Exhibit 10.1

EXECUTION VERSION

 

 

 

ASSET PURCHASE AGREEMENT

by and between

FIRST PLACE FINANCIAL CORP.,

a Delaware corporation,

and

TALMER BANCORP, INC.,

a Michigan corporation

Dated as of October 26, 2012

 

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE 1

 

INTERPRETATION

     1   

1.1

 

Definitions

     1   

1.2

 

Currency

     11   

1.3

 

Governing Law

     11   

1.4

 

Schedules and Exhibits

     11   

ARTICLE 2

 

PURCHASE OF SHARES AND OTHER ASSETS; EQUITY CONTRIBUTION

     11   

2.1

 

Purchase and Sale of the Shares and other Assets

     11   

2.2

 

Consideration

     12   

2.3

 

Payments

     12   

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     12   

3.1

 

Corporate Status and Authority; Non-Contravention

     12   

3.2

 

Capitalization of the Bank

     13   

3.3

 

Business Operations

     14   

3.4

 

Regulatory Reports

     16   

3.5

 

Deposits

     16   

3.6

 

Financial Matters

     17   

3.7

 

Tax Matters

     18   

3.8

 

Litigation and Claims

     20   

3.9

 

Employee Matters

     20   

3.10

 

Properties and Leases

     22   

3.11

 

Absence of Certain Changes

     23   

3.12

 

Commitments and Contracts

     23   

3.13

 

Risk Management Instruments

     24   

3.14

 

Environmental Matters

     25   

3.15

 

Insurance

     26   

3.16

 

Intellectual Property

     26   

3.17

 

Related Party Transactions

     27   

3.18

 

Community Reinvestment Act

     27   

3.19

 

Anti-money Laundering

     27   

3.20

 

Customer Information Security

     27   

3.21

 

Loan Portfolio

     28   

3.22

 

Qualification as Mortgage Lender, Originator and Servicer

     29   

3.23

 

Servicing

     30   

3.24

 

Brokers or Finders

     30   

3.25

 

Disclaimer of Other Representations and Warranties

     30   

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     31   

4.1

 

Corporate Status and Authority; Non-contravention

     31   

4.2

 

Governmental Authorizations

     31   

4.3

 

Investment Intent

     31   

4.4

 

Sufficient Funds

     32   

4.5

 

Non-reliance

     32   

4.6

 

Litigation and Claims

     32   

 

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ARTICLE 5

 

PRE-CLOSING MATTERS AND OTHER COVENANTS

     32   

5.1

 

Operations until Closing

     32   

5.2

 

Confidentiality

     36   

5.3

 

Return of Information

     37   

5.4

 

Consents and Approvals

     37   

5.5

 

Indemnification; D&O Insurance

     39   

5.6

 

Certain Company Contracts

     39   

5.7

 

Notice of Certain Events

     39   

5.8

 

Payment of the Broker’s Fees

     40   

5.9

 

Stalking-Horse Bidder Fee

     40   

5.10

 

Debtor in Possession

     41   

5.11

 

The Sale Motion

     41   

5.12

 

The Bidding Procedures

     42   

5.13

 

Bankruptcy Efforts

     46   

5.14

 

Reasonable Access to Records and Certain Personnel

     46   

5.15

 

Public Announcements

     46   

5.16

 

Tax Refunds

     47   

5.17

 

Tax Elections

     47   

5.18

 

Preparation and Filing of Tax Returns; Taxes

     47   

5.19

 

Tax Cooperation

     48   

5.20

 

Tax Proceedings

     48   

5.21

 

Transfer Taxes

     48   

5.22

 

Resignations

     49   

5.23

 

Deferred Compensation Plan

     49   

5.24

 

Bankruptcy Filings

     49   

5.25

 

Transfer of Business-Related Assets and Contracts

     49   

5.26

 

Plan

     49   

5.27

 

Appeal

     50   

5.28

 

Non-Solicitation of Competing Bids

     50   

5.29

 

Employees

     50   

5.30

 

Certain Benefit Arrangements»

     50   

ARTICLE 6

 

CONDITIONS OF CLOSING

     51   

6.1

 

Conditions to the Purchaser’s Obligations

     51   

6.2

 

Conditions to the Company’s Obligations

     52   

6.3

 

Mutual Condition

     53   

6.4

 

Termination

     53   

ARTICLE 7

 

CLOSING TRANSACTIONS

     54   

7.1

 

Time and Place

     54   

7.2

 

Company’s Closing Deliverables

     54   

7.3

 

Purchaser’s Closing Deliverables

     55   

7.4

 

Concurrent Delivery

     55   

7.5

 

Transfer of Shares

     55   

ARTICLE 8

 

SURVIVAL OF REPRESENTATIONS AND COVENANTS

     56   

8.1

 

Survival

     56   

ARTICLE 9

 

MISCELLANEOUS

     56   

9.1

 

Legal and Other Fees and Expenses

     56   

9.2

 

Notices

     56   

9.3

 

Further Assurances

     57   

9.4

 

Time of the Essence

     57   

 

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9.5

 

Entire Agreement

     57   

9.6

 

Assignment

     57   

9.7

 

Invalidity

     57   

9.8

 

Waiver and Amendment

     57   

9.9

 

Third-Party Beneficiaries

     57   

9.10

 

Surviving Provisions on Termination

     58   

9.11

 

Captions

     58   

9.12

 

Counterparts

     58   

SCHEDULES AND EXHIBITS

 

Schedule I    Disclosure Schedule Schedule 4.2    Purchaser Required Approvals
Schedule 5.5(a)    Indemnification Agreement Schedule 5.6    Assumed Bank
Related Contracts Schedule 5.8    Broker’s Fees Schedule 5.22    Continuing
Board Members Schedule 6.1(h)    Consents Exhibit A    Bidding Procedures Order
Exhibit B    Sale Order

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of October 26, 2012,
by and between First Place Financial Corp., a Delaware corporation (the
“Company”), and Talmer Bancorp, Inc., a Michigan corporation (the “Purchaser”).

RECITALS

A. The Company owns all of the issued and outstanding shares of Common Stock of
First Place Bank, a federal savings association (the “Bank”).

B. The Company wishes to sell, and the Purchaser wishes to purchase, all of the
shares of Common Stock of the Bank issued and outstanding as of the Closing Date
(as hereinafter defined) (the “Shares”), free and clear of all Encumbrances (as
hereinafter defined), and certain other assets of the Company, all on the terms
and conditions set forth in this Agreement.

C. The Company intends to file a voluntary bankruptcy petition (the “Bankruptcy
Case”) under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101,
et seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”) promptly following the date this
Agreement is executed (the date of such filing, the “Petition Date”).

D. The parties intend for the sale and purchase of the Shares and the Other
Purchased Assets (the “Sale”), including the assumption and assignment of the
Assumed Bank Related Contracts (if any), to be effectuated pursuant to an order
of the Bankruptcy Court under Sections 105, 363 and 365 of the Bankruptcy Code
approving such transactions with Purchaser or a bidder that makes a higher or
otherwise better bid.

In consideration of the covenants, agreements, representations and warranties
set forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, covenant and agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions. In this Agreement, unless the context otherwise requires or
unless otherwise specifically provided herein:

(a) “Adequate Assurance Information” is defined in Section 5.12(d)(x).

(b) “Affiliate” means, with respect to any Person, any other Person controlling,
controlled by or under common control with, such Person, with “control” for such
purpose meaning the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities or voting interests, by contract or
otherwise.

(c) “Agreement” is defined in the introductory paragraph.

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(d) “Alternative Transaction” means any one of the following transactions with
or by a Third Party: (a) a merger, consolidation or similar transaction
involving the Company or the Bank, or (b) a sale, lease or other disposition
directly or indirectly by merger, consolidation, tender offer, share exchange or
otherwise of assets of Company or the Bank constituting a majority of the
consolidated assets of Company or the Bank.

(e) “Assumed Bank Related Contracts” is defined in Section 5.6.

(f) “Assumed Contract Liabilities” is defined in Section 7.2(f).

(g) “Auction” is defined in Section 5.12(h).

(h) “Bank” is defined in the recitals.

(i) “Bank Related Contracts” is defined in Section 2.1.

(j) “Bank Significant Agreement” is defined in Section 3.12(a).

(k) “Bank Tax Refund” means that certain refund of Tax in the amount that the
Company is currently seeking from the IRS.

(a) “Bankruptcy Case” is defined in the recitals.

(b) “Bankruptcy Code” is defined in the recitals.

(c) “Bankruptcy Court” is defined in the recitals.

(d) “Bankruptcy Rules” is defined in Section 5.12(g).

(e) “Benefit Arrangement” means any “employee benefit plan” as defined in
Section 3(3) of ERISA (whether or not subject to ERISA) and any other material
plan, program, agreement, arrangement, obligation or practice, including,
without limitation, any pension, profit sharing, severance, welfare, fringe
benefit, employee loan, retirement, medical, welfare, employment or consulting,
severance, stay or retention bonuses or compensation, executive or incentive
compensation, sick leave, vacation pay, plant closing benefits, disability,
workers’ compensation, retirement, deferred compensation, bonus, stock option,
or purchase or other stock-related, equity incentive or synthetic equity,
tuition reimbursement or scholarship, employee discount, meals, travel, or
vehicle allowances, plan, program, agreement, arrangement, obligation or
practice, any plans subject to Section 125 of the Code, as amended, and any
plans or arrangements providing benefits or payments in the event of a change of
control, change in ownership or effective control or sale of assets
(i) established, sponsored, maintained, or contributed to, or required to be
contributed to, by the Bank or any ERISA Affiliate, on behalf of any current or
former director, employee, agent, independent contractor, or service provider of
the Bank or its Subsidiaries, or their beneficiaries, or (ii) pursuant to which
the Bank or any ERISA Affiliate has any Liability or other obligation (whether
contingent or otherwise).

(f) “BHCA” means the Bank Holding Company Act of 1956, as amended.

(g) “Bid Deadline” is defined in Section 5.12(d).

(h) “Bidding Procedures” is defined in Section 5.9(c).

 

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(i) “Bidding Procedures Order” means the bidding procedures order, approving,
among other things, the process by which bids may be solicited in connection
with the sale of the Shares and the Other Purchased Assets, in the form attached
hereto as Exhibit A with such changes as are acceptable to Purchaser and the
Company.

(j) “Books and Records” means all files, ledgers and correspondence, all
manuals, reports, texts, notes, memoranda, invoices, receipts, accounts,
accounting records and books, financial statements and financial working papers
and all other records and documents of any nature or kind whatsoever, including,
without limitation, those recorded, stored, maintained, operated, held or
otherwise wholly or partly dependent on discs, tapes and other means of storage,
including, without limitation, any electronic, magnetic, mechanical,
photographic or optical process, whether computerized or not, and all software,
passwords and other information and means of or for access thereto, belonging to
the Bank or its Subsidiaries or relating to the Business.

(k) “Broker” means Keefe, Bruyette & Woods, Inc.

(l) “Broker’s Fees” means the fees payable by the Company and/or the Bank to the
Broker in connection with the Closing in an aggregate amount equal to the amount
set forth in Section 3.24 of the Disclosure Schedule.

(m) “Burdensome Condition” means any restraint, limitation, term, requirement,
provision or condition that would (i) reasonably be expected to impair in any
material respect the benefits to the Purchaser or any of its Affiliates of the
Contemplated Transactions; (ii) require any Person other than the Purchaser to
become a bank holding company under the BHCA; (iii) require any Person other
than the Purchaser to guaranty, support or maintain the capital of the Bank;
(iv) require modification of, or impose any limitation or restriction on, the
activities, governance, legal structure, compensation, or fee arrangements of
the Purchaser or any of its Affiliates (or its partners, members or equity
holders); or (v) cause any Person other than the Purchaser to be deemed to
control the Bank; provided, however, that the following shall not be deemed to
be a “Burdensome Condition”: (x) those restraints, limitations, terms,
requirements, provisions or conditions specifically applicable to the Bank or
its Subsidiaries by reason of their condition as of the date hereof and
specifically disclosed to the Purchaser in Section 3.3(b)(ii) of the Disclosure
Schedule and (y) any restraint, limitation, term, requirement, provision or
condition that applies generally to bank holding companies and banks as provided
by statute, regulation, or written and publicly available supervisory guidance
of general applicability, in each case, as in effect on the date hereof.

(n) “Business” means the business currently carried on by the Bank and its
Subsidiaries.

(o) “Business Day” means any day other than a Saturday, Sunday or any federal
holiday in the United States.

(p) “Call Reports” means the Bank’s Consolidated Reports of Condition and Income
(FFIEC Form 041) or any successor form of the Federal Financial Institutions
Examination Council.

(q) “Cash Purchase Price” is defined in Section 2.2.

(r) “Charter Documents” means articles or certificate of incorporation, bylaws
and any other constituted document of a corporate entity.

 

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(s) “Closing” means the completion of the sale and purchase of the Shares and
the Other Purchased Assets in accordance with Article 7.

(t) “Closing Date” means five (5) Business Days following the satisfaction or
waiver, as applicable, of the conditions set forth in Article 6 and the Sale
Order (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to fulfillment or waiver of those conditions), or such
other date as may be agreed upon in writing by the Company and the Purchaser or
by their respective counsel.

(u) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(v) “Common Stock” is defined in Section 3.2(a).

(w) “Company” is defined in the introductory paragraph.

(x) “Company’s Reports” is defined in Section 3.4(a).

(y) “Company Tax Returns” is defined in Section 5.18.

(z) “Competing Purchase Agreement” is defined in Section 5.12(d)(i).

(aa) “Conformity Election” is defined in Section 5.17(c).

(bb) “Consent” means any approval, consent, ratification, waiver or other
authorization.

(cc) “Contemplated Transactions” means all of the transactions between the
Company, the Bank and the Purchaser contemplated by this Agreement.

(dd) “Continuing Board Members” is defined in Section 5.22.

(ee) “Contracts” means all contracts, agreements, instruments, leases,
indentures and commitments, whether written or oral, relating to the Business to
which the Company, the Bank or any other Subsidiary is a party, including,
without limitation, non-competition, non-solicitation and confidentiality
agreements.

(ff) “Contract Designation Date” is defined in Section 5.6.

(gg) “CRA” is defined in Section 3.18.

(hh) “Criticized Assets” is defined in Section 3.21(a).

(ii) “Cure Cost Ceiling” shall mean $500,000.

(jj) “Deferred Compensation Plan” is defined in Section 5.1(b)(xxi).

(kk) “Disclosure Schedule” means the disclosure schedule delivered by the
Company to the Purchaser concurrently with execution and delivery of this
Agreement in the form of Schedule I.

 

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(ll) “Encumbrance,” with respect to any asset, means, whether or not registered
or registrable or recorded or recordable, and regardless of how created or
arising:

i. a lien, encumbrance, adverse claim, charge, execution, security interest,
pledge against such asset, or a subordination to any right or claim of others in
respect thereof;

ii. a claim or interest against such asset;

iii. an option or other right to acquire, or to acquire any interest in such
asset;

iv. an interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset; and

v. any other encumbrance of whatsoever nature and kind against such asset.

(mm) “Environmental Claim” means any claim, action, cause of action, suit,
proceeding, investigation, order, demand or notice by any Person alleging actual
or potential liability (including, without limitation, for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, attorneys’ fees or penalties) arising out of, based
on, resulting from or relating to (i) the presence, or release into the
environment, of, or exposure to, any Materials of Environmental Concern, or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.

(nn) “Environmental Laws” means all Legal Requirements relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata, and
natural resources), including, without limitation, Legal Requirements relating
to (i) emissions, discharges, releases or threatened releases of, or exposure
to, Materials of Environmental Concern, (ii) the manufacture, processing,
distribution, use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Materials of
Environmental Concern, (iii) recordkeeping, notification, disclosure and
reporting requirements regarding Materials of Environmental Concern,
(iv) endangered or threatened species of fish, wildlife and plant and the
management or use of natural resources, (v) the preservation of the environment
or mitigation of adverse effects on or to human health or the environment, or
(vi) emissions or control of greenhouse gases.

(oo) “Equity Contribution” means the equity contribution, to be made
concurrently with the Closing, by the Purchaser to the Bank in an amount
necessary to obtain the Purchaser Required Approvals, which equity contribution
is not expected to exceed Two Hundred Five Million Dollars ($205,000,000) in
cash. For the avoidance of doubt, the Bank shall not issue any new shares of
Common Stock to the Purchaser in connection with the Equity Contribution.

(pp) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

(qq) “ERISA Affiliate” shall mean any entity required to be aggregated in a
controlled group or affiliated service group with the Bank for purposes of ERISA
or the Code (including under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA), at any relevant time.

(rr) “FDIC” means the Federal Deposit Insurance Corporation, or any successor
thereto.

(ss) “Federal Reserve Board” means the Board of Governors of the Federal Reserve
System, or any successor thereto.

 

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(tt) “GAAP” shall mean generally accepted accounting principles as in effect in
the United States.

(uu) “Governmental Authority” means any federal, state, municipal, county or
regional government or governmental or regulatory authority, domestic or
foreign, and includes any department, commission, bureau, board, administrative
agency or regulatory body of any of the foregoing or any non-governmental
regulatory body that provides standards for certification.

(vv) “Governmental Authorization” means any Consent, approval, license,
registration, permit or waiver issued, granted, given or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.

(ww) “Indemnified Parties” is defined in Section 5.5(a).

(xx) “Initial Minimum Bid Increment” is defined in Section 5.12(d)(i).

(yy) “Initial Minimum Overbid” is defined in Section 5.12(d)(i).

(zz) “Initial Overbid” is defined in Section 5.12(e)(i).

(aaa) “June 30 Balance Sheet” is defined in Section 3.6(a).

(bbb) “Knowledge” of the Company, or words of similar import, including without
limitation, the Company being aware of a fact or circumstance, means the actual
knowledge as of the date of this Agreement, after reasonable inquiry, of Albert
P. Blank, Craig Carr, Louis J. Dunham, David W. Gifford and Rob Kowalski.

(ccc) “Leased Properties” is defined in Section 3.10.

(ddd) “Legal Requirement” means any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.

(eee) “Liability” means, with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown,
absolute or contingent, whether or not accrued, disputed or undisputed,
liquidated or unliquidated, secured or unsecured, joint or several, due or to
become due, vested or unvested, executory, determined, determinable or
otherwise.

(fff) “Loans” is defined in Section 3.21.

(ggg) “Material Adverse Effect” means (a) any fact, effect, event, change,
occurrence or circumstance, including as a result of a regulatory exam by a
Governmental Authority conducted after the date hereof, that, by itself or
together with other facts, effects, events, changes, occurrences or
circumstances, has had or would be reasonably expected to have a material and
adverse effect on (1) the business, regulatory status, any Regulatory Agreement,
assets, liabilities (including deposit liabilities), profits, condition
(financial or otherwise) or results of operations of the Bank and its
Subsidiaries or the Business (as applicable), taken as a whole, or (2) the
ability of the Company or the Bank to timely consummate the transactions
contemplated by this Agreement; or (b) any other act or omission which would be
reasonably expected to materially impair the ability to operate the Business in
the Ordinary Course; provided, however, that none of the following shall be
taken into account in determining whether there has been a “Material Adverse
Effect”: (i) changes in GAAP or regulatory accounting requirements, (ii) changes
in laws, rules or regulations of general applicability to companies in the U.S.
banking

 

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industry, (iii) changes in global, national or regional political conditions or
general economic or market conditions (including changes in prevailing interest
rates, credit availability and liquidity, currency exchange rates, and price
levels or trading volumes in the United States or foreign securities markets)
affecting other companies or banks in the U.S. banking industry, (iv) any
outbreak or escalation of hostilities, declared or undeclared acts of war or
terrorism, (v) any changes made by the Company or the Bank in the Business or
other actions taken, delayed or omitted to be taken by the Company or the Bank
at the written request or with the prior written consent of the Purchaser, and
(vi) with respect to the Bank, any pre-Closing restrictions or conditions
imposed on the Bank as a result of the Regulatory Agreements to which the Bank
is a party as of the date of this Agreement; except, with respect to clauses
(i), (ii), and (iii), to the extent that the effects of such change are
materially disproportionately adverse to the business, assets, liabilities
(including deposit liabilities), profits, condition (financial or otherwise) or
results of operations of the Bank and its Subsidiaries or the Business (as
applicable), taken as a whole, as compared to other similarly situated companies
in the U.S. banking industry.

(hhh) “Material Governmental Authorization” is defined in Section 3.3(b)(ii).

(iii) “Material Permit” is defined in Section 3.3(a).

(jjj) “Materials of Environmental Concern” means chemicals, pollutants,
contaminants, toxic or hazardous substances, materials or wastes, petroleum and
petroleum products, greenhouse gases, asbestos or asbestos-containing materials
or products, polychlorinated biphenyls, lead or lead-based paints or materials,
radon, fungus, mold, mycotoxins or other substances having an adverse effect on
human health or the environment.

(kkk) “Mortgage” means a mortgage, deed of trust, pledge or collateral
assignment of property trust beneficiary interest or other instrument creating a
lien on or ownership interest in a Mortgaged Property.

(lll) “Mortgage Finance Agency” means the Federal Housing Administration, the
Farmers Home Administration (now known as Rural Housing and Community
Development Services), the Federal National Mortgage Association (Fannie Mae),
the Federal Home Loan Mortgage Corporation (Freddie Mac), the United States
Department of Veterans’ Affairs, the Rural Housing Service of the U.S.
Department of Agriculture or any other federal or state agency with authority to
(i) determine any investment, origination, lending or servicing requirements
with regard to mortgage loans originated, purchased or serviced by the Company,
the Bank or any of their Subsidiaries (ii) originate, purchase, or service
mortgage loans, or otherwise promote mortgage lending, including without
limitation state and local housing finance authorities.

