Document:

Exhibit 10.5

 

THIRD AMENDMENT TO CREDIT AGREEMENT

 

This Third Amendment to
Credit Agreement (“Amendment”) is made as of this     day
of November, 2009, by and among Gemino Healthcare Finance, LLC (“Lender”) and
Clarient, Inc., Clarient Diagnostic Services, Inc. and ChromaVision
International, Inc.  (collectively, the “Borrowers”).

 

BACKGROUND

 

A.            Borrowers
and Lender are parties to a certain Credit Agreement dated July 31, 2008 (as
modified and amended from time to time, the “Credit Agreement”), pursuant to
which Borrowers established certain financing arrangements with Lender.  The Credit Agreement and all instruments,
documents and agreements executed in connection therewith, or related thereto
are referred to herein collectively as the “Existing Credit Documents.”  All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Credit Agreement.

 

B.            Borrowers
have informed Lender that an Event of Default has occurred under the Credit
Agreement due to Borrowers’ failure to comply with Section 6.06(a) of the
Credit Agreement for the fiscal quarter ending September 30, 2009 (“Existing
Default”).

 

C.            Borrowers
have requested and Lender has agreed to waive the Existing Default and amend
the terms and conditions of the Existing Credit Documents, pursuant to the
terms and conditions of this Amendment.

 

D.            Borrowers
and Lender desire to set forth their agreement in writing.

 

NOW THEREFORE, with the foregoing Background deemed
incorporated by reference and for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto, intending to
be legally bound, covenant and agree as follows:

 

1.             Waiver
of Existing Default.  Borrowers
acknowledge and agree that as of this date, the Existing Default has occurred
and remains outstanding under the Existing Credit Documents.  Upon the effectiveness of this Amendment,
Lender hereby waives the Existing Default. 
Such waiver shall in no way constitute a waiver of any other Event of
Default or Unmatured Event of Default which may have occurred but which is not
specifically referenced as an “Existing Default” nor shall it obligate Lender
to provide any further waiver of any other Event of Default or Unmatured Event
of Default (whether similar or dissimilar, including any further Events of
Default resulting from a failure to comply with Sections 6.06(a) of the Credit
Agreement).

 

2.             Amendment.  Upon the effectiveness of this Amendment, the
Credit Agreement is hereby amended in the following manner:

 

(a)           The
definitions of “Advance Rate” and “Fixed Charge Coverage Ratio” set forth in
Annex I to the Credit Agreement are hereby by amended and restated as follows:

 

“Advance Rate” means eighty-five percent (85%)
or such other percentage(s) resulting from an adjustment pursuant to Section
2.01(e) hereof.

 

 

“Fixed Charge Coverage
Ratio” means the ratio of (A) EBITDA, to (B) the sum of (i) interest
expense paid in cash with respect to Senior Debt, plus (ii)  interest expense paid in cash on Subordinated
Debt, plus (iii) payments made under Capital Leases, plus (iv) fees
paid to Safeguard pursuant to the Safeguard Indemnity, plus (v) unfinanced
capital expenditures, plus (vi) taxes paid in cash, all as determined
for Borrowers on a consolidated basis in accordance with GAAP, on a rolling
four (4) quarter basis; provided, however, that such calculation as of
the fiscal quarter ending March 31, 2010 shall be for the most recent fiscal
quarterly period ending on such date on a cumulative, annualized basis; such
calculation for the fiscal quarter ending June 30, 2010 shall be for the two (2)
most recent fiscal quarterly periods ending on such date on a cumulative,
annualized basis and such calculation for the fiscal quarter ending September 30,
2010 shall be for the three (3) most recent fiscal quarterly periods ending on
such date on a cumulative, annualized basis.

 

(b)           Section 2.01(d) of
the Credit Agreement is hereby amended and restated as follows:

 

(d)           The initial term of the Credit
Facility (“Initial Term”) shall expire on January 31, 2011.  All Revolving Loans shall be repaid on or
before the earlier of the last day of the Initial Term or upon termination of
the Credit Facility or termination of this Agreement (“Maturity Date”).  After the Maturity Date no further Revolving
Loans shall be available from Lender.

