"THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS, EACH PURCHASER OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT JS NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTIONS OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. ANY TRANSFEREE OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE
HEREOF (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL
NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED BY
THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS
THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A-PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE
ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT
IT WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY
THIS INSTRUMENT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND."

(c) In the event that any Capital Securities, Underlying Common Shares or Warrant
Shares (i) become registered under the Securities Act or (ii) are eligible to be transferred without
restriction in accordance with Rule 144 or another exemption from registration under the
Securities Act (other than Rule 144A), at the request of the Investor, the Company shall issue
new certificates or other instruments representing such Capital Securities, Underlying Common
Shares or Warrant Shares, which shall not contain the applicable legend in Section 5.2(a) above;
provided that the Investor surrenders to the Company the previously issued certificates or other
instruments.

Section 5.3 Certain Transactions.
(a) The Company will not merge or consolidate with, or sell, transfer or lease all or

substantially all of its property or assets to, any other party unless the successor, transferee or
lessee party (or its ultimate parent entity), as the case may be (if not the Company), expressly

-14-


(1) the Exercise Price shall be adjusted to equal the consideration per share of
Common Stock received by the Company in connection with the Common Stock
Issuance; and

(2) the number of Shares issuable upon the exercise of this Warrant
immediately prior to the Common Stock Issuance (the “Jnitial Number”) shall be
increased to the number obtained by multiplying the Initial Number by a fraction (A) the
numerator of which shall be the Exercise Price in effect immediately prior to the
Common Stock Issuance and (B) the denominator of which shall be the consideration per
share of Common Stock received by the Company in connection with the Common Stock
Issuance.

For purposes of the foregoing, the aggregate consideration receivable by the Company in
connection with a Common Stock Issuance shall be deemed to be equal to the sum of the net
offering price (including the Fair Market Value of any non-cash consideration and after
deduction of any related expenses payable to third parties) of all such securities plus the
minimum aggregate amount, if any, payable upon exercise or conversion of any such convertible
securities into shares of Common Stock; and “Permitted Transactions” shall mean issuances
(i) as consideration for or to fund the acquisition of businesses and/or related assets at Fair
Market Value, (ii) in connection with employee benefit plans and compensation related
arrangements in the ordinary course and consistent with past practice approved by the Board of
Directors, (iii) in connection with a public or broadly marketed offering and sale of Common
Stock or convertible securities for cash conducted by the Company or its affiliates pursuant to
registration under the Securities*Act or Rule 144A thereunder on a basis consistent with capital
raising transactions by comparable financial institutions and (iv) in connection with the exercise
of preemptive rights on terms existing as of the Issue Date. For the avoidance of doubt, each
Equity Raise (as defined in the Certificate of Designations) shall be subject to adjustment as set
forth in this Section 13(B) and shall not be considered a Permitted Transaction hereunder. Any
adjustment made pursuant to this Section 13(B) shall become effective immediately upon the
date of such issuance.

(C) Other Distributions. In case the Company shall fix a record date for the making
of a distribution to all holders of shares of its Common Stock of securities, evidences of
indebtedness, assets, cash, rights or warrants (excluding Ordinary Cash Dividends, dividends of
its Common Stock and other dividends or distributions referred to in Section 13(A)), in each
such case, the Exercise Price in effect prior to such record date shall be reduced immediately
thereafter to the price determined by multiplying the Exercise Price in effect immediately prior to
the reduction by the quotient of (x) the Market Price of the Common Stock on the last trading
day preceding the first date on which the Common Stock trades regular way on the principal
national securities exchange on which the Common Stock is listed or admitted to trading without
the right to receive such distribution, minus the amount of cash and/or the Fair Market Value of
the securities, evidences of indebtedness, assets, rights or warrants to be so distributed in respect
of one share of Common Stock (such amount and/or Fair Market Value, the “Per Share Fair
Market Value”) divided by (y) such Market Price on such date specified in clause (x); such
adjustment shall be made successively whenever such a record date is fixed. In such event, the
number of Shares issuable upon the exercise of this Warrant shall be increased to the number
obtained by dividing (x) the product of (1) the number of Shares issuable upon the exercise of

-9-


association or over-the-counter market that is the primary market for the trading of the shares of
Common Stock.

“U.S. GAAP” means United States generally accepted accounting principles.

“VWAP” means the volume-weighted average trading price of a share of Common Stock
as reported by Bloomberg LP.

“Warrant” means this Amended and Restated Warrant, issued pursuant to the Exchange
Agreement.

“Warrantholder” has the meaning set forth in Section 2.

2. Number of Shares; Exercise Price. This certifies that, for value received, the
United States Department of the Treasury and its successors and assigns (the “Warrantholder”)
is entitled, upon the terms and subject to the conditions hereinafter set forth, to acquire from the
Company, in whole or in part, after the receipt of all applicable Regulatory Approvals, if any, up
to an aggregate of the number of fully paid and nonassessable shares of Common Stock set forth
in Item 5 of Schedule A hereto, at a purchase price per share of Common Stock equal to the
Exercise Price. The number of shares of Common Stock (the “Shares”) and the Exercise Price
are subject to adjustment as provided herein, and all references to “Common Stock,” “Shares”
and “Exercise Price” herein shall be deemed to include any such adjustment or series of
adjustments.

3. Exercise of Warrant; Term. Subject to Section 2, to the extent permitted by
applicable laws and regulations, the right to purchase the Shares represented by this Warrant is
exercisable, in whole or in part by the Warrantholder, at any time or from time to time after the
execution and delivery of this Warrant by the Company on the date hereof, but in no event later
than 5:00 p.m., New York City time on [@], 2020! (the “Expiration Time”), by (A) the surrender
of this Warrant and Notice of Exercise, in substantially the form set forth in Annex A attached
hereto, duly completed and executed on behalf of the Warrantholder, at the principal executive
office of the Company located at the address set forth in Item 6 of Schedule A hereto (or such
other office or agency of the Company in the United States as it may designate by notice in
writing to the Warrantholder at the address of the Warrantholder appearing on the books of the
Company), and (B) payment of the Exercise Price for the Shares thereby purchased:

(i) by having the Company withhold, from the shares of Common Stock that
would otherwise be delivered to the Warrantholder upon such exercise, shares of
Common Stock issuable upon exercise of the Warrant equal in value to the aggregate
Exercise Price as to which this Warrant is so exercised based on the Market Price of the
Common Stock on the trading day on which this Warrant is exercised and the Notice of
Exercise is delivered to the Company pursuant to this Section 3, or

(ii) with the consent of both the Company and the Warrantholder, by
tendering in cash, by certified or cashier’s check payable to the order of the Company, or

' Ten years from Issue Date.


Preferred Stock
Par value: $1.00
Total Authorized: 50,000,000 shares authorized.

Outstanding (by series): 3,600,000 shares of 7.125% Noncumulative Perpetual Monthly

Income Preferred Stock, Series A

3,000,000 shares of 8.35% Noncumulative Perpetual Monthly
Income Preferred Stock, Series B

4,140,000 shares of 7.40% Noncumulative Perpetual Monthly
Income Preferred Stock, Series C

3,680,000 shares of 7.25% Noncumulative Perpetual Monthly
Income Preferred Stock, Series D

7,584,000 shares of 7.00% Noncumulative Perpetual Monthly
Income Preferred Stock, Series E

400,000 shares of Fixed Rate Cumulative Perpetual Preferred
Stock, Series F

Reserved for issuance: None
Remaining authorized but unissued: 27,596,000
Proposed to be issued:

Fixed Rate Cumulative Mandatorily Convertible Preferred Stock,
Series G, in exchange for Series F Preferred Stock

Sch. A-2


(including all documents incorporated therein), contain the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior and contemporaneous
arrangements or undertakings with respect thereto.

[Remainder of page intentionally left blank]

-14-


Section 3.6 Anti-Takeover Provisions and Rights Plan. The Board of Directors has
taken all necessary action to ensure that the transactions contemplated by this Agreement and the
Amended Warrant and the consummation of the transactions contemplated hereby and thereby,
including the conversion of the Capital Securities in accordance with the terms of the New
Certificate of Designations and the exercise of the Amended Warrant in accordance with its
terms, will be exempt from any anti-takeover or similar provisions of the Company’s Charter and
bylaws, and any other provisions of any applicable “moratorium”, “control share”, “fair price”,
“interested stockholder” or other anti-takeover laws and regulations of any jurisdiction. The
Company has taken all actions necessary to render any stockholders’ rights plan of the Company
inapplicable to this Agreement, the Capital Securities and the Amended Warrant and the
consummation of the transactions contemplated hereby and thereby, including the conversion of
the Capital Securities in accordance with the terms of the New Certificate of Designations and
the exercise of the Amended Warrant by the Investor in accordance with its terms.

Section 3.7 No Company Material Adverse Effect. Since December 31, 2009, no
fact, circumstance, event, change, occurrence, condition or development has occurred that,
individually or in the aggregate, has had or would reasonably be likely to have a Company
Material Adverse Effect, except as disclosed on Schedule B.

Section 3.8 Offering of Securities. Neither the Company nor any person acting on its
behalf has taken any action (including any offering of any securities of the Company under
circumstances which would require the integration of such offering with the offering of the
Capital Securities under the Securities Act and the rules and regulations of the SEC promulgated
thereunder), which might subject the offering, issuance or sale of the Capital Securities to the
Investor pursuant to this Agreement to the registration requirements of the Securities Act.

Section 3.9 Brokers and Finders. No broker, finder or investment banker is entitled
to any financial advisory, brokerage, finder’s or other fee or commission in connection with this
Agreement or the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company or any Company Subsidiary for which the Investor could have any
liability.

Section 3.10 Disclosure on Form 10-K and Form 10-Q. The Company has disclosed
in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and

Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010 all agreements,
contracts and arrangements required to be disclosed therein.

ARTICLE IV
COVENANTS
Section 4.1 Commercially Reasonable Efforts. Subject to the terms and conditions
of this Agreement, each of the parties will use its commercially reasonable efforts in good faith

to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable laws, so as to permit consummation of the

-8-


(ii) the Ex-Dividend Date in the case of a Specified Corporate Transaction
contemplated by Section 9(a)(i), the date of adoption of the plan in the case of a Specified
Corporate Transaction contemplated by Section 9(a)(ii) or the date on which the
Specified Corporate Transaction is anticipated to be effective in the case of a Specified
Corporate Transaction contemplated by Section 9(a)(iii);

(iii) the date by which the Specified Corporate Transaction conversion option
must be exercised by a holder of Designated Preferred Stock;

(iv) the Conversion Rate then in effect and whether the Corporation will pay
cash or issue shares of Common Stock (calculated in accordance with Section 6(e) above)
in respect of accrued and unpaid dividends; and

(v) the place or places where certificates for shares of Designated Preferred
Stock are to be surrendered for issuance of certificates representing Shares.

(c) To exercise a Specified Corporate Transaction conversion option, a holder of the
Designated Preferred Stock must, no later than 5:00 p.m., New York City time, on the date by
which the conversion option upon the Specified Corporate Transaction must be exercised as
specified in the Notice of Specified Corporate Transaction delivered under Section 9(b), comply
with the procedures set forth in Section 6(h) and indicate that it is exercising its conversion
option pursuant to this Section 9.

~  (d) If a holder of the Designated Preferred Stock does not elect to’ exercise its
conversion option pursuant to this Section 9, the shares of Designated Preferred Stock or
successor securities held by it shall remain outstanding but the holder of the Designated
Preferred Stock shall not thereafter be entitled to convert such holder shares of the Designated
Preferred Stock in accordance with this Section 9.

Section 10. Conversion upon Change of Control.

(a) Change of Control. In addition to the right of a holder of Designated Preferred
Stock, at such holder’s option, to convert, at any time and from time to time, all or any portion of
the Designated Preferred Stock as set forth in Section 6, a holder of Designated Preferred Stock
shall have the right, at such holder’s option, to convert all or any portion of such holder’s
Designated Preferred Stock into a number of Shares equal to the product of the then-applicable
Conversion Rate and the number of shares of Designated Preferred Stock surrendered for
conversion during the period beginning on the Business Day following the effective date of the
Change of Control (the "Change of Control Effective Date") and ending on the date that is 30
calendar days after the Change of Control Effective Date; provided, however, notwithstanding
anything in this Certificate of Designations to the contrary, holders of Designated Preferred
Stock shall not be entitled to convert shares of Designated Preferred Stock until the converting
holder has first received any applicable Regulatory Approvals. In addition to the number of
Shares issuable upon conversion upon a Change of Control, the holders of shares of Designated
Preferred Stock so converted shall have the right to receive any accrued and unpaid dividends on
such shares to, but excluding, the Conversion Date (including, if applicable, as provided in

A-20


(63) "Business Day" means any day except Saturday, Sunday and any day on which
banking institutions in the State of New York generally are authorized or required by law or
other governmental actions to close.

(g) “Bylaws” means the bylaws of the Corporation, as they may be amended from
time to time.

(h) "Capital Stock" means (A) with respect to any Person that is a corporation or
company, any and all shares, interests, participations or other equivalents (however designated)
of capital or capital stock of such Person and (B) with respect to any Person that is not a
corporation or company, any and all partnership or other equity interests of such Person.

(0) "Certificate of Designations" means the Certificate of Designations or comparable
instrument relating to the Designated Preferred Stock, of which these Standard Provisions form a
part, as it may be amended from time to time.

@) "Change of Control" means the occurrence of one of the following:

(i) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" becomes the "beneficial
owner" (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the Capital Stock of the Corporation that
is at the time entitled to vote by the holder thereof in the election of the Board of
Directors (or comparable body); or oF

(ii) the first day on which a majority of the members of the Board of Directors
are not Continuing Directors.

(k) "Change of Control Effective Date" has the meaning set forth in Section 10(a).

()) "Charter" means the Corporation’s certificate or articles of incorporation, articles
of association, or similar organizational document.

(m) "Common Stock Issuance" has the meaning set forth in Section 11(d).

(n) "Common Stock Offering" means the sale and issuance for cash by the
Corporation to persons other than the Corporation or any of its subsidiaries after the Original
Issue Date of shares of Common Stock (other than any such sales and issuances made pursuant
to agreements or arrangements entered into, or pursuant to financing plans which were publicly
announced, on or prior to the Signing Date).

(0) “Company Material Adverse Effect” means a material adverse effect on the
business, results of operation or financial condition of the Corporation and its consolidated
subsidiaries taken as a whole; provided, however, that Company Material Adverse Effect shall
not be deemed to include the effects of (i) changes after the date hereof in general business,
economic or market conditions (including changes generally in prevailing interest rates, credit
availability and liquidity, currency exchange rates and price levels or trading volumes in the
United States or foreign securities or credit markets), or any outbreak or escalation of hostilities,

A-2


IN WITNESS WHEREOF, First BanCorp has caused this Certificate of Designations to
be signed by Lawrence Odell, its Executive Vice President and Secretary, this [e] day of [@],
2010.

FIRST BANCORP

By:

Name:
Title:


Preferred Stock for Shares and to own such Shares without such holder being in violation of any
applicable law, rule or regulation, including, without limitation, the Bank Holding Company Act
of 1956, as amended, and the Change in Bank Control Act of 1978, as amended, and the receipt
of any necessary approvals and authorizations of, filings and registrations with, notifications to,
or expiration or termination of any applicable waiting period under, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any other applicable laws and the rules
and regulations thereunder.

(au) "Regulatory Event" means, with respect to the Corporation, that (i) the Federal
Deposit Insurance Corporation or any other governmental authority shall be appointed as
conservator or receiver for the Corporation; (ii) the Corporation shall have been considered in
"troubled condition" for the purposes of 12 U.S.C. Sec. 1831i or any regulation promulgated
thereunder; (iii) the Corporation shall qualify as “Undercapitalized," "Significantly
Undercapitalized," or "Critically Undercapitalized" as those terms are defined in 12 C.F.R. Sec,
208.43; or (iv) the Corporation shall have become subject to any formal or informal regulatory
action requiring the Corporation to materially improve its capital, liquidity or safety and
soundness.

(vv) "Share Dilution Amount" has the meaning set forth in Section 3(b).

(ww) "Shares" means the shares of the Corporation’s Common Stock issuable upon
conversion of the Designated Preferred Stock.

(xx) "Special Distribution” means a distribution on the Common Stock of:

69) rights, options or warrants (other than pursuant to a shareholder rights
plan) entitling holders of Common Stock to purchase, for a period of 45 calendar days or
less, shares of Common Stock at a price less than the average Market Price of the
Common Stock for the 10 consecutive Trading Days immediately preceding the
declaration date for such distribution; or

(ii) cash or other assets, debt securities or rights to purchase the Corporation’s
securities (other than pursuant to a shareholder rights plan or a dividend or distribution on
the Common Stock in shares of Common Stock), which distribution has a per share value
as determined by the Board of Directors exceeding 10% of the Market Price of the
Common Stock on the Trading Day preceding the declaration date for such distribution.

(yy) "Specified Corporate Transaction" has the meaning set forth in Section 9(a).

(zz) "Standard Provisions" mean these Standard Provisions that form a part of the
Certificate of Designations relating to the Designated Preferred Stock.

(aaa) [Reserved.]
(bbb) "Trading Day" means (A) if the shares of Common Stock are not traded on any
national or regional securities exchange or association or over-the-counter market, a Business

Day or (B) if the shares of Common Stock are traded on any national or regional securities
exchange or association or over-the-counter market, a Business Day on which such relevant

A-6


of (i) the Liquidation Amount per share and (ii) the amount of any accrued and unpaid dividends
(including, if applicable as provided in Section 3(a) above, dividends on such amount), whether
or not declared, to the date of payment (such amounts collectively, the "Liquidation Preference").

(b) Partial Payment. If in any distribution described in Section 4(a) above the assets
of the Corporation or proceeds thereof are not sufficient to pay in full the amounts payable with
respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts
payable with respect of any other stock of the Corporation ranking equally with Designated
Preferred Stock as to such distribution, holders of Designated Preferred Stock and the holders of
such other stock shall share ratably in any such distribution in proportion to the full respective
distributions to which they are entitled.

(c) Residual Distributions. If the Liquidation Preference has been paid in full to all
holders of Designated Preferred Stock and the corresponding amounts payable with respect of
any other stock of the Corporation ranking equally with Designated Preferred Stock as to such
distribution has been paid in full, the holders of other stock of the Corporation shall be entitled to
receive all remaining assets of the Corporation (or proceeds thereof) according to their respective
rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of this
Section 4, the merger or consolidation of the Corporation with any other corporation or other

entity, including a merger or consolidation in which the holders of Designated Preferred Stock
receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash,
securities or other property) of all or substantially all of the assets of the Corporation, shall not
constitute a liquidation, dissolution or winding up of the Corporation.

Section 5. Redemption.

(a) Optional Redemption. The Corporation, at its option, subject to the approval of
the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from
time to time, out of funds legally available therefor, the shares of Designated Preferred Stock at
the time outstanding, upon notice given as provided in Section 5(c) below, at a redemption price
equal to the sum of (i) (A) the Liquidation Amount per share or (B) if redeemed on or after the
first Dividend Payment Date falling on or after the second anniversary of the Original Issue Date,
the greater of (1) the Liquidation Amount per share and (2) the product of the Conversion Rate
and the average of the Market Prices per share of Common Stock over the 20 consecutive
Trading Day period beginning on the Trading Day after the notice of redemption is given as
provided in Section 5(c) below and (ii) except as otherwise provided below, any accrued and
unpaid dividends to, but excluding, the date fixed for redemption (including, if applicable, as
provided in Section 3(a) above, dividends on such amount), regardless of whether any dividends
are actually declared; provided that the aggregate redemption price of the Designated Preferred
Stock redeemed pursuant to this paragraph may not exceed an amount equal to the sum of (x)
any aggregate gross proceeds of not less than the Minimum Amount received by the Corporation
from one or more Common Stock Offerings and (y) any net increase to the Corporation’s
retained earnings after the Original Issue Date above the Corporation’s retained earnings
reflected in its most recent publicly available balance sheet on or prior to the Original Issue Date;
and provided further that the minimum number of shares of Designated Preferred Stock

A-10


(c) "Exchange Value" means, for each share of Designated Preferred Stock, an
amount equal to $650.

(d) "Initial Conversion Price" means, for each share of Designated Preferred Stock,
an amount equal to $0.7252.

(e) “Initial Quarterly Dividend" means $0.07.

63) "Junior Stock" means the Common Stock and any other class or series of stock of
the Corporation the terms of which expressly provide that it ranks junior to Designated Preferred
Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the
Corporation. For purposes of clarification, the junior subordinated debentures issued by the
Corporation in connection with trust preferred securities issued by certain subsidiaries of the
Corporation shall not be deemed to be Junior Stock.

(g) "Liquidation Amount" means $1,000 per share of Designated Preferred Stock.

(h) "Mandatory Conversion Date" means the seventh anniversary of the Original
Issue Date.

@ "Minimum Amount" means $[e]. [Amount equal to 25% of the aggregate
Liquidation Amount of the Designated Preferred Stock issued on the Original Issue Date}

G) “Other Preferred Stock” has the meaning set forth in Section 7(b)(iii).
(k) “Other Preferred Stock Exchange” has the meaning set forth in Section 7(b)(iii).

qd) “Parity Stock" means any class or series of stock of the Corporation (other than
Designated Preferred Stock) the terms of which do not expressly provide that such class or series
shall rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to rights
on liquidation, dissolution or winding up of the Corporation (in each case without regard to
whether dividends accrue cumulatively or non-cumulatively). Without limiting the foregoing,
Parity Stock shall include the Corporation’s 7.125% Noncumulative Perpetual Monthly Income
Preferred Stock, Series A, 8.35% Noncumulative Perpetual Monthly Income Preferred Stock,
Series B, 7.40% Noncumulative Perpetual Monthly Income Preferred Stock, Series C, 7.25%
Noncumulative Perpetual Monthly Income Preferred Stock, Series D, and 7.00% Noncumulative
Perpetual Monthly Income Preferred Stock, Series E. For purposes of clarification, the junior
subordinated debentures issued by the Corporation in connection with trust preferred securities
issued by certain subsidiaries of the Corporation shall not be deemed to be Parity Stock.

(m) "Signing Date" means July 7, 2010.

Part 4. Certain Voting Matters. Whether the vote or consent of the holders of a plurality,
majority or other portion of the shares of Designated Preferred Stock and any Voting Parity
Stock has been cast or given on any matter on which the holders of shares of Designated
Preferred Stock are entitled to vote shall be determined by the Corporation by reference to the
specified liquidation amount of the shares voted or covered by the consent as if the Corporation
were liquidated on the record date for such vote or consent, if any, or, in the absence of a record

-2-


Section 5.10 Bank or Thrift Holding Company Status.

