Document:

Letter Agreement between First State Bank and Citibank Global Markets

 Exhibit 10.12 
 

 
 390 Greenwich Street – 4th floor 
 New York, New York 10013 
 212-816-6000 
 April 15, 2009 
 THE PURPOSE OF THIS LETTER AGREEMENT (THIS
“CONFIRMATION”) IS TO AMEND AND RESTATE THAT CONFIRM DATED JUNE 12, 2007
THAT SETS FORTH THE TERMS AND CONDITIONS OF THE TRANSACTION BETWEEN
CITIGROUP GLOBAL MARKETS INC. (“CGMI”) AND FIRST STATE BANK (“COUNTERPARTY”) ON
THE TRADE DATE SET FORTH BELOW (THE “ORIGINAL CONFIRM”). CGMI AND
COUNTERPARTY AGREE THAT THE ORIGINAL CONFIRM SHALL BE AMENDED AND RESTATED
TO READ AS FOLLOWS: 
 COUNTERPARTY AND CGMI ARE
PARTIES TO THE MASTER REPURCHASE AGREEMENT DATED AS OF MAY 23, 2007 (AS
AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME, OR ANY MASTER
REPURCHASE AGREEMENT ENTERED INTO WHICH MAY BE DEEMED TO SUPERCEDE THE
AFORMENTIONED AGREEMENT, THE “AGREEMENT”), AND THIS CONFIRMATION SHALL SUPPLEMENT, FORM
A PART OF, AND BE SUBJECT TO, SUCH AGREEMENT UPON THE EXECUTION
AND DELIVERY THEREOF BY BOTH PARTIES, AND ALL PROVISIONS CONTAINED OR
INCORPORATED BY REFERENCE IN SUCH AGREEMENT SHALL GOVERN THIS TRANSACTION EXCEPT
AS EXPRESSLY MODIFIED HEREIN. IN THE EVENT OF ANY INCONSISTENCY BETWEEN
THIS CONFIRMATION AND THE AGREEMENT, THIS CONFIRMATION WILL GOVERN. TERMS DEFINED
IN THE AGREEMENT AND USED BUT NOT OTHERWISE DEFINED IN THIS
CONFIRMATION SHALL HAVE THE SAME MEANING AS IN THE AGREEMENT. 
  

			
	TRANSACTION:	  	REVERSE REPURCHASE
		
	SELLER:	  	COUNTERPARTY
		
	BUYER:	  	CGMI
		
	PURCHASED SECURITIES:	  	AGENCY DEBT
		
	PURCHASE DATE:	  	JUNE 14, 2007
		
	REPURCHASE DATE:	  	JUNE 14, 2017
		
	Pricing Rate:	  	4.97%
		
	MARGIN PERCENTAGE:	  	10% HAIR-CUT
		
	PURCHASE PRICE:	  	USD $5,000,000.00
		
		  	PURCHASE PRICE TO REMAIN CONSTANT DURING TERM OF
TRANSACTION UNLESS OTHERWISE AGREED BY THE PARTIES.
		
	LOCK OUT DATE:	  	JUNE 14, 2009
		
	SELLER PAYMENTS:	  	SELLER SHALL PAY THE BUYER INTEREST QUARTERLY, ON THE 14
TH OF EVERY SEPTEMBER,
DECEMBER, MARCH, AND JUNE (OR IF SUCH DATE IS NOT A NEW
YORK AND LONDON BUSINESS DAY,

			
	 	  	THEN THE FOLLOWING DAY THAT IS A NEW YORK
AND LONDON BUSINESS
DAY UNLESS THAT DAY FALLS IN THE NEXT CALENDAR
MONTH, IN WHICH
CASE THAT DATE WILL BE THE FIRST PRECEDING DAY
THAT IS A BUSINESS
DAY), COMMENCING SEPTEMBER 14, 2007, ON AN ACTUAL/360
BASIS.
		