 

(c)           Section 2.03(c) of
the Credit Agreement is hereby amended and restated as follows:

 

(c)           Should the Credit
Facility be terminated for any reason prior to the last day of the Initial
Term, in addition to repayment of all Obligations then outstanding and
termination of Lender’s commitment hereunder, Borrowers shall unconditionally
be obligated to pay at the time of such termination, a fee (“Termination Fee”)
in an amount equal to one percent (1.0%) of the Revolving Loan Commitment.

 

Borrowers acknowledge that the Termination Fee is an
estimate of Lender’s damages in the event of early termination and is not a
penalty.  In the event of termination of
the Credit Facility, all of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination.  All undertakings, agreements, covenants,
warranties and representations of Borrowers contained in the Loan Documents
shall survive any such termination, and Lender shall retain its security
interests in the Collateral and all of its rights and remedies under the Loan
Documents notwithstanding such termination until Borrowers have paid the
Obligations to Lender, in full, in immediately available funds, together with
the applicable Termination Fee, if any.  

 

2

 

Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its security interests
in the Collateral unless, with respect to any loss or damage Lender may incur
as a result of dishonored checks or other items of payment received by Lender
from Borrowers or any Obligor and applied to the Obligations, Lender shall, at
its option, (i) have received a written agreement executed by Borrowers and by
any Person whose loans or other advances to Borrowers are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; (ii) have retained such monetary reserves and security interests on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem necessary to protect Lender from any such loss or damage; or (iii) have
received such other written agreements and/or arrangements satisfactory to
Lender, in its sole discretion, with respect to such matters.

 

(d)           Effective as of December
1, 2009, Section 2.03(d) of the Credit Agreement is hereby amended and restated
as follows:

 

(d)           Borrowers shall
unconditionally pay to Lender a fee (“Unused Line Fee”) equal to
one-half of one percent (0.50%) per annum of the unused portion of the Credit
Facility.  The unused portion of the
Credit Facility shall be the difference between the Revolving Loan Commitment
and the average daily outstanding balance of the Revolving Loans during each
month (or portion thereof, as applicable), which fees shall be calculated and
payable monthly, in arrears, and shall be due and payable on the first calendar
day of each month.

 

(e)           Section 6.06 of the
Credit Agreement is hereby amended and restated as follows:

 

6.06         Financial
Covenants.  Borrowers shall perform and comply with each
of the following financial covenants as reflected and computed from their
financial statements:

 

(a)           Borrowers shall maintain a Loan Turn
Days of not greater than thirty-five (35) days, measured as of December 31,
2009.

 

(b)           RESERVED

 

(c)           Borrowers shall maintain, at all
times, a Fixed Charge Coverage Ratio, measured quarterly at the end of each
fiscal quarter, of not less than (i) 1.00 to 1.0 as of the fiscal quarter
ending March 31, 2010, (ii) 1.10 to 1.0 as of the fiscal quarter ending June 30,
2010, and (iii) 1.20 to 1.0 as of the fiscal quarter ending September 30, 2010
and each fiscal quarter thereafter.

 

3

 

3.             Representations
and Warranties.  Each Borrower
represents and warrants to Lender that:

 

(a)           All warranties and
representations made to Lender under the Credit Agreement and the Existing
Credit Documents are true and correct as of the date hereof (except as to such
warranties and representations which are as of a specific date, which
warranties and representations are true and correct as of such date).

 

(b)           The execution and
delivery by such Borrower of this Amendment and the performance by it of the
transactions herein contemplated (i) are and will be within its powers, (ii) have
been authorized by all necessary organizational action, and (iii) are not and
will not be in contravention of any order of any court or other agency of
government, of law or any other indenture, agreement or undertaking to which
any Borrower is a party or by which the property of such Borrower is bound, or
be in conflict with, result in a breach of, or constitute (with due notice
and/or lapse of time) a default under any such indenture, agreement or
undertaking or result in the imposition of any lien, charge or encumbrance of
any nature on any of the properties of such Borrower.