(mmm) “Mortgage Loan” shall mean any loan secured by a Mortgage or a
participation interest or certificate or other ownership interest in such a loan
that has been sold to a Mortgage Finance Agency.

(nnn) “Mortgaged Property” shall mean the underlying property or properties
securing a loan, consisting of a fee simple estate or leasehold estate, or both,
in a parcel of land improved by one or more properties, together with any
personal property, fixtures, leases and other property or rights pertaining
thereto, or property trust beneficiary interest with respect to the foregoing.

(ooo) “Notice of Sale” means a notice of the sale of the Shares and the Other
Purchased Assets and the Sale Hearing.

 

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(ppp) “OCC” means the Office of the Comptroller of the Currency, which includes
the OTS as a predecessor to the OCC.

(qqq) “Order” means any order, judgment, decree, decision, ruling, writ,
assessment, charge, stipulation, injunction or other determination of any
Governmental Authority, or any arbitration award entered into by an arbitrator,
in each case having competent jurisdiction to render such.

(rrr) “Ordinary Course of Business” or “in the Ordinary Course” means the
conduct of the Business in substantially the same manner as the Business was
operated on the date of this Agreement, including operations in conformance with
the Bank’s practices and procedures as of such date and continued cooperation
with Governmental Authorities concerning investigations by or inquiries from
Governmental Authorities regarding or relating to the Company, the Bank or their
respective directors and employees.

(sss) “OTS” means the Office of Thrift Supervision.

(ttt) “Other Purchased Assets” is defined in Section 2.1.

(uuu) “Other Real Estate Owned” is defined in Section 3.21(a).

(vvv) “Outside Date” is defined in Section 6.4(a).

(www) “Owned Mortgage Loan” shall mean a Mortgage Loan owned by the Company, the
Bank or their Subsidiaries.

(xxx) “Owned Properties” is defined in Section 3.10.

(yyy) “Overbidder” is defined in Section 5.12(b).

(zzz) “Overbidder’s Deposit” is defined in Section 5.12(d)(ii).

(aaaa) “Permits” means all permits, licenses, registrations, consents,
authorizations, approvals, privileges, waivers, exemptions, orders,
certificates, rulings, agreements and other concessions from, of or with
Governmental Authorities or other regulatory bodies required to carry on the
Business as now being carried on.

(bbbb) “Permitted Liens” means (i) liens for current taxes and assessments not
yet delinquent or as to which the Bank is diligently contesting in good faith
and by appropriate proceeding either the amount thereof or the liability
therefor or both; (ii) liens of landlords, carriers, mechanics, materialmen and
repairmen incurred in the Ordinary Course of Business for sums not yet past due,
or which are being contested in good faith by appropriate proceedings and for
the payment of which adequate reserves in accordance with GAAP and regulatory
accounting principles have been established on the books of the Bank, or the
defense of which has been accepted by a title insurer, bonding company, other
surety or other Person; (iii) any recorded lien (other than for funded
indebtedness) relating to any leased premises; (iv) zoning restrictions,
easements, licenses and other restrictions on the use of real property or any
interest therein, or minor irregularities in title thereto, which do not
materially impair the use of such property or the merchantability or the value
of such property or interest therein; (v) liens encumbering the interest of the
landlord under any real estate lease the existence of which does not result in a
default under such real estate leases; (vi) deposits, liens or pledges to secure
payments of worker’s compensation, unemployment insurance, pensions or other
social security obligations, or the performance of bids, tenders, leases,
contracts (other than contracts for the payment of money), public or statutory

 

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obligations, surety, stay or appeal bonds, or similar obligations arising in the
Ordinary Course of Business; (vii) purchase money mortgages or other purchase
money or vendor’s liens (including, without limitation, finance leases),
provided that no such lien shall extend to or cover any other property of the
Bank other than that so purchased; (viii) liens on assets given to secure
deposits and other liabilities of the Bank arising in the Ordinary Course of
Business (including those given to secure borrowings, advances, or discount
window availability from any private or governmental banking entity or any
clearinghouse); (ix) pledges of securities to secure fed funds borrowings from
other banks; and (x) liens arising out of judgments or awards in respect of
which the Bank is in good faith prosecuting an appeal or proceeding for review
and in respect of which it has secured a subsisting stay of execution pending
such appeal or proceeding and which are disclosed or reserved against on the
Bank’s financial statements.

(cccc) “Person” means an individual, legal personal representative, corporation,
limited liability company, partnership, firm, trust, trustee, syndicate, joint
venture, unincorporated organization or Governmental Authority.

(dddd) “Petition Date” is defined in the recitals.

(eeee) “Post-Close Filings” is defined in Section 5.14.

(ffff) “Pre-Closing Tax Period” is defined in Section 5.18.

(gggg) “Preferred Stock” is defined in Section 3.2(a).

(hhhh) “Proceedings” means any actions, claims, demands, lawsuits, assessments,
arbitrations, judgments, awards, decrees, orders, injunctions, prosecutions and
investigations, or other proceedings, of, by, against, or relating to, the
Company, the Bank, any other Subsidiary, or the Business.

(iiii) “Properties” is defined in Section 3.10.

(jjjj) “Proprietary Rights” is defined in Section 3.16.

(kkkk) “Purchaser” is defined in the introductory paragraph.

(llll) “Purchase Plans” is defined in Section 5.29.

(mmmm) “Purchaser Required Approvals” is defined in Section 4.2.

(nnnn) “Qualified Bid” is defined in Section 5.12(e)(ii).

(oooo) “Qualified Overbidder” is defined in Section 5.12(e).

(pppp) “Qualified Plan” is defined in Section 3.9(b)(ii).

(qqqq) “Real Estate” is defined in Section 3.10.

(rrrr) “Regulatory Agreement” is defined in Section 3.3(b)(vii).

(ssss) “Sale” is defined in the recitals.

(tttt) “Sale Hearing” is defined in Section 5.11(b).

(uuuu) “Sale Motion” is defined in Section 5.11.

 

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(vvvv) “Sale Order” means the order, approving the sale of the Shares and the
Other Purchased Assets to the Purchaser, in substantially the form attached
hereto as Exhibit B with such changes as are acceptable to Purchaser and the
Company.

(wwww) “Serviced Mortgage Loans” is defined in Section 3.23(a).

(xxxx) “Servicing Contracts” is defined in Section 3.23(a).

(yyyy) “Shares” is defined in the recitals.

(zzzz) “Specified Person” means (i) any Person that has indicated an interest
in, or could reasonably be expected to have an interest in, participating in any
direct or indirect sale of any equity interest in, or any material portion of
the assets of, the Company or the Bank or any extraordinary corporate
transaction directly or indirectly involving the Company or the Bank, (ii) any
Affiliate of any such Person and (iii) any director, officer, employee, agent,
representative or advisor of any such Person or any of its Affiliates.

(aaaaa) “Stalking-Horse Bidder Fee” is defined in Section 5.9(a).

(bbbbb) “Subsidiary” includes any corporation or other entity of which a
majority of the capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time, directly or indirectly, owned by
such party. The term “Subsidiary” shall include all Subsidiaries of any
Subsidiary.

(ccccc) “Tax” or “Taxes” means (i) all federal, state, local and foreign taxes,
charges, fees, imposts, levies or other like assessments, including, without
limitation, all income, gross receipts, alternative or add-on minimum, capital,
sales, use, ad valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, recapture, real and personal
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, together with any interest, penalties, additions to tax or
additional amounts imposed by any taxing authority, (ii) any liability for the
payment of any amounts of the type described in clause (i) as a result of being
a member of an affiliated, consolidated, combined or unitary group for any
period (including any arrangement for group or consortium tax relief or similar
arrangement) and (iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) as a result of any express or implied
obligation to indemnify any other Person or as a result of any obligation under
any agreement or arrangement to make any payment determined by reference to the
Tax liability of a third party.

(ddddd) “Tax Matter” is defined in Section 5.20.

(eeeee) “Tax Refund” means any Tax refunds from any Governmental Authority,
including the Bank Tax Refund.

(fffff) “Tax Returns” means all returns, statements, reports, documents,
declarations, forms, designations, claims for refund, and other information and
filings (including elections, disclosures, schedules and estimates), and any
attachments, addenda or amendments thereto (whether or not a payment is required
to be made with respect to any such return or other document) relating to Taxes.

(ggggg) “Third Party” means any Person or group other than Purchaser and its
Affiliates.

(hhhhh) “Transfer Tax Returns” is defined in Section 5.21.

 

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(iiiii) “Transfer Taxes” is defined in Section 5.21.

(jjjjj) “Unaudited Financial Statements” means the consolidated unaudited
financial statements of the Bank and its Subsidiaries, consisting of
consolidated unaudited statements of financial condition as of June 30, 2012,
2011 and 2010, and consolidated unaudited statements of operations, for the
years ended June 30, 2012, 2011 and 2010.

(kkkkk) “USA Patriot Act” is defined in Section 3.19.

1.2 Currency. Except where otherwise expressly provided, all monetary amounts in
this Agreement are stated and shall be paid in United States currency.

1.3 Governing Law. This Agreement and the agreements contemplated hereby shall
be construed and interpreted, and the rights of the parties shall be determined,
in accordance with the Bankruptcy Code and the substantive laws of the State of
Delaware, in each case without regard to the conflict of laws principles thereof
or of any other jurisdiction.

1.4 Schedules and Exhibits. The following are the Schedules and Exhibits which
are attached to and form part of this Agreement:

 

Schedule I    Disclosure Schedule Schedule 4.2    Purchaser Required Approvals
Schedule 5.5(a)    Indemnification Agreement Schedule 5.6    Assumed Bank
Related Contracts Schedule 5.8    Broker’s Fees Schedule 5.22    Continuing
Board Members Schedule 6.1(h)    Consents Exhibit A    Bidding Procedures Order
Exhibit B    Sale Order

ARTICLE 2

PURCHASE OF SHARES AND OTHER ASSETS; EQUITY CONTRIBUTION

2.1 Purchase and Sale of the Shares and other Assets. Subject to the terms and
conditions set forth in this Agreement, and subject to the entry of a Sale Order
and for the Cash Purchase Price, the Company agrees to (a) sell, assign and
transfer to the Purchaser, free and clear of all Encumbrances, and the Purchaser
agrees to purchase from the Company, on the Closing Date, effective as of and
from the Closing, all of the Shares and (b) sell, assign and transfer to the
Bank, free and clear of all Encumbrances, (i) all of the Contracts of the
Company that relate to the Business set forth in Section 2.1 of the Disclosure
Schedule or that are identified in Section 3.12 of the Disclosure Schedule and
that are specifically noted as Contracts of the Company that relate to the
Business (collectively, the “Bank Related Contracts”) that Purchaser has
identified on Schedule 5.6 as Assumed Bank Related Contracts; (ii) any right,
title and interest of the Company to any proceeds received or to be received
after June 30, 2012 related to any

 

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Assumed Bank Related Contract, including any such proceeds from any insurance
claims to the extent (but, in the case of insurance claims, only to the extent)
solely related to the Bank or its Subsidiaries or the Business; and (iii) all of
the trademarks and service marks registered to the Company set forth in
Section 3.16 of the Disclosure Schedule (the assets identified in clauses (i),
(ii) and (iii) collectively, the “Other Purchased Assets”).

2.2 Consideration. The amount payable to the Company for the Shares and the
Other Purchased Assets will be Forty-Five Million Dollars ($45,000,000) (the
“Cash Purchase Price”), which shall, subject to the terms and conditions hereof,
be payable by the Purchaser to the Company at Closing (subject to Section 5.8
(Payment of Broker’s Fees)). Concurrently with the Closing, the Purchaser shall
make the Equity Contribution.

2.3 Payments. On the Closing Date, the Purchaser shall: (a) pay the Cash
Purchase Price for the Shares and the Other Purchased Assets to the Company
(subject to Section 5.8 (Payment of Broker’s Fees)) by wire transfer to an
account designated by the Company in writing at least two (2) Business Days
prior to the Closing Date; (b) pay the amount in excess of the Cure Cost Ceiling
that is necessary in order to cure, assume, and assign all Bank Related
Contracts designated by Purchaser; and (c) fund the Equity Contribution to an
account of the Bank designated by the Company.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to such exceptions as are disclosed in the Disclosure Schedule dated as
of the date hereof and attached hereto, the Company hereby makes the following
representations and warranties to the Purchaser as of the date hereof and as of
the Closing Date; provided that those representations and warranties which
address matters only as of a particular earlier date shall have been true and
correct only on such date. The inclusion of an item in the Disclosure Schedule
shall not be deemed an admission by the Company or the Bank that such item
represents a material fact, event, or circumstance or has had or would be
reasonably expected to have a Material Adverse Effect. Disclosure in any section
of the Disclosure Schedule shall apply only to such section of such Disclosure
Schedule, except to the extent that it is reasonably apparent from the face of
such disclosure that such disclosure is relevant to another section of such
Disclosure Schedule.

3.1 Corporate Status and Authority; Non-Contravention.

(a) Status of the Company. The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware and otherwise has the
corporate power and authority to own or lease all of its properties and assets
and to conduct its business in the manner in which its business is now being
conducted. The Company is duly registered as a savings and loan holding company.
The Company is duly qualified to do business and is in good standing in each
jurisdiction in which its ownership of properties or conduct of business
requires such qualification except where failure to be so qualified has not had
and would not reasonably be expected to have a Material Adverse Effect.

(b) Status of Bank. The Bank is a federal savings association and direct,
wholly-owned Subsidiary of the Company, is duly organized, validly existing and
in good standing under the laws of the United States of America, is authorized
under the laws of the United States of America to engage in the Business and
otherwise has the corporate power and authority to own or lease all of its
properties and assets and to conduct the Business in the manner in which the
Business is now being conducted. The Bank is duly qualified to do business and
is in good standing in each jurisdiction in which its ownership of properties or
conduct of business requires such qualification except where failure

 

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to be so qualified has not had and would not reasonably be expected to have a
Material Adverse Effect. The Bank is duly authorized by the OCC to conduct
business as a federal savings association. The deposit accounts of the Bank are
insured to the fullest extent permitted by law by the Deposit Insurance Fund
(including through the Transaction Deposit Insurance Guaranty Program), which is
administered by the FDIC. The FDIC has not been appointed receiver of the Bank.
Complete and correct copies of the Charter Documents of the Bank, as currently
in effect, have prior to the date hereof been delivered to the Purchaser.

(c) Due Authorization. (i) The Company has full legal right, corporate power and
authority to enter into this Agreement and, subject to the Sale Order, to carry
out its obligations hereunder and thereunder; and (ii) the execution and
delivery of this Agreement and all documents, instruments and agreements
required to be executed and delivered by the Company pursuant to this Agreement
and, subject to the Sale Order, the completion and performance of the
Contemplated Transactions have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement and all documents,
instruments and agreements required to be executed and delivered by the Company
pursuant to this Agreement have been duly executed and delivered by the Company
and, subject to the Sale Order, constitute a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with their
respective terms. No other corporate proceedings, including any stockholder or
debt holder approvals, are necessary for the execution and delivery by the
Company of this Agreement, the performance by it or of its obligation hereunder
or thereunder or the consummation by it of the Contemplated Transactions.

(d) Non-contravention. Except as disclosed on Section 3.1(d) of the Disclosure
Schedule, neither the execution and delivery of this Agreement, nor, subject to
the Sale Order, the completion and performance of the Contemplated Transactions,
or compliance by the Company with any of the provisions hereof or thereof, will
(i) materially violate, materially conflict with, or result in a material breach
of any provision of, or constitute a material default (or an event which, with
notice or lapse of time or both, would constitute a material default) under, or
result in the termination of, or result in the loss of any benefit or creation
of any material 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 material Encumbrance upon any of the material
properties or assets of the Company or any Subsidiary under any of the terms,
conditions or provisions of (A) the Charter Documents of the Company, the Bank
or any other Subsidiary, or (B) any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which the Company, the Bank or any other Subsidiary is a party or by which it
may be bound, or to which the Company, the Bank or any other Subsidiary or any
of the properties or assets of the Company, the Bank or any other Subsidiary may
be subject, or (ii) assuming the Purchaser Required Approvals are duly obtained,
violate in any material respect any Legal Requirement or any judgment, ruling,
order, writ, injunction or decree applicable to the Company, the Bank or any
other Subsidiary or any of their respective properties or assets.

3.2 Capitalization of the Bank.

(a) Ownership. The authorized capital stock of the Bank consists of 33,000,000
shares of common stock, $1.00 par value (the “Common Stock”), of which 560,198
shares of Common Stock are outstanding and 3,000,000 shares of preferred stock,
$1.00 par value (the “Preferred Stock”), of which no shares of Preferred Stock
are outstanding. No other shares of capital stock of the Bank are issued or
outstanding. All of the outstanding shares of Common Stock and Preferred Stock
are directly and beneficially owned and held by the Company and have been duly
authorized and validly issued, are fully paid and nonassessable with no personal
liability attaching to the ownership thereof, have been issued in full
compliance with all federal and state securities laws and other Legal
Requirements, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and are free and
clear of all Encumbrances.

 

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(b) Outstanding Stock Rights. There are no (i) outstanding preemptive rights,
subscriptions, options, calls, warrants or other rights of any kind or nature to
acquire any securities of the Bank or its Subsidiaries; (ii) outstanding
securities, instruments or obligations that are or may become convertible into
or exchangeable for any securities of the Bank or its Subsidiaries;
(iii) Contracts under which the Company or any of its Subsidiaries or the Bank
and its Subsidiaries are or may become obligated to sell, issue or otherwise
dispose of or redeem, purchase or otherwise acquire any securities of the Bank
or its Subsidiaries; (iv) shareholder agreements, voting trusts or other
agreements, arrangements or understandings to which the Company or any of its
Subsidiaries or the Bank or its Subsidiaries is a party or of which the Company
is aware, that may reasonably be expected to affect the exercise of voting or
any other rights with respect to the capital stock of the Bank or its
Subsidiaries, or (v) outstanding bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which the shareholder of the Bank or
its Subsidiaries may vote.

(c) Bank Subsidiaries. Other than the Subsidiaries set forth on Section 3.2(c)
of the Disclosure Schedule, the Bank does not have any Subsidiaries nor own any
equity interests in any other Person. Each Subsidiary is a direct, wholly owned
Subsidiary of the Bank, is duly organized, validly existing and in good standing
under the laws of the state set forth on Section 3.2(c) of the Disclosure
Schedule, is authorized under the laws of such state to engage in the Business
that the Subsidiary, conducts and otherwise has the corporate power and
authority to own or lease all of its properties and assets and to conduct the
Business that the Subsidiary conducts in the manner in which the Business that
the Subsidiary conducts is now being conducted. Each Bank Subsidiary is duly
qualified to do business and is in good standing in each jurisdiction in which
its ownership of properties or conduct of business requires such qualification
except where failure to be so qualified has not had and would not reasonably be
expected to have a Material Adverse Effect. All of the outstanding shares of
each Bank Subsidiary are directly and beneficially owned and held by the Bank
and have been duly authorized and validly issued, are fully paid and
nonassessable with no personal liability attaching to the ownership thereof,
have been issued in full compliance with all federal and state securities laws
and other Legal Requirements, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities, and
are free and clear of all Encumbrances. The operations of each Bank Subsidiary
are as described in Section 3.2(c) of the Disclosure Schedule.

(d) Ownership of Assets Covenant. Neither the Company nor any of its
Subsidiaries (other than the Bank and its Subsidiaries) (i) owns or has any
right to use any asset or property (whether real, personal, tangible, intangible
or otherwise) used in or held for use in, or related to, the Business or
(ii) other than the Bank Related Contracts, is a party to any Contract relating
to the Business. Except as disclosed on Section 3.2(d) of the Disclosure
Schedule, no Subsidiary of the Company (other than the Bank or its Subsidiaries)
has or owns any interest in any Tax Refund (or any proceeds of any Tax Refund
received or to be received after June 30, 2012) or any proceeds received or to
be received after June 30, 2012 related to any Assumed Bank Related Contract
(including any proceeds from any insurance claim to the extent related to the
Bank or its Subsidiaries or the Business).

3.3 Business Operations.

(a) Permits. The Bank and its Subsidiaries hold all Permits material to the
Business, including without limitation all Permits required from the FDIC and
the OCC, to conduct a commercial banking business (each, a “Material Permit”).
All of the Material Permits are validly issued, are in full force and effect and
are being complied with by the Bank and its Subsidiaries in all material
respects. Except as set forth on Section 3.3(a) of the Disclosure Schedule, no
notice of breach or default in respect

 

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of any Material Permit has been received by the Bank or its Subsidiaries and
there are no Proceedings in progress, pending or, to the Company’s Knowledge,
threatened which would reasonably be expected to result in the cancellation,
revocation, suspension or adverse alteration of any of them, and the Company is
not aware of any existing matters or state of facts which is reasonably likely
to give rise to any such notice or Proceeding.

(b) Governmental Authorizations. Except as set forth on Section 3.3(b) of the
Disclosure Schedule:

(i) Each Governmental Authorization that is held by the Bank or its Subsidiaries
or that otherwise relates to the Business is valid and in full force and effect.

(ii) The Bank and its Subsidiaries are in compliance in all material respects
with all of the terms and requirements of each Governmental Authorization
applicable to it that is material to the Business (a “Material Governmental
Authorization”).

(iii) No event has occurred or circumstance exists that would or would
reasonably be expected to (with or without notice or lapse of time)
(A) constitute or result directly or indirectly in a material violation of or a
failure to comply with any material term or requirement of any Material
Governmental Authorization, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation or termination of, or any
modification to, or would otherwise impair in any way, any Material Governmental
Authorization.

(iv) Neither the Company nor the Bank (nor its Subsidiaries) has received any
notice or other communication from any Governmental Authority regarding (A) any
actual, alleged, possible or potential violation of or failure to comply with
any material term or requirement of any Material Governmental Authorization or
(B) any actual, proposed, possible or potential revocation, withdrawal,
suspension, cancellation, termination of or modification to any Material
Governmental Authorization.

