Document:

ex10-2.htm

 

	
IN THE MATTER OF PARKE BANK

	  	
)

	
STATE OF NEW JERSEY

	  	  	
)

	
DEPARTMENT OF

	
SEWELL, NEW JERSEY

	  	
)

	
BANKING AND INSURANCE

 

CONSENT ORDER 

 

TO:     PARKE BANK

    c/o Celestino R. Pennoni, Chairman 

    601 Delsea Drive 

    Sewell, New Jersey 08080 

 

BOARD OF DIRECTORS 

PARKE BANK 

 

Acknowledged: 

Parke Bank, Sewell, New Jersey 

 

By:           Celestino R. Pennoni, Chairman 

Thomas Hedenberg, Vice-Chairman 

Vito S. Pantilone, President, Chief Executive Officer and Director 

Dr. Edward Infantolino, Director 

Jack C. Sheppard, Jr., Director 

Arret F. Dobson, Director 

Fred G. Choate, Director 

Ray H. Tresch, Director 

Jeffrey H. Kripitz, Director 

Richard Phalines, Director 

Daniel J. Dalton, Director 

Anthony J. Jannetti, Director 

WHEREAS, the Commissioner of Banking and Insurance of the State of New Jersey (“Commissioner”) is charged with the responsibility of administering and enforcing the New Jersey Banking Act of 1948, N.J.S.A. 17:9A-1 et seq. (“the Act”); and 

  

1 of 22  

  

 

WHEREAS, Parke Bank is a financial institution chartered by the Commissioner under the Act; and

WHEREAS, pursuant to N.J.S.A. 17:9A-267, the Commissioner may order a state chartered financial institution to cease any unsafe and unsound practices; and 

WHEREAS, the Commissioner and the Bank having agreed to enter into this Consent Order pursuant to N.J.S.A. 17:9A-267, and the Bank, without admitting or denying any charges of unsafe and sound banking practices and violations of law or regulation, hereby consent to the following provisions; 

NOW THEREFORE, it is on this 9th day of April, 2012, ORDERED AND AGREED that: 

MANAGEMENT

1.     (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; 

  

2 of 22  

  

(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 capital adequacy, asset quality, management effectiveness, earnings, liquidity, and sensitivity to interest rate risk. 

BOARD PARTICIPATION 

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

(b)    This oversight 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; to the extent appropriate, new, overdue, renewal, insider, charged off, delinquent (30 to 89 days), nonaccrual, nonperforming, classified and recovered loans; investment activity; internal loan watch; liquidity levels and funds management; adoption or modification of operating policies; individual committee reports; audit reports; information technology; internal control reviews including managements' responses; asset liability management; reconciliation of general ledger accounts; and compliance with this ORDER. Board minutes shall document these reviews and approvals, including the names of any dissenting directors. 

  

3 of 22  

  

(c)    The Bank shall notify the Commissioner and the Regional Director of the FDIC’s New York Regional Office (“Regional Director”) in writing of any 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) within 10 days of the event. Prior to the addition of any individual to the Board or the employment of any individual as a senior executive officer, or any change in the title or function of a senior executive officer or director, the Bank shall request and obtain the Commissioner’s and the Regional Director’s written non-objection. Any notification required by this subparagraph shall include a description of the background and experience of any proposed new senior executive officer or Board member and must be received at least 30 days prior to the individual assuming the new position. 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. 

LOSS CHARGE-OFF 

3.    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 Commissioner 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 10 days after the receipt of any subsequent report of examination of the Bank from the FDIC or the Commissioner, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified "Loss" in any subsequent report of examination that have not been previously collected or charged off. 

  

4 of 22  

  

 

REDUCTION OF DELINQUENCIES AND CLASSIFIED ASSETS 

4.    (a)    Within 45 days from the effective date of this ORDER, the Bank shall formulate and submit for review as described in subparagraph (c), a written plan ("Delinquent and Classified Asset Plan") to reduce the Bank's risk position in each asset in excess of $250,000 which is more than 90 days delinquent or classified "Substandard" or "Doubtful" in the current Report of Examination. Thereafter, the Delinquent and Classified Asset Plan shall be revised to reduce the Bank’s risk position in each asset in excess of $250,000 which becomes more than 90 days delinquent or classified “Substandard,” “Doubtful” or listed for “Special Mention” in any 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 Commissioner and the Regional Director. 

(b)    The Delinquent and 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 delinquent or adversely 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 schedule for reducing the outstanding dollar amount of each delinquent or adversely classified asset, including timeframes for achieving the reduced dollar amounts (at a 

  

5 of 22    

  

 

minimum, the schedule for each adversely classified asset must show its dollar balance on a quarterly basis);

(iii)         specific action plans intended to reduce the Bank's risk exposure in each classified asset; 

(iv)   delineate areas of responsibility for loan officers; and 

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

(c)    The Delinquent and Classified Asset Plan shall be submitted to the Commissioner and the Regional Director for non-objection or comment. Within 30 days from receipt of non-objection or any comments from the Commissioner and the Regional Director, 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 Delinquent and Classified Asset Plan. 