(a) The Company shall maintain its status as a Bank Holding Company (or, if
permitted to become a Savings and Loan Holding Company in accordance with Subsection (b)
below, such status) for as long as the Investor owns any debt or equity securities of the Company
or an Affiliate of the Company acquired pursuant to this Agreement.

(b) | The Company may become a Savings and Loan Holding Company in accordance
with the requirements of the Home Owners’ Loan Act and applicable regulations, provided that
it has duly fulfilled any commitments to or other requirements or obligations imposed by the
Board of Governors of the Federal Reserve System.

Section 5.11 Compliance with Employ American Workers Act. Until the Company
is no longer deemed a recipient of funding under Title I of EESA or Section 13 of the Federal
Reserve Act for purposes of the EAWA, as the same may be determined pursuant to any
regulations or other legally binding guidance promulgated under EAWA, the Company shall
comply, and the Company shall take all necessary action to ensure that its subsidiaries comply,
in all respects with the provisions of the EAWA and any regulations or other legally binding
guidance promulgated under the EAWA.

ARTICLE VI

MISCELLANEOUS

Section 6.1 Termination. This Agreement may be terminated at any time prior to the
Closing:

(a) by either the Investor or the Company if the Closing shall not have occurred by
the 90th calendar day following the date hereof; provided, however, that in the event the Closing
has not occurred by such 90th calendar day, the parties will consult in good faith to determine
whether to extend the term of this Agreement, it being understood that the parties shall be
required to consult only until the fifth day after such 90th calendar day and not be under any
obligation to extend the term of this Agreement thereafter; provided, further, that the right to
terminate this Agreement under this Section 6.1(a) shall not be available to any party whose
breach of any representation or warranty or failure to perform any obligation under this
Agreement shall have caused or resulted in the failure of the Closing to occur on or prior to such
date;

(b) by either the Investor or the Company in the event that any Governmental Entity
shall have issued an order, decree or ruling or taken any other action restraining, enjoining or

otherwise prohibiting the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable; or

(c) by the mutual written consent of the Investor and the Company.

In the event of termination of this Agreement as provided in this Section 6.1, this
Agreement shall forthwith become void and there shall be no liability on the part of either party

-18-


this Warrant before such adjustment, and (2) the Exercise Price in effect immediately prior to the
distribution giving rise to this adjustment by (y) the new Exercise Price determined in
accordance with the immediately preceding sentence. In the case of adjustment for a cash
dividend that is, or is coincident with, a regular quarterly cash dividend, the Per Share Fair
Market Value would be reduced by the per share amount of the portion of the cash dividend that
would constitute an Ordinary Cash Dividend. In the event that such distribution is not so made,
the Exercise Price and the number of Shares issuable upon exercise of this Warrant then in effect
shall be readjusted, effective as of the date when the Board of Directors determines not to
distribute such shares, evidences of indebtedness, assets, rights, cash or warrants, as the case may
be, to the Exercise Price that would then be in effect and the number of Shares that would then
be issuable upon exercise of this Warrant if such record date had not been fixed.

(D) Certain Repurchases of Common Stock. In case the Company effects a Pro Rata
Repurchase of Common Stock, then the Exercise Price shall be reduced to the price determined
by multiplying the Exercise Price in effect immediately prior to the Effective Date of such Pro
Rata Repurchase by a fraction of which the numerator shall be (i) the product of (x) the number
of shares of Common Stock outstanding immediately before such Pro Rata Repurchase and
(y) the Market Price of a share of Common Stock on the trading day immediately preceding the
first public announcement by the Company or any of its Affiliates of the intent to effect such Pro
Rata Repurchase, minus (ii) the aggregate purchase price of the Pro Rata Repurchase, and of
which the denominator shall be the product of (a) the number of shares of Common Stock
outstanding immediately prior to such Pro Rata Repurchase minus the number of shares of
Common Stock so repurchased and (b) the Market Price per share of Common Stock on the
trading day immediately preceding the first public announcement by the Company or any of its ©
Affiliates of the intent to effect such Pro Rata Repurchase. In such event, the number of shares
of Common Stock issuable upon the exercise of this Warrant shall be increased to the number
obtained by dividing (x) the product of (1) the number of Shares issuable upon the exercise of
this Warrant before such adjustment, and (2) the Exercise Price in effect immediately prior to the
Pro Rata Repurchase giving rise to this adjustment by (y) the new Exercise Price determined in
accordance with the immediately preceding sentence. For the avoidance of doubt, no increase to
the Exercise Price or decrease in the number of Shares issuable upon exercise of this Warrant
shall be made pursuant to this Section 13(D).

(E) Business Combinations. In case of any Business Combination or reclassification
of Common Stock (other than a reclassification of Common Stock referred to in Section 13(A)),
the Warrantholder’s right to receive Shares upon exercise of this Warrant shall be converted into
the right to exercise this Warrant to acquire the number of shares of stock or other securities or
property (including cash) which the Common Stock issuable (at the time of such Business
Combination or reclassification) upon exercise of this Warrant immediately prior to such
Business Combination or reclassification would have been entitled to receive upon
consummation of such Business Combination or reclassification; and in any such case, if
necessary, the provisions set forth herein with respect to the rights and interests thereafter of the
Warrantholder shall be appropriately adjusted so as to be applicable, as nearly as may reasonably
be, to the Warrantholder’s right to exercise this Warrant in exchange for any shares of stock or
other securities or property pursuant to this paragraph. In determining the kind and amount of
stock, securities or the property receivable upon exercise of this Warrant following the
consummation of such Business Combination, if the holders of Common Stock have the right to

-10-


(i) if the Corporation makes a Special Distribution to all or substantially all
holders of Common Stock, at any time after the Corporation has given the notice of such
distribution as provided in Section 9(b) below until the earlier of 5:00 p.m., New York
City time, on the Business Day preceding the Ex-Dividend Date for such distribution or
any announcement by the Corporation that such distribution shall not take place;

(ii) if the Corporation adopts a plan relating to the liquidation or dissolution of
the Corporation, at any time beginning on the Business Day following the date notice of
the Specified Corporate Transaction is given as provided in Section 9(b) below and
ending on the date that is 30 calendar days after such date; or

(iii) if the Corporation consolidates or merges with or into any other Person, or
sells, leases, transfers, conveys or otherwise disposes, in one or a series of related
transactions, all or substantially all of its assets and those of its subsidiaries taken as a
whole to any Person that results in any reclassification, conversion, exchange or
cancellation of outstanding shares of the Capital Stock of the Corporation, other than any
merger solely for the purpose of changing the Corporation’s jurisdiction of incorporation
and resulting in a reclassification, conversion or exchange of outstanding Shares solely
into shares of common stock of the surviving entity, at any time beginning 15 days prior
to the date announced by the Corporation as the anticipated effective date of the
transaction and until and including the date which is 15 days after the date that is the
actual effective date of such transaction;

provided, however, notwithstanding anything in this Certificate of Designations to the contrary,
holders of Designated Preferred Stock shall not be entitled to convert shares of Designated
Preferred Stock until the converting holder has first received any applicable Regulatory
Approvals. In addition to the number of Shares issuable upon conversion in connection with a
Specified Corporate Transaction, the holders of shares of Designated Preferred Stock so
converted shall have the right to receive any accrued and unpaid dividends on such shares to, but
excluding, the Conversion Date (including, if applicable, as provided in Section 3(a) above,
dividends on such amount), regardless of whether any dividends are actually declared.

(b) Specified Corporate Transaction Conversion Procedures. In the event of a
Specified Corporate Transaction, the Corporation shall provide notice thereof to each holder of
Designated Preferred Stock. In the case of a Specified Corporate Transaction contemplated by
Section 9(a)(i), such notice shall be mailed at least 30 days prior to the Ex-Dividend Date for
such distribution. In the case of a Specified Corporate Transaction contemplated by
Section 9(a)(ii), such notice shall be mailed no later than 5 days after the adoption of the plan of
liquidation or dissolution. In the case of a Specified Corporate Transaction contemplated by
Section 9(a)(iii), such notice shall be mailed at least 20 days prior to the beginning of the
conversion period related to such Specified Corporate Transaction. Each such notice given to a
holder shall state, as applicable:

qi) a description of the Specified Corporate Transaction, including a
description of the type and amount of the distribution to be made or consideration to be
received per share of Common Stock;


Defined Terms

Affiliate

Agreement

Amended Warrant
Benefit Plans

Board

Business Combination
Capital Securities
Capitalization Date
Charter

Closing

Closing Date

Common Stock
Company

Company Material Adverse Effect
Company Subsidiaries
Compensation Regulations
Designated Matters
Dividend Exchange
EAWA

EESA

Exchange

Exchange Act

GAAP

Governmental Entities
Information

Investor

Junior Stock

New Certificate of Designations
Observer

Old Warrant

Other Transactions

Parity Stock

Permitted Repurchases
Preferred Stock
Previously Disclosed
Relevant Period

SEC

Section 4.5 Employee
Securities Purchase Agreement
Senior Executive Officers
Series F Preferred Stock
Series F Shares

Share Dilution Amount
Status Report

subsidiary

Section 6.7(b)
Preamble

Recitals

Section 1.2(d)(viii)
Section 4.10(a)
Section 6.7(c)
Recitals

Section 3.1(b)
Section 1.2(d)(iv)
Section 1.2(a)
Section 1.2(a)
Recitals

Preamble

Section 6.7(d)
Section 4.4(a)
Section 1.2(d)(viii)
Section 6.7(e)
Recitals

Section 6.7(£)
Section 1.2(d)(viti)
Recitals

Section 5.3(b)
Section 5.7(a)@i)
Section 1.2(c)
Section 4.4(c)
Preamble

Section 6.7(g)
Section 1.2(d)(iv)
Section 4.10(a)
Recitals

Section 4.9
Section 6.7(h)
Section 5.7(a)(ii)
Section 6.7(i)
Section 6.7(j)
Section 1.2(d)(viii)
Section 3.5(b)
Section 4.5(b)
Recitals

Section 1.2(d)(viii)
Recitals

Recitals

Section 5.7(a)(ii)
Section 4.9
Section 6.7(a)

-iv-


effect at the time of the record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to the number obtained by
multiplying the Conversion Price in effect immediately prior to the record or effective date, as
the case may be, for the dividend, distribution, subdivision, combination or reclassification
giving rise to this adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock outstanding at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or reclassification, in each
case, prior to giving effect to such event, and (y) the denominator of which shall be the number
of shares of Common Stock outstanding immediately after, and solely as a result of, such event.

(b) Issuance of Common Stock upon Other Preferred Stock Exchange.

@ Until the date on which the Original Designated Preferred Stockholder no
longer holds the Designated Preferred Stock or any portion thereof, (A) if (1) Other
Preferred Stock shall have been exchanged for Common Stock pursuant to an Other
Preferred Stock Exchange and (2) the value of the Other Preferred Stock for purposes of
the Other Preferred Stock Exchange (which shall equal the Market Price per share of
Common Stock as of the Signing Date multiplied by the aggregate number of shares of
Common Stock for which the Other Preferred Stock is exchanged) shall have exceeded
49% of the liquidation preference of such Other Preferred Stock, then the consideration
per share of Common Stock received by the Corporation in such Other Preferred Stock
Exchange for purposes of Section 11(b)(ii) below shall be deemed to equal the number
obtained by dividing (i) the amount equal to 49% of the liquidation preference of such
Other Preferred Stock by (ii) the number of shares of Common Stock issued by the
Corporation in connection with the Other Preferred Stock Exchange.

(ii) In the event that, after taking into account the adjustments required
pursuant to Section 11(b)(i) above, the Other Preferred Stock shall have been exchanged
for shares of Common Stock at a consideration per share of Common Stock that is less
than the Conversion Price in effect immediately prior to the Other Preferred Stock
Exchange, then the Conversion Price shall be decreased to the number obtained by
multiplying the Conversion Price in effect immediately before the Other Preferred
Exchange by a fraction (1) the numerator of which shall be the sum of (i) the number of
shares of Common Stock of the Corporation outstanding immediately prior to the Other
Preferred Stock Exchange and (ii) the number of additional shares of Common Stock
which the aggregate consideration deemed to be received by the Corporation for the
Common Stock issued in the Other Preferred Stock Exchange would purchase at the
Conversion Price in effect immediately prior to the Other Preferred Stock Exchange, and
(2) the denominator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to the Other Preferred Stock Exchange and (ii) the
number of shares of Common Stock issued by the Corporation in connection with the
Other Preferred Stock Exchange.

(ii) Any adjustment made pursuant to this Section 11(b) shall become

effective immediately upon acceptance by the Corporation of the shares that are tendered
in the Other Preferred Stock Exchange.

A-22


Section 3(a) above, dividends on such amount), regardless of whether any dividends are actually
declared.

(b) Change of Control Conversion Procedures. In the event of a Change of Control,
the Corporation shall provide notice thereof to each holder of Designated Preferred Stock. Such
notice shall be mailed at least 20 days prior to the date on which the Corporation anticipates
consummating the Change of Control (or, if later, within two Business Days after the
Corporation becomes aware of a Change of Control). Each such notice given to a holder shall
state:

@ a description of the Change of Control;

(ii) the date on which the Change of Control is anticipated to be effected or, if
known, the Change of Control Effective Date;

Gii) the date by which the Change of Control conversion option must be
exercised, which shall be 30 calendar days after the Change of Control Effective Date;

(iv) the Conversion Rate then in effect and whether the Corporation will pay
cash or issue shares of Common Stock (calculated in accordance with Section 6(e) above)
in respect of accrued and unpaid dividends; and

(v) the place or places where certificates for shares of Designated Preferred
Stock are to be surrendered for issuance of certificates representing Shares.

(c) To exercise a Change of Control conversion option, a holder of the Designated
Preferred Stock must, no later than 5:00 p.m., New York City time, on the date by which the
conversion option upon the Change of Control must be exercised as specified in the notice
delivered under Section 10(b), comply with the procedures set forth in Section 6(h) and indicate
that it is exercising its conversion option pursuant to this Section 10.

(d) If a holder of the Designated Preferred Stock does not elect to exercise its
conversion option pursuant to this Section 10, the shares of Designated Preferred Stock or
successor securities held by it shall remain outstanding but the holder of the Designated
Preferred Stock shall not thereafter be entitled to convert such holder’s shares of the Designated
Convertible Preferred Stock in accordance with this Section 10.

Section 11. Anti-Dilution Adjustments. The Conversion Price and the Conversion
Rate shall be subject to adjustment from time to time as follows; provided, that if more than one
Subsection of this Section 11 is applicable to a single event, the Subsection shall be applied that
produces the largest adjustment and no single event shall cause an adjustment under more than
one Subsection of this Section 11 so as to result in duplication:

(a) Stock Splits, Subdivisions, Reclassifications or Combinations. If the Corporation
shall (i) declare and pay a dividend or make a distribution on its Common Stock in shares of
Common Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares of Common Stock, or (iii) combine or reclassify the outstanding shares
of Common Stock into a smaller number of shares of Common Stock, the Conversion Price in

A-21


outstanding immediately prior to the Common Stock Issuance and (2) the number of shares of
Common Stock issued (or into which Convertible Securities may be exercised or converted) in
connection with the Common Stock Issuance.

For purposes of the foregoing, the aggregate consideration receivable by the Corporation
in connection with a Common Stock Issuance shall be deemed to be equal to the sum of the net
offering price (including the Fair Market Value of any non-cash consideration and after
deduction of any related expenses payable to third parties) of all such securities plus the
minimum aggregate amount, if any, payable upon exercise or conversion of any such
Convertible Securities into shares of Common Stock; and "Permitted Transactions" shall mean
issuances (i) as consideration for or to fund the acquisition of businesses and/or related assets at
Fair Market Value, (ii) in connection with employee benefit plans and compensation related
arrangements in the ordinary course and consistent with past practice approved by the Board of
Directors, (iii) in connection with a public or broadly marketed offering and sale of Common
Stock or Convertible Securities for cash conducted by the Corporation or its Affiliates pursuant
to registration under the Securities Act or Rule 144A thereunder on a basis consistent with
capital raising transactions by comparable financial institutions and (iv) in connection with the
exercise of preemptive rights on terms existing as of the Original Issue Date. Any adjustment
made pursuant to this Section 11(d) shall become effective immediately upon the date of such
issuance. For the avoidance of doubt, notwithstanding any other provision hereof, Section 11(d)
shall not apply to any transaction to which Section 11(a), 11(b) or 11(c) applies.

(e) Other Distributions. In case the Corporation shall fix a record date for the making
of a distribution to all holders of its shares‘of Common Stock, evidences of indebtedness, assets,
cash, rights or warrants (excluding Ordinary Cash Dividends, dividends of its Common Stock
and other dividends or distributions referred to in Section 11(a)), in each such case, the
Conversion Price in effect prior to such record date shall be reduced immediately thereafter to
the price determined by multiplying the Conversion Price in effect immediately prior to the
reduction by the quotient of (x) the Market Price of the Common Stock on the last Trading Day
preceding the first date on which the Common Stock trades in a regular way (including on the
principal national securities exchange on which the Common Stock is listed or admitted to
trading) without the right to receive such distribution, minus the amount of cash and/or the Fair
Market Value of the securities, evidences of indebtedness, assets, cash, rights or warrants to be
so distributed in respect of one share of Common Stock (such amount and/or Fair Market Value,
the "Per Share Fair Market Value") divided by (y) such Market Price on such date specified in
clause (x); such adjustment shall be made successively whenever such a record date is fixed. In
the case of adjustment for a cash dividend that is, or is coincident with, a regular quarterly cash
dividend, the Per Share Fair Market Value would be reduced by the per share amount of the
portion of the cash dividend that would constitute an Ordinary Cash Dividend. In the event that
such distribution is not so made, the Conversion Price then in effect shall be readjusted, effective
as of the date when the Board of Directors determines not to distribute such securities, evidences
of indebtedness, assets, rights, cash or warrants, as the case may be, to the Conversion Price that
would then be in effect and the Conversion Rate if such record date had not been fixed.

(f) Certain Repurchases of Common Stock. In case the Corporation effects a Pro

Rata Repurchase of Common Stock, then the Conversion Price shall be reduced to the price
determined by multiplying the Conversion Price in effect immediately prior to the Effective Date

A-24


“Initial Conversion Price” has the meaning set forth in Part 3 of the Certificate of
Designations.

“Initial Number” has the meaning set forth in Section 13(B)(2).
“Issue Date” means the date set forth in Item 3 of Schedule A hereto.

“Market Price” means, with respect to the Common Stock, on any given date, the
average VWAP for the 5 consecutive trading day-period ending on the Trading Day immediately
preceding such given date. “Market Price” shall be determined without reference to after hours
or extended hours trading. If the Common Stock is not listed and traded in a manner that the
quotations referred to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be (i) in the event that any portion of the Warrant is
held by the Original Warrantholder, the fair market value per share of the Common Stock as
determined in good faith by the Original Warrantholder or (ii) in all other circumstances, the fair
market value per share of the Common Stock as determined in good faith by the Board of
Directors in reliance on an opinion of a nationally recognized independent investment banking
corporation retained by the Company for this purpose and certified in a resolution to the
Warrantholder. For the purposes of determining the Market Price of the Common Stock on the
“trading day” preceding, on or following the occurrence of an event, (i) that trading day shall be
deemed to commence immediately after the regular scheduled closing time of trading on the
New York Stock Exchange or, if trading is closed at an earlier time, such earlier time and (ii) that
trading day shall end at the next regular scheduled closing time, or if trading is closed at an
earlier time, such earlier time (for the avoidance of doubt, and as an example, if the Market Price
is to be determined as of the last trading day preceding a specified event and the closing time of
trading on a particular day is 4:00 p.m. and the specified event occurs at 5:00 p.m. on that day,
the Market Price would be determined by reference to such 4:00 p.m. closing time).

“Ordinary Cash Dividends” means a regular quarterly cash dividend on shares of
Common Stock out of surplus or net profits legally available therefor (determined in accordance
with generally accepted accounting principles in effect from time to time), provided that
Ordinary Cash Dividends shall not include any cash dividends paid subsequent to the Issue Date
to the extent the aggregate per share dividends paid on the outstanding Common Stock in any
quarter exceed the amount set forth in Item 4 of Schedule A hereto, as adjusted for any stock
split, stock dividend, reverse stock split, reclassification or similar transaction.

“Original Warrant” has the meaning set forth in Section 15.

“Original Warrantholder” means the United States Department of the Treasury and any
successor or assign that is an Affiliate of the United States Department of the Treasury. Any
actions specified to be taken by the Original Warrantholder hereunder may only be taken by such
Person and not by any other Warrantholder.

“Permitted Transactions” bas the meaning set forth in Section 13(B).

“Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.


assumes the due and punctual performance and observance of each and every covenant,
agreement and condition of this Agreement and the Amended Warrant to be performed and
observed by the Company.

(b) Without the prior written consent of the Investor, until such time as the Investor
shall cease to own any debt or equity securities of the Company acquired pursuant to this
Agreement or the Amended Warrant (including, for the avoidance of doubt, the Capital
Securities, the Underlying Common Shares and the Warrant Shares), the Company shall not
permit any of its “significant subsidiaries” (as such term is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) to (i) engage in
any merger, consolidation, statutory share exchange or similar transaction following the
consummation of which such significant subsidiary is not wholly-owned by the Company, (ii)
dissolve or sell all or substantially all of its assets or property other than in connection with an
internal reorganization or consolidation involving wholly-owned subsidiaries of the Company or
(iii) issue or sell any shares of its capital stock or any securities convertible or exercisable for any
such shares, other than issuances or sales in connection with an internal reorganization or
consolidation involving wholly-owned subsidiaries of the Company.

Section 5.4 Transfer_of Capital Securities; Underlying Common Shares and
Warrant Shares. Subject to compliance with applicable securities laws, the Investor shall be
permitted to transfer, sell, assign or otherwise dispose of ("Transfer") all or a portion of the
Capital Securities, Amended Warrant, Underlying Common Shares or Warrant Shares at any
time, and the Company shall take all steps as may be reasonably requested by the Investor to
facilitate the Transfer of the Capital Securities, the Underlying Common Shares and the Warrant
Shares.

Section 5.5 Registration Rights. The Capital Securities, Amended Warrant,
Underlying Common Shares and Warrant Shares shall be Registrable Securities under the
Securities Purchase Agreement and the Capital Securities shall be Preferred Shares under the
Securities Purchase Agreement and, upon their issuance, the provisions of Section 4.5 of the
Securities Purchase Agreement shall be applicable to them, including with the benefit, to the
extent available, of the tacking of any holding period from the date of issuance of the Series F
Preferred Stock. The Investor acknowledges that, on the date hereof, the Company is not eligible
to file a registration statement on Form S-3 covering all of the Capital Securities, Amended
Warrant, Underlying Common Shares and Warrant Shares, and the Company shall not be
obligated to file a Shelf Registration Statement (as defined in Section 4.5 of the Securities
Purchase Agreement) unless and until requested to do so in writing by the Investor.

