Document:

EX-10.2

 Exhibit 10.2 

GUARANTY OF PAYMENT 

GUARANTY OF PAYMENT (this “Guaranty”), made as of July 10, 2020, by PROLOGIS, L.P., a Delaware limited partnership (the
“Guarantor”), for the benefit of SUMITOMO MITSUI BANKING CORPORATION, as Administrative Agent (in such capacity, the “Administrative Agent”), for the lenders (the “Lenders”) that are from time to
time parties to the Sixth Amended and Restated Revolving Credit Agreement (as amended or otherwise modified from time to time, the “Credit Agreement”), dated as of the date hereof, among Prologis Marunouchi Finance Investment
Limited Partnership (the “Initial Borrower”), any affiliate of the Initial Borrower that becomes a party thereto (other than Prologis, L.P.), the Guarantor, the Lenders and the Administrative Agent. Capitalized terms used but not
defined herein have the meanings ascribed thereto in the Credit Agreement. 
 W I T N E S S E T H: 

WHEREAS, the Lenders have agreed to make loans to Initial Borrower and to one or more Qualified Borrowers (together with Initial Borrower,
each a “Borrower” and collectively the “Borrowers”) for so long as such entities remain Qualified Borrowers under the Credit Agreement in the aggregate principal amount not to exceed JPY 55,000,000,000 (hereinafter
collectively referred to as the “Loans”); 
 WHEREAS, the Loans may be evidenced by (i) promissory notes of Initial
Borrower made to Administrative Agent or to each of the Lenders in accordance with Section 2.4 of the Credit Agreement and (ii) promissory notes and qualified borrower undertakings of the Qualified Borrowers made to Administrative Agent or
to each of the Lenders in accordance with Section 2.4 of the Credit Agreement (collectively, the “Notes”); 
 WHEREAS,
the Credit Agreement, the Notes and any other documents executed in connection therewith are hereinafter collectively referred to as the “Loan Documents”; 

WHEREAS, the Guarantor is the direct or indirect owner of equity interests of the Initial Borrower and each Qualified Borrower; and 

WHEREAS, as a condition to the execution and delivery of the Loan Documents, the Lenders have required that the Guarantor execute and deliver
this Guaranty; 
 NOW THEREFORE, in consideration of the premises and the benefits to be derived from the making of the Loans by the Lenders
to the Borrowers, and in order to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and the other Loan Documents, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees as follows: 
 1.    The Guarantor, on behalf of itself and its successors and
assigns, hereby irrevocably, absolutely and unconditionally guarantees the full and punctual payment when due, whether at stated maturity or otherwise, of all Obligations of the Borrowers now or hereafter existing under the Notes and the Credit
Agreement, including in the event that the Borrowers exercise the right under the Credit Agreement to increase the Facility Amount, for principal 

 
and/or interest as well as any other amounts due thereunder, including, without limitation, all indemnity obligations of the Borrowers thereunder, and all reasonable and documented costs and
expenses (including, without limitation, reasonable and documented attorneys’ fees and disbursements) incurred by the Administrative Agent and/or the Lenders in enforcing their rights under this Guaranty (all of the foregoing obligations being
the “Guaranteed Obligations”). 
 2.    It is agreed that the Guaranteed Obligations of the Guarantor
hereunder are primary, and this Guaranty shall be enforceable against the Guarantor and its successors and assigns without the necessity for any suit or proceeding of any kind or nature whatsoever brought by the Administrative Agent or any of the
Lenders against one or more of the Borrowers or their respective successors or assigns or any other party or against any security for the payment and performance of the Guaranteed Obligations and without the necessity of any notice of non-payment or non-observance or of any notice of acceptance of this Guaranty or of any notice or demand to which the Guarantor might otherwise be entitled (including, without
limitation, diligence, presentment, notice of maturity, extension of time, change in nature or form of the Guaranteed Obligations, acceptance of further security, release of further security, imposition or agreement arrived at as to the amount of or
the terms of the Guaranteed Obligations, notice of adverse change in any Borrower’s financial condition and any other fact that might materially increase the risk to the Guarantor), all of which the Guarantor hereby expressly waives; and the
Guarantor hereby expressly agrees that the validity of this Guaranty and the obligations of the Guarantor hereunder shall in no way be terminated, affected, diminished, modified or impaired by reason of the assertion of or the failure to assert by
the Administrative Agent or any of the Lenders against one or more of the Borrowers or their respective successors or assigns, any of the rights or remedies reserved to the Administrative Agent or any of the Lenders pursuant to the provisions of the
Loan Documents. The Guarantor agrees that any notice or directive given at any time to the Administrative Agent or any of the Lenders that is inconsistent with the waiver in the immediately preceding sentence shall be void and may be ignored by the
Administrative Agent and the Lenders, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this
Guaranty, unless the Administrative Agent has specifically agreed otherwise in a writing, signed by a duly authorized officer. The Guarantor specifically acknowledges and agrees that the foregoing waivers are of the essence of this transaction and
that, but for this Guaranty and such waivers, the Administrative Agent and the Lenders would not make the requested Loans to the Borrowers. 

