Exhibit 4.2




 





 


NOTE HOLDERS
AGREEMENT


 


 


Dated as of August 18, 2008


 


by and among


 


CoBiz Financial Inc.


 


and


 


the Holders of Promissory Notes


 


Issued by CoBiz Financial Inc. in Connection
with


 


a Private Placement Memorandum


 


of CoBiz Financial Inc. dated as of July 25,
2008




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND INCORPORATION BY
  REFERENCE

  	
  1

  
	
  Section 1.1

  	
  Definitions

  	
  1

  
	
  Section 1.2

  	
  Other Definitions

  	
  4

  
	
  Section 1.3

  	
  Rules Of Construction

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE NOTES

  	
  4

  
	
  Section 2.1

  	
  The Notes

  	
  4

  
	
  Section 2.2

  	
  Issuance of the Notes

  	
  5

  
	
  Section 2.3

  	
  Register of Notes

  	
  6

  
	
  Section 2.4

  	
  Establishment of Record Date

  	
  6

  
	
  Section 2.5

  	
  Exchange of Notes

  	
  6

  
	
  Section 2.6

  	
  Replacement of Notes

  	
  7

  
	
  Section 2.7

  	
  Unissued Principal

  	
  7

  
	
  Section 2.8

  	
  Cancellation

  	
  7

  
	
  Section 2.9

  	
  Identification Numbers

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE III PAYMENTS; PREPAYMENTS

  	
  7

  
	
  Section 3.1

  	
  Required Payments

  	
  7

  
	
  Section 3.2

  	
  Optional Prepayments

  	
  8

  
	
  Section 3.3

  	
  Notice of Prepayment

  	
  8

  
	
  Section 3.4

  	
  Surrender of Notes on Payment

  	
  8

  
	
  Section 3.5

  	
  No Other Optional Prepayments

  	
  8

  
	
  Section 3.6

  	
  Payment Mechanics

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV COVENANTS OF THE COMPANY

  	
  9

  
	
  Section 4.1

  	
  Payment of Principal and Interest

  	
  9

  
	
  Section 4.2

  	
  Limitation on Dividends

  	
  9

  
	
  Section 4.3

  	
  Acquisition of Notes

  	
  10

  
	
  Section 4.4

  	
  Corporate Existence

  	
  10

  
	
  Section 4.5

  	
  Taxes

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V SUCCESSORS OF THE COMPANY

  	
  10

  
	
  Section 5.1

  	
  When Company May Merge, Etc.

  	
  10

  
	
  Section 5.2

  	
  Successor Corporation Substituted

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI DEFAULTS AND REMEDIES

  	
  10

  
	
  Section 6.1

  	
  Events of Default

  	
  10

  
	
  Section 6.2

  	
  Acceleration of Maturity; Rescission and
  Annulment

  	
  11

  
	
  Section 6.3

  	
  Collection Of Indebtedness And Suits For
  Enforcement

  	
  11

  
	
  Section 6.4

  	
  Holders May File Proofs Of Claim

  	
  12

  
	
  Section 6.5

  	
  Application of Money Collected

  	
  12

  
	
  Section 6.6

  	
  Limitation On Suits

  	
  12

  
	
  Section 6.7

  	
  Delay or Omission Not Waiver

  	
  13

  



 


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  Section 6.8

  	
  Control by Holders

  	
  13

  
	
  Section 6.9

  	
  Waiver Of Past Defaults

  	
  13

  
	
  Section 6.10

  	
  Undertaking For Costs

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII SUBORDINATION OF NOTES

  	
  13

  
	
  Section 7.1

  	
  Agreement of Subordination

  	
  13

  
	
  Section 7.2

  	
  Default on Senior Indebtedness

  	
  14

  
	
  Section 7.3

  	
  Liquidation, Dissolution, Bankruptcy

  	
  14

  
	
  Section 7.4

  	
  Standstill Period for Judicial Proceedings

  	
  15

  
	
  Section 7.5

  	
  Subrogation of Notes; Etc.

  	
  15

  
	
  Section 7.6

  	
  Authorization to Effect Subordination

  	
  16

  
	
  Section 7.7

  	
  Notice to Holders

  	
  16

  
	
  Section 7.8

  	
  No Impairment of Subordination

  	
  16

  
	
  Section 7.9

  	
  Senior Indebtedness Entitled to Rely

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TRANSFERS

  	
  16

  
	
  Section 8.1

  	
  General

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX AMENDMENTS AND WAIVERS

  	
  17

  
	
  Section 9.1

  	
  Without Consent of Holders

  	
  17

  
	
  Section 9.2

  	
  With Consent of Holders

  	
  17

  
	
  Section 9.3

  	
  Limitations

  	
  18

  
	
  Section 9.4

  	
  Revocation and Effect of Consents

  	
  18

  
	
  Section 9.5

  	
  Notation on or Exchange of Notes

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE X TERMINATION OF AGREEMENT

  	
  18

  
	
   

  	
   

  
	
  ARTICLE XI MISCELLANEOUS

  	
  19

  
	
  Section 11.1

  	
  Notices

  	
  19

  
	
  Section 11.2

  	
  Communication by Holders with Other Holders

  	
  19

  
	
  Section 11.3

  	
  No Recourse Against Others

  	
  19

  
	
  Section 11.4

  	
  Entire Agreement

  	
  19

  
	
  Section 11.5

  	
  Counterparts and Exchanges by Electronic
  Transmission or Facsimile

  	
  20

  
	
  Section 11.6

  	
  Governing Law

  	
  20

  
	
  Section 11.7

  	
  Construction

  	
  20

  
	
  Section 11.8

  	
  No Adverse Interpretation of Other
  Agreements

  	
  20

  
	
  Section 11.9

  	
  Successors

  	
  20

  
	
  Section 11.10

  	
  Severability

  	
  20

  
	
  Section 11.11

  	
  Table of Contents, Headings, Etc.

  	
  20

  



 


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NOTE HOLDERS
AGREEMENT


 


This Note Holders Agreement (the “Agreement”), dated as of August 18,
2008, is by and among CoBiz Financial Inc., a Colorado corporation (the “Company”),
and each of the Holders (as defined below) of the Notes (as defined
below).  The Company and the Holders are
referred to individually throughout this Agreement as a “Party” and are
referred to collectively throughout this Agreement as the “Parties”.


