Exhibit 10.1
EXECUTION COPY
 
AMENDED AND RESTATED INVESTMENT AGREEMENT
DATED AS OF
JULY 14, 2011
AMONG
FIRST BANCORP
AND
THE INVESTORS NAMED ON THE SIGNATURE PAGES HERETO
 

 

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TABLE OF CONTENTS

              PAGE  
ARTICLE 1 PURCHASE OF SHARES
    1  
1.1 Purchase of Shares
    1  
 
       
ARTICLE 2 THE CLOSING TRANSACTIONS
    2  
2.1 Closing
    2  
2.2 Actions on the Closing Date
    2  
 
       
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
    2  
3.1 Representations and Warranties of the Company
    2  
3.2 Representations and Warranties of the Investors
    19  
 
       
ARTICLE 4 ACTIONS PRIOR TO THE TRANSACTION
    21  
4.1 Stockholder Approval
    21  
4.2 HSR Act Filings
    21  
4.3 Listing of Shares
    22  
4.4 Change of Bank Control Act and Bank Holding Company Act
    22  
4.5 Most Favored Terms
    23  
4.6 Notice of Adverse Occurrences
    23  
4.7 Reasonable Best Efforts
    23  
4.8 Election of Independent Chairman and Independent Directors; Board
Representative
    24  
4.9 Access; Confidentiality
    26  
4.10 Conduct of the Business
    26  
 
       
ARTICLE 5 CONDITIONS PRECEDENT TO TRANSACTION
    28  
5.1 Conditions to the Company’s Obligations
    28  
5.2 Conditions to the Investor’s Obligations
    29  
5.3 Waiver of Conditions to Investor’s Obligations
    32  
 
       
ARTICLE 6 ADDITIONAL AGREEMENTS
    32  
6.1 Company Obligation Regarding Adequate Public Information
    32  
6.2 Efforts to Maintain Listing
    32  
6.3 Additional Regulatory Matters
    32  
6.4 Percentage Maintenance Rights
    33  
6.5 Participation in Other Offerings
    36  
 
       
ARTICLE 7 SALE RESTRICTIONS
    38  
7.1 Restrictions on Sales of Acquired Common Stock
    38  

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              PAGE  
ARTICLE 8 SECURITIES ACT REGISTRATION
    39  
8.1 Obligation to Register Acquired Common Stock
    39  
8.2 Obligations of the Investors Regarding Registration
    43  
8.3 Indemnification Regarding Disclosures
    44  
8.4 Assignment of Registration Rights
    44  
8.5 Lock Up Agreements
    45  
8.6 Holdback
    45  
 
       
ARTICLE 9 TERMINATION
    45  
9.1 Right to Terminate
    45  
9.2 Manner of Terminating Agreement
    46  
9.3 Effect of Termination
    46  
 
       
ARTICLE 10 INDEMNIFICATION
    47  
10.1 Indemnification Against Loss Due to Inaccuracies in Company’s
Representations and Warranties or Company Failure to Fulfill Obligations
    47  
10.2 Indemnification Against Loss Due to Inaccuracies in Investor’s
Representations and Warranties or Investor Failure to Fulfill Obligations
    47  
10.3 Limit on Liability for Breach of Warranty
    47  
10.4 Indemnification Sole Remedy
    48  
 
       
ARTICLE 11 ABSENCE OF BROKERS
    48  
11.1 Representations and Warranties Regarding Brokers and Others
    48  
 
       
ARTICLE 12 GENERAL
    49  
12.1 Announcement of Transaction
    49  
12.2 Expenses
    49  
12.3 Entire Agreement
    49  
12.4 Benefit of Agreement
    50  
12.5 Captions
    50  
12.6 Assignments
    50  
12.7 Notices and Other Communications
    50  
12.8 Governing Law
    51  
12.9 Consent to Jurisdiction
    52  
12.10 Remedies; Specific Performance
    52  
12.11 Non-Recourse
    52  
12.12 Waiver of Jury Trial
    52  
12.13 Amendments
    52  
12.14 Interpretation
    53  

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              PAGE  
12.15 Mutual Drafting
    53  
12.16 Severability
    53  
12.17 Counterparts
    53  
12.18 Independent Nature of Investors’ Obligations and Rights
    53  

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LIST OF EXHIBITS
Exhibit A            Illustrative Pro Forma Capitalization of the Company
Exhibit B            Form of Opinion of K&L Gates LLP
Exhibit C            Form of Opinion of Martinez Odell & Calabria

         
Acquired Common Stock
    1  
Agency
    15  
Aggregate Purchase Price
    2  
Agreement
    1  
Bank Holding Company Act
    3  
Bank Regulatory Agency
    14  
Board Representative
    26  
Business Day
    2  
CBCA
    22  
Closing Date
    2  
Code
    11  
Common Stock
    1  
Company
    1  
Company 10-K
    7  
Company Benefit Plans
    13  
Company Financial Statements
    8  
Company Material Adverse Effect
    3  
Company Reports
    7  
Company Significant Agreement
    17  
Company Subsidiaries
    7  
Company Subsidiary
    7  
Environmental Law
    12  
ERISA
    13  
Exchange Act
    7  
FDIC
    6  
FDIC Consent Order
    10  
Federal Reserve Agreement
    10  
Federal Reserve Board
    6  
FirstBank
    3  
GAAP
    3  
Governmental Entity
    5  
HSR Act
    6  
Indemnitee
    44  
Information
    27  
Insurer
    15  
Intellectual Property
    19  
Intellectual Property Rights
    18  
Interim Financials
    8  
Investor
    1  
Investor Agreements
    4  
Investors
    1  
IT Assets
    18  

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Loan
    17  
Loan Investor
    15  
March 10-Q
    7  
Material Adverse Change
    9  
Materially Burdensome Regulatory Condition
    23  
New Security
    34  
Nominating Committee
    24  
NYSE
    4  
Observer
    25  
OCFI
    6  
OCFI Order
    10  
OFAC
    16  
Original Agreement
    1  
Other Investors
    4  
Per Share Price
    1  
Piggyback Registration
    40  
Previously Disclosed
    3  
PRTD
    33  
Qualifying Ownership Interest
    24  
Registrable Securities
    39  
Rights Offering
    1  
Ruling
    31  
Securities Act
    2  
Series G Preferred Stock
    1  
Shelf Registration Statement
    39  
Special Registration
    45  
Submission
    23  
Tax Return
    12  
Taxes
    12  
Termination Date
    46  
Unlawful Gains
    16  

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INVESTMENT AGREEMENT
          This agreement is dated as of July 14, 2011 among First BanCorp (the
“Company”), a Puerto Rico chartered financial holding company, and each of the
investors that have signed this Agreement (each an “Investor” and together, the
“Investors”), relating to the sale by the Company to each of the Investors of a
number of shares of common stock of the Company (“Common Stock”), par value
$0.10 per share, shown opposite the name of each such Investor on the signature
pages of this Agreement, and amends and restates an Investment Agreement dated
as of May 26, 2011 among the Company and the Investors (the “Original Agreement”
and, as amended and restated by this agreement, the “Agreement”). Now,
therefore, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, and intending to be
legally bound, the parties hereby agree as follows:
ARTICLE 1
PURCHASE OF SHARES
     1.1 Purchase of Shares. Subject to the conditions contained in this
Agreement, on the Closing Date described in Section 2.1, the Investors will
purchase from the Company, and the Company will sell to the Investors, in total
(to be allocated among the investors as they specify to the Company prior to the
Closing Date) the lesser of (x) 49,746,992 shares of Common Stock, (y) 24.9% of
all the shares of Common Stock that will be outstanding after the issuances of
Common Stock to all Other Investors on the Closing Date, and the conversion of
the Company’s fixed rate cumulative mandatorily convertible preferred stock,
Series G (“Series G Preferred Stock”) into Common Stock as set forth in
Section 5.1(g), or (z) the maximum amount that will not result in such Investor
or any of its affiliates being in control of the Company or of FirstBank for
purposes of the Bank Holding Company Act or the Federal Reserve Board’s
Regulation Y, or otherwise being subject to regulation as a bank holding company
under that Act (the shares being purchased by all the Investors being the
“Acquired Common Stock”) for the purchase price of the lesser of (a) $3.50 per
share of Common Stock or (b) such price as may be agreed with any Other Investor
(the “Per Share Price”). At least two (2) Business Days before the Closing Date,
the Company shall deliver to each Investor a reasonably detailed calculation of
the number of shares of Acquired Common Stock to be purchased by such Investor,
as provided in this Section 1.1. Exhibit A contains hypothetical examples
illustrating how the number of shares of Acquired Common Stock would be
calculated if the Investors and Other Investors purchase Common Stock for (i)
$500 million and (ii) $525 million (equal to $562.3 million minus the
$37.3 million purchase price of the shares that would be issuable on exercise of
rights expected to be issued to holders of Common Stock that is outstanding
prior to the Closing Date (the “Rights Offering”), respectively, and in either
event, all the Series G Preferred Stock is converted into Common Stock. The Per
Share Price and the number of shares of Acquired Common Stock shall be adjusted
to reflect appropriately the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Common Stock), extraordinary cash dividends, reorganization,
recapitalization, reclassification, combination, exchange of shares or other
like change with respect to Common Stock (other than the conversion of the
Series G Preferred Stock into Common Stock) occurring on or after the date
hereof and prior to the Closing.

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ARTICLE 2
THE CLOSING TRANSACTIONS
     2.1 Closing. Subject to the satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the sale of Common Stock described in
Article 1 will take place at the offices of K&L Gates, LLP, 599 Lexington
Avenue, New York, NY 10019, or by electronic exchange of documents and signature
pages, on the day (the “Closing Date”) that is the second Business Day after the
day on which all the conditions in Article 5 (other than conditions that by
their terms cannot be fulfilled until the Closing Date, but subject to the
satisfaction or waiver of such conditions) are satisfied, or at such other place
and time as is agreed upon by the parties. As used in this Agreement, the term
“Business Day” means a day that is not a Saturday, a Sunday or a day on which
banks in New York City or in San Juan, Puerto Rico generally are required or
permitted not to be open for banking business.
     2.2 Actions on the Closing Date. Not later than 11:00 a.m., New York City
time, on the Closing Date, each Investor will transmit to an account of the
Company with a bank in New York City that is specified by the Company at least
two Business Days before the Closing Date immediately available funds equal to
the full amount of the purchase price for the Acquired Common Stock to be
purchased by such Investor in accordance with Section 1.1 (the “Aggregate
Purchase Price”). Upon receipt by the Company of confirmation that such funds
have been received, the Company will instruct The Bank of New York Mellon
Shareholder Services (or its successor), as transfer agent, to issue the
Acquired Common Stock to the Investor in book entry form. The depositary that
holds the Acquired Common Stock may be instructed to note on its records that
the Acquired Common Stock (a) has been issued without registration under the
Securities Act of 1933, as amended (the “Securities Act”), and may not be sold
or transferred other than in a transaction that is registered under the
Securities Act or is exempt from the registration requirements of the Securities
Act (which notation will be withdrawn when resale of the Acquired Common Stock
has been registered under the Securities Act as contemplated by Article 8), and
(b) is subject to the sale restrictions contained in Article 7. On the Closing
Date, the Company shall also deliver or cause to be delivered to each Investor
(x) a receipt for the Aggregate Purchase Price paid by that Investor; and (y) a
certificate of the Secretary or an Assistant Secretary of the Company, dated as
of the Closing Date, certifying (i) the resolutions duly and validly adopted by
the Board of Directors of the Company evidencing its authorization of the
execution and delivery of this Agreement and the other Investor Agreements (as
defined below) and the consummation of the transactions contemplated hereby and
thereby, (ii) the current versions of the Certificate of Incorporation and
bylaws of the Company, each as amended to date, and (iii) as to the signatures
and authority of persons signing this Agreement and related documents on behalf
of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
     3.1 Representations and Warranties of the Company. The Company represents
and warrants to the Investors as follows:
          (a) Organization and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Puerto Rico. The Company is duly registered as a financial
holding company under the U.S. Bank Holding Company Act of 1956, as amended (the
“Bank Holding Company Act”). Each of the Company and each Company Subsidiary,
including each Company Subsidiary that is a “significant subsidiary” (as that
term is defined in Rule 1-02(w) of Regulation S-X under the

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Securities Act), including FirstBank Puerto Rico (“FirstBank”), has all the
corporate power and authority that is required to enable it to conduct its
business as it is being conducted at the date of the Original Agreement. The
Company and each Company Subsidiary is duly qualified to do business and is in
good standing in every jurisdiction in which qualification is required, except
jurisdictions in which failure to qualify would not have a Company Material
Adverse Effect. The Company has furnished to the Investors or has filed with the
Securities and Exchange Commission (the “SEC”) pursuant to its Electronic Data
Gathering, Analysis and Retrieval system (“EDGAR”), true, correct and complete
copies of the Company’s Articles of Incorporation and By-Laws, as amended
through the date of the Original Agreement. For purposes of this Agreement,
“Previously Disclosed” means (i) information publicly disclosed by the Company
in the Company 10-K or the March 10-Q (excluding any risk factor disclosures
contained in such documents and any disclosure of risks included in any
forward-looking statements disclaimer or other statements that are similarly
non-specific or are predictive or forward-looking in nature), or (ii) documents
made available to the Investors prior to the date of the Original Agreement
either physically or in an electronic data room to which the Investors or their
representatives had access and the information contained in those documents, in
each of (i) and (ii), prior to and until 11:59 p.m. on May 23, 2011, or
(iii) information about tax audits and the extension of the period of
limitations with respect to a U.S. Internal Revenue Service tax audit made
available to the Investors prior to and until 11:59 p.m. on May 25, 2011).
          (b) “Company Material Adverse Effect.” As used in this Agreement, the
term “Company Material Adverse Effect” means any circumstance, change, effect,
event or fact the effect of which, individually or in the aggregate, (i) is, or
would reasonably be expected to be, materially adverse to the business, assets,
liabilities, results of operations or financial condition of the Company and its
consolidated Company Subsidiaries taken as a whole or (ii) prevents or
materially delays or materially impairs the ability of the Company to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby; provided, however, that the term Company Material Adverse
Effect will not include any circumstance, change, effect, event or fact arising
from (A) changes after the date of the Original Agreement in general business,
economic or market conditions in the United States or the Commonwealth of Puerto
Rico (including changes generally in prevailing interest rates, credit
availability and liquidity, currency exchange rates and price levels or trading
volumes in the United States or foreign securities or credit markets), or any
outbreak or escalation of hostilities, declared or undeclared acts of war or
terrorism, in each case generally affecting the industries in which the Company
and the Company Subsidiaries operate, (B) changes or proposed changes after the
date of the Original Agreement in United States generally accepted accounting
principles (“GAAP”) or regulatory accounting requirements applicable to the
Company and the Company Subsidiaries, (C) changes or proposed changes after the
date of the Original Agreement in securities or other laws or regulations of
general applicability (excluding banking laws and banking regulations),
(D) changes in the market price or trading volume of the Common Stock or any
other equity, equity-related or debt securities of the Company or the Company
Subsidiaries (but not the underlying reason or reasons for any such change),
(E) the effects of actions or failures to act by the Company or the Company
Subsidiaries that are required by this Agreement, or (F) failure by the Company
or any of the Company Subsidiaries to meet internal projections or forecasts
with regard to results of operations or financial condition (but not the
underlying reason or reasons that the projections or forecasts are not met);
provided, however, that in the case of clauses (A), (B) and (C), any
circumstance, change, effect, event or fact shall nevertheless be considered in
determining whether a Company Material Adverse Effect has occurred to the extent
that such circumstance, change, effect, event or fact, individually or in the
aggregate, has, or would reasonably be expected to have, a disproportionate,
adverse impact on the business, assets, liabilities, results

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of operations or financial condition of the Company and its consolidated Company
Subsidiaries taken as a whole relative to other participants in the United
States or in the Commonwealth of Puerto Rico in the industries in which the
Company and the Company Subsidiaries operate.
          (c) Authorization. The Company has all corporate power and authority
that is necessary to enable it to enter into this Agreement and the other
Investor Agreements and carry out the transactions contemplated by this
Agreement and the other Investor Agreementes. All corporate actions necessary to
authorize the Company to enter into this Agreement and the other Investor
Agreements and carry out the transactions contemplated by them have been taken,
except that, if the rules of the New York Stock Exchange (“NYSE”) require
stockholder approval of the issuance of Common Stock to the Investors and the
Other Investors, that approval has not yet been given. When this Agreement is
executed by the Company, assuming due execution by the Investors, it will be a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms. The purchases of the Acquired Common Stock
contemplated by this Agreement will not, either alone or together with the
purchases of Common Stock contemplated by the other Investor Agreements,
constitute a Business Combination subject to Section B of Article Tenth of the
Company’s Articles of Incorporation and will not be subject to any statutory or
other provisions regarding business combinations with interested stockholders or
other anti-takeover provisions. The Company has not adopted a shareholder rights
plan or other plan intended to have adverse effects on persons who acquire
beneficial ownership of more than specified portions of the outstanding stock of
the Company or who obtain control of the Company .
          (d) NYSE Required Stockholder Approval. If the rules of the NYSE
require stockholder approval of the issuance of Common Stock to the Investors
and the Other Investors as contemplated by this Agreement and the other Investor
Agreements, such stockholder approval will require the affirmative vote of a
majority of the votes cast, provided that the total votes cast represents over
50% of all the outstanding Common Stock.
          (e) Other Investors and Aggregate Sale Price. Subject to Section 4.5,
the Company has entered into, or intends to enter into, agreements (together
with this Agreement, "Investor Agreements”) with investors other than the
Investors (“Other Investors”) relating to purchases of Common Stock at the Per
Share Price. The Company is seeking to enter into Investor Agreements (including
this Agreement) relating to sales of Common Stock with a total aggregate sale
price of at least $500 million and not more than (i) $562.3 million, minus
(ii) the aggregate purchase price of the shares that would be issuable on
exercise of rights expected to be issued in the Rights Offering, which Rights
Offering will not exceed $37.3 million in the aggregate. Copies of Investor
Agreements with Other Investors or group of commonly advised Other Investors
that, in each case, will be acquiring a number of shares of Common Stock that is
equal to or greater than the total shares of Acquired Common Stock being
purchased by all Investors hereunder have been provided to the Investors prior
to the date of the Original Agreement. The Company has no other agreements or
understandings (including, without limitation, side letters) with Other
Investors, except that the Company may have side letters, that have been
provided to the Investors prior to the date of the Original Agreement, with one
or more Other Investors each of which will be purchasing what will be after the
Closing and the issuance of Common Stock on conversion of the Series G Preferred
Stock at least 3.5% of the Company’s outstanding Common Stock.
          (f) No Conflict. Neither the execution, delivery and performance by
the Company of this Agreement or of any or all of the Investor Agreements with
the Other Investors, nor the consummation of the transactions contemplated by
this Agreement or by any or all of

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the Investor Agreements with the Other Investors, will violate, conflict with,
result in a breach of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, (i) the Articles of
Incorporation or the By-Laws of the Company, (ii) any agreement or instrument or
obligation to which the Company or any of the Company Subsidiaries is a party or
by which any of them is bound or to which the Company or any of the Company
Subsidiaries or any of their assets or properties may be subject, or (iii) any
law, order, judgment, rule or regulation of any governmental or regulatory
authorities, agencies, courts, commissions or other entities, whether federal,
state, local or foreign and including such authorities of the Commonwealth of
Puerto Rico, the United States, the United States Virgin Islands, the British
Virgin Islands or any other nation, province, municipality or other political
subdivision thereof, or any applicable self-regulatory organizations (each, a
“Governmental Entity”) having jurisdiction over the Company or any of the
Company Subsidiaries, except violations, breaches or defaults that would not
reasonably be expected to have a Company Material Adverse Effect.
          (g) Issuance of Acquired Common Stock. The shares of Acquired Common
Stock have been duly authorized and, when issued and delivered in accordance
with this Agreement, will be validly issued, fully paid and non-assessable
outstanding shares of Common Stock and will not subject the Investors to
personal liability. The sale of Common Stock as contemplated by this Agreement
and the Investor Agreements with the Other Investors will not give any other
person preemptive rights or other rights to acquire shares of the Company of any
class or series. When shares of Acquired Common Stock are sold to the Investors
on the Closing Date as contemplated by this Agreement, the respective Investors
will own such shares free and clear of any liens, encumbrances or claims of any
other persons, other than liens imposed because of acts of the Investors and
restrictions on transfer imposed by applicable securities or banking laws.
          (h) Capitalization. The only authorized stock of the Company is
2,000,000,000 shares of Common Stock and 50,000,000 shares of preferred stock.
At the date of the Original Agreement, the only outstanding stock is not more
than 21,350,000 shares of Common Stock, 2,522,000 shares of Series A through E
preferred stock (with a liquidation preference of $25 per share) and 424,174
shares of Series G Preferred Stock (with a liquidation preference of $1,000 per
share). In the event the Company enters into Investor Agreements (including this
Agreement) with total aggregate sale proceeds of between $500 million and
$525 million ($562.3 million minus the expected $37.3 million purchase price of
the shares that would be issuable on exercise of rights expected to be issued in
the Rights Offering), such Investor Agreements will require the Company to issue
no less than 142,857,142 shares of Common Stock and no more than 150,000,000
shares of Common Stock. The only options, warrants, exchangeable securities or
other agreements which require, or which, upon the passage of time, the payment
of money or the occurrence of any other event, may require the Company to issue
any stock of any class or series are (i) options, warrants and employee equity
grants that may entitle the holders to purchase a total of up to 132,000 shares
of Common Stock (subject to adjustment as a result of various occurrences,
including the transactions contemplated by this Agreement and the other Investor
Agreements), (ii) the conversion provisions of the Series G Preferred Stock,
which, among other things, give the holders the right to convert the Series G
Preferred Stock into a total of approximately 29,246,000 shares of Common Stock
(which, as a result of the sales of Common Stock contemplated by this Agreement
and the other Investor Agreements, will become between 32,916,087 and 32,941,797
shares of Common Stock), (iii) a warrant entitling the United States Department
of the Treasury to purchase 389,483 shares of Common Stock (subject to
adjustment as a result of various occurrences, including the transactions
contemplated by this Agreement and the other Investor Agreements, which will