(d)    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, so long as such credit remains uncollected. If the Bank determines that failure to extend any additional credit would be substantially detrimental to the best interests of the Bank, a waiver or non-objection may be requested from the Commissioner and the Regional Director. Such waiver request shall 

  

6 of 22    

  

 

be made by the Board and contain a certification in writing as to the specific reasons why failure to advance additional funds would be substantially detrimental to the best interests of the Bank. 

(e)    The Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower whose loan or other credit is more than 90 days delinquent or has been classified "Substandard", "Doubtful", or is listed for "Special Mention" in the current or any future report of examination, and is uncollected, unless the Board, or 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 subparagraph, whether in the form of a renewal, extension, or further advance of funds, such additional credit shall be approved by the Board, 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. 

(f)    The Board's determinations and approval shall be recorded in the minutes of the Board meeting and copies shall be submitted to the Commissioner and the Regional Director at such times as the Bank submits the progress reports required by this ORDER or sooner upon the written request of the Commissioner and the Regional Director. 

  

7 of 22  

  

INTEREST RESERVES AND INTEREST-ONLY TERMS 

5.    (a)    Within 30 days from the effective date of this ORDER, the Bank shall engage a qualified independent third party firm, acceptable to the Commissioner and the Regional Director, to conduct a review of all credits that have been originated, extended, or restructured with the use of interest reserves and/or interest-only conditions, identify repayment risks and regulatory accounting standards associated with this loan portfolio, including the borrower’s source of repayment, and prepare a written analysis and assessment of their findings (“Interest Reserve Report”). 

(b)    The Interest Reserve Report shall be developed within 90 days from the engagement of the third party and shall include, at a minimum: 

(i)     identification and status of all credits that have been originated and/or held by the Bank, extended, or restructured with the use of interest reserves and/or interest-only terms or conditions, including name, original and outstanding loan amount and, with respect to interest reserve loans, the reserve dollar amount, term of the reserve and funding history of the reserve;

(ii)    assessment of the borrower’s ability to repay and underlying collateral value; 

(ii)    evaluation of management’s underwriting practices, risk rating process, and compliance with regulatory reporting requirement as it relates to the identified loan portfolio. This evaluation should include, but is not limited to, the Bank’s identification of problem assets and workout strategies, placement of credits on past due or non-accrual status, and compliance 

  

8 of 22  

  

 

with FDIC guidance relating to troubled debt restructure (“TDR”) as defined in the instructions to the quarterly Consolidated Reports of Condition and Income (“Call Report”) and in the Policy Statement on Prudent Commercial Real Estate Loan Workouts (FIL-61-2009, issued October 30, 2009); and 

(iv)    based on the findings of subparagraph (b), include an assessment of impact on the Bank’s earnings and Allowance for Loan and Lease Losses (“ALLL”); 

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

(d)    If applicable, within 30 days from the receipt of the Interest Reserve Report, the Bank shall review its Call Reports filed with the Department of Banking and Insurance on or after December 31, 2010, and amend said reports if necessary to accurately reflect the financial condition of the Bank as of the date of each such report. 

(e)    While the Order is in effect, all credits that are originated, extended, or restructured with the use of interest reserves or interest-only terms, need to be approved by the Board, or a designated committee thereof, who shall determine that: 

  

9 of 22  

  

 

(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. 

(f)    The Board's determinations and approval, as described in subparagraph 5(e), shall be recorded in the minutes of the Board meeting and copies shall be submitted to the Commissioner and the Regional Director at such times as the Bank submits the progress reports required by this ORDER or sooner upon the written request of the Commissioner and the Regional Director. 

LOAN REVIEW PROGRAM

6.    (a)    Within 45 days from the effective date of this ORDER, the Board shall establish a program of independent loan review that will provide for a periodic review of the Bank's loan portfolio and the identification and categorization of problem credits ("Loan Review Program"). 

(b)    At a minimum, the Loan Review Program shall provide for: 

(i)    prompt identification of loans with credit weaknesses that warrant the special attention of management, including the name of the borrower, amount of the loan, reason 

  

10 of 22    

  

why the loan warrants special attention; and assessment of the degree of risk that the loan will not be fully repaid according to its terms; 

(ii)     prompt identification of all outstanding balances and commitments attributable to each obligor identified under the requirements of subparagraph (i), including outstanding balances and commitments attributable to related interests of such obligors, including the obligor of record, relationship to the primary obligor identified under subparagraph (i), and an assessment of the risk exposure from the aggregate relationship; 

(iii)   identification of trends affecting the quality of the loan portfolio and potential problem areas; 

(iv)    assessment of the overall quality of the loan portfolio; 

(v)     identification of credit and collateral documentation exceptions; 

(vi)    identification and status of violations of laws, rules, or regulations with respect to the lending function; 

(vii)   identification of loans that are not in conformance with the Bank's Loan Policy; 

(viii)         identification of loans to directors, officers, principal shareholders, and their related interests; and 

(ix)    a mechanism for reporting periodically, but in no event less than quarterly, the information developed in (i) through (viii) above to the Board. 

