Exhibit
2.1





MERGER
AGREEMENT





































AGREEMENT
AND PLAN OF MERGER




BETWEEN




FIRST
CLOVER LEAF FINANCIAL CORP.




AND




PARTNERS
FINANCIAL HOLDINGS, INC.















April
30, 2008












TABLE OF
CONTENTS




ARTICLE
      I CERTAIN DEFINITIONS
            11.1
            Certain
      Definitions
            1ARTICLE
      II THE MERGER
            92.1
            Merger
            92.2
            Effective
      Time
            102.3
            Certificate
      of Incorporation and Bylaws
            102.4
            Directors
      and Officers of Surviving Corporation.
            102.5
            Directors
      of FCL Bank
            102.6
            Effects
      of the Merger
            102.7
            Tax
      Consequences
            102.8
            Possible
      Alternative Structures
            112.9
            Additional
      Actions
            11ARTICLE
      III CONVERSION OF SHARES
            113.1
            Merger
      Consideration
            113.2
            Treatment
      of Stock Options and Warrants.
            133.3
            Election
      Procedures
            133.4
            Procedures
      for Exchange of Partners Common Stock
            17ARTICLE
      IV REPRESENTATIONS AND WARRANTIES OF PARTNERS
            194.1
            Organization
            194.2
            Capitalization
            204.3
            Authority;
      No Violation
            204.4
            Consents
            214.5
            Financial
      Statements and Regulatory Reports
            224.6
            Taxes
            224.7
            No
      Material Adverse Effect
            234.8
            Contracts;
      Leases; Defaults
            234.9
            Ownership
      of Property; Insurance Coverage
            244.10
            Legal
      Proceedings
            254.11
            Compliance
      With Applicable Law
            254.12
            Employee
      Benefit Plans
            264.13
            Brokers,
      Finders and Financial Advisors
            294.14
            Environmental
      Matters
            294.15
            Loan
      Portfolio
            314.16
            Related
      Party Transactions
            324.17
            Schedule
      of Termination Benefits
            324.18
            Deposits
            334.19
            Antitakeover
      Provisions Inapplicable; Required Vote of Stockholders
            334.20
            Registration
      Obligations
            334.21
            Risk
      Management Instruments
            334.22
            Trust
      Accounts
            33











ARTICLE
      V REPRESENTATIONS AND WARRANTIES OF FCLF
            335.1
            Organization
            335.2
            Capitalization
            345.3
            Authority;
      No Violation
            345.4
            Consents
            355.5
            Financial
      Statements and Regulatory Reports
            365.6
            Taxes
            365.7
            No
      Material Adverse Effect
            375.8
            Ownership
      of Property; Insurance Coverage
            375.9
            Legal
      Proceedings
            375.10
            Compliance
      With Applicable Law
            385.11
            Employee
      Benefit Plans
            395.12
            Environmental
      Matters
            405.13
            Securities
      Documents
            425.14
            Brokers,
      Finders and Financial Advisors
            425.15
            Deposits
            425.16
            Risk
      Management Instruments
            425.17
            Financial
      Resources
            43ARTICLE
      VI COVENANTS OF PARTNERS
            436.1
            Conduct
      of Business
            436.2
            Current
      Information
            466.3
            Access
      to Properties and Records
            476.4
            Financial
      and Other Statements
            476.5
            Maintenance
      of Insurance
            486.6
            Disclosure
      Supplements
            486.7
            Consents
      and Approvals of Third Parties
            496.8
            All
      Reasonable Efforts
            496.9
            Failure
      to Fulfill Conditions
            496.10
            No
      Solicitation
            496.11
            Reserves
      and Merger-Related Costs
            506.12
            Board
      of Directors and Committee Meetings.
            506.13
            Prohibition
      on Solicitation of Employees
            51ARTICLE
      VII COVENANTS OF FCLF
            517.1
            Conduct
      of Business
            517.2
            Current
      Information
            527.3
            Financial
      and Other Statements
            527.4
            Disclosure
      Supplements
            527.5
            Consents
      and Approvals of Third Parties
            537.6
            All
      Reasonable Efforts
            537.7
            Failure
      to Fulfill Conditions
            537.8
            Employee
      Benefits
            537.9
            Directors
      and Officers Indemnification and Insurance
            567.10
            Termination
      of Employees
            587.11
            Stock
      Listing
            58





ii





7.12
            Maintenance
      of Insurance
            587.13
            Prohibition
      on Solicitation of Employees
            58ARTICLE
      VIII REGULATORY AND OTHER MATTERS
            588.1
            Partners
      Stockholders Meeting
            588.2
            Proxy
      Statement-Prospectus
            598.3
            Regulatory
      Approvals
            60ARTICLE
      IX CLOSING CONDITIONS
            619.1
            Conditions
      to Each Party’s Obligations under this Agreement
            619.2
            Conditions
      to the Obligations of FCLF under this Agreement
            629.3
            Conditions
      to the Obligations of Partners under this Agreement
            63ARTICLE
      X THE CLOSING
            6410.1
            Time
      and Place
            6410.2
            Deliveries
      at the Pre-Closing and the Closing
            65ARTICLE
      XI TERMINATION, AMENDMENT AND WAIVER
            6511.1
            Termination
            6511.2
            Effect
      of Termination
            6711.3
            Amendment,
      Extension and Waiver
            68ARTICLE
      XII MISCELLANEOUS
            6912.1
            Confidentiality
            6912.2
            Public
      Announcements
            6912.3
            Survival
            6912.4
            Notices
            6912.5
            Parties
      in Interest
            7012.6
            Complete
      Agreement
            7012.7
            Counterparts
            7012.8
            Severability
            7112.9
            Governing
      Law
            7112.10
            Interpretation
            7112.11
            Specific
      Performance
            71





Exhibit
      A
            Form
      of Option and Warrant Cancellation AgreementExhibit
      B
            Form
      of Voting AgreementExhibit
      C
            Form
      of Consulting Agreement













iii


AGREEMENT AND PLAN OF
MERGER




THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”), is dated as of April 30,
2008, between FIRST CLOVER LEAF FINANCIAL CORP., a Maryland corporation and
federal stock holding company (“FCLF”), and PARTNERS FINANCIAL HOLDINGS, INC., a
Delaware corporation and bank holding company (“Partners”).




WHEREAS,
the Board of Directors of each party has approved this Agreement and
(i) has determined that this Agreement and the Merger and related
transactions contemplated hereby are in the best interests of the respective
parties, and (ii) has determined that this Agreement and the transactions
contemplated hereby are consistent with their respective business strategies;
and




WHEREAS,
the parties desire to make certain representations, warranties and agreements in
connection with the business transactions described in this Agreement and to
prescribe certain conditions thereto.




NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties
and agreements herein contained, and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:




ARTICLE
I




CERTAIN
DEFINITIONS




1.1           Certain
Definitions.  As used in this Agreement, the following terms
have the following meanings (unless the context otherwise requires, both here
and throughout this Agreement, references to Articles and Sections refer to
Articles and Sections of this Agreement).




“Accounting Firm”
shall have the meaning set forth in Section 7.8.1(c) hereof.




“Acquisition Proposal”
shall have the meaning set forth in Section 6.10 hereof.




“Affiliate” shall have
the meaning set forth in the Securities Act.




“Agreement” means this
Agreement and Plan of Merger, and any amendment or supplement
hereto.




“Applications” means
the applications for regulatory approval that are required by the Contemplated
Transactions.




“BHCA” shall mean the
Bank Holding Company Act of 1956, as amended.




“Bank Merger” shall
mean the merger of Partners Bank with and into FCL Bank, with FCL Bank as the
surviving institution, which merger shall occur following the Merger, as set
forth in more detail in Section 2.1 hereof.







“Bank Merger
Agreement” shall have the meaning set forth in Section 2.1
hereof.




“Bank Regulator” shall
mean any federal or state banking regulator (including but not limited to the
FDIC, the OTS, the DFPR and the FRB) that regulates FCL Bank or Partners Bank,
or any of their respective holding companies or subsidiaries, as the case may
be.




“BIF” shall mean the
Bank Insurance Fund as administered by the FDIC.




“Cash Consideration”
shall have the meaning set forth in Section 3.1.2 hereof.




“Cash Election” shall
have the meaning set forth in Section 3.3.2 hereof.




“Cash Election Shares”
shall have the meaning set forth in Section 3.3.1 hereof.




“Certificate” shall
mean the certificates evidencing shares of Partners Common Stock.




“Claim” shall have the
meaning set forth in Section 7.9.2 hereof.




“Closing” shall have
the meaning set forth in Section 2.2 hereof.




“Closing Date” shall
have the meaning set forth in Section 2.2 hereof.




“COBRA” shall mean the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.




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




“Confidentiality
Agreement” shall mean the confidentiality agreement referred to in
Section 12.1 hereof.




“Consulting Agreement”
shall have the meaning set forth in Section 7.8.1(a) hereof.




“Consulting Services”
shall have the meaning set forth in Section 7.8.1(c) hereof.




“Contemplated
Transactions” shall have the meaning set forth in Section 2.1
hereof.




“DFPR” shall mean the
Illinois Department of Financial and Professional Regulation.




“DGCL” shall mean the
Delaware General Corporation Law.




“Disclosure Schedules”
shall mean the FCLF Disclosure Schedules and Partners Disclosure Schedules,
collectively.




“Dissenting Shares”
shall have the meaning set forth in Section 3.1.4 hereof.




“Dissenting
Stockholder” shall have the meaning set forth in Section 3.1.4
hereof.




“Effective Time” shall
mean the date and time specified pursuant to Section 2.2 hereof as the
effective time of the Merger.




“Election Deadline”
shall mean the date and time specified to Section 3.3.3 hereof.




2







“Election Form” shall
have the meaning set forth in Section 3.3.2 hereof.




“Election Form Record
Date” shall mean the date specified pursuant to Section 3.3.2
hereof.




“Environmental Laws”
means any federal, state or local law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any Governmental Entity relating to
(1) the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (2) the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Materials of Environmental
Concern.  The term Environmental Law includes without limitation
(a) the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. ss.9601, et seq; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq; the Clean Air
Act, as amended, 42 U.S.C. ss.7401, et seq; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. ss.9601, et seq; the Emergency
Planning and Community Right to Know Act, 42 U.S.C. ss.1101, et seq; the Safe
Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all
comparable state and local laws, and (b) any common law (including without
limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to the presence of or
exposure to any Materials of Environmental Concern.




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




“ERISA Affiliate”
shall have the meaning set forth in Section 4.12.3 hereof, with respect to
Partners, and Section 5.11.3 hereof, with respect to FCLF.




“ERISA Affiliate Plan”
shall have the meaning set forth in Section 4.12.3 hereof, with respect to
Partners, and Section 5.11.3 hereof, with respect to FCLF.




“Excess Amount” shall
have the meaning set forth in Section 7.8.1(c) hereof.




“Excess Shares” shall
have the meaning set forth in Section 3.3.4 hereof.




“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.




“Exchange Agent” shall
mean a bank or trust company or other agent designated by FCLF, and reasonably
acceptable to Partners, which shall act as exchange agent for FCLF in connection
with the exchange procedures for converting Certificates into the Merger
Consideration.




“Exchange Fund” shall
have the meaning set forth in Section 3.4.1 hereof.




“Exchange Ratio” shall
have the meaning set forth in Section 3.1.2 hereof.




“Excise Tax” shall
have the meaning set forth in Section 7.8.1(c) hereof.




3







“Executive” shall have
the meaning set forth in Section 7.8.1(c) hereof.




“FCL Bank” shall mean
First Clover Leaf Bank, FSB, a federally chartered stock savings bank, with its
principal offices located at 300 St. Louis Street, Edwardsville, Illinois 62025,
which is a wholly owned subsidiary of FCLF.




“FCL Bank Compensation and
Benefit Plan” shall have the meaning set forth in Section 5.11.1
hereof.




“FCL Bank Defined Benefit
Plan” shall have the meaning set forth in Section 5.11.3
hereof.




“FCLF” shall mean
First Clover Leaf Financial Corp., a Maryland corporation with its principal
executive offices located at 300 St. Louis Street, Edwardsville, Illinois
62025.




“FCLF Closing Condition
Standard” shall have the meaning set forth in Section 9.3.1
hereof.




“FCLF Common Stock”
shall mean the common stock, par value $.10 per share, of FCLF.




“FCLF Disclosure
Schedule” shall mean a written Disclosure Schedule delivered by FCLF to
Partners specifically referring to the appropriate Section of this Agreement and
describing in detail the matters contained therein.




“FCLF
ESOP” shall have the meaning set forth in Section 7.8.3 hereof.




“FCLF Financial
Statements” shall mean the (i) the audited consolidated statements
of financial condition (including related notes and schedules) of FCLF as of
December 31, 2007 and 2006 and the consolidated statements of income, changes in
stockholders’ equity, and cash flows (including related notes and schedules, if
any) of FCLF for each of the two years ended December 31, 2007 and 2006, as
filed by FCLF in its Securities Documents; (ii) the interim consolidated
financial statements of FCLF as of the calendar quarter ended March 31, 2008 and
thereafter, as filed by FCLF in its Securities Documents; and (iii) any
additional or supplemental financial documents or information required to be
provided from time to time from the date hereof to the Closing Date pursuant to
the terms of this Agreement.




“FCLF Preferred Stock”
shall have the meaning set forth in Section 5.2.1 hereof.




“FCLF Regulatory
Reports” means the Thrift Financial Reports of FCL Bank and accompanying
schedules, as filed with the FDIC and OTS, for each calendar quarter beginning
with the quarter ended September 30, 2006 through the Closing Date, and all
Reports filed with the OTS by FCLF from September 30, 2006 through the Closing
Date.




“FDIA” shall mean the
Federal Deposit Insurance Act, as amended.




“Fee” shall have the
meaning set forth in Section 11.2.2 hereof.




4







“FDIC” shall mean the
Federal Deposit Insurance Corporation or any successor thereto.




“Final VWAP” means the
volume weighted average price per share of FCLF Common Stock, rounded to the
nearest cent, during the period of 20 consecutive trading days in which such
shares are traded on The Nasdaq Stock Market ending at the end of the day that
is the third day immediately preceding the Pre-Closing Date.  For this
purpose, the Final VWAP shall be calculated using the default criteria for the
function known as “Bloomberg VWAP” of the AQR function for FCLF Common Stock on
the automated quote and analytical system distributed by Bloomberg Financial
LP.





“FHLB” shall mean the
Federal Home Loan Bank of Chicago.




“FRB” shall mean the
Board of Governors of the Federal Reserve System or any successor
thereto.




“GAAP” shall mean
Generally Accepted Accounting Principles, consistently applied, and as in effect
from time to time in the United States of America.




“Governmental Entity”
shall mean any federal or state court, administrative agency or commission or
other governmental authority or instrumentality.




“HOLA” shall mean the
Home Owners’ Loan Act, as amended.




“Increased Exchange
Ratio” shall have the meaning set forth in Section 11.1.10
hereof.




“Indemnified Parties”
shall have the meaning set forth in Section 7.9.2 hereof.




“IRS” shall mean the
United States Internal Revenue Service.




“Knowledge” as used
with respect to a Person (including references to such Person being aware of a
particular matter) means those facts that are known, or should have been known
after inquiry reasonable in the circumstances, by the executive officers and
directors of such Person, and includes any facts, matters or circumstances set
forth in any written notice from any Bank Regulator or any other written notice
received by that Person. When the term “Knowledge” is used with respect a
Person, it shall also include the Knowledge of the executive officers and
directors of such Person’s Subsidiaries.




“Loan Property” shall
have the meaning set forth in Section 4.14.2 hereof.




“Mailing Date” shall
mean the day specified pursuant to Section 3.3.2 hereof.




“Material Adverse
Effect” shall mean, with respect to FCLF or Partners, as applicable, any
effect that (i) is material and adverse to the financial condition, results
of operations, or business of FCLF and its Subsidiaries taken as a whole, or
Partners and its Subsidiaries taken as a whole, as applicable, or
(ii) would materially impair the ability of either FCLF, on the one hand,
or Partners, on the other hand, to perform its obligations under this Agreement
or otherwise materially threaten or materially impede the consummation of the
Contemplated Transactions; provided that “Material Adverse Effect” shall not be
deemed to include the impact




5


of
(a) changes in laws and regulations affecting banks or thrift institutions
generally, (b) changes in GAAP or regulatory accounting principles
generally applicable to financial institutions and their holding companies,
(c) actions and omissions of a party hereto (or any of its Subsidiaries)
taken with the prior written consent of the other party, (d) the direct
effects of compliance with this Agreement on the operating performance of the
parties including the expenses incurred by the parties hereto in consummating
the Contemplated Transactions, and (e) any change in the value of the
securities portfolio of FCLF or Partners, whether held as available for sale or
held to maturity, resulting from a change in interest rates
generally.




“Materials of Environmental
Concern” shall mean pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products, and any other materials regulated under
Environmental Laws.




“MCAC” shall mean the
Maryland Corporations and Associations Code.




“Merger” shall mean
the merger of Partners with and into FCLF pursuant to the terms
hereof.




“Merger Consideration”
shall mean the cash or FCLF Common Stock, or combination thereof, to be paid by
FCLF for each share of Partners Common Stock, as more fully described in
Section 3.1 hereof.




“Merger Registration
Statement” shall mean the registration statement, together with all
amendments, filed with the SEC under the Securities Act for the purpose of
registering shares of FCLF Common Stock to be offered to holders of Partners
Common Stock as a portion of the Merger Consideration in connection with the
Merger.




“Mixed Election” shall
have the meaning set forth in Section 3.3.2 hereof.




“Mixed Election
Shares” shall have the meaning set forth in Section 3.3.1
hereof.




“NASD” shall mean the
National Association of Securities Dealers, Inc.




“New 125 Plan” shall
have the meaning set forth in Section 7.8.3 hereof.




“New FCLF Plans” shall
have the meaning set forth in Section 7.8.2 hereof.




“Non-Election” shall
have the meaning set forth in Section 3.3.2 hereof.




“Non-Election Shares”
shall have the meaning set forth in Section 3.3.1 hereof.




“OTS” shall mean the
Office of Thrift Supervision or any successor thereto.




“Observer” shall have
the meaning set forth in Section 6.12 hereof.




“PBGC” shall mean the
Pension Benefit Guaranty Corporation, or any successor thereto.




“Participation
Facility” shall have the meaning set forth in Section 4.14.2
hereof.




6







“Partners” shall mean
Partners Financial Holdings, Inc. a Delaware corporation, with its principal
offices located at #1 Ginger Creek Meadows, Glen Carbon, Illinois
62034.




“Partners 125 Plan”
shall have the meaning set forth in Section 7.8.3 hereof.




“Partners Bank” shall
mean Partners Bank, an Illinois state bank, with its principal offices located
at #1 Ginger Creek Meadows, Glen Carbon, Illinois 62034, which is a wholly owned
subsidiary of Partners.




“Partners Closing Condition
Standard” shall have the meaning set forth in Section 9.2.1
hereof.




“Partners Common
Stock” shall mean the common stock, par value $10.00 per share, of
Partners.




“Partners Compensation and
Benefit Plans” shall have the meaning set forth in Section 4.12.1
hereof.




“Partners Defined Benefit
Plan” shall have the meaning set forth in Section 4.12.3
hereof.




“Partners Disclosure
Schedule” shall mean a written Disclosure Schedule delivered by Partners
to FCLF specifically referring to the appropriate Section of this Agreement and
describing in detail the matters described therein.




“Partners Financial
Statements” shall mean (i) the audited consolidated statements of
financial condition (including related notes and schedules, if any) of Partners
as of December 31, 2007, 2006 and 2005 and the consolidated statements of
income, changes in stockholders’ equity and cash flows (including related notes
and schedules, if any) of Partners for each of the three years ended December
31, 2007, 2006 and 2005, and (ii) the interim consolidated financial
statements of Partners as of the calendar quarter ended March 31, 2008; and
(iii) any additional or supplemental financial documents or information required
to be provided from time to time from the date hereof to the Closing Date
pursuant to the terms of this Agreement.




“Partners Regulatory
Reports” means the Call Reports of Partners Bank and accompanying
schedules, as filed with the FDIC and DFPR, for each calendar quarter beginning
with the quarter ended December 31, 2005 through the Closing Date, and all
Reports filed with the FRB by Partners from December 31, 2005 through the
Closing Date.




“Partners Stockholder”
means a holder of Partners Common Stock as of the Election Form Record
Date.




“Partners Stockholders
Meeting” means the meeting of Partners Stockholders to be held for the
purpose of considering and approving this Agreement.




“Partners Stock
Options” means an outstanding option award to purchase shares of Partners
Common Stock granted pursuant to the Partners Financial Holdings, Inc. 2000
Stock Option and Award Plan and the Partners Financial Holdings, Inc. 2005 Stock
Option and Award




7


Plan. As
of the date of this Agreement, there are currently outstanding Partners Stock
Options for 21,700 Partners Common Shares, with an average exercise price of
$31.9039.




“Partners Stock
Warrants” means an outstanding warrant to purchase shares of Partners
Common Stock.  As of the date of this Agreement, there are currently
outstanding Partners Stock Warrants for 28,331 shares of Partners Common Stock,
with an average exercise price of $20.00.




“Pension Plan” shall
have the meaning set forth in Section 4.12.2 hereof, with respect to
Partners, and Section 5.11.2 hereof, with respect to FCLF.




“Per Share Option/Warrant
Consideration” shall have the meaning set forth in Section 3.2
hereof.




“Person” shall mean
any individual, corporation, partnership, joint venture, association, entity,
trust or “group” (as “group” is defined under Section 13(d)(3) of the
Exchange Act).




“Potential Payment”
shall have the meaning set forth in Section 7.8.1(c) hereof.




“Pre-Closing” shall
have the meaning set forth in Section 10.1 hereof.




“Pre-Closing Date”
shall have the meaning set forth in Section 10.1 hereof.




“Proxy
Statement-Prospectus” shall mean the proxy statement/prospectus, as the
same may be amended or supplemented from time to time, to be delivered to
Partners Stockholders in connection with the solicitation of their approval of
this Agreement.




“Regulatory Agreement”
shall have the meaning set forth in Section 4.11.3 hereof, with respect to
Partners, and the meaning set forth in Section 5.10.3 hereof, with respect
to FCLF.




“Representative” shall
have the meaning set forth in Section 3.3.2 hereof.




“Restrictive
Covenants” shall have the meaning set forth in Section 7.8.1(c)
hereof.




“Rights” shall mean
warrants, options, rights, convertible securities, preemptive rights, stock
appreciation rights, and other arrangements or commitments that obligate an
entity to issue or dispose of any of its capital stock or other ownership
interests to any Person pursuant to the terms of the agreement granting such
Right or the instrument evidencing such Right, or which provide for compensation
based on the equity appreciation of its capital stock.




“SAIF” shall mean the
Savings Association Insurance Fund administered by the FDIC.




“SEC” shall mean the
United States Securities and Exchange Commission or any successor
thereto.




“Securities Act” shall
mean the Securities Act of 1933, as amended.




“Securities Documents”
shall mean all reports, periodic filings, offering circulars, proxy statements,
registration statements, and all similar documents filed, or required to be
filed, pursuant to the Securities Laws.




8







“Securities Laws”
shall mean the Securities Act; the Exchange Act; the Investment Company Act of
1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust
Indenture Act of 1939, as amended; and the rules and regulations of the SEC
promulgated thereunder.




“Severance Payment”
shall have the meaning set forth in Section 7.10 hereof.




“Stifel” shall mean
Stifel, Nicolaus & Company, Incorporated.




“Stock Consideration”
shall have the meaning set forth in Section 3.1.2 hereof.




“Stock Conversion
Number” shall have the meaning set forth in Section 3.3.1
hereof.




“Stock Election” shall
have the meaning set forth in Section 3.3.2.




“Stock Election
Number” shall have the meaning set forth in Section 3.3.1.




“Stock Exchange” shall
mean the Nasdaq Capital Market.




“Subsidiary” shall
have the meaning set forth in Rule 1-02 of Regulation S-X of the
SEC.




“Superior Proposal”
shall have the meaning set forth in Section 6.10 hereof.




“Surviving
Corporation” shall have the meaning set forth in Section 2.1
hereof.




“Takeover Laws” shall
have the meaning set forth in Section 4.19 hereof.




“Termination Date”
shall mean December 31, 2008.




Other
terms used herein are defined in the preamble and elsewhere in this
Agreement.




ARTICLE
II




THE
MERGER




2.1           Merger.  As
promptly as practicable following the satisfaction or waiver of the conditions
to each party’s respective obligations hereunder, and subject to the terms and
conditions of this Agreement, at the Effective Time: (a) Partners shall
merge with and into FCLF with FCLF as the resulting or surviving corporation
(the “Surviving Corporation”); (b) the separate existence of Partners shall
cease and all of the rights, privileges, powers, franchises, properties, assets,
liabilities, and obligations of Partners shall be vested in and assumed by the
Surviving Corporation; (c) all of the shares of Partners Common Stock issued and
outstanding immediately prior to the Merger shall be converted solely into the
right to receive the Merger Consideration, pursuant to the terms of Article III
hereof; and (d) all of the shares of Common Stock of the Surviving Corporation
outstanding immediately prior to the Merger shall remain issued and outstanding
after the Merger.  As soon as practicable after the date hereof, but
in no event later than the date of the Partners Stockholder Meeting, FCL Bank
and Partners Bank shall enter into an Agreement and Plan of Merger (the “Bank
Merger Agreement”), in form and




9


substance
mutually agreeable to the parties hereto that provides for Partners Bank to
merge with and into FCL Bank, with FCL Bank as the resulting institution under
the name “First Clover Leaf Bank,” which name shall be effective at the time of
the consummation of the Bank Merger. The result of the Merger and Bank Merger
(collectively, the “Contemplated Transactions”) will be that FCLF will be the
sole stockholder of FCL Bank, the resulting institution, and the separate
existence of each of Partners and Partners Bank will cease.




2.2           Effective
Time.  The Merger shall be effected by the filing of a
certificate of merger with the Maryland Office of the Secretary of State in
accordance with Section 3-107 of the MCAC and Delaware Office of the Secretary
of State in accordance with Section 252 of the DGCL, each on the date of
the closing (the “Closing Date”) of the Merger as set forth in Article X of
this Agreement (the “Closing”).  The “Effective Time” means the date
and time upon which the certificate of merger is deemed effective by the last to
occur of the Maryland Office of the Secretary of State and the Delaware Office
of the Secretary of State, or such later time as may be mutually agreeable to
FCLF and Partners and set forth in the certificate of merger, not to exceed 90
days after the certificate of merger is accepted for record by the last to occur
of the Maryland Office of the Secretary of State and the Delaware Office of the
Secretary of State.  Immediately after the Effective Time, FCLF shall
take such actions as it deems appropriate to cause the Bank Merger and
Parent-Subsidiary Merger to be consummated.




2.3           Certificate of Incorporation
and Bylaws.  Following the Merger, the Articles of
Incorporation and Bylaws of FCLF shall be the Articles of Incorporation and
Bylaws of FCLF, the surviving corporation in the Merger. Following the Bank
Merger, the Charter and Bylaws of FCL Bank shall remain the Charter and Bylaws
of FCL Bank.




2.4           Directors and Officers of
Surviving Corporation.  The directors and officers of FCLF
immediately prior to the Effective Time shall remain the directors and officers
of the Surviving Corporation after the Effective Time, until their successors
are duly elected or appointed and qualified. No directors of Partners or
Partners Bank shall be added to the Board of Directors of FCLF.




