Document:

CARBON
DEVELOPMENT AGREEMENT

    

    

    THIS AGREEMENT is
dated January 14, 2011

    

    

    BETWEEN:

    

    BIO-CARBON
SOLUTIONS INTERNATIONAL INC

    A Nevada
corporation having an address at:

    123 Queen
St East, suite 202

    Sault Ste
Marie, Ontario,

    Canada
P6A 2Z5

    

    As
“BCSI”

    

    AND:

    

    BASIA
HOLDINGS, INC.

    A
Tennessee corporation having an address at:

    18 East
Sunrise Highway  ̃ Suite 311  ̃ Freeport, NY 11520

    

    

    As
“BASIA”

    

    WHEREAS:

    

    BCSI  is
a carbon project development  firm with exclusive know how for the
quantification, management, monitoring and sale of carbon credits or
environmental benefits “Carbon credits”;

    

    AND
WHEREAS

    

    BASIA is
a coal resource development company with the exclusive ownership of lands which
cover 9,000 acres of
heavily forested lands in Grundy County,
Tennessee and which contains approximately 52,000,000 tons of recoverable coal
that may be extracted by surface and underground mining methods “The
Project”.

    

    
      AND
WHEREAS

    

    

    Carbon
credits can be generated from various methodologies and generated from using a
broad spectrum of technologies or methodologies that reduce the emissions of
greenhouse warming gases, which include the type of activities that are
pertinent to The Project;

    

    AND
WHEREAS

    

    BCSI and
BASIA wish to collaborate for the development and sale of carbon credits that
may be derived from the Project;

    

    AND
WHEREAS

    

    BCSI and
BASIA wish to enter into this Carbon Development Agreement  (the
“CDA”) which
grants to BCSI the exclusive rights for the development of the carbon credits
derived from The Project.

    

    NOW, THEREFORE, in
consideration of the premises and the mutual promises and covenants herein, the
parties hereto (the “Parties”, or
individually the “Party”) agree as
follows:

    

    PART
I

    AGREEMENT

    

    2.1                      This
CDA grants exclusive rights to BCSI for the development of carbon credits or
carbon offsets or environmental benefits derived from the Project including
projects developed by BASIA’s subsidiaries.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    .

    PART
2

    TERMINATION

    

    3.1                      This
CDA shall be effective upon the date hereof, and shall continue in full force
and effect unless  the other Party becomes bankrupt.

    

    3.2                      The
Parties acknowledge and agree that the rights and obligations of any Party that
have accrued prior to the expiration of this Agreement or which are expressed to
survive such expiration  shall not be affected by the termination of
this CDA.

    

    PART
3

    COMPENSATION

    

    BASIA
shall pay BCSI 20 % of the net Cash Flow from the sale of carbon credits
generated by BCSI on behalf of BASIA.  Payment is due on December 31
of each year.

     

    PART
4

    INTELLECTUAL
PROPERTY

    

    Except
with agreed specifically in writing, BCSI Inc and BASIA shall retain ownership
and title of all their respective assets, intellectual property related to
technologies, business know-how, trademarks, business contacts, access to
government capital and loans for business development including future
improvements and modifications.

    

    PART
5

    CONFIDENTIALITY

    

    
      	
              5.1

            	
              Each
      Party shall treat as confidential information this CDA, the subject matter
      hereof, and all other discussions, draft agreements, agreements,
      information, reports, data, test results, marketing, product and cost
      information, business opportunities, knowhow, research and analyses
      related to the Parties’ Technologies or this CDA the “Confidential
      Information”).  The standard of care to be used in protecting
      the Confidential Information hereunder shall be the same degree of care
      the Parties use to protect their own confidential information, but in any
      event, shall not be less than a reasonable degree of care practised by
      diligent and prudent persons in similar
  circumstances.

            

    

    

    
      	
              5.2

            	
              Confidential
      Information shall be used by the receiving Party only for purposes of the
      actions specifically contemplated by this CDA and shall be promptly
      returned to the disclosing Party on the written request of the disclosing
      Party. Each Party shall restrict the disclosure of Confidential
      Information to those of its employees and agents who have a need to know
      such information relative to this CDA and shall only disclose such
      Confidential Information to those persons who have agreed to receive, hold
      and use such information subject to the terms and restrictions of this
      CDA.