Section 5.6 Voting Matters.

(a) The Investor agrees that it will vote, or cause to be voted, or exercise its right to
consent (or cause its right to consent to be exercised) with respect to, all Underlying Common
Shares and Warrant Shares beneficially owned by it and its controlled Affiliates (and which are
entitled to vote on such matter) with respect to each matter on which holders of Common Stock
are entitled to vote or consent, other than a Designated Matter, in the same proportion (for,
against or abstain) as all other shares of the Company's Common Stock are voted or consents are
given with respect to each such matter. The Investor agrees to attend all meetings of the

-15-


entity (x) of which such person or a subsidiary of such person is a general partner or (y) of which
a majority of the voting securities or other voting interests, or a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a majority of the board of
directors or persons performing similar functions with respect to such entity, is directly or
indirectly owned by such person and/or one or more subsidiaries thereof.

(b) ‘The term “Affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other person. For
purposes of this definition, “control” (including, with correlative meanings, the terms “controlled
by” and “under common control with”) when used with respect to any person, means the
possession, directly or indirectly, of the power to cause the direction of management and/or
policies of such person, whether through the ownership of voting securities by contract or
otherwise.

(c) The term “Business Combination” means a merger, consolidation, statutory share
exchange or similar transaction that requires the approval of the Company’s stockholders.

(d) The term “Company Material Adverse Effect” means a material adverse effect
on the business, results of operation or financial condition of the Company and its consolidated
subsidiaries taken as a whole; provided, however, that Company Material Adverse Effect shall
not be deemed to include: (i) the effects of (A) changes after the date hereof in general business,
economic or market conditions (including changes generally in prevailing interest rates, credit
availability and liquidity, currency exchange rates and price levels or trading volumes in the
United States or foreign securities or credit markets), or any outbreak or escalation of hostilities,
declared or undeclared acts of war or terrorism, in each case generally affecting the industries in
which the Company and its subsidiaries operate, (B) changes or proposed changes after the date
hereof in GAAP or regulatory accounting requirements, or authoritative interpretations thereof,
(C) changes or proposed changes after date hereof in securities, banking and other laws of
general applicability or related policies or interpretations of Governmental Entities (in the case of
each of these clauses (A), (B) and (C), other than changes or occurrences to the extent that such
changes or occurrences have or would. reasonably be expected to have a materially
disproportionate adverse effect on the Company and its consolidated subsidiaries taken as a
whole relative to comparable U.S. banking or financial services organizations), or (D) changes in
the market price or trading volume of the Common Stock or any other equity, equity-related or
debt securities of the Company or its consolidated subsidiaries (it being understood and agreed
that the exception set forth in this clause (D) does not apply to the underlying reason giving rise
to or contributing to any such change); or (ii) the ability of the Company to consummate the
Exchange and the other transactions contemplated by this Agreement and perform its obligations
hereunder on a timely basis.

{e) “Designated Matters” means (i) the election and removal of directors, (ii) the
approval of any Business Combination, (iii) the approval of a sale of all or substantially all of the
assets or property of the Company, (iv) the approval of a dissolution of the Company, (v) the
approval of any issuance of any securities of the Company on which holders of Common Stock
are entitled to vote, (vi) the approval of any amendment to the Charter or bylaws of the Company
on which holders of Common Stock are entitled to vote and (vii) the approval of any other

-21-


Parity Stock in the ordinary course of its business, (D) purchases by a broker-dealer
subsidiary of the Company of trust preferred securities or capital stock of the Company or
an Affiliate of the Company for resale pursuant to an offering by the Company of such
trust preferred securities or capital stock underwritten by such broker-dealer subsidiary,
(E) any redemption or repurchase of rights pursuant to any stockholders’ rights plan,
(F) the acquisition by the Company or any of the Company Subsidiaries of record
ownership in Junior Stock, Parity Stock or trust preferred securities of the Company or an
Affiliate of the Company for the beneficial ownership of any other persons (other than
the Company or any other Company Subsidiary), including as trustees or custodians,
(G) the Other Transactions, and (H) the exchange or conversion of Junior Stock for or
into other Junior Stock or of Parity Stock or trust preferred securities of the Company or
an Affiliate of the Company for or into other Parity Stock (with the same or lesser
aggregate liquidation amount) or Junior Stock, in each case set forth in this clause (H),
solely to the extent required pursuant to binding contractual agreements entered into prior
to the date hereof or any subsequent agreement for the accelerated exercise, settlement or
exchange thereof for Common Stock (clauses (C) and (F), collectively, the “Permitted
Repurchases”). “Share Dilution Amount” means the increase in the number of diluted
shares outstanding (determined in accordance with United States generally accepted
accounting principles (“GAAP”), and as measured from the date of the Company’s most
recently filed consolidated financial statements prior to the Closing Date) resulting from
the grant, vesting or exercise of equity-based compensation to employees and equitably
adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar
transaction.

(b) Until such time as the Investor ceases to own any Capital Securities, the Company
shall not repurchase any Capital Securities from any holder thereof, whether by means of open
market purchase, negotiated transaction, or otherwise, other than Permitted Repurchases, unless
it offers to repurchase a ratable portion of the Capital Securities then held by the Investor on the
same terms and conditions.

(c) The parties agree that, effective as of the date hereof, Section 4.8 of the Securities
Purchase Agreement shall be amended in its entirety by replacing such Section 4.8 with the
provisions set forth in this Section 5.7 and any terms included in this Section 5.7 that are not
otherwise defined in the Securities Purchase Agreement shall have the meanings ascribed to such
terms in this Agreement.

Section 5.8 Repurchase of Investor Securities. From and after the date of this
Agreement, the agreements set forth in Section 4.9 of the Securities Purchase Agreement shall be
applicable (including to the Amended Warrant) following the redemption in whole of the Capital
Securities held by the Investor or the Transfer by the Investor of all of the Capital Securities held
by the Investor to one or more third parties not affiliated with the Investor.

Section 5.9  [Reserved.]

-17-


“Per Share Fair Market Value” has the meaning set forth in Section 13(C).

“Preferred Stock” means the Fixed Rate Cumulative Mandatorily Convertible Preferred
Stock, Series G, described in the Certificate of Designations.

“Preferred Stock Conversion Price” means the Conversion Price, as defined in the
Certificate of Designations, as adjusted from time to time, irrespective of whether or not any
Preferred Stock is outstanding.

“Pro Rata Repurchases” means any purchase of shares of Common Stock by the
Company or any Affiliate thereof pursuant to (A) any tender offer or exchange offer subject to
Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated thereunder or
(B) any other offer available to substantially all holders of Common Stock, in the case of both
(A) or (B), whether for cash, shares of Capital Stock of the Company, other securities of the
Company, evidences of indebtedness of the Company or any other Person or any other property
(including, without limitation, shares of Capital Stock, other securities or evidences of
indebtedness of a subsidiary), or any combination thereof, effected while this Warrant is
outstanding. The “Effective Date” of a Pro Rata Repurchase shall mean the date of acceptance of
shares of Common Stock for purchase or exchange by the Company under any tender or
exchange offer which is a Pro Rata Repurchase or the date of purchase with respect to any Pro
Rata Repurchase that is not a tender or exchange offer.

“Regulatory Approvals” with respect to the Warrantholder, means, to the extent
“applicable and required to permit the Warrantholder to exercise this Warrant for shares of
Common Stock and to own such Common Stock without the Warrantholder being in violation of
any applicable law, rule or regulation, including, without limitation, the Bank Holding Company
Act of 1956, as amended, and the Change in Bank Control Act of 1978, as amended, and the
receipt of any necessary approvals and authorizations of, filings and registrations with,
notifications to, or expiration or termination of any applicable waiting period under, the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any other applicable laws
and the rules and regulations thereunder.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute,
and the rules and regulations promulgated thereunder.

“Shares” has the meaning set forth in Section 2.

“trading day” means (A) if the shares of Common Stock are not traded on any national or
regional securities exchange or association or over-the-counter market, a business day or (B) if
the shares of Common Stock are traded on any national or regional securities exchange or
association or over-the-counter market, a business day on which such relevant exchange or
quotation system is scheduled to be open for business and on which the shares of Common
Stock (i) are not suspended from trading on any national or regional securities exchange or
association or over-the-counter market for any period or periods aggregating one half hour or
longer; and (ii) have traded at least once on the national or regional securities exchange or


shares of Common Stock to effectuate such conversion and exercise. Nothing in this Section 4.7
shall preclude the Company from satisfying its obligations in respect of the conversion of Capital
Securities or the exercise of the Amended Warrant by delivery of shares of Common Stock
which are held in the treasury of the Company.

Section 4.8 Monthly Lending Reports. During the Relevant Period, the Company
will detail in monthly reports submitted to the Investor the information required by the CPP
Monthly Lending Reports, as published on www. financialstability.gov from time to time.

Section 4.9 Status Reports. The Company has informed the Investor that the
Company intends to pursue certain other transactions described below (the "Other Transactions")
each with a target date for consummation as indicated (a "Targeted Completion Date"):

(a) Obtain stockholder approval of an amendment to the Company’s Charter
increasing the number of shares the Company is authorized to issue to at least 1,200,000,000
shares and changing the par value of the Common Stock to $0.10 per share by October 5, 2010;

(b) Exchange at least $385 million in aggregate liquidation value of the Company’s
7.125% Noncumulative Perpetual Monthly Income Preferred Stock, Series A, 8.35%
Noncumulative Perpetual Monthly Income Preferred Stock, Series B, 7.40% Noncumulative
Perpetual Monthly Income Preferred Stock, Series C, 7.25% Noncumulative Perpetual Monthly
Income Preferred Stock, Series D, and 7.00% Noncumulative Perpetual Monthly Income
Preferred Stock, Series E, for shares of Common Stock by October 5, 2010;

(c) Close one or more transactions in which investors other than the Investor have
provided a minimum aggregate amount of $500 million in gross cash proceeds to the Company
in exchange for Common Stock by October 5, 2010.

The Company will use its commercially reasonable efforts to consummate each of the
Other Transactions by its applicable Targeted Completion Date. Until all of the Other
Transactions have been consummated (or the Company and the Investor agree that one or more
of the Other Transactions is no longer susceptible to consummation on terms and conditions that
are in the Company’s best interest), the Company shall provide the Investor with a reasonably
detailed written report regarding the status of each of the Other Transactions at least once every
two weeks and more frequently if reasonably requested by the Investor; provided, however, that
if any one or more of the Other Transactions is not consummated by the time of its Targeted
Completion Date, the Company shall, with respect to any such non-consummated Other
Transaction, (x) within five business days after the Targeted Completion Date for such Other
Transaction provide to the Investor a reasonably detailed written description of the status of such
Other Transaction including the Company’s best estimate of the steps and timeline to complete
such Other Transaction (the "Status Report") and (y) thereafter, no less frequently than monthly
and more frequently if reasonably requested by the Investor until such Other Transactions have
been consummated, provide to the Investor an updated version of the Status Report.

Section 4.10 Observer to the Board.

(a) So long as the Investor and its Affiliates beneficially own any of the Capital
Securities or least 5% of the issued and outstanding Common Stock (treating all securities

-12-


IN WITNESS WHEREOF, I execute this waiver on my own behalf, thereby communicating my
acceptance and acknowledgement to the provisions herein.

Respectfully,

Name:
Title:
Date:

Annex D-3


(c) Issuances of Common Stock upon an Equity Raise. Until the date on which the
Original Designated Preferred Stockholder no longer holds the Designated Preferred Stock or
any portion thereof, if the Corporation shall issue or agree to issue shares of Common Stock (or
rights or warrants or other securities exercisable or convertible into or exchangeable for shares of
Common Stock) (collectively, "Convertible Securities")) to an Equity Investor pursuant to an
Equity Raise (an “Equity Raise Issuance”) without consideration or at a consideration per share
of Common Stock (or having a conversion price per share of Common Stock) that is less than
90% of the Market Price per share of Common Stock on the Trading Day immediately preceding
the pricing of the Equity Raise offering, then the Conversion Price in effect immediately prior to
the Equity Raise Issuance shall be decreased to the number obtained by multiplying such
Conversion Price by a fraction (A) the numerator of which shall be the sum of (1) the number of
shares of Common Stock of the Corporation outstanding immediately prior to the Equity Raise
Issuance and (2) the number of additional shares of Common Stock which the aggregate
consideration receivable by the Corporation for the total number of shares of Common Stock
issued (or into which Convertible Securities may be exercised or converted) in connection with
the Equity Raise Issuance would purchase at a consideration per share of 90% of the Market
Price per share of Common Stock on the Trading Day immediately preceding the pricing of the
Equity Raise offering, and (B) the denominator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to the Equity Raise Issuance and (2) the
number of shares of Common Stock issued (or into which Convertible Securities may be
exercised or converted) to the Equity Investor in connection with the Equity Raise Issuance.

For purposes of the foregoing, the aggregate consideration receivable by the Corporation
in connection with an Equity Raise Issuance shall’be deemed to be equal to the sum of the net
offering price (including the Fair Market Value of any non-cash consideration and after
deduction of any related expenses payable to third parties) of all Common Stock plus the
minimum aggregate amount, if any, payable upon exercise or conversion of any such
Convertible Securities into shares of Common Stock. Any adjustment made pursuant to this
Section 11(c) shall become effective immediately upon the date of the applicable Equity Raise
Issuance.

(d) Other Issuances of Common Stock. Until the date on which the Original
Designated Preferred Stockholder no longer holds the Designated Preferred Stock or any portion
thereof, if the Corporation shall issue shares of Common Stock or Convertible Securities other
than pursuant to a Permitted Transaction (as defined below) or a transaction for which
Sections 11(a), 11(b) or 11(c) apply (a "Common Stock Issuance") without consideration or at a
consideration per share (or having a conversion price per share) that is less than the Conversion
Price in effect immediately prior to such Common Stock Issuance, then the Conversion Price in
effect immediately prior to the Common Stock Issuance shall be decreased to the number
obtained by multiplying such Conversion Price by a fraction (A) the numerator of which shall be
the sum of (1) the number of shares of Common Stock of the Corporation outstanding
immediately prior to the Common Stock Issuance and (2) the number of additional shares of
Common Stock which the aggregate consideration receivable by the Corporation for the total
number of shares of Common Stock issued (or into which Convertible Securities may be
exercised or converted) in connection with the Common Stock Issuance would purchase at the
Conversion Price in effect immediately prior to such Common Stock Issuance and (B) the
denominator of which shall be the sum of (1) the number of shares of Common Stock

A-23


Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date
shall be payable to holders of record of Designated Preferred Stock as they appear on the stock
register of the Corporation on the applicable record date, which shall be the 15th calendar day
immediately preceding such Dividend Payment Date or such other record date fixed by the
Board of Directors or any duly authorized committee of the Board of Directors that is not more
than 60 nor less than 10 days prior to such Dividend Payment Date (each, a "Dividend Record
Date"). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether
or not such day is a Business Day.

Holders of Designated Preferred Stock shall not be entitled to any dividends, whether
payable in cash, securities or other property, other than dividends (if any) declared and payable
on Designated Preferred Stock as specified in this Section 3 (subject to the other provisions of
the Certificate of Designations).

(b) Priority of Dividends. So long as any share of Designated Preferred Stock
remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock
or any other shares of Junior Stock (other than dividends payable solely in shares of Common
Stock) or Parity Stock, subject to the immediately following paragraph in the case of Parity
Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly,
purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its
subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the
latest completed Dividend Period (including, if applicable as provided in Section 3(a) above,
dividends on such amount), on all outstanding shares of Designated Preferred Stock have been or
are contemporaneously declared and paid in full (or have been declared and a sum sufficient for
the payment thereof has been set aside for the benefit of the holders of shares of Designated
Preferred Stock on the applicable record date). The foregoing limitation shall not apply to
(i) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior
Stock in connection with the administration of any employee benefit plan in the ordinary course
of business (including purchases to offset the Share Dilution Amount (as defined below)
pursuant to a publicly announced repurchase plan) and consistent with past practice, provided
that any purchases to offset the Share Dilution Amount shall in no event exceed the Share
Dilution Amount; (ii) purchases or other acquisitions by a broker-dealer subsidiary of the
Corporation solely for the purpose of market-making, stabilization or customer facilitation
transactions in Junior Stock or Parity Stock in the ordinary course of its business; (iii) purchases
by a broker-dealer subsidiary of the Corporation of Capital Stock of the Corporation for resale
pursuant to an offering by the Corporation of such Capital Stock underwritten by such broker-
dealer subsidiary; (iv) any dividends or distributions of rights or Junior Stock in connection with
a stockholders” rights plan or any redemption or repurchase of rights pursuant to any
stockholders’ rights plan; (v) the acquisition by the Corporation or any of its subsidiaries of
record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other
Persons (other than the Corporation or any of its subsidiaries), including as trustees or
custodians; and (vi) the exchange or conversion of Junior Stock for or into other Junior Stock or
of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation
amount) or Junior Stock, in each case, solely to the extent required pursuant to binding
obligations entered into prior to the Signing Date or any subsequent agreement for the
accelerated exercise, settlement or exchange thereof for Common Stock. "Share Dilution
Amount" means the increase in the number of diluted shares outstanding (determined in

A-8


of the Company arising from financial assistance under the Troubled Asset Relief
Program remains outstanding (such period, as it may be further described in the
Compensation Regulations, the “Relevant Period”), in order to comply with Section 111
of EESA or the Compensation Regulations and (B) the Investor shall have received a
certificate signed on behalf of the Company by a Senior Executive Officer certifying to
the effect that the condition set forth in Section 1.2(d)(viii)(A) has been satisfied; “Senior
Executive Officers” means the Company's “senior executive officers” as defined in
Section 111 of the EESA and the Compensation Regulations.

Section 1.3 Interpretation. When a reference is made in this Agreement to
"Recitals," "Articles," "Sections," "Annexes" or "Schedules" such reference shall be to a Recital,
Article or Section of, or Annex or Schedule to, this Agreement, unless otherwise indicated. The
terms defined in the singular have a comparable meaning when used in the plural, and vice versa.
References to "herein", "hereof", "hereunder" and the like refer to this Agreement as a whole and
not to any particular section or provision, unless the context requires otherwise. The table of
contents and headings contained in this Agreement are for reference purposes only and are not
part of this Agreement. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed followed by the words “without limitation." No rule of
construction against the draftsperson shall be applied in connection with the interpretation or
enforcement of this Agreement, as this Agreement is the product of negotiation between
sophisticated parties advised by counsel. All references to "$" or "dollars" mean the lawful
currency of the United States of America. Except as expressly stated in this Agreement, all
references to any statute, rule or regulation are to the statute, rule or regulation as amended,
modified, supplemented or replaced from time to time (and, in the case of statutes, include any
rules and regulations promulgated under the statute) and to any section of any statute, rule or
regulation include any successor to the section. References to a "business day" shall mean any
day except Saturday, Sunday and any day on which banking institutions in the State of New
York generally are authorized or required by law or other governmental actions to close.

ARTICLE II
EXCHANGE

Section 2.1 Exchange; Dividend Exchange.

(a) On the terms and subject to the conditions set forth in this Agreement, (i) the
Company agrees to issue the Capital Securities to the Investor in exchange for 400,000 shares of
the Series F Shares, and the Investor agrees to deliver to the Company the Series F Shares in
exchange for the Capital Securities, and (ii) the Company and the Investor mutually agree to
amend and restate the Old Warrant to reflect the terms and conditions of the Amended Warrant.

(b) Simultaneously with the Exchange, the Company shall deliver to the Investor
pursuant to the Dividend Exchange the number of shares of Capital Securities (rounded to the
nearest whole number) determined by dividing the total amount of the cash payment of accrued
and unpaid dividends that would otherwise be payable to the Investor (rounded to the nearest
whole cent) by $1,000, representing the liquidation amount per share of the Capital Securities.
For the avoidance of doubt, if the Closing Date were June 15, 2010, the total amount of the cash

-4-


ANNEX A

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT
RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS.

AMENDED AND RESTATED
WARRANT
to purchase
5,842,259
Shares of Common Stock

of First BanCorp
Issue Date: [@], 2010

1. Definitions. Unless the context otherwise requires, when used herein the
following terms shall have the meanings indicated.

“Affiliate” has the meaning ascribed to it in the Exchange Agreement.

“Appraisal Procedure” means a procedure whereby two independent appraisers, one
chosen by the Company and one by the Original Warrantholder, shall mutually agree upon the
determinations then the subject of appraisal. Each party shall deliver a notice to the other
appointing its appraiser within 15 days after the Appraisal Procedure is invoked. If within 30
days after appointment of the two appraisers they are unable to agree upon the amount in
question, a third independent appraiser shall be chosen within 10 days thereafter by the mutual
consent of such first two appraisers. The decision of the third appraiser so appointed and chosen
shall be given within 30 days after the selection of such third appraiser. If three appraisers shall
be appointed and the determination of one appraiser is disparate from the middle determination
by more than twice the amount by which the other determination is disparate from the middle
determination, then the determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be binding and conclusive upon the
Company and the Original Warrantholder; otherwise, the average of all three determinations
shall be binding upon the Company and the Original Warrantholder. The costs of conducting
any Appraisal Procedure shall be borne by the Company.

“Board of Directors” means the board of directors of the Company, including any duly
authorized committee thereof.

“Business Combination” means a merger, consolidation, statutory share exchange or
similar transaction that requires the approval of the Company’s stockholders.


the Market Price on the second Trading Day immediately preceding the applicable Conversion
Date or, in the event of any dividends arising under the Designated Preferred Stock paid in the
form of Common Stock, the Dividend Payment Date (unless there are no legally available assets
with which to make such cash payment, in which event such cash payment shall be made as soon
as possible thereafter). If more than one share of the Designated Preferred Stock is surrendered
for conversion at one time by or for the same holder, the number of full shares of Common Stock
issuable upon conversion thereof, including in respect of accrued and unpaid dividends, shall be
computed on the basis of the aggregate number of shares of the Designated Preferred Stock so
surrendered.

(k) Status of Shares Subject to Conversion. Shares of Designated Preferred Stock
that are converted in accordance with Sections 6, 7, 8, 9 or 10 shall revert to authorized but
unissued shares of Preferred Stock (provided that any such cancelled shares of Designated
Preferred Stock may be reissued only as shares of any series of Preferred Stock other than
Designated Preferred Stock).

Section 7. Early Conversion.

