Document:

exv10w1

Exhibit 10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	In the Matter of

	 	 	)	 	 	STIPULATION AND CONSENT
	 

	 	 	)	 	 	TO THE ISSUANCE OF AN
	 

	 	 	)	 	 	ORDER TO CEASE AND DESIST
	ADVANTA BANK CORP.

	 	 	)	 	 	 
	DRAPER, UTAH

	 	 	)	 	 	FDIC-09-266b
	 

	 	 	)	 	 	 
	(INSURED STATE NONMEMBER BANK)

	 	 	)	 	 	 

     Subject to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE
AND DESIST (CONSENT AGREEMENT) by the Federal Deposit Insurance Corporation (FDIC), it is hereby
stipulated and agreed by and between a representative of the Legal Division of the FDIC and Advanta
Bank Corp., Draper, Utah (Respondent) as follows:

     1. The Respondent has been advised of its right to receive a Notice of Charges for an Order to
Cease and Desist; Findings of Fact and Conclusions of Law; Order to Pay; and Notice of Hearing
(collectively, NOTICE) detailing the unsafe or unsound banking practices alleged to have been
committed by the Respondent for which an Order to Cease and Desist (ORDER) may issue against the
Respondent pursuant to sections 8(b) of the Federal Deposit Insurance Act (Act), 12 U.S.C. §§
1818(b).

     2. The Respondent has been further advised of its right to a hearing on the charges under
sections 8(b) of the Act, 12

 

 

U.S.C. §§ 1818(b) and the FDIC Rules of Practice and Procedure, 12 C.F.R. Part 308.

     3. The Respondent is represented by counsel.

     4. The Respondent admits that the FDIC is the appropriate Federal banking agency to maintain
this enforcement action pursuant to section 3(q)(3) of the Act, 12 U.S.C. § 1813(q)(3), and that
the FDIC has jurisdiction over it and the subject matter of this proceeding.

     5. In the interest of compromise and settlement, the Respondent, solely for the purpose of
this proceeding pursuant to section 8(b) of the Act, 12 U.S.C. §§ 1818(b), and without admitting or
denying any of charges of unsafe or unsound banking practices, hereby consents and agrees to the
issuance of the ORDER by the FDIC.

     6. The Respondent further stipulates and agrees that such ORDER will be deemed to be an order
which has become final under the Act, and that such ORDER shall become effective upon its issuance
by the FDIC and fully enforceable by the FDIC pursuant to the provisions of the Act subject only to
the conditions of paragraphs 8 and 9 of this CONSENT AGREEMENT.

     7. In the event the FDIC accepts this CONSENT AGREEMENT and issues the ORDER, it is agreed
that no action will be taken by the FDIC against the Respondent to enforce the ORDER

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in the United States District Court unless the Respondent or any director, officer, employee,
agent, successor or assign, or other institution-affiliated party (collectively, the Bank Parties)
has violated or is about to violate any provision of such ORDER.

     8. The FDIC and the Respondent agree that entering into this CONSENT AGREEMENT shall not
constitute an admission of liability by the Respondent for the alleged unsafe or unsound banking
practices that form the basis of the ORDER.

     9. The Respondent hereby waives:

          (a) all defenses and counterclaims of any kind to the NOTICE and in this proceeding;

          (b) a public hearing for the purpose of taking evidence on such alleged charges;

          (c) the filing of proposed findings of fact and conclusions of law;

          (d) the issuance of a recommended decision by an administrative law judge;

          (e) the filing of exceptions and briefs with respect to such recommended decision; and

          (f) judicial
review of the ORDER as provided by section 8(h) of the Act, 12 U.S.C. § 1818(h), or any other challenge to the validity of the ORDER.

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Dated this 24 day of June, 2009.

