Document:

Exhibit 10.1

 

EXECUTION VERSION

 

AMENDMENT NO. 1 TO

CREDIT AND GUARANTY AGREEMENT

 

           This AMENDMENT NO. 1 TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is dated as of February 29, 2012 and is among GXS WORLDWIDE, INC. (the “Borrower”), the Lenders (as defined in the Credit Agreement referred to below) party hereto, WELLS FARGO CAPITAL FINANCE, INC. (formerly known as Wells Fargo Foothill, Inc.), as Administrative Agent, and, for purposes of Sections 4 and 5 hereof, certain Subsidiaries of the Borrower.

RECITALS:

           WHEREAS, the Borrower, certain Subsidiaries of the Borrower, the Lenders, Wells Fargo Capital Finance, Inc. (formerly known as Wells Fargo Foothill, Inc.), as Administrative Agent, Wells Fargo Bank, N.A., as Issuing Bank, and Wilmington Trust FSB, as Collateral Trustee, are parties to that certain Credit and Guaranty Agreement, dated as of December 23, 2009 (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”); and

WHEREAS, the Borrower has requested that the Lenders amend certain terms of the Credit Agreement as hereinafter provided, including the extension of the Revolving Commitment Expiration Date, and the Lenders party hereto have agreed to amend the Credit Agreement as set forth herein subject to the satisfaction of the conditions precedent to effectiveness set forth in Section 3 hereof.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Section 1.  Defined Terms.  Except as otherwise defined in this Amendment, capitalized terms defined in the Credit Agreement and used herein (including in the preamble and recitals hereto) shall have the meanings given to them in the Credit Agreement.

Section 2.  Amendments to the Credit Agreement.  Subject to the satisfaction of the conditions set forth in Section 3 hereof, effective as of the First Amendment Effective Date (as defined in Section 3 hereof):

	 	
(a)

	
the definition of “Adjusted Eurodollar Rate” in Section 1.01 of the Credit Agreement is hereby amended by deleting the words “the greater of (I) 2.00% per annum and (II)” in the second line thereof.

	 	
(b)

	
the definition of “Applicable Margin” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

““Applicable Margin” means (i) with respect to Eurodollar Rate Loans, 4.50% per annum, and (ii) with respect to Base Rate Loans, 3.50% per annum.”

	 	
(c)

	
the definition of “Base Rate” in Section 1.01 of the Credit Agreement is hereby amended by adding the word “and” directly before the word “(ii)” in the second line thereof and deleting the words “, and (iii) 3.00%” in the third line thereof.

	 	
(d)

	
Section 1.01 of the Credit Agreement is hereby amended by adding the following defined term in the proper alphabetical order: ““First Amendment Effective Date” means February 29, 2012.”

 

 

  

  

  

 

	 	
(e)

	
the definition of “Revolving Commitment Expiration Date” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

““Revolving Commitment Expiration Date” means March 15, 2015.”

	 	
(f)

	
the definition of “Revolving Commitment Fee Percentage” in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

““Revolving Commitment Fee Percentage” means 0.50% per annum.”

	 	
(g)

	
Section 6.09(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

“(b) Net Leverage Ratio.  Permit the Net Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending March 30, 2010, to exceed (a) for each Fiscal Quarter ending prior to the consummation of the Specified Acquisition, 5.75:1, (b) for each Fiscal Quarter ending thereafter but prior to the Fiscal Quarter ending March 31, 2012, 5.25:1 and (c) for the Fiscal Quarter ending March 31, 2012 and for each Fiscal Quarter ending thereafter, 5.75:1; or”

Section 3.  Effectiveness.  The effectiveness of the amendments to the Credit Agreement set forth in Section 2 of this Amendment is subject to the satisfaction of the following conditions precedent (the date of such satisfaction, the “First Amendment Effective Date”):

	 	
(a)

	
the Administrative Agent shall have received from (i) the Borrower, (ii) each Guarantor and (iii) each Lender, a counterpart of this Amendment signed on behalf of such party;

	 	
(b)

	
the Borrower shall have paid all fees (including the amendment fees set forth in Section 6 of this Amendment) and expenses due and payable under the Loan Documents and set forth in an invoice delivered to the Borrower at least one Business Day prior to the First Amendment Effective Date; and

	 	
(c)

	
the Administrative Agent shall have received from the Borrower a certificate which shall include certifications that (i) each of the representations and warranties contained in Section 5 of this Amendment are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representation and warranty that is already qualified by materiality) at and as if made as of the First Amendment Effective Date except to the extent they expressly relate to an earlier date and (ii) as of the First Amendment Effective Date, no Default or Event of Default is continuing.

Section 4.  Consent and Affirmation of the Loan Parties.

(a)           Each Loan Party (prior to and after giving effect to this Amendment) hereby consents to the amendments to the Credit Agreement effected hereby (the Credit Agreement as amended by this Amendment, the “Amended Credit Agreement”) and confirms and agrees that, notwithstanding the effectiveness of this Amendment, each Loan Document to which such Loan Party is a party is, and the obligations of such Loan Party contained in the Amended Credit Agreement, this Amendment or in any other Loan Document to which it is a party are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects, in each case as amended by this Amendment.  For greater certainty and without limiting the foregoing, each Loan Party hereby confirms that the existing security 

 

 

  

  

  

 

 

interests granted by such Loan Party in favor of the Collateral Trustee, for the benefit of the Beneficiaries (as defined in the Pledge and Security Agreement), pursuant to the Loan Documents in the Collateral described therein shall continue to secure the obligations of the Loan Parties under the Amended Credit Agreement and the other Loan Documents as and to the extent provided in the Loan Documents.  Each Guarantor reaffirms and agrees that its guarantee of the obligations of the Loan Parties under the Amended Credit Agreement and the Loan Documents is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects.