 

(c)           This Amendment and
any assignment, instrument, document, or agreement executed and delivered in
connection herewith, is valid, binding and enforceable in accordance with its
respective terms.

 

(d)           No Event of Default
or Unmatured Event of Default, other than the Existing Default, has occurred
and is continuing under the Credit Agreement or any of the other Existing
Credit Documents.

 

(e)           The Comerica
Subordinated Debt has been paid in full (other than with respect to the
Comerica Letter of Credit (as defined in the Comerica Letter Agreement (as
defined below))) and the Comerica Loan Documents have been terminated pursuant
to the terms of the certain letter agreement dated March 26, 2009 among
Borrowers and Lender and acknowledged by Comerica (“Comerica Letter Agreement”).

 

(f)            The Safeguard
Subordinated Debt has been paid in full (except certain obligations with
respect to that certain Amended and Restated Registration Rights Agreement
dated February 27, 2009 among Clarient, Safeguard, Safeguard Scientifics, Inc.
and Safeguard Delaware (“Safeguard Registration Rights Agreement”) and the
Safeguard Loan Documents have been terminated (other than certain Warrants (as
defined in the Safeguard Subordination Agreement) and the Safeguard
Registration Rights Agreement), pursuant to the terms of that certain letter
agreement dated May 14, 2009 among Borrowers and Lender.

 

4.             Amendment
Fee.  Prior the to the effectiveness
of this Amendment, Borrowers shall pay to Lender a nonrefundable amendment fee
(“Amendment Fee”) equal to $5,000, which Amendment Fee shall be fully earned
upon execution of this Amendment.

 

5.             Effectiveness
Conditions.  This Amendment shall be
effective upon completion of the following conditions precedent (all documents
and other items to be in form and substance satisfactory to Lender and Lender’s
counsel):

 

(a)           Execution and
delivery by Borrowers of this Amendment;

 

4

 

(b)           Delivery by
Borrowers of certified copies of resolutions of each Borrower’s board of
directors, general partners, members or managers, as applicable, authorizing
the execution of this Amendment and each document required to be delivered by
any Section hereof;

 

(c)           No Unmatured Event
of Default or Event of Default, other than the Existing Default, shall have
occurred and be continuing under the Existing Credit Documents;

 

(d)           Payment by Borrowers
of any and all costs, fees and expenses of Lender (including, the Amendment Fee
and attorneys’ fees) in connection with this Amendment and the transaction
contemplated hereby; and

 

(e)           Execution and/or
delivery by Borrowers of all agreements, instruments and documents requested by
Lender to effectuate and implement the terms hereof and the Existing Credit
Documents.

 

6.             Confirmation
of Indebtedness.  Borrowers hereby
acknowledge and confirm that as of the close of business on November 10, 2009,
Borrowers are indebted to Lender, without defense, setoff, claim or
counterclaim, under the Existing Credit Documents, in the aggregate principal
amount of $5,968,656.59  plus all fees, costs and expenses (including attorneys’ fees) incurred
to date in connection with the Existing Credit Documents.

 

7.             Ratification
of Existing Credit Documents.  Except
as expressly set forth herein, all of the terms and conditions of the Credit
Agreement and Existing Credit Documents are hereby ratified and confirmed and
continue unchanged and in full force and effect.  All references to the Credit Agreement shall
mean the Credit Agreement as modified by this Amendment.

 

8.             Security
Interest.  Borrowers hereby confirm
and agree that all security interests and liens granted to Lender continue to
be perfected, first priority liens and remain in full force and effect and
shall continue to secure the Obligations. 
All Collateral remains free and clear of any liens other than liens in
favor of Lender and Permitted Liens. 
Nothing herein contained is intended to in any way impair or limit the
validity, priority, and extent of Lender’s existing security interest in and
liens upon the Collateral.

 

9.             Governing
Law.  This Amendment, and all matters
arising out of or relating to this Amendment, shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to principles of conflicts of laws, and shall be
construed without the aid of any canon, custom or rule of law requiring
construction against the draftsman.

