines, based upon the Examination Criteria, should not have
been effected by the Assuming Bank; provided, (x) the Receiver must
provide notice to the Assuming Bank detailing the grounds for not making such
payment, (y) the Receiver must provide the Assuming Bank with a reasonable
opportunity to cure any such deficiency and (z) (1) to the extent
curable, if cured, the Receiver shall make payment with respect to any properly
effected Charge-Off and (2) to the extent not curable, the Receiver shall
make a payment as to all Charge-Offs (or portion of Charge-Offs) that were
effected which

 

105

 

would
have been payable as a Charge-Off if the Assuming Bank had properly effected
such Charge-Off. In the event that the Receiver does not make any payments with
respect to any Charge-Off of a Shared-Loss Asset pursuant to this
Section 2.1 or determines that a payment was improperly made, the Assuming
Bank and the Receiver shall, upon final resolution, make such accounting
adjustments and payments as may be necessary to give retroactive effect to such
corrections.

 

(d)           Sale of, or
Additional Advances or Amendments with Respect to, Shared-Loss Loans and
Administration of Related Loans. No Shared-Loss
Loan shall be treated as a Shared-Loss Asset pursuant to this Section 2.1
(i) if the Assuming Bank sells or otherwise transfers such Shared-Loss
Loan or any interest therein (whether with or without recourse) to any Person,
(ii) after the Assuming Bank makes any additional advance, commitment or
increase in the amount of a commitment with respect to such Shared-Loss Loan
that does not constitute a Permitted Advance or a Shared-Loss Loan Commitment
Advance, (iii) after the Assuming Bank makes any amendment, modification,
renewal or extension to such Shared-Loss Loan that does not constitute a
Permitted Amendment, or (iv) after the Assuming Bank has managed,
administered or collected any “Related Loan” (as such term is defined in
Section 3.4 of Article III of this Commercial Shared-Loss Agreement)
in any manner which would have the effect of increasing the amount of any
collections with respect to the Related Loan to the detriment of such
Shared-Loss Asset to which such loan is related; provided, that
any such Shared-Loss Loan that has been the subject of Charge-Offs prior to the
taking of any action described in clause (i), (ii), or (iii) or
(iv) of this Section 2.1(d) by the Assuming Bank shall be
treated as a Shared-Loss Asset pursuant to this Section 2.1 solely for the
purpose of treatment of Recoveries on such Charge-Offs until such time as the
amount of Recoveries with respect to such Shared-Loss Asset equals such
Charge-Offs.

 

(e)           Option to
Purchase.

 

(i)            In the event
that the Assuming Bank determines that there is a substantial likelihood that
continued efforts to collect a Shared-Loss Asset or an Asset for which a
charge-off was effected by the Failed Bank with, in either case, a Legal
Balance of $500,000 or more on the Accounting Records of the Assuming Bank will
result in an expenditure, after Bank Closing, of funds by on behalf of the
Assuming Bank to a third party for a specified purpose (the expenditure of
which, in its best judgment, will maximize collections), which do not
constitute Reimbursable Expenses or Recovery Expenses, and such expenses will
exceed ten percent (10%) of the then book value thereof as reflected on the
Accounting Records of the Assuming Bank, the Assuming Bank shall
(i) promptly so notify the Receiver and (ii) request that such
expenditure be treated as a Reimbursable Expense or Recovery Expense for
purposes of this Section 2.1. (Where the Assuming Bank determines that
there is a substantial likelihood that the previously mentioned situation
exists with respect to continued efforts to collect a Shared-Loss Asset or an
Asset for which a charge-off was effected by the Failed Bank with, in either
case, a Legal Balance of less than $1,000,000 on the Accounting Records of the
Assuming Bank, the Assuming Bank may so notify the Receiver and request that
such expenditure be treated as a Reimbursable Expense or Recovery Expense.)
Within thirty (30) days after its receipt of such a notice, the Receiver will
advise the Assuming Bank of its consent or denial, that such

 

106

 

expenditures
shall be treated as a Reimbursable Expense or Recovery Expense, as the case may
be. Notwithstanding the failure of the Receiver to give its consent with
respect to such expenditures, the Assuming Bank shall continue to administer
such Shared-Loss Asset in accordance with Section 2.2, except that the
Assuming Bank shall not be required to make such expenditures. At any time
after its receipt of such a notice and on or prior to the Termination Date the
Receiver shall have the right to purchase such Shared-Loss Asset or Asset as
provided in Section 2.1(e)(iii), notwithstanding any consent by the
Receiver with respect to such expenditure.

 

(ii)           During the period prior to
the Termination Date, the Assuming Bank shall notify the Receiver within
fifteen (15) days after any of the following becomes fully or partially
charged-off:

 

(A)  a Shared-Loss
Loan having a Legal Balance (or, in the case of more than one
(1) Shared-Loss Loan made to the same Obligor, a combined Legal Balance)
of $500,000 or more in circumstances in which the legal claim against the
relevant Obligor survives; or

 

(B)   a Shared-Loss
Loan to a director, an “executive officer” as defined in 12 C.F.R. 215.2(d), a
“principal shareholder” as defined in 12 C.F.R. 215.2(l), or an Affiliate of
the Assuming Bank.

 

(iii)          If the Receiver determines
in its discretion that the Assuming Bank is not diligently pursuing collection
efforts with respect to any Shared-Loss Asset which has been fully or partially
charged-off or written-down (including any Shared-Loss Asset which is
identified or required to be identified in a notice pursuant to
Section 2.1(e)(ii)) or any Asset for which there exists a Failed Bank
Charge-Off/Write-Down, the Receiver may at its option, exercisable at any time
on or prior to the Termination Date, require the Assuming Bank to assign,
transfer and convey such Shared-Loss Asset or Asset to and for the sole benefit
of the Receiver for a price equal to the Shared-Loss Asset Repurchase Price
thereof less the Related Liability Amount with respect to any Related
Liabilities related to such Shared-Loss Asset or Asset.

 

(iv)          Not later than ten
(10) days after the date upon which the Assuming Bank receives notice of
the Receiver’s intention to purchase or require the assignment of any Shared-
Loss Asset or Asset pursuant to Section 2.1 (e)(i) or (iii), the
Assuming Bank shall transfer to the Receiver such Shared-Loss Asset or Asset
and any Credit Files relating thereto and shall take all such other actions as
may be necessary and appropriate to adequately effect the transfer of such
Shared-Loss Asset or Asset from the Assuming Bank to the Receiver. Not later
than fifteen (15) days after the date upon which the Receiver receives such
Shared-Loss Asset or Asset and any Credit Files relating thereto, the Receiver
shall pay to the Assuming Bank an amount equal to the Shared-Loss Asset
Repurchase Price of such Shared-Loss Asset or Asset less the Related Liability
Amount.

 

(v)           The Receiver shall assume
all Related Liabilities with respect to any Shared-Loss Asset or Asset set
forth in the notice described in Section 2.1(e)(iv).

 

107

 

(f)       Dispute
Resolution.