(v) All applications required to have been filed for the renewal of the Material
Governmental Authorizations have been duly filed on a timely basis with the
appropriate Governmental Authorities, and all other filings required to have
been made with respect to such Governmental Authorizations have been duly made
on a timely basis with the appropriate Governmental Authority, except as have
not had, and would not reasonably be expected to be, material.

(vi) There is no authorization, license, approval, Consent, order or any other
action of, or any registration, declaration, filing or notice with or to any
Governmental Authority or court that is required for the execution or delivery
by the Company of this Agreement or the validity or enforceability of this
Agreement against the Company, and, subject to the Sale Order and the receipt of
the Purchaser Required Approvals, the completion or performance by the Company
of any of the Contemplated Transactions.

(vii) The Bank and its Subsidiaries are not subject to any cease-and-desist or
other similar order or enforcement action issued by, nor is any of them a party
to any written agreement, consent agreement or memorandum of understanding with,
or a party to any commitment letter or similar undertaking to, or subject to any
capital directive by, or adopted any board resolutions at the request of, any
Governmental Authority (each item in this sentence, a “Regulatory Agreement”),
nor has the Bank or its Subsidiaries been notified since January 1, 2009 by any
Governmental Authority that it is considering issuing, initiating, ordering, or
requesting any such Regulatory Agreement. The Bank and its Subsidiaries are in
compliance in all material respects with each Regulatory Agreement to which
either of

 

15

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them is a party or subject, and neither the Bank nor its Subsidiaries has
received any notice from any Governmental Authority indicating that the Bank or
its Subsidiaries is not in compliance in all material respects with any such
Regulatory Agreement.

(viii) Except for normal examinations conducted by a Governmental Authority in
the regular course of the Business and except as disclosed in Section 3.8 of the
Disclosure Schedule, no Governmental Authority has initiated any Proceeding into
the Business or operations of the Bank or its Subsidiaries since January 1,
2009. There is no unresolved violation, criticism or exception by any
Governmental Authority with respect to any report or statement relating to any
examinations or inspections of the Bank or its Subsidiaries. Other than the
current OCC safety and soundness examination, as of the date of this Agreement,
no regulatory examination of the Bank or its Subsidiaries is under way, and no
other report of examination is pending.

(c) Compliance with Law. Except as set forth on Section 3.3(c) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is in material
violation of, or has materially violated, and to the Knowledge of the Company
neither the Company nor any of its Subsidiaries is under investigation with
respect to or has been threatened to be charged with or given notice of any
material violation of, any Legal Requirement.

3.4 Regulatory Reports.

(a) Company’s Reports. Except as set forth on Section 3.4(a) of the Disclosure
Schedule, the Company has filed or furnished, as applicable, on a timely basis,
all forms, filings, registrations, submissions, statements, certifications,
reports and documents required to be filed or furnished by it with any
Governmental Authority, including any and all federal and state banking
authorities, since January 1, 2009 (including any amendments thereto, the
“Company’s Reports”). Except as set forth on Section 3.4(a) of the Disclosure
Schedule, each of the Company’s Reports, at the time of its filing or being
furnished, complied as to form in all material respects with all Legal
Requirements applicable to the Company’s Reports. Except as set forth in
Section 3.4(a) of the Disclosure Schedule, as of their respective dates (or, if
amended prior to the date hereof, as of the date of such amendment), the
Company’s Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances in which they were
made, not misleading.

(b) Bank’s Reports. Except as set forth on Section 3.4(b) of the Disclosure
Schedule, the Bank and its Subsidiaries have duly filed with the OCC, the OTS,
the FDIC and any other applicable Governmental Authorities, as the case may be,
in correct form in all material respects, the reports, returns and filing
information data required to be filed under any applicable Legal Requirement,
including any and all federal and state banking authorities, and such reports
were complete and accurate in all material respects and in compliance in all
material respects with the requirements of any applicable Legal Requirement.
Except as set forth on Section 3.4(b) of the Disclosure Schedule, as of their
respective dates (or, if amended prior to the date hereof, as of the date of
such amendment), such reports did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances in which they
were made, not misleading.

3.5 Deposits. All of the deposits held by the Bank (including the records and
documentation pertaining to such deposits) have been established and are held in
compliance in all material respects with (i) all applicable policies, practices
and procedures of the Bank, and (ii) all applicable Legal Requirements,
including anti-money laundering, anti-terrorism, or embargoed persons
requirements. All of the deposit accounts of the Bank are insured to the maximum
limit set by the FDIC and any premiums

 

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and assessments required to be paid in connection therewith have been fully
paid, and no proceedings for the termination or revocation of such insurance are
pending, or, to the Knowledge of the Company, threatened.

3.6 Financial Matters.

(a) Bank Financial Statements. The Company has, prior to the date hereof,
provided to the Purchaser the Unaudited Financial Statements, which are attached
as Section 3.6(a) of the Disclosure Schedule. Except as set forth on
Section 3.6(a) of the Disclosure Schedule, the Unaudited Financial Statements
(i) are true, accurate and complete in all material respects, (ii) have been
prepared in accordance with GAAP (except for the omission of footnotes) and
regulatory accounting principles consistently applied and (iii) fairly present
in all material respects the consolidated financial position of the Bank and its
Subsidiaries as of the respective dates set forth therein and their consolidated
results of operations, for the respective periods set forth therein. The
consolidated financial statements of the Bank and its Subsidiaries to be
prepared after the date of this Agreement and prior to the Closing (A) will be
true, accurate and complete in all material respects, (B) will have been
prepared in accordance with GAAP (except for the omission of footnotes) and
regulatory accounting principles consistently applied and (C) will fairly
present in all material respects the consolidated financial position of the Bank
and its Subsidiaries as of the respective dates set forth therein and their
consolidated results of operations for the respective periods set forth therein.
The balance sheet dated June 30, 2012, included in the Unaudited Financial
Statements is referred to as the “June 30 Balance Sheet.”

(b) Call Reports. The financial statements contained in the Call Reports of the
Bank to be prepared after the date of this Agreement and prior to the Closing
(A) will be true, accurate and complete in all material respects, (B) will have
been prepared in accordance with GAAP and regulatory accounting principles
consistently applied, except as may be otherwise indicated in the notes thereto
and except for the omission of footnotes, and (C) will fairly present in all
material respects the consolidated financial condition of the Bank and its
Subsidiaries as of the respective dates set forth therein and their consolidated
results of operations and stockholders’ equity for the respective periods set
forth therein, subject, in the case of interim period financial statements, to
year-end adjustments (none of which will be material).

(c) Systems and Processes. Except as set forth on Section 3.6(c) of the
Disclosure Schedule, the Bank and its Subsidiaries have in place sufficient
systems and processes that are customary for a community bank of the size of the
Bank and that are designed to (x) provide reasonable assurances regarding the
reliability of the Bank’s and its Subsidiaries’ financial statements and (y) in
a timely manner accumulate and communicate to the Bank’s and its Subsidiaries’
principal executive officer and principal financial officer the type of
information that would be required to be disclosed in the Bank’s and its
Subsidiaries’ financial statements. Except as set forth on Section 3.6(c) of the
Disclosure Schedule, neither the Bank or its Subsidiaries nor, to the Company’s
Knowledge, any employee, auditor, accountant or representative of the Bank or
its Subsidiaries has received or otherwise had or obtained Knowledge of any
complaint, allegation, assertion or claim, whether written or oral, regarding
the adequacy of such systems and processes or the accuracy or integrity of the
Bank’s or its Subsidiaries’ financial statements. Except as set forth on
Section 3.6(c) of the Disclosure Schedule, to the Company’s Knowledge, there has
been no instance of fraud by the Bank or its Subsidiaries, whether or not
material, that occurred during any period since January 1, 2009.

(d) Auditor Independence. Except as set forth on Section 3.6(d) of the
Disclosure Schedule, since January 1, 2009, the Company’s and the Bank’s
external auditor was independent of the Company and the Bank and their
management. As of the date hereof, except as set forth on Section 3.6(d) of the
Disclosure Schedule, the Company’s and the Bank’s external auditor has not
resigned or been dismissed as a result of or in connection with any
disagreements with the Company on a matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.

 

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(e) Books and Records.

(i) Except as set forth on Section 3.6(e)(i) of the Disclosure Schedule, the
Books and Records have been and are being maintained in the Ordinary Course of
Business in accordance and compliance with all applicable accounting
requirements and Legal Requirements and are complete in all material respects to
reflect corporate action by the Bank and its Subsidiaries. Neither the Company
nor the Bank nor any of their Subsidiaries have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K of the
Securities Act of 1933, as amended.

(ii) The records, systems, controls, data and information of the Bank and its
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 control of the
Bank and its Subsidiaries or any of their accountants (including all means of
access thereto and therefrom) in all material respects. Except as set forth on
Section 3.6(e)(ii) of the Disclosure Schedule, the Bank and its Subsidiaries
have established and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with its management’s general or specific authorizations and
(B) transactions are recorded in conformity with GAAP consistently applied and
all Legal Requirements. Since January 1, 2009, except as set forth on
Section 3.6(e) of the Disclosure Schedule, the Bank and its Subsidiaries or, to
the Company’s Knowledge, any director, senior executive officer, auditor or
independent accountant, has not received written notice or otherwise obtained
knowledge of any material weakness regarding the accounting or auditing
practices, procedures or methods of the Bank and its Subsidiaries or their
respective internal accounting controls, other than material weaknesses that
have been remedied prior to the date of this Agreement.

(f) Liabilities. Neither the Bank nor any of its Subsidiaries has any Liability,
and there is no existing condition, situation or set of circumstances that could
reasonably be expected to result in such a Liability, except:

(i) Liabilities to the extent disclosed on, reflected in or provided for in the
June 30 Balance Sheet;

(ii) Liabilities incurred in the Ordinary Course of Business since June 30,
2012, except those, that individually or in the aggregate, are not material;

(iii) Liabilities disclosed in the Disclosure Schedule;

(iv) Liabilities arising from this Agreement; and

(v) Other Liabilities that, individually or in the aggregate, are not material.

3.7 Tax Matters. Except as set forth on Section 3.7 of the Disclosure Schedule:

(a) Each of the Bank and its Subsidiaries (or the Company on behalf of the Bank
or its Subsidiaries) has filed all federal income Tax Returns and all other
material Tax Returns required to be filed by it. All such Tax Returns were true,
correct and complete in all material respects and accurately reflected in all
material respects the taxable income (or other measure of Tax) of the Bank and
its Subsidiaries.

 

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(b) Each of the Bank and its Subsidiaries (or the Company on behalf of the Bank
or its Subsidiaries) has paid all Taxes with respect to which there is any
direct or indirect Liability on the part of one or more of the Bank, its
Subsidiaries or the consolidated, combined, affiliated, unitary or other tax
group including the Company, the Bank and its Subsidiaries whether or not shown
on any Tax Return. The Bank and its Subsidiaries have established reserves in
accordance with GAAP that are adequate for the payment of all Taxes not yet due
and payable with respect to the assets and operations of the Bank and its
Subsidiaries.

(c) Each of the Bank and its Subsidiaries (or the Company on behalf of the Bank
or its Subsidiaries) has withheld and paid to the appropriate taxing authority
all material Taxes required to be withheld and paid, including in connection
with any amounts owing to any employee, independent contractor, creditor,
stockholder or other third party and all Forms W-2 and 1099 and any other forms
required with respect thereto have been properly completed and timely filed.

(d) None of the Company, the Bank or its Subsidiaries has received from any
taxing authority written notice of, and, to the Knowledge of the Company, there
is not threatened, any audit, claim, action, suit, request for information,
ruling, determination, investigation or administrative or judicial proceeding
that is pending or being conducted with respect to Taxes of the Bank or its
Subsidiaries. None of the Company, the Bank or its Subsidiaries has received
from any taxing authority (including in jurisdictions in which the Bank or its
Subsidiaries has not filed Tax Returns) written notice of, and, to the Knowledge
of the Company, there is not threatened, any proposed assessment, adjustment or
deficiency for any amount of Taxes proposed, asserted, or assessed against the
Bank or its Subsidiaries.

(e) Neither the Bank nor its Subsidiaries is a party to or bound by any Tax
sharing, allocation or indemnification agreement or similar agreement or
arrangement.

(f) Neither the Bank nor its Subsidiaries has, in the longer of the past two
years or in all tax years for which the statute of limitations has not expired,
or to the Knowledge of the Company, prior years, constituted either a
“distributing corporation” or a “controlled corporation” in a distribution of
stock intended to qualify for tax-free treatment under Section 355 of the Code.

(g) Neither the Bank nor its Subsidiaries will be required, for income Tax
purposes for any taxable period ending after the Closing Date, to include in its
taxable income any item of income or gain or to exclude from its taxable income
any item of deduction or loss as a result of any (i) change in method of
accounting under Section 481(c) of the Code (or any corresponding or similar
provision of state, local or foreign law) for a taxable period ending on or
prior to the Closing Date, (ii) closing agreement under Section 7121 of the Code
(or any corresponding or similar provision of state, local or foreign law)
executed on or prior to the Closing Date, (iii) installment sale or open
transaction disposition occurring on or prior to the Closing Date, or
(iv) prepaid amount received on or prior to the Closing Date.

(h) There are no liens or encumbrances for Taxes on any of the assets of the
Bank or its Subsidiaries other than liens or encumbrances for Taxes not yet due
and payable.

(i) No written claim has been received in the last six years by the Company, the
Bank or its Subsidiaries from a taxing authority in a jurisdiction where the
Bank or its Subsidiaries does not file Tax Returns that the Bank or its
Subsidiaries is or may be subject to taxation by that jurisdiction or should
have been included in a combined, consolidated, affiliated, unitary or other
group Tax Return of that jurisdiction.

(j) Neither the Bank nor its Subsidiaries has engaged in any “reportable
transactions” within the meaning of Treasury Regulations Section 1.6011-4(b).

 

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3.8 Litigation and Claims. Except as set forth on Section 3.8 of the Disclosure
Schedule, there are no pending or, to the Knowledge of the Company, threatened
Proceedings against or relating specifically to the Bank or its Subsidiaries or
the Business that would reasonably be expected to materially interfere with or
delay any of the Contemplated Transactions. Except as set forth on Section 3.8
of the Disclosure Schedule, there is no material Order or regulatory restriction
imposed upon or relating specifically to the Bank or its Subsidiaries or the
Business that would reasonably be expected to materially interfere with or delay
any of the Contemplated Transactions.

3.9 Employee Matters.

(a) Employees. Section 3.9(a) of the Disclosure Schedule sets forth, for each
officer and other key employee whose annual compensation equals or exceeds
$100,000 of the Bank or its Subsidiaries, such employee’s name, title, hire
date, location, whether full- or part-time, and whether active or on leave (and,
if on leave, the nature of the leave and the expected return date). Five
(5) days prior to the Closing Date, the Company will provide the Purchaser with
a revised version of Section 3.9(a) of the Disclosure Schedule, updated as of
such date. No officer or other key employee whose compensation equals or exceeds
$100,000 of the Bank or its Subsidiaries has indicated to the Company, the Bank
or any of their Subsidiaries that he or she intends to resign or retire as a
result of the Contemplated Transactions contemplated by this Agreement or
otherwise within one year after the Closing Date.

(b) Employee Benefit Plans; Labor.

(i) Section 3.9(b)(i) of the Disclosure Schedule sets forth a complete and
correct list of each Benefit Arrangement. The Company has prior to the date
hereof provided to the Purchaser correct and complete copies of (i) each Benefit
Arrangement, including all amendments thereto (or, in the case of any such
Benefit Arrangement that is unwritten, descriptions thereof), (ii) the most
recent annual reports on Form 5500 filed with the Internal Revenue Service with
respect to each Benefit Arrangement (if any such report was required), (iii) the
most recent summary plan description for each Benefit Arrangement for which such
summary plan description is required and (iv) each trust agreement and insurance
or group annuity contract relating to any Benefit Arrangement.

(ii) Each Benefit Arrangement that is intended to be tax qualified under
Section 401(a) of the Code (each, a “Qualified Plan”) and each trust established
in connection with any Qualified Plan which is intended to be tax exempt under
Section 501(a) of the Code is tax qualified or tax exempt, as applicable, and
the Bank has received a determination letter or an opinion letter from the
Internal Revenue Service upon which it may rely regarding each such Qualified
Plan’s qualified status under the Code, and to the Company’s Knowledge, no event
has occurred since the date of the most recent determination letter or
application relating to any such Qualified Plan that would adversely affect the
qualification of such Qualified Plan. The Company has prior to the date hereof
provided to the Purchaser a correct and complete copy of the most recent
determination letter or opinion letter received with respect to each Qualified
Plan, as well as a correct and complete copy of each pending application for a
determination letter, if any.

(iii) Except as set forth on Section 3.9(b)(iii) of the Disclosure Schedule,
each Benefit Arrangement has been administered in all material respects in
accordance with its terms and in compliance with the applicable provisions of
ERISA, the Code, all other Legal Requirements and the terms of all applicable
collective bargaining agreements (if any). No events have occurred with respect
to any Benefit Arrangement that could result in payment or assessment by or
against the Bank or its Subsidiaries of any excise taxes under Section 4972,
4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code. There are no
investigations by any Governmental Authority, termination proceedings or other
claims (except routine claims for benefits payable under the Benefit
Arrangements) or Proceedings against or involving any Benefit Arrangement.

 

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(iv) Neither the Company nor the Bank (or its Subsidiaries) has any obligation
to gross up, indemnify or otherwise reimburse any current or former employee of
the Bank or its Subsidiaries for any tax incurred by any such employee,
including, without limitation, under Section 409A or 4999 of the Code. No
Benefit Arrangement, individually or collectively, would reasonably be expected
to result in the payment of any amount that would not be deductible under
Section 280G of the Code.

(v) No Qualified Plan is, or ever has been, subject to Title IV of ERISA or
Section 412 of the Code. No direct, contingent or secondary liability to any
Person has been incurred or could reasonably be expected to be incurred by the
Bank or its ERISA Affiliates under Title IV of ERISA.

(vi) Neither the Bank nor any of its ERISA Affiliates contributes to, or has
within the preceding six years, contributed to or incurred any contingent or
actual liability or other obligation in connection with, any Multiemployer Plan.
Neither the Bank nor any of its ERISA Affiliates has, within the preceding six
years, withdrawn in a complete or partial withdrawal from any Multiemployer Plan
or incurred any liability under Section 4204 of ERISA that has not been
satisfied in full.

(vii) Except as set forth on Section 3.9(b)(vii) of the Disclosure Schedule, the
Bank and its Subsidiaries have no obligation to provide medical, dental or life
insurance benefits (whether or not insured) to any employees or former employees
of the Bank or its Subsidiaries (or beneficiary thereof) after retirement or
other termination of service (other than coverage mandated by Legal
Requirements).

(viii) There are no collective bargaining agreements binding on the Bank or its
Subsidiaries; none of the employees of the Bank or its Subsidiaries is
represented by a labor union, and, to the Knowledge of the Company, there is no,
and since January 1, 2009, has been no, (i) organizational effort made or
threatened by or on behalf of any labor organization or trade union to organize
any employees of the Bank or its Subsidiaries, and (ii) no demand for
recognition of any employees of the Bank or its Subsidiaries has been made by or
on behalf of any labor organization or trade unions.

(ix) There are no, and since January 1, 2009, there have not been any, strikes,
work stoppages, work slowdowns or lockouts pending or, to the Knowledge of the
Company, contemplated or threatened against or involving the Bank or its
Subsidiaries.

(x) The Company is in compliance, in all material respects, with all applicable
Legal Requirements respecting employment and employment practices, including
those relating to labor management relations, wages, hours, overtime, employee
classification, discrimination, sexual harassment, civil rights, affirmative
action, work authorization, immigration, safety and health, information privacy
and security, workers compensation, continuation coverage under group health
plans, wage payment and the payment and withholding of Taxes.

(xi) Except as set forth on Section 3.9(b)(xi) of the Disclosure Schedule, there
are no Proceedings pending or, to the Knowledge of the Company, threatened
against or affecting the Bank or its Subsidiaries, relating to the alleged
material violation of any applicable Legal Requirement pertaining to labor
relations or employment related matters.

 

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(xii) Except as set forth on Section 3.9(b)(xii) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement will not (either
alone or together with any other event) entitle any current or former employee,
consultant or independent contractor of the Bank or its Subsidiaries to
severance pay or accelerate the time of payment or vesting or trigger any
material payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, materially increase the amount payable or
trigger any other material obligation pursuant to, any Benefit Arrangement or
otherwise.

(xiii) There has been no amendment to, written interpretation of or announcement
(whether or not written) by the Company, the Bank or the Bank’s Subsidiaries
relating to, or change in employee participation or coverage under, any Benefit
Arrangement that would increase materially the expense of maintaining such plan
above the level of expense incurred in respect thereof for the most recent
fiscal year ended prior to the date hereof.

(xiv) Except as set forth on Section 3.9(b)(xiv) of the Disclosure Schedule, any
and all benefits and coverage under each health, accident, life, disability and
similar plan or arrangement sponsored by the Company, the Bank or any Subsidiary
is not other than fully insured.

(xv) Except as set forth on Section 3.9(b)(xv) of the Disclosure Schedule, no
Benefit Arrangement, or similar plan or arrangement sponsored by the Company,
the Bank or any Subsidiary, is subject to any requirement of Section 409A of the
Code.