            

    

    

    
      	
              5.3

            	
              Notwithstanding
      the above, this section  imposes no obligation on the receiving
      Party with respect to information
that:

            

    

    

    
      	
               
      

            	
              (a)

            	
              is
      or becomes a matter of public knowledge through no fault of the receiving
      Party,

            

    

    

    
      	
               
      

            	
              (b)

            	
              is
      rightfully received by the receiving Party from a third party without a
      duty of confidentiality,

            

    

    

    (c)           is
required to be disclosed by law, or

    

    
      	
               
      

            	
              (d)

            	
              is
      disclosed by the receiving Party with the disclosing Party's prior written
      consent.

            

    

    

    PART
6

    COVENANTS,
REPRESENTATIONS & WARRANTIES

    

    
      	
              6.1

            	
              Each
      Party represents and warrants that it has all corporate approvals and the
      independent right and power to enter into this
  CDA.

            

    

    

    
      	
              6.2

            	
              BASIA
      and BCSI agree that BCSI offer no guaranty regarding the eligibilty of the
      project with respect to carbon credits.  BCSI will exert best
      efforts to secure carbon credit benefits to
  BASIA.

            

    

    

    
      	
              6.3

            	
              BASIA
      agrees that BCSI is a carbon development company and has carbon
      development agreements with other parties who may or may not compete with
      BASIA.

            

    

    

    PART
7

    LIMITATION
OF LIABILITY

    

    Except
with respect to obligations of confidentiality and restrictions on use set forth
herein, neither Party will be liable for any indirect, special, incidental or
consequential damages of any kind, including lost profits, lost revenues, lost
business opportunities, failure to realize expected savings, or other commercial
or economic losses of any kind arising out of, in connection with,
or resulting from their performance under this Agreement, even if the other
Party has been advised of the possibility of such damage.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    PART
8

    DISPUTE
RESOLUTION

    

    Except
for applications for injunctions or restraining orders, any disputes arising out
of or in connection with any binding provisions of this CDA or in respect of any
defined legal relationship associated therewith or derived therefrom will be,
insofar as lawfully possible, referred to and finally resolved or determined by
arbitration in Ontario, Canada and each party shall be responsible for its own
fees.

    

    PART
9

    NOTICES

    

    Any
notice to be given by either Party to the other under this CDA will be in
writing and may be delivered personally, by facsimile or by first class prepaid
mail to the following addresses:

    

    If to
BCSI:

    

    

    Bio-Carbon
Solutions International Inc

    123 March
Street, Suite 202

    Sault Ste
Marie, On P6A 2Z5 Canada

    

    
      
        
          	
                  Attention: 

                	
                  Luc
      C Duchesne

                
	
                  Facsimile:

                	705
      253 9572
	
                  Email:

                	ce0@bio-carb.com

        

      

    

     

    If to BASIA HOLDINGS,
INC

    

    Basia
Holdings, Inc.

    18 East
Sunrise Highway, Suite 311

    Freeport,
NY  11520 USA

    
      

      
        
          
            
              	
                      Attention: 

                    	
                      Neal
      R. Bruckman

                    
	
                      Facsimile:

                    	516 546 6220
	      
                      Email: 

                    	fintekusa@gmail.com
	
                    

            

        

      

    

    or to
such other address as may be designated by written notice given by either Party
to the other Party.

    

    Notices
delivered in person or by facsimile will be effective on the date of such
delivery. Notices issued by mail will be effective on the third business day
following the date that the envelope containing the notice is postmarked unless
between the time of mailing and the time the notice is deemed effective
there is an interruption in postal service, in which case, the notice will not
be effective until actually received. In the event of a postal strike or
lockout, notices or demands under this CDA must be delivered personally or by
facsimile.

