SECURITIES PURCHASE AGREEMENT
 
dated as of July 7, 2010
 
between
 
SUN BANCORP, INC.
 
and
 
Maycomb Holdings II, LLC
 
Maycomb Holdings III, LLC
 
Siguler Guff Distressed Opportunities Fund IV, LP
 
Siguler Guff Distressed Opportunities Fund IV (T), LP
 
 
 
 
 

 
 
 

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TABLE OF CONTENTS
         
Page
  ARTICLE I     Purchase; Closings
2
           
1.1
Purchase
 
2
 
1.2
Closings
 
2
 
1.3
Second Closing Adjustments
 
7
    ARTICLE II    Representations and Warranties  
9
           
2.1
Disclosure
 
9
 
2.2
Representations and Warranties of the Company
 
10
 
2.3
Representations and Warranties of the Investor
 
31
          ARTICLE III   Covenants  
33
           
3.1
Filings; Other Actions
 
33
 
3.2
Expenses
 
35
 
3.3
Access, Information and Confidentiality
 
36
 
3.4
Conduct of the Business
 
36
 
3.5
Reasonable Efforts
 
37
 
3.6
Company Forbearances
 
37
 
3.7
Shareholder Litigation
 
39
          ARTICLE IV    Additonal Agreements  
39
           
4.1
No Rights Agreement
 
39
 
4.2
Governance Matters
 
39
 
4.3
Legend
 
40
 
4.4
Certain Transactions
 
41
 
4.5
Indemnity
 
41
 
4.6
Registration Rights
 
44
 
4.7
Gross-Up Rights
 
56
 
4.8
Anti-Takeover Matters; Takeover Laws; No Rights Triggered
 
58
 
4.9
Additional Regulatory Matters
 
59
 
4.11
MFN Provision
 
60
 
4.12
Corporate Opportunities
 
60
 
4.13
Transfer Restrictions
 
61
 
4.14
Standstill
 
63
          ARTICLE V    Termination  
63
           
5.1
Termination
 
62
 
5.2
Effects of Termination
 
63
 
5.3
Second Closing Termination
 
63

 
 
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ARTICLE VI     Miscellaneous  
63
           
6.1
Survival
 
63
 
6.2
Amendment
 
63
 
6.3
Waivers
 
63
 
6.4
Counterparts and Facsimile
 
64
 
6.5
Governing Law
 
64
 
6.6
Waiver of Jury Trial
 
64
 
6.7
Notices
 
64
 
6.8
Entire Agreement, Etc.
 
66
 
6.9
Other Definitions
 
66
 
6.10
Captions
 
67
 
6.11
Severability
 
67
 
6.12
No Third-Party Beneficiaries
 
68
 
6.13
Public Announcements
 
68
 
6.14
Specific Performance
 
68

 
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LIST OF EXHIBITS
         
Exhibit A:
 
Form of Series B Certificate
 
Exhibit B
 
Form of Opinion of Counsel
 
Exhibit C
 
Form of Officer’s Certificate from the Company
 
Exhibit D
 
Investor Term Sheet
 

 
 
 
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INDEX OF DEFINED TERMS
             
Affiliate
 
67
 
ERISA
 
23
Agency
 
29
 
ERISA Affiliate
 
23
Agreement
 
1
 
ERISA Plan
 
23
Annual Meeting
 
42
 
Exchange Act
 
16
Article XIII
 
60
 
Expense Reimbursement Deadline
 
36
Beneficial Owner
 
68
 
FDIC
 
12
Beneficial Ownership
 
68
 
First Closing
 
2
Beneficially Own
 
68
 
First Closing Approvals
 
4
Benefit Plan
 
23
 
First Closing Date
 
2
BHC Act
 
2
 
GAAP
 
15
Board Observer
 
41
 
Governmental Entity
 
3
Board of Directors
 
5
 
Hazardous Substance
 
26
Burdensome Condition
 
61
 
her
 
68
Business Combination
 
9
 
herein
 
68
Business Combination Exemption
     
hereof
 
68
Resolution
 
59
 
hereunder
 
68
business day
 
68
 
him
 
68
Bylaws
 
1
 
his
 
68
CBC Act
 
2
 
Holder
 
55
Certificate of Incorporation
 
1
 
Holders’ Counsel
 
56
Change in Control
 
8
 
include
 
68
Charter
 
1
 
included
 
68
Code
 
23
 
includes
 
68
Common Shares
 
1
 
including
 
68
Common Stock
 
1
 
Incumbent Directors
 
9
Company
 
1
 
Indemnified Party
 
43
Company 10-K
 
12
 
Indemnifying Party
 
43
Company Bank
 
39
 
Indemnitee
 
53
Company Financial Statements
 
15
 
Information
 
36
Company Preferred Stock
 
12
 
Initial Purchase Price
 
2
Company Reports
 
15
 
Initial Purchased Shares
 
2
Company Restricted Stock
 
12
 
Insurer
 
30
Company Significant Agreement
 
19
 
Intellectual Property
 
27
Company Stock Option
 
12
 
Investor
 
1
Company Stock Option Plans
 
12
 
Investor\Brown Agreement
 
5
Company Subsidiaries
 
11
 
IRS
 
17
Company Subsidiary
 
11
 
it
 
68
Company’s knowledge
 
68
 
IT Assets
 
27
control
 
68
 
its
 
68
controlled by
 
68
 
knowledge of the Company
 
68
Conversion Shares
 
3
 
Liens
 
11
Covered Persons
 
60
 
Loan Investor
 
30
De Minimis Claim
 
44
 
Loans
 
28
Disclosure Schedule
 
10
 
Losses
 
43, 45
Environmental Law
 
26
 
Material Adverse Effect
 
10

 
 
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Meeting End Date
 
35
 
SEC
 
11
NASDAQ
 
4
 
Second Closing
 
2
New Jersey Secretary
 
1
 
Second Closing Date
 
3
New Security
 
57
 
Second Closing Termination
 
64
NJBCA
 
26, 60
 
Second Closing Termination Date
 
64
OCC Agreement
 
5
 
Second Purchase Price
 
3
Other Private Placements
 
1
 
Securities
 
1
Other Securities Purchase Agreements
 
1
 
Securities Act
 
16
Parent Corporation
 
9
 
Selling Expenses
 
57
Pending Underwritten Offering
 
57
 
Series B Certificate
 
1
Pension Plan
 
23
 
Series B Preferred Shares
 
1
Permitted Liens
 
17
 
Series B Preferred Stock
 
1
Permitted Transferee
 
62
 
Shareholder Approvals
 
14
person
 
68
 
Shareholder Litigation
 
39
Piggyback Registration
 
47
 
Shelf Registration Statement
 
46
Plan Asset Regulations
 
61
 
Special Registration
 
47
Pool
 
29
 
subsidiary
 
67
Pre-Closing Period
 
37
 
Surviving Corporation
 
9
Previously Disclosed
 
10
 
Takeover Law
 
26
Purchase Price
 
3
 
Tax
 
18
Register
 
56
 
Tax Return
 
18
registered
 
56
 
Taxes
 
18
Registrable Securities
 
56
 
Threshold Amount
 
44
registration
 
56
 
Transaction Documents
 
1
Registration Deadline
 
46
 
Transaction Expenses
 
36
Registration Expenses
 
56
 
Transfer
 
62
Regulatory Action
 
28
 
under common control with
 
68
Rule 144
 
56
 
Unlawful Gains
 
22
Rule 144A
 
56
 
VCOC
 
61
Rule 158
 
56
 
VCOC Investor
 
61
Rule 159A
 
56
 
Voting Agreement
 
1
Rule 405
 
56
 
Voting Debt
 
13
Rule 415
 
56
 
without limitation
 
68
Scheduled Black-out Period
 
57
       

 
 
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SECURITIES PURCHASE AGREEMENT, dated as of July 7, 2010 (this "Agreement"),
between Sun Bancorp, Inc., a New Jersey corporation (the "Company"), and Maycomb
Holdings II, LLC, Maycomb Holdings III, LLC, Siguler Guff Distressed
Opportunities Fund IV, LP, and Siguler Guff Distressed Opportunities Fund IV
(T), LP (collectively, the "Investors").
 
 
RECITALS:
 
 
A.   The Investment.  The Company intends to sell to the Investors, and the
Investors severally intend to purchase from the Company, as an investment in the
Company, the securities as described herein.  The securities to be purchased at
the first closing are 720,500 shares of common stock, par value $1.00 per share,
of the Company (the "Common Stock" or "Common Shares").  The securities to be
purchased at the second closing, subject to adjustment as of the date of the
second closing in accordance with the terms hereof, are 16,942 shares of
Mandatorily Convertible Cumulative Non-Voting Perpetual Preferred Stock, Series
B, par value $1.00 per share, of the Company, having the terms set forth on
Exhibit A (the "Series B Preferred Stock" or "Series B Preferred Shares").
 
 
B.   The Securities.  The term "Securities" refers collectively to (i) the
shares of Common Stock and Series B Preferred Stock purchased under this
Agreement and (ii) any securities (including shares of Common Stock) into which
any of the foregoing are converted, exchanged or exercised in accordance with
the terms thereof and this Agreement.  When issued, the Series B Preferred Stock
will have the designations, relative rights, preferences and limitations set
forth in the certificate of amendment, substantially in the form attached as
Exhibit A (the "Series B Certificate"), made a part of the Company's Amended and
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), by filing the Series B Certificate with the Secretary of State
of the State of New Jersey (the "New Jersey Secretary").
 
C.   Additional Private Placements.  Concurrently with the first closing and
second closing hereunder, the Company has agreed to sell Common Shares and
Preferred Shares, respectively, in private placements to the other investors
listed in Section 1.2(a) of the Disclosure Schedule (the "Other Private
Placements") under separate securities purchase agreements (the "Other
Securities Purchase Agreements").
 
D.   Transaction Documents.  The term "Transaction Documents" refers to this
Agreement, the Other Securities Purchase Agreements, the Series B Certificate
and the Investor Agreement.
 
 
NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:
 
 
 
 

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ARTICLE I
 
Purchase; Closings
 
1.1   Purchase.  On the terms and subject to the conditions set forth herein,
the Investors will severally purchase from the Company, and the Company will
issue and sell to the Investors, a number of shares of Common Stock and Series B
Preferred Stock as set forth herein.
 
1.2   Closings.  The transactions contemplated hereby will occur over two
closings.
 
(a)   First Closing.
 
    (1)   Subject to the satisfaction (or, where permissible, waiver) of the
conditions to closing set forth in Section 1.2 (c), the first closing (the
"First Closing") shall take place at a time and date as shall be agreed upon by
the parties hereto, but in no event later than the third business day after the
date of satisfaction or waiver of the last of the conditions specified in
Section 1.2(c),  by delivery by facsimile of any documents required to be
delivered pursuant to this Agreement to consummate the First Closing, to the
offices of Malizia Spidi & Fisch, PC located at 1227 25th Street, N.W.,
Washington, D.C.  20037, or such other date or location as agreed by the parties
in writing.  The date of the First Closing is referred to as the "First Closing
Date."
 
    (2)    Subject to the satisfaction of the conditions described in Section
1.2(c), at the First Closing, the Company will deliver to each Investor one or
more certificates bearing the appropriate legends herein provided for and free
and clear of all Liens representing 720,500 shares of Common Stock (the "Initial
Purchased Shares") against payment by each Investor of its pro rata share of the
$2,882,000 (the "Initial Purchase Price") by wire transfer of immediately
available United States funds to a bank account designated by the Company;
provided, that if the Initial Purchased Shares would cause the Investors or
their Affiliates to be deemed for purposes of the Bank Holding Company Act of
1956, as amended (the "BHC Act"), or the Change in Bank Control Act of 1978, as
amended (the "CBC Act"), to own 10% or more of the outstanding shares of any
class of voting securities of the Company or to otherwise control the Company,
then the Investors shall severally purchase the highest number of shares of
Common Stock at a purchase price of $4.00 per share (and the Initial Purchase
Price shall be reduced accordingly) such that the Investors will not be deemed
for purposes of the BHC Act or the CBC Act to own 10% or more of any class of
voting securities of the Company or to otherwise control the Company.  Any
determinations under the proviso of the immediately preceding sentence shall
take into account the appropriate regulatory treatment of convertible
securities.
 
(b)   Second Closing.
 
    (1)    Subject to the satisfaction (or, where permissible, waiver) of the
conditions to closing set forth in Section 1.2(d), the second closing (the
"Second
 
 
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Closing") shall take place at a time and date as shall be agreed upon by the
parties hereto, but in no event later than the tenth business day after the date
of satisfaction or waiver of the last of the conditions specified in Section
1.2(d), by delivery by facsimile of any documents required to be delivered
pursuant to this Agreement to consummate the First Closing, to the offices of
Malizia Spidi & Fisch, PC located at 1227 25th Street, N.W., Washington,
D.C.  20037, or such other date or location as agreed by the parties in
writing.  The date of the Second Closing is referred to as the "Second Closing
Date."
 
    (2)   Subject to the satisfaction of the conditions described in Section
1.2(d), at the Second Closing, the Company will deliver to the Investors one or
more certificates bearing the appropriate legends herein provided for and free
and clear of all Liens representing 16,942 shares of Series B Preferred Stock
against payment by each Investor of its pro rata share of $16,942,000 (the
"Second Purchase Price" and together with the Initial Purchase Price, the
"Purchase Price") by wire transfer of immediately available United States funds
to a bank account designated by the Company; provided that if the Common Shares
issued at the First Closing and the shares of Common Stock issuable upon the
conversion of the Series B Preferred Shares (the "Conversion Shares") would
cause the Investors or their Affiliates to be deemed for purposes of the BHC Act
to own 10% or more of the outstanding shares of any class of voting securities
of the Company or to otherwise control the Company, then the number of Series B
Preferred Shares to be purchased at the Second Closing shall be reduced to the
highest number of Series B Preferred Shares at a purchase price per share of
$1,000 (and the Second Purchase Price and the Purchase Price shall be reduced
accordingly) such that the Investors will not be deemed for purposes of the BHC
Act to own 10% or more of the outstanding shares of any class of voting
securities of the Company or to otherwise control the Company.  Any
determinations under the proviso of the immediately preceding sentence shall
take into account the appropriate regulatory treatment of convertible
securities.
 
(c)   Conditions to First Closing.
 
    (1)   The obligation of the Investors to consummate the First Closing is
subject to the fulfillment prior to or contemporaneously with the First Closing
of each of the following conditions:
 
    (i)   no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the First Closing or shall prohibit
or restrict the Investors or their Affiliates from owning, voting, or, subject
to the receipt of the Shareholder Approvals (defined below), converting or
exercising, any securities of the Company in accordance with the terms thereof
and no lawsuit shall have been commenced by any court, administrative agency, or
governmental or regulatory authority or instrumentality, whether federal, state,
local or foreign, or any industry self-regulatory organization (each, a
"Governmental Entity") or third party seeking to effect any of the foregoing;
 
 
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    (ii)   the representations and warranties of the Company set forth in this
Agreement shall be true and correct in all respects as of the date hereof and as
of the First Closing (except to the extent such representations and warranties
are made as of a specified date, in which case such representations and
warranties shall be true and correct in all respects as of such date);
 
    (iii)   the Company shall have performed all obligations required to be
performed by it at or prior to or contemporaneously with the First Closing under
this Agreement;
 
    (iv)   since the date hereof, there shall not have occurred any
circumstance, event, change, development or effect that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect on the Company or the Company Bank;
 
     (v)   the Company shall receive gross proceeds from the sale of Common
Shares pursuant to this Agreement and the Other Securities Purchase Agreements
of an aggregate amount of $18,691,000 from the investors listed in Section
1.2(a) of the Disclosure Schedule, contemporaneously with the First Closing, and
all of such proceeds, other than (A) amounts used to reimburse the Investors for
their out-of-pocket fees and expenses pursuant to Section3.2 of this Agreement
and (B) amounts to pay expenses of the Company related to the shareholders'
meeting to be held in connection with the Shareholder Approvals and the
transactions contemplated by the Transaction Documents shall be contributed as
capital to the Company Bank;
 
    (vi)   the Company shall have reimbursed the Investors for an amount equal
to $150,000 in respect of the out-of-pocket fees and expenses incurred by the
Investors in connection with the transactions contemplated hereby;
 
    (vii)   counsel for the Company shall have delivered to the Investors their
written opinion, dated the First Closing Date, in the form set forth in Exhibit
B hereto, in form and substance satisfactory to the Investors;
 
    (viii)   the Company shall have delivered to the Investors a duly executed
Officer's Certificate in the form set forth in Exhibit C hereto;
 
    (ix)   the Company shall have caused the shares of Common Stock issuable at
the First Closing, as well as the Conversion Shares, to be approved for listing
on the NASDAQ Global Select Market ("NASDAQ"), subject to official notice of
issuance;
 
    (x)   the Company and the Investors shall have made or obtained any
application, notice, filing, approval, consent, non-objection, or exemption as
may be required to, from, or by any Governmental Entity in order to consummate
the transactions contemplated by the Transaction Documents to be completed at
the First Closing, including, without limitation, submission by the Investors of
customary passivity commitments to the Federal Reserve and, to the extent
 
 
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requested by the Investors, the concurrence of Federal Reserve staff that
neither the Investors nor their Affiliates will control the Company for purposes
of the CBC Act or BHC Act or otherwise be required to become a bank holding
company (collectively, the "First Closing Approvals");
 
    (xi)   the Investors shall have determined, in their reasonable good faith
judgment, that consummation of the transactions contemplated by the Transaction
Documents would not result in a Burdensome Condition;
 
    (xii)   no law, rule, regulation, policy, order, guideline or regulatory
interpretation, other than the Dodd-Frank Wall Street Reform and Consumer
Protection Act, shall have been enacted, issued, implemented or modified after
the date hereof that would, in the reasonable and good faith judgment of the
Investors, materially and adversely affect the anticipated benefits or burdens
of the transactions contemplated herein;
 
    (xiii)   except as Previously Disclosed, no Regulatory Action shall have
been threatened in writing or issued by any Governmental Entity with regulatory
authority over the Company and its subsidiaries and neither the Company nor the
Company Bank shall have entered into an agreement with respect to or otherwise
consented to a Regulatory Action;
 
    (xiv)   except as Previously Disclosed, the Company Bank shall be in
compliance with the Agreement by and between the Company Bank and the Office of
the Comptroller of the Currency, dated April 15, 2010 (the "OCC Agreement"), in
all material respects, and after giving effect to the investment to be made
hereunder at the First Closing and the investments pursuant to the Other
Securities Purchase Agreements, the Company Bank's regulatory capital ratios
shall meet or exceed the requirements set forth in the OCC Agreement;
 
    (xv)   each of WLR SBI Acquisition Co, LLC, Bernard A. Brown, Sidney R.
Brown, Ike Brown, Jeffrey S. Brown, Anne Koons and any of their respective
Affiliates owning shares of the Company's capital stock shall have entered into
an agreement with the Investor, substantially on the terms set forth on Exhibit
D, in a form acceptable to the Investor; and
 
    (xvi)   at Closing, the Company will deliver a certificate of the Chief
Executive Officer or the Chief Financial Officer certifying compliance with each
of the above conditions and upon the request of the Investors shall provide
sufficient detail that the Investors may verify compliance.
 