3.10 Properties and Leases. The Bank or its Subsidiaries (a) has good, valid and
marketable title to all the properties and assets reflected in the June 30
Balance Sheet or acquired after the date thereof (except properties sold or
otherwise disposed of since the date thereof in the Ordinary Course) (the “Owned
Properties”), free and clear from any Encumbrances other than Encumbrances that,
(A) individually or in the aggregate, (i) do not, and would not reasonably be
expected to, affect the value thereof or interfere with the use made or to be
made thereof by the Bank or its Subsidiaries in any material respect or
otherwise be material, (ii) do not secure indebtedness for borrowed money and
(iii) arose only in the Ordinary Course and (B) in the case of Owned Properties
consisting of Real Estate, Permitted Liens, (b) is the lessee of all leasehold
estates reflected in the June 30 Balance Sheet or acquired after the date
thereof (except for leases that have expired by their terms since the date
thereof) (the “Leased Properties” and, collectively with the Owned Properties,
the “Properties”; and any Property consisting of real estate or buildings or
improvements thereon (“Real Estate”)), free and clear from Encumbrances other
than Encumbrances that, (A) individually or in the aggregate, (i) would not, and
would not reasonably be expected to, affect the value thereof or interfere with
the use made or to be made thereof by the Bank or its Subsidiaries in any
material respect or otherwise be material, (ii) do not secure indebtedness for
borrowed money and (iii) arose only in the Ordinary Course and (B) in the case
of Leased Properties consisting of Real Estate, Permitted Liens and is in
possession of the properties purported to be leased thereunder, and each such
lease is valid without default thereunder by the lessee or, to the Knowledge of
the Company, the lessor, and (c) owns or leases all properties and assets as are
used by the Bank or its Subsidiaries in the Business or otherwise necessary to
their respective operations as now conducted. Section 3.10 of the Disclosure
Schedule contains a true and complete list of all Real Estate as of the date of
this Agreement and identifies which Real Estate is owned and which is leased.
The Real Estate is in material compliance with all applicable zoning laws and
building codes, and the buildings and improvements located on the Real Estate
are in good operating condition and in a state of good working order, ordinary
wear and tear excepted. There are no pending or, to the Knowledge of the
Company, threatened material condemnation proceedings against any of the Real
Estate. The Bank and its Subsidiaries are in compliance with all applicable
health and safety related requirements for the Real Estate, including those
under the Americans with Disabilities Act of 1990 and the Occupational Safety
and Health Act of 1970.

 

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3.11 Absence of Certain Changes. Since June 30, 2012, (a) there has not been,
and no fact, effect, event, change, occurrence or circumstance has occurred that
would reasonably be expected to have, a Material Adverse Effect, and (b) no
material default (or event which, with notice or lapse of time, or both, would
constitute a material default) exists on the part of the Bank or its
Subsidiaries or, to the Knowledge of the Company, on the part of any other
party, in the due performance and observance of any term, covenant or condition
of any Contract to which the Bank or its Subsidiaries is a party and which is,
individually or in the aggregate, material to the financial condition of the
Bank and its Subsidiaries.

3.12 Commitments and Contracts.

(a) Except as set forth on Section 3.12 of the Disclosure Schedule, there are no
Contracts to which the Bank or its Subsidiaries is a party or subject or which
otherwise relate to the Business (whether written or oral, express or implied)
of the type described below (each Contract disclosed or required to be
disclosed, including the Bank Related Contracts, a “Bank Significant
Agreement”):

(i) any Contract which is or would constitute a “material contract” within the
meaning of Item 601(b)(10) of Regulation S-K to be performed in whole or in part
after the date of this Agreement;

(ii) any Contract with respect to the employment or service of any current
directors, officers, employees or consultants (excluding attorneys, accountants
and auditors) of the Bank or its Subsidiaries and of any former director or
officer of the Bank or its Subsidiaries whose service as such terminated after
December 31, 2010, other than the Bank’s standard form at-will offer letter;

(iii) any Contract, including pursuant to a board resolution, by the Bank or its
Subsidiaries with (A) the Company or any of its Affiliates (other than the Bank
or its Subsidiaries) or (B) any director or officer of the Company or its
Affiliates;

(iv) any Contract which limits the freedom of the Bank or its Subsidiaries to
compete in any material line of business or with any Person or in any area, or
to solicit the business of any Person or category of Persons;

(v) any material Contract with a Governmental Authority or Mortgage Finance
Agency;

(vi) any Contract pursuant to which the Bank or its Subsidiaries grants or makes
available, or is granted or receives, any material Proprietary Rights (other
than non-exclusive licenses to commercially available software on
non-discriminatory pricing terms);

(vii) any Contract which (A) 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 Bank or its Subsidiaries; (B) limits or purports to limit
the ability of the Bank or its Subsidiaries to own, operate, sell, transfer,
pledge or otherwise dispose of any material assets or business the Bank or its
Subsidiaries owns, or (C) contains a “most favored nation” clause or similar
term providing preferential pricing to a party (other than the Bank or its
Subsidiaries) that is material to the Bank or its Subsidiaries;

(viii) any material partnership, joint venture, limited liability company,
operating, shareholder, investors rights or other similar agreement or
arrangement;

 

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(ix) any lease or sublease (A) of personal property providing for aggregate
annual rentals of $100,000 or more or (B) of Real Estate;

(x) any material indenture, deed of trust, loan agreement or other financing
agreement or instrument to which the Bank or its Subsidiaries is an obligor or
guarantor;

(xi) 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, including continuing material
indemnity obligations, of the Bank or its Subsidiaries;

(xii) any current or on-going agreement or series of agreements for the
purchase, sale, receipt, lease or use of materials, supplies, goods, services
(except for services provided by attorneys), equipment or other assets
(excluding real estate owned properties obtained through foreclosure proceedings
or by the execution of deed in lieu of foreclosure agreements entered into in
the Ordinary Course) providing for aggregate payments by or to the Bank and its
Subsidiaries of $150,000 or more annually or $300,000 or more in the aggregate;

(xiii) any participation, loan purchase or similar agreement pursuant to which
the Bank or its Subsidiaries has (A) acquired an interest in the indebtedness of
any third party or (B) sold an interest in the indebtedness of any third party;

(xiv) any material agreement (including any keepwell agreement, other than the
Company’s source of strength obligations pursuant to the Federal Reserve Board’s
Regulation Y) under which (A) any Person has directly or indirectly guaranteed
any material liabilities or obligations of the Bank or its Subsidiaries or
(B) the Bank or its Subsidiaries has, directly or indirectly, guaranteed any
material liabilities or obligations of any other Person (other than letters of
credit entered into in the Ordinary Course, including for the avoidance of doubt
with customary terms);

(xv) any correspondent Contract or other similar Contract; and

(xvi) any other agreement, commitment, arrangement or plan that is (A) not made
in the Ordinary Course or (B) material to the Bank and its Subsidiaries, taken
as a whole.

(b) Prior to the date hereof, the Company has provided (by hard copy, electronic
data room or otherwise) to Purchaser or its representatives true, correct and
complete copies, including all amendments, of each of the Bank Significant
Agreements. (i) Each of the Bank Significant Agreements has been duly and
validly authorized, executed and delivered by the Bank or its Subsidiaries and
is binding on the Bank or its Subsidiaries, as applicable, and in full force and
effect; (ii) the Bank and its Subsidiaries are in all material respects in
compliance with and have in all material respects performed all obligations
required to be performed by any of them to date under each Bank Significant
Agreement; (iii) the Bank and its Subsidiaries have not received notice of any
material violation or default (or any condition which with the passage of time
or the giving of notice would cause such a violation or default) by any party
under any Bank Significant Agreement; and (iv) no other party to any Bank
Significant Agreement is, to the Knowledge of the Company, in material default
in any respect thereunder, except to the extent the filing of the Bankruptcy
Case constitutes a default of any such agreement.

3.13 Risk Management Instruments. Section 3.13 of the Disclosure Schedule sets
forth all derivative instruments of the Bank and its Subsidiaries, including
swaps, caps, floors and option agreements, whether entered into for the Bank’s
or its Subsidiaries’ own account or for the account of a customer of the Bank.
All such derivative instruments were entered into (a) only in the Ordinary
Course

 

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of Business and consistent with past practice, (b) in accordance with all
applicable laws, rules, regulations and regulatory policies and (c) with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of the Bank or its
Subsidiaries and is enforceable against the Bank or its Subsidiaries, as
applicable, and, to the Knowledge of the Company, the other parties thereto
(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) in accordance with its terms. Neither the Bank or its Subsidiaries
nor, to the Knowledge of the Company, any other party thereto, is in breach of
any of its material obligations under any such agreement or arrangement.

3.14 Environmental Matters. Except as set forth on Section 3.14 of the
Disclosure Schedule:

(a) The Bank and its Subsidiaries are and have since January 1, 2009 been in
compliance in all material respects with all Environmental Laws. None of the
Bank, the Bank’s Subsidiaries nor the Company has received any communication
from any Person that alleges that the Bank or its Subsidiaries is not in
compliance with any Environmental Laws and, to the Knowledge of the Company,
there are no circumstances that would reasonably be expected to prevent or
interfere with such compliance in the future.

(b) There is no Environmental Claim pending or, to the Knowledge of the Company,
threatened, nor are there any circumstances that would reasonably be expected to
form the basis for any Environmental Claim, against the Bank or its Subsidiaries
or against any person or entity whose liability for any Environmental Claim the
Bank or its Subsidiaries has indemnified, retained or assumed by contract or by
operation of law.

(c) The Company has provided to Purchaser all assessments, reports, data,
results of investigations or audits, and other information that is in the
possession or control of or reasonably available to the Company or the Bank or
its Subsidiaries regarding any Materials of Environmental Concern, Environmental
Law, Environmental Claim or other environmental matters pertaining to or the
environmental condition of any properties currently or previously owned, leased
or operated by the Bank or its Subsidiaries since January 1, 2009, including but
not limited to corporate offices or branch locations or properties acquired
through foreclosure, granting of a deed in lieu of foreclosure or similar
transfer of title or possession, or the compliance (or noncompliance) by or
Liability of the Bank or its Subsidiaries under any Environmental Laws.

(d) Except as would not reasonably be expected to give rise to any material
Liability of the Bank or its Subsidiaries, since January 1, 2009, no Materials
of Environmental Concern have been discharged, disposed of, spilled, leaked or
otherwise released at, on, to, from or under any property now or previously
owned, leased or operated by the Bank or its Subsidiaries or any of their
respective predecessors (including, to the Knowledge of the Company, any such
properties acquired through foreclosure, granting of a deed in lieu of
foreclosure or similar transfer of title or possession).

(e) Neither the Bank nor its Subsidiaries is required by any Environmental Law
or by virtue of the transactions set forth herein and contemplated hereby, or as
a condition to the effectiveness of any transactions contemplated hereby, (i) to
perform a site assessment for Materials of Environmental Concern, (ii) to remove
or remediate Materials of Environmental Concern, (iii) to give notice to or
receive approval from any Governmental Authority regarding environmental
matters, other than a supervising bankruptcy court with jurisdiction over the
pending transaction, or (iv) to record or deliver to any Person any disclosure
document or statement pertaining to environmental matters.

 

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3.15 Insurance. Except as set forth on Section 3.15 of the Disclosure Schedule,
the Bank and its Subsidiaries maintain insurance underwritten by insurers of
recognized financial responsibility, of the types and in the amounts that the
Bank and its Subsidiaries reasonably believe are adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Bank or its Subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
with such deductibles as are customary for companies in the same or similar
business. Section 3.15 of the Disclosure Schedule sets forth a true and complete
list of, and the Company has furnished to Purchaser prior to the date hereof
true and complete copies of, all insurance policies and fidelity bonds relating
to the assets, business, operations, employees, officers or directors of the
Bank and its Subsidiaries, whether or not the Bank or its Subsidiaries are party
to such insurance policies or fidelity bonds. Except as set forth on
Section 3.15 of the Disclosure Schedule, there is no claim by the Bank or its
Subsidiaries pending under any of such policies or bonds as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
bonds or in respect of which such underwriters have reserved their rights. All
premiums payable under all such policies and bonds have been timely paid and the
Company, the Bank and its Subsidiaries have otherwise in all material respects
complied fully with the terms and conditions of all such policies and bonds.
Such policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) have been in effect since at least
January 1, 2009 and remain in full force and effect. The Company has no
Knowledge of any threatened termination or premium increase with respect to, or
material alteration of coverage under, any of such policies or bonds. The Bank
and its Subsidiaries shall after the Closing continue to have coverage under
policies and bonds relating to the Business with respect to events occurring
prior to the Closing and such coverage will not be affected by any claims by the
Company or any of its Subsidiaries other than the Bank and its Subsidiaries.

3.16 Intellectual Property. The Bank and its Subsidiaries own or are licensed to
use or otherwise possess legally enforceable rights to use all material patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, “Proprietary Rights”) that are material to the
Business and used in or necessary for the conduct of the Business as currently
conducted. The Bank and its Subsidiaries have the right to use all material
Proprietary Rights owned by the Bank and used in the conduct of the Business as
currently conducted without infringing, misappropriating or otherwise violating
the Proprietary Rights of any third party, and neither the Bank, its
Subsidiaries nor the conduct of the Business has infringed, misappropriated or
otherwise violated any such Proprietary Rights in any material respect. To the
Company’s Knowledge, the Bank has the right to use all material Proprietary
Rights licensed to the Bank and used in the conduct of the Business as currently
conducted without infringing, misappropriating or otherwise violating the
Proprietary Right of any third party or otherwise violating the terms of any
licensing or other agreement to which the Bank is a party. To the Company’s
Knowledge, no Person is infringing, misappropriating or otherwise violating any
of the Proprietary Rights of the Bank, except where the infringement of or lack
of a right to use such Proprietary Rights would not have any material impact on
the Bank. No charges, claims or litigation have been asserted or, to the
Company’s Knowledge, threatened against the Bank or its Subsidiaries contesting
the right of the Bank or its Subsidiaries to use, or the validity of, any of the
Proprietary Rights used in the conduct of Business as currently conducted or
challenging or questioning the validity or effectiveness of any license or
agreement pertaining thereto or asserting the misuse thereof, and, to the
Company’s Knowledge, no valid basis exists for the assertion of any such charge,
claim or litigation. All licenses and other agreements to which the Bank or its
Subsidiaries is a party relating to Proprietary Rights are in full force and
effect and constitute valid, binding and enforceable obligations of the Bank,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles, as the case may be, and
there have not been and there currently are not any defaults (or any event
which, with notice or lapse of time, or both, would

 

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constitute a default) by the Bank or its Subsidiaries under any license or other
agreement affecting Proprietary Rights used in the conduct of the Business as
currently conducted, except for defaults, if any, which would not have any
material impact on the Bank or would arise from the filing of the Bankruptcy
Case. The validity, continuation and effectiveness of all licenses and other
agreements relating to the Proprietary Rights used in the conduct of Business as
currently conducted and the current terms thereof will not be affected by the
transactions contemplated by this Agreement. Section 3.16 of the Disclosure
Schedule sets forth a true and complete list of all registrations and
applications for registration of Proprietary Rights owned by the Bank or its
Subsidiaries.

3.17 Related Party Transactions.

(a) Except as set forth on Section 3.17 of the Disclosure Schedule and as part
of the normal and customary terms of an individual’s employment or service as a
director, neither the Bank nor its Subsidiaries is now or has since January 1,
2009, been involved, directly or indirectly, in any business arrangement or
other relationship (as debtor, creditor, guarantor or otherwise), Contract for
goods or services, lease or other transaction or agreement with (x) the Company
or any of its Affiliates (other than the Bank or its Subsidiaries), any director
or officer of the Company or any of its Affiliates (including the Bank and its
Subsidiaries), any stockholder owning 5% or more of the outstanding Common Stock
of the Company or, to the Knowledge of the Company, any Affiliate or “associate”
or member of the “immediate family” (as such terms are respectively defined in
Rule 12b-2 and Rule 16a-l of the Securities Exchange Act of 1934) of any such
director, officer or stockholder, or (y) to the Knowledge of the Company, and
other than credit and consumer banking transactions in the Ordinary Course of
Business, any employee of the Company or any of its Affiliates (including the
Bank and its Subsidiaries) who is not an officer, or any Affiliate, or
“associate” or member of the “immediate family” of any such employee.

(b) The Bank and its Subsidiaries are in material compliance with Sections 23A
and 23B of the Federal Reserve Act, its implementing regulations, and the
Federal Reserve Board’s Regulation O.

3.18 Community Reinvestment Act. The Company has no Knowledge of, has not been
advised of, and has no reason to believe that any facts or circumstances exist
that would cause the Bank to be deemed not to be in satisfactory compliance in
any material respect with the Community Reinvestment Act (“CRA”) or to be
assigned a rating for CRA purposes by federal or state bank regulators of lower
than “satisfactory.”

3.19 Anti-money Laundering. The Company has no Knowledge of, has not been
advised of, and has no reason to believe that any facts or circumstances exist
that would cause the Bank or its Subsidiaries to be operating in violation in
any material respect of the Bank Secrecy Act, the USA PATRIOT Act of 2001, (the
“USA PATRIOT Act”), any order issued with respect to anti-money laundering by
the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any
other applicable anti-money laundering statute, rule or regulation or any
license, order or regulation issued with respect to economic sanctions programs
by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or
that the Bank or its Subsidiaries is under investigation with respect to or has
been threatened to be charged with or given notice of any violation of any of
the foregoing. The Bank’s Board of Directors has adopted and implemented an
anti-money laundering program that contains adequate and appropriate customer
identification verification procedures that comply with Section 326 of the USA
PATRIOT Act and that meets the requirements in all material respects of
Section 352 of the USA PATRIOT Act.

3.20 Customer Information Security. Except as set forth on Section 3.20 of the
Disclosure Schedule, since January 1, 2009, there has been no unauthorized
disclosure of, or access to any non-public

 

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personal information of a customer of the Bank or its Subsidiaries that could
result in substantial harm or inconvenience to such customer. The Company has no
Knowledge of, has not been advised of, and has no reason to believe that any
facts or circumstances exist that would cause the Bank or its Subsidiaries to be
deemed not to be in satisfactory compliance in any material respect with the
applicable privacy of customer information requirements contained in any federal
and state privacy laws and regulations, including, without limitation, in Title
V of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder,
as well as the provisions of any information security program adopted by the
Bank pursuant to 12 C.F.R. Part 170.

3.21 Loan Portfolio.

(a) Section 3.21(a)(i) of the Disclosure Schedule sets forth (i) the aggregate
outstanding principal amount, as of September 30, 2012, of all loan agreements,
notes or borrowing arrangements (including mortgage loans, leases, credit
enhancements and participations) payable to Bank or its Subsidiaries
(collectively, the “Loans”), other than “non-accrual” Loans, and
(ii) separately, the aggregate outstanding principal amount, as of the date
hereof, of all “non accrual” Loans. Except as listed on Section 3.21(a)(ii) of
the Disclosure Schedule, as of the date hereof, neither the Bank nor its
Subsidiaries had any outstanding Loan or asset classified as “Other Real Estate
Owned” or that was designated internally by the Bank or its Subsidiaries (or, to
the Company’s Knowledge, by a Governmental Authority in an examination report or
directive) as “special mention,” “substandard,” “doubtful,” “loss” or words of
similar import (any of the foregoing Loans or assets, “Criticized Assets”).
Section 3.21(a)(iii) of the Disclosure Schedule sets forth (x) a summary of
Criticized Assets as of the date hereof, by category of Loan (e.g., commercial
and consumer), together with the aggregate principal amount of such Loans by
category and (y) each asset of the Bank or its Subsidiaries that, as of the date
hereof, is so classified. In addition, subject to the disclosures set forth on
Section 3.21(a)(iv) of the Disclosure Schedule, to the Company’s Knowledge, no
borrower with respect to a Loan has (i) filed, or consented by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, (ii) to the
Knowledge of the Company, made an assignment for the benefit of its creditors,
(iii) to the Knowledge of the Company, consented to the appointment of a
custodian, receiver, trustee, liquidator or other officer with similar power
over itself or any substantial part of its property, (iv) been adjudicated
insolvent, or (v) taken action for the purpose of authorizing any of the
foregoing. The Bank or its Subsidiaries, as applicable, has good, valid and
marketable title to all properties and assets reflected in Section 3.21(a)(ii)
of the Disclosure Schedule that are classified as “Other Real Estate Owned”,
free and clear from Encumbrances and any material obligations that would affect
the value or transferability thereof. The information (including electronic
information and information contained on tapes and computer disks and the
information set forth on Section 3.21(a) of the Disclosure Schedule referenced
in this Section 3.21) with respect to the Loans and Criticized Assets made
available to Purchaser by the Company is, as of the respective dates indicated
therein, true and complete in all material respects.

(b) Except as set forth on Section 3.21(b) of the Disclosure Schedule, each Loan
(i) is evidenced by notes, agreements or other evidences of indebtedness which
are true, genuine and what they purport to be, (ii) to the extent purported to
be secured, has been secured by valid liens and security interests which have
been perfected and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of
equity).

(c) Except as set forth on Section 3.21(c) of the Disclosure Schedule, neither
the Bank nor its Subsidiaries administers or services, or has in the past
administered or serviced, any loan,

 

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note or borrowing not originated and owned by the Bank. Except as set forth on
Section 3.21(c) of the Disclosure Schedule, no loans, notes or borrowings have
been originated by the Bank’s Subsidiaries. Except as set forth on
Section 3.21(c) of the Disclosure Schedule, all Loans originated by the Bank
were made and are administered or serviced, as applicable, in accordance with
customary lending standards of the Bank. Except as set forth on Section 3.21(c)
of the Disclosure Schedule, all such Loans (and any related guarantees) and
payments due thereunder are, and on the Closing Date will be, free and clear of
any Encumbrance, and each of the Bank and its Subsidiaries has complied in all
material respects, and on the Closing Date will have complied in all material
respects, with all applicable loan policies and procedures of the Bank and
applicable laws and regulations relating to such Loans, including any applicable
laws and regulations with respect to documentation in connection with the
origination, processing, underwriting (including credit approval), purchase and
servicing of mortgage loans, real estate settlement procedures, consumer
protection, truth in lending, fair housing, transfers of servicing, collection
practices, equal credit opportunity and adjustable rate mortgages, and the terms
and provisions of any mortgage or other collateral documents and other loan
documents with respect to such Loans, including any agreements between the
Company, the Bank and any Mortgage Finance Agency.

