EXHIBIT 4
INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS OF LONG-TERM DEBT
ADVANCES, PLEDGE, AND SECURITY AGREEMENT
This Advances, Pledge and Security Agreement (the "Advances Agreement"),
dated as of this 24th Day of March, 1997, is between ChoiceOne State Bank,
with its principal place of business at 109 East Division, P.O. Box 186,
Sparta, Michigan 49345-0186, (the "Member") and the Federal Home Loan Bank
of Indianapolis, with its principal place of business at 8250 Woodfield
Crossing Boulevard, Indianapolis, Indiana 46240, and mailing address at
P.O. Box 60, Indianapolis, Indiana 46206 (the "Bank").
WHEREAS, the Bank, subject to the provisions of the Federal Home Loan Bank
Act ("Bank Act"), the Rules and Regulations of the Federal Housing Finance
Board or its legal successor ("FHFB Regulations"), the policies of the FHFB
and the Bank's Credit Policies (as hereinafter defined) is authorized to
make available Advances and Other Credit Products to its members; and
WHEREAS, Member desires from time to time to apply for such Advances and
Other Credit Products that may be available to it; and
WHEREAS, the Bank requires that such Advances and Other Credit Products
provided by the Bank be secured pursuant to this Advances Agreement, and
Member agrees to provide such security as requested by the Bank by the
means set forth in this Advances Agreement.
NOW THEREFORE, intending to be legally bound, the Member and the Bank agree
as follows:
1. GENERAL.
SECTION 1.01. DEFINITIONS.
As used herein, the following terms shall have the following meanings:
"ADVANCES" means any and all loans or other extensions of credit now or
hereafter granted by the Bank to the Member, including all loans or
extensions of credit by the Bank to the Member prior to the date hereof.
"ADVICE OF CREDIT" means one or more written confirmations to be executed
by the Member and the Bank specifying the type or category of advance made,
the terms of repayment, the interest rate (which may be fixed or variable),
and any other pertinent terms and conditions, which shall evidence an
advance.
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"APPLICATION FOR ADVANCE" means one or more written or telephonic requests
for an advance, in such form or forms as shall be specified by the Bank
from time to time, and which is executed by the Bank shall evidence an
Advance.
"BANK DEPOSITS" shall mean all deposit accounts maintained by the Member
with the Bank (excluding safekeeping accounts expressly held for the
benefit of a third-party), all money, cash and checks, drafts, notices,
bills, bills of exchange and bonds deposited therein or credited thereto,
including any increases, renewals, extensions, substitutions and
replacements, whether or not such instruments have been posted to any such
deposit account, and all statements, certificates, passbooks and
instruments representing any such deposit account.
"CAPITAL STOCK" means all of the capital stock of the Bank owned by the
Member, and all payments which have been or hereafter are made on account
of subscriptions to, and all unpaid dividends on, such Capital Stock.
"COLLATERAL" means all assets of the Member of any kind or nature
whatsoever, whether tangible or intangible, including without limitation,
all Capital Stock, Bank Deposits, Mortgage Collateral, Securities
Collateral, and Other Collateral, all cash and cash equivalents, all
insurance proceeds, all tax refunds, all proceeds of any of the foregoing,
and all collections on any and all of the foregoing, which are now or
hereafter pledged to the Bank pursuant to Section 3.01 hereof. It also
means, including without limitation, any of the foregoing which have
previously been assigned, transferred or pledged to the Bank by the Member
as collateral for loans or other extensions of credit prior to the date
hereof, all of such assets in which a security interest is granted pursuant
to the terms hereof or in which a security interest is hereafter assigned,
transferred, granted, or pledged pursuant to the terms hereof.
"COLLATERAL POLICY" shall mean the Bank's Collateral Policy as stated in
the Credit Policy Manual, policy statement or operating circulars of the
Bank, as in effect from time to time.
"COLLATERAL REQUIREMENT" means such aggregate Market Value (or unpaid
principal balance) of Eligible Collateral as is specified in the Bank's
Collateral Policy or as may be otherwise specified in writing by the Bank
from time to time as being the collateral maintenance level the Member must
maintain hereunder. The Bank may increase or decrease the Collateral
Requirement at any time for, including without limitation, specific
collateral listings, physical possession requirements, and where
applicable, blanket collateral requirements.
"CREDIT POLICIES" shall mean the Bank's Credit Policy Manual, policy
statements, or operating circulars relating to Advances and Other Credit
Products offered by the Bank, all as in effect from time to time.
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"ELIGIBLE COLLATERAL" means Collateral other than Capital Stock which: (I)
meets the definition of Eligible Collateral under the Bank's Collateral
Policy, including without limitation one-to-four family whole mortgage
loans, government and agency securities, private mortgage-backed
securities, and Bank Deposits; (II) is owned by the Member free and clear
of any liens, encumbrances or other interests other than the assignment to
the Bank hereunder; (III) has not been in default within the most recent
12-month period provided that in the case of Mortgage Collateral, mortgage
payments that are overdue by more than sixty (60) days shall not be
included within Eligible Collateral; (IV) in the case of Mortgage
Collateral, relates to residential real property which is covered by fire,
hazard, and where applicable, flood insurance in an amount at least
sufficient to discharge the mortgage loan in full in case of loss and as to
which all real estate taxes are current; and (V) in the case of Mortgage
Collateral, does not secure an indebtedness on which any director, officer,
employee, attorney or agent of the Member or of any Federal Home Loan Bank
is personally liable. The Bank may change the definition of Eligible
Collateral from time to time, and the Bank's determination of Eligible
Collateral shall be conclusive.
"INDEBTEDNESS" means all obligations, liabilities or indebtedness of the
Member to the Bank, due or to become due, direct or indirect, absolute or
contingent, joint or several, now existing or hereafter at any time
created, arising or incurred under this Advances Agreement, or any Advice
of Credit, Application for Advance, Other Credit Product Agreements,
Advances, Other Credit Products, Bank Deposits, including any overdrafts or
other charges in connection therewith. Indebtedness also means any
obligations for any other services (including without limitation,
safekeeping, operating and other correspondence services) provided by the
Bank, including any applications, commitments, other agreements or
documents relating to the foregoing, any amendments to any of the foregoing
agreements or documents and any obligations under indemnification
provisions in any such agreements or documents, and any renewal, extension
or substitution of any such obligations, liabilities and indebtedness,
including attorneys' fees of the Bank in the collection thereof and the
enforcement of any remedies with respect to any Collateral.
"MARKET VALUE" means the market value of Collateral determined in a manner
as specified by the Bank from time to time. The Bank may change the method
of determining Market Value at any time which shall be consistently applied
to substantially all borrowers. The Bank's determination of Market Value
shall be conclusive.
"MORTGAGE COLLATERAL" means whole mortgage loans, Mortgage Documents and
all security agreements, guaranties, insurance policies, certificates,
binders, commitments or reports relating thereto, including title
insurance, private mortgage insurance and hazard and liability insurance,
surveys, bonds, participations, purchase commitments, hedge contracts or
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other agreements to purchase, guaranty or insure any mortgage loans or
securities to be issued by the Member. Mortgage Collateral also means any
other agreement, instrument or document pertaining to, affecting or
obtained by the Member in connection with the loans covered by the Mortgage
Documents, financing statements perfecting the Member's security interest
in any of the foregoing, certificates, evidences of recordation,
applications, underwriting materials, appraisals, notices, opinions of
counsel, loan servicing data, files, correspondence, computer programs,
tapes, discs, cards, account records and all other electronically stored or
written records or materials relating to the loans covered by the Mortgage
Documents, including any and all rights, claims, and choses in action
against or with respect to any person or entity which has provided services
to the member in connection with any other Mortgage Collateral, including
without limitation, surveyors, appraisers, environmental engineers,
environmental assessment firms, contractors, and architects. Unless
otherwise authorized by the Bank, Mortgage Collateral shall not include
mortgage securities or loan participations.
