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EXHIBIT 10.5
CONVEYANCE AND INDEMNIFICATION AGREEMENT
This CONVEYANCE AND INDEMNIFICATION AGREEMENT (the "Agreement") dated
November ___, 1996 is entered into between the FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC") in its corporate capacity ("FDIC Corporate"); the FDIC
Receivers (as defined in that certain Settlement Agreement dated as of June 22,
1994) (whether one or more, the "Indemnitee"); FCLT Loans, L.P., as an assignee
of First City Bancorporation of Texas, Inc. ("FCBOT") and its related entities
("FCBOT Affiliated Entities") (FCBOT and the FCBOT Affiliated Entities are
collectively referred to as the "First City Parties") and FIRSTCITY LIQUIDATING
TRUST ("FCLT"). Capitalized terms used in this Agreement and not otherwise
defined shall be given the same meaning as set forth in the Settlement Agreement
(as defined below).
RECITALS:
WHEREAS, pursuant to the terms of that certain Settlement Agreement
dated as of June 22, 1994, between FDIC Corporate, the FDIC Receivers, and the
First City Parties, as amended as of January 30, 1995 (as amended, the
"Settlement Agreement"), the FDIC Receivers agreed to, among other things, (i)
effect distributions of the Surplus (as defined in the Settlement Agreement)
generated out of the First City Bank Receiverships (as defined in the Bankruptcy
Plan) to the First City Parties and (ii) defend certain litigation and other
disputed matters of the First City Parties, the FDIC Receivers, FDIC Corporate
and/or certain other parties: and
WHEREAS, FCLT Loans, L.P. is an assignee of the First City Parties: and
WHEREAS, FCLT is the sole limited partner of FCLT Loans, L.P.; and
WHEREAS, the parties find it to be mutually desirable to terminate the
First City Bank Receiverships prior to the originally anticipated termination
date; and
WHEREAS, the FDIC Receivers desire to make an early final cash
distribution of Surplus in the amount of $19,690,217.33 (the "Cash Assets")
pursuant to Section 5.1 of the Settlement Agreement; and
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WHEREAS, as a condition to the closing of the First City Bank
Receiverships and the final distribution of Surplus by the FDIC Receivers prior
to the scheduled payment date and as consideration therefor, the parties desire
to enter into an agreement whereby (i) FCLT Loans, L.P. will provide indemnity
to the FDIC against any known or unknown liabilities, claims or expenses in an
aggregate amount up to $12 million, $2 million or the amount of known
litigation risk as determined in FDIC's sole discretion, whichever amount is
greater, of which shall be secured by a replenishable, interest bearing account
at FHLB-Chicago, payable to the FDIC, (ii) FCLT Loans, L.P. will assume all
outstanding obligations held by the FDIC associated with the First City Bank
Receiverships and (iii) all of the rights and privileges held by the FDIC
Receivers in cash assets shall be assigned to FCLT Loans, L.P.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties agree as follows:
1. DISTRIBUTION OF SURPLUS ASSIGNMENT OF RIGHTS.
a. ASSIGNMENT OF CASH ASSETS. As the final cash
distribution of Surplus pursuant to Section 5.1 of the Settlement
Agreement, the FDIC Receivers hereby sell, transfer, assign and convey
unto FCLT Loans, L.P. all of FDIC Receivers' rights, title and interest
in and to the Cash Assets.
b. INDEMNIFICATION. As a condition to and in consideration
of the assignment of the Cash Assets from the FDIC Receivers to FCLT
Loans, L.P., FCLT Loans, L.P. agrees to indemnify the FDIC against any
known or unknown liabilities, obligations or actual expenses
incurred by the FDIC which may arise now or in the future until the
Termination Date (as hereinafter defined) associated with the First
City Bank Receiverships (the "Indemnified Obligations"). Such
indemnification shall be subject to the conditions and limitations, and
governed by the procedures, set forth in Section 3 hereof.
2. ASSIGNMENT OF OUTSTANDING LITIGATION
a. PROCEEDS. The FDIC Receivers hereby transfer and
assign to FCLT Loans, L.P., and FCLT Loans, L.P. hereby assumes
and accepts, the obligation to pay all the costs and expenses incurred
or to be incurred in connection with the litigation, claims and
obligations described on Schedule A hereto (the "Outstanding Claims"),
and the right to receive any proceeds recovered by the FDIC in
connection therewith. The FDIC shall have the absolute right to defend
and manage the Outstanding Claims in its sole discretion, including,
but
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not limited to, the right to select counsel to defend the Outstanding Claims
and to settle the Outstanding Claims on terms acceptable to the FDIC.
