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FEDERAL HOME LOAN BANK
OF SEATTLE
EXHIBIT 10.6
ADVANCES, SECURITY AND DEPOSIT AGREEMENT
May 20, 1999
This Advances, Security and Deposit Agreement ("Agreement") is made
as of the above date and is between the Federal Home Loan Bank of Seattle,
including its successors ("Seattle Bank"), and CITY BANK, including its
successors ("Customer"). Except as to Customers, which have not signed prior
Agreements, it renews, amends and restates prior contracts between the parties
or their predecessors entitled "Advances Agreement, Pledge Agreement and
Security Agreement" and "Deposit Account Resolution."
RECITALS
A. The Seattle Bank is authorized by the Federal Home Loan Bank Act, as
amended, and related regulations and directives ("Act"), and by the
Seattle Bank's own policies, to make loans to the Customer
("Advances"). The Seattle Bank is also authorized to provide demand
and time deposit accounts to the Customer ("Accounts") and to
perform additional services, all of which may create obligations
from the Customer to the Seattle Bank ("Other Obligations"). Other
Obligations may include, without limitation, debts by reason of
interest rate swap agreements, letters of credit, overdrafts,
settlements, and wire transfers.
B. This Agreement, and related policies which are, from time to time,
sent by the Seattle Bank to its Customers, specifies the terms and
conditions under which the Seattle Bank may make Advances available
to the Customer; open and use Accounts; and collateralize such
Advances and Other Obligations.
AGREEMENTS
1. Prior to or at the time of the execution and deliver of this
Agreement, the Customer has provided the Seattle Bank with a
certified copy of a resolution adopted by the Customer's Board of
Directors or other governing body ("Resolution") approving this
Agreement an authorized designated officers or employees of the
Customer to obtain Advances, open and use Accounts, and incur Other
Obligations. The Seattle Bank may rely upon, and the Customer is
estopped from denying, the authority of the persons designated in
the Resolution.
2. The Customer may request Advances from the Seattle Bank by applying
to the Seattle Bank in such form, as it shall require.
3. Each Advance shall be evidenced by a promissory note ("Note") or by
another confirming document as required by the Seattle Bank. The
applicable terms and conditions of this Agreement are incorporated
therein as well as in other agreements, if any, that relate to Other
Obligations.
4. On the first day of each month or at such other times that payments
of principal and/or interest are due, the Customer agrees to pay, or
to authorize a charge to the Customer's Account for the principal
and/or interest that is due on each outstanding Advance, Note or
Other obligation. interest shall be charged at the rate set forth in
the Note or other instrument evidencing the Indebtedness. Delinquent
principal and/or interest may bear interest, at the option of the
Seattle Bank, equal to the Seattle Bank's then current Flexible
Balance advance rate.
5. As collateral ("Security") for the payment of all Advances, Notes or
Other obligations (collectively, "Indebtedness") of the Customer to
the Seattle Bank, the Customer hereby assigns pledges and grants
security interests to the Seattle Bank ("Security interests") in the
following: (a) its stock in the Seattle Bank (which
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cannot be pledged to another entity); (b) its funds on deposit with
the Seattle Bank; (c) its notes or other instruments representing
obligations of third parties, including the proceeds thereof, and
any related mortgages or deeds of trust ("Mortgages") securing any
of them and/or any securities representing an interest in such
Mortgages; (d) securities issued, insured or guaranteed by the
United States government or by any agency thereof; (e) other real
estate-related collateral; and (F) its instruments, accounts,
general intangibles, inventory, equipment and other property in
which a security interest can be granted by the Customer to the
Seattle Bank. Upon the withdrawal from membership in the Seattle
Bank, and as the final part of the plan of liquidation of the
customer's Indebtedness to the Seattle Bank, the stock of such
Customer may be redeemed and credited upon the indebtedness of the
Customer, in whole or in part, for an amount equal to the par value
of the stock which would otherwise be paid to the Customer by the
Seattle Bank.