3.    The Guarantor waives, and covenants and agrees that it will not at any time insist upon, plead or in any manner
whatsoever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshaling-of-assets or redemption laws, or right of homestead or
exemption, whether now or at any time hereafter in force, that may delay, prevent or otherwise affect the performance by the Guarantor of its obligations under, or the enforcement by the Administrative Agent or any of the Lenders of, this Guaranty.
The Guarantor further covenants and agrees not to set up or claim any defense, counterclaim, setoff or other objection of any kind to any action, suit or proceeding in law, equity or otherwise, or to any demand or claim that may be instituted or
made by the Administrative Agent or any of the Lenders other than the defense of the actual timely payment and performance by the Borrowers of the Guaranteed Obligations hereunder; provided, however, that the foregoing shall not be deemed a waiver
of the 

  
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Guarantor’s right to assert any compulsory counterclaim if such counterclaim is compelled under local law or rule of procedure, nor shall the foregoing be deemed a waiver of the
Guarantor’s right to assert any claim that would constitute a defense, setoff, counterclaim or crossclaim of any nature whatsoever against the Administrative Agent or any Lender in any separate action or proceeding. The Guarantor represents,
warrants and agrees that, as of the date hereof, its obligations under this Guaranty are not subject to any counterclaims, setoffs or defenses against the Administrative Agent or any Lender of any kind. 

4.    The provisions of this Guaranty are for the benefit of the Administrative Agent and the Lenders and their successors
and permitted assigns, and nothing herein contained shall impair as between any Borrower and the Administrative Agent and the Lenders the obligations of any Borrower under the Loan Documents. 

5.    This Guaranty shall be a continuing, unconditional and absolute guaranty and the liability of the Guarantor
hereunder shall in no way be terminated, affected, modified, impaired or diminished by reason of the happening, from time to time, of any of the following, all without notice or the further consent of the Guarantor: 

(a)    any assignment, amendment, modification or waiver of or change in any of the terms, covenants,
conditions or provisions of any of the Guaranteed Obligations or the Loan Documents or the invalidity or unenforceability of any of the foregoing; or 

(b)     any extension of time that may be granted by the Administrative Agent to any Borrower, the
Guarantor or their respective successors or assigns; or 
 (c)    any action that the Administrative
Agent may take or fail to take under or in respect of any of the Loan Documents or by reason of any waiver of, or failure to enforce any of the rights, remedies, powers or privileges available to the Administrative Agent under this Guaranty or
available to the Administrative Agent at law, equity or otherwise, or any action on the part of the Administrative Agent granting indulgence or extension in any form whatsoever; or 

(d)    any sale, exchange, release, or other disposition of any property pledged, mortgaged or conveyed, or
any property in which the Administrative Agent and/or the Lenders have been granted a lien or security interest to secure any indebtedness of any Borrower to the Administrative Agent and/or the Lenders; or 

(e)    any release of any person or entity who may be liable in any manner for the payment and collection
of any amounts owed by any Borrower to the Administrative Agent and/or the Lenders; or 
 (f)    the
application of any sums by whomsoever paid or however realized to any amounts owing by any Borrower to the Administrative Agent and/or the Lenders under the Loan Documents in such manner as the Administrative Agent shall determine in its sole
discretion; or 

  
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 (g)    any Borrower’s or the Guarantor’s
voluntary or involuntary liquidation, dissolution, sale of all or substantially all of its assets and liabilities, appointment of a trustee, receiver, liquidator, sequestrator or conservator for all or any part of any Borrower’s or the
Guarantor’s assets, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment, or the commencement of other similar proceedings affecting any Borrower or the Guarantor or any of
the assets of any of them, including, without limitation, (i) the release or discharge of any Borrower or the Guarantor from the payment and performance of its respective obligations under any of the Loan Documents by operation of Law, or
(ii) the impairment, limitation or modification of the liability of any Borrower or the Guarantor in bankruptcy, or of any remedy for the enforcement of the Guaranteed Obligations under any of the Loan Documents or the Guarantor’s
liability under this Guaranty, resulting from the operation of any present or future provisions of any Debtor Relief Law or from the decision of any court; or 

(h)    any improper disposition by any Borrower of the proceeds of the Loans, it being acknowledged by the
Guarantor that the Administrative Agent or any Lender shall be entitled to honor any request made by any Borrower for a disbursement of such proceeds and that neither the Administrative Agent nor any Lender shall have any obligation to see the
proper disposition by any Borrower of such proceeds. 
 6.    The Guarantor agrees that if at any time all or any part
of any payment at any time received by the Administrative Agent under or with respect to this Guaranty is or must be rescinded or returned by the Administrative Agent or any Lender for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of any Borrower or the Guarantor), then the Guarantor’s obligations hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence notwithstanding such
previous receipt by such party, and the Guarantor’s obligations hereunder shall continue to be effective or reinstated, as the case may be, as to such payment, as though such previous payment had never been made. 