	 	 	 
	FDIC
LEGAL DIVISION
	 	ADVANTA BANK CORP.
DRAPER, UTAH
	 	 	 
	BY:
	 	BY:
	 	 	 
	/s/ Carol G. Laakso	 	/s/ Dennis Alter
	 	 	 
	Carol G. Laakso
	 	Dennis Alter
	Counsel
	 	Director
	 	 	 
	 	 	/s/ Calvin M. Boardman
	 	 	 
	 	 	Calvin M. Boardman
	 	 	Director
	 	 	 
	 	 	/s/ Philip M. Browne
	 	 	 
	 	 	Philip M. Browne
	 	 	Director
	 	 	 
	 	 	/s/ Fred W. Fairclough
	 	 	 
	 	 	Fred W. Fairclough
	 	 	Director
	 	 	 
	 	 	/s/ Fred P. Gonzales
	 	 	 
	 	 	Fred P. Gonzales
	 	 	Director
	 	 	 
	 	 	/s/ John F. Moore
	 	 	 
	 	 	John F. Moore
	 	 	Director
	 	 	 
	 	 	/s/ William Wirthlin
	 	 	 
	 	 	William Wirthlin
	 	 	Director
	 	 	 
	 	 	 
	 	 	Comprising the Board of
	 	 	Directors of Advanta Bank Corp.,
	 	 	Draper, Utah

4exv10w2

Exhibit 10.2

FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C.

	 	 	 	 	 	 	 
	 	 	 	)	 	 	 
	In the Matter of
	 	 	)	 	 	ORDER TO CEASE AND DESIST
	 	 	 	)	 	 	 
	 	 	 	)	 	 	 
	ADVANTA BANK CORP.
	 	 	)	 	 	 
	DRAPER, UTAH
	 	 	)	 	 	FDIC-09-266b
	 	 	 	)	 	 	 
	(Insured State Nonmember Bank)
	 	 	)	 	 	 
	 	 	 	)	 	 	 

     Advanta Bank Corp., Draper, Utah (“Bank”), through its board of directors, having been advised
of its right to the issuance and service of a NOTICE OF CHARGES AND OF HEARING detailing the unsafe
or unsound banking practices alleged to have been committed by the Bank and of its right to a
hearing on the alleged charges under section 8(b) of the Federal Deposit Insurance Act (“FDI Act”),
12 U.S.C. § 1818(b), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE
ISSUANCE OF AN ORDER TO CEASE AND DESIST (“CONSENT AGREEMENT”) with counsel for the Federal Deposit
Insurance Corporation (“FDIC”) dated June 24, 2009, whereby, solely for the purpose of this
proceeding and without admitting or denying the alleged charges of unsafe or unsound banking
practices, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the
FDIC.

     The FDIC considered the matter and determined that they had reason to believe that the Bank
may engage in unsafe or unsound banking practices. The FDIC, therefore, accepted the CONSENT
AGREEMENT and issued the following:

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ORDER TO CEASE AND DESIST

     IT IS ORDERED, that the Bank, institution-affiliated parties, as that term is defined in
section 3(u) of the Act, 12 U.S.C. § 1813(u), of the Bank and its successors and assigns, cease and
desist from the following unsafe or unsound banking practices:

	 	1.	 	The Bank’s Board of Directors and Management operating the Bank in a manner
that causes the Bank’s significant financial deterioration;
	 
	 	2.	 	Operating with inadequate capital for the Bank’s risk profile; and
	 
	 	3.	 	Operating in a manner that does not sustain satisfactory earnings performance
to maintain sufficient capital in relation to the Bank’s risk profile.

     IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties and its successors
and assigns take affirmative action as follows:

MANAGEMENT

     1. (a) The Bank shall have and retain qualified management. Each member of management shall
possess qualifications and experience commensurate with his or her duties and responsibilities at
the Bank. The qualifications of management personnel shall be evaluated on their ability to:

	 	(1)	 	Comply with the requirements of the ORDER;
	 
	 	(2)	 	Operate all aspects of the Bank in a safe and
sound manner, giving due consideration to the Bank’s asset quality,
capital adequacy, earnings, management effectiveness, liquidity, and
its sensitivity to market risk; and
	 
	 	(3)	 	Comply with applicable laws and regulations.

