Document:

Filed by sedaredgar.com - Canyan Copper Corp.  Exhibit 10.5

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND ARE PROPOSED TO BE ISSUED
IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE SECURITIES ACT.
UPON ANY SALE, SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.

REGULATION S SUBSCRIPTION 
AND DEBT SETTLEMENT
AGREEMENT 

THIS AGREEMENT is made effective as of the 15th day of
June, 2009. 

BETWEEN: 

  
    
      
        THE SUBSCRIBER LISTED ON THE EXECUTION PAGE TO THIS
          AGREEMENT 

        (hereinafter called the "Subscriber") 

      

    

  

OF THE FIRST PART 

AND:

  
    
      
        CANYON COPPER CORP., a Nevada corporation,
          with a corporate office at Suite 408 - 1199 West Pender Street, Vancouver,
          BC V6E 2R1 

        (hereinafter called the “Corporation") 

      

    

  

OF THE SECOND PART 

WHEREAS: 

A.                     
 The Corporation is indebted to the Subscriber in the principal amount of
US $120,000, plus interest of US $40,339.72, for an aggregate indebtedness of US
$160,339.72 (the "Indebtedness"); and 

B.                     
 The Subscriber and the Corporation wish to settle the amounts owed by the
Corporation to the Subscriber by the issuance of shares of the Corporation’s
common stock and share purchase warrants to acquire additional shares of the
Corporation’s common stock on the terms and conditions set out in this
Agreement, 

THE PARTIES HEREBY AGREE AS FOLLOWS: 

1.                      
DEFINITIONS 

1.1                    
The following terms will have the following meanings for all purposes of this
Agreement: 

2

	 	(a) 	
      "Agreement" means this Agreement, and all appendices,
      schedules and amendments to the Agreement.

	 	 	 
	 	(b) 	
      “Common Stock” means the common stock of the Corporation,
      par value $0.00001 per share.

	 	 	 
	 	(c) 	
      "Exchange Act" means the United States Securities
      Exchange Act of 1934, as amended.

	 	 	 
	 	(d) 	
      “Indebtedness” means the total of the amounts owed by the
      Corporation to the Subscriber including all principal and interest on any
      loans, advances, promissory notes, or other obligations of the Corporation
      to the Subscriber.

	 	 	 
	 	(e) 	
      “Offering" means the offering of the Units by the
      Corporation.

	 	 	 
	 	(f) 	
      “Purchase Price” means the purchase price for the Units
      as set out in Section 2.1 of this Agreement.

	 	 	 
	 	(g) 	
      "SEC" means the United States Securities and Exchange
      Commission.

	 	 	 
	 	(h) 	
      "Securities Act" means the United States Securities Act
      of 1933, as amended.

	 	 	 
	 	(i) 	
      "Shares" means those shares of Common Stock to be issued
      by the Corporation to the Subscriber subject to the terms and conditions
      of this Agreement, and comprising a portion of the Units.

	 	 	 
	 	(j) 	
      “Unit” means a unit consisting of one (1) Share and
      one-half (1/2) Warrant.

	 	 	 
	 	(k) 	
      “Warrant” means one full share purchase warrant entitling
      the holder to purchase one additional share of Common Stock at a price of
      US $0.06 per share during the period from the date of issue to the date
      that is two (2) years from the date of issue, and comprising a portion of
      the Units.

	 	 	 
	 	(l) 	
      “Warrant Shares” means the shares of Common Stock
      issuable upon the proper exercise of the Warrants.

1.2                    
All dollar amounts referred to in this agreement are in United States Dollars,
unless expressly stated otherwise. 

2.                      
PURCHASE AND SALE OF SHARES 

2.1                    
Subject to the terms and conditions of this Agreement, the Subscriber hereby
subscribes for and agrees to purchase from the Corporation 4,008,493 Units at a
price equal to US $0.04 per Unit, or US $160,339.72 in the aggregate. Upon
execution of this Agreement by the Subscriber, the subscription by the
Subscriber for the Units set out above will be irrevocable. 