2.5           Directors of FCL
Bank.  Each of the directors of FCLF and FCL Bank,
respectively, immediately prior to the Effective Time shall continue as
directors of FCLF and FCL Bank, respectively, immediately after the Effective
Time. No directors of Partners or Partners Bank shall be added to the Board of
Directors of FCL Bank.




2.6           Effects
of the Merger.  At and after the Effective Time, the Merger shall have
the effects as set forth in the DGCL and MCAC.




2.7           Tax
Consequences.  It is intended that the Contemplated
Transactions shall constitute a reorganization within the meaning of
Section 368(a) of the Code, and that this Agreement shall constitute a
“plan of reorganization” as that term is used in Sections 354 and 361 of
the Code.  Following the date hereof until the Effective Time, neither
FCLF, Partners, nor any of their respective Affiliates or Subsidiaries shall
knowingly take any action, cause any action to be taken, fail to take any
action, or cause any action to not be taken, which action or failure to act
could cause the Contemplated Transactions to fail to qualify as a reorganization
under Section 368(a) of the Code.




10







FCLF and
Partners each hereby agrees to deliver certificates in compliance with IRS
published advance ruling guidelines, with customary exceptions and modifications
thereto, to enable counsel to deliver the legal opinion contemplated by
Section 9.1.6 hereof, which certificates shall be effective as of the date
of such opinion.




2.8           Possible Alternative
Structures.  Notwithstanding anything to the contrary contained
in this Agreement, prior to the Effective Time, FCLF shall be entitled to revise
the structure of the Contemplated Transactions described in Section 2.1
hereof provided that (i) there are no adverse federal, state or local
income tax consequences to Partners Stockholders as a result of the
modification; (ii) the consideration to be paid to the Partners
Stockholders under this Agreement is not thereby changed in kind or value or
reduced in amount; and (iii) such modification will not materially delay or
jeopardize receipt of any required regulatory approvals or other consents and
approvals relating to the consummation of the Merger or otherwise unreasonably
delay the Closing. The parties hereto each agrees to appropriately amend this
Agreement and any related documents in order to reflect any such revised
structure.




2.9           Additional
Actions.  If, at any time after the Effective Time, FCLF shall
consider or be advised that any further actions, deeds, assignments, assurances
in law or otherwise, or any other acts are necessary or desirable to
(i) vest, perfect, or confirm, of record or otherwise, in FCLF or FCL Bank
either of its respective right, title, or interest in, to, or under any of the
rights, properties, or assets of Partners or Partners Bank, or
(ii) otherwise carry out the purposes of this Agreement or the Contemplated
Transactions, Partners and each of its Subsidiaries and their respective
officers and directors shall be deemed to have granted to FCLF an irrevocable
power of attorney, coupled with an interest, to execute and deliver, in such
official corporate capacities, all such deeds, assignments or assurances in law
or any other acts as are necessary or desirable to accomplish the foregoing, and
each of the officers and directors of FCLF are authorized in the name of
Partners or any of its Subsidiaries, as the case may be, to take any and all
such actions.




ARTICLE
III




CONVERSION
OF SHARES




3.1           Merger
Consideration.  At the Effective Time, by virtue of the Merger
and without any action on the part of FCLF, Partners, or the holders of any of
the shares of Partners Common Stock, the Merger shall be effected in accordance
with the following terms:




3.1.1             Each
issued and outstanding share of FCLF Common Stock shall remain outstanding and
unaffected by the Merger.




3.1.2             Each
outstanding share of Partners Common Stock that under the terms of
Section 3.3 hereof is to be converted into the right to receive shares of
FCLF Common Stock shall, subject to Section 3.4 hereof, be converted into
and become the right to receive that number of shares of FCLF Common Stock as
determined in this Section 3.1.2 (the “Stock
Consideration”).  Each outstanding share of Partners Common Stock that
under the terms of Section 3.3 hereof is to be converted into the right to
receive cash shall be converted into the right to receive a cash payment as
determined in this Section 3.1.2 (the “Cash Consideration”). Each
outstanding share of Partners Common Stock to receive Stock Consideration shall
be




11


converted
into and become the right to receive 5.7971 shares of FCLF Common Stock (the
“Exchange Ratio”); provided, however, that if Partners provides notice of
termination of this Agreement as provided in Section 11.1.10 hereof and FCLF
elects to increase the Stock Consideration as provided in Section 11.1.10
hereof, the Exchange Ratio shall equal the Increased Exchange Ratio determined
in accordance with Section 11.1.10 hereof.  Each outstanding share of
Partners Common Stock to receive Cash Consideration shall be converted into and
become the right to receive $56 in cash. Partners Stock Options and Partners
Stock Warrants shall cease to have any rights to acquire any shares of Partners
Common Stock and instead shall only have the right to receive the Per Share
Option/Warrant Consideration pursuant to Section 3.2 hereof.




3.1.3             In
the event, subsequent to the date of this Agreement, either of FCLF or Partners
changes (or establishes a record date for changing) the number of, or provides
for the exchange of, shares of (i) FCLF Common Stock, in the case of FCLF, or
(ii) Partners Common Stock, in the case of Partners, issued and outstanding
prior to the Effective Time as a result of a stock split, stock dividend,
recapitalization, reclassification, or similar transaction and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio and Merger
Consideration shall be proportionately and appropriately adjusted.




3.1.4             Each
outstanding share of Partners Common Stock, the holder of which has perfected
his right to dissent under the DGCL and has not effectively withdrawn or lost
such right as of the Effective Time (the “Dissenting Shares”), shall not be
converted into or represent a right to receive Merger Consideration hereunder,
and the holder thereof shall be entitled only to such rights as are granted to a
Dissenting Stockholder under the DGCL.  Partners shall give FCLF
prompt notice upon receipt by Partners of any notice of exercise of the rights
associated with Dissenting Shares under the DGCL and of withdrawals of such
notice and any other instruments in connection with such notice (any Partners
Stockholder duly exercising such rights with respect to Dissenting Shares under
the DGCL being hereinafter called a “Dissenting Stockholder”), and FCLF shall
have the right to participate in all negotiations and proceedings with respect
to any such Dissenting Shares.  Partners shall not, except with the
prior written consent of FCLF, voluntarily make any payment with respect to, or
settle or offer to settle, any Dissenting Shares, or waive any failure to timely
deliver a written demand for appraisal or the taking of any other action by a
Dissenting Stockholder as may be necessary to perfect appraisal rights under the
DGCL.  Any payments made in respect of Dissenting Shares shall be made
by the Surviving Corporation.




3.1.5             If
any Dissenting Stockholder shall effectively withdraw or lose (through failure
to perfect or otherwise) his right to such payment at or prior to the Effective
Time, such Dissenting Stockholder’s shares of Partners Common Stock shall be
converted into a right to receive Merger Consideration in accordance with the
applicable provisions of this Agreement.  If such Dissenting
Stockholder shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such payment after the Election Deadline, each share of
Partners Common Stock of such holder shall be treated as a Non-Election
Share.




3.1.6             After
the Effective Time, shares of Partners Common Stock outstanding immediately
prior to the Merger shall be no longer outstanding and shall be automatically
be




12


canceled,
cease to exist, and thereafter, by operation of this Section 3.1, solely
represent the right to receive the Merger Consideration.




3.2           Treatment of Stock Options
and
Warrants.         Partners
(i) shall cause each Person who holds Partners Stock Warrants to deliver to
FCLF, and (ii) shall use its commercially reasonable efforts to cause each
Person who holds Partners Stock Options to deliver to FCLF, a cancellation
agreement in the form attached as Exhibit Ahereto on or prior
to the Pre-Closing Date wherein each such Person shall agree that, subject to
the provisions of this Agreement, at the Effective Time, each outstanding
Partners Stock Option and Partners Stock Warrant held by such Person shall cease
to represent a Right to acquire shares of Partners Common Stock and shall be
converted into the right to receive cash in an amount (less any applicable
withholding taxes) equal to the remaining number of shares of Partners Common
Stock subject to the original option or warrant, as the case may be, and not
exercised as of the Effective Time, multiplied by an amount equal
to:  (a) $56 minus (b) the exercise price of such option or warrant
(with such calculation used for each individual option or warrant) (the
“PerShare
Option/Warrant Consideration”).  For example,if a Person
holds unexercised Partners Stock Options to purchase 100 shares of Partners
Common Stock for an exercise price of $20 per share, such Person will be
entitled to receive at the Effective Time cash in an amount equal to $3,600 (100
x ($56 - $20)).  FCLF will pay the Per Share Option/Warrant
Consideration to each holder of Partners Stock Options and Partners Stock
Warrants listed on Partners Disclosure Schedule 4.2.4 upon the delivery by such
holder to FCLF of a cancellation agreement in the form attached as Exhibit Ahereto. Upon request
by FCLF, Partners will pay the Per Share Option/Warrant Consideration
immediately prior to the Effective Time.




3.3           Election
Procedures.




3.3.1             Partners
Stockholders may elect to receive shares of FCLF Common Stock or cash, or a
combination thereof (in all cases without interest) in exchange for such
Partners Stockholders’ shares of Partners Common Stock in accordance with the
following procedures; provided that, in the aggregate, and subject to the
provisions of Section 3.3.6 hereof, 50% of the total number of shares of
Partners Common Stock issued and outstanding as of the Closing Date, but
excluding any Treasury Stock (the “Stock Conversion Number”), shall be converted
into the Stock Consideration and the remaining outstanding shares of Partners
Common Stock shall be converted into the Cash Consideration; provided, however,
that, in the event that the Stock Election Number shall be greater than or less
than the Stock Conversion Number, FCLF may, in its discretion, increase or
decrease the Stock Conversion Number by an amount up to (but not to exceed) the
amount of any such difference; provided further, however, that FCLF may not
increase or decrease the Stock Conversion Number by an amount that would prevent
the tax opinion referred to in Section 9.1.6 hereof from being rendered because
the firm charged with providing such opinion reasonably determines that, as a
result of such increase or decrease in the Stock Conversion Number, the Merger
may not satisfy the continuity of interest requirements under applicable federal
income tax principles relating to reorganizations under Section 368(a) of
the Code. Any Dissenting Shares, properly perfected under the DGCL, shall be
entitled to receive cash pursuant to the DGCL. Shares of Partners Common Stock
as to which a Cash Election has been made are referred to herein as “Cash
Election Shares.” Shares of Partners Common Stock as to which a Stock Election
has been made are referred to herein as “Stock Election Shares.” Shares of
Partners Common Stock as to which a Mixed Election has been




13


made are
referred to herein as “Mixed Election Shares”. Shares of Partners Common Stock
as to which no election has been made (or as to which an Election Form is not
returned properly completed or timely submitted) are referred to herein as
“Non-Election Shares.” The aggregate number of shares of Partners Common Stock
with respect to which Stock Consideration has been elected, either pursuant to a
Stock Election or Mixed Election, is referred to herein as the “Stock Election
Number.”




3.3.2             Partners
shall cause an election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of such
Certificates to the Exchange Agent), in such form and substance acceptable to
FCLF (the “Election Form”), to be mailed with the Proxy Statement-Prospectus (or
on such other date as Partners and FCLF shall mutually agree) (the “Mailing
Date”) to each Partners Stockholder who is the record holder of Partners Common
Stock as of five business days prior to the Mailing Date (the “Election Form
Record Date”).  Each Election Form shall permit such Partners
Stockholder, subject to the allocation and election procedures set forth in this
Section 3.3, (i) to elect to receive the Cash Consideration for all of
the shares of Partners Common Stock held by such Partners Stockholder (a “Cash
Election”), in accordance with Section 3.1.2, (ii) to elect to receive
the Stock Consideration for all of the shares of Partners Common Stock held by
such Partners Stockholder (a “Stock Election”), in accordance with
Section 3.1.2, (iii) to elect to receive the Stock Consideration for a
part of such holder’s Partners Common Stock and the Cash Consideration for the
remaining part of such holder’s Partners Common Stock (a “Mixed Election”), or
(iv) to indicate that such record holder has no preference as to the
receipt of Cash Consideration or Stock Consideration for the shares of Partners
Common Stock held by such Partners Stockholder (a “Non-Election”).  A
holder of record of shares of Partners Common Stock who holds such shares as
nominee, trustee or in another representative capacity (a “Representative”) may
submit multiple Election Forms, provided that each such Election Form covers all
the shares of Partners Common Stock held by such Representative for a particular
beneficial owner.  Any shares of Partners Common Stock with respect to
which the holder thereof shall not, as of the Election Deadline, have made an
election by submission to the Exchange Agent of an effective, properly completed
Election Form shall be deemed Non-Election Shares. In no event shall Dissenting
Shares receive Merger Consideration pursuant to this Agreement. However, for
purposes of making the proration calculations provided for in this
Section 3.3, Dissenting Shares existing at the Effective Time shall be
deemed Cash Election Shares.




3.3.3             To
be effective, a properly completed Election Form shall be submitted to the
Exchange Agent on or before 5:00 p.m., Edwardsville, Illinois time, on the later
of the date of the Partners Stockholder Meeting or the 25th day following the
Mailing Date (or such other time and date as FCLF and Partners may mutually
agree) (the “Election Deadline”); provided, however, that the Election Deadline
may not occur on or after the Closing Date.  Partners shall use all
reasonable efforts to make available as promptly as possible an Election Form to
any holder of record of Partners Common Stock who, prior to the Election
Deadline, requests such Election Form following the initial mailing of the
Election Forms.  Partners shall provide to the Exchange Agent all
information necessary for it to perform as specified herein.  An
election shall have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the Election
Deadline.  If a Partners Stockholder either (i) does not submit a
properly completed Election Form in a timely fashion, or (ii) revokes its
Election Form




14


prior to
the Election Deadline (without later submitting a properly completed Election
Form prior to the Election Deadline), the shares of Partners Common Stock held
by such stockholder shall be designated as Non-Election Shares.  Any
Election Form may be revoked or changed by the Person submitting such Election
Form to the Exchange Agent by written notice to the Exchange Agent only if such
notice of revocation or change is actually received by the Exchange Agent at or
prior to the Election Deadline.  Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have discretion to
determine when any election, modification, or revocation is received and whether
any such election, modification, or revocation has been properly
made.




3.3.4             Adjustment in the event of
Excess Stock Election. If the Stock Election Number exceeds the Stock
Conversion Number (the amount by which the Stock Election Number exceeds the
Stock Conversion Number being referred to herein as the “Excess Shares”),
then:




(A)                 First,
all of the Cash Election Shares (and Dissenting Shares) and the portion of the
Cash Consideration specified or deemed specified on the Election Forms by
holders of Mixed Election Shares shall be converted into the right to receive
the Cash Consideration elected pursuant to the applicable Election Forms;
and




(B)                 Second,
the holders of Non-Election Shares shall receive Cash Consideration so as to
reduce the number of Excess Shares to zero, or as close as possible to
zero.  The number of shares of Partners Common Stock held by each such
holder of Non-Election Shares that shall be converted into the right to receive
Cash Consideration shall be equal to the lesser of (i) the total number of
Non-Election Shares owned by such holder, and (ii) a number determined by
multiplying the total number of Non-Election Shares owned by each such holder by
a fraction, the numerator of which is the total number of Non-Election Shares
owned by each such holder and the denominator of which is the total number of
Non-Election Shares owned by all holders (and the remaining shares of Partners
Common Stock, if any, held by each such holder of Non-Election Shares shall be
converted into the right to receive Stock Consideration); and




(C)                 Third,
if the reallocation set forth in clause (B) above is not sufficient to reduce
the number of Excess Shares to zero, then the Exchange Agent shall reallocate
the Stock Consideration payable to each holder of Mixed Election Shares and
Stock Election Shares so as to reduce the number of Excess Shares (determined
after giving effect to clauses (A) and (B) above) to zero.  The number
of Mixed Election Shares for which Stock Consideration shall have been elected
by the holder thereof and the number of Stock Election Shares of each holder
which shall be reallocated into the right to receive Cash Consideration shall be
equal to the number determined by multiplying the total number of such Mixed
Election Shares or Stock Election Shares, as the case may be, owned by each such
holder by a fraction, the numerator of which is the total number of such Mixed
Election Shares or Stock Election Shares, as the case may be, owned by each such
holder, and the denominator of which is the total number of such Mixed Election
Shares and Stock Election Shares owned by all such holders (and the remaining
Mixed Election Shares or Stock Election Shares, as the case may be, held by each
such holder shall be converted into the right to receive Stock
Consideration).




15







3.3.5        
     Adjustment in the event of
Excess Cash Election. If the Stock Election Number is less than the Stock
Conversion Number, then:




(A)                 First,
all of the Stock Election Shares and the portion of the Stock Consideration
specified or deemed specified on the Election Forms by holders of Mixed Election
Shares shall be converted into the right to receive the amount of Stock
Consideration elected pursuant to the applicable Election Forms;
and




(B)                 Second,
the holders of Non-Election Shares shall receive shares of Stock Consideration
so as to reduce the amount by which the Stock Election Number is less than the
Stock Conversion Number to zero, or as close as possible to zero.  The
number of shares of Partners Common Stock held by each such holder of
Non-Election Shares that shall be converted into the right to receive Stock
Consideration shall be equal to the lesser of (i) the total number of
Non-Election Shares owned by such holder, and (ii) a number determined by
multiplying the total number of Non-Election Shares owned by each such holder by
a fraction, the numerator of which is the total number of Non-Election Shares
owned by each such holder and the denominator of which is the total number of
Non-Election Shares owned by all holders (and the remaining shares of Partners
Common Stock, if any, held by each such holder of Non-Election Shares shall be
converted into the right to receive Cash Consideration); and




(C)                 Third,
if the reallocation set forth in clause (B) above is not sufficient to reduce
the amount by which the Stock Election Number is less than the Stock Conversion
Number to zero, then the Exchange Agent shall reallocate the Cash Consideration
payable to each holder of Mixed Election Shares and Cash Election Shares so as
to reduce the amount by which the Stock Election Number is less than the Stock
Conversion Number (determined after giving effect to clauses (A) and (B) above)
to zero.  The number of Mixed Election Shares for which Cash
Consideration shall have been elected by the holder thereof and the number of
Cash Election Shares of each holder which shall be reallocated into the right to
receive Stock Consideration shall be equal to the number determined by
multiplying the total number of such Mixed Election Shares or Cash Election
Shares, as the case may be, owned by each such holder by a fraction, the
numerator of which is the total number of such Mixed Election Shares or Cash
Election Shares, as the case may be, owned by each such holder and the
denominator of which is the total number of such Mixed Election Shares and Cash
Election Shares owned by all such holders (and the remaining Mixed Election
Shares and Cash Election Shares held by each such holder shall be converted into
the right to receive Cash Consideration).




3.3.6             No Fractional
Shares.  Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of FCLF Common
Stock shall be issued as Merger Consideration, no dividend or distribution with
respect to FCLF Common Stock shall be payable on or with respect to any
fractional share interest, and such fractional share interests shall not entitle
the owner thereof to vote or to any other rights of a stockholder of
FCLF.  In lieu of the issuance of any such fractional share, FCLF
shall pay to each former holder of Partners Common Stock who otherwise would be
entitled to receive a fractional share of FCLF Common Stock, an amount in cash
determined by multiplying $9.66 by the fractional share of FCLF Common Stock
which such holder would otherwise be entitled to




16


receive
pursuant to Section 3.1.2.  No interest will be paid on the cash
that holders of such fractional shares shall be entitled to receive upon such
delivery.  For purposes of determining any fractional share interest,
all shares of Partners Common Stock owned by a Partners Stockholder shall be
combined so as to calculate the maximum number of whole shares of FCLF Common
Stock issuable to such Partners Stockholder.




3.4           Procedures for Exchange of Partners Common
Stock.




3.4.1             FCLF to Make Merger
Consideration Available.  After the Election Deadline but no
later than the Closing Date, FCLF shall deposit, or shall cause to be deposited,
with the Exchange Agent for the benefit of the Partners Stockholders, for
exchange in accordance with this Section 3.4, the Merger Consideration
consisting of certificates representing the shares of FCLF Common Stock and an
estimated amount of cash sufficient to pay the aggregate amount of cash payable
pursuant to this Article III (including the estimated amount of cash to be
paid in lieu of fractional shares of FCLF Common Stock, and for Partners Stock
Options and Partners Stock Warrants) (such cash and certificates for shares of
FCLF Common Stock being hereinafter referred to as the “Exchange
Fund”).




3.4.2             Exchange of
Certificates.  Within five business days after the Effective
Time, FCLF shall take all steps necessary to cause the Exchange Agent to mail to
each holder of a Certificate or Certificates, a form letter of transmittal for
return to the Exchange Agent and instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration and cash in lieu of
fractional shares into which the Partners Common Stock represented by such
Certificates shall have been converted as a result of the Merger.  The
letter of transmittal shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent.  Promptly upon proper surrender of
a Certificate for exchange and cancellation to the Exchange Agent, together with
a properly completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, as applicable,
(i) a certificate representing that number of shares of FCLF Common Stock
(if any) to which such former Partners Stockholder shall have become entitled
pursuant to the provisions of Section 3.1.2 hereof, (ii) a check
representing that amount of cash (if any) to which such former Partners
Stockholder shall have become entitled pursuant to the provisions of
Section 3.1.2, and (iii) a check representing the amount of cash (if
any) payable in lieu of fractional shares of FCLF Common Stock, which such
former Partners Stockholder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Section 3.4.2,
and the Certificate so surrendered shall forthwith be canceled.  No
interest will be paid or accrued on the cash payable in lieu of fractional
shares.  Certificates surrendered for exchange by any Person who will
be an Affiliate of FCLF or FCL Bank after the Effective Time shall not be
exchanged for certificates representing shares of FCLF Common Stock until FCLF
has received the written agreement of such Person contemplated by
Section 8.4.




3.4.3             Rights of Certificate
Holders after the Effective Time.  The holder of a Certificate
that prior to the Merger represented issued and outstanding Partners Common
Stock shall have no rights, after the Effective Time, with respect to such
Partners Common Stock except to surrender the Certificate in exchange for the
Merger Consideration as provided in this Agreement.  No interest will
be paid or accrued on the Merger Consideration. No dividends or




17


other
distributions declared after the Effective Time with respect to FCLF Common
Stock shall be paid to the holder of any unsurrendered Certificate that is to be
exchanged for Stock Consideration by virtue of the Merger until the holder
thereof surrenders such Certificate in accordance with this
Section 3.4.




3.4.4             Surrender by Persons Other
than Record Holders.  If the Person surrendering a Certificate
and signing the accompanying letter of transmittal is not the record holder
thereof, then it shall be a condition of the payment of the Merger Consideration
that: (i) such Certificate is properly endorsed to such Person or is
accompanied by appropriate stock powers, in either case signed exactly as the
name of the record holder appears on such Certificate, and is otherwise in
proper form for transfer, or is accompanied by appropriate evidence of the
authority of the Person surrendering such Certificate and signing the letter of
transmittal to do so on behalf of the record holder; and (ii) the Person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the payment to a Person other than the
registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.




3.4.5             Closing of Transfer
Books.  Commencing on the date of the Closing Date, there shall
be no transfers on the stock transfer books of Partners of the Partners Common
Stock.  If, after such time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be exchanged for the
Merger Consideration and canceled as provided in this
Section 3.4.




3.4.6             Return of Exchange
Fund.  At any time following the six-month period after the
Effective Time, FCLF shall be entitled to require the Exchange Agent to deliver
to it any portions of the Exchange Fund which had been made available to the
Exchange Agent and not disbursed to holders of Certificates (including, without
limitation, all interest and other income received by the Exchange Agent in
respect of all funds made available to it), and thereafter such holders shall be
entitled to look to FCLF (subject to abandoned property, escheat and other
similar laws) with respect to any Merger Consideration that may be payable upon
due surrender of the Certificates held by them.  Notwithstanding the
foregoing, neither FCLF nor the Exchange Agent shall be liable to any holder of
a Certificate for any Merger Consideration delivered in respect of such
Certificate to a public official pursuant to any abandoned property, escheat or
other similar law.




3.4.7             Lost, Stolen or Destroyed
Certificates.  In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by FCLF, the posting by such Person of a bond in such amount as FCLF
may reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration deliverable
in respect thereof.




3.4.8             Withholding.  FCLF
or the Exchange Agent will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement or the Contemplated
Transactions to any holder of Partners Common Stock such amounts as FCLF
(or




18


any
Affiliate thereof) or the Exchange Agent are required to deduct and withhold
with respect to the making of such payment under the Code, or any applicable
provision of U.S. federal, state, local or non-U.S. tax law.  To the
extent that such amounts are properly withheld by FCLF or the Exchange Agent,
such withheld amounts will be paid by FCLF or the Exchange Agent, as the case
may be, to the proper Governmental Entity and will be treated for all purposes
of this Agreement as having been paid to the holder of the Partners Common Stock
in respect of whom such deduction and withholding were made by FCLF or the
Exchange Agent.




ARTICLE
IV




REPRESENTATIONS
AND WARRANTIES OF PARTNERS




Partners
hereby represents and warrants to FCLF, on behalf of Partners and on behalf of
Partners Bank as the sole stockholder of Partners Bank, that the statements
contained in this Article IV are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV), except as set forth in an
exception to any such statement contained in this Article IV that is included in
the Partners Disclosure Schedule delivered by Partners to FCLF, and except as to
any representation or warranty which specifically relates to an earlier
date.  Partners, on its own behalf and on behalf of Partners Bank as
the sole stockholder of Partners Bank, has made a good faith effort to ensure
that the disclosure on each schedule of the Partners Disclosure Schedule
corresponds to the Section of this Agreement referenced
therein.  However, for purposes of the Partners Disclosure Schedule,
any item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant and to the extent
that it is reasonably clear on the face of such schedule that such item applies
to such other schedule.  References to the Knowledge of Partners shall
include the Knowledge of Partners, Partners Bank and each other Partners
Subsidiary.




4.1           Organization.





4.1.1             Partners
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly registered as a bank holding company
under the BHCA.  Partners has full corporate power and authority to
carry on its business as now conducted and is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
qualification. Partners is duly licensed or qualified to do business in each
jurisdiction listed on Partners Disclosure Schedule 4.1.1.




4.1.2             Partners
Bank is an Illinois state bank organized, validly existing and in good standing
under Illinois law.  Partners Disclosure Schedule 4.1.2 identifies (i)
each Partners Subsidiary and describes the business conducted by such entity
(other than as to Partners Bank), and (ii) each director, executive officer and
five percent or greater shareholder of Partners and each Partners Subsidiary.
Partners has no other Subsidiaries or director, executive officer or five
percent or greater shareholder of it or any Partners Subsidiary except for those
listed on Partners Disclosure Schedule 4.1.2.  The deposits of
Partners Bank are insured by the FDIC through the BIF to the fullest extent
permitted by law, and all premiums and assessments required to be
paid




19


in
connection therewith have been paid by Partners Bank when due.  Each
other Partners Subsidiary is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of incorporation or organization, each as listed on Partners
Disclosure Schedule 4.1.2.




4.1.3             The
respective minute books of Partners and each Partners Subsidiary accurately
record all corporate actions of their respective stockholders and boards of
directors (including committees).




4.1.4             Prior
to the date of this Agreement, Partners has made available to FCLF true and
correct copies of the bylaws and certificate of incorporation, articles of
incorporation or charter of Partners, Partners Bank, and each Subsidiary of
Partners, and amendments thereto as in effect on the date hereof.