    

    PART
10

    GENERAL
PROVISIONS

    

    
      	
              10.1

            	
              Partnership:
      Nothing in this CDA is intended to imply the existence of a partnership,
      joint venture, or agency relationship between the
  Parties.

            

    

    

    
      	
              10.2

            	
              Time of
      Essence: Time is of the essence with respect to this CDA and the
      performance of each obligation of each Party hereunder unless otherwise
      expressly stated.

            

    

    

    
      	
              10.3

            	
              Amendments:
      No modifications, waivers or amendments to this CDA shall be effective
      unless in writing and signed all
Parties.

            

    

    

    
      	
              10.4

            	
              Assignment:
      Neither Party may assign or transfer this Agreement or any of its rights
      or obligations under this CDA, without the prior written consent of the
      other party.

            

    

    

    
      	
              10.5

            	
              Governing
      Law: This CDA will be governed by and interpreted exclusively in
      accordance with the laws of the Province of Ontario, Canada and the
      Parties hereby irrevocably attorn to the jurisdiction of the courts of the
      Province of Ontario for matters which are not properly the subject of Part
      9.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              10.6

            	
              Costs: Each
      Party will be responsible for its own costs in relation to any activities
      covered by this CDA and the negotiation of the Commercial Agreements,
      unless otherwise indicated.

            

    

    

    
      	
              10.7

            	
              Further
      Assurances: Each Party will execute and deliver such further and
      other agreements, documents and instruments and do such further acts and
      things as are within its power and as may be necessary or desirable to
      fully implement and carry out the terms of this CDA that are expressed to
      be legally enforceable as and from the time of execution
      hereof.

            

    

    

    
      	
              10.8

            	
              Entire
      Agreement: This CDA supersedes any prior understandings, agreements
      or proposals (written or oral) between the Parties as to the subject
      matter of this CDA.

            

    

    

    IN WITNESS WHEREOF,
the Parties executed this CDA as of the date first above written.

    

    
      
        
          	
                  BIO-CARBON
      SOLUTIONS INTERNATIONAL INC

                
	 
      	 
      
	
                  By:

                	
                  Dr..
      Luc C Duchesne

                
	 
      	 
      
	
                  Signature:

                	
                  /s/  Luc
      C. Duchesne

                
	 
      	 
      
	
                  Title:

                	
                  CEO

                
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                  BASIA
      HOLDINGS, INC

                
	 
      	 
      
	
                  By:

                	
                  Neal
      R. Bruckman

                
	 
      	 
      
	
                  Signature:

                	
                  /S/
      Neal R. Bruckman

                
	 
      	 
      
	
                  Title:

                	
                  President

                

        

      

    

    .Unassociated Document

    
       

      FEDERAL
DEPOSIT INSURANCE CORPORATION

       

      WASHINGTON,
D.C.

       

      AND

       

      COMMONWEALTH
OF KENTUCKY

       

      DEPARTMENT
OF FINANCIAL INSTITUTIONS

       

      FRANKFORT,
KENTUCKY

      
        
          
            
              	 
      	 
      	 
      
	 
      	
                      )

                    	 
      
	
                      In
      the Matter of

                    	
                      )

                    	
                      CONSENT
      ORDER

                    
	 
      	
                      )

                    	 
      
	 
      	
                      )

                    	 
      
	
                      FIRST
      FEDERAL SAVINGS BANK OF

                    	
                      )

                    	 
      
	
                      ELIZABETHTOWN

                    	
                      )

                    	 
      
	
                      ELIZABETHTOWN,
      KENTUCKY

                    	
                      )

                    	
                      FDIC-10-817b

                    
	 
      	
                      )

                    	 
      
	 
      	
                      )

                    	 
      
	
                      (KENTUCKY
      CHARTERED

                    	
                      )

                    	 
      
	
                      INSURED
      NONMEMBER BANK)

                    	
                      )

                    	 
      
	 
      	
                      )

                    	 
      

            

          

        

      

       

