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SECTION 618-A
Repudiation of contracts
Banking (BNK) CHAPTER 2, ARTICLE 13
§ 618-a. Repudiation of contracts. 1. Except as otherwise provided in
this section, when the superintendent has taken possession of the
business and property in this state of a banking organization, unless
the federal regulator or insurer is appointed as receiver or liquidator,
the superintendent may assume or repudiate any contract, including an
unexpired lease, of the banking organization: (a) to which such banking
organization is a party, (b) the performance of which the
superintendent, in the superintendent's discretion, determines to be
burdensome, and (c) the repudiation of which the superintendent
determines, in the superintendent's discretion, will promote the orderly
administration of the banking organization's affairs. After the
expiration of ninety days from the date that the superintendent takes
possession of the banking organization, any party to a contract with the
banking organization being liquidated may demand in writing that the
superintendent assume or repudiate such contract. If the superintendent
has not assumed or repudiated the contract within fifteen calendar days
from the date of receipt of the demand by the superintendent, the
affected party may bring an action in the supreme court in the judicial
district in which the principal office of the banking organization is
located to obtain an order requiring the superintendent to decide
whether to assume or repudiate that contract. If the superintendent has
not assumed or repudiated a contract by one month before the last date
for filing claims against the banking organization being liquidated
pursuant to section six hundred twenty of this article, such contract
shall be deemed repudiated. Notwithstanding the foregoing, with respect
to an unexpired lease of the banking organization for the rental of real
property under which the banking organization was a lessee, if the
superintendent remains in possession of the leasehold, the
superintendent shall not be required to assume or repudiate such lease
and may continue in possession of such leasehold for the remainder of
the term of the lease in accordance with the terms of the lease;
provided, however, that should the superintendent later repudiate the
lease before the end of the lease term, any amounts that may be due the
lessor due to such repudiation shall be calculated according to the
provisions of paragraph (a) of subdivision three of this section.
Notwithstanding any other provision contained in this subdivision, in
liquidating a branch or agency of a foreign banking corporation, the
superintendent shall not assume or repudiate any qualified financial
contract that the branch or agency entered into which is subject to a
multi-branch netting agreement or arrangement that provides for netting
present or future payment obligations or payment entitlements (including
termination or close-out values relating to the obligations or
entitlements) among the parties to the contract and agreement or
arrangement and the superintendent shall not be required to assume or
repudiate any other qualified financial contract that the branch or
agency entered into; provided, however, that upon any repudiation of any
qualified financial contract or the termination or liquidation of any
qualified financial contract in accordance with its terms, the liability
of the superintendent under such qualified financial contract shall be
determined in accordance with subdivision two of this section.

2. (a) Except as otherwise provided in this section, upon the
repudiation or termination of any contract pursuant to subdivision one
of this section, the liability of the superintendent shall be limited to
the actual direct compensatory damages of the parties to the contract,
determined as of the date the superintendent took possession of the
banking organization. The superintendent shall not be liable for any
future wages other than severance payments (to the extent such payments
are reasonable), or for payments for future services, costs of cover, or
any consequential, punitive or exemplary damages, damages for lost
profits or lost opportunity or damages for pain and suffering.

(b) Except as otherwise provided in this section, the liability of the
superintendent upon the repudiation of any qualified financial contract,
or in connection with the termination or liquidation of any qualified
financial contract in accordance with the terms thereof, shall be
limited as provided in paragraph (a) of this subdivision, except that
compensatory damages shall be deemed to include normal and reasonable
costs of cover or other reasonable measures of damages utilized among
participants in the market for qualified financial contract claims,
calculated as of the date of repudiation or the date of the termination
of such qualified financial contract in accordance with its terms. Upon
the repudiation of any qualified financial contract or in connection
with the termination or liquidation of any qualified financial contract
in accordance with the terms thereof, if the superintendent shall be
entitled to damages, such damages shall be paid over by the party to the
superintendent upon written demand pursuant to subdivision two of
section six hundred fifteen of this article, notwithstanding any
provision in any such contract that purports to effect a forfeiture of
such damages.

(c) In the case of the liquidation of a branch or agency of a foreign
banking corporation by the superintendent, with respect to qualified
financial contracts subject to netting agreements or arrangements that
provide for netting present or future payment obligations or payment
entitlements (including termination or close-out values relating to the
obligations or entitlements) among the parties to the contracts and
agreements or arrangements, the liability of the superintendent to any
party to any such qualified financial contract upon repudiation or in
connection with the termination or liquidation of such qualified
financial contract in accordance with the terms thereof, shall be
calculated as of the date of repudiation or the date of the termination
of such qualified financial contract in accordance with its terms and
shall be limited to the lesser of (i) the global net payment obligation
and (ii) the branch/agency net payment obligation. The liability of the
superintendent under this paragraph shall be reduced by any amount
otherwise paid to or received by the party in respect of the global net
payment obligation pursuant to such qualified financial contract which
if added to the liability of the superintendent under this paragraph
would exceed the global net payment obligation. The liability of the
superintendent under this paragraph to a party to a qualified financial
contract also shall be reduced by the fair market value or the amount of
any proceeds of collateral that secures and has been applied to satisfy
the obligations of the foreign banking corporation pursuant to such
qualified financial contract to the party. In the event that netting
under the applicable netting agreement or arrangement results in a
branch/agency net payment entitlement, notwithstanding any provision in
any such contract that purports to effect a forfeiture of such
entitlement, the superintendent may make written demand upon the party
to such contract under subdivision two of section six hundred fifteen of
this article for an amount not to exceed the lesser of (x) the global
net payment entitlement and (y) the branch/agency net payment
entitlement. The liability of the party under this paragraph shall be
reduced by any amount otherwise paid to or received by the
superintendent or any other liquidator or receiver of the foreign
banking corporation in respect of the global net payment entitlement
pursuant to such qualified financial contract which if added to the
liability of the party under this paragraph would exceed the global net
payment entitlement. The liability of the party under this paragraph to
the superintendent pursuant to such qualified financial contract also
shall be reduced by the fair market value or the amount of any proceeds
of collateral that secures and has been applied to satisfy the
obligations of the party pursuant to such qualified financial contract
to the foreign banking corporation.