6. The Customer agrees that it holds the Security for the benefit of,
and subject to the direction and control of, the Seattle Bank;
including, without limitation, the following: (a) Security and
Security interests shall include and extend to after-acquired
Security; (b) the customer may use, commingle or dispose of all or
part of the Security or proceeds thereof if, at all times, it owns
and maintains Security of the types and kinds specified by the Act
and as required to meet the requirements thereof, free and clear of
pledges, liens or other encumbrances of third parties, in such
amount of the outstanding Indebtedness as may be specified by the
Seattle Bank from time to time; (c) at its expense and as soon as
possible upon demand by the Seattle Bank, the Customer will
assemble, segregate and/or deliver such portions of the Security as
are directed by the Seattle Bank at or to a location designated by
it; will allow the Seattle Bank to participate in such assembly,
segregation or delivery and to verify or audit such Security,
including, without imitation, access to the Customer's premises and
records for such purposes; and will protect and promptly disclose to
the Seattle Bank any material change in value of the Security so
assembled, segregated or delivered; (d) the Customer promptly will
make, execute and deliver to the Seattle Bank such assignments,
listings powers or other documents as the Seattle Bank such reports,
audits and confirmations regarding the Security as the Seattle Bank
may reasonably request; and (f) the Customer shall pay to the
Seattle Bank any reasonable fees associated with the processing,
control, and maintenance of such Security.
7. Upon the occurrence of any one or more of the following events
("Default"), the Seattle Bank may, without notice, declare and
thereby cause all Indebtedness of the Customer to be due and payable
immediately: (a) failure of the Customer to make any payment due on
any Indebtedness, or breach of or failure to perform any other duty
as provided herein or in any other agreement to which the Customer
and the Seattle Bank are parties; (b) any taking over of the
Customer or any of its assets by a supervising agency, or an
application for or the appointment of a conservator, receiver,
trustee or liquidator for it or any of its assets; (c) an
adjudication of the Customer's bankruptcy or insolvency; (d) an
assignment by the Customer for the benefit of creditors, a general
transfer of its assets for any purpose or any other form of
liquidations, merger, sale of assets or dissolution of or by the
Customer, (e) existence of facts indicating a representation,
statement or warranty made or furnished to the Seattle Bank by or on
behalf of the Customer in connection with all or part of any
Indebtedness or other transaction was or is false in any material
respect; (f) damage, loss, sale or encumbrance of any of the
Security except as permitted by this Agreement; (g) any levy,
seizure, garnishment (as the debtor), execution, attachment or other
process issued against the Customer; (h) any event which results in
acceleration of the maturity of any debt of the Customer to others;
(i) good faith determination by the Seattle Bank that the Customer's
ability to repay any Indebtedness has become impaired or that a
material adverse change has occurred in the financial condition of
the Customer from that disclosed to the Seattle Bank at the time of
creation of any Indebtedness or subsequently; (j) termination of the
Customer's membership in the Seattle Bank; or (k) good faith
determination by the Seattle Bank that there is a reasonable
possibility that the Indebtedness would not be paid in full from the
proceeds of a liquidation of the Security if the Seattle Bank did
not declare a Default.
8. At any time after Default, the Customer may not substitute Security
without permission of the Seattle Bank, and the Seattle Bank shall
have all of the rights and remedies of a secured party under the
Act, the Uniform Commercial Code of the State of Washington and/or
as otherwise provided by law, by this Agreement or by any other
agreement between the parties ("Default Rights") including, without
limitation, the Seattle Bank's
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right to take immediate possession of any or all Security wherever
located and to dispose of the Security in accordance with applicable
law. If any notice of disposition of Security is required by law,
such notification shall be deemed reasonable and properly given if
mailed, postage prepaid, at least five calendar days before such
disposition to the last address of the Customer then appearing on
the records of the Seattle Bank. The proceeds of any disposition of
Security shall be applied in the following order to payment of: (a)
all reasonable expenses incurred by or on behalf of the Seattle Bank
for the collection, care, safekeeping, sale, foreclosure, delivery
or other disposition of Security including, without limitation,
insurance, commissions, guarantees, security valuation fees,
expenses, costs and reasonable attorneys' fees incurred in
connection therewith; (b) interest on all Indebtedness, whether due
or accrued; (c) the principal amount of all Indebtedness; (d) any
secondarily secured debt of the Customer to any third party who
proves its subordinate security interest in the Security to the
reasonable satisfaction of the Seattle Bank; and (e) any remainder
to the Customer. If there is a deficiency, the Customer shall be
liable to the Seattle Bank therefor. No delay by the Seattle Bank in
the exercise of its Default Rights shall operate as a waiver, and a
waiver of any specific Default Right shall not constitute a waiver
of any other Default Right not specifically waived. The Customer
hereby irrevocably appoints the Seattle Bank and/or its designee as
its true and lawful attorney in fact to deal in any manner with the
Security in the event of a Default.
