This is an action to enjoin the payment of severance benefits arising from employment contracts between plaintiff Cardinal, a failed thrift, and defendant bank officials. The case requires an interpretation of whether a regulation allowing avoidance of some employment contracts of troubled savings and loans, 12 C.F.R. § 563.39(5) (1990), permits the Federal Savings and Loan Insurance Corporation (“FSLIC”)1 and an insolvent thrift (Cardinal Federal Savings Bank) to avoid paying severance benefits to two officers recruited by FSLIC to prepare the thrift for acquisition. The regulation reads as follows:
(5) All obligations under the [employment] contract shall be terminated, except to the extent determined that continuation of the contract is necessary of [sic] the continued operation of the association
(i) by the Director or his or her desig-nee, at the time the Federal Deposit Insurance Corporation or Resolution Trust Corporation enters into an agreement to provide assistance to or on behalf of the association under the authority contained in 2[13](c) of the Federal Deposit Insurance Act; or
(ii) by the Director or his or her desig-nee, at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the association or when the association is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.
12 C.F.R. § 563.39(5)(i) and (ii) (1990). (Emphasis added).
That ambiguous regulation provides in subsections (i) and (ii) that all obligations under employment contracts are terminated automatically by FSLIC at the time FSLIC enters an “agreement to provide assistance” to a struggling institution, or “approves a supervisory merger to resolve problems related to [the bank’s] operation,” or determines that the bank is “in an unsafe or unsound condition.” 12 C.F.R. § 563.39(5)(i) and (ii) (1990). There is an exception to termination, however, which we find to be applicable and to protect the contracts in question from termination. An employment agreement is made immune from termination under that regulation “to the extent determined that continuation of the contract is necessary [to] the continued operation of the institution.” Id. at § 563.39(5). Further, employee rights *1253that have “vested” at the time of the assistance agreement are expressly excluded from automatic termination, id., a provision we find unnecessary to interpret in light of our disposition based on the above-mentioned exception.
Defendants Quinn and Gannon, hired to manage the insolvent Cardinal Federal Savings Bank and to prepare it for acquisition, were fired after one year of service when First Nationwide Financial Services purchased Cardinal’s assets and liabilities with FSLIC assistance.2 After being fired by First Nationwide, defendants obtained the proceeds of certain letters of credit which secured the severance benefits, and Cardinal and FSLIC sued for a preliminary injunction to enjoin defendants from using the proceeds. The District Court issued the injunction. The defendant officers now appeal from District Judge Bell’s order enjoining them from using the proceeds of letters of credit paid under a severance-pay agreement negotiated for Cardinal by FSLIC. Federal Sav. & Loan Ins. Corp. v. Quinn, 711 F.Supp. 366, 379 (N.D.Ohio 1989). We disagree with the District Court’s conclusion that the preliminary injunction should issue. Although FSLIC, pursuant to section 563.39(5)(ii), apparently determined that Cardinal was in an “unsafe or unsound condition,” which would ordinarily terminate Cardinal’s obligations under its employment contracts with Quinn and Gannon, FSLIC triggered the exception through actions that amount to a determination that continuation of those employment contracts until their negotiated expiration date was necessary to improve Cardinal’s “unsafe or unsound” condition. Therefore, because Quinn and Gannon were fired during the life of their employment contracts, which FSLIC knowingly entered into with the hope of rescuing Cardinal from insolvency, we vacate the District Court’s order entering the preliminary injunction.