 

10.           Release.
As further consideration for Lender’s agreement to grant the accommodations set
forth herein, each Borrower hereby waives and releases and forever discharges
Lender and its officers, directors, attorneys, agents and employees from any
liability, damage, claim, loss or expense of any kind that Borrowers, or any of
them, may have against Lender arising out of or relating to the Obligations,
this Amendment or the Existing Credit Documents.

 

11.           Counterparts.  This Amendment may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute one and the same
respective agreement.  Signature by
facsimile or PDF shall bind the parties hereto.

 

5

 

IN WITNESS WHEREOF, the
parties have executed this Amendment the day and year first above written.

 

	
  BORROWERS:

  	
  CLARIENT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLARIENT
  DIAGNOSTIC SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CHROMAVISION
  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
  GEMINO
  HEALTHCARE FINANCE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

[SIGNATURE
PAGE TO THIRD AMENDMENT TO CREDIT AGREEMENT]

 

S-1COASTAL BANKING COMPANY, INC.

EXHIBIT 10.1

AGREEMENT BY AND BETWEEN

CBC National Bank

Fernandina Beach, Florida

and

The Comptroller of the Currency

CBC National Bank, Fernandina Beach, Florida (“Bank”) and the Comptroller of the Currency of the United States of America (“Comptroller”) wish to protect the interests of the depositors, other customers, and shareholders of the Bank, and, toward that end, wish the Bank to operate safely and soundly and in accordance with all applicable laws, rules and regulations.

The Comptroller has found unsafe and unsound banking practices relating to the Bank’s increasing credit risk. Additional actions by the Board and management are needed to restore the Bank to a safe and sound condition.

In consideration of the above premises, it is agreed, between the Bank, by and through its duly elected and acting Board of Directors (“Board”), and the Comptroller, through his authorized representative, that the Bank shall operate at all times in compliance with the articles of this Agreement.

ARTICLE I

JURISDICTION

(1)

This Agreement shall be construed to be a “written agreement entered into with the agency” within the meaning of 12 U.S.C. § 1818(b)(1).

(2)

This Agreement shall be construed to be a “written agreement between such depository institution and such agency” within the meaning of 12 U.S.C. § 1818(e)(1) and 12 U.S.C. § 1818(i)(2).

(3)

This Agreement shall be construed to be a “formal written agreement” within the meaning of 12 C.F.R. § 5.51(c)(6)(ii). See 12 U.S.C. § 1831i.

(4)

This Agreement shall be construed to be a “written agreement” within the meaning of 12 U.S.C. § 1818(u)(1)(A).

(5)

All reports or plans which the Bank or Board has agreed to submit to the Assistant Deputy Comptroller pursuant to this Agreement shall be forwarded to the:

Assistant Deputy Comptroller

North Florida Field Office

8375 Dix Ellis Trail, Suite 403

Jacksonville, FL 32256

ARTICLE II

CREDIT RISK

(1)

The Board shall continue to ensure Bank adherence to a written program to reduce the high level of credit risk in the Bank. The program shall include, but not be limited to:

(a)

procedures to strengthen credit underwriting, particularly in the commercial real estate (CRE) portfolio;

(b)

procedures to strengthen loan portfolio management, to include internal lending guidelines and concentration limits that control the Bank’s overall risk exposure to CRE, and a contingency plan to reduce or mitigate concentrations in the event of adverse market conditions, including a plan to limit CRE growth if concentrations become excessive;

(c)

procedures to maintain an adequate, qualified staff in all credit related functional areas, including the Bank’s special assets division;

(d)

procedures for continued strengthening of collections; and

(e)

an action plan to identify, measure, monitor and manage CRE concentration risk and future CRE growth.

(2)

The Board shall submit a copy of the program to the Assistant Deputy Comptroller.

(3)

At least quarterly, the Board shall prepare a written assessment of the Bank’s credit risk, which shall evaluate the Bank’s progress under the aforementioned program. The Board shall submit a copy of this assessment to the Assistant Deputy Comptroller.

ARTICLE III

CRITICIZED ASSETS

(1)

The Bank shall take immediate and continuing action to protect its interest in those assets criticized in the ROE, in any subsequent Report of Examination, by internal or external loan review, or in any list provided to management by the National Bank Examiners.