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          (b) While this ORDER is in effect, the Bank shall notify the New York Regional
Director (“Regional Director”) in writing of any resignations and/or terminations of any members of
its board of directors and/or any of its senior executive officer(s) within 15 days of the event.
The Bank shall also establish procedures to ensure compliance with section 32 of the FDI Act, 12
U.S.C. § 1831i and Subpart F of Part 303 of the FDIC’s Rules and Regulations, 12 C.F.R. §§ 303.100
through 303.103. In addition, the Bank shall notify the Regional Director in writing when it
proposes to add any individual to the Bank’s board of directors or employ any individual as a
senior executive officer. The notification must be received at least 30 days before such addition
or employment is intended to become effective and should include a description of the background
and experience of the individual(s) to be added or employed.

MANAGEMENT – BOARD SUPERVISION

     2. Within 30 days after the effective date of this ORDER, the Bank’s board of directors shall
increase its participation in the affairs of the Bank by assuming full responsibility for the
approval of the Bank’s policies and objectives and for the supervision of the Bank’s management,
including all the Bank’s activities. The board’s participation in the Bank’s affairs shall
include, at a minimum, monthly meetings in which the following areas shall be reviewed and approved
by the board: reports of income and expenses; insider, charged-off, delinquent, nonaccrual, and
recovered loans; investment activities; material changes to policies; and individual committee
actions impacting the aforementioned. The Bank’s board of directors’ minutes shall document the
board’s reviews and approvals, including the names of any dissenting directors.

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STRATEGIC PLAN AND BUDGET/EXECUTIVE COMPENSATION

     3. (a) Within 30 days of this ORDER, the Bank shall submit to the Regional Director for review
and approval a written strategic plan and budget providing for the orderly discontinuance of
deposit-taking operations and the voluntary termination of deposit insurance after the repayment in
full of all deposits. In connection therewith, the Bank shall provide the Regional Director with
pro forma financial statements for the period necessary to complete the orderly liquidation of
assets. This plan shall, at a minimum, provide for: (i) the responsibilities of the Bank’s board
of directors regarding the definition, approval, implementation, and monitoring of the strategic
plan and budget, and the procedures designed to ensure that the board of directors fulfills such
responsibilities; (ii) the repayment in full of all deposits; (iii) the operating assumptions that
form the bases for major projected income and expense components; (iv) financial performance
objectives, including plans for earnings, liquidity, and capital supported by detailed quarterly
and annual pro forma financial statements, including projected budgets, balance sheets, and income
statements; and (v) the establishment of a monthly review process to monitor the actual income and
expenses of the Bank in comparison to budgetary projections. Notwithstanding the above, the Bank
may submit a plan for future activities during the years in which the Bank is implementing the
orderly discontinuation of deposit taking operations contemplated by this provision. The plan,
subject to the prior approval of the FDIC, may permit the continuation of deposit taking
activities.

          (b) Within 30 days from the effective date of this ORDER, the Bank shall submit to the
Regional Director for review and approval an Executive Compensation Plan which incorporates
qualitative as well as profitability performance standards. For purposes of this paragraph,
“compensation” refers to any and all salaries, bonus and other benefits of every kind

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and nature whatsoever, whether paid directly or indirectly. Executive officers are defined as
any officer designated as chairman of the board, vice-chairman of the board, president, chief
executive officer, executive vice president, senior vice president, or chief financial officer.

CAPITAL ADEQUACY

     4. (a) Within 30 days of the effective date this ORDER, the Bank shall submit to the
Regional Director, for review and approval, an acceptable written plan to achieve and maintain
sufficient capital at the Bank. The plan shall, at a minimum, address: (i) the Bank’s current and
future capital requirements; (ii) the Bank’s level of concentrations of credit; (iii) the volume of
the Bank’s adversely classified assets; (iv) the Bank’s anticipated level of retained earnings; (v)
the collectability of on-book account receivables and other assets associated with securitized
assets; and (vi) source and timing of additional funds to fulfill the future capital needs of the
Bank.

          (b) Notwithstanding the provisions of paragraph 4(a) the Bank shall at all times during the
term of this ORDER, maintain its Tier 1 Leverage Capital ratio at a level of no less than 5 percent
and Total Risk-Based Capital ratio equal to or greater than 10 percent, which during the term of
this Order shall be calculated and reported in writing to the Regional Director within 15 days of
the end of each month. For the purpose of reporting the Tier 1 Leverage Capital ratio at the end
of months which do not represent the end of a quarter, the Tier 1 Leverage Capital ratio shall be
calculated by substituting month-end Total Assets for quarterly Average Assets.