"MORTGAGE DOCUMENTS" means mortgages, deeds of trust or other security
deeds in land and interests in real property and the improvements and
fixtures located thereon (herein "mortgages") and all notes, bonds or other
instruments evidencing loans secured thereby (herein "mortgage notes") and
any endorsement and assignments thereof to the Member.
"OTHER COLLATERAL" means such items of tangible and intangible property,
other than Capital Stock, Bank Deposits, Mortgage Collateral, and
Securities Collateral, which are offered as collateral by the Member to the
Bank and which the Bank in its discretion expressly accepts by written
notice delivered to the Member as collateral for Advances and Other Credit
Products.
"OTHER CREDIT PRODUCT AGREEMENT" means a writing or electronic transmission
in such form as shall be specified by the Bank, executed by the Bank and
the Member and setting forth the obligations of the Bank and Member,
including without limitation, any Community Investment or Affordable
Housing Program transaction, any service confirmation, service contract,
reimbursement agreement, interest rate swap agreement, transaction,
confirmation, applications, notices, advice or other instruments between
the Bank and the Member.
"OTHER CREDIT PRODUCTS" means any and all commitments or obligations under
which the Bank agrees to make Advances to the Member or payments on behalf
of or for the account of the Member, including without limitation, letters
of credit, guarantees, demand or CMS account transactions, check
processing, deposit overdrafts, item processing services, coin and currency
services, safekeeping services (including security lending programs),
Community Investment or Affordable Housing Program transactions,
correspondent banking service debits or services charges, or other
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arrangements intended to facilitate transactions between or among the Bank,
the Member and third parties, or under which the Bank enters into a credit
or financial accommodation agreement or other arrangement with the Member,
including without limitation, repurchase agreements and interest rate
exchange transactions (such as interest rate swap agreements, cap, collar
and floor agreements) and such other products or services as may be offered
by the Bank from time to time pursuant to its Credit Policies and
irrespective of whether the Bank's obligation is contingent or conditional.
"OUTSTANDING COMMITMENTS" means, at any point in time, the maximum
aggregate principal amount of Advances or payments which the Bank may be
obligated to make to the Member (or other parties) under Advance
Applications or Other Credit Product Agreements then in effect.
"SECURITIES COLLATERAL" means all securities or certificates evidencing a
direct or indirect interest in a loan or a group of loans secured by
mortgages, including without limitation, mortgage-backed securities,
collateralized mortgage obligations and real estate mortgage investment
conduits, including Federal Home Loan Mortgage Corporation mortgage
participation certificates, Federal National Mortgage Association mortgage
pass-through mortgage-backed certificates and Government National Mortgage
Association modified pass-through mortgage-backed certificates, and all
Mortgage Documents and items of Mortgage Collateral owned or otherwise
acquired by the Member relating to the loans underlying such securities or
certificates; consolidated obligations of the Federal Home Loan Bank
System; obligations of or guaranteed by the United States; and obligations
of or guaranteed by agencies or instrumentalities of the United States.
2. ADVANCES DOCUMENTATION.
SECTION 2.01. APPLICATION FOR ADVANCES.
The Member may apply for Advances or commitments by completing and
submitting an Application for Advance or requesting Other Credit Product
services. The preceding sentence notwithstanding, the Bank may in its
discretion make an Advance, make a commitment, or deliver Other Credit
Products to the Member pursuant to the Bank Act, FHFB Regulations, Credit
Policies, and other Bank procedures in effect from time to time, and by
either (I) the receipt of an oral or written application which is executed
by the Bank without change, or (II) in the case of an application received,
completed or modified by the Bank pursuant to a telephonic or other
unsigned communication by the Member, by an Advice of Credit writing
generated by the Bank. The Member shall be estopped from asserting any
claim or defense with respect to the terms applicable to an Advance,
commitment, or Other Credit Product entered into pursuant to a telephone
application or other unsigned communication unless, within two (2) business
days of receipt of the Bank's advice, the Member delivers to the Bank a
written notice specifying the disputed term(s) or condition(s). The Bank
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shall have the absolute right to rely upon the procedures established
hereby or pursuant to the terms hereof and shall have no liability to the
Member for any actions taken or omitted to be taken in connection with such
procedures. The member agrees that it will hold the Bank and each of its
employees, officers, directors, agents, and representatives harmless from
any loss, liability or damage which the Member may suffer, including
without limitation, lost profits and attorneys' fees and disbursements,
arising out of or in connection with such procedures, absent fraud, willful
misconduct, or recklessness on the part of the Bank.
SECTION 2.02. BANK'S RECEIPT OF WRITTEN CONFIRMATION AND FINDINGS.
Within five (5) business days of receipt, Member agrees to execute and
return any Advice of Credit, confirmation, or Other Credit Product
Agreement to the Bank. Upon request of the Bank, the Member shall sign and
deliver to the Bank a promissory note or notes in such form as the Bank may
reasonably require evidencing any Advance. Unless otherwise requested by
the Member and approved by the Bank, each Advance shall be funded by
crediting the Member's CMS account(s) with the Bank.
SECTION 2.03. INTEREST COMPUTATIONS AND REPAYMENT OF ADVANCES AND OTHER
CREDIT PRODUCTS.
The Member agrees to repay each Advance or Other Credit Product in
accordance with this Advances Agreement and the terms and conditions of the
Advice of Credit or Other Credit Product Agreement. Each Advance, Advice
of Credit, Application for Advance, Other Credit Product and Other Credit
Product Agreement shall be subject to the terms of the Credit Policies and
applicable laws, regulations, and limitations, all as in effect from time
to time, including the Bank Act, the FHFB Regulations and the statements of
policy and guidelines of the FHFB, which shall be deemed to be incorporated
by reference into this Advances Agreement. Unless otherwise specified in
the Bank's Credit Policies or as may be otherwise specified in writing by
the Bank from time to time, interest shall be paid at the time of each
payment of all of the principal of each Advance on the amount of principal
so repaid, and shall be paid on the fifteenth (15th) day of each month (or
the Bank's next business day if the Bank is not open for business on the
fifteenth (15th)) on the daily outstanding principal amount of each Advance
since the previous interest payment date (other than principal amounts
which have been repaid in full since such interest payment date), in each
case at the rate applicable to such Advance as stated in the related Advice
of Credit. The Member shall pay to the Bank, immediately and without
demand, interest on any past due amount owing on any Advance or Other
Credit Product at the rate in effect and being charged by the Bank from
time to time on defaults. The default rate on past due payments of
principal and interest may, at the option of the Bank, be at a rate of five
percent (5%) per annum in addition to the then highest current rate being
charged by the Bank for advances, not to exceed the highest legal interest
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rate allowed under Indiana law. The Member shall maintain in the Member's
CMS account with the Bank an amount at least equal to the amounts then
currently due and payable to the Bank on outstanding Advances and Other
Credit Products. The Member hereby authorizes the Bank to debit the
Member's CMS account with the Bank for all amounts due and payable on any
Advance or Other Credit Product and for all other amounts due and payable
hereunder. In the event that the amount in the Member's CMS account is, at
any time, insufficient to pay such due and payable amounts, the Banks may
without notice to the Member apply any Bank Deposits then in the possession
of the Bank to the payment of such due and payable amounts.
