Exhibit 10.3

EXECUTION VERSION

 

 

 
AMENDED & RESTATED SECURITIES PURCHASE AGREEMENT
 
dated as of June 30, 2010
 

 
by and among
 
HAMPTON ROADS BANKSHARES, INC.
 

 

 
and
 

 
THE PURCHASERS SIGNATORY HERETO
 
_____________________________
 

 

 

 
 

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Table of Contents

     
PAGE
ARTICLE I
PURCHASE; CLOSINGS
6
 
1.1.
Issuance, Sale and Purchase
6
 
1.2.
Closings; Deliverables for Closings; Conditions of Closings
6
 
1.3.
Escrow
12
ARTICLE II
REPRESENTATIONS AND WARRANTIES
13
 
2.1.
Certain Terms
13
 
2.2.
Representations and Warranties of the Company
14
 
2.3.
Representations and Warranties of Purchasers
14
ARTICLE III
COVENANTS
17
 
3.1.
Confidentiality
17
 
3.2.
Stockholder Meetings
18
 
3.3.
Transfer Taxes
19
 
3.4.
Legend
19
 
3.5.
Continued Listing Authorization
20
 
3.6.
Registration Rights
20
 
3.7.
Certain Other Transactions
34
 
3.8.
Articles of Amendment
35
 
3.9.
Limitation on Beneficial Ownership
35
 
3.10.
Notice of Certain Events
35
 
3.11.
Preemptive Rights
36
 
3.12.
Most Favored Nation
38
 
3.13.
Exchange Offers
38
 
3.14.
Rights Offering
39
ARTICLE IV
TERMINATION
40
 
4.1.
Termination
40
 
4.2.
Effects of Termination
40
ARTICLE V
INDEMNITY
41
 
5.1.
Indemnification by the Company
41
 
5.2.
[Intentionally Omitted]
42
 
5.3.
Notification of Claims
42
 
5.4.
Indemnification Payment
43

 
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5.5.
Exclusive Remedies
43
ARTICLE VI
MISCELLANEOUS
44
 
6.1.
Survival
44
 
6.2.
Expenses
44
 
6.3.
Other Definitions
44
 
6.4.
Independent Nature of Purchasers’ Obligations and Rights
49
 
6.5.
Amendment and Waivers
50
 
6.6.
Amendment and Restatement of Original Agreement
50
 
6.7
Counterparts and Facsimile
50
 
6.8.
Governing Law
51
 
6.9.
Jurisdiction
51
 
6.10.
WAIVER OF JURY TRIAL
51
 
6.11.
Notices
51
 
6.12.
Entire Agreement
52
 
6.13.
Successors and Assigns
52
 
6.14.
Captions
52
 
6.15.
Severability
52
 
6.16.
Third Party Beneficiaries
53
 
6.17.
Public Announcements
53
 
6.18.
Specific Performance
54
 
6.19.
No Recourse
54

 
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LIST OF SCHEDULES AND EXHIBITS
 
Schedule I – Company Representations and Warranties
Schedule II – Terms of Exchange Offers
Schedule III – Knowledge

Exhibit A – Legal Opinion
Exhibit B – Form of Secretary’s Certificate
Exhibit C – Form of Officer’s Certificate
Exhibit D-1 – Accredited Investor Questionnaire
Exhibit D-2 – Stock Certificate Questionnaire
Exhibit E – Form of Voting Agreement
Exhibit F – Preferred Stock Articles of Amendment

 
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AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT, dated as of June 30, 2010
(this “Agreement”), by and among Hampton Roads Bankshares, Inc., a Virginia
corporation (the “Company”), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a “Purchaser”, and
collectively, the “Purchasers”).
 
RECITALS:
 
A.  Amended and Restated Agreement.  In connection with the execution of the
Amended and Restated Anchor Investment Agreement, the Company and the purchasers
signatory hereto desire to amend and restate, in its entirety, the Stock
Purchase Agreement, dated as of May 24, 2010 (the “Original Stock Purchase
Agreement”), by and among the Company and the purchasers signatory hereto.
 
B. The Equity Investment. The Company intends to sell up to $255,000,000 worth
of newly issued equity (the “Equity Investment”) in the form of shares of $0.625
par value common stock of the Company (the “Common Stock” or “Common Shares”) to
new investors in a private placement exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”),
and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “Commission” or the “SEC”) under
the Securities Act.
 
C. The Private Placement. Of such $255,000,000 amount, the Company intends to
issue and sell to the Purchasers under this Agreement, and the Purchasers,
severally and not jointly, intend to purchase from the Company, that number of
Common Shares set forth below each such Purchaser’s name on the signature page
of this Agreement, which aggregate amount for all Purchasers together shall
represent approximately 20.8% of the outstanding Common Stock on an as-converted
basis after giving effect to the Recapitalization (as defined below) (and
including the Rights Offering), for an aggregate purchase price of approximately
$65,319,630 (the “Private Placement”).  Subject to the satisfaction or waiver of
the terms and conditions to be satisfied at or prior to the First Closing, a
portion of the Common Shares to be purchased pursuant to the Private Placement
shall be purchased at the First Closing and, subject to the satisfaction or
waiver of the conditions to be satisfied at or prior to the Second Closing, the
remainder of the Common Shares to be purchased pursuant to the Private Placement
shall be purchased at the Second Closing.
 
D. The Anchor Investment. Of such $255,000,000 amount, the Company intends to
issue and sell to one or more funds managed by Carlyle Global Financial Services
Partners, L.P. (“the Carlyle Anchor Investor”) and ACMO-HR, L.L.C. (“the
Anchorage Anchor Investor” and, together with the Carlyle Anchor Investor, the
“Anchor Investors”; the Anchor Investors, together with the Purchasers, the
“Investors”), and the Anchor Investors, severally and not jointly, intend to
purchase from the Company, the number of Common Shares as will result in (i) the
Carlyle Anchor Investor owning a number of Common Shares equal to approximately
23.3% of the shares of Common Stock outstanding immediately after giving effect
to the Recapitalization (including the Rights Offering) for an aggregate
purchase price of approximately $72,982,786 and (ii) the Anchorage Anchor
Investor owning a number of Common Shares equal to 21.3% of the shares of Common
Stock outstanding immediately after giving effect to the transactions
contemplated by the Transaction Documents (including the Rights Offering) for an
aggregate purchase price of $66,708,076 (the “Anchor Investment” and the amended
and restated agreement relating thereto, the “Anchor Investment
Agreement”).  Subject to the satisfaction or waiver of the terms and conditions
to be satisfied at or prior to the First Anchor Closing, a portion of the Common
Shares to be purchased pursuant to the Anchor Investment shall be purchased at
the First Anchor Closing and, subject to the satisfaction or waiver of the
conditions to be satisfied at or prior to the Second Anchor Closing, the
remainder of the Common Shares to be purchased pursuant to the Anchor Investment
shall be purchased at the Second Anchor Closing.
 

 
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E. TARP Exchange. The United States Department of Treasury (the “Treasury”)
holds (i) 80,347 shares of Fixed Rate Cumulative Perpetual Preferred Stock,
Series C (the “TARP Preferred Stock”) and (ii) a warrant, dated December 31,
2008, to purchase 1,325,858 shares of the Common Stock at an exercise price of
$9.09 per share (the “TARP Warrant”). On the terms and subject to the conditions
set forth in a letter dated May 18, 2010 from Treasury to the Company (the
“Treasury Letter”), and an Exchange Agreement to be executed by the Treasury and
the Company incorporating the terms of the Treasury Letter (the “Exchange
Agreement”) and the terms and conditions of Section 1.2(e) of this Agreement,
the Company intends to exchange the TARP Preferred Stock for a new series of
mandatorily convertible preferred stock (the “Convertible Preferred Stock”),
which such shares the Company will then convert into 46,713,372 shares of Common
Stock (subject to adjustment as provided therein), and to amend the TARP Warrant
to, among other things, reduce the exercise price thereof to $0.43 per share
(collectively, the “TARP Exchange”).
 
F.  Exchange Offers.  Prior to the First Closing, the Company intends to conduct
exchange offers (the “Exchange Offers”) pursuant to which the Company will offer
to exchange each share of the Non-Convertible Non-Cumulative Perpetual Preferred
Stock, Series A (the “Series A Preferred Stock”) for Common Shares and each
share of the Non-Convertible Non-Cumulative Perpetual Preferred Stock, Series B
(the “Series B Preferred Stock”) for Common Shares, in each case on the terms
set forth on Schedule II hereto.
 
G. Charter Amendment and Stockholder Proposals. In connection with the
transactions contemplated hereby and the TARP Exchange and the Exchange Offers,
the Company will call a special meeting of stockholders for the purpose of (i)
increasing the authorized number of Common Shares to an amount necessary to
consummate the transactions contemplated by the Transaction Documents and the
other transactions referred to herein and therein, (ii) amending the terms of
the Series A Preferred Stock and the Series B Preferred Stock on the terms set
forth on Schedule II hereto, (iii) approving the issuance of the Common Shares
pursuant to NASDAQ Marketplace Rules 5635(b) and 5635(d), (iv) approving a
reverse stock split of the Common Shares, if such approval is required by the
NASDAQ Marketplace Rules or as the Company otherwise deems necessary and (v)
adopting certain other amendments to the Articles of Incorporation of the
Company.
 
H. The Rights Offering. Following the First Closing, the Company will commence a
rights offering providing holders of record of the Common Stock on the day prior
to the First Closing Date with the right to invest in Common Stock at the same
price per share paid by the Purchasers and the Anchor Investors (the “Rights
Offering” and together with the Equity Investment, the TARP Exchange and the
Exchange Offers, the “Recapitalization”). The rights will be non-transferable
and will provide for the purchase of a maximum of $20,000,000 worth of Common
Stock by such existing stockholders.
 
I.           Voting Agreements. Each of the members of the Board of Directors of
the Company has entered into separate voting agreements substantially in the
form of Exhibit E hereto whereby such member of the Board of Directors agrees to
vote their shares of Common Stock in favor of the Stockholder Proposals.
 
NOW, THEREFORE, in consideration of the foregoing mutual covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser,
severally and not jointly, hereby agree as follows:
 

 
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Purchase; ClosingS
 
1.1. Issuance, Sale and Purchase
 
.
 
(a) At the First Closing, subject to the terms and conditions set forth herein,
the Company agrees to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, agrees to purchase from the Company, free and clear
of any Liens, the number of Common Shares set forth below such Purchaser’s name
on the signature page of this Agreement for a purchase price per share of $0.43
(the “First Purchase Price”) payable by each Purchaser to the Company.
 
(b) At the Second Closing, subject to the terms and conditions set forth herein,
the Company agrees to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, agrees to purchase from the Company, free and clear
of any Liens, the number of Common Shares set forth below such Purchaser’s name
on the signature page of this Agreement for a purchase price per share of $0.43
(the “Second Purchase Price,” together with the First Purchase Price, the “Full
Purchase Price”) payable by each Purchaser to the Company.
 
1.2. Closings; Deliverables for Closings; Conditions of Closings
 
.
 
(a) First Closing.  The closing of the purchase of the Common Shares by the
Purchasers pursuant to Section 1.1(a) (the “First Closing”)
 
(b)  shall occur on the second Business Day following the satisfaction or waiver
of the conditions to the First Closing set forth in Section 1.2(e) (other than
those conditions that by their nature are to be satisfied at the First Closing,
but subject to the satisfaction or waiver of those conditions) (provided, that
the Company shall provide the Purchasers with notice of the First Closing Date
and provided further that the First Closing Date shall be postponed as necessary
to ensure that the First Closing Date occurs no earlier than ten (10) Business
Days after the foregoing notice has been provided by the Company to the
Purchasers) at the offices of Simpson Thacher & Bartlett located at 425
Lexington Avenue, New York, NY 10017 or such other date or location as agreed in
writing by the parties.  The date of the First Closing is referred to as the
“First Closing Date.”
 
(c) Second Closing.  The closing of the purchase of the Common Shares by the
Purchasers pursuant to Section 1.1(b) (the “Second Closing”) shall occur on the
date of the closing of the Rights Offering and the backstop purchase to be
provided, if required, by CapGen pursuant to the CapGen Investment Agreement
following the satisfaction of the conditions to the Second Closing set forth in
Section 1.2(f) (other than those conditions that by their nature are to be
satisfied at the Second Closing, but subject to the satisfaction or waiver of
those conditions (provided, that the Company shall provide the Purchasers with
notice of the Second Closing Date and provided further that the Second Closing
Date shall be postponed as necessary to ensure that the Second Closing Date
occurs no earlier than ten (10) Business Days after the foregoing notice has
been provided by the Company to the Purchasers) at the offices of offices of
Simpson Thacher & Bartlett located at 425 Lexington Avenue, New York, NY 10017
or such other date or location as agreed in writing by the parties.  The date of
the Second Closing is referred to as the “Second Closing Date.”  The term
“Closing” shall apply to the First Closing and/or the Second Closing, as
applicable and the term “Closings” shall refer to the First Closing and the
Second Closing, collectively.  The term “Closing Date” shall apply to the First
Closing Date and/or the Second Closing Date, as applicable and the term “Closing
Dates” shall refer to the First Closing Date and the Second Closing Date,
collectively.
 

 
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(d) First Closing Deliverables.  At the First Closing the parties shall make the
following deliveries:
 
(A) the Company shall have issued instructions to its transfer agent (the
“Transfer Agent”) authorizing the issuance, in book-entry form, to Purchaser of
the Common Shares specified on Purchaser’s signature page hereto (or, if the
Company and such Purchaser shall have agreed, as indicated on a duly completed
Stock Certificate Questionnaire in the form included as Exhibit D-2, that
Purchaser will receive stock certificates for its Common Shares, then the
Company shall instead instruct the Transfer Agent to issue such specified stock
certificates registered in the name of such Purchaser or as otherwise set forth
on such Stock Certificate Questionnaire) concurrent with the release by the
Escrow Agent of the Escrow Funds pursuant to the Escrow Agreement (as such terms
are defined below) to the Company;
 
(B) The Company shall have delivered to each Purchaser a certificate evidencing
the incorporation and good standing of the Company and each of the Company
Subsidiaries as of a date within ten (10) Business Days before the First Closing
Date; and
 
(C) The Escrow Agent shall deliver concurrently with the First Closing the
Escrow Funds comprising the First Purchase Price by wire transfer of immediately
available funds to the account provided to the Escrow Agent by the Company at
least one (1) Business Day prior to the First Closing Date (the “Company
Account”); provided, however, that any Purchaser that is an investment company
registered under the Investment Company Act of 1940, as amended, shall not be
required to deliver the Purchase Price prior to its receipt of the Common Shares
purchased by it hereunder.
 
(e) First Closing Conditions.  (1)  The respective obligations of each
Purchaser, on the one hand, and the Company, on the other hand, to consummate
the First Closing are each subject to the satisfaction or written waiver by the
Company and the Purchasers of the following conditions prior to the First
Closing:
 
(A) No provision of any Law and no judgment, injunction, order or decree shall
prohibit the First Closing or the Second Closing or shall prohibit or restrict
the Purchasers or any of their Affiliates from owning or voting any Common
Shares to be purchased pursuant to the Transaction Documents;
 
(B) All Governmental Consents required to have been obtained at or prior to the
First Closing Date in connection with the execution, delivery or performance of
this Agreement and the consummation of the transactions contemplated hereby and
thereby (including the transactions to be effected at the Second Closing) shall
have been obtained and shall be in full force and effect; and
 
(C)           The General Stockholder Proposals shall have been approved and
adopted and the General Articles of Amendment shall have been duly filed with
the Commonwealth of Virginia State Corporation Commission and shall be in full
force and effect.