7.    Until this Guaranty is terminated pursuant to the terms hereof, the Guarantor (i) shall have no right of
subrogation against any Borrower by reason of any payments or acts of performance by the Guarantor in compliance with the obligations of the Guarantor hereunder, (ii) waives any right to enforce any remedy that the Guarantor now or hereafter
shall have against any Borrower by reason of any one or more payment or acts of performance in compliance with the obligations of the Guarantor hereunder and (iii) from and after an Event of Default, subordinates any liability or indebtedness
of any Borrower now or hereafter held by the Guarantor or any affiliate of the Guarantor to the obligations of any Borrower under the Loan Documents. The foregoing, however, shall not be deemed in any way to limit any rights that the Guarantor may
have at law or in equity with respect to any other partners, members or other interest holders of any Borrower. 

  
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 8.    The Guarantor represents and warrants to the Administrative Agent
and the Lenders with the knowledge that the Administrative Agent and the Lenders are relying upon the same, as follows: 

(a)    the Guarantor is a direct or indirect owner of equity interests of the Initial Borrower and each
Qualified Borrower (other than Prologis, L.P.); 
 (b)    based upon such relationships, the Guarantor
has determined that it is in its best interests to enter into this Guaranty; 
 (c)    this Guaranty is
necessary and convenient to the conduct, promotion and attainment of the Guarantor’s business, and is in furtherance of the Guarantor’s business purposes; 

(d)    the benefits to be derived by the Guarantor from the Borrowers’ access to funds made possible
by the Loan Documents are at least equal to the obligations undertaken pursuant to this Guaranty; 

(e)    the Guarantor is solvent and has full power and legal right to enter into this Guaranty and to
perform its obligations under the terms hereof and (i) the Guarantor is organized and validly existing under the laws of the State of Delaware, (ii) the Guarantor has complied with all provisions of applicable Law in connection with all
aspects of this Guaranty, and (iii) the person executing this Guaranty has all the requisite power and authority to execute and deliver this Guaranty; 

(f)    to the best of the Guarantor’s knowledge, there is no action, suit, proceeding, or
investigation pending or threatened against or affecting the Guarantor at law, in equity, in admiralty or before any arbitrator or any governmental department, commission, board, bureau, agency or instrumentality (domestic or foreign) that is likely
to materially and adversely impair the ability of the Guarantor to perform its obligations under this Guaranty; 

(g)    the execution and delivery of, and the performance by the Guarantor of its obligations under this
Guaranty, have been duly authorized by all necessary action on the part of the Guarantor and do not (i) violate any provision of any Law, rule, regulation (including, without limitation, Regulation U or X of the Board of Governors of the
Federal Reserve System of the United States), order, writ, judgment, decree, determination or award presently in effect having applicability to the Guarantor or the Organization Documents of the Guarantor the consequences of which violation is
likely to materially and adversely impair the ability of the Guarantor to perform its obligations under this Guaranty or (ii) violate or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default
under any indenture, agreement or other instrument to which the Guarantor is a party, or by which the Guarantor or any of its property is bound, the consequences of which violation, conflict, breach or default is likely to materially and adversely
impair the ability of the Guarantor to perform its obligations under this Guaranty; 
 (h)    this
Guaranty has been duly executed by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in 

  
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accordance with its terms except as enforceability may be limited by applicable insolvency, bankruptcy or other Laws affecting creditors’ rights generally or general principles of equity,
whether such enforceability is considered in a proceeding in equity or at law; 
 (i)    no
authorization, consent, approval, license or formal exemption from, nor any filing, declaration or registration with, any Federal, state, local or foreign court, governmental agency or regulatory authority is required in connection with the making
and performance by the Guarantor of this Guaranty, except those which have already been obtained; and 

(j)    the Guarantor is not and is not required to be registered as an “investment company” as
that term is defined in the Investment Company Act of 1940, as amended. 
 9.    The Guarantor and Administrative Agent
each acknowledge and agree that this Guaranty is a guarantee of payment and performance and not of collection and enforcement in respect of any obligations that may accrue to the Administrative Agent and/or the Lenders from any Borrower under the
provisions of any Loan Document. 
 10.    Subject to the terms and conditions of the Credit Agreement, and in
conjunction therewith, the Administrative Agent or any Lender may assign any or all of its rights under this Guaranty. In the event of any such assignment, the Administrative Agent shall give the Guarantor prompt notice of same. If the
Administrative Agent elects to sell all the Loans or participations in the Loans and the Loan Documents, including this Guaranty, the Administrative Agent or any Lender may forward to each purchaser and prospective purchaser all documents and
information relating to this Guaranty or to the Guarantor, whether furnished by any Borrower or the Guarantor or otherwise, subject to the terms and conditions of the Credit Agreement. 