 

(i)        (A) Any
dispute as to whether a Charge-Off of a Shared-Loss Asset was made in
accordance with Examination Criteria shall be resolved by the Assuming Bank’s
Chartering Authority. (B) With respect to any other dispute arising under
the terms of this Commercial Shared-Loss Agreement which the parties hereto
cannot resolve after having negotiated such matter, in good faith, for a thirty
(30) day period, other than a dispute the Corporation is not permitted to
submit to arbitration under the Administrative Dispute Resolution Act of 1996
(“ADRA”), as amended, such other dispute shall be resolved by determination of
a review board (a “Review Board”) established pursuant to Section 2.1(f).
Any Review Board under this Section 2.1(f) shall follow the
provisions of the Federal Arbitration Act and shall follow the provisions of
the ADRA. (C) Any determination by the Assuming Bank’s Chartering
Authority or by a Review Board shall be conclusive and binding on the parties
hereto and not subject to further dispute, and judgment may be entered on said
determination in accordance with applicable arbitration law in any court having
jurisdiction thereof.

 

(ii)       A Review Board shall consist
of three (3) members, each of whom shall have such expertise as the
Corporation and the Assuming Bank agree is relevant. As appropriate, the
Receiver or the Corporation (the “FDIC Party”) will select one member, one member
will be selected by the Assuming Bank and the third member (the “Neutral
Member”) will be selected by the other two members. The member of the Review
Board selected by a party may be removed at any time by such party upon two
(2) days’ written notice to the other party of the selection of a
replacement member. The Neutral Member may be removed by unanimous action of
the members appointed by the FDIC Party and the Assuming Bank after two
(2) days’ prior written notice to the FDIC Party and the Assuming Bank of
the selection of a replacement Neutral Member. In addition, if a Neutral Member
fails for any reason to serve or continue to serve on the Review Board, the
other remaining members shall so notify the parties to the dispute and the
Neutral Member in writing that such Neutral Member will be replaced, and the
Neutral Member shall thereafter be replaced by the unanimous action of the
other remaining members within twenty (20) business days of that notification.

 

(iii)              No dispute may
be submitted to a Review Board by any of the parties to this Commercial
Shared-Loss Agreement unless such party has provided to the other party a
written notice of dispute (“Notice of Dispute”). During the forty-five (45)-day
period following the providing of a Notice of Dispute, the parties to the
dispute will make every effort in good faith to resolve the dispute by mutual
agreement. As part of these good faith efforts, the parties should consider the
use of less formal dispute resolution techniques, as judged appropriate by each
party in its sole discretion. Such techniques may include, but are not limited
to, mediation, settlement conference, and early neutral evaluation. If the
parties have not agreed to a resolution of the dispute by the end of such
forty-five (45)-day period, then, subject to the discretion of the Corporation
and the written consent of the Assuming Bank as set forth in
Section 2.1(f)(i)(B) above, on the first day following the end of
such period, the FDIC Party and the Assuming Bank shall notify each other of
its selection of its member of the Review Board and such members shall be
instructed to promptly select the Neutral Member of the Review Board. If the
members

 

108

 

appointed
by the FDIC Party and the Assuming Bank are unable to promptly agree upon the
initial selection of the Neutral Member, or a timely replacement Neutral Member
as set forth in Section 2.1(f)(ii) above, the two appointed members
shall apply to the American Arbitration Association (“AAA”), and such Neutral
Member shall be appointed in accordance with the Commercial Arbitration
Rules of the AAA.

 

(iv)               The resolution
of a dispute pursuant to this Section 2.1(f) shall be governed by the
Commercial Arbitration Rules of the AAA to the extent that such rules are
not inconsistent with this Section 2.1(f). The Review Board may modify the
procedures set forth in such rules from time to time with the prior
approval of the FDIC Party and the Assuming Bank.

 

(v)                Within fifteen
(15) days after the last to occur of the final written submissions of both
parties, the presentation of witnesses, if any, and oral presentations, if any,
the Review Board shall adopt the position of one of the parties and shall
present to the parties a written award regarding the dispute. The determination
of any two (2) members of a Review Board will constitute the determination
of such Review Board.

 

(vi)               The FDIC Party
and the Assuming Bank will each pay the fees and expenses of the member of the
Review Board selected by it. The FDIC Party and Assuming Bank will share
equally the fees and expenses of the Neutral Member. No such fees or expenses
incurred by or on behalf of the Assuming Bank shall be subject to reimbursement
by the FDIC Party under this Commercial Shared-Loss Agreement or otherwise.

 

(vii)              Each party will
bear all costs and expenses incurred by it in connection with the submission of
any dispute to a Review Board. No such costs or expenses incurred by or on
behalf of the Assuming Bank shall be subject to reimbursement by the FDIC Party
under this Commercial Shared-Loss Agreement or otherwise. The Review Board
shall have no authority to award costs or expenses incurred by either party to
these proceedings.

 

(viii)             Any dispute
resolution proceeding held pursuant to this Section 2.1(f) shall not
be public. In addition, each party and each member of any Review Board shall
strictly maintain the confidentiality of all issues, disputes, arguments,
positions and interpretations of any such proceeding, as well as all information,
attachments, enclosures, exhibits, summaries, compilations, studies, analyses,
notes, documents, statements, schedules and other similar items associated
therewith, except as the parties agree in writing or such disclosure is
required pursuant to law, rule or regulation. Pursuant to ADRA, dispute
resolution communications may not be disclosed either by the parties or by any
member of the Review board unless:

 

(1)   all parties to the dispute resolution
proceeding agree in writing;

(2)    the communication has already been made
public;

(3)    the communication is required by statute,
rule or regulation to be made public; or

(4)    a court determines that such testimony or
disclosure is necessary to prevent a manifest injustice, help establish a
violation of the law or prevent harm to the public health or safety, or of
sufficient magnitude in the particular case to

 

109

 

outweigh
the integrity of dispute resolution proceedings in general by reducing the
confidence of parties in future cases that their communications will remain
confidential.

 

(ix)               Any dispute
resolution proceeding pursuant to this Section 2.1(f) (whether as a
matter of good faith negotiations, by resort to a Review Board, or otherwise)
is a compromise negotiation for purposes of the Federal Rules of Evidence
and state rules of evidence. The parties agree that all proceedings,
including any statement made or document prepared by any party, attorney or
other participants are privileged and shall not be disclosed in any subsequent
proceeding or document or construed for any purpose as an admission against
interest. Any document submitted and any statements made during any dispute
resolution proceeding are for settlement purposes only. The parties further agree
not to subpoena any of the members of the Review Board or any documents
submitted to the Review Board. In no event will the Neutral Member voluntarily
testify on behalf of any party.

 

(x)                No decision,
interpretation, determination, analysis, statement, award or other
pronouncement of any Review Board shall constitute precedent as regards any
subsequent proceeding (whether or not such proceeding involves dispute
resolution under this Commercial Shared-Loss Agreement) nor shall any Review
Board be bound to follow any decision, interpretation, determination, analysis,
statement, award or other pronouncement rendered by any previous Review Board
or any other previous dispute resolution panel which may have convened in
connection with a transaction involving other failed financial institutions or
Federal assistance transactions.

 

(xi)               The parties may
extend any period of time in this Section 2.1(f) by mutual agreement.
Notwithstanding anything above to the contrary, no dispute shall be submitted
to a Review Board until each member of the Review Board, and any substitute
member, if applicable, agrees to be bound by the provisions of this
Section 2.1(f) as applicable to members of a Review Board. Prior to
the commencement of the Review Board proceedings, or, in the case of a
substitute Neutral Member, prior to the re-commencement of such proceedings
subsequent to that substitution, the Neutral Member shall provide a written
oath of impartiality.