    (2)   The obligation of the Company to consummate the First Closing is
subject to the fulfillment prior to or contemporaneously with the First Closing
of each of the following conditions:
 
    (i)   the representations and warranties of the Investors set forth in
Section 2.3 of this Agreement shall be true and correct in all respects as of
the date hereof and as of the First Closing (except to the extent such
representations
 
 
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and warranties are made as of a specified date, in which case such
representations and warranties shall be true and correct in all respects as of
such date);
 
    (ii)   the Company and the Investors shall have obtained the approvals and
authorizations of, filings and registrations with, and notifications to, and, to
the extent required by applicable law or regulation, consents, approvals, or
exemptions from bank regulatory authorities, required to consummate the First
Closing;
 
    (iii)   each Investor shall have performed all obligations required to be
performed by it at or prior to the First Closing under this Agreement; and
 
    (iv)   no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the First Closing and no lawsuit
shall have been commenced by any Governmental Entity seeking to effect any of
the foregoing.
 
(d)   Conditions to Second Closing.
 
    (1)   The obligation of the Investors to consummate the Second Closing is
subject to the fulfillment prior to or contemporaneously with the Second Closing
of each of the following conditions:
 
    (i)   no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the Second Closing or shall prohibit
or restrict the Investors or their Affiliates from owning, voting, or, subject
to the receipt of the Shareholder Approvals, converting or exercising, any
securities of the Company in accordance with the terms thereof and no lawsuit
shall have been commenced by any Governmental Entity or third party seeking to
effect any of the foregoing;
 
    (ii)   the Company shall have performed all obligations required to be
performed by it at or prior to or contemporaneously with the Second Closing
under this Agreement;
 
    (iii)   the Series B Certificate shall have been filed with the New Jersey
Secretary and shall be in full force and effect;
 
    (iv)   the Company and the Investors shall have made or obtained any
application, notice, filing, approval, consent, non-objection, or exemption as
may be required to, from, or by any Governmental Entity in order to consummate
the transactions contemplated by the Transaction Documents to be completed at
the Second Closing, including, without limitation, notice and non-objection of
the Federal Reserve pursuant to the CBC Act and the concurrence of Federal
Reserve staff that neither the Investors nor their Affiliates will control the
Company for purposes of the BHC Act, the CBC Act or otherwise be required to
become a bank holding company;
 
 
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    (v)   the Investors shall have determined in their reasonable good faith
judgment that consummation of the transactions contemplated by the Transaction
Documents would not result in a Burdensome Condition;
 
    (vi)   no law, rule, regulation, policy, order, guideline or regulatory
interpretation, other than the Dodd-Frank Wall Street Reform and Consumer
Protection Act, shall have been enacted, issued, implemented or modified after
the First Closing Date that would, in the reasonable and good faith judgment of
the Investors, materially and adversely affect the anticipated benefits or
burdens of the transactions contemplated herein;
 
    (vii)   the Company shall have reimbursed the Investors for all Transaction
Expenses, subject to a maximum aggregate expense reimbursement to the Investors
in respect of the Transaction Expenses (including any amounts paid at the First
Closing and, if applicable, the Expense Reimbursement Deadline) of $450,000; and
 
    (viii)   the Company shall receive gross proceeds from the sale of Series B
Preferred Shares pursuant to this Agreement and the Other Securities Purchase
Agreements of an aggregate amount of $82,026,000 from the investors listed in
Section 1.2(a)(1) of the Disclosure Schedule, contemporaneously with the Second
Closing, and an amount of such proceeds necessary for the Company Bank to
maintain a pro forma total risk based capital ratio of 12% shall be contributed
as capital to the Company Bank.
 
    (2)   The obligation of the Company to consummate the Second Closing is
subject to the fulfillment prior to or contemporaneously with the Second Closing
of each of the following conditions:
 
    (i)   no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the Second Closing and no lawsuit
shall have been commenced by any Governmental Entity seeking to effect any of
the foregoing;
 
    (ii)   each Investor shall have performed all obligations required to be
performed by it at or prior to or contemporaneously with the Second Closing
under this Agreement; and
 
    (iii)   the Company and the Investors shall have obtained the approvals and
authorizations of, filings and registrations with, and notifications to, and, to
the extent required by applicable law or regulation, consents, approvals, or
exemptions from bank regulatory authorities, required to consummate the Second
Closing.
 
1.3   Second Closing Adjustments.
 
(a)   In the event that, at or prior to the Second Closing, there occurs any
transaction that would result in any adjustment or give rise to any right under
Section 10 of the
 
 
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Series B Certificate with respect to Series B Preferred Stock, if the Series B
Certificate had been filed with the State of New Jersey and was in full force
and effect, then at the Investors’ option, which may be exercised in the
Investors’ sole discretion, the number of shares of Series B Preferred Stock to
be issued to the Investors at the Second Closing under this Agreement shall be
equitably adjusted and/or the shares of Series B Preferred Stock to be issued to
the Investors at the Second 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 Investors with substantially the same
economic benefit as the Investors would have had if the Series B Certificate had
been filed with the State of New Jersey and were in full force and effect and
the Investors had held Series B Preferred Stock at the time of the applicable
transaction.  Notwithstanding anything in this Agreement to the contrary, in no
event shall the Purchase Price or any component thereof be changed by the
foregoing.
 
(b)   Notwithstanding anything in this Agreement 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 Investors (in a form that is reasonably satisfactory to the Investors)
that the terms of this Agreement, including this Section 1.3, 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 prior to the Second Closing, the Investors shall maintain the
right under this Agreement to acquire, pursuant to the terms and conditions of
this Agreement, the securities to be acquired at the Second Closing (or such
shares of stock or other securities or property (including cash) into which such
securities may have become exchangeable as a result of such Change in Control),
as if the Second Closing had occurred immediately prior to such Change in
Control.
 
    (1)   "Change in Control" means, with respect to the Company, the occurrence
of any one of the following events:
 
    (i)   any person is or becomes a Beneficial Owner (other than the Investors
and their Affiliates), directly or indirectly, of 50% or more of the aggregate
number of the voting securities of the Company; provided, however, that the
event described in this paragraph (i) will not be deemed a Change in Control by
virtue of any holdings or acquisitions: (i) by the Company or any of the Company
Subsidiaries, (ii) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of the Company 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
50% of the then outstanding voting securities of the Company, or (iii) by any
underwriter temporarily holding securities pursuant to an offering of such
securities;
 
    (ii)   the event described in paragraph (i) above in this definition of
"Change in Control" (substituting all references to 50% in such clause for
"24.9%"), and in connection with such event, individuals who, on the date of
this Agreement, constitute the Board of Directors (the "Incumbent Directors")
cease
 
 
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for any reason to constitute at least a majority of the Board of Directors;
provided that any person becoming a director subsequent to the date of this
Agreement whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board of Directors
(either by a specific vote or by approval of the proxy statement of the relevant
party in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director (except that no
individuals who were not directors at the time any agreement or understanding
with respect to any Business Combination or contested election is reached shall
be treated as Incumbent Directors for the purposes of paragraph (iii) below with
respect to such Business Combination or this paragraph in the case of a
contested election);
 
    (iii)   the consummation of a merger, consolidation, statutory share
exchange or similar transaction that requires adoption by the Company's
shareholders (a "Business Combination");
 
    (iv)   the shareholders 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
 
    (v)   the Company has entered into a definitive agreement, the consummation
of which would result in the occurrence of any of the events described in
paragraphs (i) through (iv) of this definition.
 
ARTICLE II
 
Representations and Warranties
2.1   Disclosure.
 
(a)   On or prior to the date of this Agreement, the Company delivered to the
Investors a schedule ("Disclosure Schedule") 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
or to one or more of its covenants contained in Article III; provided, however,
that notwithstanding anything in this Agreement to the contrary, the mere
inclusion of an item in such 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.
 
(b)   "Material Adverse Effect" means, with respect to the Investors, only
clause (2) that follows, or, with respect to the Company, both clauses (1) and
(2) that follow, any circumstance, event, change, development or effect that,
individually or in the aggregate (1) is or would reasonably be expected to be
material and adverse to the financial position, results of operations, business,
assets or liabilities, management or condition (financial or otherwise) of the
Company and the Company Subsidiaries taken as a whole, or (2) would or would
reasonably be expected to materially impair the ability of either the Investors
or the Company, respectively, to
 
 
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perform its respective obligations under this Agreement or otherwise materially
threaten or materially impede the consummation of the transactions contemplated
by this Agreement; provided, however, that in determining whether a Material
Adverse Effect has occurred, there shall be excluded any effect to the extent
resulting from the following: (A) changes, after the date hereof, in generally
accepted accounting principles or regulatory accounting principles generally
applicable to banks, savings associations or their holding companies, (B)
actions or omissions of the Company expressly required by the terms of this
Agreement or taken with the prior written consent of the Investors, (C) changes,
after the date hereof, in the market price or trading volumes of the Common
Stock or the Company's other securities (but not the underlying causes of such
changes); (D) proposed changes or changes, after the date hereof, in applicable
laws, rules and regulations or interpretations thereof by Governmental Entities,
(E) changes in general economic, monetary or financial conditions, including
changes in prevailing interest rates, credit markets, secondary mortgage market
conditions or housing price appreciation/depreciation trends, (F) the failure of
the Company to meet any internal or public projections, forecasts, estimates or
guidance (including guidance as to "earnings drivers") for any period ending on
or after December 31, 2009 (but not the underlying causes of such failure), and
(G) changes in global or national political conditions, including the outbreak
or escalation of war or acts of terrorism; except, with respect to any one or
more of clauses (A), (D), (E) and (G), to the extent that the effects of such
changes have a disproportionate effect on the Company and the Company
Subsidiaries, taken as a whole, relative to other banks, savings associations
and their holding companies generally.
 
(c)   "Previously Disclosed" with regard to the Company (1) means information
set forth on its Disclosure Schedule corresponding to the provision of this
Agreement to which such information relates; provided that information which is
reasonably apparent on its face that it relates to another provision of this
Agreement, shall also be deemed to be Previously Disclosed with respect to such
other provision and (2) includes information publicly disclosed by the Company
in the Company Reports filed by it with or furnished to the U.S. Securities and
Exchange Commission (the "SEC") on or after January 1, 2010, including
amendments thereto filed prior to the date hereof, and publicly available prior
to the date of this Agreement (excluding any risk factor disclosures contained
in such documents under the heading "Risk Factors," any disclosure of risks
included in any "forward-looking statements" or any other disclaimers that are
non-specific or statements that are predictive or forward-looking in nature, and
any exhibits thereto and documents incorporated by reference therein).
 
2.2   Representations and Warranties of the Company.  Except as Previously
Disclosed, the Company represents and warrants as of the date of this Agreement
and as of the First Closing Date (except to the extent made only as of a
specified date, in which case as of such date) to the Investors that:
 
(a)   Organization and Authority.  The Company is a corporation duly organized
and validly existing under the laws of the State of New Jersey, 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 failure to be so qualified would have a Material Adverse
Effect on the Company and has corporate power and authority to own its
properties and assets and to carry on its business as it is now being
conducted.  The Company is duly registered as a bank holding company under the
BHC Act.  The Company has furnished or
 
 
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made available to the Investors, prior to the date hereof, true, correct and
complete copies of the Certificate of Incorporation and the Company's bylaws, in
each case as amended through the date of this Agreement.
 
(b)   Company's Subsidiaries.  The Company has Previously Disclosed a true,
complete and correct list of all of its subsidiaries as of the date of this
Agreement (individually, a "Company Subsidiary" and, collectively, the "Company
Subsidiaries").  All shares of the outstanding capital stock of each of the
Company Subsidiaries are owned directly or indirectly by the Company.  No equity
security of any Company Subsidiary is or may be required to be issued by reason
of any option, warrant, scrip, preemptive right, right to subscribe to, gross-up
right, call or commitment of any character whatsoever relating to, or security
or right convertible into, shares of any capital stock of such Company
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional shares
of its capital stock, or any option, warrant or right to purchase or acquire any
additional shares of its capital stock.  All of the issued and outstanding
shares of capital stock (or equivalent interests of entities other than
corporations) of each of the Company Subsidiaries are duly authorized and
validly issued, fully paid and, subject to 12 U.S.C. 55 (solely with respect to
the Company Bank), nonassessable and are owned, directly or indirectly, by the
Company free and clear of any lien, adverse right or claim, charge, option,
pledge, covenant, title defect, security interest or other encumbrances of any
kind ("Liens") with respect thereto. Neither the Company nor any of the Company
Subsidiaries is a party to any right of first refusal, right of first offer,
proxy, voting agreement, voting trust, registration rights agreement, or
shareholders agreement with respect to the sale or voting of any securities of
any Company Subsidiary.  Each Company Subsidiary is an entity duly organized,
validly existing, duly qualified to do business and in good standing under the
laws of its jurisdiction of organization, and has corporate or other appropriate
organizational power and authority to own or lease its properties and assets and
to carry on its business as it is now being conducted, except as would not
reasonably be expected to have a Material Adverse Effect on the Company.  Except
in respect of the Company Subsidiaries, the Company does not own beneficially,
directly or indirectly, more than 5% of any class of equity securities or
similar interests of any corporation, bank, business trust, association or
similar organization, and is not, directly or indirectly, a partner in any
partnership or party to any joint venture.  The Company Bank is duly organized
and validly existing as a national bank and its deposit accounts are insured by
the Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by the Federal Deposit Insurance Act and the rules and regulations of
the FDIC thereunder, and all premiums and assessments required to be paid in
connection therewith have been paid when due.  The Company has furnished or made
available to the Investors, prior to the date hereof, true, correct and complete
copies of the articles of association and bylaws of the Company Bank as amended
through the date of this Agreement.
 
(c)   Capitalization.  As of the date hereof, the authorized capital stock of
the Company consists of 50,000,000 shares of Common Stock and 1,000,000 shares
of preferred stock, par value $1.00 per share (the "Company Preferred
Stock").  As of June 30, 2010, there were 23,482,136 shares of Common Stock
outstanding and no shares of Company Preferred Stock outstanding.  From the date
of this Agreement through the Second Closing Date, except pursuant to the
Transaction Documents and the transactions contemplated hereby and thereby, the
Company shall not have (i) issued or authorized the issuance of any shares of
Common Stock
 
 
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or Company Preferred Stock, or any securities convertible into or exchangeable
or exercisable for shares of Common Stock or Company Preferred Stock (other than
shares issued upon the exercise of Company Stock Options outstanding on the date
of this Agreement and disclosed in the Company's Disclosure Schedule),
(ii) reserved for issuance any shares of Common Stock or Company Preferred Stock
or (iii) repurchased or redeemed, or authorized the repurchase or redemption of,
any shares of Common Stock or Company Preferred Stock or any securities
convertible into or exchangeable or exercisable for shares of Common Stock or
Company Preferred Stock.  As of the date hereof, there are (i) outstanding stock
options issued under the Company's 1997 Stock Option Plan, as amended and
restated prior to the date hereof and as filed as exhibit 10.2 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2009 (the "Company
10-K"), 2002 Stock Option Plan as filed as exhibit 10.3 to the Company 10-K,
2004 Stock-Based Incentive Plan, as amended and restated prior to the date
hereof and as filed as exhibit 10.4 to the Company 10-K and other stock option
plans from prior acquisitions for the Company (together, the "Company Stock
Option Plans") to purchase an aggregate of 2,274,375 shares of the Common Stock
(each, a "Company Stock Option"), (ii) an aggregate of 230,785 shares of
restricted stock ("Company Restricted Stock") outstanding under the Company
Stock Option Plans and (iii)  1,024,391 shares of the Common Stock reserved for
issuance under the Company Stock Option Plans and the Employee Stock Purchase
Plan and the Director Stock Purchase Plan.  Other than in respect of awards
outstanding under or pursuant to the Company Stock Option Plans, no shares of
Common Stock or Company Preferred Stock are reserved for issuance.  All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.  Each Company
Stock Option (i) was granted in compliance with all applicable laws and all of
the terms and conditions of the Company Stock Option Plans pursuant to which it
was issued, (ii) has an exercise price per share of Common Stock equal to or
greater than the fair market value of a share of Common Stock on the date of
such grant and (iii) has a grant date on or after the date on which the Board of
Directors or compensation committee of the Board of Directors actually awarded
such Company Stock Option.  Neither the Company nor any of its officers,
directors, or employees is a party to any right of first refusal, right of first
offer, proxy, voting agreement, voting trust, registration rights agreement, or
shareholders agreement with respect to the sale or voting of any securities of
the Company.  No bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which the shareholders of the Company may vote
("Voting Debt") are issued and outstanding.  Except as set forth elsewhere in
this Section 2.2(c), the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, repurchase rights,
commitments, or agreements of any character calling for the purchase or issuance
of, or securities or rights convertible into or exchangeable or exercisable for,
any shares of Common Stock or Company Preferred Stock or any other equity
securities of the Company or Voting Debt or any securities representing the
right to purchase or otherwise receive any shares of capital stock of the
Company (including any rights plan or agreement).  The Company has Previously
Disclosed all shares of Company capital stock that have been purchased, redeemed
or otherwise acquired, directly or indirectly, by the Company or any Company
Subsidiary since December 31, 2009 and all dividends or other distributions that
have been declared, set aside, made or paid to the shareholders of the Company
since that date.
 
(d)   Authorization.
 
 
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    (1)   The Company has the corporate power and authority to enter into and
deliver this Agreement and the other Transaction Documents to which it is a
party and, subject to obtaining the Shareholder Approvals (solely with respect
to the conversion of the Series B Preferred Stock), to carry out its obligations
hereunder and thereunder.  The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Company and the consummation of the transactions contemplated hereby and
thereby, including the issuance of the Securities in accordance with the terms
of this Agreement and the increase in the authorized shares of the Company, have
been duly authorized by the affirmative vote of at least a majority of the
directors on the Board of Directors.  This Agreement and the Other Securities
Purchase Agreements have been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery of this
Agreement by the Investors and the Other Securities Purchase Agreements by all
investors party thereto, are valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganizations, fraudulent transfer or similar laws relating to or
affecting creditors generally or by general equitable principles (whether
applied in equity or at law).  No other corporate proceedings or approvals or
authorizations by the Company of the Company shareholders are necessary for the
execution and delivery by the Company of this Agreement and the other
Transaction Documents to which it is a party, the performance by the Company of
its obligations hereunder and thereunder or the consummation by the Company of
the transactions contemplated hereby and thereby, except for the receipt of the
Shareholder Approvals necessary to permit the conversion of the Series B
Preferred Stock.  The only vote of the shareholders of the Company required to
approve (i) the amendment of the Certificate of Incorporation to increase the
number of authorized shares of Common Stock to 100,000,000 shares and (ii) the
issuance of Common Shares and Conversion Shares for purposes of rule 5635 of
NASDAQ's listing rules to the Investors and the investors participating in the
Other Private Placements is a majority of the votes cast on such proposal (such
shareholder approvals, the "Shareholder Approvals").  All shares of Common Stock
owned by the shareholders party to the voting agreement, listed in Section
2.2(b) of the Disclosure Schedule, as of the date hereof are eligible to be
voted at any meeting of the shareholders of the Company called to consider the
Shareholder Approvals on the matters which are the subject of such meeting.  The
Board of Directors has resolved that the transactions contemplated hereby and by
the Other Securities Purchase Agreements are in the best interests of
shareholders of the Company and has determined to unanimously recommend (other
than the abstentions of Thomas X. Geisel, Bernard A. Brown, Sidney R. Brown,
Anne E. Koons, Ike Brown and Jeffrey S. Brown to the extent they are members of
the Board of Directors) to the shareholders the approval of the actions with
respect to the Shareholder Approvals.
 