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increase the number of shares issuable on exercise of that warrant to 1,210,513
shares) and (iv) the rights of the Investors and the Other Investors under the
Investor Agreements. In addition, the Company has 251,185 shares of Common Stock
reserved for issuance under Company Benefit Plans or for other purposes and the
Company expects to issue to the holders of its common stock as of a day prior to
the Closing Date rights that will entitle them to purchase Common Stock for a
per share price equal to the Per Share Price for a total of up to $35 million.
The Company has filed with the SEC pursuant to EDGAR or otherwise Previously
Disclosed true, correct and complete copies of all instruments and agreements
that govern the terms and conditions of those securities, including all
certificates of designation, warrant agreements and other agreements, as amended
through the date of the Original Agreement.
          (i) Consents and Approvals. Neither the execution and delivery of the
Investor Agreements by the Company, nor the completion by the Company of the
transactions that are the subject of this Agreement or the other Investor
Agreements, requires the consent of, approval by, or a filing or notification by
the Company with, any Governmental Entity, other than (i) filings with the SEC
reporting the signing of Investor Agreements or the consummation of the
transactions contemplated thereby; (ii) non-objection of the Board of Governors
of the Federal Reserve System (the “Federal Reserve Board”) to any notice filed
by an Investor pursuant to the Change in Bank Control Act of 1978, as amended;
(iii) consent to service of the Board Representative described in Section 4.8(g)
and Board representatives that Other Investors have the right to designate under
Investor Agreements, including non-objection under section 32 of the Federal
Deposit Insurance Act and waiver of the Depository Institution Management
Interlocks Act, as may be applicable; (iv) any filings or notifications that may
be required to be made with or given to the Federal Deposit Insurance Company
(the “FDIC”), the Office of the Commissioner of Financial Institutions of the
Commonwealth of Puerto Rico (the “OCFI”) and other banking or insurance
regulatory agencies; (v) filing with NYSE a supplemental listing application in
order to list the shares of Acquired Common Stock in accordance with
Section 5.2(f); and (vi) securities or blue sky laws of the various states.
Assuming the Investors’ representations and warranties in Section 3.2(h) are
correct, the transactions that are contemplated by this Agreement qualify for an
exemption from the reporting or waiting period requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) under
Section 7A(c) of the HSR Act.
          (j) FirstBank. The Company owns all the outstanding shares of capital
stock of FirstBank. FirstBank is a commercial bank duly organized and validly
existing under the laws of the Commonwealth of Puerto Rico and is duly licensed
by the OCFI. The deposits of FirstBank are insured by the FDIC to the fullest
extent permitted in the Federal Deposit Insurance Act and the rules and
regulations of the FDIC thereunder, and all premiums and assessments required to
be paid in connection therewith have been paid when due.
          (k) Subsidiaries. The Company has furnished to the Investors or has
filed with the SEC under Exhibit 21 to the Company 10-K a true, correct and
complete list of all of its subsidiaries (as the term “subsidiary” is defined
for purposes of the Bank Holding Company Act) as of the date of the Original
Agreement (individually, a “Company Subsidiary” and, collectively, the “Company
Subsidiaries”). Each Company Subsidiary (including FirstBank) has been duly
organized and is validly existing and, to the extent the concept is applicable,
in good standing under the laws of the jurisdiction in which it was formed. All
the shares of stock or other equity interests in each of the Company
Subsidiaries, whether directly or indirectly owned, have been duly authorized
and validly issued and, with regard to stock of corporations or other equity
interests in limited liability entities, are fully paid and non-assessable and
are not subject to any preemptive rights and are free and clear of any lien,
adverse right or claim,

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charge, option, pledge, covenant, title defect, security interest or other
encumbrance of any kind, with no personal liability attaching to the ownership
thereof, except liens, adverse rights or claims, charges, options, pledges,
covenants, title defects, security interests or encumbrances on the Company’s
equity interests in Company Subsidiaries other than FirstBank that do not affect
the Company’s control over those Company Subsidiaries and, in the aggregate,
would not reasonably be expected to be materially adverse to the Company and the
Company Subsidiaries taken as a whole. Neither the Company nor any of the
Company Subsidiaries has issued any options, warrants, scrips, pre-emptive
rights, rights to subscribe, gross-up rights, calls, commitments or convertible
or exchangeable securities, or is a party to any other agreements, which
require, or, upon the passage of time, the giving of notice, the payment of
money or the occurrence of any other event may require, the Company or any
Company Subsidiary to issue or transfer any shares of or other equity interests
in a Company Subsidiary, and there are no registration rights or covenants or
transfer or voting restrictions with respect to any shares of or other equity
interests in any of the Company Subsidiaries.
          (l) Company Reports. Since January 1, 2008, the Company and the
Company Subsidiaries have filed all reports, proxy statements, registration
statements and other documents required to have been filed with the SEC (the
“Company Reports”), including under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and have paid all material fees and assessments
due and payable in connection therewith. When they were filed, the Company
Reports complied in all material respects with the applicable statutes, rules,
regulations and forms. In the case of each such Company Report filed with or
furnished to the SEC, none of the Company Reports, when filed or furnished,
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading. Without limiting the
generality of what is said in the preceding sentence, the Company’s Annual
Report on Form 10-K for the year ended December 31, 2010 (the “Company 10-K”)
and its Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2011 (the “March 10-Q”) which were filed with the SEC, including any documents
incorporated by reference in them, each complied in all material respects with
the requirements of the form on which it was filed and, when it was filed, did
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading. As of the date of the
Original Agreement, there are no outstanding comments from the SEC with respect
to any Company Report other than oral inquiries regarding the accounting for and
presentation in the consolidated financial statements and disclosures made in
those consolidated financial statements regarding the February 2011 sale of
loans from FirstBank to a joint venture majority owned by PRLP Ventures LLC. No
executive officer of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002.
          (m) Controls and Procedures. The records, systems, controls, data and
information of the Company and the Company Subsidiaries are recorded, stored,
maintained and operated under means (including any electronic, mechanical or
photographic process, whether computerized or not) that are under the exclusive
ownership and direct control of the Company, the Company Subsidiaries or their
accountants (including all means of access thereto and therefrom), except for
any nonexclusive ownership and nondirect control that would not reasonably be
expected to have a material adverse effect on the system of internal accounting
controls described below. The Company (i) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) to ensure that material information relating to the Company,
including its consolidated Company Subsidiaries, is made known to the chief
executive officer and the chief financial officer of the

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Company by others within those entities, and (ii) has disclosed, based on its
most recent evaluation prior to the date of the Original Agreement, to the
Company’s outside auditors and the audit committee of the Board of Directors
(A) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
information, and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal controls over financial reporting. As of the date of the Original
Agreement, no officer of the Company has knowledge of any reason that its
outside auditors and its chief executive officer and chief financial officer
shall not be able to give the certifications and attestations required pursuant
to the rules and regulations adopted pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, without qualification, when next due. Since
December 31, 2008, (A) neither the Company nor any of the Company Subsidiaries
nor, to the knowledge of the Company, any director, officer, employee, auditor,
accountant or representative of the Company or any of the Company Subsidiaries,
has received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any of the Company Subsidiaries or their respective internal
accounting controls, including any material complaint, allegation, assertion or
claim that the Company or any of the Company Subsidiaries has engaged in
questionable accounting or auditing practices, and (B) no attorney representing
the Company or any of the Company Subsidiaries, whether or not employed by the
Company or any of the Company Subsidiaries, has reported under Part 205 of the
SEC Rules (17 CFR §205.1, et.seq.) evidence of a material violation of
securities laws, breach of fiduciary duty or similar violation by the Company or
any of its officers, directors, employees or agents to the Board of Directors or
any committee thereof or to any director or officer of the Company. The
management of the Company has, since January 1, 2006, performed the evaluation
of the effectiveness, as of the end of each fiscal year, of the Company’s
internal control over financial reporting required by SEC Rule 13a-15(c). The
evaluation as of December 31, 2010 did not disclose any material weaknesses.
          (n) Financial Statements. Each of (x) the consolidated balance sheets
of the Company and the Company Subsidiaries and the related consolidated
statements of income, stockholders’ equity and cash flows, together with the
notes thereto, included in the Company 10-K, and (y) the unaudited consolidated
balance sheets of the Company and the Company Subsidiaries as of March 31, 2011
and the related consolidated statements of income, stockholders’ equity and cash
flows for the period ending March 31, 2011, together with the notes thereto,
included in the March 10-Q, (the “Interim Financials” and, collectively, the
“Company Financial Statements”), (i) have been prepared from, and are in
accordance with, the books and records of the Company and the Company
Subsidiaries, (ii) complied, as of their respective filing dates, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, (iii) have been prepared
in accordance with GAAP applied on a consistent basis and (iv) present fairly in
conformity with GAAP in all material respects the consolidated financial
position of the Company and the Company Subsidiaries at the dates and the
consolidated results of operations, changes in stockholders’ equity and cash
flows of the Company and the Company Subsidiaries for the periods stated therein
(subject to the absence of notes and normal year-end audit adjustments in the
case of the Interim Financials which are not expected to be material).
          (o) Absence of Undisclosed Liabilities. Neither the Company nor any of
the Company Subsidiaries has any liabilities, contingent or otherwise, that
would be required to be reflected on, or disclosed in notes to, consolidated
financial statements of the Company and the

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Company Subsidiaries prepared in accordance with GAAP, other than
(i) liabilities reflected on the consolidated balance sheet of the Company and
the Company Subsidiaries at March 31, 2011 included in the March 10-Q,
(ii) liabilities disclosed in the notes to the financial statements in the
Company 10-K or the March 10-Q, (iii) liabilities that, because they were not
material, were not required by GAAP to have been reflected on the consolidated
balance sheet of the Company and the Company Subsidiaries at March 31, 2011 or
disclosed in the notes to the financial statements included in the Company 10-K
or the March 10-Q, (iv) contingent obligations and contingent liabilities
disclosed in the management’s discussion and analysis of financial condition and
results of operations included in the Company 10-K or the March 10-Q,
(v) contingent liabilities not required by GAAP to be reflected in, or described
in notes to, the Company’s financial statements and not required by applicable
SEC rules to be described in the management’s discussion and analysis of
financial condition and results of operations included in the Company 10-K or
the March 10-Q or (vi) liabilities arising in the ordinary course of the conduct
by the Company and the Company Subsidiaries of their respective businesses since
March 31, 2011.
          (p) Absence of Certain Changes. Since December 31, 2010, (i) the
Company and the Company Subsidiaries, including FirstBank, have conducted their
businesses in the ordinary course and in the same manner in which they were
being conducted during the period immediately prior to December 31, 2010,
(ii) there has not been a Material Adverse Change in the financial condition,
results of operations, business or prospects of the Company and the Company
Subsidiaries taken as a whole and (iii) nothing has occurred that has had or
would reasonably be expected to have a Company Material Adverse Effect. A
“Material Adverse Change” (x) in the financial condition of the Company and the
Company Subsidiaries will occur between two dates if between those dates there
is a material reduction of the Company’s and the Company Subsidiaries’
consolidated working capital, net worth or tangible net worth, a material
increase in their consolidated current liabilities (other than due to the
conduct of business in the ordinary course) or a material increase in their
consolidated total liabilities (other than due to the conduct of business in the
ordinary course), and (y) in the results of operations, business or prospects of
the Company and the Company Subsidiaries during a period will occur if that
period consists of one or more full fiscal quarters and during that period there
is a material reduction in its and its subsidiaries’ consolidated total
revenues, net income before income taxes, net income, or earnings before
interest, taxes, depreciation and amortization compared both with the same
period of the preceding fiscal year and with the immediately preceding period of
the same number of fiscal quarters. However, a change due wholly or primarily to
any of the conditions or occurrences referred to in clauses (A) through (F) of
Section 3.1(b) is not a Material Adverse Change (which clauses shall be read to
incorporate the proviso applicable to clauses A through C in Section 3.1(b)).
          (q) Compliance with FDIC Order, OCFI Order and Federal Reserve
Agreement. The capital of the Company and of FirstBank, supplemented by proceeds
totaling at least $500 million of the sales of Common Stock under this and other
Investor Agreements and the conversion of the Series G Preferred Stock into
Common Stock, will be sufficient to meet any applicable minimum capital
requirement imposed by statute, regulation or Governmental Entity, including any
requirements as to the capitalization of FirstBank contained in or arising out
of the consent order dated June 3, 2010 issued by the FDIC (the “FDIC Consent
Order”) and the simultaneous order issued by the OCFI requiring compliance with
the FDIC Consent Order (the “OCFI Order”) or as to the capitalization of the
Company contained in or arising out of the agreement dated June 4, 2010 between
the Company and the Federal Reserve Bank of New York (the “Federal Reserve
Agreement”) and any capital plan approved in connection therewith and in effect.

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          (r) Compliance with Laws. Each of the Company, FirstBank, and each of
the other Company Subsidiaries has at all times complied, and currently is
complying, with, and the condition and use of its assets and properties has not
violated or infringed and does not currently violate or infringe in any material
respects, any applicable United States domestic, federal, state or local, any
applicable Commonwealth of Puerto Rico, or any applicable foreign, laws,
regulations, rules, judgments, orders, injunctions or decrees, including, to the
extent they are applicable to the Company or Company Subsidiaries, the Troubled
Asset Relief Program, the Emergency Economic Stabilization Act of 2008, the
Sarbanes-Oxley Act of 2002, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, all other applicable
fair lending laws or other laws relating to discrimination and the Bank Secrecy
Act, except to the extent of failures to comply, violations or infringements
that would not reasonably be expected to result in actions against the Company
or Company Subsidiaries that would, in the aggregate, interfere in a material
respect with the businesses of the Company and the Company Subsidiaries or
result in monetary penalties against the Company or Company Subsidiaries that
would be material to the Company and the Company Subsidiaries taken as a whole.
Insofar as any officer of the Company is aware, none of the Company or any of
the Company Subsidiaries is under investigation with respect to, or has been
threatened to be charged with or given notice of any material violation of, any
such laws, regulations, rules, judgments, injunctions or decrees. FirstBank is
the only Company Subsidiary that is subject to the Community Reinvestment Act.
FirstBank has a Community Reinvestment Act rating of “satisfactory” or better.
          (s) Licenses and Permits. The Company and the Company Subsidiaries
have all material licenses, permits, orders and approvals of, and have made all
filings, applications and registrations with, Governmental Entities that are
required at the date of the Original Agreement to enable them to conduct their
businesses as they currently are being conducted and to own or lease their
properties or assets. No suspension or cancellation of any such licenses or
permits is pending or, to the knowledge of the Company, threatened.
          (t) Litigation. Neither the Company nor any of the Company
Subsidiaries is a party to (i) any legal proceeding that the Company would be
required to disclose under Item 103 of SEC Regulation S-K in a filing at the
date of the Original Agreement or the Closing Date to which that Item applies,
other than legal proceedings disclosed in the Company 10-K, or in a report on
Form 8-K filed with the SEC since December 31, 2010, or (ii) any suit or
governmental proceeding that seeks to prevent the Company from completing the
transactions that are the subject of this Agreement or any of the other Investor
Agreements, nor, to the best of the knowledge of any officer of the Company, has
any suit or governmental proceeding which seeks to prevent the Company from
completing the transactions that are the subject of this Agreement been
threatened.
          (u) Tax Matters. Each of the Company and the Company Subsidiaries has
timely filed when due (taking account of timely filed extensions) all Tax
Returns which it has been required to file and has timely paid or has timely
withheld and remitted all Taxes shown on any Tax Return. All such Tax Returns
are true, correct and complete in all material respects and accurately reflect
in all material respects all Taxes required to have been paid, except to the
extent of items that may be disputed by applicable taxing authorities but for
which there is substantial authority to support the position taken by the
Company or the Company Subsidiary and which have been adequately reserved
against in accordance with GAAP on the consolidated balance sheet at
December 31, 2010 included in the Company 10-K. No Tax lien

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has been filed by any taxing authority against the Company or any of the Company
Subsidiaries or any of their assets, other than properties acquired through
foreclosure or similar processes and held for sale. Except as Previously
Disclosed, no Federal, Commonwealth, United States Virgin Islands, foreign,
state or local audits or other administrative proceedings or court proceedings
in any jurisdiction with regard to Taxes are currently pending or threatened
with regard to the Company or any of its the Company Subsidiaries. Neither the
Company nor any of the Company Subsidiaries (i) is a party to any agreement
providing for the allocation or sharing of Taxes, (ii) has participated in or
cooperated with an international boycott as that term is used in Section 999 of
the Internal Revenue Code of 1986, as amended (the“Code”), or (iii) is liable as
a transferee, a successor or otherwise for any Tax incurred by any other person.
There is no material intercompany income or gain which may in the future become
taxable to the Company, whether on disposition of particular assets or Company
Subsidiaries or otherwise. Except as Previously Disclosed, no Tax Return of the
Company or any of the Company Subsidiaries is the subject of an audit by any
taxing authority (including any state or local taxing authority) in the
Commonwealth of Puerto Rico, the United States, the U.S. Virgin Islands or any
other nation. All deficiencies asserted or assessments made as a result of any
Tax audits that are not being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established have been paid in full.
At least since January 1, 2006, no claim has been made by an authority in a
jurisdiction where the Company or any of the Company Subsidiaries does not file
a Tax Return that the Company or any of the Company Subsidiaries is or may be
subject to taxation by that jurisdiction. Except as Previously Disclosed,
neither the Company nor any Company Subsidiary (i) has waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, in each case, that is still in
effect, or has pending a request for any such extension or waiver or (ii) has or
has ever had a permanent establishment in any country other than the country of
its organization, or is or has ever been subject to Tax in a jurisdiction
outside the country of its organization. The Company is not a “controlled
foreign corporation” within the meaning of Section 957 of the Code, nor will it
become a “controlled foreign corporation” as a result of the transactions
contemplated by this Agreement. Neither the Company nor any of the Company
Subsidiaries is (i) a passive foreign investment company within the meaning of
Section 1297 of the Code or (ii) a shareholder, directly or indirectly, in such
a passive foreign investment company. There are no current limitations on the
utilization by the Company or any of the Company Subsidiaries of its respective
net operating loss carryforwards under any applicable Tax law, including
Section 382 of the Code (or any similar provision of state, local or non-U.S.
law). The transactions described herein occurring on the Closing Date and any
other transactions contemplated by this Agreement and the other Investor
Agreements will not result in a limitation on the utilization of the Company’s
or FirstBank’s net operating loss carryforwards under any applicable provision
of Puerto Rico income Tax law. The net operating loss carryforward of FirstBank
as of December 31, 2010 as a result of losses that have been or will be
reflected on FirstBank’s Puerto Rico income tax returns (at least some of which
are or will be subject to audit) is at least $550,000,000. For the purposes of
this Agreement, the term “Taxes” means (1) all Commonwealth of Puerto Rico, U.S.
Virgin Islands, British Virgin Islands, U.S. federal, state, local, foreign or
other taxes of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Entity, including taxes on or with respect to income,
franchise, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, unemployment, social security, workers’
compensation or net worth, and taxes in the nature of excise, withholding, ad
valorem or value added, (2) liability for the payment of any amounts of the type
described in clause (1) as a result of being or having been a member of an
affiliated, consolidated, combined or unitary group, and (3) liability for the
payment of any amounts as a result of being party to any tax sharing agreement
or as a result of any express or

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implied obligation to indemnify any other person with respect to the payment of
amounts of the type described in clause (1) or (2). For the purposes of this
Agreement, the term “Tax Return” means any and all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns and any amendments thereto) supplied or required to be
supplied to any Governmental Entity in connection with Taxes.
          (v) Environmental Matters. Except as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect,
(i) the Company and the Company Subsidiaries have all environmental permits
which are necessary to enable them to conduct their businesses as they are being
conducted on the date of the Original Agreement without violating any
Environmental Laws, (ii) neither the Company nor any of the Company Subsidiaries
has received any notice of material noncompliance or material liability under
any Environmental Law, (iii) neither the Company nor any of the Company
Subsidiaries has performed any acts, including, but not limited to, releasing,
storing or disposing of hazardous materials, there is no condition on any
property owned or leased by the Company or a Company Subsidiary, and there was
no condition on any property formerly owned or leased by the Company or a
Company Subsidiary while the Company or a Company Subsidiary owned or leased
that property, that could result in liability by the Company or a Company
Subsidiary under any Environmental Law and (iv) neither the Company nor any of
the Company Subsidiaries is subject to any order of any Governmental Entity
requiring the Company or any of the Company Subsidiaries to take, or refrain
from taking, any actions in order to comply with any Environmental Law and no
action or proceeding seeking such an order is pending or, insofar as any officer
of the Company or any of the Company Subsidiaries is aware, threatened against
the Company or any of the Company Subsidiaries. As used in this Agreement, the
term“Environmental Law” means any United States, Puerto Rico or other national,
state or local law, rule, regulation, guideline or other legally enforceable
requirement of a Governmental Entity relating to protection of the environment
or to environmental conditions which affect human health or safety.
          (w) Labor Matters. No employees of the Company or Company Subsidiaries
are represented by any labor union nor are there any collective bargaining
agreements otherwise in effect. There is no pending demand by any union or
employee group to be recognized or certified as the bargaining representative
for any of the Company’s or the Company Subsidiaries’ employees, and there are
no proceedings seeking recognition or certification of that type pending before
the National Labor Relations Board or any other Governmental Entity in the
United States, Puerto Rico or elsewhere.
          (x) Company Benefit Plans.
     (i) The Company has Previously Disclosed all benefit plans, agreements,
commitments, practices or arrangements of any type maintained or sponsored by
the Company or any Company Subsidiary for its current and former employees,
directors and consultants and the compensation paid to all its directors, to its
Chief Executive Officer, its Chief Financial Officer, and its three most highly
compensated officers other than its Chief Executive Officer and its Chief
Financial Officer who were serving as officers at December 31, 2010. “Company
Benefit Plans” means all benefit and compensation plans, agreements,
commitments, practices or arrangements of any type maintained or sponsored by
the Company or any Company Subsidiary for its current and former employees,
directors and individual consultants.