SECTION 2.04. PAYMENT OF PREPAYMENT CHARGES.
Any prepayment fees or charges for which provision is made, whether under
the Advice of Credit, Other Credit Product Agreement, or otherwise, shall
be payable at the time of any voluntary or involuntary payment of the
principal of such Advance or Other Credit Product prior to the originally
scheduled maturity thereof, including without limitation, payments that are
made as a part of a liquidation of the Member or that become due as a
result of an acceleration pursuant to Section 4.01 hereof, and whether such
payment is made by the Member, by a conservator, receiver, liquidator or
trustee of or for the Member, or by any successor to or any assignee of the
Member. The method of computation for the prepayment fee, unless expressly
provided for in the applicable credit documentation, is set forth in the
Credit Policies of the Bank and may be subject to change from time to time
with advance notice to the Member.
SECTION 2.05. RIGHT OF BANK TO MAKE PAYMENTS WITH RESPECT TO OUTSTANDING
COMMITMENTS.
In the event that there are one or more Outstanding Commitments at the time
of an Event of Default under Section 4.01 hereof, the Bank may, at its
option, make any payments due thereunder from time to time by crediting a
special account with the Bank over which the Bank has sole dominion and
control. Amounts credited to such special accounts shall be deemed to have
satisfied the Bank's obligations under the Outstanding Commitments. When
all such obligations have been satisfied, the Bank shall disburse the
balance, if any, in such account first to the satisfaction of any amounts
then due and owing by the Member to the Bank and then to the Member or its
successors in interest. Payments made pursuant to this section shall be
payable on demand and shall bear interest at the rate specified for each
applicable Advance (or if such rate is not specified, at the rate in effect
and being charged by the Bank from time to time on variable rate advances),
and shall include applicable prepayment fees.
The Bank shall not fund outstanding commitments previously made to the
Member whose access to advances is restricted by its primary federal
regulator. In addition, the Bank shall not fund outstanding commitments
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previously made to the Member whose access to advances is subsequently
restricted because it does not have positive tangible capital or if the
Bank deems itself insecure for any reason as determined by the Bank in its
sole discretion. The Bank shall not honor any outstanding commitments to
the Member if the Member is a savings association that fails to maintain
its status as a Qualified Thrift Lender as such rule is defined under the
applicable federal law and federal regulations as may be in effect from
time to time.
3. SECURITY AGREEMENT.
SECTION 3.01. CREATION OF SECURITY INTEREST.
As security for all indebtedness, including without limitation, all
Advances and Other Credit Products, the Member hereby assigns, transfers,
and pledges to the Bank and grants to the Bank a security interest in all
Collateral, now or hereafter owned by the Member, and all proceeds thereof,
provided, however, that Collateral that is encumbered or disposed of by the
Member in conformity with the requirements of Section 3.03(a) hereof shall
not be subject to the security interest created hereunder. Without
limitation of the foregoing, all tangible and intangible property
heretofore assigned, transferred or pledged by the Member to the Bank as
Collateral for Advances and Other Credit Products prior to the date hereof
is hereby assigned, transferred and pledged to Bank as Collateral
hereunder.
SECTION 3.02. MEMBER'S REPRESENTATIONS AND WARRANTIES CONCERNING
COLLATERAL.
The Member represents and warrants to the Bank, as of the date hereof and
as of the date of all future Advances or Other Credit Products secured
hereunder, the following:
(a) The Member owns and has marketable title to the Collateral and has the
right and authority to grant a security interest in the Collateral and to
subject all of the Collateral to this Advances Agreement;
(b) The information contained in any certification, status report,
schedule, or other information given from time to time by the Member as to
each item of Collateral is true, accurate and complete in all material
respects;
(c) The Member maintains Eligible Collateral which has a Market Value (or
unpaid principal balance) that is at least equal to the then current
Collateral Requirement and which meets the standards and requirements from
time to time established by the Bank's Collateral Policy, the Bank Act and
the FHFB Regulations, and all other applicable laws and regulations;
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(d) The Member has not conveyed or otherwise created, and there does not
otherwise exist, any participation interest or other direct, indirect,
legal, or beneficial interest in any Collateral pledged under Sections
3.01, 3.03(a), and 3.04 on the part of any person or entity other than the
Bank and the Member;
(e) Except as may be approved in writing by the Bank, no account debtor or
other obligor owing any obligation to the Member with respect to any item
of Mortgage Collateral or Other Collateral has or will have any defenses,
offsetting claims, or other rights affecting the right of the Member or the
Bank to enforce such mortgage, mortgage note or promissory obligation, and
no defaults (or conditions that, with the passage of time or the giving of
notice or both, would constitute a default) exist under any such writings;
and
(f) No part of any real property or interest in real property that is the
subject of Collateral contains or is subject to the effects of toxins or
hazardous materials or other hazardous substances (including those defined
in any applicable state or local law; or applicable federal law, including
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 USC 9601 et seq.; the Hazardous Materials
Transportation Act, 49 USC 1801 et seq.; the Resource Conservation and
Recovery Act, 42 USC 6901 et seq.; and in the regulations adopted and
publications promulgated pursuant to said laws), the presence of which
could subject the Bank to any liability under applicable state or Federal
law or local ordinance either at any time that such property is pledged to
the Bank or upon the enforcement by the Bank of its security interest
therein.
SECTION 3.03. COLLATERAL MAINTENANCE REQUIREMENT FOR BLANKET LIENS AND
SPECIFIC LISTINGS.
(a) The Member shall at all times maintain an amount of Eligible
Collateral which has a Market Value (or unpaid principal balance, if so
required by the Bank) that is at least equal to the then current Collateral
Requirement. The Member shall not assign, pledge, transfer, create any
security interest in, sell, or otherwise dispose of any Collateral if (I)
such Collateral is held by or on behalf of the Bank pursuant to Section
3.04 hereof, (II) such Collateral has been provided in a specific listing
of Eligible Collateral pursuant to Section 3.03(e), (III) the Bank has
otherwise perfected its security interest in such Collateral, or (IV) at
the time of or immediately after such action, Member is not or would not be
in compliance with the collateral maintenance requirements of the first
sentence of this Section 3.03(a) or is or would be otherwise in default
under this Advances Agreement. So long as Member is not in default under
this Agreement, Member shall be at liberty to sell, use, commingle, and
dispose of the Collateral or the proceeds of such Collateral without being
required to account for the proceeds or replace the Collateral, subject
only to its obligation to maintain the Collateral as herein provided.
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(b) Collateral shall be held by the Member in trust for the benefit of the
Bank and subject to the Bank's direction and control, will not be
commingled with assets of the Member which are not Collateral, and will be
physically safeguarded by the Member in accordance with usual, customary
and prudent commercial practices but in any event with not less than the
same degree of care which the Member uses in physically safeguarding its
other property and assets of like kind and nature. Without limitation of
the foregoing, Member shall take all action necessary or desirable to
protect and preserve the Collateral and the Bank's interest therein,
including without limitation, the maintaining of insurance on property
securing mortgages constituting Collateral (such policies and certificates
or guaranty relating to such mortgages are herein called "insurance"), the
collection of payments under all mortgages and under all insurance, and
otherwise assuring that the loans comprising the Mortgage Collateral are
serviced in accordance with the standards of a reasonable and prudent
mortgagee. The Member (or its agent), acting on behalf of the Bank, shall
collect all payments when due on all Collateral. If the Bank requires
under Section 3.12, the Member shall hold such collections separate from
its other monies and apply them to the reduction of Indebtedness as it
becomes due; otherwise, the Member shall be entitled to use and dispose of
all such collections in the ordinary course of its business and in
compliance with all laws, rules, and regulations.