    (2)   Neither the execution, delivery and performance by the Company of this
Agreement or the other Transaction Documents to which it is a party, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by the Company with any of the provisions of any of the foregoing, will
(i) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an
 
 
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event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or result in the loss of any benefit or
creation of any right on the part of any third party under, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien, upon any of the properties or assets of
the Company or any Company Subsidiary under any of the terms, conditions or
provisions of (A) its Certificate of Incorporation or bylaws (or similar
governing documents) or (B) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or any Company Subsidiary is a party or by which it may be bound, or to which
the Company or any Company Subsidiary or any of the properties or assets of the
Company or any Company Subsidiary may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
ordinance, permit, concession, grant, franchise, law, statute, rule or
regulation or any judgment, ruling, order, writ, injunction or decree applicable
to the Company or any Company Subsidiary or any of their respective properties
or assets, except in the case of clauses (i)(B) and (ii) for such violations,
conflicts and breaches that are not material to the Company, individually or in
the aggregate.
 
    (3)   Other than the securities or blue sky laws of the various states and
the filings, notices, approvals or clearances required under federal or state
banking laws, no notice to, registration, declaration or filing with, exemption
or review by, or authorization, order, consent or approval of, any Governmental
Entity, or expiration or termination of any statutory waiting period, is
necessary for the execution and delivery of this Agreement or the consummation
by the Company of the transactions contemplated by this Agreement or the other
Transaction Documents to which it is a party.
 
(e)   Knowledge as to Conditions.  Except as Previously Disclosed, as of the
date of this Agreement, the Company knows of no reason relating to the Company
or any Company Subsidiary why any regulatory approvals and, to the extent
necessary, any other approvals, authorizations, filings, registrations, and
notices required or otherwise a condition to the consummation of the
transactions contemplated by the Transaction Documents will not be obtained.
 
(f)   Financial Statements.  The Company has previously made available to the
Investors copies of (i) the consolidated balance sheets of the Company as of
December 31, 2009 and 2008 and related consolidated statements of income,
shareholders' equity and cash flows for the three years ended December 31, 2009,
together with the notes thereto, certified by Deloitte & Touche LLP and included
in the Company 10-K, as filed with the SEC, and (ii) the unaudited consolidated
balance sheets of the Company as of March 31, 2010 and related consolidated
statements of income, shareholders' equity and cash flows for the period then
ended, included in the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 2010 (collectively, the "Company Financial Statements").  The
Company Financial Statements, and the financial statements to be filed by the
Company with the SEC after the date of this Agreement, (1) have been or will be
prepared from, and are or will be in accordance with, the books and records of
the Company and the Company Subsidiaries, (2) complied or will comply, as of
their respective date of filing with the SEC, in all material respects with
applicable
 
 
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accounting requirements and with the published rules and regulations of the SEC
with respect thereto, (3) have been or will be prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") applied on a consistent basis
and (4) present or will present fairly in all material respects the consolidated
financial position of the Company and the Company Subsidiaries at the dates set
forth therein and the consolidated results of operations, changes in
shareholders' equity and cash flows of the Company and the Company Subsidiaries
for the periods stated therein (subject to the absence of notes and year-end
audit adjustments in the case of interim unaudited statements).
 
(g)   Reports.
 
    (1)   Since December 31, 2007, the Company and each Company Subsidiary have
filed all reports, registrations, documents, filings, statements and submissions
together with any required amendments thereto, that it was required to file with
any Governmental Entity (the foregoing, collectively, the "Company Reports") and
have paid all fees and assessments due and payable in connection therewith.  As
of their respective filing dates, the Company Reports complied in all material
respects with all statutes and applicable rules and regulations of the
applicable Governmental Entities, as the case may be.  As of the date of this
Agreement, except as set forth in Section 2.2(g) of the Disclosure Schedule,
there are no outstanding comments from the SEC or any other Governmental Entity
with respect to any Company Report.  The Company Reports, including the
documents incorporated by reference in each of them, each contained all of the
information required to be included in it and, when it was filed and as of the
date of each such Company Report filed with or furnished to the SEC, such
Company Report did not, as of its date or if amended prior to the date of this
Agreement, as of the date of such amendment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made in it not misleading and complied as to form in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended, or any successor statute (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, or any successor statute (the "Exchange
Act").  No executive officer of the Company has failed in any respect to make
the certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002.  There are no facts or circumstances that would
prevent its chief executive officer and chief financial officer from giving the
certifications and attestations required pursuant to Rules 13a-14 and 15d-14
under the Exchange Act, without qualification, when next due.
 
    (2)   The records, systems, controls, data and information of the Company
and the Company Subsidiaries are recorded, stored, maintained and operated under
means (including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Company Subsidiaries or accountants (including all means
of access thereto and therefrom).  The Company (A) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the chief executive officer and the
chief financial
 
 
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officer of the Company by others within those entities, and (B) has disclosed,
based on its most recent evaluation prior to the date of this Agreement, to the
Company's outside auditors and the audit committee of the Board of Directors
(x) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect
the Company's ability to record, process, summarize, and report financial
information, and (y) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting.  The Company has no knowledge of any
reason that its outside auditors and its chief executive officer and chief
financial officer will not be able to give the certifications and attestations
required pursuant to the rules and regulations adopted pursuant to Section 404
of the Sarbanes-Oxley Act of 2002, without qualification, when next due.  Since
December 31, 2007, (i) neither the Company nor any Company Subsidiary nor, to
the knowledge of the Company, any director, officer, employee, auditor,
accountant or representative of the Company or any Company Subsidiary has
received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any Company Subsidiary or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any Company Subsidiary has engaged in questionable accounting or
auditing practices, and (ii) no attorney representing the Company or any Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of a violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of the Company Subsidiaries or
any of their respective officers, directors, employees or agents to the Board of
Directors or any committee thereof or to any director or officer of the Company
or any of the Company Subsidiaries.
 
(h)   Properties and Leases.  Except for any Permitted Liens, the Company and
each Company Subsidiary have good title free and clear of any Liens to all the
real and personal property reflected in the Company's consolidated balance sheet
as of December 31, 2009 included in the Company 10-K for the period then ended,
and all real and personal property acquired since such date, except such real
and personal property as has been disposed of in the ordinary course of
business.  For purposes of this Agreement, "Permitted Liens" means (i) Liens for
taxes and other governmental charges and assessments arising in the ordinary
course which are not yet due and payable, (ii) Liens of landlords and Liens of
carriers, warehousemen, mechanics and materialmen and other like Liens arising
in the ordinary course of business for sums not yet due and payable, and (iii)
other Liens or imperfections on property which are not material in amount or do
not materially detract from the value of or materially impair the existing use
of the property affected by such Lien or imperfection.  Except as would not be
expected to have a Material Adverse Effect, all leases of real property and all
other leases pursuant to which the Company or such Company Subsidiary, as
lessee, leases real or personal property are valid and effective in accordance
with their respective terms and there is not, under any such lease, any existing
default by the Company or such Company Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a default.
 
 
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(i)   Taxes.
 
    (1)   Each of the Company and the Company Subsidiaries has filed all
federal, state, county, local and foreign material Tax Returns required to be
filed by it and all such Tax Returns are accurate and complete in all material
respects, and paid all material Taxes owed by it and no material Taxes owed by
it or assessments received by it are delinquent.  The federal income Tax Returns
of the Company and the Company Subsidiaries for the fiscal year ended December
31, 2006, and for all fiscal years prior thereto, are for the purposes of audit
by the Internal Revenue Service (the "IRS") closed because of the expiration of
the statutory period of limitations, and no claims for additional Taxes for such
fiscal years are pending.  Neither the Company nor any Company Subsidiary has
waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency, in each case
that is still in effect, or has pending a request for any such extension or
waiver.  Neither the Company nor any Company Subsidiary is a party to any
pending action or proceeding, nor to the Company's knowledge, is any such action
or proceeding threatened by any Governmental Entity, for the assessment or
collection of Taxes, interest, penalties, assessments or deficiencies and no
material deficiencies have been proposed by any federal, state, local or foreign
taxing authority in connection with an audit or examination of the Tax Returns,
business or properties of the Company or any Company Subsidiary which has not
been settled, resolved and fully satisfied, or for which reserves adequate in
accordance with GAAP have not been provided.  To the knowledge of the Company,
each of the Company and the Company Subsidiaries has withheld and paid all Taxes
that it is required to withhold from amounts owing to employees, creditors or
other third parties.  Neither the Company nor any Company Subsidiary is a party
to, is bound by or has any obligation under, any material Tax sharing or
material Tax indemnity agreement or similar contract or arrangement other than
any contract or agreement between or among the Company and any Company
Subsidiary.  To the knowledge of the Company, neither the Company nor any
Company Subsidiary has participated in any "reportable transaction" within the
meaning of Treasury Regulations Section 1.6011-4, or any other transaction
requiring disclosure under analogous provisions of state, local or foreign
law.  Neither the Company nor any Company Subsidiary has liability for the Taxes
of any person other than the Company or any Company Subsidiary under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or
foreign law).  Neither the Company nor any Company Subsidiary has been a
"distributing corporation" or a "controlled corporation" in any distribution in
which the parties to such distribution treated the distribution as one to which
Section 355 of the Code is applicable.  The Company has not been a United States
real property holding corporation within the meaning of Section 897 of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.  Neither the Company nor any of the Company Subsidiaries has undergone an
“ownership change” within the meaning of Code Section 382(g), and, after giving
effect to the transactions contemplated by both the First Closing and the Second
Closing, the Company shall not have undergone an “ownership change” within the
meaning of Code Section 382(g).  For the purpose of this Agreement, the term
"Tax" (including, with correlative meaning, the term
 
 
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"Taxes") shall mean any and all domestic or foreign, federal, state, local or
other taxes of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Entity, including taxes on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, unemployment, social security, workers'
compensation or net worth, and taxes in the nature of excise, withholding, ad
valorem or value added or similar taxes, and the term "Tax Return" means any
return, report, information return or other document (including any related or
supporting information, and attachments and exhibits) required to be filed with
respect to Taxes, including, without limitation, all information returns
relating to Taxes of third parties, any claims for refunds of Taxes and any
amendment or supplements to any of the foregoing.
 
(j)   Absence of Certain Changes.  Since December 31, 2009, the Company has not,
and no Company Subsidiary has, made or declared any distribution or dividend in
cash or in kind to its shareholders or issued or repurchased any shares of its
capital stock or other equity interests.  Since December 31, 2009, the business
and operations of the Company and the Company Subsidiaries have been conducted
in the ordinary course of business consistent with past practice, and there has
not been:
 
    (1)   any circumstance, event, change, development or effect which,
individually or in the aggregate with other circumstances, events, changes,
developments or effects, has had or is reasonably likely to have a Material
Adverse Effect on the Company;
 
    (2)   any material damage, destruction, or other casualty loss with respect
to any material asset or property owned, leased, or otherwise used by the
Company or any Company Subsidiary, whether or not covered by insurance; or
 
    (3)   any change in any method of accounting or accounting policies by the
Company or any Company Subsidiary.
 
(k)   Commitments and Contracts.  The Company has Previously Disclosed or
provided to the Investors or their representatives, including through the
electronic data room, prior to the date hereof, true, correct, and complete
copies of each of the following to which the Company or any Company Subsidiary
is a party or subject (whether written or oral, express or implied) (each, a
"Company Significant Agreement"):
 
    (1)   any labor contract or agreement with any labor union;
 
    (2)   any contract or agreement which grants any person a right of first
refusal, right of first offer or similar right with respect to any material
properties, assets or businesses of the Company or the Company Subsidiaries;
 
    (3)   any contract containing covenants that limit the ability of the
Company or any Company Subsidiary to compete in any line of business or with any
person or which involve any restriction of the geographical area in which, or
method by which or with whom, the Company or any Company Subsidiary may carry on
its business
 
 
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(other than as may be required by law or applicable regulatory authorities); and
any contract that could require the disposition of any material assets or line
of business of the Company or any Company Subsidiary;
 
    (4)   any joint venture, partnership, strategic alliance, or other similar
contract (including any franchising agreement, but in any event, excluding
introducing broker agreements); and any contract relating to the acquisition or
disposition of any material business or material assets (whether by merger, sale
of stock or assets, or otherwise), which acquisition or disposition is not yet
complete or where such contract contains continuing material obligations or
contains continuing indemnity obligations of the Company or any of the Company
Subsidiaries;
 
    (5)   any real property lease and any other lease with annual rental
payments aggregating $1,000,000 or more;
 
    (6)   other than with respect to loans, any contract providing for, or
reasonably likely to result in, the receipt or expenditure of more than
$3,000,000 on an annual basis, including the payment or receipt of royalties or
other amounts calculated based upon revenues or income;
 
    (7)   any contract or arrangement under which the Company or any of the
Company Subsidiaries is licensed or otherwise permitted by a third party to use
any Intellectual Property that is material to its business (except for any
"shrinkwrap" or "click through" license agreements or other agreements for
software that is generally available to the public and has not been customized
for the Company or the Company Subsidiaries) or under which a third party is
licensed or otherwise permitted to use any Intellectual Property owned by the
Company or any of the Company Subsidiaries;
 
    (8)   any contract that by its terms limits the payment of dividends or
other distributions by the Company or any Company Subsidiary;
 
    (9)   any standstill or similar agreement pursuant to which the Company or
any Company Subsidiary has agreed not to acquire assets or securities of another
person;
 
    (10)   any contract that would prevent, delay or impede the Company's
ability to consummate the transactions contemplated by this Agreement and the
Other Securities Purchase Agreements;
 
    (11)   any contract providing for indemnification by the Company or any
Company Subsidiary of any person, except for immaterial contracts entered into
in the ordinary course of business consistent with past practice;
 
    (12)   other than contracts relating to the ordinary course management of
credit extensions and contracts relating to Other Real Estate Owned, any
contract that contains a put, call, or similar right pursuant to which the
Company or any Company Subsidiary could be required to purchase or sell, as
applicable, any equity interests or assets that have a fair market value or
purchase price of more than $250,000;
 
 
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    (13)   any material employment contract or understanding (including any
understandings or obligations with respect to severance or termination pay,
liabilities or fringe benefits) with any present or former director, officer,
employee or consultant;
 
    (14)   any material plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retirement payment, profit sharing or
similar arrangement with respect to any present or former director, officer,
employee or consultant;
 
    (15)   any contract with any Governmental Entity that imposes any material
obligation or restriction on the Company or the Company Subsidiaries;
 
    (16)   any contract relating to indebtedness of the Company for borrowed
money, letters of credit, capital lease obligations, obligations secured by a
Lien or interest rate or currency hedging agreements (including guarantees in
respect of any of the foregoing, but in any event excluding trade payables,
federal funds purchased, Federal Home Loan Bank advances, securities
transactions and brokerage agreements arising in the ordinary course of business
consistent with past practice, intercompany indebtedness and immaterial leases
for office equipment) in excess of $1,000,000, except for those issued in the
ordinary course of business; and
 
    (17)   any other contract or agreement which is a "material contract" within
the meaning of Item 601(b)(10) of Regulation S-K.
 
Each of the Company Significant Agreements is valid and binding on the Company
and the Company Subsidiaries, as applicable, and in full force and effect.  The
Company and each of the Company Subsidiaries, as applicable, are in compliance
in all material respects with and have performed in all material respects all
obligations required to be performed by them to date under each Company
Significant Agreement.  Neither the Company nor any of the Company Subsidiaries
knows of, or has received notice of, any violation or default (or any condition
which with the passage of time or the giving of notice would cause such a
violation of or a default) by any party under any Company Significant
Agreement.  Consummation of the transactions contemplated by this Agreement will
not place the Company or any of the Company Subsidiaries in breach or default of
any Company Significant Agreement, or trigger any modification, termination or
acceleration thereunder.  Other than as contemplated by the Other Securities
Purchase Agreements, there are no transactions or series of related
transactions, agreements, arrangements or understandings, nor are there any
currently proposed transactions, or series of related transactions between the
Company or any Company Subsidiaries, on the one hand, and the Company, any
current or former director or executive officer of the Company or any Company
Subsidiaries or any person who Beneficially Owns 5% or more of the Common Shares
(or any of such person's immediate family members or Affiliates) (other than
Company Subsidiaries), on the other hand.
 
(l)   Offering of Securities.  Neither the Company nor any person acting on its
behalf has taken any action (including, any offering of any securities of the
Company under circumstances which would require the integration of such offering
with the offering of any of the Securities to be issued pursuant to this
Agreement or any other Transaction Document under
 
 
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the Securities Act and the rules and regulations of the SEC promulgated
thereunder) which would subject the offering, issuance, or sale of any of such
Securities to be issued to the registration requirements of the Securities Act.
 
(m)   Litigation and Other Proceedings; No Undisclosed Liabilities.
 
    (1)   There is no pending or, to the knowledge of the Company, threatened,
claim, action, suit, arbitration, mediation, demand, hearing, investigation or
proceeding against the Company or any Company Subsidiary that (A) involves a
claim that is or that could be, if adversely determined, for damages in excess
of $100,000, or (B) individually or in the aggregate, has prevented or
materially impaired, or would reasonably be expected to prevent or materially
impair, the ability of the Company to consummate the transactions contemplated
hereby. Neither the Company nor any Company Subsidiary is subject to any
injunction, order, judgment or decree, nor are there any proceedings with
respect to the foregoing pending, or to the knowledge of the Company,
threatened.
 
    (2)    Neither the Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature (absolute, accrued, contingent, or
otherwise) which are not appropriately reflected or reserved against in the
financial statements described in Section 2.2(f) to the extent required to be so
reflected or reserved against in accordance with GAAP, except for liabilities
that have arisen since March 31, 2010 in the ordinary course of business
consistent with past practice or pursuant to this Agreement.
 
(n)   Compliance with Laws.  Except as Previously Disclosed, the Company and
each Company Subsidiary:
 
    (1)   is in compliance in all material respects with all, and the condition
and use of its properties does not violate or infringe in any material respect
any, applicable federal, state, local, or foreign laws, statutes, ordinances,
licenses, rules, regulations, judgments, demands, writs, injunctions, orders or
decrees applicable thereto or to employees conducting its business, including
under (A) the laws and regulations implementing the Troubled Asset Relief
Program, (B) the Sarbanes-Oxley Act of 2002, (C) the Equal Credit Opportunity
Act, the Fair Housing Act, and other fair lending and anti-discrimination laws,
(D) the Community Reinvestment Act, (E) the Home Mortgage Disclosure Act, (F)
anti-money laundering, customer identification, know-your-customer and similar
requirements, and (G) sanctions regimes implemented by the Office of Foreign
Assets Control or any other Governmental Entity;
 
    (2)   has all material permits, licenses, franchises, authorizations,
orders, and approvals of, and has made all filings, applications, and
registrations with, Governmental Entities that are required in order to permit
it to own or lease its properties and assets and to carry on its business as
presently conducted and that are material to the business of the Company or such
Company Subsidiary; all such permits, licenses, certificates of authority,
orders and approvals are in full force and
 
 
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effect,  and all such filings, applications and registrations are current, and,
to the knowledge of the Company, no suspension or cancellation of any of them is
threatened;
 
    (3)   to the knowledge of the Company, is not under investigation with
respect to, nor has been threatened by any Governmental Entity to be charged
with or given notice of any material violation of, all applicable federal,
state, local, or foreign laws, statutes, ordinances, licenses, rules,
regulations, judgments, demands, writs, injunctions, orders or decrees; and
 
    (4)   has not, since January 1, 2007, nor has any other person on behalf of
the Company or any Company Subsidiary that qualifies as a "financial
institution" under the U.S. Anti-Money Laundering laws, knowingly acted, by
itself or in conjunction with another, in any act in connection with the
concealment of any currency, securities or other proprietary interest that is
the result of a felony as defined in the U.S. Anti-Money Laundering laws
("Unlawful Gains"), nor knowingly accepted, transported, stored, dealt in or
brokered any sale, purchase or any transaction of other nature for Unlawful
Gains.
 