11.    The Guarantor agrees, upon the written request of the Administrative Agent, to execute and deliver to the
Administrative Agent, from time to time, any modification or amendment hereto or any additional instruments or documents reasonably considered necessary by the Administrative Agent or its counsel to cause this Guaranty to be, become or remain valid
and effective in accordance with its terms, provided, that, any such modification, amendment, additional instrument or document shall not increase the Guarantor’s obligations or diminish its rights hereunder and shall be reasonably satisfactory
as to form to the Guarantor and to the Guarantor’s counsel. 
 12.    This Guaranty contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all prior agreements relating to such subject matter and may not be modified, amended, supplemented or discharged except by a written agreement signed by the Guarantor and
the Administrative Agent. This Guaranty replaces in its entirety the Guaranty of Payment dated as of February 16, 2017 among the Guarantor, Prologis, Inc., and the Administrative Agent (the “Existing Guaranty”), and the
Existing Guaranty is of no further force and effect. 

  
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 13.    If any provision contained in this Guaranty shall be determined
to be invalid, illegal or unenforceable in any respect for any reason, such provision shall be deemed stricken and severed from this Guaranty and the remaining provisions shall continue in full force and effect. 

14.    This Guaranty may be signed in any number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. 
 15.    All notices, requests and other
communications to any party hereunder shall be in writing (including email transmission) and shall be addressed to such party at the address set forth below or to such other address as may be identified by any party in a written notice to the
others: 
 If to the Guarantor: 

Prologis, L.P. 

Pier 1, Bay 1 

San Francisco, California 94111 

Attn:    Tracy Patel 

Fax: 415-394-9001 

Email: tpatel@prologis.com 
 If
to the Administrative Agent: 
 Administrative Agent: 

Sumitomo Mitsui Banking Corporation 
 601 S Figueroa Ave, Suite
1800 
 Los Angeles, CA 90017 
 Attn: James D. Benko 

Facsimile: 212-224-4887 

Email: James_D_Benko@smbcgroup.com 
 with a copy to: 

Sumitomo Mitsui Banking Corporation 
 277 Park Avenue 

New York, NY 10172 
 Attn: Matt Baldwin 

Email: Matt_Baldwin@smbcgroup.com 
 and to: 

Sumitomo Mitsui Banking Corporation 
 1 North Lexington Avenue

 White Plains, NY 10601 
 Attn: David Lee, BCDAD
Agency & Special Product Services Representative 

  
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 Facsimile: 212-224-4501 

Email: David_Lee@smbcgroup.com 
 With a copy to
agencyservices@smbcgroup.com on all email correspondences. 
 Each such notice, request or other communication shall be effective
(i) if given by email or facsimile transmission, when such email or facsimile is transmitted to the email address or facsimile number specified in this Section and the appropriate answerback or facsimile confirmation is received, (ii) if
given by certified registered mail, return receipt requested, with first class postage prepaid, addressed as aforesaid, upon receipt or refusal to accept delivery, (iii) if given by a nationally recognized overnight carrier, 48 hours after such
communication is deposited with such carrier with postage prepaid for next day delivery, or (iv) if given by any other means, when delivered at the address specified in this Section. 

16.    Any acknowledgment or new promise, whether by payment of principal or interest or otherwise by any Borrower or the
Guarantor, with respect to the Guaranteed Obligations shall, if the statute of limitations in favor of the Guarantor against the Administrative Agent shall have commenced to run, toll the running of such statute of limitations, and if the period of
such statute of limitations shall have expired, prevent the operation of such statute of limitations. 
 17.    This
Guaranty shall be binding upon the Guarantor and its successors and assigns and shall inure to the benefit of the Administrative Agent and the Lenders and their respective successors and permitted assigns. 

18.    The failure of the Administrative Agent to enforce any right or remedy hereunder, or promptly to enforce any such
right or remedy, shall not constitute a waiver thereof, nor give rise to any estoppel against the Administrative Agent, nor excuse the Guarantor from its obligations hereunder. Any waiver of any such right or remedy to be enforceable against the
Administrative Agent must be expressly set forth in a writing signed by the Administrative Agent. 
 19.    (a)
    THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW). 

(b)    Any legal action or proceeding with respect to this Guaranty and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York sitting in New York County or of the United States of America for the Southern District of New York, and, by execution and delivery of this Guaranty, the Guarantor hereby accepts
for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and appellate courts from any thereof. The Guarantor irrevocably consents to the
service of process out of any of the aforementioned courts 

  
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in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Guarantor at its address for notices set forth herein. The Guarantor
hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty brought in the courts referred to above and hereby
further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of the Administrative Agent
to serve process in any other manner permitted by Law or to commence legal proceedings or otherwise proceed against the Guarantor in any other jurisdiction. 