4.2           Capitalization.




4.2.1                      The
authorized capital stock of Partners consists of 600,000 shares of common stock,
$10.00 par value per share, of which 370,008 shares are outstanding, validly
issued, fully paid and nonassessable and free of preemptive rights. There are no
shares of Partners Common Stock held by Partners as treasury
stock.  Except as disclosed on Partners Disclosure Schedule 4.2.1,
neither Partners nor any Partners Subsidiary has or is bound by any Rights of
any character relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of Partners Common
Stock, or any other security of Partners or any securities representing the
right to vote, purchase or otherwise receive any shares of Partners Common Stock
or any other security of Partners.




4.2.2             Partners
owns all of the capital stock of Partners Bank, free and clear of any lien or
encumbrance.  Except for the Partners Subsidiaries, Partners does not
possess, directly or indirectly, any equity interest in any corporate entity,
except for equity interests held in the investment portfolios of Partners
Subsidiaries, equity interests held by Partners Subsidiaries in a fiduciary
capacity, and equity interests held in connection with the lending activities of
Partners Subsidiaries, including stock in the FHLB.




4.2.3             Except
as disclosed in Partners Disclosure Schedule 4.2.3, no Person or “group” (as
that term is defined in Section 13(d)(3) of the Exchange Act), is the
beneficial owner (as defined in Section 13(d) of the Exchange Act) of five
percent or more of the outstanding shares of Partners Common Stock.




4.2.4             Under
the heading “Partners Stock Options” Partners Disclosure Schedule 4.2.4 contains
an accurate list of all outstanding Partners Stock Options, the holders of such
Partners Stock Options, and the respective exercise price for each such Partners
Stock Option. Under the heading “Partners Stock Warrants” Partners Disclosure
Schedule 4.2.4 contains an accurate list of all outstanding Partners Stock
Warrants, the holders of such Partners Stock Warrants, and the respective
exercise price for each such Partners Stock Warrant.




4.3           Authority; No Violation.




4.3.1             Partners
has full corporate power and authority to execute and deliver




20


this
Agreement and Partners Bank has (or will have prior to the Pre-Closing Date)
full corporate power and authority to execute and deliver the Bank Merger
Agreement and each has (or, in the case of Partners Bank, will have prior to the
Pre-Closing Date) full corporate power and authority to consummate the
Contemplated Transactions to which it is a party.  The execution and
delivery of this Agreement by Partners and the execution of the Bank Merger
Agreement by Partners Bank and the completion by Partners and Partners Bank of
the Contemplated Transactions to which it is a party have been (or, in the case
of Partners Bank, will be prior to the Pre-Closing Date) duly and validly
approved by the Board of Directors of Partners and Partners Bank, respectively,
and, except for approval of the Partners Stockholders, no other corporate
proceedings on the part of Partners or Partners Bank are necessary to complete
the Merger and the Bank Merger.  This Agreement has been duly and
validly executed and delivered by Partners and the Bank Merger Agreement will be
duly and validly executed and delivered by Partners Bank, and the Bank Merger
has been or will be duly and validly approved by the Board of Directors of
Partners Bank and by Partners in its capacity as sole stockholder of Partners
Bank and, subject to approval by the Partners Stockholders of the Agreement and
receipt of the required approvals of the Bank Regulators described in FCLF
Disclosure Schedule 5.4, this Agreement constitutes and the Bank Merger
Agreement, when executed, will constitute the valid and binding obligations of
Partners and Partners Bank, enforceable against Partners and Partners Bank in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally, and as to
Partners Bank, the conservatorship or receivership provisions of the FDIA, and
subject, as to enforceability, to general principles of equity.




4.3.2             (A) The
execution and delivery of this Agreement by Partners and the execution and
delivery of the Bank Merger Agreement by Partners Bank; (B) subject to
receipt of approvals from the Bank Regulators referred to in FCLF Disclosure
Schedule 5.4, and Partners’ and Partners Bank’s compliance with any conditions
contained therein, and subject to the receipt of the approval of the Partners
Stockholders, the consummation of the Contemplated Transactions, and
(C) compliance by Partners and Partners Bank with any of the terms or
provisions hereof or of the Bank Merger Agreement, as the case may be: will not
(i) conflict with or result in a breach of any provision of the certificate
of incorporation or bylaws of Partners or any Partners Subsidiary or the charter
or bylaws of Partners Bank; (ii) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
Partners or any Partners Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Partners or any Partners
Subsidiary under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement, or other
investment or obligation to which Partners or any Partners Subsidiary is a
party, or by which they or any of their respective properties or assets may be
bound or affected.




4.4           Consents.  Except
for the consents, waivers, approvals, filings, and registrations from or with
the Bank Regulators referred to in FCLF Disclosure Schedule 5.4 and compliance
with any conditions contained therein, and the approval of this Agreement by the
requisite vote of the Partners Stockholders, no consents, waivers, or approvals
of, or filings or registrations




21


with, any
Bank Regulator are necessary, and no consents, waivers or approvals of, or
filings or registrations with, any other third parties are necessary, in
connection with (a) the execution and delivery of this Agreement by
Partners and Partners Bank, and (b) the completion by Partners and Partners
Bank of the Merger and the Bank Merger, respectively.  Partners has no
actual knowledge that (i) any required approvals from a Bank Regulator or
other required consents or approvals will not be received, or (ii) any
public body or authority, the consent or approval of which is not required or to
which a filing is not required, will object to the completion of the
Contemplated Transactions.




4.5           Financial Statements and Regulatory
Reports.




4.5.1             Partners
has previously made available to FCLF the Partners Regulatory
Reports.  The Partners Regulatory Reports have been prepared in
accordance with applicable regulatory accounting principles and practices
consistently applied throughout the periods covered by such statements and
fairly present the consolidated financial position, results of operations and
changes in stockholders’ equity of Partners as of and for the periods ended on
the dates thereof, in accordance with applicable regulatory accounting
principles applied on a consistent basis.




4.5.2             Partners
has previously made available to FCLF the Partners Financial
Statements.  The Partners Financial Statements have been prepared in
accordance with GAAP, consistently applied, and (including the related notes
where applicable) fairly present in each case  (subject in the case of
the unaudited interim statements to normal year-end adjustments), the
consolidated financial position, results of operations and cash flows of
Partners and the Partners Subsidiaries on a consolidated basis as of and for the
respective periods ending on the dates thereof, in accordance with GAAP during
the periods involved, except as indicated in the notes thereto.




4.5.3             At
the date of each balance sheet included in the Partners Financial Statements or
the Partners Regulatory Reports, Partners did not have any liabilities,
obligations, or loss contingencies of any nature (whether absolute, accrued,
contingent, or otherwise) of a type required to be reflected in the Partners
Financial Statements or Partners Regulatory Reports or in the footnotes thereto
which are not fully reflected or reserved against therein or fully disclosed in
a footnote thereto, except for liabilities, obligations and loss contingencies
that are incurred in the ordinary course of business, consistent with past
practice, and except for liabilities, obligations and loss contingencies that
are within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.




4.6           Taxes.  Partners
and the Partners Subsidiaries are members of the same affiliated group within
the meaning of Code Section 1504(a). For years beginning on or after
January 1, 2004, Partners, or the appropriate Partners Subsidiary, has duly
filed all federal, state and local tax returns required to be filed by or with
respect to Partners and every Partners Subsidiary on or prior to the Closing
Date (all such returns being accurate and correct) and has duly paid or made
provisions for the payment of all federal, state, and local taxes which
(i) have been incurred by Partners and any Partners Subsidiary;
(ii) are due or, to the Knowledge of Partners, claimed to be due from
Partners or any Partners Subsidiary by any taxing authority; or (iii) are
due pursuant to




22


any
written tax sharing agreement, in each case on or prior to the Closing Date,
other than taxes or other charges which (x) are not delinquent or for which
reserves have been established on the Partners Financial Statements, (y) are
being contested in good faith, or (z) have not yet been fully
determined.  As of the date of this Agreement, Partners has received
no written notice of and there is not pending, and to Partners’ Knowledge there
is not threatened, any audit examination, deficiency assessment, tax
investigation, or refund litigation with respect to any taxes of Partners or any
of its Subsidiaries, and no claim has been made by any authority in a
jurisdiction where Partners or any of its Subsidiaries do not file tax returns
that Partners or any such Subsidiary is subject to taxation in that
jurisdiction.  Partners and its Subsidiaries have not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect.  Partners and
each of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and Partners
and each of its Subsidiaries, has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61 of
the Code and similar applicable state and local information reporting
requirements.




4.7           No Material Adverse
Effect.  Partners and the Partners Subsidiaries, taken as a
whole, have not suffered any Material Adverse Effect since December 31, 2007,
and no event has occurred or circumstance arisen since that date which, in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
Partners and the Partners Subsidiaries, taken as a whole.




4.8           Contracts; Leases;
Defaults.




4.8.1             Except
as set forth in Partners Disclosure Schedule 4.8.1, neither Partners nor any
Partners Subsidiary is a party to or subject to: (i) any agreement which by
its terms limits the payment of dividends by Partners or any Partners
Subsidiary; (ii) any instrument evidencing or related to indebtedness for
borrowed money whether directly or indirectly, by way of purchase money
obligation, conditional sale, lease, purchase, guaranty or otherwise, in respect
of which Partners or any Partners Subsidiary is an obligor to any Person, which
instrument evidences or relates to indebtedness other than deposits, repurchase
agreements, bankers’ acceptances, and “treasury tax and loan” accounts
established in the ordinary course of business and transactions in “federal
funds” or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Closing Date to FCLF or any FCLF Subsidiary;
(iii) any agreement, written or oral, that obligates Partners or any
Partners Subsidiary for the payment of more than $50,000 annually; or
(iv) any agreement, contract, arrangement, commitment or understanding
(whether written or oral) that restricts or limits in any way the conduct of
business by Partners or any Partners Subsidiary.




4.8.2             Each
real estate lease that may require the consent of the lessor or its agent
resulting from the Merger or the Bank Merger by virtue of a prohibition or
restriction relating to assignment, by operation of law or otherwise, or change
in control, is listed in Partners Disclosure Schedule 4.8.2 identifying the
section of the lease that contains such prohibition or
restriction.  Subject to any consents that may be required as a result
of the Contemplated Transactions, neither Partners nor any Partners Subsidiary
is in default in any




23


respect
under any contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its assets, business, or
operations may be bound or affected, or under which it or its assets, business,
or operations receive benefits, and there has not occurred any event that, with
the lapse of time or the giving of notice or both, would constitute such a
default.




4.8.3             True
and correct copies of agreements, contracts, arrangements, and instruments
referred to in Section 4.8.1 and 4.8.2 have been made available to FCLF on
or before the date hereof, are listed on Partners Disclosure Schedule 4.8.1 and
4.8.2 and are in full force and effect on the date hereof, and neither Partners
nor any Partners Subsidiary (nor, to the Knowledge of Partners, any other party
to any such contract, arrangement or instrument) has breached any provision of,
or is in default in any respect under any term of, any such contract,
arrangement or instrument.  No party to any contract, arrangement, or
instrument will have the right to terminate any or all of the provisions of any
such contract, arrangement, or instrument as a result of the execution of this
Agreement and the consummation of the Contemplated
Transactions.  Except as set forth in Partners Disclosure Schedule
4.8.3, no plan, contract, employment agreement, termination agreement, or
similar agreement or arrangement to which Partners or any Partners Subsidiary is
a party or under which Partners or any Partners Subsidiary may be liable
contains provisions which permit an employee or independent contractor to
terminate it without cause and continue to accrue future benefits
thereunder.  Except as set forth in Partners Disclosure Schedule
4.8.3, no such agreement, plan, contract, or arrangement (x) provides for
acceleration in the vesting of benefits or payments due thereunder upon the
occurrence of a change in ownership or control of Partners or any Partners
Subsidiary or upon the occurrence of a subsequent event (other than a default
thereunder); or (y) requires Partners or any Partners Subsidiary to provide a
benefit in the form of Partners Common Stock or determined by reference to the
value of Partners Common Stock.




4.9           Ownership of Property; Insurance
Coverage.




4.9.1             Partners
and each Partners Subsidiary has good and, as to real property, marketable,
title to all assets and properties owned by Partners and each Partners
Subsidiary in the conduct of its businesses, whether such assets and properties
are real or personal, tangible, or intangible, including assets and property
reflected in the balance sheets contained in the Partners Regulatory Reports and
in the Partners Financial Statements or acquired subsequent thereto (except to
the extent that such assets and properties have been disposed of in the ordinary
course of business, since the date of such balance sheets), subject to no
encumbrances, liens, mortgages, security interests, or pledges, and except for
(i) those items which secure liabilities for public or statutory
obligations or any discount with, borrowing from or other obligations to FHLB,
inter-bank credit facilities, or any transaction by a Partners Subsidiary acting
in a fiduciary capacity, and (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith.  Partners and
the Partners Subsidiaries, as lessee, have the right under valid and existing
leases of real and personal properties used by Partners and its Subsidiaries in
the conduct of their businesses to occupy or use all such properties as
presently occupied and used by each of them.  Such existing leases and
commitments to lease constitute or will constitute operating leases for both tax
and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in the notes to the Partners Financial Statements.




24


4.9.2             With
respect to all agreements pursuant to which Partners or any Partners Subsidiary
has purchased securities subject to an agreement to resell, if any, Partners or
such Partners Subsidiary, as the case may be, has a lien or security interest
(which to Partners’ Knowledge is a valid, perfected first lien) in the
securities or other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt secured
thereby.




4.9.3             Partners
and each Partners Subsidiary currently maintain insurance considered by Partners
to be commercially reasonable for their respective
operations.  Neither Partners nor any Partners Subsidiary has received
notice from any insurance carrier that (i) such insurance will be canceled
or that coverage thereunder will be reduced or eliminated, or (ii) premium
costs with respect to such policies of insurance will be substantially
increased.  There are presently no claims pending under such policies
of insurance and no notices have been given by Partners or any Partners
Subsidiary under such policies.  All such insurance is valid and
enforceable and in full force and effect, and within the last three years
Partners and each Partners Subsidiary has received each type of insurance
coverage for which it has applied and during such periods has not been denied
indemnification for any claims submitted under any of its insurance
policies.  Partners Disclosure Schedule 4.9.3 identifies all policies
of insurance maintained by Partners and each Partners Subsidiary.




4.10           Legal
Proceedings.  Neither Partners nor any Partners Subsidiary is a
party to any, and there are no pending or, to Partners’ Knowledge, threatened,
legal, administrative, arbitration, or other proceedings, claims (whether
asserted or unasserted), actions, or governmental investigations or inquiries of
any nature (i) against Partners or any Partners Subsidiary (other than
routine bank regulatory examinations), or (ii) to which Partners or any
Partners Subsidiary’s assets are or may be subject.  There are no
legal, administrative, arbitration or other proceedings, claims, actions or
governmental investigations challenging the validity or propriety of any of the
transactions and/or agreements contemplated by, referred to in or related to
this Agreement (including the schedules hereto).




4.11           Compliance With Applicable
Law.




4.11.1          Each
of Partners and each Partners Subsidiary is in compliance with all applicable
federal, state, local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, or decrees applicable to it and its properties,
assets, and deposits, its business, and its conduct of business and its
relationship with its employees, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act of 1977,
the Home Mortgage Disclosure Act, and all other applicable fair lending laws and
other laws relating to discriminatory business practices, and neither Partners
nor any Partners Subsidiary has received any written notice to the
contrary.




4.11.2          Each
of Partners and each Partners Subsidiary has all permits, licenses,
authorizations, orders, and approvals of, and has made all filings,
applications, and registrations with, all Bank Regulators that are required in
order to permit it to own or lease its properties and to conduct its business as
presently conducted; all such permits, licenses, certificates of authority,
orders, and approvals are in full force and effect and, no suspension or
cancellation of any such permit, license, certificate, order or approval will
result, or to the Knowledge of Partners, is




25


threatened
to result, from the consummation of the Contemplated Transactions, subject to
obtaining the approvals set forth in FCLF Disclosure Schedule 5.4.




4.11.3        
   Except as disclosed in Partners Disclosure Schedule 4.11.3,
from the period beginning January 1, 2005, neither Partners nor any Partners
Subsidiary has received any written notification or any other communication from
any Bank Regulator, or to Partners’ Knowledge is such notification or
communication threatened, (i) asserting that Partners or any Partners
Subsidiary is not in compliance with any of the statutes, regulations, or
ordinances which such Bank Regulator enforces; (ii) threatening to revoke
any license, franchise, permit, or governmental authorization;
(iii) requiring or threatening to require Partners or any Partners
Subsidiary, or indicating that Partners or any Partners Subsidiary may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding, or any other agreement with any Governmental Entity (including
any Bank Regulator) which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit the operations of Partners or any Partners
Subsidiary, including without limitation any restriction on the payment of
dividends; or (iv) directing, restricting, or limiting, or purporting to
direct, restrict, or limit, in any manner the operations of Partners or any
Partners Subsidiary (any such notice, communication, memorandum, agreement, or
order described in this sentence is hereinafter referred to as a “Regulatory
Agreement”).  Neither Partners nor any Partners Subsidiary has
consented to or entered into any currently effective Regulatory
Agreement.  The most recent regulatory rating given to Partners Bank
as to compliance with the Community Reinvestment Act is satisfactory or
better.




4.12           Employee Benefit Plans.




4.12.1            Partners
Disclosure Schedule 4.12.1 includes a list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, stock appreciation, phantom stock, welfare, and fringe benefit plans,
employment, severance and change in control agreements, and all other benefit
plans, practices, policies, and arrangements maintained by Partners or any
Partners Subsidiary in which any employee or former employee, consultant or
former consultant or director or former director of Partners or any Partners
Subsidiary participates or to which any such employee, consultant or director,
or former employee, former consultant, or former director, is a party or is
otherwise entitled to receive benefits (the “Partners Compensation and Benefit
Plans”).  Neither Partners nor any of its Subsidiaries has any
commitment to create any additional Partners Compensation and Benefit Plan or to
modify, change or renew any existing Partners Compensation and Benefit Plan,
except as required to maintain the qualified status thereof or as required for
compliance with Code Section 409A or other applicable law.  Partners
has made available to FCLF true and correct copies of the Partners Compensation
and Benefit Plans. There are no collective bargaining agreements with any labor
union relating to employees of Partners or any Partners Subsidiary.




4.12.2             Each
Partners Compensation and Benefit Plan has been operated and administered in
accordance with its terms and with laws that are applicable to such Partners
Compensation and Benefit Plans, including, but not limited to, ERISA, the Code,
the Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
COBRA, the Health Insurance Portability and Accountability Act and any
regulations or rules promulgated




26


thereunder,
and all filings, disclosures, and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act, and
any other applicable law have been timely made or any interest, fines,
penalties, or other impositions for late filings have been paid in
full.  Each Partners Compensation and Benefit Plan which is an
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA
(a “Pension Plan”) and which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter
from the IRS or is entitled to rely on a favorable advisory or opinion letter
issued by the IRS with respect to a master and prototype or volume submitter
plan, and to the Knowledge of Partners, no circumstances exist which are likely
to result in revocation of any such favorable determination letter, advisory or
opinion letter.  There is no pending or, to the Knowledge of Partners,
threatened action, suit, or claim relating to any Partners Compensation and
Benefit Plan (other than routine claims for benefits).  Neither
Partners nor any Partners Subsidiary has engaged in a transaction, or omitted to
take any action, with respect to any Partners Compensation and Benefit Plan that
would, or could reasonably be expected to, subject Partners or any Partners
Subsidiary to an unpaid tax or penalty imposed by either Section 4975 of
the Code or Section 502 of ERISA.




4.12.3             No
liability, other than (a) PBGC premiums arising in the ordinary course of
business, or (b) any employer contribution required under the terms of any
Partners Defined Benefit Plan has been or is expected by Partners or any of its
Subsidiaries to be incurred with respect to any Partners Compensation and
Benefit Plan which is a defined benefit plan subject to Title IV of ERISA
(“Partners Defined Benefit Plan”), or with respect to any “single-employer plan”
(as defined in Section 4001(a) of ERISA) subject to Title IV of ERISA
currently or formerly maintained by Partners or any entity which is considered
one employer with Partners under Section 4001(b)(1) of ERISA or
Section 414 of the Code (an “ERISA Affiliate”) (such plan hereinafter
referred to as an “ERISA Affiliate Plan”).




Except as
disclosed on Partners Disclosure Schedule 4.12.3, no Partners Defined Benefit
Plan had an “accumulated funding deficiency” (as defined in Section 302 of
ERISA prior to amendment by P.L. 109-280), whether or not waived, as of the last
day of the end of the most recent plan year ending prior to 2008.  The
fair market value of the assets of each Partners Defined Benefit Plan exceeds
the present value of the “benefit liabilities” (as defined in
Section 4001(a)(16) of ERISA) under such Partners Defined Benefit Plan as
of the end of the most recent plan year with respect to the respective Partners
Defined Benefit Plan ending prior to the date hereof, calculated on the basis of
the actuarial assumptions used in the most recent actuarial valuation for such
Partners Defined Benefit Plan as of the date hereof; and no notice of a
“reportable event” (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived has been required to be filed
for any Partners Defined Benefit Plan within the 12-month period ending on the
date hereof.  Neither Partners nor any of its Subsidiaries has
provided, or is required to provide, security to any Partners Defined Benefit
Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code or has taken any action, or omitted to take
any action, that has resulted, or would reasonably be expected to result in, the
imposition of a lien under Section 412(n) of the Code or pursuant to
ERISA.  Except as disclosed on Partners Disclosure Schedule 4.12.3,
neither Partners, its Subsidiaries, nor any ERISA Affiliate has contributed to
any “multiemployer plan,” as defined in Section 3(37) of ERISA, on or after
September 26, 1980. There is no pending, or to the Knowledge of Partners,
threatened, investigation or enforcement action by any Bank




27


Regulator
with respect to any Partners Compensation and Benefit Plan or any ERISA
Affiliate Plan.




4.12.4            All
contributions required to be made under the terms of any Partners Compensation
and Benefit Plan or ERISA Affiliate Plan to which Partners or any Partners
Subsidiary is a party or a sponsor have been timely made, and all anticipated
contributions and funding obligations are accrued on Partners’ consolidated
financial statements to the extent required by GAAP.  Partners and its
Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Partners Compensation and Benefit Plan for
financial reporting purposes to the extent required by GAAP.




4.12.5            Except
as set forth in Partners Disclosure Schedule 4.12.5, neither Partners nor any
Partners Subsidiary has any obligations to provide retiree health, life
insurance, disability insurance, or other retiree death benefits under any
Partners Compensation and Benefit Plan, other than benefits mandated by
Section 4980B of the Code.  There has been no communication to
employees by Partners or any Partners Subsidiary that would reasonably be
expected to promise or guarantee such employees retiree health, life insurance,
disability insurance, or other retiree welfare benefits.




4.12.6            Partners
and its Subsidiaries do not maintain any Partners Compensation and Benefit Plans
covering employees who are not United States residents.




4.12.7            With
respect to each Partners Compensation and Benefit Plan, if applicable, Partners
has provided or made available to FCLF copies of the: (A) trust instruments
and insurance contracts; (B) two most recent Forms 5500 filed with the IRS;
(C) most recent actuarial report and financial statement; (D) most
recent summary plan description; (E) most recent determination letter,
advisory or opinion issued by the IRS; (F) any Form 5310 or Form 5330 filed
with the IRS within the last two years; and (G) most recent
nondiscrimination tests performed under ERISA and the Code (including 401(k) and
401(m) tests).




4.12.8            Except
as disclosed in Partners Disclosure Schedule 4.12.8, the consummation of the
Contemplated Transactions will not, directly or indirectly (including, without
limitation, as a result of any termination of employment or service at any time
prior to or following the Effective Time) (A) entitle any employee,
consultant, or director of Partners or any Partners Subsidiary to any payment or
benefit (including severance pay, change in control benefit, or similar
compensation) or any increase in compensation, (B) result in the vesting or
acceleration of any benefits under any Partners Compensation and Benefit Plan,
(C) result in any increase in benefits payable under any Partners
Compensation and Benefit Plan, or entitle any current or former employee,
director, or independent contractor of Partners or any Partners Subsidiary to
any actual or deemed payment (or benefit) which could constitute a “parachute
payment” (as such term is defined in Section 280G of the
Code).




4.12.9             Neither
Partners nor any Partners Subsidiary maintains any Partners Compensation and
Benefit Plans under which (i) any payment is reasonably likely to become
non-deductible, in whole or in part, for tax reporting purposes as a result of
the limitations under Section 162(m) of the Code and the regulations issued
thereunder, or (ii) any payment is reasonably likely to become taxable
under Section 409A of the Code.




28







4.12.10          There
are no stock appreciation or similar rights, earned dividends or dividend
equivalents, or shares of restricted stock, outstanding under any of the
Partners Compensation and Benefit Plans or otherwise as of the date hereof and
none will be granted, awarded, or credited after the date hereof.




4.12.11          Partners
Disclosure Schedule 4.12.11 sets forth, as of the payroll date immediately
preceding the date of this Agreement, a list of the full names of all employees
of Partners and each Partners Subsidiary (including Partners Bank), their title
and rate of salary, their date of hire and any changes in their rate of salary
or title effected since December 31, 2007.  Partners Disclosure
Schedule 4.12.11 also sets forth any changes to any Partners Compensation and
Benefit Plan since December 31, 2007.




4.13           Brokers, Finders and
Financial Advisors.  Neither Partners nor any Partners
Subsidiary, nor any of their respective officers, directors, employees or
agents, has employed any broker, finder or financial advisor in connection with
the Contemplated Transactions, or incurred any liability or commitment for any
fees or commissions to any such Person in connection with the Contemplated
Transactions except for the retention of Stifel by Partners and the fee payable
pursuant to such retention. Partners shall be solely liable for such fees or
commissions and all such fees and commissions shall be paid prior to
Closing.  Partners shall indemnify FLCF and all FCLF Subsidiaries from
any claims by Stifel concerning such fees or its representation of Partners in
connection with the Contemplated Transactions.




4.14           Environmental
Matters.




4.14.1        
   With respect to Partners and each Partners
Subsidiary:




(A)           Each
of Partners and the Partners Subsidiaries, the Participation Facilities, and, to
Partners’ Knowledge, the Loan Properties are, and have been, in compliance with,
and are not liable under, any Environmental Laws;




(B)           There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to Partners’ Knowledge, no such action
is threatened, before any court, governmental agency or other forum against it
or any of the Partners Subsidiaries or any Participation Facility (x) for
noncompliance or alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence of or
release into the environment of any Materials of Environmental Concern, whether
or not occurring at or on a site owned, leased or operated by it or any of the
Partners Subsidiaries or at or on any Participation Facility;




(C)           There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to Partners’ Knowledge no such action
is threatened or an event occurred that could give rise to, before any court,
governmental agency, or other forum relating to or against any Loan Property (or
Partners or any of the Partners Subsidiaries in respect of such Loan Property)
(x) relating to alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law, or (y) relating to the presence of or
release into the environment of




29


any
Materials of Environmental Concern, whether or not occurring at or on a site
owned, leased or operated by it or any of the Partners Subsidiaries or at or on
any Loan Property;




(D)           The
properties currently owned or operated by Partners or any Partners Subsidiary
(including, without limitation, soil, groundwater or surface water on, under, or
adjacent to the properties, and buildings thereon) are not contaminated with and
do not otherwise contain any Materials of Environmental Concern other than as
permitted under applicable Environmental Law;




(E)           Neither
Partners nor any Partners Subsidiary has received any written notice, demand
letter, executive or administrative order, directive or request for information
from any Governmental Entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;




(F)           There
are no underground storage tanks on, in, or under any properties owned or
operated by Partners or any of the Partners Subsidiaries or on, in, or under any
Participation Facility, and no underground storage tanks have been closed or
removed from any properties owned or operated by Partners or any of the Partners
Subsidiaries or from any Participation Facility;




(G)           During
the period of (i) Partners’ or any of the Partners Subsidiaries’ ownership or
operation of any of their respective properties, or (ii) Partners’ or any of the
Partners Subsidiaries’ participation in the management of any Participation
Facility, there has been no contamination by or release of Materials of
Environmental Concern in, on, under, or affecting such properties.  To
Partners’ Knowledge, prior to the period of (x) Partners’ or any of the Partners
Subsidiaries’ ownership or operation of any of their respective current
properties or (y) Partners’ or any of the Partners Subsidiaries’ participation
in the management of any Participation Facility, there was no contamination by
or release of Materials of Environmental Concern in, on, under, or affecting
such properties;




(H)           Except
as disclosed on Partners Disclosure Schedule 4.14.1(H), none of Partners,
Partners Bank, nor any other Partners Subsidiary has conducted any environmental
studies during the past 10 years with respect to any properties owned or leased
by it or any of its Subsidiaries, or with respect to any Loan Property or any
Participation Facility. Any issues, deficiencies or violations respecting any
Materials of Environmental Concern in, on, under, or affecting such properties
raised in any such studies have been resolved or corrected prior to the date
hereof; and




(I)           To
the Knowledge of Partners, none of the properties currently owned or operated by
Partners or any Partners Subsidiary, or any Loan Property or Participation
Facility contains mold or any other biological material at a level which
constitutes or could be alleged to constitute a threat or harm to human health
or the environment.