(o)   Labor.  Employees of the Company and the Company Subsidiaries are not and
have never been represented by any labor union nor are any collective bargaining
agreements otherwise in effect with respect to such employees.  No labor
organization or group of employees of the Company or any Company Subsidiary has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Company's knowledge,
threatened to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority, nor have there been in the last
three years.  There are no organizing activities, strikes, work stoppages,
slowdowns, lockouts, arbitrations or grievances, or other labor disputes pending
or, to the knowledge of the Company, threatened against or involving the Company
or any Company Subsidiary, nor have there been in the last three years.  Each of
the Company and the Company Subsidiaries are in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours.
 
(p)   Company Benefit Plans.
 
    (1)   "Benefit Plan" means all employment agreements, employee benefit and
compensation plans, programs, agreements, contracts, policies, practices, or
other arrangements providing compensation or benefits to any current or former
employee, officer, director or consultant of the Company or any Company
Subsidiary or any beneficiary or dependent thereof that is sponsored or
maintained by the Company or any Company Subsidiary or to which the Company or
any Company Subsidiary contributes or is obligated to contribute or is party,
whether or not written, including without limitation any "employee welfare
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), any "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (whether or not such plan is
subject to ERISA) and any bonus, incentive,
 
 
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deferred compensation, vacation, stock purchase, stock appreciation right, stock
option or equity award, equity-based severance, employment, change of control,
consulting or fringe benefit plan, program, agreement or policy.  Each Benefit
Plan is listed on Section 2.2(p)(1) of the Company's Disclosure Schedule.  True
and complete copies of all Benefit Plans or descriptions thereof are listed on
Section 2.2(p)(1) of the Company's Disclosure Schedule or have been made
available to the Investors prior to the date hereof, including through the
electronic data room. or have been filed with a Company Report.
 
    (2)   With respect to each Benefit Plan, (A) the Company and the Company
Subsidiaries have complied in all material respects, and are now in material
compliance with the applicable provisions of ERISA, and the Internal Revenue
Code of 1986, as amended (the "Code") and all other laws and regulations
applicable to such Benefit Plan and (B) each Benefit Plan has been administered
in all material respects in accordance with its terms.  None of the Company or
the Company Subsidiaries nor any of their respective ERISA Affiliates has
incurred any withdrawal liability as a result of a complete or partial
withdrawal from a multiemployer plan, as those terms are defined in Part I of
Subtitle E of Title IV of ERISA, that has not been satisfied in full.  "ERISA
Affiliate" means any entity, trade or business, whether or not incorporated,
which together with the Company and the Company Subsidiaries, would be deemed a
"single employer" within the meaning of Section 4001 of ERISA or
Sections 414(b), (c), (m) or (o) of the Code.
 
    (3)   Each Benefit Plan which is subject to ERISA (an "ERISA Plan") that is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and that is intended to be qualified under Section 401(a) of
the Code is so qualified, has received a favorable determination letter from the
IRS and nothing has occurred, whether by action or failure to act, that could
likely result in revocation of any such favorable determination or opinion
letter or the loss of the qualification of such Benefit Plan under
Section 401(a) of the Code.  Neither the Company nor any Company Subsidiary has
engaged in a transaction with respect to any ERISA Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could subject
the Company or any Company Subsidiary to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA.  Neither the Company nor
any Company Subsidiary has incurred or reasonably expects to incur a material
tax or penalty imposed by Section 4980F of the Code or Section 502 of ERISA.
 
    (4)   Neither the Company, any Company Subsidiary nor any ERISA Affiliate
(x) sponsors, maintains or contributes to or has within the past six years
sponsored, maintained or contributed to a Pension Plan that is subject to
Subtitles C or D of Title IV of ERISA or (y) sponsors, maintains or has any
liability with respect to or an obligation to contribute to or has within the
past six years sponsored, maintained, had any liability with respect to, or had
an obligation to contribute to a "multiemployer plan" within the meaning of
Section 3(37) of ERISA.
 
 
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    (5)   None of the execution and delivery of this Agreement, the issuance of
Common Stock, nor the Shareholder Approvals or consummation of the transactions
contemplated hereby or by the Other Securities Purchase Agreements, will,
whether alone or in connection with another event, (i) constitute a "change in
control" or "change of control" within the meaning of any Benefit Plan or result
in any material payment or benefit (including without limitation severance,
unemployment compensation, "excess parachute payment" (within the meaning of
Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming
due to any current or former employee, officer, director or consultant of the
Company or any Company Subsidiary from the Company or any Company Subsidiary
under any Benefit Plan or any other agreement with any employee, including, for
the avoidance of doubt, any employment or change in control agreements, (ii)
result in payments under any of the Benefit Plans which would not be deductible
under Section 162(m) or Section 280G of the Code, (iii) materially increase any
compensation or benefits otherwise payable under any Benefit Plan, (iv) result
in any acceleration of the time of payment or vesting of any such benefits,
including, for the avoidance of doubt, the Company Stock Option Plans, (v)
require the funding or increase in the funding of any such benefits, or (vi)
result in any limitation on the right of the Company or any Company Subsidiary
to amend, merge, terminate or receive a reversion of assets from any Benefit
Plan or related trust.
 
    (6)   As of the date hereof, there is no pending or, to the knowledge of the
Company, threatened, litigation relating to the Benefit Plans.  Neither the
Company nor any Company Subsidiary has any obligations for retiree health and
life benefits under any ERISA Plan or collective bargaining agreement, except
for health continuation coverage as required by Section 4980B of the Code or
Part 6 of Title I of ERISA and at no expense to the Company and the Company
Subsidiaries.
 
    (7)   There are no pending or, to the knowledge of the Company, threatened
claims, lawsuits or arbitrations which have been asserted or instituted against
(i) the Benefit Plans, (ii) any fiduciaries thereof with respect to their duties
to the Benefit Plans, or (iii) the assets of any of the trusts under any of the
Benefit Plans.
 
(q)   Status of Securities.  Upon receipt of the Shareholder Approvals (other
than with respect to the Initial Purchased Shares and the Series B Preferred
Shares to be issued at the Second Closing, for which Shareholder Approvals are
not required), the Securities to be issued pursuant to this Agreement and the
Other Securities Purchase Agreements shall have been duly authorized by all
necessary corporate action of the Company.  When issued and sold against receipt
of the consideration therefor as provided in this Agreement and the Other
Securities Purchase Agreements, such Securities will be validly issued, fully
paid and nonassessable, and will not subject the holders thereof to personal
liability and will not be subject to preemptive rights of any other shareholder
of the Company, nor will such issuance result in the violation or triggering of
any price-based antidilution adjustments under any agreement to which the
Company or any Company Subsidiary is a party.
 
(r)   Investment Company.  Neither the Company nor any of the Company
Subsidiaries is an "investment company" as defined under the Investment Company
Act of 1940,
 
 
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as amended, and neither the Company nor any of the Company Subsidiaries sponsors
any person that is such an investment company.
 
(s)   Risk Management; Derivatives.
 
    (1)   The Company and the Company Subsidiaries have in place risk management
policies and procedures sufficient in scope and operation to protect against
risks of the type and in amounts expected to be incurred by persons of similar
size and in similar lines of business as the Company and the Company
Subsidiaries.
 
    (2)   All derivative instruments, including swaps, caps, floors and option
agreements, whether entered into for the Company's own account, or for the
account of one or more of the Company Subsidiaries or their customers, were
entered into (i) only for purposes of mitigating identified risk and in the
ordinary course of business, (ii) in accordance with prudent practices and in
material compliance with all applicable laws, rules, regulations and regulatory
policies, and (iii) with counterparties believed by the Company to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Company or one of the Company Subsidiaries,
enforceable in accordance with its terms.  Neither the Company nor the Company
Subsidiaries, nor, to the knowledge of the Company, any other party thereto, is
in breach of any of its obligations under any such agreement or arrangement.
 
(t)   Foreign Corrupt Practices and International Trade Sanctions.  Neither the
Company nor any Company Subsidiary, nor any of their respective directors,
officers, agents, employees or any other persons acting on their behalf (i) has
violated the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq., as
amended, or any other similar applicable foreign, federal, or state legal
requirement, (ii) has made or provided, or caused to be made or provided,
directly or indirectly, any payment or thing of value to a foreign official,
foreign political party, candidate for office or any other person knowing that
the person will pay or offer to pay the foreign official, party or candidate,
for the purpose of influencing a decision, inducing an official to violate their
lawful duty, securing any improper advantage, or inducing a foreign official to
use their influence to affect a governmental decision, (iii) has paid, accepted
or received any unlawful contributions, payments, expenditures or gifts,
(iv) has violated or operated in noncompliance with any export restrictions,
money laundering law, anti-terrorism law or regulation, anti-boycott regulations
or embargo regulations, or (v) is currently subject to any United States
sanctions administered by the Office of Foreign Assets Control of the United
States Treasury Department.
 
(u)   Environmental Liability.  Except as has not had and would not reasonably
be expected to have a Material Adverse Effect on the Company, the Company and
each Company Subsidiary: (i) are in compliance with all applicable Environmental
Laws; (ii) have not owned or operated any property that has been contaminated
with any Hazardous Substance that could be expected to result in liability for
the Company or any Company Subsidiary pursuant to any Environmental Law; (iii)
are not liable for Hazardous Substance disposal or contamination on any third
party property; (iv) have not received any notice, demand, letter, claim or
request for information in the preceding three years indicating that it may be
in violation of or subject to
 
 
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liability under any Environmental Law; (v) are not subject to any order, decree,
injunction or agreement with any Governmental Entity or any indemnity or other
agreement with any third party relating to liability under any Environmental
Law; (vi) to the Company's knowledge are not subject to any circumstances or
conditions that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use, or transfer of any
property in connection with any Environmental Law; (vii) have not participated
in the management of any borrower or other third party property, or taken any
other actions such that they are reasonably likely to be deemed an owner or
operator of such property for purposes of any Environmental Law and (viii) have
made available to the Investors copies of all environmental reports, studies,
assessments, and memoranda in its possession relating to the Company or the
Company Subsidiaries or any of their current or former properties or operations.
For purposes of this Agreement, "Environmental Law" means any law, regulation,
order, decree, common law or agency requirement relating to the protection of
the environment or human health and safety and "Hazardous Substance" means any
substance that is regulated pursuant to any Environmental Law including any
waste, petroleum products, asbestos, mold and lead products.
 
(v)   Anti-Takeover Provisions.  The Company and the Board of Directors has
taken all actions necessary to ensure that the transactions contemplated by the
Transaction Documents, individually or taken as a whole (including the
investment hereunder), are not subject to the provisions of Sections 14A:10A−1
through 10A−6 of the New Jersey Business Corporation Act (the "NJBCA")
(including, but not limited to, the approval of such transactions by the Board
of Directors and/or shareholders as contemplated by Section 14A:10A−4 of the
NJBCA and Article XIII of the Certificate of Incorporation) or Article XIII of
the Certificate of Incorporation and any other similar provisions of an
anti-takeover nature contained in its organizational documents or the provisions
of any federal or state "anti-takeover", "fair price", "moratorium", "control
share", "supermajority", "affiliate transaction", or "business combination" law,
including any provisions of the NJBCA (each, a "Takeover Law").  In the case
that any such transactions are subject to such provisions or laws, the Board of
Directors has taken and shall take all necessary action to ensure that such
transactions shall be deemed to be exceptions to such provisions or laws,
including, but not limited to, the approval of such transactions as contemplated
under Section 14A:10A−4 of the NJBCA.
 
(w)   Intellectual Property.  (i) The Company and the Company Subsidiaries own
(free and clear of any Liens) or have a valid license to use all Intellectual
Property used in or necessary to carry on their business as currently conducted,
and (ii) such Intellectual Property referenced in clause (i) above is valid,
subsisting and enforceable, and is not subject to any outstanding order,
judgment, decree or agreement adversely affecting the Company's or the Company
Subsidiaries' use of, or rights to, such Intellectual Property.  The Company and
the Company Subsidiaries have sufficient rights to use all Intellectual Property
used in their business as presently conducted, all of which rights shall survive
unchanged the consummation of the transactions contemplated by this
Agreement.  Neither the Company nor any Company Subsidiary has received any
notice of infringement or misappropriation of, or any conflict with, the rights
of others with respect to any Intellectual Property, and no reasonable basis
exists for any such claim.  To the Company's knowledge, no third party has
infringed, misappropriated or otherwise violated the Intellectual Property
rights of the Company or the Company Subsidiaries.  There is no litigation,
opposition, cancellation, proceeding, objection or claim pending, asserted,
 
 
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or, to the Company's knowledge, threatened against the Company or any Company
Subsidiary concerning the ownership, validity, registerability, enforceability,
infringement or use of, or licensed right to use, and Intellectual Property.  To
the knowledge of the Company, none of  the Company or any of the Company
Subsidiaries is using or enforcing any  Intellectual Property owned by or
licensed to the Company or any of the Company Subsidiaries in a manner that
would be expected to result in the abandonment, cancellation or unenforceability
of such Intellectual Property.  The Company and each of the Company Subsidiaries
has taken all reasonable measures to protect the Intellectual Property owned by
or licensed to the Company or any of the Company Subsidiaries.  The computers,
computer software, firmware, middleware, servers, workstations, routers, hubs,
switches, data communications lines, and all other information technology
equipment, and all associated documentation used in the business of the Company
and the Company Subsidiaries (the "IT Assets") operate and perform in all
material respects in accordance with their documentation and functional
specifications and otherwise as required in connection with the business.  To
the knowledge of the Company, no person has gained unauthorized access to the IT
Assets.  The Company and the Company Subsidiaries have implemented reasonable
backup and disaster recovery technology consistent with industry practices.  The
Company and the Company Subsidiaries take reasonable measures, directly or
indirectly, to ensure the confidentiality, privacy and security of customer,
employee and other confidential information.  The Company and the Company
Subsidiaries have complied with all internet domain name registration and other
requirements of internet domain registrars concerning internet domain names that
are used in the business.
 
"Intellectual Property" shall mean trademarks, service marks, brand names,
domain names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including divisions,
continuations, continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, know-how, trade secrets and confidential information and rights in
any jurisdiction to limit the use or disclosure thereof by any person; writings
and other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
 
(x)   Brokers and Finders.  Except for Lazard Middle Market LLC and Keefe,
Bruyette & Woods, Inc., the fees of which have been Previously Disclosed,
neither the Company nor any Company Subsidiary nor any of their respective
officers, directors or employees 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 the
Company or any Company Subsidiary in connection with the Transaction Documents
or the transactions contemplated hereby and thereby.
 
(y)   Regulatory Action.  Except as Previously Disclosed, (1) neither the
Company nor any Company Subsidiary is the subject of any cease-and-desist order,
operating agreement, written agreement, consent decree, memorandum of
understanding, commitment letter, order, directive, extraordinary supervisory
letter, required board of directors resolution or
 
 
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similar action taken, issued or required by any Governmental Entity (each, a
"Regulatory Action"); (2) neither the Company nor any Company Subsidiary has,
since December 31, 2007, been advised by any Governmental Entity that it is
considering a Regulatory Action; and (3) the Company and each Company Subsidiary
is in compliance in all material respects with any Regulatory Action.
 
(z)   Loan Portfolio.
 
    (1)   The aggregate book value of the Company's non-performing assets as of
March 31, 2010 was $86,100,000.
 
    (2)   Each loan, loan agreement, note or borrowing arrangement (including
leases, credit enhancements, commitments, guarantees and interest-bearing
assets) (collectively, "Loans") of the Company or any of the Company
Subsidiaries in original principal amount in excess of $10,000 (i) is evidenced
by notes, agreements or other evidences of indebtedness that are true, genuine
and what they purport to be, (ii) to the extent secured, has been secured by
valid Liens which have been perfected and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
 
    (3)   Except as set forth in Section 2.2(z) of the Disclosure Schedule, none
of the agreements pursuant to which the Company or any of the Company
Subsidiaries has sold Loans or pools of Loans or participations in Loans or
pools of Loans contains any obligation to repurchase such Loans or interests
therein.
 
    (4)   The Company and each Company Subsidiary has complied in all material
respects with, and all documentation in connection with the origination,
processing, underwriting and credit approval of any mortgage loan originated,
purchased or serviced by the Company or any Company Subsidiary satisfied in all
material respects, (A) the Company's and the Company Bank's underwriting
standards (and, in the case of Loans held for resale to investors, the
underwriting standards, if any, of the applicable investors); (B) all applicable
federal, state and local laws, rules and regulations with respect to the
origination, insuring, purchase, sale, pooling, servicing, subservicing, or
filing of claims in connection with mortgage loans, including all laws relating
to real estate settlement procedures, consumer credit protection, truth in
lending laws, usury limitations, fair housing, transfers of servicing,
collection practices, equal credit opportunity and adjustable rate mortgages,
(C) the responsibilities and obligations relating to mortgage loans set forth in
any agreement between the Company or any Company Subsidiary and any Agency, Loan
Investor or Insurer, (D) the applicable rules, regulations, guidelines,
handbooks and other requirements of any Agency, Loan Investor or Insurer and (E)
the terms and provisions of any mortgage or other collateral documents and other
loan documents with respect to each mortgage loan; and
 
 
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    (5)   Since December 31, 2007, no Agency, Loan Investor or Insurer has (A)
claimed in writing that the Company or any Company Subsidiary has violated or
has not complied with the applicable underwriting standards with respect to
mortgage loans sold by the Company or any Company Subsidiary to a Loan Investor
or Agency, or with respect to any sale of mortgage servicing rights to a Loan
Investor, (B) imposed in writing restrictions on the activities (including
commitment authority) of the Company or any Company Subsidiary or (C) indicated
in writing to the Company or any Company Subsidiary that it has terminated or
intends to terminate its relationship with the Company or any Company Subsidiary
for poor performance, poor loan quality or concern with respect to the Company's
or any Company Subsidiary's compliance with laws.
 
    (6)   To the knowledge of the Company, each Loan included in a pool of Loans
originated, acquired or serviced by the Company or any of the Company
Subsidiaries (a "Pool") meets all eligibility requirements (including all
applicable requirements for obtaining mortgage insurance certificates and loan
guaranty certificates) for inclusion in such Pool. All such Pools have been
finally certified or, if required, recertified in accordance with all applicable
laws, rules and regulations, except where the time for certification or
recertification has not yet expired.  To the knowledge of the Company, no Pools
have been improperly certified, and no Loan has been bought out of a Pool
without all required approvals of the applicable investors.
 
    (7)   For purposes of this Section 2.2(z):
 
    (i)   "Agency" shall mean the Federal Housing Administration, the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage Association, the
Government National Mortgage Association, or any other federal or state agency
with authority to (i) determine any investment, origination, lending or
servicing requirements with regard to mortgage loans originated, purchased or
serviced by the Company or any Company Subsidiary or (ii) originate, purchase,
or service mortgage loans, or otherwise promote mortgage lending, including,
without limitation, state and local housing finance authorities;
 
    (ii)   "Loan Investor" shall mean any person (including an Agency) having a
beneficial interest in any mortgage loan originated, purchased or serviced by
the Company or any Company Subsidiary or a security backed by or representing an
interest in any such mortgage loan; and
 
    (iii)   "Insurer" shall mean a person who insures or guarantees for the
benefit of the mortgagee all or any portion of the risk of loss upon borrower
default on any of the mortgage loans originated, purchased or serviced by the
Company or any Company Subsidiary, including the Federal Housing Administration,
the United States Department of Veterans' Affairs, the Rural Housing Service of
the U.S. Department of Agriculture and any private mortgage insurer, and
providers of hazard, title or other insurance with respect to such mortgage
loans or the related collateral.
 
 
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(aa)   Insurance.
 