(c) If any Collateral that was Eligible Collateral ceases to be Eligible
Collateral, the Member shall promptly notify the Bank in writing of that
fact and, if so requested by the Bank of the reason that the Collateral has
ceased to be Eligible Collateral. The Member shall promptly specify, or
deliver, as the case may be, other Eligible Collateral having at least the
same Market Value as the Collateral so requested to be withdrawn.
(d) The Bank may review the form and sufficiency of all documents
pertaining to the Collateral. Such documents must be satisfactory to the
Bank and, if not, such Collateral may not be acceptable as Eligible
Collateral or may have a Market Value applied thereto that is less than the
Market Value otherwise applicable under the Bank's Collateral Policy, or as
the Bank may specify. The Bank may require that the Member make any or all
documents pertaining to the Collateral available to the Bank for its
inspection and approval.
(e) If so requested by the Bank, Member agrees to (I) provide a specific
listing of the Eligible Collateral to Bank, (II) physically segregate
Mortgage Documents and Other Collateral which are a part of such specified
Collateral from all other property of the Member in a manner satisfactory
to the Bank, and/or (III) hold each Mortgage Document which is a part of
Mortgage Collateral in a separate file folder with each file folder clearly
labeled with the loan identification number and the name of the
borrower(s). Immediately upon the written request of the Bank, the Member
further agrees to clearly and legibly mark or stamp each Mortgage Document
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and each file folder containing Mortgage Documents with the following
statement (or a substantially similar statement which has been approved in
writing by the Bank): "The Mortgage/Deed Of Trust And Note Relating To This
Loan Have Been Assigned To And Represent Collateral Of The Federal Home
Loan Bank Of Indianapolis And Its Successors And Assigns" and such other
statement as may be required by the Bank from time to time.
SECTION 3.04. DELIVERY OF COLLATERAL; PHYSICAL POSSESSION REQUIREMENTS.
(a) At any time upon the Bank's oral or written request, or at any time
that the Member becomes subject to any mandatory collateral delivery
requirements pursuant to the Collateral Policy or that may be otherwise
established in writing by the Bank, the Member shall promptly on a schedule
acceptable to the Bank deliver to the Bank, or to a custodian designated by
the Bank, all Collateral including such Eligible Collateral as may be
necessary so that the Market Value of Eligible Collateral held by the Bank,
or such custodian, meets or exceeds the Collateral Requirement at all
times, and take any and all other action as may be specified by the Bank to
further evidence the perfection of the Bank's security interest in the
Collateral and to otherwise effectuate the transactions contemplated
hereby, including the signature and filing of financing statements.
Collateral delivered to the Bank shall be endorsed or assigned in
recordable form by the Member to the Bank as directed by the Bank. With
respect to Mortgage Collateral that is to be delivered hereunder, the
Member shall deliver the Mortgage Documents with necessary endorsements and
assignments relating thereto unless otherwise directed by the Bank.
Concurrently with the initial delivery of Collateral and at such other
times as provided in the Collateral Policy or as the Bank may otherwise
request, the Member will deliver to the Bank a status report and
accompanying schedules, all in form and substance satisfactory to the Bank
and dated as of the then most recent valuation date, describing the
Collateral held by the Bank or its custodian.
(b) The Member authorizes the Bank to execute and file one or more
financing statements, this Agreement, and any other documents, instruments,
or statements of any kind on its behalf and without the signature of the
Member in those public offices deemed necessary by the Bank in its sole
discretion to perfect and continue the perfection of its security interest
in the Collateral and to protect, defend and further assure the grant,
validity and perfection thereof. In addition, the Member will, at its
expense, deliver or cause to be delivered such other documents as the Bank
may request to secure the indebtedness referred to herein or to further
perfect, protect, and defend the security interest granted herein.
(c) With respect to uncertificated securities or securities entitlements
pledged to the Bank as Securities Collateral or Other Collateral hereunder,
the delivery requirements and the agreement to give control contained in
this Advances Agreement shall be satisfied by the transfer of such
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securities to the Bank, such transfer to be effected in such manner and to
be evidenced by such documents as shall be specified by the Bank.
(d) The Member agrees to pay to the Bank such reasonable fees and charges
as may be assessed by the Bank to cover the Bank's overhead and other costs
relating to the receipt, holding, redelivery and reassignment of Collateral
and to reimburse the Bank upon request for all recording fees and advances
incurred or made by the Bank in connection therewith (including the
reasonable compensation and the expenses and disbursements of any custodian
that may be appointed by the Bank hereunder, and the agents and legal
counsel of the Bank and of such custodian).
(e) The Member shall, upon request of the Bank, immediately take such
other actions as the Bank shall deem necessary or appropriate to perfect
the Bank's security interest in the Collateral or otherwise to obtain,
preserve, protect, enforce or collect the Collateral.
SECTION 3.05. WITHDRAWAL OR REASSIGNMENT OF COLLATERAL.
Upon receipt by the Bank of writings in form and substance satisfactory to
the Bank constituting (I) a request from the Member for the withdrawal or
reassignment of Collateral which has been delivered pursuant to Section
3.04 hereof, or as to which the Bank has otherwise perfected its security
interest, and (II) a detailed listing of the Collateral to be withdrawn or
reassigned, provided that the Bank's valuation of such delivered Collateral
confirms that the Member's Collateral Requirement will be satisfied after
such withdrawal or reassignment, then the Bank shall redeliver or reassign
to the Member the Collateral specified in Member's request.
Notwithstanding anything to the contrary herein contained, while an Event
of Default hereunder shall have occurred and be continuing, or at any time
that the Bank in good faith deems itself insecure, the Member may not
obtain any such withdrawal or reassignment. Further, Member agrees for
specific listings provided under Section 3.03(e) to follow the withdrawal
procedures provided for under this Section 3.05 or as otherwise specified
by the Bank.
SECTION 3.06. ADDITIONAL COLLATERAL.
The Bank may at any time require the Member to maintain and deliver to the
Bank additional Collateral over that amount of Eligible Collateral required
to meet the Member's Collateral Requirement or substitutions of Collateral.
The Member expressly agrees to maintain and deliver such additional
Collateral or substitutions of Collateral as the Bank shall require.
SECTION 3.07. REPORTS; COLLATERAL AUDIT; ACCESS.
(a) In accordance with the Collateral Policy and at such other times as
the Bank may request, the Member shall furnish to the Bank, in a format
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satisfactory to the Bank, a report so that the Bank may verify that the
Member maintains Eligible Collateral with a Market Value (or unpaid
principal balance, if so required by the Bank) sufficient to meet the
Collateral Requirement. If the Market Value or unpaid principal balance of
Eligible Collateral owned by the Member, free and clear of any liens or
encumbrances, shall at any time fall below the Collateral Requirement, the
Member shall immediately notify the Bank.