 


RECITALS


 


A.                                  Pursuant
to a Private Placement Memorandum dated as of July 25, 2008 (the “Memorandum”),
the Company is offering (the “Offering”) an aggregate minimum of five
million dollars ($5,000,000) (the “Minimum”), and up to an aggregate
maximum of thirty million dollars ($30,000,000) or such greater amount not to
exceed fifty million dollars ($50,000,000) as determined in the sole discretion
of the Company (the “Maximum”), in principal amount of promissory notes
to “accredited investors,” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”).


 


B.                                    This
Agreement is the Note Holders Agreement referred to in that certain
Subscription Agreement executed by each initial Holder and the Company in
connection with the Offering (each, a “Subscription Agreement”) and,
pursuant to the terms thereof, must be entered into by each initial Holder and
the Company in order to consummate the Offering with respect to each initial
Holder, as described in the Memorandum.


 


C.                                    The
Parties agree that it is in their best interests to set forth in this Agreement
the rights, obligations and relationships (1) as among the Holders of the
Notes; (2) as between the Company, on the one hand, and the Holders on the
other hand; and (3) as between the Holders, on the one hand, and certain
of the Company’s creditors, on the other hand, in each case on the terms and
subject to the conditions described herein.


 


AGREEMENT


 


NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Party agrees as follows for
the benefit of the other Parties:


 


ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE


 


Section 1.1                                   Definitions.


 


“Bank Facility” means the credit facility made available to the
Company under the Revolving Credit Agreement dated as August 2, 2007
between the Company and U.S. Bank National Association, as the same may be
extended, amended, supplemented, refinanced, replaced or restructured from time
to time with the same or another financial institution.


 


“Board of Directors” means the Board of Directors of the Company
or any duly authorized committee thereof.


 

















 


“Business Day” means any day except a Saturday, Sunday or a
legal holiday in the City of Denver, Colorado on which banking institutions are
authorized or required by law, regulation or executive order to close.


 


“Capital Stock” means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock.


 


“Debt” means, with respect to any Person, whether recourse is to
all or a portion of the assets of such Person, whether currently existing or
hereafter incurred and whether or not contingent and without duplication, (a) every
obligation of such Person for money borrowed; (b) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (c) every reimbursement obligation of such Person
with respect to letters of credit, bankers’ acceptances or similar facilities
issued for the account of such Person; (d) every obligation of such Person
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or other accrued liabilities arising in the
ordinary course of business); (e) every capital lease obligation of such
Person; (f) all indebtedness of such Person, whether incurred on or prior
to the date of this Agreement or thereafter incurred, for claims in respect of
derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; (g) every
obligation of the type referred to in clauses (a) through (f) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable for,
directly or indirectly, as obligor or otherwise; and (h) any renewals,
extensions, refundings, amendments or modifications of any obligation of the
type referred to in clauses (a) through (g).


 


“Default” means any of the following events:


 


(a)                                 an Event of Default;


 


(b)                                a default in the payment of any
interest on any Note when such interest becomes due and payable and such
default continues for a period of thirty (30) days;


 


(c)                                 a default in the payment of
principal of any Note at its Maturity Date; or


 


(d)                                a default in the performance, or
breach, of any covenant or warranty of the Company in this Agreement (other
than a covenant or warranty, a default in the performance of which or the
breach of which is specifically dealt with in Article VI) and the
continuance of such default or breach for a period of ninety (90) days after
there has been given, by registered or certified mail, to the Company, by the
Majority Holders, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder.


 


“Dollars” and “$” means the currency of the United States
of America.


 


“Holder” means the Person in whose name a Note is registered in
the register of Notes pursuant to Section 2.3 of this Agreement, and “Holders”
means such Persons collectively.


 


2

















 


“Indenture Indebtedness” means any indebtedness of the Company
issued as a result of or evidenced by the following indentures: (a) Indenture
dated as of September 17, 2003 between the Company and U.S. Bank National
Association, as debenture trustee for Floating Rate Junior Subordinated
Deferrable Interest Debentures Due 2033; (b) Indenture dated as of May 18,
2004 between the Company and JPMorgan Chase Bank, as trustee; and (c) Junior
Subordinated Indenture dated as of August 2, 2005 between the Company and
Wilmington Trust Company, as trustee.


 


“Junior Subordinated Indebtedness” means all Debt of the Company
that is subordinate and junior in right of payment to all other Debt of the
Company (including without limitation Senior Indebtedness and Subordinated
Indebtedness) and includes the Indenture Indebtedness.


 


“Officer” means the Chief Executive Officer, the Chief Financial
Officer, the President, any Vice President, the Treasurer, the Secretary, any
Assistant Treasurer or any Assistant Secretary of the Company.


 


“Officers’ Certificate” means a certificate signed by two
Officers, one of whom must be the Company’s principal executive officer,
principal financial officer or principal accounting officer.


 


“Opinion of Counsel” means a written opinion of legal counsel
who is reasonably acceptable to the Company and may be an employee of, or
counsel to, the Company.


 


“Original Issue Date” means the date on which the first Note is
issued by the Company in connection with the Offering.


 


“Person” means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.


 


“Senior Indebtedness” means all Debt of the Company except
Junior Subordinated Indebtedness and Subordinated Indebtedness.


 


“Senior Representative” means the (a) indenture trustee or
other trustee, agent or representative for any Senior Indebtedness or (b) with
respect to any Senior Indebtedness that does not have any such trustee, agent
or other representative, (i) in the case of such Senior Indebtedness
issued pursuant to an agreement providing for voting arrangements as among the
holders or owners of such Senior Indebtedness, any holder or owner of such
Senior Indebtedness acting with the consent of the required persons necessary
to bind such holders or owners of such Senior Indebtedness and (ii) in the
case of all other such Senior Indebtedness, the holder or owner of such Senior
Indebtedness.


 


“Subordinated Indebtedness” means all Debt of the Company, other
than Junior Subordinated Indebtedness, that is subordinate and junior in right
of payment to all Senior Indebtedness and shall include the Debt evidenced by
the Notes.


 


“Subsidiary” of any specified Person means any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock 


 


3

















 


entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof.


 


Section 1.2                                   Other
Definitions.