 

(xii)               For the
avoidance of doubt, and notwithstanding anything herein to the contrary, in the
event any notice of dispute is provided to a party under this
Section 2.1(g) prior to the Termination Date, the terms of this
Commercial Shared-Loss Agreement shall remain in effect with respect to any
such items set forth in such notice until such time as any such dispute with
respect to such item is finally resolved.

 

2.2      Administration
of Shared-Loss Assets. The Assuming
Bank shall at all times prior to the Termination Date comply with the
Rules Regarding the Administration of Shared-Loss Assets as set forth in
Article III of this Commercial Shared-Loss Agreement.

 

110

 

2.3      Auditor
Report; Right to Audit.

 

(a)                Within ninety
(90) days after the end of each fiscal year from and including the fiscal year
during which Bank Closing falls to and including the calendar year during which
the Termination Date falls, the Assuming Bank shall deliver to the Corporation
and to the Receiver a report signed by its independent public accountants stating
that they have reviewed the terms of this Commercial Shared-Loss Agreement and
that, in the course of their annual audit of the Assuming Bank’s books and
records, nothing has come to their attention suggesting that any computations
required to be made by the Assuming Bank during such calendar year by this
Article II were not made by the Assuming Bank in accordance herewith. In
the event that the Assuming Bank cannot comply with the preceding sentence, it
shall promptly submit to the Receiver corrected computations together with a
report signed by its independent public accountants stating that, after giving
effect to such corrected computations, nothing has come to their attention
suggesting that any computations required to be made by the Assuming Bank
during such year by this Article II were not made by the Assuming Bank in
accordance herewith. In such event, the Assuming Bank and the Receiver shall
make all such accounting adjustments and payments as may be necessary to give
effect to each correction reflected in such corrected computations, retroactive
to the date on which the corresponding incorrect computation was made.

 

(b)                The Assuming
Bank shall perform on an annual basis an internal audit of its compliance with
the provisions of this Article II and shall provide the Receiver and the
Corporation with copies of the internal audit reports and access to internal
audit workpapers related to such internal audit.

 

(c)                The Receiver or
the Corporation may perform an audit to determine the Assuming Bank’s
compliance with the provisions of this Commercial Shared-Loss Agreement,
including this Article II, at any time by providing not less than ten
(10) Business Days prior written notice. The scope and duration of any
such audit shall be within the discretion of the Receiver or the Corporation,
as the case may be, but shall in no event be administered in a manner that
unreasonably interferes with the operation of the Assuming Bank’s business. The
Receiver or the Corporation, as the case may be, shall bear the expense of any
such audit. In the event that any corrections are necessary as a result of such
an audit, the Assuming Bank and the Receiver shall make such accounting
adjustments and payments as may be necessary to give retroactive effect to such
corrections.

 

2.4          Withholdings. Notwithstanding any other provision in this
Article II, the Receiver, upon the direction of the Director (or designee)
of the Corporation’s Division of Resolutions and Receiverships, may withhold
payment for any amounts included in a Quarterly Certificate delivered pursuant
to Section 2.1, if, in its judgment, there is a reasonable basis under the
terms of this Commercial Shared-Loss Agreement for denying the eligibility of
an item for which reimbursement or payment is sought under such Section. In
such event, the Receiver shall provide a written notice to the Assuming Bank
detailing the grounds for withholding such payment. At such time as the
Assuming Bank demonstrates to the satisfaction of the Receiver that the grounds
for such withholding of payment, or portion of payment, no longer exist or have
been cured, then the Receiver shall pay the Assuming Bank the amount withheld
which the Receiver determines is eligible for payment, within fifteen (15)
Business Days. In the event the

 

111

 

Receiver
or the Assuming Bank elects to submit the issue of the eligibility of the item
for reimbursement or payment for determination under the dispute resolution
procedures of Section 2.1(f), then (i) if the dispute is settled by
the mutual agreement of the parties in accordance with
Section 2.1(f)(iii), the Receiver shall pay the amount withheld (to the
extent so agreed) within fifteen (15) Business Days from the date upon which
the dispute is determined by the parties to be resolved by mutual agreement,
and (ii) if the dispute is resolved by the determination of a Review
Board, the Receiver shall pay the amount withheld (to the extent so determined)
within fifteen (15) Business Days from the date upon which the Receiver is
notified of the determination by the Review Board of its obligation to make
such payment. Any payment by the Receiver pursuant to this Section 2.4
shall be made together with interest on the amount thereof from the date the
payment was agreed or determined otherwise to be due, at the interest rate per
annum determined by the Receiver to be equal to the coupon equivalent of the
three (3)-month U.S. Treasury Bill Rate in effect as of the first Business Day
of each Calendar Quarter during which such interest accrues as reported in the
Federal Reserve Board’s Statistical Release for Selected Interest Rates H.15
opposite the caption “Auction Average - 3-Month” or, if not so reported for
such day, for the next preceding Business Day for which such rate was so
reported.

 

2.5          Books and
Records. The Assuming Bank shall at all times during
the term of this Commercial Shared-Loss Agreement keep books and records which
fairly present all dealings and transactions carried out in connection with its
business and affairs. Except as otherwise provided for in the Purchase and
Assumption Agreement or this Commercial Shared-Loss Agreement, all financial
books and records shall be kept in accordance with generally accepted
accounting principles, consistently applied for the periods involved and in a
manner such that information necessary to determine compliance with any
requirement of the Purchase and Assumption Agreement or this Commercial
Shared-Loss Agreement will be readily obtainable, and in a manner such that the
purposes of the Purchase and Assumption Agreement or this Commercial
Shared-Loss Agreement may be effectively accomplished. Without the prior
written approval of the Corporation, the Assuming Bank shall not make any
change in its accounting principles adversely affecting the value of the
Shared-Loss Assets except as required by a change in generally accepted
accounting principles. The Assuming Bank shall notify the Corporation of any
change in its accounting principles affecting the Shared-Loss Assets which it
believes are required by a change in generally accepted accounting principles.

 

2.6          Information. The Assuming
Bank shall promptly provide to the Corporation such other information,
including financial statements and computations, relating to the performance of
the provisions of the Purchase and Assumption Agreement or otherwise relating
to its business and affairs or this Commercial Shared-Loss Agreement, as the
Corporation or the Receiver may request from time to time.

 

2.7          Tax Ruling. The Assuming Bank shall not at any time, without the
Corporation’s prior written consent, seek a private letter ruling or other
determination from the Internal Revenue Service or otherwise seek to qualify
for any special tax treatment or benefits associated with any payments made by
the Corporation pursuant to the Purchase and Assumption Agreement or this
Commercial Shared-Loss Agreement.

 

112

 

ARTICLE III - RULES REGARDING THE ADMINISTRATION OF
SHARED-LOSS

ASSETS AND SHARED-LOSS MTM ASSETS

 

3.1                               Agreement
with Respect to Administration. The Assuming
Bank shall (and shall cause any of its Affiliates to which the Assuming Bank
transfers any Shared-Loss Assets or Shared-Loss MTM Assets) to, or a Third
Party Servicer to, manage, administer, and collect the Shared-Loss Assets and
Shared-Loss MTM Assets while owned by the Assuming Bank or any Affiliate
thereof during the term of this Commercial Shared-Loss Agreement in accordance
with the rules set forth in this Article III (“Rules”). The Assuming
Bank shall be responsible to the Receiver and the Corporation in the
performance of its duties hereunder and shall provide to the Receiver and the
Corporation such reports as the Receiver or the Corporation reasonably deems
advisable, including but not limited to the reports required by
Section 3.3 hereof, and shall permit the Receiver and the Corporation at
all times to monitor the Assuming Bank’s performance of its duties hereunder.