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     (ii) Except as would not reasonably be expected to result in a liability
that would be material to the Company and the Company Subsidiaries taken as a
whole, (i) each Company Benefit Plan that is required to be registered with, or
approved by, a Governmental Entity in the Commonwealth of Puerto Rico, the
United States or any other jurisdiction has been so registered with or approved
by that Governmental Entity, and (ii) each Company Benefit Plan has been
maintained in all material respects in accordance with its terms and any
applicable provisions of law (including, if applicable, the U.S. Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), the Code, the
Internal Revenue Code of New Puerto Rico, the Troubled Asset Relief Program, and
the Emergency Economic Stabilization Act of 2008).
     (iii) No Company Benefit Plan is (x) a pension plan (of the type described
in Section 3(2) of ERISA) subject to statutory minimum funding requirements
under Title IV of ERISA, Section 412 of the Code, or similar law; (y) a
“multiemployer plan” (of the type described in Section 3(37) of ERISA), or
(z) an “employee welfare plan” (of the type described in Section 3(1) of ERISA)
providing benefits, including death or medical benefits, beyond termination of
service or retirement other than coverage mandated by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or similar law, and at the sole
expense of the participant or the participant’s beneficiary. Neither the Company
nor any Company Subsidiary would reasonably be expected to have any liability
with respect to any plan described in (x), (y), or (z) of this subsection or
otherwise as a result of any trade or business that is or during the past six
years has been treated as a single employer with the Company or any Company
Subsidiary under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)
of ERISA.
     (iv) Neither the execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement will give rise to a change in
control under, or result in the breach or the violation of, or the acceleration
of any right under, or result in any additional rights, or the triggering of any
anti-dilution adjustment under an equity plan sponsored by the Company or any of
the Company Subsidiaries or an employment agreement or other contract or
agreement to which the Company or any of the Company Subsidiaries is a party.
     (v) Neither the Company nor any of the Company Subsidiaries has a contract,
plan or commitment, whether legally binding or not, to create any additional
Company Benefit Plan or to modify any existing Company Benefit Plan in a manner
that would increase materially the expense of maintaining such Company Benefit
Plan above the level of the expense incurred therefore for the most recent
fiscal year.
          (y) Investment Company or Investment Adviser. Neither the Company nor
any of the Company Subsidiaries is required to be registered as an investment
company under the Investment Company Act of 1940, as amended, or to be
registered under the Investment Advisers Act of 1940, as amended.
          (z) Compliance with Banking Laws and Regulations. Neither the Company
nor any of the Company Subsidiaries (including FirstBank) (i) is subject to (or
has been advised that a Governmental Entity that regulates banking activities in
any location in which the Company or any Company Subsidiary conducts banking
activities (including the FDIC, the OCFI and the Federal Reserve) (each a “Bank
Regulatory Agency“) is considering issuing, initiating or ordering) any
cease-and-desist or similar order, or any enforcement action commenced, by any
Bank Regulatory Agency or (ii) is a party to any written agreement, consent
agreement or

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memorandum of understanding with, or any commitment letter or written
undertaking to, any Bank Regulatory Agency, and no resolution of the Board of
Directors of the Company or any of the Company Subsidiaries (including
FirstBank) is in effect that was adopted at the request of a Bank Regulatory
Agency that restricts in any material respect the conduct of its business or
that relates in a material manner to its capital adequacy, its liquidity and
funding policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies, its internal controls, its management or its
operations or business, other than the FDIC Consent Order, the OCFI Order, the
Federal Reserve Agreement and a confidential agreement dated September 28, 2010
with a Bank Regulatory Agency. The Company and each of the Company Subsidiaries
is in compliance in all material respects with all agreements, commitments and
undertakings it has made to a Governmental Entity that are currently in effect
(including the FDIC Consent Order, the OCFI Order and the Federal Reserve
Agreement) and neither the Company nor any of the Company Subsidiaries has
received any notice from any Bank Regulatory Agency indicating that either the
Company or any of the Company Subsidiaries is not in compliance in all material
respects with any such agreement, commitment or undertaking. Since January 1,
2008, the Company and each Company Subsidiary have filed all material reports,
registrations and statements, together with any required amendments thereto,
that it was required to file with the Bank Regulatory Agencies, including,
without limitation, all financial statements and financial information required
to be filed by it under the Federal Deposit Insurance Act and the Bank Holding
Company Act. As of their respective dates, such reports complied in all material
respects with all the rules and regulations promulgated by the applicable Bank
Regulatory Agencies.
          (aa) Compliance with Mortgage Laws and Sale of Mortgage Loans. The
Company and the Company Subsidiaries have complied in all material respects with
(i) all requirements of applicable laws and governmental regulations with
respect to the origination, purchase, sale, insuring or servicing of or filing
of claims in connection with mortgage loans, including all laws and governmental
regulations with respect to documentation in connection with the origination,
processing, underwriting (including credit approval), purchase and servicing of
mortgage loans, real estate settlement procedures, consumer protection, truth in
lending, fair housing, transfers of servicing, collection practices, equal
credit opportunity and adjustable rate mortgages, (ii) with regard to mortgage
loans any of them has sold to any Agency, any agreements with, or applicable
rules, regulations, guidelines or other requirements of, any Agency to which the
mortgage loans were sold, in each case, except failures to comply that would not
reasonably be expected, in aggregate, to have a Company Material Adverse Effect,
(iii) the responsibilities and obligations relating to mortgage loans set forth
in any agreement between the Company or any of the Company Subsidiaries and any
such Agency, Loan Investor or Insurer, and (iv) the terms and provisions of any
mortgage or other collateral documents and other loan documents with respect to
each mortgage loan, in the case of this clause (iv) only, except as would not
cause a Company Material Adverse Effect. Neither the Company nor any of the
Company Subsidiaries has received a written claim from any Agency, Loan Investor
or Insurer to the effect that the Company or any of the Company Subsidiaries has
failed to comply in any material respect with applicable underwriting standards
or guidelines with respect to mortgage loans sold by the Company or any of the
Company Subsidiaries to an Agency or Loan Investor or with respect to any sale
of mortgage servicing rights, or a written notice from any Agency, Loan Investor
or Insurer restricting the activities (including commitment authority) of the
Company or any of the Company Subsidiaries or terminating or giving notice of
intent to terminate its relationship with the Company or any of the Company
Subsidiaries because of poor performance, poor loan quality or concern with
respect to the Company’s or any of the Company Subsidiaries’ compliance with
laws. For purposes of this Section 3.1(aa):

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     (i) “Agency ” shall mean the Federal Housing Administration, the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage Association, the
Government National Mortgage Association, or any other federal or state agency
with authority to (i) determine any investment, origination, lending or
servicing requirements with regard to mortgage loans originated, purchased or
serviced by the Company or any of the Company Subsidiaries or (ii) originate,
purchase, or service mortgage loans, or otherwise promote mortgage lending,
including, without limitation, state and local housing finance authorities;
     (ii) “Loan Investor ” shall mean any person (including an Agency) having a
beneficial interest in any mortgage loan originated, purchased or serviced by
the Company or any of the Company Subsidiaries or a security backed by or
representing an interest in any such mortgage loan; and
     (iii) “Insurer ” shall mean a person who insures or guarantees for the
benefit of the mortgagee all or any portion of the risk of loss upon borrower
default on any of the mortgage loans originated, purchased or serviced by the
Company or any of the Company Subsidiaries, including the Federal Housing
Administration, the United States Department of Veterans’ Affairs, the Rural
Housing Service of the U.S. Department of Agriculture and any private mortgage
insurer, and providers of hazard, title or other insurance with respect to such
mortgage loans or the related collateral.
          (bb) Risk Management. The Company and the Company Subsidiaries have in
place risk management policies and procedures sufficient in scope and operation
to provide reasonable protection against risks of the type and in amounts
reasonably expected to be incurred by entities that are similar to the Company
and the Company Subsidiaries in size and in the lines of business in which they
are engaged. All material derivative instruments entered into by the Company or
the Company Subsidiaries for their own accounts were entered into (i) in the
ordinary course of business only for the purposes of mitigating identified
risks, (ii) in accordance with prudent practices and in all material respects
with all applicable laws, rules, regulations and regulatory policies, and
(iii) with counterparties that, at the time, the Company or the applicable
Company Subsidiary believed to be financially responsible. Each such material
derivative instrument constitutes a valid and legally binding obligation of the
Company or one or more of the Company Subsidiaries, enforceable in accordance
with its terms and, to the knowledge of the Company, neither the Company nor any
of the Company Subsidiaries, nor any other party thereto, is in material breach
of or has materially defaulted under any such agreement or arrangement.
          (cc) Patriot Act, Office of Foreign Asset Controls; Anti-Money
Laundering. The operations of the Company and the Company Subsidiaries are being
conducted in compliance in all material respects with applicable financial
recordkeeping, reporting and other requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the United and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, any applicable order or regulation issued by the Office
of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), or
any other applicable anti-money laundering or anti-terrorist-financing statutes,
rules or regulations of any jurisdictions, and no action or proceeding by or
before any Governmental Entity alleging violations of anti-money laundering
statutes or anti-terrorist financing statutes by the Company or any of the
Company Subsidiaries is pending or, to the knowledge of the Company, threatened,
except, in each case, as would not reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect. None of the Company or
any of the

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Company Subsidiaries has, since December 31, 2008, nor to the knowledge of the
Company has any other person on behalf of the Company or any of the Company
Subsidiaries that qualifies as a “financial institution” under U.S. anti-money
laundering laws, knowingly acted, by itself or in conjunction with another, in
any act in connection with the concealment of any currency, securities or other
proprietary interest that is the result of a felony as defined in U.S.
anti-money laundering laws (“Unlawful Gains”), nor knowingly accepted,
transported, stored, dealt in or brokered any sale, purchase or any transaction
of any other nature for Unlawful Gains. Each of the Company and, to the extent
it qualifies as a “financial institution” under U.S. anti-money laundering laws,
any of the Company Subsidiaries has implemented in all material respects such
anti-money laundering mechanisms and kept and filed all material reports and
other necessary material documents as required by, and otherwise complied in all
material respects with, U.S. anti-money laundering laws and rules and
regulations thereunder. None of the Company or any of the Company Subsidiaries,
nor any of their respective directors, officers, agents, employees or any other
persons acting on their behalf, will knowingly directly or indirectly lend,
contribute or otherwise make available any funds to any subsidiary, joint
venture partner or other person or entity for the purpose of financing the
activities of any person currently subject to U.S. sanctions administered by
OFAC.
          (dd) Foreign Corrupt Practices Act. None of the Company or any of the
Company Subsidiaries, nor any of their respective directors, officers, agents,
employees or any other persons acting on their behalf (i) has violated the
Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq., as amended, or any
other similar applicable foreign, federal, or state legal requirement, including
making or providing, or causing to be made or provided, directly or indirectly,
any payment or thing of value to a foreign official, foreign political party,
candidate for office or any other person knowing that the person shall pay or
offer to pay the foreign official, party or candidate, for the purpose of
influencing a decision, inducing an official to violate their lawful duty,
securing any improper advantage, or inducing a foreign official to use his or
her influence to affect a governmental decision, (ii) has paid, accepted or
received any unlawful contributions, payments, expenditures or gifts, or
(iii) has violated or operated in noncompliance with any export restrictions,
anti-terrorism law or regulation, anti-boycott regulations or embargo
regulations.
          (ee) Insurance. The Company and each of the Company Subsidiaries is
presently insured, and during each of the past three calendar years (or during
such lesser period of time as the Company has owned such subsidiary) has been
insured, for reasonable amounts with financially sound and reputable insurance
companies against such risks as companies engaged in a similar business would,
in accordance with good business practice, customarily be insured.
          (ff) Core Deposits and Certificates of Deposits. As of the date of the
Original Agreement, FirstBank has at least $3,475,000,000 in core deposits
(including money market, demand, checking, savings and transactional accounts
and excluding secured governmental deposits and certificates of deposits) and at
least $1,825,000,000 in certificates of deposits, excluding governmental and
brokered deposits.
          (gg) Loans to Affiliates; Loans to Directors and Officers. Neither the
Company nor any of the Company Subsidiaries is a party to any loan, loan
agreement, note or borrowing arrangement (including leases, credit enhancements,
commitments, guarantees and interest-bearing liabilities) (each, a “Loan”) with
any director or executive officer of the Company or any of the Company
Subsidiaries or shareholder of the Company that beneficially owns five percent
or more of the Common Stock of the Company. All Loans with any executive officer
of the

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Company or any of the Company Subsidiaries or shareholder of the Company are
made in compliance with the applicable requirements of the Federal Reserve
Board’s Regulation O.
          (hh) Compliance with Securities Laws. Neither the Company nor any
person acting on its behalf has taken any action (including, offering any
securities of the Company under circumstances which would require the
integration of such offering with the offering of any of the securities to be
issued pursuant to this Agreement or any other Investor Agreement with any Other
Investors for purposes of the Securities Act and the rules and regulations of
the SEC promulgated thereunder) which might subject the offering, issuance or
sale of any of the securities to be issued pursuant to this Agreement or any
other Investor Agreement with any Other Investors to the registration
requirements of the Securities Act or that would cause the sale of Common Stock
under this and the other Investor Agreements not to be eligible for the
exemption from the registration requirements of the Securities Act contained in
Section 4(2) of that Act.
          (ii) Commitments and Contracts. Each agreement to which the Company or
any Company Subsidiary is a party which is a “material contract” within the
meaning of Item 601(b)(10) of Regulation S-K (each, a “Company Significant
Agreement”) is valid and binding on the Company and the Company Subsidiaries, as
applicable, and, and insofar as any officer of the Company is aware, is valid
and binding on the other party or parties to it, and is in full force and
effect. The Company and each of the Company Subsidiaries, as applicable, are in
all material respects in compliance with and have in all material respects
performed all obligations required to be performed by them to date under each
Company Significant Agreement. Neither the Company nor any of the Company
Subsidiaries knows of, or has received notice of, any material violation or
default (or any condition which with the passage of time or the giving of notice
would cause such a violation of or a default) by the Company or any Company
Subsidiary under any Company Significant Agreement. As of the date of the
Original Agreement, there are no material transactions or series of related
transactions, agreements, arrangements or understandings, nor are there any
currently proposed material transactions, or series of related transactions
between the Company or any Company Subsidiaries, on the one hand, and the
Company, any current or former director or executive officer of the Company or
any Company Subsidiaries or any person who beneficially owns 5% or more of the
Common Stock (or any of such person’s immediate family members or affiliates)
(other than Company Subsidiaries), on the other hand. As used in this Agreement,
the term “affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other
person. For purposes of this definition, “control” (including, with correlative
meanings, the terms “controlled by” and “under common control with”) when used
with respect to any person, means the possession, directly or indirectly, of the
power to cause the direction of management or policies of such person, whether
through the ownership of voting securities by contract or otherwise.
          (jj) Properties and Leases. The Company and the Company Subsidiaries
have good and marketable title to all real properties and good title to all
other properties and assets owned by them (other than any assets the Company or
any of the Company Subsidiaries has repossessed), in each case, free from Liens
that would affect the value thereof or interfere with the use made or to be made
thereof by them in any material respect. The Company and the Company
Subsidiaries own or lease all properties that are necessary to their operations
as now conducted. All leases of real property and all other leases material to
the Company or any of the Company Subsidiaries pursuant to which the Company or
any such Company Subsidiary, as lessee, leases real or personal property are
valid and effective in accordance with their respective terms, and there is not,
under any such lease, any existing default by the Company

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or such Company Subsidiary or any event which, with notice or lapse of time or
both, would constitute such a default except for such as would not reasonably be
expected to have a Company Material Adverse Effect.
          (kk) Intellectual Property Rights.
     (i) The Company and the Company Subsidiaries own or possess adequate rights
or licenses to use all material Intellectual Property rights (“Intellectual
Property Rights”) necessary to conduct their business as conducted on the date
of the Original Agreement and as presently contemplated to be conducted in the
future. To the knowledge of the Company, no product or service of the Company or
the Company Subsidiaries infringes the Intellectual Property Rights of others.
The Company and the Company Subsidiaries have not received notice of any claim
being made or brought, or, to the knowledge of the Company, being threatened,
against the Company or any of the Company Subsidiaries (i) regarding their
Intellectual Property Rights that are necessary to conduct their business as
conducted on the date of the Original Agreement and as presently contemplated to
be conducted in the future, or (ii) that the products or services of the Company
or the Company Subsidiaries infringe the Intellectual Property Rights of others.
The computers, computer software, firmware, middleware, servers, workstations,
routers, hubs, switches, data communications lines, and all other information
technology equipment, and all associated documentation used in the business of
the Company and the Company Subsidiaries (the “IT Assets”) operate and perform
in all material respects in accordance with their documentation and functional
specifications and otherwise as required in connection with the business. To the
Company’s knowledge, no person has gained unauthorized access to the IT Assets.
The Company and the Company Subsidiaries have implemented reasonable backup and
disaster recovery technology consistent with industry practices. The Company and
the Company Subsidiaries take reasonable measures, directly or indirectly, to
ensure the confidentiality, privacy and security of customer, employee and other
confidential information. The Company and the Company Subsidiaries have complied
with all internet domain name registration and other requirements of internet
domain registrars concerning internet domain names that are used in the
business. Without limiting the foregoing, the Company and the Company
Subsidiaries (A) own or have the valid right to use all the names that are
material to the conduct of their businesses or the maintenance of their customer
goodwill, including the name “FirstBank”, in all applicable jurisdictions, free
and clear of all Liens and (B) have not granted to any third party, by license
or otherwise, any right or interest in or to use any such name other than in
connection with relationships between those third parties and the Company or
Company Subsidiaries. No third party has asserted any rights in any geographic
area in which it competes with the Company or a Company Subsidiary to any name
that is material to the business of the Company or a Company Subsidiary with
which the third party competes.
     (ii) For the purposes of this Agreement, “Intellectual Property” shall mean
trademarks, service marks, brand names, certification marks, trade dress, domain
names and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patentable or not, in any jurisdiction; patents, applications for
patents (including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or

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reissues thereof, in any jurisdiction; nonpublic information, know-how, trade
secrets and confidential information and rights in any jurisdiction to limit the
use or disclosure thereof by any person; writings and other works, whether
copyrightable or not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; and any similar intellectual property or proprietary rights.
     3.2 Representations and Warranties of the Investors. Each Investor
represents and warrants, severally and not jointly and only with respect to
itself, to the Company as follows:
          (a) Organization and Power. The Investor is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it was
formed and the Investor is duly qualified to do business in all jurisdictions
where failure to be qualified could reasonably be expected to affect adversely
the Investor’s ability to carry out the transactions that are the subject of
this Agreement. The Investor is an entity advised by an affiliate of Thomas H.
Lee Partners, L.P.
          (b) Authorization. The Investor has all power and authority that is
necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All actions necessary to authorize
the Investor to enter into this Agreement and carry out the transactions
contemplated by it have been taken. This Agreement has been duly executed by the
Investor and, assuming due execution by the Company, it is a valid and binding
agreement of the Investor, enforceable against the Investor in accordance with
its terms.
          (c) No Conflict. Neither the execution and delivery of this Agreement
by the Investor nor the consummation of the transactions contemplated by this
Agreement will violate, result in a breach of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, (i) the certificate of incorporation and bylaws or other organizational
documents of the Investor, (ii) any agreement or instrument to which the
Investor or any of its subsidiaries is a party or by which any of them is bound,
or (iii) except as set forth on Schedule 3.2, any law, or any order, rule or
regulation of any Governmental Entity having jurisdiction over the Investor or
any of its subsidiaries, except violations, breaches or defaults that would not
reasonably be expected to affect adversely the Investor’s ability to carry out
the transactions that are the subject of this Agreement when and as contemplated
by this Agreement.
          (d) Consents and Approvals. Except as set forth on Schedule 3.2,
neither the execution and delivery of this Agreement by the Investor, nor the
completion by the Investor of the transactions that are the subject of this
Agreement, requires the consent of, approval by, or a filing or notification by
the Investor with, any Governmental Entity, other than, if applicable, filings
under the Exchange Act reporting the purchase of Common Stock by the Investor
and filings, notifications, clearances or approvals that may be required to be
made or given with or to, or obtained from, the Federal Reserve Board, the FDIC,
the OCFI or any other Governmental Entity, including any banking or insurance
regulatory agency, as a result of its jurisdiction over the Company or any of
the Company Subsidiaries (including FirstBank) or persons who control the
Company. At the date of the Original Agreement, the Investor did not know of any
reason that any Governmental Entity would not give any required consent to, or
approval of, the Investors’ acquiring the Acquired Common Stock as contemplated
by this Agreement. The transactions that are contemplated by this Agreement
qualify for an exemption from the reporting or waiting period requirements of
the HSR Act under Section 7A(c) of the HSR Act.

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          (e) Ownership. The Investor and its affiliates do not own an interest
in any depository institution such that the acquisition by the Investors of the
Acquired Common Stock would cause FirstBank and that depository institution to
become “commonly controlled insured depository institutions” (as that term is
defined for purposes of Section 5(e) of the Federal Deposit Insurance Act).
Except as shown on the signature page of this Agreement, neither the Investor
nor any affiliate of the Investor (other than an affiliate as to which the
Investor does not control decisions regarding the purchase, sale or voting of
securities) owns any Common Stock of the Company.
          (f) Financial Capacity. The Investor has, or has legally binding
commitments from equity investors, lenders or both to provide, and the Investor
will have on the Closing Date, all the funds the Investor will require to enable
the Investor to pay the purchase price for the Acquired Common Stock it will be
purchasing as described in Section 1.1 when and as contemplated by this
Agreement.
          (g) Accredited Investor. The Investor either (i) is an accredited
investor, as that term is defined in SEC Rule 501 under the Securities Act, of
the type described in clause (1), (2), (3), (4) or (7) of that Rule, and has
such knowledge and experience in financial and business matters and in
investments similar to the purchase of the Acquired Common Stock that it is
capable of evaluating the merits and risks of its investment in the Acquired
Common Stock and of making an informed investment decision regarding the
purchase of the Acquired Common Stock, or (ii) is not a U.S. person, as that
term is defined in SEC Regulation S under the Securities Act and is acquiring
the Acquired Common Stock outside the United States. The Investor is aware that
the Acquired Common Stock is being offered in a transaction not involving a
public offering in the United States, that the offer and sale of the Acquired
Common Stock has not been registered under the Securities Act, and that the
Investor may only sell or transfer Acquired Common Stock under the limited
circumstances set forth in Article 7. The Investor will be acquiring the
Acquired Common Stock for investment, and not with a view to distributing the
Acquired Common Stock in violation of securities laws, except that the Investor
may sell Acquired Common Stock, to the extent permitted by Article 7, in
transactions registered under the Securities Act.
          (h) Investment Purpose. The Investor will be acquiring the Acquired
Common Stock for investment (as that term is defined in the rules under the HSR
Act) and, assuming the Company’s representations and warranties in
Section 3.1(h) are correct, the acquisition of the Acquired Common Stock by the
Investor as contemplated by this Agreement will not result in the Investor’s
owning 25% or more of the outstanding Common Stock. The Investor is not acting
in concert with any other party to an Investor Agreement with regard to the
purchase of Common Stock and the Investor has no agreements or understandings
with any other persons (other than its agreements with the Company in this
Agreement) regarding actions as a stockholder of the Company after the Closing
Date.
          (i) Investor’s Decision. The Investor’s decision to enter into this
Agreement and to purchase the Acquired Common Stock it has agreed to purchase
was based on the Investor’s or its adviser’s independent analysis of the merits
and risks of an investment in Acquired Common Stock, taking into account the
Investor’s own financial circumstances. The Investor did not rely in making that
decision upon any analysis prepared by, or investment advice received from, the
Company or any financial advisor, placement agent or other person acting on
behalf of the Company. The Investor is, however, relying on the representations
and warranties of the Company in this Agreement in making its decision to
purchase Acquired Common Stock.