 




	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  Acceptance
  Page

  	
   

  	
  2.2(a)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Bankruptcy
  Law

  	
   

  	
  6.1

  
	
  Closing

  	
   

  	
  2.2(b)

  
	
  Company

  	
   

  	
  Preamble

  
	
  Event of
  Default

  	
   

  	
  6.1

  
	
  Interest
  Rate

  	
   

  	
  2.1(b)

  
	
  Majority
  Holders

  	
   

  	
  6.2

  
	
  Maturity
  Date

  	
   

  	
  2.1(e)

  
	
  Maximum

  	
   

  	
  Recital A

  
	
  Memorandum

  	
   

  	
  Recital A

  
	
  Minimum

  	
   

  	
  Recital A

  
	
  Note(s)

  	
   

  	
  2.1

  
	
  Offering

  	
   

  	
  Recital A

  
	
  Party(ies)

  	
   

  	
  Preamble

  
	
  Prepayment
  Date

  	
   

  	
  3.3(a)

  
	
  Representative

  	
   

  	
  6.3

  
	
  Securities
  Act

  	
   

  	
  Recital A

  
	
  Subscription
  Agreement

  	
   

  	
  Recital B

  
	
  Successor
  Person

  	
   

  	
  5.1

  
	
  Transfer

  	
   

  	
  8.1

  






 


Section 1.3                                   Rules Of
Construction.  Unless the context
otherwise requires:


 


(a)                                 “or” is not exclusive;


 


(b)                                words in the singular include
the plural, and in the plural include the singular;


 


(c)                                 words in the masculine include
the feminine and neuter, words in the feminine include the masculine and
neuter, and words in the neuter include the feminine and masculine; and


 


(d)                                provisions apply to successive
events and transactions.


 


ARTICLE II

THE NOTES


 


Section 2.1                                   The
Notes.  The Board of Directors has
authorized the issuance of the Minimum, and up to the Maximum, in aggregate
principal amount of Subordinated Unsecured Promissory Notes (the “Notes”).  Each Note will:


 


4

















 


(a)                                  Be issued in a minimum principal
amount and increments of principal of two hundred fifty thousand dollars
($250,000), unless otherwise determined in the sole discretion of the Company;


 


(b)                                 Bear interest (computed on the
basis of a 365-day year) on the unpaid principal balance thereof from the last
date upon which interest has been paid on the Notes or, if no interest has been
paid on the Notes, on the date of issuance of such Note, at the rate of nine
percent (9.0%) per annum (the “Interest Rate”);


 


(c)                                  Require the Company to pay
interest quarterly in arrears on March 31, June 30, September 30
and December 31 of each year;


 


(d)                                 On and after the date that is
the fifth (5th) anniversary of the Original Issue Date, permit the Company to
prepay the Note in full at any time or in part from time to time, without
premium or penalty, upon not less than ten (10) or more than twenty (20)
days’ notice to the Holders;


 


(e)                                  Mature on the date that is the
tenth (10th) anniversary of the Original Issue Date (the “Maturity Date”);


 


(f)                                    Require the Company to pay all
outstanding principal owing under the Note on the Maturity Date; and


 


(g)                                 Be in the form of the Note set
out in Exhibit A
hereto, and shall have the terms as herein and therein provided.


 


Section 2.2                                   Issuance
of the Notes.


 


(a)                                  Subscription
for Notes.  Upon acceptance by the Company of each
potential investor’s Subscription Agreement, which shall be evidenced by the
signature of the Company on the Acceptance to Subscription Agreement Signature Page of
such potential investor’s Subscription Agreement (the “Acceptance Page”),
the Company shall sell to such potential investor, and the potential investor
shall purchase from the Company, pursuant to and in accordance with the terms
and conditions of this Agreement and in the Note, a Note in the principal
amount listed on the Acceptance Page for such potential investor.  Upon such purchase and sale and the
satisfaction of the closing conditions in such potential investor’s
Subscription Agreement, the potential investor shall become a Holder.


 


(b)                                 The Closing. 
Any closing of the Offering (each, a “Closing”) will be held in
the manner described in the Memorandum. 
At each Closing, (i) the Company shall deliver, to each potential
investor whose subscription is accepted by the Company in connection with such
Closing, (A) a Note in the aggregate principal amount of such potential
investor’s purchase, as indicated on a completed and signed Acceptance Page for
such Holder, and (B) any other items identified in such potential
investor’s Subscription Agreement, and (ii) any potential investor whose
subscription is accepted by the Company in connection with such Closing shall
have delivered by such Closing, or shall deliver upon such Closing, to the
Company (A) by check or wire transfer of immediately available funds, the
purchase price for the principal amount of such potential investor’s Note, as
indicated on a completed and signed Acceptance Page for such 


 


5

















 


potential investor, plus accrued interest from the later of the
Original Issue Date or the last interest payment date prior to the issuance of
such potential investor’s Note, (B) an executed signature page of
this Agreement and (C) any other items identified in such potential
investor’s Subscription Agreement.


 


(c)                                 Holder
Representations and Acknowledgments.


 


(i)                                    Purchase for Investment.  The Holder represents that he, she or it is
purchasing the Note for his, her or its own account and not with a view to the
distribution thereof; provided, however, that, subject to the restrictions set
forth in Article VIII, the disposition of the Holder’s Note shall at all
times be within such Holder’s control. 
Such Holder understands and acknowledges that the Notes have not been
registered under the Securities Act or any applicable state securities laws and
may be resold only if registered pursuant to the provisions of such securities
laws or if an exemption from registration under such securities laws is
available, and that the Company is not required to register the Notes.  Such Holder represents that he, she or it is
an “accredited investor” within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act.


 


(ii)                                 Notes are not Bank or Government Obligations.  The Holder understands and
acknowledges that the Notes are not savings accounts, deposits or other
obligations of any bank and that the Notes are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency or
instrumentality.  The Holder understands
and acknowledges that the Notes involve risks, including the possible loss of
all or a portion of their principal.


 


Section 2.3                                   Register
of Notes.  The Company shall cause to
be kept, at its principal executive office, a register for the registration and
transfer of Notes.  The name and address
of each Holder of a Note, each transfer thereof and the name and address of
each transferee of a Note shall be registered in the register.  The Person in whose name any Note shall be
registered shall be deemed and treated as the owner and Holder thereof for all
purposes of this Agreement.


 


Section 2.4                                   Establishment
of Record Date.  For the purposes of
determining the Holders that are entitled to consent to any matter described in
this Agreement or in the Notes or to receive any payment of principal or
interest under the Notes, or in order to make a determination of Holders for
any other purpose, the Board of Directors may fix in advance a date as the
record date for any such determination, such date to be not more than ten
(10) Business Days prior to the date on which the particular action
requiring such determination is to be taken, and if no record date is fixed for
such determination, the record date shall be the date that is five
(5) Business Days prior to the date on which the particular action
requiring such determination of Holders is to be taken.