 

3.2                               Duties of
the Assuming Bank with Respect to Shared-Loss Assets.

 

(a) In
performance of its duties under these Rules, the Assuming Bank shall:

 

(i)                 manage,
administer, collect and effect Charge-Offs and Recoveries with respect to each
Shared-Loss Asset in a manner consistent with (A) usual and prudent
business and banking practices; (B) the Assuming Bank’s (or, in the case a
Third Party Servicer is engaged, the Third Party Servicer’s) practices and
procedures including, without limitation, the then-effective written internal
credit policy guidelines of the Assuming Bank, with respect to the management,
administration and collection of and taking of charge-offs and write-downs with
respect to loans, other real estate and repossessed collateral that do not
constitute Shared Loss Assets;

 

(ii)              exercise its
best business judgment in managing, administering, collecting and effecting
Charge-Offs with respect to Shared-Loss Assets;

 

(iii)           use its best
efforts to maximize collections with respect to Shared-Loss Assets and, if
applicable for a particular Shared-Loss Asset, without regard to the effect of
maximizing collections on assets held by the Assuming Bank or any of its
Affiliates that are not Shared-Loss Assets;

 

(iv)          adopt and implement
accounting, reporting, record-keeping and similar systems with respect to the
Shared-Loss Assets, as provided in Section 3.4 hereof;

 

(v)             retain
sufficient staff to perform its duties hereunder;

 

(vi)          provide written
notification in accordance with Article IV of this Commercial Shared-Loss
Agreement immediately after the execution of any contract pursuant to which any
third party (other than an Affiliate of the Assuming Bank) will manage,
administer or

 

113

 

collect
any of the Shared-Loss Assets, together with a copy of that contract.

 

(b) Any transaction with or between any
Affiliate of the Assuming Bank with respect to any Shared-Loss Asset including,
without limitation, the execution of any contract pursuant to which any
Affiliate of the Assuming Bank will manage, administer or collect any of the
Shared-Loss Assets, or any other action involving self-dealing, shall be
subject to the prior written approval of the Receiver or the Corporation.

 

(c) The following categories of expenses shall
not be deemed to be Reimbursable Expenses or Recovery Expenses:

 

(i)                 Federal, State,
or local income taxes and expenses related thereto;

 

(ii)              salaries or
other compensation and related benefits of Assuming Bank employees and the
employees of its Affiliates including, without limitation, any bonus,
commission or severance arrangements, training, payroll taxes, dues, or travel-
or relocation- related expenses,;

 

(iii)           the cost of
space occupied by the Assuming Bank, any Affiliate thereof and their staff, the
rental of and maintenance of furniture and equipment, and expenses for data
processing including the purchase or enhancement of data processing systems;

 

(iv)          except as
otherwise provided herein, fees for accounting and other independent
professional consultants (other than consultants retained to assess the
presence, storage or release of any hazardous or toxic substance, or any
pollutant or contaminant with respect to the collateral securing a Shared-Loss
Loan that has been fully or partially charged-off); provided, that
for purposes of this Section 3.2(c)(iv), fees of attorneys and appraisers
engaged as necessary to assist in collections with respect to Shared-Loss
Assets shall not be deemed to be fees of other independent consultants;

 

(v)             allocated
portions of any other overhead or general and administrative expense other than
any fees relating to specific assets, such as appraisal fees or environmental
audit fees, for services of a type the Assuming Bank does not normally perform
internally;

 

(vi)          any expense not
incurred in good faith and with the same degree of care that the Assuming Bank
normally would exercise in the collection of troubled assets in which it alone
had an interest; and

 

(vii)       any expense
incurred for a product, service or activity that is of an extravagant nature or
design.

 

(d) Subject to Section 3.7, the Assuming
Bank shall not contract with third parties to provide services the cost of
which would be a Reimbursable Expense or Recovery Expense if the Assuming Bank
would have provided such services itself if the relevant Shared-Loss Assets
were not subject to the loss-sharing provisions of Section 2.1 of this
Commercial

 

114

 

Shared-Loss
Agreement.

 

3.3                               Duties of
the Assuming Bank with Respect to Shared-Loss MTM Assets.

 

(a) In
performance of its duties under these Rules, the Assuming Bank shall:

 

(i)                 manage,
administer, collect and each Shared-Loss MTM Asset in a manner consistent with
(A) usual and prudent business and banking practices; (B) the
Assuming Bank’s practices and procedures including, without limitation, the
then-effective written internal credit policy guidelines of the Assuming Bank,
with respect to the management, administration and collection of similar assets
that are not Shared-Loss MTM Assets;

 

(ii)              exercise its
best business judgment in managing, administering, collecting and effecting
Charge-Offs with respect to Shared-Loss MTM Assets;

 

(iii)           use its best
efforts to maximize collections with respect to Shared-Loss MTM Assets and, if
applicable for a particular Shared-Loss MTM Asset, without regard to the effect
of maximizing collections on assets held by the Assuming Bank or any of its
Affiliates that are not Shared-Loss MTM Assets, provided that, any sale of a
Shared-Loss MTM Asset shall only be made with the prior approval of the
Receiver or the Corporation;

 

(iv)          adopt and
implement accounting, reporting, record-keeping and similar systems with
respect to the Shared-Loss MTM Assets, as provided in Section 3.4 hereof;

 

(v)             retain
sufficient staff to perform its duties hereunder;

 

(vi)          provide written
notification in accordance with Article IV of this Commercial Shared-Loss
Agreement immediately after the execution of any contract pursuant to which any
third party (other than an Affiliate of the Assuming Bank) will manage,
administer or collect any of the Shared-Loss MTM Assets, together with a copy
of that contract.

 

(b)              Any transaction with or
between any Affiliate of the Assuming Bank with respect to any Shared-Loss MTM
Asset including, without limitation, the execution of any contract pursuant to
which any Affiliate of the Assuming Bank will manage, administer or collect any
of the Shared-Loss Assets, or any other action involving self-dealing, shall be
subject to the prior written approval of the Receiver or the Corporation.

 

(c)               The Assuming Bank shall not
contract with third parties to provide services the cost of which would be a
Reimbursable Expense or Recovery Expense if the Assuming Bank would have
provided such services itself if the relevant Shared-Loss Assets were not
subject to the loss-sharing provisions of Section 2.1 of this Commercial
Shared-Loss Agreement.

 

3.4                               Records and
Reports. The Assuming Bank shall establish and
maintain records on a separate general ledger, and on such subsidiary ledgers
as may be appropriate to account for the Shared-Loss Assets and the Shared-Loss
MTM Assets, in such form and detail as the

 

115

 

Receiver
or the Corporation may require, to enable the Assuming Bank to prepare and
deliver to the Receiver or the Corporation such reports as the Receiver or the
Corporation may from time to time request regarding the Shared-Loss Assets, the
Shared-Loss MTM Assets and the Quarterly Certificates required by
Section 2.1 of this Commercial Shared-Loss Agreement.