(2) The obligation of each Purchaser to purchase the Common Shares to be
purchased by it at the First Closing is also subject to the satisfaction or
written waiver by such Purchaser of the following conditions prior to the First
Closing:
 

 
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(3) The representations and warranties of the Company set forth in Schedule I to
this Agreement shall be true and correct in all respects on and as of May 23,
2010 and on and as of the First Closing Date as though made on and as of the
First Closing Date, except where the failure to be true and correct (without
regard to any materiality or Material Adverse Effect qualifications contained
therein), individually or in the aggregate, would not be reasonably likely to
have a Material Adverse Effect with respect to the Company (and except that (1)
representations and warranties made as of a specified date shall be true and
correct as of such date and (2) the representations and warranties of the
Company set forth in paragraph (b) (but only with respect to the last sentence
thereof), paragraph (c), paragraph (f) and paragraph (q)(4) of Schedule I shall
be true and correct in all respects;
 
(A) The Company shall have performed and complied with in all material respects
all agreements, covenants and conditions required by this Agreement to be
performed by it on or prior to the First Closing Date (except that with respect
to agreements, covenants and conditions that are qualified by materiality, the
Company shall have performed and complied with such agreements, covenants and
conditions, as so qualified, in all respects);
 
(B) The Company shall have caused each Purchaser to receive, substantially in
the form set forth as Exhibit A hereto, opinions of Williams Mullen, counsel to
the Company, executed by such counsel and addressed to the Purchasers;
 
(C) The Investors, the Company and the Escrow Agent shall have executed and
delivered the Escrow Agreement (as defined below) and the Escrow Agent shall
have received prior to 5:00 pm (EST) on the Business Day immediately preceding
the First Closing Date Escrow Funds in an amount equal to the anticipated
proceeds from the sale of the Common Shares, in each case at a price per share
of $0.43, in an aggregate amount of not less than $255,000,000;
 
(D) Either (i) not less than 100% of the aggregate liquidation value (or
liquidation preference as the case may be) of the outstanding shares of the
Series A Preferred Stock and the Series B Preferred Stock shall have been
exchanged for Common Shares pursuant to the Exchange Offers pursuant to the
terms set forth on Schedule II or (ii) (A) not less than 51% of the aggregate
liquidation preference of the outstanding shares of the Series A Preferred Stock
and the Series B Preferred Stock shall have been exchanged for Common Shares
pursuant to the Exchange Offer pursuant to the terms set forth on Schedule II
and (B) the Preferred Stock Proposals shall have been approved and adopted and
the Preferred Articles of Amendment shall have been duly filed with the
Commonwealth of Virginia State Corporation Commission and shall be in full force
and effect;
 
(E) There shall not be any action taken, or any Law enacted, entered, enforced
or deemed applicable to the Company or its Subsidiaries, the Purchasers or the
transactions contemplated by this Agreement, by any Governmental Entity, whether
in connection with the Governmental Consents specified in Section 1.2(e)(1)(B)
or otherwise, which imposes any restriction or condition which any Purchaser
determines, in its reasonable good faith judgment, is materially and
unreasonably burdensome or would reduce the benefits of the transactions
contemplated hereby to such Purchaser to such a degree that such Purchaser would
not have entered into this Agreement had such
 

 
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(F) condition or restriction been known to it on May 23, 2010 (any such
condition or restriction, a “Burdensome Condition”), and, for the avoidance of
doubt, (i) any requirements to maintain capital in excess of the amount required
to be considered “well capitalized” under generally applicable published
guidelines , and (ii) any requirements to disclose the identities of limited
partners, shareholders or members of any Purchaser or its Affiliates or
investment advisers shall be deemed a Burdensome Condition unless otherwise
determined by such Purchaser in its sole discretion;
 
(G) Contemporaneously with the First Closing, all of the TARP Preferred Stock
shall have been exchanged for or converted into 46,713,372 shares of Common
Stock, directly or through an exchange into and conversion of the Convertible
Preferred Stock;
 
(H) The TARP Warrants shall have been amended to reflect the reduced conversion
price of $0.43 per share pursuant to the terms and conditions of the Treasury
Letter;
 
(I) At any time after May 23, 2010, the Company shall not have agreed to enter
into or entered into (a) any agreement or transaction in order to raise capital
or (b) any transaction that resulted in, or would result in if consummated, a
Change in Control of the Company, in each case, other than in connection with
the transactions contemplated by the Transaction Documents;
 
(J) There shall not be in effect, as a result of any Regulatory Agreement, any
limitation that would limit the amount of either The Bank of Hampton Roads’ or
Shore Bank’s brokered deposits to an amount less than the amount of brokered
deposits on the books of The Bank of Hampton Roads or Shore Bank on June 24,
2010;
 
(K) Each Purchaser shall have received a certificate of the Secretary of the
Company, in the form attached hereto as Exhibit B (the “Secretary’s
Certificate”), dated as of the First Closing Date, (a) certifying the
resolutions adopted by the Board of Directors of the Company or a duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Common
Shares in the Equity Investment, (b) certifying the current versions of the
Articles of Incorporation, as amended, and by-laws, as amended, of the Company
and (c) certifying as to the signatures and authority of individuals signing
this Agreement and related documents on behalf of the Company;
 
(L) Each Purchaser shall have received a certificate, dated as of the First
Closing Date, signed on behalf of the Company by a senior executive officer
substantially in the form of Exhibit C attached hereto certifying to the effect
that the conditions set forth in Section 1.2(c)(2)(A) and Section 1.2(c)(2)(B)
have been satisfied on and as of the  First Closing Date;
 
(M) The Common Stock, including the Common Shares issued hereunder, (i) shall be
designated for listing and quotation on the Nasdaq Stock Market and (ii) shall
not have been suspended, as of the First Closing Date, by the Commission or the
Nasdaq Stock Market from trading on the Nasdaq Stock Market;
 
(N) The purchase by the Purchaser of the number of Common Shares specified in
the signature block of such Purchaser shall not (i) cause such Purchaser or
 

 
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(O) any of its Affiliates to violate any federal or state banking law or
regulation, (ii) require such Purchaser or any of its Affiliates to file a prior
notice with the Federal Reserve or its delegee under the CIBC Act or the BHC Act
or file a prior notice with the Virginia Bureau of Financial Institutions or
obtain the prior approval of any federal or state bank regulator or (iii) cause
such Purchaser, together with any other person whose ownership of voting
securities of the Company would be aggregated with such Purchaser’s ownership of
voting securities of the Company for purposes of any bank regulation or law, to
collectively be deemed to own, control or have the power to vote securities
which (assuming, for this purpose only, full conversion and/or exercise of such
securities by the Purchaser) would represent more than 9.9% of any class of
voting securities of the Company outstanding at such time; and
 
(P) Since May 23, 2010, a Material Adverse Effect shall not have occurred and no
change or other event shall have occurred that, either individually or in the
aggregate, would reasonably be likely to have a Material Adverse Effect.
 
(4) The obligations of the Company hereunder to issue and sell the Common
Shares to each Purchaser at the First Closing is subject to the satisfaction or
written waiver by the Company of the following conditions prior to the First
Closing:
 
(A) The representations and warranties of each Purchaser set forth in this
Agreement shall be true and correct in all respects on and as of May 23, 2010
and on and as of the First Closing Date as though made on and as of the First
Closing Date except where the failure to be true and correct (without regard to
any materiality qualifications contained therein) would materially adversely
affect the ability of such Purchaser to perform its obligations hereunder;
 
(B) The Company shall have received from each Purchaser a fully completed and
duly executed Accredited Investor Questionnaire, reasonably satisfactory to the
Company, and Stock Certificate Questionnaire in the forms attached hereto as
Exhibits D-1 and D-2 , respectively; and

(C) Each Purchaser has performed and complied with in all material respects all
agreements, covenants and conditions required by this Agreement to be performed
by it on or prior to the First Closing Date (except that with respect to
agreements, covenants and conditions that are qualified by materiality, each
Purchaser shall have performed and complied with such agreements, covenants and
conditions, as so qualified, in all respects).

(f) Second Closing Deliverables.  At the Second Closing the parties shall make
the following deliveries:

(A) The Company shall have delivered (or shall deliver concurrently with the
Second Closing) to each Purchaser the number of the Common Shares to be
purchased pursuant to Section 1.1(b), registered in the name of such Purchaser.

(B) Each Purchaser shall deliver concurrently with the Second Closing such
Purchaser’s portion of the Second Purchase Price as provided in Section 1.1(b)
by wire transfer of immediately available funds to the account provided to the
Company at least one (1) Business Day prior to the Second Closing Date;

 
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The Company shall have delivered to such Purchasers such other documents
relating to the purchase and sale of the Common Shares contemplated by this
Agreement as such Purchasers shall have reasonably requested in connection with
the Second Closing; and

(C) The Escrow Agent shall deliver concurrently with the Second Closing the
Escrow Funds comprising the Second Purchase Price by wire transfer of
immediately available funds to the Company Account; provided, however, (i) that
any Purchaser that is an investment company registered under the Investment
Company Act of 1940, as amended, shall not be required to deliver the Purchase
Price prior to its receipt of the Common Shares purchased by it hereunder, and
(ii) the Escrow Agent shall not be required to deliver the Escrow Funds
comprising the Second Purchase Price to the Company after June 30, 2011, and
after such date shall instead return to each Purchaser their portion of the
Second Purchase Price.
 
(g) Second Closing Conditions.  The respective obligations of each Purchaser, on
the one hand, and the Company, on the other hand, to consummate the Second
Closing are each subject to the satisfaction of the following conditions prior
to the Second Closing:

(A) The First Closing shall have been consummated in accordance with the terms
of this Agreement;

(B) The Rights Offering shall have been consummated in accordance with the terms
of this Agreement;

(C) The Company shall have received (or shall receive concurrently with the
Second Closing) proceeds from the sale of the Common Shares pursuant to the
Private Placement, the Anchor Investment and the Rights Offering, in each case
at the purchase prices set forth herein and at a price per share of $0.43, an
aggregate amount of not less than $275,000,000;

(D) The conditions stated in Section 1.2(e)(2)(M) and (N) shall remain satisfied
as of the Second Closing Date;

(E) The representations and warranties of the Company set forth in paragraphs
(f) and (ii) of Schedule I shall be true and correct in all respects; and

(F) The representations and warranties of the Purchasers in Section 2.3(a)
through (h) shall be true and correct in all respects.

1.3.  
Escrow.

 
Prior to Closings, each of the Investors, the Company and Mellon Investors LLC
(the “Escrow Agent”) shall have entered into an escrow agreement substantially
in the form customarily provided by the Escrow Agent, subject to such
modifications as may be mutually agreed to conform such agreement to the
transactions contemplated by the Transaction Documents (the “Escrow
Agreement”).  The Escrow Agreement will provide that (a) no later than 5:00 pm
(EST) on the Business Day immediately preceding the First Closing, each of the
Purchasers shall deposit into escrow by wire transfer of immediately available
funds the Full Purchase Price applicable for the purchase of the number of
Common Stock set forth on such Purchaser’s signature page (collectively, the
“Escrow Funds”) and (b) the Escrow Funds shall be disbursed to the Company
Account only after (i) with respect to the First Closing, all of the conditions
contained in Section 1.2(e)(2) of this Agreement, and (ii) with respect to the

 
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Second Closing, all of the conditions contained in Section 1.2 (g)of this
Agreement, have been satisfied or waived by each of the Purchasers.

ARTICLE II                                
REPRESENTATIONS AND WARRANTIES
2.1. Certain Terms
 
.
 
(a) As used in this Agreement, the term “Material Adverse Effect” means any
circumstance, event, change, development or effect that, individually or in the
aggregate, would reasonably be expected to (i) result in a material adverse
effect on the assets, liabilities, business, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a whole,
or (ii) materially impair or delay the ability of the Company or any of the
Company Subsidiaries to perform its or their obligations under the Transaction
Documents to consummate the Closings or any of the transactions contemplated
hereby or thereby; provided, however, that in determining whether a Material
Adverse Effect has occurred, there shall be excluded any effect to the extent
resulting from (A) actions or omissions of the Company or any Company Subsidiary
expressly required by the terms of the Transaction Documents; (B) changes, after
May 23, 2010, in general economic conditions in the United States, including
financial market volatility or downturn, (C) changes, after May 23, 2010,
affecting generally the industries or markets in which the Company operates, (D)
acts of war, sabotage or terrorism, military actions or the escalation thereof,
or outbreak of disease, (E) any changes, after May 23, 2010, in applicable Laws
or accounting rules or principles, including changes in GAAP, (F) the
announcement or pendency of the transactions contemplated by the Transaction
Documents or (G) any failure by the Company or any of the Company Subsidiaries
to meet any internal projections or forecasts with regard to the assets,
liabilities, business, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole (it being
understood and agreed that the facts and circumstances giving rise to such
failure that are not otherwise excluded from the determination of whether a
Material Adverse Effect has occurred may be taken into account in determining
whether there has been a Material Adverse Effect); provided further, however,
that any circumstance, event, change, development or effect referred to in
clauses (B), (C), (D) or (E) above shall be taken into account in determining
whether a Material Adverse Effect has occurred or would reasonably be expected
to occur to the extent that such circumstance, event, change, development or
effect has a disproportionate effect on the Company compared to other
participants in the industries or markets in which the Company operates;
provided, further, however, that the parties agree that each of the following
shall constitute a Material Adverse Effect:  (i) any restatement of the
Company’s financial statements that would have the effect of reducing the
consolidated total equity of the Company by 7.5% or more (excluding the effect
of restatements for (A) an impairment of deferred tax assets but only to the
extent the impairment does not adversely affect the value of the deferred tax
asset on the opening balance sheet of the Company after the Closings and after
the application of purchase accounting (“Permitted DTA Impairment”), and (B) an
increase in the provision for loan losses, loan charge offs, or any reserve for
loan losses), or any determination by the SEC or the Company’s independent
accountants, or any determination by the Board of Directors, that such a
restatement should be effected or (ii) any other circumstance, event, change,
development or effect after May 23, 2010 that would be reasonably expected to
(A) cause the Company’s GAAP net losses (excluding transaction expenses, accrual
for preferred dividends, and any Permitted DTA Impairment but not excluding the
provision for loan losses) for financial accounting purposes to exceed
$40,000,000 in the second quarter of 2010 or $30,000,000 in the third quarter of
2010, (B) cause any unexpected increase in GAAP net losses (excluding provision
for loan losses), or reduction in GAAP net income (excluding provision for loan
losses) for all periods after the Closings by more than $2,000,000 in excess of
what would otherwise be reported  or (C) reduce the total equity value of the
Company by more than
 

 
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(b) $15,000,000 (excluding transaction expenses, provision for loan losses,
accrual for preferred dividends, and any Permitted DTA Impairment).
 