                 First
Federal Savings Bank of Elizabethtown, Elizabethtown, Kentucky (“Bank”), having
been advised of its right to a NOTICE OF CHARGES AND OF HEARING detailing the
unsafe or unsound banking practices and violations of law, rule or regulation
alleged to have been committed by the Bank, and of its right to a hearing on the
charges under section 8(b) of the Federal Deposit Insurance Act (“Act”), 12
U.S.C. § 1818(b), and under section 286.3-690 of the Kentucky Revised Statutes,
Ky. Rev. Stat. Ann. § 286.3-690 (Michie 2006), regarding hearings before the
Department of Financial Institutions for the Commonwealth of Kentucky (“DFI”),
and having waived those rights, entered into a STIPULATION AND CONSENT TO THE
ISSUANCE OF A CONSENT ORDER (“STIPULATION”) with representatives of the Federal
Deposit Insurance Corporation (“FDIC”) and the DFI, dated January 27, 2011,
whereby, solely for the purpose of this proceeding and without admitting or
denying any charges of unsafe or unsound banking practices relating to
weaknesses in asset quality, earnings, liquidity, management, and capital, the
Bank has consented to the issuance of this CONSENT ORDER (“ORDER”) by the FDIC
and the DFI.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      The FDIC and the DFI considered the
matter and determined to accept the STIPULATION.

       

      Having also determined that the
requirements for issuance of an order under 12 U.S.C. § 1818(b) and section
286.3-690 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. § 286.3-690
(Michie 2006), have been satisfied, the FDIC and DFI HEREBY ORDER that the Bank,
its institution-affiliated parties, as that term is defined in section 3(u) of
the Act, 12 U.S.C. § 1813(u), and its successors and assigns take affirmative
action as follows:

       

      MANAGEMENT

       

      1.           (a)           During
the life of this ORDER, the Bank shall have and retain qualified management.
Management shall be provided the necessary written authority to implement the
provisions of this ORDER.  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 statutes, rules, and regulations;
  and

              

      

       

      
        	
                 
      

              	
                (iv)

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

              

      

       

      (b)           During
the life of this ORDER, prior to the addition of any individual to the board of
directors (“Board”) or the employment of any individual as a senior executive
officer, the Bank shall request and obtain the FDIC’s and DFI’s written
approval.  For purposes of this ORDER, “senior executive officer” is
defined as in section 32 of the Act (“section 32”), 12 U.S.C. § 1831(i), and
section 303.101(b) of the FDIC Rules and Regulations, 12 C.F.R. §
303.101(b).

       

      MANAGEMENT
PLAN

       

      2.           (a)           Within
30 days from the effective date of this ORDER, the Bank shall retain a bank
consultant acceptable to the Regional Director of the Chicago Regional Office of
the FDIC (“FDIC Regional Director”) and the Commissioner of the Kentucky
Department of Financial Institutions (“Commissioner”) who will develop a written
analysis and assessment of the Bank’s management needs (“Management Study”) for
the purpose of providing qualified management for the Bank.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (b)           The
Bank shall provide the FDIC Regional Director and the Commissioner with a copy
of the proposed engagement letter or contract with the consultant for
review.

       

      (c)           The
Management Study shall be developed within 120 days from the effective date of
this ORDER.  The Management Study 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 executive Bank officers and senior commercial lending staff (having
      the title of Vice President or above) 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 executive Bank officers and senior lending staff (having the title
      of Vice President or above) 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 by this paragraph of this
      ORDER.

              

      

       

      (d)           Within
30 days after receipt of the Management Study, the Bank shall formulate a plan
to implement the recommendations of the Management Study.

       

      (e)           The
plan required by this paragraph shall be submitted to and approved by the FDIC
Regional Director and the Commissioner.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      CAPITAL

       

      3.           (a)           By
March 31, 2011, the Bank shall have and maintain its level of Tier 1 capital as
a percentage of its total assets (“capital ratio”) at a minimum of 8.5 percent
and its level of qualifying total capital as a percentage of risk-weighted
assets (“total risk based capital ratio”) at a minimum of 11.5
percent.  By June 30, 2011, the Bank shall have and maintain its level
of Tier 1 capital as a percentage of its total assets (“capital ratio”) at a
minimum of 9.0 percent and its level of qualifying total capital as a percentage
of risk-weighted assets (“total risk based capital ratio”) at a minimum of 12.0
percent. For purposes of this ORDER, Tier 1 capital, qualifying total capital,
total assets, and risk-weighted assets shall be calculated in accordance with
Part 325 of the FDIC Rules and Regulations (“Part 325”), 12 C.F.R. Part
325.

