Document:

ex10-17.htm

    THE SECURITIES REPRESENTED BY THIS
CERTIFICATE (THE “WARRANTS”), AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THE WARRANTS
(THE “WARRANT SHARES”), HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS
AND NEITHER THE WARRANTS NOR THE WARRANT SHARES OR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR
TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

    

    
      	
              No. W-____

            	 
      	 
      	 
      	
              Number of
      Warrants:_________

               

            

    

    

    Original
Issue Date: November 3, 2008

    

    PACIFIC COAST NATIONAL
BANCORP

     WARRANT
CERTIFICATE

    

    Pacific
Coast National Bancorp, a California corporation (the “Company”), hereby
certifies that, for value received, __________________, or registered assigns,
is the registered holder (the “Holder”) of the number of warrants (“Warrants”)
set forth above, each Warrant entitling the Holder to purchase one share of the
Company’s common stock, par value $.01 per share (the “Shares”), at an exercise
price (the “Exercise Price”) of $4.75 per Share, subject to adjustment as
provided in Section 11 herein.

     

    The
Warrants evidenced by this Warrant Certificate are part of a series of similar
warrants issued by the Company on the Original Issue Date.

     

    
      	
               
      

            	
              1.

            	
              Term of
      Warrants.  The term for the exercise of the Warrants
      shall begin on the Original Issue Date and shall expire at 5:00 p.m. San
      Clemente, California time, on November 3, 2011 (the “Expiration
      Time”).

            

    

     

    
      	
               
      

            	
              2.

            	
              Exercise of
      Warrants.  The Holder may exercise the Warrants by
      delivering to the secretary of the Company: (i) this Warrant
      Certificate; (ii) a written notice to the Company specifying the
      number of Shares with respect to which the Warrants are being exercised;
      and (iii) a check for the full amount of the aggregate Exercise Price
      for the Shares being acquired.

            

    

     

    
      	
               
      

            	
              3.

            	
              Delivery of Shares; Partial
      Exercise.    Upon receipt of the items set
      forth in Section 2, and subject to the terms set forth herein, the
      Company shall promptly deliver to, and register in the name of, the Holder
      a certificate or certificates representing the number of Shares acquired
      by exercise of the Warrants, which shall contain a legend stating the
      restrictions on transfers of such Shares
as

            

    

    
       

       

      
        
           

        

        
           

          
          

        

        
           

        

      

       

       

       

      
        	
                 
      

              	
                 

              	
                described
      in Section 4. In the event of a partial exercise of the Warrants, a new
      Warrant Certificate, in substantially the form of this Warrant
      Certificate, evidencing the number of Shares that remain subject to the
      Warrants shall be issued by the Company to the Holder or to his, her or
      its duly authorized assigns.

              

      

       

    

    
      	
               
      

            	
              4.

            	
              Restrictions on
      Transfer.  By accepting the Warrants evidenced by this
      Warrant Certificate, the Holder represents that the Holder understands
      that the Warrants and the Shares that may be acquired upon exercise of the
      Warrants have not been registered under the Securities Act of 1933, as
      amended (the “Securities Act”), or any state securities laws and further
      understands that neither the Warrants nor the Shares acquired upon
      exercise of the Warrants or any interest therein may be offered, sold,
      pledged, assigned or otherwise transferred unless (a) a registration
      statement with respect thereto is effective under the Act and any
      applicable state securities laws or (b) the Company receives an opinion of
      counsel, which counsel and opinion are satisfactory to the Company, to the
      effect that such securities may be offered, sold, pledged, assigned or
      transferred in the manner contemplated without an effective registration
      statement under the Act or applicable state securities
    laws.

            

    

     

    
      	
               
      

            	
              5.

            	
              Registration of Transfer and
      Exchange.    

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Company shall keep, or cause to be kept, at its principal place of
      business or at such other location designated by the Company, a register
      or registers in which, subject to such reasonable regulations as the
      Company may prescribe and subject to compliance with Section 4, a
      registrar and transfer agent (the “Securities Registrar”) shall register
      this Warrant Certificate and any transfers thereof as permitted hereby
      (“Securities Register”).  The initial Securities Registrar shall
      be the secretary of the Company, and thereafter, the Securities Registrar
      may be removed and/or appointed as authorized by the
    Company.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Upon
      surrender of this Warrant Certificate for registration of transfer,
      subject to compliance with Section 4, the Company shall issue and deliver
      to the Holder or his, her or its duly authorized assigns, one or more new
      Warrant Certificates of like tenor and in like aggregate
      amount.

            

    

     

    
      	
               
      

            	
              (c)

            	
              At
      the option of the Holder, this Warrant Certificate may be exchanged for
      other Warrant Certificates of like tenor and in like aggregate amount upon
      surrender of the Warrant Certificates to be exchanged. Upon such
      surrender, the Company shall issue and deliver to the Holder or his, her
      or its duly authorized assigns, one or more new Warrant Certificates of
      like tenor and in like aggregate
amount.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Upon
      presentation or surrender of this Warrant Certificate for registration of
      transfer or exchange, in addition to complying with Section 4, this
      Warrant Certificate shall be accompanied (if so required by the Company or
      the Securities Registrar) by a written instrument or instruments of
      transfer, in form satisfactory to the Company or the Securities Registrar,
      duly

            

    

     

     

    
      
         

      

      
        2

        
        

      

      
         

      

    

     

     

    
       

      
        	
                 
      

              	
                 

              	
                executed
      by the registered Holder or by such Holder’s duly authorized attorney in
      writing.

              

      

       

    

    
      	
               
      

            	
              6.

            	
              Replacement of Warrant
      Certificates.    

