Advance, Pledge & Security Agreement

d.               “Capital Stock” means all of the capital stock of FHLBank, of any class or classes, owed by the Institution and all payments that have been or hereafter are made on account of any subscription for such capital stock and all unpaid dividends on such capital stock.

e.                “Collateral” means all assets and property, including the proceeds thereof, assigned, transferred or pledged to FHLBank by the Institution pursuant to Section 3.1 of the Agreement or otherwise.

f.                  “Commitment” or “Commitments” means any agreement under which FHLBank is obligated to make an Advance to the Institution.

g.               “Confirmation” means a written or machine-readable electronic transmission issued by FHLBank from time to time confirming an Advance, including the notation of the Advance on the Institution’s demand deposit account statement.

h.               “Member Products Policy” means the Member Products Policy of FHLBank as published from time to time or, if FHLBank ceases to have a policy with that title, any other policy or policies of FHLBank governing credit, lending, collateral, pricing and acquired member assets.

i.                   “Eligible Collateral” means Collateral, other than Capital Stock, which (1) qualifies as security for Advances under the terms and conditions of the Act and the Regulations and satisfies the requirements that may be established by FHLBank from time to time; and (2) is owned by the Institution free and clear of any liens, encumbrances or interests other than tie interest of FHLBank hereunder.

j.                   “Indebtedness” means all indebtedness of the Institution to FHLBank, whether now outstanding or hereafter incurred, including all Advances and any other sums owed by the Institution to FHLBank pursuant to any provision hereof, and all other obligations and liabilities of the Institution to FHLBank.

k.                “Lending Value” means the value that FHLBank shall from time to time, in its sole discretion, ascribe to the various types of Collateral.

l.                   “Listed Collateral” means all individual items of Collateral which (1) the Institution has specifically identified as Collateral in a written or electronic communication to FHLBank (including the description of any individual item of Collateral in a financing statement or similar document); or (2) the Institution has delivered or caused to be delivered to FHLBank or to a bailee, custodian or agent acting on FHLBank’s behalf.

m.             “Regulations” means the regulations of the Federal Housing Finance Board or its successor, as needed, 12 CFR Chapter IX.

n.               “Required Collateral Amount” means the aggregate dollar amount that FHLBank may specify from time to time may increase or decrease the Required Collateral Amount at any time.

o.               “Interest Rate Exchange and Option Transactions” or “Interest Rate Exchange and Option Transactions” means any and all interest rate swaps, interest rate caps, floors or collars, options, futures, forward contracts, currency exchange transactions, or similar transactions entered into between FHLBank and the Institution.

ADVANCES AND OTHER INDEBTEDNESS

2.1          Advances Procedures: Demand Deposit Account .   All advances are subject to and governed by the Member Products Policy, which is incorporated in and made part of this Agreement.  Periodically, the Institution may apply to FHLBank for Advances in accordance with the procedures established by FHLBank.  Unless otherwise agreed to in writing by FHLBank, each Advance shall be evidenced by a Confirmation and shall be made by crediting a demand deposit account of the Institution with FHLBank, and payments of interest, principal or other amounts owed to FHLBank shall be made by debiting such account.  The institution shall maintain sufficient available balances in the account to fund all payments due to FHLBank.

2.2          Estoppel .  Failure of the Institution to deliver a written notice to FHLBank specifying any disputed term or condition of an Advance within ten (10) Business Days after FHLBank mails by first-class mail or transmits electronically a Confirmation to the Institution shall constitute the agreement and acknowledgment by the Institution that the terms and conditions of the Advance as stated in the Confirmation are valid and are those that the Institution requested and by which the Institution agreed to be bound.  The Institution shall thereof be estopped from asserting any claim or defense with respect to the repayment of such Advance and all interest, fees and other charges thereon or in connection therewith.

2.3          Obligation to Repay .  The Institution unconditionally agrees to repay all Advances and other indebtedness, together with all interest and any fees, costs and expenses in connection therewith, at the applicable interest rate per annum provided in the Confirmation pertaining thereto, all upon the terms and conditions stated in the applicable Confirmation, FHLBank’s Member product Policy for such type of Advance or Indebtedness and as otherwise specified herein.  Accrued interest on each Advance shall be due and payable at the time specified in FHLBank’s Member Product policy, Confirmation or as otherwise specified in writing by FHLBank.