(d) Except as set forth in Section 3.21(d)(i) of the Disclosure Schedule,
neither the Bank nor its Subsidiaries has, at any time since January 1, 2009,
purchased or sold any loans or advances or any participations therein. Except as
set forth in Section 3.21(d)(ii) of the Disclosure Schedule, neither the Bank
nor its Subsidiaries has, at any time since January 1, 2009, sold any assets of
the Bank’s or its Subsidiaries’ with recourse of any kind to the Bank or its
Subsidiaries, as applicable, or entered into any agreement providing for the
sale or servicing of any Loan or other asset which constitutes a “recourse
arrangement” under applicable regulation or policy promulgated by a Governmental
Authority except, in each case, where neither the Bank nor its Subsidiaries has
any ongoing liability or exposure. Except as set forth in Section 3.21(d)(iii)
of the Disclosure Schedule, neither the Bank nor its Subsidiaries has, at any
time since January 1, 2009, received a request to repurchase any loan or advance
or participation therein, or any other asset, sold to a third party, nor has the
Bank or its Subsidiaries been advised, at any time since January 1, 2009, by any
third-party purchaser of any loan or advance or participation therein, or any
other asset, that such purchaser intends to request that the Bank or its
Subsidiaries repurchase such loan or advance or participation therein, or other
asset, and there is no basis for any of the foregoing.

(e) Except as set forth on Section 3.21(e) of the Disclosure Schedule, there is
no pending or, to the Knowledge of the Company, threatened litigation with
respect to any Loan which could adversely affect the rights of the Bank to
enforce such Loan or the Bank’s rights with respect to any related property.

3.22 Qualification as Mortgage Lender, Originator and Servicer. Except as set
forth on Section 3.22 of the Disclosure Schedule:

(a) The Bank and each of its Subsidiaries that participates as a seller or
servicer of Mortgage Loans in any program administered by a Mortgage Finance
Agency is an approved mortgagee or servicer of such Mortgage Finance Agency, as
applicable, and meets in all material respects all requirements of Law so as to
be eligible to originate, purchase, hold or service, as applicable, Mortgage
Loans;

(b) The Bank and each of its Subsidiaries is in compliance in all material
respects with all eligibility requirements under any correspondent or servicing
arrangement pursuant to which the Bank or any of its Subsidiaries originates or
services Mortgage Loans, and has never been since January 1, 2009 subject to any
fine, suspension, settlement or other agreement or other administrative
agreement or sanction by, or any reduction in any loan purchase commitment from
any Mortgage Finance Agency relating to the origination, sale or servicing of
Mortgage Loans or consumer Loans.

 

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3.23 Servicing.

(a) Section 3.23(a) of the Disclosure Schedule contains a true, correct and
complete listing of each Contract pursuant to which, as of September 30, 2012,
the Bank or any of its Subsidiaries services Mortgage Loans (collectively,
“Serviced Mortgage Loans”), whether as servicer, special servicer, sub-servicer,
master servicer or otherwise (the “Servicing Contracts”).

(b) Section 3.23(b) of the Disclosure Schedule contains a true, correct and
complete list of each pooling, participation or Servicing Contract to which the
Bank or any of its Subsidiaries is a party as of September 30, 2012 that
obligates the Bank or any of its Subsidiaries to make servicing advances with
respect to defaulted or delinquent Mortgage Loans or consumer receivables other
than out of proceeds from the sale of the related collateral or from related
insurance policies.

(c) Neither the Bank nor any if its Subsidiaries is responsible or otherwise
liable to any Person under any Servicing Contract for any Liabilities sustained
by such Person arising out of any foreclosure of any Mortgaged Property or the
acquisition and subsequent holding or disposition of Mortgaged Property
(including, without limitation, third-party expenses such as attorney’s fees and
restoration expenses) except to the extent that such Losses are attributable to
the Bank’s or its Subsidiaries’ failure to perform servicing as required by the
Servicing Contracts after the Closing Date.

(d) The servicing of each Serviced Mortgage Loan complies, in all material
respects, with the terms of any applicable program of the Mortgage Finance
Agency, Law or Servicing Contract and all applicable documents relating to such
Serviced Mortgage Loan.

(e) Except as set forth on Section 3.23(e) of the Disclosure Schedule:

(i) neither the Bank nor any if its Subsidiaries, as servicer of any Serviced
Mortgage Loan, has any repurchase obligations with respect to such Serviced
Mortgage Loan, other than in connection with breaches of representations,
warranties and covenants relating to the servicing thereof;

(ii) neither the Bank nor any if its Subsidiaries, as seller of any Mortgage
Loan, has any repurchase obligations with respect to such Mortgage Loan, other
than in connection with breaches of representations and warranties relating to
the origination thereof; and

(iii) there is no pending or, to the Knowledge of the Company, threatened,
cancellation of any Servicing Contract, and neither the Bank nor any if its
Subsidiaries has received any written notice to the effect that any party to any
Servicing Contract intends to cease doing business with the Bank or any of its
Subsidiaries.

3.24 Brokers or Finders. Except for the Broker’s Fees disclosed in Schedule 5.8,
neither the Company nor the Bank nor its Subsidiaries, nor any of their
representatives, have incurred any Liability for brokerage or finders’ fees or
agents’ commissions or other similar payments in connection with the
Contemplated Transactions.

3.25 Disclaimer of Other Representations and Warranties. EXCEPT AS EXPRESSLY SET
FORTH IN THIS ARTICLE 3, THE COMPANY MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE SHARES OR THE OTHER
PURCHASED ASSETS AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. THE PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT
TO THE EXTENT SPECIFICALLY SET FORTH IN THIS ARTICLE 3, THE PURCHASER IS
PURCHASING THE SHARES AND THE OTHER PURCHASED ASSETS ON AN “AS-IS, WHERE-IS”
BASIS.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby makes the following representations and warranties to the
Purchaser as of the date hereof and as of the Closing Date; provided that those
representations and warranties which address matters only as of a particular
earlier date shall be required to be true and correct only on such date.

4.1 Corporate Status and Authority; Non-contravention.

(a) Status of the Purchaser. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan,
and has the corporate power to own its property and conduct its business in the
manner in which such business is now being conducted and, subject to the receipt
of the Purchaser Required Approvals, has full power and capacity to enter into
this Agreement, carry out the Contemplated Transactions to which it is a party,
and duly observe and perform all its obligations contained in this Agreement.

(b) Due Authorization. The execution and delivery of this Agreement and the
completion and performance of the transactions and obligations contemplated by
or contained in this Agreement have been duly authorized by all necessary
organizational or corporate action on the part of the Purchaser, and this
Agreement has been duly executed and delivered by the Purchaser and constitutes
a legal, valid and binding obligation of the Purchaser, and, subject to the
approval of the Bankruptcy Court, is enforceable in accordance with its
respective terms.

(c) Non-contravention. Neither the execution and delivery of this Agreement nor
the completion and performance of the Contemplated Transactions will
(i) contravene any of the provisions of the Charter Documents of the Purchaser,
or (ii) result in a material breach of or material default under, or contravene,
any material indenture, contract, agreement or instrument to which the Purchaser
is a party or by which the Purchaser is bound.

4.2 Governmental Authorizations. Except for the filing of applications and
notices with, and the receipt of consents, authorizations, approvals, exemptions
or non-objections from, as applicable, the Governmental Authorities set forth on
Schedule 4.2 (the “Purchaser Required Approvals”), no consents, or approvals of
or filings or registrations with any Governmental Authority are necessary on the
part of the Purchaser or its Affiliates in connection with the execution and
delivery by the Purchaser of this Agreement and the consummation by the
Purchaser of the Contemplated Transactions. As of the date of this Agreement,
the Purchaser knows of no reason specifically related to the Purchaser why any
of the Purchaser Required Approvals should not be obtained or that any of the
Purchaser Required Approvals should not be granted without imposition of a
Burdensome Condition.

4.3 Investment Intent. The Purchaser is acquiring the Shares for its own account
and not with the view toward distribution within the meaning of Section 2(a)(11)
of the Securities Act of 1933, as amended, other than in compliance with all
applicable Legal Requirements, including United States federal securities laws.

 

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4.4 Sufficient Funds. The Purchaser has committed sources of funds to provide,
as of the Closing Date, sufficient funds to pay the Cash Purchase Price and
effect the Equity Contribution.

4.5 Non-reliance. The Purchaser acknowledges and agrees that in entering into
this Agreement it has not relied and is not relying on any representations,
warranties or other statements whatsoever, whether written or oral (from or by
the Bank, the Company or any Person acting on their behalf) other than those
expressly set out in this Agreement (or other related documents referred to
herein) and that it will not have any right or remedy rising out of any
representation, warranty or other statement not expressly set out in this
Agreement.

4.6 Litigation and Claims. There are no current, pending or, to the knowledge of
the Purchaser, threatened Proceedings against or relating specifically to the
Purchaser that would reasonably be expected to materially interfere with or
delay any of the Contemplated Transactions. There is no material Order or
regulatory restriction imposed upon or relating specifically to the Purchaser or
that would reasonably be expected to materially interfere with or delay any of
the Contemplated Transactions.

ARTICLE 5

PRE-CLOSING MATTERS AND OTHER COVENANTS

5.1 Operations until Closing. Except as expressly otherwise provided in this
Agreement or as may be otherwise required by any Governmental Authority having
jurisdiction of the Bank or the Company, or by the Bankruptcy Court or the
Bankruptcy Code, unless otherwise agreed or consented to in writing by the
Purchaser, which agreement or consent shall not be unreasonably withheld or
delayed, from the date of this Agreement to the Closing:

(a) Conduct of Business. The Company shall cause the Bank and its Subsidiaries
to: (i) subject to the provisions of the Bankruptcy Code and the supervision of
the Bankruptcy Court, carry on and conduct the Business in all material respects
in the Ordinary Course; (ii) use commercially reasonable efforts to maintain and
preserve intact its business organization and advantageous business
relationships with, but not limited to, customers, suppliers and employees, and
retain the services of its key officers and key employees; (iii) take no action
that is intended to or would reasonably be expected to adversely affect or
materially delay the ability of the Company, the Bank or the Purchaser to obtain
any necessary approvals of any Governmental Authority required for the
Contemplated Transactions or to perform its covenants and agreements under the
Agreement or to consummate the Contemplated Transactions; (iv) maintain its
Books and Records in the usual, regular and ordinary manner; (v) continue to
respond to requests and participate in investigations or respond to inquiries
from Governmental Authorities regarding or relating to the Company, the Bank or
their respective directors and employees; and (vi) provide to the Purchaser and
its employees, representatives and agents, full access during normal business
hours to the Bank’s and its Subsidiaries’ personnel and its facilities and
properties, to the Books and Records, and to all, or true copies of all, title
documents, indentures, Contracts, Encumbrances, instruments, leases and other
documents relating to the Business, and furnish them with all such information
relating to the Business as the Purchaser from time to time reasonably requests
and instruct the employees, counsel and financial advisors of the Company and
the Bank to cooperate with Purchaser in its investigation; provided that (A) all
such materials shall be made available to the Purchaser and its employees,
representatives and agents at the premises of the Bank and may not be removed
therefrom without consent, and (B) in exercising such access rights, the
Purchaser and its employees, representatives and agents shall not unduly disturb
or interfere with the activities of the Company, the Bank or the Bank’s
customers. No investigation by Purchaser or other information received by
Purchaser shall operate as a waiver or otherwise affect any representation,
warranty or agreement given or made by the Company hereunder.

 

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(b) Bank Forbearances. The Company shall not and shall cause the Bank and its
Subsidiaries not to, except with the written consent of the Purchaser:

(i) enter into any new line of business or materially change its lending,
investment, underwriting, risk and asset liability management, and other banking
and operating policies, except as required by any applicable Legal Requirement
or policies imposed by any Governmental Authority, or fail to operate in
accordance with such policies;

(ii) make any capital expenditures in excess of Five Hundred Thousand Dollars
($500,000) individually or One Million Dollars ($1,000,000) in the aggregate,
other than as required pursuant to Contracts already entered into and disclosed
in Section 5.1(b)(ii) of the Disclosure Schedule (with respect to this clause
(ii), the Purchaser agrees that it will either give or deny any requested
consent no later than three (3) Business Days after the Purchaser has received a
written request therefor (which request shall be provided in accordance with
Section 9.2) together with all material information relating thereto; provided,
however, if Purchaser does not affirmatively deny the Company’s request within
three (3) Business Days after Purchaser has received a written request therefor
together with all material information relating thereto, Purchaser’s consent
shall be deemed to have been given and the action taken by the Company or the
Bank under this clause (ii) shall not be the basis for any Material Adverse
Effect);

(iii) other than as provided in this Agreement, terminate, enter into, amend,
modify or renew any Benefit Arrangement, Bank Significant Agreement or Permit,
other than in the Ordinary Course of Business, or amend or modify any Tax
sharing agreements or any Contracts with the Broker;

(iv) issue, sell or otherwise permit to become outstanding, or dispose of or
encumber or pledge, or authorize or propose the creation of, any additional
shares of the Bank’s or its Subsidiaries’ stock or any additional options or
other rights, grants or awards with respect to the Bank’s or its Subsidiaries’
stock;

(v) make, declare, pay or set aside for payment any dividend on or in respect
of, or declare or make any distribution on any shares of its capital stock;

(vi) sell, transfer, mortgage, encumber or otherwise dispose of or discontinue
any of its assets, deposits, businesses or properties, except for mortgages in
the Ordinary Course of Business;

(vii) incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise become responsible for the
obligations of, any other Person, provided that the Bank may continue to borrow
money from the Federal Home Loan Bank System, the Federal Reserve or any other
Governmental Authority in a manner (including amounts) consistent with past
practice;

(viii) except as set forth in Section 5.1(b)(viii) of the Disclosure Schedule,
make, renew or amend any extension of credit or participation therein,
individually or in the aggregate with other extensions of credit or
participations therein to the same relationship, in excess of Seven Hundred
Fifty Thousand Dollars ($750,000); provided that the Bank may make, renew or
amend any extension of credit in the Ordinary Course of Business and consistent
with past practice if, with respect to a pre-existing relationship with a
borrower, (A) there has been no material adverse change in the relationship with
such borrower, or (B) there has been such a material adverse change but the Bank
is

 

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attempting to mitigate loss with respect to the borrower in the Ordinary Course
of Business and consistent with past practice (with respect to this clause
(viii), the Purchaser agrees that it will either give or deny any requested
consent no later than three (3) Business Days after the Purchaser has received a
written request therefor (which request shall be provided in accordance with
Section 9.2) together with all material information relating thereto; provided,
however, if Purchaser does not affirmatively deny the Company’s request within
three (3) Business Days after Purchaser has received a written request therefor
together with all material information relating thereto, Purchaser’s consent
shall be deemed to have been given and the action taken by the Company or the
Bank under this clause (viii) shall not be the basis for any Material Adverse
Effect);

(ix) except as set forth in Section 5.l(b)(ix) of the Disclosure Schedule,
(A) resolve, amend or modify any Loan, or release any claim with regard to any
Loan or any asset classified as “Other Real Estate Owned” except, in either
case, in the Ordinary Course and only if such action would result in a loss
(relative to the value of the relevant Loan as of June 30, 2012 as set forth in
the June 30 Balance Sheet) not greater than Two Hundred Fifty Thousand Dollars
($250,000) for such Loan or (B) sell any asset classified as “Other Real Estate
Owned” except in the Ordinary Course and only if such action would result in a
loss (relative to the value of the relevant asset as of June 30, 2012 as set
forth in the June 30 Balance Sheet) not greater than 5% of such value of such
asset as of June 30, 2012 (with respect to this clause (ix), the Purchaser
agrees that it will either give or deny any requested consent no later than
three (3) Business Days after the Purchaser has received a written request
therefor (which request shall be provided in accordance with Section 9.2)
together with all material information relating thereto; provided, however, if
Purchaser does not affirmatively deny the Company’s request within three
(3) Business Days after Purchaser has received a written request therefor
together with all material information relating thereto, Purchaser’s consent
shall be deemed to have been given and the action taken by the Company or the
Bank under this clause (ix) shall not be the basis for any Material Adverse
Effect);

(x) enter into, renew or amend any interest rate swaps, caps, floors and option
agreements and other interest rate risk management arrangements, whether entered
into for the account of it or for the account of a customer of it, except in the
Ordinary Course of Business and consistent with past practice;

(xi) acquire (other than by way of foreclosures, acquisitions of control in a
fiduciary or similar capacity, acquisitions of loans or participation interests,
or in satisfaction of debts previously contracted in good faith, in each case in
the Ordinary Course of Business and consistent with past practice) all or any
portion of the assets, business, deposits or properties of any other Person
(including Loans or advances or any participations therein);

(xii) merge or consolidate with or into any legal entity, dissolve, liquidate,
or otherwise terminate its existence;

(xiii) file any application to establish, relocate or terminate the operations
of any banking office;

(xiv) except as set forth in Schedule 5.1(b)(xiv) of the Disclosure Schedule,
amend its Charter Documents or similar organizational documents or otherwise
add, amend or modify in any respect the duties or obligations of indemnification
by the Bank or its Subsidiaries with respect to any of their respective current
or former directors, officers, employees, agents or other Persons;

(xv) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP or applicable accounting
requirements of a Governmental Authority;

 

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(xvi) make, change or revoke any Tax election, file any amended Tax Return
(unless to correct an error with the prior written consent of the Purchaser,
such consent not to be unreasonably withheld or delayed), enter into any closing
agreement, settle any Tax audit, claim or assessment, surrender or reduce any
right to claim a refund of Taxes, agree to extend any statute of limitations
relating to Taxes (except with respect to the routine extension of deadlines for
the original filing of Tax Returns), fail to duly and timely file with
appropriate taxing authorities all Tax Returns required to be filed by or with
respect to the Bank or its Subsidiaries or fail to remit any Taxes due, whether
or not shown on any Tax Return;

(xvii) settle any action, suit, claim or proceeding against the Bank or its
Subsidiaries, except for any settlement of (A) any action, suit, claim or
proceeding arising out of or in connection with this Agreement or the
Contemplated Transactions but only if such settlement would not reasonably be
expected to (1) adversely affect the Bank or its Subsidiaries or the Business
or, after the Closing, Purchaser or its Affiliates, or (2) interfere with or
delay any of the Contemplated Transactions; or (B) any other action, suit, claim
or proceeding that is settled in a manner consistent with past practice in an
amount or for consideration not in excess of Five Hundred Thousand Dollars
($500,000) that would not (1) impose any material restriction on the Business
after the Closing, the Purchaser or its Affiliates or (2) create precedent for
claims that are reasonably likely to be material to the Bank or, after the
Closing, to the Purchaser or its Affiliates;

(xviii) initiate any action, suit, proceeding or claim, except in the Ordinary
Course; provided, however, that the Bank shall provide the Purchaser with prior
written notice of such actions, suits, proceedings or claims in the Ordinary
Course in excess of Five Hundred Thousand Dollars ($500,000);

(xix) other than contemplated in this Agreement, terminate, enter into, amend,
modify (including by way of interpretation) or renew any employment, consulting,
severance, indemnification, change in control or similar contract, agreement or
arrangement with any current or former director, officer, employee or
consultant, or grant any salary or wage increase or increase any employee
benefit, including incentive or bonus payments (or, with respect to any of the
preceding, communicate any intention to take such action), except to make
changes that are required by this Agreement, any applicable Legal Requirements
or written contractual obligations;

(xx) except as provided in Section 5.30 hereof, terminate, enter into,
establish, adopt, amend, modify (including by way of interpretation), make new
grants or awards under or renew any Benefit Arrangement, except (A) as required
by applicable Legal Requirements, (B) to satisfy contractual obligations
existing as of the date hereof described in Section 5.1(b)(xx) of the Disclosure
Schedule or (C) make retention payments to employees pursuant to obligations
existing on the date of this Agreement;

(xxi) reimburse, refund or otherwise make payments to any current or former
director, officer or employee of the Company, except for the payment of salaries
or the reimbursement of expenses in the Ordinary Course, the payments to
directors under the First Place Bank Directors’ Deferred Compensation Plan (the
“Deferred Compensation Plan”) and the payment and advancement of expenses to
directors and employees of the Bank in connection with investigations by or
inquiries from Governmental Authorities, the Contemplated Transactions or third
party claims;

(xxii) (A) hire any employees other than to fill vacancies arising due to
terminations of employment of employees with an annual base compensation of less
than One Hundred Thousand Dollars ($100,000), or (B) terminate the employment of
any employees with an annual base

 

35

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compensation of One Hundred Thousand Dollars ($100,000) or more other than for
cause ) (with respect to this clause (xxii), the Purchaser agrees that it will
either give or deny any requested consent no later than three (3) Business Days
after the Purchaser has received a written request therefor (which request shall
be provided in accordance with Section 9.2) together with all material
information relating thereto; provided, however, if Purchaser does not
affirmatively deny the Company’s request within three (3) Business Days after
Purchaser has received a written request therefor together with all material
information relating thereto, Purchaser’s consent shall be deemed to have been
given and the action taken by the Company or the Bank under this clause
(xxii) shall not be the basis for any Material Adverse Effect);

(xxiii) (A) grant, extend, amend (except as required in the diligent prosecution
of the Proprietary Rights owned (beneficially, and of record where applicable)
by or developed for the Bank or its Subsidiaries), waive, or modify any material
rights in or to, sell, assign, lease, transfer, license, let lapse, abandon,
cancel, or otherwise dispose of, or extend or exercise any option to sell,
assign, lease, transfer, license, or otherwise dispose of, any Proprietary
Rights, or (B) fail to exercise a right of renewal or extension under any
material agreement under which the Bank is licensed or otherwise permitted by a
third party to use any Proprietary Rights (other than “shrink wrap” or “click
through” licenses), unless the Company obtains a substantially similar license
or right to use such Proprietary Rights on terms as favorable as the terms under
the existing agreement;

(xxiv) participate in any program sponsored or administered by any Governmental
Authority, which program is not part of the usual and customary banking business
of the Bank;

(xxv) engage in (or modify in a manner adverse to the Bank) any transactions
with any Person known to be a stockholder owning 1% or more of the outstanding
Common Stock of the Company or any director or officer of the Company or the
Bank (or any Affiliate of any such person), other than deposit relationships in
the Ordinary Course of Business and extensions of credit which are on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with persons unaffiliated
with the Company or the Bank and did not involve more than the normal risk of
collectability or present other unfavorable features;

(xxvi) notwithstanding any other provision hereof, knowingly take, or knowingly
omit to take, any action that would result in any of the conditions set forth in
Section 6 not being satisfied, or any action that would result in any of the
representations and warranties of the Company in this Agreement becoming untrue
or prevent the Company from performing its obligations under this Agreement or
consummating the Closing; or

(xxvii) enter into any contract with respect to, or otherwise agree or commit to
do, any of the foregoing.