(b) The Member shall provide annually an audit report prepared by the
Member's external independent auditor in accordance with generally accepted
auditing standards (and in a format acceptable to the Bank) certifying that
the Member owns, free and clear of any liens or encumbrances (except for
Bank's), Eligible Collateral with a Market Value (or unpaid principal
balance, if so required by the Bank) at least equal to the Collateral
Requirement, and deliver such report to the Bank within ninety (90) days of
each fiscal year-end of the Member, including an explanation for any
exceptions or qualifications in the report or any failure to obtain such
report. The Bank reserves the right to waive the audit report requirement
if Member's Collateral is in the physical possession of the Bank or in the
Bank's sole discretion based on particular circumstances.
(c) The Member agrees that the Bank shall have access at all reasonable
times to the Collateral in the Member's possession or control and to the
Member's books and records of account relating to such Collateral. The
Member shall permit the Bank to examine, inspect, audit, and take copies or
make extracts from its books and records and to discuss its affairs with
its independent auditor (or other representatives) as often as the Bank may
reasonably request.
(d) The Member agrees that examination reports prepared by local, state or
federal authorities may be furnished by such authorities to the Bank upon
its request, and by this Agreement, the Member authorizes and directs such
authorities to deliver such reports to the Bank and waives any objections
or restrictions thereto which it may lawfully waive. Member agrees that
upon request of the Bank, it will take any and all steps necessary to
assist the Bank in obtaining such reports from such authorities. The Bank
agrees that to the extent such reports or the information contained therein
are confidential, the Bank will use its same degree of care in keeping such
reports confidential as it applies to the Bank's own confidential
information and will not knowingly disclose any confidential information
contained therein unless required to do so by law, rules, regulations, or
judicial or regulatory process applicable to the Bank.
(e) If requested by the Bank, the Member shall furnish to the Bank a
written report covering such matters regarding the Collateral as the Bank
may require, including listing of mortgages, securities, and unpaid
principal balances thereof, and certifications concerning the status of
payments on mortgages and of taxes and insurance on property securing
mortgages.
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(f) The Member agrees to promptly report to the Bank any event which
reduces the principal balance of any mortgage or security by ten percent
(10%) or more, whether by prepayment, foreclosure sale, property-casualty
insurance or guaranty payment or otherwise.
(g) All Collateral and the satisfaction by the Member of the Collateral
Requirement shall be subject to audit and verification by or on behalf of
the Bank. Such audits and verifications may occur without notice during the
Member's normal business hours or upon reasonable notice at such other
times as the Bank may reasonably request. The Member shall provide to the
representatives or agents of the Bank for purposes of such audits and
verifications, access to all books and records related to transactions
whether made or contemplated under this Agreement. Further, Member shall
provide adequate working facilities, at Member's expense for a Bank to
conduct such audits or verifications. The Member agrees to pay to the Bank
such reasonable fees and charges as may be assessed by the Bank to cover
overhead and other costs relating to such audit and verification. The
Member further agrees that it will prepare and deliver promptly upon
request of the Bank inquiries to Member's outside auditors, outside
counsel, customers (including depositors or borrowers), and any other
person that the bank may reasonably request, to provide such information to
the Bank as it may reasonably request in connection with such audit and
verification.
SECTION 3.08. ADDITIONAL DOCUMENTATION AND STATUS REPORTS.
The Member shall at its expense make, execute, record and deliver to the
Bank such financing statements, assignments, listings, powers, notices and
other documents with respect to the Collateral and the Bank's security
interest therein as directed by the Bank and in form and substance
satisfactory to the Bank. Upon request, Member agrees to give Bank verbal
or written reports concerning the financial condition or status of any
regulatory action maintained against the Member, its holding company, or
any affiliated entity or affiliated person.
SECTION 3.09. BANK'S RESPONSIBILITIES AS TO COLLATERAL.
The Bank's duty as to the Collateral shall be solely to use reasonable care
in the custody and preservation of the Collateral in its possession, which
shall not include any steps necessary to preserve rights against prior
parties nor the duty to send notices, perform services, or take any action
in connection with the management of the Collateral. The Bank shall not
have any responsibility or liability for the form, sufficiency,
correctness, genuineness or legal effect of any instrument or document
constituting a part of the Collateral, or any signature thereon or the
description or misdescription, or value of property represented, or
purported to be represented, by any such document or instrument. The
14
Member agrees that any and all Collateral may be removed by the Bank from
the state or location where situated, and may there be dealt with by the
Bank as provided in this Advances Agreement.
SECTION 3.10. BANK'S RIGHTS AS TO COLLATERAL; POWER OF ATTORNEY.
At any time or times, at the expense of the Member, the Bank may, at its
discretion, before or after the occurrence of an Event of Default as
defined in Section 4.01 hereof, in its own name or in the name of its
nominee or of the Member, do any or all things and take any and all actions
that are pertinent to the protection of the Bank's interests hereunder and
which are lawful under the laws of the State of Indiana, or the laws of any
jurisdiction under which the Bank may be exercising its rights hereunder,
including the following:
(a) Terminate any consent given hereunder;
(b) With advance notice to Member (or its legal successor), notify
obligors on any Collateral to make payments thereon directly to the Bank;
(c) Endorse any Collateral in the Member's name;
(d) Enter into any extension, compromise, settlement, or other agreement
relating to or affecting any Collateral;
(e) Take any action the Member is required to take or which is otherwise
necessary to: (I) sign and record a financing statement or otherwise
perfect a security interest in any or all of the collateral; or (II)
obtain, preserve, protect, enforce or collect the Collateral;
(f) Take control of any funds or other proceeds generated by the
Collateral and use the same to reduce indebtedness as it becomes due; and
(g) Cause the Collateral to be transferred to its name or the name of its
nominee.
The Member hereby appoints the Bank as its true and lawful attorney, with
full power of substitution, for and on behalf of the Member and in its
name, place and stead, to prepare, execute and record endorsements and
assignments to the Bank of all or any item of Collateral, giving or
granting to the Bank, as such attorney, full power and authority to do or
perform every lawful act necessary or proper in connection therewith as
fully as the Member might or could do. The Member hereby ratifies and
confirms all that the Bank shall lawfully do or cause to be done by virtue
of this special power of attorney. This special power of attorney is
granted for a period commencing on the date hereof and continuing until the
discharge of all indebtedness and all obligations of the Member hereunder
regardless of any default by the Member, is coupled with an interest and is
irrevocable for the period granted.
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SECTION 3.11. SUBORDINATION OF OTHER LOANS TO MORTGAGE COLLATERAL.
The Member hereby agrees that all mortgage notes which are part of the
Mortgage Collateral and any notes secured by personal property ("personalty
notes") which may become part of the Other Collateral shall have priority
in right and remedy over any claims, however evidenced, for other loans,
whether made before or after the date of such mortgage or personalty notes
which are secured by the mortgages or security agreements securing such
mortgage or personalty notes but are not part of the Collateral, and shall
be satisfied out of the property covered by such mortgages or security
agreements before recourse to such property may be obtained for the
repayment of such other loans. To this end, the Member hereby subordinates
the lien of such mortgages and security agreements with respect to such
other loans to the lien of such mortgages and security agreements with
respect to such mortgage and personalty notes. The Member further agrees to
retain possession of any promissory notes evidencing such other loans and
not to pledge, assign or transfer the same, except that the same may be
pledged to the Bank as part of the Collateral. The Member, for itself and
for any other person or entity claiming by or through the Member, waives
any and all rights which it or such other person or entity may have to
require the Bank to marshal the assets of the Member or to otherwise
prioritize or sequence any class or category of Collateral with respect to
which the Bank may pursue its rights and remedies.
SECTION 3.12. PROCEEDS OF COLLATERAL.