            

    

     

    
      	
               
      

            	
              (a)

            	
              Upon
      receipt of evidence reasonably satisfactory to the Company of the loss,
      theft, destruction or mutilation of this Warrant Certificate and, in the
      case of loss, theft or destruction, on delivery of an indemnity agreement
      reasonably satisfactory in form and amount to the Company or, in the case
      of mutilation, on surrender and cancellation of this Warrant Certificate,
      the Company shall issue and deliver to the Holder or his, her or its duly
      authorized assigns, one or more new Warrant Certificates of like tenor and
      in like aggregate amount. In the case of loss, theft or destruction of
      this Warrant Certificate, prior to the issuance of a replacement Warrant
      Certificate, the Company may also require that a bond be posted in such
      amount as the Company may determine is necessary as indemnity against any
      claim that may be made against it with respect to such Warrant
      Certificate.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Warrants evidenced by this Warrant Certificate shall be held and owned
      under the express condition that the provisions of this Section are
      exclusive with respect to the replacement of this Warrant Certificate in
      the event of its mutilation, destruction, loss or theft and shall preclude
      (to the extent lawful) all other rights and remedies, notwithstanding any
      law or statute existing or hereafter enacted to the contrary with respect
      to the replacement or payment of negotiable instruments or other
      securities without their surrender.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Upon
      the issuance of a new Warrant Certificate under this Section, the Company
      may require the payment of a sum sufficient to cover any tax or other
      governmental charge that may be imposed in relation thereto and any other
      expenses (including the fees and expenses of the Company and its agents
      and counsel) connected therewith.

            

    

     

    
      	
               
      

            	
              7.

            	
              Persons Deemed
      Holders.    Prior to the due presentment of
      this Warrant Certificate for registration of transfer or exchange, the
      Company, any Securities Registrar and any other agent of the Company may
      treat the person in whose name this Warrant Certificate is registered in
      the Securities Register as the sole Holder of this Warrant Certificate and
      of the Warrants represented by this Warrant Certificate for all purposes
      whatsoever, and shall not be bound to recognize any equitable or other
      claim to or interest in this Warrant Certificate or in the Warrants
      represented by this Warrant Certificate on the part of any person and
      shall be unaffected by any notice to the
  contrary.

            

    

     

    
      	
               
      

            	
              8.

            	
              Cancellation.    Upon
      surrender for the purpose of exercise, exchange or registration of
      transfer, this Warrant Certificate shall be cancelled by the Securities
      Registrar, and no Warrant Certificates shall be issued in lieu thereof,
      except as expressly permitted by the provisions
  hereof.

            

    

        

     

    
      
         

      

      
        3

        
        

      

      
         

      

    

     

     

    
       

      
        	
                 
      

              	
                9.

              	
                Stock
      Dividends, Splits, Etc.

              

      

       

    

    
      	
               
      

            	
              (a)

            	
              If,
      prior to the Expiration Time, the Company shall subdivide its outstanding
      Shares into a greater number of Shares, or declare and pay a dividend of
      its Shares payable in additional Shares, the Exercise Price, as then in
      effect, shall be proportionately reduced, and the Company shall
      proportionately increase the number of Shares then subject to exercise
      under the Warrants (and not previously exercised) evidenced by this
      Warrant Certificate.

            

    

     

    
      	
               
      

            	
              (b)

            	
              If,
      prior to the Expiration Time, the Company shall combine its outstanding
      Shares into a lesser number of Shares, the Exercise Price, as then in
      effect, shall be proportionately increased, and the Company shall
      proportionately reduce the number of Shares then subject to exercise under
      the Warrants (and not previously exercised) evidenced by this Warrant
      Certificate.

            

    

     

    
      	
               
      

            	
              10.

            	
              Reorganization,
      Reclassifications, Consolidation or
      Merger.    If, prior to the Expiration Time,
      there shall be a reorganization or reclassification of the Shares (other
      than as provided in Section 9 hereof), or any consolidation or merger
      of the Company with another entity, the Holder shall be entitled to
      receive, during the remainder of the term of the Warrants and upon payment
      of the Exercise Price, the number of shares of stock or other securities
      or property of the Company or of the successor entity (or its parent
      company) resulting from such consolidation or merger, as the case may be,
      to which a holder of Shares, deliverable upon the exercise of the
      Warrants, would have been entitled upon such reorganization,
      reclassification, consolidation or merger; and, in any case, the Company
      shall make appropriate adjustments (as determined by the board of
      directors of the Company in its sole discretion) in the application of the
      provisions with respect to the rights and interests of the Holder so that
      the provisions set forth herein (including the adjustment to the Exercise
      Price and the number of Shares issuable upon exercise of the Warrants)
      shall be applicable, as nearly as may be practicable, to any shares or
      other property thereafter deliverable upon the exercise of the
      Warrants.

            

    

     

    
      	
               
      

            	
              11.

            	
              Certificate as to Adjustments;
      Issuance of New Warrant Certificates.    Within
      thirty (30) days following any adjustment provided for in
      Section 9 or 10 hereof, the Company shall give written notice of the
      adjustment to the Holder as provided in Section 13(a) hereof. The
      notice shall state the Exercise Price as adjusted and the increased or
      decreased number of shares purchasable upon the exercise of the Warrants
      and shall set forth in reasonable detail the method of calculation for
      each. Notwithstanding anything to the contrary set forth herein, the
      Company may, at its option, issue a new Warrant Certificate evidencing the
      Warrants, in such form as may be approved by the Company, to reflect any
      adjustment or change in the Exercise Price and the number or kind of stock
      or other securities or property purchasable upon exercise of the
      Warrants.

            

    

     

    
      	
               
      

            	
              12.

            	
              Fractional
      Shares.    The Company shall not be required to
      issue fractional Shares upon the exercise of Warrants. Warrants
      exercisable for fractional Shares
shall

            

    

     

     

    
      
         

      

      
        4

        
        

      

      
         

      

    

     

     

    
       

      
        	
                 
      

              	
                 

              	
                expire
      as of the Expiration Date, and the Holder of such Warrants shall not be
      entitled to any consideration of any kind or nature in respect of such
      Warrants.

              

      

       

    

    
      	
               
      

            	
              13.

            	
              Miscellaneous.    

