Common use of Loans; Investments Clause in Contracts

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 of the COFI Disclosure Schedule, each material loan reflected as an asset on the COFI Financial Statements dated as of December 31, 1996 is evidenced by appropriate and sufficient documentation and constitutes, to the best knowledge of COFI and Charter One Bank, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines. Except as set forth in Section 2.16 of the COFI Disclosure Schedule, all such loans are, and at the Effective Time will be, free and clear of any security interest, lien, encumbrance or other charge. (b) All guarantees of indebtedness owed to COFI or any COFI Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best knowledge of COFI and Charter One Bank, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFI. (c) All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangement. (d) Except as set forth in Section 2.16 of the COFI Disclosure Schedule and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI Financial Statements dated as of December 31, 1996 under the heading "Investment Securities," and none of the investments made by COFI and the COFI Subsidiaries since December 31, 1996, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI or any COFI Subsidiary is a party, COFI or such Subsidiary has a valid, perfected first lien, or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 Schedule 2.14 of the COFI Disclosure ScheduleSchedule of Midwest, each material loan reflected as an asset on the COFI Midwest Financial Statements Statement, dated as of December 31June 30, 1996 2002, is evidenced by appropriate and sufficient written documentation issued in the normal course of Midwest’s or the Midwest Subsidiary’s business and constitutes, to the best of the knowledge of COFI and Charter One BankMidwest, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines; to the best of the knowledge of Midwest, no obligor named therein is seeking to avoid the enforceability of the terms of any loan under any such laws or equitable principles or doctrines and no loan is subject to any valid and enforceable defense, offset or counterclaim. All such loans originated by Midwest or any Midwest Subsidiary, and to the best of the knowledge of Midwest, all such loans purchased by Midwest or any Midwest Subsidiary, were made or purchased in accordance with customary lending standards of Midwest or the Midwest Subsidiary and in the ordinary course of business of Midwest or the Midwest Subsidiary. Except as set forth in Section 2.16 Schedule 2.14 of the COFI Disclosure ScheduleSchedule of Midwest, all such loans are, and at the Effective Time Closing Date will be, free and clear of any security interest, lien, encumbrance or other charge, and Midwest and the Midwest Subsidiary have complied, and at the Closing Date will have complied, in all material respects, with all material laws and regulations relating to such loans. Except as set forth on Schedule 2.14 of the Disclosure Schedule of Midwest, there are no loans or other assets of Midwest or any Midwest Subsidiary in excess of $1,000,000 that have been classified by examiners or others as “Other Assets Specially Mentioned,” “Substandard,” “Doubtful” or “Loss” as of June 30, 2002. Set forth on Schedule 2.14 of the Disclosure Schedule of Midwest is a complete list of the Bank’s OREO as of June 30, 2002. (b) All guarantees of indebtedness owed to COFI Midwest or any COFI Midwest Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best of the knowledge of COFI and Charter One BankMidwest, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFIMidwest. (c) All In originating, underwriting, servicing, and discharging loans, mortgages, land contracts, and contractual obligations relating thereto, either for its own account or for the Table of Contents account of others, each Midwest Subsidiary has complied in all material respects with all applicable terms and conditions of such obligations and with all applicable laws, regulations, rules, contractual requirements, and procedures with respect to such servicing, except where the failure to comply would not have a Material Adverse Effect on Midwest. (d) Except as set forth on Schedule 2.14 of the Disclosure Schedule of Midwest, neither Midwest nor any Midwest Subsidiary is a party to any interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangementarrangements. (de) Except as set forth in Section 2.16 Schedule 2.14 of the COFI Disclosure Schedule of Midwest and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI Midwest Financial Statements Statement, dated as of December 31June 30, 1996 2002, under the heading "“Investment Securities," ” and none of the investments made by COFI and the COFI Subsidiaries Midwest or any Midwest Subsidiary since December 31June 30, 19962002, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI Midwest or any COFI Subsidiary the Midwest Subsidiaries freely to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI Midwest or any COFI Midwest Subsidiary is a party, COFI Midwest or such Subsidiary has the Midwest Subsidiaries have a valid, perfected first lien, lien or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement. Except as set forth in the Schedule 2.14 of the Disclosure Schedule of Midwest and except for transactions aggregating less than $300,000, neither Midwest nor any Midwest Subsidiary has sold or otherwise disposed of any assets in a transaction in which the acquirer of such assets or other person has the right, either conditionally or absolutely, to require Midwest or the Midwest Subsidiary to repurchase or otherwise reacquire any such assets.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 of the COFI Disclosure Schedule, each material Each loan reflected as an asset on the COFI Company Financial Statements dated as of December 31, 1996 is evidenced by appropriate and sufficient documentation in all material respects and constitutes, to the best knowledge of COFI and Charter One Bank, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors rights generally or equitable principles or doctrines. Except as set forth in Section 2.16 ; to the knowledge of the COFI Disclosure ScheduleCompany, no obligor named therein is seeking to avoid the enforceability of the terms of any loan under any such laws or equitable principles or doctrines and no loan is subject to any defense, offset or counterclaim. All such loans originated by the Company or any Company Subsidiary and all such loans arepurchased by the Company or any Company Subsidiary, were made or purchased in accordance with customary lending standards of the Company and at any Company Subsidiary and in the Effective Time will beordinary course of business of the Company and each Company Subsidiary. Set forth on Schedule 3.19(a)(i) is a complete list of all outstanding commitments under which the Company or any Company Subsidiary is obligated to purchase loans or loan participations. Set forth on Schedule 3.19(a)(ii) to the Company Disclosure Schedule is a complete list of the Company REO (as defined below) as of March 31, free and clear of any security interest, lien, encumbrance or other charge2005. (b) All guarantees of indebtedness owed to COFI the Company or any COFI Company Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal Federal agencies, are, to the best knowledge of COFI and Charter One Bank, are valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors rights generally or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFIdoctrines. (c) All interest rate swapsIn originating, capspurchasing, floors underwriting, servicing, and option agreements discharging loans, mortgages, land contracts, and other interest rate risk management arrangements to which COFI contractual obligations relating