  

11 of 22    

  

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

LOAN POLICY 

7.    (a)    Within 60 days from the effective date of this ORDER, the Bank shall conduct a review of the Bank's loan policies and procedures for adequacy and, based upon such review, shall make all appropriate revisions to the loan policies and procedures ("Loan Policy") necessary to address the lending deficiencies identified in the current Report of Examination. The revised Loan Policy shall be submitted for review as described in subparagraph (c). The Board shall also establish review and monitoring procedures to ensure that all lending personnel adhere to the Loan Policy, and that the Board receives timely and fully documented reports on loan activity, including reports that identify deviations from the Loan Policy. 

(b)    The Loan Policy shall, at minimum: 

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

a.    have a clearly defined and stated purpose; 

  

12 of 22    

  

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

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

d.   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; 

(ii)   require monthly monitoring and analyses of the Bank’s commercial real estate loan portfolio consistent with the FDIC’s Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices (FIL-104-2006, issued December 12, 2006); 

(iii)   require appropriate risk management practices and guidelines for the restructuring of loans and for the timely identification and reporting of TDRs, as defined in the Call Report instructions and as outlined in the FDIC’s Policy Statement on Prudent Commercial Real Estate Loan Workouts (FIL-61-2009, issued October 30, 2009); 

(iv)    incorporate limitations on the amount that can be loaned in relation to established collateral values, require the source of collateral valuations be identified, require that collateral valuations be completed prior to the commitment to lend funds, and require that collateral valuations be performed on a periodic basis over the term of the loan; 

(v)     require accurate reporting of past due loans to the Board or the Bank's loan committee at least monthly; 

  

13 of 22    

  

(vi)     require the individual reporting of loans granted as exceptions to the Loan Policy and aggregation of such loans in the portfolio; 

(vii)    prohibit the capitalization of interest or loan-related expenses unless the Board or the Bank's loan committee provides, in writing, a detailed explanation of why such action is in the best interest of the Bank; 

(viii)   define the appropriate use of, and establish specific limitations for, interest-only and principal moratorium loan terms or conditions; and 

(ix)      establish review and monitoring procedures for compliance with the FDIC's appraisal regulation, 12 C.F.R. Part 323, and the FDIC’s Interagency Appraisal and Evaluation Guidelines (FIL-82-010, issued December 2, 2010). 

(c)    The Loan Policy shall be submitted to the Commissioner and the Regional Director for non-objection or comment. Within 30 days from receipt of non-objection or comments from the Commissioner and the Regional Director, 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 Loan Policy. 

CONCENTRATIONS 

8.   (a)    Within 90 days from the effective date of this ORDER, the Bank shall formulate and submit for review as described in subparagraph (b), a written plan to reduce and manage each of the concentrations of credit identified in the Bank’s most recent Report of Examination (“Concentrations Reduction Plan”). At a minimum, the Concentrations Reduction Plan shall 

  

14 of 22  

  

provide for written procedures for the ongoing measurement and monitoring of the concentrations of credit, and a limit on concentrations commensurate with the Bank’s capital position, business strategy, management expertise, size, location, safe and sound banking practices, and the overall risk profile of the Bank. The Concentrations Reduction Plan shall prohibit any advances that would increase the concentration unless the advance is pursuant to an existing loan agreement and 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 thereof, 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. 

(b)    The Board's, or designated committee’s, determinations and approval shall be recorded in the minutes of the Board meeting and copies shall be maintained in the respective loan files. 

(c)    The Concentrations Reduction Plan shall include, but not be limited to: 

(i)     dollar levels and percent of total Tier 1 capital to which the Bank shall reduce the concentration; 

  

15 of 22  

  

(ii)     timeframes for achieving the reduction in dollar levels in response to (i) above; 

(iii)    provisions requiring compliance with the FDIC’s Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices (FIL­-104-2006, issued December 12, 2006) and Managing Commercial Real Estate Concentrations in a Challenging Environment (FIL-22-2008, issued March 17, 2008); 

(iv)   provisions for controlling and monitoring of CRE, including plans to address the rationale for CRE levels as they relate to growth and capital targets, segmentation and testing of the CRE portfolio to detect and limit concentrations with similar risk characteristics; and 

(v)    provisions for the submission of monthly written progress reports to the Board for review and notation in minutes of the Board meetings. 

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

PROFIT AND BUDGET PLAN 

9.   (a)    Within 90 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 

  

16 of 22  

  

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; 

(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 Commissioner and the Regional Director for non-objection or comment. Within 30 days from receipt of non-objection or any 

  

17 of 22  

  

comments from the Commissioner and the Regional Director, 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. A copy of the evaluation, including any action taken, shall be submitted to the Commissioner and the Regional Director at such times as the Bank submits the progress reports required by paragraph 13 of this Order. 

CORRECTION OF VIOLATIONS 

10.    The Bank shall take all steps necessary, consistent with other provisions of this ORDER and safe and sound banking practices, to eliminate or correct and prevent unsafe or unsound banking practices, violations of law or regulation, and all contraventions of regulatory policies or guidelines cited in the current Report of Examination. 