(2)

The Board shall continue to ensure Bank adherence to a written program designed to eliminate the basis of criticism of assets criticized in the ROE, in any subsequent Report of Examination, or by any internal or external loan review, or in any list provided to management by the National Bank Examiners as “doubtful,” “substandard,” or “special mention.” This program shall include, at a minimum:

(a)

an identification of the expected sources of repayment;

(b)

the appraised value of supporting collateral and the position of the Bank’s lien on such collateral where applicable;

(c)

an analysis of current and satisfactory credit information, including cash flow analysis where loans are to be repaid from operations; and

(d)

the proposed action to eliminate the basis of criticism and the time frame for its accomplishment.

(3)

Upon adoption, a copy of the program for all criticized assets equal to or exceeding five hundred thousand dollars ($500,000) shall be forwarded to the Assistant Deputy Comptroller.

(4)

The Board, or a designated committee, shall conduct a review, on at least a monthly basis, to determine: 

(a)

the status of each criticized asset or criticized portion thereof that equals or exceeds five hundred thousand dollars ($500,000);

(b)

management’s adherence to the program adopted pursuant to this Article;

(c)

the status and effectiveness of the written program; and

(d)

the need to revise the program or take alternative action.

(5)

A copy of each review shall be forwarded to the Assistant Deputy Comptroller on a quarterly basis in a format similar to Appendix A, attached hereto.

(6)

The Bank may extend credit, directly or indirectly, including renewals, extensions or capitalization of accrued interest, to a borrower whose loans or other extensions of credit are criticized in the ROE, in any subsequent Report of Examination, in any internal or external loan review, or in any list provided to management by the National Bank Examiners and whose aggregate loans or other extensions exceed five hundred thousand dollars ($500,000) only if each of the following conditions is met:

(a)

the Board or designated committee finds that the extension of additional credit is necessary to promote the best interests of the Bank and that prior to renewing, extending or capitalizing any additional credit, a majority of the full Board (or designated committee) approves the credit extension and records, in writing, why such extension is necessary to promote the best interests of the Bank; and

(b)

a comparison to the written program adopted pursuant to this Article shows that the Board’s formal plan to collect or strengthen the criticized asset will not be compromised.

(7)

A copy of the approval of the Board or of the designated committee shall be maintained in the file of the affected borrower.

ARTICLE IV

PROFIT PLAN

(1)

Within sixty (60) days, the Board shall review, revise as needed, and thereafter ensure Bank adherence to its written profit plan to improve and sustain the earnings of the Bank. This plan shall include, at minimum, the following elements:

(a)

identification of the major areas in and means by which the Board will seek to improve the Bank’s operating performance;

(b)

realistic and comprehensive budgets, including projected balance sheets and year-end income statements;

(c)

a budget review process to monitor both the Bank’s income and expenses, and to compare actual figures with budgetary projections;

(d)

a description of the operating assumptions that form the basis for major projected income and expense components;

(e)

an action plan to ensure the ongoing adequacy of capital and the availability of sources of additional capital; and,

(f)

plans to ensure the continued adequacy of the allowance for loan and lease losses, in accordance with the Allowance for Loan and Lease Losses of the Comptroller’s Handbook and OCC Bulletin 2006-47, “Interagency Policy Statement on the Allowance for Loan and Lease Losses.”

(2)

The budgets and related documents required in paragraph (1) above for 2009 shall be submitted to the Assistant Deputy Comptroller. The Board shall submit to the Assistant Deputy Comptroller annual budgets as described in paragraph (1) above for each year this Formal Agreement remains in effect. A preliminary budget for each year shall be submitted on or before November 30, of the preceding year. A final budget for each year shall be submitted on or before January 31 of the current year.

(3)

The Board shall forward comparisons of its balance sheet and profit and loss statement to the profit plan projections to the Assistant Deputy Comptroller on a quarterly basis.

ARTICLE V

BROKERED DEPOSITS

(1)

The Bank may not accept, renew, or roll over any Brokered Deposits (as defined by 12 C.F.R. § 337.6(a)(2) except that it shall not include reciprocal CDARS) that would cause the Bank’s level of Brokered Deposits to be in excess of ten percent (10%) of total deposits unless it has obtained a prior written determination of no supervisory objection from the Assistant Deputy Comptroller.