            

    

     

    
      	
               
      

            	
              (a)

            	
              Any
      notice or other communication required or permitted to be made hereunder
      shall be in writing, duly signed by the party giving such notice or
      communication and shall be deemed delivered and effective when given
      personally or mailed by first-class registered or certified mail, postage
      prepaid as follows (or at such other address for a party as shall be
      specified by like notice): (i) if given to the Company, at 905
      Calle Amanecer, Suite 100, San Clemente, California 92673; and
      (ii) if given to the Holder, at the address set forth for the Holder
      on the books and records of the Company. A notice given to the Company by
      the Holder with respect to the exercise of the Warrants shall not be
      effective until received by the
Company.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Company shall at all times, reserve and keep available out of its
      authorized and unissued Shares or out of any Shares held in treasury that
      number of Shares that will from time to time be sufficient to permit the
      exercise in full of all outstanding Warrants evidenced by this Warrant
      Certificate. The Company shall take all such action as may be necessary to
      ensure that all Shares delivered upon exercise of any Warrants shall, at
      the time of delivery of the certificates for such Shares, be duly
      authorized, validly issued, fully paid and
  nonassessable.

            

    

     

    
      	
               
      

            	
              (c)

            	
              The
      Company shall pay when due and payable any and all federal and state
      transfer taxes and charges (other any applicable income taxes) that may be
      payable in respect of the issuance and delivery of Warrant Certificates or
      of certificates for Shares receivable upon the exercise of the Warrants;
      provided, however, that the Company shall not be required to pay any tax
      that may be payable in respect of the issuance and delivery (i) of
      any Warrant Certificate or stock certificate registered in a name other
      than that of the Holder of the Warrant Certificate that has been
      surrendered, or (ii) of any Warrant Certificate under
      Section 6.

            

    

     

    
      	
               
      

            	
              (d)

            	
              No
      Holder, in his capacity as such, shall be entitled to vote or receive
      dividends or shall be deemed from any other purpose the holder of the
      Shares or other securities which may at any time be issuable upon the
      exercise of such Warrants. Nothing contained herein shall be construed to
      confer upon any Holder, in his capacity as such, any of the rights of a
      shareholder of the Company, including any right to vote for the election
      of directors or upon any matter submitted to shareholders of the Company
      at any meeting thereof, to give or withhold consent to any corporation
      action, or to receive notices of meeting or other actions affecting
      shareholders.

            

    

     

    
      	
               
      

            	
              (e)

            	
              The
      Holder, by accepting this Warrant Certificate, accepts and agrees to the
      terms set forth herein.  Such terms shall be binding upon the
      Company and the Holder and their respective heirs, successors,
      representatives and

            

    

     

     

    
      
         

      

      
        5

        
        

      

      
         

      

    

     

     

    
       

      
        	
                 
      

              	
                 

              	
                permitted
      assigns. Nothing expressed or referred to herein is intended or will be
      construed to give any person other than the Company or the Holder any
      legal or equitable right, remedy or claim under or in respect hereof, or
      any provision herein contained, it being the intention of the Company and
      the Holder that this Warrant Certificate, the assumption of obligations
      and statements of responsibilities hereunder, and all other conditions and
      provisions hereof are for the sole benefit of the Company and the Holder
      and for the benefit of no other
person.

              

      

       

    

    
      	
               
      

            	
              (f)

            	
              The
      headings contained in this Warrant Certificate are for convenience of
      reference only and will not affect in any way the meaning or
      interpretation of this Warrant Certificate. The words “hereof,” “herein”
      and “hereunder” and words of similar import when used in this Warrant
      Certificate shall refer to this Warrant Certificate as a whole and not to
      any particular provision in this Warrant Certificate. Each use herein of
      the masculine, neuter or feminine gender shall be deemed to include the
      other genders. Each use herein of the plural shall include the singular
      and vice versa, in each case as the context requires or as is otherwise
      appropriate. The word “or” is used in the inclusive sense. References to a
      person are also to his, her or its permitted successors or assigns. No
      provision of this Warrant Certificate is to be construed to require,
      directly or indirectly, any person to take any action, or omit to take any
      action, which action or omission would violate applicable law (whether
      statutory or common law), rule or
regulation.

            

    

     

    
      	
               
      

            	
              (g)

            	
              In
      the event that any provision of this Warrant Certificate shall be deemed
      to be invalid, illegal or unenforceable, the validity, legality or
      enforceability of the remaining provisions shall not in any way be
      affected or impaired thereby.

            

    

     

    
      	
               
      

            	
              (h)

            	
              THIS
      WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY SHALL BE GOVERNED
      BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
      WITHOUT REGARD TO THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
      PRINCIPLES OF CONFLICTS OF LAWS. IN THE EVENT OF A DISPUTE INVOLVING THIS
      WARRANT CERTIFICATE OR THE WARRANTS EVIDENCED HEREBY, THE COMPANY AND THE
      HOLDER, BY ACCEPTING THIS WARRANT IRREVOCABLY AGREE THAT VENUE FOR SUCH
      DISPUTE SHALL LIE EXCLUSIVELY IN THE STATE AND FEDERAL COURTS LOCATED IN
      (OR CONTAINING WITHIN THEIR JURISDICTIONAL AREAS) SAN CLEMENTE,
      CALIFORNIA.

            

    

     

    [Signature
page follows]

     

    
      
         

      

      
        6

         

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.

     

    

    Dated as of November 3, 2008.