       

      (b)           If,
while this ORDER is in effect, the Bank increases capital by the sale of new
securities, the Board shall adopt and implement a plan for the sale of such
additional securities, including the voting of any shares owned or proxies held
by or controlled by them in favor of said plan.  Should the
implementation of the plan involve public distribution of Bank securities,
including a distribution limited only to the Bank’s existing shareholders, the
Bank shall prepare detailed offering materials fully describing the securities
being offered, including an accurate description of the financial condition of
the Bank and the circumstances giving rise to the offering, and other material
disclosures necessary to comply with Federal securities laws.  Prior
to the implementation of the plan and, in any event, not less than 20 days prior
to the dissemination of such materials, the materials used in the sale of the
securities shall be submitted to the FDIC Registration and Disclosure Section,
550 17th Street,
N.W., Washington, D.C. 20429 and to the Kentucky Department of Financial
Institutions, 1025 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601,
for their review. Any changes requested to be made in the materials by the FDIC
or the DFI shall be made prior to their dissemination.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (c)           In
complying with the provisions of this paragraph, the Bank shall provide to any
subscriber and/or purchaser of Bank securities written notice of any planned or
existing development or other changes which are materially different from the
information reflected in any offering materials used in connection with the sale
of Bank securities.  The written notice required by this paragraph
shall be furnished within 10 calendar days of the date any material development
or change was planned or occurred, whichever is earlier, and shall be furnished
to every purchaser and/or subscriber of the Bank’s original offering
materials.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      DIVIDEND
RESTRICTION

       

      4.           As
of the effective date of this ORDER, the Bank shall not declare or pay any
dividend without the prior written consent of the FDIC Regional Director and the
Commissioner.

       

      LOSS
CHARGE-OFF

       

      5.           As
of the effective date of this Order the Bank shall eliminate from its books, by
charge-off or collection, all assets or portions of assets classified as “Loss”
in the Report of Examination dated July 19, 2010 (“Report”) and in subsequent
Reports or Examinations that have not been previously collected or charged
off.

       

      PROHIBITION OF ADDITIONAL
LOANS TO CLASSIFIED BORROWERS

       

      6.           (a)           As
of the effective date of this ORDER, 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 Report, so long as such credit remains
uncollected.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (b)           As
of the effective date of this ORDER, the Bank shall not extend, directly or
indirectly, any additional credit  (including any extension of credit
for the payment of interest) 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 Report, and is uncollected unless the Bank’s Board has
adopted, prior to such extension of credit, a detailed written statement giving
the reasons why such extension of credit is in the best interest of the
Bank.  A copy of the statement shall be signed by each Director
participating in the decision, and incorporated in the minutes of the applicable
Board meeting. A copy of the statement shall be placed in the appropriate loan
file.

       

      REDUCTION OF DELINQUENCIES
AND CLASSIFIED LOANS

       

      7.               
(a)           Within 60
days from the effective date of this ORDER, the Bank shall adopt, implement, and
adhere to, a written plan to reduce the Bank’s risk position in each loan in
excess of $800,000 which is delinquent in excess of 90 days or classified
“Substandard” or “Doubtful” in the Report. The plan shall include, but not be
limited to, provisions which:

       

      
        	
                 
      

              	
                (i)

              	
                Provide
      for review of the current financial condition of each delinquent or
      classified borrower, including a review of borrower cash flow and
      collateral value;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                Delineate
      areas of responsibility for loan
officers;

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (iii)

              	
                Establish
      target dollar levels to which the Bank plans to reduce delinquencies and
      classified loans within 6, 12, and 24 months from the effective date of
      this ORDER; and

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                Provide
      for the submission of monthly written progress reports to the Bank’s Board
      for review and notation in minutes of the meetings of the
      Board.