COMPLIANCE COMMITTEE 

11.    (a)    Within 30 days from the effective date of this ORDER, the Board shall establish a compliance committee ("Compliance Committee") composed of at least three directors who are not now, and have never been, involved in the daily operations of the Bank, and whose 

  

18 of 22  

  

composition is acceptable to the Commissioner and the Regional Director, to monitor and ensure the Bank’s compliance with this ORDER. 

(b)    Within 45 days from the effective date of this ORDER, and at monthly intervals thereafter, such Compliance Committee shall prepare and present to the Board a written report of its findings, detailing the form, content, and manner of any action taken to ensure compliance with this ORDER and the results thereof, and any recommendation with respect to such compliance. Such progress reports shall be included in the Board minutes. Nothing contained herein shall diminish the responsibility of the entire Board to ensure compliance with the provisions of this ORDER. 

DIVIDEND RESTRICTION

12.    The Bank shall not declare or pay any dividend without the prior written consent of the Commissioner and the Regional Director. 

PROGRESS REPORTS 

13.    Within 30 days from the end of each calendar quarter following the effective date of this ORDER, the Bank shall furnish to the Commissioner and the Regional Director 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. 

  

19 of 22  

  

 

SHAREHOLDER DISCLOSURE 

14.    Within 30 days from the effective date of this ORDER, the Bank shall send a copy of this ORDER, or otherwise furnish a description of this ORDER, to its parent holding company. The description shall fully describe the ORDER in all material respects. 

This ORDER shall be effective on the date of issuance. 

The provisions of this ORDER shall be binding upon the Bank, its institution-affiliated parties, and any successors and assigns thereof. 

The provisions of this ORDER shall remain effective and enforceable except to the extent that and until such time as any provision has been modified, terminated, suspended, or set aside by the Commissioner. 

The provisions of this ORDER shall not bar, estop, or otherwise prevent the Department of Banking and Insurance or the FDIC, or any other federal or state agency or department, from taking any other action against the Bank or any of the Bank’s current or former institution-affiliated parties. 

This agreement may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same instrument. 

In the event any paragraph of this ORDER is ruled to be invalid, illegal or unenforceable by the decision of any Court of competent jurisdiction, the validity, legality and enforceability of the remaining paragraphs hereof shall not in any way be affected or impaired thereby. 

  

20 of 22  

  

This ORDER is entered into under the Commissioner’s authority under the New Jersey Banking Act of 1948 and shall have the full force of law as provided in N.J.S.A. 17:9A-267 and 268. 

 

 

 

/s/ Kenneth E. Kobylowski

____________________________________

Kenneth E. Kobylowski, Acting Commissioner 

Department of Banking and Insurance 

  

21 of 22  

  

Consented to as to form, substance and entry: 

 

Parke Bank 

 

 

/s/Celestino R. Pennoni

__________________________________________

Celestino R. Pennoni, Chairman 

 

 

/s/Thomas Hedenberg

__________________________________________

Thomas Hedenberg, Vice-Chairman 

 

 

/s/ Vito S. Pantilione

__________________________________________

Vito S. Pantilone, President, Chief Executive Officer and Director 

 

 

/s/ Dr. Edward Infantolino

__________________________________________

Dr. Edward Infantolino, Director 

 

 

/s/ Jack C. Sheppard, Jr.

__________________________________________

Jack C. Sheppard, Jr., Director 

 

 

/s/ Arret F. Dobson

__________________________________________

Arret F. Dobson, Director 

 

 

/s/ Fred G. Choate

__________________________________________

Fred G. Choate, Director 

 

 

/s/ Ray H. Tresch

__________________________________________

Ray H. Tresch, Director 

 

 

/s/ Jeffrey H. Kripitz

__________________________________________

Jeffrey H. Kripitz, Director 

 

 

/s/ Richard Phalines

__________________________________________

Richard Phalines, Director 

 

 

/s/ Daniel J. Dalton

__________________________________________

Daniel J. Dalton, Director 

 

 

/s/ Anthony J. Jannetti

__________________________________________

Anthony J. Jannetti, Director 

 

 

 

 

22 of 22exh10-1_agmt.htm

 

 

 

 

 

 

 

 

 

EXHIBIT 10.1

 

CONSULTING AGREEMENT WITH ADVANCED EQUITY SOLUTIONS, INC.

DATED FEBRUARY 21, 2012

 

 

 

 

  

  

  

CONSULTING AGREEMENT

 

This Agreement is entered into this  21st day of  February , 2012, between Trail Blazer, Inc. a Nevada corporation (the “Company”), and Advanced Equity Solutions, Inc.  (AESI) a Nevada Sub-Chapter "S" Corporation (“Consultant”).

 

Recitals

 

A.           The Company is desirous of continuing to have its capital stock traded in a Public Market (as hereinafter defined), and to merge with an operating entity to position itself for long term stability and market acceptance.