 

3.5                               Related
Loans.

 

(a)                                  The Assuming
Bank shall not manage, administer or collect any “Related Loan” in any manner
which would have the effect of increasing the amount of any collections with
respect to the Related Loan to the detriment of the Shared-Loss Asset to which
such loan is related. A “Related Loan” means any loan or extension of credit
held by the Assuming Bank at any time on or prior to the end of the final
Recovery Quarter that is: (i) made to the same Obligor with respect to a
Loan that is a Shared-Loss Asset or with respect to a Loan from which Other
Real Estate, Additional ORE or Subsidiary ORE derived, or (ii) attributable
to the same primary Obligor with respect to any Loan described in clause
(i) under the rules of the Assuming Bank’s Chartering Authority
concerning the legal lending limits of financial institutions organized under
its jurisdiction as in effect on the Commencement Date, as applied to the
Assuming Bank.

 

(b)                                 The Assuming
Bank shall prepare and deliver to the Receiver with the Quarterly Certificates
for the Calendar Quarters ending June 30 and December 31 for all
Shared-Loss Quarters and Recovery Quarters, a schedule of all Related Loans
which are commercial loans or commercial real estate loans with Legal Balances
of $500,000 or more on the Accounting Records of the Assuming Bank as of the
end of each such semi-annual period, and all other commercial loans or commercial
real estate loans attributable to the same Obligor on such loans of $500,000 or
more.

 

3.6                               Legal
Action; Utilization of Special
Receivership Powers. The Assuming Bank shall
notify the Receiver in writing (such notice to be given in accordance with
Article IV below and to include all relevant details) prior to utilizing
in any legal action any special legal power or right which the Assuming Bank
derives as a result of having acquired a Shared-Loss Asset from the Receiver,
and the Assuming Bank shall not utilize any such power unless the Receiver
shall have consented in writing to the proposed usage. The Receiver shall have
the right to direct such proposed usage by the Assuming Bank and the Assuming
Bank shall comply in all respects with such direction. Upon request of the
Receiver, the Assuming Bank will advise the Receiver as to the status of any
such legal action. The Assuming Bank shall immediately notify the Receiver of
any judgment in litigation involving any of the aforesaid special powers or
rights.

 

3.7                               Third Party
Servicer. The Assuming Bank may perform any of its
obligations and/or exercise any of its rights under this Commercial Shared-Loss
Agreement through or by one or more Third Party Servicers, who may take actions
and make expenditures as if any such Third Party Servicer was the Assuming Bank
hereunder (and, for the avoidance of doubt, such expenses incurred by any such
Third Party Servicer on behalf of the Assuming Bank shall be Reimbursable
Expenses or Recovery Expenses, as the case may be, to the same extent such
expenses would so qualify if incurred by the Assuming Bank); provided, however,
that the use thereof by the Assuming Bank shall not release the Assuming Bank
of any obligation or liability hereunder.

 

116

 

ARTICLE IV — PORTFOLIO SALE

 

4.1                               Assuming
Bank Portfolio Sales of Remaining Shared-Loss Assets. The Assuming
Bank shall have the right with the concurrence of the Receiver, commencing as
of the first day of the third to last Shared-Loss Quarter, to liquidate for
cash consideration, in one or more transactions, all or a portion of
Shared-Loss Assets held by the Assuming Bank (“Portfolio Sales”). If the
Assuming Bank exercises its option under this Section 4.1, it must give thirty
(30) days notice in writing to the Receiver setting forth the details and
schedule for the Portfolio Sale which shall be conducted by means of sealed bid
sales to third parties, not including any of the Assuming Bank’s affiliates,
contractors, or any affiliates of the Assuming Bank’s contractors.

 

4.2                               Calculation
of Sale Gain or Loss. For Shared-Loss Assets gain
or loss on the sales under Section 4.1 will be calculated as the sale
price received by the Assuming Bank less the book value of the remaining Shared-Loss
Assets.

 

ARTICLE V – LOSS-SHARING NOTICES GIVEN TO CORPORATION
AND/OR

RECEIVER

 

As
a supplement to the notice provisions contained in Section 13.7 of the
Purchase and Assumption Agreement, any notice, request, demand, consent,
approval, or other communication (a “Notice”) given to the Corporation and/or
the Receiver in the loss-sharing context shall be given as follows:

 

5.1                               With respect to
a Notice under Section 2 and Sections 3.1-3.5 of this Commercial
Shared-Loss Agreement:

 

Federal
Deposit Insurance Corporation

Division
of Resolutions and Receiverships

550
17th Street, N.W.

Washington,
D.C. 20429

 

Attention:
Assistant Director, Franchise and Asset Marketing

 

5.2                               With respect to
a Notice under Section 3.6 of this Commercial Shared-Loss Agreement:

 

Federal
Deposit Insurance Corporation Legal Division

1601
Bryan Street

Dallas,
Texas 75201

Attention:
Regional Counsel (Litigation Branch)

 

117

 

with
a copy to:

 

Federal
Deposit Insurance Corporation Legal Division

550
17th Street, N.W.

Washington,
D.C. 20429

Attention:
Senior Counsel (Special Issues Group)

 

ARTICLE VI — MISCELLANEOUS

 

6.1                               Expenses. Except as
otherwise expressly provided herein, all costs and expenses incurred by a party
hereto in connection with this Commercial Shared-Loss Agreement shall be borne
by such party whether or not the transactions contemplated herein shall be
consummated.

 

6.2                               Successors
and Assigns; Specific Performance. All terms and
provisions of this Commercial Shared-Loss Agreement shall be binding upon and
shall inure to the benefit of the parties hereto only; provided,  however,
that, Receiver may assign or otherwise transfer this Commercial Shared-Loss
Agreement (in whole or in part) to the Federal Deposit Insurance Corporation in
its corporate capacity without the consent of Assuming Bank. Notwithstanding
anything to the contrary contained in this Commercial Shared-Loss Agreement,
except as is expressly permitted in this Section 6.2, Assuming Bank may
not assign or otherwise transfer this Commercial Shared-Loss Agreement (in
whole or in part) without the prior written consent of the Receiver, which
consent may be granted or withheld by the Receiver in its sole discretion, and
any attempted assignment or transfer in violation of this provision shall be
void ab initio. For the avoidance
of doubt, a merger or consolidation of the Assuming Bank with and into another
financial institution, the sale of all or substantially all of the assets of
the Assuming Bank to another financial institution constitutes the transfer of
this Commercial Shared-Loss Agreement which requires the consent of the
Receiver.

 

6.3                               Governing
Law. This Commercial Shared-Loss Agreement shall be construed in
accordance with federal law, or, if there is no applicable federal law, the
laws of the State of New York, without regard to any rule of conflict of
law that would result in the application of the substantive law of any
jurisdiction other than the State of New York.

 

6.4                               WAIVER OF
JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN OR TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF OR RELATING TO OR
IN CONNECTION WITH THIS COMMERCIAL SHARED-LOSS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

6.5                               Captions. All captions
and headings contained in this Commercial Shared-Loss Agreement are for
convenience of reference only and do not form a part of, and shall not affect
the meaning or interpretation of, this Commercial Shared-Loss Agreement.