(a) Conversion at the Option of the Corporation. Subject to Section 7(b), the
Corporation shall have the right, at its option to convert, at any time and from time to time, all or
any portion of the Designated Preferred Stock (but in no event less than one share of the
Designated Preferred Stock), at any time prior to the date that is nine (9) months following the
date of the Exchange Agreement ("Early Conversion"), into a number of Shares equal to the
product of the then-applicable Conversion Rate and the number of shares of Designated
Preferred Stock selected for conversion; provided, however, notwithstanding anything in this
Certificate of Designations to the contrary, holders of Designated Preferred Stock shall not be
entitled to convert shares of Designated Preferred Stock until the converting holder has first
received any applicable Regulatory Approvals. In addition to the number of Shares issuable
upon Early Conversion, the holders of shares of Designated Preferred Stock subject to Early
Conversion shall have the right to receive (in cash or shares of Common Stock at the option of
the Corporation in accordance with Section 6(e)) any accrued and unpaid dividends on such
shares to, but excluding, the Early Conversion Date (including, if applicable, as provided in
Section 3(a) above, dividends on such amount), regardless of whether any dividends are actually
declared.

(b) Conditions to Early Conversion. The Corporation’s right of conversion set forth
in Section 7(a) is subject to the fulfillment (or waiver by the Original Designated Preferred
Stockholder with respect to items (ii), (iii), (iv), (v) and (vi) below) at or prior to the Early
Conversion Date of each of the following conditions:

@ the Corporation shall have requested and received from the Appropriate
Federal Banking Agency all requisite approvals of the Early Conversion;

(ii) the stockholders of the Corporation will have approved an amendment to
the Corporation’s Charter increasing the number of shares the Corporation is authorized
to issue to at least 1,200,000,000 shares and changing the par value of the Common Stock
to $0.10 per share;

A-15


or shall have been subject to any event with respect to it which, under the
applicable laws of any jurisdiction, had an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) taken any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the foregoing
acts;

(B) a Governmental Entity in any jurisdiction shall have (1)
commenced an action or proceeding against the Corporation or any of its
subsidiaries; or (2) issued or entered a temporary restraining order, preliminary or
permanent injunction or other order applicable to the Corporation or any of its
subsidiaries, which in the case of (1) and (2) shall have had or shall be reasonably
expected to have a Company Material Adverse Effect;

(C) no fact, circumstance, event, change, occurrence, condition or
development shall have occurred that, individually or in the aggregate, shall have
had or shall be reasonably likely to have a Company Material Adverse Effect; or

(D) any Regulatory Event not otherwise existing on the date hereof.

(c) Early Conversion Procedures. In the event of an Early Conversion, the
Corporation shall provide notice of such conversion to each holder of Designated Preferred
Stock to be converted (such notice, a "Notice of Early Conversion"). Such Notice of Early
Conversion shall be mailed at least 3 days and not more than 60 days before the date fixed for
conversion (the "Early Conversion Date"). The requirement to deliver a Notice of Early
Conversion and the timing requirements for such delivery may be waived by each holder of
Designated Preferred Stock in its sole discretion. Each Notice of Early Conversion given to a
holder shall state:

(6) the Early Conversion Date;

(ii) the number of shares of Designated Preferred Stock to be converted and, if
less than all the shares held by such holder are to be converted, the number of such shares
to be converted from such holder;

(iii) the Conversion Rate then in effect and whether the Corporation will pay
cash or issue shares of Common Stock (calculated in accordance with Section 6(e) above)
in respect of accrued and unpaid dividends; and

(iv) the place or places where certificates for shares of Designated Preferred
Stock are to be surrendered for issuance of certificates representing Shares.

(d) Partial Conversion. If the Corporation elects to cause less than all the shares of
the Designated Preferred Stock to be converted under this Section 7, the shares of Designated
Preferred Stock to be converted shall be selected either pro rata or in such other manner as the
Board of Directors or a duly authorized committee thereof may determine to be fair and
equitable. Subject to the provisions hereof, the Board of Directors or a duly authorized
committee thereof shall have full power and authority to prescribe the terms and conditions upon


which shares of Designated Preferred Stock shall be converted from time to time pursuant to an
Early Conversion.

Section 8. Mandatory Conversion.

(a) Mandatory Conversion, Each share of Designated Preferred Stock shall
mandatorily convert (unless otherwise previously converted, redeemed or otherwise reacquired
by the Company) on the Mandatory Conversion Date into a number of Shares determined by
dividing the Liquidation Amount by the Market Price on the second Trading Day preceding the
Mandatory Conversion Date; provided, however, notwithstanding anything in this Certificate of
Designations to the contrary, holders of Designated Preferred Stock shall not be entitled to
convert shares of Designated Preferred Stock until the converting holder has first received any
applicable Regulatory Approvals. In addition to the number of Shares issuable upon mandatory
conversion, the holders of the shares of Designated Preferred Stock subject to mandatory
conversion shall have the right to receive any accrued and unpaid dividends on such shares to,
but excluding, the Mandatory Conversion Date (including, if applicable, as provided in
Section 3(a) above, dividends on such amount), regardless of whether any dividends are actually
declared.

(b) Mandatory Conversion Procedures. In the event of a mandatory conversion, the
Corporation shall provide notice thereof to each holder of Designated Preferred Stock to be
converted (such notice, a "Notice of Mandatory Conversion"). Such Notice of Mandatory
Conversion shall be mailed at least 30 days and not more than 60 days before the Mandatory
Conversion Date. Each Notice of Mandatory Conversion given to a holder shall state: *

@ the Mandatory Conversion Date;

(ii) that all outstanding shares of Designated Preferred Stock shall be
converted on such date;

(iii) the Conversion Rate then in effect and whether the Corporation will pay
cash or issue shares of Common Stock (calculated in accordance with Section 6(e) above)
in respect of accrued and unpaid dividends; and

(iv) the place or places where certificates for shares of Designated Preferred
Stock are to be surrendered for issuance of certificates representing Shares.

Section 9. Conversion upon a Specified Corporate Transaction.

(a) In addition to the right of a holder of Designated Preferred Stock, at such holder’s
option, to convert, at any time and from time to time, all or any portion of the Designated
Preferred Stock as set forth in Section 6, a holder of Designated Preferred Stock shall have the
tight, at such holder’s option, to convert all or any portion of such holder’s Designated Preferred
Stock into a number of Shares equal to the product of the then-applicable Conversion Rate and
the number of shares of Designated Preferred Stock surrendered for conversion upon the
following events (each a "Specified Corporate Transaction"):

A-18


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.

FIRST BANCORP

‘Name Ate ACéaqd
Tile: CBO ¢ Pees Mmnut

UNITED STATES DEPARTMENT OF THE
TREASURY

By:

Name:
Title:

{Signature Page to Exchange Agreement]



Preferred Stock, except as herein or by law expressly provided, subject to revesting in the event
of each and every subsequent default of the character above mentioned; provided that it shall be
a qualification for election for any Preferred Director that the election of such Preferred Director
shall not cause the Corporation to violate any corporate governance requirements of any
securities exchange or other trading facility on which securities of the Corporation may then be
listed or traded that listed or traded companies must have a majority of independent directors.
Upon any termination of the right of the holders of shares of Designated Preferred Stock and
Voting Parity Stock as a class to vote for directors as provided above, the Preferred Directors
shall cease to be qualified as directors, the term of office of all Preferred Directors then in office
shall terminate immediately and the authorized number of directors shall be reduced by the
number of Preferred Directors elected pursuant hereto. Any Preferred Director may be removed
at any time, with or without cause, and any vacancy created thereby may be filled, only by the
affirmative vote of the holders a majority of the shares of Designated Preferred Stock at the time
outstanding voting separately as a class together with the holders of shares of Voting Parity
Stock, to the extent the voting rights of such holders described above are then exercisable. If the
office of any Preferred Director becomes vacant for any reason other than removal from office as
aforesaid, the remaining Preferred Director may choose a successor who shall hold office for the
unexpired term in respect of which such vacancy occurred.

(c) Class Voting Rights as to Particular Matters. So long as any shares of Designated
Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter, the vote or consent of the holders of at least 66 2/3% of the shares of
Designated Preferred Stock at the time outstanding, voting as a separate class, given in person.or
by proxy, either in writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:

G) Authorization _of Senior Stock. Any amendment or alteration of the
Certificate of Designations for the Designated Preferred Stock or the Charter to authorize
or create or increase the authorized amount of, or any issuance of, any shares of, or any
securities convertible into or exchangeable or exercisable for shares of, any class or series
of Capital Stock of the Corporation ranking senior to Designated Preferred Stock with
respect to either or both the payment of dividends and/or the distribution of assets on any
liquidation, dissolution or winding up of the Corporation;

(ii) Amendment of Designated Preferred Stock. Any amendment, alteration
or repeal of any provision of the Certificate of Designations for the Designated Preferred
Stock or the Charter (including, unless no vote on such merger or consolidation is
required by Section 13(c)(iii) below, any amendment, alteration or repeal by means of a
merger, consolidation or otherwise) so as to adversely affect the rights, preferences,
privileges or voting powers of the Designated Preferred Stock; or

(iii) Share Exchanges, Reclassifications, Mergers _and_Consolidations. Any
consummation of a binding share exchange or reclassification involving the Designated
Preferred Stock, or of a merger or consolidation of the Corporation with another
corporation or other entity, unless in each case (x) the shares of Designated Preferred
Stock remain outstanding or, in the case of any such merger or consolidation with respect
to which the Corporation is not the surviving or resulting entity, are converted into or

A-28


EXCHANGE AGREEMENT, dated as of July 7, 2010 (this “Agreement”) by and
between First BanCorp, a Puerto Rico corporation (the “Company”), and the United States
Department of the Treasury (the “Investor”). All capitalized terms used herein and not otherwise
defined shall have the respective meanings ascribed to them in the Securities Purchase
Agreement.

BACKGROUND

WHEREAS, the Investor is, as of the date hereof, the beneficial owner of 400,000
shares of the Company’s preferred stock designated as “Fixed Rate Cumulative Perpetual
Preferred Stock, Series F”, having a liquidation amount of $1,000 per share (the “Series F
Preferred Stock”);

WHEREAS, the Company issued the Series F Preferred Stock pursuant to that
certain Securities Purchase Agreement — Standard Terms incorporated into a Letter Agreement,
dated as of January 16, 2009, as amended from time to time, between the Company and the
Investor (the “Securities Purchase Agreement”);

WHEREAS, effective August 2009, the Company elected to defer regularly
scheduled quarterly dividend payments on the Series F Preferred Stock;

WHEREAS, the Company and the Investor desire (i) to exchange (the “Preferred
Exchange”) all 400,000 shares of the Series F Preferred Stock beneficially owned and held by
the Investor (the “Series F Shares”) for 400,000 newly issued shares of Fixed Rate Cumulative
Mandatorily Convertible Preferred Stock, Series G, of the Company (the “Capital Securities”),
with a liquidation amount of $1,000 per share, (ii) to exchange additional fully paid and
nonassessable shares of the Capital Securities for all accrued and unpaid dividends under the
Series F Shares outstanding immediately prior to the Closing Date (such dividends accruing
daily) (the “Dividend Exchange”) and (iii) to amend the terms of that certain warrant, dated
January 16, 2009, to purchase 5,842,259 shares of common stock, par value $1.00 per share
(“Common Stock”), granted by the Company for the benefit of the Investor (the “Old Warrant”)
pursuant to an amended and restated warrant to purchase 5,842,259 shares of Common Stock, in
substantially the form attached hereto as Annex A (the “Amended Warrant”), on the terms and
subject to the conditions set forth herein (the “Warrant Exchange” and together with the
Preferred Exchange and the Dividend Exchange, the “Exchange”);

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties hereby agree as follows:


Targeted Completion Date Section 4.9

Transfer Section 5.4
Underlying Common Shares Section 1.2(d)(@)
Warrant Shares Section 3.2(a)

-v-


beneficially owned by the Investor and its Affiliates that are convertible into or exchangeable or
exercisable for Common Stock as converted, exchanged or exercised), the Investor shall be
entitled to designate one individual to serve as an observer (the “Observer”) to the Board of
Directors of the Company (the “Board”), which designation may be changed from time to time in
the sole discretion of the Investor. The Observer shall be entitled to (i) attend all meetings of the
Board and the board of directors of each subsidiary of the Company, including any committee
meetings of such boards of directors, (ii) receive notices of such meetings concurrently with the
members of the Board or such boards of directors or committees thereof and (iii) receive all
information provided to members of the Board or such boards of directors or committees thereof
at such meetings.

(b) The Observer shall have no voting rights and his or her presence shall not be
required for determining a quorum at any meeting he or she is entitled to attend pursuant to
Section 4.10(a).

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Unregistered Capital Securities. The Investor acknowledges that the
Capital Securities, the Underlying Common Shares and the Warrant Shares have not been
registered under the Securities Act or under any state securities laws. The Investor (a) is
acquiring the Capital Securities pursuant to an exemption from registration under the Securities
Act solely for investment with no present intention to distribute them to any person in violation
of the Securities Act or any applicable U.S. state securities laws, (b) will not sell or otherwise
dispose of any of the Capital Securities, the Underlying Common Shares or the Warrant Shares,
except in compliance with the registration requirements or exemption provisions of the Securities
Act and any applicable U.S. state securities laws, and (c) has such knowledge and experience in
financial and business matters and in investments of this type that it is capable of evaluating the
merits and risks of the Exchange and of making an informed investment decision.

Section 5.2 Legend.

(a) | The Investor agrees that all certificates or other instruments representing the
Amended Warrant, the Underlying Common Shares and the Warrant Shares will bear a legend
substantially to the following effect:

"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT
RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS."

(b) The Investor agrees that all certificates or other instruments representing the
Capital Securities will bear a legend substantially to the following effect:

-13-


Company Manual from the shareholder approval policy set forth in Section 312.03 of the
New York Stock Exchange Listed Company Manual in respect of the issuances by the
Company of the Capital Securities, the shares of Common Stock issuable upon
conversion of the Capital Securities (the “Underlying Common Shares”), the Amended
Warrant and the Warrant Shares as contemplated by this Agreement, and at least ten days
shall have passed since the Company sent its shareholders the letter required by Section
312.05 of the Listed Company Manual;

Gi) (A) the representations and warranties of the Company set forth in Article
III of this Agreement shall be true and correct in all respects as though made on and as of
the Closing Date (other than representations and warranties that by their terms speak as of
another date, which representations and warranties shall be true and correct in all respects
as of such other date) and (B) the Company shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior to the
Closing;

(iii) the Investor shall have received a certificate signed on behalf of the
Company by a senior executive officer certifying to the effect that the conditions set forth
in Section 1.2(d)(ii) have been satisfied;

(iv) the Company shall have duly adopted and filed with the Commonwealth
of Puerto Rico a Certificate of Designations, having the effect of an amendment to its
articles of incorporation (“Charter”), in substantially the form attached hereto as Annex B
(the “New Certificate of Designations”) and such filing shall have been accepted;

(v) the Company shall have executed the Amended Warrant and delivered
such executed Amended Warrant to the Investor or its designee(s);

(vi) the Company shall have delivered certificates in proper form or, with the
prior consent of the Investor, evidence in book-entry form, evidencing the Capital
Securities to the Investor or its designee(s);

(vii) the Company shall have delivered to the Investor written opinions from
outside counsel to the Company, addressed to the Investor and dated as of the Closing
Date, in substantially the form attached hereto as Annex C; and

(viii) (A) the Company shall have effected such changes to its compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”) with
respect to its Senior Executive Officers and any other employee of the Company or its
Affiliates subject to Section 111 of the Emergency Economic Stabilization Act of 2008,
as amended by the American Recovery and Reinvestment Act of 2009, or otherwise from
time to time (“EESA”), as implemented by any guidance, rule or regulation thereunder,
as the same shall be in effect from time to time (collectively, the “Compensation
Regulations”) (and to the extent necessary for such changes to be legally enforceable,
each of its Senior Executive Officers and other employees shall have duly consented in
writing to such changes), as may be necessary, during the period in which any obligation

3-


SCHEDULE A

CAPITALIZATION

Response to Section 3.1(b):

Capitalization Date: June 30, 2010

Common Stock

Par value: $1.00 per share

Total Authorized: 750,000,000 shares authorized

Outstanding: 92,542,722 (102,444,549 shares issued less 9,897,800 shares in treasury)

Subject to warrants, options, convertible securities, etc.:

Options: 2,455,310

Warrants: 5,842,259 (issued to Investor
on January 16, 2009)

Convertible Securities: 0

Total: 8,297,569

Reserved for benefit plans and other issuances: 3,767,784
Remaining authorized but unissued: 645,391,925

Shares issued after Capitalization Date (other than pursuant to warrants, options, convertible
securities, etc. as set forth above): None

Shares proposed to be issued:
Common Stock to be sold to institutional investors for at least $500 million

Common stock to be issued on conversion of Fixed Rate Cumulative Mandatorily
Convertible Preferred Stock, Series G.

Common Stock to be issued in exchange for Series A through E Preferred Stock

Common Stock to be issued on exercise of Rights to be issued to holders of Common
Stock.

Sch. A-1


Section 15. Prohibited Actions. The Corporation agrees that it shall not take any
action which would entitle holder(s) of Designated Preferred Stock to an adjustment of the
Conversion Price if the total number of shares of Common Stock issuable after such action upon
conversion of the Designated Preferred Stock, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon the exercise of all outstanding
options, warrants, conversion and other rights, would exceed the total number of shares of
Common Stock then authorized by its Charter.

Section 16. Notices. All notices or communications in respect of Designated
Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first
class mail, postage prepaid, or if given in such other manner as may be permitted in this
Certificate of Designations, in the Charter or Bylaws or by applicable law. Notwithstanding the
foregoing, if shares of Designated Preferred Stock are issued in book-entry form through the
Depositary or any similar facility, such notices may be given to the holders of Designated
Preferred Stock in any manner permitted by such facility.

Section 17. | No Preemptive Rights. No share of Designated Preferred Stock shall have
any rights of preemption whatsoever as to any securities of the Corporation, or any warrants,
rights or options issued or granted with respect thereto, regardless of how such securities, or such
warrants, rights or options, may be designated, issued or granted.

Section 18. Replacement Certificates. The Corporation shall replace any mutilated
certificate at the holder’s expense upon surrender of that certificate to the Corporation. The
Corporation shall replace certificates that become destroyed, stolen or lost at the holder’s
expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate
has been destroyed, stolen or lost, together with any indemnity that may be reasonably required
by the Corporation.

Section 19. Other Rights. The shares of Designated Preferred Stock shall not have
any rights, preferences, privileges or voting powers or relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or
in the Charter or as provided by applicable law.

A-30


m) The Company is not nor, after giving effect to the issuance of the Capital Securities
pursuant to the Agreement, would be on the date hereof an “investment company” or an
entity “controlled” by an “investment company,” as such terms are defined in the
Investment Company Act of 1940, as amended.

In giving the opinions set forth above (other than those opinions set forth in Sections (j) and (m)), counsel
may rely as to matters governed by the laws of the Commonwealth of Puerto Rico on opinions of counsel
licensed to practice in that Commonwealth.

Annex C-3


hereto except that nothing herein shall relieve either party from liability for any breach of this
Agreement.

Section 6.2 Survival of Representations and Warranties. The representations and
warranties of the Company made herein or in any certificates delivered in connection with the
Closing shall survive the Closing without limitation.

Section 6.3 Amendment. No amendment of any provision of this Agreement will be
effective unless made in writing and signed by an officer or a duly authorized representative of
each of the Company and the Investor; provided that the Investor may unilaterally amend any
provision of this Agreement to the extent required to comply with any changes after the date
hereof in applicable federal statutes. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative of any rights or remedies provided
by law.

Section 6.4 Waiver of Conditions. The conditions to each party’s obligation to
consummate the Exchange are for the sole benefit of such party and may be waived by such
party in whole or in part to the extent permitted by applicable law. No waiver will be effective
unless it is in a writing signed by a duly authorized officer of the waiving party that makes
express reference to the provision or provisions subject to such waiver.

Section 6.5 Governing Law; Submission to Jurisdiction, ete. - This Agreement and
any claim, controversy or dispute arising under or related to this Agreement, the relationship of
the parties, and/or the interpretation and enforcement of the rights and duties of the parties shall
be enforced, governed, and construed in all respects (whether in contract or in tort) in accordance
with the federal law of the United States if and to the extent such law is applicable, and
otherwise in accordance with the laws of the State of New York applicable to contracts made and
to be performed entirely within such State. Each of the parties hereto agrees (a) to submit to the
exclusive jurisdiction and venue of the United States District Court for the District of Columbia
and the United States Court of Federal Claims for any and all civil actions, suits or proceedings
arising out of or relating to this Agreement or the Amended Warrant or the Exchange
contemplated hereby and (b) that notice may be served upon (i) the Company at the address and
in the manner set forth for notices to the Company in Section 6.6 and (ii) the Investor at the
address and in the manner set forth for notices to the Company in Section 6.6, but otherwise in
accordance with federal law. To the extent permitted by applicable law, each of the parties
hereto hereby unconditionally waives trial by jury in any civil legal action or proceeding relating
to this Agreement or the Amended Warrant or the Exchange contemplated hereby.

Section 6.6 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to have been duly
given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of
receipt, or (b) on the second business day following the date of dispatch if delivered by a
recognized next day courier service. All notices hereunder shall be delivered as set forth below
or pursuant to such other instructions as may be designated in writing by the party to receive
such notice.

-19-


EXECUTION VERSION

EXCHANGE AGREEMENT

by and between

FIRST BANCORP

and

THE UNITED STATES DEPARTMENT OF THE TREASURY

Dated as of July 7, 2010



ANNEX D
FORM OF WAIVER

In consideration for the benefits I will receive as a result of the participation of FIRST
BANCORP (together with its subsidiaries and affiliates, the “Company”), which is either my
employer or the sole shareholder of my employer, in the United States Department of the
Treasury’s (the “Treasury”) Capital Purchase Program and/or any other economic stabilization
program implemented by the Treasury under the Emergency Economic Stabilization Act of 2008
(as amended, supplemented, or otherwise modified, the “EESA”) (any such program, including
the Capital Purchase Program, a “Program”), I hereby voluntarily waive any claim against the
United States (and each of its departments and agencies) or the Company or my employer, or any
of their respective directors, officers, employees and agents for any changes to my compensation
or benefits that are required to comply with the executive compensation and corporate
governance requirements of Section 111 of the EESA, as implemented by any guidance or
regulations issued and/or to be issued thereunder, including without limitation the provisions for
the Capital Purchase Program, as implemented by any guidance or regulation thereunder,
including the rules set forth in 31 C.F.R. Part 30, or any other guidance or regulations under the
EESA and the applicable requirements of the Exchange Agreement by and among the Company
and the Treasury dated as of July 7, 2010 (such requirements, the “Limitations”.