9. The Customer may open Accounts with the Seattle Bank subject to the
Regulations of the Seattle Bank. Any Customer's funds deposited in
Accounts shall be subject to withdrawal or charge at any time and
from time to time upon wire transfers or any other orders for the
payment of money when made and drawn on behalf of the Customer by a
person or persons authorized by the Customer. The Seattle Bank is
authorized to pay any such wire transfers or other orders, provided
they are in the form prescribed by it, and to charge the Customer's
Accounts therefor, without inquiry as to the circumstances of issue
or the disposition of the proceeds, even if drawn to the individual
order of any authorized person or payable to others for his account.
10. The Seattle Bank, if it acts in good faith and with ordinary care
(and without liability if it does so act), can charge the Accounts
with orders received by the Seattle Bank from any person acting for
or purporting to act for the Customer by telephone, or otherwise
orally, for the transfer of funds to others, including the person
giving such instructions or payable to others for his account, or
between Accounts of the Customer. All authorized Seattle Bank
charges and fees will be charged monthly to such Accounts.
11. The Customer shall maintain a net positive collected balance in all
of its Accounts. The Seattle Bank shall have the option of closing
or restricting the use of Accounts in which positive balances are
not maintained. For each day the aggregate collected balance of an
Account is negative, the Customer shall pay such charges as are
consistent with the Seattle Bank's published schedules.
12. The Customer agrees to provide to the Seattle Bank, within five days
after a request, its business plans and other financial data. In
connection with, and as an extension of, any other informational
rights of the Seattle Bank relating to examination of the Customer
by a supervising agency and reports relating thereto, the Customer
agrees that all Security shall always be subject to audit and
verification, at the Customer's expense, by or on behalf of the
Seattle Bank and that the Seattle Bank shall have access to the
Customer's premises and records for that purpose.
13. If the services of an attorney, either with or without suit, are
engaged by the Seattle Bank in connection with any Default or any
dispute relating to this Agreement, the Customer agrees to pay the
Seattle Bank's reasonable attorneys' fees, expenses and costs
incurred in connection therewith.
14. This Agreement shall be construed and enforced according to the laws
of the State of Washington and the Act. If any provision hereof is
inconsistent with the Act, this Agreement shall be deemed amended to
the end that such provision is not in conflict with the Act. In the
event any such provision cannot be so amended and is found to be
contrary to law, the balance of this Agreement shall remain in full
force and effect if so elected by the Seattle Bank.
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15. This Agreement shall continue until terminated by written notice
from one party to the other, provided that this Agreement shall
remain applicable to all then outstanding Indebtedness and duties of
the Customer and to the documents relating thereto.
City Bank
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(Name of Customer)
By Xxxxxxx X. Xxxxxxxx, Executive Vice President
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(Name)
/s/ Xxxxxxx X. Xxxxxxxx
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(Signature)
Its Executive Vice President Date: May 20, 1999
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(Title)
and
By Xxxx X. Xxxxxx, SVP and Chief Financial Officer
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(Name) (Title)
/s/ Xxxx X. Xxxxxx
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(Signature)
Its SVP and CFO Date: May 20, 1999
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(Title)
FEDERAL HOME LOAN BANK OF SEATTLE
By Xxxxx X. Xxxx Senior Vice President
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(Name) (Title)
/s/ Xxxxx X. Xxxx
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(Signature)
Its Chief Financial Officer Date: June 1, 1999
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(Title)
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