I
FSLIC finally transferred Cardinal to First Nationwide on December 30, 1988, after exercising supervisory control for more than a year. During that period, Quinn (Chief Executive Officer) and Gan-non (Chief Operating Officer) were recruited by FSLIC to help stave off Cardinal’s impending insolvency flowing from years of alleged mismanagement by the prior officers, who stepped down under pressure from FSLIC. Shortly after beginning work on November 24, 1987, Quinn and Gannon, along with Cardinal’s other officers, entered a consent agreement on December 17, 1987, under which the Federal Home Loan Bank Board (“Bank Board”), as operating head of FSLIC, took general supervisory control of Cardinal. Among the supervisory powers granted to the Bank Board was the right to approve or reject all employment contracts. Quinn and Gan-non’s contracts, approved by Cardinal on February 10, 1988 and by the Bank Board on July 14, 1988, followed lengthy negotiations with Gerald Summers, who supervised the insolvency and acquisition on behalf of FSLIC. The contracts were for one year, beginning November 24, 1987. When Quinn and Gannon were hired, they, FSLIC, and Cardinal understood that Cardinal would be acquired, that FSLIC assistance would be necessary to the acquisition, and that if anyone other than Chicago West Pullman — a private group of investors — acquired Cardinal, they would be fired.
Apparently concerned about their job security in such uncertain times, Quinn and Gannon approached Summers and proposed some contractual protections for themselves, most of which were rejected. FSLIC did acquiesce, however, to a one-year automatic contract renewal if either party failed to give written notice of termination at least 90 days prior to the expiration of the contract. In fact, Quinn and *1254Gannon’s contracts were renewed on December 1, 1988 pursuant to this clause.3 FSLIC also agreed to pay severance benefits to Quinn and Gannon if they were terminated without cause. Under the severance-benefits agreement, Cardinal was obligated to pay Quinn and Gannon’s salaries until the end of the current term, plus 100% of their annual salaries, prorated benefits and unused vacation time, and to extend insurance and other benefits for one year. See Employment Agreements § 2.5, J.A. at 307-09.
In exchange for these benefits, Quinn and Gannon each accepted $100,000 less in annual salary than they had bargained for in the absence of the severance benefits. In addition to their $210,000 (Quinn) and $200,000 (Gannon) salaries, their benefits were collateralized by $820,000 (twice their annual salaries) in letters of credit issued by nonparty Society National Bank and secured by U.S. Treasury securities held by Cardinal. In order to draw down on the letters of credit, each officer needed only to present a sight draft and certificate of beneficiary showing that they were entitled to the funds.
On December 30, 1988, First Nationwide Financial Services acquired Cardinal with FSLIC assistance and fired Quinn and Gan-non eleven months before the expiration of their contracts. When Quinn and Gannon presented the required documentation to draw on the letters of credit, FSLIC and Cardinal sued, and FSLIC moved to enjoin payment. By agreement of the parties, and in order to release Society National Bank from further involvement in the dispute, the proceeds were paid to Quinn and Gannon, but were not to be wasted or otherwise encumbered pending the preliminary injunction hearing before Judge Bell. See Stipulated Judgment Entry.
II
The District Court held that the employment contracts precluded the defendants, Quinn and Gannon, from obtaining their severance benefits. In so doing, the Court considered two distinct sections of the employment agreements. The first of those sections, section 2.8, incorporated the language of 12 C.F.R. § 563.39 (1990), which releases FSLIC from all contractual obligations upon “entering an agreement to provide assistance on behalf of Employer.” 4 That provision, however, “shall not effect rights hereunder which are vested at the time of such termination.” Both Quinn and Gannon testified that they understood that section 2.8 was part of their employment agreements, and that it would be triggered in the event of a FSLIC-assisted acquisition. The District Court did not address that portion of section 2.8 and of the federal regulations referring to the contin*1255uation of contracts necessary to the continued operation of the troubled thrift.
The second part of the employment agreements that the District Court addressed is section 4.1, which deals with the letters of credit. That section guarantees payment of the severance benefits by letter of credit if certain contingencies occurred as set forth in sections 2.1(b) (natural expiration of the term of employment), 2.2 (death), 2.3 (disability), 2.4 (voluntarily by employee or by employer for cause), 2.5 (by employer without cause or by employee with cause), or 2.6(a) (if specified events occur following a change in control). Section 4.1 does not, however, anywhere mention section 2.8(d) of the employment agreements. Section 4.1 stated:
4.1 Collateral for Obligations of Employer.
Employer hereby agrees that the performance of its obligations under §§ 2.1(b), 2.2, 2.8, 2.5, or 2.6(a) (other than employer[’]s obligations relating to participation by executives in any pension or savings plan) will be secured by an irrevocable collateralized clean Letter of Credit....