thereto, either for their own account or any COFI for the account of others, the Company and each Company Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed complied in all material respects with all applicable terms and conditions of their respective obligations thereunder to the extent that such obligations to perform have accruedand with all applicable laws, regulations, rules, contractual requirements, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss procedures with respect to such arrangementservicing. (d) Except as set forth in Section 2.16 of the COFI Disclosure Schedule and except for pledges to secure public and trust deposits, none None of the investments reflected in the COFI Company Financial Statements dated as of December 31, 1996 under the heading "Investment Securities," and none of the investments made by COFI and the COFI Subsidiaries Company since December 31, 19962004, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary the Company freely to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI the Company or any COFI Company Subsidiary is a party, COFI the Company or such Company Subsidiary has a valid, perfected first lien, lien or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement. Neither the Company nor any Company Subsidiary has sold or otherwise disposed of any assets in a transaction in which the acquiror of such assets or other person has the right, either conditionally or absolutely, to require the Company or any Company Subsidiary to repurchase or otherwise reacquire any such assets. Except as set forth on Schedule 3.19(d)(i) to the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has purchased or otherwise acquired any loans or other assets in a transaction in which the seller of such loans or other assets, or other person, has the right, either conditionally or absolutely, to repurchase such loans or other assets from the Company or any Company Subsidiary as a result of the occurrence of the transactions contemplated herein or otherwise. Set forth on Schedule 3.19(d)(ii) to the Company Disclosure Schedule is a complete and accurate list of each investment and debt security, mortgage-backed and related securities, marketable equity securities and securities purchased under agreements to resell owned by the Company or any Company Subsidiary, showing as of May 31, 2005, the carrying values and estimated fair values of investment and debt securities, the gross carrying value and estimated fair value of the mortgage-backed and related securities and the cost and estimated fair value of the marketable equity securities. (e) All United States Treasury securities, obligations of other United States Government agencies and corporations, obligations of States of the United States and their political subdivisions, and other investment securities classified as "held to maturity," "available for sale" and "trading" held by the Company or any Company Subsidiary, as reflected in the Company Financial Statements were classified and accounted for in accordance with F.A.S.B. 115 and the intentions of management.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 Schedule 3.15 of the COFI Disclosure ScheduleSchedule of CoVest, each material loan reflected as an asset on the COFI CoVest Financial Statements Statement, dated as of December 31June 30, 1996 2002, is evidenced by appropriate and sufficient written documentation issued in the normal course of CoVest’s or the CoVest Subsidiary’s business and constitutes, to the best of the knowledge of COFI and Charter One BankCoVest, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines; to the best of the knowledge of CoVest, no obligor named therein is seeking to avoid the enforceability of the terms of any loan under any such laws or equitable principles or doctrines and no loan is subject to any valid and enforceable defense, offset or counterclaim. All such loans originated by CoVest or any CoVest Subsidiary, and to the best of the knowledge of CoVest, all such loans purchased by CoVest or any CoVest Subsidiary, were made or purchased in accordance with customary lending standards of CoVest or the CoVest Subsidiary and in the ordinary course of business of CoVest or the CoVest Subsidiary. Except as set forth in Section 2.16 Schedule 3.15 of the COFI Disclosure ScheduleSchedule of CoVest, all such loans are, and at the Effective Time Closing Date will be, free and clear of any security interest, lien, encumbrance or other charge, and CoVest and the CoVest Subsidiary have complied, and at the Closing Date will have complied, in all material respects, with all material laws and regulations relating to such loans. Except as set forth on Schedule 3.15 of the Disclosure Schedule of CoVest, there are no loans or other assets of CoVest or any CoVest Subsidiary in excess of $250,000 that have been classified by examiners or others as “Other Assets Specially Mentioned,” “Substandard,” “Doubtful” or “Loss” as of June 30, 2002. Set forth on Schedule 3.15 of the Disclosure Schedule of CoVest is a complete list of the Bank’s OREO as of June 30, 2002. (b) All guarantees of indebtedness owed to COFI CoVest or any COFI CoVest Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best of the knowledge of COFI and Charter One BankCoVest, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFICoVest. (c) All In originating, underwriting, servicing, and discharging loans, mortgages, land contracts, and contractual obligations relating thereto, either for its own account or for the account of others, each CoVest Subsidiary has complied in all material respects with all applicable terms and conditions of such obligations and with all applicable laws, regulations, rules, contractual requirements, and procedures with respect to such servicing, except where the failure to comply would not have a Material Adverse Effect on CoVest. Table of Contents (d) Except as set forth on Schedule 3.15 of the Disclosure Schedule of CoVest, neither CoVest nor any CoVest Subsidiary is a party to any interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangementarrangements. (de) Except as set forth in Section 2.16 Schedule 3.15 of the COFI Disclosure Schedule of CoVest and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI CoVest Financial Statements Statement, dated as of December 31June 30, 1996 2002, under the heading "“Investment Securities," ” and none of the investments made by COFI and the COFI Subsidiaries CoVest or any CoVest Subsidiary since December 31June 30, 19962002, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI CoVest or any COFI Subsidiary the CoVest Subsidiaries freely to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI CoVest or any COFI CoVest Subsidiary is a party, COFI CoVest or such Subsidiary has the CoVest Subsidiaries have a valid, perfected first lien, lien or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement. Except as set forth in the Schedule 3.15 of the Disclosure Schedule of CoVest and except for transactions aggregating less than $100,000, neither CoVest nor any CoVest Subsidiary has sold or otherwise disposed of any assets in a transaction in which the acquirer of such assets or other person has the right, either conditionally or absolutely, to require CoVest or the CoVest Subsidiary to repurchase or otherwise reacquire any such assets. Set forth on Schedule 3.15 of the Disclosure Schedule of CoVest is a complete and accurate list of each investment and debt securities, mortgage-backed and related securities, marketable equity securities and securities purchased under agreements to resell owned by CoVest or any CoVest Subsidiary, showing as of June 30, 2002, the carrying values and the gross carrying values of the mortgage-backed and related securities and the estimated cost of the marketable equity securities.