(c)    THE GUARANTOR AND ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 (d)    The Guarantor does hereby
further covenant and agree that it may be joined in any action against the Borrower in connection with the Loan Documents and that recovery may be had against the Guarantor in such action or in any independent action against the Guarantor (with
respect to the Guaranteed Obligations), without the Administrative Agent first pursuing or exhausting any remedy or claim against any Borrower or its successors or assigns. The Guarantor also agrees that, in an action brought with respect to the
Guaranteed Obligations in any jurisdiction, it shall be conclusively bound by the judgment in any such action by the Administrative Agent (wherever brought) against any Borrower or its successors or assigns, as if the Guarantor was party to such
action, even though the Guarantor was not joined as a party in such action. 
 (e)    The Guarantor agrees to pay all
reasonable and documented expenses (including, without limitation, reasonable and documented attorneys’ fees and disbursements) of the Administrative Agent and/or the Lenders in connection with the enforcement of their rights under this
Guaranty, whether or not suit is initiated. 
 20.    Notwithstanding anything to the contrary contained herein, this
Guaranty shall terminate and be of no further force or effect upon the full performance and payment of the Guaranteed Obligations hereunder. Upon termination of this Guaranty in accordance with the terms of this Guaranty, the Administrative Agent
promptly shall deliver to the Guarantor such documents as the Guarantor or the Guarantor’s counsel reasonably may request in order to evidence such termination. 

21.    All of the Administrative Agent’s rights and remedies under each of the Loan Documents or under this Guaranty
are intended to be distinct, separate and cumulative and no such right or remedy therein or herein mentioned is intended to be in exclusion of or a waiver of any other right or remedy available to the Administrative Agent. 

22.    The Guarantor shall not use any assets of an “employee benefit plan” within the meaning of
Section 3(3) of ERISA or a “plan” within the meaning of Section 4975(e)(1) of the Code to repay or secure the Loan, the Note, the Obligations or this Guaranty. The Guarantor 

  
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shall not assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of any of its rights or interests (direct or indirect) in any Borrower, or attempt to do any of the foregoing
or suffer any of the foregoing, or permit any party with a direct or indirect interest or right in any Borrower to do any of the foregoing, if such action would cause the Note, the Loan, the Obligations, this Guaranty, or any of the Loan Documents
or the exercise of any of the Administrative Agent’s or Lender’s rights in connection therewith, to constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or
would otherwise result in the Administrative Agent or any of the Lenders being deemed in violation of Section 406 of ERISA or Section 4975 of the Code. The Guarantor shall indemnify and hold each of the Administrative Agent and the Lenders
free and harmless from and against all loss, costs (including reasonable and documented attorneys’ fees and expenses), expenses, taxes and damages (including consequential damages) that each of the Administrative Agent and the Lenders may
suffer by reason of the investigation, defense and settlement of claims as a result of a breach of the foregoing provisions by the Guarantor. 

[SIGNATURE PAGES FOLLOW] 

  
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 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guaranty as of the
date and year first above written. 
  

			
	PROLOGIS, L.P.,
	a Delaware limited partnership
		
	By:	 	PROLOGIS, INC., its General Partner
		
	By:	 	 /s/ Tracy Patel

	Name:	 	Tracy Patel
	Title:	 	Vice President

 Guaranty (Yen Revolver) 

 ACCEPTED: 

SUMITOMO MITSUI BANKING CORPORATION, 
 as Administrative Agent

  

			
	By:	 	 /s/ Michael Maguire

	Name:	 	Michael Maguire
	Title:	 	Managing Director

 Guaranty (Yen Revolver)Exhibit

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

	
					
	 
	 
	)
	 
	 

	In the Matter of
	 
	)
	 
	 

	 
	 
	)
	 
	 

	UNITY BANK
	 
	)
	 
	 

	CLINTON, NEW JERSEY
	 
	)
	CONSENT ORDER
	 

	 
	 
	)
	 
	 

	 
	 
	)
	FDIC-20-0014b
	 

	(INSURED STATE NONMEMBER BANK)
	 
	)
	 
	 

	 
	 
	)
	 
	 

	 
	 
	)
	 
	 

The Federal Deposit Insurance Corporation (FDIC) is the appropriate Federal banking agency for Unity Bank, Clinton, New Jersey (Bank), under section 3(q) of the Federal Deposit Insurance Act (Act), 12 U.S.C. § 1813(q).
The Bank, by and through its duly elected and acting board of directors (Board), has executed a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (CONSENT AGREEMENT), dated July 6, 2020, that is accepted by the FDIC.  With the CONSENT AGREEMENT, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulation relating to, among other things, weaknesses in the Bank’s Bank Secrecy Act/Anti-Money Laundering Compliance Program (BSA/AML Compliance Program), to the issuance of this CONSENT ORDER (ORDER) by the FDIC.
Having determined that the requirements for issuance of an order under section 8(b) of the Act, 12 U.S.C. § 1818(b), have been satisfied, the FDIC hereby orders that: 

BOARD SUPERVISION
1.     The Board must increase its supervision and direction of the Bank’s BSA/AML Compliance Program, consistent with the role and expertise expected for directors of banks of comparable size and 

risk, and assume full responsibility for the approval and implementation of sound BSA/AML policies, procedures, and processes reasonably designed to assure and monitor the Bank’s compliance with the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., 12 U.S.C. § 1829b, 12 U.S.C. §§ 1951-1959 and 12 U.S.C. § 1818(s), and its implementing regulations, 31 C.F.R. chapter X, 12 C.F.R. § 326.8 and 12 C.F.R. part 353 (collectively, the BSA).  The Board must ensure complete and timely compliance with this ORDER.  

