UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Earliest Event Reported) March 24, 2000 (March 10, 2000)
Citizens Bancshares Corporation
(Exact Name of Registrant as
Specified in its Charter)
Georgia 333-38509 58-1631302
(State or other jurisdiction (Commission (IRS Employer
(of Incorporation) File Number) Identification Number)
75 Piedmont Avenue, NE, Atlanta, Georgia 30302
(Address of principal executive offices)
(404) 659-5959
(Registrant's Telephone Number)
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OF ASSETS
On March 10, 2000, Citizens Trust Bank ("Citizens Trust"), a
subsidiary of Citizens Bancshares Corporation, and the Federal
Deposit Insurance Corporation as Receiver for Mutual Federal
Savings Bank, Atlanta, Georgia, entered into a Purchase and
Assumption Agreement in which Citizens Trust assumed all the
deposits and purchased most of the loans and due from other banks
of Mutual Federal Savings Bank. Citizens Trust Bank paid the
FDIC a premium of approximately $2,464,000 for the deposits
assumed and received $3,055,000 as a discount on the loans
purchased, with an option to purchase the remaining fixed assets.
These assets and liabilities will be recorded at their
estimated fair values at the date of acquisition. Premiums paid
on deposits and discounts received on loans will be
accreted/amortized into income over the estimated life of the
deposits assumed and the loans purchased.
Mutual Federal Savings Bank was closed by Order of the
Office of Thrift Supervision on Friday, March 10, 2000, at which
time the FDIC was appointed Receiver for this failed federal
savings bank. As of March 10, 2000, Mutual Federal Savings Bank
had assumable deposits of approximately $28.6 million, gross
loans of approximately $26 million and cash due from other banks
of approximately $2 million. This acquisition increases Citizens
Trust Bank's assets to approximately $244 million dollars.
ITEM 7. EXHIBITS
10.1 Purchase and Assumption Agreement By and Between
Citizens Trust Bank and the Federal Deposit
Insurance Corporation as Receiver for Mutual
Federal Savings Bank dated March 10, 2000.
Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, Registrant has caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
CITIZENS BANCSHARES CORPORATION
By:
James E. Young
President
Dated: March 24, 2000
Exhibit 10.1
PURCHASE AND ASSUMPTION AGREEMENT
SHARED LOSS
AMONG
FEDERAL DEPOSIT INSURANCE CORPORATION,
RECEIVER OF MUTUAL FEDERAL SAVINGS BANK,
ATLANTA, GEORGIA,
FEDERAL DEPOSIT INSURANCE CORPORATION
and
CITIZENS TRUST BANK
OF ATLANTA
DATED AS OF
March 10, 2000
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 2
ARTICLE II ASSUMPTION OF LIABILITIES 18
2.1 Liabilities Assumed by Assuming Bank 18
2.2 Interest on Deposit Liabilities 19
2.3 Unclaimed Deposits 20
2.4 Employee Benefit Plans 20
2.5 Option to Assume Shared-Loss Loan Commitments 20
ARTICLE III PURCHASE OF ASSETS 20
3.1 Assets Purchased by Assuming Bank 20
3.2 Asset Purchase Price 22
3.3 Manner of Conveyance; Limited Warranty;
Nonrecourse; Etc. 23
3.4 Puts of Assets to the Receiver. 23
3.5 Assets Not Purchased by Assuming Bank. 25
3.6 Assets Essential to Receiver. 26
ARTICLE IV ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS 27
4.1 Continuation of Banking Business 27
4.2 Agreement with Respect to Credit Card Business 28
4.3 Agreement with Respect to Safe Deposit Business 28
4.4 Agreement with Respect to Safekeeping Business 28
4.5 Agreement with Respect to Trust Business 28
4.6 Agreement with Respect to Bank Premises 29
4.7 Agreement with Respect to Leased Data
Processing Equipment 32
4.8 Agreement with Respect to Certain
Existing Agreements 32
4.9 Informational Tax Reporting 33
4.10 Insurance 33
4.11 Office Space for Receiver and Corporation 33
4.12 Agreement with Respect to Continuation of
Group Health Plan Coverage for
Former Employees of the Failed Bank 34
4.13 Agreement with Respect to Interim Asset Servicing34
ARTICLE V DUTIES WITH RESPECT TO DEPOSITORS
OF THE FAILED BANK 35
5.1 Payment of Checks, Drafts and Orders 35
5.2 Certain Agreements Related to Deposits 35
5.3 Notice to Depositors 35
ARTICLE VI RECORDS 36
6.1 Transfer of Records 36
6.2 Delivery of Assigned Records 36
6.3 Preservation of Records 37
6.4 Access to Records; Copies 37
ARTICLE VII BID; INITIAL PAYMENT 37
ARTICLE VIII ADJUSTMENTS 37
8.1 Pro Forma Statement 37
8.2 Correction of Errors and Omissions; Other
Liabilities 38
8.3 Payments 38
8.4 Interest 39
8.5 Subsequent Adjustments 39
8.6 Shared-Loss Assets 39
ARTICLE IX CONTINUING COOPERATION 39
9.1 General Matters 39
9.2 Additional Title Documents 39
9.3 Claims and Suits 40
9.4 Payment of Deposits 40
9.5 Withheld Payments 40
9.6 Proceedings with Respect to Certain Assets
and Liabilities 41
9.7 Information 41
ARTICLE X CONDITION PRECEDENT 42
ARTICLE XI REPRESENTATIONS AND WARRANTIES OF THE
ASSUMING BANK 42
ARTICLE XII INDEMNIFICATION 43
12.1 Indemnification of Indemnitees 43
12.2 Conditions Precedent to Indemnification 46
12.3 No Additional Warranty 47
12.4 Indemnification of Corporation and Receiver 47
12.5 Obligations Supplemental 47
12.6 Criminal Claims 47
12.7 Limited Guaranty of the Corporation 48
12.8 Subrogation 48
ARTICLE XIII MISCELLANEOUS 48
13.1 Entire Agreement 48
13.2 Headings 48
13.3 Counterparts 48
13.4 Governing Law 48
13.5 Successors 49
13.6 Modification; Assignment 49
13.7 Notice 49
13.8 Manner of Payment 50
13.9 Costs, Fees and Expenses 50
13.10 Waiver 50
13.11 Severability 50
13.12 Term of Agreement 50
13.13 Survival of Covenants, Etc. 51
13.14 Shared-Loss Arrangement 51
SCHEDULES
2.1 Certain Liabilities Assumed 53
3.1 Certain Assets Purchased 54
3.1(d) Certain New Non-Shared-Loss Loans Purchased 55
3.1(e) Loans Fully Secured by Assumed Deposits 56
3.1(ee)(i)Certain Shared-Loss Loans Purchased 57
3.1(ee)(i)(150) Certain Shared-Loss Loans Purchased (Non-
performing/Classified) 58
3.1(ee)(i)(300) Certain Shared-Loss Loans Purchased
(Commercial Real Estate Loans) 59
3.1(ee)(i)(400) Certain Shared-Loss Loans Purchased
(Commercial Loans) 60
3.1(ee)(ii)Other Real Estate Purchased 61
3.1(i) Acquired Subsidiaries 62
3.2 Purchase Price of Assets or assets 63
3.5(k) Securities Not Purchased 65
3.5(n) Certain Loans Not Purchased 66
EXHIBITS
4.13 Interim Asset Servicing Arrangement 67
13.14 Shared-Loss Arrangement 69
PURCHASE AND ASSUMPTION AGREEMENT
SHARED LOSS
THIS AGREEMENT, made and entered into as of the 10th day of
March, 2000, by and among the FEDERAL DEPOSIT INSURANCE
CORPORATION, RECEIVER of MUTUAL FEDERAL SAVINGS BANK, ATLANTA,
GEORGIA (the "Receiver"), CITIZENS TRUST BANK OF ATLANTA,
organized under the laws of the State of Georgia, and having its
principal place of business in Atlanta, Georgia (the "Assuming
Bank"), and the FEDERAL DEPOSIT INSURANCE CORPORATION, organized
under the laws of the United States of America and having its
principal office in Washington, D.C., acting in its corporate
capacity (the "Corporation").
WITNESSETH:
WHEREAS, on Bank Closing, the Chartering Authority closed
Mutual Federal Savings Bank, Atlanta, Georgia (the "Failed Bank")
pursuant to applicable law and the Corporation was appointed
Receiver thereof; and
WHEREAS, the Assuming Bank desires to purchase certain
assets and assume certain deposit and other liabilities of the
Failed Bank on the terms and conditions set forth in this
Agreement; and
WHEREAS, pursuant to 12 U.S.C. Section 1823(c)(2)(A), the
Corporation may provide assistance to the Assuming Bank to
facilitate the transactions contemplated by this Agreement, which
assistance may include indemnification pursuant to Article XII;
and
WHEREAS, the Board of Directors of the Corporation (the
"Board") has determined to provide assistance to the Assuming
Bank on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Board has determined pursuant to 12 U.S.C.
Section 1823(c)(4)(A) that such assistance is necessary to meet
the obligation of the Corporation to provide insurance coverage
for the insured deposits in the Failed Bank and is the least
costly to the deposit insurance fund of all possible methods for
meeting such obligation.
NOW THEREFORE, in consideration of the mutual promises
herein set forth and other valuable consideration, the parties
hereto agree as follows:
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ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the
meanings set forth in this Article I, or elsewhere in this
Agreement. As used herein, words imparting the singular include
the plural and vice versa.
Part A.
"Accounting Records" means the general ledger and
subsidiary ledgers and supporting schedules which support the
general ledger balances.
"Acquired Subsidiaries" has the meaning provided in
Section 3.1.
"Adversely Classified" means, with respect to any Loan
or security, a Loan or security which, as of the date of the
Information Package, has been designated in the most recent
report of examination as "Substandard," "Doubtful" or "Loss" by
the Failed Bank's appropriate Federal or State Chartering
Authority or regulator.
"Affiliate" of any Person means any director, officer,
or employee of that Person and any other Person (i) who is
directly or indirectly controlling, or controlled by, or under
direct or indirect common control with, such Person, or (ii) who
is an affiliate of such Person as the term "affiliate" is defined
in Section 2 of the Bank Holding Company Act of 1956, as amended,
12 U.S.C. Section 1841.
"Agreement" means this Purchase and Assumption
Agreement by and among the Assuming Bank, the Corporation and the
Receiver, as amended or otherwise modified from time to time.
"Assets" means all assets of the Failed Bank purchased
pursuant to Section 3.1. Assets owned by Subsidiaries of the
Failed Bank are not "Assets" within the meaning of this
definition.
"Assumed Deposits" means Deposits.
"Bank Closing" means the close of business of the
Failed Bank on the date on which the Chartering Authority closed
such institution.
"Bank Premises" means the banking houses, drive-in
banking facilities, and teller facilities (staffed or automated)
together with appurtenant parking, storage and service facilities
and structures connecting remote facilities to banking houses,
and land on which the foregoing are located, that are owned or
leased by the Failed Bank and that are occupied by the Failed
Bank as of Bank Closing. For purposes of this Agreement, those
three vacant lots owned by the Bank and located adjacent to the
Bank's main office at 195 Auburn Avenue, N.E., 197 Auburn Avenue,
N.E., and 199 Auburn Avenue, N.E., Atlanta, Georgia 30335, shall
constitute a single Bank Premises separate and apart from the
Bank's main office.
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"Bid Amount" has the meaning provided in Article VII.
"Book Value" means, with respect to any Asset and any
Liability Assumed, the dollar amount thereof stated on the
Accounting Records of the Failed Bank. The Book Value of any item
shall be determined as of Bank Closing after adjustments made by
the Receiver for differences in accounts, suspense items,
unposted debits and credits, and other similar adjustments or
corrections. The Book Value of an Acquired Subsidiary shall be
determined from the investment in subsidiary and related accounts
on the "bank only" (unconsolidated) balance sheet of the Failed
Bank based on the equity method of accounting. Without limiting
the generality of the foregoing, (i) the Book Value of a
Liability Assumed shall include all accrued and unpaid interest
thereon as of Bank Closing, and (ii) the Book Value of a Loan
shall reflect adjustments for earned interest, or unearned
interest (as it relates to the "rule of 78s" or add-on-interest
loans, as applicable), if any, as of Bank Closing, adjustments
for the portion of earned or unearned loan-related credit life
and/or disability insurance premiums, if any, attributable to the
Failed Bank as of Bank Closing, and adjustments for Failed Bank
Advances, if any, in each case as determined for financial
reporting purposes. The Book Value of an Asset shall not include
any adjustment for loan premiums, discounts or any related
deferred income or fees, or general or specific reserves on the
Accounting Records of the Failed Bank. The Book Value of a
Shared-Loss Loan Commitment shall be deemed to be zero. The Book
Value of a Shared-Loss Asset shall be net of any Failed Bank
Charge-Offs/Write-Downs.
"Business Day" means a day other than a Saturday,
Sunday, Federal legal holiday or legal holiday under the laws of
the State where the Failed Bank is located, or a day on which the
principal office of the Corporation is closed.
"Chartering Authority" means (i) with respect to a
national bank, the Office of the Comptroller of the Currency,
(ii) with respect to a Federal savings association or savings
bank, the Office of Thrift Supervision, (iii) with respect to a
bank or savings institution chartered by a State, the agency of
such State charged with primary responsibility for regulating
and/or closing banks or savings institutions, as the case may be,
(iv) the Corporation in accordance with 12 U.S.C. Section
1821(c), with regard to self appointment, or (v) the appropriate
Federal banking agency in accordance with 12 U.S.C. 1821(c)(9).
"Commitment" means the unfunded portion of a line of
credit or other commitment reflected on the books and records of
the Failed Bank to make an extension of credit (or additional
advances with respect to a Loan) that was legally binding on the
Failed Bank as of Bank Closing, other than extensions of credit
pursuant to the credit card business and overdraft protection
plans of the Failed Bank, if any.
"Credit Documents" mean the agreements, instruments,
certificates or other documents at any time evidencing or
otherwise relating to, governing or executed in connection with
or as security for, a Loan, Shared-Loss Loan Commitment,
3
Permitted Advance, Permitted Amendment, or Shared-Loss Loan
Commitment Advance, including without limitation notes, bonds,
loan agreements, letter of credit applications, lease financing
contracts, banker's acceptances, drafts, interest protection
agreements, currency exchange agreements, repurchase agreements,
reverse repurchase agreements, guarantees, deeds of trust,
mortgages, assignments, security agreements, pledges,
subordination or priority agreements, lien priority agreements,
undertakings, security instruments, certificates, documents,
legal opinions, participation agreements and intercreditor
agreements, and all amendments, modifications, renewals,
extensions, rearrangements, and substitutions with respect to any
of the foregoing.
"Credit File" means all Credit Documents and all other
credit, collateral, or insurance documents in the possession or
custody of the Assuming Bank, or any of its Subsidiaries or
Affiliates, relating to an Asset or a Loan included in a Put
Notice, or a Shared-Loss Loan Commitment, Permitted Advance,
Permitted Amendment, or Shared-Loss Loan Commitment Advance, or
copies of any thereof.
"Data Processing Lease" means any lease or licensing
agreement, binding on the Failed Bank as of Bank Closing, the
subject of which is data processing equipment or computer
hardware or software used in connection with data processing
activities. A lease or licensing agreement for computer software
used in connection with data processing activities shall
constitute a Data Processing Lease regardless of whether such
lease or licensing agreement also covers data processing
equipment.
"Deposit" means a deposit as defined in 12 U.S.C.
Section 1813(l), including, without limitation, outstanding
cashier's checks and other official checks and all uncollected
items included in the depositors' balances and credited on the
books and records of the Failed Bank; provided, that the term
"Deposit" shall not include all or any portion of those deposit
balances which, in the discretion of the Receiver or the
Corporation, (i) may be required to satisfy it for any liquidated
or contingent liability of any depositor arising from an
unauthorized or unlawful transaction, or (ii) may be needed to
provide payment of any liability of any depositor to the Failed
Bank or the Receiver, including the liability of any depositor as
a director or officer of the Failed Bank, whether or not the
amount of the liability is or can be determined as of Bank
Closing.
"Failed Bank Advances" means the total sums paid by the
Failed Bank to (i) protect its lien position, (ii) pay ad valorem
taxes and hazard insurance, and (iii) pay credit life insurance,
accident and health insurance, and vendor's single interest
insurance.
"Fair Market Value" means (i)(a) the most probable
price for which such property would have sold in a competitive
market as of Bank Closing under all conditions requisite to a
fair sale, with the buyer and the seller each acting prudently,
knowledgeably, and for self interest, and assuming that neither
is under duress, as determined by an appraiser mutually
acceptable to the Receiver and the Assuming Bank; any costs and
fees associated with such determination shall be shared equally
by the Receiver and the Assuming Bank, and (b) which, with
respect to Bank Premises (to the extent, if any, that Bank
Premises are purchased utilizing this valuation method), shall be
determined not later than sixty (60) days after Bank Closing by
4
an appraiser selected by the Receiver and the Assuming Bank
within fifteen (15) days after Bank Closing; or (ii) with respect
to property other than Bank Premises purchased utilizing this
valuation method, the price therefor as established by the
Receiver and agreed to by the Assuming Bank, or in the absence of
such agreement, as determined in accordance with clause (i)(a)
above.
"Fixtures" means those leasehold improvements,
additions, alterations and installations constituting all or a
part of Bank Premises and which were acquired, added, built,
installed or purchased at the expense of the Failed Bank,
regardless of the holder of legal title thereto as of Bank
Closing.
"Furniture and Equipment" means the furniture and
equipment (other than Safe Deposit Boxes, and leased data
processing equipment, including hardware and software), leased or
owned by the Failed Bank and reflected on the books of the Failed
Bank as of Bank Closing, including without limitation automated
teller machines, carpeting, furniture, office machinery
(including personal computers), shelving, office supplies,
telephone, surveillance and security systems, artwork, and motor
vehicles (which motor vehicles shall be deemed located at Bank
Premises owned by the Failed Bank).
"Indemnitees" means, except as provided in paragraph
(k) of Section 12.1, (i) the Assuming Bank, (ii) the Subsidiaries
and Affiliates of the Assuming Bank other than any Subsidiaries
or Affiliates of the Failed Bank that are or become Subsidiaries
or Affiliates of the Assuming Bank, and (iii) the directors,
officers, employees and agents of the Assuming Bank and its
Subsidiaries and Affiliates who are not also present or former
directors, officers, employees or agents of the Failed Bank or of
any Subsidiary or Affiliate of the Failed Bank.
"Information Package" means the compilation of
financial and other data with respect to the Failed Bank entitled
"Information Package" dated as of November 30, 1999, and any
amendments or supplements thereto provided to the Assuming Bank
by the Corporation.
"Initial Payment" means the payment made pursuant to
Article VII (based on the best information available as of Bank
Closing), the amount of which shall be either (i) if the Bid
Amount is positive, the aggregate Book Value of the Liabilities
Assumed minus the sum of the aggregate purchase price of the
Assets and assets purchased and the positive Bid Amount, or (ii)
if the Bid Amount is negative, the sum of the aggregate Book
Value of the Liabilities Assumed and the negative Bid Amount
minus the aggregate purchase price of the Assets and assets
purchased. The Initial Payment shall be payable by the
Corporation to the Assuming Bank if (i) the Liabilities Assumed
are greater than the sum of the positive Bid Amount and the
Assets and assets purchased, or if (ii) the sum of the
Liabilities Assumed and the negative Bid Amount are greater than
the Assets and assets purchased. The Initial Payment shall be
payable by the Assuming Bank to the Corporation if (i) the
Liabilities Assumed are less than the sum of the positive Bid
Amount and the Assets and assets purchased, or if (ii) the sum of
the Liabilities Assumed and the negative Bid Amount is less than
the Assets and assets purchased. Such Initial Payment shall be
subject to adjustment as provided in Article VIII.
5
"Legal Balance" means the amount of indebtedness
legally owed by an Obligor with respect to a Loan, Permitted
Advance or Shared-Loss Loan Commitment Advance, including
principal and accrued and unpaid interest, late fees, attorneys'
fees and expenses, taxes, insurance premiums, and similar
charges, if any.
"Liabilities Assumed" has the meaning provided in
Section 2.1.
"Lien" means any mortgage, lien, pledge, charge,
assignment for security purposes, security interest, or
encumbrance of any kind with respect to an Asset, including any
conditional sale agreement or capital lease or other title
retention agreement relating to such Asset.
"Loans" means all of the following owed to or held by
the Failed Bank as of Bank Closing:
(i) loans, participation agreements, interests in
participations, overdrafts of customers (including but not
limited to overdrafts made pursuant to an overdraft protection
plan or similar extensions of credit in connection with a deposit
account), revolving commercial lines of credit, home equity lines
of credit, United States and/or State-guaranteed student loans,
and lease financing contracts;
(ii) all Liens, rights (including rights of set-off),
remedies, powers, privileges, demands, claims, priorities,
equities and benefits owned or held by, or accruing or to accrue
to or for the benefit of, the holder of the obligations or
instruments referred to in clause (i) above, including but not
limited to those arising under or based upon Credit Documents,
casualty insurance policies and binders, standby letters of
credit, mortgagee title insurance policies and binders, payment
bonds and performance bonds at any time and from time to time
existing with respect to any of the obligations or instruments
referred to in clause (i) above; and
(iii) all amendments, modifications, renewals,
extensions, refinancings, and refundings of or for any of the
foregoing;
provided, that there shall be excluded from the definition of
Loans (a) any portion of the foregoing which the Failed Bank or
the Assuming Bank (or any of their respective Subsidiaries) holds
not for its own account but solely as agent or fiduciary for, or
otherwise as representative of, any other Person, (b) any loans
except as regards Shared-Loss Loans which have been charged off
the Accounting Records of the Failed Bank in whole or in part
prior to the date of the Information Package, (c) loans except as
regards Shared-Loss Loans recorded on the Accounting Records of
the Failed Bank on "in substance foreclosure" status as of Bank
Closing, and (d) Commitments.
"New Loans" means Loans made by the Failed Bank
subsequent to the "as of" date of the Information Package that
are not continuations, amendments, modifications, renewals, exten
sions, refinancings, restructurings, or refundings of or for any
then existing Loan. A New Loan is either a New Non-Shared-Loss
Loan or a New Shared-Loss Loan.