(b)           Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement, the Amended Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, the Amended Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor to any future amendments to the Amended Credit Agreement.

Section 5.  Representations and Warranties.  Each Loan Party hereby represents and warrants, on and as of the date hereof and the First Amendment Effective Date, that:

(a)           The representations and warranties contained in the Loan Documents are true and correct in all material respects to the same extent as though made on and as of the date hereof and the First Amendment Effective Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided, that to the extent any such representation or warranty is already qualified by materiality or material adverse effect, such representation or warranty shall be true and correct in all respects.

(b)           Such Loan Party has the corporate or other power and authority to execute and deliver this Amendment and perform its obligations under the Amended Credit Agreement and the other Loan Documents and has taken all necessary action to authorize the consummation of the transactions contemplated hereby and to authorize the execution and delivery of this Amendment and the performance of its obligations under the Amended Credit Agreement and the other Loan Documents.

(c)           No consent or authorization of, filing with, notice to or other similar act by or in respect of, any Governmental Authority or any other Person is required to be obtained or made by or on behalf of any Loan Party in connection with the borrowings or other extensions of credit under the Amended Credit Agreement or with the execution, delivery, performance, validity or enforceability of this Amendment or the Amended Credit Agreement or the other Loan Documents, except for consents, authorizations, notices and filings which have been obtained or made.

(d)           This Amendment has been duly executed and delivered on behalf of such Person.  This Amendment and the Amended Credit Agreement constitute a legal, valid and binding obligation of such Loan Party enforceable against each such Person in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.

(e)           Neither the execution and delivery by any Loan Party of this Amendment nor the consummation of the transactions contemplated herein, nor performance of and compliance with the terms and provisions of the Amended Credit Agreement or the other Loan Documents by such Loan Party, nor the exercise of remedies by the Administrative Agent, the Collateral Trustee and the Lenders hereunder or thereunder, will (i) violate or conflict with any provision of the articles or certificate of incorporation, bylaws, partnership agreement, operating agreement or other organizational or governing 

 

 

  

  

  

 

 

documents of such Loan Party, (ii) violate, contravene or conflict with any law applicable to it or its properties, (iii) violate, contravene or conflict with contractual provisions of, cause an event of default under, or give rise to material increased, additional, accelerated or guaranteed, rights of any Person under, any indenture, loan agreement, mortgage, deed of trust or other instrument, material contract or material lease to which it is a party or by which it may be bound or (iv) result in or require the creation of any Lien (other than the Lien of the Security Documents) upon or with respect to its properties, except in the case of clause (iii) for such violations as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

Section 6.  Fees.  The Borrower hereby covenants and agrees that, so long as the First Amendment Effective Date occurs, it shall pay to each Lender that has consented to this Amendment a fee equal to 0.75% of such Lender’s Revolving Commitment on the Amendment Effective Date.

Section 7.  Reference to and Effect on the Credit Agreement.

(a)           On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement and each reference in the other Loan Documents to the “Credit Agreement,” “thereunder,” “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement.

(b)           The Credit Agreement as specifically amended by this Amendment is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed.  This Amendment shall be a “Loan Document” for purposes of the definition thereof in the Credit Agreement.

(c)           The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

Section 8.  Execution in Counterparts.  This Amendment may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by facsimile or other electronic transmission will be effective as delivery of a manually executed counterpart thereof.

Section 9. Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

           Section 10.  CONSENT TO JURISDICTION. .  SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH LOAN PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, HEREBY EXPRESSLY AND IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH 

 

 

  

  

  

 

RESPECT TO ACTIONS BY THE ADMINISTRATIVE AGENT OR THE COLLATERAL TRUSTEE IN RESPECT OF RIGHTS UNDER ANY SECURITY AGREEMENT GOVERNED BY A LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES (I) JURISDICTION AND VENUE OF COURTS IN ANY OTHER JURISDICTION IN WHICH IT MAY BE ENTITLED TO BRING SUIT BY REASON OF ITS PRESENT OR FUTURE DOMICILE OR OTHERWISE AND (II) ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE LOAN PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.01 OF THE AMENDED CREDIT AGREEMENT; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE LOAN PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT THE AGENTS AND THE LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY SECURITY DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

 

           Section 11. WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AMENDMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WAR­RANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 11 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO.  IN THE EVENT OF LITIGATION, THIS AMENDMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

Section 12.  Headings.  The headings of the sections and subsections hereof are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose, modify or amend the terms or conditions hereof, be used in connection with the interpretation of any term or condition hereof or be given any substantive effect.

Section 13.  Severability.  In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the 

 

 

  

  

  

 

 

remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby (it being understood that the invalidity, illegality or unenforceability of a particular provision in a particular jurisdiction shall not in and of itself affect the validity, legality or enforceability of such provision in any other jurisdiction).  The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provisions with valid, legal and enforceable provisions the economic effect of which comes as close as reasonably possible to that of the invalid, illegal or unenforceable provisions.

[Signature Pages Follow]

 

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.