Loans; Investments. (a) Except (i) The Company Disclosure Letter sets forth all evidences of indebtedness reflected as otherwise disclosed assets on the books and records of Company and its Subsidiaries (“Loans”) by Company and the Company Subsidiaries to executive officers (as such term is defined in Section 2.16 Part 215 of Title 12 of the COFI Disclosure ScheduleCode of Federal Regulations) of Company or any of the Company Subsidiaries; (ii) there are no Loans to any employee, each material loan officer, director of other Affiliate of Company or any of the Company Subsidiaries on which the borrower is paying a rate other than that reflected in the note or the relevant credit agreement or on which the borrower is paying a rate which was below market at the time the Loan was made; and (iii) except as an asset listed on the COFI Financial Statements dated as of December 31Company Disclosure Letter, 1996 is all such Loans are and were made in compliance in all material respects with all applicable Laws, are evidenced in all material respects by appropriate and sufficient documentation and constitutesand, to the best knowledge of COFI and Charter One BankCompany’s knowledge, each constitutes the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its termssubject to bankruptcy, except to the extent that the enforceability thereof may be limited by bankruptcyliquidation, receivership, conservatorship, insolvency, reorganizationmoratorium, moratorium or other similar laws or affecting the rights of creditors generally and by general equitable principles or doctrines. Except as set forth in Section 2.16 of the COFI Disclosure Schedule, all such loans are, and at the Effective Time will be, free and clear of any security interest, lien, encumbrance or other chargeprinciples. (b) All guarantees Each outstanding Loan and each commitment to extend credit has been solicited and originated and is administered and serviced in all material respects in accordance with the relevant loan documents, Company’s underwriting standards and with all applicable requirements of indebtedness owed to COFI or any COFI Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best knowledge of COFI and Charter One Bank, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFILaws. (c) All interest rate swapsExcept as set forth on the Company Disclosure Letter, caps, floors and option none of the agreements and other interest rate risk management arrangements pursuant to which COFI Company or any COFI Subsidiary of the Company Subsidiaries has sold Loans or pools of Loans or participations in Loans or pools of Loans contains any obligation to repurchase or substitute such Loans or interests therein solely on account of a payment default by the obligor on any such Loan. (d) Each of Company and Bank is approved by and is in good standing: (i) as a party or supervised mortgagee by which the Department of Housing and Urban Development (“HUD”) to originate and service Title I and Title I FHA mortgage loans; (ii) as a GNMA I and II Issuer by the Government National Mortgage Association (“G▇▇▇▇▇ Mae”); (iii) by the Veteran’s Administration (“VA”) to originate and service VA loans; and (iv) as a seller/servicer by Federal National Mortgage Association (“F▇▇▇▇▇ M▇▇”) and the Federal Home Loan Mortgage Corporation (“F▇▇▇▇▇▇ Mac”) to originate and service conventional residential and multi-family mortgage loans. (e) Except for indemnity agreements with any of their properties or assets may be bound were such persons entered into in the ordinary course of business andconsistent with prior practice, none of Company or any of the Company Subsidiaries is now nor has ever been subject to any fine, suspension, settlement or other agreement or other administrative agreement or sanction by, or any obligation to indemnify, HUD, G▇▇▇▇▇ M▇▇, VA, F▇▇▇▇▇ M▇▇, F▇▇▇▇▇▇ Mac or other investor, or any federal or state agency relating to the best knowledge origination, sale or servicing of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies mortgage or consumer loans. (f) Each of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI Company and the COFI Company Subsidiaries have duly performed is in compliance in all material respects with all applicable Laws pertaining to its or their lending activities, including, without limitation, the Truth-In-Lending Act and Regulation Z, the Equal Credit Opportunity Act and Regulation B, the Real Estate Settlement Procedures Act and Regulation X, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Office of their respective obligations thereunder Foreign Asset Control rules and regulations and all HUD, G▇▇▇▇▇ Mae, F▇▇▇▇▇ M▇▇, F▇▇▇▇▇▇ Mac, other investor and mortgage insurance company requirements relating to the extent that such obligations to perform have accruedorigination, sale and to the best knowledge servicing of COFI mortgage and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangementconsumer loans. (dg) Except as set forth in Section 2.16 All United States Treasury securities, obligations of other United States Government agencies and corporations, obligations of States of the COFI Disclosure Schedule United States and except their political subdivisions, and other investment securities classified as “held to maturity” and “available for pledges to secure public sale” held by Company, Bank and trust depositsthe Company Subsidiaries (other than Bank), none of the investments as reflected in the COFI Financial Statements dated as of December 31Company, 1996 under the heading "Investment Securities," were classified and none accounted for in accordance with Statement of the investments made by COFI Financial Accounting Standards No. 115 and the COFI Subsidiaries since December 31, 1996, is subject to any restriction, whether contractual or statutory, which materially impairs the ability intentions of COFI or any COFI Subsidiary to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI or any COFI Subsidiary is a party, COFI or such Subsidiary has a valid, perfected first lien, or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreementmanagement.