2.2                    
Notwithstanding any other provision of this Agreement, the Corporation’s
obligation to issue Units to the Subscriber under the terms of this Agreement is
conditional upon the Offering and the sale of the Units to the Subscriber
complying with all securities laws and other applicable laws of the jurisdiction
in which the Subscriber is resident. The Subscriber agrees to deliver to the
Corporation all other documentation, agreements, representations and requisite
government forms required by the lawyers for the Corporation as required to
comply with all securities laws and other applicable laws of the jurisdiction of
the Subscriber. 

3

2.3                    
The Subscriber hereby authorizes and directs the Corporation to deliver the
securities to be issued to such Subscriber pursuant to this Agreement to the
Subscriber’s address indicated on the signature page of this Agreement. 

3.                      
SETTLEMENT OF INDEBTEDNESS 

3.1                    
The Corporation and the Subscriber agree to offset the full amount of the
Purchase Price against the full amount of the Indebtedness.

3.2                    
Forthwith upon the execution of this Agreement by the Subscriber and the
Corporation, the Corporation agrees to deliver to the Subscriber a share
certificate and a warrant certificate representing the Shares and Warrants
issuable under this Agreement. 

3.3                    
Upon the delivery by the Corporation of the share and warrant certificates
representing the Shares and Warrants issuable under this Agreement, the
Subscriber agrees to remise, release and forever discharge the Corporation and
its directors, officers, servants and agents (collectively the “Releasees”) from
any and all debts, obligations, claims, demands, dues, actions and causes of
action whatsoever, at law or in equity, and whether known or unknown, suspected
or unsuspected which the Subscriber has or may in the future have against the
Releasees or any of them with respect to any matter relating to the
Indebtedness. 

4.                      
REGULATION S AGREEMENTS OF THE SUBSCRIBER 

4.1                    
The Subscriber represents and warrants to the Corporation that the Subscriber is
not a “U.S. Person” as defined by Regulation S of the Securities Act and is not
acquiring the Units for the account or benefit of a U.S. Person. 

A “U.S. Person” is defined by
Regulation S of the Securities Act to be any person who is: 

	 	(a) 	
      any natural person resident in the United
      States;

	 	 	 	 
	 	(b) 	
      any partnership or corporation organized or
      incorporated under the laws of the United States;

	 	 	 	 
	 	(c) 	
      any estate of which any executor or administrator is a
      U.S. person;

	 	 	 	 
	 	(d) 	
      any trust of which any trustee is a U.S.
      person;

	 	 	 	 
	 	(e) 	
      any agency or branch of a foreign entity located in
      the United States;

	 	 	 	 
	 	(f) 	
      any non-discretionary account or similar account
      (other than an estate or trust) held by a dealer or other fiduciary for
      the benefit or account of a U.S. person;

	 	 	 	 
	 	(g) 	
      any discretionary account or similar account (other
      than an estate or trust) held by a dealer or other fiduciary organized,
      incorporate, or (if an individual) resident in the United States;
      and

	 	 	 	 
	 	(h) 	
      any partnership or corporation if:

	 	 	 	 
	 		(i) 	
      organized or incorporated under the laws of any
      foreign jurisdiction; and

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	 	(ii) 	
      formed by a U.S. person principally for the purpose of
      investing in securities not registered under the Securities Act, unless it
      is organized or incorporated, and owned, by accredited Subscribers [as
      defined in Section 230.501(a) of the Securities Act] who are not natural
      persons, estates or trusts.

4.2                    
The Subscriber acknowledges that the Subscriber was not in the United States at
the time the offer to purchase the Units was received.

4.3                    
The Subscriber acknowledges that the Units, the Shares, the Warrants and the
Warrant Shares are “restricted securities” within the meaning of the Securities
Act and will be issued to the Subscriber in accordance with Regulation S of the
Securities Act. 