              

      

       

      (b)           As
used in this paragraph, “reduce” means to: (1) collect; (2) charge off; (3)
sell; or (4) improve the quality of such assets so as to warrant removal of any
adverse classification by the FDIC and the DFI.

       

      (c)           A
copy of the plan required by this paragraph shall be submitted to the FDIC
Regional Director and the Commissioner.

       

      (d)           While
this ORDER remains in effect, the plan shall be revised to include assets which
become delinquent after the effective date of this ORDER or are adversely
classified at any subsequent examinations.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      ALLOWANCE FOR LOAN AND LEASE
LOSSES

       

       8.           (a)           Prior
to submission or publication of all Reports of Condition and Income required by
the FDIC after the effective date of this ORDER, the Bank’s Board shall review
the adequacy of the Bank’s ALLL, provide for an adequate ALLL, and accurately
report the same. The minutes of the Board meeting at which such review is
undertaken shall indicate the findings of the review, the amount of increase in
the ALLL recommended, if any, and the basis for determination of the amount of
ALLL provided.  In making these determinations, the Board shall
consider the FFIEC Instructions for the Reports of Condition and Income and any
analysis of the Bank’s ALLL provided by the FDIC or DFI.

       

      (b)          
Regarding ALLL methodology, management will ensure FAS 114 calculations utilize
values which are updated on an ongoing basis as warranted by changes in market
conditions.

       

      LOAN REVIEW AND
GRADING

       

      9.           Within
60 days from the date of this ORDER, the Bank shall implement revised
comprehensive loan grading and review procedures in order to effectively manage
and control risks in the loan portfolio.  The procedures shall require
that such loan grading and review will be performed by a qualified individual
who is not a member of the Bank’s lending staff.  The loan review
procedures shall, at a minimum:

       

      (a)          Require
periodic confirmation of the accuracy and completeness of the watch list and all
risk grades assigned by the Bank’s loan officers;

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (b)          Identify
loans or relationships that warrant special attention of management, including
but not limited to, loans requiring loss recognition, adjustments to ALLL
allocations, or nonaccrual status;

       

      (c)          Identify
credit and collateral documentation exceptions and track corrective
measures;

       

      (d)          Identify
violations of law, rules, or regulations and track corrective measures;
and

       

      (e)           Identify
loans not in conformance with the Bank’s loan policy.

       

      APPRAISAL
POLICIES

       

      10.           (a)         Within
60 days from the effective date of this ORDER, the Bank shall revise, adopt, and
implement its real estate appraisal policy to ensure compliance with Part 323 of
the FDIC’s Rules and Regulations.  In addition, appropriate criteria
for obtaining re-appraisals and or re-evaluations as part of an overall program
to review and monitor portfolio risk should be developed.

       

      (b)           Copies
of the Appraisal Policy and revisions thereto required by this paragraph shall
be submitted to the Regional Director and the Commissioner.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      CONCENTRATIONS OF
CREDIT

       

      11.         (a)         
 Within 60 days from the effective date of this ORDER, the Bank shall
formulate, adopt and implement a written plan to reduce the construction and
land development loan concentration of credit and the total commercial real
estate loan concentration of credit identified in the
Report.    Such plan shall prohibit any additional advances
that would increase the concentrations or create new concentrations unless the
Bank’s board of directors has adopted, prior to such extension of credit, a
detailed written statement giving the reasons why such extension of credit is in
the best interests of the Bank.  A copy of the statement shall be
signed by each Director, incorporated in the minutes of the applicable board of
directors’ meeting, and placed in the appropriate loan file.  The plan
shall include, but not be limited to:

       

      
        	
                 
      

              	
                (i)

              	
                Target
      dollar level and target percentage of of capital to which the Bank plans
      to reduce each concentration; and

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                Provision
      for the submission of monthly written progress reports to the Bank’s board
      of directors for review and notation in the minutes of the board of
      directors’ meetings.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      CORRECTION OF
VIOLATIONS

       

      12.         
(a)          Within 60 days from
the effective date of this ORDER,
the Bank shall eliminate and/or correct all violations of law, rule, and
regulation and shall comply with the interest rate risk policy statement listed
in the Report.