4.14.2            “Loan
Property” means any property in which the applicable party (or a Subsidiary of
it) holds a security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such
property.  “Participation Facility”




30


means any
facility in which the applicable party (or a Subsidiary of it) participates in
the management (including all property held as trustee or in any other fiduciary
capacity) and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.




4.15           Loan
Portfolio.




4.15.1             The
allowance for loan losses reflected in Partners’ audited consolidated statement
of financial condition at December 31, 2007 was, and the allowance for loan
losses shown on the balance sheets in Partners’ Financial Statements for the
period ending March 31, 2008 is, and for the periods ending after March 31, 2008
will be, adequate, as of the dates thereof, under GAAP.




4.15.2             Partners
Disclosure Schedule 4.15.2 sets forth a listing, as of March 31, 2008, by
account, of: (A) all loans (including loan participations) of Partners Bank
or any other Partners Subsidiary that have been accelerated during the past 12
months; (B) all loan commitments or lines of credit of Partners Bank or any
other Partners Subsidiary which have been terminated by Partners Bank or any
other Partners Subsidiary during the past 12 months by reason of a default or
adverse developments in the condition of the borrower or other events or
circumstances affecting the credit of the borrower; (C) all loans, lines of
credit and loan commitments as to which Partners Bank or any other Partners
Subsidiary has given written notice of its intent to terminate during the past
12 months; (D) with respect to all commercial loans (including commercial
real estate loans), all notification letters and other written communications
from Partners Bank or any other Partners Subsidiary to any of their respective
borrowers, customers or other parties during the past 12 months wherein Partners
Bank or any other Partners Subsidiary has requested or demanded that actions be
taken to correct existing defaults or facts or circumstances which may become
defaults; (E) each borrower, customer, or other party which has notified
Partners Bank or any other Partners Subsidiary during the past 12 months of, or
has asserted against Partners Bank or any other Partners Subsidiary, in each
case in writing, any “lender liability” or similar claim, and, to the Knowledge
of Partners, each borrower, customer, or other party which has given Partners
Bank or any other Partners Subsidiary any oral notification of, or orally
asserted to or against Partners Bank or any other Partners Subsidiary, any such
claim; (F) all loans, (1) that are contractually past due 90 days or
more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are
classified as “Other Loans Specially Mentioned”, “Special Mention,”
“Substandard,” “Doubtful,” “Loss,” “Classified,” “Criticized,” “Watch list” or
words of similar import, together with the principal amount of and accrued and
unpaid interest on each such loan and the identity of the obligor thereunder,
(4) where a reasonable doubt exists as to the timely future collectability
of principal and/or interest, whether or not interest is still accruing or the
loans are less than 90 days past due, (5) where the interest rate terms
have been reduced and/or the maturity dates have been extended subsequent to the
agreement under which the loan was originally created due to concerns regarding
the borrower’s ability to pay in accordance with such initial terms, or
(6) where a specific reserve allocation exists in connection therewith; and
(G) all assets classified by Partners Bank or any Partners Subsidiary as
real estate acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure.  Partners
Disclosure Schedule 4.15.2 may exclude any individual loan with a principal
outstanding balance




31


of less
than $20,000, provided that Partners Disclosure Schedule 4.15.2 includes, for
each category described, the aggregate amount of individual loans with a
principal outstanding balance of less than $20,000 that have been
excluded.




4.15.3             All
loans receivable (including discounts) and accrued interest entered on the books
of Partners and the Partners Subsidiaries arose out of bona fide arm’s-length
transactions, were made for good and valuable consideration in the ordinary
course of Partners’ or the appropriate Partners Subsidiary’s respective
business, and the notes or other evidences of indebtedness with respect to such
loans (including discounts) are true and genuine and are what they purport to
be.  The loans, discounts, and the accrued interest reflected on the
books of Partners and the Partners Subsidiaries are subject to no defenses,
set-offs, or counterclaims (including, without limitation, those afforded by
usury or truth-in-lending laws), except as may be provided by bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally or by general
principles of equity.  All such loans are owned by Partners or the
appropriate Partners Subsidiary free and clear of any liens. The notes and other
evidences of indebtedness evidencing the loans described above, and all pledges,
mortgages, deeds of trust, and other collateral documents or security
instruments relating thereto are, in all material respects, valid, true, and
genuine, and what they purport to be.




4.16           Related Party
Transactions.  Except as set forth in Partners Disclosure
Schedule 4.16, neither Partners nor any Partners Subsidiary is a party to any
transaction (including any loan or other credit accommodation) with any
Affiliate or Subsidiary of Partners.  All such transactions
(a) were made in the ordinary course of business, (b) were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other Persons,
(c) did not involve more than the normal risk of collectability or present
other unfavorable features, and (d) complied with all applicable law or
regulations or were approved by a Bank Regulator.  No loan or credit
accommodation to any Affiliate of Partners or any Partners Subsidiary is
presently in default or, during the three-year period prior to the date of this
Agreement, has been in default or has been restructured, modified, or
extended.  Neither Partners nor any Partners Subsidiary has been
notified that principal and interest with respect to any such loan or other
credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by Partners is
inappropriate.




4.17           Schedule
of Termination Benefits.  Partners Disclosure Schedule 4.17 includes a
schedule of all termination benefits and related payments that would be payable
to the individuals identified thereon, under any and all employment agreements,
special termination agreements, change in control agreements, supplemental
executive retirement plans, deferred bonus plans, deferred compensation plans,
salary continuation plans, or any compensation arrangement, or other pension
benefit or welfare benefit plan maintained by Partners or any Partners
Subsidiary for the benefit of officers, employees, or directors of Partners or
any Partners Subsidiary (the “Benefits Schedule”), assuming their employment or
service is terminated as of December 31, 2008 and the Closing Date occurs on
such date and based on the other assumptions specified in such
schedule.  No other individuals are entitled to benefits under any
such plans.




32







4.18           Deposits.  Except
as disclosed on Partners Disclosure Schedule 4.18, none of the deposits of
Partners or any Partners Subsidiary is a “brokered deposit” as defined in 12 CFR
Section 337.6(a)(2).




4.19           Antitakeover Provisions
Inapplicable; Required Vote of Stockholders.  The Board of
Directors of Partners has, to the extent such statute is applicable, taken all
action (including appropriate approvals of the Board of Directors of Partners)
necessary to exempt Partners, the Merger, and the Contemplated Transactions from
Section 203 of the DGCL (“Takeover Laws”).  The affirmative vote
of a majority of the issued and outstanding shares of Partners Common Stock is
required to approve this Agreement under Partners’ certificate of incorporation
and the DGCL.




4.20           Registration
Obligations.  Neither Partners nor any Partners Subsidiary is
under any obligation, contingent or otherwise, which will survive the Effective
Time by reason of any agreement to register any transaction involving any of its
securities under the Securities Act.




4.21           Risk Management
Instruments.  Neither Partners nor any Partners Subsidiary is a
party to any interest rate swaps, caps, floors, option agreements, futures and
forward contracts and other similar risk management arrangements, whether
entered into for Partners’ own account, or for the account of one or more of
Partners’ Subsidiaries.




4.22           Trust
Accounts.  None of Partners, Partners Bank, or any other
Partners Subsidiary conducts any trust business.




ARTICLE
V




REPRESENTATIONS
AND WARRANTIES OF FCLF




FCLF
represents and warrants to Partners, on behalf of FCLF and on behalf of FCL Bank
as the sole stockholder of FCL Bank,  that the statements contained in
this Article V are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article V), except as set forth in an exception to any such
statement contained in this Article V that is to be included in the FCLF
Disclosure Schedule delivered by FCLF to Partners.  FCLF, on its own
behalf and on behalf of FCL Bank as the sole stockholder of FCL Bank, has made a
good faith effort to ensure that the disclosure on each schedule of the FCLF
Disclosure Schedule corresponds to the Section of this Agreement referenced
therein.  However, for purposes of the FCLF Disclosure Schedule, any
item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant as and to the
extent that it is reasonably clear on the face of such schedule that such item
applies to such other schedule.  References to the Knowledge of FCLF
shall include the Knowledge of FCLF, FCL Bank and each other FCLF
Subsidiary.




5.1           Organization.




5.1.1             FCLF
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland, and is duly registered as a savings and loan
holding company under the HOLA.  FCLF has full corporate power and
authority to carry on its




33


business
as now conducted and is duly licensed or qualified to do business in the states
of the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect on FCLF.




5.1.2             FCL
Bank is a savings association organized, validly existing and in good standing
under federal law.  The deposits of FCL Bank are insured by the FDIC
to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when
due.




5.1.3             FCL
Bank is a member in good standing of the FHLB and owns the requisite amount of
stock therein.




5.1.4             The
respective minute books of FCLF and FCL Bank accurately record, in all material
respects, all material corporate actions of their respective stockholders and
boards of directors (including committees).




5.1.5             Prior
to the date of this Agreement, FCLF has made available to Partners true and
correct copies of the Articles of Incorporation/Charter and bylaws of each of
FCLF and FCL Bank.




5.2           Capitalization.




5.2.1             The
authorized capital stock of FCLF consists of 20,000,000 shares of common stock,
$0.10 par value per share, of which 8,176,731 shares are outstanding, validly
issued, fully paid and nonassessable and free of preemptive rights, and
10,000,000 shares of preferred stock, $0.10 par value per share (“FCLF Preferred
Stock”), none of which are outstanding.  There are 897,300 shares of
FCLF Common Stock held by FCLF as treasury stock.  Except as set forth
on FCLF Disclosure Schedule 5.2.1, neither FCLF nor any FCLF Subsidiary has or
is bound by any Rights of any character relating to the purchase, sale or
issuance or voting of, or right to receive dividends or other distributions on
any shares of FCLF and FCLF Common Stock, or any other security of FCLF or any
securities representing the right to vote, purchase or otherwise receive any
shares of FCLF Common Stock or any other security of FCLF.




5.2.2             FCLF
owns all of the capital stock of FCL Bank free and clear of any lien or
encumbrance.




5.2.3             The
shares of FCLF Common Stock to be issued pursuant to the Merger will, upon
issuance in accordance with the provisions of this Agreement, be duly
authorized, validly issued, fully paid and non-assessable.




5.3           Authority;
No Violation.




5.3.1             FCLF
has full corporate power and authority to execute and deliver this Agreement and
FCL Bank has (or will have prior to the Pre-Closing Date) full corporate power
and authority to execute and deliver the Bank Merger Agreement and each has full
corporate power and authority to consummate the Contemplated Transactions to
which it is a party.  The execution and delivery of this Agreement by
FCLF and the execution of the Bank Merger




34


Agreement
by FCL Bank and the completion by FCLF and FCL Bank of the Contemplated
Transactions to which it is a party have been (or, in the case of FCL Bank, will
be prior to the Pre-Closing Date) duly and validly approved by the Board of
Directors of FCLF and FCL Bank, respectively, and no other corporate proceedings
on the part of FCLF or FCL Bank are necessary to complete the Merger and the
Bank Merger.  This Agreement has been duly and validly executed and
delivered by FCLF and the Bank Merger Agreement will be duly and validly
executed and delivered by FCL Bank, and the Bank Merger has been or will be duly
and validly approved by the Board of Directors of FCL Bank and by FCLF in its
capacity as sole stockholder of FCL Bank and, subject to receipt of the required
approvals of the Bank Regulators described in FCLF Disclosure Schedule 5.4, this
Agreement constitutes and the Bank Merger Agreement when executed will
constitute the valid and binding obligations of FCLF and FCL Bank, enforceable
against FCLF and FCL Bank in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally, and as to FCL Bank, the conservatorship or receivership provisions of
the FDIA, and subject, as to enforceability, to general principles of
equity.




5.3.2             (A) The
execution and delivery of this Agreement by FCLF and the execution of the Bank
Merger Agreement by FCL Bank, (B) subject to receipt of approvals from the
Bank Regulators referred to in FCLF Disclosure Schedule 5.4, and compliance by
FCLF and FCL Bank with any conditions contained therein, the consummation of the
Contemplated Transactions, and (C) compliance by FCLF and FCL Bank with any
of the terms or provisions hereof, the consummation of the Contemplated
Transactions: will not (i) conflict with or result in a breach of any
provision of the Articles of Incorporation or charter or bylaws of FCLF or any
FCLF Subsidiary or the charter and bylaws of FCL Bank; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to FCLF or any FCLF Subsidiary or any of their respective
properties or assets; or (iii) violate, conflict with, result in a breach
of any provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result in a right of
termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of FCLF, FCL
Bank or any FCLF Subsidiary under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other investment or obligation to which any of them is a party, or by which they
or any of their respective properties or assets may be bound or affected, except
for such violations, conflicts, breaches or defaults under clause (ii) or
(iii) hereof which, either individually or in the aggregate, will not have
a Material Adverse Effect on FCLF taken as a whole.




5.4           Consents.  Except
for the consents, waivers, approvals, filings and registrations from or with the
Bank Regulators referred to in FCLF Disclosure Schedule 5.4 and compliance with
any conditions contained therein, no consents, waivers, or approvals of, or
filings or registrations with, any Bank Regulator are necessary, and no
consents, waivers or approvals of, or filings or registrations with, any other
third parties are necessary, in connection with (a) the execution and
delivery of this Agreement by FCLF and the execution and delivery of the Bank
Merger Agreement by FCL Bank, and (b) the completion by FCLF and FCL Bank
of the Contemplated Transactions.  FCLF has no actual knowledge that
(i) any required approvals from a Bank Regulator or other required consents
or approvals will not be received, or (ii) any public




35


body or
authority, the consent or approval of which is not required or to which a filing
is not required, will object to the completion of the Contemplated
Transactions.




5.5           Financial Statements and Regulatory
Reports.




5.5.1             FCLF
has previously made available to Partners the FCLF Regulatory
Reports.  The FCLF Regulatory Reports have been prepared in all
material respects in accordance with applicable regulatory accounting principles
and practices consistently applied throughout the periods covered by such
statements, and fairly present in all material respects, the consolidated
financial position, results of operations and changes in stockholders’ equity of
FCLF as of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent
basis.




5.5.2             FCLF
has previously made available to Partners the FCLF Financial
Statements.  The FCLF Financial Statements have been prepared in
accordance with GAAP, and (including the related notes where applicable) fairly
present in each case in all material respects (subject in the case of the
unaudited interim statements to normal year-end adjustments) the consolidated
financial position, results of operations and cash flows of FCLF and the FCLF
Subsidiaries on a consolidated basis as of and for the respective periods ending
on the dates thereof, in accordance with GAAP during the periods involved,
except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-QSB.




5.5.3             At
the date of each balance sheet included in the FCLF Financial Statements, FCLF
did not have any liabilities, obligations or loss contingencies of any nature
(whether absolute, accrued, contingent or otherwise) of a type required to be
reflected in such FCLF Financial Statements or FCLF Regulatory Reports or in the
footnotes thereto which are not fully reflected or reserved against therein or
fully disclosed in a footnote thereto, except for liabilities, obligations and
loss contingencies which are not material individually or in the aggregate or
which are incurred in the ordinary course of business, consistent with past
practice, and except for liabilities, obligations and loss contingencies which
are within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.




5.6           Taxes.  FCLF
and the FCLF Subsidiaries are members of the same affiliated group within the
meaning of Code Section 1504(a). FCLF or the appropriate FCLF Subsidiary
has duly filed all federal, state and material local tax returns required to be
filed by or with respect to FCLF and each FCLF Subsidiary on or prior to the
Closing Date (all such returns, to the Knowledge of FCLF, being accurate and
correct in all material respects) and has duly paid or made provisions for the
payment of all material federal, state and local taxes which (i) have been
incurred by FCLF or the appropriate FCLF Subsidiary, (ii) are due or
claimed to be due from FCLF and any FCLF Subsidiary by any taxing authority, or
(iii) are due pursuant to any written tax sharing agreement, in each case
on or prior to the Closing Date, other than taxes or other charges which (x) are
not delinquent, (y) are being contested in good faith, or (z) have not yet been
fully determined.  As of the date of this Agreement, FCLF has received
no notice of and there is not pending, and to the Knowledge of FCLF, there is
not threatened any audit examination, deficiency assessment, tax investigation
or refund litigation with respect to any taxes of FCLF or any of its
Subsidiaries, and no claim has been made by any authority in a




36


jurisdiction
where FCLF or any of its Subsidiaries do not file tax returns that FCLF or any
such Subsidiary is subject to taxation in that jurisdiction.  FCLF and
its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect.  FCLF and each of its Subsidiaries have withheld
and paid all material taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and FCLF and FCLF and each of its
Subsidiaries, to the Knowledge of FCLF, has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61 of
the Code and similar applicable state and local information reporting
requirements.




5.7           No Material Adverse
Effect.  FCLF and the FCLF Subsidiaries, taken as a whole, have
not suffered any Material Adverse Effect since December 31, 2007, and no event
has occurred or circumstance arisen since that date which, in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on FCLF, taken as
a whole.




5.8           Ownership of Property; Insurance
Coverage.




5.8.1             FCLF
and each FCLF Subsidiary has good and, as to real property, marketable title to
all material assets and properties owned by FCLF or each FCLF Subsidiary in the
conduct of their businesses, whether such assets and properties are real or
personal, tangible or intangible, including assets and property reflected in the
balance sheets contained in the FCLF Financial Statements or FCLF Regulatory
Reports or acquired subsequent thereto (except to the extent that such assets
and properties have been disposed of in the ordinary course of business, since
the date of such balance sheets), subject to no material encumbrances, liens,
mortgages, security interests or pledges, except (i) those items which
secure liabilities for public or statutory obligations or any discount with,
borrowing from or other obligations to FHLB, inter-bank credit facilities, or
any transaction by a FCLF Subsidiary acting in a fiduciary capacity, and
(ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith.  FCLF and the FCLF Subsidiaries, as lessee,
have the right under valid and existing leases of real and personal properties
used by FCLF and its Subsidiaries in the conduct of their businesses to occupy
or use all such properties as presently occupied and used by each of
them.




5.8.2             FCLF
and each FCLF Subsidiary currently maintain insurance considered by FCLF to be
reasonable for their respective operations.  Neither FCLF nor any FCLF
Subsidiary has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased.  There are presently no
material claims pending under such policies of insurance and no notices have
been given by FCLF or any FCLF Subsidiary under such policies.  All
such insurance is valid and enforceable and in full force and effect, and since
July 9, 2006, FCLF and each FCLF Subsidiary has received each type of insurance
coverage for which it has applied and during such periods has not been denied
indemnification for any material claims submitted under any of its insurance
policies.




5.9           Legal
Proceedings.  Neither FCLF nor any FCLF Subsidiary is a party
to any, and there are no pending or, to the Knowledge of FCLF, threatened legal,
administrative, arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental




37


investigations
or inquiries of any nature (i) against FCLF and FCLF or any FCLF
Subsidiary, or (ii) to which FCLF and FCLF or any FCLF Subsidiary’s assets
are or may be subject, except for any proceedings, claims, actions,
investigations or inquiries which, if adversely determined, individually or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect on FCLF, taken as a whole.  There are no legal, administrative,
arbitration or other proceedings, claims, actions or governmental investigations
challenging the validity or propriety of any of the transactions and/or
agreements contemplated by, referred to in or related to this Agreement
(including the schedules hereto).




5.10           Compliance With Applicable
Law.




5.10.1             To
the Knowledge of FCLF, each of FCLF and each FCLF Subsidiary is in compliance in
all material respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable to it, its properties, assets and deposits, its business, and its
conduct of business and its relationship with its employees, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act, and all
other applicable fair lending laws and other laws relating to discriminatory
business practices, and neither FCLF nor any FCLF Subsidiary has received any
written notice to the contrary.




5.10.2             Each
of FCLF and each FCLF Subsidiary has all material permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Bank Regulators that are required in order to permit
it to own or lease its properties and to conduct its business as presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the Knowledge of FCLF, no
suspension or cancellation of any such permit, license, certificate, order or
approval is threatened or will result from the consummation of the Contemplated
Transactions, subject to obtaining the approvals set forth in FCLF Disclosure
Schedule 5.4.




5.10.3        
    Except as disclosed in FCLF Disclosure Schedule 5.10.3,
from the period beginning July 9, 2006, neither FCLF, FCL Bank nor any FCLF
Subsidiary has received any written notification or, to the Knowledge of FCLF,
any other communication from any Bank Regulator (nor, to the Knowledge of FCLF,
is any such notification or communication threatened) (i) asserting that
FCLF, FCL Bank or any FCLF Subsidiary is not in material compliance with any of
the statutes, regulations or ordinances which such Bank Regulator enforces;
(ii) threatening to revoke any license, franchise, permit or governmental
authorization which is material to FCLF; (iii) requiring or threatening to
require FCLF, FCL Bank or any FCLF Subsidiary, or indicating that FCLF, FCL Bank
or any FCLF Subsidiary may be required, to enter into a cease and desist order,
agreement or memorandum of understanding or any other agreement with any
Governmental Entity (including any Bank Regulator) which is charged with the
supervision or regulation of banks or engages in the insurance of bank deposits
restricting or limiting, or purporting to restrict or limit, in any material
respect the operations of FCLF, FCL Bank or any FCLF Subsidiary, including
without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict
or limit, in any manner the operations of FCLF, FCL Bank or any FCLF Subsidiary,
including without limitation any restriction on the payment of dividends (any
such notice, communication, memorandum, agreement or order described in this
sentence is hereinafter referred to as a “Regulatory




38


Agreement”).  Except
as disclosed in FCLF Disclosure Schedule 5.10.3, neither FCLF, FCL Bank nor any
FCLF Subsidiary has consented to or entered into any currently effective
Regulatory Agreement.  The most recent regulatory rating given to FCL
Bank and each FCL Bank Affiliate as to compliance with the Community
Reinvestment Act is satisfactory or better.




5.11           Employee Benefit Plans.




5.11.1             FCLF
Disclosure Schedule 5.11.1 includes a list of all existing bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, stock appreciation, phantom stock, severance, welfare and fringe benefit
plans, employment, severance and change in control agreements and all other
material benefit practices, policies and arrangements maintained by FCLF or any
FCLF Subsidiary in which any employee or former employee, consultant or former
consultant or director or former director of FCLF or any FCLF Subsidiary
participates or to which any such employee, consultant or director is a party or
is otherwise entitled to receive benefits (the “FCL Bank Compensation and
Benefit Plans”).  FCLF has made available to Partners true and correct
copies of the FCL Bank Compensation and Benefit Plans.




5.11.2             To
the Knowledge of FCLF, each FCL Bank Compensation and Benefit Plan has been
operated and administered in all material respects in accordance with its terms
and with applicable law, including, but not limited to, ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
COBRA, the Health Insurance Portability and Accountability Act and any
regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any other applicable
law have been timely made or any interest, fines, penalties or other impositions
for late filings have been paid in full.  Each FCL Bank Compensation
and Benefit Plan which is an “employee pension benefit plan” within the meaning
of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and, to the Knowledge of FCLF, no
circumstances exist which are reasonably likely to result in revocation of any
such favorable determination letter.  There is no material pending or,
to the Knowledge of FCLF, threatened action, suit or claim relating to any of
the FCL Bank Compensation and Benefit Plans (other than routine claims for
benefits).  Neither FCLF nor any FCLF Subsidiary has engaged in a
transaction, or omitted to take any action, with respect to any FCL Bank
Compensation and Benefit Plan that would reasonably be expected to subject FCLF
or any FCLF Subsidiary to an unpaid tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA.




5.11.3             No
FCL Bank Compensation and Benefit Plan is a defined benefit plan subject to
Title IV of ERISA (“FCL Bank Defined Benefit Plan”) or a “single-employer plan”
(as defined in Section 4001(a) of ERISA), and no such plan is currently or
formerly maintained by FCLF or any entity which is considered one employer with
FCLF under Section 4001(b)(1) of ERISA or Section 414 of the Code (an
“ERISA Affiliate”) (such plan hereinafter referred to as an “ERISA Affiliate
Plan”).  Neither FCLF nor any of its Subsidiaries has provided, or is
required to provide, security to any FCL Bank Defined Benefit Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code or has taken any action, or omitted to take any action, that has
resulted, or would reasonably be expected to result in the




39


imposition
of a lien under Section 412(n) of the Code or pursuant to
ERISA.  Neither FCLF, its Subsidiaries, nor any ERISA Affiliate has
contributed to any “multiemployer plan,” as defined in Section 3(37) of
ERISA, on or after September 26, 1986.  To the Knowledge of FCLF,
there is no pending investigation or enforcement action by any Bank Regulator
with respect to any FCL Bank Compensation and Benefit Plan or any ERISA
Affiliate Plan.




5.11.4       
     All material contributions required to be made
under the terms of any FCL Bank Compensation and Benefit Plan or ERISA Affiliate
Plan have been timely made, and all anticipated contributions and funding
obligations are accrued on FCLF’s consolidated financial statements to the
extent required by GAAP.  FCLF and its Subsidiaries have expensed and
accrued as a liability the present value of future benefits under each
applicable FCL Bank Compensation and Benefit Plan for financial reporting
purposes to the extent required by GAAP.




5.11.5             With
respect to each FCL Bank Compensation and Benefit Plan, if applicable, FCLF has
provided or made available to Partners copies of the: (A) trust instruments
and insurance contracts; (B) two most recent Forms 5500 filed with the IRS;
(C) most recent actuarial report and financial statement; (D) most
recent summary plan description; (E) most recent determination letter
issued by the IRS; (F) any Form 5310 or Form 5330 filed with the IRS within
the last two years; and (G) most recent nondiscrimination tests performed
under ERISA and the Code (including 401(k) and 401(m) tests).