(c) As used in this Agreement, the term “Previously Disclosed” with regard to
(1) any party means information set forth on its Disclosure Schedule
corresponding or responsive to the provisions of this Agreement to which such
information relates, provided, however, that if such information is disclosed in
such a way as to make its relevance or applicability to another provision of
this Agreement reasonably apparent on its face, such information shall be deemed
to be responsive to such other provision of this Agreement, and (2) the Company,
includes information publicly disclosed by the Company in (A) the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as filed
by it with the Commission, (B) the Company’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2010, as filed by it with the Commission or (C) any
Current Report on Form 8-K filed or furnished by it with the Commission since
January 1, 2010 available prior to May 23, 2010 (excluding any risk factor
disclosures contained in such documents under the heading “Risk Factors” and any
disclosure of risks included in any “forward-looking statements” disclaimer or
other statements that are similarly non-specific and are predictive or
forward-looking in nature).  Notwithstanding anything in this Agreement to the
contrary, the mere inclusion of an item in a Disclosure Schedule shall not be
deemed an admission that such item represents a material exception or material
fact, event or circumstance or that such item has had or would reasonably be
expected to have a Material Adverse Effect on the Company or the Purchasers, as
applicable.
 
2.2. Representations and Warranties of the Company
 
.
 
Except as Previously Disclosed (other than with respect to paragraphs (a),
(d)(1), (d)(3), (e), (l), (n), (o), (p), (u), (v), (w), (y), (bb), (dd), (ee),
(gg), (ii), (jj), (kk) and (ll) of Schedule I), the Company hereby makes to each
of the Purchasers, as of May 23, 2010 and as of the First Closing Date (except
for the representations and warranties that are as of a specific date which
shall be made as of that date), those representations and warranties set forth
in Schedule I attached hereto and made a part hereof.
 
2.3.           Representations and Warranties of Purchasers.
 
Except as Previously Disclosed, each Purchaser, severally and not jointly,
hereby represents and warrants to the Company, as of May 23, 2010, and as of the
First Closing Date (except for the representations and warranties that are as of
a specific date which shall be made as of that date), for itself and for no
other Purchaser, that:
 
(a) Organization and Authority.  Such Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and where failure to be so qualified
would be reasonably expected to materially and adversely impair or delay such
Purchaser’s ability to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.
 
(b) Authorization; Compliance with Other Instruments.
 
A. Such Purchaser has the necessary power and authority to execute and deliver
this Agreement and to perform its respective obligations hereunder. The
execution, delivery and performance of this Agreement to which such Purchaser is
a party and the consummation of the transactions contemplated hereby have been
duly authorized by such Purchaser’s respective board of directors, general
partner, managing
 

 
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B. members, investment committee, investment adviser or other authorized person,
as the case may be, and no further approval or authorization by any of its
stockholders, partners or other equity owners, as the case may be, is required.
This Agreement has been duly and validly executed and delivered by such
Purchaser and, assuming due authorization, execution and delivery by the Company
and the other parties hereto, is the valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with its terms
(except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors’ rights or by general equity
principles).
 
C. Neither the execution, delivery and performance by such Purchaser of this
Agreement nor the consummation of the transactions contemplated hereby, nor
compliance by such Purchaser with any of the provisions hereof, will (A)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of any Liens upon any of the properties or assets of
such Purchaser under any of the terms, conditions or provisions of (i) such
Purchaser’s articles of incorporation or by-laws, its certificate of limited
partnership or partnership agreement or its similar governing documents or (ii)
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which such Purchaser is a party or by which
such Purchaser may be bound, or to which such Purchaser or any of the properties
or assets of such Purchaser may be subject, or (B) subject to compliance with
the statutes and regulations referred to in the next paragraph (and assuming the
correctness of the representations and warranties of the Company and the other
parties to this Agreement), violate any Law applicable to such Purchaser or any
of its properties or assets except in the case of clauses (A)(ii) and (B) for
such violations, conflicts and breaches as would not reasonably be expected to
materially adversely affect such Purchaser’s ability to perform its obligations
under this Agreement or consummate the transactions contemplated hereby on a
timely basis.
 
(c) Governmental Consents. Assuming the correctness of the representations and
warranties of (i) the Company and the other parties to this Agreement set forth
herein and (ii) the Company and the Anchor Investors set forth in the Anchor
Investment Agreement, no Governmental Consents are necessary to be obtained by
such Purchaser for the consummation of the transactions contemplated by this
Agreement.
 
(d) Purchase for Investment. Such Purchaser acknowledges that the Common Shares
have not been registered under the Securities Act or under any state securities
laws. Such Purchaser (1) is acquiring the Common Shares pursuant to an exemption
from registration under the Securities Act and other applicable securities laws
solely for investment with no present intention to distribute any of the Common
Shares to any Person, (2) will not sell or otherwise dispose of any of the
Common Shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any other applicable securities
laws, (3) has such knowledge and experience in financial and business matters
and in investments of this type that it is capable of evaluating the merits and
risks of its investment in the Common Shares and of making an informed
investment decision and (4) is an “accredited investor” (as that term is defined
by Rule 501 of the Securities Act).
 

 
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(e) Brokers and Finders. Neither such Purchaser, nor its respective Affiliates
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder’s fees, and no broker or finder has acted directly
or indirectly for such Purchaser in connection with this Agreement or the
transactions contemplated hereby.
 
(f) Investment Decision. Such Purchaser has made an independent investment
decision with respect to the transactions contemplated under this Agreement and,
except as Previously Disclosed, there are no agreements or understandings
between such Purchaser or any of its Affiliates and (i) any of the Investors
(including the other Purchasers) or any of their respective Affiliates, (ii) the
Company or (iii) the Company’s Subsidiaries.
 
(g) Financial Capability. At each Closing, such Purchaser shall have available
funds necessary to consummate such Closing on the terms and conditions
contemplated by this Agreement.
 
(h) Non-Reliance.  Without limiting its rights to rely on the representations
and warranties of the Company contained in this Agreement, in making its
investment in the Common Shares, such Purchaser is not relying on the advice or
recommendations of the Company, the Anchor Investors, CapGen, the Placement
Agents or any of their respective affiliates. Purchaser acknowledges and
confirms that neither the Placement Agents nor the Anchor Investors nor any of
their respective affiliates has assumed any responsibility for any of the
information made available in connection with the offer of the Common Shares.
Purchaser further acknowledges that none of the Placement Agents, the Anchor
Investors nor CapGen, nor any of their respective affiliates makes any
representations or warranties as to the information made available in connection
with the offer of Common Shares. Purchaser has not relied on any investigation
that the Placement Agents, the Anchor Investors or CapGen, or any of their
respective affiliates or any persons acting on their behalf may have conducted
with respect to the Common Shares or the Company.
 
(i) No Other Representations or Warranties.  Except as set forth in this
Agreement and any other documents delivered in connection with the Closing of
the transactions contemplated by this Agreement, such Purchaser makes no
representation or warranty, expressed or implied, at law or in equity, in
respect of such Purchaser or such Purchaser's business or prospects, and any
such other representations or warranties are hereby expressly disclaimed; and
the Company understands and agrees that none of such Purchaser, its advisors or
any of its affiliates or Representatives shall have any liability whatsoever to
the Company relating to or resulting from the use of information provided to the
Company except to the extent expressly provided for in this Agreement and any
other documents delivered in connection with the First Closing of the
transactions contemplated by this Agreement.
 
ARTICLE III                                
COVENANTS
3.1. Confidentiality
 
.  Except as may be required by Laws or as otherwise expressly contemplated
herein, each Purchaser or their respective Affiliates, employees, agents, and
representatives will not disclose to any third party the existence of this
Agreement, the subject matter or terms hereof or information concerning the
business or affairs of the Company that it may have acquired from such party in
connection with the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby without the prior written
consent of the Company; provided, that any
 

 
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Purchaser may disclose any such information as follows:  (a) to such Purchaser’s
Affiliates and its or its Affiliates’ employees, lenders, counsel, accountants,
agents or advisors, the actions for which the applicable party will be
responsible; (b) to comply with any applicable Law, provided that prior to
making any such disclosure the Purchaser making the disclosure notifies the
Company of any proceeding of which it is aware which may result in disclosure
and uses its commercially reasonable efforts to limit or prevent such
disclosure; (c) to the extent that the information is or becomes generally
available to the public through no fault of the Purchaser or its Affiliates
making such disclosure; (d) to the extent that the same information is in the
possession (on a non-confidential basis) of the Purchaser making such disclosure
prior to receipt of such information; (e) to the extent that the party that
received the information independently develops the same information without in
any way relying on any such information; or (f) to the extent that the same
information becomes available to the party making such disclosure on a
non-confidential basis from a source other than a Purchaser or its Affiliates,
which source, to the disclosing Purchaser’s knowledge, is not prohibited from
disclosing such information by a legal, contractual, or fiduciary obligation to
the Company.
 
3.2. Stockholder Meetings
 
.
 
(a) The Company shall call a meeting of its stockholders, to be held as promptly
as practicable after May 23, 2010, and in no event later than September 20,
2010, to vote on (1) proposals to amend the Series A Preferred Stock and the
Series B Preferred Stock pursuant to the Articles of Amendment attached hereto
as Exhibit F (the “Preferred Stock Articles of Amendment”) (the “Preferred Stock
Proposals”), (2) proposals to amend the Articles of Incorporation (A) to
increase the number of authorized shares of Common Stock to at least
1,000,000,000 shares or such larger number as the Board of Directors determines
in its reasonable judgment is necessary to effectuate the transactions
contemplated by this Agreement and by the Recapitalization, and (B) to
effectuate a reverse stock split of shares of the Common Stock to comply with
NASDAQ listing requirements and (3) proposals to approve the issuance of the
Common Shares under this Agreement and the Anchor Investment Agreement and in
connection with the other Recapitalization transactions pursuant to the
applicable NASDAQ Marketplace Rules (the stockholder proposals described in
clauses (2) and (3), the “General Stockholder Proposals”). The Board of
Directors shall unanimously recommend to the Company’s stockholders that such
stockholders approve the General Stockholder Proposals and, if applicable, the
Preferred Stock Proposals and shall take all other actions necessary to adopt
such proposals if approved by the stockholders of the Company. In connection
with each of the meetings at which such proposals will be voted on, the Company
shall promptly prepare and file with the SEC a preliminary proxy statement,
shall use its reasonable best efforts to solicit proxies for such stockholder
approval and shall use its reasonable best efforts to respond to any comments of
the SEC or its staff and to cause a definitive proxy statement related to such
stockholders’ meeting to be mailed to the Company’s stockholders as promptly as
practicable after clearance thereof by the SEC. If at any time prior to such
stockholders’ meeting there shall occur any event that is required to be set
forth in an amendment or supplement to the proxy statement, the Company shall as
promptly as practicable prepare and mail or otherwise disseminate to its
stockholders such an amendment or supplement. The Company agrees promptly to
correct any information if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall as
promptly as practicable prepare and mail or otherwise disseminate to its
stockholders an amendment or supplement to correct such information to the
extent required by applicable Laws. The recommendation made by the Board of
Directors described in this Section 3.2(a) shall be included in the proxy
statement filed in connection with obtaining such stockholder approval.  Upon
approval and adoption of any of the General Stockholder Proposals and Preferred
Stock Proposals, if applicable, the Company shall promptly file the General
Articles of Amendment and the Preferred Stock Articles of Amendment, as
applicable, with the Commonwealth of Virginia State Corporation Commission.
 

 
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(b) In the event that the approval of any of the Stockholder Proposals described
in this Section 3.2 is not obtained at such stockholders meeting, the Company
shall include a proposal to approve (and the Board of Directors shall
unanimously recommend approval of) each such proposal at a meeting of its
stockholders no less than once in each subsequent sixty-day period beginning on
the day following such initial stockholders meeting until all such approvals are
obtained or made
 
3.3. Transfer Taxes
 
.  On each Closing Date, all stock transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the sale and
transfer of the Common Shares to be sold to such Purchaser hereunder will be, or
will have been, fully paid or provided for by the Company, and all Laws imposing
such taxes will be or will have been complied with.
 
3.4. Legend
 
.
 
(a) The Purchasers agree that all certificates or other instruments representing
the securities subject to this Agreement shall bear a legend substantially to
the following effect, until such time as they are not required under Section
3.4(b) or applicable law (and, with respect to Common Shares held in book-entry
form, the Company’s transfer agent will record such a legend on the share
register):
 
“(i) THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS.
 
(ii) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND
OTHER RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT, DATED AS OF
JUNE 30, 2010, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.”
 
(b) Following the earlier of (i) the effective date of a resale registration
statement covering such Common Shares or (ii) Rule 144 becoming available for
the resale of the Common Shares, without the requirement for the Company to be
in compliance with the current public information required under Rule 144(c)(1)
(or Rule 144(i)(2), if applicable) as to the Common Shares and without volume or
manner-of-sale restrictions, the Company shall instruct the Company’s transfer
agent to remove or cause to be removed the legend set forth in Section 3.4(a)
from the certificates representing the Common Shares or from the notation in the
share register relating to the Common Shares, as applicable, and shall cause its
counsel to issue any legend removal opinion required by the transfer agent.  Any
fees (with respect to the transfer agent, Company counsel or otherwise)
associated with the issuance of such opinion or the removal of such legend shall
be borne by the Company.  If a legend is no longer required pursuant to the
foregoing, the Company will no later than three (3) Business Days following the
delivery by a Purchaser to the Company or the transfer agent (with notice to the
Company) of a legended certificate or instrument representing such Common Shares
(endorsed or with stock powers attached, signatures guaranteed, and otherwise in
form necessary to affect the reissuance and/or transfer) and any required
representation letter, deliver or cause to be delivered to such Purchaser a
certificate or instrument (as the case may be) representing such Common Shares
that is free from all restrictive legends.  The Company may not make any
notation on its records or give instructions to its transfer agent that enlarge
the restrictions on transfer set forth in this Section 3.4(b).  Certificates for
Common Shares free from all restrictive legends may be transmitted by the
transfer agent to the Purchasers by crediting the account of the Purchaser’s
prime broker with the Depository Trust Company as directed by such Purchaser.
Each
 

 
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(c) Purchaser acknowledges that the securities have not been registered under
the Securities Act or under any state securities laws and agrees that it shall
not sell or otherwise dispose of any of the securities, except in compliance
with the registration requirements or exemption provisions of the Securities Act
and any other applicable securities laws.
 
3.5. Continued Listing Authorization
 
.  The Company shall take all steps necessary to prevent the Common Shares from
being delisted from the NASDAQ, including, without limitation, effecting a
reverse stock split of the Common Stock, if necessary, to comply with NASDAQ
Listing Rule 5450(a)(1).
 
3.6. Registration Rights
 
.
 
(a) Registration.
 