4.4                    
The Subscriber agrees not to engage in hedging transactions with regard to the
Units, the Shares, the Warrants or the Warrant Shares unless in compliance with
the Securities Act. 

4.5                    
The Subscriber and the Corporation agree that the Corporation will refuse to
register any transfer of the Units, the Shares, the Warrants or the Warrant
Shares not made in accordance with the provisions of Regulation S of the
Securities Act, pursuant to registration under the Securities Act, pursuant to
an available exemption from registration, or pursuant to this Agreement.

4.6                    
The Subscriber agrees to resell the Units, the Shares, the Warrants and the
Warrant Shares only in accordance with the provisions of Regulation S of the
Securities Act, pursuant to registration under the Securities Act, or pursuant
to an available exemption from registration pursuant to the Securities Act. 

4.7                    
The Subscriber acknowledges and agrees that all certificates representing the
Units, the Shares, the Warrants and the Warrant Shares will be endorsed with the
following legend in accordance with Regulation S of the Securities Act:

  
    
      “THE SECURITIES REPRESENTED BY THIS CERTIFICATE
        HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES
        ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
        REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY REGULATION
        S PROMULGATED UNDER THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE REOFFERED
        FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH
        THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION
        UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
        UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
        MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
      

    

  

5.                      
REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER

The Subscriber, represents and warrants to the Corporation as
follows, and acknowledges that the Corporation is relying upon such
representations and warranties in entering into this Agreement: 

5.1                    
The Subscriber is an investor in securities of companies in the development
stage and acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has such knowledge and experience in financial or
business matters such that it is capable of evaluating the merits and risks of
the investment in the Units, the Shares, the Warrants and the Warrant Shares.
The Subscriber can bear the economic risk of this investment, and was not
organized for the purpose of acquiring the Units, the Shares, the Warrants or
the Warrant Shares. 

5

5.2                    
The Subscriber has had full opportunity to review the Corporation’s periodic
filings with the SEC pursuant to the Securities Act and the Securities Exchange
Act of 1934, including the Corporation’s Annual Reports, Quarterly Reports and
Current Reports and additional information regarding the business and financial
condition of the Corporation. The Subscriber believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Units, the Shares, the Warrants or the Warrant Shares. The
Subscriber further represents that it has had an opportunity to ask questions
and receive answers from the Corporation regarding the terms and conditions of
the Offering and the business, properties, prospects and financial condition of
the Corporation. The Subscriber has had full opportunity to discuss this
information with the Subscriber’s legal and financial advisers prior to
execution of this Agreement.

5.3                    
The Subscriber acknowledges that the offering of the Units, the Shares, the
Warrants and the Warrant Shares by the Corporation has not been reviewed by the
SEC and that the Units, the Shares, the Warrants and the Warrant Shares are
being issued by the Corporation pursuant to an exemption from registration under
the Securities Act. 

5.4                    
The Subscribers understands that the Units, the Shares, the Warrants and the
Warrant Shares it is purchasing are characterized as "restricted securities"
under the Securities Act inasmuch as they are being acquired from the
Corporation in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. The
Subscriber represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. 

5.5                    
The Units, the Shares, the Warrants and the Warrant Shares will be acquired by
the Subscriber for investment for the Subscriber's own account, not as a nominee
or agent, and not with a view to the resale or distribution of any part thereof,
and that the Subscriber has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Subscriber does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Units, the Shares, the Warrants or the Warrant
Shares. 

5.6                    
The Subscriber recognizes that the purchase of the Units, the Shares, the
Warrants and the Warrant Shares involves a high degree of risk in that the
Corporation is in the early stages of development of its business and may
require substantial funds in addition to the proceeds of this private placement.
The Subscriber further recognizes that an investment in the Corporation is
highly speculative and only persons who can afford the loss of their entire
investment should consider investing in the Corporation, the Units, the Shares,
the Warrants or the Warrant Shares. The Subscriber is financially able to bear
the economic risk of an investment in the Corporation and its securities. 