Appellee’s Brief at 10 n. 5.
The District Court dealt only with section 2.5 covering termination without cause and did not address the exceptions covered in the regulation. In the proceedings below, “all parties concede[d] that the triggering events provided in sections 2.1(b), 2.2, 2.3, and 2.6(a) did not occur and, therefore, do not give rise to any obligation on Cardinal’s part.” Quinn, 711 F.Supp. at 377. Quinn and Gannon contend that they were terminated without cause within the meaning of section 2.5 when First Nationwide took over and installed their own managers. The District Court rejected that argument, however, ruling instead that section 2.8(d) terminated Cardinal's contractual obligations before First Nationwide purchased Cardinal. In the District Court’s view, “once section 218(d) operates, it cuts off any contractual and financial obligation under section 2.5, unless vested.” Id. at 378.
III
Given that section 563.39 recognizes certain exceptions to the automatic termination of contractual obligations in the event of a FSLIC-assisted takeover, we asked that the parties brief whether the language of 12 C.F.R. § 563.39(b)(5)(i) (1990) was applicable to this case; that is, whether the consent agreement vesting FSLIC with plenary authority over Cardinal’s activities constituted “an agreement to provide assistance” within the meaning of 12 U.S.C.A. § 1729(f)(1) (West 1989) (provision of National Housing Act governing assistance to thrift institutions). We also asked that the parties address the applicability of section 563.39(b)(5)(ii), which continues when necessary the operation of contracts which would otherwise be terminated following either a “supervisory merger” or a determination by FSLIC that a bank is “in an unsafe or unsound condition.”
We need not decide whether the “assistance” provision of subsection (i) or the “supervisory merger” provision of subsection (ii) was triggered because Cardinal was in “an unsafe or unsound condition” under the disjunctive clause of subsection (ii). We therefore turn to the final clause in the quoted subsection, which refers to the continuation of contracts that are necessary to the continued operation of an institution that is “in an unsafe or unsound condition.” Under 12 U.S.C.A. § 1464(d)(2)(A) (West 1989), which governs the Bank Board’s authority to initiate cease and desist proceedings, the Bank Board, once it determines that a savings and loan “is about to engage[ ] in an unsafe or unsound practice in conducting the business of such association,” shall delineate the unsafe or unsound practice and hold a hearing “to determine whether an order to cease and desist therefrom should issue against the association.” The Bank Board cited Cardinal’s violation of an insurance regulation, 12 C.F.R. § 563.13(b)(1) (1987), as the basis of its authority for initiating cease and desist *1256proceedings against Cardinal.5 This determination is tantamount to a determination based on “unsafe or unsound” practices and FSLIC’s course of administrative conduct is equivalent to a finding of “unsafe and unsound” conditions, which in turn led FSLIC to take supervisory control of Cardinal in preparation for a FSLIC-assisted acquisition.