Loans; Investments. (a) Except (i) The Company Disclosure Letter sets forth all evidences of indebtedness reflected as otherwise disclosed assets on the books and records of Company and its Subsidiaries ("LOANS") by Company and the Company Subsidiaries to executive officers (as such term is defined in Section 2.16 Part 215 of Title 12 of the COFI Disclosure ScheduleCode of Federal Regulations) of Company or any of the Company Subsidiaries; (ii) there are no Loans to any employee, each material loan officer, director of other Affiliate of Company or any of the Company Subsidiaries on which the borrower is paying a rate other than that reflected in the note or the relevant credit agreement or on which the borrower is paying a rate which was below market at the time the Loan was made; and (iii) except as an asset listed on the COFI Financial Statements dated as of December 31Company Disclosure Letter, 1996 is all such Loans are and were made in compliance in all material respects with all applicable Laws, are evidenced in all material respects by appropriate and sufficient documentation and constitutesand, to the best knowledge of COFI and Charter One BankCompany's knowledge, each constitutes the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its termssubject to bankruptcy, except to the extent that the enforceability thereof may be limited by bankruptcyliquidation, receivership, conservatorship, insolvency, reorganizationmoratorium, moratorium or other similar laws or affecting the rights of creditors generally and by general equitable principles or doctrines. Except as set forth in Section 2.16 of the COFI Disclosure Schedule, all such loans are, and at the Effective Time will be, free and clear of any security interest, lien, encumbrance or other chargeprinciples. (b) All guarantees Each outstanding Loan and each commitment to extend credit has been solicited and originated and is administered and serviced in all material respects in accordance with the relevant loan documents, Company's underwriting standards and with all applicable requirements of indebtedness owed to COFI or any COFI Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best knowledge of COFI and Charter One Bank, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFILaws. (c) All interest rate swapsExcept as set forth on the Company Disclosure Letter, caps, floors and option none of the agreements and other interest rate risk management arrangements pursuant to which COFI Company or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated Company Subsidiaries has sold Loans or pools of Loans or participations in Loans or pools of Loans contains any obligation to repurchase or substitute such Loans or interests therein solely on account of a payment default by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify the obligor on any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangementLoan. (d) Except Each of Company and Bank is approved by and is in good standing: (i) as set forth in Section 2.16 a supervised mortgagee by the Department of Housing and Urban Development ("HUD") to originate and service Title I and Title I FHA mortgage loans; (ii) as a GNMA I and II Issuer by the COFI Disclosure Schedule Government National Mortgage Association ("▇▇▇▇▇▇ MAE"); (iii) by the Veteran's Administration ("VA") to originate and except for pledges to secure public service VA loans; and trust deposits, none of the investments reflected in the COFI Financial Statements dated (iv) as of December 31, 1996 under the heading "Investment Securities," and none of the investments made a seller/servicer by COFI and the COFI Subsidiaries since December 31, 1996, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI or any COFI Subsidiary is a party, COFI or such Subsidiary has a valid, perfected first lien, or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement.Federal National Mortgage Association

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 of Schedule 3.16 to the COFI Bancorp Disclosure Schedule, each material loan reflected as an asset on the COFI Bancorp Financial Statements dated as of December 31, 1996 is evidenced by appropriate and sufficient documentation in all material respects and constitutes, to the best of the knowledge of COFI and Charter One BankBancorp, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors rights generally or equitable principles or doctrines. Except as set forth in Section 2.16 ; to the best of the COFI Disclosure Scheduleknowledge of Bancorp, no obligor named therein is seeking to avoid the enforceability of the terms of any loan under any such laws or equitable principles or doctrines and no loan is subject to any defense, offset or counterclaim. All such loans originated by Bancorp or any Bancorp Subsidiary and all such loans arepurchased by Bancorp or any Bancorp Subsidiary, were made or purchased in accordance with customary lending standards of Bancorp and at any Bancorp Subsidiary and (a) to the Effective Time will beBancorp Disclosure Schedule is a complete list of Bancorp's and First Federal REO as of March 31, free and clear of any security interest, lien, encumbrance or other charge1998. (b) All guarantees of indebtedness owed to COFI Bancorp or any COFI Bancorp Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best of the knowledge of COFI and Charter One BankBancorp, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors rights generally or equitable principles or doctrines and except as would not have be material to Bancorp on a Material Adverse Effect on COFIconsolidated basis. (c) All interest rate swapsIn originating, capsunderwriting, floors servicing, and option agreements discharging loans, mortgages, land contracts, and other interest rate risk management arrangements to which COFI contractual obligations relating thereto, either for their own account or any COFI for the account of others, Bancorp and each Bancorp Subsidiary is a party or by which any have complied with all applicable terms and conditions of their properties or assets may be bound were entered into in the ordinary course of business andsuch obligations and with all applicable laws, to the best knowledge of COFI and Charter One Bankregulations, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accruedcontractual requirements, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss procedures with respect to such arrangementservicing, except where the failure to comply would not have a material adverse effect on Bancorp. (d) Except as set forth in Section 2.16 of Schedule 3.16(d) to the COFI Bancorp Disclosure Schedule and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI Bancorp Financial Statements dated as of December 31, 1996 under the heading "Investment Securities," and none of the investments