(1) Subject to the terms and conditions of this Agreement, the Company covenants
and agrees that as promptly as practicable (and in any event no later than the
date that is 15 days) after the First Closing (the “Filing Deadline”), the
Company shall have prepared and filed with the SEC one or more Shelf
Registration Statements covering the resale of all of the Registrable Securities
(or, if permitted by the rules of the SEC, otherwise designate an existing Shelf
Registration Statement filed with the SEC to cover such Registrable Securities),
and, to the extent the Shelf Registration Statement has not theretofore been
declared effective or is not automatically effective upon such filing, the
Company shall use reasonable best efforts to cause such Shelf Registration
Statement to be declared or become effective as soon as practicable (and in any
event no later than the Effectiveness Deadline) and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities for a period
from the date of its initial effectiveness until the time as there are no such
Registrable Securities remaining (including by refiling such Shelf Registration
Statement (or a new Shelf Registration Statement) if the initial Shelf
Registration Statement expires).  Notwithstanding the registration obligations
set forth in this Section 3.6(a)(1), in the event the Commission informs the
Company that all of the Registrable Securities cannot, as a result of the
application of Rule 415, be registered for resale as a secondary offering on a
single registration statement, the Company agrees to promptly (i) inform each of
the Holders thereof and use its commercially reasonable efforts to file
amendments to the initial Shelf Registration Statement as required by the
Commission and/or (ii) withdraw the initial Shelf Registration Statement and
file a new Shelf Registration Statement, in either case covering the maximum
number of Registrable Securities permitted to be registered by the Commission,
on such form available to the Company to register for resale the Registrable
Securities as a secondary offering; provided, however, that prior to filing such
amendment or new Shelf Registration Statement, the Company shall be obligated to
use its reasonable best efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with the SEC
Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09.  Notwithstanding any other provision of this Agreement, if any SEC
Guidance sets forth a limitation of the number of Registrable Securities or
other shares of Common Stock permitted to be registered on a particular Shelf
Registration Statement as a secondary offering (and notwithstanding that the
Company used diligent efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities), the number
of Registrable Securities or other shares of Common Stock to be registered on
such Shelf Registration Statement will be reduced as follows: first, the Company
shall reduce or eliminate the shares of Common Stock to be included
 

 
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(2) by any Person other than a Holder; second, the Company shall reduce or
eliminate any shares of Common Stock to be included by any Affiliate of the
Company; and third, the Company shall reduce the number of Registrable
Securities to be included by all Holders on a pro rata basis based on the total
number of unregistered Registrable Securities held by such Holders, subject to a
determination by the Commission that certain Holders must be reduced before
other Holders based on the number of Registrable Securities held by such
Holders.  In the event the Company amends the initial Shelf Registration
Statement or files a new Shelf Registration Statement, as the case may be, under
clauses (i) or (ii) above, the Company will use its commercially reasonable
efforts to file with the Commission, as promptly as allowed by Commission or SEC
Guidance provided to the Company or to registrants of securities in general, one
or more registration statements on such form available to the Company to
register for resale those Registrable Securities that were not registered for
resale on the initial Shelf Registration Statement, as amended, or the new Shelf
Registration Statement.  No Holder shall be named as an “underwriter” in any
Registration Statement without such Holder’s prior written consent.
 
(3) Except as provided in Section 3.6(a)(7), any registration pursuant to this
Section 3.6(a) shall be effected by means of a shelf registration under the
Securities Act (a “Shelf Registration Statement”) in accordance with the methods
and distribution set forth in the Shelf Registration Statement and Rule 415. If
the Purchasers or any other holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with this Agreement intends to distribute any Registrable Securities
by means of an underwritten offering it shall promptly so advise the Company and
the Company shall take all reasonable steps to facilitate such distribution,
including the actions required pursuant to Section 3.6(c). The lead underwriters
in any such distribution shall be selected by the holders of a majority of the
Registrable Securities to be distributed.
 
(4)   [Intentionally Omitted]
 
(5) If the Company proposes to register any of its securities, whether or not
for its own account (including, without limitation, pursuant to the exercise of
any demand registration rights by either Anchor Investor pursuant to the Anchor
Investment Agreement), other than a registration pursuant to Sections 3.6(a)(1)
or 3.6(a)(7) 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
Purchasers and all other Holders of its intention to effect such a registration
(but in no event less than ten Business 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 3.6(a)(4) prior to the effectiveness of such registration, whether or
not the Purchasers or any other Holders have elected to include Registrable
Securities in such registration.
 

 
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(6) If the registration referred to in Section 3.6(a)(4) is proposed to be
underwritten, the Company shall so advise the Purchasers and all other Holders
as a part of the written notice given pursuant to Section 3.6(a)(4). In such
event, the right of the Purchasers and all other Holders to registration
pursuant to this Section 3.6(a)(4) shall be conditioned upon such persons’
participation in such underwriting and the inclusion of such persons’
Registrable Securities in the underwriting, and each such person shall (together
with the Company and the other persons distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
If any participating person disapproves of the terms of the underwriting, such
Person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the Purchasers.
 
(7) In the event (x) that the Company grants “piggyback” registration rights to
one or more third parties to include their securities in an underwritten
offering under the Shelf Registration Statement pursuant to Section 3.6(a)(2) or
(y) that a Piggyback Registration under Section 3.6(a)(4) relates to an
underwritten offering, and in any such 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, solely in the case of a Piggyback Registration under
Section 3.6(a)(4) relating to a primary offering on behalf of the Company, any
securities the Company proposes to sell for its own account, (ii) second, Common
Stock and other securities of the Company issued to Treasury, (iii) third,
Registrable Securities of (A) the Purchasers and all other Holders who have
requested registration of Registrable Securities pursuant to Sections 3.6(a)(2)
or 3.6(a)(4), as applicable, and (B) any Anchor Investor that has requested
registration of its Registrable Securities pursuant to the exercise of the
demand registration rights provided in the Anchor Investment Agreement, in each
case, pro rata on the basis of the aggregate number of such securities or shares
owned by each such person and (iv) fourth, any other securities of the Company
that have been requested to be so included, subject to the terms of this
Agreement.
 
(8) In addition to any Shelf Registration Statement, the Company shall prepare
and file with the SEC, and use its reasonable best efforts thereafter to cause
to be effective, registration statements permitting the sale and distribution in
an underwritten offering of up to that number of Registrable Securities equal,
in each case, to 25% of the Registrable Securities outstanding as of the First
Closing Date (as to each such underwritten offering, the “Offering Ceiling”) (i)
first, as soon as practicable after the date twelve months after the First
Closing Date (the “First Secondary Offering Registration”), and (ii) second, as
soon as practicable after the date twelve months after the closing of the First
Secondary Offering Registration (the “Second Secondary Offering Registration”
and, together with the First Secondary Offering Registration, the “Secondary
Offering Registrations”; each, a Secondary Offering Registration”).  Each such
offering shall be underwritten by one or more managing underwriter selected by
the holders of a majority of the Registrable Securities to be distributed, and
shall be effected on a “best efforts” basis unless otherwise agreed by the
Company, Holders of a majority
 

 
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(9) of the Registrable Securities to be distributed and the managing
underwriters of such registration.  With respect to each Secondary Offering
Registration, the Company shall give prompt written notice to the Investors of
its intention to effect such Secondary Offering Registration (but, in each case,
no less than ten Business Days prior to the anticipated filing date), and shall
include in such Secondary Offering Registration all Registrable Securities with
respect to which the Company has received a written request for inclusion
therein from an Investor within five (5) Business Days of the Company’s notice
pursuant to this Section 3.6(a)(7), provided that the Anchor Investors shall
only be permitted to participate in the Second Secondary Offering
Registration.  In the event that the amount of Registrable Securities requested
to be included by Holders in either Secondary Offering Registration exceeds the
Offering Ceiling for such registration, the amount of Registrable Securities
requested to be included therein by each Holder shall be reduced proportionally
based on its pro rata ownership of the Registrable Securities as of the First
Closing Date. As to each Secondary Offering Registration, if the managing
underwriters of the underwritten offering to which it relates advise the Company
that in their reasonable opinion the number of Registrable Securities requested
to be included in such offering (after giving effect to any proportional
reduction to a level not in excess of the Offering Ceiling) 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, Common Stock and other securities of the
Company issued to the Treasury, (ii) second, Registrable Securities of the
Purchasers and all other Holders, pro rata on the basis of the aggregate number
of such securities or shares owned by each such Person and (iii) third, any
other securities of the Company that have been requested to be so included,
subject to the terms of the Transaction Documents.
 
(10) In the event that Form S-3 is not available for the registration of the
resale of Registrable Securities under Section 3.6(a)(1), the Company shall (i)
register the resale of the Registrable Securities on another appropriate form,
including, without limitation, Form S-1, and (ii) undertake to register the
Registrable Securities on Form S-3 promptly after such form is available,
provided that the Company shall maintain the effectiveness of the Shelf
Registration Statement then in effect until such time as a Shelf Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.
 
(b) Expenses of Registration. All Registration Expenses incurred in connection
with any registration, qualification or compliance hereunder shall be borne by
the Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the Holders selling in such registration pro rata on
the basis of the aggregate number of securities or shares being sold.
 
(c) Obligations of the Company. The Company shall use its reasonable best
efforts for so long as there are Registrable Securities outstanding, to take
such actions as are under its control to not become an ineligible issuer (as
defined in Rule 405 under the Securities Act). In addition, whenever required to
effect the registration of any Registrable Securities or facilitate the
distribution of Registrable Securities pursuant to an effective Shelf
Registration Statement, the Company shall, as expeditiously as reasonably
practicable:
 

 
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(d) The Company shall, by 9:30 a.m. New York City time on the first Business Day
after the Effective Date of a Shelf Registration Statement, file a final
prospectus with the SEC, as required by Rule 424(b)under the Securities Act.
 
(1) Provide to each Holder 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 (3) Business Days in advance of any filing with the SEC of any
registration statement or any amendment or supplement thereto that includes such
information.
 
(2) Prepare and file with the SEC a prospectus supplement with respect to a
proposed offering of Registrable Securities pursuant to an effective
registration statement, subject to Section 3.6(c), and keep such registration
statement effective or such prospectus supplement current.
 
(3) Prepare and file with the SEC such amendments and supplements to the
applicable registration statement and the prospectus or prospectus supplement
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
 
(4) Furnish to the Holders and any underwriters such number of copies of the
applicable registration statement and each such amendment and supplement thereto
(including in each case all exhibits) and of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned or to be distributed
by them.
 
(5) Use its reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders or
any managing underwriter(s), to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and to take
any other action which may be reasonably necessary to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by such
Holder; provided, that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
 
(6) Notify each Holder of Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the applicable prospectus, as then
in effect, 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 (which notice
shall not contain any material non-public information).
 
(7) Within one Business Day after such event, give written notice to the Holders
(which notice shall not contain any material non-public information):
 
(A)           when any registration statement filed pursuant to Section 3.6(a)
or any amendment thereto has been filed with the SEC (except for any amendment
effected by the filing of a document with the SEC pursuant to the
 

 
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Exchange Act) and when such registration statement or any post-effective
amendment thereto has become effective;
 
(B)           of any request by the SEC for amendments or supplements to any
registration statement or the prospectus included therein or for additional
information;
 
(C)           of the issuance by the SEC of any stop order suspending the
effectiveness of any registration statement or the initiation of any proceedings
for that purpose;
 
(D)           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 or the initiation or threatening of any
proceeding for such purpose;
 
(E)           of the happening of any event that requires the Company to make
changes in any effective registration statement or the prospectus related to the
registration statement in order to make the statements therein not misleading
(which notice shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made); and
 
(F)           if at any time the representations and warranties of the Company
contained in any underwriting agreement contemplated by Section 3.6(c)(12) cease
to be true and correct.
 
(8) Use its reasonable best efforts to prevent the issuance or obtain the
withdrawal of any order suspending the effectiveness of any registration
statement referred to in Section 3.6(c)(8)(C) at the earliest practicable time.
 
(9) Upon the occurrence of any event contemplated by Section 3.6(c)(7) or
3.6(c)(8)(E) and subject to the Company’s rights under Section 3.6(d), the
Company shall promptly prepare a post-effective amendment to such registration
statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to the Holders and any underwriters,
the prospectus shall not 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.
 
(10) Use reasonable best efforts to procure the cooperation of the Company’s
transfer agent in settling any offering or sale of Registrable Securities,
including with respect to the transfer of physical stock certificates into
book-entry form in accordance with any procedures reasonably requested by the
Holders or any managing underwriter(s).
 
(11) In the event of an underwritten offering pursuant to Section 3.6(a)(2) or
Section 3.6(a)(4) or conducted pursuant to Section 3.6(a)(7), enter into an
underwriting agreement in customary form, scope and substance and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith
 

 
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(12) in any underwritten offering (including making members of management and
executives of the Company available to participate in “road shows,” similar
sales events and other marketing activities), (i) make such representations and
warranties to the Holders that are selling stockholders and the managing
underwriter(s), if any, with respect to the business of the Company and the
Company Subsidiaries, and the Shelf Registration Statement, prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in customary form, substance and scope, and, if true,
confirm the same if and when requested, (ii) use its reasonable best efforts to
furnish the underwriters with opinions of counsel to the Company, addressed to
the managing underwriter(s), if any, covering the matters customarily covered in
such opinions requested in underwritten offerings, (iii) use its reasonable best
efforts to obtain “cold comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any business acquired by the Company for which financial
statements and financial data are included in the applicable registration
statement) who have certified the financial statements included in such
registration statement, addressed to each of the managing underwriter(s), if
any, such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters, (iv) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures customary in underwritten offerings, and (v) deliver such documents
and certificates as may be reasonably requested by the Holders of a majority of
the Registrable Securities being sold in connection therewith, their counsel and
the managing underwriter(s), if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company.
 
(13) Make available for inspection by a representative of Holders that are
selling stockholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information,
in each case, reasonably requested by any such representative, managing
underwriter(s), attorney or accountant in connection with such Shelf
Registration Statement.
 
(14) Cause all such Registrable Securities to be listed on each securities
exchange on which the same class of securities issued by the Company are then
listed or, if the same class of securities is not then listed on any securities
exchange, use its reasonable best efforts to cause all such Registrable
Securities of such class to be listed on the NASDAQ Stock Market.
 
(15) If requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s),
if any, promptly include in a prospectus supplement or amendment such
information as the Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith or managing underwriter(s), if
any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company has
received such request.
 

 
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(16) Timely provide to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
 
(e) Suspension of Sales. Upon receipt of written notice from the Company that a
registration statement, prospectus or prospectus supplement contains or may
contain an untrue statement of a material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that circumstances exist that make inadvisable use of
such registration statement, prospectus or prospectus supplement, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities pursuant to such registration statement until such Holder has
received copies of a supplemented or amended prospectus or prospectus
supplement, or until such Holder is advised in writing by the Company that the
use of the prospectus and, if applicable, prospectus supplement may be resumed,
and, if so directed by the Company, such Holder shall deliver to the Company (at
the Company’s expense) all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus and, if applicable, prospectus supplement
covering such Registrable Securities current at the time of receipt of such
notice (each such suspension, a “Suspension Period”). No single Suspension
Period shall exceed 30 consecutive days, and during any 365 day period, the
aggregate of all Suspension Periods shall not exceed an aggregate of 60 days.
 
(f) Termination of Registration Rights. A Holder’s registration rights as to any
securities held by such Holder (and its Affiliates, partners, members and former
members) shall not be available unless such securities are Registrable
Securities.
 
(g) Furnishing Information.
 
(1) Neither the Purchasers nor any Holder shall use any free writing prospectus
(as defined in Rule 405) in connection with the sale of Registrable Securities
without the prior written consent of the Company.
 
(2) It shall be a condition precedent to the obligations of the Company to take
any action pursuant to Section 3.6(c) as to a selling Holder that such selling
Holder, and the underwriters, if any, shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to
effect the registered offering of their Registrable Securities.
 
(h) Indemnification.
 