 

 

	 	GXS WORLDWIDE, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Gregg Clevenger	 
	 	 	Name:	Gregg Clevenger	 
	 	 	Title:	Executive Vice President & Chief Financial Officer	 

 

 

	 	GXS, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Gregg Clevenger	 
	 	 	Name:	Gregg Clevenger	 
	 	 	Title:	Executive Vice President & Chief Financial Officer	 

 

	 	GXS INTERNATIONAL, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Richard B. Nash	 
	 	 	Name:	Richard B. Nash	 
	 	 	Title:	Vice President	 

 

 

	 	GXS INVESTMENTS, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Richard B. Nash	 
	 	 	Name:	Richard B. Nash	 
	 	 	Title:	Vice President	 

 

	 	HAHT COMMERCE, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Gregg Clevenger	 
	 	 	Name:	Gregg Clevenger	 
	 	 	Title:	Executive Vice President & Chief Financial Officer	 

 

Signature Page to Amendment No. 1

 

  

  

  

 

	 	WELLS FARGO CAPITAL FINANCE, INC. 

(formerly known as Wells Fargo Foothill, Inc.)

as Administrative Agent

	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Mark Salem	 
	 	 	Name:	Mark Salem	 
	 	 	Title:	Vice President	 

Signature Page to Amendment No. 1

 

  

  

  

 

 

	 	
By signing below you have indicated your consent to this Amendment

	 
	 	 	 
	 	 	 
	 	BARCLAYS BANK PLC, 	 
	 	as a Lender	 
	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Michael J. Mozer	 
	 	 	Name:	Michael J. Mozer	 
	 	 	Title:	Vice President	 

 

 

Signature Page to Amendment No. 1

 

  

  

  

 

 

	 	
By signing below you have indicated your consent to this Amendment

	 
	 	 	 
	 	 	 
	 	CITIBANK N.A, 	 
	 	as a Lender	 
	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Ahu Gures	 
	 	 	Name:	Ahu Gures	 
	 	 	Title:	Vice President	 

 

For Lenders requiring a second signature block:

 

	 	
By:

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 

 

 

Signature Page to Amendment No. 1

 

  

  

  

 

 

	 	
By signing below you have indicated your consent to this Amendment

	 
	 	 	 
	 	 	 
	 	General Electric Capital Corporation,	 
	 	as a Lender	 
	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Devasena Vallabhaneni	 
	 	 	Name:	Devasena Vallabhaneni	 
	 	 	Title:	Duly Authorized Signatory	 

 

 

Signature Page to Amendment No. 1

 

  

  

  

 

 

	 	
By signing below you have indicated your consent to this Amendment

	 
	 	 	 
	 	 	 
	 	JPMorgan Chase Bank, N.A.,	 
	 	as a Lender	 
	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Ann B. Kerns	 
	 	 	Name:	Ann B. Kerns	 
	 	 	Title:	Vice President	 

 

For Lenders requiring a second signature block:

 

	 	
By:

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 

 

 

Signature Page to Amendment No. 1

 

  

  

  

 

 

	 	
By signing below you have indicated your consent to this Amendment

	 
	 	 	 
	 	 	 
	 	Wells Fargo Capital Finance, Inc.,	 
	 	
as a Lender

	 
	 	 	 	 	 
	 	 	 	 	 
	 	
By:

	/s/ Mark Salem	 
	 	 	Name:	Mark Salem	 
	 	 	Title:	Vice President	 

 

For Lenders requiring a second signature block:

 

	 	
By:

	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 

 

Signature Page to Amendment No. 1ex10-4.htm

 

 

Exhibit 10.4

 

COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF BANKING

 

	 	:	 
	
Commonwealth of Pennsylvania,

	
:

	
Docket No.: 120013 (ENF-ORD)

	
Department of Banking, Bureau of

	
:

	  
	
Commercial Institutions,

	
:

	  
	  	
:

	  
	
    v.

	
:

	  
	  	
:

	  
	
United Bank of Philadelphia.

	
:

	  
	  	
:

	  

CONSENT ORDER

 

WHEREAS, United Bank of Philadelphia, Philadelphia, Pennsylvania (the “Bank”), is a Pennsylvania state-chartered bank and subject to regulation by the Commonwealth of Pennsylvania Department of Banking (the “Department”) and the Federal Deposit Insurance Corporation (the “FDIC”);

 

WHEREAS, the Bureau of Commercial Institutions (the “Bureau”) is primarily responsible within the Department for the regulation and supervision of the Bank;

 

WHEREAS, the Bank was the subject of a Joint Report of Examination by the Bureau and the FDIC as of August 29, 2011 (the “Report of Examination”);

 

WHEREAS, the Report of Examination gave the Bureau and the FDIC the reason to believe that the Bank had engaged in unsafe or unsound banking practices and had committed violations of law and regulation; and,

 

WHEREAS, the Bank, without admitting or denying wrongdoing as more fully set forth in the Stipulation of Consent and Entry of Order executed by the Bank, agrees to the issuance of this Consent Order (the “Order”) by the Bureau.

 

IT IS HEREBY ORDERED, pursuant to Section 501.A of the Department of Banking Code, 71 P.S. § 733-501.A, that the Bank, its directors, officers, employees, agents, and other “institution-affiliated parties,” as that term is defined in Section 3(u) of the FDIA, 12 U.S.C. § 1813(u), and its successors and assigns, shall take the following affirmative action:

 

 

  

  

  

 

 

1.           Board Participation.

 

(a)           The Board shall increase its participation in the affairs of the Bank, assuming full responsibility for the approval of sound policies and objectives and for the supervision of all of the Bank's activities, consistent with the role and expertise commonly expected for directors of banks of comparable size.