 


Section 2.5                                   Exchange
of Notes.  Upon a Transfer of a Note
in accordance with Article VIII and the surrender of such Note at the
Company’s principal executive office, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered Holder of such Note or
his attorney duly authorized in writing, the Company shall execute and deliver,
in exchange therefor, a new Note in a principal amount equal to the unpaid
principal amount of the surrendered Note. 
Each such new Note shall be payable to such Person as such Holder may
request and shall be substantially in the form of Exhibit A.  Each such new Note shall be dated 


 


6

















 


and bear interest from the date to which interest shall have been paid
on the surrendered Note, or dated the issue date of the surrendered Note if no
interest shall have been paid thereon.


 


Section 2.6                                   Replacement
of Notes.  Upon receipt by the
Company of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note and (a) in the case of loss,
theft or destruction, receipt by the Company of indemnity reasonably
satisfactory to it or (b) in the case of mutilation, upon surrender and
cancellation thereof, the Company shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which the interest shall
have been paid on such lost, stolen, destroyed or mutilated Note, or dated the
issue date of such lost, stolen, destroyed or mutilated Note if no interest
shall have been paid thereon.


 


The provisions of this Section 2.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.


 


The Company may require payment of a sum sufficient to cover its
expenses or any taxes or governmental charges imposed in respect of any such
replacement of Notes.


 


Section 2.7                                   Unissued
Principal.  In determining whether
the Holders of the required principal amount of Notes have concurred in any
request, demand, authorization, direction, notice, consent or waiver pursuant
to this Agreement, the principal amount of Notes that has not been issued by
the Company, or that has been issued but repaid, as of the date of such
request, demand, authorization, direction, notice, consent or waiver shall be
disregarded.


 


Section 2.8                                   Cancellation.  The Company shall cancel all Notes
surrendered for transfer, exchange, payment, replacement or cancellation. The
Company may not issue new Notes to replace Notes that it has paid or canceled,
except as expressly permitted by any of the provisions of this Agreement.


 


Section 2.9                                   Identification
Numbers.  The Company, in issuing the
Notes, may use CUSIP or other identification numbers, and, if so, the Company
shall use such numbers in notices of prepayment or other correspondence with
Holders as a convenience to Holders, provided that any such correspondence may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any correspondence, and that
reliance may be placed only on the other elements of identification printed on
the Notes, and any such correspondence shall not be affected by any defect in
or omission of such numbers.


 


ARTICLE III

PAYMENTS; PREPAYMENTS


 


Section 3.1                                   Required
Payments.


 


(a)                                  Interest.  The Company shall pay accrued but unpaid
interest quarterly in arrears on March 31, June 30, September 30
and December 31 of each year.


 


(b)                                 Principal. 
The Company shall pay all amounts owing under the Notes, including
accrued but unpaid interest and outstanding principal, on the Maturity Date.


 


7

















 


Section 3.2                                   Optional
Prepayments.


 


(a)                                  Full or Partial
Prepayment.  Subject to complying with the requirements of
Section 3.2, Section 3.3 and Section 7.2 of this Agreement, the
Company may prepay the principal amount of the Notes, in whole or in part,
together with interest on the principal amount then being prepaid accrued to
the Prepayment Date, without premium or penalty, at any time on or after the
date that is the fifth (5th) anniversary of the Original Issue Date.


 


(b)                                 Partial
Prepayments Allocated Among Notes.  In connection with
any prepayment under this Section 3.2 that does not prepay all Notes in
full, the Company shall apply any such prepayment ratably among all Holders of
Notes based on the principal amount of the Notes held by each of such Holders
outstanding on the Prepayment Date.


 


Section 3.3                                   Notice
of Prepayment.  The Company shall
give written notice of any prepayment of the Notes under Section 3.2
hereof to each Holder of the Notes not less than ten (10) days or more
than twenty (20) days before the date fixed for prepayment, specifying:


 


(a)                                  the date of prepayment (which
shall be a Business Day) (the “Prepayment Date”);


 


(b)                                 that such prepayment is to be
made pursuant to Section 3.2 of this Agreement;


 


(c)                                  the principal amount of such
Holder’s Note to be prepaid on the Prepayment Date; and


 


(d)                                 a calculation by the Company of
the amount due to such Holder in connection with such prepayment.


 


After the Company provides the notice required by this Section 3.3,
the aggregate principal amount of the Notes specified in such notice, together
with interest on the principal amount then being prepaid accrued to the
Prepayment Date, shall become due and payable on the Prepayment Date.


 


Section 3.4                                   Surrender
of Notes on Payment.


 


(a)                                  Upon any partial prepayment of a
Note, such Note may (i) at the option of the Holder, be surrendered to the
Company pursuant to Section 2.5 of this Agreement in exchange for a new
Note in a principal amount equal to the principal amount remaining unpaid on
the surrendered Note, or (ii) at the option of the Company, be made available
to the Company for notation thereon of the portion of the principal so prepaid.


 


(b)                                 If the entire principal amount
of any Note, together with accrued interest thereon, is paid (whether on a
Prepayment Date, on the Maturity Date, after acceleration or otherwise), such
Note shall be surrendered to the Company for cancellation and shall not be
reissued.


 


Section 3.5                                   No
Other Optional Prepayments.  Except
as provided in this Article III, the Company may not make any optional
payment in respect of the Notes.


 


8

















 


Section 3.6                                   Payment
Mechanics.


 


(a)                                  Method of
Payment.  The Company shall pay all amounts payable
with respect to each Note (without any presentment of such Note and without any
notation of such payment being made thereon, except as set forth in Section 3.4(a))
by crediting, by wire transfer of immediately available funds, the account of
the Holder of such Note in any bank in the United States of America as may be
designated in writing by such Holder, or in such other manner as may be
reasonably directed in writing by such Holder. 
In all other cases, all amounts payable with respect to each Note shall
be made by check, mailed through a recognized overnight delivery service (such
as Federal Express or DHL) and addressed to the Holder of each Note at the
address shown in the register of Notes maintained by the Company pursuant to Section 2.3
of this Agreement.


 


(b)                                 Payments in
U.S. Dollars.  All payments under the Notes shall be made in
United States dollars.