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ARTICLE 4
ACTIONS PRIOR TO THE TRANSACTION
     4.1 Stockholder Approval. Unless the NYSE informs the Company that the NYSE
rules (including Rule 312.03 of the NYSE Listed Company Manual) do not require
(whether because the NYSE requirement has been satisfied by prior stockholder
approvals, or because of an exception, a waiver or otherwise) approval by the
Company’s stockholders of the transactions that are the subject of the Investor
Agreements, within 20 days after the date of the Original Agreement, the Company
will file with the SEC a preliminary proxy statement relating to a special
stockholders meeting at which the Company’s stockholders will be asked to
approve the transactions that are the subject of the Investor Agreements in
accordance with Rule 312.03 of the NYSE Listed Company Manual. The Company will
include in the proxy statement the unanimous recommendation of its Board of
Directors that the Company’s stockholders vote to approve the transactions that
are the subject of the Investor Agreements, unless, and solely to the extent,
the Board determines, after consultation with counsel, that in the exercise of
its fiduciary duties it must withdraw or modify that recommendation. A
withdrawal or modification of the recommendation of the Board shall not affect
the obligations of the Company to hold the meeting of the Company’s stockholders
contemplated by this Agreement. If the preliminary proxy statement has not been
filed with the SEC prior to the date of the Original Agreement, the Investors
and their counsel shall have the opportunity to review such preliminary proxy
statement in advance of the Company filing such preliminary proxy statement with
the SEC, and to provide comments thereon, which comments the Company shall give
due and reasonable consideration. The Company will provide any comments received
from the SEC to the Investors and their counsel as promptly as practicable upon
receipt thereof and shall use its reasonable best efforts to consult with the
Investors and their counsel and, to the extent it is not unreasonable for it to
do so, to resolve and comply with all comments of the staff of the SEC promptly,
and to cause the proxy statement to be filed in definitive form and distributed
to the Company’s stockholders as promptly as practicable, either by mail or by
notice of internet access, and in any event within five Business Days after the
Company is informed by the staff of the SEC that they have no further comments
with regard to the proxy statement. The Company will cause the stockholders
meeting to which the proxy statement relates and at which the Company’s
stockholders will be asked to approve the transactions that are the subject of
the Investor Agreements to be held as promptly as practicable and no more than
40 days after the Company distributes the proxy statement to its stockholders.
     4.2 HSR Act Filings.
          (a) The purchase of the Acquired Common Stock by the Investors as
contemplated by this Agreement (either alone or together with the purchases of
Common Stock by Other Investors under the other Investor Agreements) qualifies
for an exemption from the reporting or waiting period requirements of the HSR
Act under Section 7A(c) of the HSR Act. In order to satisfy the requirements of
such exemption, the Investors and the Company will each make as promptly as
practicable any filings they are required to make in connection with such
exemption under the HSR Act and such other antitrust laws with regard to the
transactions that are the subject of this Agreement and each of them will take
all reasonable steps within its control (including providing information to the
Federal Trade Commission and the Department of Justice) to ensure the
transaction qualifies for the exemption under the HSR Act. Each of the Investors
and the Company will each provide information and cooperate in all other
respects to assist the other of them in ensuring that the transaction qualifies
for the exemption under the HSR Act.

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          (b) If it is determined by any Governmental Entity that a filing with
regard to the transactions that are the subject of this Agreement is required
under the HSR Act (the HSR Act (notwithstanding the belief of the Company and
the Investors that those transactions are exempt from the reporting and waiting
period requirements of the HSR Act) or any other antitrust or competition laws
of any jurisdiction, each of the Investors and the Company will each provide
information and cooperate in all other respects to assist the other of them in
making the filing required under the HSR Act or other antitrust or competition
law. The Company will pay the filing fee that is required with regard to any
filing required under the HSR Act or any other antitrust or competition law.
     4.3 Listing of Shares. Promptly after the date of the Original Agreement,
the Company will file an application with the NYSE to list the shares of Common
Stock that it will be issuing under this Agreement and the other Investor
Agreements and the Company will use its best commercially reasonable efforts to
cause those shares to be authorized for listing upon notice of issuance.
     4.4 Change of Bank Control Act and Bank Holding Company Act. Each Investor
that is required to file a written notice with the Federal Reserve Board under
the Change in Bank Control Act of 1978, as amended (the “CBCA”) with respect to
such Investor’s proposed purchase of Acquired Common Stock will file that notice
within 20 Business Days after the date of the Original Agreement and will use
its best commercially reasonable efforts, including providing all information
reasonably requested by the Federal Reserve Board and entering into customary
passivity commitments, to obtain as promptly as practicable a written
confirmation from the Federal Reserve Board to the effect that such Investor’s
purchase of the Acquired Common Stock and the consummation of the transactions
that are the subject of this Agreement will not result in such Investor or any
of its affiliates being in control of the Company or of FirstBank for purposes
of the Bank Holding Company Act or the Federal Reserve Board’s Regulation Y, or
otherwise being subject to regulation as a bank holding company under that Act.
The Company will cooperate with each Investor in all reasonable respects with
regard to such Investor’s efforts to obtain such confirmation from the Federal
Reserve Board. If the Federal Reserve Board requires revisions to the structure
of the transactions that are the subject of this Agreement before it will give
such confirmation, the Company and the Investors will cooperate to make the
necessary revisions, provided that neither the Company nor the Investors will be
required to revise the structure of those transactions in a way that would
impose a Materially Burdensome Regulatory Condition. Notwithstanding anything to
the contrary, neither the Investors nor any of their affiliates shall be
required to comply with, agree to, or suffer to exist, any requirement,
condition, restriction or limitation (other than customary passivity commitments
or other requirements, conditions, restrictions or limitations that are
customary for similarly situated investments) arising pursuant to any notice to,
registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, that when
used in reference to an Investor’s or the Company’s obligations hereunder or a
condition to an Investor’s or the Company’s obligations hereunder, is, in the
good faith reasonable judgment of such Investor or the Company, as the case may
be, materially burdensome on, or would materially reduce the economic benefits
of the transactions contemplated by this Agreement to, such Investor or the
Company or any of their affiliates (any such requirement, condition, restriction
or limitation, a “Materially Burdensome Regulatory Condition”). At least 20
Business Days before the Closing Date, the Company will include in a schedule of
contemplated steps with regard to the transactions that are the subject of this
and the other Investor Agreements that is submitted to the Federal Reserve
Board, or in another document that is submitted to the Federal Reserve Board
regarding the transactions that are the subject of this Agreement and the other
Investor Agreements, disclosure of the fact that

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between the time when Common Stock is issued to the Investors at the Closing and
the time when the conversion of the Series G Preferred Stock into Common Stock
becomes effective (which is expected to be immediately after Common Stock is
issued to, and paid for, by the Investors and the Other Investors at the
Closing), the Acquired Common Stock will constitute more than 9.9% of the
outstanding shares of Common Stock (the “Submission)”. A copy of the Submission
will be provided to the Investors at least two Business days prior to its being
submitted to the Federal Reserve Board.
     4.5 Most Favored Terms. The Company has not entered into and will not enter
into any Investor Agreement, or amend any Investor Agreement, with any Other
Investor so that such other Investor Agreement is in any respect more favorable
to the Other Investor that is a party to such Investor Agreement than this
Agreement is to the Investors, including with respect to the Per Share Price, or
that gives any Other Investor or group of affiliated Other Investors the right
to purchase more shares of Common Stock than the total number of shares to be
purchased by all the Investors, unless the Company modifies this Agreement so
that it provides the Investors with the same rights and benefits that are
provided to the Other Investor under the Investor Agreement to which it is a
party (or the Company offers to modify this Agreement in that manner but the
Investors refuse to agree to such modification). To the extent funds are raised
via private placements, the Company shall provide the Investors with copies of
any and all written documents the Company or its representatives prepare for the
purposes of such private placements, including the offering memorandum, and
shall cooperate with the Investors to incorporate the Investors’ reasonable
comments provided on a timely basis regarding any such documents that are
finalized after the date of the Original Agreement prior to furnishing such
documents to the participants in such private placements.
     4.6 Notice of Adverse Occurrences. The Company shall promptly provide the
Investors with written notice of the occurrence of any circumstance, change,
effect, event, fact or development occurring between the date of the Original
Agreement and the Closing Date and relating to the Company or any of the
Company’s Subsidiaries of which the Company has knowledge and which (a) causes
any representation and warranty in Section 3.1 to cease to be correct, (b) could
give rise to a Material Adverse Change in the financial condition, results of
operations, business or prospects of the Company and the Company’s Subsidiaries
taken as a whole, or (c) has, or in the Company’s reasonable judgment could give
rise to, a Company Material Adverse Effect.
     4.7 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, the Company and the Investors will use their respective reasonable
best efforts to take, or cause to be taken, all appropriate actions, to do, or
cause to be done, and assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including
causing the satisfaction and fulfillment of all the conditions set forth in
Article 5. Without limiting the foregoing, the Company shall use its reasonable
best efforts, in order to cause the condition set forth in Section 5.2(h) to be
fulfilled at the Closing, to cause the conversion of the Series G Preferred
Stock to take place at the Closing or immediately after the Closing, and if the
conversion will not occur until immediately after the Closing, to obtain from
all the holders of the Series G Preferred Stock written assurances at or before
the Closing that on the Closing Date, effective immediately after (but subject
to) the completion of the sales of Common Stock contemplated by this Agreement
and the other Investor Agreements, the Company will have the right to cause all
the shares of Series G Preferred Stock to be converted into Common Stock.

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     4.8 Election of Independent Chairman and Independent Directors; Board
Representative.
          (a) At or before the Closing, the Company’s Board of Directors will
elect as Chairman of the Board a person of national reputation within the
banking community who (i) is independent of the Company, the Investors and the
Other Investors; (ii) has “banking or related financial management expertise”
within the meaning of 12 U.S.C. Section 1831m(g)(1)(C)(i) and 12 C.F.R.
Part 363, Appendix A, Section 32; (iii) has served, within the last three years,
as the Chief Executive Officer, President, Chief Financial Officer, Chief Risk
Officer, Chief Credit Officer or non-executive director of an insured depository
institution or insured depository institution holding company of comparable or
greater size as FirstBank, and (iv) has significant experience working with
United States bank regulatory agencies. Subject to the requirements set forth in
Section 5.2(b), if the Company, despite exercising good faith best efforts, is
not able to find by the Closing Date a person with the qualifications described
in the preceding sentence who is willing to serve as Chairman of the Board, the
Company will use its good faith best efforts to identify such a person and cause
that person to become Chairman of the Board as promptly as practicable after the
Closing.
          (b) The Company shall cause the Board Representative to be elected or
appointed, subject to satisfaction of all legal and governance requirements
regarding service as a director of the Company and to the approval of the
Company’s Corporate Governance and Nominating Committee (the “Nominating
Committee”) (such approval not to be unreasonably withheld or delayed), to the
Board of Directors on the Closing Date, and thereafter, as long as the Investors
own in the aggregate at least 25% of the number of shares of Acquired Common
Stock acquired by the Investors on the Closing Date (the “Qualifying Ownership
Interest ”), the Company will include the Board Representative among the
Company’s and its directors’ nominees for election to the Board of Directors at
all of the Company’s applicable annual meetings, subject to satisfaction of all
legal and governance requirements regarding service as a director of the Company
and to the approval of the Nominating Committee (such approval not to be
unreasonably withheld or delayed). If the Nominating Committee determines that
the Board Representative is not qualified to serve on the Board of Directors of
the Company, the Investors will have the right to designate a different Board
Representative. If the Investors no longer have a Qualifying Ownership Interest,
the Investors shall have no further rights under this Section 4.8 and, at the
written request of the Board of Directors, shall use all reasonable best efforts
to cause their Board Representative to resign from the Board of Directors as
promptly as possible thereafter. The Board of Directors shall cause the Board
Representative to be appointed to two committees of the Board as requested by
the Board Representative, so long as the Board Representative qualifies to serve
on such committees under the applicable rules of the NYSE (or such other market
as is the principal market for the Common Stock), the SEC and the Company’s
corporate governance guidelines and the charters of such committees.
          (c) The Company shall use its reasonable best efforts to cause the
Board Representative to be elected as a director of the Company by the
stockholders of the Company and the Company shall solicit proxies for the Board
Representative to the same extent as it does for any of its other nominees to
the Board of Directors.
          (d) Subject to Section 4.8(b), upon the death, resignation,
retirement, disqualification or removal from office of the Board Representative,
the Investors shall, in accordance with Section 4.8(g), have the right to
designate the replacement for the Board Representative, which replacement shall
satisfy all legal and governance requirements

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regarding service as a director of the Company. The Board of Directors of the
Company shall take all action required to fill the vacancy resulting from the
death, resignation, retirement, disqualification or removal of the Board
Representative with the designated replacement, subject to satisfaction of all
legal and governance requirements regarding service as a director of the Company
and to the approval of the Nominating Committee (such approval not to be
unreasonably withheld or delayed). If the Nominating Committee determines that
the designated replacement Board Representative is not qualified to serve on the
Board of Directors of the Company, the Investors will have the right to
designate a different replacement Board Representative. After a person becomes a
replacement Board Representative, the provisions of this Section 4.8 will apply
to that replacement Board Representative to the same extent they apply to
predecessor Board Representatives.
          (e) The Company hereby agrees that, from and after the Closing Date,
for so long as the Investors own the Qualifying Ownership Interest, the Company
shall, subject to applicable law, invite a person designated by the Investors
and reasonably acceptable to the Board of Directors (the “Observer”) to attend
meetings of the Board of Directors (including any meetings of committees thereof
which the Board Representative is a member) in a nonvoting observer capacity. If
the Investors no longer own the Qualifying Interest, the Investors shall have no
further rights under this Section 4.8(e).
          (f) The Board Representative shall be entitled to the same
compensation and same indemnification in connection with his or her role as a
director as the other members of the Board of Directors, and the Board
Representative shall be entitled to reimbursement for documented, reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or any committee thereof, to the same extent as the other members of the Board
of Directors. The Company shall notify the Board Representative and the Observer
of all regular meetings and special meetings of the Board of Directors and of
all regular and special meetings of any committee of the Board of Directors of
which the Board Representative is a member. The Company shall provide the Board
Representative and Observer with copies of all notices, minutes, consents and
other material that it provides to all other members of the Board of Directors
concurrently as such materials are provided to the other members.
          (g) For purposes of this Agreement, “Board Representative” means
Thomas M. Hagerty or such successor as the holders of a majority of the shares
of Common Stock held by the Investors shall designate.
          (h) The Company agrees that a majority of the members of the Board of
Directors shall be independent of the Company, the Investors and the Other
Investors.
          (i) Following the Closing, the Company shall use its reasonable best
efforts to identify two (2) persons who will then be nominated by the Company
for election to the Board of Directors (subject to satisfaction of all legal and
governance requirements regarding service as a director of the Company and to
the approval of the Nominating Committee) at the Company’s Annual Meeting of
Stockholders to be held in April 2012, and each of whom (i) is not a member of
the Board of Directors prior to the Closing, (ii) is determined by the Board of
Directors to be independent of the Company, the Investors and the Other
Investors, (iii) has “banking or related financial management expertise” within
the meaning of 12 U.S.C. Section 1831m(g)(1)(C)(i) and 12 C.F.R. Part 363,
Appendix A, Section 32, and (iv) has served as a director of an insured
depository institution or insured depository institution holding company of
comparable or greater size as FirstBank. The Company shall use its reasonable
best efforts so that at all times after the Company’s annual meeting of
stockholders to be held in April 2012

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as long as the Investors hold a Qualifying Ownership Interest, a majority of the
directors on the Board (other than directors elected by the holders of the
Company’s Series A through E Preferred Stock, if they have the right to elect
directors) will be comprised solely of (i) persons designated by the Investors
or by Other Investors as board representatives through exercise of rights under
Investor Agreements, (ii) a Chairman of the Board who satisfies the
qualifications set forth in Section 4.8(a), and (iii) persons each of whom
satisfies all the qualifications set forth in this Section 4.8(i).
     4.9 Access; Confidentiality.
          (a) From the date of the Original Agreement, until the date when the
shares of Common Stock owned by the Investors represent less than the Qualifying
Ownership Interest, the Company shall ensure that upon reasonable notice, but no
more than once per quarter, the Company and its subsidiaries shall use
reasonable efforts to afford to the Investors and their representatives
(including officers and employees of the Investors, and counsel, accountants and
other professionals retained by the Investors) such access during normal
business hours to its books, records (including Tax returns and appropriate work
papers of independent auditors under normal professional courtesy), properties
and personnel and to such other information as the Investors may reasonably
request.
          (b) Except as otherwise provided in Section 12.2, each party to this
Agreement shall hold, and shall cause its respective subsidiaries and their
directors, officers, employees, agents, consultants and advisors to hold, in
strict confidence, unless disclosure to a Governmental Entity is necessary or
appropriate in connection with any necessary regulatory approval or unless
compelled to disclose by judicial or administrative process or, upon the advice
of its counsel, by other requirement of law or the applicable requirements of
any Governmental Entity (in which case, the party disclosing such information
shall provide the other party with prior written notice of its intention to
disclose the information), all nonpublic records, books, contracts, instruments,
computer data and other data and information (collectively “Information”)
concerning the other party hereto furnished to it by such other party or its
representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (1) previously known by such party on a
nonconfidential basis, (2) in the public domain through no fault of such party
or (3) later lawfully acquired from other sources by the party to which it was
furnished), and neither party hereto shall release or disclose such Information
to any other person, except its auditors, attorneys, financial advisors, other
consultants and advisors and, to the extent permitted above, to bank regulatory
authorities.
          (c) If, through the exercise of its rights under this Section 4.9 or
otherwise, an Investor obtains material non-public information about the
Company, that Investor will comply with all applicable provisions of law
relating to trading on the basis of material non-public information, including
SEC Rule 10b5-1.
     4.10 Conduct of the Business. Prior to the earlier of the Closing Date and
the termination of this Agreement pursuant to Article 9, the Company shall, and,
shall cause each of the Company Subsidiaries to: (a) use commercially reasonable
efforts to carry on its business in the ordinary course of business and use
reasonable best efforts to maintain and preserve its and its subsidiaries’
business (including its organization, assets, properties, goodwill and insurance
coverage) and preserve business relationships with customers, strategic
partners, suppliers, distributors and others having business dealings with it;
provided, that nothing in this clause (a) shall limit or require any actions
that the Board of Directors may, in good faith,

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determine to be inconsistent with, or reasonably likely to be necessary to
enable the Company and the Company Subsidiaries to be able to comply with, the
duties of the Board of Directors or the Company’s obligations under applicable
law or imposed by any Governmental Entity and (b) consult with the Investors
prior to taking any material actions outside of the ordinary course of business.
Without limiting the foregoing, during the period from the date of the Original
Agreement until the Closing Date, the Company shall and shall cause the Company
Subsidiaries to, not take any of the following actions: (i) grant or provide any
severance or termination payments or benefits to any director, officer or
employee of the Company or any of its subsidiaries, other than as required by
any Company Benefit Plans; (ii) increase the compensation, bonus or pension,
welfare, severance or other benefits of, pay any bonus to, or make any new
equity awards to any director, officer or employee of the Company or any of its
subsidiaries, other than (x) as required by any Company Benefit Plans or
(y) increases in employee salaries, or bonus awards, made in the ordinary course
consistent with past practice, that do not in aggregate exceed 5% of current
aggregate employee salaries; (iii) establish, adopt, amend or terminate any
Company Benefit Plan or amend the terms of any outstanding equity-based awards,
except that the Company expects to inform employees that it intends to adopt new
equity incentive plans, or amend existing equity incentive plans, in each case,
after the Closing Date, so that the Company will be able to make equity based
awards to employees with regard to up to 4% of the shares of Common Stock that
will be outstanding after the Closing and the conversion of the Series G
Preferred Stock into Common Stock; (iv) take any action to accelerate the
vesting or payment, or fund or in any other way secure the payment, of
compensation or benefits under any Company Benefit Plan, to the extent not
already provided in any such Company Benefit Plan; (v) change any actuarial or
other assumptions used to calculate funding obligations with respect to any
Company Benefit Plan or to change the manner in which contributions to such
plans are made or the basis on which such contributions are determined, except
as may be required by GAAP; (vi) forgive any loans to directors, officers or
employees of the Company or any of the Company Subsidiaries; (vii) amend its
articles of incorporation, bylaws or other comparable charter or organizational
documents of the Company or any of the Company Subsidiaries; (viii) except as
contemplated or permitted by this Agreement and the other Investor Agreements or
required by Company Benefit Plans, issue, deliver, sell, pledge or otherwise
encumber or subject to any lien, security interest or other encumbrance any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options, to acquire any such
shares, voting securities or convertible securities, of the Company or any of
the Company Subsidiaries; (ix) amend, modify or waive any material term of any
outstanding security of the Company or any of the Company Subsidiaries; (x) make
or change any Tax election or adopt or change any material Tax practice or
policy (unless required by applicable law) or change its fiscal year or
accounting methods, policies or practices (except as required by changes in
GAAP; (xi) except as expressly contemplated in the applicable organizational
documents, adjust, split, combine or reclassify any of the Company’s capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock; (xii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
other securities thereof or any rights, warrants or options to acquire any such
shares or securities (other than pursuant to any Company Benefit Plan); or
(xiii) authorize any of, or commit or agree to take any of, the foregoing
actions.

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ARTICLE 5
CONDITIONS PRECEDENT TO TRANSACTION
     5.1 Conditions to the Company’s Obligations. The obligations of the Company
to complete the transactions that are the subject of this Agreement are subject
to satisfaction of the following conditions (any or all of which may be waived
by the Company):
          (a) (i) The representations and warranties of the Investors contained
in Section 3.2(a) and Section 3.2(b) will be true and correct in all material
respects as of the Closing Date with the same effect as though made on such date
(except that any representation and warranty that relates to a specified date or
a specified time period need only to have been true and correct with regard to
the specified date or time period) and (ii) all other representations and
warranties of the Investors contained in this Agreement will be true and correct
as of the Closing Date (without giving effect to any “material” or “materiality”
qualifications contained in such representations and warranties) with the same
effect as though made on such date (except that any representation and warranty
that relates to a specified date or a specified time period need only to have
been true and correct with regard to the specified date or time period), except,
in the case of this clause (ii) only, to the extent the failure of any such
representations or warranties to be true and correct would not, individually or
in the aggregate, prevent or materially delay the ability of the Investors to
perform their obligations under this Agreement and to consummate the
transactions contemplated hereby.
          (b) The Investors will have fulfilled in all material respects all
their obligations under this Agreement required to have been fulfilled on or
before the Closing Date.
          (c) No provision of any applicable law or regulation shall exist and
no order, decree, injunction or judgment will have been entered by any
Governmental Entity and be in force that invalidates this Agreement or restrains
the Company from completing the transactions that are the subject of this
Agreement and no actions or proceedings will be pending against the Company or
any of the Company Subsidiaries that, if decided against the Company or any of
the Company Subsidiaries, would (i) materially affect the operations of the
Company and the Company Subsidiaries taken as a whole or (ii) reasonably be
expected to require the Company or any of the Company Subsidiaries to pay
damages, in each case of clause (i) or (ii), in order to complete the
transactions that are the subject of the Investor Agreements (including this
Agreement) in an amount that would have a Company Material Adverse Effect.
          (d) The Company’s stockholders will have given the approval of the
issuances of Common Stock contemplated by the Investor Agreements that are
required by Rule 312.03 of the NYSE Listed Company Manual, or the NYSE will have
informed the Company in writing that it is not required to obtain that
stockholder approval (whether because the NYSE requirement has been satisfied by
prior stockholder approvals, or because of an exception, a waiver or otherwise).
          (e) All approvals of the Federal Reserve Board, the FDIC, the OCFI and
all other Governmental Entities, including those with authority to regulate
banking or insurance, that are required to be obtained before the sales of
Common Stock contemplated by the Investor Agreements can be completed will have
been obtained.
          (f) The shares of Common Stock that will be issued under the Investor
Agreements will have been authorized for listing on the NYSE.