6
"Obligor" means each Person liable for the full or
partial payment or performance of any Loan, Permitted Advance or
Shared-Loss Loan Commitment Advance, or any obligations with
respect to Other Real Estate, Additional ORE or Subsidiary ORE,
whether such Person is obligated directly, indirectly, primarily,
secondarily, jointly, or severally.
"Payment Date" means the first Business Day after Bank
Closing.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, or government or any agency
or political subdivision thereof, excluding the Corporation.
"Primary Indemnitor" means any Person (other than the
Assuming Bank or any of its Affiliates) who is obligated to
indemnify or insure, or otherwise make payments (including
payments on account of claims made against) to or on behalf of
any Person in connection with the claims covered under Article
XII, including without limitation any insurer issuing any
directors and officers liability policy or any Person issuing a
financial institution bond or banker's blanket bond.
"Put Date" has the meaning provided in Section 3.4.
"Put Notice" has the meaning provided in Section 3.4.
"Qualified Financial Contract" means a qualified
financial contract as defined in 12 U.S.C. Section 1821(e)(8)(D).
"Record" means any document, microfiche, microfilm and
computer records (including but not limited to magnetic tape,
disc storage, card forms and printed copy) of the Failed Bank
generated or maintained by the Failed Bank that is owned by or in
the possession of the Receiver at Bank Closing.
"Related Liability" with respect to any Asset means any
liability existing and reflected on the Accounting Records of the
Failed Bank as of Bank Closing for (i) indebtedness secured by
mortgages, deeds of trust, chattel mortgages, security interests
or other liens on or affecting such Asset, (ii) ad valorem taxes
applicable to such Asset, and (iii) any other obligation
determined by the Receiver to be directly related to such Asset.
"Related Liability Amount" with respect to any Related
Liability on the books of the Assuming Bank, means the amount of
such Related Liability as stated on the Accounting Records of the
Assuming Bank (as maintained in accordance with generally
accepted accounting principles) as of the date as of which the
Related Liability Amount is being determined. With respect to a
liability that relates to more than one asset, the amount of such
Related Liability shall be allocated among such assets for the
purpose of determining the Related Liability Amount with respect
to any one of such assets. Such allocation shall be made by
7
specific allocation, where determinable, and otherwise shall be
pro rata based upon the dollar amount of such assets stated on
the Accounting Records of the entity that owns such asset.
"Repurchase Price" means with respect to any Asset or
asset other than Shared-Loss Assets, which shall be determined by
the Receiver, the lesser of (a) or (b) (regarding the Repurchase
Price of Shared-Loss Assets only, see definition of "Shared-Loss
Asset Repurchase Price" in Exhibit 13.14):
(a) the amount paid by the Assuming Bank, decreased by
the amount of any money received with respect thereto since Bank
Closing and, if the Asset is a Loan or other interest bearing or
earning asset, the resulting amount shall then be increased or
decreased, as the case may be, by interest or discount (whichever
is applicable) accrued from and after Bank Closing at the lower
of: (i) the contract rate with respect to such Asset, or (ii) the
Settlement Interest Rate; net proceeds received by or due to the
Assuming Bank from the sale of collateral, any forgiveness of
debt, or otherwise shall be deemed money received by the Assuming
Bank; or
(b) the dollar amount thereof stated on the Accounting
Records of the Assuming Bank as of the date as of which the
Repurchase Price is being determined, as maintained in accordance
with generally accepted accounting principles, and, if the asset
is a Loan, regardless of the Legal Balance thereof and adjusted
in the same manner as the Book Value of a Failed Bank Loan would
be adjusted hereunder.
Provided, however, (b), above, shall not be applicable for Loans
repurchased pursuant to Section 3.4(a).
If any Asset or asset is purchased as part of a group of Assets
or assets for Book Value and/or as a percentage of Book Value,
the amount paid by the Assuming Bank, for purposes of (a), above,
shall be the Book Value, as of the date of Bank Closing, of the
individual Asset or asset being repurchased multiplied, if
applicable, by the percentage paid.
"Safe Deposit Boxes" means the safe deposit boxes of
the Failed Bank, if any, including the removable safe deposit
boxes and safe deposit stacks in the Failed Bank's vault(s), all
rights and benefits (other than fees collected prior to Bank
Closing) under rental agreements with respect to such safe
deposit boxes, and all keys and combinations thereto.
"Settlement Date" means the first Business Day
immediately prior to the day which is one hundred eighty (180)
days after Bank Closing, or such other date prior thereto as may
be agreed upon by the Receiver and the Assuming Bank. The
Receiver, in its discretion, may extend the Settlement Date.
"Settlement Interest Rate" means, for the first
calendar quarter or portion thereof during which interest
accrues, the rate determined by the Receiver to be equal to the
equivalent coupon issue yield on twenty-six (26)-week United
States Treasury Bills in effect as of Bank Closing as published
in The Wall Street Journal; provided, that if no such equivalent
coupon issue yield is available as of Bank Closing, the
equivalent coupon issue yield for such Treasury Bills most
8
recently published in The Wall Street Journal prior to Bank
Closing shall be used. Thereafter, the rate shall be adjusted to
the rate determined by the Receiver to be equal to the equivalent
coupon issue yield on such Treasury Bills in effect as of the
first day of each succeeding calendar quarter during which
interest accrues as published in The Wall Street Journal.
"Subsidiary" has the meaning set forth in Section
3(w)(4) of the Federal Deposit Insurance Act, 12 U.S.C. Section
1813(w)(4), as amended.
Part B. In addition to the terms defined above, defined
below are certain additional terms relating to loss-sharing, as
used in this Agreement (including, without limitation, Exhibit
13.14).
"AAA" means the American Arbitration Association as
provided in Section 2.1(f)(iii) of Exhibit 13.14.
"Accrued Interest" means, with respect to any Shared-
Loss Loan, Permitted Advance or Shared-Loss Loan Commitment
Advance at any time, the amount of earned and unpaid interest,
taxes, credit life and/or disability insurance premiums (if any)
payable by the Obligor accrued on or with respect to such Shared-
Loss Loan, Permitted Advance or Shared-Loss Loan Commitment
Advance, all as reflected on the Accounting Records of the Failed
Bank or the Assuming Bank (as applicable); provided, that Accrued
Interest shall not include any amount that accrues on or with
respect to any Shared-Loss Loan, Permitted Advance or Shared-Loss
Loan Commitment Advance after that Asset has been placed on non-
accrual or non-performing status by either the Failed Bank or the
Assuming Bank (as applicable).
"Additional ORE" means Shared-Loss Loans that become
Other Real Estate after Bank Closing.
"Applicable Anniversary of the Commencement Date" means
the second (2nd) anniversary of the Commencement Date.
"Calendar Quarter" means a quarterly period (a) for the
first such period, beginning on the Commencement Date and ending
on the last calendar day of either March, June, September or
December, whichever is the first to occur after the Commencement
Date, and (b) for quarterly periods thereafter, beginning on the
first calendar day of the calendar month immediately after the
month that ended the prior period and ending on the last calendar
day of each successive three-calendar-month period thereafter
(i.e., each March, June, September and December, starting in the
applicable order depending on the ending date of first such
period) of any year.
"Capitalized Expenditures" means those expenditures
that (i) would be capitalized under generally accepted accounting
principles, and (ii) are incurred with respect to Other Real
Estate, Additional ORE or Subsidiary ORE. Capitalized
Expenditures shall not include expenses related to environmental
conditions including, but not limited to, remediation, storage or
disposal of any hazardous or toxic substances or any pollutant or
contaminant.
9
"Charge-Offs" means, with respect to any Shared-Loss
Assets for any period, an amount equal to the aggregate amount of
reversals or charge-offs of Accrued Interest and charge-offs of
the principal amount of such assets net of unearned interest
(including write-downs associated with Other Real Estate,
Additional ORE and Subsidiary ORE) effected by the Assuming Bank
during such period in accordance with the Examination Criteria
and reflected on the Accounting Records of the Assuming Bank;
provided, that: (i) the aggregate amount of Accrued Interest
(including any reversals thereof) for the period after Bank
Closing that shall be included in determining the amount of
Charge-Offs for any Shared-Loss Loan shall not exceed ninety (90)
days' Accrued Interest; (ii) no Charge-Off shall be taken with
respect to any anticipated expenditure by the Assuming Bank until
such expenditure is actually incurred; (iii) any financial
statement adjustments made in connection with the purchase of any
Assets pursuant to this Agreement or any future purchase, merger,
consolidation or other acquisition of the Assuming Bank shall not
constitute "Charge-Offs"; and (iv) losses incurred on the sale or
other disposition of Shared-Loss Assets to any Person (other than
the sale or other disposition of Other Real Estate, Additional
ORE or Subsidiary ORE to a Person other than an Affiliate of the
Assuming Bank which is conducted in a commercially reasonable and
prudent manner) shall not constitute Charge-Offs.
"Commencement Date" means the first calendar day
following Bank Closing.
"Consumer Loans" means Loans to individuals for
household, family and other personal expenditures (including
United States and/or State-guaranteed student loans and
extensions of credit pursuant to a credit card plan or debit card
plan).
"Environmental Assessment" means an assessment of the
presence, storage or release of any hazardous or toxic substance,
pollutant or contaminant with respect to the collateral securing
a Shared-Loss Loan that has been fully or partially charged off.
"Examination Criteria" means the examination criteria
customarily employed by, or any applicable regulations of, the
Assuming Bank's Chartering Authority.
"Failed Bank Charge-Offs/Write-Downs" means, with
respect to any Asset, an amount equal to the aggregate amount of
reversals or charge-offs of Accrued Interest and charge-offs and
write-downs of principal effected by the Failed Bank with respect
to that Asset as reflected on the Accounting Records of the
Failed Bank.
"FDIC Party" has the meaning provided in Section
2.1(f)(ii) of Exhibit 13.14.
"Home Equity Loans" means Loans that constitute the
funded portions of lines of credit secured by mortgages on one-
to four-family residences or stock of cooperative housing
associations.
10
"New Non-Shared-Loss Loans" means all New Loans that
constitute a Consumer Loan, a Home Equity Loan or a Residential
Mortgage Loan.
"New Shared-Loss Loans" means all New Loans other than
New Non-Shared-Loss Loans.
"Net Charge-Offs" means, with respect to any period, an
amount equal to the aggregate amount of Charge-Offs for such
period less the amount of Recoveries for such period.
"Neutral Member" has the meaning provided in Section
2.1(f)(ii) of Exhibit 13.14.
"Non-Shared-Loss Loan Commitment" means any Commitment
other than a Shared-Loss Loan Commitment.
"Notice of Dispute" has the meaning provided in Section
2.1(f)(iii) of Exhibit 13.14.
"ORE Subsidiary" means any Subsidiary of the Assuming
Bank that engages solely in holding, servicing, managing or
liquidating interests of a type described in clause (A) of the
definition of "Other Real Estate," which interests have arisen
from the collection or settlement of a Shared-Loss Loan.
"Other Real Estate" means all of the following
(including any of the following fully or partially charged off
the books and records of the Failed Bank or the Assuming Bank)
that (i) are owned by the Failed Bank as of Bank Closing and are
purchased pursuant to Section 3.1(ee)(ii) or (ii) have arisen
subsequent to Bank Closing from the collection or settlement by
the Assuming Bank of a Shared-Loss Loan:
(A) all interests in real estate (other than Bank
Premises and Fixtures), including but not limited to mineral
rights, leasehold rights, condominium and cooperative
interests, air rights and development rights; and
(B) all other assets (whether real or personal
property) acquired by foreclosure or in full or partial
satisfaction of judgments or indebtedness.
"Permitted Advance" means an advance of funds by the
Assuming Bank with respect to a Shared-Loss Loan, or the making
of a legally binding commitment by the Assuming Bank to advance
funds with respect to a Shared-Loss Loan, that (i) in the case of
such an advance, is actually made, and, in the case of such a
commitment, is made and all of the proceeds thereof actually
advanced, within one (1) year after the Commencement Date, (ii)
does not cause the sum of (A) the book value of such Shared-Loss
Loan as reflected on the Accounting Records of the Assuming Bank
after any such advance has been made by the Assuming Bank plus
(B) the unfunded amount of any such commitment made by the
Assuming Bank related thereto, to exceed 110% of the Book Value
of such Shared-Loss Loan, (iii) is not made with respect to a
11
Shared-Loss Loan with respect to which (A) there exists a related
Shared-Loss Loan Commitment or (B) the Assuming Bank has taken a
Charge-Off and (iv) is made in good faith, is supported at the
time it is made by documentation in the Credit Files and conforms
to and is in accordance with the applicable requirements set
forth in Article III of Exhibit 13.14 and with the then effective
written internal credit policy guidelines of the Assuming Bank;
provided, that the limitations in subparagraphs (i), (ii) and
(iii) of this definition shall not apply to any such action
(other than to an advance or commitment related to the
remediation, storage or final disposal of any hazardous or toxic
substance, pollutant or contaminant) that is taken to preserve or
secure the value of the collateral for such Shared-Loss Loan.
"Permitted Amendment" means, with respect to any Shared-
Loss Loan Commitment or Shared-Loss Loan, any amendment,
modification, renewal or extension thereof, or any waiver of any
term, right, or remedy thereunder, made by the Assuming Bank in
good faith and otherwise in accordance with the applicable
requirements set forth in Article III of Exhibit 13.14 and the
then effective written internal credit policy guidelines of the
Assuming Bank; provided, that:
(i) with respect to a Shared-Loss Loan Commitment or a
Shared-Loss Loan that is not a revolving line of credit, no such
amendment, modification, renewal, extension, or waiver, except as
allowed under the definition of Permitted Advance, shall operate
to increase the amount of principal (A) then remaining available
to be advanced by the Assuming Bank under the Shared-Loss Loan
Commitment or (B) then outstanding under the Shared-Loss Loan;
(ii) with respect to a Shared-Loss Loan Commitment or a
Shared-Loss Loan that is a revolving line of credit, no such
amendment, modification, renewal, extension, or waiver, except as
allowed under the definition of Permitted Advance, shall operate
to increase the maximum amount of principal authorized as of Bank
Closing to be outstanding at any one time under the underlying
revolving line of credit relationship with the debtor (regardless
of the extent to which such revolving line of credit may have
been funded as of Bank Closing or may subsequently have been
funded and/or repaid); and
(iii) no such amendment, modification, renewal, extension or
waiver shall extend the term of such Shared-Loss Loan Commitment
or Shared-Loss Loan beyond the end of the final Shared-Loss
Quarter unless the term of such Shared-Loss Loan Commitment or
Shared-Loss Loan as existed on Bank Closing was beyond the end of
the final Shared-Loss Quarter, in which event no such amendment,
modification, renewal, extension or waiver shall extend such term
beyond the term as existed as of Bank Closing.
"Quarterly Certificate" has the meaning provided in
Section 2.1(a)(i) of Exhibit 13.14.
"Recoveries" (I)(A) In addition to any sums to be
applied as Recoveries pursuant to subparagraph (II) below,
"Recoveries" means, with respect to any period, the sum of
(without duplication):
12
(i) the amount of collections during such period by the
Assuming Bank on Charge-Offs of Shared-Loss Assets effected by
the Assuming Bank prior to the end of the final Shared-Loss
Quarter; plus
(ii) the amount of collections during such period by
the Assuming Bank on Failed Bank Charge-Offs/Write-Downs; plus
(iii) the amount of gain on any sale or other
disposition during such period by the Assuming Bank of Other Real
Estate, Additional ORE or Subsidiary ORE (provided, that the
amount of any such gain included in Recoveries shall not exceed
the aggregate amount of the related Failed Bank Charge-Offs/Write-
Downs and Charge-Offs taken and any related Reimbursable Expenses
and Recovery Expenses); plus
(iv) the amount of collections during such period by
the Assuming Bank of any Reimbursable Expenses or Recovery
Expenses; plus
(v) the amount of any fee or other consideration
received by the Assuming Bank during or prior to such period in
connection with any amendment, modification, renewal, extension,
refinance, restructure, commitment or other similar action taken
by the Assuming Bank with respect to an Asset with respect to
which there exists a Failed Bank Charge-Off/Write-Down or a
Shared-Loss Loan as to which a Charge-Off has been effected by
the Assuming Bank during or prior to such period (provided, that
the amount of any such fee or other consideration included in
Recoveries shall not exceed the aggregate amount of the related
Failed Bank Charge-Offs/Write-Downs and Charge-Offs taken and any
related Reimbursable Expenses and Recovery Expenses).
(I)(B) For the purpose of determining the amounts to be
applied as Recoveries pursuant to subparagraph (I)(A) above, the
Assuming Bank shall apply amounts received on the Assets that are
not otherwise applied to reduce the book value of principal of a
Shared-Loss Loan (or, in the case of Other Real Estate,
Additional ORE, Subsidiary ORE and Capitalized Expenditures, that
are not otherwise applied to reduce the book value thereof) in
the following order: first to Charge-Offs and Failed Bank Charge-
Offs/Write Downs; then to Reimbursable Expenses and Recovery
Expenses; then to interest income; and then to other expenses
incurred by the Assuming Bank.
(II) If there occurs an amendment, modification, renewal,
extension, refinance, restructure, commitment or other similar
action with respect to a Shared-Loss Loan as to which there
exists a Failed Bank Charge-Off/Write Down or as to which a
Charge-Off has been effected by the Assuming Bank during or prior
to such period, and if, as a result of such occurrence, the
Assuming Bank recognizes any interest income for financial
accounting purposes on that Shared-Loss Loan, then "Recoveries"
shall also include the portion of the total amount of any such
interest income recognized by the Assuming Bank which is derived
by multiplying:
(A) the total amount of any such interest income recognized
by the Assuming Bank during such period with respect to that
Shared-Loss Loan as described above, by
13
(B) a fraction, the numerator of which is the aggregate
principal amount (excluding reversals or charge-offs of
Accrued Interest) of all such Failed Bank Charge-Offs/Write-
Downs and Charge-Offs effected by the Assuming Bank with
respect to that Shared-Loss Loan plus the principal amount
of that Shared-Loss Loan that has not yet been charged-off
but has been placed on nonaccrual status, all of which
occurred at any time prior to or during the period in which
the interest income referred to in subparagraph (II)(A)
immediately above was recognized, and the denominator of
which is the total amount of principal indebtedness
(including all such prior Failed Bank Charge-Offs/Write-
Downs and Charge-Offs as described above) due from the
Obligor on that Shared-Loss Loan as of the end of such
period;
provided, however, that the amount of any interest income
included as Recoveries for a particular Shared-Loss Loan shall
not exceed the aggregate amount of (a) Failed Bank Charge-
Offs/Write-Downs, (b) Charge-Offs effected by the Assuming Bank
during or prior to the period in which the amount of Recoveries
is being determined, plus (c) any Reimbursable Expenses and
Recovery Expenses paid to the Assuming Bank pursuant to this
Agreement during or prior to the period in which the amount of
Recoveries is being determined, all with respect to that
particular Shared-Loss Loan; and, provided, further, that any
collections on any such Shared-Loss Loan that are not applied to
reduce book value of principal or recognized as interest income
shall be applied pursuant to subparagraph (I) above.
(III) Notwithstanding subparagraphs (I) and (II) above, the
term "Recoveries" shall not include: (a) any amounts paid to the
Assuming Bank by the Receiver pursuant to Section 2.1 of Exhibit
13.14, (b) amounts received with respect to Charge-Offs effected
by the Assuming Bank after the final Shared-Loss Quarter, (c)
after the final Shared-Loss Quarter, income received by the
Assuming Bank from the operation of, and any gains recognized by
the Assuming Bank on the disposition of, Other Real Estate,
Additional ORE or Subsidiary ORE (such income and gains being
hereinafter together referred to as "ORE Income"), except to the
extent that aggregate ORE Income exceeds the aggregate expenses
paid to third parties by the Assuming Bank after the final Shared-
Loss Quarter to manage, operate and maintain Other Real Estate,
Additional ORE or Subsidiary ORE (such expenses being hereinafter
referred to as "ORE Expenses"). In determining the extent
aggregate ORE Income exceeds aggregate ORE Expenses for any
Recovery Quarter as set forth immediately above in subparagraph
(c), the Assuming Bank will subtract (i) ORE Expenses paid to
third parties during such Recovery Quarter (provided, that, in
the case of the final Recovery Quarter only, the Assuming Bank
will subtract ORE Expenses paid to third parties from the
beginning of the final Recovery Quarter up to the date the
Assuming Bank is required to deliver the final Quarterly
Certificate pursuant to this Agreement) from (ii) ORE Income
received during such Recovery Quarter, to calculate net ORE
income ("Net ORE Income") for that Recovery Quarter. If the
amount of Net ORE Income so calculated for a Recovery Quarter is
positive, such amount shall be reported as Recoveries on the
Quarterly Certificate for such Recovery Quarter. If the amount of
Net ORE Income so calculated for a Recovery Quarter is negative
("Net ORE Loss Carryforward"), such amount shall be added to any
ORE Expenses paid to third parties in the next succeeding
Recovery Quarter, which sum shall then be subtracted from ORE
Income for that next succeeding Recovery Quarter, for the purpose
14
of determining the amount of Net ORE Income (or, if applicable,
Net ORE Loss Carryforward) for that next succeeding Recovery
Quarter. If, as of the end of the final Recovery Quarter, a Net
ORE Loss Carryforward exists, then the amount of the Net ORE Loss
Carryforward that does not exceed the aggregate amount of Net ORE
Income reported as Recoveries on Quarterly Certificates for all
Recovery Quarters may be included as a Recovery Expense on the
Quarterly Certificate for the final Recovery Quarter.
"Recovery Amount" has the meaning provided in Section
2.1(b)(ii) of Exhibit 13.14.