2.4          Funding Commitments; Ineligibility .  In the event the Institution’s access to Advances is restricted by any applicable law or regulatory directive, FHLBank shall not fund outstanding Commitments to the Institution.  The Institution shall immediately notify FHLBank if it becomes ineligible for Advances under any applicable law or regulatory directive.

2.5          Stock Purchase .  The Institution unconditionally agrees that whenever it receives an Advance or transacts any other business with FHLBank, it shall purchase Capital Stock as and when required by FHLBank’s Capital Plan, Member Product Policy, and any applicable laws, Regulations, resolutions of FHLBank’s board of directors and provisions of FHLBank’s Organization Certificate or bylaws, all as in effect at the time the Advance or other transaction is entered into (or, if at that time FHLBank does not have a Capital Plan, any other plans or policies of FHLBank governing Capital Stock and capital structure).  The Institution authorizes FHLBank to effect purchase by exchanging shares of classes of Capital Stock held by the Institution and/or debiting the Institution’s accounts at FHLBank in accordance with such Capital plan, Member Product Policy, and any applicable laws, Regulations, resolutions of FHLBank’s board of directors and provisions of FHLBank’s Organization Certificate or bylaws, as amended.

SECURITY AGREEMENT

3.1                                  Blanket Pledge; Required Collateral .

a.                As security for all present and future Indebtedness, the Institution hereby assigns, transfers and pledges to FHLBank, and grants to FHLBank a security interest in, all assets and properties now owned or hereafter acquired by the Institution, wherever located, including, without limitation, all (1) Capital Stock; (2) instruments (including without limitation, all notes, promissory notes, and all other instruments evidencing a debt, and any mortgage, deed of trust, title or other document securing a debt); (3) investment property (including, without limitation, mortgage-backed securities, other securities, share certificates or other participation interests in any securities trust, and mortgage loan participation certificates); (4) chattel paper; (5) choses in action; (6) general intangibles; (7) certificates of deposit; (8) accounts and deposit accounts (including, without limitation, deposit accounts of the Institution held by FHLBank; and (9) proceeds of all of the foregoing.

b.               The Institution shall at all time have granted FHLBank a security interest in an amount of Eligible Collateral that has a Lending Value at least equal to the Required Collateral Amount applicable to the Institution.

c.                While the Institution may, except as provided below, retain the documents evidencing any Collateral it has pledged to FHLBank, it is specifically understood and agreed that the Institution holds such documents solely for the benefit, and subject to the direction and control, of FHLBank.  The Institution shall at all times retain (or deliver to a custodian or other bailee to hold for the exclusive benefit of the Institution) the original, executed notes, mortgages and any assignments and amendments thereof for all mortgage loans that the Institution represents to be Eligible Collateral (by including their value in any report of Eligible Collateral or otherwise), unless it delivers such originals to FHLBank.

d.               The Institution may use, commingle and dispose of the Collateral and collect, compromise and dispose of the proceeds of the Collateral, and any transferee of such Collateral shall take free and clear of any security or other interest granted to FHLBank in Section 3.1(a) hereof, subject only to the Institution’s obligation to maintain the Collateral as provided in Section 3.1(b); however, that this Section 3.1(d) shall not apply to Listed Collateral.

e.                FHLBank may take such steps as it reasonably deems necessary to protect its security interest in Collateral including, without limitation, filing financing statements, requiring delivery, and requiring the pledging and/or perfection of additional collateral whether or not such additional collateral is Eligible Collateral.

3.2                                  Listed Collateral; Perfection .

a.                 Immediately upon FHLBank’s request, and from time to time thereafter, the Institution shall provide FHLBank an amount of Listed Collateral which is also Eligible Collateral that has a Lending Value at all times at least equal to the Required Collateral Amount applicable to the Institution.  The Institution shall take all actions as FHLBank shall reasonably deem necessary or appropriate to perfect FHLBank’s security interest in the Listed Collateral, including but not limited to the making, execution and delivery to FHLBank of such assignments, listings, powers, financing statements or other instruments and documents as FHLBank may require.  The Institution shall not assign, pledge, transfer, create any security interest in, sell or otherwise dispose of any Listed Collateral without the prior written consent of FHLBank.