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          (g) All the outstanding shares of Series G Preferred Stock will have
been converted into the number of shares of Common Stock determined in
accordance with the Certificate of Designations relating to the Series G
Preferred Stock as in effect on the date of the Original Agreement, or all the
holders of Series G Preferred Stock will have given written assurances that on
the Closing Date, effective immediately after (but subject to) the completion of
the sales of Common Stock contemplated by this Agreement and the other Investor
Agreements, the Company will have the right to cause all the shares of Series G
Preferred Stock to be converted into Common Stock.
          (h) The Company shall have received one or more certificates from the
Investors, dated as of the Closing Date, signed, as applicable, by an officer of
each Investor, certifying that the conditions set forth in Section 5.1(a) and
5.1(b) have been fulfilled.
     5.2 Conditions to the Investor’s Obligations. The obligations of the
Investors to complete the transactions that are the subject of this Agreement
are subject to satisfaction of the following conditions (any or all of which may
be waived by the Investors, and any or all of which will be deemed waived by the
Investors under the circumstances described in Section 5.3):
          (a) (i) The representations and warranties of the Company contained in
Section 3.1(h) will be true and correct in all respects as of the Closing Date
with the same effect as though made on such date (except for such inaccuracies
as are de minimis relative to Section 3.1(h) taken as a whole); (ii) the
representations and warranties of the Company contained in Section 3.1(a) (with
respect to the Company and its Significant Subsidiaries) and Section 3.1(c) will
be true and correct in all material respects as of the Closing Date with the
same effect as though made on such date (except that any representation and
warranty that relates to a specified date or a specified time period need only
to have been true and correct with regard to the specified date or time period);
and (iii) all other representations and warranties of the Company contained in
this Agreement will be true and correct as of the Closing Date (without giving
effect to any “Company Material Adverse Effect”, “material” or “materiality”
qualifications contained in such representations and warranties) with the same
effect as though made on such date (except that any representation and warranty
that relates to a specified date or a specified time period need only to have
been true and correct with regard to the specified date or time period), except,
in the case of this clause (iii) only, to the extent the failure of any such
representations or warranties to be true and correct would not, individually or
in the aggregate, have, or reasonably be expected to have, a Company Material
Adverse Effect.
          (b) The Company will have fulfilled in all material respects all its
obligations under this Agreement (including, for the avoidance of doubt, the
obligations required under the first sentence of Section 4.8(a)) required to
have been fulfilled on or before the Closing Date.
          (c) No provision of any applicable law or regulation shall exist and
no order, decree, injunction or judgment will have been entered by any
Governmental Entity and be in force that invalidates this Agreement or restrains
any of the Investors from completing the transactions that are the subject of
this Agreement and no actions or proceedings will be pending against any of the
Investors or the Company or any of the Company Subsidiaries that, if decided
against any of the Investors or the Company or any of the Company Subsidiaries,
could require an Investor to pay damages that would be material to such
Investor, would impose a Materially Burdensome Regulatory Condition or could
reasonably be expected to have a Company Material Adverse Effect.

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          (d) Between the date of the Original Agreement and the Closing Date,
there will not have been a Material Adverse Change in the financial condition,
results of operations, business or prospects of the Company and the Company
Subsidiaries taken as a whole and nothing will have occurred that has had or
would reasonably be expected to have a Company Material Adverse Effect.
          (e) The Company’s stockholders will have given the approval of the
issuance of Common Stock contemplated by the Investor Agreements that are
required by NYSE listed company Rule 312.03, or the NYSE will have informed the
Company in writing that it is not required to obtain that stockholder approval
(whether because the NYSE requirement has been satisfied by prior stockholder
approvals, or because of an exception, a waiver or otherwise).
          (f) The shares of Common Stock that will be issued under Investor
Agreements will have been authorized for listing on the NYSE.
          (g) The Company will receive gross proceeds on or before the Closing
Date from sales of Common Stock under Investor Agreements (including this
Agreement) totaling at least $500 million and not more than (i) $562.3 million,
minus (ii) the purchase price of the shares expected to be issuable on exercise
of the rights expected to be issued in the Rights Offering.
          (h) (i) All the outstanding shares of Series G Preferred Stock will
have been converted into an aggregate of not more than the number of shares of
Common Stock calculated as provided in the Certificate of Designations relating
to the Series G Preferred Stock as in effect on the date of the Original
Agreement and all dividends and other amounts accrued or owing but unpaid in
respect of the Series G Preferred Stock shall have been paid in cash in full, or
(ii) all the holders of Series G Stock will have given written assurances that
on the Closing Date, effective immediately after (but subject to) the completion
of the sales of Common Stock contemplated by this Agreement and the other
Investor Agreements, the Company will have the right to cause all the shares of
Series G Preferred Stock to be converted into Common Stock on the Closing Date
and the Company shall have delivered notice to the holders of the Series G
Preferred Stock of such conversion and done all things necessary to cause such
conversion to occur and to pay all dividends and other amounts accrued or owing
but unpaid in respect of the Series G Preferred Stock, in each case, immediately
after (but subject to) the completion of the sales of Common Stock contemplated
by this Agreement and the other Investor Agreements.
          (i) The Investors will have received confirmation from the Federal
Reserve Board, satisfactory to the Investors in their reasonable judgment, to
the effect that none of the Investors or any of their affiliates (which for
purposes of this paragraph shall include all “affiliates” as defined in the Bank
Holding Company Act or Regulation Y of the Federal Reserve) shall be deemed to
“control” the Company or any Company Subsidiary after the Closing Date for
purposes of the Bank Holding Company Act or Regulation Y of the Federal Reserve.
          (j) All approvals of the Federal Reserve Board, the FDIC, the OCFI and
all other Governmental Entities, including those with authority to regulate
banking or insurance, that are required to be obtained before the sales of
Common Stock contemplated by the Investor Agreements can be completed will have
been obtained and no such approval shall impose or contain any Materially
Burdensome Regulatory Condition.

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          (k) The Company shall not have received any notification from any of
the FDIC, the Federal Reserve Board and the OCFI to the effect that the capital
of the Company or of FirstBank is insufficient to meet any applicable minimum
capital requirement imposed by statute, regulation or Governmental Entity,
including any requirements as to the capitalization of FirstBank contained in or
arising out of the FDIC Consent Order and the OCFI Order or as to the
capitalization of the Company contained in or arising out of the Federal Reserve
Agreement, and any capital plan approved in connection therewith and in effect
with regard to the Company or FirstBank, as the case may be, or to the effect
that the Company will not be permitted to make acquisitions and to engage in all
aspects of its business and its currently proposed businesses without material
restrictions, including the imposition of a Materially Burdensome Regulatory
Condition.
          (l) No proceeding by any Governmental Entity shall be pending or
threatened in writing in which the Governmental Entity asserts that the Company,
FirstBank or any subsidiary of FirstBank has engaged in improper lending
practices.
          (m) The private letter ruling dated May 6, 2011, received by FirstBank
from the Puerto Rico Department of the Treasury, a true and correct copy of
which has been provided to the Investors (the “Ruling”), to the effect that the
issuance of Common Stock to the Investors and the Other Investors as
contemplated by the Investor Agreements will not reduce or limit the extent to
which FirstBank can apply losses incurred in 2010 or prior years to reduce
income taxes FirstBank would be required to pay to the Commonwealth of Puerto
Rico in 2011 or any subsequent year or years, shall continue to be in full force
and effect and not amended or modified in any respect.
          (n) In the event FirstBank’s Puerto Rico income tax returns have been
filed prior to the Closing Date, the net operating loss carryforward of
FirstBank as of December 31, 2010 as a result of losses that are reflected on
such income tax returns (at least some of which are or will be subject to audit)
will be at least $550,000,000.
          (o) As of the Closing Date, FirstBank shall have at least
$3,475,000,000 in core deposits (including, money market, demand, checking,
savings and transactional accounts and excluding secured governmental deposits
and certificates of deposits) and at least $1,825,000,000 in certificates of
deposits, excluding governmental and brokered deposits.
          (p) On the Closing Date, taking into account the transactions
contemplated by the Investor Agreements and assuming the full conversion of the
Series G Preferred Stock, the Company’s Tier 1 leverage ratio shall be no lower
than 10.75%.
          (q) The consummation of the transactions contemplated by the Investor
Agreements and the conversion of the Series G Preferred Stock will not cause the
Company or any Company Subsidiary to be required by GAAP to establish a new cost
basis for its assets through the application of push down accounting or
otherwise.
          (r) The Company shall not be in default, and there shall not be any
condition which with the passage of time or the giving of notice, or both, would
result in a default, under repurchase agreements (so-called repos) or agreements
for borrowed money under which the Company has payment obligations totaling more
than $25 million.

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          (s) The Investors shall have received the legal opinion(s),
substantially in the forms attached hereto as Exhibit B and Exhibit C,
respectively, of K&L Gates LLP and Martinez Odell & Calabria, P.S., counsel to
the Company.
          (t) The Investors shall have received (A) a certificate from the
Company, dated as of the Closing Date, signed by an officer of the Company,
certifying that the conditions set forth in Section 5.1(a) and 5.1(b) have been
fulfilled and (B) the items required to be delivered pursuant to the last
sentence of Section 2.2.
     5.3 Waiver of Conditions to Investor’s Obligations. If investors that have
signed Investor Agreements obligating them to purchase in total 75% of all the
shares of Common Stock that investors have agreed to purchase under all the
Investor Agreements that are in effect on the Closing Date (including this
Agreement) waive any of the conditions in Section 5.2 of this Agreement other
than Section 5.2(n) and comparable provisions of their Investor Agreements, the
Investors will be deemed to have waived that condition, or those conditions,
even if the Investor does not itself waive that condition or those conditions.
The condition in Section 5.2(n) may only be waived by an Investor as to itself,
and failure of the condition in that subsection with regard to an Investor will
only affect the obligations of that Investor.
ARTICLE 6
ADDITIONAL AGREEMENTS
     6.1 Company Obligation Regarding Adequate Public Information. Until such
time as the Investors no longer own any Registrable Securities, the Company
will:
          (a) File in a timely manner all reports it is required to file under
Section 13 of the Exchange Act, except that failure to file a report on Form 8-K
will not be a breach of this Agreement.
          (b) Do all things, in addition to filing required reports under
Section 13 of the Exchange Act, that are necessary so that adequate public
information, as defined in Rule 144(c) under the Securities Act, is available at
all times.
          (c) Upon request, furnish to the Investor a written statement as to
the Company’s compliance with the reporting conditions of Rule 144 under the
Securities Act, and a copy of the most recent annual or quarterly report of the
Company (which may be a Report on Form 10-K or 10-Q); and such other reports and
documents as the Investor may reasonably request in order to meet the
requirements of any rule that would allow the Investors to sell Registrable
Securities without registration under the Securities Act.
     6.2 Efforts to Maintain Listing. From the Closing Date until such time as
no Investor any longer owns any Registrable Securities, the Company will use its
reasonable best efforts to cause the Common Stock to be listed on either the New
York Stock Exchange or the Nasdaq Global Market (or a successor to one of those
exchanges).
     6.3 Additional Regulatory Matters
          (a) The Company shall not take any action (including, any redemption,
repurchase or recapitalization of Common Stock, of securities or rights,
options, or warrants to purchase Common Stock, or securities of any type
whatsoever that are, or may become, convertible into or exchangeable into or
exercisable for Common Stock) that, based on the

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advice of counsel, could cause any Investor or any of its affiliates to be
deemed to become, or “control”, a “bank holding company” with respect to the
Company and its affiliates within the meaning of the Bank Holding Company Act,
including the rules and regulations promulgated thereunder (or any successor
provision).
          (b) Neither the Company nor the Investors shall take or permit to be
taken any action that would cause any subsidiary of the Company to become a
“commonly controlled insured depository institution” (as that term is defined
for purposes of 12 U.S.C. §1815(e), as may be amended or supplemented from time
to time, or any successor provision) with respect to any institution that is not
a direct or indirect subsidiary of the Company.
          (c) The Company shall not take, or permit to be taken, any action that
would reasonably be expected to cause any Investor to be subject to or bound by
the FDIC’s Statement of Policy on Qualifications for Failed Bank Acquisitions,
as it may be amended or supplemented from time to time, except with the prior
written consent of such Investor.
          (d) In the event that any party to this Agreement breaches its
obligations under this Section 6.3 or believes that it is reasonably likely to
breach such obligations, it shall immediately notify the other parties and shall
cooperate in good faith with such other parties to modify ownership or other
arrangements or take any other action, in each case, as is necessary to cure or
avoid such breach.
          (e) The Company shall, and shall cause FirstBank to, take all
necessary and appropriate actions within their commercially reasonable control
to:
     (i) ensure the continuing application of the Ruling;
     (ii) (A) supplement the ruling request submitted to the Puerto Rico
Treasury Department (the “PRTD”) on January 14, 2011 to include a request that
the PRTD rule that (x) the requirements of Puerto Rico Treasury
Article 1124(b)(2)-2 were met to allow FirstBank to use its net operating losses
to offset First Leasing & Rental Corporation’s income and (y) the transactions
contemplated by this Agreement do not cause a “change of identity” or a change
in the trade or business of FirstBank (within the meaning of Puerto Rico
Treasury Article 1124(b)(2)-2(a)(3)) and (B) confirm with the Puerto Rico
Treasury Department by filing for a ruling request (as may be necessary) that,
with respect to the net operating losses of FirstBank, the Company will continue
to meet the requirements of Puerto Rico Treasury Article 1124(b)(2)-2(a)(3)
during the net operating losses carryover period; and
     (iii) with respect to the mortgage tax credits granted by the Puerto Rico
Treasury Department that are set to expire June 30, 2011, either (x) timely
transfer such credits to one or more subsidiaries for timely application of such
credits against such subsidiaries’ 2010 Commonwealth of Puerto Rico Tax
liability, (y) timely apply for a refund for such credits from the Puerto Rico
Treasury Department, or (z) timely sell such credits to a third party in an
arm’s-length transaction.
     6.4 Percentage Maintenance Rights
          (a) Sale of New Securities. After the Closing, for so long as the
Investors own the Qualifying Ownership Interest (before giving effect to any
issuances triggering provisions of this Section 6.4), at any time that the
Company makes any public or nonpublic

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offering (including the Rights Offering) or sale of any equity (including Common
Stock, preferred stock or restricted stock), or any securities, options or debt
that is convertible into or exercisable or exchangeable for equity or that
includes an equity component (such as, an “equity” kicker) (including any hybrid
security) (any such security, a “New Security”) (other than (1) pursuant to the
granting or exercise of employee stock options or other stock incentives
pursuant to the Company’s stock incentive plans approved by the Board of
Directors (so long as the authorized awards under the Company’s stock incentive
plans represent less than 10% of the outstanding shares of Common Stock) or the
issuance of stock pursuant to the Company’s employee stock purchase plan
approved by the Board of Directors or similar plan where stock is being issued
or offered to a trust, other entity or otherwise, for the benefit of any
employees, officers or directors of the Company, in each case, in the ordinary
course of providing incentive compensation, (2) issuances of capital stock as
full or partial consideration for a merger, acquisition, joint venture,
strategic alliance, license agreement or other similar non-financing
transaction, (3) issuances of up to a total of 8,000,000 shares of Common Stock
in exchange for shares of the Company’s Series A through E Non-Cumulative
Preferred Stock outstanding as of the Closing Date, or (4) issuances of shares
of Common Stock upon the conversion of the Series G Preferred Stock in
accordance with the terms applicable thereto as of the date of the Original
Agreement), the Investors shall be afforded the opportunity to acquire from the
Company for the same price (net of any underwriting discounts or sales
commissions) and on the same terms (except that, to the extent permitted by law
and the Articles of Incorporation and By-Laws of the Company, the Investors may
elect to receive such securities in nonvoting form, convertible into voting
securities in a widely dispersed offering) as such securities are proposed to be
offered to others, up to the amount of New Securities in the aggregate required
to enable it to maintain its percentage Common Stock-equivalent interest in the
Company as it was immediately prior to any such issuance of New Securities. The
amount of New Securities that the Investors shall be entitled to purchase in the
aggregate shall be determined by multiplying (x) the total number or principal
amount of such offered New Securities by (y) a fraction, the numerator of which
is the number of shares of Common Stock held by the Investors as of such date,
and the denominator of which is the number of shares of Common Stock then
outstanding plus the number of shares of Common Stock represented by any
then-existing warrant or any other convertible securities then outstanding (if
any) on an as-exercised or as-converted basis on such date (after giving effect
to any applicable adjustment thereunder).
          (b) Most Favored Purchase Opportunity. Without limiting anything that
is said in Section 6.4(a), (i) if at any time after the Closing while the
Investors own the Qualifying Ownership Interest, the Company offers any Other
Investor and its affiliates, other than an Other Investor which, together with
its affiliates, owns more shares of Common Stock than the Investors, the
opportunity to purchase New Securities, the Company will offer the Investors the
opportunity to purchase, for the same price (net of any underwriting discounts
or sales commissions) and on the same terms (except that, to the extent
permitted by law and the Articles of Incorporation and By-Laws of the Company,
the Investors may elect to receive such securities in nonvoting form,
convertible into voting securities in a widely dispersed offering) as such New
Securities are proposed to be offered to the Other Investor and its affiliates,
an amount of New Securities that is at least as great in aggregate as the
aggregate amount of New Securities the Company offers the Other Investor and its
affiliates the opportunity to purchase, and (ii) if at any time when the
Investors in aggregate own at least as many shares of Common Stock as any other
entity or group of affiliated entities, the Company offers to sell to any entity
or group of affiliated entities a number of New Securities that, after giving
effect to the acquisition of all the Common Stock that can be acquired upon
conversion or exercise of New Securities or other securities that are
convertible into, or exercisable to acquire, Common

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Stock, would cause the other entity or group of affiliated entity to own more
shares of Common Stock than the Investors, the Company will offer the Investors
the opportunity to purchase, for the same price (net of any underwriting
discounts or sales commissions) and on the same terms (except that, to the
extent permitted by law and the Articles of Incorporation and By-Laws of the
Company, the Investors may elect to receive such securities in nonvoting form,
convertible into voting securities in a widely dispersed offering) as such New
Securities are offered to the other entity or group of affiliated entities, the
amount of New Securities that will cause the aggregate number of shares of
Common Stock owned by the Investors, after giving effect to the acquisition of
all the Common Stock that can be acquired upon conversion or exercise of New
Securities or other securities that are convertible into, or exercisable to
acquire, Common Stock, to be equal to the number of shares of Common Stock owned
by the other entity or group of affiliated entities, after giving effect to the
acquisition of all the Common Stock that can be acquired upon conversion or
exercise of New Securities or other securities that are convertible into, or
exercisable to acquire, Common Stock.
          (c) Notice. In the event the Company proposes to offer or sell New
Securities that are subject to the Investors’ rights under Section 6.4(a) or
(b), it shall give the Investors written notice of its intention, describing the
price (or range of prices), anticipated amount of securities, timing and other
terms upon which the Company proposes to offer the same (including, in the case
of a registered public offering and to the extent possible, a copy of the
prospectus included in the registration statement filed with respect to such
offering), no later than five (5) Business Days, as the case may be, after the
initial filing of a registration statement with the SEC with respect to an
underwritten public offering, after the signing of an agreement with the initial
purchasers with respect to a Rule 144A offering or after the Company makes a
firm commitment to pursue any other offering. The Investors shall have ten
(10) Business Days from the date of receipt of such a notice to notify the
Company in writing that they intend to exercise their rights provided in this
Section 6.4 and as to the amount of New Securities the Investors desire to
purchase, up to the maximum amount calculated pursuant to Section 6.4(a) or (b).
Such notice shall constitute a binding agreement by the Investors to purchase
the amount of New Securities so specified at the price and on the other terms
set forth in the Company’s notice to it. The failure of the Investors to respond
within such ten (10) Business Day period shall be deemed to be a waiver of the
Investors’ rights under this Section 6.4 only with respect to the offering
described in the applicable notice.
          (d) Purchase Mechanism. If the Investors exercise their rights
provided in this Section 6.4, the closing of the purchase of the New Securities
with respect to which such rights have been exercised shall take place on a date
specified by the Company that will be not less than ten nor more than thirty
calendar days after the giving of notice of such exercise, which period of time
shall be extended for a maximum of twenty days in order to comply with
applicable laws and regulations (including receipt of any applicable regulatory
or stockholder approvals). Each of the Company and the Investors agree to use
their commercially reasonable efforts to secure any regulatory or stockholder
approvals or other consents, and to comply with any law or regulation necessary
in connection with the offer, sale and purchase of, such New Securities.
          (e) Failure of Purchase. In the event the Investors fail to exercise
their rights provided in this Section 6.4 within the ten Business Day period
described in Section 6.4(c) or, if so exercised, the Investors are unable to
consummate such purchase within the time period specified in Section 6.4(d)
above because of their failure to obtain any required regulatory or stockholder
consent or approval, the Company shall thereafter be entitled during the period
of ninety days following the conclusion of the applicable period to sell or
enter into