 

B.           Consultant is in the business of providing consulting services and other assistance to entities to assist them positioning to have their equity securities traded in a Public Market and to help the Company accomplish its goals.

 

C.           The Company is currently a Publicly Traded company with "Shell" status.

 

Agreement

 

NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.                 Definitions.  The following words or phrases shall have the meanings ascribed below:

 

a.      A “34 Act Corporation” is a corporation which has any of its authorized capital stock registered under Sections 12 or 15 of the Securities Exchange Act of 1934, whether or not the filings required as a result of said registration are correct.

 

b.      An “Affiliate” is a Person that directly or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, another Person.

 

c.      “Control” or “Controlled” relates to the ability to exert a material influence on the establishment or maintenance of the policies of a Person.

 

d.      “Due Diligence” means the act of conducting an investigation of a subject, which

 

investigation is reasonably prudent under the circumstances.

 

e.      “Person” shall mean a corporation, partnership or other entity, as well as an individual.

 

f.      “Pre-Transaction Period” is defined in Section 2.

 

g.      “Public Market” means any United States national stock exchange, the NASDAQ System, or over-the counter and quoted on the so-called pink sheets.

 

  

  

  

h.      A “Public Shell” is a 34 Act Corporation which will likely have negligible or no net worth, and no identifiable business.

 

i.      “Transaction” means any transaction, including a merger or other reorganization, pursuant to which the Company or an Affiliate of the Company becomes a 34 Act Corporation.

 

2.           Pre-Transaction Engagement of Consultant.  The Company hereby engages Consultant, and the Consultant agrees, from the date hereof until the occurrence of a Transaction or until 180 days from the date of this Agreement, which period may be extended upon notice to the Company at the option of the Consultant for up to 60 days (the “Pre-Transition Period”), to act as the Company’s consultant to:

 

a.           Analyze and discuss strategies to facilitate the Company’s goals to continue to have its capital stock traded in a Public Market;

 

b.           Introduce to the Company a suitable operating entity, and the persons controlling the operating entity, for the purpose of a Transaction;

 

c.           Provide advice and guidance to the Company in facilitating a Transaction.

 

d.           Introduce the Company to accredited investors, venture capital firms and other potential institutional investors who might have an interest in assisting the Company to raise capital for its stated purposes

 

e.       Conduct Due Diligence and analysis with respect to the Company and its business, as Consultant deems appropriate.

 

3.           Post-Transaction Obligations of Consultant.  The Company hereby engages Consultant, and Consultant agrees, following the occurrence of a Transaction, and for a period of 90 days (which period may be extended upon notice to the Company at the option of Consultant for up to 60 days), to act as the Company’s consultant to:

 

a.           Consult with the Company’s Board of Directors in planning for any equity or debt financing, including providing guidance as to the capital requirement of the Company and its equity or debt financing.

 

b.           Assist the Company in preparing for Due Diligence that might be conducted by a potential investor in the Company’s equity or debt instruments.

 

c.           Continue to provide the services outlined in subparagraphs a and d of Section 2.

 

4.           Consultant’s Compensation.  Other than the reimbursement of expenses incurred by Consultant as provided in Section 5, Consultant’s sole compensation for its services provided hereunder shall consist of five million (5,000,000) shares of the Company, and/or other compensation, as the parties may agree.  Said shares to be issued to Consultant upon execution of this Consulting Agreement.  Said shares to be issued to 

 

 

  

2

  

 

 

Consultant or its assigns, pursuant to instructions to be provided by Consultant.  As the success of Consultant’s efforts under Section 3 will enhance the value of Consultant’s equity interest in the Public Shell, such success is sufficient consideration for its efforts under that Section.  Accordingly, notwithstanding the post-Transaction obligations of Consultant under Section 3, Consultant will not receive any compensation in addition to that provided in this Section, except as may be subsequently agreed to between Consultant and the Company, and the compensation identified in this Section shall be deemed to be earned at the time of the Transaction.

 

This Agreement does not Contemplate Acts of a Finder, Underwriter, Broker, Dealer, Promoter or any Act that would constitute the Offer and Sale of Securities. TME acknowledges and agrees that no representations or warranty has been made by DEPLLC, it’s associates, affiliates or any other person as to the successful outcome of any financial plan, private or public financing or other business plans put forth by DEPLLC its affiliates or associates. TME further acknowledges and agrees that DEPLLC, its affiliates and/or associates have not, and will not act or be considered to act as a finder, underwriter, broker, dealer or promoter of any of TME securities, either in private or public transactions.  TME represents and warrants that all payments and authorizations under this Agreement constitute compensation for services performed or to be performed and do not constitute an offer, payment, promise or authorization for payment to DEPLLC, or its affiliates and/or associates to act as a finder, underwriter, broker, dealer or promoter of any of TME securities.