 

6.6                               Entire
Agreement; Amendments. This Commercial Shared-Loss Agreement,

 

118

 

along
with the Single Family Shared-Loss Agreement and the Purchase and Assumption
Agreement, including the Exhibits and any other documents delivered pursuant
hereto, embody the entire agreement of the parties with respect to the subject
matter hereof, and supersede all prior representations, warranties, offers,
acceptances, agreements and understandings, written or oral, relating to the
subject matter herein. This Commercial Shared-Loss Agreement may be amended or
modified or any provision thereof waived only by a written instrument signed by
both parties or their respective duly authorized agents.

 

6.7                               Severability. Whenever
possible, each provision of this Commercial Shared-Loss Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Commercial Shared-Loss Agreement is held to be
prohibited by or invalid, illegal or unenforceable under applicable law, such
provision shall be construed and enforced as if it had been more narrowly drawn
so as not to be prohibited, invalid, illegal or unenforceable, and the
validity, legality and enforceability of the remainder of such provision and
the remaining provisions of this Commercial Shared-Loss Agreement shall not in
any way be affected or impaired thereby.

 

6.8                               No Third Party
Beneficiary. This Commercial Shared-Loss
Agreement and the Exhibits hereto are for the sole and exclusive benefit of the
parties hereto and their respective permitted successors and permitted assigns
and there shall be no other third party beneficiaries, and nothing in
Commercial Shared-Loss Agreement or the Exhibits shall be construed to grant to
any other Person any right, remedy or claim under or in respect of this
Commercial Shared-Loss Agreement or any provision hereof.

 

6.9                               Consent. Except as otherwise
provided herein, when the consent of a party is required herein, such consent
shall not be unreasonably withheld or delayed.

 

6.10                        Rights Cumulative. Except as otherwise
expressly provided herein, the rights of each of the parties under this
Commercial Shared-Loss Agreement are cumulative, may be exercised as often as
any party considers appropriate and are in addition to each such party’s rights
under the Purchase and Sale Agreement and any of the related agreements or
under law. Except as otherwise expressly provided herein, any failure to
exercise or any delay in exercising any of such rights, or any partial or
defective exercise of such rights, shall not operate as a waiver or variation
of that or any other such right.

 

119Exhibit
10.1

 

AMENDMENT AGREEMENT

 

THIS AMENDMENT AGREEMENT (this “Agreement”), dated as of June
30, 2009 is entered into by and between Etelos, Inc., a Delaware corporation
(the “Company”), and each of the holder identified on the signature pages
hereto (the “Purchasers”). Capitalized
terms used herein, but not otherwise defined, shall have the meanings ascribed
to such terms in the Purchase Agreements (as defined below).

 

WHEREAS, Etelos, Incorporated, a Washington
corporation (the “Predecessor Company”), and Purchasers are parties to
that certain Securities Purchase Agreement, dated January 31, 2008 (the “January
Purchase Agreement”), pursuant to which the Predecessor Company issued to
Purchasers common stock purchase warrants to purchase, in the aggregate,
333,333 shares of Common Stock (the “January 2008 Warrants”) and a 6%
Secured Convertible Debenture in the original principal amount of, in the
aggregate, $1,000,000 (the “January 2008 Debenture”);

 

WHEREAS, the Predecessor Company and Purchasers
are parties to that certain Securities Purchase Agreement, dated April 22, 2008
(the “April Purchase Agreement” and together with the January Purchase
Agreement, the “Purchase Agreements”), pursuant to which the Predecessor
Company issued to Purchasers, among others, common stock purchase warrants to
purchase, in the aggregate, 333,333 shares of Common Stock (the “April 2008
Warrants” and together with the January 2008 Warrants, the “Warrants”)
and a 6% Secured Convertible Debenture in the original principal amount of, in
the aggregate, $3,000,000 (the “April 2008 Debenture”);

 

WHEREAS, pursuant to that certain Securities and
Option Purchase Agreement dated March 2, 2009, a Purchaser, Enable Growth
Partners LP, purchased from Hudson Bay Fund, LP and Hudson Bay Overseas Fund,
Ltd. (collectively, “Hudson Bay”) the 6% Secured Convertible Debentures
the Company issued to Hudson Bay pursuant to the Purchase Agreements in the
original aggregate principal amount of $1,500,000 (the “Hudson Bay
Debentures” and together with the January 2008 Debenture and the April 2008
Debenture, the “Debentures”);

 

WHEREAS, the Company is the surviving corporation
resulting from the merger of the Predecessor Company with and into Tripath
Technology Inc., a Delaware corporation, which subsequently changed its name to
Etelos, Inc.;

 

WHEREAS, the Company assumed the obligations of
the Predecessor Company, including the obligations under the Purchase
Agreements, the Debentures, the Warrants and the other transaction documents
entered into in connection therewith (collectively, the “Transaction  Documents”);

 

WHEREAS, the parties wish to amend certain terms
of the Transaction Documents.

 

NOW,
THEREFORE, in
consideration of the terms and conditions contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound hereby, agree
as follows:

 

1

 

1.            Debentures -
Maturity Date. The Maturity Date (as such term is defined in the
Debentures) of each Debenture is hereby amended to mean December 31, 2012.

 

2.            Debentures -
Optional Redemption Amount. The definition of “Optional Redemption Amount”
under Section 1 of each Debenture is hereby amended and restated in its
entirety as follows:

 

““Optional Redemption Amount” means the sum of (i) 100% of the
then outstanding principal amount of the Debenture, (ii) accrued but unpaid
interest and (iii) all liquidated damages and other amounts due in respect of
the Debenture.”

 

3.            Debentures -
Interest Payments. With respect to each Debenture, all unpaid interest that
would otherwise have accrued prior to September 30, 2010 if not for this
Amendment shall accrete to the principal amount of each respective Debenture and
shall be payable on the Maturity Date (as amended herein) of each such
Debenture thereby increasing the principal amount of the Debentures, as of the
date hereof, to the amounts set forth on Annex A attached hereto.  No interest payments shall be payable or due
on the Debentures prior to October 1, 2010. 
After September 30, 2010 interest shall accrue on the Debentures,
payable in cash only, at the rate of 6% per annum from October 1, 2010 until
the Maturity Date.  All references in the
Debenture to the Company’s ability to pay interest in shares of Common Stock
are hereby deemed removed.  Accordingly, Section
2 of each Debenture is hereby deleted in its entirety and replaced with the
following:

 

“Section 2.             Interest.

 

(a)           Payment of
Interest in Cash. The Company shall pay interest to the Holder on the
aggregate unconverted and then outstanding principal amount of this Debenture
at the rate of (a) 0% per annum until September 30, 2010 and (b) 6% per annum
from October 1, 2010 until the Maturity Date, payable semiannually on January 1
and July 1, on each Conversion Date (as to that principal amount then being
converted), on each Optional Redemption Date (as to that principal amount then
being redeemed) and on the Maturity Date (each such date, an “Interest Payment
Date”) (if any Interest Payment Date is not a Business Day, then the
applicable payment shall be due on the next succeeding Business Day), in cash.

 

(b)           [Intentionally Omitted.]

 

(c)           Interest Calculations.
Interest shall be calculated on the basis of a 360-day year, consisting of
twelve 30 calendar day periods, and shall accrue daily commencing on the
Original Issue Date until payment in full of the principal sum, together with
all accrued and unpaid interest, liquidated damages and other amounts which may
become due hereunder, has been made. Interest shall cease to accrue with
respect to any principal amount converted, provided that, the Company actually
delivers the Conversion Shares within the time period required by Section 4(d)(ii)
herein.  Interest hereunder will be paid
to the Person in whose 

 

2

 

name
this Debenture is registered on the records of the Company regarding
registration and transfers of this Debenture (the “Debenture Register”).