I acknowledge that the Limitations may require modification or termination of the employment,
compensation, bonus, incentive, severance, retention and other benefit plans, arrangements,
policies and agreements (including so-called "golden parachute" agreements), whether or not in
writing, that I may have with the Company or my employer or in which I may participate as they
relate to the period the United States holds any equity or debt securities of the Company acquired
through a Program or for any other period applicable under such Program or Limitations, as the
case may be, and I hereby consent to all such modifications.

This waiver includes all claims I may have under the laws of the United States or any other
jurisdiction (whether or not in existence as of the date hereof) related to the requirements
imposed by the Limitations, including without limitation a claim for any compensation or other
payments or benefits I would otherwise receive, any challenge to the process by which the
Limitations are or were adopted and any tort or constitutional claim about the effect of these
Limitations on my employment relationship and I hereby agree that I will not at any time initiate,
or cause or permit to be initiated on my behalf, any such claim against the United States, the
Company, my employer or their respective directors, officers, employees or agents in or before
any local, state, federal or other agency, court or body.

J agree that, in the event and to the extent that the Compensation Committee of the Board of
Directors of the Company or similar governing body (the “Committee”) reasonably determines
that any compensatory payment and benefit provided to me, including any bonus or incentive
compensation based on materially inaccurate financial statements or performance criteria, would
cause the Company to fail to be in compliance with the Limitations (such payment or benefit, an
"Excess Payment"), upon notification from the Company, I shall repay such Excess Payment to
the Company within 15 business days. In addition, I agree that the Company shall have the right

Annex D-1


ANNEX A

Form of Notice of Exercise

Date: [
TO: — First BanCorp

RE: Election to Purchase Common Stock

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby
agrees to subscribe for and purchase the number of shares of the Common Stock set forth below
covered by such Warrant. The undersigned, in accordance with Section 3 of the Warrant, hereby
agrees to pay the aggregate Exercise Price for such shares of Common Stock in the manner set
forth below. A new warrant evidencing the remaining shares of Common Stock covered by such
Warrant, but not yet subscribed for and purchased, if any, should be issued in the name set forth
below.

Number of Shares of Common Stock
Method of Payment of Exercise Price (note if cashless exercise pursuant to Section 3(i) of the

Warrant or cash exercise pursuant to Section 3(ii) of the Warrant, with consent of the Company
and the Warrantholder):

Aggregate Exercise Price:

Holder:
By:
Name:
Title:

Annex A-1


Common Stock other than (i) shares issued upon the exercise of stock options or delivered under
other equity-based awards or other convertible securities or warrants which were issued and
outstanding on the Capitalization Date and disclosed on Schedule A and (ii) shares disclosed on
Schedule A.

Section 3.2. Authorization and Enforceability.

(a) The Company has the corporate power and authority to execute and deliver this
Agreement and the Amended Warrant and to carry out its obligations hereunder and thereunder
(which includes the issuance of the Capital Securities, the Underlying Common Shares, the
Amended Warrant and the shares of Common Stock issuable upon exercise of the Amended
Warrant (the “Warrant Shares”)).

(b) The execution, delivery and performance by the Company of this Agreement and
the Amended Warrant and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part of the Company
and its stockholders, and no further approval or authorization is required on the part of the
Company or its stockholders. This Agreement is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to the Bankruptcy
Exceptions.

Section 3.3 Capital Securities and Underlying Common Shares. The Capital
Securities have been duly and validly authorized by all necessary action, and, when issued and

delivered pursuant to this Agreement, such Capital Securities will be duly and validly issued and
fully paid and nonassessable, will not be issued in violation of any preemptive rights, will
represent nonassessable undivided beneficial interests in the assets of the Company, will not
subject the holder thereof to personal liability and will rank parri passu with all other series or
classes of Preferred Stock, whether or not issued or outstanding. The shares of Underlying
Common Stock have been duly authorized and reserved for issuance upon conversion of the
Capital Securities and when so issued in accordance with the terms of the New Certificate of
Designations will be validly issued, fully paid and nonassessable.

Section 3.4 Amended Warrant and Warrant Shares. The Amended Warrant has
been duly and validly authorized and, when executed and delivered as contemplated hereby, will
constitute a valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the same may be limited by applicable
Bankruptcy Exceptions. The Warrant Shares have been duly authorized and reserved for
issuance by the Company and when so issued and delivered in accordance with the terms of the
Amended Warrant will be validly issued, fully paid and non-assessable, without the necessity of
any approval of its stockholders.

Section 3.5 Non-Contravention.

(a) The execution, delivery and performance by the Company of this Agreement, the
Amended Warrant, and the consummation of the transactions contemplated hereby and thereby,
and compliance by the Company with the provisions hereof and thereof, will not (A) violate,
conflict with, or result in a breach of any provision of, or constitute a default (or an event which,

-6-


payment of accrued and unpaid dividends that would otherwise be payable to the Investor
(rounded to the nearest whole cent) would equal $22,129,710, and the number of shares of
Capital Securities issuable to Treasury in exchange for such amount would equal 22,130 shares.
The issuance of any such shares of Capital Securities in such amount shall constitute full
payment of the cash dividends that would otherwise have been payable under the Series F Shares
outstanding immediately prior to the Closing Date.

Section 2.2. Exchange Documentation. Settlement of the Exchange will take place
on the Closing Date, at which time the Investor will cause delivery of the Series F Shares to the
Company or its designated agent and the Company will cause delivery of the Capital Securities
to the Investor or its designated agent.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as Previously Disclosed, the Company represents and warrants to the Investor as
of the date hereof and as of the Closing Date that:

Section 3.1 Existence and Power.

(a) Organization, Authority and Significant Subsidiaries. The Company is duly
organized, validly existing and in good standing under the laws of the Commonwealth of Puerto

Rico and has all necessary power and authority to own, operate and lease its properties and to
carry on its business in all material respects as it is being currently conducted, and except as has
not, individually or in the aggregate, had and would not reasonably be expected to have a
Company Material Adverse Effect, has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to require such qualification; each
subsidiary of the Company that is a “significant subsidiary” within the meaning of Rule 1-02(w)
of Regulation S-X under the Securities Act, including, without limitation, FirstBank Puerto Rico,
has been duly organized and is validly existing in good standing under the laws of its jurisdiction
of organization. The Charter and bylaws of the Company, copies of which have been provided
to the Investor prior to the date hereof, are true, complete and correct copies of such documents
as in full force and effect as of the date hereof.

(b) Capitalization. The authorized capital stock of the Company, and the outstanding
capital stock of the Company (including securities convertible into, or exercisable or
exchangeable for, capital stock of the Company) as of the most recent fiscal month-end
preceding the date hereof (the “Capitalization Date”) is set forth on Schedule A. The outstanding
shares of capital stock of the Company have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive rights (and were not
issued in violation of any preemptive rights). Except as provided in the Old Warrant, as of the
date hereof, the Company does not have outstanding any securities or other obligations providing
the holder the right to acquire Common Stock that is not reserved for issuance as specified on
Schedule A, and the Company has not made any other commitment to authorize, issue or sell any
Common Stock. Since the Capitalization Date, the Company has not issued any shares of

5.


exchange or quotation system is scheduled to be open for business and on which the shares of
Common Stock (i) are not suspended from trading on any national or regional securities
exchange or association or over-the-counter market for any period or periods aggregating one
half hour or longer; and (ii) have traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the primary market for the trading of
the shares of Common Stock.

(ccc) [Reserved.]
(ddd) [Reserved.]

(eee) "Voting Parity Stock" means, with regard to any matter as to which the holders of
Designated Preferred Stock are entitled to vote as specified in Sections 13(a) and 13(b) of these
Standard Provisions that form a part of the Certificate of Designations, any and all series of
Parity Stock upon which like voting rights have been conferred and are exercisable with respect
to such matter.

(fff) "VWAP" means the volume-weighted average trading price of a share of
Common Stock as reported by Bloomberg LP.

Section 3. Dividends.

(a) Rate. Holders of Designated Preferred Stock shall be entitled to receive, on each
share of Designated Preferred Stock if, as and when declared by the Board of Directors or any
duly authorized committee of the Board of Directors, but only out of funds legally available
therefor, cumulative cash dividends (subject to Section 6(e) below) with respect to each
Dividend Period (as defined below) at a rate per annum equal to the Applicable Dividend Rate
on (i) the Liquidation Amount per share of Designated Preferred Stock and (ii) the amount of
accrued and unpaid dividends for any prior Dividend Period on such share of Designated
Preferred Stock, if any. Such dividends shall begin to accrue and be cumulative from the
Original Issue Date, shall compound on each subsequent Dividend Payment Date (i.e., no
dividends shall accrue on other dividends unless and until the first Dividend Payment Date for
such other dividends has passed without such other dividends having been paid on such date) and
shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the first
such Dividend Payment Date to occur at least 20 calendar days after the Original Issue Date. In
the event that any Dividend Payment Date would otherwise fall on a day that is not a Business
Day, the dividend payment due on that date shall be postponed to the next day that is a Business
Day and no additional dividends shall accrue as a result of that postponement. The period from
and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is
a "Dividend Period", provided that the initial Dividend Period shall be the period from and
including the Original Issue Date to, but excluding, the next Dividend Payment Date.

Dividends that are payable on Designated Preferred Stock in respect of any Dividend
Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months.
The amount of dividends payable on Designated Preferred Stock on any date prior to the end ofa
Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day
year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.


the Company shall also cause a copy of such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in the Company’s records.

Q) Notice of Adjustment Event. In the event that the Company shall propose to take
any action of the type described in this Section 13 (but only if the action of the type described in
this Section 13 would result in an adjustment in the Exercise Price or the number of Shares into
which this Warrant is exercisable or a change in the type of securities or property to be delivered
upon exercise of this Warrant), the Company shall give notice to the Warrantholder, in the
manner set forth in Section 13(I), which notice shall specify the record date, if any, with respect
to any such action and the approximate date on which such action is to take place. Such notice
shall also set forth the facts with respect thereto as shall be reasonably necessary to indicate the
effect on the Exercise Price and the number, kind or class of shares or other securities or property
which shall be deliverable upon exercise of this Warrant. In the case of any action which would
require the fixing of a record date, such notice shall be given at least 10 days prior to the date so
fixed, and in case of all other action, such notice shall be given at least 15 days prior to the taking
of such proposed action. Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.

(K) Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent
to the taking of any action which would require an adjustment pursuant to this Section 13, the
Company shall take any action which may be necessary, including obtaining regulatory, New
York Stock Exchange, NASDAQ Stock Market or other applicable national securities exchange
or stockholder approvals or exemptions, in order that the Company may thereafter validly..and
legally issue as fully paid and nonassessable all shares of Common Stock that the‘Warrantholder
is entitled to receive upon exercise of this Warrant pursuant to this Section 13.

(L) Adjustment Rules. Any adjustments pursuant to this Section 13 shall be made
successively whenever an event referred to herein shall occur.

14. Exchange. At any time following the date on which the shares of Common Stock
of the Company are no longer listed or admitted to trading on a national securities exchange
(other than in connection with any Business Combination), the Original Warrantholder may
cause the Company to exchange all or a portion of this Warrant for an economic interest or
security (to be determined by the Original Warrantholder after consultation with the Company)
of the Company classified as permanent equity under U.S. GAAP having a value equal to the
Fair Market Value of the portion of the Warrant so exchanged. The Original Warrantholder shall
calculate any Fair Market Value required to be calculated pursuant to this Section 14, which shall
not be subject to the Appraisal Procedure.

15. Effect of Execution. This Warrant and the terms and conditions set forth herein
hereby amend and restate the terms and conditions of that certain warrant arising under that
certain Securities Purchase Agreement — Standard Terms incorporated into the Letter Agreement,
dated as of January 16, 2009, as amended from time to time, between the Company and the
Original Warrantholder (the “Original Warrant”), and the Original Warrant shall have no further
force or effect as of and following the Issue Date.

-12-


a)

b)

d)

e)

8)

h)

ANNEX C
FORM OF OPINION

The Company is duly organized, validly existing and in good standing under the laws of
the Commonwealth of Puerto Rico and has all necessary power and authority to own,
operate and lease its properties and to carry on its business as it is being currently
conducted.

FirstBank Puerto Rico has been duly organized and is validly existing and in good
standing under the laws of the Commonwealth of Puerto Rico and has all necessary
power and authority to own, operate and lease its properties and to carry on its business
as it is being currently conducted.

The outstanding shares of capital stock of the Company have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable, and subject to no
preemptive rights (and were not issued in violation of any preemptive rights).

The Company has the corporate power and authority to execute and deliver the
Agreement and the Amended Warrant and to carry out its obligations thereunder (which
includes the issuance of the Capital Securities, the Underlying Common Shares, the
Amended Warrant and the Warrant Shares).

The execution, delivery and performance by the Company of the Agreement and the
Amended Warrant and the consummation of the transactions contemplated thereby, have
been duly authorized by all necessary corporate action on the part of the Company and its
shareholders, no further approval or authorization is required on the part of the Company
and no further approval or authorization is required on the part of the Company’s
shareholders, including, without limitation, by any rule or requirement of any national
stock exchange.

The Capital Securities have been duly and validly authorized by all necessary action, and,
when issued and delivered pursuant to the Agreement, such Capital Securities will be
duly and validly issued and fully paid and nonassessable, will not be issued in violation
of any preemptive rights, will not subject the holder thereof to personal liability and,
when issued , will rank senior to or parri passu with all other series or classes of Preferred
Stock then outstanding.

The Underlying Common Shares have been duly and validly authorized by all necessary
action and reserved for issuance upon conversion of the Capital Securities and when so
issued in accordance with the terms of the New Certificate of Designations will be validly
issued, fully paid and nonassessable.

The Amended Warrant has been duly and validly authorized by all necessary action and,
when executed and delivered as contemplated in the Agreement, will constitute a valid
and legally binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the same may be limited by applicable bankruptcy,

Annex C-1


ANNEX A

FORM OF AMENDED WARRANT

Annex A-1


SCHEDULE A

Item 1

Name: First BanCorp

Corporate or other organizational form: Corporation
Jurisdiction of organization: Commonwealth of Puerto Rico

Item 2
Exercise Price: Preferred Stock Conversion Price

Item 3
Issue Date: [e], 2010

Item 4
Amount of last dividend declared prior to the Issue Date: $0.07

Item 5
Number of shares of Common Stock: 5,842,259

Item 6
Company’s address: First BanCorp
1591 Ponce de Leon
San Juan, Puerto Rico 00908-0146

Item 7
Notice information: First BanCorp
1591 Ponce de Leon
San Juan, Puerto Rice 00908-0146
Attn: General Counsel
Phone: (787) 729-8088
Fax: (787) 753-8402

Sch. A-1


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.

FIRST BANCORP

By:

Name:
Title:

UNITED STATES DEPARTMENT OF THE
TREASURY

By:

Name: Herbert M. tibalil, L Jr.
Title: Assistant Secretary iT rife cial
Stability

{Signature Page to Exchange Agreement}


(f) Dividends Accrued after Record Date. Any accrued and unpaid dividends
payable on shares of Designated Preferred Stock to be converted on a Conversion Date that
occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the
holder of record of such shares on such Dividend Record Date, but rather shall be paid to the
holder of such shares on such Conversion Date.

(g) Notices by the Corporation. Every notice required to be given by the Corporation
pursuant to Section 7, 8, 9 or 10 below shall be given by first class mail, postage prepaid,
addressed to the holders of record of the Designated Preferred Stock at their respective last
addresses appearing on the books of the Corporation and shall contain the information required
by Section 7, 8, 9 or 10 hereof, as applicable. Any notice by the Corporation mailed within the
time period specified in Section 7, 8, 9 or 10 below shall be conclusively presumed to have been
duly given, whether or not the holder receives such notice, but failure duly to give such notice by
mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Designated
Preferred Stock designated for conversion shall not affect the validity of the proceedings for the
conversion of any other shares of Designated Preferred Stock. Notwithstanding the foregoing, if
shares of Designated Preferred Stock are issued in book-entry form through the Depositary or
any other similar facility, any notice by the Corporation may be given to the holders of
Designated Preferred Stock at such time and in any manner permitted by such facility.

(h) Conversion Procedures by Holder. To effect a conversion, a holder of the
Designated Preferred Stock shall: (i) with respect to a conversion pursuant to Section 6, 9 or 10,
complete and manually sign the conversion notice, if any, provided by the Corporation or, if
applicable, the conversion agent appointed by the Corporation, or a facsimile of the conversion
notice; (ii) with respect to a conversion pursuant to Section 6, 9 or 10, deliver the completed
conversion notice, (iii) with respect to any conversion, deliver the certificated shares of
Designated Preferred Stock to be converted to the Corporation or, if applicable, the conversion
agent appointed by the Corporation; and (iv) with respect to any conversion, if required, furnish
appropriate endorsements and transfer documents. If a holder’s interest is a beneficial interest in
a global certificate representing the Designated Preferred Stock, a holder must comply with the
Depositary’s procedures for converting a beneficial interest in a global security.

@ Taxes and Duties. A holder of the Designated Preferred Stock shall not be
required to pay any transfer or similar taxes or duties relating to the issuance or delivery of
Shares if such holder of the Designated Preferred Stock exercises its conversion rights, but such
holder of the Designated Preferred Stock shall be required to pay any transfer or similar tax or
duty that may be payable relating to any transfer involved in the issuance or delivery of Shares in
a name other than the name of such holder. A certificate representing Shares shall be issued and
delivered only after all applicable taxes and duties, if any, payable by the holder of the
Designated Preferred Stock have been paid in full.

(0) No Fractional Shares. No fractional shares of Common Stock shall be issued as a
result of any conversion of shares of Designated Preferred Stock or the payment of accrued and
unpaid dividends on the Designated Preferred Stock in the form of Common Stock. In lieu of
any fractional share of Common Stock otherwise issuable in respect of any conversion or
payment of accrued and unpaid dividends, the Corporation shall pay an amount in cash
(computed to the nearest cent) equal to such fraction of a share of Common Stock multiplied by

A-14


ARTICLE I

THE CLOSING: THE EXCHANGE OF CAPITAL SECURITIES FOR SERIES F
PREFERRED STOCK

Section 1.1 The Capital Securities. The Capital Securities are being issued to the
Investor in the Exchange pursuant to Article II hereof. The shares of Series F Preferred Stock
exchanged for the Capital Securities pursuant to Article II hereof are being reacquired by the
Company and shall have the status of authorized but unissued shares of Preferred Stock of the
Company undesignated as to series and may be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the Company; provided
that such shares shall not be reissued as shares of Series F Preferred Stock.

Section 1.2. The Closing.

(a) The closing of the Exchange (the “Closing”) will take place at the offices of
Cadwalader, Wickersham & Taft LLP, One World Financial Center, New York, New York
10281, at 9:00 a.m., EST on the first business day immediately following the day on which all of
the conditions set forth in Sections 1.2(c) and (d) are satisfied or waived (other than those
conditions that by their terms must be satisfied on the Closing Date, but subject to the
satisfaction or waiver of those conditions), or at such other place, time and date as shall be
agreed between the Company and the Investor. The time and date on which the Closing occurs
is referred to in this Agreement as the “Closing Date”.

(b) Subject to the fulfillment or waiver of the conditions to the Closing in this
Section 1.2, at the Closing (i) the Company will deliver the Capital Securities to the Investor, as
evidenced by one or more certificates dated the Closing Date and registered in the name of the
Investor or its designee(s) and (ii) the Investor will deliver the certificate representing the Series
F Shares to the Company.

(c) The respective obligations of each of the Investor and the Company to
consummate the Exchange are subject to the fulfillment (or waiver by the Company and the
Investor, as applicable) prior to the Closing of the conditions that (i) any approvals or
authorizations of all United States and other governmental, regulatory or judicial authorities
(collectively, “Governmental Entities”) required for the consummation of the Exchange shall
have been obtained or made in form and substance reasonably satisfactory to each party and shall
be in full force and effect and all waiting periods required by United States and other applicable
law, if any, shall have expired and (ii) no provision of any applicable United States or other law
and no judgment, injunction, order or decree of any Governmental Entity shall prohibit
consummation of the Exchange as contemplated by this Agreement.

(d) The obligation of the Investor to consummate the Exchange is also subject to the
fulfillment (or waiver by the Investor) at or prior to the Closing of each of the following
conditions:

(i) the Company shall have obtained an exception in writing pursuant to

Section 312.05 (Financial Viability Exception) of the New York Stock Exchange Listed

-2-


Company's stockholders in person or by proxy for purposes of obtaining a quorum. In order to
effectuate the foregoing agreements, to the maximum extent permitted by applicable law, the
Investor hereby grants a proxy appointing each of the Chief Executive Officer and Chairman of
the Company attorney-in-fact and proxy for it and its controlled Affiliates with full power of
substitution, for and in the name of it and its controlled Affiliates, to vote, express consent or
dissent, or otherwise to utilize such voting power in the manner and solely on the terms provided
by this Section 5.6 with respect to the Underlying Common Shares and the Warrant Shares and
the Investor hereby revokes any and all previous proxies granted with respect to the Underlying
Common Shares.and the Warrant Shares for purposes of the matters contemplated in this Section
5.6; provided that such proxy may only be exercised if the Investor fails to comply with the
terms of this Section 5.6. The proxy granted hereby is irrevocable prior to the termination of this
Agreement, is coupled with an interest and is granted in consideration of the Company entering
into this Agreement and issuing the Capital Securities and Amended Warrant to the Investor.

(b) The Investor shall retain the right to vote in its sole discretion all Underlying
Common Shares and Warrant Shares beneficially owned by it and its controlled Affiliates (and
which are entitled to vote on such matter) on any Designated Matter.

Section 5.7 _ Restriction on Dividends and Repurchases.

(a) Until the earlier of (i) January 16, 2012 or (ai) such time as the Investor ceases to
own any debt or equity securities of the Company or an Affiliate of the Company acquired
pursuant to this Agreement or the Amended Warrant, neither the Company nor any Company
Subsidiary shall, without-the consent of the Investor:

(i) declare or pay any dividend or make any distribution on the Common
Stock (other than (A) regular quarterly cash dividends of not more than the amount of the
last quarterly cash dividend per share declared or, if lower, publicly announced an
intention to declare, on the Common Stock prior to October 14, 2008, as adjusted for any
stock split, stock dividend, reverse stock split, reclassification or similar transaction,
(B) dividends payable solely in shares of Common Stock and (C) dividends or
distributions of rights or Junior Stock in connection with a stockholders’ rights plan); or

(ii) redeem, purchase or acquire any shares of Common Stock or other capital
stock or other equity securities of any kind of the Company, or any trust preferred
securities issued by the Company or any Affiliate of the Company, other than
(A) redemptions, purchases or other acquisitions of the Capital Securities (which
purchases shall be made on a pro rata basis, as provided in Section 5.7(b)),
(B) redemptions, purchases or other acquisitions of shares of Common Stock or other
Junior Stock, in each case in this clause (B) in connection with the administration of any
employce benefit plan in the ordinary course of business (including purchases to offset
the Share Dilution Amount (as defined below) pursuant to a publicly announced
repurchase plan) and consistent with past practice; provided that any purchases to offset
the Share Dilution Amount shall in no event exceed the Share Dilution Amount,
(C) purchases or other acquisitions by a broker-dealer subsidiary of the Company solely
for the purpose of market-making, stabilization or customer facilitation transactions in
trust preferred securities of the Company or an Affiliate of the Company, Junior Stock or

-16-


D

k)

)

insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles, regardless of whether such
enforceability is considered in a proceeding at law or in equity.