 

5.           Costs and Expenses.

 

a.           Company Responsibility.  The Company shall be responsible for all expenses incurred in connection with this Agreement and the Transaction, including but not limited to (i) fees and expenses of legal counsel for the Company, (ii) fees and expenses of accountants for the Company, (iii) costs and expenses necessary to establish a stock transfer agent, and (iv) costs and expenses relating to compliance with federal and state securities laws and registrations, and with the requirements of the Financial Institutions National Regulatory Association.  Notwithstanding the foregoing, Consultant shall, and the Company shall not, be responsible for the cost incurred by Consultant in (i) locating, (ii) conducting Due Diligence or research relating to, or activities in support of preparing the Public Shell for a Transaction.  While Consultant may pay certain expenses on behalf of the Company, it has no obligation to do so.  Expenses for legal counsel, SEC filing preparations and audits prior to a merger, will be paid by Consultant, and reimbursed by the company at the appropriate time, or converted to additional equity, at Consultant's sole discretion, pursuant to terms mutually acceptable to the parties.

 

b.           Consultant Responsibility.  Consultant shall be responsible for costs and expenses incurred in locating, gaining access to and investigating a suitable operating entity, and for conducting due-diligence and preparing the Public Shell for a Transaction with the Company or any Affiliate.

 

c.           Reimbursement.  The Company shall reimburse Consultant for direct out-

 

 

  

3

  

 

of-pocket expenses reasonably incurred by the Consultant pre-Transaction during the Term of the Agreement (including expenses paid on behalf of the Company under subsection 5a) exclusively in connection with the performance of Consultant’s service hereunder upon the presentation to the Company by Consultant of (i) a written request certifying that the expenses were incurred consistent with this Agreement, and (ii) receipts and itemized accounts of such expenditures in accordance with the rules and regulations of the Internal Revenue Code.  Such request for reimbursement will be made by Consultant within 30 days following the date of the Transaction and paid by the Company within 15 days following the receipt of such a request unless the Parties agree to a different repayment schedule, and shall not exceed $500,000 unless with prior mutual consent.  Company shall reimburse Consultant for direct out-of-pocket expenses reasonably incurred by the Consultant post-Transaction (including expenses paid on behalf of the Company under subsection 5a) exclusively in connection with the performance of Consultant’s service hereunder upon presentation to the Company by Consultant of (i) a written request certifying that the expenses were incurred consistent with this Agreement, and (ii) receipts and itemized accounts of such expenditures in accordance with the rules and regulations of the Internal Revenue Code.  Such request for reimbursement will be made by Consultant within 30 days following the end of the calendar month in which the expenses were incurred and paid by the Company within 15 days following the receipt of such request, unless the Parties agree to a different repayment schedule.

 

6.           Exclusivity.  Consultants engagement hereunder is exclusive, and the Company will not engage any other person to provide the services set forth in Section 2, or enter into any agreement, understanding or letter of intent to merge or effect a reorganization with, or allow an Affiliate to merge or effect a reorganization with, a Public Shell, during the Pre-Transaction Period, except as contemplated herein.

 

7.           Other Obligations of the Company.

 

a.           Cooperation.  The Company will cooperate with Consultant and provide Consultant with such documents and other information (See Exhibit "B"), and provide Consultant with access to officers, directors, attorneys, accountants, advisors and employees of the Company and its Affiliates, as Consultant may reasonably require or request, in order to permit Consultant to conduct Due Diligence and to carry out its obligations and permitted activities as contemplated herein.

 

b.           Reasonable Efforts to Merge.  During the Pre-Transition Period, the Company will, or will cause an Affiliate to, use its best efforts to diligently and promptly enter into, and carry out the terms of, a definitive agreement with a suitable operating entity introduced to the Company, as provided in Subsection 2b.

 

8.           Warranties and Representations of the Company.  The Company represents and warrants to Consultant as follows:

 

a.           Organization and Standing.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State indicated in 

 

 

  

4

  

 

the first paragraph of this Agreement, and has full power and authority to carry on its business as now conducted and to own and operate its assets, properties and business.

 

b.           Authorization.  All corporate and other proceedings required to be taken by or on the part of the Company, including, without limitation, all action required to be taken by the Company to authorize the Company to enter into and carry out this Agreement have been duly and properly taken, and this Agreement has been, and, at the time of a Transaction will be, valid and enforceable against the Company in accordance with its terms.

 

c.           Financial Statements.  The balance sheet provided to Consultant, as derived from the books and records of the Company, fairly presents the financial condition of the Company as of December 31, 2011 (the “Date of Financials”) in accordance with generally accepted accounting principles and practices as consistently applied by the Company.  Subsequent to the Date of Financials, the Company has not incurred any liabilities, debts or obligations, other than those incurred in the ordinary course of business.

 

d.           Material Changes.  Since the Date of Financials there has not been:

 

	
  

	
i.

	
any material adverse change in the condition (financial or other) of the properties, assets or business of the Company;

 

	
  

	
ii.

	
any occurrence, event or condition of any character which may materially affect assets, properties or business of the Company; or

 

	
  

	
iii.

	
any change in the Company's accounting methods or practices or any material change in depreciation or amortization policies or rates theretofore adopted by the Company.