5.12           Environmental
Matters.




5.12.1             With
respect to FCLF and FCL Bank:




(A)           Each
of FCLF and FCL Bank, the Participation Facilities, and, to FCLF’s Knowledge,
the Loan Properties are, and have been, in substantial compliance with, and are
not liable under, any Environmental Laws;




(B)           There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to FCLF’s Knowledge, no such action is
threatened, before any court, governmental agency or other forum against any of
them or any Participation Facility (x) for noncompliance or  alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release into the
environment of any Materials of Environmental Concern, whether or not occurring
at or on a site owned, leased or operated by any of them or any Participation
Facility;




(C)           There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending and, to FCLF’s Knowledge no such action is
threatened, before any court, governmental agency or other forum relating to or
against any Loan Property (or FCLF or FCL Bank in respect of such Loan Property)
(x) relating to alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law, or (y) relating to the presence of or
release into the environment of any Materials of Environmental Concern, whether
or not occurring at or on a site owned, leased or operated by FCLF or FCL Bank
or at or on any Loan Property;




40







(D)           To
FCLF’s Knowledge, the properties currently owned or operated by FCLF or FCL Bank
(including, without limitation, soil, groundwater or surface water on, under or
adjacent to the properties, and buildings thereon) are not contaminated with and
do not otherwise contain any Materials of Environmental Concern other than as
permitted under applicable Environmental Law;




(E)           Neither
of FCLF or FCL Bank has received any written notice, demand letter, executive or
administrative order, directive or request for information from any Governmental
Entity or any third party indicating that it may be in violation of, or liable
under, any Environmental Law;




(F)           To
FCLF’s Knowledge, there are no underground storage tanks on, in or under any
properties owned or operated by FCLF or any of the FCLF Subsidiaries or on, in
or under any Participation Facility, and no underground storage tanks have been
closed or removed from any properties owned or operated by FCLF or any of the
FCLF Subsidiaries or from any Participation Facility;




(G)           To
FCLF’s Knowledge, during the period of (a)  FCLF’s or FCL Bank’s ownership
or operation of any of their respective current properties, or (b)  FCLF’s
or FCL Bank’s participation in the management of any Participation Facility,
there has been no contamination by or release of Materials of Environmental
Concern in, on, under or affecting such properties.  To FCLF’s
Knowledge, prior to the period of (x) FCLF’s or FCL Bank’s ownership or
operation of any of their respective current properties, or (y) FCLF’s or FCL
Bank’s participation in the management of any Participation Facility, there was
no contamination by or release of Materials of Environmental Concern in, on,
under or affecting such properties; and




(H)           Neither
of FCLF nor FCL Bank has conducted any environmental studies since July 9, 2006,
with respect to any properties owned or leased by it or any of its Subsidiaries,
or with respect to any Loan Property or any Participation Facility.




5.12.2             To
the Knowledge of FCLF, neither the conduct nor operation of their business nor
any condition of any property currently or previously owned or operated by any
of them (including, without limitation, in a fiduciary or agency capacity), or
on which any of them holds a lien, results or resulted in a violation of any
Environmental Laws that is reasonably likely to impose a material liability
(including a material remediation obligation) upon FCLF or any FCLF
Subsidiary.  To the Knowledge of FCLF, no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in any
material liability to FCLF or any FCLF Subsidiary by reason of any Environmental
Laws.  Neither FCLF nor any FCLF Subsidiary has received any written
notice from any Person that FCLF or any FCLF Subsidiary or the operation or
condition of any property ever owned, operated, or held as collateral or in a
fiduciary capacity by any of them are currently in violation of or otherwise are
alleged to have financial exposure under any Environmental Laws or relating to
Materials of Environmental Concern (including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any Materials of Environmental Concern at, on, beneath, or
originating from any such property) for which a material liability is reasonably
likely to be imposed upon FCLF or any FCLF Subsidiary.




41


5.12.3             There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending or, to the FCLF’s Knowledge, threatened,
before any court, governmental agency or other forum against FCLF or any FCLF
Subsidiary (x) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law, or (y) relating to the presence of or
release into the environment of any Materials of Environmental Concern, whether
or not occurring at or on a site owned, leased or operated by any of the
FCLF.




5.13           Securities Documents.
FCLF has filed all Securities Documents required to be filed with the SEC since
July 9, 2006 and FCLF has made available to Partners copies of its
(i) annual report on Form 10-KSB for the year ended December 31, 2006 and
2007, (ii) quarterly report on Form 10-QSB for each quarter ended on or
after September 30, 2006, and (iii) proxy materials used or for use in
connection with its meetings of stockholders held or to be held in 2007 and
2008.  All Securities Documents filed or to be filed by FCLF with the
SEC since July 9, 2006 complied (or will comply for filings after the date
hereof), at the time filed with the SEC, in all material respects with the
Securities Laws and did not (or will not, for filings after the date hereof) at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.




5.14           Brokers, Finders and
Financial Advisors.  Neither FCLF nor any FCLF Subsidiary, nor
any of their respective officers, directors, employees or agents, has employed
any broker, finder or financial advisor in connection with the Contemplated
Transactions, or incurred any liability or commitment for any fees or
commissions to any such Person in connection with the Contemplated Transactions,
except for the retention of RP Financial, LC by FCLF and the fee payable
pursuant thereto.




5.15           Related Party
Transaction.  Except as set forth in FCLF Disclosure Schedule
5.15, neither FCLF, FCL Bank nor any FCL Bank Subsidiary is a party to any
transaction (including any loan or other credit accommodation) with any
Affiliate of FCLF.  All such transactions (a) were made in the
ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, (c) did not involve more than
the normal risk of collectability or present other unfavorable features, and (d)
complied with all applicable law or regulations or were approved by a Bank
Regulator.  No loan or credit accommodation to any Affiliate of FCLF
or any FCLF Subsidiary is presently in default or, during period beginning July
9, 2006 to the date of this Agreement, has been in default or has been
restructured, modified or extended.  Neither FCLF nor any FCLF
Subsidiary has been notified that principal and interest with respect to any
such loan or other credit accommodation will not be paid when due or that the
loan grade classification accorded such loan or credit accommodation by FCLF is
inappropriate.




5.15           Deposits.  None
of the deposits of any FCLF Subsidiary is a “brokered deposit” as defined in 12
CFR Section 337.6(a)(2).




5.16           Risk Management
Instruments.  Neither FCLF nor FCL Bank is a party to any
interest rate swaps, caps, floors, option agreements, futures and forward
contracts and other




42


similar
risk management arrangements, whether entered into for FCLF’s own account, or
for the account of any Subsidiary of FCLF.




5.17           Financial
Resources.  FCLF has, and shall have at the Effective Time,
sufficient cash available to enable it to comply with its obligation to fund the
Cash Consideration under Section 3.4.1.




ARTICLE
VI




COVENANTS
OF PARTNERS




6.1           Conduct of Business.




6.1.1             Affirmative
Covenants.  During the period from the date of this Agreement
to the earlier to occur of the Effective Time or the termination of this
Agreement, except with the prior written consent of FCLF, Partners will: operate
its business, and it will cause each of Partners Bank and each of its other
Subsidiaries to operate its business, only in the usual, regular, and ordinary
course of business; use reasonable efforts to preserve intact its business
organization and assets and maintain its rights and franchises; and not
voluntarily take any action which would (i) adversely affect the ability of
any party to obtain any necessary approvals of any Governmental Entity
(including Bank Regulators) required for the Contemplated Transactions or
increase the period of time necessary to obtain such approvals,  or
(ii) adversely affect its ability to perform its covenants and agreements
under this Agreement.




6.1.2             Negative
Covenants.  Partners agrees that from the date of this
Agreement to the earlier to occur of the Effective Time or the termination of
this Agreement, except as otherwise specifically permitted or required by this
Agreement, or consented to by FCLF in writing, Partners will not, and will cause
Partners Bank and each of the other Partners Subsidiaries not to:




(A)                 Change
or waive any provision of its certificate of incorporation, charter or bylaws,
except as required by law;




(B)                 Change
the number of authorized or issued shares of its capital stock (other than as a
result of the exercise of Partners Stock Options prior to the Closing Date),
issue any shares that are held as “treasury shares” as of the date of this
Agreement, or issue or grant any Right or agreement of any character relating to
its authorized or issued capital stock or any securities convertible into shares
of such stock, or split, combine or reclassify any shares of capital stock, or
declare, set aside or pay any dividend or other distribution in respect of
capital stock, or redeem or otherwise acquire any shares of capital stock;
provided, however, that Partners may continue to declare and pay a quarterly
cash dividend on its shares of Partners Common Stock in the same amounts and at
the same times it declared and paid such dividends during 2007 (if a dividend is
declared the month of the Closing, Partners shall have the right to declare and
pay such dividend in that same month);




(C)           Make
application for the opening or closing of any, or open or close any, branch or
automated banking facility;




43







(D)           Except
as to bonus payments which have been accrued on the Partners Financial
Statements as of December 31, 2007, grant or agree to pay any bonus, severance,
or termination to, or enter into, renew, or amend any employment agreement,
severance agreement, and/or supplemental executive agreement with, or increase
in any manner the compensation or fringe benefits of, any of its directors,
officers, or employees, except (i) as may be required pursuant to
commitments existing on the date hereof and set forth on Partners Disclosure
Schedule 4.8.1 and 4.12.1; (ii) the right to pay in the aggregate up to
$70,000 in bonuses during calendar year 2008 (and prior to Closing), with no
individual receiving more than 20% of the aggregate amount of such bonuses,
(iii) merit pay increases for any employees that are not officers such that, in
the aggregate, such merit pay increases do not exceed 5% of the aggregate amount
of the base salaries (prior to any such increase) of such non-officer employees;
and (iii) Partners Bank may hire at-will employees to fill vacancies that
may from time to time arise in the ordinary course of business;




(E)           Except
as provided in Partners Disclosure Schedule 4.12.11, enter into or, except as
may be required by law, modify any pension, retirement, stock option, stock
purchase, stock appreciation right, stock grant, savings, profit sharing,
deferred compensation, supplemental retirement, consulting, bonus, group
insurance, or other employee benefit, incentive, or welfare contract, plan, or
arrangement, or any trust agreement related thereto, in respect of any of its
directors, officers, or employees; or make any contributions to any defined
contribution or defined benefit plan not in the ordinary course of business
consistent with past practice;




(F)           Merge
or consolidate Partners or any Partners Subsidiary with any other corporation;
sell or lease all or any substantial portion of the assets or business of
Partners or any Partners Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other Person, firm,
association, corporation, or business organization other than in connection with
foreclosures, settlements in lieu of foreclosure, troubled loan, or debt
restructuring, or the collection of any loan or credit arrangement between
Partners, or any Partners Subsidiary, and any other Person; enter into a
purchase and assumption transaction with respect to deposits and liabilities;
permit the revocation or surrender by any Partners Subsidiary of its certificate
of authority to maintain, or file an application for the relocation of, any
existing branch office;




(G)           Sell
or otherwise dispose of the capital stock of Partners or of any Partners
Subsidiary, or sell or otherwise dispose of any asset of Partners or of any
Partners Subsidiary, or purchase or otherwise acquire, any assets of Partners or
of any Partners Subsidiary other than in the ordinary course of business
consistent with past practice; subject any asset of Partners or of any Partners
Subsidiary to a lien, pledge, security interest, or other encumbrance (other
than in connection with deposits, repurchase agreements, bankers acceptances,
“treasury tax and loan” accounts established in the ordinary course of business
and transactions in “federal funds” and the satisfaction of legal requirements
in the exercise of trust powers) other than in the ordinary course of business
consistent with past practice; or incur any indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money) or incur any material
liabilities, except in the ordinary course of business consistent with past
practice;




44







(H)           Knowingly
take any action which would result in any of the representations and warranties
of Partners set forth in this Agreement becoming untrue as of any date after the
date hereof or in any of the conditions set forth in Article IX not being
satisfied, except in each case as may be required by applicable law or
regulation or by any Bank Regulators;




(I)           Change
any method, practice or principle of accounting, except as may be required from
time to time by GAAP (without regard to any optional early adoption date) or any
Bank Regulator responsible for regulating Partners or Partners
Bank;




(J)           Waive,
release, grant, or transfer any material rights of value or modify or change in
any respect any existing agreement or indebtedness to which Partners or any
Partners Subsidiary is a party, other than in the ordinary course of business,
consistent with past practice;




(K)           Purchase
any equity securities, or purchase any security for its investment portfolio
inconsistent with Partners’ or any Partners Subsidiary’s current investment
policy that alters the mix, maturity, credit, or interest rate risk profile of
its portfolio of investment securities or its portfolio of mortgage-backed
securities;




(L)           Enter
into, renew, extend, or modify any other transaction (other than deposit
transactions) with any Affiliate outside of the ordinary course of
business;




(M)          Enter
into any futures contract, option, interest rate caps, interest rate floors,
interest rate exchange agreement, or other agreement or take any other action
for purposes of hedging the exposure of its interest-earning assets and
interest-bearing liabilities to changes in market rates of
interest;




(N)           Make
any change in policies in existence on the date of this Agreement with regard
to: the extension of credit, or the establishment of reserves with respect to
the possible loss thereon or the charge off of losses incurred thereon;
investments; asset/liability management; or other banking policies except as may
be required by changes in applicable law or regulations or by a Bank
Regulator;




(O)           Except
for the execution of this Agreement and the Bank Merger Agreement and the
consummation of the Contemplated Transactions, take any action that would give
rise to an acceleration of the right to payment to any individual under any
Partners Compensation and Benefit Plan;




(P)           Make
any capital expenditures in excess of $25,000 individually or $50,000 in the
aggregate, other than pursuant to binding commitments existing on the date
hereof that have been disclosed to FCLF in the Partners Disclosure Schedules and
other than expenditures necessary to maintain existing assets in good
repair;




(Q)           Undertake,
enter into, amend, or terminate any lease, contract, commitment for its account,
or other agreement (including without limitation any settlement agreement with
respect to litigation) other than in the normal course of providing credit to
customers as part of its banking business, involving a payment by




45


Partners
or Partners Bank of more than $100,000 annually, or containing any financial
commitment extending beyond 12 months from the date hereof;




(R)           Enter
into, increase, or renew any loan or credit commitment (including standby
letters of credit) in an amount in excess of $400,000 (excluding commitments
issued prior to the date of this Agreement which have not yet expired), without
first providing FCL Bank with Partners Bank’s customary loan underwriting
analysis and consulting with and receiving the consent of FCL Bank, it being
understood that “consulting with” in the context of this sentence means advising
sufficiently in advance of any proposed action to allow FCLF a reasonable
opportunity to respond; provided, however, that FCLF shall be deemed to have
consented to the loan or credit commitment if it shall not have responded to
Partners within 24 hours of its receipt by Dennis Terry, Lisa Fowler, or such
other designee as FCLF may give written notice of to Partners, of such loan
underwriting analysis; or




(S)           Agree
to do any of the foregoing.




6.2           Current
Information.




6.2.1        
    During the period from the date of this Agreement to the
earlier to occur of the Effective Time or the termination of this Agreement,
Partners will, and will cause Partners Bank to, cause one or more of its
representatives to confer with representatives of FCLF and report the general
status of its ongoing operations at such times as FCLF may reasonably request,
which shall include, but not be limited to, discussion of the possible
termination by Partners and Partners Bank of third-party service provider
arrangements effective at the Effective Time or at a date thereafter,
non-renewal of personal property leases and software licenses used by Partners
or any of its Subsidiaries in connection with its systems operations, retention
of outside consultants and additional employees to assist with the conversion,
and outsourcing, as appropriate, of proprietary or self-provided system
services, it being understood that Partners shall not be obligated to take any
such action prior to the Effective Time and, unless Partners otherwise agrees,
no conversion shall take place prior to the Effective Time.  Partners
will promptly notify FCLF of any change in the normal course of its business or
in the operation of its properties and, to the extent permitted by applicable
law, of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of litigation involving Partners or any Partners
Subsidiary.




6.2.2             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, Partners shall cause
Partners Bank to meet with FCL Bank on a regular basis to discuss and plan for
the conversion of Partners Bank’s data processing and related electronic
informational systems to those used by FCL Bank, which planning shall include,
but not be limited to, discussion of the possible termination by Partners Bank
of third-party service provider arrangements effective at the Effective Time or
at a date thereafter, non-renewal of personal property leases and software
licenses used by Partners Bank in connection with its systems operations,
retention of outside consultants and additional employees to assist with the
conversion, and outsourcing, as appropriate, of proprietary or self-provided
system services, it being understood that Partners Bank shall not be obligated
to take




46


any such
action prior to the Effective Time and, unless Partners otherwise agrees, no
conversion shall take place prior to the Effective Time.




6.2.3             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, Partners shall cause
Partners Bank to provide FCL Bank, within 10 business days of the end of each
calendar month, a written list of nonperforming assets (the term “nonperforming
assets,” for purposes of this subsection, means (i) loans that are
“troubled debt restructuring” as defined in Statement of Financial Accounting
Standards No. 15, “Accounting by Debtors and Creditors for Troubled Debt
Restructuring,” (ii) loans on nonaccrual, (iii) real estate owned,
(iv) all loans 90 days or more past due as of the end of such month, and
(iv) and impaired loans). Partners shall cause Partners Bank, on a
bi-weekly basis, to provide FCL Bank with a schedule of (a) all loan approvals,
which schedule shall indicate the loan amount, loan type and other material
features of the loan, and (b) a report of Partners Bank’s then-current allowance
for loan and lease losses and, in light of current economic conditions, a report
with respect to the circumstances of any increases in such
allowance.




6.3           Access to Properties and
Records.  Subject to Section 12.1, during the period from
the date of this Agreement to the earlier to occur of the Effective Time or the
termination of this Agreement, Partners shall, and shall cause Partners Bank to,
permit FCLF access during normal business hours, or after business hours upon 24
hours notice, to its properties and those of the Partners Subsidiaries and to
those Partners employees designated on Partners Disclosure Schedule 6.3, and
shall disclose and make available to FCLF during normal business hours all of
its books, papers, and records relating to the assets, properties, operations,
obligations, and liabilities, including, but not limited to, all books of
account (including the general ledger), tax records, minute books of directors’
(other than minutes that discuss any of the Contemplated Transactions or other
strategic alternatives) and stockholders’ meetings, organizational documents,
bylaws, contracts and agreements, filings with any regulatory authority,
litigation files, plans affecting employees, and any other business activities
or prospects in which FCLF may have an interest; provided, however, that
Partners shall not be required to take any action that would provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights or business interests or confidences of any customer or
other Person or would result in the waiver by it of the privilege protecting
communications between it and any of its counsel.  Partners shall
provide and shall cause its auditors to provide FCLF with such historical
financial information regarding it and the Partners Subsidiaries (and related
audit reports and consents) as FCLF may request for securities disclosure
purposes.  FCLF shall use commercially reasonable efforts to minimize
any interference with Partners’ regular business operations during any such
access to Partners’ property, books, and records.  Partners and each
Partners Subsidiary shall permit FCLF, at its expense, to cause a “Phase I
environmental audit” and a “Phase II environmental audit” to be performed at any
physical location owned or occupied by Partners or any Partners
Subsidiary.




6.4           Financial and Other
Statements.




6.4.1             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, within 15 days of the
receipt thereof, Partners will furnish to FCLF copies of each annual, interim,
or special audit of the books of




47


Partners
and the Partners Subsidiaries made by its independent accountants and copies of
all internal control reports submitted to Partners by such accountants in
connection with each annual, interim, or special audit of the books of Partners
and the Partners Subsidiaries made by such accountants.




6.4.2             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, as soon as reasonably
available, but in no event later than the date such documents are filed with the
appropriate Bank Regulator, Partners will deliver to FCLF the Partners
Regulatory Reports filed by it with the Bank Regulators.  Partners
will furnish to FCLF copies of all documents, statements, and reports as it or
any Partners Subsidiary shall send to its stockholders, the Bank Regulators or
any other regulatory authority, except as legally prohibited
thereby.  Within 25 days after the end of each month, Partners will
deliver to FCLF a consolidated balance sheet and a consolidated statement of
operations, without related notes, for such month prepared in accordance with
current financial reporting practices.




6.4.3             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, Partners will advise FCLF
promptly of the receipt of any examination report of any Bank Regulator with
respect to the condition or activities of Partners or any of the Partners
Subsidiaries.




6.4.4             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, within five business days,
Partners will furnish to FCLF such additional financial data as FCLF may
reasonably request, including without limitation, detailed monthly financial
statements and loan reports; provided, however, that if it is not feasible for
Partners to deliver such information within such five business day period, then
Partners shall notify FCLF that it cannot deliver such information within such
five business day period and shall provide FCLF with the estimated delivery date
and Partners shall diligently continue to gather such information and deliver
such information to FCLF as soon as practicable.




6.5           Maintenance of
Insurance.  During the period from the date of this Agreement
to the earlier to occur of the Effective Time or the termination of this
Agreement, Partners shall, and shall cause Partners Bank and any other Partners
Subsidiary to, maintain insurance in such amounts as are reasonable to cover
such risks as are customary in relation to the character and location of its
properties and the nature of its business, with such coverage and in such
amounts not less than that currently maintained by Partners, Partners Bank and
each other Partners Subsidiary.




6.6           Disclosure
Supplements.  Three business days prior to the Pre-Closing
Date, Partners shall deliver to FCLF an updated Partners Disclosure Schedule
disclosing any matter hereafter arising which, if existing, occurring, or known
at the date of this Agreement, would have been required to be set forth or
described in such Partners Disclosure Schedule or which is necessary to correct
any information then set forth in such Partners Disclosure Schedule which has
been rendered inaccurate thereby.  No supplement or amendment to such
Partners Disclosure Schedule shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Article IX or
termination of this Agreement pursuant to Article XI.




48







6.7           Consents and Approvals of
Third Parties.  Partners shall, and shall cause Partners Bank
to, use all commercially reasonable efforts to obtain as soon as practicable all
consents and approvals of any other Persons necessary or desirable for the
consummation of the Contemplated Transactions.  Without limiting the
generality of the foregoing, FCLF, at its discretion, shall be permitted to
require Partners to utilize the services of a professional proxy soliciting firm
to provide assistance in obtaining the stockholder vote required to be obtained
hereunder.




6.8           All Reasonable
Efforts.  Subject to the terms and conditions herein provided,
Partners agrees to take or cause to be taken, and agrees to cause Partners Bank
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Contemplated Transactions.  A voting
agreement in the form attached as Exhibit B to this
Agreement shall be executed by each director of Partners as of the date of this
Agreement.




6.9           Failure to Fulfill
Conditions.  In the event that Partners determines that a
condition to its obligation to complete the Contemplated Transactions cannot be
fulfilled and that it will not waive that condition, it will notify FCLF within
24 hours of discovering or becoming aware of such condition.




6.10           No
Solicitation.  From and after the date hereof until the
termination of this Agreement, neither Partners, nor any Partners Subsidiary,
nor any of their respective officers, directors, employees, representatives,
agents, or Affiliates (including, without limitation, any investment banker,
attorney, or accountant retained by Partners or any of its Subsidiaries), will,
directly or indirectly, initiate, solicit, or knowingly encourage (including by
way of furnishing non-public information or assistance) any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, or enter into or maintain or continue discussions
or negotiate with any Person or entity in furtherance of such inquiries or to
obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal,
or authorize or permit any Partners Subsidiary, or any of its or any Partners
Subsidiaries’ officers, directors, or employees, or any investment banker,
financial advisor, attorney, accountant, or other representative retained by it
or by any Partners Subsidiary to take any such action, and Partners shall notify
FCLF orally (within 24 hours) and in writing (within 48 hours) of all of the
relevant details relating to all inquiries and proposals which it or any
Partners Subsidiary, or any of its or any Partners Subsidiaries’ officers,
directors, or employees, or investment banker, financial advisor, attorney,
accountant, or other representative may receive relating to any of such matters;
provided, however, that nothing contained in this Section 6.10 shall
prohibit the Board of Directors of Partners from furnishing information to, or
entering into discussions or negotiations with any Person or entity that makes
an unsolicited written proposal to acquire Partners pursuant to a merger,
consolidation, share exchange, business combination, tender or exchange offer,
or other similar transaction, if, and only to the extent that: (A) the
Board of Directors of Partners, after consultation with and after considering
the advice of its financial advisor (which may be the financial advisor in this
transaction), determines in good faith that such proposal may be or could be
superior to the Merger from a financial point-of-view to the Partners
Stockholders, (B) the Board of Directors of Partners, after consultation
with and after considering the advice of outside legal counsel (which may be its
outside legal counsel in this transaction), determines in good faith that the
failure to furnish information to or enter into discussions with such Person may
cause the Board of Directors of Partners to breach its fiduciary




49


duties to
the Partners Stockholders under applicable law (such proposal that satisfies
(A) and (B) being referred to herein as a “Superior Proposal”);
(C) Partners notifies FCLF within the timeframes set forth above in this
Section 6.10 of such inquiries, proposals, or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with, Partners, its Subsidiaries, or any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any inquiries, proposals, or
offers; and (D) the Partners Stockholders Meeting has not
occurred.  Subject to the provisions of Section 11.2.2 with respect to
the obligation of Partners to pay the Fee to FCLF, Partners may withdraw its
support of the Contemplated Transactions or terminate this Agreement (and, after
this Agreement is terminated, subject to Article XI, Partners is under no
further obligation with respect to this Agreement). For purposes of this
Agreement, “Acquisition Proposal” shall mean any proposal or offer as to any of
the following (other than the Contemplated Transactions hereunder) involving
Partners or any of its Subsidiaries: (i) any merger, consolidation, share
exchange, business combination, or other similar transactions; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 25% or
more of the assets of Partners, taken as a whole, in a single transaction or
series of transactions; (iii) any tender offer or exchange offer for 25% or
more of the outstanding shares of capital stock of Partners or the filing of a
registration statement under the Securities Act in connection therewith; or
(iv) any public announcement of a proposal, plan, or intention to do any of
the foregoing or any agreement to engage in any of the foregoing.




6.11           Reserves and Merger-Related
Costs.  Subject to compliance with GAAP, on or before the
Effective Time, Partners shall establish such additional accruals and reserves
as may be necessary to conform the accounting reserve practices and methods
(including credit loss practices and methods) of Partners to those of FCLF (as
such practices and methods are to be applied to Partners from and after the
Closing Date) and FCLF’s plans with respect to the conduct of the business of
Partners following the Merger and otherwise to reflect Merger-related expenses
and costs incurred by Partners; provided, however, that Partners shall not be
required to take such action unless FCLF agrees in writing that all conditions
to Closing set forth in Article IX have been satisfied or waived (except
for the expiration of any applicable waiting periods) and that it is not aware
of any fact or circumstance that would prevent completion of the Merger; and
provided further that Partners shall not be required to take such action prior
to the Pre-Closing Date. No accrual or reserve, made by Partners or any Partners
Subsidiary pursuant to this Section 6.11, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall constitute or be
deemed to be a breach or violation of any representation, warranty, covenant,
condition, or other provision of this Agreement or to constitute a termination
event within the meaning of Section 11.1.




6.12           Board of Directors and
Committee Meetings.  To the extent not prohibited by applicable
law or any Bank Regulator, during the period from the date of this Agreement to
the earlier to occur of the Effective Time or the termination of this Agreement,
Partners shall, and shall cause Partners Bank and each other Partners Subsidiary
to, permit one or more representatives of FCLF to attend any meeting of the
Board of Directors of Partners, Partners Bank, and/or other Subsidiary or the
Executive Committees and Loan Committees thereof as an observer (the
“Observer”), provided that none of such parties shall be required to permit the
Observer to remain present during any confidential discussion of this Agreement
and the Contemplated Transactions or any third party proposal to acquire control
of Partners or Partners




50


Bank or
during any other matter that the respective Board of Directors has been advised
of by outside counsel that such attendance by the Observer may violate a
confidentiality obligation or fiduciary duty. The Board of Directors of
Partners, Partners Bank, and/or other Subsidiary or the Executive Committees
thereof, as applicable, shall provide the Observer with notice of any such
meeting upon the same terms as the notice provided to directors or committee
members with respect to such meeting.