5.7                    
The Subscriber is not aware of any advertisement of the Units, the Shares, the
Warrants or the Warrant Shares. 

5.8                    
This Agreement has been duly authorized, validly executed and delivered by the
Subscriber. 

5.9                    
The Subscriber has satisfied itself as to the full observance of the laws of his
or her jurisdiction in connection with any invitation to subscribe for the
Units, the Shares, the Warrants or the Warrant Shares or any use of this
Agreement, including (i) the legal requirements within his jurisdiction for the
purchase of the Units, the Shares, the Warrants or the Warrant Shares; (ii) any
foreign exchange restrictions applicable to such purchase; (iii) any
governmental or other consents that may need to be obtained; (iv) the income tax
and other tax consequences, if any, that may be 

6

relevant to an investment in the Units, the Shares, the
Warrants or the Warrant Shares; and (v) any restrictions on transfer applicable
to any disposition of the Units, the Shares, the Warrants and the Warrant Shares
imposed by the jurisdiction in which the Subscriber is resident. 

6.             
         REPRESENTATIONS AND
WARRANTIES OF THE CORPORATION 

The Corporation, represents and warrants to the Subscriber as
follows, and acknowledges that the Subscriber is relying upon such
representations and warranties in entering into this Agreement: 

6.1                    
The Corporation has the right and authority to enter into this Agreement and to
issue the Shares, the Warrants and the Warrant Shares to the Subscriber, both on
the terms and conditions set out herein. 

6.2                    
The Shares and the Warrant Shares, when issued upon the proper exercise of the
Warrants in accordance with the terms and conditions set out therein, will be
validly issued, fully paid and non-assessable shares in the Common Stock of the
Corporation. 

7.                     
 MISCELLANEOUS 

7.1                    
Any notice or other communication given hereunder shall be deemed sufficient if
in writing and sent by registered or certified mail, return receipt requested,
addressed to the Corporation, at its corporate office at Suite 408 - 1199 West
Pender Street, Vancouver, BC V6E 2R1, Attention: Anthony R. Harvey, Chairman
& Chief Executive Officer, and to the Subscriber at its address indicated on
the last page of this Agreement. Notices shall be deemed to have been given on
the date of mailing, except notices of change of address, which shall be deemed
to have been given when received. 

7.2                    
The parties agree to execute and deliver all such further documents, agreements
and instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement. 

7.3                    
This Agreement supersedes any prior written or oral agreements or understandings
between the parties relating to the subject matter hereof. 

7.4                    
Notwithstanding the place where this Agreement may be executed by any of the
parties hereto, the parties expressly agree that all the terms and provisions
hereof shall be construed in accordance with and governed by the laws of the
State of Nevada. 

7.5                    
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns. 

7.6                    
Time shall be of the essence of this Agreement. 

7.7                    
This Agreement is intended to be performed in accordance with, and only to the
extent permitted by, all applicable laws, ordinances, rules and regulations. If
any provision of this Agreement, or the application thereof to any person or
circumstance, shall, for any reason and to any extent, be held illegal, invalid
or unenforceable, such provision shall be severed herefrom and be ineffective to
the extent of such illegality, invalidity and unenforceability, and such
illegality, invalidity and unenforceability shall not affect or impair the
remaining provisions hereof and the application of such provisions to other
persons or circumstances, all of which shall be enforced to the greatest extent
permitted by law. 

7

7.8                    
All covenants, agreements, representations on the part of each of the parties,
notwithstanding any investigations or enquiries made by any of the parties prior
to closing or the waiver of any condition by any of the parties, shall survive
the date hereof.