After determining that Cardinal was in “an unsafe or unsound condition,” FSLIC sought to remedy that condition by hiring Quinn and Gannon to sell off assets and defray Cardinal’s soaring liabilities in an effort to prepare the troubled thrift for acquisition. FSLIC, Quinn, and Gannon negotiated the employment contracts for eight months while the two newly hired officers worked toward decreasing the amount of assistance necessary to fund First Nationwide’s acquisition of Cardinal. Certainly it was FSLIC’s perception that employing new managers was necessary to the continued operation of Cardinal. FSLIC recruited and hired Quinn and Gan-non specifically to eradicate the “unsafe or unsound condition” that prior management had created presumably because FSLIC thought it “necessary” to “the continued operation of the institution.” The “extent determined” that “the [employment] contract is necessary” was expressed in the “extent” of the consideration bargained for by FSLIC in the contract itself. Quinn and Gannon would receive one-year renewable contracts and, if fired without cause, would be entitled to liquidated damages in the form of collateralized severance benefits. The fact that the work of Quinn and Gan-non ultimately succeeded in effecting a FSLIC-assisted acquisition certainly does nothing to undercut FSLIC’s determination that their continued employment was necessary to sustain Cardinal throughout the life of the contracts, even if an acquisition preceded the expiration of the contracts. FSLIC negotiated and approved the contracts with its eyes open, well aware of the situation. It did not come into a failing thrift and exert control with contracts over which it had no say-so already in place. It negotiated the contracts itself. Once FSLIC recruited and negotiated the employment contracts providing the extent to which Quinn and Gannon’s services would be needed to save Cardinal from its “unsafe or unsound condition,” no subsequent act by FSLIC or Cardinal, be it a successful FSLIC-assisted acquisition or a supervisory merger, should interfere with the contracts or their legal consequences in the event of breach.
By promising to pay Quinn and Gannon specified salaries and benefits, including severance pay, and then by refusing to pay Quinn and Gannon only one month after renewing their contracts, the plaintiffs violated section 2.5 of the employment agreements. Section 2.5 sets forth the liquidated damages — the predetermined salary and benefits package that Quinn and Gan-non would be entitled to if Cardinal terminated them without cause. The fact that it was First Nationwide and not Cardinal that actually fired Quinn and Gannon is beside the point. By refusing to pay Quinn and Gannon, and by severing them from their employment without cause — whether by a purchase and assumption agreement or otherwise — Cardinal breached its contracts with Quinn and Gannon. That breach is unaltered by the subsequent assistance agreement and acquisition. At the time of the assistance agreement and acquisition, the contracts between Cardinal and defendants were valid and enforceable, owing their very existence to FSLIC’s mission to *1257improve Cardinal's “unsafe or unsound condition.”
Any other reading would yield a result in conflict with the underlying purpose of the banking regulation in question. The history of section 563.39 indicates that the Bank Board designed that section to afford FSLIC “greater flexibility to reject abusive or excessive longterm employment and fringe benefit contracts executed by institutions that subsequently go into default [or] enter into an assistance agreement with the FSLIC....” 47 Fed.Reg. 17,471 (1982). The contracts in our case were not negotiated by Cardinal in the past, nor did they bestow huge benefits on the very managers who were responsible for the bank’s demise. Instead, these contracts were negotiated by FSLIC with the hope of securing new managers who could successfully preserve assets and defray liabilities, thus preparing the institution for acquisition with less assistance than would have otherwise been required. Quinn and Gan-non worked to realize this hope. FSLIC should not have to fund golden parachutes when it pushes out negligent or corrupt bank officers whose mismanagement of the bank necessitates FSLIC assistance. But that is not involved here. The managers seeking benefits in this case are two competent employees hired essentially by FSLIC. Their success at Cardinal may well have reduced the amount of assistance that FSLIC would have to provide in the inevitable takeover. Their contract for severance benefits thus should not be avoided simply because FSLIC’s goal in recruiting and hiring them in the first place was accomplished sooner than expected.
Because in our view the defendants’ severance benefits were negotiated as critical components of employment contracts determined by FSLIC to be necessary to cure Cardinal’s “unsafe or unsound condition,” thus triggering the exception to automatic termination, the District Court’s determination that plaintiffs are likely to prevail on the merits was erroneous. The preliminary injunction must therefore be dissolved. It is unnecessary for us to reach the question of whether Quinn and Gannon’s rights under the employment contracts were “vested” within the meaning of section 563.-39(5).6 Accordingly, the District Court’s order issuing a preliminary injunction in favor of plaintiffs is vacated and the case remanded to that Court for further proceedings not inconsistent with this opinion.