    (1)   The Company and the Company Subsidiaries are, and will remain
following consummation of the transactions contemplated by the Transaction
Documents, insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
reasonably believes to be prudent and that are of the type customary in the
businesses and location in which the Company and the Company Subsidiaries are
engaged.  The Company and the Company Subsidiaries have not been refused any
insurance coverage sought or applied for, and the Company and the Company
Subsidiaries do not have any reason to believe that they will not be able to
renew their existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
their business at a cost that would not have a Material Adverse Effect on the
Company.
 
    (2)   The Company (i) maintains directors' and officers' liability insurance
and fiduciary liability insurance with financially sound and reputable insurance
companies with benefits and levels of coverage that have been made available to
the Investors, (ii) has timely paid all premiums on such policies and (iii)
there has been no lapse in coverage during the term of such policies.
 
(bb)   Board of Directors.  The Company does not have, and the Board of
Directors have not adopted, any policies, directives or resolutions, or any
amendments to the Company's by-laws or certificate of incorporation not
Previously Disclosed, with respect to qualification or other requirements for
serving as a director on the Board of Directors of the Company or any Company
Subsidiary.
 
(cc)   Other Private Placements.  Concurrently with the execution and delivery
of this Agreement, the Company has agreed to sell Common Shares in the Other
Private Placements on the same economic and financial terms and conditions set
forth in this Agreement, with the closing of such Other Private Placements to
occur simultaneously with the First Closing.  The Company has provided true,
correct and complete copies of the Other Securities Purchase Agreements to the
Investors.  Except for the Other Securities Purchase Agreements, the Company is
not a party to any agreements, understandings, arrangements or commitments with
the counterparties to the Other Securities Purchase Agreements or their
Affiliates. Except for the Transaction Documents, there are no agreements or
other understandings between the Company and any investor party to any Other
Securities Purchase Agreement with respect to any Other Private Placement or
otherwise.
 
(dd)   Related Party Transactions.
 
    (1)   Except as set forth in Section 2.2(dd) of the Disclosure Schedule or
as part of the normal and customary terms of an individual's employment or
service as a director, none of the Company or any of the Company Subsidiaries is
party to any extension of credit (as debtor, creditor, guarantor or otherwise),
contract for goods or services, lease or other agreement with any (A) affiliate,
(B) insider or related interest of an insider, (C) shareholder owning 5% or more
of the outstanding Common Stock
 
 
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or related interest of such a shareholder, or (D) to the knowledge of the
Company, and other than credit and consumer banking transactions in the ordinary
course of business, employee who is not an executive officer.  For purposes of
the preceding sentence, the term "affiliate" shall have the meaning assigned in
Regulation W issued by the Federal Reserve, as amended, and the terms "insider,"
"related interest," and "executive officer" shall have the meanings assigned in
the Federal Reserve's Regulation O, as amended.
 
    (2)   The Company Bank is in compliance with, and has since December 31,
2006, complied with, Sections 23A and 23B of the Federal Reserve Act, its
implementing regulations, and the Federal Reserve's Regulation O.
 
2.3   Representations and Warranties of the Investors.  Each Investor hereby
severally represents and warrants as of the date of this Agreement to the
Company that:
 
(a)   Purchase for Investment.  The Investor acknowledges that the Securities
have not been registered under the Securities Act or under any state securities
laws.  The Investor (1) is acquiring the Securities pursuant to an exemption
from registration under the Securities Act for its own account solely for
investment with no present intention or plan to distribute any of the Securities
to any person nor with a view to or for sale in connection with any distribution
thereof, in each case in violation of the Securities Act, (2) will 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) has such knowledge and experience in
financial and business matters and in investments of this type that the Investor
is capable of evaluating the merits and risks of the investment in the
Securities 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).  Without limiting any of the foregoing, neither the Investor nor any of
its Affiliates has taken, and the Investor will not, and will cause its
Affiliates not to, take any action that would otherwise cause the Securities to
be purchased hereunder to be subject to the registration requirements of the
Securities Act.
 
(b)   Financial Capability.  The Investor will have immediately available funds
necessary to consummate the First Closing and the Second Closing, as of the
respective date of each such closing, on the terms and conditions contemplated
by this Agreement.
 
(c)   Organization and Authority.  The Investor 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 affect the Investor's
ability to perform its obligations under this Agreement or consummate the
transactions contemplated hereby on a timely basis, and the Investor has the
corporate or other power and authority and governmental authorizations to own
its properties and assets and to carry on its business as it is now being
conducted.
 
(d)   Authorization.  (1)  The Investor has the corporate or other power and
authority to enter into this Agreement and to carry out its obligations
hereunder.  The execution,
 
 
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delivery and performance of this Agreement by the Investor and the consummation
of the transactions contemplated hereby have been duly authorized by the
Investor's board of directors, general partner or managing members, as the case
may be (if such authorization is required), and no further approval or
authorization by any of its partners or other equity owners, as the case may be,
is required.  This Agreement has been duly and validly executed and delivered by
the Investor and assuming due authorization, execution and delivery by the
Company, is a valid and binding obligation of the Investor enforceable against
the Investor 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).
 
    (2)   Neither the execution, delivery and performance by the Investor of
this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by the Investor 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 Lien upon any of the properties or assets of
the Investor under any of the terms, conditions or provisions of (i) its
certificate of limited partnership or partnership agreement or similar governing
documents or (ii) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Investor is a
party or by which it may be bound, or to which the Investor or any of the
properties or assets of the Investor may be subject, or (B) violate any law,
statute, ordinance, rule or regulation, permit, concession, grant, franchise or
any judgment, ruling, order, writ, injunction or decree applicable to the
Investor 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 and adversely affect the Investor's ability
to perform its obligations under this Agreement or consummate the transactions
contemplated hereby on a timely basis.
 
    (3)   No notice to, registration, declaration or filing with, exemption or
review by, or authorization, order, consent or approval of, any Governmental
Entity, nor expiration or termination of any statutory waiting period, is
necessary for the consummation by the Investor of the transactions contemplated
by this Agreement.
 
(e)   Ownership.  The Investor is not the owner of record or the Beneficial
Owner of shares of Common Stock or securities convertible into or exchangeable
for Common Stock.
 
(f)   Knowledge as to Conditions.  As of the date of this Agreement, the
Investor does not know of any reason relating to the Investor why any regulatory
approvals and, to the extent necessary, any other approvals, authorizations,
filings, registrations, and notices required or otherwise a condition to the
consummation by it of the transactions contemplated by this Agreement will not
be obtained.
 
 
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(g)   Brokers and Finders.  Neither the Investor nor its Affiliates, any of
their respective officers, directors, employees or agents 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 the Investor, in connection with this Agreement or
the transactions contemplated hereby, in each case, whose fees the Company would
be required to pay.
 
 
ARTICLE III
 
Covenants
 
3.1   Filings; Other Actions.
 
(a)   The Investors and the Company will cooperate and consult with each other
and use reasonable best efforts to prepare and file all necessary documentation,
to effect all necessary applications, notices, petitions, filings, and other
documents, and to obtain all necessary permits, consents, orders, approvals, and
authorizations of, or any exemption by, all third parties and Governmental
Entities, and expiration or termination of any applicable waiting periods,
necessary or advisable to consummate the transactions contemplated by this
Agreement and to perform the covenants contemplated by this Agreement.  Each
party shall execute and deliver both before and after the First Closing and the
Second Closing such further certificates, agreements, and other documents and
take such other actions as the other party may reasonably request to consummate
or implement such transactions or to evidence such events or matters.  In
particular, the Company will use its reasonable best efforts to help the
Investors promptly obtain or submit, as the case may be, as promptly as
practicable, the approvals and authorizations of, filings and registrations
with, and notifications to, or expiration or termination of any applicable
waiting period, all notices to and, to the extent required by applicable law or
regulation, consents, approvals, or exemptions from bank regulatory authorities,
for the transactions contemplated by this Agreement.  The parties hereby agree
that neither any Investor nor any of its Affiliates shall be required by this
Agreement to file any notice to the Federal Reserve pursuant to the CBC Act with
respect to the transactions contemplated by this Agreement.  The Investors and
the Company will each have the right to review in advance, and to the extent
practicable, each will consult with the other, in each case subject to
applicable laws relating to the exchange of information and confidential
information related to the Investors, all the information (other than personal
or sensitive information) relating to such other party, and any of their
respective Affiliates, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement.  In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable.  Each party hereto agrees to keep the other party
apprised of the status of matters relating to completion of the transactions
contemplated hereby.  The Investors and the Company shall promptly furnish each
other to the extent permitted by applicable laws with copies of written
communications received by them or their Affiliates from, or delivered by any of
the foregoing to, any Governmental Entity in respect of the transactions
contemplated by this Agreement or any other Transaction
Document.  Notwithstanding anything to the contrary contained in this Agreement,
the Investors shall not be required to provide any materials to the Company that
it deems private or confidential.
 
 
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(b)   The Company shall call a meeting of its shareholders, as promptly as
practicable after the date hereof, to obtain the Shareholder Approvals,
including, without limitation, (i) amending the Certificate of Incorporation to
increase the number of authorized shares of Common Stock to 100,000,000, and
(ii) approving the issuance of Common Shares and Conversion Shares for purposes
of rule 5635 of NASDAQ's listing rules to the Investors and the investors
participating in the Other Private Placements.  The Board of Directors shall
unanimously recommend (other than the abstentions of Thomas X. Geisel, Bernard
A. Brown, Sidney R. Brown, Anne E. Koons, Ike Brown and Jeffrey S. Brown to the
extent they are members of the Board of Directors) to the Company's shareholders
that such shareholders provide the Shareholder Approvals, and shall not modify
or withdraw such recommendation.  In connection with such meeting, the Company
shall promptly prepare (and the Investors will reasonably cooperate with the
Company to prepare) and file with the SEC a preliminary proxy statement, shall
use its reasonable best efforts to solicit proxies for such shareholder
approval, and shall use its reasonable best efforts to respond promptly to any
comments of the SEC or its staff and to cause a definitive proxy statement
related to such shareholders' meeting to be mailed to the Company's
shareholders, as promptly as practicable, after clearance by the SEC.  The
Company shall notify the Investors promptly of the receipt of any comments from
the SEC or its staff with respect to the proxy statement and of any request by
the SEC or its staff for amendments or supplements to such proxy statement or
for additional information and will supply the Investors with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to such proxy
statement.  If at any time prior to such shareholders' 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
to its shareholders such an amendment or supplement.  The Investors and the
Company each agree to correct promptly any information provided by it or on its
behalf for use in the proxy statement 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 to its shareholders an
amendment or supplement to correct such information to the extent required by
applicable laws and regulations.  The Company shall consult with the Investors
prior to filing with the SEC or mailing any proxy statement, or any amendment or
supplement thereto, and provide the Investors with reasonable opportunity to
comment thereon.  The directors' recommendation described in this Section 3.1
shall be included in the proxy statement filed in connection with obtaining such
shareholder approval.  Immediately upon approval by shareholders of the
amendments to the Certificate of Incorporation as described above, the Company
shall file a certificate of amendment to duly amend the Certificate of
Incorporation to include such amendments.  In the event that any of the
Shareholder Approvals is not obtained at such shareholders' meeting, the Company
shall include a proposal to approve (and the Board of Directors shall
unanimously recommend (other than the abstentions of Thomas X. Geisel, Bernard
A. Brown, Sidney R. Brown, Anne E. Koons, Ike Brown and Jeffrey S. Brown to the
extent they are members of the Board of Directors) such Shareholder Approvals at
a meeting of its shareholders once in the twelve month period beginning on the
Meeting End Date until such approval is obtained or made.  "Meeting End Date"
means (x) if the Second Closing Date has occurred by October 31, 2010, then
February 28, 2011, or (y) if the Second Closing Date has not occurred by October
31, 2010, then the date that is four months after the Second Closing Date.
 
 
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(c)   Each party agrees, upon request, to furnish the other party with all
information concerning itself, its subsidiaries, Affiliates, directors,
officers, partners, and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the proxy statement in connection with
such shareholders' meeting and any other statement, filing, notice, or
application made by or on behalf of such other party or any of its subsidiaries
to any Governmental Entity in connection with this Agreement or the Other
Securities Purchase Agreements.  Notwithstanding anything herein to the
contrary, the Investors shall not be required to furnish the Company with any
(1) sensitive personal biographical or personal financial information of any of
the directors, officers, employees, managers or partners of the Investors or any
of its Affiliates or (2) proprietary and non-public information related to the
organizational terms of, or investors in, the Investors or their Affiliates;
provided, however, that the Investors will furnish such information as
reasonably requested by the applicable bank regulator as necessary to consummate
the transactions contemplated hereby.
 
(d)   From the date of this Agreement, until the earlier of the date of
termination of this Agreement and the date when the Shareholder Approvals have
been obtained, the Company shall not, directly or indirectly, amend, modify, or
waive, and the Board of Directors shall not recommend approval of any proposal
to the shareholders having the effect of amending, modifying, or waiving any
provision in the Certificate of Incorporation or bylaws of the Company in any
manner adverse to the Investors or any other holder of Securities issued
pursuant to this Agreement.
 
(e)   The Company shall take all actions necessary to ensure that none of the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, nor the consummation of the transactions
contemplated as part of the Other Private Placements, nor the Shareholder
Approvals will constitute a "change in control" or "change of control" within
the meaning of any Benefit Plan.
 
3.2   Expenses.
 
(a)   At the First Closing, the Company shall directly reimburse the Investors
for an amount equal to $150,000 in respect of the out-of-pocket fees and
expenses incurred by the Investors in connection with the transactions
contemplated hereby.
 
(b)   At the earlier of (a) the Second Closing and (b) the 70th day after the
First Closing Date (the "Expense Reimbursement Deadline"), the Company shall
directly reimburse the Investors for an amount equal to (x) all out-of-pocket
fees and expenses incurred in connection with due diligence efforts, the
negotiation and preparation of the Transaction Documents and undertaking of the
transactions contemplated by the Transaction Documents, including, but not
limited to, the fees and expenses of the Investors’ accounting, financial and
other advisors, legal counsel and credit review, but excluding the purchase
price for any of the securities to be purchased hereunder (the "Transaction
Expenses"), minus (y) $150,000.
 
(c)   If the Second Closing Date occurs after the Expense Reimbursement
Deadline, at the Second Closing, the Company shall directly reimburse the
Investors for an amount equal to all of the Transaction Expenses incurred by the
Investors and their Affiliates after the Expense Reimbursement Deadline.
 
 
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(d)   In no event, however, shall the aggregate of such reimbursement for the
First Closing, the Expense Reimbursement Deadline and the Second Closing exceed
$450,000.
 
(e)   Other than as set forth in this Section 3.2 and Section 4.6(b), each of
the parties will bear and pay all other costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated under this
Agreement.
 
3.3   Access, Information and Confidentiality.
 
(a)   From the date of this Agreement until the Second Closing Date, the Company
will ensure that upon reasonable notice, the Company and its subsidiaries will
afford to the Investors and their representatives (including employees of the
Investors, and counsel, accountants, financial and investment banking advisors
and other professionals retained by the Investors) such access during normal
business hours to its books, records, properties and personnel and to such other
information as the Investors may reasonably request.
 
(b)   Each party to this Agreement will hold, and will cause its respective
subsidiaries and their directors, officers, employees, agents, consultants, and
advisors to hold, in strict confidence, unless disclosure to a Governmental
Entity is necessary or appropriate in connection with any necessary regulatory
approval or unless compelled to disclose by judicial or administrative process
or, in the written opinion of its counsel, by other requirement of law or the
applicable requirements of any Governmental Entity, all nonpublic records,
books, contracts, instruments, computer data and other data and information
(collectively, "Information") concerning the other party hereto furnished to it
by such other party or its representatives pursuant to this Agreement (except to
the extent that such information can be shown to have been (1) previously known
by such party on a nonconfidential basis, (2) in the public domain through no
fault of such party, or (3) later lawfully acquired from other sources by the
party to which it was furnished), and neither party hereto shall release or
disclose such Information to any other person, except its auditors, attorneys,
financial advisors, other consultants, and advisors and, to the extent permitted
above, to bank regulatory authorities.
 
(c)   The Company shall promptly provide the Investors with written notice of
the occurrence of any circumstance, event, change, development or effect
occurring after the date hereof and prior to the First Closing Date and relating
to the Company or any Company Subsidiary of which the Company has knowledge and
which constitutes a Material Adverse Effect or may otherwise cause or render any
of the representations and warranties of the Company set forth in this Agreement
to be inaccurate.
 
3.4   Conduct of the Business.  Prior to the earlier of the First Closing Date
and the termination of this Agreement pursuant to Section 5.1 (the "Pre-Closing
Period"), the Company shall, and shall cause each Company Subsidiary to, (i)
conduct its business in the ordinary course consistent with past practice,
(ii) use reasonable best efforts to preserve intact its current business
organizations and its rights and permits issued by Governmental Entities, keep
available the services of its current officers and key employees and preserve
its relationships with customers, suppliers, Governmental Entities and others
having business dealings with it to the end that its goodwill and ongoing
businesses shall be unimpaired and (iii) not take any action that would
reasonably be expected to materially adversely affect or materially delay the
receipt
 
 
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of any approvals of any Governmental Entity required to consummate the
transactions contemplated hereby or by the Other Securities Purchase Agreements
or materially adversely affect or materially delay the consummation of the
transactions contemplated hereby or by the Other Securities Purchase Agreements.
 
3.5   Reasonable Efforts.  The Company agrees to use its best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the Investors in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement and the Other
Securities Purchase Agreements, including using best efforts to accomplish the
following:  (a) the taking of all reasonable acts necessary to cause the
conditions to the First Closing and the Second Closing to be satisfied; (b) the
mailing of the definitive proxy statement to the Company's shareholders promptly
following clearance from the SEC; (c) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings and the taking of all
reasonable steps necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by any Governmental Entity; (d) the obtaining of all
necessary consents, approvals or waivers from third parties; and (e) executing
and delivering any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement and the Other Securities Purchase Agreements.
 