made by COFI and the COFI Subsidiaries Bancorp since December 31, 19961997, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary Bancorp freely to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI Bancorp or any COFI Bancorp Subsidiary is a party, COFI Bancorp or such Bancorp Subsidiary has a valid, perfected first lien, lien or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement. Except as set forth in Schedule 3.16(d) to the Bancorp Disclosure Schedule, and except for transactions involving repurchase agreements in the investment portfolio effected in the ordinary course of business, neither Bancorp nor any Bancorp Subsidiary has sold or otherwise disposed of any assets in a transaction in which the acquiror of such assets or other person has the right, either conditionally or absolutely, to require Bancorp or any Bancorp Subsidiary to repurchase or otherwise reacquire any such assets. Set forth on Schedule 3.16(d) to the Bancorp Disclosure Schedule is a complete and accurate list of each investment and debt security, mortgage-backed and related securities, marketable equity securities and securities purchased under agreements to resell owned by Bancorp or any Bancorp Subsidiary, showing as of July 31, 1998, the carrying values and estimated fair values of investment and debt securities, the gross carrying value and estimated fair value of the mortgage-backed and related securities and the estimated cost and estimated fair value of the marketable equity securities. (e) All United States Treasury securities, obligations of other United States Government agencies and corporations, obligations of States of the United States and their political subdivisions, and other investment securities classified as "held to maturity," "available for sale" and "trading" held by Bancorp or any Bancorp Subsidiary, as reflected in the Bancorp Financial Statements were classified and accounted for in accordance with F.A.S.B. 115 and the intentions of management.

Loans; Investments. (ai) Except as otherwise disclosed EXCEPT AS OTHERWISE set forth in Section 2.16 of the COFI Disclosure Schedule, each material loan reflected as an asset on the COFI Diablo Financial Statements dated as of December 31September 30, 1996 is evidenced by appropriate 2006, and sufficient documentation and constituteseach loan originated or acquired after such date, to the best knowledge of COFI and Charter One Bank, constitutes the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines. Except as set forth in Section 2.16 of the COFI Diablo Disclosure Schedule, all such loans are, and at the Effective Time will be, free and clear of any security interest, lien, encumbrance or other chargecharge and do not, and will not at the Effective Time, include any provision for prepayment penalties in violation of any law or regulation. All currently outstanding loans of Diablo, including any current extensions of any loan, were solicited, originated and currently exist in material compliance with all applicable requirements of federal and state law and regulations promulgated thereunder. There are no oral modifications or amendments or additional agreements related to the loans that are not reflected in Diablo’s records, and to the knowledge of Diablo no claim of defense as to the enforcement of any loan has been asserted, and Diablo has no knowledge of any acts or omissions that would give rise to any claim or right of rescission, set off, counterclaim or defense. Except as set forth in the Disclosure Schedule, there is no loan or other asset of Diablo that has been classified by Diablo or its examiners as “Watchlist,”“Special Mention,”“Substandard,”“Doubtful” or “Loss” (identified by borrower, outstanding amounts and summary of loan terms). (bii) All guarantees of indebtedness owed to COFI or any COFI SubsidiaryDiablo, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best knowledge of COFI and Charter One BankDiablo, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFIdoctrines. (c) All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangement. (diii) Except as set forth in Section 2.16 of the COFI Disclosure Schedule and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI Diablo Financial Statements dated as of December 31September 30, 1996 2006 under the heading "“Investment Securities," ” and none of the investments made by COFI and the COFI Subsidiaries Diablo since December 31September 30, 19962006, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary Diablo to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principlesGAAP. With respect to all material repurchase agreements to which COFI or any COFI Subsidiary Diablo is a party, COFI or such Subsidiary Diablo has a valid, perfected first lien, lien or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement. Except as set forth in the Disclosure Schedule and except for a transaction involving less than $50,000, Diablo has not sold or otherwise disposed of any assets in a transaction in which the acquiror of such assets or other person has the right, either conditionally or absolutely, to require Diablo to repurchase or otherwise reacquire any such assets. (iv) Set forth in the Disclosure Schedule is a complete and accurate list of each investment and debt security, mortgage-backed and related securities, marketable equity securities and securities purchased under agreements to resell owned by Diablo showing as of September 30, 2006 the carrying values and estimated fair values of investment and debt securities, the gross carrying value and estimated fair value of the mortgage-backed and related securities and the estimated cost and estimated fair value of the marketable equity securities. (v) All United States Treasury securities, obligations of other United States Government agencies and corporations, obligations of States of United States and their political subdivisions, and other investment securities classified as “held to maturity” and “available for sale” held by Diablo, as reflected in the Diablo Financial Statements dated September 30, 2006 were classified and accounted for in accordance with GAAP.