The Warrant Shares have been duly and validly authorized by all necessary action and
reserved for issuance by the Company and when so issued and delivered in accordance
with the terms of the Amended Warrant for an exercise price per share in excess of the
par value of the Warrant Shares will be validly issued, fully paid and non-assessable.

Assuming the due execution and delivery by the other party thereto, the Agreement and
the Amended Warrant are valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and general equitable principles,
regardless of whether such enforceability is considered in a proceeding at law or in
equity.

The execution, delivery and performance by the Company of the Agreement, the
Amended Warrant, and the consummation of the transactions contemplated thereby, and
compliance by the Company with the provisions thereof, will not (A) violate, conflict
with, or result in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of, any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
Company Subsidiary under any of the terms, conditions or provisions of its
organizational documents or under any material agreement, contract, indenture, lease,
mortgage, power of attorney, evidence of indebtedness, letter of credit, license,
instrument, obligation, purchase or sales order, or other commitment, whether oral or
written, identified on Schedule A attached hereto, which the Company has represented
lists all material agreements and instruments to which it is a party or by which it or any of
its properties is bound or (B) subject to compliance with the statute and regulations
referred to in Section 3.5(b) of the Agreement violate any statute, rule or regulation or
any judgment, ruling, order, writ, injunction or decree known to us after reasonable
inquiry that is applicable to the Company or any Company Subsidiary or any of their
respective properties or assets except, in the case of clause (B), for those occurrences
that, individually or in the aggregate, have not had and would not reasonably be expected
to have a Company Material Adverse Effect.

Other than the filing of any current report on Form 8-K required to be filed with the SEC,
such filings and approvals as are required to be made or obtained under any state "blue
sky" laws and such consents and approvals that have been made or obtained no notice to,
filing with, exemption or review by, or authorization, consent or approval of, any
Governmental Entity is required to be made or obtained by the Company in connection
with the consummation by the Company of the Exchange.

Annex C-2


(ii) "NASDAQ" means NASDAQ Stock Market LLC.
Gj) | "NYSE" means the New York Stock Exchange.

(kk) "Ordinary Cash Dividends" means a regular quarterly cash dividend on shares of
Common Stock out of surplus or net profits legally available therefor (determined in accordance
with generally accepted accounting principles in effect from time to time), provided that
Ordinary Cash Dividends shall not include any cash dividends paid subsequent to the Original
Issue Date to the extent the aggregate per share dividends paid on the outstanding Common
Stock in any quarter exceed the Initial Quarterly Dividend, as adjusted for any stock split, stock
dividend, reverse stock split, reclassification or similar transaction.

ri) "Original Designated Preferred Stockholder" means the United States Department
of the Treasury and any successor or assign that is an Affiliate of the United States Department
of the Treasury. Any actions specified to be taken by the Original Designated Preferred
Stockholder hereunder may only be taken by such Person and not by any other holder of
Designated Preferred Stock.

(mm) "Original Issue Date" means the date on which shares of Designated Preferred
Stock are first issued.

(nn) "Permitted Transactions" has the meaning set forth in Section 11(d).
(oo) "Per Share Fair Market Value" has the meaning set forth in Section 11(e).

(pp) "Person" has the meaning given to it in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

(qq) "Preferred Director" has the meaning set forth in Section 13(b).

(tr) "Preferred Stock" means any and all series of preferred stock of the Corporation,
including the Designated Preferred Stock.

(ss) "Pro Rata Repurchase" means any purchase of shares of Common Stock by the
Corporation or any Affiliate thereof pursuant to (A) any tender offer or exchange offer subject to
Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated thereunder or
(B) any other offer available to substantially all holders of Common Stock, in the case of both
(A) or (B), whether for cash, shares of Capital Stock of the Corporation, other securities of the
Corporation, evidences of indebtedness of the Corporation or any other Person or any other
property (including, without limitation, shares of Capital Stock, other securities or evidences of
indebtedness of a subsidiary), or any combination thereof, effected while the Designated
Preferred Stock is outstanding. The "Effective Date" of a Pro Rata Repurchase shall mean the
date of acceptance of shares of Common Stock for purchase or exchange by the Corporation
under any tender or exchange offer which is a Pro Rata Repurchase or the date of purchase with
respect to any Pro Rata Repurchase that is not a tender or exchange offer.

(tt) "Regulatory Approvals" with respect to the holder of the Designated Preferred
Stock, means, to the extent applicable and required to permit the conversion of the Designated

A-5


exchanged for preference securities of the surviving or resulting entity or its ultimate
parent, and (y) such shares remaining outstanding or such preference securities, as the
case may be, have such rights, preferences, privileges and voting powers, and limitations
and restrictions thereof, taken as a whole, as are not materially less favorable to the
holders thereof than the rights, preferences, privileges and voting powers, and limitations
and restrictions thereof, of Designated Preferred Stock immediately prior to such
consummation, taken as a whole;

provided, however, that for all purposes of this Section 13(c), any increase in the amount of the
authorized Preferred Stock, including any increase in the authorized amount of Designated
Preferred Stock necessary to satisfy preemptive or similar rights granted by the Corporation to
other persons prior to the Signing Date, or the creation and issuance, or an increase in the
authorized or issued amount, whether pursuant to preemptive or similar rights or otherwise, of
any other series of Preferred Stock, or any securities convertible into or exchangeable or
exercisable for any other series of Preferred Stock, ranking equally with and/or junior to
Designated Preferred Stock with respect to the payment of dividends (whether such dividends
are cumulative or non-cumulative) and the distribution of assets upon liquidation, dissolution or
winding up of the Corporation shall not be deemed to adversely affect the rights, preferences,
privileges or voting powers, and shall not require the affirmative vote or consent of, the holders
of outstanding shares of the Designated Preferred Stock.

(d) Changes after Provision for Redemption or Conversion. No vote or consent of the
holders of Designated Preferred Stock shall be required pursuant to Section 13(c).abave if, at or
prior to the time when any such vote or consent would otherwise be required pursuant to such
Section, all outstanding shares of the Designated Preferred Stock shall have been redeemed, or
shall have been called for redemption upon proper notice and sufficient funds shall have been
deposited in trust for such redemption, in each case pursuant to Section 5 above or shall have
been converted and sufficient Shares shall have been delivered, in each case, pursuant to
Sections 6, 7, 8, 9 or 10 above.

(e) Procedures for Voting and Consents. The rules and procedures for calling and
conducting any meeting of the holders of Designated Preferred Stock (including, without
limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies
at such a meeting, the obtaining of written consents and any other aspect or matter with regard to
such a meeting or such consents shall be governed by any rules of the Board of Directors or any
duly authorized committee of the Board of Directors, in its discretion, may adopt from time to
time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws,
and applicable law and the rules of any national securities exchange or other trading facility on
which Designated Preferred Stock is listed or traded at the time.

Section 14. Record Holders. To the fullest extent permitted by applicable law, the
Corporation, the transfer agent, registrar, dividend disbursing agent and conversion agent may
deem and treat the record holder of any share of Designated Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the Corporation nor such transfer agent,
registrar, dividend disbursing agent or conversion agent shall be affected by any notice to the
contrary.

A-29


to postpone any such payment or benefit for a reasonable period of time to enable the Committee
to determine whether such payment or benefit would constitute an Excess Payment.

J understand that any determination by the Committee as to whether or not, including the manner
in which, a payment or benefit needs to be modified, terminated or repaid in order for the
Company to be in compliance with Section 111 of the EESA and/or the Limitations shall be a
final and conclusive determination of the Committee which shall be binding upon me. | further
understand that the Company is relying on this letter from me in connection with its participation
in a Program.

Annex D-2


{e) Effectiveness of Redemption. If notice of redemption has been duly given and if
on or before the redemption date specified in such notice all funds necessary for the redemption
have been deposited by the Corporation, in trust for the pro rata benefit of the holders of the
shares of Designated Preferred Stock called for redemption, with a bank or trust company doing
business in the Borough of Manhattan, The City of New York, and having a capital and surplus
of at least $500 million and selected by the Board of Directors, so as to be and continue to be
available solely therefor, then, notwithstanding that any certificate for any share of Designated
Preferred Stock so called for redemption has not been surrendered for cancellation, on and after
the redemption date dividends shall cease to accrue on all Designated Preferred Stock so called
for redemption, all shares of Designated Preferred Stock so called for redemption shall no longer
be deemed outstanding and all rights with respect to such shares of Designated Preferred Stock
shall forthwith on such redemption date cease and terminate, except only the right of the holders
thereof to receive the amount payable on such redemption from such bank or trust company,
without interest. Any funds unclaimed at the end of three years from the redemption date shall,
to the extent permitted by law, be released to the Corporation, after which time the holders of the
shares of Designated Preferred Stock so called for redemption shall look only to the Corporation
for payment of the redemption price of such shares of Designated Preferred Stock.

(f) Status of Redeemed Shares. Shares of Designated Preferred Stock that are
redeemed, repurchased or otherwise acquired by the Corporation shall revert to authorized but
unissued shares of Preferred Stock (provided that any such cancelled shares of Designated
Preferred Stock may be reissued only as shares of any series of Preferred Stock other than
Designated Preferred Stock). soe

Section 6. General Conversion Provisions.

(a) Conversion by Holders; Approvals. Holders of Designated Preferred Stock shall
have the right, at their option, to convert, at any time and from time to time, all or any portion of
the Designated Preferred Stock (but in no event less than one share of the Designated Preferred
Stock), into a number of Shares equal to the product of the then-applicable Conversion Rate and
the number of shares of Designated Preferred Stock surrendered for conversion in accordance
with the terms and conditions of this Certificate of Designations (which, in the event of a
Specified Corporate Transaction or a Change of Control, shall include the provisions of
Sections 9 and 10, respectively); provided, however, notwithstanding anything in this Certificate
of Designations to the contrary, holders of Designated Preferred Stock shall not be entitled to
convert shares of Designated Preferred Stock until the converting holder has first received any
applicable Regulatory Approvals; provided, further, notwithstanding anything in this Certificate
of Designations to the contrary, the Designated Preferred Stock may not be converted until the
Corporation shall first have obtained, to the extent required by applicable law or regulation or
necessary in order to comply with any requirement of any securities exchange on which the
Shares are listed or traded, all stockholder approvals required to effect the conversion and
completed all other actions necessary to effect the conversion.

(b) Effectiveness of Conversion. If any notice of conversion has been duly given in
accordance with the procedures set forth in Sections 7, 8, 9 and 10 below, then, effective
immediately (notwithstanding that any certificate for any Designated Preferred Stock to be
converted has not been surrendered for conversion) prior to 5:00 p.m., New York City time, on

A-12


date of exercise hereof. The Company will at no time close its transfer books against transfer of
this Warrant in any manner which interferes with the timely exercise of this Warrant.

7. Charges, Taxes and Expenses. Issuance of certificates for Shares to the
Warrantholder upon the exercise of this Warrant shall be made without charge to the
Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid by the Company.

8. Transfer/Assignment.

(A) Subject to compliance with clause (B) of this Section 8, this Warrant and all rights
hereunder are transferable and assignable, in whole or in part, upon the books of the Company by
the registered holder hereof in person or by duly authorized agent, and a new warrant shall be
made and delivered by the Company, of the same tenor and date as this Warrant but registered in
the name of one or more transferees, upon surrender of this Warrant, duly endorsed, to the office
or agency of the Company described in Section 3. All expenses (other than stock transfer taxes)
and other charges payable in connection with the preparation, execution and delivery of the new
warrants pursuant to this Section 8 shall be paid by the Company.

(B) If and for so long as required by the Exchange Agreement, this Warrant shall
contain the legend as set forth in Section 5.2(a) of the Exchange Agreement.

9. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
surrender hereof by the Warrantholder to the Company, for a new warrant or warrants of like
tenor and representing the right to purchase the same aggregate number of Shares. The
Company shall maintain a registry showing the name and address of the Warrantholder as the
registered holder of this Warrant. This Warrant may be surrendered for exchange or exercise in
accordance with its terms, at the office of the Company, and the Company shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such registry.

10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity
or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares as provided for in such lost, stolen,
destroyed or mutilated Warrant.

11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a business day,
then such action may be taken or such right may be exercised on the next succeeding day that is
a business day.

12. Rule 144 Information. The Company covenants that it will use its reasonable best
efforts to timely file all reports and other documents required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations promulgated by the SEC
thereunder (or, if the Company is not required to file such reports, it will, upon the request of any

-7-


of such Pro Rata Repurchase by a fraction of which the numerator shall be (i) the product of
(x) the number of shares of Common Stock outstanding immediately before such Pro Rata
Repurchase and (y) the Market Price of a share of Common Stock on the Trading Day
immediately preceding the first public announcement by the Corporation or any of its Affiliates
of the intent to effect such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the
Pro Rata Repurchase, and of which the denominator shall be the product of (i) the number of
shares of Common Stock outstanding immediately prior to such Pro Rata Repurchase minus the
number of shares of Common Stock so repurchased and (ii) the Market Price per share of
Common Stock on the Trading Day immediately preceding the first public announcement by the
Corporation or any of its Affiliates of the intent to effect such Pro Rata Repurchase. For the
avoidance of doubt, no increase to the Conversion Price shall be made pursuant to this
Section 11(f). ,

(g) Business Combinations. In case of any Business Combination or reclassification
of Common Stock (other than a reclassification of Common Stock referred to in Section 11(a)),
the right of a holder of Designated Preferred Stock to receive Shares upon conversion of the
Designated Preferred Stock into Shares shall be converted into the right to convert the
Designated Preferred Stock to acquire the number of shares of stock or other securities or
property (including cash) which the Shares issuable (at the time of such Business Combination or
reclassification) upon conversion of the Designated Preferred Stock immediately prior to such
Business Combination or reclassification would have been entitled to receive upon
consummation of such Business Combination or reclassification; and in any such case, if
necessary, the provisions set forth herein..with respect to the rights and interests thereafter of a
holder of Designated Preferred Stock shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to the right of a holder of Designated Preferred Stock to convert the
Designated Preferred Stock in exchange for any shares of stock or other securities or property
pursuant to this paragraph. In determining the kind and amount of stock, securities or the
property receivable upon conversion of the Designated Preferred Stock following the
consummation of such Business Combination, if the holders of Common Stock have the right to
elect the kind or amount of consideration receivable upon consummation of such Business
Combination, then the consideration that a holder of Designated Preferred Stock shall be entitled
to receive upon exercise shall be deemed to be the types and amounts of consideration received
by the majority of all holders of the shares of Common Stock that affirmatively make an election
(or of all such holders if none make an election).

(h) Rounding of Calculations; Minimum Adjustments. All calculations under this
Section 11 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 11 to the
contrary notwithstanding, no adjustment in the Conversion Price or the Conversion Rate shall be
made if the amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a share
of Common Stock, but any such amount shall be carried forward and an adjustment with respect
thereto shall be made at the time of and together with any subsequent adjustment which, together
with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 or
1/10th of a share of Common Stock, or more.

@ Timing of Issuance of Additional Common Stock upon Certain Adjustments. In
any case in which the provisions of this Section 11 shall require that an adjustment shall become

A-25


Warrantholder, make publicly available such information as necessary to permit sales pursuant to
Rule 144 under the Securities Act), and it will use reasonable best efforts to take such further
action as any Warrantholder may reasonably request, in each case to the extent required from
time to time to enable such holder to, if permitted by the terms of this Warrant and the Exchange
Agreement, sell this Warrant without registration under the Securities Act within the limitation
of the exemptions provided by (A) Rule 144 under the Securities Act, as such rule may be
amended from time to time, or (B) any successor rule or regulation hereafter adopted by the
SEC. Upon the written request of any Warrantholder, the Company will deliver to such
Warrantholder a written statement that it has complied with such requirements.

13. Adjustments and Other Rights. The Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall be subject to adjustment from time to time as
follows; provided, that if more than one subsection of this Section 13 is applicable to a single
event, the subsection shall be applied that produces the largest adjustment and no single event
shall cause an adjustment under more than one subsection of this Section 13 so as to result in
duplication:

(A) Stock Splits, Subdivisions, Reclassifications or Combinations. If the Company
shall (i) declare and pay a dividend or make a distribution on its Common Stock in shares of
Common Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a
greater number of shares, or (iii) combine or reclassify the outstanding shares of Common Stock
“into a smaller number of shares, the number of Shares issuable upon exercise of this Warrant at
the time of the record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall! be proportionately adjusted so that the
Warrantholder after such date shall be entitled to purchase the number of shares of Common
Stock which such holder would have owned or been entitled to receive in respect of the shares of
Common Stock subject to this Warrant after such date had this Warrant been exercised
immediately prior to such date. In such event, the Exercise Price in effect at the time of the
record date for such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this Warrant before such
adjustment and (2) the Exercise Price in effect immediately prior to the record or effective date,
as the case may be, for the dividend, distribution, subdivision, combination or reclassification
giving rise to this adjustment by (y) the new number of Shares issuable upon exercise of the
Warrant determined pursuant to the immediately preceding sentence.

(B) Certain Issuances of Common Shares or Convertible Securities. Until the earlier
of (i) the date on which the Original Warrantholder no longer holds this Warrant or any portion
thereof and (ii) the third anniversary of the Issue Date, if the Company shall-issue shares of
Common Stock (or rights or warrants or other securities exercisable or convertible into or
exchangeable for shares of Common Stock) (collectively, “convertible securities”, and, such
transaction, a “Common Stock Issuance”), other than in Permitted Transactions (as defined
below) or a transaction to which subsection (A) of this Section 13 is applicable, without
consideration or at a consideration per share of Common Stock (or having a conversion price per
share of Common Stock) that is less than the Initial Conversion Price, then:



ANNEX A
STANDARD PROVISIONS

Section 1. General Matters. Each share of Designated Preferred Stock shall be
identical in all respects to every other share of Designated Preferred Stock. The Designated
Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with
respect to the payment of dividends and the distribution of assets in the event of any dissolution,
liquidation or winding up of the Corporation.

Section 2. Standard Definitions. As used herein with respect to Designated Preferred
Stock:

(a) "Affiliate" means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, such other Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms "controlled by" and "under
common contro! with") when used with respect to any Person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of such Person,
whether through the ownership of voting securities by contract or otherwise.

(b) "Applicable Dividend Rate" means (i) during the period from the Original Issue
Date to, but excluding, the first day of the first Dividend Period commencing on or after January
16, 2014, 5% per annum and (ii) from and after the first day of the first Dividend Period
commencing on or after January 16, 2014, 9% per annum. -

(ce) "Appraisal Procedure” means a procedure whereby two independent appraisers,
one chosen by the Corporation and one by the Original Designated Preferred Stockholder, shall
mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a
notice to the other appointing its appraiser within 15 days after the Appraisal Procedure is
invoked. If within 30 days after appointment of the two appraisers they are unable to agree upon
the amount in question, a third independent appraiser shall be chosen within 10 days thereafter
by the mutual consent of such first two appraisers. The decision of the third appraiser so
appointed and chosen shall be given within 30 days after the selection of such third appraiser. If
three appraisers shall be appointed and the determination of one appraiser is disparate from the
middle determination by more than twice the amount by which the other determination is
disparate from the middle determination, then the determination of such appraiser shall be
excluded, the remaining two determinations shall be averaged and such average shall be binding
and conclusive upon the Corporation and the Original Designated Preferred Stockholder;
otherwise, the average of all three determinations shall be binding upon the Corporation and the
Original Designated Preferred Stockholder. The costs of conducting any Appraisal Procedure
shall be borne by the Corporation.

(d) "Appropriate Federal Banking Agency" means the "appropriate Federal banking
agency" with respect to the Corporation as defined in Section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

(e) "Business Combination" means a merger, consolidation, statutory share exchange
or similar transaction that requires the approval of the Corporation’s stockholders.

A-1


matters reasonably incidental to the foregoing subclauses (i) through (vi) as determined by the
Investor.

(f) The term “EAWA” means the Employ American Workers Act (Section 1611 of
Division A, Title XVI of the American Recovery and Reinvestment Act of 2009), Public Law
No. 111-5, effective as of February 17, 2009, as may be amended and in effect from time to time.

(g) The term “Junior Stock” means the Common Stock and any other class or series
of stock of the Company the terms of which expressly provide that it ranks junior to the Capital
Securities as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the
Company.

(h) The term “Parity Stock” means any class or series of stock of the Company the
terms of which do not expressly provide that such class or series will rank senior or junior to the
Capital Securities as to dividend rights and/or as to rights on liquidation, dissolution or winding
up of the Company (in each case without regard to whether dividends accrue cumulatively or
non-cumulatively).

0) The term "Preferred Stock" means any and all series of preferred stock of the
Company, including the Capital Securities.

Gj) The term “Previously Disclosed” means information set forth or incorporated in
the Company’s Annual Report on Form 10-K for the most recently completed fiscal year of the
Company filed with the SEC prior to the date hereof or in its other reports and forms filed with
or furnished to the SEC under Section 13(a), 14(a) or 15(d) of the Exchange Act on or after the
last day of the most recently completed fiscal year of the Company and prior to the date hereof.

(kK) To the extent any securities issued pursuant to this Agreement or the transactions
contemplated hereby are registered in the name of a designee of the Investor pursuant to
Section 1.2 or 6.8(c) or transferred to an Affiliate of the Investor, all references herein to the
Investor holding or owning any debt or equity securities of the Company, Capital Securities or
Registrable Securities (and any like variations thereof) shall be deemed to refer to the Investor,
together with such designees and/or Affiliates, holding or owning any debt or equity securities,
Capital Securities or Registrable Securities (and any like variations thereof), as applicable.

Section 6.8 Assignment. Neither this Agreement nor any right, remedy, obligation
nor liability arising hereunder or by reason hereof shall be assignable by any party hereto without
the prior written consent of each other party, and any attempt to assign any right, remedy,
obligation or liability hereunder without such consent shall be void, except (a) an assignment, in
the case of a Business Combination where such party is not the surviving entity, or a sale of
substantially all of its assets, to the entity which is the survivor of such Business Combination or
the purchaser in such sale, (b) as provided in Sections 5.4 and 5.5 and (c) an assignment by the
Investor of this Agreement to an Affiliate of the Investor; provided that if the Investor assigns
this Agreement to an Affiliate, the Investor shall be relieved of its obligations under this
Agreement but (i) all rights, remedies and obligations of the Investor hereunder shall continue
and be enforceable and exercisable by and against such Affiliate, and (ii) the Company's
obligations and liabilities hereunder shall continue to be outstanding.