6.13           Prohibition on Solicitation
of Employees.  If this Agreement is terminated or if the Merger
is not consummated for any reason, for a period of two years from the date of
termination, neither Partners nor any Partners Subsidiary, nor any of their
respective officers or directors will, directly or indirectly, initiate, solicit
or knowingly encourage any employee who is designated as a Vice President or
higher, or who is designated a loan officer, of FCLF or any FCLF Subsidiary to
leave his employment with FCLF or such FCLF Subsidiary, as the case may be, to
pursue employment at Partners or any Partners Subsidiary.




ARTICLE
VII




COVENANTS
OF FCLF




7.1           Conduct of Business.




7.1.1             Affirmative
Covenants.  During the period from the date of this Agreement
to the earlier to occur of the Effective Time or the termination of this
Agreement, except with the written consent of Partners, FCLF will, and will
cause FCL Bank to, conduct its business in the ordinary course consistent with
past practices and will not take any action that would: (i) adversely
affect the ability of any party to obtain the approvals from any Governmental
Entity or the Bank Regulators required for the Contemplated Transactions or
increase the period of time necessary to obtain such approvals;
(ii) adversely affect its ability to perform its covenants and agreements
under this Agreement; (iii) result in the representations and warranties
contained in Article V not being true and correct on the date of this
Agreement or at any future date on or prior to the Effective Time; or (iv)
otherwise result in any of the conditions set forth in Article IX not being
satisfied.




7.1.2             Negative
Covenants.  FCLF agrees that from the date of this Agreement to
the earlier to occur of the Effective Time or the termination of this Agreement,
except as otherwise specifically permitted or required by this Agreement or
consented to by Partners in writing, FCLF will not, and will cause FCL Bank not
to:




(A)           change
or waive any provision of its Articles of Incorporation, Charter or Bylaws,
except as required by law;




(B)           change
the number of authorized or issued shares of its capital stock, issue any shares
that are held as “treasury shares” as of the date of this Agreement, or issue or
grant any Right or agreement of any character relating to its authorized or
issued capital stock or any securities convertible into shares of such stock, or
split, combine or reclassify any shares of capital stock, or, except with
respect to normal quarterly dividends paid by FCLF on FCLF Common Stock in the
ordinary course of business, set




51


aside or
pay any dividend or other distribution in respect of capital stock;
or




(C)           Agree
to do any of the foregoing.




7.2           Current Information.




7.2.1             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, at such times as Partners
may reasonably request, FCLF will cause one or more of its representatives to
confer with representatives of Partners and report such information with respect
to the general status of its ongoing operations, including the progress of the
Contemplated Transactions. FCLF will promptly notify Partners, to the extent
permitted by applicable law, of any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of material litigation involving FCLF and any FCLF
Subsidiary.




7.2.2             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, FCLF will advise Partners
promptly of the receipt of any examination report of any Bank Regulator with
respect to the condition or activities of FCL Bank or any of the FCLF
Subsidiaries.




7.2.3             Subject
to Section 12.1, during the period from the date of this Agreement to the
earlier to occur of the Effective Time or the termination of this Agreement,
within 5 business days, FCLF will furnish to Partners such books, papers,
records, and financial data relating to its and the FCLF Subsidiaries’ assets,
properties, operations, obligations, and liabilities as Partners may reasonably
request, including without limitation, detailed monthly financial statements and
loan reports; provided, however, that if it is not practicable for FCLF to
deliver such information within such 5-business day period, then FCLF shall
notify Partners that it cannot deliver such information within such 5-business
day period and shall provide Partners with the estimated delivery date and FCLF
shall diligently continue to gather such information and deliver such
information to Partners as soon as practicable.




7.3           Financial and Other
Statements.




7.3.1             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, as soon as reasonably
available, but in no event later than the date such documents are filed with the
SEC, FCLF will deliver to Partners the Securities Documents filed by it with the
SEC under the Securities Laws.




7.3.2             During
the period from the date of this Agreement to the earlier to occur of the
Effective Time or the termination of this Agreement, FCLF will furnish to
Partners copies of all documents, statements, and reports as it or FCL Bank file
with the OTS or any other regulatory authority with respect to the Contemplated
Transactions.




7.4           Disclosure
Supplements.  Three business days prior to the Pre-Closing
Date, FCLF shall deliver to Partners an updated FCLF Disclosure Schedule
disclosing any matter hereafter arising which, if existing, occurring, or known
at the date of this Agreement, would have been required to be set forth or
described in such FCLF Disclosure Schedule or which is




52


necessary
to correct any information then set forth in such FCLF Disclosure Schedule which
has been rendered inaccurate thereby.  No supplement or amendment to
such FCLF Disclosure Schedule shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Article IX or
termination of this Agreement pursuant to Article XI.




7.5           Consents and Approvals of
Third Parties.  FCLF shall, and shall cause FCL Bank to, use
all commercially reasonable efforts to obtain as soon as practicable all
consents and approvals of any other Persons necessary or desirable for the
consummation of the Contemplated Transactions.




7.6           All Reasonable
Efforts.  Subject to the terms and conditions herein provided,
FCLF agrees to use all commercially reasonable efforts to take or cause to be
taken, and agrees to cause FCL Bank to use all commercially reasonable efforts
to take or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Contemplated Transactions.




7.7           Failure to Fulfill
Conditions.  In the event that FCLF determines that a condition
to its obligation to complete the Contemplated Transactions cannot be fulfilled
and that it will not waive that condition, it will notify Partners within 24
hours of discovering or becoming aware of such condition.




7.8           Employee Benefits.




7.8.1             FCLF
will review all Partners Compensation and Benefit Plans and, subject to the
other provisions of this Section 7.8, may, in its sole discretion, terminate or
continue such plans; provided, however, that any termination of a Partners
Compensation and Benefit Plan that is subject to Code Section 409A shall comply
with the requirements of that Code section, such that, no interest, penalties,
or additional tax will be imposed under Code Section 409A(a)(1)(B) resulting
from the termination (excluding interest, penalties, or additional tax resulting
solely from the operation of such plan prior to the termination thereof).
Partners shall terminate its participation in the Independent Bankers'
Legacy Plan ("Partners 401(k) Plan") prior to the Closing Date and, prior
to such termination, (i) shall make any delinquent contributions for the 2006
plan year as indicated in the 2006 Form 5500, plus any fees or penalties
resulting from such delinquency, (ii) to the extent not contrary to applicable
law and subject to the approval and consent of the Plan Administrator and
Trustees of the Partners 401(k) Plan, shall notify, or arrange for the Plan
Administrator to notify, existing employees of Partners who participate in the
Partners 401(k) Plan and have Partners' Common Stock in the Partners' 401K Plan
that was contributed as part of a Partners' matching contribution that such
Partners Common Stock will be transferred by the Plan Administrator or Trustee
of the Partners 401(k) Plan to an individual account option within the Partners
401(k) Plan, and (iii) to the extent not contrary to applicable law and
subject to the approval and consent of the Plan Administrator and Trustees of
the Partners 401(k) Plan, shall use its commercially reasonable efforts to
correct any material defects in the operation of the Partners'
401(k) Plan that are a result of an act or omission of Partners and are
specifically identified in detail, in writing by FCLF within the 30-day period
following the execution of this Agreement.




53







(a)           Pursuant
to Section 9.3.7 hereof, FCLF shall, and shall cause FCL Bank to, enter into a
consulting agreement, which shall become effective as of the Effective Time,
with Bart J. Solon, President and Chief Executive Officer of Partners and
Partners Bank, in substantially the form set forth in Exhibit C hereto (the
“Consulting Agreement”). TheConsulting
Agreement shall provide that it supersedes any prior employment/consulting
agreement and/or change in control agreement to which Mr. Solon is a party,
except that the Management Continuity Agreement shall remain in full force and
effect, specifically including the restrictive covenants contained therein,
which shall be in addition to and not in lieu of the restrictive covenants
contained in the Consulting Agreement.







(b)           Pursuant
to Section 9.3.6 hereof, FCLF shall, on the Closing Date, honor and pay the
$510,000 parachute payment due Bart J. Solon under his Management Continuity
Agreement and the $248,400 parachute payment due Ron Seabaugh under his
Management Continuity Agreement, which are both listed on Partners Disclosure
Schedule 4.12.8.





(c)           Notwithstanding
the foregoing provisions of this Section 7.8.1, the parties shall at all times
cooperate with each other and work together in good faith, and use their best
efforts, to accomplish the foregoing matters in the manner described above in
Sections 7.8.1(a) and 7.8.1(b) (or in a substantially comparable manner subject
to the consent of Bart J. Solon or Ron Seabaugh, which consent shall not be
unreasonably withheld, to any variance) such that Bart J. Solon and Ron Seabaugh
are not subject to any interest, penalties or additional taxes under the Code,
including Code Sections 4999 and 409A(a)(1)(B); provided, however, that if it is
determined (in the reasonable, good faith opinion of the Accounting Firm), that
any amount payable to Bart J. Solon (“Executive”) by FCLF or FCL Bank under the
consulting agreement referenced above in Section 7.8.1(a) or any other plan,
program or agreement under which Executive participates or is a party
(collectively, the “Potential Payments”) would constitute an “Excess Parachute
Payment” within the meaning of Section 280G of the Code, subject to the excise
tax imposed by Section 4999 of the Code, as amended from time to time (the
“Excise Tax”), then nothing herein requires FCLF or FCL Bank to pay the “Excess
Amount”.  For purposes hereof, the “Excess Amount” is the minimum
amount needed to reduce such Potential Payments to the extent necessary so that
no portion of the Potential Payments payable to the Executive is subject to the
Excise Tax.  The parties mutually agree upon Scheffel and Company
(“Accounting Firm”) as the independent accounting firm to perform the
calculations and analysis contemplated by this Section 7.8.1(c). A written
report setting forth the calculations and analysis of the Accounting Firm shall
be provided to FCLF, Partners and the Executive, and the cost of performing such
calculations and analysis, and preparing such report, shall be paid by
FCLF.  If the amounts payable by FCLF or FCL Bank to the Executive are
to be reduced pursuant to this Section 7.8.1(c), the Executive shall determine
the compensation and benefits to be so reduced.  FCLF, FCL Bank,
Partners and the Executive hereby recognize that the services to be performed
under the consulting agreement (“Consulting Services”), and the restrictive
covenants in Executive’s consulting agreement, Management Continuity Agreement
and all other applicable plans, programs and agreements that involve or relate
to a Potential Payment (“Restrictive Covenants”), have value and that value
shall be determined by the Accounting Firm and recognized in the Section 280G
calculations and analysis by an allocation of the Potential


54


Payments
among the Consulting Services, the Restrictive Covenants and such payments based
on the value of the fair market value of the Consulting Services and the
Restrictive Covenants.





(d)           The
obligations of FCLF provided under this Section 7.8.1 are intended to be, and
shall be, enforceable against FCLF directly by Bart J. Solon and Ron Seabaugh
(who shall be third party beneficiaries of this Section 7.8.1).





7.8.2             FCLF
shall provide compensation and benefits to the current and former employees of
Partners and the Partners Subsidiaries that are in the aggregate no less
favorable than the lesser of (i) those provided to the current and former
employees of Partners and its Subsidiaries as of the Closing Date; and (ii)
those provided to FCLF’s similarly situated employees.  With respect
to any employee benefit plan in which any employees of Partners or the Partners
Subsidiaries are eligible to participate after the Closing Date (the “New FCLF
Plans”), FCLF shall, except as otherwise expressly provided below in this
Section 7.8.2 with respect to the FCLF ESOP:  (a) waive all
pre-existing condition exclusions and waiting periods with respect to
participation and coverage requirements applicable to employees of Partners or
the Partners Subsidiaries under any health and welfare New FCLF Plans (except to
the extent that such conditions, requirements and waiting periods exist under
the benefit plans that covered such employees before the Closing Date and have
not yet been met with respect to the employee, or except as otherwise expressly
prohibited by the insurer of the life insurance or disability FCLF Plans after
FLCLF has used reasonable, good faith efforts to obtain such waivers) in which
such employees may be eligible to participate after the Closing Date, and
deductibles, coinsurance or maximum out-of-pocket payments made by such
employees during the applicable plan year in which such employee first
participates in the applicable New FCLF Plan occurs will reduce the amount of
deductibles, coinsurance and maximum out-of-pocket payments under the New FCLF
Plans; provided that, for purposes of deductibles, coinsurance and out-of-pocket
payments, such employee was enrolled in similar coverage under the Plans
immediately prior to the effective time of coverage in the New FCLF Plans, (b)
with respect to present employees of Partners and the Partners Subsidiaries on
the Closing Date, recognize prior service with Partners or the Partners
Subsidiaries or otherwise credited by Partners or the Partners Subsidiaries to
such employees that is accrued on or prior to the Closing Date for purposes of
eligibility to participate and vesting credit and, with respect to severance pay
and paid time off, recognize prior service with Partners and the Partners
Subsidiaries or otherwise credited by Partners and the Partners Subsidiaries to
such employees for years of service calculations in any New FCLF Plan in which
such employees may be eligible to participate after the Closing Date; provided,
however, that in no event will any credit be given to the extent it would result
in the duplication of benefits for the same period of service or to the extent
such service relates to benefit accrual under a pension or retirement plan; and
(c) with respect to present employees of Partners and the Partners Subsidiaries
on the Closing Date, credit each such employee with the amount of the accrued
but unused paid time off that such employee has earned under the paid time off
program of Partners or the Partners Subsidiaries to the paid time off program or
equivalent of FCLF or its Affiliates in effect on the Closing Date, and (B) to
the extent that an employee has, as of the Closing Date, accrued but unused paid
time off in excess of the maximum amount of paid time off that may be accrued
under FCLF’s paid time off program, pay such employee for the value of such
excess days at the employee’s regular rate of pay within 30 days of the Closing
Date.  Notwithstanding anything contained in this Section 7.8.2 to the
contrary, in no event shall any of the provisions of




55


this
Section 7.8.2 be applicable to FCLF’s Employee Stock Ownership Plan (“FCLF
ESOP”). Any employee, consultant, contractor, officer, or director of Partners
or Partners Bank who is eligible to participate in the FCLF ESOP will be treated
as a new hire of FCLF or FCL Bank, as the case may be, for purposes of the FCLF
ESOP and must qualify under the terms and conditions of the FCLF ESOP with
respect to eligibility, vesting, and such other provisions set forth therein
without credit for or reference to such person’s prior service at Partners or
Partners Bank.




7.8.3             FCLF
shall, or shall cause its Affiliates, either (i) to maintain the Code Section
125 plans of Partners or the Partners Subsidiaries (the “Partners 125 Plan”) for
the remainder of the calendar year in which the Closing Date occurs, or (ii) to
terminate the Partners 125 Plans as of or after the Closing Date and either
allow the employees of Partners and the Partners Subsidiaries who become
employees of FCLF or one of its Affiliates as of the Closing Date to participate
in FCLF’s or an Affiliate’s Code Section 125 Plan or adopt a new Code Section
125 plan (either alternative referred to hereafter as the “New 125 Plan”) for
such employees who were participating in the Partners 125 Plans, and transfer
the account balances, including amounts deferred and claims paid in the year of
the transfer, of such employees under the Partners 125 Plans to the New 125
Plan.




7.9           Directors and Officers Indemnification and
Insurance.




7.9.1             FCLF
shall maintain, or shall cause FCL Bank to maintain, in effect for three years
following the Effective Time, the current directors’ and officers’ liability
insurance policies maintained by Partners and the Partners Subsidiaries
(provided, that FCLF may substitute therefor policies of at least the same
coverage containing terms and conditions which are not less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall FCLF be required to expend pursuant to this
Section 7.9.1 more than 125% of the annual cost currently expended by
Partners with respect to such insurance provided further, however, that if the
amount of the aggregate premiums necessary to maintain or procure such insurance
coverage exceeds such maximum amount, FCLF shall use all reasonable efforts to
maintain the most advantageous policies of directors’ and officers’ insurance
obtainable for an aggregate premium equal to such maximum amount.  In
connection with the foregoing, Partners agrees in order for FCLF to fulfill its
agreement to provide directors and officers liability insurance policies for
three years to provide such insurer or substitute insurer with such
representations as such insurer may request.




7.9.2             In
addition to Section 7.9.1, for a period of three years after the Effective
Time, FCLF shall indemnify, defend, and hold harmless each Person who is now, or
who has been at any time before the date hereof or who becomes before the
Effective Time, an officer or director of Partners or a Partners Subsidiary (the
“Indemnified Parties”) against all losses, claims, damages, costs, expenses
(including attorney’s fees), liabilities, or judgments or amounts that are paid
in settlement (which settlement shall require the prior written consent of FCLF)
of or in connection with any claim, action, suit, proceeding, or investigation,
whether civil, criminal, or administrative (each a “Claim”), in which an
Indemnified Party is, or is threatened to be made, a party or witness, arising
in whole or in part out of the fact that such Person is or was a director,
officer, or employee of Partners or a Partners Subsidiary if such Claim pertains
to any matter of fact arising, existing, or occurring before the Effective Time
(including, without




56


limitation,
the Merger and the other Contemplated Transactions), regardless of whether such
Claim is asserted or claimed before, or after, the Effective Time (the
“Indemnified Liabilities”), to the fullest extent permitted under Partners’
Certificate of Incorporation and Bylaws as in effect as of the date of this
Agreement, in compliance with applicable state or federal law.  FCLF
shall pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by applicable
state or federal law upon receipt of an undertaking to repay such advance
payments if such Indemnified Party shall be adjudicated or determined to be not
entitled to indemnification in the manner set forth below.  Any
Indemnified Party wishing to claim indemnification under this Section 7.9.2
upon learning of any Claim, shall notify FCLF (but the failure so to notify FCLF
shall not relieve it from any liability which it may have under this
Section 7.9.2, except to the extent such failure materially prejudices
FCLF) and shall deliver to FCLF the undertaking referred to in the previous
sentence.  In the event of any such Claim (whether arising before or
after the Effective Time) (1) FCLF shall have the right to assume the
defense thereof (in which event the Indemnified Parties will cooperate in the
defense of any such matter) and upon such assumption FCLF shall not be liable to
any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if FCLF elects not to assume such defense, or
counsel for the Indemnified Parties reasonably advises the Indemnified Parties
that there are or may be (whether or not any have yet actually arisen) issues
which raise conflicts of interest between FCLF and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them, and FCLF
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) except to the extent otherwise required due to conflicts of
interest, FCLF shall be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties whose reasonable fees and expenses
shall be paid promptly as statements are received unless there is a conflict of
interest that necessitates more than one law firm, (3) FCLF shall not be
liable for any settlement effected without its prior written consent, and
(4) no Indemnified Party shall be entitled to indemnification hereunder
with respect to a matter as to which (x) such Indemnified Party shall have been
adjudicated in any proceeding to have acted willfully or grossly negligent, or
not to have acted in good faith or in a manner such Indemnified Party reasonably
believed to be in, or not opposed to, the best interests of Partners or any
Partners Subsidiary, or (y) in the event that a proceeding is compromised or
settled so as to impose any liability or obligation upon an Indemnified Party,
if there is a determination that with respect to such matter the Indemnified
Party acted willfully or grossly negligent, or not to have acted in good faith
or in a manner such Indemnified Party reasonably believed to be in, or not
opposed to, the best interests of Partners or any Partners
Subsidiary.  The determination shall be made by a majority vote of a
quorum consisting of the Directors of FCLF who are not involved in such
proceeding. Nothing in this Section 7.9.2 is intended to, or shall, modify or
terminate any rights to indemnification that an Indemnified Party may otherwise
have under applicable law or the Certificate of Incorporation, Charter and/or
Bylaws of Partners and/or Partners Bank as in effect as of the date of this
Agreement.




7.9.3             In
the event that either FCLF or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving bank or entity of such consolidation or merger, or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so that the
successors and assigns of FCLF shall assume the obligations set forth in this
Section 7.9.




57


7.9.4             The
obligations of FCLF provided under this Section 7.9 are intended to be, and
shall be, enforceable against FCLF directly by the Indemnified Parties (who
shall be third party beneficiaries of this Section 7.9) and shall be binding on
all respective successors and assigns of FCLF.




7.10           Termination of
Employees.  FCLF will provide any Partners or Partners Bank
employee who is terminated in calendar year 2008 in connection with the
Contemplated Transactions or at any time within six months after the Closing
Date a lump sum severance in cash equal to two weeks’ pay for each complete year
of service (“Severance Payment”), any such Severance Payment to be capped at a
maximum equal to 24 weeks’ pay.  No payment will be made for partial
years of service.  Any terminated employee who is to receive payment
through a severance, employment, or other agreement establishing the right of
such employee to payment upon termination shall be ineligible for the Severance
Payment hereunder. The obligations of FCLF provided under this Section 7.10
are intended to be, and shall be, enforceable against FCLF directly by any
employee so terminated as provided in this Section 7.10 (who shall be third
party beneficiaries of this Section 7.10) and shall be binding on all respective
successors and assigns of FCLF.




7.11           Stock
Listing.  FCLF agrees to list on the Stock Exchange (or such
other national securities exchange on which the shares of the FCLF Common Stock
shall be listed as of the date of consummation of the Merger), subject to
official notice of issuance, the shares of FCLF Common Stock to be issued in the
Merger.




7.12           Maintenance of
Insurance.  FCLF shall maintain, and cause FCL Bank to
maintain, insurance in such amounts as is reasonable to cover such risks as are
customary in relation to the character and location of its properties and the
nature of its business, with such coverage and in such amounts not less than
that currently maintained by FCLF.




7.13           Prohibition on Solicitation
of Employees.  If this Agreement is terminated or if the Merger
is not consummated for any reason, for a period of two years from the date of
termination, neither FCLF nor any FCLF Subsidiary, nor any of their respective
officers or directors will, directly or indirectly, initiate, solicit or
knowingly encourage any employee who is designated as a Vice President or
higher, or who is designated a loan officer, of Partners or any Partners
Subsidiary to leave his employment with Partners or such Partners Subsidiary, as
the case may be, to pursue employment at FCLF or any FCLF
Subsidiary.




ARTICLE
VIII




REGULATORY
AND OTHER MATTERS




8.1           Partners Stockholders
Meeting.




Partners will (i) as promptly as
practicable after the Merger Registration Statement is declared effective by the
SEC, take all steps necessary to duly call, give notice of, convene, and hold a
meeting of the Partners Stockholders (the “Partners Stockholders Meeting”), for
the purpose of considering this Agreement and the Merger, and for such other
purposes as may be, in Partners’ reasonable judgment, necessary or desirable,
(ii) subject to the next




58


sentence,
have its Board of Directors recommend approval of this Agreement to the Partners
Stockholders.  The Board of Directors of Partners may fail to make
such a recommendation, or withdraw, modify, or change any such recommendation
only in connection with a Superior Proposal, as set forth in Section 6.10,
and only if such Board of Directors, after having consulted with and considered
the advice of outside counsel to such Board, has determined that the making of
such recommendation, or the failure so to withdraw, modify, or change its
recommendation, may constitute a breach of the fiduciary duties of such
directors under applicable law; and (iii) consult with FCLF with respect to
each of the foregoing matters.




8.2           Proxy
Statement-Prospectus.




8.2.1             For
the purposes of (x) registering with the SEC under the Securities Act and
applicable state securities laws the FCLF Common Stock to be offered to Partners
Stockholders in connection with the Merger, and (y) holding the Partners
Stockholders Meeting, FCLF shall draft and prepare, and Partners shall fully
cooperate in the preparation of, the Merger Registration Statement, including a
combined proxy statement and prospectus or statements satisfying all applicable
requirements of applicable state securities and banking laws, and of the
Securities Act and the Exchange Act, and the rules and regulations thereunder
(such proxy statement/prospectus in the form mailed by Partners to the Partners
Stockholders, together with any and all amendments or supplements thereto, being
herein referred to as the “Proxy Statement-Prospectus”).  FCLF shall
file the Merger Registration Statement, including the Proxy
Statement-Prospectus, with the SEC no later than 45 days following the date
hereof, and FCLF shall cause the Merger Registration Statement, including the
Proxy Statement-Prospectus, to comply in all material respects as to form with
the requirements of the Securities Act and the Exchange Act (to the extent
applicable).




8.2.2             Each
of FCLF and Partners shall use their best efforts to have the Merger
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing, and Partners shall thereafter within five
business days print and mail the Proxy Statement-Prospectus to the Partners
Stockholders.  FCLF shall also use its best efforts to obtain all
necessary state securities law or “Blue Sky” permits and approvals required to
carry out the Contemplated Transactions, and Partners shall furnish all
information concerning Partners and the holders of Partners Common Stock as may
be reasonably requested in connection with any such action.




8.2.3             Partners
shall provide FCLF with any information concerning itself that FCLF requests in
connection with the drafting and preparation of the Proxy Statement-Prospectus,
and FCLF shall notify Partners promptly of the receipt of any comments of the
SEC with respect to the Proxy Statement-Prospectus and of any requests by the
SEC for any amendment or supplement thereto or for additional information and
shall provide to Partners promptly copies of all correspondence between FCLF, or
any of its representatives and the SEC.  The information to be
provided by or with respect to FCLF for inclusion or incorporation by reference
in the Proxy Statement-Prospectus will not, at the time the Proxy
Statement-Prospectus is mailed, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein not misleading.  The information to be provided by Partners
for inclusion in the Proxy Statement-Prospectus will not, at the time the Proxy
Statement-Prospectus is mailed, contain any untrue statement of a material fact
or omit to




59


state any
material fact necessary in order to make the statements therein not
misleading.  The information supplied, or to be supplied, by or with
respect to FCLF for inclusion or incorporation by reference in the Applications
will, at the time such documents are filed with any Regulatory Authority, be
accurate in all material respects.  The information supplied, or to be
supplied, by Partners for inclusion in the Applications will, at the time such
documents are filed with any Regulatory Authority, be accurate in all material
respects.  FCLF shall give Partners and its counsel, which may be any
independent third-party counsel selected by the Board of Directors of Partners,
the opportunity to review and comment on and the Proxy Statement-Prospectus
prior to its being filed with the SEC and shall give Partners and its counsel
the opportunity to review and comment on all amendments and supplements to the
Proxy Statement-Prospectus and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC.  Each of FCLF, and Partners agrees to use all reasonable
efforts, after consultation with the other party hereto, to respond promptly to
all such comments of and requests by the SEC and to cause the Proxy
Statement-Prospectus and all required amendments and supplements thereto to be
mailed to the Partners Stockholders entitled to vote at the Partners
Stockholders Meeting, referred to in Section 8.1 hereof at the earliest
practicable time. Notwithstanding anything contained herein to the contrary,
counsel for FCLF shall have the final decision on the text and format of the
Proxy Statement-Prospectus, any amendments and supplements thereto, and any
responses to comments from the SEC.




8.2.4             Partners
and FCLF shall promptly notify the other party if at any time it becomes aware
that the Proxy Statement-Prospectus or the Merger Registration Statement
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.  In such event, Partners shall fully cooperate with FCLF
in the preparation of a supplement or amendment to such Proxy
Statement-Prospectus that corrects such misstatement or omission, and FCLF shall
file an amended Merger Registration Statement with the SEC that corrects such
misstatement or omission and Partners shall mail an amended Proxy
Statement-Prospectus to the Partners Stockholders.