 

(d)           Late Fee.  All overdue accrued and unpaid interest to be
paid hereunder shall entail a late fee at an interest rate equal to the lesser
of 18% per annum or the maximum rate permitted by applicable law (“Late Fees”)
which shall accrue daily from the date such interest is due hereunder through
and including the date of payment in full.

 

(e)           Prepayment.  Except as otherwise set forth in this
Debenture, the Company may not prepay any portion of the principal amount of
this Debenture without the prior written consent of the Holder.”

 

4.            Debentures -
Subsequent Equity Sales Adjustment Floor. The following sentence is hereby
added at the end of Section 5(b) of each Debenture:

 

“Notwithstanding anything to the contrary in this Section 5(b), in no event shall
the Conversion Price be reduced to less than $0.10 as a result of any
adjustment to the Conversion Price pursuant to this Section 5(b), subject to
adjustment for reverse and forward stock splits and the like.”

 

5.            Debentures -
Monthly Redemption. Section 6(a) of each Debenture is hereby deleted in its
entirety and all references to said Section or terms defined therein are no
longer of any meaning under the Debentures and shall have no force or effect.
Accordingly, Section 6(a) of each Debenture is hereby deleted in its entirety
and replaced with the following:

 

“a)           [Intentionally
Omitted.]”

 

6.            Debentures –
Waiver of Past Interest.  Purchasers
hereby waive any Event of Default (as such term is defined in the Debentures)
arising out of, resulting from or relating to the Company’s failure to pay any
interest accrued under any of the Debentures and unpaid through the date
hereof.

 

7.            Registration
Rights Agreement.

 

(a)           The
parties hereby (i) terminate the Registration Rights Agreement, dated January 31,
2008, as amended on April 22, 2008 (the “RRA”), and all rights and
obligations of the parties thereunder are hereby terminated and extinguished in
full without any further action of any party; and (ii) waive any and all
defaults that may have occurred under the RRA or the right to obtain liquidated
damages or fees as a result of such defaults and agree that no party shall have
any rights or remedies arising out of, resulting from or relating to any such
defaults.

 

(b)           At
any time after the date hereof and ending at such time that all of the
Securities may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such 

 

3

 

Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and
not as a penalty, by reason of any such delay in or reduction of its ability to
sell the Securities, an amount in cash equal to two percent (2.0%) of the
aggregate principal amount of Debentures held by the Purchaser on the day of a
Public Information Failure and on every thirtieth (30th) day (pro rated for periods
totaling less than thirty days) thereafter until the earlier of (a) the date
such Public Information Failure is cured and (b) such time that such public
information is no longer required  for
the Purchasers to transfer the Underlying Shares pursuant to Rule 144.  The payments to which a Purchaser shall be
entitled pursuant to this Section 7(b) are referred to herein as “Public
Information Failure Payments.”  Public Information Failure  Payments shall be paid on the earlier of (i)
the last day of the calendar month during which such Public Information Failure  Payments are incurred and (ii) the third
(3rd) Business Day
after the event or failure giving rise to the Public Information Failure  Payments is cured.  In the event the Company fails to make Public
Information Failure  Payments in a
timely manner, such Public Information Failure
Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Public Information Failure,
and such Purchaser shall have the right to pursue all remedies available to it
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.

 

8.            Warrant Exchange.  Effective as of the date hereof, on or before
the Termination Date of each applicable Warrant, each Purchaser shall have the
right, exercisable in its sole discretion on written notice to the Company
(each, a “Notice of Exchange”), from time to time, to exchange (an “Exchange”)
for no cash consideration, all or a portion of the Warrants then held by such
Purchaser for shares of Common Stock (such shares, the “New Shares”), at
a ratio of one share of Common Stock for each share of Common Stock underlying
such Warrant being Exchanged (the “Exchange Ratio”).  The Company shall not effect any Exchange,
and such Purchaser shall not have the right to Exchange any portion of a
Warrant to the extent that after giving effect to the issuance of New Shares
after such Exchange as set forth on the applicable Notice of Exchange, such
Purchaser (together with the Purchaser’s Affiliates, and any other person or
entity acting as a group together with such Purchaser or any of the Purchaser’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined in Section 2(d) of each of the Warrants). The Company
acknowledges and agrees that such Purchaser may request an Exchange from time
to time until such time as the New Shares issuable upon Exchange of the
respective Warrant have all been issued. 
The obligations of the Company with respect to the New Shares shall be
identical in all respects to the obligations of the Company with respect to the
Warrant Shares and enforceable against the Company as though the New Shares are
Warrant Shares.

 

9.            Warrants -
Subsequent Equity Sales. Section 3(b) of each Warrant is hereby deleted in
its entirety and all references to said Section or terms defined therein are no
longer of any meaning under the Warrants and shall have no force or effect.
Accordingly, Section 3(b) of each Warrant is hereby deleted in its entirety and
replaced with the following:

 

“b)          [Intentionally
Omitted.]”

 

4

 

10.          Representations
and Warranties of the Company.  The
Company hereby makes the representations and warranties set forth below to
Purchasers as of the date of its execution of this Agreement:

 

(a)           Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder in accordance with the terms hereof.  The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection therewith.  This Agreement has been duly executed by the
Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

 

(b)           No
Conflicts.  The execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, subject to the terms hereof,
do not and will not: (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties
or assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or (iii)
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the case of each
of clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.

 

(c)           Issuance
of the New Shares.  The New Shares
are duly authorized and, upon exercise of the Exchange by the Purchasers will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for
in the Transaction Documents.  The
Company will have reserved from its duly authorized capital stock a number of
shares of Common Stock for issuance of the New Shares sufficient for the exercise
in full of the Exchange.

 

5

 

(d)           Holding
Period for the New Shares. The Company acknowledges and agrees that the
Exchange is a cashless exchange under Section 3(a)(9) of the Securities Act and
accordingly the holding period of the New Shares under Rule 144 tacks back to
the date that the Warrants were originally issued.  Subject to the Purchaser reducing its
beneficial ownership in the Company’s common stock below 10% of the amount of
shares outstanding and any subsequent action by a Purchaser that would
otherwise cause it to be deemed an “affiliate” of the Company after the date
hereof, the Company agrees to take all actions, including, without limitation,
the issuance by its legal counsel of any necessary legal opinions (which may be
satisfied pursuant to Section 11), necessary to issue to the Underlying Shares
and New Shares without restriction and not containing any restrictive legend
without the need for any action by such Purchaser.

 

(e)           Equal
Consideration.  Other than the terms
contained in this Agreement, no consideration has been offered or paid to any
person to amend or consent to a waiver, modification, forbearance or otherwise
of any provision of any of the Debentures or Transaction Documents.