5.2 Confidentiality. Each party acknowledges that any information, materials and
documentation it receives or observes pursuant to or as contemplated by the
Contemplated Transactions, either before or after execution of this Agreement,
is confidential; provided, however, that the foregoing shall not include
information which (a) is or becomes available to the public other than as a
result of a disclosure by the recipient party, (b) was known to the recipient
party or in its possession prior to its disclosure to the recipient party,
(c) becomes available to the recipient party from a source other than the
disclosing party, provided that such source is not known by the recipient party
to be bound by a confidentiality agreement with the disclosing party and is not
otherwise prohibited from transmitting the information to the recipient party by
a contractual, legal or fiduciary obligation, or (d) is or was developed
independently by the recipient party without reference to confidential
information provided by the

 

36

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disclosing party. Each party shall take, and shall cause its employees,
representatives and agents to take, all reasonable steps and precautions to
protect and maintain the confidentiality of such information, materials and
documentation; provided that, (i) the foregoing will not prevent the Company or
the Purchaser from disclosing or making available such information (A) to its
and its Affiliates’ respective directors, officers, employees, members,
partners, agents, representatives or advisors (including, without limitation,
attorneys, accountants, insurers, rating agencies, consultants, bankers and
financial advisors), any such information, materials and documentation on a
confidential basis for the purpose of carrying out the Contemplated
Transactions, (B) to the extent required by a Legal Requirement or (C) in
connection with obtaining the Required Purchaser Approvals or discussions with
supervising Governmental Authorities; and provided further that, (ii) (A) the
obligations of the Purchaser under this Section 5.2 shall terminate at Closing
with respect to matters relating to the Bank, its Subsidiaries or the Business,
and (B) from and after Closing, the Company will treat all information,
materials and documentation of or relating to the Bank, its Subsidiaries or the
Business as confidential in accordance herewith and notwithstanding clause (b),
(c) or (d) of the proviso to the first sentence of this Section 5.2.

5.3 Return of Information. If the Closing is not completed and this Agreement is
terminated, each party shall, upon the written request of the other party,
return to the other party or destroy (such destruction to be confirmed in
writing to the other party upon written request) all materials, documentation,
data, records and other papers and copies thereof (whether on paper or in
electronic, magnetic, photographic, mechanical or optical storage) relating to
the Purchaser or its Affiliates or to the Company, the Bank, the Shares or the
Business which is confidential and which is in the possession of such party and
maintain the confidentiality of all information or knowledge obtained from the
other party, and not use any such information or knowledge for any purpose
whatsoever; provided that, a party may maintain such information to the extent
required by applicable Legal Requirements or such party’s established document
retention policies (including any requirement to retain e-mail on an automated
e-mail archival system) or relating to the safeguarding or backup storage of
electronic data or in connection with a legal dispute with the other party.

5.4 Consents and Approvals.

(a) Purchaser Required Approvals. The Purchaser and the Company agree to use
commercially reasonable best efforts to obtain all Purchaser Required Approvals,
and to take, or cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable under any applicable Legal Requirement
to consummate the Contemplated Transactions. For the avoidance of doubt, none of
the foregoing obligations shall require the Purchaser or any of its Affiliates
to take any action that would result in the imposition of a Burdensome
Condition.

(b) Preparation of Applications. As promptly as practicable following the
execution and delivery of this Agreement, but in no event later than ten
(10) Business Days thereafter, the Purchaser, with the cooperation of the
Company, shall cause to be published all required notices and prepare all
necessary documentation and effect all necessary filings in order to obtain the
Purchaser Required Approvals. The Purchaser and the Company will cooperate with
each other and will each furnish the other and the other’s counsel with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any application, petition or any other statement or
application made by or on behalf of the Purchaser, the Company or their
respective Subsidiaries to any Governmental Authority in connection with the
Contemplated Transactions. The Purchaser and the Company shall have the right to
review and approve in advance all characterizations of the information relating
to them and any of their respective Subsidiaries which appear in any filing
made, or written materials submitted, in connection with the Contemplated
Transactions with any Governmental Authority. Notwithstanding anything herein to
the contrary, the Purchaser shall not be required to furnish the Company with
any (i) personal biographical or

 

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financial information of any of the directors, officers, employees, managers or
partners of the Purchaser or any of its Affiliates, or (ii) proprietary and
non-public information related to the organizational terms of, or investors in
the Purchaser or any of its Affiliates. In addition, nothing herein shall
require the Purchaser or any of its Affiliates to take any action that would
result in the imposition of a Burdensome Condition.

(c) Submission of Applications for Purchaser Required Approvals. The Purchaser
and the Company shall use their commercially reasonable best efforts to:

(i) cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry relating to
the Purchaser Required Approvals, including, but not limited to, the Purchaser,
the Company and their respective Subsidiaries cooperating and using commercially
reasonable best efforts to make, on a timely basis, all registrations, filings
and applications with, give all notices to, and obtain any approvals, orders,
qualifications and waivers from a Governmental Authority necessary for the
consummation of the transactions contemplated hereby; provided, however, that
neither the Company or any of its Affiliates nor the Purchaser or any of its
Affiliates shall be required to commence or be a plaintiff in any litigation in
connection with any such registration, filing, application, notice, approval,
order, qualification or waiver or take any action that would result in the
imposition of a Burdensome Condition;

(ii) subject to any Legal Requirement, permit each other to review and discuss
in advance, and consider in good faith the views of the other in connection
with, any proposed written communication (or other correspondence or memoranda)
between any such party and any Governmental Authority relating to the other
party; and

(iii) subject to any Legal Requirement, promptly inform each other of and supply
to each other any written communication (or other correspondence or memoranda)
submitted to (except to the extent such submission is confidential), or received
by them from, any Governmental Authority, in each case regarding any of the
Contemplated Transactions, except to the extent that such communication relates
to the information described in the next to last sentence of Section 5.4(b).

(d) Access and Investigation. Without in any way limiting anything else
contained in this Agreement, the Company shall, in connection with the
procurement of any and all Purchaser Required Approvals, permit Purchaser and
its representatives reasonable access to the properties and personnel of the
Company and its Subsidiaries, and shall disclose and make available to Purchaser
and its representatives all books, papers and records relating to the assets,
stock ownership, properties, operations, obligations and liabilities of the
Company and its Subsidiaries, including, without limitation, all books of
account (including the general ledger), Tax records, minute books of meetings of
boards of directors (and any committees thereof) and stockholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority (except for any confidential portions thereof),
accountants’ work papers, litigation files, loan files, plans affecting
employees and any other business activities or prospects; provided, that such
access shall be reasonably related to the Contemplated Transactions hereunder
and, in the reasonable opinion of the Company, not unduly interfere with normal
operations or violate any Legal Requirement. Without in any way limiting
anything else contained in this Agreement, the Company and the Bank shall make
their respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with the other party and their representatives; provided, that such
access shall be reasonably related to the Contemplated Transactions and shall
not unduly interfere with normal operations.

 

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5.5 Indemnification; D&O Insurance.

(a) The Purchaser shall not adversely affect or diminish any of the Bank’s
duties and obligations of indemnification to the extent relating to acts or
omissions prior to the Closing and existing immediately prior to the Closing
Date in favor of the individuals who are entitled to indemnification arising by
operation of any Legal Requirement in effect as of the date hereof, including
the indemnification agreement set forth on Schedule 5.5(a) (the “Indemnified
Parties”). Such duties and obligations shall continue in full force and effect
for so long as they would have (but for the Contemplated Transactions) otherwise
survived and continued in full force and effect.

(b) Prior to the Closing, and subject to Section 6.1(i), the Purchaser shall
cooperate with the Company and the Bank to procure a directors’ and officers’
liability insurance policy for the Bank’s directors and officers relating to
acts arising prior to Closing; provided, however, in no event shall the
Purchaser be required to maintain such insurance following the expiration of its
term or procure alternative insurance coverage after the Closing.

5.6 Certain Company Contracts. On Schedule 5.6, the Purchaser lists all Bank
Related Contracts that Purchaser may elect to acquire in connection with the
Sale (such Bank Contracts designated by Purchaser, the “Assumed Bank Related
Contracts”). The Purchaser shall have, except as otherwise provided below, until
that date which is five (5) Business Days prior to the date scheduled for
hearing on the entry of the Sale Order to designate which of such Contracts it
wishes to assume and have the Company assume and assign to Purchaser at Closing
(such date being referred to herein as the “Contract Designation Date”). In all
cases, appropriate additions and deletions to Schedule 5.6 shall be made to
reflect such elections made by the Purchaser. The Company shall, prior to the
Closing but during its Bankruptcy Case, pursuant to Section 365 of the
Bankruptcy Code, assume (and take all necessary actions, including the payment
of cure costs up to the Cure Cost Ceiling, to effect assumption) and assign to
the Bank the Assumed Bank Related Contracts so identified by Purchaser;
provided, however, that the Company’s cumulative obligation to pay cure costs
associated with the assumption of any executory contracts transferred to
Purchaser, including the Assumed Bank Related Contracts, shall not exceed the
Cure Cost Ceiling, with Purchaser assuming full responsibility for any cure
costs in excess of the Cure Cost Ceiling. In connection with the Bankruptcy
Case, the Company shall include in the Sale Motion, in form and substance
acceptable to Purchaser in its sole discretion, a request for authorization to
assume and assign to the Bank the Assumed Bank Related Contracts. To the extent
that, under any applicable non-bankruptcy Legal Requirement, any Assumed Bank
Related Contract may not be assigned to the Bank by the Company absent the
wavier or consent of, or notice to, one or more Persons, the Company and the
Purchaser shall use their commercially reasonable best efforts to obtain all
such waivers or consents and to make all such notices prior to the Closing and
shall cooperate in all respects with respect thereto. Notwithstanding anything
in this Agreement to the contrary, the only liabilities or obligations that will
be assigned to or assumed by the Bank or the Purchaser with respect to the
Assumed Bank Related Contracts will be both: (i) the total amount of cure costs,
in excess of the Cure Cost Ceiling, necessary to assume and assign any executory
agreements, including Assumed Bank Related Contracts, identified by Purchaser;
and (ii) obligations that first arise after Closing.

5.7 Notice of Certain Events. The Company shall promptly notify the Purchaser in
writing of:

(c) any notice or other material written or oral communication from any Person
other than a Governmental Authority in connection with the Contemplated
Transactions;

(d) any actions, suits, claims, investigations or proceedings commenced or, to
its Knowledge, threatened against, relating to or involving or otherwise
affecting the Company or the Bank

 

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or its Subsidiaries that, if pending on the date hereof, would have been
required to have been disclosed pursuant to Section 3.8 or that could reasonably
be expected to adversely affect or delay the Company’s ability to consummate any
of the Contemplated Transactions;

(e) any circumstance, event or action the existence, occurrence or taking of
which could reasonably be expected to result in any representation or warranty
made by the Company in this Agreement not being true and correct or that could
reasonably be expected to cause any condition set forth in Section 6.1 or
Section 6.3 not to be satisfied; and

(f) any failure of the Company to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement.

No information received by the Purchaser pursuant to this Section 5.7 or
otherwise shall operate as a waiver or otherwise affect any representation,
warranty or agreement given or made by the Company in this Agreement, nor shall
any such information be deemed to change, supplement or amend the Disclosure
Schedule.

5.8 Payment of the Broker’s Fees. At the Closing, the Bank shall pay to the
Broker the Broker’s Fees in full satisfaction of all obligations of the Bank and
the Purchaser in connection with the engagement letters or other agreements of
the Company, the Bank or any other Subsidiaries with the Broker as set forth on
Schedule 5.8.

5.9 Stalking-Horse Bidder Fee.

(a) In consideration for the Purchaser serving as the stalking-horse bidder and
agreeing to effect the Equity Contribution in connection with the Closing, and
this Agreement being subject to termination in the event that the Company
receives a higher and better bid consistent with the Bidding Procedures,
provided this Agreement is not terminated prior to the Closing due to
Purchaser’s uncured breach and regardless of whether or not the Purchaser makes
any matching or competing bids, the Company shall pay to the Purchaser a
stalking-horse bidder fee in an amount equal to Five Million Dollars
($5,000,000) (the “Stalking-Horse Bidder Fee”) on the first Business Day
following the date of consummation of an Alternative Transaction.

(b) The parties intend that the Stalking-Horse Bidder Fee shall be treated as an
administrative expense in the Bankruptcy Case; provided that, in no event will
the Stalking-Horse Bidder Fee be paid in the absence of the entry of a sale
order approving an Alternative Transaction. The Company acknowledges and agrees
that: (i) the approval of the Stalking-Horse Bidder Fee is an integral part of
the transactions contemplated by this Agreement; (ii) in the absence of the
Company’s obligation to pay the Stalking-Horse Bidder Fee, the Purchaser would
not have entered into this Agreement; (iii) the entry of the Purchaser into this
Agreement is necessary for preservation of the estate of the Company and the
Bank and is beneficial to the Company because, in the Company’s business
judgment, it will enhance the Company’s ability to maximize the value of its
assets for the benefit of its creditors; (iv) the Stalking-Horse Bidder Fee is
reasonable in relation to the Purchaser’s efforts and to the magnitude of the
Contemplated Transactions and the Purchaser’s lost opportunities resulting from
the time spent pursuing the Contemplated Transactions; and (v) time is of the
essence with respect to the entry of the Bidding Procedures Order by the
Bankruptcy Court, approving, among other things, the process by which bids may
be solicited in connection with the sale of the Shares and the Other Purchased
Assets (the “Bidding Procedures”). The Company’s agreement to pay the
Stalking-Horse Bidder Fee is subject to Bankruptcy Court approval of this
Agreement, including without limitation approval of payment of the
Stalking-Horse Bidder Fee, which approval shall be granted in the Bidding
Procedures Order.

 

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5.10 Debtor in Possession. During the pendency of the Bankruptcy Case, the
Company shall continue to operate its business as a debtor in possession
pursuant to the Bankruptcy Code.

5.11 The Sale Motion. On or within two (2) Business Days following the Petition
Date, the Company shall file a sale motion with the Bankruptcy Court (the “Sale
Motion”), and such additional pleadings as may be necessary to support the Sale
Motion, requesting expedited relief and seeking the entry of the Sale Order and
the following relief from the Bankruptcy Court in a form and substance
reasonably acceptable to the Purchaser:

(a) Approval of the Bidding Procedures and entry of the Bidding Procedures Order
no later than fifteen (15) days following the Petition Date;

(b) Scheduling the sale hearing (the “Sale Hearing”) to take place not less than
thirty (30) days following the entry of the final Bidding Procedures Order;

(c) Subject to the Bidding Procedures, approval of the proposed asset purchase
agreement between the Company and the Successful Bidder, as that term shall be
defined in the Sale Order, including the Sale of the Shares and the Other
Purchased Assets to such Successful Bidder and the equity contribution to the
Bank by such Successful Bidder contemplated thereby;

(d) Confirmation that the sale of the Shares and the Other Purchased Assets to
the Successful Bidder shall be free and clear of all Encumbrances;

(e) Confirmation that the Company may assume and assign to the Bank all Assumed
Bank Related Contracts, provided that the Company will not be obligated to, and
will not, assume and assign to the Bank any Assumed Bank Related Contracts not
desired by the Successful Bidder;

(f) Confirmation that the Company may assume any Tax sharing agreements, and
promptly transfer to the Bank any amounts of Tax Refunds received from any
Governmental Authority;

(g) Confirmation that the Company may assume any proceeds related to any Assumed
Bank Related Contract (including any such proceeds from any insurance claims to
the extent relating to the Bank or its Subsidiaries), and promptly transfer to
the Bank any such proceeds;

(h) Confirmation that the Successful Bidder and the Company may cause the
Closing to occur as soon as practicable after the entry of the Sale Order; and

(i) Approval of findings of fact and conclusions of law reasonably similar, but
not limited to, the following:

(i) the Notice of Sale, and the parties who were served with copies of such
Notice, were in compliance with Sections 105 and 363 of the Bankruptcy Code and
Bankruptcy Rules 2002, 6004, and 9014 and any other applicable provision of the
Bankruptcy Code, the Bankruptcy Rules, or any local bankruptcy rule governing
the sale of assets free and clear of Encumbrances, or as directed by the
Bankruptcy Court as long as the Bankruptcy Court finds that such notice is
sufficient under the circumstances;

(ii) all requirements imposed by Section 363(f) of the Bankruptcy Code for the
sale of the Shares free and clear of Encumbrances and the sale of the Other
Purchased Assets free and clear of Encumbrances (other than Permitted Liens)
have been satisfied;

 

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(iii) the Successful Bidder is a purchaser of the Shares and the Other Purchased
Assets in “good faith” pursuant to Section 363(m) of the Bankruptcy Code, and
the Sale is entitled to the protections of Section 363(m);

(iv) the Successful Bidder and the Company did not engage in any conduct which
would allow this Agreement to be set aside pursuant to Section 363(n) of the
Bankruptcy Code;

(v) pursuant to Section 105 of the Bankruptcy Code, any creditors of the Company
are prohibited from taking any actions against the Successful Bidder or the
Shares and the Other Purchased Assets; and

(vi) the terms and provisions of the Sale are fair and reasonable.

5.12 The Bidding Procedures.

(a) The Bidding Procedures and the Bidding Procedures Order shall be in a form
and substance acceptable to the Purchaser and shall include the provisions and
the terms set forth in Section 5.9.

(b) In order to be qualified to receive any confidential information from the
Company or the Bank to submit an Initial Overbid, as that term is hereinafter
defined, and to participate in the Auction, a potential bidder (an “Overbidder”)
must submit each of the following to the Company on a timely basis:

(i) An executed confidentiality agreement which shall inure to the benefit of
the Successful Bidder, in a form and substance acceptable to the Company; and

(ii) Current audited financial statements and the latest unaudited financial
statements of the Overbidder or, if the Overbidder is an entity formed for the
purpose of acquiring the Shares and the Other Purchased Assets, current audited
financial statements and the latest unaudited financial statements of the equity
holders or sponsors of the Overbidder who will guarantee the obligations of the
Overbidder, or such other form of financial disclosure and/or credit-quality
support or enhancement satisfactory to the Company, if any, that will allow the
Company to make a reasonable determination as to the Overbidder’s financial and
other capabilities to consummate the Sale (including, but not limited to, the
ability to obtain all necessary regulatory approvals with respect to the
ownership of the Shares and operation of the Bank on a timely basis)

(c) Neither the Company, nor the Bank, nor any of their employees, officers,
directors, affiliates, subsidiaries, representatives, agents, advisors, or
professionals are responsible for, and shall bear no liability with respect to,
any information obtained by potential bidders in connection with the Sale. The
Company and/or the Bank shall not be obligated to furnish any due diligence
information after the Bid Deadline;

 

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(d) In order to participate at the Auction, an Overbidder must submit the
following to the Company at least ten (10) days prior to the Sale Hearing (the
“Bid Deadline”):

(i) a proposed asset purchase agreement (the “Competing Purchase Agreement”),
executed by the Overbidder, that:

1. is on substantially the same terms and conditions as those in the Purchase
Agreement, along with a redlined, marked copy showing all changes between the
Competing Purchase Agreement and the Purchase Agreement;

2. provides for a purchase price to be paid to the Company that exceeds the sum
of the Cash Purchase Price and the Stalking Horse Bidder Fee by at least Two and
a Half Million Dollars ($2,500,000) (such total amount, the “Initial Minimum
Overbid,” and the sum of the Stalking Horse Bidder Fee, and Two and a Half
Million Dollars being referred to herein as the “Initial Minimum Bid
Increment”);

3. provides for the recapitalization of the Bank through an equity contribution
on terms not less favorable to the Bank than the Equity Contribution or on terms
acceptable to Governmental Authorities as evidenced by written authorization or
affidavit;

4. remains irrevocable until one business day after the Closing;

5. waives any right of Overbidder to receive a fee analogous to the Stalking
Horse Bidder Fee or to compensation under Bankruptcy Code Section 503(b) for
making a substantial contribution; and

6. contains a proposed closing date that is not later than the Outside Date
hereunder;

(ii) a cashier’s check made payable to the order of the Company in an amount
equal to the Initial Minimum Overbid less the Cash Purchase Price (the
“Overbidder’s Deposit”) which, if the Overbidder is the Successful Bidder, will
be retained by the Company as a nonrefundable deposit for application against
the purchase price at the closing of the transaction, or, if the Overbidder is
not the Successful Bidder, returned to the Overbidder within three (3) business
days of the Closing, in the event that the Bankruptcy Court does not approve a
sale of the Shares and the Other Purchased Assets to the Overbidder. The
Overbidder’s Deposit provided by each Overbidder shall not earn interest;