(2)

If the Bank seeks to acquire Brokered Deposits in excess of ten percent (10%) of total deposits, the Board shall apply to the Assistant Deputy Comptroller for written permission. Such application shall contain, at a minimum, the following:

(a)

the dollar volume, maturities, and cost of the Brokered Deposits to be acquired;

(b)

the proposed use of the Brokered Deposits, i.e., short-term liquidity or restructuring of liabilities to reduce cost;

(c)

alternative funding sources available to the Bank; and

(d)

the reasons why the Bank believes that the acceptance of the Brokered Deposits does not constitute an unsafe and unsound practice in its particular circumstances.

(3)

The Assistant Deputy Comptroller may require the submission of such additional information as necessary to make an informed decision. Upon consideration of the Bank’s application, the Comptroller will determine, in its sole discretion, whether the proposed acquisition of Brokered Deposits may be accomplished in a safe and sound manner, and it may prohibit or condition the Bank’s acquisition.

ARTICLE VI

COMPLIANCE COMMITTEE

(1)

Within fifteen (15) days of the date of this Agreement, the Board shall appoint a Compliance Committee of at least five (5) directors, of which no more than one (1) shall be an employee or controlling shareholder of the Bank or any of its affiliates (as the term “affiliate” is defined in 12 U.S.C. § 371c(b)(1)), or a family member of any such person. Upon appointment, the names of the members of the Compliance Committee and, in the event of a change of the membership, the name of any new member shall be submitted in writing to the Assistant Deputy Comptroller. The Compliance Committee shall be responsible for monitoring and coordinating the Bank’s adherence to the provisions of this Agreement.

(2)

The Compliance Committee shall meet at least monthly.

(3)

Within forty-five (45) days of the date of this Agreement and quarterly thereafter, the Compliance Committee shall submit a written progress report to the Board setting forth in detail:

(a)

a description of the action needed to achieve full compliance with each Article of this Agreement;

(b)

actions taken to comply with each Article of this Agreement; and

(c)

the results and status of those actions.

(4)

The Board shall forward a copy of the Compliance Committee’s report, with any additional comments by the Board, to the Assistant Deputy Comptroller within ten (10) days of receiving such report.

ARTICLE VII

CLOSING

(1)

Although the Board has agreed to submit certain programs and reports to the Assistant Deputy Comptroller for review or prior written determination of no supervisory objection, the Board has the ultimate responsibility for proper and sound management of the Bank.

(2)

It is expressly and clearly understood that if, at any time, the Comptroller deems it appropriate in fulfilling the responsibilities placed upon him by the several laws of the United States of America to undertake any action affecting the Bank, nothing in this Agreement shall in any way inhibit, estop, bar, or otherwise prevent the Comptroller from so doing.

(3)

Any time limitations imposed by this Agreement shall begin to run from the effective date of this Agreement. Such time requirements may be extended in writing by the Assistant Deputy Comptroller for good cause upon written application by the Board.

(4)

The provisions of this Agreement shall be effective upon execution by the parties hereto and its provisions shall continue in full force and effect unless or until such provisions are amended in writing by mutual consent of the parties to the Agreement or excepted, waived, or terminated in writing by the Comptroller.

(5)

In each instance in this Agreement in which the Board is required to ensure adherence to, and undertake to perform certain obligations of the Bank, it is intended to mean that the Board shall:

(a)

authorize and adopt such actions on behalf of the Bank as may be necessary for the Bank to perform its obligations and undertakings under the terms of this Agreement;

(b)

require the timely reporting by Bank management of such actions directed by the Board to be taken under the terms of this Agreement;

(c)

follow-up on any non-compliance with such actions in a timely and appropriate manner;

(d)

ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the program developed pursuant to this Agreement; and

(e)

require corrective action be taken in a timely manner of any noncompliance with such actions.