	CALCULATION AGENT:	  	CGMI
		
	CALL OPTION:	  	CGMI SHALL HAVE THE RIGHT IN ITS OWN DISCRETION TO
TERMINATE THE TRANSACTION ON THE LOCK OUT DATE OR ANY QUARTERLY
PAYMENT DATE THEREAFTER WITH TWO NEW YORK BUSINESS DAYS PRIOR NOTICE
BY TELEPHONE OR FAX.
		
	MARGIN:	  	MARK TO MARKET DAILY.
		
		  	MARGIN REQUIREMENTS MAY BE SATISFIED BY DELIVERY OF CASH
OR ADDITIONAL PURCHASE SECURITIES, OR AS OTHERWISE AGREED BY THE
PARTIES.
		
		  	UPON THE PROVISION OF SEVEN (7) DAY’S NOTICE, BUYER
MAY REQUIRE ADDITIONAL MARGIN (AS DETERMINED BY BUYER, IN ITS ABSOLUTE
DISCRETION) FROM SELLER WITH RESPECT TO ANY UNDERLYING INTEREST RATE EXPOSURE
FOR THIS TRANSACTION. UPON RECEIPT OF SUCH NOTICE, SELLER SHALL TRANSFER
CASH OR ADDITIONAL PURCHASED SECURITIES (AS DEFINED IN THE AGREEMENT) NO
LATER THAN THE CLOSE OF BUSINESS IN THE RELEVANT MARKET ON THE
SEVENTH DAY FOLLOWING RECEIPT OF NOTICE (OR IF SUCH DAY IS NOT
A BUSINESS DAY, THEN THE FOLLOWING BUSINESS DAY).
		
	TERMINATION EVENT:	  	(A) IF SELLER FAILS TO PROVIDE ADDITIONAL MARGIN FOR ANY
INTEREST RATE EXPOSURE WITHIN THE SEVEN (7) DAYS OF BUYER’S NOTICE
(AS MORE SPECIFICALLY DESCRIBED ABOVE), THEN SUCH FAILURE SHALL BE AN
EVENT OF DEFAULT UNDER THE AGREEMENT, WITH SELLER BEING THE DEFAULTING
PARTY.
		
		  	(B) IT SHALL CONSTITUTE AN ADDITIONAL EVENT OF DEFAULT
UNDER THE AGREEMENT (AND BUYER SHALL HAVE THE RIGHTS OF THE
NON-DEFAULTING PARTY SET FORTH IN PARAGRAPH 11 OF THE AGREEMENT) IF
ANY OF THE FOLLOWING OCCUR WITH RESPECT TO SELLER:
		
		  	(1) SELLER CEASES TO BE “ADEQUATELY CAPITALIZED” AT ANY
TIME BEFORE SEPTEMBER 30, 2009; OR
		
		  	(2) SELLER FAILS TO REGAIN AND MAINTAIN “WELL CAPITALIZED”
STATUS ON AND AFTER SEPTEMBER 30, 2009; OR
		
		  	(3) SELLER IS ISSUED A “CEASE AND DESIST ORDER”
AT ANY TIME BY ITS FEDERAL OR STATE REGULATORS; OR

			
		  	(4) SELLER FAILS TO DELIVER (BY APRIL 16, 2009) ADDITIONAL CASH
MARGIN SUCH THAT THE TOTAL AMOUNT OF EXCESS CASH MARGIN IS EQUAL
TO $500,000 (SUCH AMOUNT SHALL BE IN ADDITION TO ANY MARGIN REQUIRED
TO BE DELIVERED UNDER THE “MARGIN” SECTION HEREUNDER OR OTHERWISE UNDER
THE AGREEMENT) (THE “EXCESS MARGIN”); OR
		
		  	(5) SELLER FAILS AT ANY TIME TO MAINTAIN EXCESS MARGIN
EQUAL TO $500,000.
		
		  	“ADEQUATELY CAPITALIZED” AND “WELL CAPITALIZED” SHALL HAVE
THE MEANINGS SET FORTH UNDER 12 U.S.C., AS DETERMINED BY SELLER’S APPROPRIATE
FEDERAL BANKING AGENCY, BUT IN NO EVENT LESS THAN THE AMOUNT REQUIRED
IN A CAPITAL DIRECTIVE OR OTHER CAPITAL REQUIREMENT BY SELLER’S
APPROPRIATE FEDERAL BANKING AGENCY.”
		