(1) The Company agrees to indemnify each Holder and, if a Holder is a person
other than an individual, such Holder’s officers, directors, employees, agents,
representatives and Affiliates, and each Person, if any, that controls a Holder
within the meaning of the Securities Act (each, an “Indemnitee”), against any
and all Losses, joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto or any documents
incorporated therein by reference or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto);
or any omission to state therein 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 shall not be
liable to such Indemnitee in any such case to the extent that any such Loss is
based solely upon (i) an
 

 
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(2) untrue statement or omission made in such registration statement, including
any such preliminary prospectus or final prospectus contained therein or any
such amendments or supplements thereto or contained in any free writing
prospectus (as such term is defined in Rule 405) prepared by the Company or
authorized by it in writing for use by such Holder (or any amendment or
supplement thereto), in reliance upon and in conformity with information
regarding such Indemnitee or its plan of distribution or ownership interests
which was furnished in writing to the Company by such Indemnitee expressly for
use in connection with such registration statement, including any such
preliminary prospectus or final prospectus contained therein or any such
amendments or supplements thereto, or (ii) offers or sales effected by or on
behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing
prospectus” (as defined in Rule 405) that was not authorized in writing by the
Company.  Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnitee and shall survive the
transfer of the Registrable Securities by the Holders.
 
(3) If any proceeding shall be brought or asserted against any Indemnitee, such
Indemnitee shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnitee and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnitee to give such notice shall not
relieve the Company of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have materially and adversely
prejudiced the Company.
 
An Indemnitee shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnitee or Indemnitees
unless:  (1) the Company has agreed in writing to pay such fees and expenses;
(2) the Company shall have failed promptly to assume the defense of such
proceeding and to employ counsel reasonably satisfactory to such Indemnitee in
any such proceeding; or (3) the named parties to any such proceeding (including
any impleaded parties) include both such Indemnitee and the Company, and such
Indemnitee shall have been advised by counsel that a conflict of interest exists
if the same counsel were to represent such Indemnitee and the Company; provided,
that the Company shall not be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnitees.  The Company shall
not be liable for any settlement of any such proceeding effected without its
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned.  The Company shall not, without the prior written consent of the
Indemnitee, effect any settlement of any pending proceeding in respect of which
any Indemnitee is a party, unless such settlement includes an unconditional
release of such Indemnitee from all liability on claims that are the subject
matter of such proceeding.
 
Subject to the terms of this Agreement, all fees and expenses of the Indemnitee
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such proceeding in a manner not
inconsistent with this Section 3.6(g)(2)) shall be paid to the Indemnitee, as
incurred, within twenty (20) Business Days of written notice thereof to the
Company; provided, that the Indemnitee shall promptly reimburse the Company for
that portion of such fees and expenses applicable to such actions for which such
Indemnitee is finally judicially determined to
 

 
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not be entitled to indemnification hereunder). The failure to deliver written
notice to the Company within a reasonable time of the commencement of any such
action shall not relieve the Company of any liability to the Indemnitee under
this Section 3.6(g), except to the extent that the Company is materially and
adversely prejudiced in its ability to defend such action.
 
(4) If the indemnification provided for in Section 3.6(g)(1) is unavailable to
an Indemnitee with respect to any Losses or is insufficient to hold the
Indemnitee harmless as contemplated therein, then the Company, in lieu of
indemnifying such Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee as a result of such Losses 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 such Losses 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, shall 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 such statement or omission; the Company and each Holder agree
that it would not be just and equitable if contribution pursuant to this Section
3.6(g)(3) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in Section 3.6(g)(1). No Indemnitee guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Company if the Company was not guilty of such fraudulent
misrepresentation.
 
(5) The indemnity and contribution agreements contained in this Section 3.6(g)
are in addition to any liability that the Company may have to the Indemnitees
and are not in diminution or limitation of the indemnification provisions under
Article V of this Agreement.
 
(i) Assignment of Registration Rights. The rights of each Purchaser to
registration of Registrable Securities pursuant to Section 3.6(a) may be
assigned by such Purchaser to a transferee or assignee of Registrable Securities
to which (i) there is transferred to such transferee no less than $1,000,000 in
Registrable Securities and (ii) such transfer is permitted under the terms
hereof; provided, however, that the transferor shall, within ten days after such
transfer, furnish to the Company written notice of the name and address of such
transferee or assignee and the number and type of Registrable Securities that
are being assigned.
 
(j) Holdback. With respect to any underwritten offering of Registrable
Securities by the Purchasers or other Holders pursuant to this Section 3.6, 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 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 90 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. “Special Registration” means the registration of (i)
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 (ii) shares of equity
securities and/or options or other rights in respect thereof to be offered to
directors, members of
 

 
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(k) management, employees, consultants, customers, lenders or vendors of the
Company or its Subsidiaries or in connection with dividend reinvestment plans.
 
(l) Rule 144; Rule 144A Reporting. With a view to making available to the
Purchasers and Holders the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its reasonable best efforts to:
 
(1) make and keep adequate current public information with respect to the
Company available, as those terms are understood and defined in Rule 144(c)(1)
or any similar or analogous rule promulgated under the Securities Act, at all
times after the effective date of this Agreement;
 
(2) so long as a Purchaser or a Holder owns any Registrable Securities, furnish
to such Purchaser or such Holder forthwith upon request: (x) a written statement
by the Company as to its compliance with the reporting requirements of Rule 144
under the Securities Act, and of the Exchange Act; (y) a copy of the most recent
annual or quarterly report of the Company; and (z) such other reports and
documents as the Purchaser or Holder may reasonably request in availing itself
of any rule or regulation of the SEC allowing it to sell any such securities
without registration; and
 
(3) to take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act.
 
(m) As used in this Section 3.6, the following terms shall have the following
respective meanings:
 
(1) “Effective Date” means the date that the Shelf Registration Statement filed
pursuant to Section 3.6(a)(1) is first declared effective by the Commission.
 
(2) “Effectiveness Deadline” means, with respect to the initial Shelf
Registration Statement required to be filed pursuant to Section 3.6(a)(1), the
earlier of (i) the 90th calendar day following the First Closing Date and (ii)
the 5th Business Day after the date the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such Shelf Registration
Statement will not be “reviewed” or will not be subject to further review;
provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or
other day that the Commission is closed for business, the Effectiveness Deadline
shall be extended to the next Business Day on which the Commission is open for
business.
 
(3) “Holder” means (i) the Purchasers and any other holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred in compliance with Section 3.6(h) hereof and (ii) the Anchor
Investors and any other holder of Registrable Securities to whom the
registration rights conferred by the Anchor Investment Agreement have been
transferred in compliance with Section 3.14(h) thereof.
 
(4) “Holders’ Counsel” means one counsel for the selling Holders chosen by
Holders holding a majority interest in the Registrable Securities being
registered.
 

 
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(5) “Register,” “registered” and “registration” shall refer to a registration
effected by preparing and (a) filing a registration statement in compliance with
the Securities Act and applicable rules and regulations thereunder, and the
declaration or ordering of effectiveness of such registration statement or (b)
filing a prospectus and/or prospectus supplement in respect of an appropriate
effective registration statement.
 
(6) “Registrable Securities” means (A) all Common Stock held by the Investors
from time to time and (B) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (A) by way of
conversion, exercise or exchange thereof or stock dividend or stock split or in
connection with a combination of shares, recapitalization, reclassification,
merger, amalgamation, arrangement, consolidation or other reorganization,
provided that, once issued, such securities shall not be Registrable Securities
when (i) they are sold pursuant to an effective registration statement under the
Securities Act, (ii) they may be immediately sold pursuant to Rule 144 without
limitation thereunder on volume or manner of sale and without the requirement
for the Company to be in compliance with the current public information required
under Rule 144(c)(1) (or Rule 144(i)(2), if applicable), (iii) they shall have
ceased to be outstanding or (iv) they have been sold in a private transaction in
which the transferor’s rights under this Agreement are not assigned to the
transferee of the securities. No Registrable Securities may be registered under
more than one registration statement at one time.
 
(7) “Registration Expenses” means all expenses incurred by the Company in
effecting any registration pursuant to this Agreement (whether or not any
registration or prospectus becomes effective or final) or otherwise complying
with its obligations under this Section 3.6, including, without limitation, all
registration, filing and listing fees, printing expenses, fees and disbursements
of counsel for the Company, blue sky fees and expenses, expenses incurred in
connection with any “road show,” the reasonable fees and disbursements of
Holders’ Counsel (not to exceed $25,000), and expenses of the Company’s
independent accountants in connection with any regular or special reviews or
audits incident to or required by any such registration, but shall not include
Selling Expenses and the compensation of regular employees of the Company, which
shall be paid in any event by the Company.
 
(8) “Rule 144,” “Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each
case, such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.
 
(9) "SEC Guidance" means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.
 
(10) “Selling Expenses” means all discounts, selling commissions and stock
transfer taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of Holders’ Counsel included in Registration Expenses).
 
At any time, any holder of Registrable Securities (including any Holder) may
elect to forfeit its rights set forth in this Section 3.6 from that date
forward; provided, that a Holder forfeiting such rights shall nonetheless be
entitled to participate under Sections 3.6(a)(4)-(7) in any Pending Underwritten
Offering to the same extent that such Holder would have been entitled to if the
holder had not withdrawn; and
 

 
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provided, further, that no such forfeiture shall terminate a Holder’s rights or
obligations under Section 3.6(g) with respect to any prior registration or
Pending Underwritten Offering. “Pending Underwritten Offering” means, with
respect to any Holder forfeiting its rights pursuant to this Section 3.6(k), any
underwritten offering of Registrable Securities in which such Holder has advised
the Company of its intent to register its Registrable Securities either pursuant
to Section 3.6(a)(2) , 3.6(a)(4) or 3.6(a)(7) prior to the date of such Holder’s
forfeiture.
 
3.7. Certain Other Transactions
 
.
 
(a) Prior to the Second Closing, notwithstanding anything in the Transaction
Documents to the contrary, the Company shall not directly or indirectly effect
or cause to be effected any transaction with a third party that would reasonably
be expected to result in a Change in Control unless such third party shall have
provided prior assurance in writing to the Purchasers (in a form that is
reasonably satisfactory to the Purchasers) that the terms of the Transaction
Documents shall be fully performed (i) by the Company or (ii) by such third
party if it is the successor of the Company or if the Company is its direct or
indirect Subsidiary. For the avoidance of doubt, it is understood and agreed
that, in the event that a Change in Control occurs on or prior to the Second
Closing, the Purchasers shall maintain the right under this Agreement to
acquire, pursuant to the terms and conditions of the this Agreement, the Common
Stock (or such other securities or property (including cash) into which the
Common Stock may have become exchangeable as a result of such Change in
Control), as if both of the Closings (or the Second Closing, if the First
Closing has already occurred) had occurred immediately prior to such Change in
Control, including, for the avoidance of doubt, the Common Stock issuable
pursuant to warrants to be issued pursuant to the Carlyle Investor Letter, the
Anchorage Investor Letter, and the CapGen Investor Letter.
 
(b) In the event that, at or prior to either Closing, (i) the number of shares
of Common Stock or securities convertible or exchangeable into or exercisable
for shares of Common Stock issued and outstanding is changed as a result of any
reclassification, stock split (including reverse split), stock dividend or
distribution (including any dividend or distribution of securities convertible
or exchangeable into or exercisable for shares of Common Stock), merger, tender
or exchange offer or other similar transaction, (ii) the Company fixes a record
date that is at or prior to the applicable Closing Date for the payment of any
non-stock dividend or distribution on the Common Stock other than any ordinary
cash dividends, then the number of shares of Common Stock to be issued to the
Purchasers at the applicable Closing under this Agreement, together with the
applicable per share price (and the number of shares and per share price
pursuant to the Rights Offering and the backstop commitment), shall be equitably
adjusted and/or the shares of Common Stock to be issued to the Purchasers at the
applicable Closing under this Agreement shall be equitably substituted with
shares of other stock or securities or property (including cash), in each case,
to provide the Purchasers with substantially the same economic benefit from this
Agreement as the Purchasers had prior to the applicable transaction.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the aggregate Purchase Price or any component, or the aggregate percentage of
shares to be purchased by any Purchaser thereof be changed by the foregoing.
 
(c) Notwithstanding anything in the foregoing, the provisions of this Section
3.7 shall not be triggered by (i) the transactions contemplated by this
Agreement (other than the reverse stock split and related matters) or (ii) any
issuances of options, restricted stock units or other equity-based awards
granted to newly-appointed directors, employees or consultants of the Company at
or around the same time as the transactions contemplated by this Agreement to
such Persons, including upon exercise of any such options (not to exceed 2.5% of
the Capital Stock of the Company on a fully-diluted basis).
 

 
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(d) The reverse stock split contemplated by this Agreement shall not occur prior
to the issuance of the warrants pursuant to the Carlyle Investor Letter, the
Anchorage Investor Letter and the CapGen Investor Letter.
 
3.8. Articles of Amendment
 
. In connection with the First Closing, the Company shall file the Articles of
Amendment in the Commonwealth of Virginia, and such Articles of Amendment shall
continue to be in full force and effect as of the First Closing Date and the
Second Closing Date.
 
3.9. Limitation on Beneficial Ownership.  Notwithstanding anything to the
contrary in the Transaction Documents, neither the Company  nor any Company
Subsidiary shall take any action (including any redemption, repurchase, or
recapitalization of Common Stock, or 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 in
each case, where the Purchasers are not given the right to participate in such
redemption, repurchase or recapitalization to the extent of the Purchaser’s pro
rata proportion), that would cause any Purchaser’s ownership of voting
securities of the Company (together with the ownership by such Purchaser’s
Affiliates (as such term is used under the BHC Act) of voting securities of the
Company) to increase above 9.9% of any class of voting securities of the
Company, without the prior written consent of such affected Purchaser, or to
increase to an amount that would constitute “control” under the BHC Act or the
CIBC Act, or otherwise cause any Purchaser to “control” the Company under and
for purposes of the BHC Act or the CIBC Act. Notwithstanding anything to the
contrary in this Agreement or any Transaction Document,  no Purchaser (and its
Affiliates or any other Persons with which it is acting in concert) will be
entitled to purchase a number of Common Shares that would result in such
Purchaser becoming, directly or indirectly, the beneficial owner (as determined
under Rule 13d-3 under the Exchange Act) or the owner for purposes of any
banking law or regulation of more than 9.9% of the number of shares of Common
Stock issued and outstanding.  Notwithstanding anything to the contrary in this
Agreement, no Purchaser shall have the ability to exercise any voting rights of
any securities in excess of 9.9% of any class of voting securities of the
Company.  In the event that either the Company or any Company Subsidiary
breaches its obligations under this Section 3.9 or believes that it is
reasonably likely to breach such obligations, it shall promptly notify the other
parties hereto and shall cooperate in good faith with such parties to modify an
ownership or other arrangement or take such actions and make such other
arrangements, in each case, as is necessary to cure or avoid such breach..
 
3.10. Notice of Certain Events.  Each party hereto shall promptly notify the
other party hereto of (a) any event, condition, fact, circumstance, occurrence,
transaction or other item of which such party becomes aware prior to each
Closing that would constitute a violation or breach of this Agreement (or a
breach of any representation or warranty contained herein) or, if the same were
to continue to exist as of applicable Closing Date, would constitute the
non-satisfaction of any of the conditions set forth in Section 1.2 hereof, and
(b) any event, condition, fact, circumstance, occurrence, transaction or other
item of which such party becomes aware which would have been required to have
been disclosed pursuant to the terms of this Agreement had such event,
condition, fact, circumstance, occurrence, transaction or other item existed as
of May 23, 2010.  Notwithstanding the foregoing, neither party shall be required
to take any action that would jeopardize such party’s attorney-client privilege.
 