BSA/AML COMPLIANCE PROGRAM
2.     The Bank must review and improve its written BSA/AML Compliance Program and ensure that it is reasonably designed to assure and monitor the Bank’s compliance with the BSA.  At a minimum, the BSA/AML Compliance Program must address the BSA-related deficiencies and weaknesses identified in the October 21, 2019 FDIC Report of Examination (2019 ROE) transmitted to the Bank on February 26, 2020, meet the requirements of this ORDER, and include procedures for monitoring performance and for periodically reviewing and revising the BSA/AML Compliance Program to ensure that it is and continues to be reasonably designed to assure and monitor the Bank’s compliance with the BSA.
(a)    BSA Risk Assessment:  Within 90 days from the effective date of this ORDER, the Bank must:
(i)    review and improve its BSA risk assessment (Risk Assessment) to accurately reflect the Bank’s risk profile related to money laundering, terrorist financing, and other illicit activity (Risk Profile) and develop appropriate risk-mitigating strategies for identified risks after reviewing its products, services, customers, entities, transactions, system alerts, and geographic footprint and conducting a detailed qualitative and quantitative analysis of the risk within each identified category; and
(ii)    establish appropriate written policies, procedures, and processes regarding Risk Assessments that require, at a minimum, the periodic reassessment of the Bank’s Risk Profile and satisfactory documentation of the resulting Risk Assessment.
(b)    System of BSA Internal Controls:  Within 180 days from the effective date of this ORDER, the Bank must review, improve, and validate its system of internal controls to ensure that it is 

reasonably designed to assure and monitor compliance with the BSA (BSA Internal Controls) taking into consideration the Risk Assessment; the Risk Profile; the Bank’s size, structure, and complexity; and the deficiencies and weaknesses identified in the 2019 ROE.  At a minimum, such system of BSA Internal Controls must include written policies, procedures, and processes addressing the following areas:
(i)    Suspicious Activity Monitoring and Reporting:  The Bank must: 
(A)    review and improve its policies, procedures, processes, and systems for monitoring, detecting, and reporting suspicious activity conducted within or through the Bank and ensure the timely, accurate, and complete filing of suspicious activity reports (SARs) with an appropriate level of documentation and support for Bank management’s decisions to file or not to file a SAR.  These policies, procedures, processes, and systems should ensure that all relevant areas of the Bank are monitored for suspicious activity, including cash transactions, monetary instruments, ACH and ATM transactions, and international and domestic wire transfers; and 
(B)    conduct a comprehensive review and validation of all systems the Bank utilizes to monitor, detect, and report suspicious activity and develop policies, procedures, and processes requiring the periodic review and validation of these systems based on the Bank’s current Risk Profile.  Decisions to adjust or not adjust system parameters as a result of the reviews should be supported through a well-documented analysis with appropriate information.  
(ii)    Customer Due Diligence:  The Bank must review and improve its customer due diligence (CDD) policies, procedures, and processes for new and existing customers to:
(A)be consistent with the Bank’s Risk Profile and Risk Assessment, with increased focus on customers identified in the Bank’s Customer Risk Profile, as defined below, as posing heightened risk of money laundering, terrorist financing, or other illicit activities; 
(B)establish specific staff responsibilities, including who is responsible for reviewing or approving changes to a customer’s risk rating or profile; 

(C)ensure that the Bank possesses sufficient customer information to implement an effective suspicious activity monitoring system; 
(D)document analysis associated with the due diligence process, including guidance for resolving issues when insufficient or inaccurate information is obtained;  
(E)maintain current customer information;
(F)    operate in conjunction with the Bank’s Customer Identification Program (CIP); 
(G)    enable the Bank to reasonably predict the types of transactions in which a customer is likely to engage; and 
(H)    provide for:
i.     a risk assessment of the customer base through an appropriate risk-rating system to ensure that the risk level of the Bank’s customers is accurately identified based on the potential for money laundering, terrorist financing, or other illicit activity posed by the customer’s activities, with consideration given to the purpose of the account, the anticipated type and volume of account activity, types of products and services offered, and locations and markets served by the customer (Customer Risk Profile);
ii.    an appropriate level of ongoing monitoring commensurate with the risk level of a Customer Risk Profile to ensure that the Bank can reasonably detect suspicious activity and accurately determine which customers are higher risk and require additional due diligence (risk-based customer due diligence or RBCDD);
iii.    a process to obtain and analyze a sufficient level of customer information at account opening to establish and support the risk ratings assigned in the Bank’s Customer Risk Profiles;
iv.    a process to document and satisfactorily support the CDD analysis; and