b.                The Institution agrees to pay to FHLBank upon demand such fees and charges as may be assessed by FHLBank to cover overhead and other costs relating to the perfection of FHLBank’s security interest in the Listed Collateral (including without limitation the receipt, holding and redelivery of Collateral and to reimburse FHLBank upon request for all recording fees) and other reasonable expenses, disbursements and advances incurred or made by FHLBank in connection therewith (including the reasonable compensation and the expenses and disbursements of any bailee that may be appointed by FHLBank hereunder, and the agents and legal counsel of FHLBank and of such bailee).

c.                 In the event any Listed Collateral that was Eligible Collateral ceases to be Eligible Collateral, the Institution will promptly notify FHLBank in writing of the reason such Listed Collateral has ceased to be Eligible Collateral and request the deletion or delivery of such Listed Collateral pursuant to Section 3.4.

d.                The form and sufficiency of all documents pertaining to the Listed Collateral shall be satisfactory to FHLBank.  Any Listed Collateral that is not satisfactory to FHLBank may be rejected by FHLBank or may have a Lending Value ascribed thereto shall be less than the value normally ascribed thereto under FHLBank’s Member Product Policy. Or as FHLBank may otherwise specify.

3.3                                  Listed Collateral; Deletion or Delivery .  Upon receipt by FHLBank of a written request from the Institution asking for the deletion on redelivery of any Listed Collateral, FHLBank shall promptly redeliver to the Institution, at the Institution’s expense, or acknowledge the deletion of, the Listed Collateral specified in said written request.  Notwithstanding anything to the contrary herein, while an Event of Default shall have occurred and be continuing, or at any time that FHLBank’s records indicate that such deletion or redelivery would reduce the Lending Value of the Institution’s Eligible Collateral below the Required Collateral Amount, or at any time that FHLBank reasonably and in good faith deems itself insecure, FHLBank may refuse such request.

3.4                                  Representations and Warranties .  The Institution represents and warrants to FHLBank, as of the date hereof and as of each date on which there shall be any outstanding Indebtedness or Commitment, as follow:

a.                The Institution owns and has title to all Collateral and has the right and authority to grant a security interest to FHLBank in all Collateral and to subject all Collateral to this Agreement.

b.               All Listed Collateral, and all other Collateral that the Institution represents to be Eligible Collateral (by including its value in any report of Eligible Collateral or otherwise), meets the standards and requirements for Eligible Collateral from time to time established by FHLBank, the Act and the Regulations.

c.                The Institution has not conveyed or otherwise created, and there does not otherwise exist, any participation interest (except as permitted by the Member Product Policy) or other direct, indirect, legal or beneficial interest, lien or encumbrance, in any Listed Collateral or any other Collateral that the Institution represents to be Eligible Collateral, in favor of any person or entity other than FHLBank and the Institution, except as specifically communicated in writing to FHLBank.

3.5                                  Reports, Audits and Access .

a.                The Institution shall provide FHLBank with written periodic reports containing such information on the Collateral as FHLBank shall require from time to time, including listings of mortgages and securities, unpaid principal balances thereof and certifications concerning the status of payments of mortgages and of taxes and insurance on property securing mortgages.  The Institution shall give FHLBank access at all reasonable times to Collateral in the possession of the Institution and to the books and records of account of the Institution relating to the Collateral for the purpose of permitting FHLBank to examine, verify or reconcile the Collateral and the reports of the Institution to FHLBank thereon.

b.               All Collateral and the satisfaction by the Institution of the Required Collateral Amount shall be subject to periodic audit and verification by or on behalf of FHLBank.  Such audits and verifications may occur without notice during the Institution’s normal business hours or upon reasonable notice at such other times as FHLBank may reasonably request.  The Institution shall provide access to, and shall make adequate working facilities available to, the representatives or agents of FHLBank for purposes of such audits and verifications.  The Institution agrees to pay to FHLBank such reasonable fees and charges as may be assessed by FHLBank to cover overhead and other costs relating to such audits and verifications.

c.                The Institution shall furnish to FHLBank, if FHLBank requests, an audit report prepared by an external independent auditor of the Institution in such form as FHLBank may require certifying the accuracy of any or all information required to be given to FHLBank by the Institution with respect to the Collateral, and copies of any