3.11. Preemptive Rights.
 
(a) Sale of New Securities. Until the earlier of (x) the first-year anniversary
of the First Closing or (y) such date as such Purchaser sells or otherwise
disposes of more than 50% of the Common Shares acquired by it in the Equity
Investment (as adjusted from time to time for any reorganization,
recapitalization, stock dividend, stock split, reverse stock split, or other
like changes in the Company’s capitalization), at any time that the Company
proposes to make any public or nonpublic
 

 
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(b) offering or sale of any equity (including Common Stock, preferred stock or
restricted stock), or any securities, options or debt that is convertible or
exchangeable into or exercisable 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 the issuance and sale of securities (i)
in connection with the Rights Offering and the Second Closing; (ii) to
employees, officers, directors or consultants of the Company pursuant to
employee benefit plans or compensatory arrangements approved by the Board of
Directors (including upon the exercise of employee stock options granted
pursuant to any such plans or arrangements) or (iii) as consideration in
connection with any bona fide, arm’s-length direct or indirect merger,
acquisition or similar transaction) such Purchaser shall first 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, such Purchaser 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 such New
Securities to be offered in the aggregate required to enable it to maintain its
proportionate Common Stock-equivalent interest in the Company immediately prior
to any such issuance of New Securities. The New Securities that a Purchaser
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 such Purchaser and its Affiliates (assuming full
conversion or exercise of any securities convertible into or exercisable for
Common Stock) and the denominator of which is the number of shares of Common
Stock then outstanding immediately preceding any offering of New Securities.
Notwithstanding anything herein to the contrary, in no event shall a Purchaser
have the right to purchase securities hereunder to the extent that such purchase
would result in such Purchaser exceeding the ownership limitations of the
Purchasers set forth in Section 3.9.
 
(c) Notice. In the event the Company proposes to offer or sell New Securities
that are subject to a Purchaser’s rights under Section 3.11(a), it shall give
such Purchaser written notice of its intention, specifying 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), at least thirty
(30) days prior to the proposed offer, issuance or sale. A Purchaser shall have
twenty-five (25) days from the date of receipt of such a notice to notify the
Company in writing that it intends to exercise its rights provided in this
Section 3.11 and as to the amount of New Securities such Purchaser desires to
purchase, up to the maximum amount calculated pursuant to Section 3.11(a). Such
notice shall constitute a non-binding agreement of such Purchaser to purchase
the amount of New Securities so specified at the price and other terms set forth
in the Company’s notice to it. The failure of a Purchaser to respond within such
twenty-five (25) day period shall be deemed to be a waiver of such Purchaser’s
rights under this Section 3.11 only with respect to the offering described in
the applicable notice.
 
(d) Purchase Mechanism. If a Purchaser exercises its rights provided in this
Section 3.11, the closing of the purchase of the New Securities with respect to
which such right has been exercised shall take place within sixty (60) days
after the giving of notice of such exercise, provided that, if such issuance is
subject to regulatory approval, such sixty (60)-day period shall be extended
until the expiration of ten (10) Business Days after all such approvals have
been received, but in no event later than one-hundred-twenty (120) days from the
date of the Company’s initial notice pursuant to Section 3.11(b). Each of the
Company and the Purchasers agrees to use its commercially reasonable efforts to
secure any regulatory or stockholder approvals or other consents, and to comply
with any Law necessary in connection with the offer, sale and purchase of, such
New Securities.
 

 
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(e) Failure of Purchase. In the event a Purchaser fails to exercise its rights
provided in this Section 3.11 within the twenty-five (25) day period described
in Section 3.11(b) or, if so exercised, such Purchaser is unable to consummate
such purchase within the time period specified in Section 3.11(c) above because
of its failure to obtain any required regulatory or stockholder consent or
approval, the Company shall thereafter be entitled during the period of 90 days
following the conclusion of the applicable period to sell or enter into an
agreement (pursuant to which the sale of the Common Stock covered thereby shall
be consummated, if at all, within 30 days from the date of such agreement) to
sell the Common Stock not elected to be purchased pursuant to this Section 3.11
or which such Purchaser is 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 Purchasers. 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 time
period exceed 90 days from the date of the applicable agreement with respect to
such sale. In the event the Company has not sold the Common Stock or entered
into an agreement to sell the Common Stock within such 90-day period (or sold
and issued Common Stock in accordance with the foregoing within 30 days from the
date of said agreement (as such period may be extended in the manner described
above for a period not to exceed 90 days from the date of such agreement)), the
Company shall not thereafter offer, issue or sell such Common Stock without
first offering such securities to the Purchasers in the manner provided above.
 
(f) Non-Cash Consideration. In the case of the offering of securities for
consideration in whole or in part other than cash, including securities acquired
in exchange therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value thereof as
reasonably determined by the Board of Directors; provided, however, that such
fair value as reasonably determined by the Board of Directors shall not exceed
the aggregate market price of the securities being offered as of the date the
Board of Directors authorizes the offering of such securities.
 
(g) Cooperation. The Company and each Purchaser shall cooperate in good faith to
facilitate the exercise of such Purchaser’s rights under this Section 3.11,
including securing any required approvals or consents.
 
3.12. Most Favored Nation.  During the period from May 23, 2010 through
completion of the Second Closing, neither the Company nor the Company
Subsidiaries shall enter into any additional agreements with any existing or
future investors (including any Purchaser but excluding any Anchor Investor or
CapGen) in the Company or any of the Company Subsidiaries that have the effect
of establishing rights or otherwise benefiting such investor in a manner more
favorable in any material respect to such investor than the rights and benefits
established in favor of the Purchasers by this Agreement, unless, in any such
case, each Purchaser will be given a copy of such additional agreement and has
been offered the opportunity to receive such rights and benefits of such
additional agreement within 60 days of the later of the execution of such
additional agreement and May 23, 2010.  Such Purchaser shall notify the Company
in writing, within 30 days after the date it receives a copy of such additional
agreement, of its election to receive the rights and benefits set forth
therein.  For the avoidance of doubt, each Purchaser will receive a copy of each
additional agreement agreed to with one or more other investors (including any
additional agreement entered into with any Purchaser but excluding any
agreements with any Anchor Investor or CapGen). Without limiting the foregoing,
the Company shall not offer any investors (other than the Anchor Investors or
CapGen) in any other capital raising transaction occurring at the same time as
the transactions contemplated by this Agreement, terms more favorable, in form
or substance, than those offered in connection with the Private Placement,
unless the Purchasers are
 

 
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3.13. also provided with such terms or have consented thereto in writing;
provided, however, that for purposes of this Section 3.12, the Purchasers hereby
consent to the Company’s entry into (i) the CapGen Investment Agreement, (ii)
the letter agreement dated as of the date hereof between the Company and CapGen
(and the related agreements attached thereto), (iii) the letter agreement dated
as of the date hereof between the Company and Midtown Acquisitions L.P. (the
“Davidson Investor Letter”) and (iv) the letter agreement dated as of the date
hereof between the Company and Fir Tree Value Master Fund, LP, Fir Tree Capital
Opportunity Master Fund, LP, Fir Tree Mortgage Opportunity Master Fund, LP and
Fir Tree REOF II Master Fund, LLC (collectively, the “Fir Tree Investors”) (the
“Fir Tree Investor Letter”), and the terms and conditions thereof in each case
in the form previously delivered by the Company to the Purchasers. For the
purposes of this Agreement, all parties agree that the terms and conditions of
those documents referred to in clauses (i), (ii), (iii) and (iv), of this
paragraph, as well as the terms and provisions of (A) the letter agreement dated
as of the date hereof between the Company and an Affiliate of the Carlyle Anchor
Investor (and the related agreements attached thereto) (the “Carlyle Investor
Letter”) and (B) the letter agreement dated as of the date hereof between the
Company and an Affiliate of the Anchorage Anchor Investor (and the related
agreements attached thereto) (the “Anchorage Investor Letter”), shall be deemed
Previously Disclosed, as that term is used herein, including for the purposes of
modifying the Company’s representations and warranties.
 
3.14. Exchange Offers.  As soon as practicable following May 23, 2010, the
Company shall prepare and file with the SEC a Schedule TO covering the Exchange
Offers.  The Company shall use reasonable best efforts to have the Schedule TO
cleared by the SEC.  The Company shall use its reasonable best efforts to take
any action required to be taken under any applicable state securities laws in
connection with the Exchange Offers.  The Company shall advise the Purchasers,
promptly after it receives notice thereof, of the time when the Exchange Offer
has become effective, the issuance of any stop order, the suspension of the
qualification of the Common Stock issuable pursuant to the Exchange Offers for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Schedule TO.  The Company shall not pay or give, directly or indirectly, any
commission or other remuneration to any Person for soliciting the acquisition of
the Series A Preferred Stock and Series B Preferred Stock or the exchange as
contemplated pursuant to the Exchange Offers. The Board of Directors shall
unanimously recommend to the holders of the Series A Preferred Stock and the
Series B Preferred Stock that such stockholders tender their shares of Series A
Preferred Stock and Series B Preferred Stock into the Exchange Offers.
 
3.15. Rights Offering
 
(a)           As promptly as practicable following the First Closing, and
subject to compliance with all applicable Law, including the Securities Act, the
Company shall distribute to each holder of record of Common Stock (including any
holders who received Common Stock pursuant to the Exchange Offers) as of the
close of business on the Business Day immediately preceding the First Closing
Date (each, a “Legacy Stockholder”) non-transferable rights (the “Rights”) to
purchase from the Company an amount of Common Shares calculated pursuant to
Section 3.14(b) at a per share purchase price equal to $0.43 (“Rights Purchase
Price”).  The transactions described in this Section 3.14, including the
purchase and sale of Common Shares upon the exercise of Rights and any
commitments to purchase unsubscribed Common Shares in Section 3.14(c), shall be
referred to in this Agreement as the “Rights Offering.”  The registration
statement relating to the Rights Offering shall be filed within 15 days after
the First Closing.

(b)           Each Right shall entitle a Legacy Stockholder to purchase any
whole number of Common Shares, provided that (i) no Legacy Stockholder shall
thereby exceed, together with any other person with whom such Legacy Stockholder
may be aggregated under applicable law, 4.9% beneficial ownership of the
Company's equity securities and (ii) the aggregate purchase price of all Common
Shares purchased in the Rights Offering shall not exceed Twenty Million Dollars
($20,000,000).

 
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(c)          In the event the Rights Offering is over-subscribed, subscriptions
by Legacy Stockholders shall be reduced proportionally based on their pro rata
ownership of the Common Stock outstanding as of the close of business on the
trading day immediately preceding the First Closing Date but assuming that the
Exchange Offers shall have occurred on such date. In the event the Rights
Offering is under-subscribed, pursuant to the CapGen Investment Agreement,
CapGen shall purchase any unsubscribed Common Shares at the Rights Purchase
Price simultaneously with, and conditioned upon, the Second Closing.

 
ARTICLE IV                                
TERMINATION
4.1. Termination. This Agreement may be terminated prior to the First Closing:
 
(a) by mutual written agreement of the Company and Purchasers representing 75%
of the aggregate number of Common Shares to be purchased pursuant to this
Agreement;
 
(b) by any party, upon written notice to the other parties, in the event that
the First Closing does not occur on or before September 30, 2010; provided,
however, that the right to terminate this Agreement pursuant to this Section
4.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the First Closing to occur on or prior to such date;
 
(c) by any Purchaser, upon written notice to the Company and the other
Purchasers, if (i) there has been a breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement, or any such
representation and warranty shall have become untrue after the date of this
Agreement, such that Section 1.2(c)(2)(A) would not be satisfied and (ii) such
breach or condition is not curable or, if curable, is not cured prior to the
date that would otherwise be the First Closing Date in absence of such breach or
condition; provided that this Section 4.1(c) shall only apply if such Purchaser
is not in material breach of any of the terms of this Agreement;
 
(d) by any Purchaser, upon written notice to the Company and the other
Purchasers, if the Anchor Investment Agreement is terminated;
 
(e) by the Company, upon written notice to the Purchasers, if (i) there has been
a breach of any representation, warranty, covenant or agreement made by a
Purchaser in this Agreement, or any such representation and warranty shall have
become untrue after the date of this Agreement, such that Section 1.2(c)(3)(A)
would not be satisfied and (ii) such breach or condition is not curable or, if
curable, is not cured prior to the date that would otherwise be the Closing Date
in absence of such breach or condition; provided that this Section 4.1(e) shall
only apply if the Company is not in material breach of any of the terms of this
Agreement; or
 
(f) by any party, upon written notice to the other parties, in the event that
any Governmental Entity shall have issued any order, decree or injunction or
taken any other action restraining, enjoining or prohibiting any of the
transactions contemplated by this Agreement, and such order, decree, injunction
or other action shall have become final and nonappealable.
 
4.2. Effects of Termination. In the event of any termination of this Agreement
as provided in Section 4.1, this Agreement (other than Section 3.1 and Article
VI of this Agreement, which
 

 
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4.3. shall remain in full force and effect) shall forthwith become wholly void
and of no further force and effect; provided that nothing herein shall relieve
any party from liability for fraud or willful breach of this Agreement.
 

ARTICLE V                                
INDEMNITY
5.1. Indemnification by the Company
 
.
 
(a) After the First Closing and subject to Sections 5.1, 5.3 and 5.4, the
Company shall indemnify, defend and hold harmless to the fullest extent
permitted by Law each Purchaser and its Affiliates, and their successors and
assigns, officers, directors, partners, members and employees, as applicable,
(the “Purchaser Indemnified Parties”) against, and reimburse any of the
Purchaser Indemnified Parties for:
 
(1) all Losses that any of the Purchaser Indemnified Parties may at any time
suffer or incur, or become subject to (A) as a result of or in connection with
the inaccuracy or breach of any representation or warranty made by the Company
in this Agreement or any certificate delivered pursuant hereto or (B) as a
result of or in connection with any breach or failure by the Company to perform
any of their covenants or agreements contained in this Agreement; and
 
(2) any action, suit, claim, proceeding or investigation by any stockholder of
the Company or any other Person relating to this Agreement or the other
Transaction Documents or the transactions contemplated hereby or thereby
(including the Private Placement, the Anchor Investment, the TARP Exchange, the
Exchange Offers and the Rights Offering).
 