"Recovery Expenses" means, for any Recovery Quarter,
the amount of actual, reasonable and necessary out-of-pocket
expenses (other than Capitalized Expenditures) paid to third
parties (other than Affiliates of the Assuming Bank) by the
Assuming Bank, as limited by Sections 3.2(c) and (d) of Article
III to Exhibit 13.14, to recover amounts owed with respect to (i)
any Shared-Loss Asset as to which a Charge-Off was effected prior
to the end of the final Shared-Loss Quarter (provided that such
amounts were incurred no earlier than the date the first Charge-
Off on such Shared-Loss Asset was reflected on the Accounting
Records of the Assuming Bank), and (ii) Failed Bank Charge-
Offs/Write-Downs (including, in each case, expenses related to an
Environmental Assessment but excluding (A) any other expenses
related to such environmental conditions including, but not
limited to, the remediation, storage or final disposal of any
such hazardous or toxic substance, or any such pollutant or
contaminant and (B) expenses related to any lender liability
claims or actions, including but not limited to, such claims or
actions arising from environmental conditions); provided, that,
so long as income with respect to a Shared-Loss Loan is being pro-
rated pursuant to the arithmetical formula in subsection (II) of
the definition of "Recoveries", the term "Recovery Expenses"
shall not include that portion of any such expenses paid during
such Recovery Quarter to recover any amounts owed on that Shared-
Loss Loan that is derived by:
subtracting (1) the product derived by multiplying:
(A) the total amount of any such expenses paid by the
Assuming Bank during such Recovery Quarter with respect
to that Shared-Loss Loan, by
(B) a fraction, the numerator of which is the aggregate
principal amount (excluding reversals or charge-offs of
Accrued Interest) of all such Failed Bank Charge-
Offs/Write-Downs and Charge-Offs effected by the
Assuming Bank with respect to that Shared-Loss Loan
plus the principal amount of that Shared-Loss Loan that
has not yet been charged-off but has been placed on
nonaccrual status, all of which occurred at any time
prior to or during the period in which the interest
income referred to in subparagraph (II)(A) of the
definition of "Recoveries" was recognized, and the
denominator of which is the total amount of principal
indebtedness (including all such prior Failed Bank
Charge-Offs/Write-Downs and Charge-Offs as described
above) due from the Obligor on that Shared-Loss Loan as
of the end of such period;
15
from (2) the total amount of any such expenses paid during
that Recovery Quarter with respect to that Shared-Loss Loan.
"Recovery Quarter" has the meaning provided in Section
2.1(a)(ii) of Exhibit 13.14.
"Reimbursable Expenses" means, for any Shared-Loss
Quarter, the amount of actual, reasonable and necessary out-of-
pocket expenses (other than Capitalized Expenditures) paid to
third parties (other than Affiliates of the Assuming Bank) by the
Assuming Bank, as limited by Sections 3.2(c) and (d) of Article
III of Exhibit 13.14, to:
(i) recover amounts owed with respect to any Shared-
Loss Asset as to which a Charge-Off has been effected prior to
the end of the final Shared-Loss Quarter (provided that such
amounts were incurred no earlier than the date the first Charge-
Off on such Shared-Loss Asset was reflected on the Accounting
Records of the Assuming Bank) and recover amounts owed with
respect to Failed Bank Charge-Offs/Write-Downs (including, in
each case, expenses related to an Environmental Assessment but
excluding (A) any other expenses related to such environmental
conditions including, but not limited to, the remediation,
storage or final disposal of any such hazardous or toxic
substance, or any such pollutant or contaminant and (B) expenses
related to any lender liability claims or actions, including but
not limited to, such claims or actions arising from environmental
conditions); provided, that, so long as income with respect to a
Shared-Loss Loan is being pro-rated pursuant to the arithmetical
formula in subsection (II) of the definition of "Recoveries", the
term "Reimbursable Expenses" shall not include that portion of
any such expenses paid during such Shared-Loss Quarter to recover
any amounts owed on that Shared-Loss Loan that is derived by:
subtracting (1) the product derived by multiplying:
(A) the total amount of any such expenses paid by the
Assuming Bank during such Shared-Loss Quarter with
respect to that Shared-Loss Loan, by
(B) a fraction, the numerator of which is the aggregate
principal amount (excluding reversals or charge-offs of
Accrued Interest) of all such Failed Bank Charge-
Offs/Write-Downs and Charge-Offs effected by the
Assuming Bank with respect to that Shared-Loss Loan
plus the principal amount of that Shared-Loss Loan that
has not yet been charged-off but has been placed on
nonaccrual status, all of which occurred at any time
prior to or during the period in which the interest
income referred to in subparagraph (II)(A) of the
definition of "Recoveries" was recognized, and the
denominator of which is the total amount of principal
indebtedness (including all such prior Failed Bank
Charge-Offs/Write-Downs and Charge-Offs as described
above) due from the Obligor on that Shared-Loss Loan as
of the end of such period;
from (2) the total amount of any such expenses paid during
that Shared-Loss Quarter with respect to that Shared-Loss
Loan; and
16
(ii) manage, operate or maintain Other Real Estate,
Additional ORE or Subsidiary ORE less the amount of any income
received by the Assuming Bank during such Shared-Loss Quarter
with respect to such Other Real Estate, Additional ORE or
Subsidiary ORE (which resulting amount under this clause (ii) may
be negative).
"Residential Mortgage Loans" means Loans, excluding
advances made pursuant to Home Equity Loans, that are secured by
mortgages on one- to four-family residences or stock of
cooperative housing associations.
"Review Board" has the meaning provided in Section
2.1(f)(i) of Exhibit 13.14.
"Shared-Loss Amount" has the meaning provided in
Section 2.1(b)(i) of Exhibit 13.14.
"Shared-Loss Asset Repurchase Price" means, with
respect to any Shared-Loss Asset, which shall be determined by
the Receiver, the principal amount thereof due from an Obligor
(including, subject to the limitations discussed below, the
amount of any Accrued Interest) stated on the Accounting Records
of the Assuming Bank, as of the date as of which the Shared-Loss
Asset Repurchase Price is being determined (regardless, in the
case of a Shared-Loss Loan, of the Legal Balance thereof);
provided, that (i) in the case of a Shared-Loss Loan there shall
be excluded from such amount the amount of any Accrued Interest
accrued on or with respect to such Shared-Loss Loan prior to the
ninety (90)-day period ending on the day prior to the purchase
date determined pursuant to Sections 2.1(e)(i) or 2.1(e)(iii) of
Exhibit 13.14, except to the extent such Accrued Interest was
included in the Book Value of such Shared-Loss Loan, and (ii) any
collections on a Shared-Loss Loan received by the Assuming Bank
after the purchase date applicable to such Shared-Loss Loan shall
be applied (without duplication) to reduce the Shared-Loss Asset
Repurchase Price of such Shared-Loss Loan on a dollar-for-dollar
basis. For purposes of determining the amount of unpaid interest
which accrued during a given period with respect to a variable-
rate Shared-Loss Loan, all collections of interest shall be
deemed to be applied to unpaid interest in the chronological
order in which such interest accrued.
"Shared-Loss Assets" means Shared-Loss Loans, Other
Real Estate purchased by the Assuming Bank pursuant to Section
3.1(ee)(ii), Additional ORE, Subsidiary ORE and Capitalized
Expenditures.
"Shared-Loss Loan Commitment" means:
(i) any Commitment to make a further extension of credit or
to make a further advance with respect to an existing Shared-Loss
Loan; and
(ii) any Shared-Loss Loan Commitment (described in
subparagraph (i) immediately preceding) with respect to which the
Assuming Bank has made a Permitted Amendment.
17
"Shared-Loss Loan Commitment Advance" means an advance
pursuant to a Shared-Loss Loan Commitment with respect to which
the Assuming Bank has not made a Permitted Advance.
"Shared-Loss Loans" means:
(i)(A) Loans purchased by the Assuming Bank pursuant to
(1) Sections 3.1(ee)(i) and (2) Section 3.1(ee)(iv), (B) New
Shared-Loss Loans purchased by the Assuming Bank pursuant to
Section 3.1(ee)(v), (C) Permitted Advances and (D) Shared-Loss
Loan Commitment Advances, if any; provided, that Shared-Loss
Loans shall not include Loans, New Shared-Loss Loans, Permitted
Advances and Shared-Loss Loan Commitment Advances with respect to
which an Acquired Subsidiary, or a constituent Subsidiary
thereof, is an Obligor; and
(ii) any Shared-Loss Loans (described in subparagraph
(i) immediately preceding) with respect to which the Assuming
Bank has made a Permitted Amendment.
"Shared-Loss Quarter" has the meaning provided in
Section 2.1(a)(i) of Exhibit 13.14.
"Subsidiary ORE" means all assets owned by ORE
Subsidiaries that would constitute Additional ORE if such assets
were on the books of the Assuming Bank.
"Termination Date" means the third (3rd) anniversary of
the Commencement Date.
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1 Liabilities Assumed by Assuming Bank. The Assuming Bank
expressly assumes at Book Value (subject to adjustment pursuant
to Article VIII) and agrees to pay, perform, and discharge all of
the following liabilities of the Failed Bank as of Bank Closing,
except as otherwise provided in this Agreement (such liabilities
referred to as "Liabilities Assumed"):
(a) Assumed Deposits; provided, that as to any Deposits of
public money which are Assumed Deposits, the Assuming
Bank agrees to properly secure such Deposits with such
of the Assets as appropriate which, prior to Bank
Closing, were pledged as security therefor by the
Failed Bank;
(b) liabilities for indebtedness secured by mortgages,
deeds of trust, chattel mortgages, security interests
or other liens on or affecting any Assets, if any;
provided, that the assumption of any liability pursuant
to this paragraph shall be limited to the market value
of the Assets securing such liability as determined by
the Receiver;
18
(c) overdrafts, debit balances, service charges,
reclamations, and adjustments to accounts with the
Federal Reserve Banks as reflected on the books and
records of any such Federal Reserve Bank within ninety
(90) days after Bank Closing, if any;
(d) ad valorem taxes applicable to any Asset, if any;
provided, that the assumption of any ad valorem taxes
pursuant to this paragraph shall be limited to an
amount equal to the market value of the Asset to which
such taxes apply as determined by the Receiver;
(e) liabilities, if any, for federal funds purchased,
repurchase agreements and overdrafts in accounts
maintained with other depository institutions
(including any accrued and unpaid interest thereon
computed to and including Bank Closing); provided, that
the assumption of any liability pursuant to this
paragraph shall be limited to the market value of the
Assets securing such liability as determined by the
Receiver;
(f) United States Treasury tax and loan note option
accounts, if any;
(g) liabilities for any acceptance or commercial letter of
credit (other than "standby letters of credit" as
defined in 12 C.F.R. Section 337.2(a)); provided, that
the assumption of any liability pursuant to this
paragraph shall be limited to the market value of the
Assets securing such liability as determined by the
Receiver;
(h) duties and obligations assumed pursuant to this
Agreement including without limitation those relating
to the Failed Bank's credit card business, overdraft
protection plans, safe deposit business, safekeeping
business or trust business, if any;
(i) liabilities, if any, for amounts owed to any Acquired
Subsidiary; and
(j) duties and obligations under any contract pursuant to
which the Failed Bank provides mortgage servicing for
others, or mortgage servicing is provided to the Failed
Bank by others.
Schedule 2.1 attached hereto and incorporated herein sets
forth certain categories of Liabilities Assumed and the aggregate
Book Value of the Liabilities Assumed in such categories. Such
schedule is based upon the best information available to the
Receiver and may be adjusted as provided in Article VIII.
2.2 Interest on Deposit Liabilities. The Assuming Bank
agrees that, from and after Bank Closing, it will accrue and pay
interest on Deposit liabilities assumed pursuant to Section 2.1
at a rate(s) is shall determine; provided, that for
19
nontransaction Deposit liabilities such rate(s) shall not be less
than the lowest rate offered by the Assuming Bank to its
depositors for nontransaction deposit accounts.
The Assuming Bank shall permit each such depositor to
withdraw, without penalty for early withdrawal, all or any
portion of such depositor's Deposit, whether or not the Assuming
Bank elects to pay interest in accordance with any deposit
agreement formerly existing between the Failed Bank and such
depositor; and further provided, that if such Deposit has been
pledged to secure an obligation of the depositor to the Failed
Bank, any withdrawal thereof shall be subject to the terms of the
agreement governing such pledge. The Assuming Bank shall give
notice to such depositors as provided in Section 5.3 of the
rate(s) of interest which it has determined to pay and of such
withdrawal rights.
2.3 Unclaimed Deposits. If, within eighteen (18) months
after Bank Closing, any depositor of the Failed Bank does not
claim or arrange to continue such depositor's Deposit assumed
pursuant to Section 2.1 at the Assuming Bank, the Assuming Bank
shall, within fifteen (15) Business Days after the end of such
eighteen (18)-month period, (i) refund to the Corporation the
full amount of each such Deposit (without reduction for service
charges), (ii) provide to the Corporation a schedule of all such
refunded Deposits in such form as may be prescribed by the
Corporation, and (iii) assign, transfer, convey and deliver to
the Receiver all right, title and interest of the Assuming Bank
in and to Records previously transferred to the Assuming Bank and
other records generated or maintained by the Assuming Bank
pertaining to such Deposits. During such eighteen (18)-month
period, at the request of the Corporation, the Assuming Bank
promptly shall provide to the Corporation schedules of unclaimed
deposits in such form as may be prescribed by the Corporation.
2.4 Employee Benefit Plans. Except as provided in Section
4.12, the Assuming Bank shall have no liabilities, obligations or
responsibilities under the Failed Bank's health care, bonus,
vacation, pension, profit sharing or stock purchase plans or
similar plans, if any, unless the Receiver and the Assuming Bank
agree otherwise subsequent to the date of this Agreement.
2.5 Option to Assume Shared-Loss Loan Commitments. The
Receiver hereby grants the Assuming Bank an exclusive option for
the period of thirty (30) days, commencing the day after Bank
Closing, to assume any or all of the Shared-Loss Loan Commitments
at the respective Book Values thereof. To exercise such option,
the Assuming Bank must, within such thirty-day period, (i) affirm
in writing to the Person to whom such Shared-Loss Loan Commitment
was made that the Assuming Bank will unconditionally honor such
Shared-Loss Loan Commitment notwithstanding that the Assuming
Bank is not required to do so pursuant to the terms of this
Agreement, and (ii) certify to the Receiver that it has delivered
such affirmation to such Person.
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ARTICLE III
PURCHASE OF ASSETS
3.1 Assets Purchased by Assuming Bank. Subject to Sections
3.5 and 3.6, the Assuming Bank hereby purchases from the
Receiver, and the Receiver hereby sells, assigns, transfers,
conveys, and delivers to the Assuming Bank, all right, title, and
interest of the Receiver in and to all of the following:
(a) cash and receivables from depository institutions,
including cash items in the process of collection, plus
any accrued interest thereon computed to and including
Bank Closing;
(b) securities (other than the capital stock of
Subsidiaries of the Failed Bank and those securities
referred to in Section 3.5(k), if any), plus any
accrued interest thereon computed to and including Bank
Closing;
(c) federal funds sold and repurchase agreements, if any,
including any accrued interest thereon computed to and
including Bank Closing;
(d) New Loans that are not New Shared-Loss Loans and which
are not Adversely Classified as of Bank Closing listed
on Schedule 3.1(d);
(e) Loans fully secured by Assumed Deposits and listed on
Schedule 3.1(e), if any (including any such Loan that the Failed
Bank charged-off in whole or in part during the period from the
date of the Information Package to and including Bank Closing);
(ee)
(i) Loans listed on Schedules 3.1(ee)(i)(150), (300)
and (400);
(ii) Other Real Estate listed on Schedule 3.1(ee)(ii)
(Other Real Estate Purchased);
(iii) rights, if any, with respect to Shared-Loss
Loan Commitments that are ultimately assumed by
the Assuming Bank pursuant to Section 2.5;
(iv) all Loans (not otherwise purchased pursuant to
Section 3.1(e) above or pursuant to any asset sale
agreement with the Assuming Bank or any other
party) that have been fully charged-off
(including, without limitation, Loans that have
been charged-off to only a nominal Book Value
amount) by the Failed Bank prior to Bank Closing,
including, without limitation, Loans, or the
residual rights from any such Loans, that, as of
Bank Closing, were reflected on the books and
records of the Failed Bank as judgements or
deficiencies; and
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(v) all New Shared-Loss Loans (together with Accrued
Interest on such Loans computed to and including
Bank Closing);
(f) credit card business, if any, including all outstanding
extensions of credit, subject to Section 4.2;
(g) Safe Deposit Boxes and related business, safekeeping
business and trust business, if any, subject to Section
4.3, 4.4 or 4.5, respectively;
(h) Records and other documents as provided in Section 6.1;
(i) capital stock of the Subsidiaries of the Failed Bank
listed on Schedule 3.1(i), if any (the "Acquired
Subsidiaries");
(j) amounts owed to the Failed Bank by any Acquired
Subsidiary;
(k) assets securing Deposits of public money, to the extent
not otherwise purchased hereunder;
(l) overdrafts of customers (including but not limited to
overdrafts made pursuant to an overdraft protection
plan or similar extensions of credit in connection with
a deposit account); and
(m) rights of the Failed Bank to provide mortgage servicing
for others and to have mortgage servicing provided to
the Failed Bank by others and related contracts.
Schedule 3.1 attached hereto and incorporated herein sets forth
certain categories of Assets. Such schedule(s) is based upon the
best information available to the Receiver and may be adjusted as
provided in Article VIII. Assets are purchased hereunder by the
Assuming Bank subject to all liabilities for indebtedness
collateralized by Liens affecting such Assets to the extent
provided in Section 2.1.
3.2 Asset Purchase Price.
(a) All Assets and assets of the Failed Bank subject to an
option to purchase by the Assuming Bank shall be purchased for
the amount, or the amount resulting from the method specified for
determining the amount, as specified on Schedule 3.2, except as
otherwise may be provided herein. Any Asset, asset of the Failed
Bank subject to an option to purchase or other asset purchased
for which no purchase price is specified on Schedule 3.2 or
otherwise herein shall be purchased at its Fair Market Value.
(b) The purchase price for securities (other than the
capital stock of any Acquired Subsidiary) purchased under Section
3.1 by the Assuming Bank shall be the market value thereof as of
Bank Closing, which market value shall be (i) the quotation for
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the closing price of each such security effective on Bank Closing
as published in The Wall Street Journal; (ii) provided, that if
such closing price is not available for any such security, the
market value thereof shall be determined by taking the average of
the quotations for asked and bid prices for each such security
effective on Bank Closing as published in The Wall Street
Journal; and (iii) further provided, that if the closing price
and asked and bid prices are not published in The Wall Street
Journal, the market value of each such security shall be
determined by taking the average of the quotations for asked and
bid prices for each such security as quoted by the National
Association of Securities Dealers (exclusive of any brokerage
commissions) or if unavailable from such source, then from three
(3) independent brokers mutually acceptable to the Receiver and
the Assuming Bank, in either case as in effect on Bank Closing.
The value of such securities shall be calculated within sixty
(60) days after Bank Closing. Any costs associated with such
valuation shall be shared equally by the Receiver and the
Assuming Bank.
3.3 Manner of Conveyance; Limited Warranty; Nonrecourse;
Etc. THE CONVEYANCE OF ALL ASSETS, INCLUDING REAL AND PERSONAL
PROPERTY INTERESTS, PURCHASED BY THE ASSUMING BANK UNDER THIS
AGREEMENT SHALL BE MADE, AS NECESSARY, BY RECEIVER'S DEED OR
RECEIVER'S BILL OF SALE, "AS IS", "WHERE IS", WITHOUT RECOURSE
AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
WITHOUT ANY WARRANTIES WHATSOEVER WITH RESPECT TO SUCH ASSETS,
EXPRESS OR IMPLIED, WITH RESPECT TO TITLE, ENFORCEABILITY,
COLLECTIBILITY, DOCUMENTATION OR FREEDOM FROM LIENS OR
ENCUMBRANCES (IN WHOLE OR IN PART), OR ANY OTHER MATTERS.
3.4 Puts of Assets to the Receiver.
(a) Puts Within 14 and At 30 Days After Bank Closing.
During the fourteen (14)-day period following Bank Closing and
only during such period, in accordance with this Section 3.4, the
Assuming Bank shall be entitled to require the Receiver to
purchase any New Loan that is not a New Shared-Loss Loan that was
transferred to the Assuming Bank pursuant to Section 3.1(d), and
at the end of the thirty (30)-day period following Bank Closing
and at that time only, in accordance with this Section 3.4, the
Assuming Bank shall be entitled to require the Receiver to
purchase any remaining overdraft transferred to the Assuming Bank
pursuant to 3.1(l) which both was made after the "as of" date of
the Information Package and was not made pursuant to an overdraft
protection plan or similar extension of credit. Notwithstanding
the foregoing, the Assuming Bank shall not have the right to
require the Receiver to purchase any Loan if (i) the Obligor with
respect to such Loan is an Acquired Subsidiary, or (ii) the
Assuming Bank has:
(A) made any advance in accordance with the terms of a
Commitment or otherwise with respect to such Loan;
(B) taken any action that increased the amount of a
Related Liability with respect to such Loan over
the amount of such liability immediately prior to
the time of such action;
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(C) created or permitted to be created any Lien on
such Loan which secures indebtedness for money
borrowed or which constitutes a conditional sales
agreement, capital lease or other title retention
agreement;
(D) entered into, agreed to make, grant or permit, or
made, granted or permitted any modification or
amendment to, any waiver or extension with respect
to, or any renewal, refinancing or refunding of,
such Loan or related Credit Documents; or
(E) sold, assigned or transferred all or a portion of
such Loan to a third party (whether with or
without recourse).
The Assuming Bank shall transfer all such Loans to the Receiver
without recourse, and shall indemnify the Receiver against any
and all claims of any Person claiming by, through or under the
Assuming Bank with respect to any such Loan, as provided in
Section 12.4.
(b) Puts Prior to the Settlement Date. During the period
from Bank Closing to and including the Business Day immediately
preceding the Settlement Date, the Assuming Bank shall be
entitled to require the Receiver to purchase any Asset which the
Assuming Bank can establish is evidenced by forged or stolen
instruments as of Bank Closing; provided, that, the Assuming Bank
shall not have the right to require the Receiver to purchase any
such Asset with respect to which the Assuming Bank has taken any
action referred to in Section 3.4(a)(ii) with respect to such
Asset. The Assuming Bank shall transfer all such Assets to the
Receiver without recourse, and shall indemnify the Receiver
against any and all claims of any Person claiming by, through or
under the Assuming Bank with respect to any such Asset, as
provided in Section 12.4.