7.9                    
This Agreement may be executed in one or more counterparts, all of which will be
considered one and the same agreement and will become effective when one or more
counterparts have been signed by each party and delivered to the other party, it
being understood that all parties need not sign the same counterpart 

IN WITNESS WHEREOF, this Agreement is executed as of the
day and year first written above. 

	Number of Units Subscribed: 	4,008,493 Units 
	 	 
	Signature of Subscriber or 	  
	Authorized Signatory for Subscriber: 	/s/ David Dawes 
	 	 
	Name of Authorized Signatory for Subscriber 	  
	(if Subscriber is not an individual): 	David Dawes 
	 	 
	Name of Subscriber: 	ATON SELECT FUND LIMITED 
	 	 
	Address of Subscriber: 	3076 Sir Francis Drake's Highway 
	  	Road
      Town, Tortola B.V.I. 
	 	 
	Jurisdiction of Incorporation of Subscriber 	  
	(if Subscriber is not an individual): 	British Virgin Islands 
	 	 
	Telephone Number of Subscriber: 	XXXXX XXX XX XX 
	  	  
	 	 
	 	 
	  	  
	 	 
	CANYON COPPER CORP. 	  
	 	 
	Signature Of Authorized Signatory: 	/s/ Kurt Bordian 
	 	 
	Name of Authorized Signatory: 	Kurt
      Bordian 
	 	 
	Position of Authorized Signatory: 	Treasurer & CFO 
	 	 
	Date of Acceptance: 	June
      29, 2009Exhibit 10.1

 

FEDERAL DEPOSIT INSURANCE CORPORATION

 

WASHINGTON, D.C.

 

NEVADA FINANCIAL INSTITUTIONS DIVISION

 

LAS VEGAS, NEVADA

 

	
   

  	
  )

  	
   

  
	
  In the Matter of

  	
  )

  	
   

  
	
   

  	
  )

  	
  ORDER TO CEASE
  AND DESIST

  
	
  NEVADA SECURITY BANK

  	
  )

  	
   

  
	
  RENO, NEVADA

  	
  )

  	
  FDIC-09-173b

  
	
   

  	
  )

  	
   

  
	
  (INSURED STATE
  NONMEMBER BANK)

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  

 

Nevada
Security Bank, Reno, Nevada (“Bank”), having been advised of its right to 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)(1) of the Federal
Deposit Insurance Act (“Act”), 12 U.S.C. § 1818(b)(1), and Section 658.115
of the Nevada Revised Statutes, 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”),
and with counsel for the Nevada Financial Institutions Division (“NFID”), dated
June 25, 2009, whereby solely for the purpose of this proceeding and without admitting or
denying the alleged charges of unsafe or unsound banking practices and
violations of law and/or regulations, the Bank consented to the issuance of an
ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC and the NFID.

 

 

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

 

ORDER TO CEASE AND DESIST

 

IT
IS HEREBY ORDERED, 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, cease and desist from the following
unsafe and unsound banking practices, as more fully set forth in the Joint FDIC
and NFID Report of Examination (“ROE”) dated February 9, 2009:

 

(a)           operating with
management and a board of directors whose policies and practices are
detrimental to the Bank and jeopardize the safety and soundness of the Bank;

 

(b)           operating with
inadequate capital in relation to the kind and quality of assets
held by the Bank;

 

(c)           operating with
a large volume of poor quality loans;

 

(d)           operating in
such a manner as to produce operating losses;

 

(e)           operating with
inadequate provisions for liquidity; and

 

(f)            operating with
excessive reliance on non-core funding and brokered deposits.

 

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

 

1.             The Bank shall
have and retain qualified management.

 

(a)           Each member of
management shall have qualifications and experience commensurate with his or
her duties and responsibilities at the Bank. Management shall include a chief
executive officer with proven ability in managing a Bank of comparable size,
and experience in upgrading a low quality loan portfolio, improving earnings,
and other matters needing particular attention. Management shall also include a
senior lending officer with

 

2

 

significant
appropriate lending, collection, and loan supervision experience and experience
in upgrading a low quality portfolio. Each member of management shall be
provided appropriate written authority from the Bank’s Board to implement the
provisions of this ORDER.