(iii) evidence in the form of affidavits or declarations, acceptable to the
Company, establishing that the Overbidder has the financial ability to pay the
cash purchase price and make the equity contribution, or to otherwise satisfy
the requirements of Section 5.12(d)(i)(3), set forth in the Competing Purchase
Agreement;

(iv) a bid:

1. containing terms and conditions that are higher and better than the terms and
conditions of the Purchase Agreement;

2. providing for a purchase price to be paid to the Company that is at least
equal to the Initial Minimum Overbid; and

3. that does not contain any due diligence, financing, or regulatory
contingencies (other than, with respect to a bid by an Overbidder that the
Company determines is otherwise eligible and qualified to receive such approval,
those necessary regulatory approvals with respect to the ownership of the Shares
and operation of the Bank) of any kind;

 

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(v) admissible evidence in the form of affidavits or declarations, acceptable to
the Company, establishing the Overbidder’s good faith, within the meaning of
Section 363(m) of the Bankruptcy Code;

(vi) admissible evidence in the form of affidavits or declarations, acceptable
to the Company, establishing that the Overbidder is capable and qualified,
financially, legally, and otherwise, of unconditionally performing all
obligations under the Competing Purchase Agreement;

(vii) admissible evidence, acceptable to the Company, in the form of affidavits
or declarations establishing that the Overbidder has or is capable of obtaining
all required regulatory approvals to perform all of its obligations under the
Competing Purchase Agreement and to close the transaction not later than the
Outside Date;

(viii) a written waiver, acceptable to the Company, of any right of the
Overbidder to receive a fee analogous to the Stalking Horse Bidder Fee or to
compensation under Bankruptcy Code Section 503(b) for making a substantial
contribution;

(ix) admissible evidence, acceptable to the Company, of authorization and
approval from the Overbidder’s board of directors (or comparable governing body)
with respect to the execution, delivery, and closing of the submitted Competing
Purchase Agreement;

(x) sufficient financial or other information (the “Adequate Assurance
Information”) to establish adequate assurance of future performance with respect
to any lease or contract to be assumed and assigned to the bidder in connection
with the proposed transaction. The bid shall also identify a contact person
(with relevant contact information) that counterparties to any executory
contract can contact to obtain additional Adequate Assurance Information; and

(xi) a statement indicating that the Overbidder consents to the core
jurisdiction of the Bankruptcy Court for all disputes relating to the Sale, and
has waived any right to a jury trial in connection with any disputes relating to
the Auction or the Sale

(e) A “Qualified Overbidder” is a potential Overbidder that both:

(i) delivers to the Company a timely, conforming Competing Asset Purchase
Agreement, an Overbidder’s Deposit, and the other materials set forth in section
“(d)” above (an “Initial Overbid”); and

(ii) the Company has determined is reasonably likely (based on information
submitted by the Overbidder) to be able to consummate a sale if selected as the
Successful Purchaser. Each Overbidder shall comply with all reasonable requests
for additional information and due diligence by the Company or its advisors
regarding the Overbidder and its proposed transaction. Failure by an Overbidder
to comply with requests for information and due diligence access shall be a
basis for the Company to determine that such Overbidder is not a Qualified
Overbidder. Not later than five (5) business days after an Overbidder delivers
all of the materials required in “(c)” above, the Company shall determine and
notify an Overbidder if it is a Qualified Bidder. In the event that any
Overbidder is not a Qualified Overbidder, the Company shall refund that
Overbidder’s Deposit within five (5) business days after the Bid Deadline or as
soon as reasonably practicable thereafter. Any bid submitted by a Qualified
Overbidder shall be a “Qualified Bid.” Each Qualified Overbidder shall be deemed
to acknowledge and represent that it has had an opportunity to conduct any and
all due diligence regarding the Sale prior to submitting any bids; and that it
did not rely on any written or oral statements, representations, promises,
warranties or guaranties of the Company or its professionals, advisors, and
agents and/or employees whatsoever, whether express, implied, by operation of
law, or otherwise.

 

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(f) The Purchaser shall automatically be deemed a Qualified Overbidder.

(g) If, on the Bid Deadline, the Purchaser is the only Qualified Overbidder, the
Company shall not conduct an Auction and shall request at the Sale Hearing that
the Bankruptcy Court approve the Purchase Agreement, including the Sale of the
Shares and the Other Purchased Assets to the Purchaser and the Equity
Contribution contemplated thereby, and request that the Sale Order shall be
immediately effective upon entry, notwithstanding the provisions of Rule 6004(h)
of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rule
62(g) of the Federal Rules of Civil Procedure;

(h) If, on the Bid Deadline, there is more than one Qualified Overbidder, the
Company shall conduct an auction of the Shares and the Other Purchased Assets
(the “Auction”), subject to approval of the Bankruptcy Court, in which the
Purchaser and all other Qualified Overbidders may participate. The Auction shall
be governed by the following procedures:

(i) The Company and its professionals shall direct and preside over the Auction.
The auction shall be conducted at the offices of Patton Boggs LLP, 2550 M
Street, NW, Washington, DC 20037 on that date determined after entry of the
Bidding Procedures Order by the Bankruptcy Court, or at such other place and
time as the Company shall notify all Qualified Overbidders who have submitted
Qualified Bids and expressed an interest in participating in the Auction. The
Company shall maintain a transcript of all bids made and announced at the
Auction.

(ii) bidding will commence at the amount of the highest bid submitted by a
Qualified Overbidder, as determined by the Company. The Company, at the start of
the Auction, will describe the terms of the opening bid. The Purchaser shall be
entitled to credit bid the amount of the Stalking Horse Bidder Fee at the
Auction;

(iii) each subsequent bid, after the Initial Minimum Overbid, shall be in
increments of no less than One Million Dollars ($1,000,000);

(iv) each Qualified Overbidder must certify to the Company, prior to the start
of the Auction, that it has not engaged in any undisclosed group bidding or
collusion with respect to the Auction or the Sale;

(v) the Purchaser shall have the right, but not the obligation, in its sole and
absolute discretion, to match bids made by any Qualified Overbidder and, in such
event, the Purchaser’s matching bid shall be deemed the highest and best bid for
the Shares and the Other Purchased Assets;

(vi) the Auction shall continue until there is only one Qualified Bid that the
Company determines in its reasonable business judgment, after consultation with
its advisors, is the winning bid. In making this decision, the Company, in
consultation with its legal and financial advisors, may consider, among other
things: (a) the number, type and nature of changes to the Purchase Agreement
requested by each Qualified Overbidder; (b) the extent to which such
modifications are likely to delay closing of the Sale and the cost to the
Company of such modifications or delay; (c) the total consideration to be
provided by the Qualified Overbidder; (d) the Qualified Overbidder’s ability to
close a transaction and the timing thereof; (e) the net benefit to the estate,
taking into account the Purchaser’s rights to the Stalking Horse Bidder Fee, and
the Equity Contribution offered by the Qualified Bidder;

 

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(vii) if, upon conclusion of the Auction, and consistent with the terms of the
Bidding Procedures, the Purchaser’s final bid matches or is greater than the
highest bid made by any Qualified Overbidder, the Company shall request
Bankruptcy Court approval of the Purchase Agreement, including the Sale of the
Shares and the Other Purchased Assets to the Purchaser and the Equity
Contribution contemplated thereby, and request Bankruptcy Court authorization
for the Company to sell the Shares and the Other Purchased Assets to the
Purchaser, and the amount of the Purchaser’s final bid shall constitute the Cash
Purchase Price under the Purchase Agreement; and

(viii) the Company may, with Bankruptcy Court approval, elect to deem the
Purchaser’s final bid to be the highest bid, notwithstanding the receipt of an
apparently higher bid from another Overbidder, if the Company reasonably
concludes that the Overbidder may not be able to close on a timely basis, or for
any other reason.

(i) The Purchaser has standing and is deemed to be a party in interest with
standing to be heard on any motion, hearing or other matter related to this
Agreement or any Overbid, or other sale of assets subject to this Agreement.

(j) These Bidding Procedures may be modified by the Company as required by the
terms of the Bidding Procedures Order.

5.13 Bankruptcy Efforts. The Purchaser and the Company shall use their
commercially reasonable best efforts to cause the Bankruptcy Court to (i) enter
the Bidding Procedures Order and the Sale Order, and (ii) approve the
Stalking-Horse Bidder Fee.

5.14 Reasonable Access to Records and Certain Personnel. In order to facilitate
the Company’s efforts to (i) administer and close the Bankruptcy Case, and
(ii) prepare tax returns (together, the “Post-Close Filings”), Purchaser shall
permit Company’s counsel, accountants and any other professional representative
of the Company, during regular business hours, with reasonable notice, and
subject to reasonable rules and regulations, reasonable access to any
information acquired by the Purchaser pursuant to this Agreement, including
financial information of the Company and the Bank that are required for the
Company to complete the Post-Close Filings, or to facilitate the administration
of the Bankruptcy Case. The Company shall reimburse the Purchaser for any
reasonable costs necessary to comply with the provisions of this Section 5.14.
The Purchaser shall retain any information acquired by the Purchaser pursuant to
this Agreement for a period of six (6) years following the Closing Date. The
obligations created by this Section 5.14 shall terminate thirty (30) days after
the entry of a final non-appealable order by the Bankruptcy Court approving the
Final Report and closing the Bankruptcy Case. Notwithstanding the forgoing, the
Purchaser shall not be required to provide such information which it deems
confidential or is privileged, unless required by a court order.

5.15 Public Announcements. Other than mutually agreed upon press releases and
other materials to be issued upon the announcement of this Agreement or
thereafter, with respect to which the parties shall cooperate in good faith to
jointly prepare or communicate consistent with the joint communication policy of
the parties, from and after the date hereof, neither party shall make any public
announcement or public comment regarding this Agreement or the Contemplated
Transactions without the prior written consent of the other party (which consent
shall not be unreasonably withheld, delayed or conditioned), unless and only to
the extent that (a) the furnishing or use of information is required in making
any filing or obtaining any Governmental Authorization required for the
consummation of the Contemplated Transactions, or (b) the furnishing or use of
such information is required by Legal Requirements.

 

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5.16 Tax Refunds. The Company shall promptly transfer to the Bank any and all
Tax Refunds received from any Governmental Authority.

5.17 Tax Elections.

(a) On its consolidated federal income Tax Return for the taxable year in which
the Closing Date occurs, the Company shall elect under Treasury Regulations
Section 1.1502-36(d) to reduce its tax basis in the Shares to the extent
necessary to prevent any reduction of the Bank’s Tax attributes. All Tax Returns
filed by the Company, the Bank and its Subsidiaries shall be consistent with
this provision. In addition, the Company shall take any other action reasonably
requested by the Purchaser to preserve the Bank’s Tax attributes.

(b) At the Purchaser’s discretion, the Company will make, or forego making (and
cause its Subsidiaries to make or forego making), the election under Internal
Revenue Code Section 108(b)(5) for the consolidated federal return filing year
that includes the date of Closing. The Purchaser will provide direction to
Company on making or not making the election within twenty (20) days of
receiving a preliminary calculation of how the Company would apply the
provisions of Sec. 108 to any excluded cancellation of debt income.

(c) If the Bank currently has in place a valid election under Treasury
Regulations Section 1.166-2(d)(3) (the “Conformity Election”), at the
Purchaser’s discretion, it will apply for voluntary revocation of the Conformity
Election, effective for the Company’s consolidated federal return filing year
that included the date of Closing. The Purchaser will advise the Company in
writing of its desire for voluntary revocation within sixty (60) days of the end
of the Company’s consolidated federal return filing year that included the date
of Closing.

5.18 Preparation and Filing of Tax Returns; Taxes. The Company shall include the
income, equity or other applicable tax base of the Bank and its Subsidiaries on
the Company’s consolidated, unitary, affiliated or other combined federal and
state income Tax Returns for all periods through the end of the Closing Date
(such period, the “Pre-Closing Tax Period” and such Tax Returns, the “Company
Tax Returns”), in accordance with applicable tax statutes, and pay any federal
and state Taxes attributable to such income, equity or other applicable tax base
subject to the Bank reimbursing the Company for the Bank’s pro rata share of any
such income Taxes paid by the Company, such pro rata share to be determined in
accordance with federal consolidated return regulations, where applicable, and
with the Interagency Policy Statement on Income Tax Allocation in a Holding
Company Structure. The Bank shall furnish Tax information to the Company for
inclusion in such Company Tax Returns in accordance with the Bank’s past custom
and practice. The income of the Bank and its Subsidiaries shall be apportioned
to the period up to and including the Closing Date and the period after the
Closing Date by closing the books of the Bank and its Subsidiaries as of the end
of the Closing Date. The Company shall timely prepare and file (or cause to be
prepared and filed) the Company Tax Returns, and shall prepare all Company Tax
Returns in a manner consistent with prior practice in respect of the Bank and
its Subsidiaries unless otherwise required by applicable law or unless the
Purchaser consents to such different treatment, such consent not to be
unreasonably withheld, conditioned or delayed. The Company shall provide (or
cause to be provided) to the Purchaser a copy of any Company Tax Return at least
twenty (20) Business Days prior to the due date for filing such return (or, if
such Tax Return is required to be filed within twenty (20) Business Days after
the Closing Date, as soon as practicable after preparation but prior to filing
thereof), and the Purchaser shall have ten (10) Business Days in which to review
and comment on such return prior to the filing thereof. The Company shall not
unreasonably withhold its consent to reflecting such Purchaser comments on such
returns to the extent permitted by applicable law. The Purchaser and the Company
agree to report all transactions not in the ordinary course of business
occurring on the Closing Date after the Closing on the Purchaser’s federal and
state income Tax Returns

 

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to the extent permitted by Treasury Regulations Section 1.1 502-76(b)(1)(ii)(B).
Neither Party shall amend or cause to be amended any consolidated/unitary Tax
Returns that relates to any Tax period or portion thereof that ends on or before
the Closing Date without the consent of the other Party, which consent shall not
be unreasonably withheld, conditioned or delayed.

5.19 Tax Cooperation. In connection with the preparation of Tax Returns, audit
examinations, and any administrative or judicial proceedings relating to the Tax
liabilities imposed on or attributable to the Bank or its Subsidiaries, the
Purchaser on the one hand and the Company on the other hand shall reasonably
cooperate fully with each other, including the furnishing or making available
during normal business hours of records, personnel (as reasonably required),
books of account, powers of attorney or other materials necessary or helpful for
the preparation of such Tax Returns, the conduct of audit examinations or the
defense of claims by taxing authorities as to the imposition of Taxes. The
Company shall provide to the Purchaser copies of all information, returns,
books, records and documents relating to any Tax matters of or attributable to
the Bank or its Subsidiaries.

5.20 Tax Proceedings. The Company shall promptly notify the Purchaser upon
receipt by the Company of any notice of any inquiries, assessments, audits,
proceedings or similar events received from any taxing authority with respect to
any Taxes, Tax attributes (including net operating losses) or Tax Refunds of or
attributable to the Bank and its Subsidiaries, including such items included in
any consolidated, affiliated, unitary or other combined Tax Return, whether
attributable to the Pre-Closing Tax Period or any period or portion of a period
after the Closing Date (any such inquiry, assessment, audit, proceeding or
similar event, a “Tax Matter”). The Purchaser shall have the right to control
the process, disposition and decision of whether to settle any Tax Matter in its
sole discretion. In addition, the Company shall not enter into any settlement of
or otherwise compromise any inquiry, assessment, audit, proceeding or similar
event to the extent that such settlement or compromise could adversely affect
the Tax liability (including a reduction of a Tax Refund, net operating loss or
other Tax attribute) of the Bank, its Subsidiaries or the Purchaser, including
under this Agreement, without the consent of the Purchaser, such consent not to
be unreasonably withheld, conditioned or delayed.

5.21 Transfer Taxes. Notwithstanding any other provision of this Agreement, the
Purchaser shall be solely responsible for any transfer, sales, use, stamp,
conveyance, value added, recording, registration, documentary, filing and other
similar non-income Taxes and administrative fees (including, without limitation,
notary fees) (“Transfer Taxes”) arising in connection with the consummation of
the Contemplated Transactions, whether levied on the Company, the Purchaser or
its Affiliates. The Purchaser shall timely prepare (or cause to be prepared) any
Tax Returns with respect to Transfer Taxes arising in connection with the
consummation of the Contemplated Transactions (the “Transfer Tax Returns”). The
Purchaser shall provide (or cause to be provided) to the Company a copy of any
Transfer Tax Return at least ten (10) days prior to the due date for filing such
return, and the Company shall have five (5) days in which to review and comment
on such return prior to the filing thereof. The Purchaser shall take any such
Company comments into consideration in good faith, provided, however, that the
Purchaser shall have final determination as to the contents of any Transfer Tax
Return unless the Company believes and informs the Purchaser that, upon advice
of its advisors, a position taken by the Purchaser is not permitted under
applicable law, and provided, further, that if the Company so believes any
position reflected on a Transfer Tax Return is not permitted under applicable
law, the parties shall engage an independent third party accounting firm to
determine whether such position is permitted under applicable law and the
determination of such accounting firm shall control the treatment of the
disputed position(s) on such Transfer Tax Return. The expense of such accounting
firm shall be borne 50% by the Company and 50% by the Purchaser. The Company
shall timely file all Transfer Tax Returns and the Purchaser shall pay to the
Company the amount shown as due on any such return at least three (3) days prior
to the due date of such return. Upon the request of the Company, the Purchaser
agrees to pay to the Company any additional Transfer Taxes, along with related
penalties and interest, if any, if and to the

 

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extent the Company is then liable for such Transfer Taxes pursuant to an audit
or other proceeding by a taxing authority in respect of any Transfer Taxes that
the Purchaser has not previously paid over to the Company or a taxing authority.
The Company and the Purchaser shall cooperate to minimize Transfer Taxes. If a
certificate or document of exemption is required to reduce or eliminate the
Transfer Taxes, the Purchaser will promptly furnish such certificate or document
to the Company or the Purchaser will cooperate with the Company to allow the
Company to obtain such reduction or exemption from Transfer Taxes.

5.22 Resignations. The Company shall deliver to the Purchaser written
resignations, in form and substance reasonably acceptable to the Purchaser,
effective as of the Closing Date, of each member of the board directors of the
Bank other than those listed on Schedule 5.22 (the “Continuing Board Members”).

5.23 Deferred Compensation Plan. Subject to receipt of non-objection from the
OCC, effective as of the day immediately preceding the Closing Date, the Company
shall (or shall cause the Bank to) terminate the Deferred Compensation Plan in a
manner consistent with Section 409A of the Code and the regulations thereunder.
As soon as permissible under Code Section 409A-related regulations and any
Regulatory Agreements, the Purchaser, or the Bank at the Purchaser’s discretion,
shall make a lump sum payment to each director of the Bank eligible under the
Deferred Compensation Plan equal to the amount payable to such director under
the Deferred Compensation Plan.

5.24 Bankruptcy Filings.

(a) From and after the Agreement Date through the Closing Date, promptly before
filing any papers or pleadings in the Bankruptcy Case that relate in any way to
this Agreement, the Sale, the Bid Procedures, the Contemplated Transaction or
the Purchaser, the Company shall provide the Purchaser with a copy of such
papers or pleadings.

(b) The Company shall, through the Closing Date, use its best efforts to provide
the Purchaser with prompt notice of any papers or pleadings filed by a party
other than the Purchaser in the Bankruptcy Case that relate in any way to this
Agreement, the Sale, the Bid Procedures or the Purchaser.

5.25 Transfer of Business-Related Assets and Contracts. If at any time, whether
before or after the Closing, the Company or any of its officers or employees
discovers or is otherwise aware of the fact that the Company or one of its
Subsidiaries (other than the Bank or its Subsidiaries) (a) owns any asset
(whether real, personal, tangible, intangible or otherwise) that is used or held
for use in connection with, or that relates to, the Business or (b) is a party
to any Contract relating to the Business, the Company will promptly give notice
of that fact to the Purchaser and, if the Purchaser so requests, the Company
will promptly cause such asset to be transferred to the Bank free and clear of
all Encumbrances, or the rights and obligations (but not any obligations
relating to a pre-transfer breach or default) under such Contract to be assigned
to the Bank free and clear of all Encumbrances, as the case may be, for no
consideration.

5.26 Plan. The Company covenants and agrees that if the Sale Order is entered,
the terms of any plan of reorganization or liquidation submitted, supported or
sponsored by the Company for confirmation shall not conflict with, supersede,
abrogate, nullify, modify or restrict the terms of this Agreement and the rights
of the Purchaser hereunder, or in any way prevent or interfere with the
consummation or performance of the transactions contemplated by this Agreement,
including any transaction that is approved pursuant to the Sale Order.

 

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5.27 Appeal. If the Sale Order or the Bidding Procedures Order is appealed by
any Person, or petition for certiorari or motion for rehearing, reconsideration
or rehearing is filed with respect thereto, the Company agrees to take all
action as may be reasonably necessary to defend against such appeal, petition or
motion and to obtain an expedited resolution of such appeal, petition or motion.

5.28 Non-Solicitation of Competing Bids. Except in accordance with the Bidding
Procedures Order (once entered by the Bankruptcy Court), the Company shall not,
and shall cause its Affiliates and its and their representatives not to,
(a) solicit or negotiate with any Specified Person (and to cease immediately any
such ongoing activity), or enter into any agreement or understanding with
respect to, or approve or recommend, any direct or indirect sale of any equity
interest in, or any material portion of the assets of, the Company or the Bank
or any extraordinary corporate transaction directly or indirectly involving the
Company or the Bank or (b) provide any Specified Person (other than the
Purchaser and its Affiliates, agents and representatives) with access to the
books, records, operating data, contracts, documents or other information
relating to the Bank. The Company shall promptly notify the Purchaser of any
proposal or offer from a third party to acquire, directly or indirectly, all or
any substantial portion of the assets, properties, rights and interests of the
Company or the Bank received by the Company in writing after the date hereof
until the Bankruptcy Court shall have entered the Bidding Procedures Order, and
the Company shall communicate to the Purchaser the material terms of any such
bid.