. Although Federal Deposit Insurance Corporation (''FDIC") is the statutory successor to FSLIC, see 12 U.S.C.A. 1821a (West 1989) (creating FSLIC Resolution Fund managed by FDIC), this opinion refers to FSLIC in place of what since has become the interest of FDIC because it was FSLIC’s interest that has been litigated throughout this suit.
. Although section 2.7(a) of the employment agreements indicates that First Nationwide may have assumed the obligation of Cardinal upon purchasing Cardinal’s assets, and therefore may be required to indemnify Cardinal for the amount of the treasury bills put up by Cardinal to collateralize Quinn and Gannon’s employment benefits, First Nationwide is not a party to this action. We do not decide, therefore, any questions pertaining to the rights and obligations of First Nationwide.
. In the proceedings below, Judge Bell reported FSLIC’s contention that Quinn and Gannon’s employment contracts should be avoided because they breached their fiduciary duty by not seeking approval of the renewal of their contracts pursuant to paragraph 16(o) of the consent agreement. See Quinn, 711 F.Supp. at 377. Judge Bell also rejected the claim of Quinn and Gannon that FSLIC lacked standing to litigate. See id. at 376. The propriety of neither of these rulings is challenged on appeal.
. The employment contracts state in pertinent part:
2.8 Termination or Suspension as Required by Law.
Notwithstanding anything in this Agreement to the contrary, the following provisions shall limit the obligations of Employer, to the extent required by the applicable regulations of the Federal Savings and Loan Insurance Corporation (12 C.F.R. 563.39), or similar succeeding regulations:
(d) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of Employer, (i) by the FSLIC, at the time the FSLIC enters into an agreement to provide assistance to or on behalf of Employer under the authority contained in Section 406(f) of the National Housing Act; or (ii) by the Federal Home Loan Bank Board, at the time the Board or its principal supervisory agent approves a supervisory merger to resolve problems related to operation of Employer or when Employer is determined by the Board to be in an unsafe or unsound position.
(e) Termination or suspension pursuant to subparagraphs (a), (b), (c), and (d) hereunder, shall not effect rights hereunder which are vested at the time of such termination.
Quinn, 711 F.Supp. at 371-72.
. The consent agreement stated in pertinent part:
WHEREAS, the FSLIC is of the opinion that the Institution has not complied with certain of the regulations to which the Institution is subject in conducting the business of the Institution, in particular Section 563.13(b)(1) of the Insurance Regulations (12 C.F.R. Section 563.13(b)(1) (1987)), for the calendar quarter ended September 30, 1987, thereby providing grounds for the initiation of cease and desist proceedings against the Institution by the FSLIC; and WHEREAS, in the interest of regulatory
compliance and cooperation, the Institution is willing to enter into this Agreement to avoid the initiation of such cease and desist proceedings ....
Consent Agreement at 2, J.A. at 553.
. Section 563.39 provides that "[a]ny rights of the parties that have already vested, however, shall not be affected by such action.” Quinn and Gannon argue that their contract rights are vested under this provision. They contend that they were not fired by operation of law but were fired without cause eleven months before their contracts expired. In their view, their rights in continued employment under one-year renewable contracts had vested when they entered those contracts with FSLIC, as had their rights to the liquidated damages set forth in the contracts. The "vested” nature of these rights, Quinn and Gannon contend, is further reinforced by the collateralization of the liquidated damages in the form of irrevocable letters of credit guaranteed by treasury notes. The collat-eralization, they argue, admittedly a “concession” on Summers’s part, see J.A. at 467, was negotiated solely to give Quinn and Gannon a heightened expectancy interest in their job security or in the financial consequences should their job security turn out to be illusory.
In rejecting that argument, the District Court reasoned that because "defendants' employment agreements terminated by operation of law pursuant to section 2.8(d),” they in effect were fired before First Nationwide acquired Cardinal and thus could not have been fired without cause within the meaning of section 2.5 of the employment contracts. Quinn, 711 F.Supp. at 379. As a result, because defendants were not fired without cause, their entitlement to the severance benefits had not been triggered and thus their rights under the contracts had not "vested” under section 563.39. Id.