3.6   Company Forbearances.  During the Pre-Closing Period, other than as
approved by the Investors in writing, the Company shall not, and shall not
permit any Company Subsidiary to:
 
(a)   (i) adjust, split, combine or reclassify any of its capital stock; (ii)
set any record or payment dates for the payment of any dividends or
distributions on its capital stock or make, declare or pay any dividend or make
any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exercisable or exchangeable for any shares of
its capital stock or stock appreciation rights or grant any person any right to
acquire any shares of its capital stock; or (iii) issue or commit to issue any
additional shares of capital stock (except pursuant to the exercise of options
and restricted stock unit grants outstanding as of the date hereof and disclosed
in the Company's Disclosure Schedule), convertible debt or any securities
convertible into or exercisable or exchangeable for, or any rights, warrants or
options to acquire, any additional shares of capital stock (including options)
or convertible debt, it being understood and agreed that for purposes of this
Section 3.6(a), and only for such purposes, the Pre-Closing Period shall
terminate on the earlier to occur of (x) the Second Closing Date, (y) the
termination of this Agreement and (z) the date of a Second Closing Termination;
 
(b)   (i) increase the compensation or benefits of any employee of the Company
or any Company Subsidiary (except (x) for increases in salary or wages of
employees of the Company or any Company Subsidiary in the ordinary course of
business consistent with past practice, provided that no such increase shall
result in an annual adjustment of more than 5% of the aggregate base salary and
wages payable by the Company and the Company Subsidiaries during 2009 and (y)
pursuant to the Company's Benefit Plans as described on the Company's Disclosure
Schedule); (ii) except as required by law, grant any severance or termination
pay to
 
 
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any employee of the Company or any Company Subsidiary except pursuant to the
terms of any Plan in effect on the date of this Agreement and which was made
available to the Investors prior to the date of this Agreement and disclosed in
the Company's Disclosure Schedule; (iii) loan or advance any money or other
property to any employees of the Company or any Company Subsidiary other than in
the ordinary course of business consistent with past practice; (iv) (x)
establish, adopt, enter into, amend or terminate, or (y) grant (other than in
the ordinary course of business consistent with past practice), any waiver or
consent under, any Benefit Plan or any plan, agreement, program, policy, trust,
fund or other arrangement that would be a Benefit Plan if it were in existence
as of the date of this Agreement; or (v) grant or amend or modify any equity or
equity-based awards (including options and restricted stock units);
 
(c)   (i)  incur any indebtedness for borrowed money, other than (x) deposit
liabilities, FHLB advances, advances from the Federal Reserve discount window,
Fed funds purchases, guarantees and letters of credit on behalf of Company Bank
customers and repurchase agreements, in each case entered into in the ordinary
course of business consistent with past practice and, in the case of repurchase
agreements, with a final maturity of five years or less, or (y) indebtedness
incurred in the ordinary course of business consistent with past practice in
order to finance working capital (subject in the case of this clause (y) to an
aggregate maximum amount of $5,000,000), (ii) guarantee, endorse or assume
responsibility for, the obligations of any person other than any wholly-owned
Subsidiary of the Company (other than the endorsement of checks and other
negotiable instruments in the normal process of collection) or (iii) redeem,
repurchase, prepay, defease, or cancel, or modify in any material respect the
terms of, indebtedness for borrowed money, other than (x) deposit liabilities,
FHLB advances and reverse repurchase agreements in each case in the ordinary
course of business consistent with past practice or (y) in accordance with the
terms of the applicable instrument as in effect on the date hereof;
 
(d)   (i)  settle any action involving claims against the Company or any Company
Subsidiary resulting in monetary damages or other payments in excess of
$100,000, or (ii) agree or consent to the issuance of any order restricting or
otherwise affecting its business or operations, or, in each case, that would
cause the Company or any Company Subsidiary to breach a representation, warranty
or covenant contained in this Agreement or would otherwise adversely affect the
rights of the Investors under this Agreement;
 
(e)   amend its certificate of incorporation, bylaws or similar governing
documents (other than for the purpose of effectuating the transactions as
contemplated by the Transaction Documents), or enter into a plan of
consolidation, merger, share exchange, reorganization or complete or partial
liquidation with any person (other than consolidations, mergers or
reorganizations solely among wholly-owned Company Subsidiaries), or a letter of
intent or agreement in principle with respect thereto;
 
(f)   make any changes in its accounting methods or method of Tax accounting,
practices or policies, except as may be required under Law or GAAP, in each case
following consultation with the Company's independent public accountants or tax
advisors;
 
(g)   except as required by law, make or change any Tax election, file any
amended Tax Returns, settle or compromise any material Tax liability of the
Company or any of the
 
 
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Company Subsidiaries, agree to an extension or waiver of the statute of
limitations with respect to the assessment or determination of Taxes of the
Company or any of its Subsidiaries, enter into any closing agreement with
respect to any Tax or surrender any right to claim a Tax refund;
 
(h)   amend any Other Securities Purchase Agreement;
 
(i)   sell any assets or deposits of the Company Bank other than dispositions of
other real estate owned (OREO) in the ordinary course of business; or
 
(j)   agree to, or make any commitment to, take any of the actions prohibited by
this Section 3.6 or that would otherwise materially adversely affect or
materially delay the consummation of the transactions contemplated hereby or by
the other Transaction Documents.
 
3.7   Shareholder Litigation.  The Company shall promptly inform the Investors
of any claim, action, suit, arbitration, mediation, demand, hearing,
investigation or proceeding ("Shareholder Litigation") against the Company, any
Company Subsidiary or any of the past or present executive officers or directors
of the Company or any Company Subsidiary that is threatened or initiated by or
on behalf of any shareholder of the Company in connection with or relating to
the OCC Agreement or the transactions contemplated hereby or by the Other
Securities Purchase Agreements.  The Company shall consult with the Investors
and keep the Investors informed of all material filings and developments
relating to any such Shareholder Litigation.
 
ARTICLE IV
 
Additional Agreements
 
4.1   No Rights Agreement.  From the date hereof through such time during which
the Investors collectively, together with their Affiliates, own at least 5% of
the outstanding shares of Common Stock of the Company, the Company shall not
enter into any poison pill agreement, shareholders' rights plan or similar
agreement that shall limit the rights of the Investors and their Affiliates and
associates to hold any shares of Common Stock or acquire additional securities
of the Company unless such poison pill agreement, shareholders' rights plan or
similar agreement grants an exemption or waiver to the Investors and their
Affiliates and associates and any group in which the Investors may become a
member of, immediately effective upon execution of such plan or agreement that
would allow the Investors and their Affiliates and associates to acquire such
additional securities of the Company.
 
4.2   Governance Matters.
 
(a)   The Company hereby agrees that, from and after the First Closing Date, for
so long as the Investor, together with its Affiliates owns any Common Shares and
(B) on or after the Second Closing, owns 6.0% or more of all of the outstanding
shares of Common Stock (counting for such purposes all shares of Common Stock
into or for which the securities of the Company owned by the Investors are
directly or indirectly convertible or exercisable and excluding as shares owned
and outstanding all Common Shares issued by the Company after the Second Closing
Date other than as contemplated by this Agreement), the Company shall, subject
 
 
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to applicable law, invite a person designated by the Investors (the "Board
Observer") to attend meetings of the Board of Directors (or any committee
thereof) and the board of directors of the Company Bank (or any committee
thereof) in a nonvoting observer capacity.  The Board Observer shall be required
to comply with all policies and procedures applicable to members of the Board of
Directors and the board of directors of the Company Bank relating to
confidentiality, insider trading and other compliance policies.  If the
Investors collectively, together with their Affiliates, no longer beneficially
own the minimum number of shares of Common Stock as specified in the first
sentence of this Section 4.2(a), the Investors shall have no further rights
under this Section 4.2(a).
 
(b)   The Board Observer shall be entitled to reimbursement for documented,
reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors (or any committee thereof) and the board of directors of the Company
Bank (or any committee thereof), to the same extent as other members of the
Board of Directors and the board of directors of the Company Bank.  The Company
shall notify the Board Observer of all regular meetings and special meetings of
the Board of Directors and the board of directors of the Company Bank and of all
regular and special meetings of any committee thereof. The Company shall provide
the Board Observer with copies of all notices, minutes, consents and other
material that it provides to all other members of the Board of Directors or the
Company Bank concurrently as such materials are provided to the other members.  
 
(c)   Effective immediately following the next annual meeting of shareholders of
the Company following the date of this Agreement (the "Annual Meeting"), the
number of directors on the Board of Directors and the board of directors of the
Company Bank shall not exceed twelve, comprised as set forth in Section 4.2(i)
of the Company's Disclosure Schedule.  The Company agrees to request that any
current member of the Board of Directors and the board of directors of the
Company Bank who will not be nominated for reelection at the Annual Meeting
resign from the Board of Directors and the board of directors of the Company
Bank, effective as of the earlier to occur of (i) 45 days after the date hereof
and (ii) the filing of the Company's preliminary proxy statement relating to the
annual meeting with the SEC.
 
(d)   The Company and the Board of Directors shall not take any action that
would result in any amendment to the governing documents of the Company or the
Company Bank inconsistent with the provisions of this Section 4.2.
 
4.3   Legend.
 
(a)   The Investors agree that all certificates or other instruments
representing the Securities subject to this Agreement will bear a legend
substantially to the following effect:
 
"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
 
 
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PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS."
 
(b)   Upon request of the Investors, upon receipt by the Company of an opinion
of counsel reasonably satisfactory to the Company and its counsel to the effect
that such legend is no longer required under the Securities Act or applicable
state laws, as the case may be, the Company shall promptly cause the legend to
be removed from any certificate for any securities.  The Investors acknowledge
that the Securities have not been registered under the Securities Act or under
any state securities laws and agrees that it will 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.
 
4.4   Certain Transactions.
 
(a)   The Company will not merge or consolidate into, or sell, transfer or lease
all or substantially all of its property or assets to, any other party unless
the successor, transferee or lessee party, as the case may be (if not the
Company), or, at the request of the Investors, the ultimate parent of such
successor, transferee or lessee party of the Company, expressly assumes the due
and punctual performance and observance of each and every covenant and condition
of this Agreement to be performed and observed by the Company.
 
(b)   Other than with respect to the Series B Preferred Stock, from and after
the First Closing through and including December 31, 2012, the Company shall not
set any record or payment dates for the payment of any cash dividends or cash
distributions on its capital stock or make, declare or pay any cash dividend or
make any other cash distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exercisable or exchangeable for any shares of
its capital stock or stock appreciation rights.
 
4.5   Indemnity.
 
(a)   The Company agrees to indemnify and hold harmless the Investors and their
Affiliates and each of their respective officers, directors, partners, members,
stockholders, managers, employees and agents, to the fullest extent lawful, from
and against any and all actions, suits, claims, proceedings, costs, losses,
liabilities, damages, expenses (including reasonable attorneys' fees and
disbursements), amounts paid in settlement and other costs (collectively,
"Losses") arising out of or resulting from (1) any inaccuracy in or breach of
the Company's representations or warranties in Section 2.2 of this Agreement or
any certificate delivered by or on behalf of the Company pursuant to this
Agreement, (2) the Company's breach of agreements or covenants made by the
Company in this Agreement or (3) any Losses arising out of or resulting from any
legal, administrative or other proceedings instituted by any Governmental
Entity, shareholder of the Company or any other person (other than the Investors
and their Affiliates and the Company and the Company Subsidiaries) arising out
of the transactions contemplated by this Agreement (other than any Losses
attributable to the acts, errors or omissions on the part of the Investors, but
not including the transactions contemplated hereby).
 
 
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(b)   Each Investor agrees to severally indemnify and hold harmless each of the
Company and its Affiliates and each of their respective officers, directors,
partners, employees and agents, to the fullest extent lawful, from and against
any and all Losses arising out of or resulting from (1) any inaccuracy in or
breach of such Investor's representations or warranties in Section 2.3 of this
Agreement or (2) such Investor's breach of agreements or covenants made by the
Investor in this Agreement.
 
(c)   A party entitled to indemnification hereunder (each, an "Indemnified
Party") shall give written notice to the party indemnifying it (the
"Indemnifying Party") of any claim with respect to which it seeks
indemnification promptly after the discovery by such Indemnified Party of any
matters giving rise to a claim for indemnification; provided that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4.5 unless and to the
extent that the Indemnifying Party shall have been actually prejudiced by the
failure of such Indemnified Party to so notify such party.  Such notice shall
describe in reasonable detail such claim.  In case any such action, suit, claim
or proceeding is brought against an Indemnified Party, the Indemnified Party
shall be entitled to hire, at its own expense, separate counsel and conduct the
defense thereof; provided, however, that the Indemnifying Party shall be
entitled to assume and conduct the defense thereof, unless the counsel to the
Indemnified Party advises the Indemnifying Party in writing that such claim
involves a conflict of interest (other than one of a monetary nature) that would
reasonably be expected to make it inappropriate for the same counsel to
represent both the Indemnifying Party and the Indemnified Party, in which event
the Indemnified Party shall be entitled to retain its own counsel at the cost
and expense of the Indemnifying Party (except that the Indemnifying Party shall
only be liable for the legal fees and expenses of one law firm for all
Indemnified Parties, taken together with respect to any single action or group
of related actions).  If the Indemnifying Party assumes the defense of any
claim, all Indemnified Parties shall thereafter deliver to the Indemnifying
Party copies of all notices and documents (including court papers) received by
the Indemnified Party relating to the claim, and any Indemnified Party shall
cooperate in the defense or prosecution of such claim.  Such cooperation shall
include the retention and (upon the Indemnifying Party's request) the provision
to the Indemnifying Party of records and information that are reasonably
relevant to such claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder.  The Indemnifying Party shall not be liable for any settlement of any
action, suit, claim or proceeding effected without its written consent;
provided, however, that the Indemnifying Party shall not unreasonably withhold,
delay or condition its consent.  The Indemnifying Party further agrees that it
will not, without the Indemnified Party's prior written consent (which shall not
be unreasonably withheld or delayed), settle or compromise any claim or consent
to entry of any judgment in respect thereof in any pending or threatened action,
suit, claim or proceeding in respect of which indemnification has been sought
hereunder unless such settlement or compromise includes an unconditional release
of such Indemnified Party from all liability arising out of such action, suit,
claim or proceeding.
 
(d)   For purposes of the indemnity contained in Sections 4.5(a)(1) and
4.5(b)(1), all qualifications and limitations set forth in the parties'
representations and warranties as to "materiality," "Material Adverse Effect"
and words of similar import, shall be disregarded in determining (i) whether
there shall have been any inaccuracy in or breach of any
 
 
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representations and warranties in this Agreement and (ii) the amount of Losses
in respect of any breach of any representation or warranty.
 
(e)   The Company shall not be required to indemnify the Indemnified Parties
pursuant to Section 4.5(a)(1) (1) with respect to any claim for indemnification
if the amount of Losses with respect to such claim and all related claims are
less than $50,000 (any claim or series of related claims involving Losses less
than such amount being referred to as a "De Minimis Claim") and (2) unless and
until the aggregate amount of all Losses incurred with respect to all claims
(other than De Minimis Claims) pursuant to Section 4.5(a)(1) exceed $250,000
(the "Threshold Amount"), in which event the Company shall be responsible for
the entire amount of such Losses.   No Investor shall be required to indemnify
the Indemnified Parties pursuant to Section 4.5(b)(1) (1) with respect to any De
Minimis Claim and (2) unless and until the aggregate amount of all Losses
incurred with respect to all claims (other than De Minimis Claims) pursuant to
Section 4.5(b)(1) exceed the Threshold Amount, in which event such Investor
shall be responsible for the entire amount of such Losses.  The cumulative
indemnification obligation of (1) the Company to each Investor and all of the
Indemnified Parties affiliated with (or whose claims are permitted by virtue of
their relationship with) the Investor or (2) the Investor to the Company and the
Indemnified Parties affiliated with (or whose claims are permitted by virtue of
their relationship with) the Company, in each case for inaccuracies in or
breaches of representations and warranties, shall in no event exceed such
Investor’s pro rata share of the Purchase Price.
 
(f)   Any claim for indemnification pursuant to this Section 4.5 for breach of
any representation or warranty can only be brought on or prior to the eighteen
month anniversary of the Second Closing Date (other than a claim for a breach of
the representations and warranties in Section 2.2(c), which may be brought
indefinitely, and the representations and warranties in Sections 2.2(i), which
may be brought until 90 days after the expiration of the applicable statutory
periods of limitations); provided that if notice of a claim for indemnification
pursuant to this Section 4.5 for breach of any representation or warranty is
brought prior to the end of such period, then the obligation to indemnify in
respect of such breach shall survive as to such claim, until such claim has been
finally resolved.
 
(g)   The obligations of the Indemnifying Party under this Section 4.5 shall
survive the transfer or redemption of the Common Stock issued pursuant to this
Agreement, or the Closing or termination of this Agreement.  The indemnity
provided for in this Section 4.5 shall be the sole and exclusive monetary remedy
of Indemnified Parties after the Closing for any inaccuracy of any of the
representations and warranties contained in Sections 2.2 and 2.3 of this
Agreement or any other breach of any covenant or agreement contained in this
Agreement; provided that nothing herein shall limit in any way any such parties'
remedies in respect of fraud, intentional misrepresentation or omission or
intentional misconduct by the other party in connection with the transactions
contemplated hereby.  No party to this Agreement (or any of its Affiliates)
shall, in any event, be liable or otherwise responsible to any other party (or
any of its Affiliates) for any consequential or punitive damages of such other
party (or any of its Affiliates) arising out of or relating to this Agreement or
the performance or breach hereof.  The indemnification rights contained in this
Section 4.5 are not limited or deemed waived by any investigation or knowledge
by the Indemnified Party prior to or after the date hereof.
 
 
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(h)   The indemnity provided for in this Section 4.5 shall be the sole and
exclusive monetary remedy of Indemnified Parties after the First Closing for any
inaccuracy of any representation or warranty or any other breach of any covenant
or agreement contained in this Agreement; provided that nothing herein shall
limit in any way any such party's remedies in respect of fraud by any other
party in connection with the transactions contemplated hereby. No party to this
Agreement (or any of its Affiliates) shall, in any event, be liable or otherwise
responsible to any other party (or any of its Affiliates) for any consequential,
indirect, incidental or punitive damages of such other party (or any of its
Affiliates) arising out of or relating to this Agreement or the performance or
breach hereof. For the purposes of this Section 4.5, a diminution in value of
the Securities will not constitute consequential, indirect or incidental
damages, and shall constitute "Losses" for which indemnification may be provided
pursuant to this Section 4.5.
 
(i)   Any indemnification payments pursuant to this Section 4.5 shall be treated
as an adjustment to the Purchase Price for the Purchased Shares for U.S. federal
income and applicable state and local Tax purposes, unless a different treatment
is required by applicable law.
 
4.6    Registration Rights.
 
(a)    Registration.
 
    (1)   Subject to the terms and conditions of this Agreement, the Company
covenants and agrees that no later than the date that is 12 months after the
Second Closing Date (the "Registration Deadline"), the Company shall have
prepared and filed with the SEC a Shelf Registration Statement (defined below)
covering all Registrable Securities (or otherwise designate an existing Shelf
Registration Statement filed with the SEC to cover the 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 promptly as practicable after
the filing thereof 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 such time as there are no Registrable Securities remaining
(including by refiling such Shelf Registration Statement (or a new Shelf
Registration Statement) if the initial Shelf Registration Statement
expires).  If the Company is a well-known seasoned issuer (as defined in Rule
405 under the Securities Act) at the time of filing of the Shelf Registration
Statement with the SEC, such Shelf Registration Statement shall be designated by
the Company as an automatic Shelf Registration Statement.
 
    (2)   Any registration pursuant to this Section 4.6(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 Investors 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
 
 
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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 4.6(c);
provided, that the Company shall not be required to facilitate an underwritten
offering of Registrable Securities unless the expected gross proceeds from such
offering exceed $10,000,000.  The lead underwriters in any such distribution
shall be selected by the holders of a majority of the Registrable Securities to
be distributed and be reasonably acceptable to the Company.
 
    (3)   The Company shall not be required to effect a registration (including
a resale of Registrable Securities from an effective Shelf Registration
Statement) or an underwritten offering pursuant to this Section 4.6(a):  (i)
with respect to securities that are not Registrable Securities; (ii) during any
Scheduled Black-out Period; or (iii) if the Company has notified the Investors
and all other Holders that in the good faith judgment of the Board of Directors,
it would be materially detrimental to the Company or its security holders for
such registration or underwritten offering to be effected at such time, in which
event the Company shall have the right to defer such registration or
underwritten offering for a period of not more than 60 days after receipt of the
request of the Investors or any other Holder; provided that such right to delay
a registration or underwritten offering shall be exercised by the Company (A)
only if the Company has generally exercised (or is concurrently exercising)
similar black-out rights against holders of similar securities that have
registration rights and (B) not more than twice in any 12-month period and not
more than 60 days in the aggregate in any 12-month period.
 
    (4)   After the First Closing Date, whenever the Company proposes to
register any of its equity securities, other than a registration pursuant to
Section 4.6(a)(1) 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 will give prompt written notice to the
Investors and all other Holders of its intention to effect such a registration
(but in no event less than 15 days prior to the anticipated filing date) and
(subject to clause (6) below) will 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 4.6(a)(4) prior to the
effectiveness of such registration, whether or not the Investors or any other
Holders have elected to include Registrable Securities in such
registration.  "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 management or employees of the Company or Company Subsidiaries or in
connection with dividend reinvestment plans.
 