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 Schedule 4.13 of the COFI Disclosure ScheduleStatement, (i) each material loan reflected as an asset on Loan originated by the COFI Financial Statements dated as Company or one of December 31, 1996 its Subsidiaries is evidenced by appropriate and sufficient written documentation and constitutesissued in the Ordinary Course of Business of the Company or a Subsidiary of the Company, to the best knowledge of COFI and Charter One Bank, (ii) each Loan constitutes the legal, valid and binding obligation of the Company or a Subsidiary of the Company (as the case may be) and, to the Knowledge of the Company, each obligor named therein, and is enforceable in accordance with its terms, terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws Laws or equitable principles or doctrinesdoctrines and (iii) to the Knowledge of the Company, no obligor named in any Loan is seeking to avoid the enforceability of the terms thereof under any bankruptcy, insolvency, reorganization, moratorium or similar Laws or equitable principles or doctrines and no Loan is subject to any valid and enforceable defense, offset or counterclaim. Except as otherwise disclosed in Schedule 4.13 of the Disclosure Statement, all Loans originated by the Company or any Subsidiary of the Company, and to the Knowledge of the Company, all Loans originated by any Person other than the Company or any Subsidiary of the Company, were originated in material compliance with all applicable Laws in accordance with the customary lending standards of the originator thereof, and the industry in which the originator operated and in the Ordinary Course of Business of the originator thereof. In underwriting, purchasing, servicing, collecting and discharging Loans, either for its account or the account of others, the Company and each Subsidiary has complied in all material respects with all applicable Laws and has performed such function in the Ordinary Course of Business. Except as set forth in Section 2.16 Schedule 4.13 of the COFI Disclosure ScheduleStatement, all such loans Loans are, and at the Effective Time Closing Date will be, free and clear of any Encumbrance other than an31 Encumbrance in favor of the Company or a Subsidiary of the Company, and the Company and each Subsidiary of the Company, as applicable, has complied, and at the Closing Date will have complied, in all material respects, with all Laws relating to the Loans. The Company has not and does not engage in predatory lending or make predatory loans. All Loans that are secured are evidenced by appropriate and sufficient ancillary security interestdocuments and are so secured by valid, lienperfected and enforceable Encumbrances. Except as set forth on Schedule 4.13 of the Disclosure Statement, encumbrance there are no Loans or other chargeassets of the Company or any Subsidiary of the Company that have been classified by examiners or otherwise as "Other Assets Specially Mentioned," "Substandard," "Doubtful" or "Loss" as of the date hereof. Except as set forth on Schedule 4.13 of the Disclosure Statement, the Company has no "Other Real Estate Owned" ("OREO") as of the date hereof. (b) All guarantees of indebtedness owed to COFI the Company or any COFI SubsidiarySubsidiary of the Company, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state Governmental Entities, are legal, valid and federal agencies, areenforceable with respect to the Company or a Subsidiary of the Company and, to the best knowledge Knowledge of COFI and Charter One Bankthe Company, valid and enforceablethe other party thereto, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws Laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFIdoctrines. (c) All Except as set forth on Schedule 4.13 of the Disclosure Statement, neither the Company nor any Subsidiary of the Company is a party to any interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangementarrangements. (d) Except as set forth in Section 2.16 Schedule 4.13 of the COFI Disclosure Schedule Statement and except for pledges to secure public and trust depositsdeposits and repurchase agreements entered into in the Ordinary Course of Business, none of the investments reflected in the COFI Financial Statements Company's balance sheet dated as of December 31September 30, 1996 under the heading "Investment Securities," 2005, and none of the investments made by COFI and the COFI Subsidiaries Company or any Subsidiary of the Company since December 31September 30, 19962005, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI the Company or any COFI Subsidiary of the Company freely to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI the Company or any COFI Subsidiary of the Company is a party, COFI the Company or such a Subsidiary of the Company (as applicable) has a valid, perfected first lien, lien or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt obligations secured by such collateral under such agreement. Except as set forth in Schedule 4.13 of the Disclosure Statement, neither the Company nor any Subsidiary of the Company has sold or otherwise disposed of any assets in a transaction in which the acquirer of such assets or other Person has the right, either conditionally or absolutely, to require the Company or any Subsidiary of the Company to repurchase or otherwise reacquire any such assets. Set forth on Schedule 4.13 of the Disclosure Statement is a complete and accurate list of each investment in debt securities, mortgage-backed and related securities, marketable equity securities and securities purchased under agreements to resell owned by the Company or any Subsidiary of the Company, showing as of September 30, 2005, the carrying values and the gross carrying values of the mortgage-backed and related securities and the estimated cost of the marketable equity securities.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 the Joint Disclosure Schedule of the COFI Disclosure ScheduleMelling and Melling Subsidiary, each material loan reflected as an asset on the COFI Financial Statements dated as of December 31, 1996 2006 financial statements is evidenced by appropriate and sufficient documentation and constitutes, to the best of the knowledge of COFI Melling Subsidiary and Charter One BankMelling, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines; to the best of the knowledge of Melling Subsidiary and Melling, no obligor named therein, other than as disclosed in the Joint Disclosure of Melling and Melling Subsidiary, is seeking to avoid the enforceability of the terms of any loan under any such laws or equitable principles or doctrines and no loan is subject to any defense, offset or counterclaim. All such loans originated by Melling Subsidiary, and to the best of the knowledge of Melling Subsidiary and Melling, all such loans purchased by Melling Subsidiary, were made or purchased in accordance with customary lending standards of Melling Subsidiary and in the ordinary course of business of Melling Subsidiary. Except as set forth in Section 2.16 the Joint Disclosure Schedule of the COFI Disclosure ScheduleMelling and Melling Subsidiary, all such loans are, and at the Effective Time Closing Date will be, free and clear of any security interest, lien, encumbrance or other chargecharge except those as would normally be found in the ordinary course of business of Melling Subsidiary, and Melling Subsidiary has complied, and at the Closing Date will have