 

(b)           This participation shall include meetings to be held no less frequently than monthly at which, at a minimum, the following areas shall be reviewed and approved: reports of income and expenses; new, overdue, renewal, insider, charged off, and recovered loans; investment activity; liquidity levels and funds management; adoption or modification of operating policies; individual committee reports; audit reports; internal control reviews including management’s responses; reconciliation of general ledger accounts; and compliance with this Order.  Board minutes shall be specific and detailed and document these reviews and approvals, including the names of any dissenting directors.

 

(c)           The Bank shall notify the Regional Director of the FDIC’s New York Regional Office (“Regional Director”) and the Bureau in writing of any additions, resignations, or terminations of any members of its Board or any of its "senior executive officers" (as that term is defined in section 303.101(b) of the FDIC’s Rules and Regulations, 12 C.F.R. § 303.101(b)), within 10 days of the event.  Any notification required by this subparagraph shall include a description of the background(s) and experience of any proposed replacement personnel, and must be received at least 30 days prior to the individual(s) assuming the new position(s).  The Bank shall also establish procedures to ensure compliance with section 32 of the Act, 12 U.S.C. § 1831i, and Subpart F of Part 303 of the FDIC's Rules and Regulations, 12 C.F.R. Part 303.

 

 

 

  

  

  

 

 

 

2.           Management.

 

(a)           The Bank shall have and retain qualified management.  At a minimum, such management shall include: a chief executive officer with proven ability in managing a bank of comparable size and complexity, and experience in upgrading a low quality loan portfolio; a senior lending officer with an appropriate level of lending, collection, and loan supervision experience for the type and quality of the Bank's loan portfolio; and a chief financial officer with demonstrated ability in all financial areas including, but not limited to, accounting, regulatory reporting, budgeting and planning, management of the investment function, liquidity management, and interest rate risk management.  The Board shall provide the necessary written authority to management to implement the provisions of this Order.

 

(b)           The qualifications of management shall be assessed on its ability to:

 

(i)           comply with the requirements of this Order;

 

(ii)           operate the Bank in a safe and sound manner;

 

(iii)           comply with applicable laws, rules, and regulations; and

 

	
  

	
(iv)

	
restore all aspects of the Bank to a safe and sound condition, including management effectiveness, earnings, capital adequacy, asset quality, sensitivity to interest rate risk and liquidity.

 

(c)           Within 75 days from the effective date of this Order, the Bank shall retain a bank consultant who is acceptable to the Regional Director and the Bureau and who will develop a written analysis and assessment of the Bank's management needs ("Management Report") for the purpose of providing qualified management for the Bank.

 

 

 

  

  

  

 

 

(d)           The Management Report shall be developed within 135 days from the effective date of this Order and shall include, at a minimum:

 

	
  

	
(i)

	
identification of both the type and number of officer positions needed to properly manage and supervise the affairs of the Bank;

	
  

	
(ii)

	
identification and establishment of such Bank committees as are needed to provide guidance and oversight to active management;

	
  

	
(iii)

	
evaluation of all Bank officers and staff members to determine whether these individuals possess the ability, experience, and other qualifications required to perform present and anticipated duties, including adherence to the Bank's established policies and practices, and restoration and maintenance of the Bank in a safe and sound condition;

	
  

	
(iv)

	
evaluation of all Bank officers' compensation, including salaries, director fees, and other benefits; and

	
  

	
(v)

	
a plan to recruit and hire any additional or replacement personnel with the requisite ability, experience, and other qualifications to fill those officer or staff member positions identified in the Management Report.

 

(e)           Within 60 days from the effective date of this Order, the Bank shall provide the Regional Director and the Bureau with a copy of the proposed engagement letter or contract with the third party for non-objection or comment before it is executed.

 

(f)           The contract or engagement letter shall include, at a minimum:

 

 

 

  

  

  

 

 

	
  

	
(i)

	
a description of the work to be performed under the contract or engagement letter, the fees for each significant element of the engagement, and the aggregate fee;

	
  

	
(ii)

	
the responsibilities of the firm or individual;

	
  

	
(iii)

	
identification of the professional standards covering the work to be performed;

	
  

	
(iv)

	
identification of the specific procedures to be used when carrying out the work to be performed;

	
  

	
(v)

	
the qualifications of the employee(s) who are to perform the work;

	
  

	
(vi)

	
the time frame for completion of the work;

	
  

	
(vii)

	
any restrictions on the use of the reported findings;

	
  

	
(viii)

	
a provision for unrestricted examiner access to work papers; and

	
  

	
(ix)

	
a certification that the firm or individual is not affiliated in any manner with the Bank.

 

(g)           Within 45 days from receipt of the Management Report, the Bank shall formulate a written plan ("Management Plan") that incorporates the findings of the Management Report, a plan of action in response to each recommendation contained in the Management Report, and a time frame for completing each action.

 

	
  

	
(i)

	
At a minimum, the Management Plan shall:

	
  

	
1.

	
contain a recitation of the recommendations included in the Management Report, a plan of action to respond to each recommendation, and a time frame for completing each action;

 

 

 

 

  

  

  

 

 

	
  

	
2.

	
include provisions to implement necessary training and development for all employees;

	
  

	
3.

	
establish procedures to periodically review and update the Management Plan, as well as periodically review and assess the performance of each officer and staff member; and

	
  

	
4.

	
contain a current management succession plan.