8.3           Regulatory
Approvals.  Each of Partners and FCLF, and Partners and FCFL
will cause Partners Bank and FCL Bank, respectively, to, cooperate with the
others and use all reasonable efforts to promptly prepare all necessary
documentation, to effect all necessary filings and to obtain all necessary
Applications, permits, consents, approvals and authorizations of the SEC, the
OTS, any other Bank Regulator, third parties, other Governmental Entities
necessary to consummate the Contemplated Transactions, including without
limitation the Merger and Bank Merger.  FCLF and FCL Bank shall make
all Application filings with all Bank Regulators not later than 45 days after
the date hereof.  Partners and FCLF will furnish each other and each
other’s counsel with all information concerning themselves, their subsidiaries,
directors, officers, and stockholders and such other matters as may be necessary
or advisable in connection with the Proxy Statement-Prospectus and any
Application, petition or any other statement or application made by or on behalf
of Partners or FCLF to any Governmental Entity in connection with the Merger and
the other Contemplated Transactions.  Partners and FCLF shall have the
right to review and approve in advance all characterizations of the information
relating to either such party and any of its Subsidiaries that appear in any
filing made with any Governmental Entity in connection with the Contemplated
Transactions.  In addition, Partners and FCLF shall each furnish to
the other for review a copy of each such filing made in connection with
the




60


Contemplated
Transactions with any Governmental Entity (including any Bank Regulator) prior
to its filing.




ARTICLE
IX




CLOSING
CONDITIONS




9.1           Conditions to Each Party’s
Obligations under this Agreement.  The respective obligations
of each party under this Agreement shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, none of which may be
waived:




9.1.1             Stockholder Approval.
This Agreement shall have been approved by the requisite vote of the Partners
Stockholders.




9.1.2             Injunctions.  None
of the parties hereto shall be subject to any order, decree, or injunction of a
court or agency of competent jurisdiction that enjoins or prohibits the
consummation of the Contemplated Transactions.




9.1.3             Regulatory
Approvals.  All necessary approvals, authorizations, and
consents of all Bank Regulators and Governmental Entities required to consummate
the Contemplated Transactions shall have been obtained and shall remain in full
force and effect and all waiting periods relating to such approvals,
authorizations, or consents shall have expired; and no such approval,
authorization, or consent shall include any condition or requirement, excluding
standard conditions that are normally imposed by regulatory authorities in bank
merger transactions, that would, in the good faith judgment of the Board of
Directors of FCLF, materially and adversely affect the business, operations,
financial condition, property, or assets of the combined enterprise or otherwise
materially impair the value of Partners or Partners Bank to FCLF or FCL
Bank.




9.1.4             Effectiveness of Merger Registration Statement.
The Merger Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the Merger
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or threatened by the SEC and, if the offer and
sale of FCLF Common Stock in the Merger is subject to the Blue Sky laws of any
state, shall not be subject to a stop order of any state securities
commissioner.




9.1.5             Stock Exchange
Listing.  The shares of FCLF Common Stock to be issued in the
Merger shall have been authorized for listing on the Stock Exchange, subject to
official notice of issuance.




9.1.6             Tax
Opinion.  On the basis of facts, representations, and
assumptions stated therein which shall be consistent with the state of facts
existing at the Closing Date, Partners shall have received an opinion of
Polsinelli Shalton Flanigan Suelthaus PC reasonably acceptable in form and
substance to Partners dated as of the Closing Date, substantially to the effect
that, for federal income tax purposes:




(A)           The
Merger, when consummated in accordance with the terms hereof, either will
constitute a reorganization within the meaning of Section 368(a) of the
Code




61


or will
be treated as part of a reorganization within the meaning of Section 368(a)
of the Code;




(B)                 FCLF
and Partners will each be a party to a reorganization within the meaning of
Section 368(b) of the Code;




(C)                 The
Bank Merger will not adversely affect the Merger qualifying as a reorganization
within the meaning of Section 368(a) of the Code;




(D)                 No
gain or loss will be recognized by FCLF, FCL Bank, Partners or Partners Bank by
reason of the Merger;




(E)                 Stockholders
of Partners will not recognize gain or loss upon the exchange of their shares of
Partners Common Stock for shares of FCLF Common Stock (except with respect to
the cash portion of the Merger Consideration (including any cash in lieu of
fractional shares) or consideration received as a result of the exercise of
dissenters’ rights);




(F)                 The
basis of the FCLF Common Stock to be received pursuant to the Merger (including
any fractional shares deemed received for tax purposes) by a Partners
Stockholder will be the same as the basis of the Partners Common Stock
surrendered pursuant to the Merger in exchange therefor, increased by the amount
treated as a dividend, if any, and by the amount of any gain recognized by such
Partners Stockholder as a result of the Merger and decreased by any cash
received by such Partners Stockholders in the Merger; and




(G)                 The
holding period of the shares of FCLF Common Stock to be received by a Partners
Stockholder will include the period during which the Partners Stockholder held
the shares of Partners Common Stock surrendered in exchange therefor, provided
the Partners Common Stock surrendered is held as a capital asset at the
Effective Time.




Each of FCLF and Partners shall provide
a certificate contemplated by Section 2.7 hereof on which such counsel may rely
in rendering its opinion.




9.2           Conditions to the
Obligations of FCLF under this Agreement.  The obligations of
FCLF under this Agreement shall be further subject to the satisfaction of the
conditions set forth in Sections 9.2.1 through 9.2.8 at or prior to the
Closing, any of which may be waived by FCLF:




9.2.1             Representations and
Warranties.  Except as otherwise contemplated by this Agreement
or consented to in writing by FCLF, each of the representations and warranties
of Partners set forth in this Agreement shall be true and correct as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Effective Time; and Partners shall have
delivered to FCLF a certificate of Partners to such effect signed by the Chief
Executive Officer and the Secretary of Partners as of the Effective Time;
provided, however, that, anything in this Agreement to the contrary
notwithstanding, the condition set forth in this Section 9.2.1 shall be deemed
to have been satisfied (and Partners shall not be deemed to be in breach of this
Agreement) even if any such representations and warranties




62


are not
so true and correct unless the failure of any one or more of such
representations or warranties to be so true and correct (disregarding any
qualifications as to material, materiality, Material Adverse Effect or similar
expressions), individually or in the aggregate, has had or will have a Material
Adverse Effect on Partners (the “Partners Closing Condition
Standard”).




9.2.2             Agreements and
Covenants.  Partners, Partners Bank and each Partners
Subsidiary shall have performed all obligations and complied in all material
respects with all agreements or covenants to be performed or complied with by
each of them at or prior to the Effective Time, and FCLF shall have received a
certificate signed on behalf of Partners by the Chief Executive Officer and
Secretary of Partners to such effect dated as of the Effective
Time.




9.2.3             Permits, Authorizations,
Etc.  Partners shall have obtained any and all material
permits, authorizations, consents, waivers, clearances, or approvals required
for the lawful consummation of the Merger by Partners, Partners Bank, and each
of its other Subsidiaries.




9.2.4             No Material Adverse
Effect.  Since December 31, 2007, no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Partners.




9.2.5             Dissenting
Shares.  As of immediately prior to the Effective Time, not
more than 10% of the issued and outstanding shares of Partners Common Stock
shall have dissented to the Merger under the DGCL, and preserved, as of
immediately prior to the Effective Time, the right to pursue their right of
appraisal for the fair value of their shares of Partners Common Stock under the
DGCL.




9.2.6             Stock Option/Warrant
Payment.  Each Person who holds Partners Stock Options and/or
Partners Stock Warrants shall have delivered to FCLF a cancellation agreement in
the form attached as Exhibit Ahereto and the aggregate payment due to holders of Partners Stock Options
and Partners Stock Warrants cancelled in the Merger shall not exceed
$1,550,000.




9.2.7             Resignations.  FCLF
shall have received evidence in form satisfactory to FCLF of the resignation of
all officers and directors of Partners and Partners Bank as shall be requested
by FCLF.




Partners
will furnish FCLF with such certificates of its officers or others and such
other documents to evidence fulfillment of the conditions set forth in this
Section 9.2 as FCLF may reasonably request.




9.3           Conditions to the
Obligations of Partners under this Agreement.  The obligations
of Partners under this Agreement shall be further subject to the satisfaction of
the conditions set forth in Sections 9.3.1 through 9.3.7 at or prior to the
Closing, any of which may be waived by Partners:




9.3.1             Representations and
Warranties.  Except as otherwise contemplated by this Agreement
or consented to in writing by Partners, each of the representations and
warranties of FCLF set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the




63


Effective
Time; and FCLF shall have delivered to Partners a certificate of FCLF to such
effect signed by the Chief Executive Officer and the Secretary of FCLF as of the
Effective Time; provided, however, that, anything in this Agreement to the
contrary notwithstanding, the condition set forth in this Section 9.3.1 shall be
deemed to have been satisfied (and FCLF shall not be deemed to be in breach of
this Agreement) even if any such representations and warranties are not so true
and correct unless the failure of any one or more of such representations or
warranties to be so true and correct (disregarding any qualifications as to
material, materiality, Material Adverse Effect or similar expressions),
individually or in the aggregate, has had or will have a Material Adverse Effect
on FCLF (the “FCLF Closing Condition Standard”).




9.3.2             Agreements and
Covenants.  FCLF and FCL Bank shall have performed all
obligations and complied in all material respects with all agreements or
covenants to be performed or complied with by each of them at or prior to the
Effective Time, and Partners shall have received a certificate signed on behalf
of FCLF by the Chief Executive Officer and Secretary of FCLF to such effect
dated as of the Effective Time.




9.3.3             Permits, Authorizations,
Etc.  FCLF shall have obtained any and all material permits,
authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Contemplated Transaction by FCLF and FCL
Bank.




9.3.4             Payment of Merger
Consideration.  FCLF shall have delivered the Exchange Fund to
the Exchange Agent on or before the Closing Date and the Exchange Agent shall
provide Partners with a certificate evidencing such delivery.




9.3.5             No Material Adverse
Effect.  Since December 31, 2007, no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on FCLF.




9.3.6             Parachute
Payments.  FCLF shall, on the Closing Date, honor the $510,000
parachute payment due Bart J. Solon under his Management Continuity Agreement,
and the $248,400 parachute payment due Ron Seabaugh under his Management
Continuity Agreement, which are both listed on Partners Disclosure Schedule
4.12.8.




9.3.7             Consulting
Agreement.  FCLF shall, and shall cause FCL Bank to, execute
and deliver the Consulting Agreement with Bart J. Solon in substantially the
form attached as Exhibit
C to this Agreement, any material deviations from such form being
mutually agreeable to the parties to such Consulting Agreement.




FCLF will
furnish Partners with such certificates of their officers or others and such
other documents to evidence fulfillment of the conditions set forth in this
Section 9.3 as Partners may reasonably request.




ARTICLE
X




THE
CLOSING




10.1           Time and
Place.  Subject to the provisions of Articles IX and XI, the
Closing of the Merger shall take place at the headquarters of FCLF at 10:00 a.m,
at FCLF’s election, on the




64


last
business day of, or the first business day of the month following, in each case,
the month during which the last of the conditions precedent set forth in
Sections 9.1.1, 9.1.3, 9.1.4, 9.2.3 and 9.3.3 has been fulfilled or waived
(including the expiration of any applicable waiting period), or at such other
place, date, or time upon which FCLF and Partners mutually agree.  A
pre-closing of the Contemplated Transactions (the “Pre-Closing”) shall take
place at the headquarters of FCLF at 5:00 p.m. on the day immediately prior to
the Closing Date (the “Pre-Closing Date”).




10.2           Deliveries at the
Pre-Closing and the Closing.  At the Pre-Closing there shall be
delivered to FCLF and Partners the opinions, certificates, and other documents
and instruments required to be delivered at the Pre-Closing under
Article IX.  At or prior to the Closing, FCLF shall deliver the
Merger Consideration as set forth under Section 9.3.4.




ARTICLE
XI




TERMINATION,
AMENDMENT AND WAIVER




11.1           Termination.  This
Agreement may be terminated at any time prior to the Closing Date, whether
before or after approval of the Merger by the Partners
Stockholders:




11.1.1             At
any time by the mutual written agreement of FCLF and Partners;




11.1.2             By
either Partners or FCLF (provided, that the terminating party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained herein) if there shall have been a breach of any of the
representations or warranties set forth in this Agreement on the part of the
other party (after, in the case of the representations and warranties of
Partners, application of the Partners Closing Condition Standard, and after, in
the case of the representations and warranties of FCLF, application of the FCLF
Closing Condition Standard), which breach by its nature cannot be cured prior to
the Pre-Closing Date or, provided that the breach is curable in nature, shall
not have been cured within the first to occur of the Pre-Closing, or 30 days
after written notice by FCLF to Partners, or by Partners to FCLF, as the case
may be, of such breach;




11.1.3             By
either Partners or FCLF (provided, that the terminating party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained herein) if there shall have been a material failure to perform or
comply with any of the covenants or agreements set forth in this Agreement on
the part of the other party, which failure by its nature cannot be cured prior
to the Pre-Closing Date or, provided that the failure is curable in nature,
shall not have been cured within the first to occur of the Pre-Closing, or 30
days after written notice by FCLF to Partners, or by Partners to FCLF, as the
case may be, of such failure;




11.1.4             At
the election of either FCLF or Partners, if the Closing shall not have occurred
by the Termination Date, or such later date as shall have been agreed to in
writing by FCLF and Partners; provided, that no party may terminate this
Agreement pursuant to this Section 11.1.4 if the failure of the Closing to
have occurred on or before the Termination Date was due solely to the fact that
waiting periods imposed by any applicable Bank Regulator had commenced, but not
yet expired, as of the Termination Date (not to exceed 30 days beyond
the




65


Termination
Date), or if the failure of the Closing to have occurred on before the
Termination Date was due to such party’s breach of any of its obligations under
this Agreement;




11.1.5             By
either Partners or FCLF if the Partners Stockholders shall have voted at the
Partners Stockholders meeting on this Agreement and such vote shall not have
been sufficient to approve the Agreement;




11.1.6             By
either Partners or FCLF if (i) final action has been taken by a Bank
Regulator whose approval is required in connection with this Agreement and the
Contemplated Transactions, which final action (x) has become unappealable, and
(y) does not approve this Agreement or the Contemplated Transactions;
(ii) any Bank Regulator whose approval or nonobjection is required in
connection with this Agreement and the Contemplated Transactions has stated in
writing that it will not issue the required approval or nonobjection; or
(iii) any court of competent jurisdiction or other Governmental Entity
shall have issued an order, decree, ruling, or taken any other action
restraining, enjoining, or otherwise prohibiting the Contemplated Transactions
and such order, decree, ruling, or other action shall have become final and
nonappealable;




11.1.7             By
the Board of Directors of either party (provided, that the terminating party is
not then in material breach of any representation, warranty, covenant, or other
agreement contained herein) in the event that any of the conditions precedent to
the obligations of such party to consummate the Merger cannot be satisfied or
fulfilled by the date specified in Section 11.1.4;




11.1.8             By
the Board of Directors of FCLF if the Board of Directors of Partners has
withdrawn its recommendation of this Agreement or failed to make such
recommendation, or modified or qualified such recommendation in a manner adverse
to FCLF; or




11.1.9             By
the Board of Directors of Partners if Partners has received a Superior Proposal
and, in accordance with Section 6.10, the Board of Directors of Partners
has made a determination to accept such Superior Proposal; provided that
Partners shall not terminate this Agreement pursuant to this Section 11.1.9
and enter in a definitive agreement with respect to the Superior Proposal until
the expiration of five business days following FCLF’s receipt of written notice
advising FCLF that Partners has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal (and including a copy
thereof with all accompanying documentation, if in writing) and identifying the
Person making the Superior Proposal.  After providing such notice,
Partners shall provide a reasonable opportunity to FCLF during the five-day
period to make such adjustments in the terms and conditions of this Agreement as
would enable Partners to proceed with the Merger on such adjusted
terms.




11.1.10           By
the Board of Directors of Partners if the quotient determined by dividing the
Final VWAP by $9.66 is less than 0.85 and FCLF has not elected to cure such
condition in the manner described in the next sentence.  FCLF shall
have the right, but not the obligation, upon written notice to Partners prior to
or on the Pre-Closing Date, to increase the Exchange Ratio (the “Increased
Exchange Ratio”) to an amount equal to the quotient obtained by dividing (x)
$47.60 by (y) the Final VWAP and, in such event, the condition set forth in the
preceding sentence shall be deemed not to exist.




66







It is the
intention of the parties that following completion of the Pre-Closing, which
completion will be acknowledged in writing by the parties at such time, neither
party shall have the right to terminate this Agreement at any time
thereafter.  If, after the Pre-Closing Date, any party hereto shall
attempt to terminate this Agreement or shall fail to take any action necessary
to effect the consummation of the Merger (including, without limitation, FCLF’s
obligation to satisfy the condition set forth in Section 9.3.4), the other
party shall be entitled to injunctive relief to enforce this Agreement, and the
first party hereby agrees not to contest any judicial proceeding seeking the
granting of such an injunction.




11.2           Effect
of Termination.




11.2.1             In
the event of termination of this Agreement pursuant to any provision of
Section 11.1, this Agreement shall forthwith become void and have no
further force, except that the provisions of Sections 6.13, 7.13, 11.2 and
Article XII, and any other Section which, by its express terms, relates to
post-termination rights or obligations, shall survive such termination of this
Agreement and remain in full force and effect.




11.2.2            If
this Agreement is terminated, expenses and damages of the parties hereto shall
be determined as follows:




(A)           Whether
or not the Merger and other Contemplated Transactions are consummated, all costs
and expenses incurred in connection with this Agreement and the Contemplated
Transactions shall be paid by the party incurring such expenses.




(B)           Except
as set forth in Sections 11.2.1 and 11.2.2(C), (D) and (E), in the event of a
termination of this Agreement pursuant to this Article XI, no party to this
Agreement shall have any liability or further obligation to any other
party.




(C)           As
a condition of FCLF’s willingness and in order to induce FCLF to enter into this
Agreement, and to reimburse FCLF for incurring the costs and expenses related to
entering into this Agreement and consummating the Contemplated Transactions,
Partners hereby agrees to pay FCLF the amount designated below within three
business days after written demand for payment is made by FCLF following the
occurrence of any of the events set forth below:




(i)           If
FCLF terminates this Agreement pursuant to Section 11.1.8 or Partners
terminates this Agreement pursuant to Section 11.1.9, Partners shall pay a
fee of $825,000 in the aggregate (the “Fee”);




(ii)           If
this Agreement is terminated by FCLF (A) pursuant to Section 11.1.2 on account
of a breach of Partners’ representations or warranties  (after
application of the Partners Closing Condition Standard), and such breach was not
knowing and willful, Partners shall pay to FCLF the lesser of the Fee and the
costs and expenses actually incurred by FCLF in connection with and up to and
including the execution of this Agreement, or (B) pursuant to Section 11.1.2 on
account of a breach of Partners’ representations or warranties  (after
application of the Partners Closing Condition Standard), and such breach was
knowing and willful, Partners shall pay to FCLF the Fee, or (C) pursuant to
Section 11.1.3 on




67


account
of a breach of a covenant or agreement by Partners or any Partners Subsidiary,
Partners shall pay to FCLF the Fee; or




(iii)           If
Partners enters into a definitive agreement relating to an Acquisition Proposal
or consummates an Acquisition Proposal involving Partners within 12 months after
the occurrence of the failure of the Partners Stockholders to approve this
Agreement after the occurrence of an Acquisition Proposal, Partners shall pay to
FCLF the Fee.




(D)           As
a condition of Partners’ willingness and in order to induce Partners to enter
into this Agreement, and to reimburse Partners for incurring the costs and
expenses related to entering into this Agreement and consummating the
Contemplated Transactions, FCLF hereby agrees to pay the following to Partners
within three business days after written demand for payment is made by Partners
following the termination of this Agreement by Partners (A) pursuant to Section
11.1.2 on account of a breach of FCLF’s representations or warranties (after
application of the FCLF Closing Condition Standard), and such breach was not
knowing and willful, FCLF shall pay to Partners the lesser of the Fee and the
costs and expenses actually incurred by Partners in connection with and up to
and including the execution of this Agreement, or (B) pursuant to Section 11.1.2
on account of a breach of FCLF’s representations or warranties (after
application of the FCLF Closing Condition Standard), and such breach was knowing
and willful, FCLF shall pay to Partners the Fee, or (C) pursuant to Section
11.1.3 on account of a breach of a covenant or agreement by FCLF or any FCLF
Subsidiary FCLF shall pay to Partners the Fee.




(E)           If
payment of the Fee is made pursuant to Section 11.2.2(C) or Section
11.2.2(D), as applicable, then the party receiving such payment and its
Subsidiaries will have no other rights or claims against the other parties,
their Subsidiaries, and their respective officers and directors, under this
Agreement, it being understood and agreed that payment the Fee under
Section 11.2.2(C) or Section 11.2.2(D), as applicable, constitutes
liquidated damages and shall be the sole and exclusive remedy of the party
receiving such Fee and such party’s Subsidiaries and their respective officers
and directors and shall be in lieu of damages incurred in the event of any such
termination of this Agreement.




11.3           Amendment, Extension and
Waiver.  Subject to applicable law, at any time prior to the
Effective Time (whether before or after approval thereof by the Partners
Stockholders), the parties hereto by action of their respective Boards of
Directors, may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(c) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained herein; provided,
however, that after any approval of this Agreement by the Partners Stockholders,
there may not be, without further approval of such Partners Stockholders, any
amendment of this Agreement which reduces the amount or value or changes the
form of consideration to be delivered to the Partners Stockholders pursuant to
this Agreement.  This Agreement may not be amended except by an
instrument in writing signed on behalf of both of the parties
hereto.  Any agreement on the part of a party hereto to any extension
or waiver shall




68


be valid
only if set forth in an instrument in writing signed on behalf of such party,
but such waiver or failure to insist on strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.




ARTICLE
XII




MISCELLANEOUS




12.1           Confidentiality.  Except
as specifically set forth herein, FCLF and Partners mutually agree to be bound
by the terms of the letter agreement dated October 2, 2007, and the reciprocal
confidentiality agreement dated April 9, 2008, previously executed by the
parties hereto (collectively, the “Confidentiality Agreement”) that relate to
the confidentiality of information.  The parties hereto agree that
such Confidentiality Agreement shall continue in accordance with its terms,
notwithstanding the termination of this Agreement.  Notwithstanding
the foregoing, the parties (and each employee, representative, or other agent of
the parties) may disclose to any and all persons, without limitation of any
kind, the tax treatment and any facts that may be relevant to the tax structure
of the Contemplated Transactions; provided, however, that no party (nor any
employee, representative or other agent thereof) may disclose any other
information to the extent that such disclosure could result in a violation of
any federal or state securities law.




12.2           Public
Announcements.  The parties hereto shall cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement, and except as may be
otherwise required by law (including any obligations of FCLF to file a Form 8-K
under the Securities Act), no party hereto shall issue any news release, or
other public announcement or communication with respect to this Agreement unless
such news release, public announcement or communication has been mutually agreed
upon by the other party hereto.




12.3           Survival.  All
representations and warranties in this Agreement shall expire on and be
terminated and extinguished at the Effective Time, and all covenants and
agreements in this Agreement shall expire on and be terminated and extinguished
at the Effective Time, other than those covenants and agreements set forth in
Article III, Section 7.8, Section 7.9 and this Article XII, which shall survive
or be performed after the Effective Time.




12.4           Notices.  All
notices or other communications hereunder shall be in writing and shall be
deemed given if delivered by receipted hand delivery or mailed by prepaid
registered or certified mail (return receipt requested) or by recognized
overnight courier addressed as follows:




If
      to Partners, to:
            Bart
      J. SolonPresident
      and Chief Executive OfficerPartners
      Financial Holdings, Inc.#1
      Ginger Creek MeadowsGlen
      Carbon, Illinois 62034Fax:
      (618) 659-4001





69





With
      copies to:
            Tom
      W. Zook, Esq.Lewis,
      Rice & Fingersh, LC500
      N. Broadway, Suite 2000St.
      Louis, Missouri 63102Fax :
      (314) 612-7671If
      to FCLF, to:
            Dennis
      M. TerryPresident
      and Chief Executive OfficerFirst
      Clover Leaf Financial Corp.300
      St. Louis StreetEdwardsville,
      Illinois 62025Fax:
      (618) 656-0371With
      copies to:
            Joseph
      T. Porter, Jr., Esq.Polsinelli
      Shalton Flanigan Suelthaus PC100
      South Fourth Street, Suite 1100St.
      Louis, Missouri 63102Fax:
      (314) 231-1776





or such
other address as shall be furnished in writing by any party, and any such notice
or communication shall be deemed to have been given: (a) as of the date
delivered by hand; (b) three business days after being delivered to the
U.S. mail, postage prepaid; or (c) one business day after being delivered
to the overnight courier.




12.5           Parties in
Interest.  This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, and that (except as
provided in Section 7.8.2, Section 7.9 and Section 7.10) nothing in
this Agreement is intended to confer upon any other Person any rights or
remedies under or by reason of this Agreement.




12.6           Complete
Agreement  This Agreement, including the Exhibits and
Disclosure Schedules hereto and the documents and other writings referred to
herein or therein or delivered pursuant hereto, and the Confidentiality
Agreement, referred to in Section 12.1, contains the entire agreement and
understanding of the parties with respect to its subject
matter.  There are no restrictions, agreements, promises, warranties,
covenants, or undertakings between the parties other than those expressly set
forth herein or therein.  This Agreement supersedes all prior
agreements and understandings (other than the Confidentiality Agreement referred
to in Section 12.1) between the parties, both written and oral, with
respect to its subject matter.  Neither of the parties to this
Agreement has entered into this Agreement in reliance on any representation by
any other party or any other Person, except as expressly set forth in this
Agreement.




12.7           Counterparts.  This
Agreement may be executed in one or more counterparts all of which shall be
considered one and the same agreement and each of which shall be deemed an
original.




70







12.8           Severability.  In
the event that any one or more provisions of this Agreement shall for any reason
be held invalid, illegal or unenforceable in any respect, by any court of
competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement and the parties shall use
their reasonable efforts to substitute a valid, legal and enforceable provision
which, insofar as practical, implements the purposes and intents of this
Agreement.




12.9           Governing
Law.  This Agreement shall be governed by the laws of Illinois,
except to the extent this Agreement or the Merger must be governed by Maryland
corporate law, without giving effect to its principles of conflicts of
laws.




12.10                      Interpretation.  When
a reference is made in this Agreement to Sections or Exhibits, such reference
shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated.  The recitals hereto constitute an integral part of this
Agreement. References to Sections include subsections, which are part of the
related Section (e.g., a section numbered “Section 5.5.1” would be part of
“Section 5.5” and references to “Section 5.5” would also refer to
material contained in the subsection described as
“Section 5.5.1”).  The table of contents, index and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.  Whenever
the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” The phrases
“the date of this Agreement,” “the date hereof” and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the Recitals to this Agreement.




12.11                      Specific
Performance.  The parties hereto agree that irreparable damage
would occur in the event that the provisions contained in this Agreement were
not performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity or under the express terms
of this Agreement.









[Remainder
of page left blank intentionally.]




71


IN
WITNESS WHEREOF, FCLF and Partners have caused this Agreement to be executed by
their duly authorized officers as of the date first set forth
above.