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an agreement (pursuant to which the sale of the New Securities covered thereby
shall be consummated, if at all, within thirty days from the date of such
agreement) to sell the New Securities not elected to be purchased pursuant to
this Section 6.4 or which the Investors are unable to purchase because of such
failure to obtain any such consent or approval, at a price and upon other terms
that, taken in the aggregate, are not more favorable to the purchasers of such
securities than were specified in the Company’s notice to the Investors.
Notwithstanding the foregoing, if such sale is subject to the receipt of any
regulatory or stockholder approval or consent or the expiration of any waiting
period, the time period during which such sale may be consummated shall be
extended until the expiration of five (5) Business Days after all such approvals
or consents have been obtained or waiting periods expired, but in no event shall
such extension period exceed ninety days from the date of the applicable
agreement with respect to such sale. In the event the Company has not sold the
New Securities or entered into an agreement to sell the New Securities within
such ninety-day period (or sold and issued New Securities in accordance with the
foregoing within thirty days from the date of said agreement (as such period may
be extended in the manner described above for a period not to exceed ninety days
from the date of such agreement)), the Company shall not thereafter offer, issue
or sell such New Securities without first offering such securities to the
Investors in the manner provided above.
          (f) Non-Cash Consideration. In the case of the offering of securities
for a consideration in whole or in part other than cash, including securities
acquired in exchange therefor (other than securities by their terms so
exchangeable), the per share purchase price to be paid by the investors shall be
cash equal to the per share fair value of the non-cash consideration as
determined by the Board of Directors (treating warrants as being exercised and
convertible securities as being converted and including any payment required on
exercise of the warrants or conversion of the convertible securities); provided,
however, that such fair value as determined by the Board of Directors shall not
exceed the aggregate per share market price of the securities being offered
(treating warrants as being exercised and convertible securities as being
converted and including any payment required on exercise of the warrants or
conversion of the convertible securities) as of the date the Board of Directors
authorizes the offering of such securities.
          (g) Cooperation. The Company and the Investors shall cooperate in good
faith to facilitate the exercise of the Investors’ rights under this
Section 6.4, including securing any required approvals or consents.
     6.5 Participation in Other Offerings.
          (a) Except as provided in Section 6.5(b) or 6.5(c), in the event this
Agreement is terminated pursuant to Section 9.1, other than a termination by the
Company under Section 9.1(c) if the Closing Date shall not have occurred by
December 31, 2011 because one or more Investors has breached its
representations, warranties or obligations under this Agreement and such breach
has resulted in the failure of a condition set forth in Section 5.1 to be
fulfilled, each of the Investors shall have the right, for a period of one year
after the date of such termination, to participate and purchase securities in
any offering of securities by the Company on terms no less favorable to such
Investor(s) than to any other participants in such offering, including with
respect to price and the type and rights of such securities purchased and
offered, in an amount to be determined by such Investors in their sole
discretion up to the lesser of (x) 24.9% of all the Common Stock that will be
outstanding after the offering and after any substantially simultaneous
conversion of the Series G Preferred Stock into Common Stock or (y) the maximum
amount that will not result in such Investor or

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any of its affiliates being in control of the Company or of FirstBank for
purposes of the Bank Holding Company Act or the Federal Reserve Board’s
Regulation Y, or otherwise being subject to regulation as a bank holding company
under that Act.
          (b) The provisions of Section 6.5(a) will not apply to (i) any
transaction or series of transactions that will result in a person or group of
persons acquiring 100% of the common stock of the Company or to any merger of
the Company, or (ii) any offering of securities of the Company as part of a
merger, share exchange or other transaction in which either the Company becomes
part of, or majority owned by, another entity that results in such entity or any
of its affiliates being in control of the Company or of FirstBank for purposes
of the Bank Holding Company Act or the Federal Reserve Board’s Regulation Y, or
otherwise being subject to regulation as a bank holding company under that Act
or the Company acquires at least a majority of the outstanding equity of another
entity.
          (c) The provisions of Section 6.5(a) will not apply to any offering of
securities to investors if (i) the offering is fully subscribed by investors
other than the Investors, (ii) the investors who have proposed to purchase a
majority of the securities the Company is offering inform the Company in writing
that if the Company issues securities to the Investors in accordance with
Section 6.5(a) the other investors will withdraw their willingness to purchase
the securities the Company is offering and (iii) the Company pays the Investors
a total of $12.5 million, minus any sum paid pursuant to Section 9.3 allocated
among them in proportion to the respective numbers of shares of Acquired Common
Stock each of them has agreed in this Agreement to purchase.
          (d) If the Investors are entitled under Section 6.5(a) to participate
in an offering of securities by the Company, not later than the earliest time
that any of the securities are issued to purchasers in the offering, the Company
will notify the Investors of the offering, including the title and principal
terms of the securities being offered, the price for which the securities are
being offered, and the maximum amount of the securities that the Investors are
entitled under Section 6.5(a) to purchase. The respective Investors will have
30 days from the date they are sent that notice to notify the Company that they
wish to purchase at least some of the securities they are entitled to purchase
and, if an Investor wishes to purchase less than all the securities it is
entitled to purchase, the amount of securities the Investor wishes to purchase.
An Investor will not have the right to purchase securities under Section 6.5(a)
unless it notifies the Company within the 30 day period that it wishes to
purchase the securities. A notice to the Company that an Investor wishes to
purchase securities will be a binding agreement by the Investor to purchase the
securities specified in the notice.
          (e) If an Investor exercises its purchase right provided in this
Section 6.5, the closing of the purchase of the New Securities with respect to
which such right has been exercised shall take place on the later of (i) a date
specified by the Company that will be not less than ten nor more than thirty
calendar days after the giving of notice of such exercise, or (ii) the earliest
date on which securities are issued to any purchasers in the offering, which
period of time shall be extended for a maximum of twenty days in order to comply
with applicable laws and regulations (including receipt of any applicable
regulatory or stockholder approvals). Each of the Company and the Investors
agree to use their commercially reasonable efforts to secure any regulatory or
stockholder approvals or other consents, and to comply with any law or
regulation necessary in connection with the offer, sale and purchase of, the
securities.

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          (f) If the Investors fail to purchase the full amount of securities
that they are entitled to purchase under Section 6.5(a), the Company may, within
90 days after the end of the 30 day period described in Section 6.5(d), sell to
other persons the securities the Investors did not purchase for a sale price not
less than the price at which the securities were offered to the Investors.
          (g) The Company may issue securities that are the subject of an
offering to purchasers other than the Investors before the time when Investors
must decide whether to participate in the offering and before the Investors who
elect to participate in the offering purchase securities that are the subject of
the offering.
ARTICLE 7
SALE RESTRICTIONS
     7.1 Restrictions on Sales of Acquired Common Stock. No Investor will sell
or otherwise transfer any of the Acquired Common Stock, except as follows:
          (a) An Investor may at any time transfer Acquired Common Stock to an
entity that is an affiliate of the Investor, as the term “affiliate” is defined
in the Securities Act, or to a general or limited partner of the Investor, but
only if prior to the transfer, the affiliate or the general or limited partner
delivers to the Company a written agreement to be bound by this Section 7.1 to
the same extent as the Investor.
          (b) An Investor may sell Acquired Common Stock in transactions that
are registered under the Securities Act.
          (c) An Investor may sell Acquired Common Stock in transactions that
are not subject to the registration requirements of the Securities Act by reason
of Rule 144 under the Securities Act.
          (d) If Rule 144A under the Securities Act makes it possible for sales
of Acquired Common Stock to be exempt under that Rule from the registration
requirements of the Securities Act, the Investor may sell Acquired Common Stock
to one or more purchasers, each of which is a qualified institutional buyer, as
that term is defined in Rule 144A, in transactions that satisfy all the
conditions in Rule 144A(d), but only if prior to each sale, the purchaser
delivers to the Company an agreement to be bound by this Section 7.1 to the same
extent as the Investor.
          (e) An Investor may sell Acquired Common Stock in transactions that
constitute “offshore transactions,” as that term is defined in Rule 902 under
the Securities Act.
          (f) An Investor may sell or transfer Acquired Common Stock as part of
a merger of the Investor with another entity or in connection with a sale of all
or substantially all of the Investor’s assets to the person to whom the Investor
transfers the Acquired Common Stock, but only if prior to the merger or sale,
the entity that will survive the merger or the purchaser of all or substantially
all of the Investor’s assets delivers to the Company an agreement to be bound by
this Section 7.1 to the same extent as the Investor.
          (g) The Investor may sell Acquired Common Stock in a transaction that
is exempt from the registration requirements of the Securities Act for a reason
other than one described in a previous paragraph of this Section, but only if
prior to each such sale, the

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purchaser delivers to the Company a written agreement to be bound by this
Section 7.1 to the same extent as the Investor.
ARTICLE 8
SECURITIES ACT REGISTRATION
     8.1 Obligation to Register Acquired Common Stock..
          (a) As promptly as practicable, and in any event not later than
90 days after the Closing Date, the Company will file with the SEC a shelf
registration statement (the “Shelf Registration Statement”) under SEC Rule 415
relating to sales of Registrable Securities by the Investors and other holders
of Registrable Securities. If the Shelf Registration Statement can be filed as
an automatic shelf registration statement, the Company will file it as an
automatic shelf registration statement. If the Shelf Registration Statement
cannot be filed as an automatic shelf registration statement, the Company will
file it on Form S-3, or if the Shelf Registration Statement cannot be filed on
Form S-3, the Company will file it on Form S-1 or such other form as is
applicable. The Company may, instead of filing a separate registration statement
relating to the Registrable Securities, register the Registrable Securities by
filing a prospectus supplement to an existing automatic shelf registration
statement or by otherwise designating an existing shelf registration statement
to cover the Registrable Securities. The Company will use its reasonable best
efforts to cause the Shelf Registration Statement to become effective as
promptly as practicable (or, if it is an automatic shelf registration statement,
to cause it to be effective when it is filed) and to keep the Shelf Registration
Statement continuously effective and available for resales of Registrable
Securities until such time as there are no remaining Registrable Securities
(including by refiling the Shelf Registration Statement, or filing a new Shelf
Registration Statement, if the initial Shelf Registration Statement ceases to be
effective or is not otherwise available for resales of Registrable Securities).
          (b) The term “Registrable Securities” means shares of Common Stock
that are issued under Investor Agreements (including this Agreement), and any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to such shares,
except that shares of Common Stock will cease to be Registrable Securities when
(i) they are sold pursuant to an effective registration statement under the
Securities Act, (ii) they may be sold pursuant to Rule 144 without limitation on
volume or manner of sale and without a requirement that the Company be in
compliance with the current public information requirement of Rule 144(c)(1) (or
Rule 144(i)(2), if applicable, (iii) they cease to be outstanding or (iv) they
have been sold in a private transaction in which the transferor’s rights under
this Section 8.1 are not assigned to the transferee.
          (c) If any Investors notify the Company that they intend to distribute
Registrable Securities by means of an underwritten offering, and that the
aggregate public offering price of the shares that will be the subject of the
underwritten offering is estimated to be at least $25,000,000, the Company will
take all reasonable steps to facilitate that distribution, including the actions
described in Section 8.1(f). However, the Company will not be required to file
or supplement a registration statement (i) with respect to any Registrable
Securities that cannot be sold under a registration statement as a result of the
transfer restrictions set forth in Article 8; (ii) with respect to securities
that are not Registrable Securities; or (iii) if after receiving a request for
registration of an underwritten distribution of Registrable Securities from the
Investor, the Company notifies the Investor and any other holders of Registrable
Securities who joined in the request that in the good faith judgment of the
Company’s Board of Directors, it would be materially detrimental to the Company
or its stockholders for a registration to be

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effected at the particular time, in which event the Company may defer filing a
registration statement, a post-effective amendment or a prospectus supplement
relating to the underwritten distribution of Registrable Securities for up to
90 days after receipt of the request for registration; provided, that the
Company may not exercise the right to defer filing a registration statement, a
post-effective amendment or a prospectus supplement relating to an underwritten
distribution more than twice in any 12-month period or for an aggregate of more
than 180 days in any 12-month period.
          (d) If during any period when the Shelf Registration Statement is not
effective or available, the Company proposes to register any of its securities,
other than a registration pursuant to Section 8.1(a) or a Special Registration,
and the registration form to be filed may be used for the registration or
qualification for distribution of Registrable Securities, the Company shall give
prompt written notice to the Investors of its intention to effect such a
registration (but in no event less than ten days prior to the anticipated filing
date) and shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within ten Business Days after the date of the Company’s notice (a “Piggyback
Registration”). Any such person that has made such a written request may
withdraw its Registrable Securities from such Piggyback Registration by giving
written notice to the Company and the managing underwriter, if any, on or before
the fifth Business Day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this
Section 8.1(d) prior to the effectiveness of such registration, whether or not
the Investors or any other Holders have elected to include Registrable
Securities in such registration. If (x) the Company grants “piggyback”
registration rights to one or more third parties to include their securities in
an underwritten offering under a Shelf Registration Statement under
Section 8.1(a) or (y) a Piggyback Registration under this Section 8.1(d) that
relates to an underwritten primary offering on behalf of the Company, and in
either case the managing underwriters advise the Company that in their
reasonable opinion the number of securities requested to be included in such
offering exceeds the number which can be sold without adversely affecting the
marketability of such offering (including an adverse effect on the per share
offering price), the Company shall include in such registration or prospectus
only such number of securities that in the reasonable opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering (including an adverse effect on the per share offering price), which
securities shall be so included in the following order of priority: (i) first,
in the case of a Piggyback Registration under Section 8.1(d), the securities the
Company proposes to sell, (ii) second, Registrable Securities of the Investors
who have requested registration of Registrable Securities pursuant to
Sections 8.1(a) or 8.1(d) of this Agreement, pro rata on the basis of the
aggregate number of such securities or shares subject to such request and
(ii) third, any other securities of the Company that have been requested to be
so included, subject to the terms of this Agreement.
          (e) The Company will bear all expenses of preparing and filing the
Shelf Registration Statement and all other expenses of fulfilling its
obligations under this Article 8. However, the Company will not pay any
commissions or underwriting discounts and other expenses incurred by an Investor
for its own benefit (including fees and disbursements of counsel for an Investor
related to the Investor’s sale of Common Stock), and the Investor will be
responsible for paying all those expenses.
           (f) Whenever the Company is required to effect the registration of
any Registrable Securities, or facilitate the distribution of Registrable
Securities in an underwritten offering, the Company will, as expeditiously as
reasonably practicable:

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     (i) Prepare and file with the SEC a registration statement, or a
post-effective amendment or prospectus supplement with regard to an already
effective registration statement, relating to the offering and sale of the
Registrable Securities and keep that registration statement effective or that
prospectus supplement current until the Registrable Securities to which it
relates no longer are Registrable Securities or the underwritten distribution
has been completed or abandoned.
     (ii) Prepare and file with the SEC such amendments and supplements to the
applicable registration statement and the prospectus or prospectus supplement
relating to the underwritten distribution of Registrable Securities as may be
necessary to comply with the Securities Act with respect to the distribution of
the Registrable Securities to which the registration statement or the prospectus
supplement relates.
     (iii) Provide to each holder of Registrable Securities a copy of any
disclosure regarding the plan of distribution or the selling holders, in each
case, with respect to such holder, at least three Business Days in advance of
any filing with the SEC of any registration statement or any amendment or
supplement thereto that amends such information.
     (iv) Furnish to each holder of the Registrable Securities to which the
registration statement or prospectus supplement relates and to the underwriters
of any underwritten offering of those Registrable Securities at least one copy
of the registration statement (including exhibits) and each amendment to it, and
as many copies of the prospectus included in that registration statement and any
amendments or supplements to it, as each holder or underwriter may reasonably
request, and any other documents that they may reasonably request in order to
facilitate the disposition of Registrable Securities they own or are
distributing.
     (v) File a copy of the final prospectus or prospectus supplement with the
SEC under Rule 424, even if the Company is not required by that Rule to do so.
     (vi) Use its reasonable best efforts to register and qualify the
Registrable Securities that are the subject of the registration statement or
prospectus supplement under the securities or Blue Sky laws of such, if any,
jurisdictions as may reasonably be requested by any holder or managing
underwriter, and to keep that registration or qualification in effect for as
long as required by applicable law, and take any other reasonable action that
may be necessary or appropriate to enable the holders to dispose of the
Registrable Securities that are the subject of the registration or
qualification, provided that the Company will not be required to qualify to do
business or to file a general consent to service of process in any jurisdiction.
     (vii) At any time when holders of Registrable Securities are required to
deliver prospectuses in connection with sales of Registrable Securities, notify
each holder of Registrable Securities of the happening of any event as a result
of which the applicable prospectus includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
     (g) The Company will give written notice to the Investors:

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     (i) When any registration statement filed pursuant to this Section 8.1 or
any amendment to such a registration statement is filed with the SEC and when
any such registration statement or any post-effective amendment to such a
registration statement becomes effective;
     (ii) Of any request by the SEC for an amendment or supplement to any
registration statement filed pursuant to this Section 8.1 that relates to
Registrable Securities owned by one or more Investors or the prospectus included
in any such registration statement;
     (iii) Of the issuance by the SEC of a stop order suspending the
effectiveness of any registration statement filed pursuant to this Section 8.1
that relates to Registrable Securities owned by one or more Investors or the
initiation by the SEC of a proceeding for that purpose;
     (iv) Of the receipt by the Company or its legal counsel of any notification
with respect to the suspension of the qualification of the Common Stock for sale
in any jurisdiction in which Registrable Securities owned by Investors are
registered or qualified or the initiation of any proceeding for that purpose;
     (v) Of the happening of any event that requires the Company to make changes
in any effective registration statement that relates to Registrable Securities
owned by one or more Investors or the prospectus included in any such
registration statement or a supplement to it in order to make the statements
therein not misleading (which notice will be accompanied by an instruction to
suspend the use of the prospectus or prospectus supplement until the requisite
changes have been made and which suspensions hereunder, when aggregated with any
suspensions under Section 8.1(i), will not exceed 90 days in any 12-month
period); and
     (vi) If at any time the representations and warranties of the Company
contained in any underwriting agreement relating to an underwritten distribution
that includes Registrable Securities owned by one or more Investors cease to be
true and correct in all material respects.
          (h) The Company will use its reasonable best efforts to prevent the
issuance, or obtain the withdrawal, as promptly as practicable, of any order
suspending the effectiveness of any registration statement relating to
Registrable Securities owned by Investors.
          (i) If anything occurs that causes a registration statement, a
prospectus or a prospectus supplement relating to a sale of Registrable
Securities to contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company will
promptly prepare a post-effective amendment to the registration statement or a
supplement to the prospectus or prospectus supplement so that the registration
statement, prospectus or prospectus supplement no longer will contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading . If the Company notifies Investors to suspend the use of a
prospectus or prospectus supplement until required changes have been made, each
Investor will (and will cause any underwriter of a distribution of Registrable
Securities owned by the Investor to) suspend use of that prospectus or
prospectus supplement and use its

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reasonable best efforts to obtain the return of any copies of the prospectus or
prospectus supplement that the Investor (or the underwriters) have given to
prospective purchasers of Registrable Securities; provided, however, that
suspensions hereunder, when aggregated with any suspensions under
Section 8.1(g)(v), will not exceed 90 days in any 12-month period.
          (j) The Company will use reasonable best efforts to procure the
cooperation of the Company’s transfer agent in settling any transfer of
Registrable Securities in a transaction that is registered under the Securities
Act as contemplated by this Section 8.1.
          (k) If Investors and other holders of Registrable Securities notify
the Company that they intend to distribute Registrable Securities by means of an
underwritten offering, and that the aggregate public offering price of the
underwritten offering is estimated to be at least $25,000,000, the Company will
enter into an underwriting agreement in customary form, and take all other
actions that are reasonably requested by the managing underwriter, if any, to
facilitate the underwritten disposition of the Registrable Securities, including
(i) making members of management and executives of the Company available to
participate in a “road show” and similar events, (ii) making representations and
warranties to the selling stockholders and the underwriters that are customarily
made by issuers in connection with underwritten public offerings by selling
stockholders, (iii) using its reasonable best efforts to obtain and furnish to
the underwriters opinions of counsel to the Company regarding the matters
customarily covered in opinions given in connection with underwritten public
offerings by selling stockholders, (iv) using its reasonable best efforts to
obtain and furnish to the underwriters “comfort letters” from the firm of
independent registered public accountants that audits the Company’s financial
statements (and, if necessary, any other independent registered public
accountants that audited any financial statements included in the registration
statement) and (v) delivering to the underwriters any other documents or
certificates that the managing underwriter reasonably requests.
     8.2 Obligations of the Investors Regarding Registration.
          (a) No Investor will use any free writing prospectus (as defined in
Rule 405 under the Securities Act) in connection with a sale of Registrable
Securities without the prior written consent of the Company.
          (b) Each Investor will, and will cause any underwriters of an
underwritten offering of Registrable Securities owned by the Investor to,
furnish to the Company all information regarding themselves, the Registrable
Securities that the Investor and any other selling stockholders hold, and the
intended method of disposition of those Registrable Securities as the Company
may reasonably request for inclusion in a registration statement, prospectus or
prospectus supplement required by this Article 8. The Company will not describe
the Investor as an “underwriter” in any registration statement, prospectus or
prospectus supplement without the prior written consent of the Investor,
provided that if the staff of the SEC requests that the Investor be described as
an “underwriter,” and the Company and the Investor are not able to convince the
SEC (by using good faith reasonable efforts through the comment process or
otherwise) that the Investor does not need to be described as an “underwriter”
and the Investor does not consent to being described as an underwriter, the
Investor will not be eligible to include Registrable Securities it or its
affiliates own in the applicable registration statement.

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     8.3 Indemnification Regarding Disclosures.
          (a) The Company agrees to indemnify each Investor and each Investor’s
officers, directors, employees, agents, representatives and affiliates, and each
person, if any, that controls the Investor within the meaning of the Securities
Act (each, an “Indemnitee”), against any and all losses, liabilities and
expenses (including reasonable fees and expenses of attorneys and other
professionals) arising out of or based upon any untrue statement or alleged
untrue statement of material fact contained in any registration statement,
prospectus or prospectus supplement that includes Registrable Securities owned
by the Investor, or any amendments or supplements to any of them or any
documents incorporated by reference in any of them or contained in any free
writing prospectus prepared by the Company or authorized by it in writing for
use by the Investor; or any omission or alleged omission to state in any such
document a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, that the Company will not be liable to any Indemnitee
to the extent that any loss, liability or expense results from (i) a claim
relating to information provided in writing by the Investor or an underwriter of
an offering that includes Registrable Securities owned by the Investor for use
in connection with the applicable registration statement, prospectus or
prospectus supplement, or (ii) an offer or sale effected by or on behalf of such
Investor “by means of” (as defined in Rule 159A under the Securities Act) a
“free writing prospectus” that was not prepared or authorized in writing by the
Company.
          (b) If the indemnification provided for in Section 8.3(a) is not
available to an Indemnitee with respect to any loss, liability or expenses
referred to in that Section or is not sufficient to hold the Indemnitee harmless
as contemplated in that Section, then the Company, in lieu of indemnifying that
Indemnitee, will contribute to the amount paid or payable by that Indemnitee in
such proportion as is appropriate to reflect the relative fault of the
Indemnitee, on the one hand, and the Company, on the other hand, in connection
with the statements or omissions which resulted in the loss, liability or
expenses as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnitee, on the other hand,
will be determined by reference to, among other factors, whether the untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Indemnitee and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the statement or omission. The Company and the Investors agree that it
would not be just and equitable if contribution under this Section 8.3 were
determined by pro rata allocation or by any other method of allocation that does
not take account of those equitable considerations. No Indemnitee that is guilty
of fraudulent misrepresentation (as that term is used with regard to Section
11(f) of the Securities Act) will be entitled to contribution from the Company
if the Company was not guilty of fraudulent misrepresentation.
     8.4 Assignment of Registration Rights. The rights of an Investor to
registration of Registrable Securities under this Article 8 may be assigned by
the Investor to any transferee of Registrable Securities if (i) the Investor
transfers to that transferee Registrable Securities with a market value at the
time of transfer of at least $5,000,000, (ii) the transfer is permitted under
the terms of this Agreement and (iii) the Investor or the transferee has
furnished to the Company written notice of the name and address of the
transferee and the number of Registrable Securities that were, or are being,
transferred to the transferee, and the transferee agrees in writing to be bound
by this Article 8, including Section 8.3.