          (c) After the Regional Director approves the capital plan, the Bank’s board of directors shall
adopt the capital plan, including any modifications or amendments requested by

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the Regional Director. Thereafter, the Bank shall immediately initiate measures detailed in the
capital plan, to the extent such measures have not previously been initiated, to effect compliance
with the plan within thirty (30) days after the Regional Director responds to the capital plan.

          (d) In addition, the Bank shall comply with the FDIC’s Statement of Policy on Risk-Based
Capital found in Appendix A to Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325,
App. A.

          (e) For purposes of this ORDER, all terms in this Order relating to capital shall be
calculated according to call report instructions, FIL-20-2009, and the methodology set forth in
Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325.

FUNDS MANAGEMENT AND LIQUIDITY

     5. Within 30 days of this Order, the Bank shall submit to the Regional Director an acceptable,
comprehensive liquidity contingency plan. The written plan shall, at a minimum,

     (a) assess possible liquidity events that the Bank may encounter and identify responses to the
potential impact of such events on the Bank’s short-term, intermediate-term, and long-term
liquidity profile;

     (b) provide for weekly review of the Bank’s deposit structure, including volume and trend of
total deposits, maturity distribution of all time deposits; and

     (c) provide for weekly calculation and reporting of the Bank’s liquidity posture in a format
acceptable to the Regional Director.

PARENT COMPANY/AFFILIATE RELATIONS

     6. Without the prior written consent of the Regional Director, the Bank shall not
directly or indirectly enter into, participate in, or otherwise engage in or allow any extension of

6

 

credit to Advanta Corp. (the “Parent Company”) or to any other “affiliate” of the Bank and/or
directly or indirectly enter into, participate in, or otherwise engage in or allow any “covered
transaction” or “transaction covered” with the Parent Company or with any “affiliate” of the Bank
regardless of whether such “extension of credit”, “covered transaction” or “transaction covered”
would be prohibited, limited or otherwise regulated by Sections 23A or 23B of the Federal Reserve
Act (“Sections 23A and 23B”), 12 U.S.C. §§ 371c and 371c-1.

     For purposes of this ORDER, “extension of credit” shall be defined as set forth at 12 C.F.R. §
215.3 and “affiliate,” “covered transaction” and “transaction covered” shall have the meanings set
forth in Sections 23A and 23B; provided, however, that the terms “covered transactions” and
“transactions covered” shall not include the continued provision of and payments for operational
services provided by affiliates under pre-existing contracts in the normal course of business,
including the provision of technology platforms and dual employees. Additionally, for purposes of
this ORDER, any transaction by the Bank with any person or entity shall be deemed to be a
transaction with an “affiliate” of the Bank if any of the proceeds of the transaction are used for
the benefit of, or transferred to any Bank affiliate.

     7. (a) As of the effective date of this ORDER, the Bank shall not make any payment, directly
or indirectly, to or for the benefit of the Parent Company or any other Bank affiliate, without the
prior written consent of the Regional Director, except for the continued provision of and payments
for operational services provided by affiliates under reasonable pre-existing contracts and
arrangements in the normal course of business.

          (b) As of the effective date of this ORDER, the Bank shall not enter into any contract or
modification of an existing contract with its Parent Company or any other Bank affiliate, or
increase the periodic payments under any existing contract with its Parent Company

7

 

or any other Bank affiliate without submitting the new contract, modification, or information
concerning the proposed increase in any existing contract with its Parent Company or any other Bank
affiliate to the Regional Director for review and comment.

CASH TRANSACTIONS 

     8. As of the effective date of this Order, all transactions for the withdrawal,
transfer
or other utilization of Bank cash assets must be approved in writing by a Bank officer.

DIVIDEND RESTRICTION

     9. As of the effective date of this ORDER, the Bank shall not declare or pay any dividends
without the prior written consent of the Regional Director. Requests for approval shall be
received at least 30 days prior to the proposed date for the declaration of dividends and shall
contain, but not be limited to, information on consolidated earnings for the most recent annual
period and the last quarter.