    

    
      	 
      	 
      	
              PACIFIC COAST NATIONAL
      BANCORP,

               a California
      corporation

            

    

    

    
      	 
      	 
      	
              By:

            	 
      	 
      
	 
      	 
      	
              Name:

            	 
      	 
      
	 
      	 
      	
              Title:

            	 
      	 
      

    

    

    

    
      	
              [SEAL]

            	 
      	 
      

    

    

    

    

    
      	
              Attest:

            	 
      	 
      

    

    

    
      	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      

    

    

     

    

     

    

    
      
         

      

      
        7ex10-12.htm

    UNITED STATES OF AMERICA

    Before
the

    OFFICE
OF THRIFT SUPERVISION

    

    

    
      
        	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	
                In
      the Matter of

              	
                )

              	
                Order
      No.: CN09-13

              
	 
      	
                )

              	 
      
	
                MAINSTREET
      SAVINGS BANK, FSB

              	
                )

              	
                Effective
      Date: May 29, 2009

              
	 
      	
                )

              	 
      
	
                Hastings,
      Michigan

              	
                )

              	 
      
	
                OTS
      Docket No. 00966

              	
                )

              	 
      
	 
      	
                )

              	 
      

      

    

    

    STIPULATION AND CONSENT TO
ISSUANCE OF ORDER TO CEASE AND DESIST

    

    WHEREAS, the Office of Thrift
Supervision (OTS), acting by and through its Regional Director for the Central
Region (Regional Director), and based upon information derived from the exercise
of its regulatory and supervisory responsibilities, has informed MAINSTREET SAVINGS BANK, FSB, Hastings,
Michigan, OTS Docket No. 00966 (Association) that OTS is of the opinion that
grounds exist to initiate an administrative proceeding against the Association
pursuant to 12 USC § 1818(b);

    WHEREAS, the Regional
Director, pursuant to delegated authority, is authorized to issue Orders to
Cease and Desist where a savings association has consented to the issuance of an
order; and

    WHEREAS, the Association
desires to cooperate with OTS to avoid the time and expense of such
administrative cease and desist proceeding by entering into this Stipulation and
Consent to the Issuance of Order to Cease and Desist (Stipulation) and, without
admitting or denying that such grounds exist, but only admitting the statements
and conclusions in Paragraph I below concerning Jurisdiction, hereby stipulates
and agrees to the following terms:

    
      
         

      

      
         

         

      

      
         

      

    

    

    
      
        	
                1.

              	
                Jurisdiction

              
	 
      	
                a.

              	
                The
      Association is a "savings association" within the meaning of 12 USC §
      1813(b) and 12 USC § 1462(4). Accordingly, the Association is "an insured
      depository institution" as that term is defined in 12 USC § 1813(c);
      and

              
	 
      	
                b.

              	
                Pursuant
      to 12 USC § 18 13(q), the Director of OTS is the "appropriate Federal
      banking agency" with jurisdiction to maintain an administrative
      enforcement proceeding against a savings association. Therefore, the
      Association is subject to the authority of OTS to initiate and maintain an
      administrative cease and desist proceeding against it pursuant to 12 USC §
      1818(b).

              

      

    

    

     

    
      
        	
                2.

              	
                OTS Findings of Fact

              
	 
      	
                Based
      on a November 17, 2008 comprehensive examination of the Association, OTS
      finds that the Association has engaged in unsafe and unsound banking
      practices, that resulted in the Association operating with an inadequate
      level of capital for the kind and quality of assets held, a large volume
      of nonearning assets, and low
earnings.

              

      

    

    

     

    
      
        
          	
                  3.

                	
                  Consent

                
	 
      	
                  The
      Association consents to the issuance by OTS of the accompanying Order to
      Cease and Desist (Order). The Association further agrees to comply with
      the terms of the Order upon the Effective Date of the Order and stipulates
      that the Order complies with all requirements of law.

                
	
                  4.

                	
                  Finality

                
	 
      	
                  The
      Order is issued by OTS under 12 USC § 1818(b) and upon the Effective Date
      it shall be a final order, effective and fully enforceable by OTS under
      the provisions of 12 USC §
1818(i).

                

        

      

    

    
      
         

      

      
        2

         

      

      
         

      

    

    

    
      
        	
                5.

              	
                Waivers

              
	 
      	
                The
      Association waives the
following:

              

      

    

     

    
      	 
      	
              a.

            	
              The
      right to be served with a written notice of OTS's charges against it as
      provided by 12 USC § 1818(b) and 12 CFR Part 509;

            
	 
      	
              b.

            	
              The
      right to an administrative hearing of OTS's charges as provided by 12 USC
      § 1818(b) and 12 CFR Part 509;

            
	 
      	
              c.

            	
              The
      right to seek judicial review of the Order, including, without limitation,
      any such right provided by 12 USC § 1818(h), or otherwise to challenge the
      validity of the Order; and

            
	 
      	
              d.

            	
              Any
      and all claims against OTS, including its employees and agents, and any
      other governmental entity for the award of fees, costs, or expenses
      related to this OTS enforcement matter and/or the Order, whether arising
      under common law, federal statutes or
otherwise.

            

    

     

    
      
        
          	
                  6.

                	
                  OTS Authority Not
  Affected

                
	 
      	
                  Nothing
      in this Stipulation or accompanying Order shall inhibit, estop, bar or
      otherwise prevent OTS from taking any other action affecting the
      Association if at any time OTS deems it appropriate to do so to fulfill
      the responsibilities placed upon OTS by law.

                
	
                  7.

                	
                  Other Governmental Actions Not
      Affected

                
	 
      	
                  The
      Association acknowledges and agrees that its consent to the issuance of
      the Order is solely for the purpose of resolving the matters addressed
      herein, consistent with Paragraph 6 above, and does not otherwise release,
      discharge. compromise, settle, dismiss, resolve, or in any way affect any
      actions, charges against, or liability of the Association that arise
      pursuant to this action or otherwise, and that may be or have been brought
      by any governmental entity other than
OTS.

                

        

      

    

    

     

    
      
         

      

      
        3

         

      

      
         

      

    

    

     

    
      	
              8.

            	
              Miscellaneous

            
	 
      	
              a.

            	
              The
      laws of the United States of America shall govern the construction and
      validity of this Stipulation and of the Order;

            
	 
      	
              b.