		  	SELLER COVENANTS THAT IT SHALL NOTIFY BUYER AS PROMPTLY
AS PRACTICABLE UPON THE OCCURRENCE OF THE EVENTS IN SUBCLAUSES (1) (2) AND
(3) OF THIS CLAUSE (B).

 CGMI HAS SENT YOU A
SYSTEM-GENERAGED CONFIRMATION IN ADDITION TO THIS CONFIRMATION. IN THE EVENT
OF ANY INCONSISTENCY BETWEEN THIS CONFIMATION AND THE SYSTEM-GENERATED CONFIRMATION,
ABSENT MANIFEST ERROR THE TERMS OF THIS CONFIRMATION SHALL PREVAIL. FROM
AND AFTER THE DATE HEREOF, ALL REFERENCES IN THE AGREEMENT OR
OTHERWISE TO THE ORIGINAL CONFIRMATION SHALL BE DEEMED TO BE REFERENCES
TO THE ORIGINAL CONFIRMATION AS AMENDED AND RESTATED HEREBY. 
 PLEASE EXECUTE THIS CONFIRMATION BELOW
AND RETURN TO ARLENE HAMILTON AT 388 GREENWICH STREET, 17TH FL, NEW YORK, NY 10013, TO SIGNIFY
YOUR AGREEMENT TO THE ABOVE TERMS. 
 THANK
YOU. 
  

			
	CITIGROUP GLOBAL MARKETS INC.
	
	  

	NAME:	 	STEPHEN MALEKIAN
	TITLE:	 	MANAGING DIRECTOR

 AGREED AND ACCEPTED: 
  

			
	FIRST STATE BANK
		
	BY:	 	  

	NAME:	 	
	TITLE:Letter Agreement between First State Bank and Citibank Global Markets

 Exhibit 10.13 
 

 
 390 Greenwich Street – 4th floor 
 New York, New York 10013 
 212-816-6000 
 April 15, 2009 
 THE PURPOSE OF THIS LETTER AGREEMENT (THIS
“CONFIRMATION”) IS TO AMEND AND RESTATE THAT CONFIRM DATED SEPTEMBER 21, 2007
THAT SETS FORTH THE TERMS AND CONDITIONS OF THE TRANSACTION BETWEEN
CITIGROUP GLOBAL MARKETS INC. (“CGMI”) AND FIRST STATE BANK (“COUNTERPARTY”) ON
THE TRADE DATE SET FORTH BELOW (THE “ORIGINAL CONFIRM”). CGMI AND
COUNTERPARTY AGREE THAT THE ORIGINAL CONFIRM SHALL BE AMENDED AND RESTATED
TO READ AS FOLLOWS: 
 COUNTERPARTY AND CGMI ARE
PARTIES TO THE MASTER REPURCHASE AGREEMENT DATED AS OF MAY 23, 2007 (AS
AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME, OR ANY MASTER
REPURCHASE AGREEMENT ENTERED INTO WHICH MAY BE DEEMED TO SUPERCEDE THE
AFORMENTIONED AGREEMENT, THE “AGREEMENT”), AND THIS CONFIRMATION SHALL SUPPLEMENT, FORM
A PART OF, AND BE SUBJECT TO, SUCH AGREEMENT UPON THE EXECUTION
AND DELIVERY THEREOF BY BOTH PARTIES, AND ALL PROVISIONS CONTAINED OR
INCORPORATED BY REFERENCE IN SUCH AGREEMENT SHALL GOVERN THIS TRANSACTION EXCEPT
AS EXPRESSLY MODIFIED HEREIN. IN THE EVENT OF ANY INCONSISTENCY BETWEEN
THIS CONFIRMATION AND THE AGREEMENT, THIS CONFIRMATION WILL GOVERN. TERMS DEFINED
IN THE AGREEMENT AND USED BUT NOT OTHERWISE DEFINED IN THIS
CONFIRMATION SHALL HAVE THE SAME MEANING AS IN THE AGREEMENT. 
  