(c) Notices to the Receiver. In the event that the Assuming
Bank elects to require the Receiver to purchase one or more
Assets, the Assuming Bank shall deliver to the Receiver a notice
(a "Put Notice") which shall include:
(i) a list of all Assets that the Assuming Bank
requires the Receiver to purchase;
(ii) a list of all Related Liabilities with respect to
the Assets identified pursuant to (i) above; and
(iii) a statement of the estimated Repurchase Price of
each Asset identified pursuant to (i) above as of the applicable
Put Date.
Such notice shall be in the form prescribed by the Receiver or
such other form to which the Receiver shall consent. As provided
in Section 9.6, the Assuming Bank shall deliver to the Receiver
such documents, Credit Files and such additional information
relating to the subject matter of the Put Notice as the Receiver
may request and shall provide to the Receiver full access to all
other relevant books and records.
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(d) Purchase by Receiver. The Receiver shall purchase Loans
that are specified in the Put Notice and shall assume Related
Liabilities with respect to such Loans, and the transfer of such
Loans and Related Liabilities shall be effective as of a date
determined by the Receiver, which date shall not be later than
thirty (30) days after receipt by the Receiver of the Credit
Files with respect to such Loans (the "Put Date").
(e) Purchase Price and Payment Date. Each Loan purchased by
the Receiver pursuant to this Section 3.4 shall be purchased at a
price equal to the Repurchase Price of such Loan less the Related
Liability Amount applicable to such Loan, in each case determined
as of the applicable Put Date. If the difference between such
Repurchase Price and such Related Liability Amount is positive,
then the Receiver shall pay to the Assuming Bank the amount of
such difference; if the difference between such amounts is
negative, then the Assuming Bank shall pay to the Receiver the
amount of such difference. The Assuming Bank or the Receiver, as
the case may be, shall pay the purchase price determined pursuant
to this Section 3.4(e) not later than the twentieth (20th)
Business Day following the applicable Put Date, together with
interest on such amount at the Settlement Interest Rate for the
period from and including such Put Date to and including the day
preceding the date upon which payment is made.
(f) Servicing. The Assuming Bank shall administer and
manage any Asset subject to purchase by the Receiver in
accordance with usual and prudent banking standards and business
practices until such time as such Asset is purchased by the
Receiver.
(g) Reversals. In the event that the Receiver purchases an
Asset (and assumes the Related Liability) that it is not required
to purchase pursuant to this Section 3.4, the Assuming Bank shall
repurchase such Asset (and assume such Related Liability) from
the Receiver at a price computed so as to achieve the same
economic result as would apply if the Receiver had never
purchased such Asset pursuant to this Section 3.4.
3.5 Assets Not Purchased by Assuming Bank. The Assuming
Bank does not purchase or acquire, or (except as otherwise
expressly provided in this Agreement) obtain an option to
purchase or acquire under this Agreement:
(a) any financial institution bonds, banker's blanket
bonds, or public liability, fire, or extended coverage insurance
policy or any other insurance policy of the Failed Bank, or
premium refund, unearned premium derived from cancellation, or
any proceeds payable with respect to any of the foregoing;
(b) any interest, right, action, claim, or judgment against
(i) any officer, director, employee, accountant, attorney, or any
other Person employed or retained by the Failed Bank or any
Subsidiary of the Failed Bank on or prior to Bank Closing arising
out of any act or omission of such Person in such capacity, (ii)
any underwriter of financial institution bonds, banker's blanket
bonds or any other insurance policy of the Failed Bank, (iii) any
shareholder or holding company of the Failed Bank, or (iv) any
other Person whose action or inaction may be related to any loss
(exclusive of any loss resulting from such Person's failure to
pay on a Loan made by the Failed Bank) incurred by the Failed
Bank; provided, that for the purposes hereof, the acts, omissions
24
or other events giving rise to any such claim shall have occurred
on or before Bank Closing, regardless of when any such claim is
discovered and regardless of whether any such claim is made with
respect to a financial institution bond, banker's blanket bond,
or any other insurance policy of the Failed Bank in force as of
Bank Closing;
(c) prepaid regulatory assessments of the Failed Bank, if
any;
(d) legal or equitable interests in tax receivables of the
Failed Bank, if any, including any claims arising as a result of
the Failed Bank having entered into any agreement or otherwise
being joined with another Person with respect to the filing of
tax returns or the payment of taxes;
(e) Federal Reserve Bank and Federal Home Loan Bank stock,
if any;
(f) amounts reflected on the Accounting Records of the
Failed Bank as of Bank Closing as a general or specific loss
reserve or contingency account, if any;
(g) owned and leased Bank Premises and owned and leased
Furniture and Equipment and Fixtures and data processing
equipment (including hardware and software) located on Bank
Premises, if any; provided, that the Assuming Bank does obtain an
option under Section 4.6, Section 4.7 or Section 4.8, as the case
may be, with respect thereto;
(h) owned Bank Premises which the Receiver, in its
discretion, determines may contain environmentally hazardous
substances;
(i) any amounts owed to the Failed Bank by any Subsidiary
of the Failed Bank other than an Acquired Subsidiary;
(j) any "goodwill," as such term is defined in the
instructions to the report of condition prepared by banks
examined by the Corporation in accordance with 12 C.F.R. Section
304.4, and other intangibles;
(k) any security if, in the discretion of the Receiver, the
value of such security either cannot be determined or is
determined to be zero pursuant to Section 3.2(b), and any
security listed on Schedule 3.5(k), if any;
(l) any criminal restitution orders issued in favor of the
Failed Bank;
(m) Federal Home Loan Bank account; and
(n) any Loans identified as excluded assets on Schedule
3.5(n).
The Assuming Bank only acquires assets and rights as provided in
this Agreement. The foregoing shall not be construed to imply
that any particular asset or right listed otherwise would have
been sold or assigned or that any asset or right not listed is
sold or assigned.
26
3.6 Assets Essential to Receiver.
(a) The Receiver may refuse to sell to the Assuming Bank,
or the Assuming Bank agrees, at the request of the Receiver set
forth in a written notice to the Assuming Bank, to assign,
transfer, convey, and deliver to the Receiver all of the Assuming
Bank's right, title and interest in and to, any Asset or asset
essential to the Receiver as determined by the Receiver in its
discretion (together with all Credit Documents evidencing or
pertaining thereto), which may include any Asset or asset that
the Receiver determines to be:
(i) made to an officer, director, or other Person
engaging in the affairs of the Failed Bank, its Subsidiaries or
Affiliates or any related entities of any of the foregoing;
(ii) the subject of any investigation relating to any
claim with respect to any item described in Section 3.5(a) or
(b), or the subject of, or potentially the subject of, any legal
proceedings;
(iii) made to a Person who is an Obligor on a loan
owned by the Receiver or the Corporation in its corporate
capacity or its capacity as receiver of any institution;
(iv) secured by collateral which also secures any asset
owned by the
Receiver; or
(v) related to any asset of the Failed Bank not
purchased by the Assuming Bank under this Article III.
(b) Each such Asset or asset purchased by the Receiver
shall be purchased at a price equal to the Repurchase Price
thereof less the Related Liability Amount with respect to any
Related Liabilities related to such Asset or asset, in each case
determined as of the date of the notice provided by the Receiver
pursuant to Section 3.6(a). The Receiver shall pay the Assuming
Bank not later than the twentieth (20th) Business Day following
receipt of related Credit Documents and Credit Files together
with interest on such amount at the Settlement Interest Rate for
the period from and including the date of receipt of such
documents to and including the day preceding the day on which
payment is made. The Assuming Bank agrees to administer and
manage each such Asset or asset in accordance with usual and
prudent banking standards and business practices until each such
Loan is purchased by the Receiver. All transfers with respect to
Loans under this Section 3.6 shall be made as provided in Section
9.6. The Assuming Bank shall transfer all such Assets or assets
and Related Liabilities to the Receiver without recourse, and
shall indemnify the Receiver against any and all claims of any
Person claiming by, through or under the Assuming Bank with
respect to any such Asset or asset, as provided in Section 12.4.
ARTICLE IV
ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS
The Assuming Bank agrees with the Receiver and the
Corporation as follows:
27
4.1 Continuation of Banking Business. The Assuming Bank
agrees to provide full service banking in the trade area of the
Failed Bank commencing on the first banking business day
(including a Saturday) after Bank Closing. At the option of the
Assuming Bank, such banking services may be provided at any or
all of the Bank Premises, or at other premises within such trade
area.
4.2 Agreement with Respect to Credit Card Business. The
Assuming Bank agrees to honor and perform, from and after Bank
Closing, all duties and obligations with respect to the Failed
Bank's credit card business, and/or processing related to credit
cards, if any, and assumes all outstanding extensions of credit
with respect thereto. Fees related to the credit card business
collected prior to Bank Closing shall be for the benefit of the
Receiver and fees collected after Bank Closing shall be for the
benefit of the Assuming Bank.
4.3 Agreement with Respect to Safe Deposit Business. The
Assuming Bank assumes and agrees to discharge, from and after
Bank Closing, in the usual course of conducting a banking
business, the duties and obligations of the Failed Bank with
respect to all Safe Deposit Boxes, if any, of the Failed Bank and
to maintain all of the necessary facilities for the use of such
boxes by the renters thereof during the period for which such
boxes have been rented and the rent therefor paid to the Failed
Bank, subject to the provisions of the rental agreements between
the Failed Bank and the respective renters of such boxes;
provided, that the Assuming Bank may relocate the Safe Deposit
Boxes of the Failed Bank to any office of the Assuming Bank
located in the trade area of the Failed Bank. Fees related to the
safe deposit business collected prior to Bank Closing shall be
for the benefit of the Receiver and fees collected after Bank
Closing shall be for the benefit of the Assuming Bank.
4.4 Agreement with Respect to Safekeeping Business. The
Receiver transfers, conveys and delivers to the Assuming Bank and
the Assuming Bank accepts all securities and other items, if any,
held by the Failed Bank in safekeeping for its customers as of
Bank Closing. The Assuming Bank assumes and agrees to honor and
discharge, from and after Bank Closing, the duties and
obligations of the Failed Bank with respect to such securities
and items held in safekeeping. The Assuming Bank shall be
entitled to all rights and benefits heretofore accrued or
hereafter accruing with respect thereto; provided, that, fees
related to the safe keeping business collected prior to Bank
Closing shall be for the benefit of the Receiver and fees
collected after Bank Closing shall be for the benefit of the
Assuming Bank. The Assuming Bank shall provide to the Receiver
written verification of all assets held by the Failed Bank for
safekeeping within sixty (60) days after Bank Closing.
4.5 Agreement with Respect to Trust Business.
(a) The Assuming Bank shall, without further transfer,
substitution, act or deed, to the full extent permitted by law,
succeed to the rights, obligations, properties, assets,
investments, deposits, agreements, and trusts of the Failed Bank
under trusts, executorships, administrations, guardianships, and
agencies, and other fiduciary or representative capacities, all
to the same extent as though the Assuming Bank had assumed the
28
same from the Failed Bank prior to Bank Closing; provided, that
any liability based on the misfeasance, malfeasance or
nonfeasance of the Failed Bank, its directors, officers,
employees or agents with respect to the trust business is not
assumed hereunder. Fees related to the trust business collected
prior to Bank Closing shall be for the benefit of the Receiver
and fees collected after Bank Closing shall be for the benefit of
the Assuming Bank.
(b) The Assuming Bank shall, to the full extent permitted
by law, succeed to, and be entitled to take and execute, the
appointment to all executorships, trusteeships, guardianships and
other fiduciary or representative capacities to which the Failed
Bank is or may be named in wills, whenever probated, or to which
the Failed Bank is or may be named or appointed by any other
instrument.
(c) In the event additional proceedings of any kind are
necessary to accomplish the transfer of such trust business, the
Assuming Bank agrees that, at its own expense, it will take
whatever action is necessary to accomplish such transfer. The
Receiver agrees to use reasonable efforts to assist the Assuming
Bank in accomplishing such transfer.
(d) The Assuming Bank shall provide to the Receiver written
verification of the assets held in connection with the Failed
Bank's trust business within sixty (60) days after Bank Closing.
4.6 Agreement with Respect to Bank Premises.
(a) Option to Purchase. Subject to Section 3.5, the
Receiver hereby grants to the Assuming Bank an exclusive option
for the period of ninety (90) days commencing the day after Bank
Closing to purchase any or all owned Bank Premises. The Assuming
Bank shall give written notice to the Receiver within the option
period of its election to purchase or not to purchase any of the
owned Bank Premises. Any purchase of such premises shall be
effective as of the date of Bank Closing and such purchase shall
be consummated as soon as practicable thereafter, and in no event
later than the Settlement Date.
(b) Option to Lease. The Receiver hereby grants to the
Assuming Bank an exclusive option for the period of ninety (90)
days commencing the day after Bank Closing to cause the Receiver
to assign to the Assuming Bank any or all leases for leased Bank
Premises, if any, which have been continuously occupied by the
Assuming Bank from Bank Closing to the date it elects to accept
an assignment of the leases with respect thereto to the extent
such leases can be assigned; provided, that the exercise of this
option with respect to any lease must be as to all premises or
other property subject to the lease. If an assignment cannot be
made of any such leases, the Receiver may, in its discretion,
enter into subleases with the Assuming Bank containing the same
terms and conditions provided under such existing leases for such
leased Bank Premises or other property. The Assuming Bank shall
give notice to the Receiver within the option period of its
election to accept or not to accept an assignment of any or all
leases (or enter into subleases or new leases in lieu thereof).
The Assuming Bank agrees to assume all leases assigned (or enter
into subleases or new leases in lieu thereof) pursuant to this
Section 4.6.
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(c) Facilitation. The Receiver agrees to facilitate the
assumption, assignment or sublease of leases or the negotiation
of new leases by the Assuming Bank; provided, that neither the
Receiver nor the Corporation shall be obligated to engage in
litigation, make payments to the Assuming Bank or to any third
party in connection with facilitating any such assumption,
assignment, sublease or negotiation or commit to any other
obligations to third parties.
(d) Occupancy. The Assuming Bank shall give the Receiver
fifteen (15) days' prior written notice of its intention to
vacate prior to vacating any leased Bank Premises with respect to
which the Assuming Bank has not exercised the option provided in
Section 4.6(b). Any such notice shall be deemed to terminate the
Assuming Bank's option with respect to such leased Bank Premises.
(e) Occupancy Costs.
(i) The Assuming Bank agrees to pay to the Receiver, or
to appropriate third parties at the direction of the Receiver,
during and for the period of any occupancy by it of (x) owned
Bank Premises the market rental value and all operating costs,
and (y) leased Bank Premises, all operating costs with respect
thereto and to comply with all relevant terms of applicable
leases entered into by the Failed Bank, including without
limitation the timely payment of all rent. Operating costs
include, without limitation all taxes, fees, charges, utilities,
insurance and assessments, to the extent not included in the
rental value or rent. If the Assuming Bank elects to purchase any
owned Bank Premises in accordance with Section 4.6(a), the amount
of any rent paid (and taxes paid to the Receiver which have not
been paid to the taxing authority and for which the Assuming Bank
assumes liability) by the Assuming Bank with respect thereto
shall be applied as an offset against the purchase price thereof.
(ii) The Assuming Bank agrees during the period of
occupancy by it of owned or leased Bank Premises, to pay to the
Receiver rent for the use of all owned or leased Furniture and
Equipment and all owned or leased Fixtures located on such Bank
Premises for the period of such occupancy. Rent for such property
owned by the Failed Bank shall be the market rental value
thereof, as determined by the Receiver within sixty (60) days
after Bank Closing. Rent for such leased property shall be an
amount equal to any and all rent and other amounts which the
Receiver incurs or accrues as an obligation or is obligated to
pay for such period of occupancy pursuant to all leases and
contracts with respect to such property. If the Assuming Bank
purchases any owned Furniture and Equipment or owned Fixtures in
accordance with Section 4.6(f) or 4.6(h), the amount of any rents
paid by the Assuming Bank with respect thereto shall be applied
as an offset against the purchase price thereof.
(f) Certain Requirements as to Furniture, Equipment and
Fixtures. If the Assuming Bank purchases owned Bank Premises or
accepts an assignment of the lease (or enters into a sublease or
a new lease in lieu thereof) for leased Bank Premises as provided
in Section 4.6(a) or 4.6(b), or if the Assuming Bank does not
exercise such option but within twelve (12) months following Bank
Closing obtains the right to occupy such premises (whether by
assignment, lease, sublease, purchase or otherwise), other than
in accordance with Section 4.6(a) or (b), the Assuming Bank shall
(i) effective as of the date of Bank Closing, purchase from the
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Receiver all Furniture and Equipment and Fixtures owned by the
Failed Bank and located thereon as of Bank Closing, (ii) accept
an assignment or a sublease of the leases or negotiate new leases
for all Furniture and Equipment and Fixtures leased by the Failed
Bank and located thereon, and (iii) if applicable, accept an
assignment or a sublease of any ground lease or negotiate a new
ground lease with respect to any land on which such Bank Premises
are located; provided, that the Receiver shall not have disposed
of such Furniture and Equipment and Fixtures or repudiated the
leases specified in clause (ii) or (iii).
(g) Vacating Premises.
(i) If the Assuming Bank elects not to purchase any
owned Bank Premises, the notice of such election in accordance
with Section 4.6(a) shall specify the date upon which the
Assuming Bank's occupancy of such premises shall terminate, which
date shall not be later than ninety (90) days after the date of
the Assuming Bank's notice not to exercise such option. The
Assuming Bank promptly shall relinquish and release to the
Receiver such premises and the Furniture and Equipment and
Fixtures located thereon in the same condition as at Bank
Closing, normal wear and tear excepted. By occupying any such
premises after the expiration of such ninety (90)-day period, the
Assuming Bank shall, at the Receiver's option, (x) be deemed to
have agreed to purchase such Bank Premises, and to assume all
leases, obligations and liabilities with respect to leased
Furniture and Equipment and leased Fixtures located thereon and
any ground lease with respect to the land on which such premises
are located, and (y) be required to purchase all Furniture and
Equipment and Fixtures owned by the Failed Bank and located on
such premises as of Bank Closing.
(ii) If the Assuming Bank elects not to accept an
assignment of the lease or sublease any leased Bank Premises, the
notice of such election in accordance with Section 4.6(b) shall
specify the date upon which the Assuming Bank's occupancy of such
leased Bank Premises shall terminate, which date shall not be
later than the date which is one hundred eighty (180) days after
Bank Closing. Upon vacating such premises, the Assuming Bank
shall relinquish and release to the Receiver such premises and
the Fixtures and the Furniture and Equipment located thereon in
the same condition as at Bank Closing, normal wear and tear
excepted. By failing to provide notice of its intention to vacate
such premises prior to the expiration of the option period
specified in Section 4.6(b), or by occupying such premises after
the one hundred eighty (180)-day period specified above in this
paragraph (ii), the Assuming Bank shall, at the Receiver's
option, (x) be deemed to have assumed all leases, obligations and
liabilities with respect to such premises (including any ground
lease with respect to the land on which premises are located),
and leased Furniture and Equipment and leased Fixtures located
thereon in accordance with this Section 4.6 (unless the Receiver
previously repudiated any such lease), and (y) be required to
purchase all Furniture and Equipment and Fixtures owned by the
Failed Bank and located on such premises as of Bank Closing.
(h) Furniture and Equipment and Certain Other Equipment.
The Receiver hereby grants to the Assuming Bank an option to
purchase, effective as of the date of Bank Closing, all Furniture
and Equipment or any telecommunications, data processing
equipment (including hardware and software) and check processing
and similar operating equipment owned by the Failed Bank and
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located at any owned or leased Bank Premises that the Assuming
Bank elects to vacate or which it could have, but did not occupy,
pursuant to this Section 4.6; provided, that, the Assuming Bank
shall give the Receiver notice of its election to purchase such
property at the time it gives notice of its intention to vacate
such Bank Premises or within ten (10) days after Bank Closing for
Bank Premises it could have, but did not, occupy.
4.7 Agreement with Respect to Leased Data Processing Equipment.
(a) The Receiver hereby grants to the Assuming Bank an
exclusive option for the period of ninety (90) days commencing
the day after Bank Closing to accept an assignment from the
Receiver of any or all Data Processing Leases to the extent that
such Data Processing Leases can be assigned.
(b) The Assuming Bank shall (i) give written notice to the
Receiver within the option period specified in Section 4.7(a) of
its intent to accept an assignment or sublease of any or all Data
Processing Leases and promptly accept an assignment or sublease
of such Data Processing Leases, and (ii) give written notice to
the appropriate lessor(s) that it has accepted an assignment or
sublease of any such Data Processing Leases.
(c) The Receiver agrees to facilitate the assignment or
sublease of Data Processing Leases or the negotiation of new
leases or license agreements by the Assuming Bank; provided, that
neither the Receiver nor the Corporation shall be obligated to
engage in litigation or make payments to the Assuming Bank or to
any third party in connection with facilitating any such
assumption, assignment, sublease or negotiation.
(d) The Assuming Bank agrees, during its period of use of
any property subject to a Data Processing Lease, to pay to the
Receiver or to appropriate third parties at the direction of the
Receiver all operating costs with respect thereto and to comply
with all relevant terms of the applicable Data Processing Leases
entered into by the Failed Bank, including without limitation the
timely payment of all rent, taxes, fees, charges, utilities,
insurance and assessments.
(e) The Assuming Bank shall, not later than fifty (50) days
after giving the notice provided in Section 4.7(b), (i)
relinquish and release to the Receiver all property subject to
the relevant Data Processing Lease, in the same condition as at
Bank Closing, normal wear and tear excepted, or (ii) accept an
assignment or a sublease thereof or negotiate a new lease or
license agreement under this Section 4.7.