The Member shall collect all payments when due on all Collateral. If the
Bank so requires, the Member, as the Bank's agent, shall hold such
collections separate from its other monies in one or more designated cash
collateral accounts maintained at the Bank and apply them to the reduction
of indebtedness as it becomes due; otherwise, the Member shall be entitled
to use and dispose of all such collections in the ordinary course of
business and in compliance with all laws, rules, and regulations.
4. DEFAULT; REMEDIES.
SECTION 4.01. EVENTS OF DEFAULT; ACCELERATION.
In the event of the occurrence of any of the following events or conditions
of default ("Event of Default"), the Bank may at its option, by a notice to
the Member, declare all indebtedness and accrued interest thereon,
including any prepayment fees (including without limitation, those fees
charged pursuant to Section 2.03 and 2.04), or charges which are payable in
connection with the payment prior to the originally scheduled maturity of
any indebtedness, to be immediately due and payable without presentment,
demand, protest or any further notice:
16
(a) Failure of the Member to pay when due any interest on, or principal
of, any Advance or any amount payable in connection with any Other Credit
Product; or
(b) Failure of the Member to timely perform any promise or obligation or
to satisfy any condition or liability contained herein, in an Application
for Advance, Advice of Credit, or in any Other Credit Product Agreement to
which the Member and the Bank are parties; or
(c) Any representation, statement, or warranty made or furnished in any
manner to the Bank by or on behalf of the Member in connection with any
Advance or Other Credit Product or any certification of the Market Value
(or unpaid principal balance, if so required by the Bank) of Eligible
Collateral shall have been false or misleading in any material respect when
made or furnished; or
(d) Failure of the Member to maintain Eligible Collateral which has a
Market Value (or unpaid principal balance, if so required by the Bank) that
is at least equal to the then current Collateral Requirement under the
applicable blanket lien/specific listing requirements of Section 3.03 or
physical possession requirements of Section 3.04, free of any encumbrances
or claims as required herein; or
(e) The issuance of any tax levy, seizure, attachment, garnishment, levy
of execution, or other process with respect to the Collateral; or
(f) Any failure to pay or suspension of payment by the Member to any
creditor of sums due or the occurrence of any event which results in
another creditor having the right to accelerate the maturity of any
indebtedness of the Member under any security agreement, indenture, loan
agreement, or comparable undertaking; or
(g) Application for or appointment of a conservator, receiver, or trustee
for the Member or of any affiliate or subsidiary of the Member or the
Member's property, entry of a judgment or decree adjudicating the Member or
any affiliate or subsidiary of Member insolvent or bankrupt, or an
assignment by the Member or any affiliate or subsidiary of the Member for
the benefit of creditors; or
(h) Sale by the Member of all or a material part of the Member's assets or
the taking of any other action by the Member to liquidate or dissolve; or
(i) Termination of the Member's membership in the Bank, or the Member's
ceasing to be a type of financial institution that is eligible under the
Bank Act to borrow or apply for membership in the Bank; or
(j) Merger, consolidation or other combination of the Member with an
entity which is not a member of the Bank if the nonmember entity is the
surviving entity; or
17
(k) With respect to Advances made pursuant to Section 11(g)(4) of the Bank
Act (12 USC 1431(g)), if the creditor liabilities of the Member, excepting
liabilities to the Bank, are increased in any manner to an amount exceeding
five percent (5%) of the Member's net assets; or
(l) Member threatens or initiates legal action to challenge an otherwise
legally enforceable provision under this Advances Agreement in an attempt
to make the Bank insecure under this Advances Agreement; or
(m) The Bank in good faith determines that a material adverse change has
occurred in the financial condition of the Member (including its holding
company or other affiliates), or the Member fails to comply with the Bank's
Credit Policies or other applicable policies including the requirement of
creditworthiness as determined by the Bank at its sole discretion.
SECTION 4.02. REMEDIES; SET OFF; SPECIFIC PERFORMANCE.
(a) Upon the occurrence of any Event of Default, the Bank shall have all
of the rights and remedies provided by applicable law, which shall include,
but not be limited to, all of the remedies of a secured party under the
Uniform Commercial Code as in effect in the State of Indiana, Section 10 of
the Bank Act (12 USC 1430), and other applicable federal law. In addition,
the Bank may take immediate possession of any of the Collateral or any part
thereof wherever the same may be found without judicial process. The Bank
may require the Member to assemble the Collateral and make it available to
the Bank at a place designated by the Bank which is reasonably convenient
to both parties. The Bank may sell, assign and deliver the Collateral or
any part thereof at public or private sale for such price as the Bank deems
appropriate without any liability for any loss due to decrease in the
market value of the Collateral during the period held. The Bank shall have
the right to purchase all or part of the Collateral at such sale. If the
Collateral includes insurance or securities which will be redeemed by the
issuer upon surrender, or any accounts or deposits in the possession of the
Bank, the Bank may realize upon such Collateral without notice to the
Member. If any notification of intended disposition of any of the
Collateral is required by applicable law, such notification shall be deemed
reasonable and properly given if mailed, postage prepaid, at least five (5)
days before any such disposition to the address of the Member appearing on
the records of the Bank. The proceeds of any sale shall be applied in the
order that the Bank, in its sole discretion, may choose. The Member agrees
to pay all the costs and expenses of the Bank in the collection of the
indebtedness and enforcement of the Bank's rights and remedies in case of
default, including, without limitation, reasonable attorneys' fees. The
Bank shall, to the extent required by law, apply any surplus after (I)
payment of the indebtedness, (II) provision for repayment to the Bank of
any amounts to be paid or advanced under Outstanding Commitments, and (III)
all costs of collection and enforcement, to third parties claiming a
18
secondary or other security interest in the Collateral, with any remaining
surplus paid to the Member. The Member shall be liable to the Bank for any
deficiency remaining.
(b) If the indebtedness, accrued interest thereon and other amounts or
charges owing by the Member shall have become due and payable (by
acceleration or otherwise), the Bank shall have the right, at any time or
from time to time to the fullest extent permitted by law, in addition to
all other rights and remedies available to it, without prior notice to the
Member, to set off against and to appropriate and apply to such due and
payable amounts any debt owing to, and any other funds held in any manner
for the account of, the Member by the Bank, including without limitation,
all Bank Deposits now or hereafter maintained by the Member with the Bank.
Such right shall exist whether or not such debt owing to, or funds held for
the account of, the Member is matured or unmatured, and regardless of the
existence or adequacy of any collateral, guaranty or any other security,
right or remedy available to the Bank. The Member hereby consents to and
confirms the foregoing arrangements and confirms the Bank's rights of
banker's lien and set off. Nothing in this Advances Agreement shall be
deemed a waiver or prohibition of or restriction on the Bank's rights of
banker's lien or set off.
(c) The Member acknowledges that the breach by the Member of the
provisions of this Agreement and in particular Section 3.04 hereof would
cause irreparable injury to the Bank and that remedies at law for any such
breach will be inadequate, and consents and agrees that the Bank shall be
entitled, without the necessity of proof of actual damage, to specific
performance of the terms of this Agreement and to injunctive relief in any
proceedings which may be brought to enforce the provisions of this
Agreement. The Member waives the right to assert the defense that such
breach or violation can be compensated adequately in damages in an action
of law.