	
  

	
(ii)

	
The Management Plan shall be submitted to the Regional Director and the Bureau for non-objection or comment. Within 30 days from receipt of non-objection or any comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the Management Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Management Plan.

 

3.           Profit and Budget Plan.

 

(a)           Within 60 days from the effective date of this Order, and within the first 30 days of each calendar year thereafter, the Bank shall formulate and submit for review as described in subparagraph (c), a written profit and budget plan ("Profit Plan") consisting of goals and strategies, consistent with sound banking practices, and taking into account the Bank's other written plans, policies, or other actions as required by this Order.

 

(b)           The Profit Plan shall include, at a minimum:

 

 

 

  

  

  

 

 

 

	
  

	
(i)

	
a description of the operating assumptions that form the basis for, and adequately support, material projected revenue and expense components;

	
  

	
(ii)

	
specific goals to maintain appropriate provisions to the ALLL;

	
  

	
(iii)

	
realistic and comprehensive budgets for all categories of income and expense, including but not limited to the carrying costs associated with Other Real Estate Owned (“OREO”) and nonaccrual loans as well as personnel and occupancy expenses;

	
  

	
(iv)

	
an executive compensation plan, addressing any and all salaries, bonuses, and other benefits of every kind or nature whatsoever, both current and deferred, whether paid directly or indirectly, which plan incorporates qualitative as well as profitability performance standards for the Bank's senior executive officers;

	
  

	
(v)

	
a budget review process to monitor the revenue and expenses of the Bank, whereby actual performance is compared against budgetary projections not less than quarterly; and

	
  

	
(vi)

	
recording the results of the budget review, and any actions taken by the Bank as a result of the budget review, in the Board minutes.

 

(c)           The Profit Plan shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and Bureau, and after incorporation and adoption of all comments, the Board shall approve the Profit Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Profit Plan.

 

 

 

  

  

  

 

(d)           Within 30 days following the end of each calendar quarter following completion of the Profit Plan required by this paragraph, the Board shall evaluate the Bank's actual performance in relation to the Profit Plan, record the results of the evaluation, and note any actions taken by the Bank in the minutes of the Boards' meeting at which such evaluation is undertaken.

 

4.           Strategic Plan.

 

(a)           Within 60 days from the effective date of this Order, the Bank shall develop and submit for review as required by subparagraph (c), a written strategic plan ("Strategic Plan") supported by an operating budget and consisting of goals and strategies, consistent with sound banking practices, and taking into account the Bank's other written plans, policies, or other actions as required by this Order.  The Strategic Plan shall contain an assessment of the Bank's current financial condition and market area, and a description of the operating assumptions that form the basis for major projected income and expense components.

 

(b)           The Strategic Plan shall include, at a minimum:

 

	
  

	
(i)

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

	
  

	
(ii)

	
specific goals to improve the net interest margin, increase interest income, and reduce discretionary expenses;

	
  

	
(iii)

	
financial goals, including pro forma statements for asset growth, capital adequacy, and earnings; and

	
  

	
(iv)

	
coordination of the Bank's loan, investment, funds management, and operating policies, profit and budget plan, and ALLL methodology, with the Strategic Plan.

 

 

 

  

  

  

 

 

(c)           The Strategic Plan shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the Strategic Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Strategic Plan.

 

(d)           The Strategic Plan required by this Order shall be revised 30 days prior to the end of each calendar year, and approved by the Board, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and adhere to the revised Strategic Plan.

 

5.           Capital.

 

(a)           Within 60 days from the effective date of this Order, the Board shall develop a written capital plan ("Capital Plan"), subject to review and approval of the Regional Director and the Bureau, as described in subparagraph (c), that details the manner in which the Bank will meet and maintain a Leverage Ratio of at least 8.50% and a Total Risk-Based Capital Ratio of at least 12.50% (as such terms are defined in Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325).  At a minimum, the Capital Plan shall include specific benchmark Leverage Ratios and Total Risk-Based Capital Ratios to be met at each calendar quarter end, until the required capital levels are achieved.  The Bank shall comply with the FDIC's Statement of Policy on Risk-Based Capital, found in Appendix A to Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325, App. A.

 

 

 

  

  

  

 

 

(b)           In the event any required capital ratio falls below the minimum quarter-end benchmark capital ratios required by the approved Capital Plan, the Bank shall immediately notify the Regional Director and the Bureau, and within 60 days shall either:

 

	
  

	
(i)

	
increase capital in an amount sufficient to comply with the quarter-end benchmark capital ratios as set forth in the approved Capital Plan; or

	
  

	
(ii)

	
submit to the Regional Director and the Bureau a contingency plan for the sale, merger, or liquidation of the Bank in the event the primary sources of capital are not available.

 

(c)           The Capital Plan shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the Capital Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Capital Plan.

 

(d)           The Board shall review the Bank's adherence to the Capital Plan, at a minimum, on a monthly basis.  Copies of the reviews and updates shall be submitted to the Regional Director and the Bureau as part of the Progress Reports required by this Order, and any material changes to the Capital Plan shall be submitted to the Regional Director and the Bureau no later than 10 days after completion.