FIRST
      CLOVER LEAF FINANCIAL CORP.ByName:Title:PARTNERS
      FINANCIAL HOLDINGS, INC.ByName:Title:




















72


EXHIBIT
A




FORM
OF OPTION AND WARRANT CANCELLATION AGREEMENT




Stock Option/Warrant
Cancellation Agreement




This
Stock Option/Warrant Cancellation Agreement (this “Agreement”) is made and
entered into as of ___________________, 2008 (the “Effective Date”), among
___________________ (“Holder”), Partners Financial Holdings, Inc., a Delaware
corporation (“Partners”), and First Clover Leaf Financial Corp., a Maryland
corporation (“FCLF”).




Recitals




A.           Holder
was granted the right to purchase one or more shares of common stock, $10.00 par
value per share (“Partners Common Stock”).




B.           Partners
has entered into that certain Agreement and Plan of Merger, dated as of April
30, 2008, between FCLF and Partners (the “Merger Agreement”).




C.           In
connection with the transactions contemplated by the Merger Agreement, the
parties now desire to settle and cancel all Partners Stock Options and Partners
Stock Warrants (as those terms are defined in the Merger Agreement) and any and
all rights Holder otherwise would be entitled to under the terms and conditions
of such Partners Stock Options or Partners Stock Warrants, as the case may
be.




Agreements




In
consideration of the foregoing premises, which are incorporated herein by this
reference, and the covenants and agreements of the parties herein contained, the
parties hereto, intending to be legally bound, hereby agree as
follows:




Section
1.                      Awards.  Holder
acknowledges that the following is a true and complete list of all outstanding
Partners Stock Options and Partners Stock Warrants granted to Holder and
unexercised as of the Effective Date (“Awards”) and that there are no other
outstanding Awards held by Holder as of the Effective Date:




Date
      of Award
            Number
      of Shares Outstanding
              Subject
      to Awards
            Exercise
      Price





Section
2.                      Termination of
Awards.  Subject to the payment described in Section 4
below, effective as of the Effective Date, all Awards shall terminate in their
entirety and




A-1


thereafter
be null and void and Holder shall have no interests and rights thereunder on or
after the Effective Date.




Section
3.                      Holder
Agreements.  Holder acknowledges that (1) Partners or FCLF has
not made any representations about, and Holder has not relied upon any statement
in this Agreement with respect to, any individual tax consequences that may
arise by virtue of any payment provided under this Agreement including, but not
limited to, those which arise because of the application of  Section
409A of the Internal Revenue Code, and (2) Holder has or will consult with
Holder’s own tax advisors as to any such tax
consequences.   Holder agrees that it shall be Holder’s sole
responsibility to pay any amount that may be due and owing as federal or state
taxes, interest and penalties, including but not limited to those which may
arise under Section 409A of the Internal Revenue Code, arising out of any
payments by Partners or FCLF.




Section
4.                      Payment.  In
consideration for the cancellation of the Awards, FCLF shall pay to Holder on
the Effective Date a cash payment equal to the product
of:  (a) the remaining number of shares of Partners Common Stock
subject to unexercised Awards, multiplied by (b)  an amount equal to:
(i) $56 minus
(ii) the exercise price of such Award (with such calculation used for each
individual share of Partners Common Stock subject to the Award).




Section
5.                      Release.  Subject
to receipt of the payment described in Section 3 above, and except with
respect to Holder’s rights under this Agreement, Holder, on Holder’s own behalf
and that of Holder’s heirs, executors, attorneys, administrators, successors,
and assigns, knowingly and voluntarily releases, and forever discharges Partners
and FCLF, their past, current and future affiliates, assigns, successors,
directors and officers, of and from any claim, known or unknown, Holder had, now
has or may have as of the Effective Time by reason of any matter or claim under
the terms of any Award or this Agreement.




Section
6.                      Governing
Law.  This Agreement shall be construed in accordance with the
laws of the State of Illinois except to the extent this Agreement must be
governed by Maryland corporate law, without regard to the conflict of law
provisions of any jurisdiction.




In
Witness Whereof, this Agreement has been duly executed as of the Effective
Date.


____________________________________
              [Insert
      Name]
            Date:        _______________Partners
      Financial Holdings, Inc.
              
              
              By:   ________________________________
              Name:   _________________________
              Title:   
       _________________________
            Date:        _______________








A-2


EXHIBIT
B




FORM
OF VOTING AGREEMENT




First
Clover Leaf Financial Corp.


300 St.
Louis Street


Edwardsville,
Illinois 62025





Ladies
and Gentlemen:





The
undersigned is a director and/or executive officer Partners Financial Holdings,
Inc. (“Partners”) and/or a director of Partners Bank (“Partners Bank”) and is
the beneficial holder of shares of common stock of Partners (“Partners Common
Stock”).




Partners
and First Clover Leaf Financial Corp. (“FCLF”) are considering the execution of
an Agreement and Plan of Merger (“Agreement”) contemplating the merger of
Partners with and into FCLF, with FCLF as the surviving corporation (the
“Merger”), such execution being subject in the case of Partners to the execution
and delivery of this letter agreement (“letter agreement”).  In
consideration of the substantial expenses that FCLF will incur in connection
with the transactions contemplated by the Agreement and in order to induce FCLF
to execute the Agreement and to proceed to incur such expenses, the undersigned
agrees and undertakes, in his capacity as a stockholder of Partners and not in
his capacity as a director of Partners, as follows:




1.           The
undersigned, while this letter agreement is in effect, shall vote in favor of
the Agreement or cause to be voted in favor of the Agreement all of the shares
of Partners Common Stock that the undersigned shall be entitled to so vote,
whether such shares are beneficially owned by the undersigned on the date of
this letter agreement or are subsequently acquired or whether the undersigned
has no beneficial ownership but has voting control of such shares on the date of
this letter agreement or voting control is subsequently acquired, at the meeting
of Partners’ stockholders to be called and held following the date hereof, to
consider the Agreement and the Merger.




2.           The
undersigned, while this letter agreement is in effect, agrees not to sell,
transfer, or otherwise dispose of any shares of Partners Common Stock on or
prior to the date of the meeting of Partners stockholders to vote on the
Agreement, unless the purchaser or transferee agrees to be bound by the terms of
this letter agreement.




3.           The
undersigned acknowledges and agrees that any remedy at law for breach of the
foregoing provisions shall be inadequate and that, in addition to any other
relief which may be available, in the event of a breach of this letter agreement
by the undersigned, FCLF shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages.




4.           The
foregoing restrictions shall not apply to shares with respect to which the
undersigned may have voting power as a fiduciary for others, but does apply to
shares with respect to which the undersigned may have voting power pursuant to a
voting or other agreement.  In addition, this letter agreement shall
only apply to actions taken by the undersigned




B-1


in his
capacity as a stockholder of Partners and shall not in any way limit, affect or
prohibit actions the undersigned may take in his capacity as a director of
Partners.




5.           The
undersigned agrees to execute an Option and Warrant Cancellation Agreement, in
the form attached as Exhibit
A to the Agreement, in conjunction with the Closing of the transactions
contemplated by the Agreement with respect to all of the options and warrants
held by the undersigned on the Closing Date. The undersigned further agrees
that, with respect to any and all of the warrants held by the undersigned, he
will not exercise such warrants but will instead cancel all of such warrants
held by the undersigned on the date hereof pursuant to the terms of the Option
and Warrant Cancellation Agreement.




6.           This
letter agreement shall automatically terminate upon termination of the Agreement
in accordance with its terms.




IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first above written.







Very
      truly yours,SignatureName
      (please print)







Accepted
and agreed to as of the date first above written:




FIRST
      CLOVER LEAF FINANCIAL CORP.By:Title:





B-2


EXHIBIT
C




FORM
OF CONSULTING AGREEMENT







THIS
CONSULTING AGREEMENT (this “Agreement”), dated as of the ____ day of __________,
2008, is made by and among FIRST CLOVER LEAF FINANCIAL CORP., a Maryland
corporation (“Holding Company”), FIRST CLOVER LEAF BANK, FSB, a federal savings
bank (the “Bank”), and BART J. SOLON, an individual with a principal residence
in the State of Illinois (“Consultant”).




Recitals




A.           Holding
Company has entered into that certain Agreement and Plan of Merger (the “Merger
Agreement”), dated April 30, 2008, by and among Holding Company and Partners
Financial Holdings, Inc. (“Partners”) pursuant to which it is contemplated that
Partners will be acquired by Holding Company.  Concurrently, Partners
Bank (“Partners Bank”) will be merged into Bank.




B.           It
is a condition to Partners’ obligations under the Merger Agreement that Holding
Company cause the delivery of this Agreement to Partners.




C.           Consultant
served as President and Chief Executive Officer of Partners and Partners Bank
prior to the Merger.




D.           Holding
Company desires to have Consultant’s experience, expertise, services and advice
available to it and the Bank further desires to retain Consultant’s services to
assist in the transition of ownership and management following the merger of
Partners Bank into Bank by retaining Consultant as a consultant for the term
described in Section 1, subject to the terms and conditions of this Agreement,
and Consultant desires to serve Holding Company and Bank in such
capacity.




E.           As
described in Sections 7 and 8 below, Holding Company desires that Consultant
avoid other business activities that may create a conflict, or the appearance of
a conflict between his role as a consultant to Holding Company and Bank and such
other activities, and Consultant desires to avoid creating a conflict or the
appearance of such a conflict.




F.           Holding
Company and Consultant desire to set forth the terms of their agreement
concerning Consultant consulting services for Holding Company and Bank and the
restrictions of Consultant.




Agreement




NOW,
THEREFORE, in consideration of the foregoing and of the mutual promises herein
contained the receipt and sufficiency of which are hereby acknowledged, and as
an inducement material for Holding Company and Partners to engage in the Merger
the parties hereto agree as follows:




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1.           Engagement as
Consultant.  Subject to the terms and conditions set forth
herein, effective as of the effective time (“Effective Time”) of the merger of
Partners Bank into Bank, the Bank hereby engages Consultant as a consultant and
advisor of the Bank to assist in the transition of ownership and management of
the Bank following the Merger and Consultant hereby accepts such engagement as a
consultant and advisor of the Bank.  The term of this Agreement shall
commence on the Effective Time and shall continue for a term of 18 months (the
“Consulting Period”).




2.           Duties of
Consultant.




(a)           Consultant’s
duties as a consultant hereunder shall be to furnish to the Bank, on a regular
basis not to exceed 30 hours per week during regular business hours, subject to
the terms hereof, such advisory and consulting services in connection with the
business of the Bank as may from time to time be requested by the Chief
Executive Officer of the Bank after the Effective Time.  The intent
hereof is to make the benefit of Consultant’s experience, abilities and
knowledge available to the Bank during the Consulting Period in order to assist
the transition of borrowing and depository relationships of Partners Bank to the
Bank.




(b)           Consultant
shall make himself available, as an independent contractor, to render such
services on a reasonable basis.  The Parties anticipate that
Consultant shall perform Consultant’s services on site at the Bank’s
facilities.  The Bank shall provide reasonable office space, general
office supplies and such reasonable administrative staff support as requested by
Consultant.  During the term of consultancy, Consultant shall be
reimbursed for all reasonable and necessary expenses incurred by him in
discharging his obligations hereunder, including but not limited to travel and
entertainment expenses and access to any athletic tickets possessed by the Bank;
provided such expenses are timely submitted and documented, in accordance with
the expense reimbursement policy of the Bank.  Any additional or
unusual expenses or materials needed by Consultant in connection with the
performance of services hereunder shall be provided by the Bank but only if
approved in writing in advance by the Bank.




3.           Independent Contractor
Status.  It is hereby acknowledged and understood that
Consultant shall be an independent contractor. Nothing contained in this
Agreement shall be construed so as to create an employment relationship between
Consultant and Bank.  Consultant will not be eligible for any pension,
bonus, vacation pay, sick pay, or other fringe benefits that Bank may provide to
its employees.  All responsibility for the withholding of funds for
social security taxes, federal and state income taxes, or any other tax with
respect to Consultant’s services hereunder shall be the sole and absolute
obligation of Consultant.




4.           Consulting
Fee.  In consideration of the consulting services to be
rendered by Consultant throughout the Consulting Period, the Bank shall pay to
Consultant an annual rate of $175,000, paid monthly at such times as the Bank
shall determine.  By virtue of Consultant’s status as an independent
contractor, all payments hereunder shall be made without any withholding for
federal income tax purposes and on an annual basis the Bank shall deliver an IRS
Form 1099 to Consultant.




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5.           Bonus.  In
consideration of retention of borrowing and depository relationships of Partners
Bank as well as the generation of new and additional business for the Bank
during the Consulting Period, the Bank shall pay bonuses upon such terms and
subject to meeting such goals as set forth in Appendix A, attached hereto and
made a part hereof by this reference.




6.           Termination for disability
or death.





(a)  The
Bank or Consultant may terminate this Agreement after having established
Consultant's Disability.  For purposes of this Agreement, "Disability"
means a physical or mental infirmity that impairs Consultant's ability to
substantially perform his duties under this Agreement and that impairs
Consultant's ability to substantially perform his duties under this Agreement
for a period of ninety (90) consecutive days).  The Board of the Bank
shall determine in good faith, based upon competent medical advice and other
factors that they reasonably believe to be relevant, whether or not Consultant
is and continues to be disabled for purposes of this Agreement.  As a
condition to any benefits, the Board may require Consultant to submit to such
physical or mental evaluations and tests as it deems reasonably appropriate, at
the Bank's expense.





(b)  In
the event of such Disability, Consultant's obligation to perform services under
this Agreement will terminate.  In the event of such termination,
Consultant shall receive his Consulting Fee, as defined in Section 4, at the
rate in effect on the Date of Termination for a period of three (3) months
following the Date of Termination by reason of Disability.





(c)  In
the event of Consultant's death during the term of this Agreement, this
Agreement shall terminate.





7.           Covenant of
Confidentiality.




(a)
Consultant acknowledges that, in and as a result of Consultant’s engagement
hereunder, Consultant will be making use of, acquire knowledge of and/or add to
confidential or proprietary information relating to the Bank and its affiliates,
including, without limitation, the Bank’s lists of customers and accounts,
systems, procedures, policies, manuals, advertising, marketing plans, marketing
strategies, trade secrets, business plans, financial data, strategies, methods
of conducting business, price lists, formulas, processes, procedures, standards,
know-how, manuals, techniques, technology, confidential reports, and all other
information, knowledge, or data of any kind or nature relating to the products,
services, or business of the Bank or any subsidiary, parent or other affiliate
of the Bank (collectively, “Confidential Information”), provided further that
the term Confidential Information in this Agreement shall be interpreted
coextensively with, and not broader than, the term “trade secret” as defined in
Section 2(d) of the Illinois Trade Secrets Act and coextensively with the
confidential obligations of bank employees and directors under federal banking
regulations.  Consultant covenants and agrees that Consultant shall
not, at any time during or following the term of Consultant’s engagement by the
Bank, directly or indirectly, except in furtherance of the Bank’s business and
in




C-3


accordance
with the Bank’s policies, use, disseminate, divulge or disclose, for any purpose
whatsoever, any Confidential Information.




(b)           Upon
termination of Consultant’s engagement by the Bank, whether such termination was
by Consultant or the Bank, all documents, records, notebooks, and similar
repositories of or documents containing any Confidential Information with
respect to Holding Company, Bank, Partners or Partners Bank, including all
existing copies or extractions thereof, then in Consultant’s possession or in
Consultant’s control, whether prepared by Consultant or others, shall be the
sole property of the Bank.  Upon termination, all documents, records,
notebooks, and similar repositories of or documents containing any Confidential
Information, including all existing copies, extractions thereof or renderings
created therefrom, shall be promptly returned to the Bank and all duplications
retained by Consultant in paper or electronic form shall immediately be
destroyed.




8.           Restrictive
Covenant.  Through Consultant’s engagement by the Bank,
Consultant will acquire additional and intimate knowledge about the customers,
financial data, price, and business negotiations and business techniques of the
Bank, as they may now exist or as they may be developed in the future.
Consultant acknowledges and agrees that pursuant to this Agreement Consultant
may perform services for firms, corporations, and other associations and
business enterprises and individuals, families, and trusts which Consultant may
solicit as clients and customers of the Bank (“Customers”), and in so doing, has
and will utilize the Bank’s ideas, techniques and expertise in establishing an
even greater rapport with such customers.




In order to avoid the inadvertent
disclosure of the Bank’s confidential matters, and as consideration for all of
the benefits provided to Consultant hereunder and in further consideration of
the Merger Consideration received by Consultant pursuant to the Merger
Agreement, Consultant hereby covenants and agrees that:





(a)           Noncompetition.





(i) During
Consultant’s Consulting Period with the Bank and for a period of two (2) years
after the termination of Consultant’s engagement by the Bank (the “Period”),
whether such termination is by the Bank or by the Consultant or is for any or no
reason, Consultant agrees that Consultant will not directly or indirectly
(whether as an owner, operator, employee, officer, director, manager,
consultant, agent, independent contractor, or otherwise) participate in the
ownership, management, financing, operation or control of, or be employed by any
bank, savings and loan, credit union, or other financial institution or provide
banking, lending, credit, or other services similar to those performed by the
Bank as of the Effective Time (the “Restricted Business”) within any city, town
or county of the State of Illinois in which Bank has an office or has filed an
application for regulatory approval to establish an office, throughout the terms
of this Agreement (the “Restricted Area”).


C-4





(ii)  The
constraint set forth above in Section 5(a)(i) shall not prevent Consultant
from making passive investments, not to exceed 5% of the total equity ownership,
in any publicly traded enterprise engaged in the Restricted Business within the
Restricted Area, as measured by the date of investment by
Consultant.





(b) Nonsolicitation.  Consultant
agrees that during the Period, Consultant shall not:





(i)           Directly
or indirectly (A) solicit for employment or attempt to hire any individual
then employed by Bank or any of the affiliated or related entities,
subsidiaries, holding companies, or otherwise of the Bank (the “Bank Related
Entities”) or any former employee employed by the Bank or Bank Related Entities
during the one-year period after such former employee has voluntarily terminated
his or her employment with the Bank or any of the Bank Related Entities, or
(B) encourage any employee of the Bank or any of the Bank Related Entities
to terminate his or her employment with the Bank or such Bank Related Entity for
any reason; or





(ii)
            Directly
      or indirectly (A) solicit any Customer, client or entity having a
      business relationship with the Bank or any affiliate or subsidiary of the
      Bank, which is a prospect of the Bank or any affiliate or subsidiary of
      the Bank that has had contact with the Bank or any affiliate or subsidiary
      of the Bank during the Consulting Period, or which Consultant has actively
      pursued on behalf of the Bank or any affiliate or subsidiary of the Bank,
      or (B) contact any such Customer, client or prospect for the purpose
      of encouraging such Customer, client or prospect to terminate its business
      relationship with the Bank or any affiliate or subsidiary of the
      Bank.





9.           Reasonableness of
Restrictions.




(a)           Consultant
has carefully read and considered the provisions of Sections 7 and 8 hereof
and, having done so, agrees that the restrictions set forth therein (including,
but not limited to, the time period of restriction and the geographical areas of
restriction set forth in Section 8 hereof) are fair and reasonable and are
reasonably required for the protection of the interests of the
Bank.




(b)           Consultant
represents that Consultant’s experience, capabilities, and personal assets are
such that this Agreement does not deprive Consultant from either earning a
livelihood in the unrestricted business activities which remain open to
Consultant or from otherwise adequately and appropriately supporting Consultant
and Consultant’s family.




C-5


(c)           In
the event that any of the provisions of Sections 7 and 8 shall be held to
be invalid or unenforceable, the remaining provisions shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
parts had not been included therein.  In the event that any provision
of Section 8 relating to time period and/or areas of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum time period
or areas such court deems reasonable and enforceable, said time period and/or
areas of restriction shall be deemed to become and thereafter be the maximum
time period and/or areas which such court deems reasonable and
enforceable.




10.           Delegation of Duties and
Assignment of Rights.




(a)           Consultant
may not delegate the performance of any of Consultant’s obligations or duties
hereunder, or assign any rights hereunder. Any such purported delegation or
assignment shall be void.  The Bank may assign all of its rights and
obligations under this Agreement in writing, without prior notice to or consent
of Consultant, to a person or entity acquiring the principal assets used or
useful in the operation of the Bank’s business or portion thereof for which
Consultant is involved or stock of the Bank or otherwise gained control
thereof.  Such assignment shall not be effective until such time as
the Bank provides written notice to Consultant of the assignment.




(b)           In
the event of an assignment by the Bank, each reference in this Agreement to the
Bank shall include the assignee from and after the date of such
assignment.  In the event the assignment occurs after a Change in
Control (as hereinafter defined) of the Bank, this Agreement shall remain in
full force and effect; provided, however, the Restricted Area shall remain as
defined immediately prior to the Change in Control.  The term Change
in Control shall have the meaning as set forth in the Bank Holding Company Act
of 1956, as amended, and in the regulations promulgated thereunder.




11.           Governing
Law.  The construction and interpretation of this Agreement
shall at all times and in all respects be governed by the laws of the State of
Illinois.




12.           Severability.  The
provisions of this Agreement shall be deemed severable, and the invalidity or
unenforceability of any one or more of the provisions hereof shall not affect
the validity and enforceability of the other provisions hereof.




13.           Notices.  Any
notice required to be given hereunder shall be sufficient and deemed given when
in writing, and sent by certified or registered mail, return receipt requested,
first-class postage prepaid, or by courier service, to the parties hereto at the
addresses set forth on the signature page hereto.




14.           Remedies.  Consultant
acknowledges and agrees that a breach by Consultant of the provisions of this
Agreement will cause the Bank irreparable injury and
damage.  Consultant, therefore, expressly agrees that the Bank shall
be entitled to injunctive and other equitable relief to prevent a breach of this
Agreement, or any part thereof by Consultant, or by Consultant’s partners,
agents, representatives, servants, employers, employees and/or any and all
persons directly or indirectly acting for or with




C-6


Consultant,
and to secure its enforcement, in addition to any other remedy to which the Bank
might be entitled.  Any and all of the Bank’s remedies for the breach
of this Agreement shall be cumulative and the pursuit of one remedy shall not be
deemed to exclude any and all other remedies with respect to the subject matter
hereof.




15.           Advice of
Counsel.  Consultant acknowledges he has read this Agreement
and any attached exhibits, understands their terms and signs the Agreement
voluntarily of his own free will, without coercion or duress, and with full
understanding of the significance and binding effect of the
Agreement.  Consultant further acknowledges he has been advised by
Holding Company that it is in his best interests to be represented by counsel
with respect to the execution of this Agreement and to thoroughly discuss all
aspects of this Agreement with his attorney.  Consultant has been
represented by counsel of his own choosing in connection with the negotiation
and execution of this Agreement.  The terms of this Agreement have
been freely and equally negotiated between the parties hereto; and no term or
provision hereof shall be construed against either party due to such party’s
drafting of any such term or provision.




16.           Entire Agreement;
Waiver. This Agreement contains the entire agreement and understanding by
and between the Bank and Consultant with respect to the engagement of Consultant
herein referred to, and no representations, promises, agreements or
understandings, written or oral, not herein contained shall be of any force or
effect. This Agreement supersedes any prior employment or consulting agreement
or change in control agreement to which Consultant is a party, except that the
Management Continuity Agreement shall remain in full force and effect,
specifically including the restrictive covenants contained therein, which shall
be in addition to and not in lieu of the restrictive covenants contained in this
Agreement. No change or modification hereof shall be valid or binding unless the
same is in writing and signed by the party intended to be bound.  No
waiver of any provision of this Agreement shall be valid unless the same is in
writing and signed by the party against whom such waiver is sought to be
enforced.  No valid waiver of any provision of or breach of this
Agreement at any time shall be deemed a waiver of any other provision or
subsequent breach of this Agreement at such time or will be deemed a valid
waiver of such provision or subsequent breach at any other time.




C-7


IN
WITNESS WHEREOF, Holding Company, the Bank and Consultant have duly executed
this Agreement as of the day and year first above written.




BANK:
            
            
            CONSULTANT:FIRST
      CLOVER LEAF BANK, FSBByName:
            
            
            Bart
      J. SolonTitle:HOLDING
      COMPANY:FIRST
      CLOVER LEAF FINANCIAL CORP.ByName:Title:


C-8


Appendix
A




Bart
Solon Consulting Agreement




Bonus
Arrangement







Bonus
pool of $200,000





Any bonus
will be paid at the end of the 18 month Consulting Agreement, and the date of
termination of the agreement will be the “Measurement Date”





Calculation of Bonus Pool
Payout: The amount of the payment from the bonus pool will be calculated
as follows:





·
            At
      the closing of the merger, the aggregate dollar amount (based on a
      three-month average) of the sum of Partners' gross loans receivable
      (exclusive of loan loss reserves and/or purchase accounting adjustments)
      plus deposits exclusive of purchase accounting adjustments will be the
      “Initial Measurement Amount”... at March 31, 2008, using a three month
      average, the Initial Measurement Amount would have been approximately
      $172.5 million consisting of gross loans of $90.2 million and deposits of
      $82.3 million





·
            At
      the closing of the merger and during the term of the Consulting Agreement,
      all Partners’ loans and deposits (including new loan and deposit
      relationships brought to FCLF by Bart Solon and additional loans and
      deposits of Partners clients brought to FCLF by Bart Solon) and all new
      FCLF loans and deposits principally generated by Mr. Solon will be
      separately flagged in the FCLF systems and such information shall be made
      available to Mr. Solon





·
            At
      the Measurement Date, the amount of the bonus pool payment will be based
      on the ratio of the aggregate dollar amount of the flagged loans and
      deposits (based on a three-month average), determined in the same manner
      as at the closing of the merger, in comparison to the aggregate Initial
      Measurement Amount as follows:





o
            100%
      or greater
            $200,000
      (full bonus pool payout)o
            80%
      or less
            no
      payouto
            80.1%
      to 99.9%
            bonus
      paid out proportionally





·
            In
      the event of a Change in Control (as defined in the Consulting Agreement),
      Mr. Solon shall receive any bonus payment that would be payable to him
      based on the above schedule assuming, for purposes of a determining any
      potential bonus payment upon a Change in Control only, that the effective
      date of such Change in Control is the Measurement
  Date.





·
            If,
      after 12 months, the Consulting Agreement is terminated pursuant to
      Section 6(a) or Section 6(b) thereof due to the disability of Mr. Solon,
      Mr. Solon shall be entitled to the greater of (i) half of any bonus
      payment that would be payable to him based on the above schedule assuming,
      for purposes of determining any potential bonus payment upon disability
      only, that the date of disability is
the


C-9


Measurement
      Date, such one-half bonus payment to be reduced by (x) the amount of the
      consulting fees incurred in the 90-day period after such disability as
      contemplated by Section 6(a) of the Consulting Agreement and (y) the
      amount of any payment Mr. Solon would be entitled to receive pursuant to
      Section 6(b) of the Consulting Agreement; or (ii) such consulting fees and
      payment as Mr. Solon would be entitled to receive pursuant to Sections
      6(a) and 6(b) of the Consulting
Agreement.





·
            If,
      after 12 months, the Consulting Agreement is terminated pursuant to
      Section 6(c) thereof due to the death of Mr. Solon, Mr. Solon’s estate
      shall be entitled to half of any bonus payment that would be payable to
      him based on the above schedule assuming, for purposes of determining any
      potential bonus payment upon death only, that the date of death is the
      Measurement Date.





Payment of Additional
Bonus: If the ratio of the aggregate dollar amount of the flagged loans
and deposits exceeds the Initial Measurement Amount, then Mr. Solon will be
eligible for an additional bonus payout as determined by the FCLF Board of
Directors in the same manner as FCLF lending and business development
staff






C-12