 

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

 

(i)            comply with the requirements
of this ORDER;

 

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

 

(iii)          comply with applicable laws
and regulations; and

 

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

 

(c)           During the life
of this ORDER, the Bank shall notify the Regional Director of the FDIC’s San
Francisco Regional Office (“Regional Director”) and the Commissioner of the NFID
(“Commissioner”) in writing when it proposes to add any
individual to the Bank’s Board 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 or individuals to be added or employed.

 

2.             The Bank’s
capital levels have declined in part due to the write down
of the GSE preferred stock of the FNMA and the FHLMC.

 

(a)           Within 45 days
from the effective date of this ORDER, the Bank shall develop and adopt a plan
to meet and thereafter maintain capital levels as described in Paragraph 2(b).

 

(b)           Within 90 days
from the effective date of this ORDER, the Bank shall
achieve and thereafter maintain Tier 1 capital equal to 8 percent of the Banks total
assets as

 

3

 

described
in Part 325 of the FDIC’s
Rules and Regulations, and by December 31, 2009, the Bank shall
maintain Tier 1 Capital in such an amount to exceed 9 percent of the Bank’s
total assets.

 

(c)           Within 90 days
from the effective date of this ORDER, the bank shall achieve and thereafter
maintain the risk-based capital equal to 11.25 percent of total risk-weighted
assets as described in Appendix A to Part 325 of the FDIC’s Rules and
Regulations, and by December 31, 2009, the Bank shall maintain a total
risk based capital ratio of 12 percent.

 

(d)           In the event
any ratio falls below the established minimum, the Bank shall notify the
Regional Director and the Commissioner and shall increase capital in an amount
sufficient to comply with this provision within 45 days.

 

(e)           The level of
Tier 1 capital to be maintained during the life of this ORDER pursuant to
Subparagraph 2(b) shall be in addition to a fully funded allowance for
loan and lease losses, the adequacy of which shall be satisfactory to the
Regional Director and the Commissioner as determined at subsequent examinations
and/or visitations.

 

(f)            For the
purposes of this ORDER, the terms “Tier 1 capital” and “total assets” shall
have, the meanings ascribed to them in Part 325 of the FDIC’s Rules and
Regulations, 12 C.F.R. §§ 325.2(v) and 325.2(x).

 

3.             (a)           Within 45 days from the
effective date of this ORDER, the Bank shall implement a methodology for the
allowance for loan and lease losses that ensures compliance with outstanding
regulatory and accounting guidance.

 

4.             (a)           Within 15 days from the
effective date of this ORDER, the Bank shall eliminate from its books, by
charge-off or collection, all assets classified “Loss” and one-half of
the assets classified “Doubtful” in the ROE dated February 9, 2009
that have not been previously collected or charged off. Elimination of these
assets through proceeds of other loans made by the Bank is not considered
collection for the purpose of this paragraph.

 

4

 

(b)           Within 45 days
from the effective date of this ORDER, the Bank shall develop written asset
disposition plans for each classified asset. The plans shall be reviewed and
approved by the Bank’s Board and acceptable to the Regional Director as
determined at subsequent examinations/and or visitations.

 

5.             Within 45 days
from the effective date of this ORDER, the Bank shall update its written plan,
approved by its Board and acceptable to the Regional Director and the
Commissioner for systematically reducing the amount of loans or other
extensions of credit advanced, directly or indirectly, to or for the benefit
of, any borrowers in the “Commercial Real Estate” Concentrations, as more fully set forth in the ROE dated February 9, 2009.