4.8 Agreement with Respect to Certain Existing Agreements.
(a) Subject to the provisions of Section 4.8(b), with
respect to agreements existing as of Bank Closing which provide
for the rendering of services by or to the Failed Bank, within
thirty (30) days after Bank Closing, the Assuming Bank shall give
the Receiver written notice specifying whether it elects to
assume or not to assume each such agreement. Except as may be
otherwise provided in this Article IV, the Assuming Bank agrees
to comply with the terms of each such agreement for a period
commencing on the day after Bank Closing and ending on: (i) in
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the case of an agreement that provides for the rendering of
services by the Failed Bank, the date which is ninety (90) days
after Bank Closing, and (ii) in the case of an agreement that
provides for the rendering of services to the Failed Bank, the
date which is thirty (30) days after the Assuming Bank has given
notice to the Receiver of its election not to assume such
agreement; provided, that the Receiver can reasonably make such
service agreements available to the Assuming Bank. The Assuming
Bank shall be deemed by the Receiver to have assumed agreements
for which no notification is timely given. The Receiver agrees to
assign, transfer, convey, and deliver to the Assuming Bank all
right, title and interest of the Receiver, if any, in and to
agreements the Assuming Bank assumes hereunder. In the event the
Assuming Bank elects not to accept an assignment of any lease (or
sublease) or negotiate a new lease for leased Bank Premises under
Section 4.6 and does not otherwise occupy such premises, the
provisions of this Section 4.8(a) shall not apply to service
agreements related to such premises. The Assuming Bank agrees,
during the period it has the use or benefit of any such
agreement, promptly to pay to the Receiver or to appropriate
third parties at the direction of the Receiver all operating
costs with respect thereto and to comply with all relevant terms
of such agreement.
(b) The provisions of Section 4.8(a) shall not apply to (i)
agreements pursuant to which the Failed Bank provides mortgage
servicing for others or mortgage servicing is provided to the
Failed Bank by others, (ii) agreements that are subject to
Sections 4.1 through 4.7 and any insurance policy or bond
referred to in Section 3.5(a), and (iii) consulting, management
or employment agreements, if any, between the Failed Bank and its
employees or other Persons. The Assuming Bank does not assume any
liabilities under any of the foregoing agreements pursuant to
this Agreement.
4.9 Informational Tax Reporting. The Assuming Bank agrees
to perform all obligations of the Failed Bank with respect to
Federal and State income tax informational reporting related to
(i) the Assets and the Liabilities Assumed, (ii) deposit accounts
that were closed and loans that were paid off or collateral
obtained with respect thereto prior to Bank Closing, (iii)
miscellaneous payments made to vendors of the Failed Bank, and
(iv) any other asset or liability of the Failed Bank, including,
without limitation, loans not purchased and Deposits not assumed
by the Assuming Bank, as may be required by the Receiver.
4.10 Insurance. The Assuming Bank agrees to obtain insurance
coverage effective from and after Bank Closing, including public
liability, fire and extended coverage insurance acceptable to the
Receiver with respect to owned or leased Bank Premises that it
occupies, and all owned or leased Furniture and Equipment and
Fixtures and leased data processing equipment (including hardware
and software) located thereon, in the event such insurance
coverage is not already in force and effect with respect to the
Assuming Bank as the insured as of Bank Closing. All such
insurance shall, where appropriate (as determined by the
Receiver), name the Receiver as an additional insured.
4.11 Office Space for Receiver and Corporation. For the
period commencing on the day following Bank Closing and ending on
the one hundred eightieth (180th) day thereafter, the Assuming
Bank agrees to provide to the Receiver and the Corporation,
without charge, adequate and suitable office space (including
parking facilities and vault space), furniture, equipment
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(including photocopying and telecopying machines) and utilities
(including local telephone service) at the Bank Premises occupied
by the Assuming Bank for their use in the discharge of their
respective functions with respect to the Failed Bank. In the
event the Receiver and the Corporation determine that the space
provided is inadequate or unsuitable, the Receiver and the
Corporation may relocate to other quarters having adequate and
suitable space and the costs of relocation and any rental and
utility costs for the balance of the period of occupancy by the
Receiver and the Corporation shall be borne by the Assuming Bank.
4.12 Agreement with Respect to Continuation of Group Health
Plan Coverage for Former Employees of the Failed Bank.
(a) The Assuming Bank agrees to assist the Receiver, as
provided in this Section 4.12, in offering individuals who were
employees or former employees of the Failed Bank, or any of its
Subsidiaries, and who, immediately prior to Bank Closing, were
receiving, or were eligible to receive, health insurance coverage
or health insurance continuation coverage from the Failed Bank
("Eligible Individuals"), the opportunity to obtain health
insurance coverage in the Corporation's FIA Continuation Coverage
Plan which provides for health insurance continuation coverage to
such Eligible Individuals who are qualified beneficiaries of the
Failed Bank as defined in Section 607 of the Employee Retirement
Income Security Act of 1974, as amended (respectively, "qualified
beneficiaries" and "ERISA"). The Assuming Bank shall consult with
the Receiver and not later than five (5) Business Days after Bank
Closing shall provide written notice to the Receiver of the
number (if available), identity (if available) and addresses (if
available) of the Eligible Individuals who are qualified
beneficiaries of the Failed Bank and for whom a "qualifying
event" (as defined in Section 603 of ERISA) has occurred and with
respect to whom the Failed Bank's obligations under Part 6 of
Subtitle B of Title I of ERISA have not been satisfied in full,
and such other information as the Receiver may reasonably
require. The Receiver shall cooperate with the Assuming Bank in
order to permit it to prepare such notice and shall provide to
the Assuming Bank such data in its possession as may be
reasonably required for purposes of preparing such notice.
(b) The Assuming Bank shall take such further action to
assist the Receiver in offering the Eligible Individuals who are
qualified beneficiaries of the Failed Bank the opportunity to
obtain health insurance coverage in the Corporation's FIA
Continuation Coverage Plan as the Receiver may direct. All
expenses incurred and paid by the Assuming Bank (i) in connection
with the obligations of the Assuming Bank under this Section
4.12, and (ii) in providing health insurance continuation
coverage to any Eligible Individuals who are hired by the
Assuming Bank and such employees' qualified beneficiaries shall
be borne by the Assuming Bank.
(c) This Section 4.12 is for the sole and exclusive benefit
of the parties to this Agreement, and for the benefit of no other
Person (including any former employee of the Failed Bank or any
Subsidiary thereof or qualified beneficiary of such former
employee). Nothing in this Section 4.12 is intended by the
parties, or shall be construed, to give any Person (including any
former employee of the Failed Bank or any Subsidiary thereof or
qualified beneficiary of such former employee) other than the
34
Corporation, the Receiver and the Assuming Bank any legal or
equitable right, remedy or claim under or with respect to the
provisions of this Section.
4.13 Agreement with Respect to Interim Asset Servicing. At
any time after Bank Closing, the Receiver may establish on its
books an asset pool(s) and may transfer to such asset pool(s) (by
means of accounting entries on the books of the Receiver) all or
any assets and related liabilities of the Failed Bank which are
not acquired by the Assuming Bank, including, without limitation,
wholly unfunded Commitments and assets and related liabilities
which may be acquired, funded or originated by the Receiver
subsequent to Bank Closing. The Receiver may remove assets (and
related liabilities) from or add assets (and related liabilities)
to such pool(s) at any time in its discretion. At the option of
the Receiver, the Assuming Bank agrees to service, administer,
and collect such pool assets in accordance with and for the term
set forth in Exhibit 4.13 "Interim Asset Servicing Arrangement".
ARTICLE V
DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK
5.1 Payment of Checks, Drafts and Orders. Subject to
Section 9.5, the Assuming Bank agrees to pay all properly drawn
checks, drafts and withdrawal orders of depositors of the Failed
Bank presented for payment, whether drawn on the check or draft
forms provided by the Failed Bank or by the Assuming Bank, to the
extent that the Deposit balances to the credit of the respective
makers or drawers assumed by the Assuming Bank under this
Agreement are sufficient to permit the payment thereof, and in
all other respects to discharge, in the usual course of
conducting a banking business, the duties and obligations of the
Failed Bank with respect to the Deposit balances due and owing to
the depositors of the Failed Bank assumed by the Assuming Bank
under this Agreement.
5.2 Certain Agreements Related to Deposits. Subject to
Section 2.2, the Assuming Bank agrees to honor the terms and
conditions of any written escrow or mortgage servicing agreement
or other similar agreement relating to a Deposit liability
assumed by the Assuming Bank pursuant to this Agreement.
5.3 Notice to Depositors.
(a) Within seven (7) days after Bank Closing, the Assuming
Bank shall give (i) notice to depositors of the Failed Bank of
its assumption of the Deposit liabilities of the Failed Bank, and
(ii) any notice required under Section 2.2, by mailing to each
such depositor a notice with respect to such assumption and by
advertising in a newspaper of general circulation in the county
or counties in which the Failed Bank was located. The Assuming
Bank agrees that it will obtain prior approval of all such
notices and advertisements from counsel for the Receiver and that
such notices and advertisements shall not be mailed or published
until such approval is received.
(b) The Assuming Bank shall give notice by mail to
depositors of the Failed Bank concerning the procedures to claim
their deposits, which notice shall be provided to the Assuming
35
Bank by the Receiver or the Corporation. Such notice shall be
included with the notice to depositors to be mailed by the
Assuming Bank pursuant to Section 5.3(a). Notices required by
Sections 5.3(a) and (b) shall be mailed by the Assuming Bank not
later than thirty (30) days after Bank Closing.
(c) If the Assuming Bank proposes to charge fees different
from those charged by the Failed Bank before it establishes new
deposit account relationships with the depositors of the Failed
Bank, the Assuming Bank shall give notice by mail of such changed
fees to such depositors.
ARTICLE VI
RECORDS
6.1 Transfer of Records.
(a) In accordance with Section 3.1, the Receiver assigns,
transfers, conveys and delivers to the Assuming Bank the
following Records pertaining to the Deposit liabilities of the
Failed Bank assumed by the Assuming Bank under this Agreement,
except as provided in Section 6.4:
(i) signature cards, orders, contracts between the
Failed Bank and its depositors and Records of similar character;
(ii) passbooks of depositors held by the Failed Bank,
deposit slips, cancelled checks and withdrawal orders
representing charges to accounts of depositors;
and the following Records pertaining to the Assets:
(iii) records of deposit balances carried with other
banks, bankers or trust companies;
(iv) Loan and collateral records and Credit Files and
other documents;
(v) deeds, mortgages, abstracts, surveys, and other
instruments or records of title pertaining to real estate or real
estate mortgages;
(vi) signature cards, agreements and records
pertaining to Safe Deposit Boxes, if any; and
(vii) records pertaining to the credit card
business, trust business or safekeeping business of the Failed
Bank, if any.
(b) The Receiver, at its option, may assign and transfer to
the Assuming Bank by a single blanket assignment or otherwise, as
soon as practicable after Bank Closing, any other Records not
36
assigned and transferred to the Assuming Bank as provided in this
Agreement, including but not limited to loan disbursement checks,
general ledger tickets, official bank checks, proof transactions
(including proof tapes) and paid out loan files.
6.2 Delivery of Assigned Records. The Receiver shall
deliver to the Assuming Bank all Records described in (i) Section
6.1(a) as soon as practicable on or after the date of this
Agreement, and (ii) Section 6.1(b) as soon as practicable after
making any assignment described therein.
6.3 Preservation of Records. The Assuming Bank agrees that
it will preserve and maintain for the joint benefit of the
Receiver, the Corporation and the Assuming Bank, all Records of
which it has custody for such period as either the Receiver or
the Corporation in its discretion may require, until directed
otherwise, in writing, by the Receiver or Corporation. The
Assuming Bank shall have the primary responsibility to respond to
subpoenas, discovery requests, and other similar official
inquiries with respect to the Records of which it has custody.
6.4 Access to Records; Copies. The Assuming Bank agrees to
permit the Receiver and the Corporation access to all Records of
which the Assuming Bank has custody, and to use, inspect, make
extracts from or request copies of any such Records in the manner
and to the extent requested, and to duplicate, in the discretion
of the Receiver or the Corporation, any Record in the form of
microfilm or microfiche pertaining to Deposit account
relationships; provided, that in the event that the Failed Bank
maintained one or more duplicate copies of such microfilm or
microfiche Records, the Assuming Bank hereby assigns, transfers,
and conveys to the Corporation one such duplicate copy of each
such Record without cost to the Corporation, and agrees to
deliver to the Corporation all Records assigned and transferred
to the Corporation under this Article VI as soon as practicable
on or after the date of this Agreement. The party requesting a
copy of any Record shall bear the cost (based on standard
accepted industry charges to the extent applicable, as determined
by the Receiver) for providing such duplicate Records. A copy of
each Record requested shall be provided as soon as practicable by
the party having custody thereof.
ARTICLE VII
BID; INITIAL PAYMENT
The Assuming Bank has submitted to the Receiver a positive
bid of $2,463,666.00 for the Assets purchased and Liabilities
Assumed hereunder (the "Bid Amount"). On the Payment Date, the
Assuming Bank will pay to the Corporation, or the Corporation
will pay to the Assuming Bank, as the case may be, the Initial
Payment, together with interest on such amount (if the Payment
Date is not the day following the day of Bank Closing) from and
including the day following Bank Closing to and including the day
preceding the Payment Date at the Settlement Interest Rate.
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ARTICLE VIII
ADJUSTMENTS
8.1 Pro Forma Statement. It is understood that the
determination of the Initial Payment is based on the Receiver's
best estimate of the Liabilities Assumed and the Assets at Bank
Closing. The Receiver, as soon as practicable after Bank Closing,
in accordance with the best information then available, shall
provide to the Assuming Bank a pro forma statement reflecting any
adjustments of such liabilities and assets as may be necessary
and identifying all Shared-Loss Assets. Such pro forma statement
shall take into account, to the extent possible, (i) liabilities
and assets of a nature similar to those contemplated by Section
2.1 or Section 3.1, respectively, which at Bank Closing were
carried in the Failed Bank's suspense accounts, (ii) accruals as
of Bank Closing for all income related to the assets and business
of the Failed Bank acquired by the Assuming Bank hereunder,
whether or not such accruals were reflected on the Accounting
Records of the Failed Bank in the normal course of its
operations, and (iii) adjustments to determine the Book Value of
any investment in an Acquired Subsidiary and related accounts on
the "bank only" (unconsolidated) balance sheet of the Failed Bank
based on the equity method of accounting, whether or not the
Failed Bank used the equity method of accounting for investments
in subsidiaries, except that the resulting amount cannot be less
than the Acquired Subsidiary's recorded equity as of Bank Closing
as reflected on the Accounting Records of the Acquired
Subsidiary. Any Loan that is not a Shared-Loss Loan purchased by
the Assuming Bank pursuant to Section 3.1 which the Failed Bank
charged off during the period following the date of the
Information Package to Bank Closing shall be deemed not to be
charged off for the purposes of the pro forma statement, and the
purchase price shall be determined pursuant to Section 3.2.
8.2 Correction of Errors and Omissions; Other Liabilities.
(a) In the event any bookkeeping omissions or errors are
discovered in preparing any pro forma statement or in completing
the transfers and assumptions contemplated hereby, the parties
hereto agree to correct such errors and omissions, it being
understood that, as far as practicable, all adjustments will be
made consistent with the judgments, methods, policies or
accounting principles utilized by the Failed Bank in preparing
and maintaining Accounting Records, except that adjustments made
pursuant to this Section 8.2(a) are not intended to bring the
Accounting Records of the Failed Bank into accordance with
generally accepted accounting principles.
(b) If the Receiver discovers at any time subsequent to the
date of this Agreement that any claim exists against the Failed
Bank which is of such a nature that it would have been included
in the liabilities assumed under Article II had the existence of
such claim or the facts giving rise thereto been known as of Bank
Closing, the Receiver may, in its discretion, at any time,
require that such claim be assumed by the Assuming Bank in a
manner consistent with the intent of this Agreement. The Receiver
will make appropriate adjustments to the pro forma statement
provided by the Receiver to the Assuming Bank pursuant to Section
8.1 as may be necessary.
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8.3 Payments. The Receiver agrees to cause to be paid to
the Assuming Bank, or the Assuming Bank agrees to pay to the
Receiver, as the case may be, on the Settlement Date, a payment
in an amount which reflects net adjustments (including any costs,
expenses and fees associated with determinations of value as
provided in this Agreement) made pursuant to Section 8.1 or
Section 8.2, plus interest as provided in Section 8.4. The
Receiver and the Assuming Bank agree to effect on the Settlement
Date any further transfer of assets to or assumption of
liabilities or claims by the Assuming Bank as may be necessary in
accordance with Section 8.1 or Section 8.2.
8.4 Interest. Any amounts paid under Section 8.3 or Section
8.5, shall bear interest for the period from and including the
day following Bank Closing to and including the day preceding the
payment at the Settlement Interest Rate.
8.5 Subsequent Adjustments. In the event that the Assuming
Bank or the Receiver discovers any errors or omissions as
contemplated by Section 8.2 or any error with respect to the
payment made under Section 8.3 after the Settlement Date, the
Assuming Bank and the Receiver agree to promptly correct any such
errors or omissions, make any payments and effect any transfers
or assumptions as may be necessary to reflect any such correction
plus interest as provided in Section 8.4.
8.6 Shared-Loss Assets. In the event that any adjustment
pursuant to Section 8.1 or 8.2 is made with respect to any asset
with respect to which one or more Charge-Offs were taken into
account in the computation of any payment pursuant to Section 2.1
of Exhibit 13.14, then the amount of any interest payment thereon
pursuant to Section 8.4 shall be adjusted to put the Assuming
Bank and the Receiver in the same economic position as if the
Book Value of such asset as of Bank Closing had been the same as
the value of such asset as determined pursuant to Section 8.1 or
8.2.
ARTICLE IX
CONTINUING COOPERATION
9.1 General Matters. The parties hereto agree that they
will, in good faith and with their best efforts, cooperate with
each other to carry out the transactions contemplated by this
Agreement and to effect the purposes hereof.
9.2 Additional Title Documents. The Receiver, the
Corporation and the Assuming Bank each agree, at any time, and
from time to time, upon the request of any party hereto, to
execute and deliver such additional instruments and documents of
conveyance as shall be reasonably necessary to vest in the
appropriate party its full legal or equitable title in and to the
property transferred pursuant to this Agreement or to be
transferred in accordance herewith. The Assuming Bank shall
prepare such instruments and documents of conveyance (in form and
substance satisfactory to the Receiver) as shall be necessary to
vest title to the Assets in the Assuming Bank. The Assuming Bank
shall be responsible for recording such instruments and documents
of conveyance at its own expense.
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9.3 Claims and Suits.
(a) The Receiver shall have the right, in its discretion,
to (i) defend or settle any claim or suit against the Assuming
Bank with respect to which the Receiver has indemnified the
Assuming Bank in the same manner and to the same extent as
provided in Article XII, and (ii) defend or settle any claim or
suit against the Assuming Bank with respect to any Liability
Assumed, which claim or suit may result in a loss to the Receiver
arising out of or related to this Agreement, or which existed
against the Failed Bank on or before Bank Closing. The exercise
by the Receiver of any rights under this Section 9.3(a) shall not
release the Assuming Bank with respect to any of its obligations
under this Agreement.
(b) In the event any action at law or in equity shall be
instituted by any Person against the Receiver and the Corporation
as codefendants with respect to any asset of the Failed Bank
retained or acquired pursuant to this Agreement by the Receiver,
the Receiver agrees, at the request of the Corporation, to join
with the Corporation in a petition to remove the action to the
United States District Court for the proper district. The
Receiver agrees to institute, with or without joinder of the
Corporation as coplaintiff, any action with respect to any such
retained or acquired asset or any matter connected therewith
whenever notice requiring such action shall be given by the
Corporation to the Receiver.
9.4 Payment of Deposits. In the event any depositor does
not accept the obligation of the Assuming Bank to pay any Deposit
liability of the Failed Bank assumed by the Assuming Bank
pursuant to this Agreement and asserts a claim against the
Receiver for all or any portion of any such Deposit liability,
the Assuming Bank agrees on demand to provide to the Receiver
funds sufficient to pay such claim in an amount not in excess of
the Deposit liability reflected on the books of the Assuming Bank
at the time such claim is made. Upon payment by the Assuming Bank
to the Receiver of such amount, the Assuming Bank shall be
discharged from any further obligation under this Agreement to
pay to any such depositor the amount of such Deposit liability
paid to the Receiver.
9.5 Withheld Payments. At any time, the Receiver or the
Corporation may, in its discretion, determine that all or any
portion of any deposit balance assumed by the Assuming Bank
pursuant to this Agreement does not constitute a "Deposit" (or
otherwise, in its discretion, determine that it is the best
interest of the Receiver or Corporation to withhold all or any
portion of any deposit), and may direct the Assuming Bank to
withhold payment of all or any portion of any such deposit
balance. Upon such direction, the Assuming Bank agrees to hold
such deposit and not to make any payment of such deposit balance
to or on behalf of the depositor, or to itself, whether by way of
transfer, set-off, or otherwise. The Assuming Bank agrees to
maintain the "withheld payment" status of any such deposit
balance until directed in writing by the Receiver or the
Corporation as to its disposition. At the direction of the
Receiver or the Corporation, the Assuming Bank shall return all
or any portion of such deposit balance to the Receiver or the
Corporation, as appropriate, and thereupon the Assuming Bank
shall be discharged from any further liability to such depositor
with respect to such returned deposit balance. If such deposit
balance has been paid to the depositor prior to a demand for
return by the Corporation or the Receiver, and payment of such
40
deposit balance had not been previously withheld pursuant to this
Section, the Assuming Bank shall not be obligated to return such
deposit balance to the Receiver or the Corporation. The Assuming
Bank shall be obligated to reimburse the Corporation or the
Receiver, as the case may be, for the amount of any deposit
balance or portion thereof paid by the Assuming Bank in
contravention of any previous direction to withhold payment of
such deposit balance or return such deposit balance the payment
of which was withheld pursuant to this Section.
9.6 Proceedings with Respect to Certain Assets and Liabilities.
(a) In connection with any investigation, proceeding or
other matter with respect to any asset or liability of the Failed
Bank retained by the Receiver, or any asset of the Failed Bank
acquired by the Receiver pursuant to this Agreement, the Assuming
Bank shall cooperate to the extent reasonably required by the
Receiver.
(b) In addition to its obligations under Section 6.4, the
Assuming Bank shall provide representatives of the Receiver
access at reasonable times and locations without other limitation
or qualification to (i) its directors, officers, employees and
agents and those of the Acquired Subsidiaries, and (ii) its books
and records, the books and records of the Acquired Subsidiaries
and all Credit Files, and copies thereof. Copies of books,
records and Credit Files shall be provided by the Assuming Bank
as requested by the Receiver and the costs of duplication thereof
shall be borne by the Receiver.