 
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    (5)   If the registration referred to in Section 4.6(a)(4) is proposed to be
underwritten, the Company will so advise the Investors and all other Holders as
a part of the written notice given pursuant to Section 4.6(a)(4).  In such
event, the right of the Investors and all other Holders to registration pursuant
to this Section 4.6(a) will be conditioned upon such persons' participation in
such underwriting and the inclusion of such persons' Registrable Securities in
the underwriting, and each such person will (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 Investors.
 
    (6)   The Company represents and warrants that, other than in connection
with the Other Securities Purchase Agreements, it has not granted to any holder
of its securities and agrees that it shall not grant "piggyback" registration
rights to one or more third parties to include their securities in the Shelf
Registration Statement or in an underwritten offering under the Shelf
Registration Statement pursuant to Section 4.6(a)(2).  If a Piggyback
Registration under Section 4.6(a)(4) relates to an underwritten primary offering
on behalf of the Company, and 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 will 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 will be so included in the following order of priority: (i) first, in
the case of a Piggyback Registration under Section 4.6(a)(4), the securities the
Company proposes to sell, (ii) second, Registrable Securities of the Investors
and all other Holders who have requested registration of Registrable Securities
pursuant to Section 4.6(a)(2) or 4.6(a)(4), as applicable, 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 this Agreement.
 
(b)   Expenses of Registration.  All Registration Expenses incurred in
connection with any registration, qualification or compliance hereunder shall be
borne by the Company.  The Company shall bear its internal expenses (including,
without limitation, all salaries and expenses of their officers and employees
performing legal, accounting or other duties) and expenses of any person,
including special experts, retained by the Company.  The Company shall also
reimburse the Investors for the reasonable fees and disbursements of legal
counsel to the Investors in an amount not to exceed $25,000 per
registration.  All Selling Expenses incurred in connection with any
registrations hereunder shall be borne by the holders of the securities so
registered pro rata on the basis of the aggregate offering or sale price of the
securities so registered.
 
 
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(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 remain a well-known seasoned issuer (as
defined in Rule 405 under the Securities Act) if it becomes eligible for such
status in the future (and 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:
 
    (1)   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 this Section 4.6(c), and keep such
registration statement effective or such prospectus supplement current until the
securities described therein are no longer Registrable Securities.
 
    (2)   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.
 
    (3)   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.
 
    (4)   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.
 
    (5)   Notify each Holder 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.
 
    (6)   Give written notice to the Holders:
 
 
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    (i)   when any registration statement filed pursuant to Section 4.6(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 Exchange Act)
and when such registration statement or any post-effective amendment thereto has
become effective;
 
    (ii)   of any request by the SEC for amendments or supplements to any
registration statement or the prospectus included therein or for additional
information;
 
    (iii)   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;
 
    (iv)   of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the Common
Stock for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
 
    (v)   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
 
    (vi)   if at any time the representations and warranties of the Company
contained in any underwriting agreement contemplated by Section 4.6(c)(10) cease
to be true and correct.
 
    (7)   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 4.6(c)(6)(iii) at the earliest practicable
time.
 
    (8)   Upon the occurrence of any event contemplated by Section 4.6(c)(5) or
4.6(c)(6)(v), 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 will 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.  If the Company
notifies the Holders in accordance with Section 4.6(c)(6)(v) to suspend the use
of the prospectus until the requisite changes to the prospectus have been made,
then the Holders and any underwriters shall suspend use of such prospectus and
use their reasonable best efforts to return to the Company all copies of such
prospectus (at the Company's expense) other than permanent file copies then in
such Holder's or underwriter's possession.  The total number of days that any
such suspension may be in effect in any 180-day period shall not exceed 30 days.
 
 
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    (9)   Use its 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).
 
    (10)   If an underwritten offering is requested pursuant to Section
4.6(a)(2), 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 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 shareholders and the managing
underwriter(s), if any, with respect to the business of the Company and its
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 "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 Shelf Registration Statement)
who have certified the financial statements included in such Shelf 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 "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.
 
    (11)   Make available for inspection by a representative of Holders that are
selling shareholders, 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 (and of the type customarily provided in
connection with due diligence conducted in connection with a registered public
offering of securities) by
 
 
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any such representative, managing underwriter(s), attorney or accountant in
connection with such Shelf Registration Statement.
 
    (12)   Cause all such Registrable Securities (other than the Series B
Preferred Stock, unless such Series B Preferred Stock has not converted into
Common Stock within the first anniversary of the date of this Agreement;
provided that the Company shall have no obligation to cause the listing of the
Series B Preferred Stock if it is not eligible for listing on the national
securities exchange on which the Common Stock is then listed) to be listed on
each securities exchange on which similar securities issued by the Company are
then listed or, if no similar securities issued by the Company are then listed
on any securities exchange, use its reasonable best efforts to cause all such
Registrable Securities to be listed on the New York Stock Exchange or NASDAQ, as
determined by the Company.
 
    (13)   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.
 
    (14)   Timely provide to its security holders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
 
(d)   Suspension of Sales.  During any Scheduled Black-out Period and 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
until termination of such Scheduled Black-out Period or 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 the prospectus supplement may be
resumed.  The total number of days that any such suspension may be in effect in
any 180-day period shall not exceed 45 days.
 
(e)   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.
 
(f)   Free Writing Prospectuses; Information.
 
 
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    (1)   No 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 4.6 that the Investors and/or the selling
Holders 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 reasonably
required to effect the registered offering of their Registrable Securities.  The
Company shall not name the Investors or any of their Affiliates as
"underwriters" in any registration statement without the prior written consent
of the Investors; provided, however, that if such prior written consent is not
provided upon the Company's request (which request shall only be made if staff
of the SEC requests naming any Investor as a "statutory underwriter" and after
the Company uses its reasonable efforts to negotiate with the staff of the SEC
with a view to not naming any Investor as an "underwriter"), the Investors and
any of their Affiliates shall not be eligible to include Registrable Securities
in the applicable registration statement.
 
 
(g)   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,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon (i) an 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 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
 
 
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"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.
 
    (2)   If the indemnification provided for in Section 4.6(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 4.6(g)(2) 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 4.6(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.
 
(h)   Assignment of Registration Rights.  The rights of the Investors to
registration of Registrable Securities pursuant to Section 4.6 may be assigned
by the Investors to a transferee or assignee of Registrable Securities to which
there is transferred to such transferee no less than $10,000,000 in Registrable
Securities in the aggregate including Registrable Securities acquired from other
investors party to Other Securities Purchase Agreements; 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.  Notwithstanding the foregoing, the rights of the Investors to
registration of Registrable Securities pursuant to Section 4.6 may be assigned
to any Permitted Transferee of the Investors under Section 4.12 to which there
is transferred to such Permitted Transferee any Registrable Securities,
regardless of amount; 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.
 
(i)   Holdback.  With respect to any underwritten offering of Registrable
Securities by the Investors or other Holders pursuant to Section 4.6, 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 Shelf Registration Statement (other than such registration or a Special
Registration) covering any of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
period not to exceed 30 days prior and 90 days following the effective date of
such offering or such longer period up to 180 days as may be requested by the
managing underwriter.  The Company also agrees to use its reasonable best
efforts to cause each of its directors and senior executive officers to execute
and deliver
 
 
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customary lockup agreements in such form and for such time period up to 180 days
as may be requested by the managing underwriter.
 
(j)   "Market Stand-Off" Agreement; Agreement to Furnish Information.  The
Investors and each Holder hereby agrees:
 
    (1)   that the Investors shall not sell, transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale with respect to any common
equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any common equity securities of the Company held
by the Investors (other than those included in the registration) for a period
specified by the representatives of the underwriters of the common equity or
equity-related securities not to exceed ten days prior to and 90 days following
the effective date of any firm commitment underwritten registered sale of common
equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any common equity securities of the Company by
the Company that raises aggregate gross proceeds of at least $10,000,000 for the
Company's own account in which the Company gave the Investors an opportunity to
participate in accordance with Section 4.6(a)(4); provided that all executive
officers and directors of the Company enter into similar agreements and only if
such persons remain subject thereto (and are not released from such agreement)
for such period; provided that nothing herein will prevent the Investors from
making any distribution of Registrable Securities to the partners or
shareholders  or other equity owners thereof or a transfer to an Affiliate or
Permitted Transferee that is otherwise in compliance with applicable securities
laws, so long as such distributees or transferees agree to be bound by the
restrictions set forth in this Section 4.6(j);
 
    (2)   to execute and deliver such other agreements as may be reasonably
requested by the Company or the representatives of the underwriters which are
consistent with the foregoing obligation in Section 4.6(j)(1) or which are
necessary to give further effect thereto; and
 
    (3)   if requested by the Company or the representative of the underwriters
of Common Stock (or other securities of the Company), each Investor shall
provide, within ten days of such request, such information as may be reasonably
required by the Company or such representative in connection with the completion
of any public offering of the Company's securities pursuant to a registration
statement filed under the Securities Act in which the Investor participates.
 
(k)   Rule 144; Rule 144A Reporting.  With a view to making available to the
Investors 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:
 
    (1)   make and keep public information available, as those terms are
understood and defined in Rule 144(c)(1) or any similar or analogous rule
 
 
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promulgated under the Securities Act, at all times after the effective date of
this Agreement;
 
    (2)   file with the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act, and if at any time the Company
is not required to file such reports, make available, upon the request of any
Holder, such information necessary to permit sales pursuant to Rule 144A
(including the information required by Rule 144A(d)(4) and the Securities Act);
 
    (3)   so long as the Investors or Holder owns any Registrable Securities,
furnish to the Investors or such Holder forthwith upon request: 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; a copy of the most
recent annual or quarterly report of the Company; and such other reports and
documents as the Investors 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
 
    (4)   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.
 
(l)   As used in this Section 4.6, the following terms shall have the following
respective meanings:
 
    (1)   "Holder" means an Investor and any other holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred in compliance with Section 4.6(g) hereof.
 
    (2)   "Holders' Counsel" means one counsel for the selling Holders chosen by
Holders holding a majority interest in the Registrable Securities being
registered.
 
    (3)   "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 on Form S-3 or
other form approved by the holders of a majority of Registrable Securities
available for sales of securities pursuant to Rule 415 under the Securities Act.
 
    (4)   "Registrable Securities" means (A) all Common Stock and Series B
Preferred Stock held by the Investors from time to time, (B) the shares of
Common Stock issued or issuable pursuant to the conversion of the Series B
Preferred Stock held by the Investors from time to time and (C) any equity
securities issued or issuable directly or indirectly with respect to the
securities referred to in the foregoing clause (A) or (B) 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
 
 
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reorganization, provided that, once issued, such securities will not be
Registrable Securities when (i) they are sold pursuant to an effective
registration statement under the Securities Act, (ii) they may be freely resold
(without volume or method of sale restrictions, public information requirements
or other conditions) without registration under the Securities Act, (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.
 
    (5)   "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 4.6, including, without limitation, all
registration, filing and listing fees (including filings made with the Financial
Industry Regulatory Authority), printing expenses (including printing of
prospectuses and certificates for the Securities), the Company's expenses for
messenger and delivery services and telephone, fees and disbursements of counsel
for the Company, blue sky fees and expenses, expenses incurred by the Company in
connection with any "road show," the fees and disbursements of Holders' Counsel,
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.
 
    (6)   "Rule 144," "Rule 144A," "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.
 
    (7)   "Scheduled Black-out Period" means the period from and including the
thirtieth day prior to the last day of a fiscal quarter of the Company to and
including the business day after the day on which the Company publicly releases
its earnings for such fiscal quarter, or such shorter period that is
commensurate with the black-out period applicable to the Company's directors
from time to time.
 
    (8)   "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), other than $25,000 of
fees and disbursements of Holders' Counsel, which shall be reimbursed by the
Company pursuant to Section 4.6(b).
 
(m)   At any time, any holder of Securities (including any Holder) may elect to
forfeit its rights set forth in this Section 4.6 from that date forward;
provided, that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Sections 4.6(a)(4)-(6) in any Pending Underwritten Offering to
the same extent that such Holder would have been entitled to if the holder had
not withdrawn; and provided, further, that no such forfeiture shall terminate a
Holder's rights or obligations under Section 4.6(f) with respect to any prior
registration or
 
 
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Pending Underwritten Offering.  "Pending Underwritten Offering" means, with
respect to any Holder forfeiting its rights pursuant to this Section 4.6(m), 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 Section4.6(a)(2) or 4.6(a)(4) prior to the date of such Holder's forfeiture.
 
4.7   Gross-Up Rights.
 
(a)   Sale of New Securities.  For so long as the Investors collectively,
together with their Affiliates, (A) prior to the Second Closing, has not sold
Common Shares in an amount, individually or in the aggregate, that would result
in the Investors collectively, together with their Affiliates, Beneficially
Owning less than 5% of the outstanding shares of Common Stock and (B) on or
after the Second Closing, owns 6.0% or more of all of the outstanding shares of
Common Stock (counting for such purposes all shares of Common Stock into or for
which the securities of the Company owned by the Investors are directly or
indirectly convertible or exercisable and excluding as shares owned and
outstanding all Common Shares issued by the Company after the Second Closing
Date other than as contemplated by this Agreement) (before giving effect to any
issuances triggering provisions of this Section), if, at any time after the date
hereof, the Company makes any public or nonpublic offering or sale of any equity
security (including Common Stock, preferred stock or restricted stock), or any
securities, options or debt that is convertible or exchangeable into equity or
that includes an equity component (such as, an "equity kicker") (including any
hybrid security) (any such security, a "New Security") (other than (i) any
Common Stock or other securities (1) issuable upon the exercise or conversion of
any securities of the Company issued or agreed to be issued as of the date
hereof (2) issuable pursuant to the transactions contemplated by this Agreement;
(ii) pursuant to the granting or exercise of employee stock options or other
stock incentives pursuant to the Company's stock incentive plans approved by the
Board of Directors or the issuance of stock pursuant to the Company's employee
stock purchase plan approved by the Board of Directors or similar plan where
stock is being issued or offered to a trust, other entity or otherwise, for the
benefit of any employees, officers or directors of the Company, in each case in
the ordinary course of providing incentive compensation; or (iii) issuances of
capital stock as full or partial consideration for a merger, acquisition, joint
venture, strategic alliance, license agreement or other similar nonfinancing
transaction), then the Investors shall be afforded the opportunity to acquire
from the Company for the same price (net of any underwriting discounts or sales
commissions) and on the same terms (except that, to the extent permitted by law
and the Certificate of Incorporation and bylaws of the Company, the Investors
may elect to receive such securities in nonvoting form, convertible into voting
securities in a widely dispersed or public offering) as such securities are
proposed to be offered to others, up to the amount of New Securities in the
aggregate required to enable it to maintain its proportionate Common
Stock-equivalent interest in the Company immediately prior to any such issuance
of New Securities.  The amount of New Securities that the Investors shall be
entitled to purchase in the aggregate shall be determined by multiplying (x) the
total number or principal amount of such offered New Securities by (y) a
fraction, the numerator of which is the number of shares of Common Stock held by
the Investors, and the denominator of which is the number of shares of Common
Stock then outstanding.
 
(b)   Notice.  In the event the Company proposes to offer or sell New
Securities, it shall give the Investors written notice of its intention,
describing the price (or range of prices),
 
 
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anticipated amount of securities, timing, and other terms upon which the Company
proposes to offer the same (including, in the case of a registered public
offering and to the extent possible, a copy of the prospectus included in the
registration statement filed with respect to such offering), no later than two
business days, as the case may be, after the initial filing of a registration
statement with the SEC with respect to an underwritten public offering, after
the commencement of marketing with respect to a Rule 144A offering or after the
Company proposes to pursue any other offering.  Each Investor shall have 7
business 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 4.7 and,
as to the amount of New Securities the Investor desires to purchase, up to the
maximum amount calculated pursuant to Section 4.7(a).  Such notice shall
constitute a nonbinding indication of interest of the Investor 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 an Investor to respond within such 7
business day period shall be deemed to be a waiver of such Investor's rights
under this Section 4.7 only with respect to the offering described in the
applicable notice.
 
(c)   Purchase Mechanism.  If an Investor exercises its rights provided in this
Section 4.7, the closing of the purchase of the New Securities with respect to
which such right has been exercised shall take place within 20 calendar days
after the giving of notice of such exercise, which period of time shall be
extended for a maximum of 120 days in order to comply with applicable laws and
regulations (including receipt of any applicable regulatory or shareholder
approvals).  The Company and any Investor participating in any such transaction
agrees to use commercially reasonable efforts to secure any regulatory or
shareholder approvals or other consents, and to comply with any law or
regulation necessary in connection with the offer, sale and purchase of, such
New Securities; provided, however, that nothing herein shall require an Investor
to consummate such a transaction if doing so would result in the Investor,
together its Affiliates to be deemed for purposes of the BHC Act or the CBC Act
to own 10% or more of any class of voting securities of the Company or to
otherwise control the Company.
 
(d)   Failure of Purchase.  In the event that an Investor fails to exercise its
rights provided in this Section 4.7 within said 7 business day period or, if so
exercised, the Investor is unable to consummate such purchase within the time
period specified in Section 4.7(c) because of the Investor's failure to obtain
any required regulatory or shareholder consent or approval, the Company shall
thereafter be entitled (during the period of 45 days following the conclusion of
the applicable period) to sell or enter into an agreement (pursuant to which the
sale of the New Securities covered thereby shall be consummated, if at all,
within 30 days from the date of said agreement) to sell the New Securities not
elected to be purchased pursuant to this Section 4.7 by the Investor or which
the Investor is unable to purchase because of such failure to obtain any such
consent or approval, at a price and upon terms no more favorable in the
aggregate to the purchasers of such securities than were specified in the
Company's notice to the Investor.  Notwithstanding the foregoing, if such sale
is subject to the receipt of any regulatory or shareholder 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 business days
after all such approvals or consents have been obtained or waiting periods
expired, but in no event shall such time period exceed 120 days from the date of
the applicable agreement with respect to such sale.  In the event the Company
has not sold the New Securities or entered into an agreement to sell the New
Securities within said 45-day period (or sold and issued New Securities in
accordance with the foregoing within 30 days from the date of said agreement (as
 
 
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such period may be extended in the manner described above for a period not to
exceed 120 days from the date of said agreement)), the Company shall not
thereafter offer, issue or sell such New Securities without first offering such
securities to the Investors in the manner provided above.
 
(e)   Non-Cash Consideration.  In the case of the offering of securities for a
consideration in whole or in part other than cash, including securities acquired
in exchange therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors; provided, however, that such fair value as
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.
 
(f)   Cooperation.  The Company and the Investor shall cooperate in good faith
to facilitate the exercise of the Investor's rights under this Section 4.7,
including to secure any required approvals or consents.
 
4.8   Anti-Takeover Matters; Takeover Laws; No Rights Triggered.  If any
Takeover Law may become, or may purport to be, applicable to the transactions
contemplated or permitted by this Agreement, the Company and the members of the
Board of Directors shall grant such approvals and take such actions as are
necessary so that the transactions contemplated or permitted by this Agreement
and the Other Securities Purchase Agreements may be consummated, as promptly as
practicable, on the terms contemplated by this Agreement and the other
respective Transaction Documents, as the case may be, and otherwise act to
eliminate or minimize the effects of any Takeover Law on any of the transactions
contemplated or permitted by this Agreement and the Other Securities Purchase
Agreements.
 