 

e.           Absence of Certain Changes.  Since the Date of Financials, the Company has not:

 

	
  

	
i.

	
incurred any liability, obligation or debt which would have a material and adverse affect on the Company;

	
  

	
ii.

	
sold, assigned or transferred any of the assets, or canceled any debts or claims held by the Company which would have a material and adverse affect on Consultant's use or operation of the Company;

	
  

	
iii.

	
waived or compromised any rights in favor of the Company of any substantial value which would have a material and adverse affect on Consultant's use or operation of the Company.

f.           Compliance.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not:

 

 

  

5

  

 

	
  

	
i.

	
result in the breach of any of the terms or conditions of, or constitute a default under or violate, as the case may be, the Articles of Incorporation or By-Laws of the Company, or any agreement, mortgage, note, bond, indenture, license or other document or undertaking, oral or written, to which the Company is a party or by which it may be bound, or by which it or any of the property or assets of the Company may be affected; or

 

	
  

	
ii.

	
violate any law, order, writ, injunction or decree of any court, administrative agency or governmental body.

 

g.           Due Performance.  The Company has in all material respects performed all obligations required to be performed by it under, and is not in default in any material respect of, any agreement, mortgage, note, bond, indenture, license or other document or undertaking, oral or written, to which it is a party or by which it may be bound.  The Company is not in violation or default in any material respect of any order, writ, injunction or decree of any court, administrative agency or governmental body.  To the best of the Company’s knowledge, the Company is not in violation or default in any material respect of any statute, rule or regulation of any applicable governmental unit or agency.

 

h.           Litigation.  There are not any claims, actions, suits, charges, arbitrations, proceedings, investigations or controversies, administrative or judicial, pending or threatened against the Company other than those identified in Appendix D.  In all cases, the Company represents and warrants that any litigation will be cleared or settled thirty days prior to the planned date of Transaction.

 

i.           Taxes.  The Company does not have any knowledge of any unpaid taxes, and does not have any knowledge of any proposed or threatened unassessed deficiency, or any pending or threatened audit or investigation with respect to any such taxes.

 

j.           Finders.  The Company has not engaged any broker or finder with respect to the transactions contemplated hereunder, except as otherwise disclosed.

 

k.           Representations True as of Time of Transaction.  All representations and warranties made by the Company in this Agreement shall be materially true and correct immediately prior to the occurrence of any Transaction with the same effect as if they had been made at and as of that time.

 

l.           Accuracy of Information.  All information provided to (i) Consultant, (ii) any person investing in the securities of the Company, or (iii) in any filing made with the Securities and Exchange Commission, will be accurate, complete and truthful, and, when taken as a whole, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

9.           Warranties and Representations of Consultant.  Consultant represents and 

 

  

6

  

 

warrants to the Company as follows:

 

a.           Organization and Standing.  Consultant is a Sub Chapter "S" corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has full power and authority to carry on its business as now conducted and as hereinafter contemplated.

 

b.           Authorization.  All governance proceedings required to be taken by or on the part of Consultant to authorize it to enter into and carry out this Agreement and the transactions contemplated hereby have been duly taken. This Agreement has been duly executed and delivered by Consultant and this Agreement is, and will be, valid and enforceable against it in accordance with its terms.

 

10.           Disclaimers.  Neither Consultant nor any of its officers, directors, members, employees or agents:

 

a.           Will provide, or is authorized to provide, the Company with any legal, accounting or tax advice, and the Company shall not rely on what it believes to be such advice from Consultant.

 

b.           Will engage in the purchase or sale of any securities on behalf of the Company;

 

c.           Is registered as a broker or dealer, or business opportunity banker, or a representative thereof, under any federal or state law or regulation;

 

d.           Is a member of any self-regulatory organization, such as the Financial Institutions National Regulatory Association.

 

11.           Term.  The Term of this Agreement shall commence on the date hereof, and shall be terminable by the Company or Consultant upon 30 days’ prior notice on the earlier of (i) the same date one year hence, or (ii) 90 days following the occurrence of a Transaction, subject to an extension of 60 days as provided in Section 3.  Except for the obligations of the Consultant under Section 2 of this Agreement, all other provisions shall survive the termination of the Term of this Agreement.

 

12.           Notices.  To be effective, all notices, consents, approvals or other communications required or permitted hereunder shall be in writing.  A written notice or other communication shall be deemed to have been given hereunder (i) if delivered by hand, when the notifying party delivers such notice or other communication to all other parties to this Agreement, (ii) if delivered by telecopier or overnight delivery service, on the first business day following the date of such notice or other communication is transmitted by telecopier or timely delivered to the overnight courier, or (iii) if delivered by mail, on the third business day following the date such notice or other communication is deposited in the U.S. mail by certified or registered mail addressed to the other party.  Mailed or telecopied communications shall be directed as follows unless written notice of 

 

  

7

  

 

a change of address or telecopier number has been given in writing in accordance with this Section:

 

If to the Company:                                        TrailBlazer, Inc.