3. INDEMNIFICATION
a. GENERAL. FCLT Loans, L.P. shall indemnify, and reimburse
Indemnitee for all liabilities, obligations, actual expenses, costs and any
loss incurred by the FDIC associated with the First City Bank Receiverships,
including, but not limited to, actual expenses incurred in connection with the
Outstanding Claims; provided, however, that in no event shall FCLT Loans,
L.P.'s liability under Section 1(b) and this Section 3(a) exceed twelve million
dollars ($12,000,000). The term "actual expenses" as used herein shall include,
but is not limited to, all research costs, accounting charges, review fees,
attorneys' fees, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or actual
expenses of any kind incurred in connection with operating the First City Bank
Receiverships and in defending litigation, preparing to defend, investigating,
or being or preparing to be a witness in litigation.
4. SECURITY AGREEMENT
a. SECURITY INTEREST. FCLT Loans, L.P. hereby grants bargains,
sells, transfers and assigns to Indemnitee a security interest (the "Security
Interest") in and to the following Collateral (as defined herein).
b. COLLATERAL. The Security Interest granted hereby covers the
following collateral (the "Collateral"): A replenishable, interest bearing
account at FHLB-Chicago, payable to the FDIC, evidencing a deposit by FCLT
Loans L.P. in the original principal amount of two million dollars
($2,000,000.00) or the amount of the known litigation risk as determined in
FDIC's sole discretion at any time, whichever amount is greater (the "Secured
Amount"), payable to the order of FDIC.
(i) The FDIC shall have the absolute right to draw down the
Collateral, including any accrued interest, to reimburse the FDIC for payment
of any and all Indemnified Obligations or Outstanding Claims in accordance with
this Agreement as determined in FDIC's sole discretion.
(ii) The FDIC will give written notice and an accounting as
appropriate to FCLT Loans, L.P. of all amounts drawn from the Collateral or of
any increase of the known litigation risk, which notice will serve as written
demand for
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FCLT Loans, L.P. to deposit additional funds to the Collateral to bring the
account up to the Secured Amount.
(iii) Once FCLT Loans, L.P. has deposited an additional two million
dollars ($2,000,000) to the Collateral account pursuant to written notice from
the FDIC as set forth in subsection (ii) above, FCLT Loans, L.P. may request,
at its sole discretion and cost, a mediation to determine the reasonableness of
any new written notice and/or demand requiring a further deposit of more than
one hundred thousand dollars ($100,000). To activate its rights under this
subsection, FCLT Loans, L.P. must first give written notice to the FDIC
concurrent with its timely deposit of the disputed additional funds to the
Collateral account. Failure to timely make the required deposit will act to
nullify this subsection and trigger the Default provision of this Agreement. If
at mediation, it is agreed that FDIC's written notice and/or demand was
unreasonable under the terms of this Agreement, in whole or in part, then the
affected funds will be returned to FCLT Loans, L.P. with accrued interest.
c. FCLT LOANS L.P.'S WARRANTIES AND COVENANTS.
(i) Except for the Security Interest granted to the Indemnitee
pursuant to this Agreement, FCLT Loans, L.P. is the sole owner of the
Collateral, having title thereto, free and clear of any and all claims, liens,
mortgages, privileges, encumbrances, security interests or rights of others.
(ii) No security agreement, financing statement, statement of
assignment, mortgage, or equivalent security or lien instrument or continuation
statement covering all or any part of the Collateral is on file or of record in
any public office.
(iii) This Agreement constitutes and creates a valid and continuing
first lien on and first security interest in the Collateral in favor of the
Indemnitee, prior to all other liens, encumbrances, security interests,
privileges, statements of assignment and rights of others.
(iv) FCLT Loans, L.P. shall defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest
therein adverse to the Indemnitee.
(v) FCLT Loans, L.P. shall keep the Collateral free from liens,
privileges, statements of assignment, mortgages or other security interests
except for the Security Interest hereby granted. FCLT will not sell, pledge,
encumber or otherwise dispose or hypothecate the Collateral or any portion
thereof.