(a)   New Jersey Business Combination Statute; Article XIII of the Certificate
of Incorporation.  The Board of Directors has duly adopted an irrevocable
resolution as follows (the "Business Combination Exemption Resolution"):
 
"RESOLVED, that pursuant to Sections 14A:10A-1 through 10A-6 of the New Jersey
Business Corporation Act (the "NJBCA") and Article XIII of the Certificate of
Incorporation ("Article XIII"), the Board of Directors of the Corporation, for
the specific purpose of establishing an irrevocable exemption from Sections
14A:10A-1 through 10A-6 of the NJBCA and Article XIII, hereby approves
thereunder (i) the entering into, and all of the transactions relating to and
contemplated or permitted by, the Securities Purchase Agreement, between the
Corporation and the Investors, including, without limitation, (A) the assignment
of any rights thereunder, (B) any person or entity becoming an "interested
shareholder" as defined in each of Sections 14A:10A-1 through 10A-6 of the NJBCA
and Article XIII including, without limitation, the Investors, any present or
future affiliates or associates of the Investors, and any assignees of the
foregoing (whether individually or in another capacity) (collectively, the
"Covered Persons") and (C) the transfer of any shares of common stock or other
securities of the Corporation in accordance with the terms and conditions of the
Securities Purchase Agreement, (ii) any transaction in which any Covered Person
becomes an "interested shareholder" as defined in Sections 14A:10A-1 through
 
 
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10A-6 of the NJBCA or Article XIII or acquires additional shares of common stock
or other securities of the Corporation thereafter and (iii) any "business
combination" as defined in Sections 14A:10A-1 through 10A-6 of the NJBCA or
Article XIII involving any Covered Person, including, without limitation, the
exercise of the rights afforded under Section 4.7 of the Securities Purchase
Agreement."
 
(b)   Business Combination Exemption. The Company represents that the Business
Combination Exemption Resolution adopted by the Company is a valid action of the
Board of Directors of the Company, binding on the Company, and constitutes a
valid and irrevocable exemption by the Company from Sections 14A:10A-1 through
10A-6 of the NJBCA and Article XIII of the Certificate of Incorporation as to
any transaction, person or entity described in such resolution..
 
4.9   Additional Regulatory Matters.
 
(a)   The Company and the Investors agree to cooperate and use their reasonable
best efforts to ensure that neither the Investors nor any of their Affiliates
will be deemed to control the Company for purposes of the CBC Act or otherwise
be deemed a "bank holding company" for purposes of the BHC Act.
 
(b)   The Company shall not knowingly take any action that would reasonably be
expected to pose a substantial risk that the Investors or any of their
Affiliates would be deemed to control the Company for purposes of the CBC Act or
otherwise be deemed a "bank holding company" for purposes of the BHC Act,
including undertaking any redemption, recapitalization, or repurchase of Common
Stock, of securities or rights, options, or warrants to purchase Common Stock,
or securities of any type whatsoever that are, or may become, convertible into
or exchangeable into or exercisable for Common Stock in each case, where the
Investor is not given the right to participate in such redemption,
recapitalization, or repurchase to the extent of the Investor's pro rata
proportion.
 
(c)   Notwithstanding anything in this Agreement to the contrary, in no event
shall the Investors or any of their Affiliates, principal, shareholder, member,
partner, director, officer, or employee of the Investor be required: (1) to
become a "bank holding company" within the meaning of the BHC Act, a "savings
and loan holding company" within the meaning of the Home Owners' Loan Act, or a
similarly regulated entity under any similar or successor law; (2) to support or
maintain the capital, liquidity, or financial condition of the Company or a
Company Subsidiary (other than through the investment on the terms expressly
stated herein); (3) to modify or limit its operations, investments, or
commercial practices (other than with respect to relationships with the Company
or the Company Subsidiaries); (4) to modify or limit its governance, ownership,
legal structure, accounting, or compensation arrangements; (5) to become subject
to or otherwise permit or accept any other condition, limitation, restriction,
requirement, or restraint imposed by any bank regulatory authority on the
Investor, the Company or any of their respective Affiliates in connection with
the transactions contemplated herein that would, in the reasonable and good
faith judgment of the Investor, materially and adversely affect the anticipated
benefits or burdens of the transactions contemplated herein; (6) to propose,
undertake, agree to or accept any of the items described in clauses (1) through
(5) as a condition
 
 
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to receiving any regulatory or governmental approval, consent, waiver or
non-objection (each of clauses (1) through (6), a "Burdensome Condition").
 
4.10   MFN Provision.  If the Company, in connection with the Other Private
Placements, enters into an agreement that contains terms more favorable to any
investor than the terms provided to the Investors under this Agreement, then the
Company will modify or revise the terms of this Agreement in order for the
transaction contemplated hereby to reflect any more favorable terms provided to
any other investor in connection with the Other Private Placements or otherwise;
provided however, in no event shall the Investors be accorded any Board
nominee(s) or Board member appointments.
 
4.11   Corporate Opportunities.  To the fullest extent permitted by applicable
law or regulation, including but not limited to the laws and regulations of the
State of New Jersey, neither the Investors nor any of their Affiliates or
Persons associated with the Investors, nor the Board Observer shall be obligated
to refer or present any particular business opportunity to the Company or the
Company Bank.  An Investor shall have the right to take such opportunity for its
own account (individually or as a partner, shareholder, member, participant or
fiduciary) or recommend to others such particular opportunity, unless such
opportunity is presented to the Board Observer as a business opportunity for the
Company or the Company Bank or the Board Observer learns of such opportunity in
his capacity as a director or Board Observer, even if such opportunity is of a
character that, if referred or presented to the Company or the Company Bank, as
applicable, could be taken by the Company or the Company Bank, as applicable;
provided that in the case where such opportunity is presented to the Board
Observer as a business opportunity for the Company or the Company Bank or the
Board Observer learns of such opportunity in his capacity as a director or Board
Observer, such Board Observer shall present such business opportunity to the
Company or the Company Bank, as applicable, and if the Company or the Company
Bank, as applicable, does not decide to pursue such business opportunity within
30 days of notice thereof, or subsequently determines to abandon the pursuit of
such business opportunity, the Board Observer (and the Investors or their
Affiliates or other Persons associated with them) shall have the right to take
for their own account or to recommend to others such business
opportunity.  Notwithstanding anything to the contrary herein, this Section 4.11
shall not be applicable to any business opportunity with respect to the
acquisition of or investment in a depository institution headquartered in the
State of New Jersey, it being understood and agreed that, for the avoidance of
doubt, nothing herein shall require an Investor or any of its Affiliates or
Persons associated with an Investor, nor the Board Observer, to refer any
business opportunity to the Company or the Company Bank which it is not required
to refer under applicable law.
 
4.12   Transfer Restrictions.
 
(a)   Except as otherwise permitted in this Agreement, the Investors will not
transfer, sell, assign or otherwise dispose of ("Transfer") any Securities
acquired pursuant to this Agreement, except that following the date that is
eighteen months from the First Closing Date, an Investor may Transfer any or all
of the Securities owned by the Investor from time to time, and the restrictions
under this Section 4.12 shall be of no further force and effect.
 
(b)   Notwithstanding Section 4.12(a), the Investors shall be permitted to
Transfer any portion or all of their Securities at any time under the following
circumstances:
 
 
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    (1)   Transfers to (A) any Affiliate of an Investor (including without
limitation any Affiliated fund) or any person or entity under common control
with the Investor's ultimate parent, general partner or investment advisor (any
such transferee shall be included in the term "Investor") or (B) any limited
partner or shareholder of the Investor or limited partner or shareholder of the
Investor's Affiliates (each, a "Permitted Transferee"), but in each case only if
the transferee agrees in writing for the benefit of the Company (with a copy
thereof to be furnished to the Company) to be bound by the terms of this
Agreement.
 
    (2)   Transfers pursuant to a merger, tender offer or exchange offer or
other business combination, acquisition of assets or similar transaction or
change of control involving the Company or any Company Subsidiaries; provided
that such transaction has been approved by the Board of Directors.
 
    (3)   In the event that, as a result of (A) any share repurchases,
recapitalizations, redemptions or similar actions by the Company not caused by
the Investors or (B) any change in the amount of Securities held by an Investor
resulting from adjustment or exchange provisions or other terms of the
Securities, the Investor reasonably determines, based on the advice of legal
counsel, that unless it disposes of all or a portion of its Securities, it or
any of its Affiliates could reasonably be deemed to "control" the Company for
purposes of the BHC Act, CIBCA or any rules or regulations promulgated
thereunder (or any successor provision), then the Investors shall be permitted
to Transfer the portion of the Securities reasonably necessary to avoid such
control determination.
 
    (4)   Transfers upon the exercise of its rights described under "Tag-Along
Rights" in Exhibit D, to the extent provided for in such agreement.
 
4.13   Standstill.  For so long as the Investors collectively, together with
their Affiliates, owns 5% or more of all of the outstanding shares of Common
Stock (counting for such purposes all shares of Common Stock into or for which
the securities of the Company owned by the Investors and their Affiliates are
directly or indirectly convertible or exercisable and excluding as shares owned
and outstanding all Common Shares issued by the Company after the Second Closing
Date other than as contemplated by this Agreement), neither the Investors nor
any of their Affiliates shall in any way acquire, offer or propose to acquire or
agree to acquire, other than as specifically contemplated in the Transaction
Documents, Beneficial Ownership of any voting securities of the Company if such
acquisition would result in the Investors collectively, togethet with their
Affiliates having Beneficial Ownership of more than 9.9% of the outstanding
shares of Common Stock of the Company (for the avoidance of doubt, for purposes
of calculating the Beneficial Ownership of the Investors and their Affiliates
hereunder, (x) any security that is convertible into, or exercisable for, any
such voting securities or Common Stock that is Beneficially Owned by the
Investors or their Affiliates shall be treated as fully converted or exercised
in accordance with its terms, as the case may be, into the underlying voting
securities or Common Stock, and (y) any security convertible into, or
exercisable for, the Common Stock that is Beneficially Owned by any person other
than the Investors or any of their Affiliates shall not be taken into account).
 
 
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4.14   Information Rights.  Each Investor will have the right to consult with
management of the Company and its Company Bank and inspect, have access to and
receive audited and unaudited financial statements, annual budgets and other
financial, operations or general information, including advance notification of
and consultation with respect to significant corporate actions, with respect to
the Company or the Company Bank as and when such Investor shall reasonably
request.
 
 
ARTICLE V
 
Termination
 
5.1   Termination.  This Agreement may be terminated prior to the First Closing:
 
(a)   by mutual written consent of the Investors and the Company;
 
(b)   by the Company, upon written notice to the Investors, in the event that
the conditions of the First Closing set forth in Section 1.2(c)(2) are not
satisfied on or before October 31, 2010; provided, however, that the right to
terminate this Agreement pursuant to this Section 5.1(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 Closing to
occur on or prior to such date;
 
(c)   by the Investors, upon written notice to the Company, in the event that
the conditions of the First Closing set forth in Section 1.2(c)(1) are not
satisfied on or before October 31, 2010; provided, however, that the right to
terminate this Agreement pursuant to this Section 5.1(c) 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 Closing to
occur on or prior to such date;
 
(d)   by the Company or the Investors, upon written notice to the other, 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;
 
(e)   by the Investors, if the Investors or any of their Affiliates receives
written notice from or is otherwise advised by a Governmental Entity that it
will not grant (or intends to rescind or revoke if previously approved) any
regulatory approval required to consummate the transactions contemplated hereby
or receives written notice from such Governmental Entity that it will not grant
such approval on the terms contemplated by this Agreement without imposing any
Burdensome Condition;
 
(f)   by the Investors, if a "change in control" within the meaning of any
Benefit Plan occurs on or after the date hereof but prior to the First Closing
Date.
 
 
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5.2   Effects of Termination.  In the event of any termination of this Agreement
as provided in Section 5.1, this Agreement (other than Section 3.2, Section 4.5,
this Section 5.2 and Article VI (other than Section 6.1) and all applicable
defined terms, which 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 willful breach of this
Agreement.
 
5.3   Second Closing Termination.  Notwithstanding anything to the contrary
herein, in the event that the conditions of the Second Closing set forth in
Section 1.2(d) are not satisfied on or before December 31, 2010 (the "Second
Closing Termination Date"), either party shall have the right, upon written
notice to the other, to terminate the parties’ obligations to consummate the
Second Closing, in which event the Company shall have no obligation to the
Investors to issue the Series B Preferred Shares to be issued at the Second
Closing and the Investors shall have no obligation to the Company to pay the
Second Purchase Price (a "Second Closing Termination"); provided, however, that
the right to cause a Second Closing Termination pursuant to this Section 5.3
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 Second Closing to occur on or prior to the Second Closing
Termination Date.  For the avoidance of doubt, a Second Closing Termination
shall not result in the termination of this Agreement.
 
 
ARTICLE VI
 
Miscellaneous
 
6.1   Survival.  Each of the representations and warranties set forth in this
Agreement shall survive the Closing under this Agreement but only for a period
of 18 months following the Second 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) and
thereafter shall expire and have no further force and effect; provided that the
representations and warranties in Section 2.2(c) shall survive indefinitely and
the representations and warranties in Sections 2.2(i) shall survive until 90
days after the expiration of the applicable statutory periods of
limitations.  Except as otherwise provided herein, all covenants and agreements
contained herein shall survive for the duration of any statutes of limitations
applicable thereto or until, by their respective terms, they are no longer
operative.
 
6.2   Amendment.  No amendment or waiver of this Agreement will be effective
with respect to any party unless made in writing and signed by an officer of a
duly authorized representative of such party.
 
6.3   Waivers.  No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The conditions to each party's
obligation to consummate the 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
applicable law.  No waiver of any party to this Agreement will be effective
unless it is in a
 
 
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writing signed by a duly authorized officer of the waiving party that makes
express reference to the provision or provisions subject to such waiver.
 
6.4   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.
 
6.5   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.  The parties hereto irrevocably
and unconditionally agree that any suit or proceeding arising out of or relating
to this Agreement and the transactions contemplated hereby will be tried
exclusively in the U.S. District Court for the Southern District of New York or,
if that court does not have subject matter jurisdiction, in any state court
located in The City and County of New York and the parties agree to submit to
the jurisdiction of, and to venue in, such courts.
 
6.6   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.
 
6.7   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 follows:
 
 
(a)   If to the Investors:
 
Siguler Guff & Company, LP
825 Third Avenue
New York, NY 10022
Attn:
Facsimile:   (212) 332-5100
 
 
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with copies to:
 
Michael Doherty, Esq.
Ropes & Gray
1211 Avenue of the Americas
New York, NY 10036-8704
Phone: 212-497-3612
 
and
 
 
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    If to the Company:
 
 
Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Attn:  Chief Executive Officer
Facsimile:  (856) 691-9187
 
with a copy to:
 
Malizia Spidi & Fisch, PC
1227 25th Street, N.W.
Suite 200 West
Washington, D.C. 20037
Attn:  John J. Spidi
Facsimile:  (202) 434-4661
 
6.8   Entire Agreement, Etc.  This Agreement (including the Exhibits, Schedules,
and Disclosure Schedule hereto) and the other documents referred to herein
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties, with respect to the subject matter hereof; the terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and their permitted assigns.  For the
avoidance of doubt, the Company agrees that the Investors may assign its rights
and obligations under this Agreement, in whole or in part, to one or more
Affiliates, parallel investment funds, co-investment funds or successor
investment funds and that such assignees shall be included in the term
"Investor".
 
6.9   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.  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, annex and schedule references not attributed to a particular
document shall be references to such exhibits, annexes and schedules to this
Agreement.  When used herein:
 
    (1)   the term "subsidiary" means those corporations, banks, savings banks,
associations and other persons of which such person owns or controls 25% or more
of the outstanding equity securities either directly or indirectly through an
unbroken chain of entities as to each of which 25% or more of the outstanding
equity securities is owned directly or indirectly by its parent or otherwise
controlled by such parent and any entity that would be a "subsidiary" for
purposes of the BHC Act; provided, however, that there shall not be included any
such entity to the extent that the equity securities of such entity were
acquired in satisfaction of a debt previously contracted in good faith or are
owned or controlled in a bona fide fiduciary capacity;
 
 
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    (2)   the term "Affiliate" means, with respect to any person, any person
directly or indirectly controlling, controlled by or under common control with,
such other person.  For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control with")
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such person, whether through the ownership of voting securities by contract or
otherwise or for purposes of the BHC Act or the CBC Act;
 
    (3)   the word "or" is not exclusive;
 
    (4)   the words "including," "includes," "included" and "include" are deemed
to be followed by the words "without limitation";
 
    (5)   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;
 
    (6)   the words "it" or "its" are deemed to mean "him" or "her" and "his" or
"her", as applicable, when referring to an individual;
 
    (7)   "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 the State of New Jersey generally are authorized or required by law
or other governmental actions to close;
 
    (8)   "person" has the meaning given to it in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act;
 
    (9)   "Beneficially Own," "Beneficial Owner" and "Beneficial Ownership" are
defined in Rules 13d-3 and 13d-5 of the Exchange Act; and
 
    (10)   "knowledge of the Company" or "Company's knowledge" means the actual
knowledge after due inquiry of the executive officers of the Company.
 
6.10   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.
 
6.11   Severability.  If any provision of this Agreement or the application
thereof to any person (including the officers and directors of the Investors 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
 
 
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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.
 
6.12   No Third-Party Beneficiaries.  Nothing contained in this Agreement,
expressed or implied, is intended to confer or shall confer upon any person
other than the express parties hereto, any benefit right or remedies, except
that the provisions of Sections 4.2, 4.3, 4.5, 4.6 and 4.7 shall inure to the
benefit of the persons referred to in those Sections, including any
Holders.  The representations and warranties set forth in Article II and the
covenants set forth in Articles III and IV have been made solely for the benefit
of the parties to this Agreement and (a) may be intended not as statements of
fact, but rather as a way of allocating the risk to one of the parties if those
statements prove to be inaccurate; (b) have been qualified by reference to the
Disclosure Schedule of each party, each of which contains certain disclosures
that are not reflected in the text of this Agreement; and (c) may apply
standards of materiality in a way that is different from what may be viewed as
material by shareholders of, or other investors in, the Company.
 
6.13   Public Announcements.  Subject to each party's disclosure obligations
imposed by law or regulation, each of the parties hereto will cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement or the Other Securities Purchase
Agreements, and no party hereto will make any such news release or public
disclosure without first consulting with the other party hereto and receiving
its consent (which shall not be unreasonably withheld, conditioned, or delayed),
and each party shall coordinate with the other with respect to any such news
release or public disclosure.
 
6.14   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.
 
 
*  *  *
 
 
-68-

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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.
 

   
SUN BANCORP, INC.
                 
By:
 /s/ Thomas X. Geisel         
Name:
Thomas X. Geisel         
Title:
 President & CEO                           
Maycomb Holdings II, LLC
     
By:
Siguler Guff DOF II CP, LLC
     
Its:
Managing Member
               
By:
 /s/ Kenneth Burns      
Title
Managing Director                           
Maycomb Holdings III, LLC
     
By:
Siguler Guff DOF III GP, LLC
     
Its:
Managing Member
               
By:
 /s/ Kenneth Burns      
Title
Managing Director                           
Siguler Guff Distressed Opportunities Fund IV, LP
     
By:
Siguler Guff DOF IV GP, LOLC
     
Its:
General Partner
               
By:
 /s/ Kenneth Burns      
Title:
Managing Director                           
Siguler Guff Distressed Opportunities Fund IV (T), LP
     
By:
Siguler Guff DOF IV GP, LLC
     
Its:
General
               
By:
  /s/ Kenneth Burns      
Title:
  Managing Director

 
 
 
[Signature Page to Securities Purchase Agreement]