            	
              If
      any provision of this Stipulation and/or the Order is ruled to be invalid.
      illegal, or unenforceable by the decision of any Court of competent
      jurisdiction, the validity, legality, and enforceability of the remaining
      provisions hereof shall not in any way be affected or impaired thereby,
      unless the Regional Director in his or her sole discretion determines
      otherwise;

            
	 
      	
              c.

            	
              All
      references to OTS in this Stipulation and the Order shall also mean any of
      the OTS's predecessors, successors, and assigns;

            
	 
      	
              d.

            	
              The
      section and paragraph headings in this Stipulation and
      the Order are for convenience only and shall not affect the interpretation
      of this
      Stipulation or the Order;

            
	 
      	
              e.

            	
              The
      terms of this Stipulation and of the Order represent the final agreement
      of the parties with respect to the subject matters thereof, and constitute
      the sole agreement of the parties with respect to such subject matters;
      and

            
	 
      	
              f.

            	
              The
      Stipulation and Order shall remain in effect until terminated, modified,
      or suspended in writing by OTS, acting through its Regional Director or
      other authorized representative.

            

    

     

    
      
        	
                9.

              	
                Signature of Directors/Board
      Resolution

              
	 
      	
                Each
      Director signing this Stipulation attests that he or she voted in favor of
      a Board Resolution authorizing the consent of the Association to the
      issuance of the Order and the execution of the
  Stipulation.

              

      

    

    

     

    
      
         

      

      
        4

         

      

      
         

      

    

    WHEREFORE,
the Association, by its directors, executes this Stipulation.

     

    
      	 
      	 
      	 
      	
              Accepted
      by:

            
	 
      	 
      	 
      	 
      
	
              MAINSTREET
      SAVINGS BANK, FSB

              Hastings,
      Michigan

            	 
      	
              OFFICE
      OF THRIFT SUPERVISION

            
	 
      	 
      	 
      	 
      
	
              By:

            	 /s/
      Gordon F. Fuhr 	
              By:

            	 
      /s/ Daniel T. McKee
	 
      	
              Gordon
      F. Fuhr, Chairman

            	 
      	
              Daniel
      T. McKee

              Acting
      Regional Director, Central Region

            
	 
      	 
      	 
      	 
      
	 
      	 /s/
      Eric T. Dreisbach 	 
      	
              Date:
      See Effective Date on page 1

            
	 
      	
              Eric
      T. Dreisbach, Director

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 /s/
      David L. Hatfield 	 
      	 
      
	 
      	
              David
      L. Hatfield, Director

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 /s/
      Mary Lou Hart 	 
      	 
      
	 
      	
              Mary
      Lou Hart, Director

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 /s/
      David L. Jasperse 	 
      	 
      
	 
      	
              David
      L. Jasperse, Director

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 /s/
      Carl A. Schoessel 	 
      	 
      
	 
      	
              Carl
      A. Schoessel, Director

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 /s/
      James R. Toburen 	 
      	 
      
	 
      	
              James
      R. Toburen, Director

            	 
      	 
      
	 
      	 
      	 
      	 
      

    

    

    

    

    

    
      
         

      

      
        5

         

      

      
         

      

    

    UNITED
STATES OF AMERICA

    

    Before
the

    

    OFFICE
OF THRIFT SUPERVISION

    

    

    
      
        	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	
                In
      the Matter of

              	
                )

              	
                Order
      No.: CN09-13

              
	 
      	
                )

              	 
      
	
                MAINSTREET
      SAVINGS BANK, FSB

              	
                )

              	
                Effective
      Date:  May 29, 2009

              
	 
      	
                )

              	 
      
	
                Hastings,
      Michigan

              	
                )

              	 
      
	
                OTS
      Docket No. 00966

              	
                )

              	 
      
	 
      	
                )

              	 
      

      

    

    

     

    ORDER TO CEASE AND
DESIST

     

    WHEREAS, MAINSTREET SAVINGS BANK,
FSB, Hastings, Michigan, OTS Docket No. 00966 (Association), by and
through its Board of Directors (Board) has executed a Stipulation and Consent to
the Issuance of an Order to Cease and Desist (Stipulation); and

    WHEREAS, the Association, by
executing the Stipulation, has consented and agreed to the issuance of this
Order to Cease and Desist (Order) by the Office of Thrift Supervision (OTS)
pursuant to 12 USC § 1818(b); and

    WHEREAS, pursuant to delegated
authority, the OTS Regional Director for the Central Region (Regional Director),
is authorized to issue Orders to Cease and Desist where a savings association
has consented to the issuance of an order.

    NOW,
THEREFORE, IT IS ORDERED that:

    

    
      
        
          
            	
                    1.

                  	
                    The
      Association and its directors, officers, and employees shall cease and
      desist from any action (alone or with others) for or toward causing,
      bringing about, participating in or counseling, or the aiding and abetting
      of all unsafe or unsound practices that resulted in the Association
      operating with inadequate capital in relation to the kind and quality of
      assets held by the Association, a large volume of nonearning assets, and
      low earnings.

                  

          

        

      

    

    

    
      
         

      

      
         

         

      

      
         

      

    

    Capital

    

    
      
        
          	
                  2.

                	
                  a.

                	
                  Within
      ninety (90) days and at all times thereafter, the Association shall have
      and maintain: (a) a Tier 1 (Core) Capital Ratio of at least eight percent
      (8%) and (b) a Total Risk-Based Capital Ratio of at least twelve percent
      (12 %).

                

        

      

    

    

    
      
        	 
      	
                b.

              	
                Effective
      immediately, the Board shall review the Association's capital levels at
      each regular monthly Board meeting and ensure that the Association
      continually assesses the sufficiency of the Association's capital levels
      relative to its risk profile, including but not limited to, such risks as:
      classified asset levels and core earnings. The trends in such risks shall
      also be reviewed and monitored by the Board. The Board's review of capital
      adequacy and any actions to be taken shall be fully detailed in
      the Board meeting
minutes.

              

      

    

    

    
      
        	 
      	
                c.