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d. DEFAULT. FCLT Loans, L.P. shall be in default under this Agreement
upon the happening of any of the following events or conditions:
(i) failure to comply with any of the provisions of this
Agreement, including, but not limited to, the payment of any subsequent
payments needed to replenish or increase the Collateral up to the then current
Secured Amount within five business days from receipt of written notice in
accordance with section 4 (b)(ii) above.
e. REMEDIES. When any event of default occurs and at any time
thereafter, the Indemnitee may liquidate the Collateral, including accrued
interest, keep any and all cash proceeds and take such other legal action as
may be necessary to enforce this Agreement.
f. GENERAL.
(i) TERMINATION. Assuming that the Secured Amount has not been
exhausted on the Termination Date (as hereinafter defined) then, and in that
case only, any remaining Security Interest evidenced hereby or provided for
herein shall terminate and the remaining Collateral, along with accrued
interest, if any, together with this Agreement shall be returned to FCLT Loans,
L.P.
(ii) WAIVER. No delay on the part of the Indemnitee in
exercising any power or right shall operate as a waiver thereof; nor shall any
single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any power or right. No waiver by the
Indemnitee of any right hereunder or of any default by FCLT Loans, L.P. shall
be binding upon the Indemnitee unless in writing, and no failure by the
Indemnitee to exercise any right hereunder or waive of any default of FCLT
Loans, L.P. shall operate as a waiver of any other or further exercise of such
right or of any further default.
5. GENERAL
a. DURATION OF AGREEMENT. This Agreement shall continue until and
terminate upon March 31, 1999.
b. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever; (i) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of
any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not
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itself invalid, illegal or unenforceable) shall not in any way be effected or
impaired thereby; and (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.
c. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
d. HEADINGS. The headings of the paragraphs of this Agreements
are inserted for convenience only and shall not be deemed to constitute part of
or to effect the construction of this Agreement.
e. MODIFICATION AND WAIVER. This instrument contains the entire
agreement of the parties with respect to its subject matter. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by all of the parties to this Agreement. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions (whether or not similar) nor shall such waiver constitute a
continuing waiver.
f. PARTIES BOUND. The rights of the Indemnitee hereunder shall
inure to the benefit of its successors and assigns. The terms of this Agreement
shall be binding upon heirs, executors, administrators, successors, and assigns
of the parties hereto. All representations, warranties and agreements of FCLT
Loans, L.P. shall bind FCLT Loans, L.P.'s personal representatives, heirs,
successors and assigns.
g. NOTICE. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after mailing:
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(1) If to Indemnitee, to:
Mr. G. Xxxxxxx Xxxxxx
Regional Director
FDIC
0000 Xxxxxxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
with a copy to:
Regional Counsel
FDIC Legal Division
0000 Xxxxxxxx Xxxxx, Xxxxx 0000X
Xxxxxx, Xxxxx 00000
(2) If to FCLT or FCLT Loans, L.P., to:
Xx. Xxxxxx X. Xxxxx
President, FCLT Loans Asset Corp.
0000 Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
with a copy to:
G. Xxxxxxx Xxxxxx
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
or to such other address as may have been furnished to Indemnitee by FCLT or
FCLT Loans, L.P. or to FCLT or FCLT Loans, L.P. by the Indemnitee, as the case
may be.
h. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with the laws of the
United States of America, and to the extent such law is not applicable, with
the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
FEDERAL DEPOSIT INSURANCE CORPORATION,
in its corporate capacity
By: XXXXXX XXXXX by permission
/s/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx
Name: Xxxxxx Xxxxx
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Title: Senior Counsel
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FEDERAL DEPOSIT INSURANCE CORPORATION
in its capacity as the FDIC Receivers
By: /s/ XXXXXX X. X'XXXXX, XX. 12/20/96
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Name: Xxxxxx X. X'Xxxxx, Xx.
Title: Regional Manager (Operations)
FIRSTCITY LIQUIDATING TRUST
By: FLEET NATIONAL BANK, as Trustee
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Vice President
FCLT Loans, L.P., a limited partnership
By: FCLT LOANS ASSET CORP.
its General Partner
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: President
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CONVEYANCE AND INDEMNIFICATION AGREEMENT
EXHIBIT A
1. First City - Beaumont
Xxxxxxxx Xxxx litigation for alleged wrongful repossession of her
vehicle in July 1992.
2. First City - Corpus Christi
Potential environmental liability
3. First City - Forth Worth
Potential claim resulting from alleged misrepresentations that
caused account holder to convert bank account to mutual fund in
December 1992 (and resulting loss of value of the fund)
4. November '96 claim for $20,000 First City Cashier's check.
5. Any Depositor Claims.