-22-


(bb) "Equity Raise Issuance" has the meaning set forth in Section 11(c).

(cc) "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

(dd) "Ex-Dividend Date" means, in respect of a dividend or distribution to holders of
Common Stock, the first date on which a sale of the Common Stock does not automatically
transfer the right to receive the relevant dividend or distribution from the seller of the Common
Stock to its buyer.

(ee) "Fair Market Value" means, with respect to any security or other property, the fair
market value of such security or other property as determined by the Board of Directors, acting
in good faith. For so long as the Original Designated Preferred Stockholder holds the Designated
Preferred Stock or any portion thereof, it may object in writing to the Board of Directors’
calculation of fair market value within 10 days of receipt of written notice thereof. If the
Original Designated Preferred Stockholder and the Corporation are unable to agree on fair
market value during the 10-day period following the delivery of the Original Designated
Preferred Stockholder’s objection, the Appraisal Procedure may be invoked by either party to
determine Fair Market Value by delivering written notification thereof not later than the 30th day
after delivery of the Original Designated Preferred Stockholder’s objection.

(ff) | “Governmental Entities” means all United States and other governmental,
regulatory or judicial authorities.

(gg) "Liquidation Preference" has the meaning set forth in Section 4(a).

(hh) "Market Price" means, with respect to the Common Stock, on any given date, the
average VWAP for the 5 consecutive Trading Day-period ending on the Trading Day
immediately preceding such given date. "Market Price" shall be determined without reference to
after hours or extended hours trading. If the Common Stock is not listed and traded in a manner
that the quotations referred to above are available for the period required hereunder, the Market
Price per share of Common Stock shall be deemed to be (i) in the event that any portion of the
Designated Preferred Stock is held by the Original Designated Preferred Stockholder, the fair
market value per share of the Common Stock as determined in good faith by the Original
Designated Preferred Stockholder or (ii) in all other circumstances, the fair market value per
share of the Common Stock as determined in good faith by the Board of Directors in reliance on
an opinion of a nationally recognized independent investment banking corporation retained by
the Corporation for this purpose and certified in a resolution to the holder(s) of Designated
Preferred Stock. For the purposes of determining the Market Price of the Common Stock on the
"Trading Day" preceding, on or following the occurrence of an event, (i) that Trading Day shall
be deemed to commence immediately after the regular scheduled closing time of trading on the
NYSE or, if trading is closed at an earlier time, such earlier time and (ii) that Trading Day shall
end at the next regular scheduled closing time, or if trading is closed at an earlier time, such
earlier time (for the avoidance of doubt, and as an example, if the Market Price is to be
determined as of the last Trading Day preceding a specified event and the closing time of trading
on a particular day is 4:00 p.m. and the specified event occurs at 5:00 p.m. on that day, the
Market Price would be determined by reference to such 4:00 p.m. closing time).

A-4


the applicable Conversion Date, holders of Designated Preferred Stock whose shares of
Designated Preferred Stock are to be converted shall cease to have any rights to such shares of
Designated Preferred Stock (including with respect to dividends) subject to the right of any such
holders to receive any accrued and unpaid dividends to the Conversion Date on such shares of
Designated Preferred Stock and any other payments to which they are otherwise entitled
pursuant to the terms hereof.

(c) No Rights as Holders of Common Stock Prior to Conversion. The person or
persons entitled to receive the Shares issuable upon conversion shall be treated for all purposes
as the record holder(s) of such Shares as of 5:00 p.m., New York City time, on the applicable
Conversion Date notwithstanding that the stock transfer books of the Corporation may then be
closed or certificates representing such Shares may not be actually delivered on such date,
provided that in the event of a conversion pursuant to Section 9 or 10 below, the holder(s) of
Designated Preferred Stock has complied with Section 9(c) or 10(c), respectively. No allowance
or adjustment, except as set forth in Section 11, shall be made in respect of dividends payable to
holders of Common Stock of record as of any date prior to such Conversion Date. Prior to the
applicable Conversion Date, Shares issuable upon conversion of Designated Preferred Stock
shall not be deemed outstanding for any purpose, and holders of Designated Preferred Stock
shall have no rights with respect to the Common Stock (including voting rights, rights to respond
to tender offers for the Common Stock and rights to receive any dividends or other distributions
on the Common Stock) by virtue of holding shares of Designated Preferred Stock.

(d) Delivery of Shares and Cash. The Corporation shall_deliver to the holders of
Designated Preferred Stock that have been converted the Shares’ and any amount of cash to
which such holders are entitled on or prior to the third Trading Day immediately following the
applicable Conversion Date. If fewer than all the shares of Designated Preferred Stock
represented by any certificate are converted, a new certificate shall be issued representing the
unconverted shares of Designated Preferred Stock without charge to the holder thereof.

(e) Accrued and Unpaid Dividends. Upon a conversion of any shares of Designated
Preferred Stock as set forth in Sections 6, 7, 8, 9 and 10, the holders of such shares shall receive
all accrued and unpaid dividends on such shares in cash out of funds legally available therefor or,
at the option of the Corporation, in substitute in whole or in part for such cash, in fully paid and
nonassessable shares of Common Stock legally available for such purpose to, but excluding, the
applicable Conversion Date. Accrued and unpaid dividends paid in shares of Common Stock
shall be paid by delivering to each holder of Designated Preferred Stock entitled thereto a
number of shares of Common Stock determined by dividing the total amount of the cash
payment of accrued and unpaid dividends that would otherwise be payable to such holder
(rounded to the nearest whole cent) by the Market Price on the second Trading Day preceding
the applicable Conversion Date. The issuance of any such shares of Common Stock in such
amount shall constitute full payment of all accrued and unpaid dividends that would otherwise
have been payable. The Board of Directors of the Corporation shall determine the form of
payment of accrued and unpaid dividends with respect to any conversion and such election shall
be set forth in the applicable notice provided to holders of the Designated Preferred Stock by the
Corporation as set forth in Sections 7, 8, 9 and 10 below.


LIST OF SCHEDULES
SCHEDULE A: CAPITALIZATION
SCHEDULE B: COMPANY MATERIAL ADVERSE EFFECT

“iii-


IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
a duly authorized officer.

Dated: [e], 2010

COMPANY: First BanCorp

By:
Name:
Title:

Attest:

By:

Name:
Title:

[Signature Page to Warrant]


16. No Impairment. The Company will not, by amendment of its Charter or through
any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such
action as may be necessary or appropriate in order to protect the rights of the Warrantholder.

17. Governing Law, etc. This Warrant and any claim, controversy or dispute arising
under or related to this Agreement, the relationship of the parties, and/or the interpretation and
enforcement of the rights and duties of the parties shall be enforced, governed and construed in
all respects (whether in contract or in tort) in accordance with the federal law of the United
States if and to the extent such law is applicable, and otherwise in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely within such
State. Each of the Company and the Warrantholder agrees (a) to submit to the exclusive
jurisdiction and venue of the United States District Court for the District of Columbia for any
civil action, suit or proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby, and (b) that notice may be served upon the Company at the address in
Section 21 below and upon the Warrantholder at the address for the Warrantholder set forth in
the registry maintained by the Company pursuant to Section 9 hereof. To the extent permitted by
applicable law, each of the Company and the Warrantholder hereby unconditionally waives trial
by jury in any civil legal action or proceeding relating to the Warrant or the transactions
contemplated hereby or thereby.

18. Binding Effect. This Warrant shall be binding upon any successors or assigns of
the Company.

19. Amendments. This Warrant may be amended and the observance of any term of
this Warrant may be waived only with the written consent of the Company and the
Warrantholder.

20. Prohibited Actions. The Company agrees that it will not take any action which
would entitle the Warrantholder to an adjustment of the Exercise Price if the total number of
shares of Common Stock issuable after such action upon exercise of this Warrant, together with
all shares of Common Stock then outstanding and all shares of Common Stock then issuable
upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed
the total number of shares of Common Stock then authorized by its Charter.

21. Notices. Any notice, request, instruction or other document to be given hereunder
by any party to the other will be in writing and will be deemed to have been duly given (a) on the
date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on
the second business day following the date of dispatch if delivered by a recognized next day
courier service. All notices hereunder shall be delivered as set forth in Item 7 of Schedule A
hereto, or pursuant to such other instructions as may be designated in writing by the party to
receive such notice.

22. Entire Agreement. This Warrant, the forms attached hereto and Schedule A
hereto (the terms of which are incorporated by reference herein), and the Exchange Agreement

-13-


(iii) at least $385 million in aggregate liquidation value of the Corporation’s
7.125% Noncumulative Perpetual Monthly Income Preferred Stock, Series A, 8.35%
Noncumulative Perpetual Monthly Income Preferred Stock, Series B, 7.40%
Noncumulative Perpetual Monthly Income Preferred Stock, Series C, 7.25%
Noncumulative Perpetual Monthly Income Preferred Stock, Series D, and 7.00%
Noncumulative Perpetual Monthly Income Preferred Stock, Series E (collectively, the
“Other Preferred Stock”) shall have been exchanged for shares of Common Stock (each,
an “Other Preferred Stock Exchange”); provided, however, that the terms of each Other
Preferred Stock Exchange shall, except as approved by the Original Designated Preferred
Shareholder in its sole discretion, not involve the issuance of more than 11.6822 shares of
Common Stock for each share of Other Preferred Stock, and shall otherwise be
acceptable to the Original Designated Preferred Shareholder in its sole discretion;

(iv) the Corporation shall have closed one or more transactions in which
investors other than the Original Designated Preferred Stockholder (each, an "Equity
Investor") have collectively provided a minimum aggregate amount of $500 million in
gross cash proceeds to the Corporation in exchange for Common Stock (each such
investment by an Equity Investor, an "Equity Raise"); provided, however, that the terms
of each such Equity Raise (other than the price per share of Common Stock issued by the
Corporation in each such Equity Raise) shall be reasonably acceptable to the Original
Designated Preferred Shareholder in its sole discretion;

(vy) the Corporation shall have made all applicable adjustments pursuant to
Section 11 that are required to be made on or before the Early Conversion Date; and

(vi) none of the following shall have occurred with respect to the Corporation
or any of its subsidiaries:

(A) _ the Corporation or any of its subsidiaries shall have (1) dissolved
(other than pursuant to a consolidation, amalgamation or merger); (2) become
insolvent or unable to pay its debts or failed or admitted in writing its inability
generally to pay its debts as they become due; (3) made a general assignment,
arrangement or composition with or for the benefit of its creditors; (4) instituted
or have instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors’ rights, or a petition shall have been presented for
its winding-up or liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition shall have resulted in
a judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation; (5) had a resolution passed
for its winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) sought or shail have become subject
to the appointment of an administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official for it or for all or substantially
all its assets; (7) had a secured party take possession of all or substantially all its
assets or had a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets; (8) caused

A-16


Exchange as promptly as practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall use commercially reasonable efforts to cooperate with the other
party to that end.

Section 4.2 Expenses. If requested by the Investor, the Company shall pay all
reasonable out of pocket and documented costs and expenses associated with the Exchange,
including, but not limited to, the reasonable fees, disbursements and other charges of the
Investor’s legal counsel and financial advisors.

Section 4.3 Exchange Listing. If requested by the Investor, the Company shall, at the
Company’s expense, cause the Capital Securities and the Amended Warrant, to the extent the
Capital Securities and the Amended Warrant comply with applicable listing requirements, to be
listed on the New York Stock Exchange or other national stock exchange, subject to official
notice of issuance, and shall maintain such listing for so long as any Common Stock is listed on
such exchange. At the Investor’s request, the Company agrees to take such action as may be
necessary to change the minimum denominations of the Capital Securities to $25 or such other
amount as the Investor shall reasonably request. As soon as reasonably practicable following the
Closing, the Company shall, at its expense, cause the Underlying Common Shares and the
Warrant Shares to be listed on the same national securities exchange on which the Common
Stock is listed, subject to official notice of issuance, and shall maintain such listing for so long as
any Common Stock is listed on such exchange.

Section 4.4 Access, Information and Confidentiality.

(a) From the date hereof until the date when the Investor no longer holds any debt or
equity securities of the Company or an Affiliate of the Company acquired pursuant to this
Agreement or the Amended Warrant, the Company will permit the Investor and its agents,
consultants, contractors and advisors (i) acting through the Company’s Appropriate Federal
Banking Agency, to examine the corporate books and make copies thereof and to discuss the
affairs, finances and accounts of the Company and the subsidiaries of the Company (the
"Company Subsidiaries") with the principal officers of the Company, all upon reasonable notice
and at such reasonable times and as often as the Investor may reasonably request and (ii) to
review any information material to the Investor’s investment in the Company provided by the
Company to its Appropriate Federal Banking Agency.

(b) From the date hereof until the date when the Investor no longer holds any debt or
equity securities of the Company or an Affiliate of the Company acquired pursuant to this
Agreement or the Amended Warrant, the Company shall permit, and shall cause each of the
Company’s Subsidiaries to permit (A) the Investor and its agents, consultants, contractors, (B)
the Special Inspector General of the Troubled Asset Relief Program, and (C) the Comptroller
General of the United States access to personnel and any books, papers, records or other data, in
each case, to the extent relevant to ascertaining compliance with the financing terms and
conditions; provided that prior to disclosing any information pursuant to clause (B) or (C), the
Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of
the United States shall have agreed, with respect to documents obtained under this Agreement in
furtherance of its function, to follow applicable law and regulation (and the applicable customary
policies and procedures) regarding the dissemination of confidential materials, including

-9-


declared or undeclared acts of war or terrorism, in each case generally affecting the industries in
which the Corporation and its subsidiaries operate, (ii) changes or proposed changes after the
date hereof in United States generally accepted accounting principles or regulatory accounting
requirements, or authoritative interpretations thereof, (iii) changes or proposed changes after date
hereof in securities, banking and other laws of general applicability or related policies or
interpretations of Governmental Entities (in the case of each of these clauses (i), (ii) and (iii),
other than changes or occurrences to the extent that such changes or occurrences have or would
reasonably be expected to have a materially disproportionate adverse effect on the Corporation
and its consolidated subsidiaries taken as a whole relative to comparable U.S. banking or
financial services organizations), or (iv) changes in the market price or trading volume of the
Common Stock or any other equity, equity-related or debt securities of the Corporation or its
consolidated subsidiaries (it being understood and agreed that the exception set forth in this
clause (iv) does not apply to the underlying reason giving rise to or contributing to any such
change).

(p) "Continuing Directors” means, as of any date of determination, any member of
the Board of Directors who (i) was a member of the Board of Directors on the Original Issue
Date or (ii) was nominated for election or elected to the Board of Directors with the approval of a
majority of the Continuing Directors who were members of the Board of Directors at the time of
such new director’s nomination or election.

(q) "Conversion Date" means any date on which shares of Designated Preferred
Stock are converted as set forth in this Certificate of Designations.

(x) "Conversion Price" means the Initial Conversion Price, subject to adjustment as
set forth in Section 11 of this Certificate of Designations.

(s) "Conversion Rate" means for each share of Designated Preferred Stock, the
Exchange Value divided by the Conversion Price, subject to adjustment as set forth in Section 11
of this Certificate of Designations.

(t) "Convertible Securities" has the meaning set forth in Section 11(c).

(u) "Depositary" means The Depository Trust Company or its nominee or any
successor depositary appointed by the Corporation.

(vy) "Dividend Period" has the meaning set forth in Section 3(a).

(w) "Dividend Record Date" has the meaning set forth in Section 3(a).
@ "Early Conversion" has the meaning set forth in Section 7(a).

(y) "Early Conversion Date" has the meaning set forth in Section 7(c).
(2) "Equity Investor" has the meaning set forth in Section 7(b)(iv).

(aa) “Equity Raise” has the meaning set forth in Section 7(b)(iv).


accordance with generally accepted accounting principles in the United States, and as measured
from the date of the Corporation’s consolidated financial statements most recently filed with the
Securities and Exchange Commission prior to the Original Issue Date) resulting from the grant,
vesting or exercise of equity-based compensation to employees and equitably adjusted for any
stock split, stock dividend, reverse stock split, reclassification or similar transaction.

When dividends are not paid (or declared and a sum sufficient for payment thereof set
aside for the benefit of the holders thereof on the applicable record date) on any Dividend
Payment Date (or, in the case of Parity Stock having dividend payment dates different from the
Dividend Payment Dates, on a dividend payment date falling within a Dividend Period related to
such Dividend Payment Date) in full upon Designated Preferred Stock and any shares of Parity
Stock (other than noncumulative dividends that are not declared on a dividend payment date
which the Company therefore has no obligation to pay), all dividends declared on Designated
Preferred Stock and all such Parity Stock and payable on such Dividend Payment Date (or, in the
case of Parity Stock having dividend payment dates different from the Dividend Payment Dates,
on a dividend payment date falling within the Dividend Period related to such Dividend Payment
Date) shall be declared pro rata so that the respective amounts of such dividends declared shall
bear the same ratio to each other as all accrued and unpaid dividends per share on the shares of
Designated Preferred Stock (including, if applicable as provided in Section 3(a) above, dividends
on such amount) and all Parity Stock payable on such Dividend Payment Date (or, in the case of
Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a
dividend payment date falling within the Dividend Period related to such Dividend Payment
Date) (subject to their having been declared by the Board of Directors or a duly authorized
committee of the Béard of Directors out of legally available funds and including, in the case of
Parity Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to each
other. If the Board of Directors or a duly authorized committee of the Board of Directors
determines not to pay any dividend or a full dividend on a Dividend Payment Date, the
Corporation shall provide written notice to the holders of Designated Preferred Stock prior to
such Dividend Payment Date.

Subject to the foregoing, and not otherwise, such dividends (payable in cash, securities or
other property) as may be determined by the Board of Directors or any duly authorized
committee of the Board of Directors may be declared and paid on any securities, including
Common Stock and other Junior Stock, from time to time out of any funds legally available for
such payment, and holders of Designated Preferred Stock shall not be entitled to participate in
any such dividends.

Section 4. Liquidation Rights.

(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of
Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred
Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus)
available for distribution to stockholders of the Corporation, subject to the rights of any creditors
of the Corporation, before any distribution of such assets or proceeds is made to or set aside for
the holders of Common Stock and any other stock of the Corporation ranking junior to
Designated Preferred Stock as to such distribution, payment in full in an amount equal to the sum

A-9


Regulations, the Company shall use its best efforts to (i) obtain from such Section 4.5 Employee
a waiver in substantially the form attached hereto as Annex D and (ii) deliver such waiver to the
Investor as promptly as possible, in each case, within sixty days of the Closing Date or, if later,
within sixty days of such Section 4.5 Employee becoming subject to the requirements of this
Section. “Section 4.5 Employee” means (A) each Senior Executive Officer and (B) any other
employee of the Company or its Affiliates determined at any time to be subject to Section 111 of
EESA and the Compensation Regulations.

(c) Clawback. In the event that any Section 4.5 Employee receives a payment in
contravention of the provisions of this Section 4.5, the Company shall promptly provide such
individual with written notice that the amount of such payment must be repaid to the Company in
full within fifteen business days following receipt of such notice or such earlier time as may be
required by the Compensation Regulations and shall promptly inform the Investor (i) upon
discovering that a payment in contravention of this Section 4.5 has been made and (ii) following
the repayment to the Company of such amount and shall take such other actions as may be
necessary to comply with the Compensation Regulations.

(d) Limitation on Deductions. During the Relevant Period, the Company agrees that
it shall not claim a deduction for remuneration for federal income tax purposes in excess of
$500,000 for each Senior Executive Officer that would not be deductible if Section 162(m)(5) of
the Code applied to the Company.

(e) Amendment to Prior Agreement. The parties agree that, effective as of the date
hereof, Section 4.10 of the Securities Purchase Agreement shall be amended in its entirety by
replacing such Section 4.10 with the provisions set forth in this Section 4.5 and any terms
included in this Section 4.5 that are not otherwise defined in the Securities Purchase Agreement
shall have the meanings ascribed to such terms in this Agreement.

Section 4.6 Certain Notifications Until Closing. From the date hereof until the
Closing, the Company shall promptly notify the Investor of (i) any fact, event or circumstance of
which it is aware and which would reasonably be likely to cause any representation or warranty
of the Company contained in this Agreement to be untrue or inaccurate in any material respect or
to cause any covenant or agreement of the Company contained in this Agreement not to be
complied with or satisfied in any material respect and (ii) except as Previously Disclosed, any
fact, circumstance, event, change, occurrence, condition or development of which the Company
is aware and which, individually or in the aggregate, has had or would reasonably be likely to
have a Company Material Adverse Effect; provided, however, that delivery of any notice
pursuant to this Section 4.6 shall not limit or affect any rights of or remedies available to the
Investor; provided, further, that a failure to comply with this Section 4.6 shall not constitute a
breach of this Agreement or the failure of any condition set forth in Section 1.2 to be satisfied
unless the underlying Company Material Adverse Effect or material breach would independently
result in the failure of a condition set forth in Section 1.2 to be satisfied.

Section 4.7 Sufficiency of Authorized Common Stock. During the period from the
Closing Date until the date on which all the Capital Securities have been converted and the
Amended Warrant has been fully exercised, the Company shall at all times have reserved for
issuance, free of preemptive or similar rights, a sufficient number of authorized and unissued

-11-


Section 4.7
Section 4.8
Section 4.9
Section 4.10

Section 5.1
Section 5.2
Section 5.3
Section 5.4

Section 5.5
Section 5.6
Section 5.7
Section 5.8
Section 5.9
Section 5.10
Section 5.11

Section 6.1
Section 6.2
Section 6.3
Section 6.4
Section 6.5
Section 6.6
Section 6.7
Section 6.8
Section 6.9
Section 6.10
Section 6.11
Section 6.12
Section 6.13

ANNEX A:
ANNEX B:
ANNEX C:
ANNEX D:

Sufficiency of Authorized Common Stocl
Monthly Lending Reports
Status Reports ...........
Observer to the Board

ARTICLE V

ADDITIONAL AGREEMENTS

Unregistered Capital Securities
Legend.
Certain Transactions .
Transfer of Capital Securities; Underlying Common Shares and Warrant

Shares...
Registration Rights
Voting Matters ...
Restriction on Dividends and Repurchases ..
Repurchase of Investor Securities .
[Reserved.] 0... eseseeeseseeseeeees
Bank or Thrift Holding Company Statu: .
Compliance with Employ American Workers ACt.........cccsseessessecseeeesseseeneeneenee 18

ARTICLE VI

MISCELLANEOUS

Termination.
Survival of Representations and Warranties

Waiver of Conditions
Governing Law; Submission to Jurisdiction, etc.
Notices...
Definition:
Assignment .
Severability .
No Third-Party Beneficiarie:
Entire Agreement, etc
Counterparts and Facsimile
Specific Performance

LIST OF ANNEXES

FORM OF AMENDED WARRANT

FORM OF NEW CERTIFICATE OF DESIGNATIONS
FORM OF OPINION

FORM OF WAIVER

-ii-


by wire transfer of immediately available funds to an account designated by the
Company.