              	
                Within
      thirty (30) days, the Association shall, pursuant to Board authorization,
      submit to the Regional Director a written contingency plan acceptable to
      the Regional Director that will be implemented by the Association in the
      event the Association falls below adequately capitalized as defined in 12
      CFR § 565.4(b)(2) (Contingency Plan). At a minimum, the Contingency Plan
      shall detail the actions to be taken within specific time frames to
      achieve one of the following results: (i) merger with or acquisition by
      another federally insured institution or holding company thereof, or (ii)
      voluntary liquidation by, among other things, filing the appropriate
      applications with OTS in conformity with federal laws and regulations. The
      Contingency Plan shall be implemented immediately if the Association falls
      below adequately capitalized or upon notification by the Regional Director
      of the requirement to implement the Contingency Plan. Once implemented,
      the Association shall submit to the Regional Director written status
      reports detailing the Association's actions taken and progress in
      implementing the Contingency Plan no later than the 1st and 15th days of
      each month.

              

      

    

    

    Asset
Ouality

    

    
      
        	
                3.

              	
                a.

              	
                Effective
      immediately, unless otherwise approved in writing by the Regional
      Director, the Association shall originate only the following types of
      loans pursuant to its current underwriting policies and
      procedures:

              

      

    

    

    
      
        	 
      	 
      	
                i.

              	
                one-to-four
      family residential real estate first lien, prime loans with a
      loan-to-value ratio of no more than 80% without private mortgage
      insurance, a principal amount of no more than $275,000, and conforming in
      all other respects with government-sponsored enterprise (GSE) or
      government agency purchase requirements;
and

              

      

    

    
      
         

      

      
        2

         

      

      
         

      

    

    

    
      
        	 
      	 
      	
                ii.

              	
                Fully
      collateralized savings account
loans.

              

      

    

    

    
      
        
          	 
      	
                  b.

                	
                  The
      Association shall not modify, renew, or restructure any existing loans if
      such modification, renewal, or restructuring results in new funds being
      disbursed to the borrower.

                
	 
      	
                  c.

                	
                  Within
      thirty (30) days, the Association shall provide
      to the Regional Director a list of all loans-in-process and legally
      binding loan commitments outstanding as of the Effective Date of this
      Order and may fund such obligations and
  commitments.

                

        

      

    

    

    
      
        
          
            	
                    4.

                  	
                    a.

                  	
                    On
      a quarterly basis, the Board shall prepare a classified asset report that
      includes, at a minimum, the
following:

                  

          

        

      

    

    

    
      
        
          
            	 
      	 
      	 
      	
                    i.

                  	
                    Identification
      of each asset classified under the Association's asset classification
      policy;

                  
	 
      	 
      	 
      	
                    ii.

                  	
                    A
      brief narrative summary outlining the current status of each classified
      asset, along with the specific identification of any change in the status
      of a classified asset from the prior reporting period;
  and

                  
	 
      	 
      	 
      	
                    iii.

                  	
                    Copies
      of Loan Review Committee minutes, for all meetings held during the
      previous quarter.

                  

          

        

      

    

    

    
      
        	 
      	
                b.

              	
                Within
      30 days of the close of each quarter, the Board shall provide the Regional
      Director with a copy of the classified asset report required by this
      paragraph.

              

      

    

    

    
      
        	
                5.

              	
                a.

              	
                Within
      forty-five (45) days, the Board shall adopt an internal asset review
      program for the Association in accordance with OTS CEO Ltr 140 (May 17,
      2001) that establishes a program of independent loan review that will
      provide for a regular review of the Association's loan portfolio and the
      independent identification and classification of problem credits and
      assets as required by 12 CFR § 560.160 (Internal Asset Review Program). At
      a minimum, the Internal Asset Review Program shall provide
      for:

              

      

    

    

    
      
        	 
      	 
      	
                i.

              	
                Prompt
      identification of loans with credit weaknesses that warrant the special
      attention of management, including the name of the borrower, amount of the
      loan, reason why the loan warrants special attention, and the assessment
      of the degree of risk that the loan will not be fully repaid according to
      its terms;

              

      

    

    
      
         

      

      
        3

         

      

      
         

      

    

    

    
      
        	 
      	 
      	
                ii.

              	
                Action
      plans to reduce the Association's risk exposure from each identified
      relationship;

              
	 
      	 
      	
                iii.

              	
                Assessment
      of the overall quality of the loan portfolio;

              
	 
      	 
      	
                iv.

              	
                Identification
      of credit and collateral documentation exceptions and an action plan to
      address the identified deficiencies;

              
	 
      	 
      	
                v.

              	
                Identification
      of any loans that are not in conformance with the Association's lending
      policy and an action plan to address the identified deficiencies;
      and

              
	 
      	 
      	
                vi.

              	
                A
      mechanism for reporting periodically, but in no event less than quarterly,
      the information developed in (i) through (v) above to the Board. The
      report shall also describe the action(s) taken by management with respect
      to criticized assets.

              

      

    

    

    
      
        	 
      	
                b.

              	
                Within
      five (5) days of Board approval of the Internal Asset Review Program, the
      Board shall forward a copy of the Internal Asset Review Program to the
      Regional Director for review and comment. Within ten (10) days of receipt
      of any comments from the Regional Director, the Board shall amend the
      Internal Asset Review Program to incorporate the comments. The Board shall
      adopt the amended Internal Asset Review Program and provide a copy of the
      amended Internal Asset Review Program to the Regional Director within five
      (5) days of Board approval of any
revisions.

              

      

    

    

    
      
        	
                6.

              	
                a.

              	
                Within
      thirty (30) days, the Board shall revise the Association's nonhomogeneous
      loan administration policies and procedures addressed on pages 10-14 of
      the OTS Report of Examination dated November 17, 2008
    (ROE).

              
	 
      	
                b.