 

6.           Classified Assets Reduction.

 

(a)           Within 60 days from the effective date of this Order, the Bank shall formulate and submit for review as described in subparagraph (c), a written plan ("Classified Asset Plan") to reduce the Bank's risk position in each asset or loan relationship (or related other real estate owned properties) in excess of $100,000 which is classified "Substandard" or "Doubtful" in the current Report of Examination.  For purposes of this provision, "reduce" means to collect, charge off, or improve the quality of an asset so as to warrant its removal from adverse classification by the Regional Director and the Bureau.

 

 

 

 

  

  

  

 

 

 

(b)           The Classified Asset Plan shall include, at a minimum, the following:

 

	
  

	
(i)

	
an action plan to review, analyze and document the current financial condition of each classified borrower, including source of repayment, repayment ability, and alternative repayment sources, as well as the value and accessibility of any pledged or assigned collateral, and any possible actions to improve the Bank's collateral position;

	
  

	
(ii)

	
a specific action plan to reduce delinquencies and classified items to 60% of Tier 1 Capital plus the ALLL, and 40% of Tier 1 Capital plus the ALLL, within 6 months and 12 months, respectively, from the effective date of this Order;

	
  

	
(iii)

	
a schedule showing, on a quarterly basis, the expected consolidated balance of all adversely classified items, and the ratio of the consolidated balance to the Bank's projected Tier 1 Capital plus the ALLL;

	
  

	
(iv)

	
specific action plans intended to reduce the Bank's risk exposure in each classified item;

	
  

	
(v)

	
delineate areas of responsibility for loan officers; and

 

 

 

 

  

  

  

 

 

	
  

	
(vi)

	
provide for the submission of monthly written progress reports to the Board for review and notation in minutes of the Board meetings.

	
  

	
(vii)

	
The Classified Asset Plan shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the Classified Asset Plan, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Classified Asset Plan.

 

(c)           The Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who is already obligated in any manner to the Bank on any extensions of credit (including any portion thereof) that has been charged off the books of the Bank or classified "Loss" in the current or any future Report of Examination or visitation findings, so long as such credit remains uncollected.

 

(d)           The Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower whose loan or other credit has been classified "Substandard" or "Doubtful", or is listed for "Special Mention", in the current or any future Report of Examination, and is uncollected, unless the Board, or a designated committee thereof, provides, in writing, a detailed explanation of why the extension is in the best interest of the Bank.  Prior to extending additional credit pursuant to this paragraph, whether in the form of a renewal, extension, or further advance of funds, such additional credit shall be approved by the Board or a designated committee who shall determine that:

 

 

 

  

  

  

 

 

	
  

	
(i)

	
the failure of the Bank to extend such credit would be detrimental to the best interests of the Bank, with a written explanation of why the failure to extend such credit would be detrimental;

	
  

	
(ii)

	
the extension of such credit would improve the Bank's position, with a written explanatory statement of how and why the Bank's position would improve; and

	
  

	
(iii)

	
an appropriate workout plan has been developed, and will be implemented, in conjunction with the additional credit to be extended.

 

(e)           The Board's determinations and approval shall be recorded in the minutes of the Board meeting, or designated committee, and copies shall be submitted to the Regional Director and the Bureau at such times as the Bank submits the Progress Reports required by this Order, or sooner upon the written request of the Regional Director or the Bureau.

 

7.           Loss Charge-Off.  The Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified "Loss" by the FDIC or the Department in the current Report of Examination that have not been previously collected or charged off.  Elimination or reduction of such assets with the proceeds of other Bank extensions of credit shall not be considered "collection" for purposes of this paragraph.  Thereafter, within 15 days after the receipt of any Report of Examination or visitation findings of the Bank from the FDIC or the Department, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified "Loss" in any Report of Examination or visitation findings that have not been previously collected or charged off.

 

 

 

 

  

  

  

 

 

8.           Loan Policy.

 

(a)           Within 60 days from the effective date of this Order, the Bank shall revise its Loan Policy to establish review and monitoring procedures that ensure that all lending personnel adhere to the Loan Policy and that all credit administration and underwriting deficiencies identified in the current Report of Examination are addressed.  The revisions to the Loan Policy and related written procedures shall be submitted for review as described in subparagraph (c).

 

(b)           The revised Loan Policy shall ensure, at minimum, the following:

 

	
  

	
(i)

	
all extensions of credit originated, renewed, or modified by the Bank, including loans purchased from a third party (loan participations):

	 	
1. 

	
have a clearly defined and stated purpose;

	
  

	
2.

	
have a predetermined and realistic repayment source and schedule, including secondary source of repayment;

	
  

	
3.

	
are supported by complete loan documentation, including lien searches, perfected security interests, and collateral valuations; and

	
  

	
4.

	
are supported by current financial information, profit and loss statements or copies of tax returns, and cash flow projections, which shall be maintained throughout the term of the loan, and are otherwise in conformance with the Loan Policy; and

 

 

 

  

  

  

 

 

	
  

	
(ii)

	
review and monitoring procedures comply with the FDIC's appraisal regulation, 12 C.F.R. Part 323, and the Interagency Appraisal and Evaluation Guidelines.

 

(c)           The revised Loan Policy and related written procedures shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the Loan Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the revised Loan Policy.