       

      (b)        
Within 60 days from the effective date of this ORDER,
the Bank shall implement procedures to ensure future compliance
with all applicable laws, rules, regulations, and policy
statements.

       

      PROFIT PLAN AND
BUDGET

       

      13.         (a)           Within
60 days from the effective date of this ORDER, the Bank shall revise, and
implement revisions to, its written profit plan and adopt a realistic,
comprehensive budget for all categories of income and expense for calendar year
2011.  The plan required by this paragraph shall contain formal goals
and strategies, consistent with sound banking practices, to reduce discretionary
expenses and to improve the Bank’s overall earnings, and shall contain a
description of the operating assumptions that form the basis for major projected
income and expense components.

       

      (b)           The
written profit plan shall address, at a minimum:

       

      
        	
                 
      

              	
                (i)

              	
                Realistic
      and comprehensive budgets;

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (ii)

              	
                A
      budget review process to monitor the income and expenses of the Bank to
      compare actual figures with budgetary
  projections;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                Identification
      of major areas in, and means by which, earnings will be
      improved;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                A
      description of the operating assumptions that form the basis for and
      adequately support major projected income and expense
      components.

              

      

       

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

       

      (d)           A
written profit plan and budget shall be prepared for each calendar year for
which this ORDER is in effect and shall be completed at least 30 days prior to
the beginning of the applicable calendar year.

       

      (e)           Copies
of the plan and budget required by this paragraph shall be submitted to and
approved by the FDIC Regional Director and the Commissioner.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      LIQUIDITY
PLAN

       

      14.           (a)           Within
60 days from the effective date of this ORDER, the Bank shall revise, and
implement revisions to, its written contingency funding plan (“Liquidity
Plan”).  At a minimum, the Liquidity Plan shall be prepared in
conformance with the Liquidity Risk Management Guidance found at FIL-84-2008 and
include provisions which address the issues identified in the
Report.

       

      (b)           On
each Friday that the Bank is open for business, the Bank shall submit to the
FDIC Regional Director and the Commissioner a liquidity analysis report in a
format that is acceptable to the FDIC Regional Director and the Commissioner
until the Board is notified that submission of such report is no longer
warranted.

       

      (c)           A
copy of the plan required by this paragraph shall be submitted to and approved
by the FDIC Regional Director and the Commissioner.

       

      NOTIFICATION TO
SHAREHOLDER

       

      15.       Following
the effective date of this ORDER, the Bank shall send to its shareholder a copy
of this ORDER: (1) in conjunction with the Bank’s next shareholder
communication; or (2) in conjunction with its notice or proxy statement
preceding the Bank’s next shareholder meeting.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      PROGRESS
REPORTS

       

      16.             
Within 30 days from the end of each calendar quarter following the effective
date of this ORDER, the Bank shall furnish to the FDIC Regional Director and the
Commissioner written progress reports signed by each member of the Bank’s Board
detailing the actions taken to secure compliance with the ORDER and the results
thereof.

       

      The effective date of this ORDER shall
be upon issuance by the FDIC and the DFI.

       

      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
FDIC and the DFI.

       

      Issued
Pursuant to Delegated Authority.

       

      Dated: January
27, 2011

      

      
        
          
            
              	/s/
      M.
      Anthony Lowe  	 
      	/s/
      Charles
      A. Vice  
	
                      M.
      Anthony Lowe

                    	 
      	
                      Charles
      A. Vice

                    
	
                      Regional
      Director

                    	 
      	
                      Commissioner

                    
	
                      Chicago
      Regional Office

                    	 
      	
                      Department
      of Financial

                    
	
                      Federal
      Deposit Insurance

                    	 
      	
                      Institutions

                    
	
                      Corporation

                    	
                        

                    	
                      Commonwealth
      of Kentucky

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