			
	TRANSACTION:	  	REVERSE REPURCHASE
		
	SELLER:	  	COUNTERPARTY
		
	BUYER:	  	CGMI
		
	PURCHASED SECURITIES:	  	AGENCY CMO AND CALLABLE AGENCY
		
	PURCHASE DATE:	  	SEPTEMBER 25, 2007
		
	REPURCHASE DATE:	  	SEPTEMBER 25, 2017
		
	PRICING RATE:	  	4.39%
		
	INITIAL MARGIN PERCENTAGE:	  	10% HAIR-CUT
		
	PURCHASE PRICE:	  	USD $15,000,000.00
		
		  	PURCHASE PRICE TO REMAIN CONSTANT DURING TERM OF
TRANSACTION UNLESS OTHERWISE AGREED BY THE PARTIES.
		
	LOCK OUT DATE:	  	SEPTEMBER 25, 2010
		
	SELLER PAYMENTS:	  	SELLER SHALL PAY THE BUYER INTEREST QUARTERLY, ON THE 25
TH OF EVERY SEPTEMBER, DECEMBER, MARCH, AND
JUNE (OR IF SUCH DATE IS NOT A NEW YORK AND LONDON
BUSINESS DAY, THEN THE FOLLOWING DAY THAT IS A NEW YORK AND
LONDON

			
		  	BUSINESS DAY UNLESS THAT DAY FALLS IN THE NEXT
CALENDAR MONTH, IN WHICH CASE THAT DATE WILL BE THE FIRST PRECEDING
DAY THAT IS A BUSINESS DAY), COMMENCING DECEMBER 25, 2007, ON AN ACTUAL/360
BASIS.
		
	CALCULATION AGENT:	  	CGMI
		
	CALL OPTION:	  	CGMI SHALL HAVE THE RIGHT IN ITS OWN DISCRETION TO
TERMINATE THE TRANSACTION ON THE LOCK OUT DATE OR ANY QUARTERLY
PAYMENT DATE THEREAFTER WITH TWO NEW YORK BUSINESS DAYS PRIOR NOTICE
BY TELEPHONE OR FAX.
		
	MARGIN:	  	MARK TO MARKET DAILY.
		
		  	MARGIN REQUIREMENTS MAY BE SATISFIED BY DELIVERY OF CASH
OR ADDITIONAL PURCHASE SECURITIES, OR AS OTHERWISE AGREED BY THE
PARTIES.
		
		  	UPON THE PROVISION OF SEVEN (7) DAY’S NOTICE, BUYER
MAY REQUIRE ADDITIONAL MARGIN (AS DETERMINED BY BUYER, IN ITS ABSOLUTE
DISCRETION) FROM SELLER WITH RESPECT TO ANY UNDERLYING INTEREST RATE EXPOSURE
FOR THIS TRANSACTION. UPON RECEIPT OF SUCH NOTICE, SELLER SHALL TRANSFER
CASH OR ADDITIONAL PURCHASED SECURITIES (AS DEFINED IN THE AGREEMENT) NO
LATER THAN THE CLOSE OF BUSINESS IN THE RELEVANT MARKET ON THE
SEVENTH DAY FOLLOWING RECEIPT OF NOTICE (OR IF SUCH DAY IS NOT
A BUSINESS DAY, THEN THE FOLLOWING BUSINESS DAY).
		
	TERMINATION EVENT:	  	(A) IF SELLER FAILS TO PROVIDE ADDITIONAL MARGIN FOR ANY
INTEREST RATE EXPOSURE WITHIN THE SEVEN (7) DAYS OF BUYER’S NOTICE
(AS MORE SPECIFICALLY DESCRIBED ABOVE), THEN SUCH FAILURE SHALL BE AN
EVENT OF DEFAULT UNDER THE AGREEMENT, WITH SELLER BEING THE DEFAULTING
PARTY.
		