 

9.           Allowance for Loan and Lease Losses (“ALLL”).

 

(a)           Within 60 days from the effective date of this Order, the Bank shall develop and submit for review as described in subparagraph (d), a comprehensive policy and methodology for determining the ALLL ("ALLL Policy").  The ALLL Policy shall provide for a review of the ALLL at least once each calendar quarter, and the results be properly reported in the quarterly Consolidated Reports of Condition and Income (“Call Report”).  Such reviews shall, at a minimum, be made in accordance with:

 

	
  

	
(i)

	
Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Subtopic 450-20 and Topic 310 (formerly FASB Statements Numbers 5 and 114, respectively), effective after September 15, 2009;

 

 

 

 

  

  

  

 

	
  

	
(ii)

	
the Federal Financial Institutions Examination Council’s (“FFIEC”) Instructions for the Call Report;

	
  

	
(iii)

	
the Interagency Statement of Policy on the Allowance for Loan and Lease Losses (FIL-105-206, issued December 13, 2006);

	
  

	
(iv)

	
other applicable regulatory guidance that addresses the appropriateness of the Bank's ALLL; and

	
  

	
(v)

	
any analysis of the Bank's ALLL provided by the FDIC and the Department of Banking.

 

(b)           Such reviews shall include, at a minimum:

 

	 	
(i) 

	
the Bank's loan loss experience;

	 	
(ii) 

	
an estimate of the potential loss exposure in the portfolio; and

	
  

	
(iii)

	
trends of delinquent and non-accrual loans, and prevailing and prospective economic conditions.

 

(c)           The minutes of the Board meetings at which such reviews are undertaken shall include complete details of the reviews and the resulting recommended adjustment in the ALLL.  The Board shall document in the minutes the basis for any determination not to require provisions for loan losses in accordance with subparagraphs (a) and (b).

 

(d)           The ALLL Policy shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the ALLL Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the ALLL Policy.

 

 

 

 

 

  

  

  

 

(e)           A deficiency in the ALLL shall be remedied in the calendar quarter in which it is discovered by a charge to current operating earnings prior to any Tier 1 Capital determinations required by this Order and prior to the Bank's submission of its Call Report.  The Bank shall thereafter maintain an appropriate ALLL.

 

(f)           The analysis supporting the determination of the adequacy of the ALLL shall be submitted to the Regional Director and the Bureau.  These submissions shall be made at such times as the Bank files the progress reports required by this Order, or sooner upon the written request of the Regional Director or the Bureau.  In the event that the Regional Director or the Bureau determines that the Bank's ALLL is inadequate, the Bank shall increase its ALLL and amend its Call Reports accordingly.

 

10.           Interest Rate Risk.

 

(a)           Within 60 days from the effective date of this Order, the Bank shall develop and submit for review as described in subparagraph (c), an interest rate risk policy and procedures ("IRR Policy") that shall include, at a minimum:

 

	 	
(i) 

	
measures designed to control the nature and amount of interest rate risk the Bank takes, including those that specify risk limits, and define lines of responsibility and authority for managing risk;

	 	
(ii) 

	
a system for identifying and measuring interest rate risk;

	 	
(iii) 

	
a system for monitoring and reporting risk exposures; and

	
  

	
(iv)

	
a system of internal controls, review, and audit to ensure the integrity of the overall risk management process.

 

(b)           The IRR Policy shall address the exceptions noted in the current Report of Examination, comply with the Federal Financial Institutions Examination Council's ("FFIEC’s") Advisory on Interest Rate Risk Management (FIL-2-2010, issued January 20, 2010), the FFIEC's Supervisory Policy Statement on Investment Securities and End-User Derivative Activities, and the Joint Agency Policy Statement on Interest Rate Risk (FIL-52-96, issued July 12, 1996).

 

 

 

 

 

  

  

  

 

 

(c)           The IRR Policy shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director and the Bureau, and after incorporation and adoption of all comments, the Board shall approve the IRR Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the IRR Policy.

 

11.           Liquidity and Funds Management.

 

(a)           Within 60 days from the effective date of this Order, the Bank shall revise its liquidity and funds management policy to strengthen the Bank’s funds management procedures and maintain adequate provisions to meet the Bank’s liquidity needs (“Liquidity and Funds Management Policy”).  The policy shall be submitted for review as described in subparagraph (c).

 

(b)           The Liquidity and Funds Management Policy shall include, at a minimum, provisions that:

 

	
  

	
(i)

	
provide a statement of the Bank’s long-term and short-term liquidity needs and plans for ensuring that such needs are met;

	
  

	
(ii)

	
provide for a periodic review of the Bank’s deposit structure, including the volume and trend of total deposits and the volume and trend of the various types of deposits offered;

 

 

 

 

 

 

  

  

  

 

 

	
  

	
(iii)

	
establish sufficient back-up lines of credit that would allow the Bank to borrow funds to meet depositor demands if the Bank’s other provisions for liquidity proved to be inadequate;

	
  

	
(iv)

	
require categories of investments that can be liquidated within one day in amounts sufficient (as a percentage of the Bank’s total assets) to ensure the maintenance of the Bank’s liquidity posture at a level consistent with short- and long- term liquidity objectives;

	
  

	
(v)

	
establish contingency plans by identifying alternative courses of action designed to meet the Bank’s liquidity needs; and

	
  

	
(vi)

	
comply with the guidance set forth in Liquidity Risk Management (FIL-84-2008, issued August 26, 2008).

 

(c)           The Liquidity and Funds Management Policy shall be submitted to the Regional Director and the Bureau for non-objection or comment.  Within 30 days from receipt of non-objection or any comments from the Regional Director or the Bureau, and after incorporation and adoption of all comments, the Board shall approve the Liquidity and Funds Management Policy, which approval shall be recorded in the minutes of the Board meeting.  Thereafter, the Bank shall implement and fully comply with the Liquidity and Funds Management Policy.