(c) Not later than ten (10) days after the Put Notice
pursuant to Section 3.4 or the date of the notice of transfer of
any Loan by the Assuming Bank to the Receiver pursuant to Section
3.6, the Assuming Bank shall deliver to the Receiver such
documents with respect to such Loan as the Receiver may request,
including without limitation the following: (i) all related
Credit Documents (other than certificates, notices and other
ancillary documents), (ii) a certificate setting forth the
principal amount on the date of the transfer and the amount of
interest, fees and other charges then accrued and unpaid thereon,
and any restrictions on transfer to which any such Loan is
subject, and (iii) all Credit Files, and all documents,
microfiche, microfilm and computer records (including but not
limited to magnetic tape, disc storage, card forms and printed
copy) maintained by, owned by, or in the possession of the
Assuming Bank or any Affiliate of the Assuming Bank relating to
the transferred Loan.
9.7 Information. The Assuming Bank promptly shall provide
to the Corporation such other information, including financial
statements and computations, relating to the performance of the
provisions of this Agreement as the Corporation or the Receiver
may request from time to time, and, at the request of the
Receiver, make available employees of the Failed Bank employed or
retained by the Assuming Bank to assist in preparation of the pro
forma statement pursuant to Section 8.1.
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ARTICLE X
CONDITION PRECEDENT
The obligations of the parties to this Agreement are subject
to the Receiver and the Corporation having received at or before
Bank Closing evidence reasonably satisfactory to each of any
necessary approval, waiver, or other action by any governmental
authority, the board of directors of the Assuming Bank, or other
third party, with respect to this Agreement and the transactions
contemplated hereby, the closing of the Failed Bank and the
appointment of the Receiver, the chartering of the Assuming Bank,
and any agreements, documents, matters or proceedings
contemplated hereby or thereby.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF THE ASSUMING BANK
The Assuming Bank represents and warrants to the Corporation
and the Receiver as follows:
(a) Corporate Existence and Authority. The Assuming Bank
(i) is duly organized, validly existing and in good standing
under the laws of its Chartering Authority and has full power and
authority to own and operate its properties and to conduct its
business as now conducted by it, and (ii) has full power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder. The Assuming Bank has taken all
necessary corporate action to authorize the execution, delivery
and performance of this Agreement and the performance of the
transactions contemplated hereby.
(b) Third Party Consents. No governmental authority or
other third party consents (including but not limited to
approvals, licenses, registrations or declarations) are required
in connection with the execution, delivery or performance by the
Assuming Bank of this Agreement, other than such consents as have
been duly obtained and are in full force and effect.
(c) Execution and Enforceability. This Agreement has been
duly executed and delivered by the Assuming Bank and when this
Agreement has been duly authorized, executed and delivered by the
Corporation and the Receiver, this Agreement will constitute the
legal, valid and binding obligation of the Assuming Bank,
enforceable in accordance with its terms.
(d) Compliance with Law.
(i) Neither the Assuming Bank nor any of its
Subsidiaries is in violation of any statute, regulation, order,
decision, judgment or decree of, or any restriction imposed by,
the United States of America, any State, municipality or other
political subdivision or any agency of any of the foregoing, or
any court or other tribunal having jurisdiction over the Assuming
Bank or any of its Subsidiaries or any assets of any such Person,
or any foreign government or agency thereof having such
jurisdiction, with respect to the conduct of the business of the
Assuming Bank or of any of its Subsidiaries, or the ownership of
the properties of the Assuming Bank or any of its Subsidiaries,
42
which, either individually or in the aggregate with all other
such violations, would materially and adversely affect the
business, operations or condition (financial or otherwise) of the
Assuming Bank or the ability of the Assuming Bank to perform,
satisfy or observe any obligation or condition under this
Agreement.
(ii) Neither the execution and delivery nor the
performance by the Assuming Bank of this Agreement will result in
any violation by the Assuming Bank of, or be in conflict with,
any provision of any applicable law or regulation, or any order,
writ or decree of any court or governmental authority.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification of Indemnitees. From and after Bank
Closing and subject to the limitations set forth in this Section
and Section 12.6 and compliance by the Indemnitees with Section
12.2, the Receiver agrees to indemnify and hold harmless the
Indemnitees against any and all costs, losses, liabilities,
expenses (including attorneys' fees) incurred prior to the
assumption of defense by the Receiver pursuant to paragraph (d)
of Section 12.2, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with claims
against any Indemnitee based on liabilities of the Failed Bank
that are not assumed by the Assuming Bank pursuant to this
Agreement or subsequent to the execution hereof by the Assuming
Bank or any Subsidiary or Affiliate of the Assuming Bank for
which indemnification is provided hereunder in (a) of this
Section 12.1, subject to certain exclusions as provided in (b) of
this Section 12.1:
(a)
(1) claims based on the rights of any shareholder or
former shareholder as such of (x) the Failed Bank, or (y) any
Subsidiary or Affiliate of the Failed Bank;
(2) claims based on the rights of any creditor as such
of the Failed Bank, or any creditor as such of any director,
officer, employee or agent of the Failed Bank, with respect to
any indebtedness or other obligation of the Failed Bank arising
prior to Bank Closing;
(3) claims based on the rights of any present or former
director, officer, employee or agent as such of the Failed Bank
or of any Subsidiary or Affiliate of the Failed Bank;
(4) claims based on any action or inaction prior to
Bank Closing of the Failed Bank, its directors, officers,
employees or agents as such, or any Subsidiary or Affiliate of
the Failed Bank, or the directors, officers, employees or agents
as such of such Subsidiary or Affiliate;
43
(5) claims based on any malfeasance, misfeasance or
nonfeasance of the Failed Bank, its directors, officers,
employees or agents with respect to the trust business of the
Failed Bank, if any;
(6) claims based on any failure or alleged failure (not
in violation of law) by the Assuming Bank to continue to perform
any service or activity previously performed by the Failed Bank
which the Assuming Bank is not required to perform pursuant to
this Agreement or which arise under any contract to which the
Failed Bank was a party which the Assuming Bank elected not to
assume in accordance with this Agreement and which neither the
Assuming Bank nor any Subsidiary or Affiliate of the Assuming
Bank has assumed subsequent to the execution hereof;
(7) claims arising from any action or inaction of any
Indemnitee, including for purposes of this Section 12.1(a)(7) the
former officers or employees of the Failed Bank or of any
Subsidiary or Affiliate of the Failed Bank that is taken upon the
specific written direction of the Corporation or the Receiver,
other than any action or inaction taken in a manner constituting
bad faith, gross negligence or willful misconduct; and
(8) claims based on the rights of any depositor of the
Failed Bank whose deposit has been accorded "withheld payment"
status and/or returned to the Receiver or Corporation in
accordance with Section 9.5 and/or has become an "unclaimed
deposit" or has been returned to the Corporation or the Receiver
in accordance with Section 2.3;
(b) provided, that, with respect to this Agreement, except
for paragraphs (7) and (8) of Section 12.1(a), no indemnification
will be provided under this Agreement for any:
(1) judgment or fine against, or any amount paid in
settlement (without the written approval of the Receiver) by, any
Indemnitee in connection with any action that seeks damages
against any Indemnitee (a "counterclaim") arising with respect to
any Asset and based on any action or inaction of either the
Failed Bank, its directors, officers, employees or agents as such
prior to Bank Closing, unless any such judgment, fine or amount
paid in settlement exceeds the greater of (i) the Repurchase
Price of such Asset, or (ii) the monetary recovery sought on such
Asset by the Assuming Bank in the cause of action from which the
counterclaim arises; and in such event the Receiver will provide
indemnification only in the amount of such excess; and no
indemnification will be provided for any costs or expenses other
than any costs or expenses (including attorneys' fees) which, in
the determination of the Receiver, have been actually and
reasonably incurred by such Indemnitee in connection with the
defense of any such counterclaim; and it is expressly agreed that
the Receiver reserves the right to intervene, in its discretion,
on its behalf and/or on behalf of the Receiver, in the defense of
any such counterclaim;
(2) claims with respect to any liability or obligation
of the Failed Bank that is expressly assumed by the Assuming Bank
pursuant to this Agreement or subsequent to the execution hereof
by the Assuming Bank or any Subsidiary or Affiliate of the
Assuming Bank;
44
(3) claims with respect to any liability of the Failed
Bank to any present or former employee as such of the Failed Bank
or of any Subsidiary or Affiliate of the Failed Bank, which
liability is expressly assumed by the Assuming Bank pursuant to
this Agreement or subsequent to the execution hereof by the
Assuming Bank or any Subsidiary or Affiliate of the Assuming
Bank;
(4) claims based on the failure of any Indemnitee to
seek recovery of damages from the Receiver for any claims based
upon any action or inaction of the Failed Bank, its directors,
officers, employees or agents as fiduciary, agent or custodian
prior to Bank Closing;
(5) claims based on any violation or alleged violation
by any Indemnitee of the antitrust, branching, banking or bank
holding company or securities laws of the United States of
America or any State thereof;
(6) claims based on the rights of any present or former
creditor, customer, or supplier as such of the Assuming Bank or
any Subsidiary or Affiliate of the Assuming Bank;
(7) claims based on the rights of any present or former
shareholder as such of the Assuming Bank or any Subsidiary or
Affiliate of the Assuming Bank regardless of whether any such
present or former shareholder is also a present or former
shareholder of the Failed Bank;
(8) claims, if the Receiver determines that the effect
of providing such indemnification would be to (i) expand or alter
the provisions of any warranty or disclaimer thereof provided in
Section 3.3 or any other provision of this Agreement, or (ii)
create any warranty not expressly provided under this Agreement;
(9) claims which could have been enforced against any
Indemnitee had the Assuming Bank not entered into this Agreement;
(10) claims based on any liability for taxes or fees
assessed with respect to the consummation of the transactions
contemplated by this Agreement, including without limitation any
subsequent transfer of any Assets or Liabilities Assumed to any
Subsidiary or Affiliate of the Assuming Bank;
(11) except as expressly provided in this Article XII,
claims based on any action or inaction of any Indemnitee, and
nothing in this Agreement shall be construed to provide
indemnification for (i) the Failed Bank, (ii) any Subsidiary or
Affiliate of the Failed Bank, or (iii) any present or former
director, officer, employee or agent of the Failed Bank or its
Subsidiaries or Affiliates; provided, that the Receiver, in its
discretion, may provide indemnification hereunder for any present
or former director, officer, employee or agent of the Failed Bank
or its Subsidiaries or Affiliates who is also or becomes a
director, officer, employee or agent of the Assuming Bank or its
Subsidiaries or Affiliates;
(12) claims or actions which constitute a breach by the
Assuming Bank of the representations and warranties contained in
Article XI;
45
(13) claims arising out of or relating to the condition
of or generated by an Asset arising from or relating to the
presence, storage or release of any hazardous or toxic substance,
or any pollutant or contaminant, or condition of such Asset which
violate any applicable Federal, State or local law or regulation
concerning environmental protection; and
(14) claims based on, related to or arising from any
asset, including a loan, acquired or liability assumed by the
Assuming Bank, other than pursuant to this Agreement.
12.2 Conditions Precedent to Indemnification. It shall be a
condition precedent to the obligation of the Receiver to
indemnify any Person pursuant to this Article XII that such
Person shall, with respect to any claim made or threatened
against such Person for which such Person is or may be entitled
to indemnification hereunder:
(a) give written notice to the Regional Counsel (Litigation
Branch) of the Corporation in the manner and at the address
provided in Section 13.7 of such claim as soon as practicable
after such claim is made or threatened; provided, that notice
must be given on or before the date which is six (6) years from
the date of this Agreement;
(b) provide to the Receiver such information and
cooperation with respect to such claim as the Receiver may
reasonably require;
(c) cooperate and take all steps, as the Receiver may
reasonably require, to preserve and protect any defense to such
claim;
(d) in the event suit is brought with respect to such
claim, upon reasonable prior notice, afford to the Receiver the
right, which the Receiver may exercise in its sole discretion, to
conduct the investigation, control the defense and effect
settlement of such claim, including without limitation the right
to designate counsel and to control all negotiations, litigation,
arbitration, settlements, compromises and appeals of any such
claim, all of which shall be at the expense of the Receiver;
provided, that the Receiver shall have notified the Person
claiming indemnification in writing that such claim is a claim
with respect to which the Person claiming indemnification is
entitled to indemnification under this Article XII;
(e) not incur any costs or expenses in connection with any
response or suit with respect to such claim, unless such costs or
expenses were incurred upon the written direction of the
Receiver; provided, that the Receiver shall not be obligated to
reimburse the amount of any such costs or expenses unless such
costs or expenses were incurred upon the written direction of the
Receiver;
(d) not release or settle such claim or make any payment or
admission with respect thereto, unless the Receiver consents in
writing thereto, which consent shall not be unreasonably
withheld; provided, that the Receiver shall not be obligated to
reimburse the amount of any such settlement or payment unless
such settlement or payment was effected upon the written
direction of the Receiver; and
46
(e) take reasonable action as the Receiver may request in
writing as necessary to preserve, protect or enforce the rights
of the indemnified Person against any Primary Indemnitor.
12.3 No Additional Warranty. Nothing in this Article XII
shall be construed or deemed to (i) expand or otherwise alter any
warranty or disclaimer thereof provided under Section 3.3 or any
other provision of this Agreement with respect to, among other
matters, the title, value, collectibility, genuineness,
enforceability or condition of any (x) Asset, or (y) asset of the
Failed Bank purchased by the Assuming Bank subsequent to the
execution of this Agreement by the Assuming Bank or any
Subsidiary or Affiliate of the Assuming Bank, or (ii) create any
warranty not expressly provided under this Agreement with respect
thereto.
12.4 Indemnification of Receiver and Corporation. From
and after Bank Closing, the Assuming Bank agrees to indemnify and
hold harmless the Corporation and the Receiver and their
respective directors, officers, employees and agents from and
against any and all costs, losses, liabilities, expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with
any of the following:
(a) claims based on any and all liabilities or obligations
of the Failed Bank assumed by the Assuming Bank pursuant to this
Agreement or subsequent to the execution hereof by the Assuming
Bank or any Subsidiary or Affiliate of the Assuming Bank, whether
or not any such liabilities subsequently are sold and/or
transferred, other than any claim based upon any action or
inaction of any Indemnitee as provided in paragraph (7) or (8) of
Section 12.1(a); and
(b) claims based on any act or omission of any Indemnitee
(including but not limited to claims of any Person claiming any
right or title by or through the Assuming Bank with respect to
Assets transferred to the Receiver pursuant to Section 3.4 or
3.6), other than any action or inaction of any Indemnitee as
provided in paragraph (7) or (8) of Section 12.1(a).
12.5 Obligations Supplemental. The obligations of the
Receiver, and the Corporation as guarantor in accordance with
Section 12.7, to provide indemnification under this Article XII
are to supplement any amount payable by any Primary Indemnitor to
the Person indemnified under this Article XII. Consistent with
that intent, the Receiver agrees only to make payments pursuant
to such indemnification to the extent not payable by a Primary
Indemnitor. If the aggregate amount of payments by the Receiver,
or the Corporation as guarantor in accordance with Section 12.7,
and all Primary Indemnitors with respect to any item of
indemnification under this Article XII exceeds the amount payable
with respect to such item, such Person being indemnified shall
notify the Receiver thereof and, upon the request of the
Receiver, shall promptly pay to the Receiver, or the Corporation
as appropriate, the amount of the Receiver's (or Corporation's)
payments to the extent of such excess.
12.6 Criminal Claims. Notwithstanding any provision of this
Article XII to the contrary, in the event that any Person being
indemnified under this Article XII shall become involved in any
criminal action, suit or proceeding, whether judicial,
administrative or investigative, the Receiver shall have no
47
obligation hereunder to indemnify such Person for liability with
respect to any criminal act or to the extent any costs or
expenses are attributable to the defense against the allegation
of any criminal act, unless (i) the Person is successful on the
merits or otherwise in the defense against any such action, suit
or proceeding, or (ii) such action, suit or proceeding is
terminated without the imposition of liability on such Person.
12.7 Limited Guaranty of the Corporation. The Corporation
hereby guarantees performance of the Receiver's obligation to
indemnify the Assuming Bank as set forth in this Article XII. It
is a condition to the Corporation's obligation hereunder that the
Assuming Bank shall comply in all respects with the applicable
provisions of this Article XII. The Corporation shall be liable
hereunder only for such amounts, if any, as the Receiver is
obligated to pay under the terms of this Article XII but shall
fail to pay. Except as otherwise provided above in this Section
12.7, nothing in this Article XII is intended or shall be
construed to create any liability or obligation on the part of
the Corporation, the United States of America or any department
or agency thereof under or with respect to this Article XII, or
any provision hereof, it being the intention of the parties
hereto that the obligations undertaken by the Receiver under this
Article XII are the sole and exclusive responsibility of the
Receiver and no other Person or entity.
12.8 Subrogation. Upon payment by the Receiver, or the
Corporation as guarantor in accordance with Section 12.7, to any
Indemnitee for any claims indemnified by the Receiver under this
Article XII, the Receiver, or the Corporation as appropriate,
shall become subrogated to all rights of the Indemnitee against
any other Person to the extent of such payment.
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement. This Agreement embodies the entire
agreement of the parties hereto in relation to the subject matter
herein and supersedes all prior understandings or agreements,
oral or written, between the parties.
13.2 Headings. The headings and subheadings of the Table of
Contents, Articles and Sections contained in this Agreement,
except the terms identified for definition in Article I and
elsewhere in this Agreement, are inserted for convenience only
and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
13.3 Counterparts. This Agreement may be executed in any
number of counterparts and by the duly authorized representative
of a different party hereto on separate counterparts, each of
which when so executed shall be deemed to be an original and all
of which when taken together shall constitute one and the same
Agreement.
13.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE FEDERAL LAW OF THE UNITED STATES OF AMERICA,
AND IN THE ABSENCE OF CONTROLLING FEDERAL LAW, IN ACCORDANCE WITH
THE LAWS OF THE STATE IN WHICH THE MAIN OFFICE OF THE FAILED BANK
IS LOCATED.
48
13.5 Successors. All terms and conditions of this Agreement
shall be binding on the successors and assigns of the Receiver,
the Corporation and the Assuming Bank. Except as otherwise
specifically provided in this Agreement, nothing expressed or
referred to in this Agreement is intended or shall be construed
to give any Person other than the Receiver, the Corporation and
the Assuming Bank any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provisions
contained herein, it being the intention of the parties hereto
that this Agreement, the obligations and statements of
responsibilities hereunder, and all other conditions and
provisions hereof are for the sole and exclusive benefit of the
Receiver, the Corporation and the Assuming Bank and for the
benefit of no other Person.
13.6 Modification; Assignment. No amendment or other
modification, rescission, release, or assignment of any part of
this Agreement shall be effective except pursuant to a written
agreement subscribed by the duly authorized representatives of
the parties hereto.
13.7 Notice. Any notice, request, demand, consent, approval
or other communication to any party hereto shall be effective
when received and shall be given in writing, and delivered in
person against receipt therefor, or sent by certified mail,
postage prepaid, courier service, telex or facsimile transmission
to such party (with copies as indicated below) at its address set
forth below or at such other address as it shall hereafter
furnish in writing to the other parties. All such notices and
other communications shall be deemed given on the date received
by the addressee. Notwithstanding the addresses set forth in
this Section 13.7, in the context of the administration of Shared-
Loss Assets, certain notices to the Receiver and/or Corporation
should be given as set forth in Article IV of Exhibit 13.14 to
this Agreement.
Assuming Bank
Citizens Trust Bank of Atlanta
75 Piedmont Avenue
Atlanta, Georgia 30303
Attention: Willard C. Lewis
Sr. Executive Vice President
with a copy to: James E. Young
President and CEO
49
Receiver and Corporation
Federal Deposit Insurance Corporation,
Receiver of Mutual Federal Savings Bank, Atlanta, Georgia
1910 Pacific Avenue
Dallas, Texas 75201
Attention: Deputy Director (DRR-Field Operations Branch)
with copy to: Regional Counsel (Litigation Branch)
and with respect to notices under Article XII:
Federal Deposit Insurance Corporation
Receiver of Mutual Federal Savings Bank, Atlanta, Georgia
1910 Pacific Avenue
Dallas, Texas 75201
Attention: Regional Counsel (Litigation Branch)
13.8 Manner of Payment. All payments due under this
Agreement shall be in lawful money of the United States of
America in immediately available funds as each party hereto may
specify to the other parties; provided, that in the event the
Receiver or the Corporation is obligated to make any payment
hereunder in the amount of $25,000.00 or less, such payment may
be made by check.
13.9 Costs, Fees and Expenses. Except as otherwise
specifically provided herein, each party hereto agrees to pay all
costs, fees and expenses which it has incurred in connection with
or incidental to the matters contained in this Agreement,
including without limitation any fees and disbursements to its
accountants and counsel; provided, that the Assuming Bank shall
pay all fees, costs and expenses (other than attorneys' fees
incurred by the Receiver) incurred in connection with the
transfer to it of any Assets or Liabilities Assumed hereunder or
in accordance herewith.
13.10 Waiver. Each of the Receiver, the Corporation and
the Assuming Bank may waive its respective rights, powers or
privileges under this Agreement; provided, that such waiver shall
be in writing; and further provided, that no failure or delay on
the part of the Receiver, the Corporation or the Assuming Bank to
exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor will any single or partial
exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege by the Receiver, the
Corporation, or the Assuming Bank under this Agreement, nor will
any such waiver operate or be construed as a future waiver of
such right, power or privilege under this Agreement.
50
13.11 Severability. If any provision of this Agreement
is declared invalid or unenforceable, then, to the extent
possible, all of the remaining provisions of this Agreement shall
remain in full force and effect and shall be binding upon the
parties hereto.
13.12 Term of Agreement. This Agreement shall continue
in full force and effect until the sixth (6th) anniversary of
Bank Closing; provided, that the provisions of Section 6.3 and
6.4 shall survive the expiration of the term of this Agreement.
Provided, however, the receivership of the Failed Bank may be
terminated prior to the expiration of the term of this Agreement;
in such event, the guaranty of the Corporation, as provided in
and in accordance with the provisions of Section 12.7 shall be in
effect for the remainder of the term. Expiration of the term of
this Agreement shall not affect any claim or liability of any
party with respect to any (i) amount which is owing at the time
of such expiration, regardless of when such amount becomes
payable, and (ii) breach of this Agreement occurring prior to
such expiration, regardless of when such breach is discovered.
13.13 Survival of Covenants, Etc. The covenants,
representations, and warranties in this Agreement shall survive
the execution of this Agreement and the consummation of the
transactions contemplated hereunder.
13.14 Shared-Loss Arrangement. Definitions, terms and
conditions related to Shared-Loss Assets are set forth in Exhibit
13.14 to this Agreement. Exhibit 13.14 is hereby incorporated
into this Agreement by this reference. The Receiver, the
Corporation and the Assuming Bank hereby agree to be bound by the
provisions set forth in Exhibit 13.14.
[Signature Page Follows]
51
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
as of the date first above written.
FEDERAL DEPOSIT INSURANCE CORPORATION,
RECEIVER OF MUTUAL FEDERAL SAVINGS BANK,
ATLANTA, GEORGIA
BY:
NAME: Sandra M. White
TITLE: Supervisory Resolutions Specialist
Attest:
FEDERAL DEPOSIT INSURANCE CORPORATION
BY:
NAME: Sandra M. White
TITLE: Supervisory Resolutions Specialist
Attest:
CITIZENS TRUST BANK OF ATLANTA
BY:
NAME: James E. Young
TITLE: President and CEO
Attest:
52
SCHEDULE 2.1 - Certain Liabilities Assumed
53
SCHEDULE 3.1 - Certain Assets Purchased
54
SCHEDULE 3.1(d) - Certain New Non-Shared-Loss Loans Purchased
55
SCHEDULE 3.1(e) - Loans Fully Secured by Assumed Deposits
[Contents of schedule begin on following page]
56
SCHEDULE 3.1(ee)(i) - Certain Shared-Loss Loans Purchased
[Subschedules begin on following page]
57
SCHEDULE 3.1(ee)(i)(150) - Certain Shared-Loss Loans Purchased
(Non-performing/Classified)
[Contents of schedule begin on following page]
58
SCHEDULE 3.1(ee)(i)(300) - Certain Shared-Loss Loans Purchased
(Commercial Real Estate Loans)
[Contents of schedule begin on following page]
59
SCHEDULE 3.1(ee)(i)(400) - Certain Shared-Loss Loans Purchased
(Commercial Loans)
[Contents of schedule begins on following page]
60
SCHEDULE 3.1(ee)(ii) - Other Real Estate Purchased
NONE
61
SCHEDULE 3.1(i) - Acquired Subsidiaries
NONE
62
SCHEDULE 3.2 - Purchase Price of Assets or assets
(a) cash and receivables from Book Value
depository institutions, including
cash items in the process of
collection, plus interest thereon:
(b) securities (exclusive of the As provided in Section 3.2(b)
capital stock of Acquired
Subsidiaries), plus interest
thereon:
(c) federal funds sold and repurchase Book Value
agreements, if any, including
interest thereon:
(d) New Non-Shared-Loss Loans purchased Book Value
pursuant to Section 3.1(d):
(e) Loans purchased pursuant to Section Book Value
3.1(e):
(ee)
Loans, Other Real Estate and Book Value
other assets and rights
purchased pursuant to Section
3.1(ee):
(f) credit card business, if any, Book Value
including all outstanding
extensions of credit:
(g) Safe Deposit Boxes and related Fair Market Value
business, safekeeping business
and trust business, if any:
(h) Records and other documents: Book Value
(i) capital stock of any Acquired Fair Market Value
Subsidiaries:
(j) amounts owed to the Failed Bank by Fair Market Value
any Acquired Subsidiary:
63
(k) assets securing Deposits of public Fair Market Value
money, to the extent not otherwise
purchased hereunder:
(l) Overdrafts of customers: Book Value
(m) rights of the Failed Bank to Fair Market Value
provide mortgage servicing for
others and to have mortgage
servicing provided to the Failed
Bank by others and related
contracts.
assets subject to an option to purchase:
(a) Bank Premises: Fair Market Value
(b) Furniture and Equipment: Fair Market Value
(c) Fixtures: Fair Market Value
(d) Other Equipment: Fair Market Value
64
SCHEDULE 3.5(k) - Securities Not Purchased
AS SPECIFIED IN SECTION 3.5
65
SCHEDULE 3.5(n) - Certain Loans Not Purchased
66
EXHIBIT 4.13
INTERIM ASSET SERVICING ARRANGEMENT
(a) With respect to each asset designated from time to time
by the Receiver to be serviced by the Assuming Bank pursuant to
this Arrangement (such assets being designated as "Pool Assets"),
during the term of this Arrangement, the Assuming Bank shall:
(i) Promptly apply payments received with respect to
any Pool Assets;
(ii) Reverse and return insufficient funds checks;
(iii) Pay (A) participation payments to participants in
Loans, as and when received; and (B) tax and insurance bills on
Pool Assets as they come due, out of escrow funds maintained for
purposes;
(iv) Maintain accurate records reflecting (A) the
payment history of Pool Assets, with updated information received
concerning changes in the address or identity of the obligors and
(B) usage of data processing equipment and employee services with
respect to servicing duties;
(v) Send billing statements to obligors on Pool Assets
to the extent that such statements were sent by the Failed Bank;
(vi) Send notices to obligors who are in default on
Loans (in the same manner as the Failed Bank);
(vii) Send to the Receiver, Attn: Managing Liquidator,
at the address provided in Section 13.7 of the Agreement, via
overnight delivery: (A) on a weekly basis, weekly reports for the
Pool Assets, including, without limitation, reports reflecting
collections and the trial balances, transaction journals and loan
histories for Pool Assets having activity, together with copies
of (1) checks received, (2) insufficient funds checks returned,
(3) checks for payment to participants or for taxes and
insurance, (4) pay-off requests, (5) notices to defaulted
obligors, and (6) data processing and employee logs and (B) any
other reports, copies or information as may be periodically or
from time to time requested; and
(viii) Remit on a weekly basis to the Receiver, Attn:
Division of Finance, Cashier Unit, Operations, at the address in
(vii), via wire transfer to the account designated by the
Receiver, all payments received on Pool Assets managed by the
Assuming Bank or at such time and place and in such manner as may
be directed by the Receiver.
(ix) prepare and timely file all information reports
with appropriate tax authorities, and, if required by the
Receiver, prepare and file tax returns and pay taxes due on or
before the due date, relating to the Pool Assets.
67
Notwithstanding anything to the contrary in this Section,
the Assuming Bank shall not be required to initiate litigation or
other collection proceedings against any obligor or any
collateral with respect to any defaulted Loan. The Assuming Bank
shall promptly notify the Receiver, at the address provided above
in subparagraph (a)(vii), of any claims or legal actions
regarding any Pool Asset.
(b) The Receiver agrees to reimburse the Assuming Bank for
actual, reasonable and necessary expenses incurred in connection
with the performance of duties pursuant to this Arrangement,
including expenses of photocopying, postage and express mail, and
data processing and employee services (based upon the number of
hours spent performing servicing duties).
(c) The Assuming Bank shall provide the services described
herein for an initial period of ninety (90) days after Bank
Closing. At the option of the Receiver, exercisable by notice
given not later than ten (10) days prior to the end of such
initial period or a renewal period, the Assuming Bank shall
continue to provide such services for such renewal period(s) as
designated by the Receiver, up to the Settlement Date.
(d) At any time during the term of this Arrangement, the
Receiver may, upon written notice to the Assuming Bank, remove
one or more Pool Assets from the Pool, at which time the Assuming
Bank's responsibility with respect thereto shall terminate.
(e) At the expiration of this Agreement or upon the
termination of the Assuming Bank's responsibility with respect to
any Pool Asset pursuant to paragraph (d) hereof, the Assuming
Bank shall:
(i) deliver to the Receiver (or its designee) all of
the Credit Documents and Pool Records relating to the Pool
Assets; and
(ii) cooperate with the Receiver to facilitate the
orderly transition of managing the Pool Assets to the Receiver
(or its designee).
(f) At the request of the Receiver, the Assuming Bank shall
perform such transitional services with regard to the Pool Assets
as the Receiver may request. Transitional services may include,
without limitation, assisting in any due diligence process deemed
necessary by the Receiver and providing to the Receiver or its
designee(s) (x) information and data regarding the Pool Assets,
including, without limitation, system reports and data downloads
sufficient to transfer the Pool Assets to another system or
systems, and (y) access to employees of the Assuming Bank
involved in the management of, or otherwise familiar with, the
Pool Assets.
68
EXHIBIT 13.14
SHARED-LOSS ARRANGEMENT
This Shared-Loss Arrangement Exhibit shall apply when the
Assuming Bank purchases Shared-Loss Assets. The terms hereof
shall modify and supplement, as necessary, the terms of the
Agreement to which the Exhibit is a part and incorporated
therein. To the extent any inconsistencies may arise between the
terms of the Agreement and this Exhibit, the terms of this
Exhibit shall control. References in this Exhibit to a particular
Section shall be deemed to refer to a Section in this Exhibit
unless the context indicates that a Section of the Agreement is
intended.
ARTICLE I -- DEFINITIONS
Capitalized terms used in this Exhibit that are not defined
in this Exhibit are defined in the Agreement.
ARTICLE II -- SHARED-LOSS ARRANGEMENT
2.1 Shared-Loss Arrangement.
(a) Quarterly Certificates. (i) Not later than thirty
(30) days after the end of each Calendar Quarter from and
including the initial Calendar Quarter to and including the
Calendar Quarter in which the Applicable Anniversary of the
Commencement Date falls (each of such Calendar Quarters being
referred to herein as a "Shared-Loss Quarter"), the Assuming Bank
shall deliver to the Receiver a certificate, signed by the
Assuming Bank's chief executive officer and its chief financial
officer, setting forth in such form and detail as the Receiver
may specify (a "Quarterly Certificate"):
(A) the amount of Charge-Offs, the amount of
Recoveries and the amount of Net Charge-Offs (which
amount may be negative) during such Shared-Loss Quarter
with respect to the Shared-Loss Assets (and for
Recoveries, with respect to the Assets for which a
charge-off was effected by the Failed Bank prior to
Bank Closing); and
(B) the aggregate amount of Reimbursable Expenses
(which amount may be negative) during such Shared-Loss
Quarter.
(ii) Not later than thirty (30) days after the end of
each Calendar Quarter from and including the first Calendar
Quarter following the final Shared-Loss Quarter to and including
the Calendar Quarter in which the Termination Date falls (each of
such Calendar Quarters being referred to herein as a "Recovery
Quarter"), the Assuming Bank shall deliver to the Receiver a
Quarterly Certificate setting forth, in such form and detail as
the Receiver may specify, the amount of Recoveries and Recovery
Expenses during such Recovery Quarter. On the Quarterly
69
Certificate for the first Recovery Quarter only, the Assuming
Bank may report as a separate item, in such form and detail as
the Receiver may specify, the aggregate amount of any
Reimbursable Expenses that: (a) were incurred prior to or during
the final Shared-Loss Quarter, and (b) had not been included in
any Quarterly Certificate for any Shared-Loss Quarter because
they had not been actually paid by the Assuming Bank (in
accordance with the terms of this Agreement) during any Shared-
Loss Quarter and (c) were actually paid by the Assuming Bank (in
accordance with the terms of this Agreement) during the first
Recovery Quarter.
(b) Payments With Respect to Shared-Loss Assets.
(i) For purposes of this Section 2.1(b), the Assuming
Bank shall record the Shared-Loss Assets on its Accounting
Records at Book Value. If the amount of all Net Charge-Offs
during any Shared-Loss Quarter plus Reimbursable Expenses during
such Shared-Loss Quarter (the "Shared-Loss Amount") is positive,
then, except as provided in Sections 2.1(c) and (e) below, not
later than fifteen (15) days after the date on which the Receiver
receives the Quarterly Certificate with respect to such Shared-
Loss Quarter, the Receiver shall pay to the Assuming Bank an
amount equal to eighty percent (80%) of the Shared-Loss Amount
for such Shared-Loss Quarter. If the Shared-Loss Amount during
any Shared-Loss Quarter is negative, the Assuming Bank shall pay
to the Receiver an amount equal to eighty percent (80%) of the
Shared-Loss Amount for such Shared-Loss Quarter, which payment
shall be delivered to the Receiver together with the Quarterly
Certificate for such Shared-Loss Quarter.
(ii) If the amount of gross Recoveries during any
Recovery Quarter less Recovery Expenses during such Recovery
Quarter (the "Recovery Amount") is positive, then, simultaneously
with its delivery of the Quarterly Certificate with respect to
such Recovery Quarter, the Assuming Bank shall pay to the
Receiver an amount equal to eighty percent (80%) of the Recovery
Amount for such Recovery Quarter. If the Recovery Amount is
negative, then such negative amount shall be subtracted from the
amount of gross Recoveries during the next succeeding Recovery
Quarter in determining the Recovery Amount in such next
succeeding Recovery Quarter; provided, that this Section
2.1(b)(ii) shall operate successively in the event that the
Recovery Amount (after giving effect to this Section 2.1(b)(ii))
in such next succeeding Recovery Quarter is negative. The
Assuming Bank shall specify, in the Quarterly Certificate for the
final Recovery Quarter, the aggregate amount for all Recovery
Quarters only, as of the end of, and including, the final
Recovery Quarter of (A) Recoveries ("Aggregate Recovery Period
Recoveries"), (B) Recovery Expenses ("Aggregate Recovery
Expenses"), and (C) only those Recovery Expenses that have been
actually "offset" against Aggregate Recovery Period Recoveries
(including those so "offset" in that final Recovery Quarter)
("Aggregate Offset Recovery Expenses"); as used in this sentence,
the term "offset" means the amount that has been applied to
reduce gross Recoveries in any Recovery Quarter pursuant to the
methodology set forth in this Section 2.1(b)(ii). If, at the end
of the final Recovery Quarter the amount of Aggregate Recovery
Expenses exceeds the amount of Aggregate Recovery Period
Recoveries, the Receiver shall have no obligation to pay to the
Assuming Bank all or any portion of such excess. Subsequent to
the Assuming Bank's calculation of the Recovery Amount (if any)
for the final Recovery Quarter, the Assuming Bank shall also show
on the Quarterly Certificate for the final Recovery Quarter the
results of the following three mathematical calculations: (i)
70
Aggregate Recovery Period Recoveries minus Aggregate Offset
Recovery Expenses; (ii) Aggregate Recovery Expenses minus
Aggregate Offset Recovery Expenses; and (iii) the lesser of the
two amounts calculated in (i) and (ii) immediately above
("Additional Recovery Expenses") multiplied by 80% (the amount so
calculated in (iii) being defined as the "Additional Recovery
Expense Amount"). If the Additional Recovery Expense Amount is
greater than zero, then the Assuming Bank may request in the
Quarterly Certificate for the final Recovery Quarter that the
Receiver reimburse the Assuming Bank the amount of the Additional
Recovery Expense Amount and the Receiver shall pay to the
Assuming Bank the Additional Recovery Expense Amount within
fifteen (15) days after the date on which the Receiver receives
that Quarterly Certificate. On the Quarterly Certificate for the
final Recovery Quarter only, the Assuming Bank may include, in
addition to any Recovery Expenses for that Recovery Quarter that
were paid by the Assuming Bank in that Recovery Quarter, those
Recovery Expenses that: (a) were incurred prior to or during the
final Recovery Quarter, and (b) had not been included in any
Quarterly Certificate for any Recovery Quarter because they had
not been actually paid by the Assuming Bank (in accordance with
the terms of this Agreement) during any Recovery Quarter, and (c)
were actually paid by the Assuming Bank (in accordance with the
terms of this Agreement) prior to the date the Assuming Bank is
required to deliver that final Quarterly Certificate to the
Receiver under the terms of Section 2.1(a)(ii).
(iii) [reserved]
(iv) With respect to each Shared-Loss Quarter and
Recovery Quarter, collections by the Assuming Bank on any charge-
off effected by the Failed Bank prior to Bank Closing on an Asset
other than a Shared-Loss Asset shall be reported as Recoveries
under this Section 2.1 only to the extent such collections exceed
the Book Value of such Asset, if any. For any Shared-Loss Quarter
or Recovery Quarter in which collections by the Assuming Bank on
such Asset are applied to both Book Value and to a charge-off
effected by the Failed Bank prior to Bank Closing, the amount of
expenditures incurred by the Assuming Bank attributable to the
collection of any such Asset, that shall be considered a
Reimbursable Expense or a Recovery Expense under this Section 2.1
will be limited to a proportion of such expenditures which is
equal to the proportion derived by dividing (A) the amount of
collections on such Asset applied to a charge-off effected by the
Failed Bank prior to Bank Closing, by (B) the total collections
on such Assets.
(v) If the Assuming Bank has duly specified an amount
of Reimbursable Expenses on the Quarterly Certificate for the
first Recovery Quarter as described above in the last sentence of
Section 2.1(a)(ii), then, not later than fifteen (15) days after
the date on which the Receiver receives that Quarterly
Certificate, the Receiver shall pay to the Assuming Bank an
amount equal to eighty percent (80%) of the amount of such
Reimbursable Expenses.
(c) Limitation on Shared-Loss Payment. The Receiver
shall not be required to make any payments pursuant to this
Section 2.1 with respect to any Charge-Off of a Shared-Loss Asset
that the Receiver or the Corporation determines, based upon the
Examination Criteria, should not have been effected by the
Assuming Bank. In the event that the Receiver does not make any
payments with respect to any Charge-Off of a Shared-Loss Asset
71
pursuant to this Section 2.1 or determines that a payment was
improperly made, the Assuming Bank and the Receiver shall make
such accounting adjustments and payments as may be necessary to
give retroactive effect to such corrections.
(d) Sale of, or Additional Advances or Amendments with
Respect to, Shared-Loss Loans. No Shared-Loss Loan shall be
treated as a Shared-Loss Asset pursuant to this Section 2.1 (i)
if the Assuming Bank sells or otherwise transfers such Shared-
Loss Loan or any interest therein (whether with or without
recourse) to any Person, (ii) after the Assuming Bank makes any
additional advance, commitment or increase in the amount of a
commitment with respect to such Shared-Loss Loan that does not
constitute a Permitted Advance or a Shared-Loss Loan Commitment
Advance, (iii) after the Assuming Bank makes any amendment,
modification, renewal or extension to such Shared-Loss Loan that
does not constitute a Permitted Amendment, or (iv) after the
Assuming Bank has managed, administered or collected any "Related
Loan" (as such term is defined in Section 3.4 of Article III of
this Exhibit) in any manner which would have the effect of
increasing the amount of any collections with respect to the
Related Loan to the detriment of such Shared-Loss Asset to which
such loan is related; provided, that any Charge-Off with respect
to a Shared-Loss Loan as to which the Assuming Bank would be
entitled to payment from the Receiver in accordance with Section
2.1(b), but for clause (i) of this Section 2.1(d), shall lose
such entitlement only if such Charge-Off is associated with the
sale or transfer of such Shared-Loss Loan (regardless of whether
such Charge-Off was effected before or after such sale or
transfer); provided further, that any such Shared-Loss Loan that
has been the subject of Charge-Offs prior to the taking of any
action described in clause (i), (ii), (iii) or (iv) of this
Section 2.1(d) by the Assuming Bank shall be treated as a Shared-
Loss Asset pursuant to this Section 2.1 solely for the purpose of
treatment of Recoveries on such Charge-Offs until such time as
the amount of Recoveries with respect to such Shared-Loss Asset
equals such Charge-Offs.
(e) Option to Purchase.
(i) In the event that the Assuming Bank determines
that there is a substantial likelihood that continued efforts to
collect a Shared-Loss Asset or an Asset for which a charge-off
was effected by the Failed Bank with, in either case, a Legal
Balance of $500,000 or more on the Accounting Records of the
Assuming Bank will result in an expenditure of funds by the
Assuming Bank to a third party for a specified purpose (the
expenditure of which, in its best judgment, will maximize
collections), which do not constitute Reimbursable Expenses or
Recovery Expenses, and such expenses will exceed ten percent
(10%) of the then book value thereof as reflected on the
Accounting Records of the Assuming Bank, the Assuming Bank shall
(i) promptly so notify the Receiver and (ii) request that such
expenditure be treated as a Reimbursable Expense or Recovery
Expense for purposes of this Section 2.1. (Where the Assuming
Bank determines that there is a substantial likelihood that the
previously mentioned situation exists with respect to continued
efforts to collect a Shared-Loss Asset or an Asset for which a
charge-off was effected by the Failed Bank with, in either case,
a Legal Balance of less than $500,000 on the Accounting Records
of the Assuming Bank, the Assuming Bank may so notify the
Receiver and request that such expenditure be treated as a
Reimbursable Expense or Recovery Expense.) Within thirty (30)
days after its receipt of such a notice, the Receiver will advise
72
the Assuming Bank of its consent or denial that such expenditures
shall be treated as a Reimbursable Expense or Recovery Expense,
as the case may be. Notwithstanding the failure of the Receiver
to give its consent with respect to such expenditures, the
Assuming Bank shall continue to administer such Shared-Loss Asset
in accordance with Section 2.2, except that the Assuming Bank
shall not be required to make such expenditures. At any time
after its receipt of such a notice and on or prior to the
Termination Date the Receiver shall have the right to purchase
such Shared-Loss Asset or Asset as provided in Section
2.1(e)(iii), notwithstanding any consent by the Receiver with
respect to such expenditure.
(ii) During the period prior to the Termination Date,
the Assuming Bank shall notify the Receiver within fifteen (15)
days after any of the following becomes fully or partially
charged-off:
(A) a Shared-Loss Loan having a Legal Balance (or,
in the case of more than one (1) Shared-Loss Loan made
to the same Obligor, a combined Legal Balance) of
$500,000 or more in circumstances in which the legal
claim against the relevant Obligor survives; or
(B) a Shared-Loss Loan to a director, an
"executive officer" as defined in 12 C.F.R. ' 215.2(d),
a "principal shareholder" as defined in 12 C.F.R. '
215.2(l), or an Affiliate of the Assuming Bank.
(iii) If the Receiver determines in its sole
discretion that the Assuming Bank is not diligently pursuing
collection efforts with respect to any Shared-Loss Asset which
has been fully or partially charged-off or written-down
(including any Shared-Loss Asset which is identified or required
to be identified in a notice pursuant to Section 2.1(e)(ii)) or
any Asset for which there exists a Failed Bank Charge-Off/Write-
Down, the Receiver may at its option, exercisable at any time on
or prior to the Termination Date, require the Assuming Bank to
assign, transfer and convey such Shared-Loss Asset or Asset to
and for the sole benefit of the Receiver for a price equal to the
Repurchase Price thereof less the Related Liability Amount with
respect to any Related Liabilities related to such Shared-Loss
Asset or Asset.
(iv) Not later than ten (10) days after the date upon
which the Assuming Bank receives notice of the Receiver's
intention to purchase or require the assignment of any Shared-
Loss Asset or Asset pursuant to Section 2.1(e)(i) or (iii), the
Assuming Bank shall transfer to the Receiver such Shared-Loss
Asset or Asset and any Credit Files relating thereto and shall
take all such other actions as may be necessary and appropriate
to adequately effect the transfer of such Shared-Loss Asset or
Asset from the Assuming Bank to the Receiver. Not later than
fifteen (15) days after the date upon which the Receiver receives
such Shared-Loss Asset or Asset and any Credit Files relating
thereto, the Receiver shall pay to the Assuming Bank an amount
equal to the Repurchase Price of such Shared-Loss Asset or Asset
less the Related Liability Amount.
(v) The Receiver shall assume all Related Liabilities
with respect to any Shared-Loss Asset or Asset set forth in the
notice described in Section 2.1(e)(iv).
73
(f) Dispute Resolution.
(i) (A) Any dispute as to whether a Charge-Off of a
Shared-Loss Asset was made in accordance with Examination
Criteria shall be resolved by the Assuming Bank's Chartering
Authority. (B) With respect to any other dispute arising under
the terms of this Exhibit 13.14, at the discretion of the
Corporation, to be exercised in each instance of such other
dispute, and with the subsequent written consent of the Assuming
Bank, such other dispute shall be resolved by determination of a
review board (a "Review Board") established pursuant to Section
2.1(f). Any Review Board under this Section 2.1(f) shall follow
the provisions of the Federal Arbitration Act and shall follow
the provisions of the Administrative Dispute Resolution Act of
1996 ("ADRA"). (C) Any determination by the Assuming Bank's
Chartering Authority or by a Review Board shall be conclusive and
binding on the parties hereto and not subject to further dispute,
and judgment may be entered on said determination in accordance
with applicable arbitration law in any court having jurisdiction
thereof.
(ii) A Review Board shall consist of three (3) members,
each of whom shall have such expertise as the Corporation and the
Assuming Bank agree is relevant. As appropriate, the receiver or
the Corporation (the "FDIC Party") will select one member, one
member will be selected by the Assuming Bank and the third member
(the "Neutral Member") will be selected by the other two members.
The member of the Review Board selected by a party may be removed
at any time by such party upon two (2) days' written notice to
the other party of the selection of a replacement member. The
Neutral Member may be removed by unanimous action of the members
appointed by the FDIC Party and the Assuming Bank after two (2)
days' prior written notice to the FDIC Party and the Assuming
Bank of the selection of a replacement Neutral Member. In
addition, if a Neutral Member fails for any reason to serve or
continue to serve on the Review Board, the other remaining
members shall so notify the parties to the dispute and the
Neutral Member in writing that such Neutral Member will be
replaced, and the Neutral Member shall thereafter be replaced by
the unanimous action of the other remaining members within twenty
(20) business days of that notification.
(iii) No dispute may be submitted to a Review Board
by any of the parties to this Agreement unless such party has
provided to the other party a written notice of dispute ("Notice
of Dispute"). During the forty-five (45)-day period following the
providing of a Notice of Dispute, the parties to the dispute will
make every effort in good faith to resolve the dispute by mutual
agreement. As part of these good faith efforts, the parties
should consider the use of less formal dispute resolution
techniques, as judged appropriate by each party in its sole
discretion. Such techniques may include, but are not limited to,
mediation, settlement conference, and early neutral evaluation.
If the parties have not agreed to a resolution of the dispute by
the end of such forty-five (45)-day period, then, subject to the
discretion of the Corporation and the written consent of the
Assuming Bank as set forth in Section 2.1(f)(i)(B) above, on the
first day following the end of such period, the FDIC Party and
the Assuming Bank shall notify each other of its selection of its
member of the Review Board and such members shall be instructed
to promptly select the Neutral Member of the Review Board. If the
members appointed by the FDIC Party and the Assuming Bank are
unable to promptly agree upon the initial selection of the
74
Neutral Member, or a timely replacement Neutral Member as set
forth in Section 2.1(f)(ii) above, the two appointed members
shall apply to the American Arbitration Association ("AAA"), and
such Neutral Member shall be appointed in accordance with the
Commercial Arbitration Rules of the AAA.
(iv) The resolution of a dispute pursuant to this
Section 2.1(f) shall be governed by the Commercial Arbitration
Rules of the AAA to the extent that such rules are not
inconsistent with this Section 2.1(f). The Review Board may
modify the procedures set forth in such rules from time to time
with the prior approval of the FDIC Party and the Assuming Bank.
(v) Within fifteen (15) days after the last to occur
of the final written submissions of both parties, the
presentation of witnesses, if any, and oral presentations, if
any, the Review Board shall adopt the position of one of the
parties and shall present to the parties a written award
regarding the dispute. The determination of any two (2) members
of a Review Board will constitute the determination of such
Review Board.
(vi) The FDIC Party and the Assuming Bank will each pay
the fees and expenses of the member of the Review Board selected
by it. The FDIC Party and Assuming Bank will share equally the
fees and expenses of the Neutral Member. No such fees or expenses
incurred by the Assuming Bank shall be subject to reimbursement
by the FDIC Party under this Agreement or otherwise.
(vii) Each party will bear all costs and expenses
incurred by it in connection with the submission of any dispute
to a Review Board. No such costs or expenses incurred by the
Assuming Bank shall be subject to reimbursement by the FDIC Party
under this Agreement or otherwise. The Review Board shall have no
authority to award costs or expenses incurred by either party to
these proceedings.
(viii) Any dispute resolution proceeding held pursu
ant to this Section 2.1(f) shall not be public. In addition, each
party and each member of any Review Board shall strictly maintain
the confidentiality of all issues, disputes, arguments, positions
and interpretations of any such proceeding, as well as all
information, attachments, enclosures, exhibits, summaries,
compilations, studies, analyses, notes, documents, statements,
schedules and other similar items associated therewith. Pursuant
to ADRA, dispute resolution communications may not be disclosed
either by the parties or by any member of the Review board
unless:
(1) all parties to the dispute resolution proceeding
agree in writing;
(2) the communication has already been made public;
(3) the communication is required by statute to be made
public; or
(4) a court determines that such testimony or
disclosure is necessary to prevent a manifest
injustice, help establish a violation of the law or
prevent harm to the public health or safety, or of
sufficient magnitude in the particular case to outweigh
the integrity of dispute resolution proceedings in
general by reducing the confidence of parties in future
cases that their communications will remain
confidential.
75
(ix) Any dispute resolution proceeding pursuant to this
Section 2.1(f) (whether as a matter of good faith negotiations,
by resort to a Review Board, or otherwise) is a compromise
negotiation for purposes of the Federal Rules of Evidence and
state rules of evidence. The parties agree that all proceedings,
including any statement made or document prepared by any party,
attorney or other participants are privileged and shall not be
disclosed in any subsequent proceeding or document or construed
for any purpose as an admission against interest. Any document
submitted and any statements made during any dispute resolution
proceeding are for settlement purposes only. The parties further
agree not to subpoena any of the members of the Review Board or
any documents submitted to the Review Board. In no event will the
Neutral Member voluntarily testify on behalf of any party.
(x) No decision, interpretation, determination,
analysis, statement, award or other pronouncement of any Review
Board shall constitute precedent as regards any subsequent
proceeding (whether or not such proceeding involves dispute
resolution under this Exhibit 13.14) nor shall any Review Board
be bound to follow any decision, interpretation, determination,
analysis, statement, award or other pronouncement rendered by any
previous Review Board or any other previous dispute resolution
panel which may have convened in connection with a transaction
involving other failed financial institutions or Federal
assistance transactions.
(xi) The parties may extend any period of time in this
Section 2.1(f) by mutual agreement. Notwithstanding anything
above to the contrary, no dispute shall be submitted to a Review
Board until each member of the Review Board, and any substitute
member, if applicable, agrees to be bound by the provisions of
this Section 2.1(f) as applicable to members of a Review Board.
Prior to the commencement of the Review Board proceedings, or, in
the case of a substitute Neutral Member, prior to the re-
commencement of such proceedings subsequent to that substitution,
the Neutral Member shall provide a written oath of impartiality.
2.2 Administration of Shared-Loss Assets. The Assuming Bank
shall at all times prior to the Termination Date comply with the
Rules Regarding the Administration of Shared-Loss Assets as set
forth in Article III of this Exhibit.
2.3 Auditor Report; Right to Audit.
(a) Within ninety (90) days after the end of each
calendar year from and including the calendar year during which
Bank Closing falls to and including the calendar year during
which the Termination Date falls, the Assuming Bank shall deliver
to the Corporation and to the Receiver a report signed by its
independent public accountants stating that they have reviewed
the terms of this Agreement and that, in the course of their
annual audit of the Assuming Bank's books and records, nothing
has come to their attention suggesting that any computations
required to be made by the Assuming Bank during such calendar
year by this Article II were not made by the Assuming Bank in
accordance herewith. In the event that the Assuming Bank cannot
comply with the preceding sentence, it shall promptly submit to
the Receiver corrected computations together with a report signed
by its independent public accountants stating that, after giving
effect to such corrected computations, nothing has come to their
76
attention suggesting that any computations required to be made by
the Assuming Bank during such year by this Article II were not
made by the Assuming Bank in accordance herewith. In such event,
the Assuming Bank and the Receiver shall make all such accounting
adjustments and payments as may be necessary to give effect to
each correction reflected in such corrected computations,
retroactive to the date on which the corresponding incorrect
computation was made.
(b) The Assuming Bank shall perform on a semi-annual
basis an internal audit of its compliance with the provisions of
this Article II and shall provide the Receiver and the
Corporation with copies of the internal audit reports and access
to internal audit workpapers related to such internal audit.
(c) The Receiver or the Corporation may perform an
audit to determine the Assuming Bank's compliance with the
provisions of this Agreement, including this Article II, at any
time. The scope and duration of any such audit shall be within
the sole discretion of the Receiver or the Corporation, as the
case may be. The Receiver or the Corporation, as the case may be,
shall bear the expense of any such audit. In the event that any
corrections are necessary as a result of such an audit, the
Assuming Bank and the Receiver shall make such accounting
adjustments and payments as may be necessary to give retroactive
effect to such corrections.
2.4 Withholdings. Notwithstanding any other provision
in this Article II, the Receiver, upon the direction of the
Director (or designee) of the Corporation's Division of
Resolutions and Receiverships, may withhold payment for any
amounts included in a Quarterly Certificate delivered
pursuant to Section 2.1, if, in its sole judgment, there is
a reasonable basis for denying the eligibility of an item
for which reimbursement or payment is sought under such
Section. In such event, the Receiver shall provide a written
notice to the Assuming Bank detailing the grounds for
withholding such payment. At such time as the Assuming Bank
demonstrates to the satisfaction of the Receiver that the
grounds for such withholding of payment, or portion of
payment, no longer exist or have been cured, then the
Receiver shall pay the Assuming Bank the amount withheld
which the Receiver determines is eligible for payment,
within fifteen (15) Business Days. In the event the Receiver
or the Assuming Bank elects to submit the issue of the
eligibility of the item for reimbursement or payment for
determination under the dispute resolution procedures of
Section 2.1(f), then (i) if the dispute is settled by the
mutual agreement of the parties in accordance with Section
2.1(f)(iii), the Receiver shall pay the amount withheld (to
the extent so agreed) within fifteen (15) Business Days from
the date upon which the dispute is determined by the parties
to be resolved by mutual agreement, and (ii) if the dispute
is resolved by the determination of a Review Board, the
Receiver shall pay the amount withheld (to the extent so
determined) within fifteen (15) Business Days from the date
upon which the Receiver is notified of the determination by
the Review Board of its obligation to make such payment. Any
payment by the Receiver pursuant to this Section 2.4 shall
be made together with interest on the amount thereof from
the date the payment was agreed or determined otherwise to
be due, at the interest rate per annum determined by the
Receiver to be equal to the coupon equivalent of the three
(3)-month U.S. Treasury Bill Rate in effect as of the first
Business Day of each Calendar Quarter during which such
interest accrues as reported in the Federal Reserve Board's
Statistical Release for Selected Interest Rates H.15
77
opposite the caption "Auction Average - 3-Month" or, if not
so reported for such day, for the next preceding Business
Day for which such rate was so reported.
2.5 Books and Records. The Assuming Bank shall at all
times keep books and records which fairly present all
dealings and transactions carried out in connection with its
business and affairs. Except as otherwise provided for in
the Agreement or this Exhibit, all financial books and
records shall be kept in accordance with generally accepted
accounting principles, consistently applied for the periods
involved and in a manner such that information necessary to
determine compliance with any requirement of the Agreement
or this Exhibit will be readily obtainable, and in a manner
such that the purposes of the Agreement and this Exhibit may
be effectively accomplished. Without the prior written
approval of the Corporation, the Assuming Bank shall not
make any change in its accounting principles affecting the
Shared-Loss Assets except as required by a change in
generally accepted accounting principles. The Assuming Bank
shall notify the Corporation of any change in its accounting
principles affecting the Shared-Loss Assets which it
believes are required by a change in generally accepted
accounting principles.
2.6 Information. The Assuming Bank shall promptly pro
vide to the Corporation such other information, including
financial statements and computations, relating to the
performance of the provisions of the Agreement or otherwise
relating to its business and affairs or this Exhibit, as the
Corporation or the Receiver may request from time to time.
2.7 Tax Ruling. The Assuming Bank shall not at any
time, without the Corporation's prior written consent, seek
a private letter ruling or other determination from the
Internal Revenue Service or otherwise seek to qualify for
any special tax treatment or benefits associated with any
payments made by the Corporation pursuant to the Agreement
or this Exhibit.
ARTICLE III - RULES REGARDING THE ADMINISTRATION OF SHARED-
LOSS ASSETS
3.1 Agreement with Respect to Administration. The
Assuming Bank shall (and shall cause any of its Affiliates
to which the Assuming Bank transfers any Shared-Loss Assets
to) manage, administer, and collect the Shared-Loss Assets
while owned by the Assuming Bank or any Affiliate thereof
during the term of the Agreement in accordance with the
rules set forth in this Article III ("Rules"). The Assuming
Bank shall be responsible to the Receiver and the
Corporation in the performance of its duties hereunder and
shall provide to the Receiver and the Corporation such
reports as the Receiver or the Corporation deems advisable,
including but not limited to the reports required by Section
3.3 hereof, and shall permit the Receiver and the
Corporation at all times to monitor the Assuming Bank's
performance of its duties hereunder.
3.2 Duties of the Assuming Bank. (a) In performance of
its duties under these Rules, the Assuming Bank shall:
(i) manage, administer, collect and effect
Charge-Offs and Recoveries with respect to each Shared-Loss
Asset in a manner consistent with (A) usual and prudent
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business and banking practices and (B) the Assuming Bank's
practices and procedures including, without limitation, the
then-effective written internal credit policy guidelines of
the Assuming Bank, with respect to the management,
administration and collection of and taking of charge-offs
and write-downs with respect to loans, other real estate and
repossessed collateral that do not constitute Shared-Loss
Assets;
(ii) exercise its best business judgment in
managing, administering, collecting and effecting Charge-
Offs with respect to Shared-Loss Assets;
(iii) use its best efforts to maximize
collections with respect to Shared-Loss Assets and, if
applicable for a particular Shared-Loss Asset, without
regard to the effect of maximizing collections on assets
held by the Assuming Bank or any of its Affiliates that are
not Shared-Loss Assets;
(iv) adopt and implement accounting,
reporting, record-keeping and similar systems with respect
to the Shared-Loss Assets, as provided in Section 3.3
hereof;
(v) retain sufficient staff to perform its
duties hereunder; and
(vi) provide written notification in
accordance with Article IV of this Exhibit immediately after
the execution of any contract pursuant to which any third
party (other than an Affiliate of the Assuming Bank) will
manage, administer or collect any of the Shared-Loss Assets,
together with a copy of that contract.
(b) Any transaction with or between any Affiliate
of the Assuming Bank with respect to any Shared-Loss Asset
including, without limitation, the execution of any contract
pursuant to which any Affiliate of the Assuming Bank will
manage, administer or collect any of the Shared-Loss Assets,
or any other action involving self-dealing, shall be subject
to the prior written approval of the Receiver or the
Corporation.
(c) The following categories of expenses shall not
be deemed to be Reimbursable Expenses or Recovery Expenses:
(i) Federal, State, or local income taxes
and expenses related thereto;
(ii) salaries or other compensation and
related benefits of Assuming Bank employees and the
employees of its Affiliates including, without limitation,
any bonus, commission or severance arrangements, training,
payroll taxes, dues, or travel- or relocation-related
expenses;
(iii) the cost of space occupied by the
Assuming Bank, any Affiliate thereof and their staff, the
rental of and maintenance of furniture and equipment, and
expenses for data processing including the purchase or
enhancement of data processing systems;
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(iv) except as otherwise provided herein,
fees for accounting and other independent professional
consultants (other than consultants retained to assess the
presence, storage or release of any hazardous or toxic
substance, or any pollutant or contaminant with respect to
the collateral securing a Shared-Loss Loan that has been
fully or partially charged-off); provided, that for purposes
of this Section 3.2(c)(iv), fees of attorneys and appraisers
engaged as necessary to assist in collections with respect
to Shared-Loss Assets shall not be deemed to be fees of
other independent consultants;
(v) allocated portions of any other overhead
or general and administrative expense other than any fees
relating to specific assets, such as appraisal fees or
environmental audit fees, for services of a type the
Assuming Bank does not normally perform internally;
(vi) any expense not incurred in good faith
and with the same degree of care that the Assuming Bank
normally would exercise in the collection of troubled assets
in which it alone had an interest; and
(vii) any expense incurred for a product,
service or activity that is of an extravagant nature or
design.
(d) The Assuming Bank shall not contract with
third parties to provide services the cost of which would be
a Reimbursable Expense or Recovery Expense if the Assuming
Bank would have provided such services itself if the
relevant Shared-Loss Assets were not subject to the loss-
sharing provisions of Section 2.1 of this Exhibit.
3.3 Shared-Loss Asset Records and Reports. The
Assuming Bank shall establish and maintain records on a
separate general ledger, and on such subsidiary ledgers as
may be appropriate to account for the Shared-Loss Assets, in
such form and detail as the Receiver or the Corporation may
require, to enable the Assuming Bank to prepare and deliver
to the Receiver or the Corporation such reports as the
Receiver or the Corporation may from time to time request
regarding the Shared-Loss Assets and the Quarterly
Certificates required by Section 2.1 of this Exhibit.
3.4 Related Loans.
(a) The Assuming Bank shall not manage,
administer or collect any "Related Loan" in any manner which
would have the effect of increasing the amount of any
collections with respect to the Related Loan to the
detriment of the Shared-Loss Asset to which such loan is
related. A "Related Loan" means any loan or extension of
credit held by the Assuming Bank at any time on or prior to
the end of the final Recovery Quarter that is: (i) made to
the same Obligor with respect to a Loan that is a Shared-
Loss Asset or with respect to a Loan from which Other Real
Estate, Additional ORE or Subsidiary ORE derived, or (ii)
attributable to the same primary Obligor with respect to any
Loan described in clause (i) under the rules of the Assuming
Bank's Chartering Authority concerning the legal lending
limits of financial institutions organized under its
jurisdiction as in effect on the Commencement Date, as
applied to the Assuming Bank.
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(b) The Assuming Bank shall prepare and deliver
to the Receiver with the Quarterly Certificates for the
Calendar Quarters ending June 30 and December 31 for all
Shared-Loss Quarters and Recovery Quarters, a schedule of
all Related Loans which are commercial loans or commercial
real estate loans with Legal Balances of $500,000 or more on
the Accounting Records of the Assuming Bank as of the end of
each such semi-annual period, and all other commercial loans
or commercial real estate loans attributable to the same
Obligor on such loans of $500,000 or more.
3.5 Legal Action; Utilization of Special Receivership
Powers. The Assuming Bank shall notify the Receiver in
writing (such notice to be given in accordance with Article
IV below and to include all relevant details) prior to
utilizing in any legal action any special legal power or
right which the Assuming Bank derives as a result of having
acquired an asset from the Receiver, and the Assuming Bank
shall not utilize any such power unless the Receiver shall
have consented in writing to the proposed usage. The
Receiver shall have the right to direct such proposed usage
by the Assuming Bank and the Assuming Bank shall comply in
all respects with such direction. Upon request of the
Receiver, the Assuming Bank will advise the Receiver as to
the status of any such legal action. The Assuming Bank shall
immediately notify the Receiver of any judgment in
litigation involving any of the aforesaid special powers or
rights.
ARTICLE IV -- LOSS-SHARING NOTICES GIVEN TO CORPORATION
AND/OR RECEIVER
As a supplement to the notice provisions contained in
Section 13.7 of the Agreement, any notice, request, demand,
consent, approval, or other communication (a "Notice") given
to the Corporation and/or the Receiver in the loss-sharing
context shall be given as follows:
4.1 With respect to a Notice under Sections 2 and Sections
3.2, 3.3, and 3.4 of this Exhibit:
Federal Deposit Insurance Corporation
Division of Resolutions and Receiverships
550 17th Street, N.W.
Washington, D.C. 20429
Attention: Assistant Director (Agreement Management)
4.2 With respect to a Notice under Section 3.5 of this
Exhibit:
Federal Deposit Insurance Corporation
Legal Division
1910 Pacific Avenue
Dallas, Texas 75201
Attention: Regional Counsel
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with a copy to:
Federal Deposit Insurance Corporation
Legal Division
550 17th Street, N.W.
Washington, D.C. 20429
Attention: Associate General Counsel (Corporate Legal
Issues)
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