(b) Notwithstanding anything to the contrary contained herein, as to any
Purchaser, the Company shall not be required to indemnify, defend or hold
harmless such Purchaser or its respective Purchaser Indemnified Parties against,
or reimburse any such Purchaser or Purchaser Indemnified Parties for, (1) any
Losses for which any such Purchaser or Purchaser Indemnified Parties would be
liable to the Company arising from its or their breach of this Agreement or (2)
any Losses pursuant to Section 5.1(a)(1)(A) (other than Losses arising out of
the inaccuracy or breach of any Company Specified Representations) (1) with
respect to any claim (or series of related claims arising from the same
underlying facts, events or circumstances) unless such claim (or series of
related claims arising from the same underlying facts, events or circumstances)
involves Losses in excess of $100,000 (nor shall any such claim or series of
related claims that do not meet the $100,000 threshold be applied to or
considered for purposes of calculating the aggregate amount of the Losses by any
such Purchaser Indemnified Parties for which the Company has  responsibility
under clause (2) of this Section 5.1(b) below); and (2) until the aggregate
amount of such Purchaser Indemnified Parties’ Losses for which such Purchaser
Indemnified Parties are finally determined to be otherwise entitled to
indemnification under Section 5.1(a)(1)(A) exceeds one percent (1%) of such
Purchaser’s aggregate purchase price paid to the Company pursuant to Section 1.1
hereof (the “Purchaser Deductible”), after which the Company shall be obligated
for all of such Purchaser Indemnified Parties’ Losses for which Purchaser
Indemnified Parties are finally determined to be otherwise entitled to
indemnification under Section 5.1(a)(1)(A) that are in excess of such Purchaser
Deductible. Notwithstanding anything to the contrary contained herein, the
Company shall not be required to indemnify, defend or hold harmless any
Purchaser and its respective Purchaser Indemnified Parties against, or reimburse
such Purchaser Indemnified Parties for, any Losses pursuant to Section
5.1(a)(1)(A) in a cumulative aggregate amount exceeding the aggregate purchase
paid by the
 

 
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(c) relevant Purchaser to the Company pursuant to Section 1.1 hereof (other than
Losses arising out of the inaccuracy or breach of any Company Specified
Representations).
 
(d) For purposes of Section 5.1(a), in determining whether there has been a
breach of a representation or warranty, the parties hereto shall ignore any
“materiality,” “Knowledge”, “Material Adverse Effect,” or similar
qualifications.  Nothing in this Article V shall be deemed to limit the rights
or remedies of the Company and its Affiliates, officers, directors,
shareholders, and employees, as applicable, in connection with any inaccuracy or
breach of any representation or warranty made by any Purchaser in this
Agreement, or any breach or failure by such Purchaser to perform any of its
covenants or agreements contained in this Agreement.
 
5.2. [Intentionally Omitted]
 
.  
 
5.3. Notification of Claims
 
.
 
(a) Any Person that may be entitled to be indemnified under Section 5.1 of this
Agreement (the “Indemnified Party”) shall promptly notify the party or parties
liable for such indemnification (the “Indemnifying Party”) in writing of any
claim in respect of which indemnity may be sought hereunder, including any
pending or threatened claim or demand by a third party that the Indemnified
Party has determined has given or could reasonably give rise to a right of
indemnification under this Agreement (including a pending or threatened claim or
demand asserted by a third party against the Indemnified Party) (each, a “Third
Party Claim”), describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim or demand; provided, however, that
the failure to provide such notice shall not release the Indemnifying Party from
any of its obligations under this Agreement except to the extent that the
Indemnifying Party is materially prejudiced by such failure.  The parties agree
that notices for claims in respect of a breach of a representation, warranty,
covenant or agreement must be delivered prior to the expiration of any
applicable survival period specified in Section 6.1 for such representation,
warranty, covenant or agreement; provided, that if, prior to such applicable
date, a party hereto shall have notified the other parties hereto in accordance
with the requirements of this Section 5.3(a) of a claim for indemnification
under this Agreement (whether or not formal legal action shall have been
commenced based upon such claim), such claim shall continue to be subject to
indemnification in accordance with this Agreement notwithstanding the passing of
such applicable date.
 
(b) Upon receipt of a notice of a claim for indemnity from an Indemnified Party
pursuant to Section 5.3(a) in respect of a Third Party Claim, the Indemnifying
Party may, by notice to the Indemnified Party delivered within twenty (20)
Business Days of the receipt of notice of such Third Party Claim, assume the
defense and control of any Third Party Claim, with its own counsel and at its
own expense, but shall allow the Indemnified Party a reasonable opportunity to
participate in the defense of such Third Party Claim with its own counsel and at
the Indemnifying Party’s expense (except that the Indemnifying party shall only
be liable for the reasonable fees and expenses of one law firm for all of the
Indemnified Parties).  The Indemnified Party may take any actions reasonably
necessary to defend such Third Party Claim prior to the time that it receives a
notice from the Indemnifying Party as contemplated by the immediately preceding
sentence.  The Company or the Purchasers (as the case may be) shall, and shall
cause each of their Affiliates and representatives to, cooperate fully with the
Indemnifying Party in the defense of any Third Party Claim.  The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party
(which shall not be unreasonably withheld), consent to a settlement, compromise
or discharge of, or the entry of any judgment arising from, any Third Party
Claim, unless such settlement, compromise, discharge or entry of any judgment
does not involve any finding or admission of any violation of Law or admission
of any wrongdoing by the Indemnified Party, and the Indemnifying Party shall (i)
pay or cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness of such settlement or judgment (unless
otherwise provided in such judgment), (ii) not
 

 
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(c) encumber any of the material assets of any Indemnified Party or agree to any
restriction or condition that would apply to or materially adversely affect any
Indemnified Party or the conduct of any Indemnified Party’s business and (iii)
obtain, as a condition of any settlement, compromise, discharge, entry of
judgment (if applicable), or other resolution, a complete and unconditional
release of each Indemnified Party from any and all liabilities in respect of
such Third Party Claim.  The Indemnified Party shall not settle, compromise or
consent to the entry of any judgment with respect to any claim or demand for
which it is seeking indemnification from the Indemnifying Party or admit to any
liability with respect to such claim or demand without the prior written consent
of the Indemnifying Party (which consent shall not be unreasonably withheld or
delayed).
 
(d) In the event any Indemnifying Party receives a notice of a claim for
indemnity from an Indemnified Party pursuant to Section 5.3(a) that does not
involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified
Party within twenty (20) Business Days following its receipt of such notice
whether the Indemnifying Party disputes its liability to the Indemnified Party
under this agreement.  The Indemnified Party shall reasonably cooperate with and
assist the Indemnifying Party in determining the validity of any such claim for
indemnity by the Indemnified Party.
 
5.4. Indemnification Payment
 
.  In the event a claim or any Action for indemnification or breach hereunder
has been finally determined, the amount of such final determination shall be
paid (a) if the Indemnified Party is an Purchaser, by the Company to the
Indemnified Party and (b) if the party claiming breach of this Agreement is the
Company, by the Purchaser against whom the claim of breach is made to the
Company, in each case on demand in immediately available funds; provided,
however, that any reasonable and documented out-of-pocket expenses incurred by
the Indemnified Party or the Company, as the case may be, as a result of such
claim or Action shall be reimbursed promptly by the Company or such Purchaser,
as the case may be, upon receipt of a copy of the invoice describing such
incurred costs from the Indemnified Party.  A claim or an Action, and the
liability for and amount of damages therefor, shall be deemed to be “finally
determined” for purposes of this Agreement when the parties hereto have so
determined by mutual agreement or, if disputed, when a final non-appealable
governmental order has been entered into with respect to such claim or Action.
 
5.5. Exclusive Remedies
 
.  Except as set forth in this Agreement and any other documents delivered in
connection with the First Closing of the transactions contemplated by this
Agreement, the Company and its representatives make no representation or
warranty, expressed or implied, at law or in equity, in respect of the Company
or the Company's business or prospects; and any and all other representations
and warranties made by the Company or its representatives are deemed to have
been superseded by this Agreement and do not survive. The Purchasers acknowledge
and agree that they are relying solely on their own investigations and the
representations and warranties contained in this Agreement and the other
documents delivered in connection with the First Closing in deciding to enter
into this Agreement and consummate the First Closing. Without limiting the
previous two sentences, each party hereto acknowledges and agrees that following
the First Closing, the indemnification provisions hereunder shall be the sole
and exclusive remedies of the parties hereto for any breach of the
representations, warranties or covenants contained in the this Agreement. No
investigation of the Company by any Purchaser, or by the Company of any
Purchaser, whether prior to or after May 23, 2010, shall limit any Indemnified
Party’s exercise of any right hereunder or be deemed to be a waiver of any such
right.  The parties agree that any payment made pursuant to a claim or Action
for indemnification under this Agreement shall be treated as an adjustment to
the Purchase Price for Tax purposes, unless otherwise required by Law.

 
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Miscellaneous
5.6. Survival
 
.  The representations and warranties of the parties hereto contained in this
Agreement shall survive in full force and effect until the date that is eighteen
(18) months after the First 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 end of such period), at which
time they shall terminate and no claims shall be made for indemnification under
Section 5.1 or Section 5.2, as applicable, for breaches of representations or
warranties thereafter, except the Company Specified Representations (other than
the representations and warranties made in paragraph (z) of Schedule I, which
shall survive until sixty (60) days following the expiration of the applicable
statute of limitations) and the Purchaser Specified Representations shall
survive the First Closing indefinitely. The covenants and agreements set forth
in this Agreement shall survive until the earliest of the duration of any
applicable statute of limitations or until performed or no longer operative in
accordance with their respective terms.
 
5.7. Expenses
 
.  Each party will pay their own costs and expenses in connection with this
Agreement and the transactions contemplated hereby. The Company shall pay all
amounts owed to the Placement Agents relating to or arising out of the
transactions contemplated hereby.
 
5.8. Other Definitions
 
.  Wherever required by the context of this Agreement, the singular shall
include the plural and vice versa, and the masculine gender shall include the
feminine and neuter genders and vice versa, and references to any agreement,
document or instrument shall be deemed to refer to such agreement, document or
instrument as amended, supplemented or modified from time to time.
 
(a) the term “Agency” means the Federal Housing Administration, the Federal Home
Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural
Housing and Community Development Services), the Federal National Mortgage
Association, the Federal National Mortgage Association, the United States
Department of Veterans’ Affairs, the Rural Housing Service of the U.S.
Department of Agriculture 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 (ii) originate, purchase, or service mortgage loans, or otherwise promote
mortgage lending, including state and local housing finance authorities.
 
(b) 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 provided that no security holder of the Company shall be deemed to
be an Affiliate of any other security holder or of the Company or any of its
Subsidiaries solely by reason of any investment in the Company. 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;
 
(c) the term “Articles of Amendment” means the General Articles of Amendment,
the Preferred Stock Articles of Amendment and any other amendments to the
Company’s Articles of Incorporation that may be required pursuant to the
transactions contemplated by this Agreement;
 
(d) the term “BHC Act” means the Bank Holding Company Act of 1956, as amended.
 
(e) the term “Board of Directors” means the Board of Directors of the Company;
 

 
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(f) the term “Business Day” means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York or in the State of Virginia generally are authorized or
required by Law or other governmental actions to close;
 
(g) the term “CapGen” means CapGen Capital Group VI LP;
 
(h) the term “CapGen Investment Agreement” means the Investment Agreement, dated
as of June 30, 2010, by and between the Company and CapGen;
 
(i) the term “Capital Stock” means capital stock or other type of equity
interest in (as applicable) a Person;
 
(j) the term “CapGen Investor Letter” means that certain letter agreement dated
as of the date hereof between the Company and an Affiliate of CapGen (and the
related agreements attached thereto);
 
(k) the term “Change in Control” means, with respect to the Company, the
occurrence of any one of the following events:
 
(A) any person is or becomes a beneficial owner (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), other than the Investors and their
Affiliates, directly or indirectly, of 20% of the aggregate voting power of the
voting securities; provided, however, that the event described in this clause
(2) will not be deemed a Change in Control by virtue of any holdings or
acquisitions: (i) by the Company or any of its Subsidiaries, (ii) by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any of its subsidiaries; provided that such holdings or acquisitions by any
such plan (other than any plan maintained under Section 401(k) of the Internal
Revenue Code of 1986, as amended) do not exceed 20% of the then outstanding
voting securities, (iii) by any underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) pursuant to a Non-Qualifying
Transaction;
 
(B) the consummation of a merger, consolidation, statutory share exchange or
similar transaction that requires adoption by the Company’s stockholders (a
“Business Combination”), unless immediately following such Business Combination:
(x) more than 50% of the total voting power of the corporation resulting from
such Business Combination (the “Surviving Corporation”), or, if applicable, the
ultimate parent corporation that directly or indirectly has beneficial ownership
(as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
of 100% of the voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented by voting securities that
were outstanding immediately before such Business Combination (or, if
applicable, is represented by shares into which such voting securities were
converted pursuant to such Business Combination), and (y) at least a majority of
the members of the board of directors of the Parent Corporation (or, if there is
no Parent Corporation, the Surviving Corporation) following the consummation of
the Business Combination were Incumbent Directors at the time the Company’s
Board of Directors approved the execution of the initial agreement providing for
such Business Combination (any Business Combination which satisfies all of the
criteria specified in (x) and (y) above will be deemed a “Non-Qualifying
Transaction”);
 

 
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(C) the stockholders of the Company approve a plan of liquidation or dissolution
of the Company or a sale of all or substantially all of the Company’s assets; or
 
(D) a majority of the members of the Board of Directors are not Continuing
Directors; provided that the changes to the membership of the Board of Directors
pursuant to Section 3.5 herein shall not be considered a Change of Control.
 
(l) the term “CIBC Act” means the Change in Bank Control Act, as amended.
 
(m) the term “Code” means the Internal Revenue Code of 1986, as amended;
 
(n) the term “Company Specified Representations” means the representations and
warranties made in paragraph(a), paragraph(c), paragraph(d)(1), paragraph(z),
and paragraph(cc) of Schedule I;
 
(o) the term “Disclosure Schedule” shall mean  a schedule delivered, on or prior
to May 23, 2010, by (i) each Purchaser to the Company and (ii) the Company to
each Purchaser setting forth, among other things, items the disclosure of which
is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 2.2 with respect to the
Company, or in Section 2.3 with respect to such Purchaser, or to one or more
covenants contained in Article III.
 
(p) the term “Environmental Laws” means all federal, state or local laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, Laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes into the environment.
 