 


(c)                                  Payments Due on
Non-Business Days.  If any payment due on, or with respect to,
any Note shall fall due on a day other than a Business Day, then such payment
shall be made on the first (1st) Business Day following the day on which such
payment shall have so fallen due; provided that, if all or any portion of such
payment shall consist of a payment of interest, for purposes of calculating
such interest, such interest shall accrue to (but not including) the originally
scheduled day of its payment, notwithstanding that it shall be payable on such
first (1st) subsequent Business Day, and the amount of the next succeeding
scheduled interest payment shall be accrued from (and including) such
originally scheduled day of payment as if all interest and principal originally
scheduled to be paid on such day had been paid thereon.


 


(d)                                 Payments, When
Made.  Any payment to be made to a Holder hereunder
or under the Note of such Holder shall be deemed to have been made (1) if
payment is made by wire transfer of immediately available funds, on the
Business Day such payment actually becomes available to such Holder at such
Holder’s bank prior to 5:00 p.m. local time of such bank or (2) if
payment is made by check, on the Business Day such payment is deposited with a
recognized overnight delivery service (such as Federal Express or DHL) and sent
by overnight delivery to such Holder at the address shown in the register of
Notes maintained by the Company pursuant to Section 2.3 of this Agreement.


 


ARTICLE IV

COVENANTS OF THE COMPANY


 


Section 4.1                                   Payment
of Principal and Interest.  The
Company covenants and agrees for the benefit of the Holders that it will duly
and punctually pay the principal of and interest on the Notes in accordance
with the terms of the Notes and this Agreement.


 


Section 4.2                                   Limitation
on Dividends.  In the event and
during the continuation of any Default by the Company, the Company may not
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company’s Capital
Stock.


 


9

















 


Section 4.3                                   Acquisition
of Notes.  The Company will not
acquire or make any offer to acquire any Notes or portion thereof unless the
Company shall have offered to acquire the Notes, pro rata, from all Holders and
upon the same terms.


 


Section 4.4                                   Corporate
Existence.  Subject to
Article V, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the
rights (charter and statutory), licenses and franchises of the Company;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise if its Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries taken as a whole and that the loss thereof is
not adverse in any material respect to the Holders.


 


Section 4.5                                   Taxes.  The Company will pay all applicable taxes and
comply with all applicable statutes, regulations and orders of governmental
bodies relating to taxes, except for taxes the payment of which, and such
statutes, regulations and orders the compliance with which, are being contested
by the Company in good faith and by appropriate proceedings.


 


ARTICLE V

SUCCESSORS OF THE COMPANY


 


Section 5.1                                   When
Company May Merge, Etc.  The
Company shall not consolidate with or merge with or into, or convey, transfer
or lease its properties and assets substantially as an entirety to, any Person
(a “Successor Person”) unless the Company is the surviving corporation
or the Successor Person (if other than the Company) is a Person organized and
validly existing under the laws of any United States domestic jurisdiction and
expressly assumes the Company’s obligations on the Notes and under this
Agreement. The Company shall deliver to the Holders, prior to the consummation
of the proposed transaction, copies of an Officers’ Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed
transaction complies with this Section 5.1.


 


Section 5.2                                   Successor
Corporation Substituted.  Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with
Section 5.1 of this Agreement, the Successor Person formed by such
consolidation or into or with which the Company is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Notes and this Agreement with the same effect as if such Successor Person
has been named as the Company therein and herein, and the predecessor Company,
in the case of a sale, conveyance or other disposition (other than a lease)
shall be released from all obligations and covenants under the Notes and this
Agreement.


 


ARTICLE VI

DEFAULTS AND REMEDIES


 


Section 6.1                                   Events
of Default.  An “Event of Default,”
wherever used herein with respect to the Notes or this Agreement, means any one
of the following events:


 


(a)                                  the entry of a decree or order
for relief in respect of the Company by a court having jurisdiction in the
premises in an involuntary case or proceeding under any Bankruptcy 


 


10

















 


Law and the continuation of any such decree or order unstayed and in
effect for a period of ninety (90) consecutive days; or


 


(b)                                 the commencement by the Company
of a voluntary case or proceeding under any Bankruptcy Law, or the filing by
the Company of a petition or answer or consent seeking reorganization or relief
under any Bankruptcy Law.


 


The term “Bankruptcy Law” means the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law.


 


Section 6.2                                   Acceleration
of Maturity; Rescission and Annulment. 
If an Event of Default occurs and is continuing, then in every such case
the Holders of a majority in principal amount of the outstanding Notes (the “Majority
Holders”) may declare the principal amount of, and accrued and unpaid
interest, if any, on all of the Notes to be due and payable immediately, by a
notice in writing to the Company, and upon any such declaration, such principal
amount and accrued and unpaid interest, if any, shall become immediately due
and payable.


 


At any time after such a declaration of acceleration with respect to
the Notes has been made and before a judgment or decree for payment of the
money due has been obtained by the Holders as provided in this Article VI,
the Majority Holders, by written notice to the Company, may rescind and annul
such declaration and its consequences if all Events of Default have been cured
or waived as provided in Section 6.9. No such rescission shall affect any
subsequent Default or impair any right consequent thereon.


 


Section 6.3                                   Collection
Of Indebtedness And Suits For Enforcement.  The Company covenants that if:


 


(a)                                  Default is made in the payment of
any interest on any Note when such interest becomes due and payable and such
default continues for a period of thirty (30) days or


 


(b)                                 Default is made in the payment
of principal of any Note at its Maturity Date,


 


then, the Company will, upon demand of the Majority Holders, pay to the
Holders of the Notes the whole amount then due and payable on the Notes for
principal and interest and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Representative and the Representative’s counsel.


 


If the Company fails to pay such amounts forthwith upon such demand,
the Holders, upon the approval of the Majority Holders, may appoint a
representative of the Holders (the “Representative”) to act as the
exclusive agent and attorney-in-fact of the Holders, and the Representative
shall, subject to Section 7.4, upon the demand of the Majority Holders,
institute a judicial proceeding for the collection of the sums so due and
unpaid, prosecute such proceeding to judgment or final decree and enforce the
same against the Company or any other obligor upon such Notes and collect the
moneys adjudged or deemed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Notes, wherever
situated.


 


11
















 


If a Default with respect to
any Notes occurs and is continuing, the Holders may, upon the approval of the
Majority Holders, proceed to protect and enforce their rights, through the
Representative, by such appropriate judicial proceedings as they deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Agreement or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.