v.    processes to reasonably ensure the timely identification and accurate reporting of known or suspected criminal activity, as required by the suspicious activity reporting provisions of part 353 of the FDIC’s Rules and Regulations, 12 C.F.R. part 353.
(iii)    Risk-Based Customer Due Diligence:  The Bank must review and improve policies, procedures, and processes to conduct RBCDD necessary for those categories of customers the Bank has reason to believe pose a heightened risk of money laundering, terrorist financing, or other illicit activities.  The RBCDD policies, procedures, and processes adopted should, at a minimum:
(A)    consider the customer’s business activity, ownership structure, anticipated or actual volume, and types of transactions; 
(B)    operate in conjunction with its CIP and CDD policies, procedures, and processes;
(C)    determine the appropriate frequency for conducting ongoing reviews, based on customer risk level;
(D)    determine the appropriate documentation necessary to conduct and support ongoing reviews and analyses in order to reasonably understand the normal and expected transactions of the customer; 
(E)    reasonably ensure the timely identification and accurate and complete reporting of known or suspected criminal activity against or involving the Bank to law enforcement and supervisory authorities, as required by the suspicious activity reporting provisions of part 353 of the FDIC’s Rules and Regulations, 12 C.F.R. part 353; 
(F)    provide for the development of a high-risk customer list noting entities with multiple accounts and assignment of one risk rating across related accounts (High-Risk Customer List); and  

(G)    ensure the BSA Internal Controls operate in conjunction with each other and are consistent with account/transaction monitoring, including arranging for the dissemination of a High-Risk Customer List to appropriate departments within the Bank.
(c)    Independent Testing:  Within 240 days from the effective date of this ORDER, and periodically thereafter based on the Bank’s current Risk Profile, independent testing for compliance with the BSA must be conducted by either a qualified outside party with the requisite ability to perform such testing and analysis or by Bank personnel who are independent of the BSA function and who have the requisite ability to perform such testing and analysis.  The scope of the testing procedures performed and the test findings must be satisfactorily documented.  The results of each independent test, as well as any apparent exceptions noted during the testing, must be presented to the Board.  The Board must document the steps taken to correct any exceptions noted, address any recommendations made during each independent test, and record its actions in the minutes of the Board meetings.
The independent testing must, at a minimum, include:
(i)    an evaluation of the overall adequacy and effectiveness of the BSA/AML Compliance Program, including policies, procedures, and processes; 
(ii)    a review of the Bank’s Risk Assessment;
(iii)    appropriate risk-based transaction testing to verify the Bank’s adherence to the BSA (e.g., CIP, CDD, and RBCDD programs; SARs; Currency Transaction Reports (CTR) and CTR exemptions; and information sharing requests); 
(iv)    an evaluation of Bank management’s efforts to resolve apparent violations and deficiencies noted in previous audits and regulatory examinations; 
(v)    a review of staff training for adequacy, accuracy, and completeness; 
(vi)    a review of the effectiveness of the suspicious activity monitoring systems used for compliance with the BSA; 

(vii)    an assessment of the effectiveness of the Bank’s policy and the overall process for identifying and reporting suspicious activity, including a review of SAR-related documentation to determine its accuracy, timeliness, completeness; and 
(viii)    an assessment of the integrity and accuracy of management information systems used in the BSA/AML Compliance Program.  
(d)    BSA Officer and Resources:  Within 90 days from the effective date of this ORDER, the Bank must ensure that its designated BSA Officer has sufficient authority and resources (monetary, physical, and personnel) to effectively administer the BSA/AML Compliance Program.  At a minimum, the Bank must:
(i)perform a review of its BSA-related resources (monetary, physical, and staffing) and analyze whether current resource levels are adequate and appropriate, and develop policies, procedures, and processes requiring the periodic, not less than annually, review of these resources.  The review should also include, at a minimum, consideration of the Bank’s current size and growth plans, geographic areas served, products and services offered, changes in the BSA, the Risk Assessment, the Risk Profile, and the deficiencies and weaknesses identified in the 2019 ROE;
(ii)ensure an adequate level of BSA-related resources, including staffing, to implement the BSA/AML Compliance Program and ensure compliance with the BSA;
(iii)delegate sufficient authority to its designated BSA Officer to effectively coordinate, monitor, and ensure compliance with the BSA; and
(iv)develop policies, procedures, and processes requiring the BSA Officer to report directly to the Board or the Compliance Committee established under paragraph 5 of this ORDER with regard to matters related to the BSA.
(e)    Training:  The Bank must take all necessary steps, consistent with sound banking practices, to ensure that all appropriate personnel are aware of, and can comply with, the requirements of 

the BSA applicable to the individual’s specific responsibilities to assure the Bank’s compliance with the BSA.  Within 180 days from the effective date of this ORDER, the Bank must develop, adopt, and implement effective training programs designed for the Board, Bank management, and staff and their specific compliance responsibilities on all relevant aspects of laws, regulations, and Bank policies, procedures, and processes relating to the BSA (Training Program).  The Training Program must ensure that all appropriate personnel are aware of, and can comply with, the requirements of the BSA on an ongoing basis and, at a minimum, include:
(i)    an overview of the BSA for new staff along with specific training designed for their specific duties and responsibilities upon hiring;
(ii)    training on the Bank’s BSA/AML policies, procedures, and processes along with new rules and requirements as they arise for appropriate personnel designed to address their specific duties and responsibilities; 
(iii)    a requirement that the Bank fully document the training of each employee, including the designated BSA Officer(s), with respect to BSA/AML policies, procedures, and processes; and
(iv)    a requirement that training in these areas be conducted at least annually.