5.29 Employees. As soon as administratively practicable after the Closing Date
and until the second anniversary of the Closing Date, and subject to Purchaser’s
and its Subsidiaries’ respective authority to amend, from time to time, or
terminate the Purchaser Plans (defined below) and all other plans, programs and
other arrangements, Purchaser shall use commercially reasonable efforts to
enable employees of the Bank who become employees of the Purchaser or a
Subsidiary of Purchaser to be entitled to participate in each employee welfare
benefit plan (as defined in ERISA Section 3(1)) and Qualified Plan of broad and
general applicability of Purchaser and its Subsidiaries (collectively, the
“Purchaser Plans” and each, a “Purchaser Plan”) to the same extent as
similarly-situated employees of Purchaser and its Subsidiaries, provided,
however, that such enabling of such employees of the Bank may occur at different
times with respect to different plans and provided, further, that Purchaser
shall use commercially reasonable efforts to continue coverage under the
applicable plans of the Bank until such employees are permitted to participate
in the applicable Purchaser Plans. Purchaser shall take all reasonable action so
that employees of the Bank who become employees of Purchaser or its Subsidiaries
shall be entitled to receive credit for their consecutive years of employment by
the Bank up to the Closing Date for purposes of any eligibility or vesting
requirements under the relevant benefit plans of Purchaser or its Subsidiaries
in which they are eligible to participate. Purchaser expressly acknowledges its
obligation to honor the terms of the Bank’s employee severance compensation
plan. In addition, any employee of the Bank who is terminated within one year of
the Closing Date by Purchaser but is not otherwise eligible to receive severance
payments under such plan will be entitled to severance payments equal to two
weeks of pay for each full year of service, subject to a minimum of four weeks
and a maximum of ten weeks. Notwithstanding anything in this Agreement to the
contrary, no provision or term of this Agreement shall constitute or be deemed
to constitute an amendment of, or a term or provision of, any Purchaser Plan or
any other plan, program or other arrangement.

5.30 Certain Benefit Arrangements. Upon not less than ten (10) days’ notice
prior to the Closing Date from Purchaser to the Company, the Company shall cause
the termination, amendment or other appropriate modification of each Qualified
Plan such that the Bank shall not sponsor or otherwise have any further
Liability or other obligation in connection with such Qualified Plans, effective
as of the date which immediately precedes the Closing Date. Upon such action,
participants in the First Place Bank 401(k) Plan and the First Place Bank
Employee Stock Ownership Plan shall be 100% vested in their account balances. In
addition, Purchaser, in its sole and absolute discretion, may refinance the
loans granted under the First Place Bank 401(k) Plan to Bank employees who
become employees of the Purchaser or a Subsidiary so that such loans are repaid
to the First Place 401(k) on or before the Closing.

 

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ARTICLE 6

CONDITIONS OF CLOSING

6.1 Conditions to the Purchaser’s Obligations. The obligation of the Purchaser
to complete the transactions contemplated by this Agreement is subject to the
fulfillment of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of
the Company contained in Sections 3.1, 3.2, 3.3, 3.11, 3.17 and 3.24 shall be
true and correct in all respects as of the date of this Agreement and as of the
Closing with the same effect as though such representations and warranties had
been made as of the Closing (provided that those representations and warranties
which address matters only as of a particular earlier date shall have been true
and correct only on such date) and (ii) the representations and warranties of
the Company contained in this Agreement (other than those representations and
warranties specified in sub-clause (i) above) shall be true and correct in all
respects (without regard to materiality or Material Adverse Effect
qualifications contained therein) as of the date of this Agreement and as of the
Closing with the same effect as though such representations and warranties had
been made as of the Closing (provided that those representations and warranties
which address matters only as of a particular earlier date shall have been true
and correct only on such date), except where the failure of such representations
and warranties in this sub-clause (ii) to be so true and correct (without regard
to materiality or Material Adverse Effect qualifications contained therein) has
not had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;

(b) Covenants. The covenants and obligations of the Company to be performed or
observed on or before the Closing pursuant to this Agreement shall have been
duly performed or observed in all material respects;

(c) Petition Date. The Company shall have filed the Bankruptcy Case within one
(1) Business Day following the date hereof;

(d) Bidding Procedures Order. The Bankruptcy Court shall have entered the
Bidding Procedures Order in form and substance acceptable to the Purchaser,
including the Stalking-Horse Bidder Fee, and such order shall be unstayed, and
shall not have been amended, modified, reversed or vacated;

(e) Sale Order. The Bankruptcy Court shall have entered the Sale Order and the
Sale Order shall not have been (i) stayed, vacated, or reversed, or be the
subject of any pending motion seeking such relief, (ii) (except with the express
written consent of the Purchaser not to be unreasonably withheld or delayed)
amended, supplemented or otherwise modified or (iii) subject to an appeal,
which, in the Purchaser’s reasonable judgment, would not be mooted as a result
of the Closing;

(f) Secretary’s Certificate. The Company shall have delivered to the Purchaser a
Secretary’s Certificate certifying to the effect that the conditions set forth
in Section 6.1(a) and (b) have been satisfied.

(g) Purchaser Required Approvals. The Purchaser shall have obtained all of the
Purchaser Required Approvals in form and substance acceptable to Purchaser and
without the imposition of any Burdensome Condition, no such Purchaser Required
Approval shall have been amended, modified, reversed or vacated and all
applicable waiting periods with respect to any of the Purchaser Required
Approvals shall have expired;

 

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(h) Consents. The material consents necessary for the continued operations of
the Business, which are set forth in Section 6.1(h) of the Disclosure Schedule,
shall have been obtained in form and substance acceptable to the Purchaser and
shall be in effect;

(i) Bank Expenses. The Bank shall not have incurred, and the Company’s chief
financial officer shall have delivered to the Purchaser within five (5) Business
Days of the Closing, an officer’s certificate certifying that the Bank shall not
have incurred, in excess of $8.5 million in total legal, investment banking, and
insurance-related costs (including contributions to a self insurance fund) and
expenses in connection with, or in preparation for, the transactions
contemplated by this Agreement (inclusive of costs and expenses of the Bank
triggered by the consummation of the transactions contemplated by this
Agreement);

(j) No Litigation. There shall not be pending or threatened any Proceeding by
any Governmental Authority or other Persons which, in the reasonable opinion of
the Purchaser, there is a possibility of an outcome that could have a Material
Adverse Effect;

(k) No Material Adverse Effect. From the date of this Agreement, there shall not
have occurred any Material Adverse Effect, nor shall any event or events have
occurred that, individually or in the aggregate, with or without the lapse of
time, could reasonably be expected to result in a Material Adverse Effect; and

(l) Deferred Compensation Plan. Evidence, in form and substance satisfactory to
the Purchaser, that in accordance with Section 5.23, the Deferred Compensation
Plan has been terminated.

The foregoing conditions are for the benefit of the Purchaser only, and
accordingly, the Purchaser will be entitled to waive compliance with any such
conditions if it sees fit to do so, without prejudice to its rights and remedies
at law and in equity and also without prejudice to any of its rights of
termination in the event of non-performance of any other conditions in whole or
in part.

6.2 Conditions to the Company’s Obligations. The obligation of the Company to
complete the transactions contemplated by this Agreement is subject to the
fulfillment of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the
Purchaser contained in this Agreement shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made as of the Closing (provided that
those representations and warranties which address matters only as of a
particular date shall have been true and correct only on such date);

(b) Covenants. The covenants and obligations of the Purchaser to be performed or
observed on or before the Closing pursuant to this Agreement shall have been
duly performed or observed in all material respects;

(c) Sale Order. The Bankruptcy Court shall have entered the Sale Order; and

(d) Secretary’s Certificate. The Purchaser shall have delivered to Seller a
Secretary’s Certificate certifying to the effect that the conditions set forth
in Section 6.2(a) and (b) have been satisfied.

 

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The foregoing conditions are for the benefit of the Company only and accordingly
the Company will be entitled to waive compliance with any such conditions if it
sees fit to do so, without prejudice to its rights and remedies at law and in
equity and also without prejudice to any of its rights of termination in the
event of non-performance of any other conditions in whole or in part.

6.3 Mutual Condition. The obligations of the Company and the Purchaser to
complete the Contemplated Transactions are subject to the fulfillment of the
condition that no injunction or restraining order or other decision, ruling or
order of a court, board, Governmental Authority or administrative tribunal of
competent jurisdiction being in effect which prohibits, restrains, limits or
imposes conditions on the transactions contemplated by this Agreement and no
action or proceeding having been instituted or remaining pending or having been
threatened (and such threat not having been withdrawn) before any such court,
board, Governmental Authority or administrative tribunal to restrain, prohibit,
limit or impose conditions on the transactions contemplated by this Agreement.

6.4 Termination.

(a) In the event that the Closing has not occurred on or before January 31, 2013
or such later date as may be agreed in writing by the Parties in their sole
discretion (the “Outside Date”), the Purchaser or the Company, as applicable,
may, subject to Section 9.10, terminate this Agreement, in which event the
parties will be released from all obligations under this Agreement, except that
the Company will not be released from its obligations to pay the Stalking Horse
Bidder Fee on the first Business Day following the date of consummation of an
Alternative Transaction unless the Purchaser is in material breach of this
Agreement, and provided that no party will be released from its obligations, or
may terminate this Agreement if it has materially breached (and not cured) any
of its covenants or obligations in or under this Agreement and such breach has
been the cause of or resulted in the failure of the Closing to occur on or
before the Outside Date.

(b) This Agreement may also be terminated prior to the Closing:

(i) at any time by the mutual written agreement of the Company and the
Purchaser;

(ii) by the Purchaser (provided, that the Purchaser is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein), if either of the conditions in Section 6.1(a) or (b) have not been
fulfilled and the breach or breaches giving rise to the failure of these
conditions to be fulfilled cannot be or have not been cured within thirty
(30) days after written notice by the Purchaser to the Company;

(iii) by the Company (provided, that the Company is not then in material breach
of any representation, warranty, covenant or other agreement contained herein),
if either of the conditions in Section 6.2(a) or (b) have not been fulfilled and
the breach or breaches giving rise to the failure of these conditions to be
fulfilled cannot be or have not been cured within thirty (30) days after written
notice by the Company to the Purchaser;

(iv) by the Company or the Purchaser, if the Bankruptcy Court enters a Sale
Order approving the Sale to a Qualified Overbidder, other than the Purchaser;

(v) by either the Company or the Purchaser, with fifteen (15) days’ prior
written notice or such shorter period as required by a court or Governmental
Authority, or any applicable Legal Requirement, if any court or Governmental
Authority shall finally determine that the subject of this Agreement violates
any applicable Legal Requirement and the terms of this Agreement cannot be
amended to meet all legal requirements to the satisfaction of such court or
Governmental Authority;

 

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(vi) by either the Company or the Purchaser, if the Purchaser or any of its
Affiliates receives written notice from or is otherwise advised by a
Governmental Authority that it will not grant (or intends to rescind or revoke
if previously approved) any of the Purchaser Required Approval or receives
written notice from such Governmental Authority that it will not grant such
Purchaser Required Approval on the terms contemplated by this Agreement without
imposing any Burdensome Condition;

(vii) upon two (2) days’ prior written notice by the Purchaser to the Company,
if the Bankruptcy Court fails to approve the Stalking-Horse Bidder Fee as part
of the Bidding Procedures Order; provided that such notice of termination is
provided to the Company not later than the end of the second Business Day
following such date;

(viii) by Purchaser, if the Bankruptcy Court has not entered the Bidding
Procedures Order within twenty-five (25) days of the Petition Date or if the
Bidding Procedures Order has been entered but is stayed as of such date; and

(ix) by Purchaser, if the Bankruptcy Court has not entered the Sale Order
approving the Sale to Purchaser by thirty-five (35) days after entry of the
Bidding Procedures Order, if such Sale Order has been entered but is stayed or
has been reversed or vacated on such date, or if such Sale Order has been
entered but has been amended or modified without the prior written consent of
Purchaser on or before such date.

ARTICLE 7

CLOSING TRANSACTIONS

7.1 Time and Place. The Closing shall take place in the offices of Nelson
Mullins Riley & Scarborough LLP at 101 Constitution Avenue, NW, Suite 900,
Washington, DC 20001 on the Closing Date; or at such other time and date, or
both, as the Company and the Purchaser or their respective counsel may agree
upon in writing.

7.2 Company’s Closing Deliverables. At the Closing, the Company shall deliver
the following to the Purchaser:

(a) a certificate signed by Secretary of the Company, certifying to the
fulfillment of the conditions specified in Section 6.1(a) and (b);

(b) stock certificates evidencing the Shares duly endorsed in blank, or
accompanied by stock powers duly executed in blank and with all required stock
transfer Tax stamps affixed;

(c) all conveyances, transfers, assignments, instruments and other documents
which are necessary to assign, sell and transfer the Shares to the Purchaser and
the Other Purchased Assets (including the assignment of the Assumed Bank Related
Contracts, if any) to the Bank, in either case as contemplated by this Agreement
in such form and content as the Purchaser may require, acting reasonably;

(d) certified copies of a resolution of the directors of the Company approving
the completion of the Contemplated Transactions including, without limitation,
the sale of the Shares and the

 

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Other Purchased Assets (including the assignment of the Assumed Bank Related
Contracts) and the execution and delivery of this Agreement and all documents,
instruments and agreements required to be executed and delivered by the Company
pursuant to this Agreement in such form and content as the Purchaser may
require, acting reasonably;

(e) a certified copy of the Sale Order;

(f) a letter agreement, in form and substance reasonably satisfactory to the
Purchaser, releasing the Purchaser, the Bank and their respective Affiliates
(and their respective officers, directors, employees, managers, partners,
members, and principals) from and against any pre-Closing Liabilities to the
Company or its Subsidiaries (other than the Bank and its Subsidiaries) other
than Liabilities under this Agreement and the Other Purchased Assets first
arising after the Closing (the “Assumed Contract Liabilities”).

(g) an affidavit from the Company that it is not a “foreign person” or subject
to withholding requirements under the Foreign Investment in Real Property Tax
Act of 1980, as amended;

(h) except for those directors set forth on Schedule 5.22, written resignation
letters of all of the members of the board of directors of the Bank, which
resignations shall be effective as of the Closing; and

(i) evidence, in form and substance reasonably satisfactory to the Purchaser, of
the termination of the Deferred Compensation Plan; and

7.3 Purchaser’s Closing Deliverables. At the Closing, the Purchaser shall effect
the Equity Contribution and deliver the following to the Company:

(a) a certificate signed by Secretary of the Purchaser, certifying to the
fulfillment of the conditions specified in Section 6.2(a) and (b);

(b) the Cash Purchase Price; and

(c) a letter agreement, in form and substance reasonably satisfactory to the
Company, releasing the Company and its respective Affiliates (and its respective
officers, directors, employees, and managers) from and against any pre-Closing
Liabilities to the Bank or its Subsidiaries other than the Assumed Contract
Liabilities and Liabilities under this Agreement.

7.4 Concurrent Delivery. It shall be a condition of the Closing that all matters
of payment and the execution and delivery of documents by any party to the
others pursuant to the terms of this Agreement shall be concurrent requirements
and that nothing will be complete at the Closing until everything required as a
condition precedent to the Closing has been paid, executed and delivered, as the
case may be.

7.5 Transfer of Shares. Subject to the terms and conditions set forth in this
Agreement, and subject to the entry of a Sale Order, the Sale of the Shares to
the Purchaser and the sale of the Other Purchased Assets (including the
assignment of the Assumed Bank Related Contracts, if any) to the Bank shall be
deemed to take effect on the Closing Date.

 

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ARTICLE 8

SURVIVAL OF REPRESENTATIONS AND COVENANTS

8.1 Survival. The Company and the Purchaser agree that all of the
representations, warranties, agreements and covenants of the Company and the
Purchaser contained in this Agreement, or any instrument delivered pursuant to
this Agreement, shall terminate at the Closing Date, except that the
representations, warranties, agreements and covenants that by their terms
survive the Closing Date and this Article 8 and Article 9 shall survive the
Closing Date.

ARTICLE 9

MISCELLANEOUS

9.1 Legal and Other Fees and Expenses. Unless otherwise specifically provided
herein, the parties will pay their respective legal, accounting and other
professional fees and expenses incurred by each of them in connection with the
negotiation and settlement of this Agreement, the completion of the Contemplated
Transactions and other matters pertaining hereto.

9.2 Notices. Any notice, request, demand or other communication required or
permitted to be given under this Agreement shall be in writing and delivered by
hand, facsimile transmission or prepaid registered mail (return receipt
requested) to the party to which it is to be given as follows:

To the Company:

First Place Financial Corp.

185 East Market Street

Warren, Ohio 44481

Attention: Craig Carr

Facsimile: (330) 373-9906

with a copy to:

Patton Boggs LLP

2550 M Street, NW

Washington, DC 20037

Attention: Joseph G. Passaic, Jr.

Facsimile: (202) 457-6315

To Purchaser:

Talmer Bancorp, Inc.

2301 W. Big Beaver Road, 5th Floor

Troy, Michigan 48084

Attention: David T. Provost

Facsimile No.: (248) 498-2914

with a copy to:

Nelson Mullins Riley & Scarborough LLP

Atlantic Station

201 17th Street NW, Suite 1700

Atlanta, Georgia 30363

Attention: J. Brennan Ryan

Facsimile No.: (404) 322-6041

 

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or to such other address or fax number as a party may specify by notice given in
accordance with this Section 9.2. Any such notice, request, demand or other
communication given as aforesaid will be deemed to have been given, in the case
of delivery by hand or registered mail, when delivered, in the case of delivery
by facsimile transmission, when a legible facsimile is received by the recipient
if received before 5:00 p.m. local time on a Business Day, or on the next
Business Day if such facsimile is received on a day which is not a Business Day
or after 5:00 p.m. local time on a Business Day.

9.3 Further Assurances. Each of the parties shall execute and deliver such
further documents, instruments and agreements and do such further acts and
things as may be reasonably required from time to time, either before, on or
after the Closing Date, to carry out the full intent and meaning of this
Agreement, give effect to the transactions contemplated by this Agreement and
assure to the Purchaser good and valid title to the Shares, free and clear of
all Encumbrances, and assure to the Bank good and valid title to the Other
Purchased Assets (including the assignment of the Assumed Bank Related
Contracts, if any), free and clear of all Encumbrances. The Company shall seek
to enforce its rights under any third party nondisclosure or confidentiality
agreements on behalf of and at the request and expense of the Purchaser.

9.4 Time of the Essence. Time shall be of the essence of this Agreement.

9.5 Entire Agreement. This Agreement (and all related documents referred to
herein, including the schedules and exhibits hereto) constitutes the entire
agreement between the Company and the Purchaser pertaining to the Contemplated
Transactions and supersedes all prior agreements, undertakings, negotiations and
discussions, whether oral or written, of the Company and the Purchaser and there
are no warranties, representations, covenants, obligations or agreements between
the Company (or any Affiliate thereof) and the Purchaser (or any Affiliate
thereof) except as set forth in this Agreement (or any such related document).

9.6 Assignment. Neither party to this Agreement may assign any of its respective
benefits, obligations or liabilities under or in respect of this Agreement
without the prior written consent of the other party, which may be withheld in
its absolute discretion; provided, however, that the Purchaser may, without the
consent of the Company, assign its rights and benefits under or in respect of
this Agreement, in whole or in part, to one or more directly or indirectly
wholly-owned Subsidiaries, if and to the extent permitted by the Regulatory
Approvals and the Bankruptcy Court, but no such assignment will relieve the
Purchaser of its obligations under this Agreement. Any attempted assignment
without the necessary consent shall be void.

9.7 Invalidity. Each of the provisions contained in this Agreement is distinct
and severable and a determination of illegality, invalidity or unenforceability
of any such provision or part hereof by a court of competent jurisdiction shall
not affect the validity or enforceability of any other provision hereof, unless
as a result of such determination this Agreement would fail in its essential
purposes.

9.8 Waiver and Amendment. Except as expressly provided in this Agreement, no
amendment or waiver of it will be binding unless made in writing by the party to
be bound by such amendment or waiver. No waiver of any provision, or any portion
of any provision, of this Agreement will constitute a waiver of any other part
of the provision or any other provision of this Agreement nor a continuing
waiver unless otherwise expressly provided.

9.9 Third-Party Beneficiaries. This Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein express or implied
shall give or be construed to give to any Person, other than the parties hereto
and such permitted assigns, any legal or equitable rights hereunder; provided,
however, that the current directors and officers of the Bank included in the
term “Indemnified Parties” shall be deemed to be third-party beneficiaries of
the provisions of Section 5.5.

 

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9.10 Surviving Provisions on Termination. Notwithstanding any other provisions
of this Agreement, if this Agreement is terminated, the provisions of Sections
1.3, 5.2, 5.3, 5.9, 5.14, 6.4(a) and 9.1 shall survive such termination and
remain in full force and effect, and each party shall remain liable for any
willful breach of this Agreement prior to its termination.

9.11 Captions. The captions in this Agreement are inserted for convenience of
reference only and shall not be considered a part of or affect the construction
or interpretation of any provision of this Agreement.

9.12 Counterparts. This Agreement may be signed in counterparts and each such
counterpart will constitute an original document and such counterparts, taken
together, will constitute one and the same instrument. Electronically
transmitted or facsimile copies shall be deemed to be originals.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.

 

COMPANY FIRST PLACE FINANCIAL CORP. By:  

/s/ Samuel A. Roth

  Name:   Samuel A. Roth   Title:   Chairman of the Board PURCHASER TALMER
BANCORP, INC. By:  

/s/ David T. Provost

  Name:   David T. Provost   Title:   Chief Executive Officer

 

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