 

(d)           The Bank shall review annually its Liquidity and Funds Management Policy for adequacy and, based upon such review, shall make necessary revisions to the policy.

 

12.           Brokered Deposits.

 

(a)           The Bank shall not accept, renew, or rollover any brokered deposit, as defined by section 337.6(a)(2) of the FDIC's Rules and Regulations, 12 C.F.R. § 337.6(a)(2), unless it is in compliance with the requirements of 12 C.F.R. § 337.6(b), governing solicitation and acceptance of brokered deposits by insured depository institutions.

 

 

 

 

 

  

  

  

 

 

(b)           The Bank shall comply with the restrictions on the effective yields on deposits described in section 337.6 of the FDIC's Rules and Regulations, 12 C.F.R. § 337.6.

 

13.           Dividend Restriction.  The Bank shall not declare or pay any dividend without the prior written consent of the Regional Director and the Bureau.

 

14.           Oversight Committee.

 

(a)           Within 15 days from the effective date of this Order, the Board shall establish a subcommittee of the Board ("Oversight Committee"), a majority of the members of which are not now, and have never been, involved in the daily operations of the Bank, with the responsibility of ensuring compliance with the provisions of this Order.

 

(b)           The Oversight Committee shall monitor compliance with this Order, and submit a written report monthly to the entire Board.  A copy of the written report, and any discussion related to the written report or this Order, shall be part of the minutes of the Board meeting.  Copies of the monthly written report shall be submitted to the Regional Director and the Bureau as part of the Progress Reports required by this Order.  Nothing contained herein shall diminish the responsibility of the entire Board to ensure compliance with the provisions of this Order.

 

15.           Progress Reports.  Within 45 days from the end of each calendar quarter following the effective date of this Order, the Bank shall furnish to the Regional Director and the Bureau written Progress Reports detailing the form, manner, and results of any actions taken to secure compliance with this Order.  All Progress Reports and other written responses to this Order shall be reviewed by the Board, and made a part of the Board minutes.

 

 

 

 

 

  

  

  

 

16.           Fidelity Bond.

 

(a)      Immediately upon renewal of the Bank’s current bond required by 7 P.S. § 1410 (the “Bond”), the Bank shall provide a full and complete copy to the Bureau and the Regional Director. The Bank shall provide a copy of the required Bond to the Bureau and the Regional Director each time the Bond is renewed while this Order is in effect.

 

(b)        The Bank shall immediately notify the Bureau and the Regional Director of any notifications or information from the Bank’s Bond insurance carrier, its agents and/or representatives that the Bond is not going to be renewed or will be terminated.

 

17.           Section 403 Reports to the Bureau.   All reports required to be submitted to the Bureau under this Order are special reports being required under Section 403 of the Department of Banking Code, 71 P.S. § 733-403, and shall be submitted to the Bureau in accordance with Section 403.B of the Department of Banking Code, 71 P.S. § 733-403.B.

 

18.           Confidentiality.  This Order and all reports and communications relating to this Order shall be confidential and shall not be released or divulged to any person or entity not officially connected to the Bank as a director, officer, attorney or employee without the express written permission of the Bureau.  Notwithstanding the foregoing, the Bank may disclose the existence and contents of this Order under the provisions of 71 P.S. § 733-404.A, relating to disclosures required by federal and state securities laws.

 

19.           Other Actions.

 

(a)           If at any time the Department shall deem it appropriate in fulfilling the responsibilities placed upon the Department under applicable law to undertake any further action affecting the Bank, nothing in this Order shall in any way inhibit, estop, bar or otherwise prevent the Department from doing so.

 

 

 

 

 

  

  

  

 

                      (b)           Nothing herein shall preclude any proceedings brought by the Department to enforce the terms of this Order, and that nothing herein constitutes, nor shall the Bank contend that it constitutes, a waiver of any right, power or authority of any other representatives of the United States, departments or agencies thereof, Department of Justice, or any other representatives of the Commonwealth of Pennsylvania or any other departments or agencies thereof, including any prosecutorial agency, to bring other actions deemed appropriate.

 

20.           Communications.  All communications regarding this Order shall be sent to:

 

Robert C. Lopez, Director

Bureau of Commercial Institutions

Commonwealth of Pennsylvania

Department of Banking

17 North Second St., Suite 1300

Harrisburg, Pennsylvania  17101

21.           Binding Nature.  The provisions of this Order including the recital paragraphs shall be binding upon the Bank and all of their institution-affiliated parties, in their capacities as such, and their successors and assigns.

 

22.           Effective Date.  The effective date of this Order shall be the date upon which this Order has been executed by the Bureau.  Each provision of this Order shall remain effective and enforceable, jointly and severally, until stayed, modified, terminated or suspended by the Bureau.

 

23.           Titles.  The titles used to identify the paragraphs of this document are for the convenience of reference only and do not control the interpretation of this document.

 

 

	 	SO ORDERED
	 	 
	 	 
	 	 
	 	 
	January 31, 2012 	 	/s/ Robert C. Lopez 
	Date 	Robert C. Lopez, Director 

Bureau of Commercial Institutions

Commonwealth of Pennsylvania

Department of Banking

17 North Second Street, Suite 1300

Harrisburg, PA 17101

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