              	
                Within
      five (5) days after Board adoption of the revisions required by
      subparagraph (a) above, the Board shall provide the revised loan
      administration policies and procedures to the Regional Director for review
      and comment. Within ten (10) days of receipt of any comments from the
      Regional Director, the Board shall amend the loan administration policies
      and procedures to incorporate any comments. The Board shall adopt the
      revised loan administration policies and procedures and provide a copy of
      such policies and procedures to the Regional Director within five (5) days
      of Board approval.

              

      

    

    

    
      
         

      

      
        4

         

      

      
         

      

    

    Business
Plan

    

    
      
        	
                7.

              	
                a.

              	
                The
      Board shall revise its current three-year business plan (Revised Business
      Plan), to include the requirements contained within this Order and the
      comments contained within the ROE, as well as ensuring, at a minimum,
      inclusion of the following:

              

      

    

    

    
      
        	 
      	 
      	
                (i)

              	
                Defined
      strategies for capital enhancement commensurate with the capital
      maintenance requirement of paragraph 2 above; and

              
	 
      	 
      	
                (ii)

              	
                Emphasis
      on reducing classified assets and operating
  expenses.

              

      

    

    

    
      
        	 
      	
                b.

              	
                By June
      30, 2009, the Board shall submit the Revised Business Plan to the Regional
      Director.

              
	 
      	
                c.

              	
                Once
      the Board has adopted the Revised Business Plan, the Association must
      operate within the parameters of its Revised Business Plan. Any proposed
      material deviations from the Revised Business Plan, including changes
      proposed by the Association, must be submitted for the prior, written
      non-objection of the Regional Director. Requests for any material
      deviations or changes must be submitted at least sixty (60) days before a
      proposed change is implemented.

              
	 
      	
                d.

              	
                On
      a quarterly basis, beginning with the first quarter following receipt of
      the Regional Director's comments on or non-objection to the Revised
      Business Plan, the Board shall compare projected operating results
      contained within the Revised Business Plan to actual results (variance
      analysis report).

              
	 
      	
                e.

              	
                The
      Board shall review the variance analysis reports each quarter and conduct
      a thorough and diligent review and assessment of management's
      implementation of and the Association's compliance with the approved
      Revised Business Plan. The Board's review of the variance report and
      assessment of management and the Association's compliance shall be fully
      documented in the appropriate Board meeting minutes. Within thirty (30)
      days of the close of each quarter, the Board shall provide the Regional
      Director with a copy of the variance analysis report required by this
      paragraph.

              

      

    

    

    Remediation of ROE
Comments

    

    
      
        	
                8.

              	 
      	
                Within
      sixty (60) days, the Board shall develop, adopt, and implement specific
      actions to ensure that the Association addresses all Matters Requiring
      Board Attention and corrective actions noted in the ROE. The minutes of
      Board meetings shall document each such action adopted and the measures
      implemented, if any, to prevent
recurrence.

              

      

    

     

    
      
         

      

      
        5

         

      

      
         

      

    

    Liquidity Management
Policy

    

    
      
        	
                9.

              	 
      	
                By
      June 30, 2009, the Board shall review and revise the Association's
      Liquidity Management Policy to address the comments and corrective actions
      on pages 27-32 of the ROE.

              

      

    

    

    Restriction on Asset
Growth

    

    
      
        	
                10.

              	 
      	
                Without
      the prior written approval of the Regional Director and consistent with
      the requirements and provisions of OTS Regulatory Bulletin 3b, the
      Association shall not increase its total assets during any quarter in
      excess of an amount equal to net interest credited on deposit liabilities
      during the quarter.

              

      

    

    

    Notice of Change of Director
or Senior Executive Officer

    

    
      
        	
                11.

              	 
      	
                The
      Association shall comply with the prior notification requirements for
      changes in directors and Senior Executive Officers set forth in 12 CFR
      Part 563, Subpart H. Specifically, the Association must notify OTS at
      least thirty (30) days before adding or replacing any member of its Board,
      employing any person as a Senior Executive Officer, or changing the
      responsibilities of any Senior Executive Officer so that the person would
      assume a different senior executive officer
  position.

              

      

    

    

    Brokered
Deposits

    

    
      
        	
                12.

              	 
      	
                The
      Association shall not accept brokered deposits except in compliance with
      12 CFR § 337.6(b)(2) without obtaining the prior written approval of the
      Federal Deposit Insurance Corporation (FDIC). The Association shall comply
      with applicable interest rate restrictions contained in 12 CFR § 337.6.
      The Association shall provide the OTS Regional Director with: (a) a copy
      of any waiver request from the Association to the FDIC and (b) a copy of
      the response received from the FDIC to any request for such a waiver by
      the Association.

              

      

    

    

    Severance and
Indemnification Payments

    

    
      
        	
                13.

              	 
      	
                The
      Association shall not make any golden parachute payment, as that term is
      defined in 12 CFR § 359.1(f), or any prohibited indemnification payment,
      as that term is defined in 12 CFR § 359.1(1), unless, with respect to
      each such payment, the Association has complied with the requirements of
      12 CFR Part 359 and, as to indemnification payments, 12 CFR §
      545.121.

              

      

    

    

    
      
         

      

      
        6

         

      

      
         

      

    

    Notice of Contractual
Arrangements Involving Compensation

    

    
      
        	
                14.

              	 
      	
                The
      Association shall not enter into, renew, extend or revise any contractual
      arrangement related to compensation or benefits with any director or
      Senior Executive Officer of the Association, unless it provides the
      Regional Director with not less than thirty (30) days prior written notice
      of the proposed transaction and receives a notice of written non-objection
      from the OTS pursuant to OTS Examination Handbook § 310. The notice to the
      Regional Director shall include a copy of the proposed employment contract
      or compensation arrangement, or a detailed, written description of the
      compensation arrangement to be offered to such officer or director,
      including all benefits and perquisites. The Board shall ensure that any
      contract, agreement, or arrangement submitted to OTS fully complies with
      the requirements of 12 CFR Part 359, 12 CFR §§ 563.39 and 563.161(b), and
      12 CFR Part 570-Appendix A.