		  	(B) IT SHALL CONSTITUTE AN ADDITIONAL EVENT OF DEFAULT
UNDER THE AGREEMENT (AND BUYER SHALL HAVE THE RIGHTS OF THE
NON-DEFAULTING PARTY SET FORTH IN PARAGRAPH 11 OF THE AGREEMENT) IF
ANY OF THE FOLLOWING OCCUR WITH RESPECT TO SELLER:
		
		  	(1) SELLER CEASES TO BE “ADEQUATELY CAPITALIZED” AT ANY
TIME BEFORE SEPTEMBER 30, 2009; OR
		
		  	(2) SELLER FAILS TO REGAIN AND MAINTAIN “WELL CAPITALIZED”
STATUS ON AND AFTER SEPTEMBER 30, 2009; OR
		
		  	(3) SELLER IS ISSUED A “CEASE AND DESIST ORDER”
AT ANY TIME BY ITS FEDERAL OR STATE REGULATORS; OR

			
		  	(4) SELLER FAILS TO DELIVER (BY APRIL 16, 2009) ADDITIONAL CASH
MARGIN SUCH THAT THE TOTAL AMOUNT OF EXCESS CASH MARGIN IS EQUAL
TO $1,500,000 (SUCH AMOUNT SHALL BE IN ADDITION TO ANY MARGIN REQUIRED
TO BE DELIVERED UNDER THE “MARGIN” SECTION HEREUNDER OR OTHERWISE UNDER
THE AGREEMENT) (THE “EXCESS MARGIN”); OR
		
		  	(5) SELLER FAILS AT ANY TIME TO MAINTAIN EXCESS MARGIN
EQUAL TO $1,500,000.
		
		  	“ADEQUATELY CAPITALIZED” AND “WELL CAPITALIZED” SHALL HAVE
THE MEANINGS SET FORTH UNDER 12 U.S.C., AS DETERMINED BY SELLER’S APPROPRIATE
FEDERAL BANKING AGENCY, BUT IN NO EVENT LESS THAN THE AMOUNT REQUIRED
IN A CAPITAL DIRECTIVE OR OTHER CAPITAL REQUIREMENT BY SELLER’S
APPROPRIATE FEDERAL BANKING AGENCY.”
		
		  	SELLER COVENANTS THAT IT SHALL NOTIFY BUYER AS PROMPTLY
AS PRACTICABLE UPON THE OCCURRENCE OF THE EVENTS IN SUBCLAUSES (1) (2) AND
(3) OF THIS CLAUSE (B).

 CGMI HAS SENT YOU A
SYSTEM-GENERAGED CONFIRMATION IN ADDITION TO THIS CONFIRMATION. IN THE EVENT
OF ANY INCONSISTENCY BETWEEN THIS CONFIMATION AND THE SYSTEM-GENERATED CONFIRMATION,
ABSENT MANIFEST ERROR THE TERMS OF THIS CONFIRMATION SHALL PREVAIL. FROM
AND AFTER THE DATE HEREOF, ALL REFERENCES IN THE AGREEMENT OR
OTHERWISE TO THE ORIGINAL CONFIRMATION SHALL BE DEEMED TO BE REFERENCES
TO THE ORIGINAL CONFIRMATION AS AMENDED AND RESTATED HEREBY. 
 PLEASE EXECUTE THIS CONFIRMATION BELOW
AND RETURN TO ARLENE HAMILTON AT 388 GREENWICH STREET, 17TH FL, NEW YORK, NY 10013, TO SIGNIFY
YOUR AGREEMENT TO THE ABOVE TERMS. 
 THANK
YOU. 
  

			
	CITIGROUP GLOBAL MARKETS INC.
	  

	NAME:	 	STEPHEN MALEKIAN
	TITLE:	 	MANAGING DIRECTOR

 AGREED AND ACCEPTED: 
  

			
	FIRST STATE BANK
		
	BY:	 	  

	NAME:	 	
	TITLE:

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