(q) the term “First Anchor Closing” means the closing of the purchase of the
Common Shares by the Anchor Investors pursuant to Section 1.1(a) of the Anchor
Investment Agreement;
 
(r) the term “GAAP” means United States generally accepted accounting principles
and practices as in effect from time to time;
 
(s) the term “General Articles of Amendment” means the amendments to Company’s
Articles of Incorporation required to effect the General Stockholder Proposals;
 
(t) the term “Governmental Consent” means any notice to, registration,
declaration or filing with, exemption or review by, or authorization, order,
consent or approval of, any Governmental Entity, or the expiration or
termination of any statutory waiting periods, including the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the “HSR Act”);
 
(u) the term “Governmental Entity” means any court, administrative agency or
commission or other governmental authority or instrumentality, whether federal,
state, local or foreign, and any applicable industry self-regulatory
organization;
 
(v)  the term “Insurer” means 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,
including the Federal Housing Administration, the
 

 
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(w) 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;
 
(x) the term “Knowledge” of the Company and words of similar import mean the
actual knowledge of any directors, executives or other employees of the Company
listed on Schedule III hereto;
 
(y) the term "Law" means any statute, law, ordinance, rule or regulation
(domestic or foreign) issued, promulgated or entered into by or with any
Governmental Entity;
 
(z) the term “Lien” mean any lien, charge, adverse right or claim, pledge,
covenant, title defect, security interest or other encumbrance of any kind;
 
(aa) the term “Loan Investor” means any Person (including an Agency) having a
beneficial interest in any mortgage loan originated, purchased or serviced by
the Company or a security backed by or representing an interest in any such
mortgage loan;
 
(bb) the term “Losses” means any and all losses, damages, reasonable costs,
reasonable expenses (including reasonable attorneys’ fees and disbursements),
liabilities, settlement payments, awards, judgments, fines, obligations, claims,
and deficiencies of any kind, excluding exemplary, consequential and punitive
damages;
 
(cc) the term “Person” means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Entity or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity;
 
(dd) the term “Preferred Articles of Amendment” means the amendments to Series A
Preferred Stock and Series B Preferred Stock required to effect the Preferred
Stock Proposals;
 
(ee) the term “Purchaser Specified Representations” means the representations
and warranties made in Section 2.3(a), Section 2.3(b)A  Section 2.3(d) and
Section 2.3(e);
 
(ff) the term “Regulatory Agreement” means with respect to the Company and
Company Subsidiaries any of (i) any cease-and-desist order or other similar
order or enforcement action issued by a Governmental Entity, (ii) any written
agreement, consent agreement or memorandum of  understanding with a Governmental
Entity, (iii) any commitment letter or similar undertaking to a Governmental
Entity, (iv) any capital directive by a Governmental Entity, since December 31,
2007, and (v) any board resolutions at the request of any Governmental Entity
that currently restricts in any material respect the conduct of its business or
that in any material manner relates 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;
 
(gg) the term “Second Anchor Closing” means the closing of the purchase of the
Common Shares by the Anchor Investors pursuant to Section 1.1(b) of the Anchor
Investment Agreement;
 
(hh) the term “Stockholder Proposals” means the General Stockholder Proposals
and the Preferred Stock Proposals;
 

 
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(ii) the term “Subsidiary” means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company or other entity (x) of
which such Person or a subsidiary of such Person is a general partner or
managing member or (y) of which a majority of the voting securities or other
voting interests, or a majority of the securities or other interests of which
having by their terms ordinary voting power to elect a majority of the board of
directors or persons performing similar functions with respect to such entity,
is directly or indirectly owned by such Person and/or one or more subsidiaries
thereof;
 
(jj) the term “Tax” or “Taxes” means all United States federal, state, local or
foreign income, profits, estimated, gross receipts, windfall profits, severance,
property, intangible property, occupation, production, sales, use, license,
excise, emergency excise, franchise, capital gains, capital stock, employment,
withholding, transfer, stamp, payroll, goods and services, value added,
alternative or add-on minimum tax, or any other tax, custom, duty or
governmental fee, or other like assessment or charge of any kind whatsoever,
together with any interest, penalties, fines, related liabilities or additions
to tax that may become payable in respect thereof imposed by any Governmental
Entity, whether or not disputed.
 
(kk) the term “Tax Return” shall mean any return, declaration, report or similar
statement required to be filed with respect any Taxes (including any attached
schedules), including, without limitation, any information return, claim or
refund, amended return and declaration of estimated Tax.
 
(ll) term “Transaction Documents” means this Agreement, the Anchor Investment
Agreement, the CapGen Investment Agreement, the Treasury Letter, the Exchange
Agreement, the Exchange Offer documents, the Carlyle Investor Letter, the Anchor
Investor Letter, the Davidson Investor Letter, the Fir Tree Investor Letter and
the Rights Offering documents, as the same may be amended or modified from time
to time;
 
(mm) the word “or” is not exclusive;
 
(nn) the words “including,” “includes,” “included” and “include” are deemed to
be followed by the words “without limitation”;
 
(oo) the terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision; and
 
(pp) all article, section, paragraph or clause references not attributed to a
particular document shall be references to such parts of this Agreement, and all
exhibit and schedule references not attributed to a particular document shall be
references to such exhibits and schedules to this Agreement.
 
5.9. Independent Nature of Purchasers’ Obligations and Rights
 
.  The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Investor, and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Investors under any Transaction Document.  The decision of each Purchaser (other
than those Purchasers that are Affiliates of each other) to purchase the Common
Shares pursuant to this Agreement has been made by such Purchaser independently
of any other non-affiliated Investors and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company, which may have been made or given by any
other non-affiliated Investor or by any agent or employee of any other
non-affiliated Investors, and no Purchaser and any of its agents or employees
shall have any liability to any other Investors (or any other Person) relating
to or arising from any such
 

 
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information, materials, statement or opinions.  Nothing contained in this
Agreement, and no action taken by any Purchaser pursuant hereto or thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group, and the Company will
not assert any such claim with respect to such obligations or the transactions
contemplated by this Agreement.  Each Purchaser (other than those that are
Affiliates of such Purchaser) confirms that it has independently participated in
the negotiation of the transaction contemplated hereby with the advice of its
own counsel and advisors and no other non-affiliated Purchaser has acted as
agent for such Purchaser in connection with making its investment hereunder and
that no non-affiliated Investors will be acting as agent of such Purchaser (and
its Affiliates) in connection with monitoring its investment in the Common
Shares or enforcing its rights under this Agreement.  Each Purchaser 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 Purchaser 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 Agreement is between the Company and a Purchaser,
solely, and not between the Company and the Purchasers collectively and not
between and among the Purchasers.
 
5.10. Amendment and Waivers
 
.  The conditions to each party’s obligation to consummate each Closing are for
the sole benefit of such party and may be waived by such party in whole or in
part to the extent permitted by Law. No amendment or waiver of any provision of
this Agreement will be effective against any party hereto unless it is in a
writing signed by a duly authorized officer or representative of such party that
makes express reference to the provision or provisions subject to such amendment
or waiver.
 
6.6.           Amendment and Restatement of Original Agreement.  The parties
agree that, effective as of the Modification Date (defined below), (a)
the Original Securities Purchase Agreement shall be amended in its entirety by
replacing such agreement with the provisions of this Agreement and the Original
Securities Purchase Agreement shall be of no further force and effect.  In
consideration of the foregoing, each party hereto, for itself and its successors
and assigns, effective on the Modification Date, hereby releases and forever
discharges the other party hereto and their Affiliates, and any of their
successors and assigns, and all such Persons’ respective officers, directors,
partners, members and employees of and from any and all Actions, losses and
liabilities that now exist or may hereafter arise pursuant to the Original
Securities Purchase Agreement as a result of any matter, fact, circumstance,
happening or thing whatsoever occurring or failing to occur under the Original
Securities Purchase Agreement.  Modification Date shall mean the date on which
occurs the execution and delivery by all parties of (i) this Agreement, (ii)
the amendment and restatement of the Anchor Investment Agreement, (iii) the
CapGen Investment Agreement, and (iv) such other modifications of the other
Transaction Agreements as is mutually agreed by the Anchor Investors, the
Company and CapGen. 
 
5.11. 
 
5.12. Counterparts and Facsimile
 
. For the convenience of the parties hereto, this Agreement may be executed in
any number of separate counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts will together constitute the same
agreement. Executed signature pages to this Agreement may be delivered by
facsimile and such facsimiles will be deemed as sufficient as if actual
signature pages had been delivered.
 
5.13. Governing Law. This Agreement will be governed by and construed in
accordance with the Laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
 
5.14. Jurisdiction. The parties hereby agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or
 

 
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5.15. the transactions contemplated hereby shall be brought in the United States
District Court for the Southern District of New York sitting in the borough of
Manhattan, New York, New York, so long as such court shall have subject matter
jurisdiction over such suit, action or proceeding or, if it does not have
subject matter jurisdiction, in any New York State court sitting in the borough
of Manhattan, New York, New York, and each of the parties hereby irrevocably
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by Law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum.  Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.  Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 6.11 shall be deemed effective service of process on such
party.  The parties hereby irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the state and federal courts referred to above for
any actions, suits or proceedings arising out of or relating to this Agreement
and the transactions contemplated hereby.
 
5.16. WAIVER OF JURY TRIAL.
 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
 
5.17. Notices.  Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to
have been duly given (a) on the date of delivery if delivered personally or by
telecopy or facsimile, upon confirmation of receipt, (b) on the first Business
Day following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third Business Day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
 
(a) If to the Purchasers:
 
 
To the address set forth under such Purchaser’s name on the signature page
hereof;

(b) If to the Company:
 
Hampton Roads Bankshares, Inc.
999 Waterside Dr., Suite 200
Norfolk, Virginia  23510
Attn:           Douglas J. Glenn, Esq.
Telephone:  (757) 217-3634
Fax:  (757) 217-3656

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

Williams Mullen
999 Waterside Dr., Suite 1700
Norfolk, Virginia 23510

 
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Attn: William A. Old, Jr.
Telephone: (757) 629-0613
Fax: (757) 629-0660

 
5.18. Entire Agreement.  This Agreement (including the Exhibits and Schedules
hereto), the other Transaction Documents and the Confidentiality Agreements
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, inducements or conditions, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof.
 
5.19. Successors and Assigns
 
.  This Agreement shall be binding upon and inure to the benefit of the parties
and their respective successors and assigns, including any purchasers of the
Common Shares.  The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each of the
Purchasers.  A Purchaser may assign some or all of its rights hereunder or
thereunder without the consent of the Company (i) to any third party, if in
compliance with this Agreement and Law or (ii) to any Affiliate of such
Purchaser, and such assignee shall be deemed to be a Purchaser hereunder with
respect to such assigned rights and shall be bound by the terms and conditions
of this Agreement that apply to “Purchasers.”
 
5.20. Captions.  The article, section, paragraph and clause captions herein are
for convenience of reference only, do not constitute part of this Agreement and
will not be deemed to limit or otherwise affect any of the provisions hereof.
 
5.21. Severability.  If any provision of this Agreement or the application
thereof to any Person (including the officers and directors of the Purchasers
and the Company) or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof, or the application of such provision to persons or circumstances other
than those as to which it has been held invalid or unenforceable, will remain in
full force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination, the parties shall negotiate in good faith in an
effort to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
 
5.22. Third Party Beneficiaries.  Nothing contained in this Agreement, expressed
or implied, is intended to confer upon any Person or entity other than the
parties hereto, any benefit right or remedies, except that the provisions of
Sections 3.6, 5.1 and 5.2 shall inure to the benefit of the persons referred to
in that Section.
 
5.23. Public Announcements.  By 9:00 a.m., New York City time, on the first
Business Day following the date of this Agreement, the Company shall issue one
or more press releases (collectively, the “Press Release”) disclosing all
material terms of the transactions contemplated hereby.  On or before 5:30 p.m.,
New York City time, on the fourth Business Day immediately following the date of
this Agreement, the Company will file a Current Report on Form 8-K with the
Commission describing the terms of this Agreement (and including as exhibits to
such Current Report on Form 8-K the material Transaction Documents (including,
without limitation, this Agreement)). By 9:00 a.m., New York City time, on the
first Business Day following the Closing Date, the Company shall issue one or
more press releases disclosing the closing of the transactions contemplated
hereby and the material terms thereof.  If this Agreement terminates prior to
Closing, by 9:00 a.m., New York City time, on the first Business Day following
the date of such termination, the Company shall issue one or more press releases
disclosing such termination.  Notwithstanding the foregoing, the Company shall
not publicly disclose the name of
 

 
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5.24. any Purchaser or any Affiliate or investment adviser of any Purchaser, or
include the name of any Purchaser or any Affiliate or investment adviser of any
Purchaser in any press release or filing with the Commission (other than the
Registration Statement) or stock exchange, without giving such Purchaser the
opportunity to review such public disclosure and the right to consent to the
disclosure of such Purchaser and the amount and terms of its purchase, except
(i) as required by federal securities law in connection with (A) any
registration statement contemplated by Section 3.6 hereof and (B) the filing of
final Transaction Documents with the Commission and (ii) to the extent such
disclosure is required by law, at the request of the Staff of the Commission or
stock exchange regulations, in which case the Company shall provide the
Purchasers with prior written notice of such disclosure permitted under this
subclause (ii).  Upon the earliest to occur of (i) the date on which the Company
files with the SEC the registration statement covering the Common Stock to be
offered pursuant to the Rights Offering, (ii) the date on which the Company
files with the SEC any other registration statement (other than a Special
Registration) and (iii) the six-month anniversary of the date of this Agreement,
the Company covenants and agrees to make such public disclosures as are
necessary to cause the Purchasers to no longer be in possession of material,
non-public information.  At such time as the Company makes the disclosures
contemplated by the preceding sentence, the Company acknowledges that the
Purchasers shall no longer be in possession of any material, non-public
information.  Without limiting the Company’s obligation pursuant to the
penultimate sentence, it is expressly acknowledged and agreed that the Company
is not obligated to, and does not intend to, disclose any information set forth
in the Disclosure Schedule or otherwise provided to or made available to any
Purchaser in connection with the transactions contemplated by the Transaction
Documents that constitutes competitively sensitive information or confidential
business information or records the public disclosure of which the Company
believes in good faith would adversely affect the Company. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that such
Purchaser will maintain the confidentiality of all information provided or made
available to it in connection with this transactions contemplated hereby
(including the existence and terms of this transaction) until such time, in the
case of each item of such information, as the Company shall have publicly
disclosed such item of information. Each Purchaser agrees that it shall not make
any public disclosure regarding this Agreement or the transactions contemplated
hereby without the prior written consent of the Company.  Following the issuance
of the Press Release, the Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents not to, provide any Purchaser with any material non-public
information regarding the Company or any of its Subsidiaries, without the
express written consent of such Purchaser.
 
5.25. Specific Performance.  The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to seek specific performance of the terms hereof,
this being in addition to any other remedies to which they are entitled at law
or equity.
 
5.26. No Recourse.  This Agreement may only be enforced against the named
parties hereto. All claims or causes of action that may be based upon, arise out
of or relate to this Agreement, or the negotiation, execution or performance of
this Agreement may be made only against the entities that are expressly
identified as parties hereto or that are subject to the terms hereof, and no
past, present or future director, officer, employee, incorporator, member,
manager, partner, stockholder, Affiliate, agent, attorney or representative of
any Purchaser or any other party hereto (including any person negotiating or
executing this Agreement on behalf of a party hereto) shall have any liability
or obligation with respect to this Agreement or with respect to any claim or
cause of action, whether in tort, contract or otherwise, that may arise out of
or relate to this Agreement, or the negotiation, execution or performance of
this Agreement and the transactions contemplated hereby.
 

 
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[Signature Page Follows]

 
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein above
written.
 

 
HAMPTON ROADS BANKSHARES, INC.

 
By:
   

 
Name:

 
Title:

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]
 

 
 

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PURCHASER:                                                                           

By:                                                          
Name:                                                          
Title:                                                          

Aggregate Purchase Price (Subscription Amount):$__________
Number of Shares to be Acquired in the FirstClosing:
____________*
Number of Shares to be Acquired in the SecondClosing:
____________*
Tax ID No.: ____________________
Address for Notice:
______________________________
______________________________
______________________________
Telephone
No.:                                                                           
Facsimile
No.:                                                                           
E-mail
Address:                                                                           
Attention:                                                                

Delivery Instructions:
(if different than above)

c/o  _______________________________

Street:   ____________________________

City/State/Zip: ______________________

Attention: __________________________

Telephone No.: ____________________________

* In no event shall the Purchaser be obligated to purchase more than the maximum
percentage of the outstanding shares of Company Common Stock or other voting
securities of any class or series of the Company’s Capital Stock designated
below (assuming no portion of the Rights Offering is subscribed and such
Purchaser is required to purchase unsubscribed shares equivalent to 100% of its
Pro Rata Basis):

[Check one of the following two percentages:]

4.9% ________

9.9% _______