 


Section 6.4                                   Holders May File Proofs Of
Claim.  In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Notes or the
property of the Company or of such other obligor or their creditors, the
Holders (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Holders shall have made any demand on the Company
for the payment of overdue principal or interest) shall, upon the approval of
the Majority Holders, be entitled and empowered, through the Representative, by
intervention in such proceeding or otherwise, (a) to file and prove a
claim for the whole amount of principal and interest owing and unpaid in
respect of the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Holders allowed in
such judicial proceeding, and (b) to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
to make such payments, to the Holders.


 


Nothing herein contained
shall be deemed to authorize the Representative or any Holder to authorize or
consent to, or accept or adopt on behalf of, any other Holder, any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Representative or any
Holder to vote in respect of the claim of any other Holder in any such
proceeding.


 


Section 6.5                                   Application of Money Collected.  Any
money collected by the Representative or the Holders pursuant to this
Article VI shall be applied in the following order and, in case of the
distribution of such money on account of principal or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:


 


First: To the reimbursement
of all reasonable expenses incurred by the Representative in connection with
taking the actions described in this Article VI;


 


Second: Subject to Article VII,
to the payment of the amounts then due and unpaid for principal of and interest
on the Notes in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Notes for principal and interest,
respectively; and


 


Third:  To the Company.


 


Section 6.6                                   Limitation On Suits.  No
Holder of any Note shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Agreement, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, in his, her or its own
name.


 


12





















 


Section 6.7                                   Delay or Omission Not Waiver.  No delay
or omission of the Representative or any Holder of any Note to exercise any
right or remedy accruing upon any Default shall impair any such right or remedy
or constitute a waiver of any such Default or an acquiescence therein. Every
right and remedy given by this Article VI or by law to the Representative
or the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Representative or the Holders (through the
Representative).


 


Section 6.8                                   Control by Holders.  The
Majority Holders shall have the right to direct the Representative as to the
time, method and place of conducting any proceeding for any remedy available to
the Holders, or exercising any power conferred on the Representative, provided
that:


 


(a)                                  such direction shall not be in conflict with any rule of
law or with this Agreement,


 


(b)                                 the Representative may take any other action deemed proper
by the Representative which is not inconsistent with such direction,


 


(c)                                  such direction is not unduly prejudicial to the rights of
other Holders, and


 


(d)                                 such direction would not involve the Representative in
personal liability.


 


Section 6.9                                   Waiver Of Past Defaults.  The
Majority Holders may, on behalf of the Holders of all the Notes, waive any past
Default hereunder with respect to such Notes and its consequences, except a
Default (i) in the payment of the principal of or interest on any Note
(provided, however, that the Majority Holders may rescind an acceleration and
its consequences, including any related payment Default that resulted from such
acceleration) or (ii) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each Note
affected. Upon any such waiver, such Default shall cease to exist, and any Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent to such subsequent or other Default.


 


Section 6.10                            Undertaking For Costs.  All
Parties agree, and each Holder of any Note, by such Holder’s acceptance
thereof, shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Agreement, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 6.10 shall not apply to any suit instituted by the Company or to
any suit instituted by a Representative.


 


ARTICLE VII

SUBORDINATION OF NOTES


 


Section 7.1                                   Agreement of Subordination.  The
Company covenants and agrees, and each Holder of a Note, by such Holder’s
acceptance thereof, likewise covenants and agrees, that all Notes shall be
issued subject to the provisions of this Article VII, and each Holder of a
Note, whether upon original issue or upon transfer thereof, accepts and agrees
to be bound by such provisions.


 


13





















 


The payment by the Company
of the principal of, and premium, if any, and interest on all Notes shall rank
pari passu with each other and with all of the other Subordinated Indebtedness.


 


The payment by the Company
of the principal of, and premium, if any, and interest on all Notes shall, to
the extent and in the manner hereinafter set forth, be subordinated and junior
in right of payment to the payment in full of all Senior Indebtedness, whether
outstanding at the date of this Note Agreement or thereafter incurred.


 


No provision of this Article VII
shall prevent the occurrence of any Default or Event of Default hereunder.


 


Section 7.2                                   Default on Senior Indebtedness.  In
the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company following any grace period, or in the event that
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default and such acceleration has not been rescinded or canceled
and such Senior Indebtedness has not been paid in full, then, in either case,
no payment shall be made by the Company with respect to the principal
(including prepayment) of, or premium, if any, or interest on the Notes or in
respect of any purchase or other acquisition of any Notes.


 


In the event that,
notwithstanding the foregoing, any payment shall be received by any
Representative or Holder when such payment is prohibited by the preceding
paragraph of this Section 7.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective Senior Representatives for application to the
payment of all Senior Indebtedness remaining to the extent necessary to pay all
Senior Indebtedness in full.


 


Section 7.3                                   Liquidation, Dissolution,
Bankruptcy.  Upon
any payment by the Company or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness of the Company
shall first be paid in full, or payment thereof provided for in money in accordance
with its terms, before any payment is made by the Company, on account of the
principal (and premium, if any) or interest on the Notes.   Upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities to which the Note Holders would be entitled to receive from the
Company, except for the provisions of this Article VII, shall be paid by
the Company, or by any receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution, or by any
Representative or the Note Holders if received by them, directly to the holders
of Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders, as calculated by the
Company) or their respective Senior Representatives, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness
in full, in money or money’s worth, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness,
before any payment or distribution is made to the Note Holders.


 


14





















 


In the event that,
notwithstanding the foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities,
prohibited by the foregoing, shall be received by any Representative or Holder
before all Senior Indebtedness is paid in full, or provision is made for such
payment in money in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered
to the holders of such Senior Indebtedness or their respective Senior
Representatives, as their respective interests may appear, as calculated by the
Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay such Senior Indebtedness in full in money
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior Indebtedness.


 


For purposes of this Article VII,
the words “cash, property or securities” shall not be deemed to include shares
of stock of the Company as reorganized or readjusted, or securities of the
Company or any other entity provided for by a plan of reorganization or
readjustment, the payment of which is subordinated at least to the extent
provided in this Article VII with respect to the Notes to the payment of
all Senior Indebtedness, that may at the time be outstanding, provided that (a) such
Senior Indebtedness is assumed by the new entity, if any, resulting from any
such reorganization or readjustment, and (b) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. 
The consolidation of the Company with, or the merger of the Company
into, another entity or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another entity upon the terms and conditions provided for in Article V
of this Agreement shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 7.3 if such other entity
shall, as part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article V of this Agreement.