              

      

    

    

    Contracts Outside of the
Normal Course of Business

    

    
      
        	
                15.

              	 
      	
                The
      Association and its subsidiaries shall not enter into any arrangement or
      contract with a third party service provider that is significant to the
      overall operation or financial condition of the Association or subsidiary
      or is outside the Association's or subsidiary's normal course of business
      unless, with respect to each such contract, the Association has: (i)
      provided OTS with a minimum of thirty (30) days prior written notice of
      such arrangement or contract; (ii) determined that the arrangement or
      contract complies with the standards and guidelines set forth in OTS
      Thrift Bulletin 82a; and (iii) received written notice of non-objection
      from the OTS.

              

      

    

    

    Dividend
Restriction

    

    
      
        	
                16.

              	 
      	
                The
      Association shall not declare or pay a dividend or make any other capital
      distribution, as that term is defined in 12 CFR § 563.141, without
      receiving the prior written approval of the Regional Director. The
      Association's written request for approval shall be submitted at least
      thirty (30) days prior to the proposed date of dividend declaration or
      payment.

              

      

    

    

    Transactions with
Affiliates

    

    
      
        	
                17.

              	 
      	
                The
      Association shall not engage in any new transaction with an affiliate
      unless, with respect to each such transaction, the Association has
      complied with the notice requirements set forth in 12 CFR § 563.41(c)(4),
      which shall include the information set forth in 12 CFR § 563.41 (c)(3).
      The Board shall ensure that any new transaction with an affiliate for
      which notice is submitted pursuant to this Paragraph, complies with the
      requirements of 12 CFR § 563.41 and Regulation W, 12 CFR
      Part 223.

              

      

    

    

    
      
         

      

      
        7

         

      

      
         

      

    

    Compliance
Monitoring

    

    
      	
              18.

            	 
      	
              By
      the last day of each succeeding month, the Board shall adopt and submit to
      the OTS certified copies of a Board resolution (Compliance
      Resolution) formally resolving that, following a diligent inquiry of
      relevant information (including a report from the Association's management
      regarding the Association's compliance with each provision of this Order),
      to the best of its knowledge and belief, during the immediately preceding
      month, the Association has complied with each provision of this Order
      currently in effect, except as otherwise stated. The Compliance Resolution
      shall: (1) specify in detail how, if at all, full compliance was found not
      to exist; and (2) identify all notices of exemption or non-objection
      issued by OTS that were outstanding as of the date of its adoption. In the
      event that one or more directors do not agree with the representations set
      forth in a Compliance Resolution, such a disagreement shall be noted in the Compliance
      Resolution.

            

    

    

    Effective Date,
Incorporation of Stipulation

    

    
      
        	
                19.

              	 
      	
                This
      Order is effective on the Effective Date as shown on
      the first page. The Stipulation is made a part hereof and is incorporated
      herein by this reference.

              

      

    

    

    Duration

    

    
      
        	
                20.

              	 
      	
                This
      Order shall remain in effect until terminated, modified or suspended, by
      written notice of such action by OTS, acting by and through its authorized
      representatives.

              

      

    

    

    Time
Calculations

    

    
      
        	
                21.

              	 
      	
                Calculation
      of time limitations for compliance with the terms of this Order run from
      the Effective Date and shall be based on calendar days, unless otherwise
      noted.

              
	
                22.

              	 
      	
                The
      Regional Director may extend any of the deadlines set forth in the
      provisions of this Order upon written request by the Association that
      includes reasons in support for any such extension. Any OTS extension
      shall be made in writing.

              

      

    

    

    Submissions and
Notices

    

    
      
        	
                23.

              	 
      	
                All
      submissions, including progress reports, to OTS that are required by or
      contemplated by this Order shall be submitted within the specified
      timeframes.

              

      

    

    
      
         

      

      
        8

         

      

      
         

      

    

    

    
      
        	
                24.

              	 
      	
                Except
      as otherwise provided herein, all submissions, requests, communications,
      consents or other documents relating to this Order shall be in writing and
      sent by first class U.S. mail (or by reputable overnight carrier,
      electronic facsimile transmission or hand delivery by messenger) addressed
      as follows:

              

      

    

    

    
      
        	 
      	 
      	
                a.

              	
                To
      OTS:

              
	 
      	 
      	 
      	
                Regional
      Director

              
	 
      	 
      	 
      	
                Office
      of Thrift Supervision

              
	 
      	 
      	 
      	
                One
      South Wacker Drive, Suite 2000

                Chicago,
      Illinois 60606

              
	 
      	 
      	 
      	
                Facsimile:
      (312) 917-5002

              
	 	 	 	 
	 
      	 
      	
                b.

              	
                To
      the Association:

              
	 
      	 
      	 
      	
                Chairman
      of the Bank

              
	 
      	 
      	 
      	
                Mainstreet
      Savings Bank, FSB

                629
      West State Street

              
	 
      	 
      	 
      	
                Hastings,
      Michigan 49058-1954

                Facsimile:
      (269) 945-0380

              

      

    

    

    No Violations
Authorized

    

    
      
        	
                25.

              	 
      	
                Nothing
      in this Order or the Stipulation shall be construed as allowing the
      Association, its Board, officers or employees to violate any law, rule, or
      regulation.

              

      

    

     

    IT
IS SO ORDERED.

    
      
        
          
            	 
      	 
      	
                    OFFICE OF THRIFT
      SUPERVISION

                  
	 	 	 
	 	 	 
	 
      	 
      	
                    By:

                  	 
      /s/ Daniel T. McKee
	 
      	 
      	 
      	
                    Daniel
      T. McKee

                  
	 
      	 
      	 
      	
                    Acting
      Regional Director, Central Region

                  
	 	 	 	 
	 
      	 
      	 
      	
                    Date:
      See Effective Date on page
1

                  

          

        

      

    

    

    
      
         

      

      
        9

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