SECTION 4.03. PAYMENT OF PREPAYMENT CHARGES
Any prepayment fees or charges applicable to an advance shall be payable at
the time of any voluntary or involuntary payment of all or part of the
principal of such Advance prior to the originally scheduled maturity
thereof, including without limitation payments that are made as a part of a
liquidation of the Borrower or that become due by operation of law or as a
result of an acceleration pursuant to Section 4.01 hereof, whether such
payment is made by the Borrower, by a conservator, receiver, liquidator or
trustee of or for the Borrower, or by any successor to or any assignee of
the Borrower.
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5. MISCELLANEOUS.
SECTION 5.01. GENERAL REPRESENTATIONS, QTL REPORTING, WARRANTIES AND
INDEMNIFICATIONS BY THE MEMBER.
The Member hereby represents and warrants that, as of the date hereof and
the date of each Advance or Other Credit Product hereunder:
(a) The Member, if a savings association, will truly and accurately
represent and warrant its status as a Qualified Thrift Lender ("QTL") as
defined by applicable federal law on any Application for Advance or Other
Credit Product Agreement between Member and the Bank. If the Member is a
savings association and it fails the QTL test as set forth by the Office
of Thrift Supervision Regulations now in effect or as amended, and becomes
ineligible under applicable federal law for Bank advances, the savings
association Member shall immediately provide the Bank with written
notification of its ineligibility for Bank advances. If a non-QTL member,
the Member warrants that Advances made under Section 10(a) of the Bank Act
(12 USC 1430 (a)), shall be for the purposes of housing finance.
(b) The Member will truly and accurately represent and warrant the purpose
of any Advance or Other Credit Product on any Application for Advance or
Other Credit Product Agreement between Member and the Bank.
(c) The Member will promptly furnish any financial, collateral or other
information requested by the Bank in connection with any Advance or Other
Credit Product.
(d) The Member is not, and neither the execution of nor the performance of
any transactions or obligations of the Member under any Advice of Credit,
Application for Advance, Other Credit Product Agreement or this Advances
Agreement shall, with the passage of time, the giving of notice or
otherwise, cause the Member to be: (i) in violation of its charter or
articles of incorporation, bylaws, the Bank Act, the FHFB Regulations, any
other law or administrative regulation, agreement, or any court decree; or
(ii) in default or in breach of any indenture, contract, or other
instrument or agreement to which the Member is a party or by which it or
any of its property is bound or any default under, breach of, or failure to
comply with any judgment, order, decree, regulatory directive, or other
process of any court or agency having jurisdiction of or which is binding
upon the Member.
(e) The Member is not in default under any Advice of Credit or Other
Credit Product Agreement with the Bank.
(f) The Member has full power and authority and has received all corporate
and governmental authorizations and approvals (including without
limitation, those required under the Bank Act and the FHFB Regulations) as
20
may be required to enter into and perform its obligations under any Advice
of Credit, Application for Advance, Other Credit Product Agreement or this
Advances Agreement, and to obtain Advances and Other Credit Products.
(g) The information given by the Member in any writing provided,
electronic transmission or in any oral statement made, in connection with
any Application for Advance or Other Credit Product Agreement, is at all
relevant times true, accurate and complete in all material respects.
(h) The Member will at all times maintain and accurately reflect the terms
of this Advances Agreement (including the Bank's security interest in the
Collateral) and all Advances and Other Credit Products hereunder on its
books and records, including evidence of necessary authorizations to
effectuate transactions under this Agreement.
(i) The Member and its successors and assigns (collectively referred to in
this Section 5.01(i) as "Member") shall indemnify and hold the Bank
harmless from and against any and all costs, claims, expenses, damages and
liabilities with respect to any action which may be instituted by any
person or entity against the Bank as a result of any transaction, including
without limitation, Bank credit extensions, services, and Other Credit
Products contemplated by this Advances Agreement or action or nonaction
arising from this Advances Agreement, except where the same results solely
from the recklessness or willful misconduct of the Bank. In addition, the
Member shall indemnify and hold the Bank harmless from and against any and
all costs, claims, expenses, damages, and liabilities resulting in any way
from the presence or effects of any toxic or hazardous substances or
materials in, on, or under any real property or interest in real property
that is subject to or included in the Collateral. The Member also agrees
to reimburse the Bank for such reasonable fees and charges as may be
assessed by the Bank to cover overhead and other cost, including reasonable
attorneys' fees, incurred either under this indemnification provision or in
the administration of this Advances Agreement, any Advice of Credit or
Other Credit Product Agreement.
SECTION 5.02. ASSIGNMENT.
The Bank may assign or negotiate to any other Federal Home Loan Bank or to
any other person or entity, with or without recourse, any Indebtedness of
the Member or participations therein, and the Bank may assign or transfer
all or any part of the Bank's right, title, and interest in and to this
Advances Agreement and may assign and deliver the whole or any part of the
Collateral to the transferee, which shall succeed to all the powers and
rights and duties of the Bank in respect thereof, and the Bank shall
thereafter be forever relieved and fully discharged from any liability or
responsibility with respect to the transferred Collateral. The Member may
not assign or transfer any of its rights or obligations hereunder (by
operation of law, the appointment of a receivership, or otherwise) without
the express prior written consent of the Bank.
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SECTION 5.03. DISCRETION OF BANK TO GRANT OR DENY ADVANCES AND OTHER
CREDIT PRODUCTS.
Nothing contained herein or in any documents or oral representations
describing or setting forth the Bank's credit programs or Credit Policies
shall be construed as an agreement or commitment on the part of the Bank to
grant Advances or extend Other Credit Products hereunder, the right and
power of the Bank in its discretion to either grant or deny any Advance or
Other Credit Product requested hereunder being expressly reserved.
SECTION 5.04. AMENDMENT; WAIVERS.
No modification, amendment or waiver of any provision of this Advances
Agreement or consent to any departure therefrom shall be effective unless
executed by the party against whom such change is asserted and shall be
effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Member in any case shall entitle the
Member to any other or further notice or demand in the same, or similar or
other circumstances. Any forbearance, failure or delay by the Bank in
exercising any right, power or remedy hereunder shall not be deemed to be a
waiver thereof, and any single or partial exercise by the Bank of any
right, power or remedy hereunder shall not preclude the further exercise
thereof. Every right, power and remedy of the Bank shall continue in full
force and effect until specifically waived by the Bank in writing.
SECTION 5.05. JURISDICTION; LEGAL FEES.
In any action or proceeding brought by the Bank or the Member in order to
enforce any right or remedy under this Advances Agreement, the parties
hereby consent to, and agree that they will submit to, the jurisdiction of
the United States District Court for the Southern District of Indiana or,
if such action or proceeding may not be brought in federal court, the
jurisdiction of the courts of the State of Indiana located in Marion
County. The Member agrees that, if any action or proceeding is brought by
the Member seeking to obtain any legal or equitable relief against the Bank
under or arising out of this Advances Agreement or any transaction
contemplated hereby, and such relief is not granted by the final decision,
after any and all appeals, of a court of competent jurisdiction, the Member
shall promptly pay upon demand all attorneys' fees and other costs incurred
by the Bank in connection therewith. Further, the Member agrees that if
any action or proceeding is brought by the Bank in connection with the
successful enforcement of any of the Bank's rights or remedies hereunder or
otherwise or if the services of legal counsel are required in connection
with the administration of the credit facilities contemplated hereby, the
Member shall pay promptly upon demand all attorneys' fees and other costs
incurred by the Bank in connection therewith.
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SECTION 5.06. WAIVER OF JURY TRIAL.
To the extent allowed by law, the Member hereby waives the right to a jury
trial in any action or proceeding brought by or against the Member
regarding this Agreement, the Collateral, Other Credit Products, or the
credit facilities contemplated hereby.