complied, in all material respects, with all laws and regulations relating to such loans. (b) All Except as otherwise disclosed in the Joint Disclosure Schedule of Melling and Melling Subsidiary, all guarantees of indebtedness owed to COFI or any COFI Melling Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best of the knowledge of COFI and Charter One BankMelling Subsidiary, valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not be material to Melling Subsidiary on a consolidated basis. (c) Except as otherwise disclosed in the Joint Disclosure Schedule of Melling and Melling Subsidiary, in originating, underwriting, servicing and discharging loans, mortgages, land contracts and contractual obligations relating thereto, either for its own account or for the account of others, Melling Subsidiary has complied with all applicable terms and conditions of such obligations and with all applicable laws, regulations, rules, contractual requirements, and procedures with respect to such servicing, except where the failure to comply would not have a Material Adverse Effect on COFIMelling Subsidiary. (c) All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI or any COFI Subsidiary to recognize any gain or loss with respect to such arrangement. (d) Except as set forth in Section 2.16 of the COFI Disclosure Schedule and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI Financial Statements dated as of December 31, 1996 under the heading "Investment Securities," and none of the investments made by COFI and the COFI Subsidiaries since December 31, 1996, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI or any COFI Subsidiary is a party, COFI or such Subsidiary has a valid, perfected first lien, or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 of the COFI Disclosure Schedule, each material loan Schedule 4.25, (a) Each Loan reflected as an asset on the COFI Financial Statements Balance Sheet dated as of December 31September 30, 1996 1999 is evidenced by appropriate and sufficient documentation and constitutes, to the best knowledge of COFI and Charter One Bank, constitutes the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except to the extent that the enforceability thereof (i) such enforcement may be limited by subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable principles or doctrinesrelief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Except as set forth in Section 2.16 of the COFI Disclosure ScheduleSchedule 4.25, all such loans Loans are, and at the Effective Time Closing will be, free and clear of any security interest, lien, encumbrance or other chargeEncumbrances. (b) All guarantees of indebtedness owed to COFI the Company or any COFI Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best knowledge of COFI and Charter One Bank, are valid and enforceable, except to the extent enforceability thereof that (i) such enforcement may be limited by applicable subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable principles or doctrines relief may be subject to equitable defenses and except as would not have a Material Adverse Effect on COFIto the discretion of the court before which any proceeding therefor may be brought. (c) All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI the Company or any COFI Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI and the COFI Subsidiaries The Company or any Subsidiary have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI the Company or any COFI Subsidiary to recognize any gain or loss with respect to such arrangement. (d) Except as set forth All outstanding Loans sold by Company or the Subsidiaries complied in Section 2.16 all material respects with Investor Requirements on the date of sale. (e) The Company and any of the COFI Disclosure Schedule Subsidiaries have at all times been and are in compliance in all material respects with the Servicing Requirements relating to the Serviced Loans and Loans previously serviced by any of them. (f) Neither the Company nor any Subsidiary has any advances outstanding with respect to any Loan, except for pledges advances made under the Servicing Requirements. (g) Neither the Company nor any Subsidiary is in default with respect to secure public and trust deposits, none any of its obligations under any Loan. (h) To the best Knowledge of the investments Company, neither the Company nor any Subsidiary is in violation in any material respect of any applicable federal, state, or local law, statute, ordinance, rule, regulation, order or guideline pertaining to the Loans, its origination or production practices, or otherwise relating to its purchase or sale of Loans or its lending business, including but not limited to, real estate settlement procedures, fair credit reporting, and every other prohibition against unlawful discrimination or governing consumer credit, and also including, without limitation, the Consumer Credit Reporting Act, Equal Credit Opportunity Act of 1975 and Regulation B, Fair Credit Reporting Act, Truth in Lending Law, in particular, Regulation Z as amended, the Flood Disaster Protection Act of 1973, and state consumer credit codes and laws. (i) The Company is a F▇▇▇▇▇ M▇▇ approved seller/servicer in good standing. The Company has not received notice from any governmental, quasi-governmental or private agency of pending or threatened actions or investigations which would question the status of the Company as an approved lender, seller/servicer or issuer of securities which has not heretofore been corrected without fines, penalties or restrictions on the Company. No event has occurred which, with the passage of time or the giving of notice, or both, would result in the loss by the Company of its qualification as an approved lender, seller/servicer or issuer or of the Company as a contractor or as a person otherwise permitted to transact business with any governmental, quasi-governmental or private agency. (j) The terms of each Loan have not been impaired, waived, altered or modified in any material respect from the date of its origination except by a written instrument, which written instrument has been recorded if recordation is necessary to protect the interests of the owner thereof. The substance of any such waiver, alteration or modification has been communicated to and approved in writing by:(i) the relevant Investor, to the extent required by the relevant Investor Requirements; and (ii) the title insurer, to the extent required by the relevant policies, and its terms are reflected in the COFI Financial Statements dated Loan Documents. Except as authorized by the applicable Investor, where the Investor's authorization is required, neither the Company nor any Subsidiary has: (i) subordinated the lien of December 31any Mortgage Loan to any other mortgage or lien