(d) A party to a qualified financial contract with a foreign banking
corporation, the branch or agency of which the superintendent is
liquidating, which party has a perfected security interest in
collateral, or other valid lien or security interest in collateral
enforceable against third parties pursuant to a security arrangement
related to such qualified financial contract, may retain all such
collateral and upon repudiation of that qualified financial contract, or
in connection with the termination or liquidation of that qualified
financial contract in accordance with its terms thereof, apply such
collateral in satisfaction of any claims secured by the collateral,
provided that the total amount so applied to such claims shall in no
event exceed the global net payment obligation, if any.

(e) The following terms shall have the following meanings: (i)
"qualified financial contract" means any securities contract, commodity
contract, forward contract (including spot and forward foreign
exchange), repurchase agreement, swap agreement, and any similar
agreement, any option to enter into any such agreement, including any
combination of the foregoing, and any master agreement for such
agreements (such master agreement, together with all supplements
thereto, shall be treated as one qualified financial contract), provided
that such contract, option or agreement, or combination of contracts,
options or agreements is reflected in the books, accounts or records of
the banking organization or a party provides documentary evidence of
such agreement; the superintendent may define by regulation securities
contract, commodity contract, forward contract, repurchase agreement and
swap agreement, and may by regulation or order determine any other
agreement to be a qualified financial contract for purposes of this
paragraph; (ii) "global net payment obligation" means the amount, if
any, owed by a foreign banking corporation as a whole to a party after
giving effect to the netting provisions of a qualified financial
contract with respect to all transactions subject to netting under such
qualified financial contract; (iii) "global net payment entitlement"
means the amount, if any, owed by a party (or that would be owed if the
relevant agreements provided for payments to either party, upon
termination thereof under any and all circumstances) to a foreign
banking corporation as a whole after giving effect to the netting
provisions of a qualified financial contract with respect to all
transactions subject to netting under such qualified financial contract;
(iv) "branch/agency net payment obligation" means with respect to a
qualified financial contact the amount, if any, that would have been
owed by the foreign banking corporation to a party after netting only
those transactions entered into by the branch or agency and such party
under such qualified financial contract; and (v) "branch/agency net
payment entitlement" means with respect to a qualified financial
contract the amount, if any, that would have been owed by a party to the
foreign banking corporation after netting only those transactions
entered into by the branch or agency and such party under such qualified
financial contract. The superintendent shall have authority to prescribe
such regulations relating to qualified financial contracts and netting
thereof as the superintendent shall deem appropriate.

3. (a) If the superintendent repudiates a lease of the banking
organization for the rental of real or personal property under which the
banking organization was a lessee, the lessor under such lease shall be
entitled to file a claim with the superintendent for whichever is the
least amount of: (i) the amount designated as liquidated damages
contained in the agreement between the banking organization and the
lessor, (ii) an amount equal to one year's rent under the terms of the
repudiated lease, or (iii) an amount equal to the rent for the remaining
term of the lease.

(b) If the superintendent repudiates a lease of the banking
organization for the rental of real property under which the banking
organization was a lessor, and the lessee was not in default at the time
of repudiation, the lessee under such repudiated lease may either (i)
treat the lease as terminated by such repudiation and vacate the
premises, or (ii) remain in possession of the leasehold interest for the
balance of the term of the lease, and for any renewal or extension of
such term that is enforceable by such lessee under applicable
non-insolvency law, unless the lessee defaults under the terms of the
lease after the date of such repudiation. If the lessee remains in
possession of the leasehold interest, the lessee shall continue to pay
to the superintendent the contractual rent pursuant to the terms of the
lease after the date of the repudiation of such lease, and may offset
against such rent payment any damages which may accrue due to the
nonperformance of any obligation of the banking organization under the
lease after the date of repudiation. The superintendent shall not be
liable to the lessee for any damages arising after such date as a result
of the repudiation other than the amount of any offset allowed under
this subdivision. Nothing stated herein shall prohibit the
superintendent from entering into a new contract with the lessee for the
rental of the leasehold which was the subject of the repudiated lease.

4. Except as otherwise provided, notwithstanding any provision in an
unexpired lease or other contract, or in applicable law, a contract or
unexpired lease of the banking organization may not be terminated or
modified by any party other than the superintendent without the
concurrence of the superintendent, and any right or obligation under
such contract or lease may not be terminated or modified, at any time
after the superintendent's taking of possession, solely pursuant to a
provision in such contract or lease that is conditioned on the
superintendent's taking of possession, or the insolvency, financial
condition or liquidation of the banking organization.

5. Nothing in this section shall affect the right of a party to a
contract of a foreign banking corporation to seek performance of such
contract or damages thereon in any other jurisdiction, provided,
however, that the superintendent shall not be liable for the performance
of such contract or damages thereon in any other jurisdiction.

6. The rights granted herein are in addition to any other rights
available to the superintendent under common law or any other law.