CONTINUED SERVICING OF CREDIT CARD ACCOUNTS

     10. (a) The Bank shall take all steps necessary to ensure that the Bank infrastructure,
staffing, and contracts necessary to service the Bank credit card accounts and related Bank owned
and Bank managed (owned by Advanta Business Card Master Trust or the Parent Company) account
receivables (collectively, “account receivables”) remain in place.

          (b) Any materially adverse changes to the servicing of the account receivables, including but
not limited to new contracts with vendors, and amendments to or cancellation of existing contracts
with vendors that materially adversely affect the servicing of the account receivables must receive
prior written non-objection by the Regional Director.

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          (c) Any unavoidable changes to the servicing of the credit card accounts must be reported by
the Bank to the Regional Director within 5 days of the Bank receiving notice of the changes.

CHANGE IN BALANCE SHEET STRUCTURE OR OPERATIONS

     11. Without prior written non-objection from the Regional Director, the Bank shall not engage
in any transaction that would materially alter its balance sheet composition, including growth in
total assets, significant changes in funding sources, or entering into or exiting existing
contracts for services provided by the Bank or to the Bank.

BROKERED DEPOSITS

	     12.	 	As of the effective date of this Order the Bank shall not renew, rollover, or
accept
“Brokered Deposits” (as such term is defined at 12 C.F.R. § 337.6).

COMPLIANCE WITH LAWS AND REGULATIONS

     13. Within 30 days from the effective date of this ORDER, the Bank shall take steps necessary,
consistent with sound banking practices, to ensure future compliance with all applicable laws,
rules, and regulations.

PROGRESS REPORTS

     14. Within thirty (30) days after the end of the calendar quarter following the effective date
of this ORDER, and by the 30th day after the end of every calendar quarter thereafter, the Bank
shall furnish written progress reports to the Regional Director detailing the

9

 

form, content, and manner of any actions taken to secure compliance with this ORDER, and the
results thereof.

NOTICE TO SHAREHOLDERS

     15. Within thirty (30) days of the effective date of this ORDER, the Bank shall send to its
shareholders or otherwise furnish a description of this ORDER. The description shall fully
describe the ORDER in all material respects. The description and any accompanying communication,
statement, or notice shall be sent to the FDIC, Division of Supervision and Consumer Protection,
Accounting and Securities Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 for
review at least 20 days prior to dissemination to shareholders. Any changes requested to be made
by the FDIC shall be made prior to dissemination of the description, communication, notice or
statement.

OTHER ACTIONS

     16. It is expressly and clearly understood that if, at any time, the Regional Director shall
deem it appropriate in fulfilling the responsibilities placed upon the Regional Director under
applicable law to undertake any further action affecting the Bank, nothing in this ORDER shall in
any way inhibit, estop, bar or otherwise prevent the Regional Director from doing so, including,
but not limited to, the imposition of civil money penalties.

     17. It is expressly and clearly understood that nothing herein shall preclude any proceedings
brought by the Regional Director to enforce the terms of this ORDER, and that nothing herein
constitutes, nor shall the Bank contend that it constitutes, a waiver of any right, power, or
authority of any other representatives of the United States, departments or agencies

10

 

thereof, Department of Justice or any other representatives of the State of Utah or any other
departments or agencies thereof, including any prosecutorial agency, to bring other actions deemed
appropriate.

REGIONAL DIRECTOR

     18. Whenever a provision of this ORDER shall require the Bank to submit a proposed letter,
report, or other matter to the Regional Director for review, comment and/or non-objection, the Bank
shall make such submission to the Regional Director at 20 Exchange Place, New York, New York 10005.

ORDER EFFECTIVE 

     19. The effective date of this ORDER shall be the date of issuance.

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

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

Pursuant to delegated authority.

Dated: June 30, 2009

	 	 	 	 	 
	 

	 	/s/ James C. Watkins

James C. Watkins
	 	 
	 

	 	Deputy Regional Director	 	 
	 

	 	Division of Supervision	 	 
	 

	 	and Consumer Protection	 	 

11

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