or given any other mortgage or lien equal priority with the lien of a mortgage loan; or (ii) executed any instrument of release, 1996 under the heading "Investment Securities," and none cancellation or satisfaction with, in whole or in part, respect to any Mortgage Loan. (k) As of the investments made by COFI and date hereof, neither the COFI Subsidiaries since December 31, 1996, Company nor any Subsidiary is subject to any restriction, whether contractual or statutory, which materially impairs repurchase obligation under any Loan. (l) All escrows required to be maintained by the ability Company pursuant to the terms of COFI the Mortgage Loans have been maintained by the Company or any COFI Subsidiary and, all prior servicers, in all material respects in accordance with all applicable legal rules and Investor Requirements and in accordance with the mortgage servicing agreements and the Loan Documents related thereto. The Company and the Subsidiaries have credited to freely dispose the account of such investment at mortgagors all interest required to be paid on any timeescrow account. All escrow, other than those restrictions imposed on securities custodial, and suspense accounts related to the owned Mortgage Loans held for investment under generally accepted accounting principlesby the Company are held in the Company's or Subsidiary's name or in the Investor's name. With respect to escrow deposits and payments which are required to be collected, all such payments are in the possession of, or under the control of, the Company or Subsidiary or an authorized subservicer, and there exist no material deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. No escrow deposits or other charges or payments have been capitalized under any mortgage or the related mortgage note. (m) Neither the Company nor any Subsidiary has received written notice of a servicing default of the Company or any Subsidiary for any Loan, and each Loan serviced by the Company or any Subsidiary has been properly serviced and accounted for in all material repurchase agreements to which COFI respects in accordance with the applicable Servicing Requirements. To the extent that any applicable legal requirement in any jurisdiction or any COFI Investor Requirement requires the payment of interest on escrow accounts with respect to any particular Loan and the Company or any Subsidiary services such Loans, all such interest has been properly paid or arrangements for such payment has been made. All amounts payable in respect of a Loan, or the property covered by a mortgage which the Company or any Subsidiary is responsible for paying, directly or on behalf of a partymortgagor, COFI have, in all material respects, been paid prior to becoming delinquent. All pools for which the Company or such any Subsidiary is responsible are in compliance in all material respects with all applicable Investor Requirements, procedures, rules, regulations and guidelines. (n) Schedule 4.25 contains a description of each Loan serviced by the Company or owned by the Company which, as of the date hereof, has a balance over $1 million and a prepayment penalty less than 5% of the principal amount. (o) Except as disclosed on Schedule 4.25, neither the Company nor any Subsidiary has a valid, perfected first lien, any Portfolio Loan. All Loans held by the Company or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreementany Subsidiary are Loans Held for Sale.

Loans; Investments. (a) Except as otherwise disclosed in Section 2.16 of the COFI Bay View Disclosure Schedule, each material loan reflected as an asset on the COFI Bay View Financial Statements dated as of December 31, 1996 1998 is evidenced by appropriate and sufficient documentation and constitutes, to the best knowledge of COFI and Charter One Bank, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines. Except as set forth in Section 2.16 of the COFI Bay View Disclosure Schedule, all such loans are, and at the Effective Time will be, free and clear of any security interest, lien, encumbrance or other charge. (b) All guarantees of indebtedness owed to COFI Bay View or any COFI Bay View Subsidiary, including but not limited to those of the Federal Housing Administration, the Small Business Administration, and other state and federal agencies, are, to the best knowledge of COFI and Charter One Bank, are valid and enforceable, except to the extent enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles or doctrines and except as would not have a Material Adverse Effect on COFIdoctrines. (c) All interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements to which COFI Bay View or any COFI Bay View Subsidiary is a party or by which any of their properties or assets may be bound were entered into in the ordinary course of business and, to the best knowledge of COFI and Charter One Bank, in accordance with then-customary practice and applicable rules, regulations and policies of thrift regulatory authorities and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations and are in full force and effect. COFI Bay View and the COFI Bay View Subsidiaries have duly performed in all material respects all of their respective obligations thereunder to the extent that such obligations to perform have accrued, and to the best knowledge of COFI and Charter One Bank, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder. None of the transactions contemplated by this Agreement would permit (i) a counterparty under any interest rate swap, cap, floor and option agreement or any other interest rate risk management agreement or (ii) any party to any mortgage backed security financing arrangement, to accelerate, discontinue, terminate, or otherwise modify any such agreement or arrangement or would require COFI Bay View or any COFI Bay View Subsidiary to recognize any gain or loss with respect to such arrangement. (d) Except as set forth in Section 2.16 of the COFI Disclosure Schedule and except for pledges to secure public and trust deposits, none of the investments reflected in the COFI Financial Statements dated as of December 31, 1996 under the heading "Investment Securities," and none of the investments made by COFI and the COFI Subsidiaries since December 31, 1996, is subject to any restriction, whether contractual or statutory, which materially impairs the ability of COFI or any COFI Subsidiary to freely dispose of such investment at any time, other than those restrictions imposed on securities held for investment under generally accepted accounting principles. With respect to all material repurchase agreements to which COFI or any COFI Subsidiary is a party, COFI or such Subsidiary has a valid, perfected first lien, or security interest in the government securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement.