Exhibit 10.15
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“ Agreement ”) is made and entered into as of
this day of December 2005 (the
“ Effective Date ”) by and between A. Vincent
Siciliano (“ Executive ”) and 1
st Pacific Bank of California, a California
state-chartered bank (the “ Bank ”), with regard
to the following:
A.
Executive has served as the President and Chief Executive Officer
of the Bank under an Employment Agreement between Executive and the
Bank dated January 1, 2005 (the “ Former Employment
Agreement ”), which the parties desire to terminate as of
the Effective Date without further liability of the Bank or
Executive thereunder of any kind.
B.
Executive and the Bank have agreed that Executive shall continue to
serve as the President and Chief Executive Officer and a full-time
employee of the Bank under the terms of this Agreement, and as such
is expected to make a major contribution to the profitability,
growth and financial strength of the Bank.
C.
The Bank considers the availability of Executive’s services,
managerial skills and business experience to be in the best
interests of the Bank and the shareholders of the Bank and desires
to assure the continued services of Executive on behalf of the
Bank.
D.
Executive is willing to be employed by the Bank upon the
understanding that the Bank will provide him with income security
and benefits if his employment with the Bank is terminated, upon
certain terms and conditions.
NOW, THEREFORE, for valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
Definitions .
“ Automobile ”
shall have the meaning set forth in Paragraph 3.5.
“ Bank ” means
1st Pacific Bank of California, a California state-chartered bank,
its successors and permitted assigns.
“ Bank Board ”
means the Board of Directors of the Bank.
“ Beneficiary ”
means the person or entity to receive rights or benefits under this
Agreement, as set forth in this Agreement, in the event of the
death of Executive. Unless otherwise specified in a written
notice to the Bank, the Beneficiary shall be the spouse of
Executive, if any, and if there is none, the estate of Executive
(including any trust created by the terms of Executive’s
will) or, if Executive provides the Bank with written notice
thereof prior to his death, any trust as to which Executive was a
settlor with a power of revocation.
“ Benefits ”
means the types and amounts of benefits provided under
Paragraph 3.7, provided that if at the date of reference the
terms of any Bank insurance plan prohibit the continuance or
recommencement of insurance benefits that Executive formerly held,
the Bank shall be obligated to pay to Executive in cash on a
monthly basis an amount equal to the Bank’s
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former premium payments (pro rated
on a monthly basis) for the benefit of Executive under such plan,
except that if Executive is entitled to COBRA health insurance
benefits the amount shall be increased to the amount payable by
Executive for such benefits if higher than the Bank’s former
premium payments.
“ Change of Control
” means the occurrence of any of the following
events:
(i)
any “person” (as used in Section 13(d) of the
Securities Exchange Act of 1934 and the rules promulgated
thereunder) becomes the “beneficial owner” (as defined
in Rule 13d-3) of securities representing a majority of the
voting power of the then outstanding securities of the Bank;
or
(ii)
a sale of assets involving all or substantially all of the assets
of the Bank, or a merger or consolidation of the Bank in which the
holders of securities of the Bank immediately prior to such event
hold in the aggregate less than a majority of the securities of the
Bank or any other surviving or resulting entity immediately after
such event.
Notwithstanding the foregoing, a
Change in Control shall not be deemed to have occurred in the event
the Bank forms a holding company as a result of which the holders
of the Bank’s outstanding voting securities immediately prior
to the transaction hold, in approximately the same relative
proportions as they held prior to the transaction, substantially
all of the outstanding voting securities of a holding company
owning all of the Bank’s outstanding voting securities after
the completion of the transaction.
“ Change of Control
Severance Benefits ” means (i) an amount equal to
the sum of (y) two (2) times Executive’s base
annual salary at the rate then in effect in accordance with
Paragraph 3.1, plus (z) the amount actually paid by the
Bank to Executive under the Plan for the immediately preceding
year; and (ii) continuation of benefits provided under
Paragraph 3.7 or substitute equivalent benefits in the event
that the particular benefits (for instance, insurance coverage) are
not carried by the Bank under its programs following the Change of
Control Termination, for a period of twelve (12) months.
“ Change of Control
Termination ” means the termination of employment of
Executive within twelve (12) months after a Change of Control
(i) by the Bank under Paragraph 4.1.5; or (ii) by
Executive under Paragraph 4.2 for Good Cause.
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Disability ”
shall be deemed to occur on the date the Executive is, by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the
Bank.
“ Executive ”
means A. Vincent Siciliano.
“ Expiration Date
” means December 31, 2007.
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“ Good Cause ”
means: (i) a reduction in Executive’s base salary
below the rate then in effect in accordance with
Paragraph 3.1; (ii) the Bank requiring that Executive be
based at a location more than fifty (50) miles from the
Bank’s headquarters as of the Effective Date (excluding
travel for Bank business and other temporary relocations of no more
than thirty (30) days individually); (iii) a reduction in his
title; or (iv) the continuation after a Change of Control, or
imposition within six (6) months after a Change of Control, of
a material reduction in the duties or authority of Executive so
that he is no longer performing substantially all of the duties of
a president and chief executive officer of a community
bank.
“ Plan ” means
the 1st Pacific Bank of California Incentive Compensation Plan for
Senior Management, in substantially the form attached hereto as
Exhibit A.
“ Separation and Consulting
Agreement ” means the Separation and Consulting Agreement
and General Release of Claims, substantially in the form attached
hereto as Exhibit B.
“ Trade secrets and other
proprietary and confidential information ” means and
consist of, for example, and not intending to be inclusive,
information concerning any matters relating to the business of the
Bank, any of its customers, governmental relations, customer
contacts, underwriting methodology, loan program configuration and
qualification strategies, marketing strategies and proposals, or
any other information concerning the business of the Bank, its
subsidiaries and affiliates, and the Bank’s good will;
provided that “Trade secrets and other proprietary and
confidential information” shall not be deemed to include
information that is or becomes, through no fault of Executive, in
the public domain.
2.
Rights and Duties of Executive .
2.1
Employment . The Bank hereby employs Executive as its
President and Chief Executive Officer, and Executive accepts the
duties described herein, and agrees to discharge the same
faithfully and to the best of his ability. Executive shall
perform such other duties as shall be from time to time prescribed
by the Bank Board. Executive shall devote his full business
time and attention to the business and affairs of the
Bank.
2.2
Termination of Former Employment Agreement . As of the
Effective Date, the Former Employment Agreement, and all of its
exhibits, shall terminate without further liability of the Bank or
Executive thereunder of any kind.
2.3
At-Will Employment . Executive’s employment with
the Bank is not for a fixed period of time and can be terminated at
the will of either Executive or the Bank at any time, with or
without notice, and with or without cause. There are no
agreements between Executive and the Bank contrary to
Executive’s at-will status. Neither a Bank Board member
nor a manager, supervisor, employee or agent of the Bank is
authorized to alter Executive’s at-will status, except for
the Chairperson of the Bank Board, and then only in a writing
signed both by the Chairperson of the Bank Board and Executive
following adoption of a resolution by the Bank Board authorizing
the specific change reflected in such writing and authorizing the
Chairperson of the Bank Board to sign such writing. Executive
should neither assume nor imply any promise of employment for any
specified period of time except through such a signed
writing. This
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Agreement shall terminate
immediately without further liability or obligation to Executive if
(i) the Bank is closed by any supervisory authority, or
(ii) any supervisory authority demands, by proposed consent
agreement or by a Prompt Corrective Action Directive, or pursuant
to cease and desist powers, the removal of Executive from his
position as the President or Chief Executive Officer of the
Bank. Should Executive remain employed under this Agreement
through the Expiration Date, Executive’s employment with the
Bank shall automatically terminate on that date and this Agreement
shall be of no force or effect on or after that date, subject to
Paragraphs 5.4 and 8.6.
2.4
Outside Activities . Executive shall not have other
employment, consulting, charitable or independent contractor work
that materially interferes with the fulfillment of
Executive’s duties to the Bank. Executive shall not
undertake expanded commitments to business or charitable activities
or engage in new such activities before consulting with the
Chairperson of the Bank or the Chairperson of the Personnel
Committee of the Bank Board. Executive will not provide
services to, hold or make any investment in or loan to, or
participate in the management or business of, any bank, savings and
loan, credit union, thrift and loan, industrial loan or other
entity engaged in the business of making loans or accepting
deposits or both; provided that Executive may own less than 5% of
the voting stock of any company that files reports under the
Securities Exchange Act of 1934.
3.
Compensation and Benefits . In consideration for the
services to be rendered by Executive to the Bank, the Bank agrees
to provide Executive with the following compensation and
benefits:
3.1
Salary . The Bank shall pay Executive a minimum annual
salary at the rate of Two Hundred Thousand Dollars ($200,000) for
the period from the date hereof to December 31, 2005,
increasing to Two Hundred Ten Thousand Dollars ($210,000) for the
period of January 1, 2006 to December 31, 2006 and
increasing to Two Hundred Thirty One Thousand ($231,000) from
January 1, 2007 through the Expiration Date, due and payable
biweekly, or otherwise in accordance with the Bank’s policy
for the scheduling of salary payments to employees as in effect
from time to time. Other salary increases, if any, shall only
be as approved by the Bank Board in its sole discretion.
3.2
Intentionally Omitted .
3.3
Withholding and Deductions . The Bank shall withhold
and/or deduct from any and all salary or other payments to
Executive, all taxes which may be required to be deducted or
withheld under any provision of law (including, but not limited to,
social security payments and income tax withholding) now in effect
or which may become effective any time during Executive’s
employment with the Bank.
3.4
Executive Incentive Compensation . In general, the
Bank believes that superior performance of Executive should be
rewarded and encouraged by incentive compensation. the Bank
Board shall adopt the Plan pursuant to which Executive may be
entitled to incentive compensation provided that the performance
goals of the Bank as set forth in the Plan are achieved and the
terms and conditions of the Plan are satisfied. In addition,
Executive shall be entitled to other incentive compensation and
bonuses as the Bank Board may determine
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in its sole discretion.
Notwithstanding the foregoing, Executive shall not participate in
the Bank’s Team Share Plan.
3.5
Automobile . The Bank shall provide Executive with the
use of an automobile to be owned or leased by the Bank, mutually
agreeable to the Bank and Executive (the “ Automobile
”). All loan and lease payments and operating costs of
the Automobile shall be borne by the Bank. Executive agrees
to maintain and provide the Bank with adequate records of expenses
incurred in the operation and maintenance of the Automobile and the
extent of the business use of the Automobile. Within ten (10)
business days after the Bank’s obligation to provide the
Automobile ceases, except in the event the Automobile is required
to be transferred to Executive under one of
Paragraphs 5.2.1(c), 5.3.1, 5.4.1 or 5.4.2, the Automobile
shall be returned to the Bank, or, at Executive’s option, the
Bank shall transfer the Automobile to Executive in exchange for
Executive’s pay-off of any lease or loan (including early
lease termination charges, taxes and other costs related to such
pay-off), or payment to the Bank of the unamortized value of the
Bank’s investment in the Automobile, if any, whichever is
lower.
3.6
Expense Reimbursement . The Bank agrees to reimburse
Executive for all ordinary and necessary expenses incurred by
Executive on behalf of the Bank in accordance with the Bank’s
policies and procedures as in effect from time to time, including
entertainment, meal and travel expenses.
3.7
Insurance . The Bank shall provide life insurance with
a life insurance benefit equal to at least one and one-half times
the annual salary of Executive at the rate then in effect under
Paragraph 3.1, which shall be provided through any group life
insurance plan of the Bank at the Bank’s option. The
Bank shall provide to Executive the long term disability insurance
provided by the Bank to employees at the Effective Date under the
Bank’s group plan or shall replace it with similar coverage
so long as Executive is employed by the Bank. Executive shall
be entitled to participate in such other insurance benefits as are
generally provided to the employees of the Bank from time to
time.
3.8
Vacation . Executive shall be entitled to five weeks
of vacation time and pay per annum, which shall be scheduled in
Executive’s discretion, subject to and taking into account
applicable banking laws and regulations. Unused vacation may
be accrued up to a maximum of six weeks of unused vacation in
addition to the vacation to which Executive may be entitled in the
current year, and thereafter Executive shall cease to accrue unused
vacation until used.
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4.
Termination
.
4.1
Employer Right to Terminate Employment . Nothing in
this Agreement shall adversely affect the right of the Bank Board
to terminate Executive. The Bank Board has the right to
terminate the employment of Executive with the Bank at will, with
or without cause, upon delivery of written notice to Executive
(except in the case of death of Executive, in which event
termination shall automatically occur at the date of death), and
including, but not limited to, for any of the following
grounds:
4.1.1
Willful breach or habitual neglect or inability (except where such
inability is due to Disability or death) to perform
Executive’s duties hereunder, including without limitation
failure to cooperate with the Bank Board in the structuring,
documentation or negotiation of a transaction that might result in
a Change of Control;
4.1.2
Malfeasance or misfeasance in the performance of Executive’s
duties hereunder, imposition of a regulatory order to remove
Executive, failure to comply with a direction by the Chairperson of
the Bank Board, material breach of Bank policy or procedure, or
breach of this Agreement;
4.1.3
Immoral or illegal conduct, conviction of a felony, conviction of a
misdemeanor involving moral turpitude;
4.1.4
Disability or death;
4.1.5
Determination in the complete discretion of the Bank Board that the
employment of Executive should be terminated prior to the
Expiration Date, without reference to the grounds set forth in
Paragraphs 4.1.1, 4.1.2, 4.1.3 or 4.1.4, and specification of
the termination date in the notice described in
Paragraph 4.1.
4.2
Termination by Executive . Executive may terminate his
employment with the Bank at will, for any reason, and without
advance notice. However, as a courtesy, Executive is
requested to deliver written notice to the Bank three
(3) months in advance of the date such termination is to take
effect, except with respect to a termination for Good Cause.
Executive may terminate his employment with the Bank prior to the
Expiration Date for Good Cause upon thirty (30) days notice to the
Bank and the Bank’s failure to cure within that time.
To be effective, such notice must be given by Executive within
fifteen (15) days of the occurrence of the event that constitutes
Good Cause, provided that if Good Cause results from a material
reduction in the duties or authority of Executive so that he is no
longer performing substantially all of the duties of a president
and chief executive officer of a community bank and such reduction
occurs before a Change of Control occurs and continues after the
Change of Control occurs, Executive shall be required to give the
thirty (30) day notice described above within fifteen (15) days of
the Change of Control.
4.3
Termination Upon Expiration . Should Executive remain
employed under this Agreement through the date five (5) months
prior to the Expiration Date, Executive shall have the right, while
he is still employed, to provide written notice to the Bank of his
desire to remain employed after the Expiration Date on or before
the date four (4) months prior to the Expiration Date.
If Executive and the Bank have not entered into an amendment of
this
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Agreement extending its term or
another written agreement replacing this Agreement on or prior to
the date three (3) months prior to the Expiration Date, and
Executive’s employment is not otherwise terminated,
Executive’s employment shall automatically terminate on the
Expiration Date. If such an extension or replacement is not
entered into on or prior to three (3) months prior to the
Expiration Date, Executive shall be deemed to have been given
advance notice by the Bank that his employment with the Bank will
terminate as of the Expiration Date. Nothing in this
Paragraph shall prejudice the at-will status of Executive or
require the Bank to negotiate with Executive.
4.4
Post-Notice Activities of Executive . In the event
termination is not effective immediately upon the delivery of
notice of termination by the Bank or Executive, the Bank shall have
the right to require that during the period between the giving of
notice and the effective date of termination, Executive’s
activities and responsibilities be curtailed as deemed appropriate
by the Bank. Such curtailment shall include, without
limitation, removing Executive from corporate offices, requiring
Executive to be physically absent from the Bank’s facilities,
and eliminating Executive’s access to computer systems,
e-mail and telephone systems.
4.5
Automatic Resignations . Upon notice of termination of
employment Executive shall, automatically and without further
action by any party, be deemed to have resigned from all
directorships with the Bank and any of its subsidiaries and
affiliates. Upon termination of employment, Executive shall,
automatically and without further action by any party, be deemed to
have resigned from all offices and other capacities with the Bank
and any of its subsidiaries and affiliates.
5.
Post-Termination Payments and Benefits . The following
are the post-termination payments and benefits to which Executive
is entitled upon termination of employment with the
Bank.
5.1
Termination Resulting from Breach . In the event the
employment of Executive is terminated under Paragraphs 4.1.1,
4.1.2 or 4.1.3, the Bank shall provide Executive only the base
salary and Benefits, if any, then-provided, on the terms
then-provided, due him through the date of termination and shall
not be obligated to provide any other compensation or
Benefits.
5.2
Other Terminations .
5.2.1
Payments . In the event the employment of Executive is
terminated under Paragraphs 4.1.4 or 4.1.5, or under
Paragraph 4.2 for Good Cause, and subject to Executive first
entering into the Separation and Consulting Agreement and such
agreement being fully effective, the Bank shall provide Executive
only the following:
(a)
a payment equal to eighteen (18) months of the base salary at the
rate then in effect in accordance with Paragraph 3.1, with
such payment to be made in two equal installments, the first of
which shall be paid to Executive within five (5) days
following the date the Separation and Consulting Agreement is fully
effective, and the second of which shall be paid to Executive on
the year anniversary of such date;
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(b)
his portion of incentive compensation under the Plan, if any, to
which he may be entitled if the Bank achieves the performance
requirements under the Plan for the year in which Executive’s
employment is terminated, subject to the terms and conditions of
the Plan;
(c)
all right, title and interest in the Automobile to Executive as
soon as reasonably practicable following the date the Separation
and Consulting Agreement is fully effective;
(d)
a payout of all accrued by unused vacation as of the date of
termination; and
(e)
continuation of the group medical and other insurance benefits, if
any, then-provided under Paragraph 3.7, for a period of nine
(9) months from the date of termination, subject to the
limitations of and to the extent permitted by the policy or
policies under which subh benefits are provided.
5.2.2
Executive’s Right to Waive Payments . Executive
shall have the right to waive his rights to receive such payments
and Benefits otherwise due under this Paragraph 5.2 by giving
advance written notice of such waiver to the Bank. After
receipt of such notice, the Bank shall have no further obligation
to provide any payments or Benefits under this
Paragraph 5.2.
5.3
Change of Control .
5.3.1
Payment Following Certain Terminations Related to Change of
Control . Subject to Executive first entering into the
Separation and Consulting Agreement and such agreement being fully
effective, in respect of any Change of Control Termination the Bank
shall pay to Executive the Change of Control Severance Benefits in
a lump sum (except for the benefits under Paragraph 3.7, which
shall be continued) within five (5) days following the date
the Separation and Consulting Agreement is fully effective, and
take such actions as may be necessary to transfer and assign all
right, title and interest in the Automobile to Executive as soon as
reasonably practicable following the date the Separation and
Consulting Agreement is fully effective.
5.3.2
Executive’s Right to Waive Payments . Executive
shall have the right to waive his rights to receive payments and
Benefits otherwise due under this Paragraph 5.3 by giving
advance written notice of such waiver to the Bank. After
receipt of such notice, the Bank shall have no further obligation
to provide any payments or Benefits under this
Paragraph 5.3.
5.3.3
Adjustments in Payments . The terms of this
Paragraph 5.3.3 override and control any and all other terms
of this Agreement to the extent inconsistent with this
Paragraph 5.3.3. This Paragraph 5.3.3 shall apply
to the extent that the aggregate present value of any or all
payments and benefits in the nature of compensation to (or for the
benefit of) Executive provided under this Agreement or otherwise
provided to Executive by or on behalf of the Bank or any affiliate,
parent or controlling entity of the Bank, constitute a
“parachute payment” under the provisions of
Section 280G of the Code, and the regulations thereunder
(the
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“ Total Payments
”). In the event that the Total Payments would exceed
an amount equal to 299% of Executive’s “base
amount” as that term is defined in Section 280G of the
Code, as determined by the independent public accountants for the
Bank (the “ Accountants ”), prior to the first
relevant payment under this Agreement, the Bank shall inform
Executive of this determination and payment shall be delayed for a
period of no longer than 30 days. During that 30 days, the
Accountants, legal counsel to the Bank, Executive and
Executive’s tax advisors shall review the tax impact to
Executive of all of the payments and benefits included in the
calculation of the “parachute payment” and Bank shall
pay to Executive under this Agreement whichever of the following in
the Bank’s judgment would provide Executive with the higher
after-tax compensation, after taking into account all applicable
state and federal taxes (computed at the highest marginal rate)
including Executive’s share of F.I.C.A. and Medicare taxes
and any taxes payable pursuant to Section 4999 of the
Code:
(a)
A reduced payment under this Agreement (or a reduction in other
payments or benefits included in the Total Payments to the extent
agreed by Executive and legally and contractually permissible) such
that the Total Payments are no more than 299% of the “base
amount”; or
(b)
The payment required under this Agreement.
5.4
Termination at Expiration Date . If Executive’s
employment is terminated as a result of expiration of this
Agreement at the Expiration Date, the Bank shall provide Executive
only the following:
5.4.1
if within ten (10) business days following the Expiration Date,
Executive first enters into the Separation and Consulting Agreement
and that agreement is fully effective, the Bank shall pay Executive
his base monthly salary at the rate in effect at the Expiration
Date under Paragraph 3.1 for a period of six (6) months
from the date the Separation and Consulting Agreement is fully
effective, with the first payment to be paid one month after such
date, or at the option of the Bank a lump sum payment of such
amount, and take such actions as may be necessary to transfer and
assign all right, title and interest in the Automobile to Executive
as soon as reasonably practicable following the date the Separation
and Consulting Agreement is fully effective.
5.4.2
if within ten (10) business days following the Expiration Date,
Executive does not enter into the Separation and Consulting
Agreement and that agreement is not fully effective, the Bank has
the option to pay Executive his base monthly salary at the rate in
effect at the date of termination under Paragraph 3.1 for a
period of six (6) months from the date of termination, with
the first payment to be paid on the one month anniversary of such
date, and take such actions as may be necessary to transfer and
assign all right, title and interest in the Automobile to Executive
as soon as reasonably practicable following the Expiration Date,
and if the Bank provides the first such payment and transfers and
assigns the Automobile, regardless of whether Executive has
executed and entered into the Separation and Consulting Agreement
with the Bank, Executive shall be deemed bound by such agreement in
the form attached hereto in exchange for the consideration provided
in this Paragraph, as if executed and delivered by him and fully
effective, other than with respect to releases of claims and
consideration for those releases;
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5.4.3
a payout of all accrued but unused vacation as of the date of
termination;
5.4.4
continuation of the group medical and other insurance benefits, if
any, then-provided under Paragraph 3.7, for a period of six
(6) months from the date of termination, subject to the
limitations of and to the extent permitted by the policy or
policies under which such benefits are provided; and
5.4.5
payment of certain incentive compensation in compliance with the
Plan, with Executive’s termination as a result of expiration
being considered for the limited purpose of interpreting the Plan
in the context of this Agreement as being a termination
“without cause.”
5.5
Consideration for Payments and Remedies . Without
limiting any other remedies available to the Bank, the payments to
be made under Paragraphs 5.2, 5.3 or 5.4 (subject to the
exceptions stated therein) after the date of termination of
Executive’s employment shall be subject to Executive’s
execution of the Separation and Consulting Agreement, and
Executive’s continued compliance with the Separation and
Consulting Agreement and the terms of this Agreement that are
effective after termination of Executive’s employment,
through the making of the last such payment.
5.6
Death Following Termination . In the event that
Executive dies while receiving any payments under this
Paragraph 5, such payments shall be continued for the benefit
of the Beneficiary, as would otherwise be required under this
Paragraph 5.
5.7
Nonassignability . Neither Executive nor any other
person or entity shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the rights or benefits of Executive
under this Paragraph 5, nor shall any of said rights or
benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance, owed by Executive or
any other person or entity, or be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise. The
terms of this Paragraph 5.7 shall not affect the
interpretation of any provision of this Agreement.
5.8
Claims Procedure . The Bank Board shall make all
determinations as to rights to benefits under this
Paragraph 5.
5.9
Regulatory Restrictions . The parties understand and
agree that at the time any payment would otherwise be made or
benefit provided under this Paragraph 5, depending on the
facts and circumstances existing at such time, the satisfaction of
such obligations by the Bank may be deemed by a regulatory
authority to be illegal, an unsafe and unsound practice, or for
some other reason not properly due or payable by the Bank.
Among other things, the regulations at 12 C.F.R. Part 30, Appendix
A promulgated pursuant to Section 39(a) of the Federal
Deposit Insurance Act, and at 12 C.F.R. Part 359, or similar
regulations or regulatory action following similar principles may
apply at such time. The Bank agrees that to the extent
reasonably feasible, it will in good faith seek to determine the
position of the appropriate regulatory authority in advance of each
payment or benefit otherwise due under this Paragraph 5,
including
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seeking the approval or acquiescence
of the appropriate regulatory