 

(f)            Survival
and Bring Down.  All of the Company’s
representations and warranties contained in this Agreement shall survive the
execution, delivery and acceptance of this Agreement by the parties
hereto.  The Company expressly reaffirms
that each of the representations and warranties set forth in each of the
Purchase Agreements (as supplemented or qualified by the disclosures in any
disclosure schedule to any Purchase Agreement), continues to be true, accurate
and complete in all material respects as of the date hereof except as set forth
in the forms, reports, schedules, registration statements, proxy statements and
other documents (including all exhibits, schedules and supplements) filed with
or furnished to the Commission by the Company since April 23, 2008 or the
disclosure schedules attached hereto (the “Bring Down Disclosure Schedule”),
and except for any representation and warranty made as of a certain date, in
which case such representation and warranty shall be true, accurate and
complete as of such date), and the Company hereby remakes and incorporates
herein by reference each such representation and warranty (as qualified by the
Bring Down Disclosure Schedule) as though made on the date of this
Agreement.  No Event of Default has
occurred under the Debentures.

 

11.          Representations
and Warranties of the Purchasers. 
Each Purchaser hereby makes the representation and warranty set forth
below to the Company as of the date of its execution of this Agreement. Such
Purchaser represents and warrants that (a) the execution and delivery of this Agreement
by it and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on its behalf and (b) this
Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and binding obligation of such Purchaser, enforceable
against it in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

 

6

 

12.          Legal Opinion.  Subject to the Purchaser reducing its
beneficial ownership in the Company’s common stock below 10% of the amount of
shares outstanding and any subsequent action by a Purchaser that would
otherwise cause it to be deemed an “affiliate” of the Company after the date
hereof, the Company hereby agrees to cause its legal counsel to issue a legal
opinion to the undersigned Purchasers and the Transfer Agent regarding this
Agreement and the transactions contemplated hereby, in form and substance
reasonably acceptable to the Purchasers, including an opinion that the
Underlying Shares and New Shares may be sold pursuant to Rule 144 without
volume restrictions or manner of sale limitations pursuant to Section 4.1 of
each of the Purchase Agreements.

 

13.          Public Disclosure.  On or before 8:30 am (Eastern Time) on the
second Trading Day immediately following the date hereof, the Company shall
file a Current Report on Form 8-K, reasonably acceptable to the Purchasers
disclosing the material terms of the transactions contemplated hereby and
attaching this Agreement as an exhibit thereto. The Company shall consult with
the Purchasers in issuing any other press releases with respect to the transactions
contemplated hereby

 

14.          Effect on
Transaction Documents.  Except as expressly set forth
above, all of the terms and conditions of the Purchase Agreements, Debentures
and Warrants shall continue in full force and effect after the execution of
this Agreement and shall not be in any way changed, modified or superseded by
the terms set forth herein, including, but not limited to, any other
obligations the Company may have to the Purchasers under the Purchase
Agreements, Debentures and Warrants.  Notwithstanding the foregoing, this Agreement
shall be deemed for all purposes as an amendment to any and all of the Purchase
Agreements, Debentures and Warrants as required to serve the purposes hereof,
and in the event of any conflict between the terms and provisions of any other
of the Purchase Agreements Debentures or Warrants, on the one hand, and the
terms and provisions of this Agreement, on the other hand, the terms and
provisions of this Agreement shall prevail.

 

15.          Fees and Expenses.  Except as expressly set forth herein, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this
Agreement.

 

16.          Entire Agreement.  This Agreement, together with the exhibits
and schedules hereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules.

 

17.          Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on
a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than

 

7

 

5:30 p.m.
(New York City time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The
address for such notices and communications shall be as set forth on the
signature pages attached hereto.

 

18.           Amendments and
Waivers. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the same
shall be in writing and signed by the Company and the Purchasers holding at
least 67% of the principal amount of the Debentures then outstanding or, in the
case of a waiver, by the party against whom enforcement of any such waived
provision is sought.  No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right.

 

19.           Headings.  The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof

 

20.           Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties; provided, however,
that no party may assign this Agreement or the obligations and rights of such
party hereunder without the prior written consent of the other parties hereto.

 

21.           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for
such proceeding.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.  If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

 

8

 

22.           Execution and
Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event
that any signature is delivered by facsimile transmission or by e-mail delivery
of a “.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

23.           Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

24.           Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser hereunder
are several and not joint with the obligations of any other Purchasers
hereunder, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser hereunder. Nothing contained herein
or in any other agreement or document delivered at any closing, and no action
taken by any Purchaser pursuant hereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser has been
represented by its own separate legal counsel in their review and negotiation of
the Transaction Documents.  For reasons
of administrative convenience only, Purchasers and their respective counsel
have chosen to communicate with the Company through Weinstein Smith LLP (“WS”).  WS does not represent all of the Purchasers
but only Enable Capital Management, LLC. The Company has elected to provide all
Purchasers with the same terms for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.

 

25.           Construction.
The parties agree that each of them and/or their respective counsel has
reviewed and had an opportunity to revise this Agreement and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any amendments hereto.

 

26.           Re-Issuance of
Debentures and Warrants. Upon the written request of either any of the
Purchasers or the Company, each party shall use commercially reasonable efforts
to deliver the instruments representing the original Debentures and Warrants to
the Company in 

 

9

 

exchange
for replacement instruments that reflect the revised terms of such securities
as set forth in this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

10

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

	
   

  	
  ETELOS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Daniel Kolke

  
	
   

  	
   

  	
  Name:
  

  	
  Daniel
  Kolke

  
	
   

  	
   

  	
  Title:

  	
  CEO

  

 

********************

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR HOLDERS
FOLLOW]

 

11

 

[PURCHASER’S SIGNATURE PAGE
TO ETLO AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Amendment
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

	
  Name
  of Purchaser:

  	
  Enable
  Growth Partners LP

  	
   

  
	
  Signature of Authorized Signatory of Purchaser:

  	
  /s/
  Brendan O’Neil

  	
   

  
	
  Name
  of Authorized Signatory: 

  	
  Brendan
  O’Neil

  	
   

  
	
  Title of Authorized Signatory:

  	
  President and CIO

  	
   

  
						

 

[SIGNATURE PAGES CONTINUE]

 

12

 

ANNEX A

 

	
  Original Issue Date

  	
   

  	
  Original 

  Principal Amount

  	
   

  	
  Accreted Interest

  	
   

  	
  Outstanding Principal

  Amount of Debentures**

  	
   

  
	
  January 31,
  2008

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  	
  $

  	
  159,945.21

  	
   

  	
  $

  	
  1,159,945.21

  	
   

  
	
  April 22,
  2008

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  	
  $

  	
  439,397.26

  	
   

  	
  $

  	
  3,439,397.26

  	
   

  
	
  January 31,
  2008*

  	
   

  	
  $

  	
  470,000.00

  	
   

  	
  $

  	
  75,174.25

  	
   

  	
  $

  	
  545,174.25

  	
   

  
	
  January 31,
  2008*

  	
   

  	
  $

  	
  530,000.00

  	
   

  	
  $

  	
  84,770.96

  	
   

  	
  $

  	
  614,770.96

  	
   

  
	
  April 22,
  2008*

  	
   

  	
  $

  	
  500,000.00

  	
   

  	
  $

  	
  73,150.68

  	
   

  	
  $

  	
  573,150.68

  	
   

  
	
  Total

  	
   

  	
  $

  	
  5,500,000.00

  	
   

  	
  $

  	
  832,438.36

  	
   

  	
  $

  	
  6,332,438.36

  	
   

  

 

* Originally issued to Hudson Bay

** Represents principal amount of the Debentures after
taking into account the transactions contemplated by this Agreement

 

13

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