OFAC COMPLIANCE
3.     Within 60 days from the effective date of this ORDER, the Bank must review and analyze its compliance with the regulations issued by the Office of Foreign Assets Control (OFAC) and take all necessary action to ensure timely and complete compliance with the OFAC regulations.  

LOOK BACK REVIEW
4.    (a)      Within 60 days from the effective date of this ORDER, the Bank must engage a qualified firm acceptable to the Deputy Regional Director of the FDIC New York Regional Office and the 

Commissioner of the New Jersey Department of Banking and Insurance (Commissioner) to conduct a review of all accounts and transaction activity for the time period beginning January 1, 2019, through the effective date of this ORDER to determine whether reportable transactions and suspicious activity involving any accounts or transactions within or through the Bank were properly identified and reported in accordance with the applicable reporting requirements (Initial Look Back Review). 
(b)    Within 180 days of receipt of the Deputy Regional Director’s and the Commissioner’s non-objections regarding the proposed engagement of the qualified firm, the firm must complete the Initial Look Back Review and the Bank must prepare and file any additional CTRs and SARs necessary based upon the review.  Upon completion of the Initial Look Back Review, the Bank must immediately submit the findings of the review and copies of any additional SARs and CTRs filed to the Deputy Regional Director and the Commissioner.  
(c)    The Deputy Regional Director and the Commissioner may, in their sole discretion after reviewing the results of the Initial Look Back Review, provide written notification (Additional Look Back Review Notification) to the Bank requiring the firm selected to do the Initial Look Back Review, or another qualified firm acceptable to the Deputy Regional Director and the Commissioner (Additional Look Back Review Firm), to review all accounts and transaction activity for additional time periods to determine whether reportable transactions and suspicious activity involving any accounts or transactions within or through the Bank were properly identified and reported in accordance with the applicable reporting requirements and in a manner consistent with the written notification sent to the Bank (Additional Look Back Review).  The Additional Look Back Review Firm must complete the Additional Look Back Review and the Bank must prepare and file any additional CTRs and SARs necessary based upon the review within the timeframe established in the Additional Look Back Review Notification.  Upon completion of the Additional Look Back Review, the Bank must immediately submit the findings of the review and copies of any additional SARs and CTRs filed to the Deputy Regional Director and the Commissioner.

DIRECTORS’ COMPLIANCE COMMITTEE
5.     Within 30 days from the effective date of this ORDER, the Board must establish a directors’ BSA/AML compliance committee (Compliance Committee).  A majority of the Compliance Committee members may not now or have previously been involved in the daily operations of the Bank.  The Compliance Committee will have the responsibility of overseeing the Bank’s compliance with this ORDER, the BSA, and the Bank’s BSA/AML Compliance Program.  The Compliance Committee must receive monthly reports from the BSA Officer regarding the Bank’s compliance with this ORDER, the BSA, and the Bank’s BSA/AML Compliance Program.  The Compliance Committee must present a report to the Board at each regularly scheduled Board meeting regarding the Bank’s compliance with this ORDER, the BSA, and the Bank’s BSA/AML Compliance Program, and this report must be recorded in the appropriate minutes of the Board meeting and retained in the Bank’s records.  The establishment of this Compliance Committee does not diminish the responsibility or liability of the entire Board to ensure timely compliance with the provisions of this ORDER. 
 
CORRECTIVE ACTION
6.     Within 240 days from the effective date of this ORDER, the Bank must take all steps necessary, consistent with other provisions of this ORDER and sound banking practices, to eliminate and correct any unsafe or unsound banking practices and any violations of law or regulation cited in the 2019 ROE.  The Bank must take all steps necessary to ensure future compliance with all applicable laws and regulations.

PROGRESS REPORTS
7.     Within 30 days after the end of each calendar quarter following the effective date of this ORDER, the Bank must furnish to the Deputy Regional Director and the Commissioner written progress reports detailing the form, manner, and results of any actions taken to secure compliance with this ORDER.  All progress reports and other written responses to this ORDER must be reviewed and approved by the Board and be made a part of the Board minutes.  

NOTICE TO PARENT HOLDING COMPANY
8.     Within 30 days from the effective date of this ORDER, the Bank must provide either a copy of this ORDER or an accurate and complete description of all material aspects of the ORDER to its parent holding company.  

OTHER ACTIONS
9.     The provisions of this ORDER do not bar, estop, or otherwise prevent the FDIC or any other federal or state agency or department from taking any other action against the Bank or any of the Bank’s current or former institution-affiliated parties.

This ORDER is effective on the date of issuance and its provisions will remain effective and enforceable until such time as any provision is modified, terminated, suspended, or set aside in writing by the FDIC.  The provisions of this ORDER are binding upon the Bank, its institution-affiliated parties, and any successors and assigns thereof.   

Issued Under Delegated Authority.
Dated: July 8, 2020

/s/ Jessica A. Kaemingk
___________________________________                
By:    Jessica A. Kaemingk
Deputy Regional Director
New York Region
Federal Deposit Insurance Corporation

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