 

6.             Within 60 days
from the effective date of this ORDER, the Bank shall formulate and implement a
written profit plan. This plan shall be forwarded to the Regional Director and
the Commissioner for review and comment and shall address, at a minimum, the
following:

 

(a)           goals and
strategies for improving and sustaining the earnings of the Bank, including:

 

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

 

(ii)          realistic and
comprehensive budgets;

 

(iii)         a budget review
process to monitor the income and expenses of the Bank to compare actual
figures with budgetary projections; and

 

(iv)        a description
of the operating assumptions that form the basis for, and adequately support,
major projected income and expense components; and

 

(v)         coordination of
the Bank’s loan, investment, and operating policies, and budget and profit
planning, with the funds management policy.

 

5

 

7.             Within 60 days from the
effective date of this ORDER, the Bank shall eliminate and/or correct all
violations of law and contravention of policy, as more fully set forth in the
ROE dated February 9, 2009. In addition, the Bank shall take all necessary steps to ensure future compliance with all applicable laws
and regulations.

 

8.             Within 45 days from the
effective date of this ORDER, the Bank shall develop a source and use of funds
report acceptable to the Regional Director and Commissioner as determined at
subsequent examinations and/or visitations.

 

9.             The Bank shall not pay cash
dividends without the prior written consent of the Regional Director and the
Commissioner.

 

10.           (a)           Upon the effective date of
this ORDER, the Bank shall not increase the amount of brokered deposits above
the amount outstanding on that date.

 

(b)           Within 10 days of the
effective date of this ORDER, the Bank shall submit to the Regional Director
and the Commissioner a written plan for eliminating its reliance on brokered
deposits. The plan should contain details as to the current composition of
brokered deposits by maturity and explain the means by which
such deposits will be paid or  rolled over. The Regional
Director and the Commissioner shall have the right to reject the Bank’s plan.
For purposes of this ORDER, brokered deposits are defined as described in
section 337.6(a)(2) of the FDIC’s Rules and Regulations to include
any deposits funded by third party agents or nominees for depositors, including
deposits managed by a trustee or custodian when each individual beneficial
interest is entitled to or
asserts a right to federal deposit insurance.

 

11.           Within 30 days
of the end of the first quarter, following the effective date of this ORDER,
and within 30 days of the end of each quarter thereafter, the Bank shall
furnish written progress reports to the Regional Director and the Commissioner
detailing the form and manner of any actions taken to secure
compliance with this ORDER and the results thereof. Such reports

 

6

 

shall include a copy of the Bank’s Report of
Condition and the Bank’s Report of Income.  Such reports may be discontinued when the
corrections required by this ORDER have been accomplished and the Regional Director
and the Commissioner have released the Bank in writing from making further
reports.

 

12.           Following
the effective date of this ORDER, the Bank shall send to its shareholder(s) or
otherwise furnish a description of this ORDER in conjunction with the Bank’s
next shareholder communication and also in conjunction with its notice or proxy
statement preceding the Bank’s next shareholder meeting. 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,
Accounting and Securities Section, Washington, D.C. 20429, at least 15 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.

 

This ORDER will become effective upon its issuance by the FDIC and the NFID. The provisions of this ORDER shall
remain effective and enforceable except to the extent that, and until such time
as, any provisions of this ORDER shall have been modified, terminated,
suspended, or set aside by the FDIC and the NFID.

 

Pursuant to delegated authority.

 

Dated at San Francisco, California, this 29th day of June,  2009.

 

 

	
  /s/
  J. George Doerr

  	
   

  	
  /s/
  George E. Burns

  
	
  J. George Doerr

  	
   

  	
  George E. Burns

  
	
  Deputy Regional Director

  	
   

  	
  Commissioner

  
	
  Risk Management

  	
   

  	
  Nevada Financial Institutions Division

  
	
  Division of Supervision and Consumer Protection

  San Francisco Region

  	
   

  	
   

  
	
  Federal Deposit Insurance Corporation

  	
   

  	
   

  

 

7

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