                                                                        c/o Dill, Dill Carr, Stonebenner & Hodgins

                                                                        Attention:  Fay Matsukage

                                                                        Denver, CO

 

If to the Consultant:                                      Advanced Equity Solutions, Inc.

                                                                        1045 Pepper Lane

                                                                        Fernley, NV  89408

                                                                        Attention:  James Hunter

 

13.           Arbitration.  All disputes or claims arising out of or in any way relating to this Agreement shall be submitted to and determined by final and binding arbitration under the rules of the American Arbitration Association.  Arbitration proceedings may be initiated by the Company or the Consultant upon notice to the other and to the American Arbitration Association, and shall be conducted by one arbitrator under the rules of the American Arbitration Association in Henderson, Nevada or such other location mutually agreed upon by the parties.  The notice must specify, in general, the issues to be resolved in any such arbitration proceeding.  The arbitrator shall be selected by agreement of the Company and the Consultant from a list of five or more arbitrators proposed to the Company and the Consultant by the American Arbitration Association, or may be a person not on such list as agreed to by the Company and the Consultant.  If the Company and the Consultant fail to agree on the person to serve as arbitrator within 15 days of delivery of the list as proposed by the American Arbitration Association, then at the request of the Company or the Consultant such arbitrator shall be selected at the discretion of the American Arbitration Association.  If the arbitrator shall determine that any arbitration proceeding was commenced by a party frivolously or without any basis, or primarily for the purpose of harassment or delay, the arbitrator may assess such party the cost of such proceedings including reasonable attorneys’ fees of the other party.  In all other cases, each party to the arbitration proceedings shall bear its own costs and its pro-rata share of its fees and expenses charged by the arbitrator and the American Arbitration Association in connection with any arbitration proceeding.  Notwithstanding the foregoing, nothing herein will prevent a party from seeking and obtaining equitable relief from a court of competent jurisdiction pending a final decision of the arbitrator and the proper filing of such decision with such court.

 

14.           Independent Consultant Status.  Neither Consultant, nor any agent of Consultant, shall be considered an agent or employee of the Company or any of its Affiliates for any purpose, but shall be an independent Consultant.  The Company shall not exercise any supervision over the Consultant or its agents in the performance of Consultant’s services hereunder, nor shall the Company require the Consultant’s compliance with detailed 

 

  

8

  

 

orders or instructions.  Neither Consultant, nor any agent of Consultant, have the right or authority to assume or create any obligation or responsibility, express or implied, on behalf of or in the name of the Company or any Affiliate, nor to accept service of legal process addressed to or intended for the Company or any Affiliate, nor to bind the Company or any Affiliate in any manner whatsoever.

 

15.           Confidentiality.  The Consultant will not disclose, and will use its best efforts to prevent such disclosure by its agents and employees, Confidential Information of the Company or its Affiliates.

 

16.           Indemnification by the Company.  The Company will indemnify and hold harmless the Consultant and Consultant’s officers, directors, employees, agents or Affiliates (referred to as “Indemnified Persons”) from and against any losses, claims, damages, liabilities, causes of action and expenses (referred to collectively as Claims”) made or brought by, or resulting from the action of, any third party, arising out of or in connection with the Agreement, a Transaction, or Consultant’s obligations or activities hereunder, provided that it is determined judicially or in binding arbitration that such Claims arose primarily or solely as a result of the gross negligence or willful misconduct of the Indemnified Person seeking indemnification.

 

17.           Miscellaneous.

 

a.           Entire Agreement; Modification.  This Agreement constitutes the full and complete understanding and agreement of the parties with respect to the services to be provided by the Consultant to the Company, and supersedes any prior understanding or agreement between the parties relating thereto.  No amendment or modification of any provision of this Agreement shall be binding unless made in writing and signed by the parties hereto.

 

b.           Successors.  This Agreement shall be binding upon and inure to the benefit of the Company and the Consultant and their respective successors and assigns; provided, however neither party shall have any right to assign, delegate or otherwise transfer any of their respective rights or obligations hereunder without the approval of the other party, which approval will not be unreasonably withheld.  The term “successors” as used herein shall include any corporation or other business entity that shall acquire, whether by merger, consolidation, purchase or otherwise, all or substantially all of the business and assets of a party to this Agreement, and successors of any such corporation or other business entity.

 

c.           Waiver.  No waiver of any term, condition or covenant of this Agreement by a party shall be deemed to be a waiver of any subsequent breaches of the same or other terms, covenants or conditions hereof by such party.

 

d.           Construction.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective or valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without

 

  

9

  

 

invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

e.           Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the state of Nevada.

 

f.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute one instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement effective as of the day and year first above written.

 

	The Company	 	 	Consultant	 
	 	 	 	 	 
	TrailBlazer, Inc.	 	 	Advanced Equity Solutions, Inc.	 
	 	 	 	 	 
	
By:  /s/ Samuel W. Fairchild          

	 	 	
By:   /s/ 

	 
	
Its:  President & Chairman           

	 	 	
Its: 

	 

 

Exhibit A

Business of the Company

 

 

 

 

 

 

 

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00202-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00202-of-00352.parquet"}]]