(6)

This Agreement is intended to be, and shall be construed to be, a supervisory “written agreement entered into with the agency” as contemplated by 12 U.S.C. § 1818(b)(1), and expressly does not form, and may not be construed to form, a contract binding on the Comptroller or the United States. Notwithstanding the absence of mutuality of obligation, or of consideration, or of a contract, the Comptroller may enforce any of the commitments or obligations herein undertaken by the Bank under his supervisory powers, including 12 U.S.C. § 1818(b)(1), and not as a matter of contract law. The Bank expressly acknowledges that neither the Bank nor the Comptroller has any intention to enter into a contract. The Bank also expressly acknowledges that no officer or employee of the Office of the Comptroller of the Currency has statutory or other authority to bind the United States, the U.S. Treasury Department, the Comptroller, or any other federal bank regulatory agency or entity, or any officer or employee of any of those entities to a contract affecting the Comptroller’s exercise of his supervisory responsibilities. The terms of this Agreement, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior agreements or prior arrangements between the parties, whether oral or written.

IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller, has hereunto set his hand on behalf of the Comptroller.

			
	/s/ Kennard L. Page

	 
	August 26, 2009                      

	Kennard L. Page                                                   

	      Date     

	 

	Assistant Deputy Comptroller

	 
	 

	North Florida Field Office

	 
	 

IN TESTIMONY WHEREOF, the undersigned, as the duly elected and acting Board of Directors of the Bank, have hereunto set their hands on behalf of the Bank.

			
	

/s/ Christina H. Bryan

	 
	August 26, 2009

	Christina H. Bryan

	 
	Date

	

/s/ Dennis O. Green

	 
	August 26, 2009

	Dennis O. Green 

	 
	Date

	

/s/ Mark B. Heles

	 
	August 26, 2009

	Mark B. Heles 

	 
	Date

	

/s/ James W. Holden, Jr.

	 
	August 26, 2009

	James W. Holden, Jr. 

	 
	Date

	

/s/ Ladson F. Howell

	 
	August 26, 2009

	Ladson F. Howell 

	 
	Date

	

/s/ James C. Key

	 
	August 26, 2009

	James C. Key 

	 
	Date

	

/s/ Robert B. Pinkerton

	 
	August 26, 2009

	Robert B. Pinkerton 

	 
	Date

	

/s/ Suellen Rodeffer Garner

	 
	August 26, 2009

	Suellen Rodeffer Garner 

	 
	Date

	

/s/ Michael Sanchez

	 
	August 26, 2009

	Michael Sanchez 

	 
	Date

	

/s/ Edward E. Wilson

	 
	August 26, 2009

	Edward E. Wilson 

	 
	Date

	

/s/ Marshall E. Wood

	 
	August 26, 2009

	Marshall E. Wood 

	 
	Date

APPENDIX A

CBC National Bank

Fernandina Beach, Florida

CRITICIZED ASSET REPORT AS OF: _____________________________________________________

______________________________________________________________________________________

BORROWER(S):

ASSET BALANCE(S) AND OCC RATING (SM, SUBSTANDARD, DOUBTFUL OR LOSS):

$________________

CRITICISM ______________________________

AMOUNT CHARGED OFF TO DATE _____________________________________________________

FUTURE POTENTIAL CHARGE-OFF _____________________________________________________

PRESENT STATUS (Fully explain any increase in outstanding balance; include past due status, nonperforming, significant progress or deterioration, etc.):

FINANCIAL AND/OR COLLATERAL SUPPORT (include brief summary of most current financial information, appraised value of collateral and/or estimated value and date thereof, bank’s lien position and amount of available equity, if any, guarantor(s) info, etc.):

PROPOSED PLAN OF ACTION TO ELIMINATE ASSET CRITICISM(S) AND TIME FRAME FOR ITS ACCOMPLISHMENT:

IDENTIFIED SOURCE OF REPAYMENT AND DEFINED REPAYMENT PROGRAM (repayment program should coincide with source of repayment):

Use this form for reporting each criticized asset that exceeds five hundred thousand dollars ($500,000) and retain the original in the credit file for review by the examiners. Submit your reports quarterly until notified otherwise, in writing, by the Assistant Deputy Comptroller.

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