 


Section 7.4                                   Standstill Period for Judicial
Proceedings.  No
judicial proceeding may be instituted for the collection of sums due and unpaid
under the Notes unless (a) no Bank Facility is in effect at the time that
such judicial proceeding is instituted, or (b) at least 90 days prior
written notice of the Representative’s intention to initiate such proceeding
has been given by the Representative to the Senior Representative for the Bank
Facility.  Upon request by the
Representative, the Company shall promptly provide the Representative with the
identity of, and contact information for, the Senior Representative for the
Bank Facility.


 


Section 7.5                                   Subrogation of Notes; Etc.  Upon
payment in full of all Senior Indebtedness, the Holders of Notes shall be
subrogated to all rights of any holders of Senior Indebtedness to receive any
payments or distributions applicable to the Senior Indebtedness until the
indebtedness evidenced by the Notes shall have been paid in full, and such
payments or distributions received by such Holders, by reason of such
subrogation, of cash, securities or other property which otherwise would be
paid or distributed to the holders of Senior Indebtedness shall, as between the
Company and its creditors other than the holders of Senior Indebtedness, on the
one hand, and such Holders, on the other hand, be deemed to be a payment by the
Company on account of Senior Indebtedness and not on account of the Notes.


 


Nothing contained in this Article VII
or elsewhere in this Agreement or in the Notes is intended to or shall impair,
as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Notes, the obligation of the Company,
which is 


 


15





















 


absolute
and unconditional, to pay to the Holders of the Notes the principal of (and
premium, if any) and interest on the Notes as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of the Notes and creditors of the
Company, other than the holders of Senior Indebtedness.


 


Upon any payment or
distribution of assets of the Company referred to in this Article VII, any
Representative and the Note Holders shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to any
Representative or to the Note Holders, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article VII.


 


Section 7.6                                   Authorization to Effect
Subordination.  Each Holder of a Note, by the Holder’s acceptance thereof, authorizes and
directs the Company, on the Holder’s behalf, to take such action as may be
necessary or appropriate to effectuate or evidence the subordination as
provided in this Article VII, and appoints the Company to act as the
Holder’s attorney-in-fact for any and all such purposes.


 


Section 7.7                                   Notice to Holders.  The
Company shall give prompt written notice to each Holder of any fact known to
the Company which would prohibit the making of any payment of monies to the
Holders pursuant to the provisions of this Article VII. Notwithstanding
the provisions of this Article VII or any other provision of this
Agreement, each Holder shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to such
Holder pursuant to the provisions of this Article VII unless and until the
Company shall have given notice to such Holder.


 


Section 7.8                                   No Impairment of Subordination.  No
right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance
by the Company with the terms, provisions and covenants of this Agreement,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.


 


Section 7.9                                   Senior Indebtedness Entitled to
Rely.  The
holders of Senior Indebtedness shall have the right to rely upon this
Article VII, and no amendment or modification of the provisions contained
herein shall diminish the rights of such holders unless such holders shall have
agreed in writing thereto.


 


ARTICLE VIII

TRANSFERS


 


Section 8.1                                   General. 
A Holder may not sell, assign,
gift, pledge, hypothecate, exchange or otherwise transfer (each, a “Transfer”)
all or any part of such Holder’s Note to any Person unless all of the
conditions set forth below are satisfied:


 


16





















 


(a)                                  Unless waived by the Company, the principal amount of the
portion of the Note proposed to be Transferred must be at least two hundred
fifty thousand dollars ($250,000);


 


(b)                                 Unless waived by the Company, the transferor Holder signs
and delivers to the Company an undertaking, in form and substance satisfactory
to the Company, to pay all reasonable expenses incurred by the Company in
connection with the Transfer;


 


(c)                                  Unless waived by the Company, the transferor Holder delivers
to the Company (1) an Opinion of Counsel for the transferor Holder, in
form and substance satisfactory to the Company, to the effect that the Transfer
of the Note is in compliance with all federal and applicable state securities
laws and (2) a statement of the transferee, in form and substance
satisfactory to the Company, making appropriate representations and warranties
with respect to compliance with all federal and applicable state securities
laws and as to any other matter reasonably required by the Company;


 


(d)                                 The transferor Holder delivers to the Company a copy of an
executed assignment of the applicable portion of the Note to the transferee,
which must be reasonably satisfactory in form and substance to the Company; and


 


(e)                                  The transferee signs and delivers to the Company an
agreement to be bound by all of the terms and conditions of this Agreement,
which must be reasonably satisfactory in form and substance to the Company.


 


Any purported Transfer of a
Note in violation of this Agreement shall be null and void ab
initio and shall transfer no right,
title or interest in or to the Note to the purported transferee, buyer,
assignee, pledgee or encumbrance holder.


 


ARTICLE IX

AMENDMENTS AND WAIVERS


 


Section 9.1                                   Without Consent of Holders.  The
Company may amend or supplement this Agreement or the Notes without the consent
of any Holder:


 


(a)                                  to cure any ambiguity, defect or inconsistency in this
Agreement or the Notes;


 


(b)                                 to comply with Article V; or


 


(c)                                  to make any change that does not adversely affect the rights
of any Holder.


 


Section 9.2                                   With Consent of Holders.  Except
as provided in Section 9.3, the Company may execute a supplement or
amendment to this Agreement with the written consent of the Majority Holders
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of any supplement or
amendment to this Agreement or of modifying in any manner the rights of the
Holders. Except as provided in Section 9.3, the Majority Holders may waive
compliance by the Company with any provision of this Agreement or the Notes.


 


It shall not be necessary
for the consent of the Holders under this Section 9.2 to approve the
particular form of any proposed supplement, amendment or waiver, but it shall
be sufficient 


 


17





















 


if
such consent approves the substance thereof. After a supplement, amendment or
waiver under this Section 9.2 becomes effective, the Company shall mail to
the Holders a notice briefly describing the supplement, amendment or waiver.
Any failure by the Company to mail or publish such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplement, amendment or waiver.


 


Section 9.3                                   Limitations.  Without
the consent of all Holders, a supplement, amendment or waiver may not:


 


(a)                                  reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;


 


(b)                                 reduce the rate of or extend the time for payment of
interest on any Note;


 


(c)                                  reduce the principal or change the Maturity Date of any Note
or reduce the amount of, or postpone the date fixed for, any payment of
principal;


 


(d)                                 waive a Default in the payment of the principal of or
interest, if any, on any Note (except a rescission of acceleration by the
Majority Holders and a waiver of the payment Default that resulted from such
acceleration);


 


(e)                                  make the principal of or interest, if any, on any Note
payable in any currency other than United States dollars; or


 


(f)                                    make any change in Section 6.9 or this Section 9.3.