SECTION 5.07. NOTICES.
Except as provided in the last sentence of this Section 5.07, any written
notice, advice, request, consent or direction given, made or withdrawn
pursuant to this Agreement shall be either in writing or transmitted
electronically and reproduced mechanically by the addressee and shall be
given by first class mail, postage prepaid, or by telecopy or other
facsimile transmission, or by private courier or delivery service. Except
for notices made under Section 4.02, all non-oral notices shall be deemed
given when actually received at the principal office of the Bank or the
Member, as appropriate. All notices shall be designated to the attention
of an office or section of the Bank or of the Member if the Bank or the
Member has made a request for the notice to be so addressed. Any notice by
the Bank to the Member pursuant to Sections 2.01, 3.03, 3.04 or 3.05 hereof
may be oral and shall be deemed to have been duly given to and received by
the Member at the time of the oral communication.
SECTION 5.08. SIGNATURES OF MEMBER; ACCEPTANCE BY BANK.
(a) For purposes of this Advances Agreement, documents shall be deemed
signed by the Member when a signature of an authorized signatory or an
authorized facsimile thereof appears on the document. The Bank may rely on
any signature or facsimile thereof which reasonably appears to the Bank to
be the signature of an authorized person, including signatures appearing on
documents transmitted electronically to and reproduced mechanically at the
Bank. The Secretary, the Cashier, the Assistant Secretaries, or the
Assistant Cashiers of the Member shall from time to time certify to the
Bank on forms provided by the Bank the names and titles of the persons
authorized to apply on behalf of the Member to the Bank for Advances and
Other Credit Products. Such certifications are incorporated herein and
made a part of this Advances Agreement and shall continue in effect until
expressly revoked by the Member notwithstanding that subsequent
certifications may authorize additional persons to act for and on behalf of
Member.
(b) This Agreement shall only be binding upon the Bank when accepted and
executed by the Bank by two duly authorized officers and shall be deemed
accepted by and delivered to the Bank at its home office in Indianapolis,
Indiana.
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SECTION 5.09. APPLICABLE LAW; SEVERABILITY.
In addition to the terms and conditions specifically set forth herein and
in any Advice of Credit or Other Credit Product Agreement between the Bank
and the Member, this Advances Agreement and all Advances and Other Credit
Products extended hereunder shall be governed by the statutory and common
law of the United States and, to the extent federal law incorporates or
defers to state law, the laws (exclusive of the choice of law provisions)
of the State of Indiana, including the Uniform Commercial Code as in effect
in the State of Indiana. In the event that any portion of this Advances
Agreement conflicts with applicable law or the Credit Policies, such
conflict shall not affect other provisions of this Advances Agreement which
can be given effect without the conflicting provisions, and to this end and
the provisions of this Advances Agreement are declared to be severable.
SECTION 5.10. INTEREST RATE LIMITATIONS.
Notwithstanding anything contained herein to the contrary, the obligation
of the Member to make payments of interest shall be subject to the
limitation that payments of interest shall not be required to be made to
the Bank to the extent that its receipt thereof would not be permissible
under the law or laws applicable to the Bank limiting rates of interest
which may be charged or collected by the Bank. Any such payments of
interest which are not made as a result of the limitation referred to in
the preceding sentence shall be made by the Member to the Bank on the
earliest interest payment date or dates on which the receipt thereof would
be permissible under the laws applicable to the Bank limiting rates of
interest which may be charged or collected by the Bank.
SECTION 5.11. SUCCESSORS AND ASSIGNS.
This Advances Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Member and the Bank, providing that the
Member may not assign any of its rights or obligations hereunder (by
operation of law, the appointment of a receivership, or other) without the
prior written consent of the Bank. The Bank may sell, transfer or assign
or grant participation in Advances or Other Credit Products.
SECTION 5.12. REMEDIES CUMULATIVE.
All rights and remedies provided herein or otherwise at law or in equity
shall be cumulative, and are in addition to, and not exclusive of, any
rights or remedies provided by law, including without limitation, the
rights and remedies of a secured party under federal law and the Uniform
Commercial Code as it is in effect from time to time in Indiana, including
the right of the Bank to retain the Collateral in satisfaction of the
Indebtedness. The exercise of one or more thereof shall not preclude, or
24
be deemed an election of remedies against, any other remedy, right or
privilege contained herein or provided to the Bank by law, rule, or
regulation or at equity.
SECTION 5.13. RECORDS OF BANK PRESUMED ACCURATE.
The books and records of the Bank with respect to the Indebtedness, the
Member's accounts or any other obligations of the Member hereunder or
otherwise owing to the Bank shall be presumed to be accurate, complete, and
binding upon the Member, absent fraud or willful misconduct on the part of
the Bank with respect to such account or obligation.
SECTION 5.14. ENTIRE AGREEMENT.
This Advances Agreement and the other documents referenced herein relating
to Advances and Other Credit Products embody the entire Agreement and
understanding between the parties hereto relating to the subject matter
hereof. This Advances Agreement amends, restates and supersedes all prior
agreements between such parties which relate to such subject matter, and
all Advances and Other Credit Products made by the Bank to the Member prior
to the execution of this Advances Agreement shall be governed by the terms
of this Advances Agreement and not by the terms of the prior agreement.
The Agreement and the other documents contemplated hereby or delivered in
connection herewith shall be construed consistently with each other in
order to best effectuate the intent of the Member and the Bank in entering
into the relationships contemplated by all these agreements. The
agreements referenced herein constitute the sole and entire agreement of
the parties and no statement or promise has been made with respect to the
subject matter of these agreements other than as expressed herein. In the
event of a conflict between the terms of this Agreement and any of the
other such documents, the provisions of this Agreement shall control,
except with respect to any note, whose respective terms shall control.
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IN WITNESS WHEREOF, the Member and the Bank have caused this Advances
Agreement to be signed in their names by their duly authorized officers as
of the date first above mentioned.
ChoiceOne Bank FEDERAL HOME LOAN BANK OF INDIANAPOLIS
(Full Name of Member)
By: /S/ JAE M. MAXFIELD By: /S/ BRUCE MOORE
Typed Name: JAE M. MAXFIELD Typed Name: BRUCE MOORE
Its: PRESIDENT & CEO Its: VICE PRESIDENT
(Title of Signer) (Title of Signer)
By: /S/ THOMAS L. LAMPEN By: /S/ TIM ZAPF
Typed Name: Thomas L. Lampen Typed Name: Tim Zapf
Its: VICE PRESIDENT & CFO Its: VICE PRESIDENT
(Title of Signer) (Title of Signer)
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FEDERAL HOME LOAN BANK OF INDIANAPOLIS
MEMBER ACKNOWLEDGMENT
AND NOTARIZATION
State of MICHIGAN )
) ss.
County of KENT )
On this 24th day of March, 1997, before me personally came Jae M. Maxfield
and Thomas L. Lampen, to me known, who, being by me duly sworn, did depose
and state that they are the President & CEO and Vice President & CFO of
said Member; and that they signed their names on the Agreement by order of
the Board of Directors or other authorized governing body of said Member;
and that said Jae M. Maxfield and Thomas L. Lampen are duly authorized and
acknowledge the execution of said instrument to be the voluntary act and
deed of said Member.
/S/ LINDA S. PECK (SEAL)
Notary Public Signature
LINDA S. PECK
Printed Name
My Commission Expires: 3-27-98
My County of Residence: KENT COUNTY, MI
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