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     8.5 Lock Up Agreements. If the Company proposes to sell securities in an
underwritten public offering or an offering under SEC Rule 144A with an expected
public offering price of at least $25,000,000, and a managing underwriter or
lead initial purchaser of that offering tells the Company that failure to
suspend sales of Registrable Securities could adversely affect the amount of
securities the Company can sell or the price for which the Company can sell the
securities, at the request of the Company, each Investor will enter into an
agreement with the underwriters or initial purchasers to suspend sales of
Registrable Securities for a period not exceeding 90 days. In the event an
Investor enters into such an agreement, the Company will use its reasonable best
efforts to cause each of the Other Investors which at the time own, together
with its Affiliates, at least as many shares of Common Stock as the Investors
and their Affiliates, and each of the Company’s senior executive officers, to
execute an agreement with substantially the same terms and conditions and for
the same time period to which such Investor is bound. An Investor will not be
required to enter into an agreement of that type more than twice in any twelve
month period.
     8.6 Holdback. With respect to any underwritten offering of Registrable
Securities by the Investors or other Holders pursuant to this Article 8, the
Company agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Shelf Registration Statement (other than such registration or a Special
Registration) covering any of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
period not to exceed ten days prior and 60 days following the effective date of
such offering or such longer period up to 90 days as may be requested by the
managing underwriter. The Company also agrees to cause each of its directors and
senior executive officers to execute and deliver customary lockup agreements in
such form and for such time period up to 90 days as may be requested by the
managing underwriter. For purposes of this Agreement, the term “Special
Registration” means the registration of (a) equity securities and/or options or
other rights in respect thereof solely registered on Form S-4 or Form S-8 (or
successor form) or (b) shares of equity securities and/or options or other
rights in respect thereof to be offered to directors, members of management,
employees, consultants, customers, lenders or vendors of the Company or Company
Subsidiaries or in connection with dividend reinvestment plans.
ARTICLE 9
TERMINATION
     9.1 Right to Terminate. This Agreement may be terminated at any time prior
to the earlier of the payment by the Investors of the purchase price for the
Acquired Common Stock, or the issuance of the Acquired Common Stock to the
Investors, as described in Section 2.2:
          (a) By mutual consent of the Investors and the Company.
          (b) By either the Investors or the Company by July 31, 2011 if, by
such date, the Company has not entered into Investor Agreements (including this
Agreement) relating to sales of Common Stock for at least $500 million (but the
right to terminate this Agreement pursuant to this Section 9.1(b) will end when
the Company has entered into Investor Agreements (including this Agreement)
relating to sales of Common Stock for at least $500 million).
          (c) By either the Investors or the Company if the Closing Date shall
not have occurred by December 31, 2011 (the “Termination Date”); provided,
however, that a party shall not be entitled to terminate this Agreement pursuant
to this Section 9.1(c) if such party has

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breached any of its representations, warranties or obligations under this
Agreement (including each such party’s obligations under Section 4.7 or 4.8, as
applicable) and such breach was a material reason for the failure of a condition
set forth in Section 5.1 or 5.2, as applicable, to be fulfilled.
          (d) By either the Investors or the Company if either of them is
informed by a Governmental Entity that an approval or other action by that
Governmental Entity that is required to enable the sale of Common Stock
contemplated by this Agreement to take place will not be given or taken by that
Governmental Entity or that any Government Entity intends to impose, or will
condition any required approval or other action on the imposition of, a
Materially Burdensome Regulatory Condition.
          (e) By either the Investors or the Company if any applicable law or
regulation shall be in force or any final and non-appealable order, decree,
injunction or judgment shall have been entered by any Governmental Entity that
invalidates this Agreement or prevents or restrains any of the parties hereto
from completing the transactions that are the subject of this Agreement.
          (f) By either the Investors or the Company if a stockholders meeting
is held as contemplated by Section 4.1, and at that meeting, the Company’s
stockholders vote on, but do not approve, the proposal to approve the
transactions that are the subject of the Investor Agreements.
          (g) By the Company, at any time prior to the Closing, if (i) any
Investor is in breach of its representations, warranties or covenants made by it
in this Agreement; (ii) such breach is not cured or capable of being cured by
the earlier of the day prior to the Termination Date and thirty days following
written notice of such breach from the Company and (iii) such breach, if
uncured, would render any condition set forth in Section 5.1 incapable of being
satisfied.
          (h) By the Investors, at any time prior to the Closing, if (i) the
Company is in breach of its representations, warranties or covenants made by it
in this Agreement; (ii) such breach is not cured or capable of being cured by
the earlier of the day prior to the Termination Date and thirty days following
written notice of such breach from the Investors and (iii) such breach, if
uncured, would render any condition set forth in Section 5.2 incapable of being
satisfied.
     9.2 Manner of Terminating Agreement. If at any time the Investors or the
Company have the right under Section 9.1 to terminate this Agreement, they or it
can terminate this Agreement by a notice to the other of them that they are or
it is terminating this Agreement at a time specified in the notice (which may be
the time the notice is given).
     9.3 Effect of Termination. If this Agreement is terminated pursuant to this
Article 9, after this Agreement is terminated, neither the Investors nor the
Company will have any further rights or obligations under this Agreement, except
that (i) the provisions of Section 6.5 will remain in effect until one year
after the day on which this Agreement is terminated, and (ii) if this Agreement
is terminated under Section 9.1(f), within 10 days after this Agreement is
terminated, the Company will pay to the Investors $5 million, which will be
allocated among them in proportion to the respective numbers of shares of
Acquired Common Stock each of them has agreed in this Agreement to purchase.
Nothing contained in this Article 9 will relieve any party of liability for any
breach of this Agreement that occurs before this Agreement is terminated or

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for any reimbursement obligations under the letter agreement dated May 26, 2011
between the Company and Thomas H. Lee Partners, L.P.
ARTICLE 10
INDEMNIFICATION
     10.1 Indemnification Against Loss Due to Inaccuracies in Company’s
Representations and Warranties or Company Failure to Fulfill Obligations.
Subject to the limits in Section 10.3, the Company indemnifies the Investors
against, and agrees to hold the Investors harmless from, all losses, liabilities
and expenses (including, but not limited to, reasonable fees and expenses of
counsel and expenses of investigation) incurred by the Investor directly or
indirectly because (i) any matter that is the subject of a representation and
warranty contained in Section 3.1 is not as represented and warranted (without
giving effect to any “material”, “materiality”, “material adverse change” or
“material adverse effect” qualification contained in any such representation and
warranty in determining whether there has been, or the extent of, any inaccuracy
in, or breach of, any such representation and warranty), or (ii) the Company
fails to fulfill in any respect any of its obligations under this Agreement, or
under any document delivered in accordance with this Agreement, which is
required to be fulfilled after the Closing Date.
     10.2 Indemnification Against Loss Due to Inaccuracies in Investor’s
Representations and Warranties or Investor Failure to Fulfill Obligations.
Subject to the limits in Section 10.3, each Investor, severally and not jointly,
indemnifies the Company against, and agrees to hold the Company harmless from,
all losses, liabilities and expenses (including, but not limited to, reasonable
fees and expenses of counsel and expenses of investigation) incurred by the
Company directly or indirectly because (i) any matter that is the subject of a
representation and warranty contained in Section 3.2 is not as represented and
warranted (without giving effect to any “material”, “materiality”, “material
adverse change” or “material adverse effect” qualification contained in any such
representation and warranty in determining whether there has been, or the extent
of, any inaccuracy in, or breach of, any such representation and warranty), or
(ii) the Investor fails to fulfill in any respect any of its obligations under
this Agreement, or under any document delivered in accordance with this
Agreement, which is required to be fulfilled after the Closing Date.
     10.3 Limit on Liability for Breach of Warranty.
          (a) Except with respect to breaches of the representations and
warranties contained in Sections 3.1(a) (Organization and Power), 3.1(c)
(Authorization), 3.1(g) (Issuance of Acquired Common Stock), Section 3.1(h)
(Capitalization) or Section 3.1(u) (Taxes) (but only with respect to the
representations and warranties in that Section with respect to the amount and
ability to apply net operating loss carryforward of FirstBank as of December 31,
2010, which shall be the only portion of Section 3.1(u) that is not subject to
the limitations in this Section 10.3), and in instances of fraud, the Company
will not be liable to any Investor under Section 10.1, or any other provision of
this Agreement, as a result of a breach of the Company’s representations and
warranties in Section 3.1, to the extent the losses, liabilities and expenses
for which the Investor would, except for this Section 10.3(a), be entitled to
indemnification under Section 10.1 are in total less than 2% or more than 15% of
the Aggregate Purchase Price the Investor has agreed in Section 1.1 to pay for
the Acquired Common Stock it is purchasing. The Company will have no obligation
to reimburse the Investor for the amount that is less than 2% or more than 15%
of the Aggregate Purchase Price the Investor has agreed in Section 1.1 to pay
for the Acquired Common Stock it is purchasing. In determining the amount of
losses, no

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individual claim or series of related claims for breach of a representation and
warranty that results in a loss of less than $50,000 in the aggregate will be
included.
          (b) Except in instances of fraud, no Investor will be liable under
Section 10.2, or any other provision of this Agreement, as a result of a breach
of such Investor’s representations and warranties in Section 3.2, to the extent
the losses, liabilities and expenses for which the Company would, except for
this Section 10.3(b), be entitled to indemnification from the Investor under
Section 10.2 are in total less than 2% or more than 15% of the total purchase
price the Investor has agreed in Section 1.1 to pay for the Acquired Common
Stock, and the Investor will have no obligation to reimburse the Company for the
amount that is less than 2% or more than 15% of the total purchase price the
Investor has agreed in Section 1.1 to pay for the Acquired Common Stock. In
determining the amount of losses, no individual claim or series of related
claims for breach of a representation and warranty that results in a loss of
less than $50,000 in the aggregate will be included.
          (c) No investigation by any Investor of the Company or by the Company
of any Investor prior to or after the date of the Original Agreement shall limit
a party’s indemnification right hereunder or be deemed a waiver of any such
right.
          (d) Any indemnification payment pursuant to Sections 10.1 and 10.2
will be treated as an adjustment to the purchase price for the Acquired Common
Stock for U.S. federal income and applicable state and local Tax purposes,
unless a different treatment is required by applicable law.
     10.4 Indemnification Sole Remedy. Except in instances of fraud, the
indemnification in Sections 10.1 and 10.2, as the case may be, will be the sole
remedy of the Investors or the Company, as applicable, as a result of a breach
of a representation and warranty contained in Section 3.1 or 3.2, as applicable.
Except as to claims with respect to breaches of the representations and
warranties in Section 3.1(u) (Taxes), any claim for indemnification must be made
in a written notification to the party from which indemnification is sought,
must describe in reasonable detail the claim and the facts on which such claim
is based and, with respect to claims for indemnification arising under
Section 10.1(i) or Section 10.2(i) must be given not later than the second
anniversary of the Closing Date; provided that if notice of a claim for
indemnification is brought prior to such second anniversary, then the
indemnification obligation in respect of such claim shall survive until the
final resolution of such claim. Each of the representations and warranties set
forth in this Agreement shall survive the Closing under this Agreement but,
except as to the representations and warranties in Section 3.1(u) (Taxes) only
for a period of two years following the Closing Date (or until final resolution
of any claim or action arising from the breach of any such representation and
warranty, if notice of such breach was provided prior to the second anniversary
of the Closing Date) and thereafter shall expire and have no further force and
effect. Neither the Company nor the Investors will have any liability for any
breach of a representation and warranty contained in Section 3.1 or 3.2 unless a
claim is made in accordance with this Section 10.4.
ARTICLE 11
ABSENCE OF BROKERS
     11.1 Representations and Warranties Regarding Brokers and Others. The
Company and the Investors each represent and warrant to the other of them that
nobody acted as a broker, a finder or in any similar capacity in connection with
the transactions that are the subject of this Agreement, except that Sandler
O’Neill & Partners, L.P. acted as financial adviser

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to the Company (there may be a finder with regard to sales of Common Stock to
some Other Investors, who will be entitled to a fee from the Company equal to 1%
of the purchase price paid by those Other Investors). The Company will pay all
the fees and other charges of Sandler O’Neill & Partners, L.P. The Company
indemnifies the Investors and agrees to hold each of them harmless from, and
each Investor, severally and not jointly, the Company, against and agrees to
hold the Company harmless from, all losses, liabilities and expenses (including,
but not limited to, reasonable fees and expenses of counsel and costs of
investigation) incurred because of any claim by anyone for compensation as a
broker, a finder or in any similar capacity by reason of services allegedly
rendered to the indemnifying party or its subsidiaries in connection with the
transactions which are the subject of this Agreement.
ARTICLE 12
GENERAL
     12.1 Announcement of Transaction. The Company will, not later than one
Business Day after Investors and Other Investors have signed Investor Agreements
(including this Agreement) relating to purchases of Common Stock for a total of
at least $500 million, (i) make a public announcement, in a form to be provided
to and approved in advance by the Investors in their reasonable discretion, of
the signing of such Investor Agreements in sufficient detail so that the fact
that Investor Agreements have been signed and knowledge of the terms of the
Investor Agreements will not constitute material non-public information and
(ii) include the Investor Presentation in a Report filed with the SEC. In
addition, if Investor Agreements are terminated and those terminations make it
unlikely that he transactions that are the subject of the Investor Agreements
will take place, the Company will, not later than one Business Day after the
Investor Agreements are terminated, make a public announcement of the
termination. The Company will also timely make all filings with the SEC that are
required under the Exchange Act with respect to the execution of Investor
Agreements, the issuance of Common Stock under Investor Agreements and the
termination of the Investor Agreements. The Company will not, without the
consent of the Investors, mention the names of the Investors or of their
Affiliates or advisers in any public disclosures regarding the transactions that
are the subject of the Investor Agreements, except that nothing in this Section
or elsewhere in this Agreement will prevent the Company from disclosing the name
of any Investor or its Affiliates or investment adviser to the extent it is
required to do so by law, by rules of the SEC or the NYSE, or by any form the
Company is required to file with a Governmental Entity, or to the extent it is
asked for that information by any Governmental Entity (including, but not
limited to, the staff of the SEC, the FDIC, the Federal Reserve or the OCFI);
provided, however, that the Company will, to the extent reasonably practicable,
provide the Investors with a reasonable opportunity to review and comment on
such disclosures and filings in advance.
     12.2 Expenses. Except as specifically provided in this Agreement or in the
letter agreement dated May 26, 2011 between the Company and Thomas H. Lee
Partners, L.P., each of the Investors and the Company will pay its own expenses
in connection with the transactions that are the subject of this Agreement,
including legal fees and disbursements.
     12.3 Entire Agreement. This Agreement, the non-disclosure agreement dated
March 25, 2011 between the Company and Thomas H. Lee Partners, L.P. and the
letter agreement dated May 4, 2011 between the Company and Thomas H. Lee
Partners, L.P. contain the entire agreement between the Company and the
Investors relating to the transactions that are the subject of this Agreement,
and supersede all prior negotiations, understandings and agreements between the
Company and any of the Investors (including, but not limited to, the Investment
Agreement dated May 26, 2011 between the Company and the

49

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Investors), and there are no representations, warranties, understandings or
agreements concerning the transactions that are the subject of this Agreement
other than those expressly set forth in this Agreement, the non-disclosure
agreement dated March 25, 2011 between the Company and Thomas H. Lee Partners,
L.P. and the letter agreement dated May 4, 2011 between the Company and Thomas
H. Lee Partners, L.P. The Company has provided a good faith estimate of the
estimated amount of transaction expenses that will be incurred by the Company
and the Company Subsidiaries and their advisors prior to or in connection with
the Closing Date.
     12.4 Benefit of Agreement. This Agreement is for the benefit of, and will
bind, the parties to it, their respective successors and any permitted assigns.
This Agreement is not intended to be for the benefit of, or to give any rights
to, anybody other than the parties, their respective successors and any
permitted assigns and, with respect to Section 8.3 only, the Indemnitees.
Without limiting the generality of the foregoing, no investor other than the
Investors will have any claim against the Company or any of the Investors under
or by reason of this Agreement.
     12.5 Captions. The captions of the Articles and Sections of this Agreement
are for convenience only, and do not affect the meaning or interpretation of
this Agreement.
     12.6 Assignments. Neither this Agreement nor any right of any party under
it may be assigned, except that (i) any Investor may assign its rights to
acquire the Acquired Common Stock to an affiliate of such Investor (in which
case, the term “Investor” will include the affiliated transferee), provided,
however, that, in such event, such Investor and such affiliate will be jointly
and severally liable for any failure of the affiliate to fulfill any of the
Investor’s obligations under this Agreement and (ii) if an Investor transfers
Registrable Securities to another person under circumstances and in a manner
that entitles the transferee to registration rights as provided in Section 8.4,
the Company will be deemed to have entered into an agreement with the transferee
giving the transferee all the rights with regard to the transferred Registrable
Securities that the Investor had immediately before the transfer.
     12.7 Notices and Other Communications. Any notice or other communication
under this Agreement must be in writing and will be deemed given when it is
delivered in person or sent by facsimile or electronic mail (with proof of
receipt at the facsimile number or email address to which it is required to be
sent), on the Business Day after the day on which it is delivered to a major
overnight delivery service marked for next business day delivery, or on the
third Business Day after the day on which it is mailed by first class registered
or certified mail, return receipt requested, from within the United States or
Puerto Rico to the address below (or to such other address as may be specified
after the date of the Original Agreement by the party to which the notice or
communication is sent):
          (a) If to the Investors (or any of them):
c/o Thomas H. Lee Partners, L.P.
100 Federal Street, 35th Floor
Boston, MA 02110
Attn: Thomas M. Hagerty
Facsimile: 617-227-3514

50

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with a copy to (which copy alone shall not constitute notice):

Weil, Gotshal & Manges LLP
100 Federal Street, 34th Floor
Boston, MA 02110
Attn: Marilyn French and James Westra
Facsimile: 617-772-8333
Email: Marilyn French@weil.com
Email: James.Westra@weil.com

with a copy to (which copy alone shall not constitute notice):

Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Attn: John L. Douglas
Facsimile: (212) 701-5145
Email Address: john.douglas@davispolk.com
          (b) If to the Company
First BanCorp
1519 Ponce de Leon Avenue
San Juan, Puerto Rico 00908
Attention: General Counsel
Facsimile No.: 787-753-8402
Email Address: lawrence.odell@firstbankpr.com

with a copy to (which copy alone shall not constitute notice):

K&L Gates LLP
599 Lexington Avenue
New York, NY 10022
Attention: David W. Bernstein
Facsimile No.: 212-536-3901
Email Address: david.bernstein@klgates.com
Any notice or communication given hereunder shall be deemed given on (a) if
received on a Business Day on or before 5:00 p.m. local time of the recipient,
the date of receipt, or (b) if received on a day other than a Business Day or on
a Business Day after 5:00 p.m. local time of the recipient, the first Business
Day following the date of receipt.
     12.8 Governing Law. This Agreement and all disputes arising out of or
relating to this Agreement and the subject matter hereof or the actions of the
parties hereto in the negotiation, execution, administration, performance or
nonperformance, enforcement, interpretation, termination and construction hereof
and all matters based upon, arising out of or related to any of the foregoing
(whether based on contract, tort or otherwise), including all matters of
construction, validity and performance, shall be governed by and construed in
accordance with the internal laws, both procedural and substantive, of the State
of New York, without regard to conflicts of laws principles (whether of the
State of New York or any other jurisdiction) that would apply the laws of any
jurisdiction other than the State of New York.

51

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     12.9 Consent to Jurisdiction. The Company and each Investor each agrees
that any action or proceeding relating to this Agreement or the transactions
that are the subject of this Agreement shall be brought in any state or Federal
court sitting in the Borough of Manhattan in the State of New York, and in no
other court, and each of them (i) consents to the personal jurisdiction of each
of those courts in any such action or proceeding, (ii) agrees not to seek to
transfer any such action or proceeding to any other court, whether because of
inconvenience of the forum or for any other reason (but nothing in this
Section 12.9 will prevent a party from removing any action or proceeding from a
state court sitting in the Borough of Manhattan to a Federal court sitting in
that Borough) and (iii) agrees that process in any such action or proceeding may
be served by registered mail or in any other manner permitted by the rules of
the court in which the action or proceeding is brought.
     12.10 Remedies; Specific Performance. The parties acknowledge that money
damages may not be an adequate remedy if the Company or any Investor failed to
perform in any material respect any of its obligations under this Agreement, and
accordingly they agree that in addition to any other remedy to which a party may
be entitled at law or in equity, each party will be entitled to seek to obtain
an order compelling specific performance of the other party’s or parties’
obligations under this Agreement, without any requirement that the party seeking
specific performance post a bond, and the parties agree that if any proceeding
is brought in equity to compel performance of any provision of this Agreement,
no party will raise the defense that there is an adequate remedy at law. No
remedy will be exclusive of any other remedy to which a party may be entitled,
and the remedies available to a party will be cumulative.
     12.11 Non-Recourse. All claims or causes of action (whether in contract or
in tort, in law or in equity) that may be based upon, arise out of or relate to
this Agreement, or the negotiation, execution or performance of this Agreement
(including any representation or warranty made in or in connection with this
Agreement or as an inducement to enter into this Agreement), may be made only
against the entities that are expressly identified as parties hereto. No person
who is not a named party to this Agreement, including without limitation any
past, present or future director, officer, employee, incorporator, member,
partner, equityholder, Affiliate, agent, attorney or representative of any named
party to this Agreement, shall have any liability (whether in contract or in
tort, in law or in equity, or based upon any theory that seeks to impose
liability of an entity party against its owners or affiliates) for any
obligations or liabilities arising under, in connection with or related to this
Agreement or for any claim based on, in respect of, or by reason of this
Agreement or its negotiation or execution; and each party hereto waives and
releases all such liabilities, claims and obligations against any such person
who is not a named party to this Agreement.
     12.12 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
INCLUDING ANY ACTION OR PROCEEDING BROUGHT BY WAY OF COUNTERCLAIM. EACH OF THE
PARTIES ACKNOWLEDGES THAT IT IS AWARE THAT THIS WAIVER OF RIGHTS TO JURY TRIAL
WAS A FACTOR IN EACH OTHER PARTY’S DECISION TO AGREE TO THE TERMS OF THIS
AGREEMENT AND THAT NOBODY PROMISED THAT THIS WAIVER OF THE RIGHT TO JURY TRIAL
WOULD NOT BE ENFORCED.
     12.13 Amendments. This Agreement may be amended by, but only by, a document
in writing signed by both the Company and all the Investors.