 


Section 9.4                                   Revocation and Effect of Consents.  Until
a modification is set forth in a supplement or amendment or a waiver becomes
effective, a consent to it by a Holder is a continuing consent by the Holder
and every subsequent Holder of a Note, or a portion of a Note that evidences
the same debt as the consenting Holder’s Note, even if notation of the consent
is not made on any Note. However, any such Holder or subsequent Holder may
revoke the consent as to his, her or its Note or portion of a Note if the
Company receives a notice of revocation from such Holder before the date that
the supplement, amendment or waiver becomes effective.


 


Any supplement, amendment or
waiver, whether effected by Section 9.2 or Section 9.3, once
effective, shall bind every Holder and every subsequent Holder of a Note, or
portion of a Note, that evidences the same debt as the Holder’s Note.


 


Section 9.5                                   Notation on or Exchange of Notes.  The
Company shall place an appropriate notation about a supplement, amendment or
waiver on any Note thereafter issued. The Company, in exchange for Notes, may
issue new Notes that reflect the supplement, amendment or waiver.


 


ARTICLE X

TERMINATION OF AGREEMENT


 


This Agreement shall cease
to be of further effect and each Party, at his, her or its own expense, shall
execute proper instruments acknowledging the termination of this Agreement,
when all Notes theretofore issued and delivered to Holders (other than Notes
that have been destroyed, lost or stolen and that have been replaced or paid)
have been delivered to the 


 


18





















 


Company
for cancellation and the Company has paid or caused to be paid all sums payable
to the Holders under this Agreement and the Notes.


 


ARTICLE XI

MISCELLANEOUS


 


Section 11.1                            Notices. 
Unless otherwise provided, any
notice, requests, demands, claims or other communication hereunder will be in
writing and will be deemed duly given if it is delivered personally or sent by
recognized international overnight courier services (such as Federal Express or
DHL) or facsimile and addressed to the Company as set forth below:


 


CoBiz Financial Inc.


821 Seventeenth Street


Denver, Colorado  80202


Attention: Lyne Andrich


Telephone: (303) 293-2265


Facsimile:  (303) 244-9700


 


The Company, by notice to
the Holders, may designate additional or different addresses or facsimile
numbers for subsequent notices or communications.


 


Any notice or communication
from the Company to a Holder shall be mailed by recognized international
overnight courier service (such as Federal Express or DHL) or sent by facsimile
to such Holder’s address or facsimile number as shown on the register of Notes
kept by the Company pursuant to Section 2.3 of this Agreement. Failure to
send a notice or communication to a Holder of any Note or any defect in it
shall not affect its sufficiency with respect to other Holders of any other
Notes.


 


Section 11.2                            Communication by Holders with Other
Holders.  For
purposes of communicating between Holders, a Holder or an agent of a Holder
may, upon written demand, copy the register of Notes maintained by the Company
pursuant to Section 2.3 of this Agreement during regular business hours if
(a) the Holder has been a Note Holder for at least three (3) months
immediately preceding the demand, (b) the demand is made in good faith and
for a purpose reasonably related to the demanding Holder’s interest as a Note
Holder, (c) the Holder describes to the Company, with reasonable particularity,
the purpose of the demand, (d) the register is directly connected with the
described purpose, and (e) the Holder pays any expenses incurred by the
Company for the costs of labor and material for such copy.


 


Section 11.3                            No Recourse Against Others.  A
director, officer, employee or shareholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Notes or this
Agreement or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder, by accepting a Note, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes to the Holders.


 


Section 11.4                            Entire Agreement.  The
Subscription Agreement, any agreement executed by the Company or any Holder in
connection with the Offering, this Agreement (including the Exhibits and
executed signature pages attached hereto) and the Notes constitute the
entire agreement among the Parties and supersedes any prior understandings,
agreements or 


 


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representations by or among the Parties, written or oral, to the extent
they relate in any way to the subject matter hereof and thereof.


 


Section 11.5                            Counterparts and Exchanges by Electronic
Transmission or Facsimile.  This Agreement may be executed in any number of counterparts and by the
Parties in separate counterparts, each of which, when so executed, shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. The exchange of a fully executed Agreement (in
counterparts or otherwise) by electronic transmission of facsimile shall be
sufficient to bind the Parties to the terms and conditions of this Agreement.


 


Section 11.6                            Governing Law.  This
Agreement and the Notes shall be governed by the laws of the State of Colorado
applicable to agreements made and to be performed in such state, without regard
to the conflict of laws provisions thereof.


 


Section 11.7                            Construction.  In
the event that an ambiguity or question of intent or interpretation arises,
this Agreement will be construed as if drafted jointly by the Parties and their
respective counsel and no presumption or burden of proof will arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  The Parties intend that
each representation, warranty and covenant contained herein will have
independent significance.  If any Party
breaches any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached will not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty or covenant.


 


Section 11.8                            No Adverse Interpretation of Other
Agreements.  This
Agreement may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Agreement.


 


Section 11.9                            Successors.  This
Agreement will be binding upon and inure to the benefit of the Parties and
their respective permitted successors and assigns.


 


Section 11.10                     Severability.  In
case any provision in this Agreement or in the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.


 


Section 11.11                     Table of Contents, Headings, Etc.  The
Table of Contents and headings of the Articles and Sections of this Agreement
have been inserted for convenience of reference only, are not to be considered
a part hereof, and shall in no way modify or restrict any of the terms or
provisions hereof.


 


Signature page follows.


 


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IN WITNESS WHEREOF, the
undersigned has caused this Agreement to be duly executed and attested, as of
the 18th day of August, 2008.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  COBIZ FINANCIAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDERS:

  
	
   

  	
   

  
	
   

  	
  (See attached signature pages)

  
					



 





















 


NOTE HOLDER AGREEMENT


SIGNATURE PAGE


 


By his, her or its signature
below, the undersigned hereby accepts, adopts and agrees to be bound by all of
the terms and conditions of the Note Holders Agreement by and between CoBiz
Financial Inc. and all of the Holders (as defined therein) as of the 18th
day of August, 2008.


 


 


	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  



 





















 


EXHIBIT A


 


FORM OF NOTE


 


[See Attached]