52

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     12.14 Interpretation. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Except to the extent otherwise
provided or when the context otherwise requires, references to Sections,
Articles or Exhibits contained herein refer to Sections, Articles or Exhibits of
this Agreement. Whenever the words “include”, “includes”, or “including” are
used in this Agreement, they are deemed to be followed by the words “without
limitation”. The words “hereof”, “herein”, and “hereunder”, and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not
to any particular provision of this Agreement. All terms defined in this
Agreement have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto, unless otherwise defined therein.
The definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms. References to a person are also to its
successors and permitted assigns. The use of “or” is not intended to be
exclusive unless expressly indicated otherwise. All Exhibits annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. A reference that a statement is made “to the
knowledge of the Company” means that no officer of the Company has actual
knowledge of facts that are inconsistent with that statement.
     12.15 Mutual Drafting. The parties hereto are sophisticated and have been
represented by lawyers who have carefully negotiated the provisions hereof. As a
consequence, the parties do not intend that the presumptions of any laws or
rules relating to the interpretation of contracts against the drafter of any
particular clause should be applied to this Agreement and therefore waive their
effects.
     12.16 Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
     12.17 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may be signed by fewer than all the parties or may
contain facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but all of
them together will constitute one and the same agreement.
     12.18 Independent Nature of Investors’ Obligations and Rights. The
obligations of each Investor under this Agreement are several and not joint with
the obligations of any other Investor under this Agreement, and no Investor
shall be responsible in any way for the performance of the obligations of any
other Investor under this Agreement. Nothing contained herein, and no action
taken by any Investor pursuant hereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its
investment hereunder and that no Investor will be acting as agent of such
Investor in connection with monitoring its investment in shares of Acquired
Common Stock or enforcing its rights under this Agreement. Each Investor shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. It is expressly understood and agreed that each
provision contained in this

53

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Agreement is between the Company and an Investor, solely, and not between the
Company and the Investors collectively and not between and among the Investors.
(Signatures on following page)

54

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement, intending to be legally bound by it, as of the day shown on the first
page of this Agreement.

            FIRST BANCORP
      By:   /s/ Lawrence Odell         Title: General Counsel and EVP           

 

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            INVESTOR:

    THOMAS H. LEE (ALTERNATIVE FUND VI, L.P.
      By:   THL Advisors (Alternative) VI, L.P., its         general partner   
        By:   Thomas H. Lee Advisors (Alternative) VI,         Ltd., its general
partner            By:   /s/ Thomas M. Hagerty         Name:   Thomas M.
Hagerty        Title:   Director     

Name                   Thomas H. Lee (Alternative) Fund VI, L.P.
Form of entity                   Exempted limited partnership
Jurisdiction of formation                   Cayman Islands
Taxpayer Identification No.                   98-0494653
Number of shares being acquired                   
Name in which securities should be registered                   
Total Purchase Price $                  
Shares already owned by Investor or affiliates                    0
Shares already owned by Investor or affiliates        0

 

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Exhibit A
Illustrative Pro Forma Capitalization of the Company
“If issuance price of new common shares is less than 90% of Market Price on
Trading Day Immediately preceding the pricing of the equity offering, then the
following factor must be multiplied against the Series G Conversion Price as
agreed to in the exchange agreement which increases the shares to Treasury”
“Market Price means, with respect to the Common Stock, on any given date, the
average VWAP for the 5 consecutive trading day-period ending on the Trading Day
immediately preceding such given date.”

                          Offering Assumptions:    
 
    90 %     90 %   Threshold Rate per Treasury Agreement
 
  $ 4.4605     $ 4.4605     FBP “Market Price” One Day Prior to Pricing
 
    78 %     78 %   Implied Equity Raise Price (% of Market)
 
  $ 3.5000     $ 3.5000     Equity Raise Price
 
  $ 525,000     $ 500,000     Gross Proceeds from Common Equity Raise ($000s)  
 
   
(1)
    21,303,669       21,303,669     # of shares of common stock outstanding
immediately prior to equity raise issuance
+
                       
(2)
    130,777,566       124,550,063     # of additional shares from common stock
offering at 90% of the market price prior to the offering      
(A)
    152,081,235       145,853,732     Numerator  
 
   
(1)
    21,303,669       21,303,669     # of shares of common stock in effect
immediately prior to equity raise issuance
+
                       
(2)
    150,000,000       142,857,143     # of additional shares of common stock for
the equity raise issuance      
(B)
    171,303,669       164,160,812     Denominator  
 
   
 
  $ 10.8780     $ 10.8780     Series G Conversion Price ($0.7252 ADJUSTED FOR
REVERSE STOCK SPLIT)
x
    0.8878       0.8885     Treasury Factor (“A” divided by “B” as defined
above)  
 
  $ 9.6574     $ 9.6649     Revised Series G Conversion Price  
 
   
 
  $ 424,174     $ 424,174     Series G Balance ($000s)
x
    75.0 %     75.0 %   TARP Pricing/% of Par
/
  $ 10.8780     $ 10.8780     Conversion Price Per Agreement (VWAP at date of
agreement)

 

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    29,245,312       29,245,312     Shares Issued from Series G Exchange  
 
   
 
  $ 424,174     $ 424,174     Series G Balance
x
    75.0 %     75.0 %   TARP Pricing/% of Par
/
  $ 9.6574     $ 9.6649     Conversion Price Per Agreement
 
     
 
    32,941,797       32,916,087     Shares Issued from adjusted Series G
Exchange      
 
    21,303,669       21,303,669     Current Shareholder Ownership
 
    32,941,797       32,916,087     Treasury Ownership
 
    150,000,000       142,857,143     New Shareholder Ownership      
 
    204,245,466       197,076,899     Total Pro Forma Shares Outstanding
 
  $ 714,859,131     $ 689,769,145     Pro Forma Market Capitalization      
 
    10.43 %     10.81 %   Current Shareholder Ownership
 
    16.13 %     16.70 %   Treasury Ownership
 
    73.44 %     72.49 %   New Shareholder Ownership    
 
    49,746,993       49,072,148     $174,114,474 shareholder/24.9% shareholder
(shares)
 
    24.36 %     24.9 %   $174,114,474 shareholder/24.9% shareholder (%)
 
  $ 174,114,474     $ 171,752,517     $174,114,474 shareholder/24.9% shareholder
($)

 

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Exhibit B
Form of Opinion of K&L Gates LLP
(see attached)

 

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[K&L GATES LETTERHEAD]
[Date]
The Investors set forth on Schedule I
c/o Thomas H. Lee Partners, L.P.
100 Federal Street, 35th Floor
Boston, MA 02110
Ladies and Gentlemen:
          We have acted as counsel to First BanCorp, a Puerto Rico chartered
financial holding company (the “Company”), in connection with the Amended and
Restated Investment Agreement dated as of July 14, 2011 (the “Investment
Agreement”) among the investors set forth on Schedule I to this letter (the
“Investors”) and the Company. The Investment Agreement provides for the issuance
and sale by the Company to the Investors (the “Transaction”) of [___] shares
(the “Acquired Shares”) of the common stock of the Company, par value $0.10 per
share (“Common Stock”). We are delivering this opinion letter to you at the
Company’s request in order to enable it to fulfill the condition in
Section 5.2(r) of the Investment Agreement.
          In connection with rendering the opinions set forth below, we have, in
addition to reviewing the Investment Agreement and the documents the Company is
required by the Investment Agreement to deliver to the Investors at or before
the Closing Date (as defined in the Investment Agreement), reviewed and relied
on statements by officers of the Company, certifications by governmental
authorities and a fact certificate of an officer of the Company (the “Fact
Certificate”) and such other documents as we deemed are necessary to enable us
to render those opinions. We have also made the assumptions that are customary
in opinion letters of this kind, including the assumptions that each document
submitted to us is accurate and complete, that each such document that is an
original is authentic, that each such document that is a copy conforms to an
authentic original, that all signatures on each such document are genuine, and
that no changes in the facts certified in the Fact Certificate have occurred or
will occur between the date of the Fact Certificate and the date of this letter.
          We have further assumed the legal capacity of natural persons, and
have assumed that each party to the Investment Agreement (other than the
Company) has the legal capacity and has satisfied all legal requirements that
are applicable to that party to the extent necessary to make the Investment
Agreement enforceable against that party. We have further assumed that the
Company (a) is duly incorporated and in good standing under the laws of the
Commonwealth of Puerto Rico, (b) has the corporate power to execute, deliver,
and perform its obligations under the Investment Agreement, (c) has taken all
corporate action necessary to authorize the execution, delivery, and performance
of the Investment Agreement and (d) has duly executed and delivered the
Investment Agreement. With respect to the assumptions described in (a), (b),
(c) and (d), we have relied on the legal opinion delivered to you by Martinez
Odell & Calabria in

 

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connection with the Investment Agreement. We have not independently verified any
of the foregoing assumptions or independently established any of the facts so
relied upon.
          Except the opinions contained in numbered paragraphs 4, 5 and 6 below,
which are limited to United States federal law, and the opinion contained in
numbered paragraph 1 below, which is limited to the rules of the New York Stock
Exchange (“NYSE”) contained in the NYSE Listed Company Manual, the opinions
expressed in this opinion letter are limited to the laws of the State of New
York, without regard to conflicts of laws principles (whether of the State of
New York or any other jurisdiction) that would apply the laws of any
jurisdiction other than New York. We are not opining on, and we assume no
responsibility with respect to, the applicability to or effect on any of the
matters covered by our opinion of any other laws, the laws of any other
jurisdiction or the laws of any county, municipality or other political
subdivision or any local governmental agency or authority.
          Based on, and subject to, the foregoing and the additional
qualifications and other matters set forth below, it is our opinion that:
          1. The stockholder approval required by the Section 312.03 of the NYSE
Listed Company Manual is the affirmative vote of a majority of the votes cast,
provided that that total votes cast represent over 50% of all of the outstanding
Common Stock.
          2. The Investment Agreement is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
          3. When the Acquired Shares are sold to and paid for by the Investors
on the Closing Date as contemplated by the Investment Agreement, the respective
Investors will receive such shares free and clear of any liens, encumbrances or
claims of any other persons, other than liens imposed because of acts of, or
conditions relating to, the Investors and restrictions on transfer imposed by
applicable securities or banking laws or Section 8-511(c) of the New York
Uniform Commercial Code.
          4. Except with regard to approvals required to be obtained by the
Investors, as to which we render no opinion, neither the execution and delivery
of the Investment Agreement by the Company, nor completion by the Company of the
Transaction, requires the consent of, approval by, or a filing or notification
by the Company with any Governmental Entity (as defined in the Investment
Agreement) under United States federal law other than filings and notifications
that have already been made.
          5. Assuming the accuracy of the representations and warranties made by
the Investors in Section 3.2 of the Investment Agreement and by the Company in
Section 3.1 of the Investment Agreement and in the Fact Certificate, the
issuance and sale of the Acquired Shares in accordance with the Investment
Agreement will be exempt from the registration requirements of the Securities
Act of 1933, as amended.
          6. The Company is not, and will not become solely as a result of the
consummation of the transactions that are the subject of the Investment
Agreement, an “investment company” or a “company” “controlled” by an “investment
company” (as each of those terms is defined in

- 2 -

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the Investment Company Act of 1940 (“1940 Act”)) that is required to be
registered under the 1940 Act.
          Our opinion in numbered paragraph 2 above is subject to the effect of
bankruptcy, insolvency, fraudulent transfer, reorganization, receivership,
moratorium, and other laws affecting the rights and remedies of creditors
generally, and to general principles of equity (whether applied by a court of
law or equity).
          We are furnishing this opinion letter to you solely in connection with
the Transaction. You may not rely on this opinion letter in any other
connection, and it may not be furnished to or relied upon by any other person
for any purpose, without our specific prior written consent. The foregoing
opinions are rendered as of the date of this letter. We assume no obligation to
update or supplement any of our opinions to reflect any changes of law or fact
that may occur.
             Yours truly,

    Attachment: Schedule I — Investors

- 3 -

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Schedule I
Thomas H. Lee (Alternative) Fund VI, L.P.

 

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Exhibit C
Form of Opinion of Martinez Odell & Calabria
(see attached)

 

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[MARTINEZ ODELL & CALABRIA LETTERHEAD]
[Date]
The Investors set forth on Schedule I
c/o Thomas H. Lee Partners, L.P.
100 Federal Street, 35th Floor
Boston, MA 02110
Ladies and Gentlemen:
          We have acted as counsel to First BanCorp, a Puerto Rico chartered
financial holding company (the “Company”), in connection with the Amended and
Restated Investment Agreement dated as of July 14, 2011 (the “Investment
Agreement”) among the investors set forth on Schedule I to this letter (the
“Investors”) and the Company. The Investment Agreement provides for the issuance
and sale by the Company to the Investors (the “Transaction”) of [___] shares
(the “Acquired Shares”) of the common stock of the Company, par value $0.10 per
share (“Common Stock”). We are delivering this opinion letter to you at the
Company’s request in order to enable it to fulfill the condition in
Section 5.2(r) of the Investment Agreement.
          In connection with rendering the opinions set forth below, we have, in
addition to reviewing the Investment Agreement and the documents the Company is
required by the Investment Agreement to deliver to the Investors at or before
the Closing Date (as defined in the Investment Agreement), reviewed and relied
on statements by officers of the Company, certifications by governmental
authorities and a fact certificate of an officer of the Company (the “Fact
Certificate”) and such other documents as we deemed are necessary to enable us
to render those opinions. We have also made the assumptions that are customary
in opinion letters of this kind, including the assumptions that each document
submitted to us is accurate and complete, that each such document that is an
original is authentic, that each such document that is a copy conforms to an
authentic original, that all signatures on each such document are genuine, and
that no changes in the facts certified in the Fact Certificate have occurred or
will occur between the date of the Fact Certificate and the date of this letter.
          We have further assumed the legal capacity of natural persons, and
have assumed that each party to the Investment Agreement (other than the
Company) has the legal capacity and has satisfied all legal requirements that
are applicable to that party to the extent necessary to make the Investment
Agreement enforceable against that party. We have not verified any of the
foregoing assumptions, or others contained herein, or independently established
any of the facts so relied upon.
          The opinions expressed in this opinion letter are limited to the laws
of the Commonwealth of Puerto Rico the (“Commonwealth”), without regard to
conflicts of laws principles (whether of the Commonwealth or any other
jurisdiction) that would apply the laws of any jurisdiction other than the
Commonwealth. We are not opining on, and we assume no responsibility with
respect to, the applicability to or effect on any of the matters covered by our
opinion of any other laws or the laws of any other jurisdiction.

 

--------------------------------------------------------------------------------

 

          Based on the foregoing, and subject to the foregoing and the
additional qualifications and other matters set forth below, it is our opinion
that:
          1. The Company is a corporation validly existing and, with the
exception of any consent order or agreement with a governmental authority, in
good standing under the laws of the Commonwealth. Each of the Company and each
subsidiary of the Company or FirstBank Puerto Rico set forth on Schedule II
(each a “Subsidiary,” collectively, the “Subsidiaries”) is duly qualified to do
business in the Commonwealth.
          2. Each of the Subsidiaries has been and is validly existing and, to
the extent the concept is applicable, and with the exception of any consent
order or agreement with a governmental authority, in good standing under the
laws of the Commonwealth.
          3. The Company has all corporate power and authority that is necessary
to enable it to enter into the Investment Agreement and carry out the
Transaction, and all corporate actions necessary to enable the Company to enter
into the Investment Agreement and carry out the Transaction have been taken. The
Investment Agreement has been duly executed and delivered by the Company.
          4. The purchase of the Acquired Shares by the Investors will not
constitute a “Business Combination” subject to Section B of Article Tenth of the
Company’s Articles of Incorporation and will not be subject to any statutory or
other provisions regarding business combinations with interested stockholders.
          5. The Acquired Shares have been duly authorized and validly issued
and, upon receipt of the full amount of requisite consideration, will be
non-assessable outstanding shares of Common Stock. The sale of the Acquired
Shares and the sale of Common Stock to Other Investors under Investor Agreements
(as defined in the Investment Agreement) will not give any other person
preemptive rights or other rights to acquire shares of Company of any class or
series under Commonwealth law, under the Certificate of Incorporation or by-laws
of the Company, or under any agreement of which we are aware to which the
Company is a party.
          6. The only authorized stock of the Company is 2,000,000,000 shares of
Common Stock and 50,000,000 shares of preferred stock.
          7. Except with regard to approvals required to be obtained by the
Investors, as to which we render no opinion, neither the execution and delivery
of the Investment Agreement by the Company, nor completion by the Company of the
Transaction, requires the consent of, approval by, or a filing or notification
by the Company with any Governmental Entity (as defined in the Investment
Agreement) under the laws of the Commonwealth other than filings and
notifications already made and/or consents and approvals already obtained.
          Our opinions expressed above are further subject to the following
limitations, exceptions, qualifications and assumptions:

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          (a) We express no opinion with respect to limitations imposed by law
and court decisions upon the availability of the remedy of specific performance,
injunctive relief and other equitable remedies, whether sought in legal or
equitable proceedings.
          (b) We note that the enforcement of any obligations of the Company
under the Investment Agreement may be limited by the receivership,
conservatorship and supervisory powers of depository institution regulatory
agencies generally, as well as by, and our opinions are subject to, applicable
bankruptcy, solvency, insolvency, reorganization, moratorium, marshaling, or
other similar laws and legal requirements (including, without limitation,
fraudulent transfer laws) and general equitable principles (whether considered
in a proceeding in equity or at law).
          (c) We express no opinion as to, and have assumed for purposes of our
opinions, the fairness of, the transactions contemplated under the Investment
Agreement, and the adequacy of consideration for the obligations of each party
thereunder.
          (d) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Investment Agreement and the effect of judicial decisions which have held that
certain provisions are unenforceable where their enforcement would violate the
implied covenant of good faith and fair dealing, or would be commercially
unreasonable, or where a default under the revised documents is not material.
          (e) We express no opinion as to the validity or enforceability of any
provision in the Investment Agreement waiving, expressly or by implication,
stated rights, defenses or rights granted by laws, where such waivers are or may
be deemed to be against public policy or prohibited by law.
          (f) We express no opinion as to the enforceability of any rights to
indemnification provided for in the Investment Agreement which may be limited by
(i) laws rendering unenforceable indemnification contrary to federal or state
securities laws and the public policy underlying such laws, and (ii) laws
limiting the enforceability of provisions exculpating or exempting a party from
liability, or requiring indemnification of a party, for its own action or
inaction, to the extent such action or inaction involves gross negligence,
recklessness or willful or unlawful conduct.
          (g) We express no opinion as to the validity or enforceability of any
particular provision that the Investment Agreement may contain relating to
(i) waivers of rights to object to jurisdiction or venue, or consents to
jurisdiction or venue, (ii) waivers of rights to (or methods of) service of
process, or rights to trial by jury, or other rights or benefits bestowed by
operation of law, or (iii) exculpation or exoneration clauses, indemnity
clauses, and clauses relating to releases or waivers of unmatured claims or
rights.
          (h) We have also assumed that, without independent investigation or
verification, there are no extrinsic agreements, arrangements or understandings
between or among any of the parties to the Investment Agreement that would
modify or interpret the terms of the same or the respective rights or
obligations of the parties thereunder.

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          (i) We express no opinion on whether the Company or each Subsidiary
has conducted all required local, municipal, state and/or federal tax filings or
paid all corresponding taxes, and we express no opinion on any tax matters
addressed in the Investment Agreement.
          (j) The opinions expressed in paragraphs 1 and 2 of this opinion are
based upon certain certificates, confirmations, statements and information
issued by or received from the appropriate Governmental Entities.
          (k) The Commonwealth’s Department of State has informed us that it
does not issue good standing certificates in connection with international
banking entities; therefore, we provide no opinion as to whether First Bank
Overseas Corp., or any other international banking entity, is in good standing
under the laws of the Commonwealth.
          (l) For purposes of the opinions set forth herein, we have relied on
the Fact Certificate, the Company’s Articles of Incorporation, and minute books
and stock records relating to meetings and written actions of the Board of
Directors and stockholders of the Company. The Company has represented to us
that the records and documents made available to us are complete and accurate.
          (m) We have assumed the conformity of the documents filed with the
U.S. Securities and Exchange Commission via EDGAR, except for required EDGAR
formatting changes to physical copies of the documents delivered to or prepared
by, the Company and submitted for our examination.
          We are furnishing this opinion letter to you solely in connection with
the Transaction. You may not rely on this opinion letter in any other
connection, and it may not be furnished to or relied upon by any other person
for any purpose, without our specific prior written consent. The foregoing
opinions are rendered as of the date of this letter. We assume no obligation to
update or supplement any of our opinions to reflect any changes of law or fact
that may occur.
             Yours truly,

Attachment: Schedule I — Investors
Attachment: Schedule II — Subsidiaries

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Schedule I
Thomas H. Lee (Alternative) Fund VI, L.P.

 

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Schedule II

         
FirstBank Puerto Rico
      Puerto Rico
First Federal Finance Corporation (d/b/a Money Express)
      Puerto Rico
FirstMortgage, Inc.
      Puerto Rico
FirstBank Overseas Corp.
      Puerto Rico
FirstBank Puerto Rico Securities Corp.
      Puerto Rico
First Management of Puerto Rico, Inc.
      Puerto Rico
FirstBank Insurance Agency, Inc.
      Puerto Rico

 

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Schedule 3.2
No Conflict; Consents and Approvals
(see attached)

 

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Schedule 3.2
No Conflict; Consents and Approvals
          In order for the Investor to complete the transactions that are the
subject of this Agreement, the Federal Reserve must determine not to object to
the Investor’s notice of change in bank control (the “CIBC Act Notice”)
rebutting the presumption of control attributed to the Investor under the BHC
Act and the Federal Reserve’s Regulation Y.
          In connection with the CIBC Act Notice, certain of the Investor’s
limited partners will be subject, as a result of the size of their limited
partnership interests in the Investor and of the Investor’s proposed acquisition
of voting stock of the Company, to regulatory filing requirements of their own
(“LP Filing Requirements”). If the LP Filing Requirements are not satisfied or
otherwise addressed to the satisfaction of the Federal Reserve, the Investor
believes that the Federal Reserve will object to the CIBC Notice. The Investor
does not know of any reason why the LP Filing Requirements would not be
addressed to the satisfaction of the Federal Reserve.