If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will
be entitled to receive from the Company within a reasonable time, and in any event not
exceeding three business days, a new warrant in substantially identical form for the purchase of
that number of Shares equal to the difference between the number of Shares subject to this
Warrant and the number of Shares as to which this Warrant is so exercised. Notwithstanding
anything in this Warrant to the contrary, the Warrantholder hereby acknowledges and agrees that
its exercise of this Warrant for Shares is subject to the condition that the Warrantholder will have
first received any applicable Regulatory Approvals.

4. Issuance of Shares; Authorization; Listing. Certificates for Shares issued upon
exercise of this Warrant will be issued in such name or names as the Warrantholder may
designate and will be delivered to such named Person or Persons within a reasonable time, not to
exceed three business days after the date on which this Warrant has been duly exercised in
accordance with the terms of this Warrant. The Company hereby represents and warrants that
any Shares issued upon the exercise of this Warrant in accordance with the provisions of
Section 3 will be duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges (other than liens or charges created by the Warrantholder,
income and franchise taxes incurred in connection with the exercise of the Warrant or taxes in
respect of any transfer occurring contemporaneously therewith). The Company agrees that the
Shares so issued will be deemed to have been issued to the Warrantholder as of the close of
business on the date on which this Warrant and payment of the Exercise Price are delivered to
the Company in accordance with the terms of this Warrant, notwithstanding that the stock
transfer books of the Company may then be closed or certificates representing such Shares may
not be actually delivered on such date. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the purpose of providing
for the exercise of this Warrant, the aggregate number of shares of Common Stock then issuable
upon exercise of this Warrant at any time. The Company will (A) procure, at its sole expense,
the listing of the Shares issuable upon exercise of this Warrant at any time, subject to issuance or
notice of issuance, on all principal stock exchanges on which the Common Stock is then listed or
traded and (B) maintain such listings of such Shares at all times after issuance. The Company
will use reasonable best efforts to ensure that the Shares may be issued without violation of any
applicable law or regulation or of any requirement of any securities exchange on which the
Shares are listed or traded.

5. No Fractional Shares or Scrip. No fractional Shares or scrip representing
fractional Shares shall be issued upon any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be
entitled to receive a cash payment equal to the Market Price of the Common Stock on the last
trading day preceding the date of exercise less the pro-rated Exercise Price for such fractional
share.

6. No Rights as Stockholders; Transfer Books, This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the

-6-


effective immediately after a record date for an event, the Corporation may defer until the
occurrence of such event (i) issuing to the holder of Designated Preferred Stock converted after
such record date and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event over and
above the Shares issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder of Designated Preferred Stock any amount of cash in lieu of a
fractional share of Common Stock; provided, however, that the Corporation upon request shall
deliver to such holder of Designated Preferred Stock a due bill or other appropriate instrument
evidencing the right of such holder of Designated Preferred Stock to receive such additional
shares, and such cash, upon the occurrence of the event requiring such adjustment.

Gg) Other Events. For so long as the Original Designated Preferred Stockholder holds
the Designated Preferred Stock or any portion thereof, if any event occurs as to which the
provisions of this Section 11 are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Board of Directors of the Corporation, fairly and adequately protect
the conversion rights of the Designated Preferred Stock in accordance with the essential intent
and principles of such provisions, then the Board of Directors shall make such adjustments in the
application of such provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of the Board of Directors, to protect such
conversion rights as aforesaid. The Conversion Price or the Conversion Rate shall not be
adjusted in the event of a change in the par value of the Common Stock or a change in the
jurisdiction of incorporation of the Corporation.

(C3) Statement Regarding Adjustments. Whenever the Conversion Price or the
Conversion Rate shall be adjusted as provided in this Section 11, the Corporation shall forthwith
file at the principal office of the Corporation a statement showing in reasonable detail the facts
requiring such adjustment and the Conversion Price that shall be in effect and the Conversion
Rate after such adjustment, and the Corporation shall also cause a copy of such statement to be
sent by mail, first class postage prepaid, to each holder of Designated Preferred Stock at the
address appearing in the Corporation’s records.

()) Notice of Adjustment Event, In the event that the Corporation shall propose to
take any action of the type described in this Section 11 (but only if the action of the type
described in this Section 11 would result in an adjustment in the Conversion Price or the
Conversion Rate or a change in the type of securities or property to be delivered upon conversion
of the Designated Preferred Stock), the Corporation shall give notice to each holder of
Designated Preferred Stock, in the manner set forth in Section 11(k), which notice shall specify
the record date, if any, with respect to any such action and the approximate date on which such
action is to take place. Such notice shall also set forth the facts with respect thereto as shall be
reasonably necessary to indicate the effect on the Conversion Price, Conversion Rate and the
number, kind or class of shares or other securities or property which shall be deliverable upon
conversion of the Designated Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least 10 days prior to the date so fixed, and
in case of all other action, such notice shall be given at least 15 days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.

A-26


If to the Company:

First Bancorp

1519 Ponce de Leon

San Juan, Puerto Rico 00908-0146
Attention: General Counsel

Facsimile: (787) 753-8402

Email: lawrence.odell@firstbankpr.com
Telephone: (787) 729-8088

With a copy to:

K&L Gates LLP

599 Lexington Avenue

New York, NY 10022

Attention: David W. Bernstein
Facsimile: (212) 536-3901

Email: david.bernstein@klgates.com
Telephone: (212) 536-4029

If to the Investor:

United States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, DC 20220

Attention: Chief Counsel Office of Financial Stability
Facsimile: (202) 927-9225

Email: OFSChiefCounselNotices@do.treas.gov

With a copy to:

Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, New York 10281
Attention: Patrick T. Quinn
Facsimile: (212) 504-6666
Email: pat.quinn@cwt.com
Telephone: (212) 504-6067
Attention: William P. Mills
Facsimile: (212) 504-6666
Email: william.mills@cwt.com
Telephone: (212) 504-6436

Section 6.7 Definitions.

(a) | When a reference is made in this Agreement to a subsidiary of a person, the term
“subsidiary” means any corporation, partnership, joint venture, limited liability company or other
pi

-20-


TABLE OF CONTENTS

ARTICLE I

THE CLOSING; THE EXCHANGE OF CAPITAL SECURITIES FOR SERIES F

Section 1.1
Section 1.2
Section 1.3

Section 2.1
Section 2.2

Section 3.1
Section 3.2
Section 3.3
Section 3.4
Section 3.5
Section 3.6
Section 3.7
Section 3.8
Section 3.9
Section 3.10

Section 4.1
Section 4.2
Section 4.3
Section 4.4
Section 4.5
Section 4.6

PREFERRED STOCK

The Capital Securitie:
The Closing..
Interpretatio:

ARTICLE I

EXCHANGE

Exchange; Dividend Exchange.
Exchange Documentation

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Existence and Power.
Authorization and Enforceability
Capital Securities and Underlying Common
Amended Warrant and Warrant Shares
Non-Contravention
Anti-Takeover Provisions and Rights Plan
No Company Material Adverse Effect .
Offering of Securities ..
Brokers and Finders...
Disclosure on Form 10-K and Form 10-Q

GW WADAADAAU

ARTICLE IV
COVENANTS

Commercially Reasonable Efforts.
Expenses .........000
Exchange Listing ..
Access, Information and Confidentiality .
Executive Compensation...........
Certain Notifications Until Closing..

=ovovocow

aay


ANNEX B

FORM OF NEW CERTIFICATE OF DESIGNATIONS

Annex B-1


“business day” means any day except Saturday, Sunday and any day on which banking
institutions in the State of New York generally are authorized or required by law or other
governmental actions to close.

“Capital Stock’ means (A) with respect to any Person that is a corporation or company,
any and all shares, interests, participations or other equivalents (however designated) of capital
or capital stock of such Person and (B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests of such Person.

“Certificate of Designations” means the Certificate of Designations of Fixed Rate
Cumulative Mandatorily Convertible Preferred Stock, Series G, of the Company.

“Charter” means, with respect to any Person, its certificate or articles of incorporation,
articles of association, or similar organizational document.

“Common Stock” means the common stock of the Company, which currently has a par
value of $1.00 per share.

“Common Stock Issuance” has the meaning set forth in Section 13(B).

“Company” means the Person whose name, corporate or other organizational form and
jurisdiction of organization is set forth in Item 1 of Schedule A hereto.

“convertible securities” has the meaning set forth in Section 13(B).

“Exchange Act’ means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

“Exchange Agreement” means the Exchange Agreement, dated as of July 7, 2010, as
amended from time to time, between the Company and the United States Department of the
Treasury, including all annexes and schedules thereto.

“Exercise Price” means the amount set forth in Item 2 of Schedule A hereto.
“Expiration Time” has the meaning set forth in Section 3.

“Fair Market Value” means, with respect to any security or other property, the fair
market value of such security or other property as determined by the Board of Directors, acting
in good faith or, with respect to Section 14, as determined by the Original Warrantholder acting
in good faith. For so long as the Original Warrantholder holds this Warrant or any portion
thereof, it may object in writing to the Board of Directors’ calculation of fair market value within
10 days of receipt of written notice thereof. If the Original Warrantholder and the Company are
unable to agree on fair market value during the 10-day period following the delivery of the
Original Warrantholder’s objection, the Appraisal Procedure may be invoked by either party to
determine Fair Market Value by delivering written notification thereof not later than the 30th day
after delivery of the Original Warrantholder’s objection.


elect the kind or amount of consideration receivable upon consummation of such Business
Combination, then the consideration that the Warrantholder shall be entitled to receive upon
exercise shall be deemed to be the types and amounts of consideration received by the majority
of all holders of the shares of common stock that affirmatively make an election (or of all such
holders if none make an election).

(F) Rounding of Calculations; Minimum Adjustments. All calculations under this
Section 13 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 13 to the
contrary notwithstanding, no adjustment in the Exercise Price or the number of Shares into
which this Warrant is exercisable shall be made if the amount of such adjustment would be less
than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $0.01 or 1/10th of a share of Common Stock, or
more.

(G) Timing of Issuance of Additional Common Stock upon Certain Adjustments. In
any case in which the provisions of this Section 13 shall require that an adjustment shall become

effective immediately after a record date for an event, the Company may defer until the
occurrence of such event (i) issuing to the Warrantholder of this Warrant exercised after such
record date and before the occurrence of such event the additional shares of Common Stock
issuable upon. such exercise by reason of the adjustment required by such event over and aboye
the shares of Common Stock issuable upon such exercise before giving effect to such adjustment
and (ii) paying to such Warrantholder any amount of cash in lieu of a fractional share of
Common Stock; provided, however, that the Company upon request shall deliver to such
Warrantholder a due bill or other appropriate instrument evidencing such Warrantholder’s right
to receive such additional shares, and such cash, upon the occurrence of the event requiring such
adjustment.

(H) Other Events. For so long as the Original Warrantholder holds this Warrant or
any portion thereof, if any event occurs as to which the provisions of this Section 13 are not
strictly applicable or, if strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then the Board of
Directors shall make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of
the Board of Directors, to protect such purchase rights as aforesaid. The Exercise Price or the
number of Shares into which this Warrant is exercisable shall not be adjusted in the event of a
change in the par value of the Common Stock or a change in the jurisdiction of incorporation of
the Company.

(D Statement Regarding Adjustments. Whenever the Exercise Price or the number of
Shares into which this Warrant is exercisable shall be adjusted as provided in Section 13, the
Company shall forthwith file at the principal office of the Company a statement showing in
reasonable detail the facts requiring such adjustment and the Exercise Price that shall be in effect
and the number of Shares into which this Warrant shall be exercisable after such adjustment, and

-ll-


SCHEDULE B
COMPANY MATERIAL ADVERSE EFFECT
Response to Section 3.7:
Regulatory Action

On June 4, 2010, the Company announced that its wholly-owned subsidiary bank, FirstBank
Puerto Rico (the “Bank”), has agreed to a Consent Order dated June 2, 2010 (the “Order”) with
the Federal Deposit Insurance Corporation and the Office of the Commissioner of Financial
Institutions of Puerto Rico. Pursuant to the Order, the Bank has agreed to take certain actions
designed to improve the financial condition of the Bank. The Company also announced that it
entered into a written agreement dated June 3, 2010 with the Federal Reserve Bank of New
York. Copies of these agreements are included in a Current Report on Form 8-K filed on June 4,
2010 with the U.S. Securities and Exchange Commission (SEC). The 8-K can be accessed
through the Corporation's website at www.firstbankpr.com, Investor Relations section, or at the
SEC website at www.sec.gov.

2010 Results of Operations

For the first quarter of 2010 the Company reported a net loss of $107.0 million, or $(1.22) per
diluted share. The Company expects a net loss from operations for the second quarter of 2010.

Sch, B-1


Section 6.9 Severability. If any provision of this Agreement, or the application
thereof to any person or circumstance, is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such determination,
the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.

Section 6.10 No Third-Party Beneficiaries. Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person or entity other than the Company
and the Investor any benefit, right or remedies, except that (i) the provisions of Section 4.4 shall
inure to the benefit of the persons referred to in that Section and (ii) the provisions of Section 5.5
shall inure to the benefit of the persons holding Capital Securities during any tacked holding
period, as contemplated by that Section.

Section 6.11 Entire Agreement, etc. This Agreement (including the Annexes and
Schedules hereto) constitutes the entire agreement, and supersedes all other prior agreements,
understandings, representations and warranties, both written and oral, between the parties, with
respect to the subject matter hereof. For the avoidance of doubt, the Securities Purchase
Agreement shall remain in full force and effect, except as expressly amended by this Agreement.

Section 6.12 Counterparts and Facsimile. For the convenience of the parties hereto,
this Agreement may be executed in any number of separate counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts will together constitute the
same agreement. Executed signature pages to this Agreement may be delivered by facsimile and
such facsimiles will be deemed as sufficient as if actual signature pages had been delivered.

Section 6.13 Specific Performance. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms. It is accordingly agreed that the parties shall be entitled (without the
necessity of posting a bond) to specific performance of the terms hereof, this being in addition to
any other remedies to which they are entitled at law or equity.

[Remainder of Page Intentionally Left Blank]

-23-


with notice or lapse of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of termination or acceleration
of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any Company Subsidiary under any of the terms,
conditions or provisions of (i) its organizational documents or (ii) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which it or any Company Subsidiary may
be bound, or to which the Company or any Company Subsidiary or any of the properties or
assets of the Company or any Company Subsidiary may be subject, or (B) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any statute, rule or
regulation or any judgment, ruling, order, writ, injunction or decree applicable to the Company
or any Company Subsidiary or any of their respective properties or assets except, in the case of
clauses (A)(ii) and (B), for those occurrences that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.

(b) Other than the filing of the New Certificate of Designations with the
Commonwealth of Puerto Rico, any current report on Form 8-K required to be filed with the
Securities and Exchange Commission (“SEC”), such filings and approvals as are required to be
made or obtained under any state "blue sky” laws and such consents and approvals that have
been made or obtained, no notice to, filing with or review by, or authorization, consent or
approval of, any Governmental Entity is required to be made or obtained by the Company in
connection with the consummation by the Company of the Exchange except for any such
notices, filings, reviews, authorizations, consents and approvals the failure of which to make or
obtain would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.

(c) Except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, (A) the execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated hereby
(including for this purpose the consummation of the Exchange) and compliance by the Company
with the provisions hereof will not (1) result in any payment (including any severance payment,
payment of unemployment compensation, “excess parachute payment” (within the meaning of
the Code), “golden parachute payment” (as defined in the EESA, as implemented by the
Compensation Regulations) or forgiveness of indebtedness or otherwise) becoming due to any
current or former employee, officer or director of the Company or any Company Subsidiary from
the Company or any Company Subsidiary under any benefit plan or otherwise, (2) increase any
benefits otherwise payable under any benefit plan, (3) result in any acceleration of the time of
payment or vesting of any such benefits, (4) require the funding or increase in the funding of any
such benefits or (5) result in any limitation on the right of the Company or any Company
Subsidiary to amend, merge, terminate or receive a reversion of assets from any benefit plan or
related trust and (B) neither the Company nor any Company Subsidiary has taken, or permitted
to be taken, any action that required, and no circumstances exist that will require the funding, or
increase in the funding, of any benefits or resulted, or will result, in any limitation on the right of
the Company or any Company Subsidiary to amend, merge, terminate or receive a reversion of
assets from any benefit plan or related trust.


redeemed by the Corporation upon any such redemption shall be at least equal to the lesser of (x)
all shares of Designated Preferred Stock then outstanding and (y) 25% of the number of shares of
Designated Preferred Stock issued on the Original Issue Date.

The redemption price for any shares of Designated Preferred Stock shall be payable in
cash on the redemption date to the holder of such shares against surrender of the certificate(s)
evidencing such shares to the Corporation or its agent. Any declared but unpaid dividends
payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend
Period shall not be paid to the holder entitled to receive the redemption price on the redemption
date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend
Record Date relating to the Dividend Payment Date as provided in Section 3 above.

(b) No Sinking Fund. The Designated Preferred Stock shall not be subject to any
mandatory redemption, sinking fund or other similar provisions. Holders of Designated
Preferred Stock shall have no right to require redemption or repurchase of any shares of
Designated Preferred Stock.

(c) Notice of Redemption. Notice of every redemption of shares of Designated
Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of
record of the shares of Designated Preferred Stock to be redeemed at their respective last
addresses appearing on the books of the Corporation. Such mailing shall be at least 30 days (or in
the event of a redemption on or after the first Dividend Payment Date falling on or after the
second anniversary of the Original Issue Date, at least 25 Trading Days) and not more than 60
days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall
be conclusively presumed to have been duly given, whether or not the holder receives such
notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing
thereof, to any holder of shares of Designated Preferred Stock designated for redemption shall
not affect the validity of the proceedings for the redemption of any other shares of Designated
Preferred Stock. Notwithstanding the foregoing, if shares of Designated Preferred Stock are
issued in book-entry form through the Depositary or any other similar facility, notice of
redemption may be given to the holders of Designated Preferred Stock at such time and in any
manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the
redemption date; (2) the number of shares of Designated Preferred Stock to be redeemed and, if
less than all the shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (3) the redemption price (or the manner of calculation thereof); and
(4) the place or places where certificates for such shares are to be surrendered for payment of the
redemption price.

(d) Partial Redemption. In case of any redemption of part of the shares of Designated
Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro
rata or in such other manner as the Board of Directors or a duly authorized committee thereof
may determine to be fair and equitable. Subject to the provisions hereof, the Board of Directors
or a duly authorized committee thereof shall have full power and authority to prescribe the terms
and conditions upon which shares of Designated Preferred Stock shall be redeemed from time to
time. If fewer than all the shares represented by any certificate are redeemed or converted, a new
certificate shall be issued representing the unredeemed shares without charge to the holder
thereof.


(m) Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent
to the taking of any action which would require an adjustment pursuant to this Section 11, the

Corporation shall take any action which may be necessary, including obtaining regulatory,
NYSE, NASDAQ or other applicable national securities exchange or stockholder approvals or
exemptions, in order that the Corporation may thereafter validly and legally issue as fully paid
and nonassessable all Shares that the holders of Designated Preferred Stock are entitled to
receive upon conversion of the Designated Preferred Stock pursuant to this Section 11.

(n) Adjustment Rules. Any adjustments pursuant to this Section 11 shall be made
successively whenever an event referred to herein shall occur.

Section 12. Reservation and Listing of Common Stock. The Corporation hereby
covenants that any Shares issued upon the conversion of the Designated Preferred Stock in
accordance with this Certificate of Designations shall be duly and validly authorized and issued,
fully paid and nonassessable and free from all taxes, liens and charges (other than liens or
charges created by a holder of Designated Preferred Stock, income and franchise taxes incurred
in connection with the conversion of the Designated Preferred Stock or taxes in respect of any
transfer occurring contemporaneously therewith). The Corporation shall at all times reserve and
keep available, out of its authorized but unissued Common Stock, solely for the purpose of
providing for the conversion of the Designated Preferred Stock, the aggregate number of shares
of Common Stock then issuable upon conversion of the Designated Preferred Stock at any time.
The Corporation shall (A) procure, at its sole expense, the listing of the Shares issuable upon
conversion of the Designated Preferred Stock at any time, subject to issuance or notice of.
issuance, on all principal stock exchanges on which the Common Stock is then listed or traded
and (B) maintain such listings of such Shares at all times after issuance. The Corporation shall
use reasonable best efforts to ensure that the Shares may be issued without violation of any
applicable law or regulation or of any requirement of any securities exchange on which the
Shares are listed or traded.

Section 13. Voting Rights.

(a) General. The holders of Designated Preferred Stock shall not have any voting
rights except as set forth below or as otherwise from time to time required by law.

(b) Preferred Stock Directors. Whenever, at any time or times, dividends payable on
the shares of Designated Preferred Stock have not been paid for an aggregate of six quarterly
Dividend Periods or more, whether or not consecutive, the authorized number of directors of the
Corporation shall automatically be increased by two and the holders of the Designated Preferred
Stock shall have the right, with holders of shares of any one or more other classes or series of
Voting Parity Stock outstanding at the time, voting together as a class, to elect two directors
(hereinafter the "Preferred Directors" and each a "Preferred Director") to fill such newly created
directorships at the Corporation’s next annual meeting of stockholders (or at a special meeting
called for that purpose prior to such next annual meeting) and at each subsequent annual meeting
of stockholders until all accrued and unpaid dividends for all past Dividend Periods, including
the latest completed Dividend Period (including, if applicable as provided in Section 3(a) above,
dividends on such amount), on all outstanding shares of Designated Preferred Stock have been
declared and paid in full at which time such right shall terminate with respect to the Designated

A-27


ANNEX B

CERTIFICATE OF DESIGNATIONS
OF

FIXED RATE CUMULATIVE MANDATORILY CONVERTIBLE PREFERRED
STOCK, SERIES G

OF
FIRST BANCORP

First BanCorp, a corporation organized and existing under the laws of the
Commonwealth of Puerto Rico (the “Corporation”), in accordance with the provisions of the
Puerto Rico General Corporation Law of 1995, as amended, does hereby certify:

The board of directors of the Corporation (the “Board of Directors”) or an applicable
committee of the Board of Directors, in accordance with the certificate of incorporation and
bylaws of the Corporation and applicable law, adopted the following resolution on June 22, 2010
creating a series of 425,000 shares of Preferred Stock of the Corporation designated as “Fixed
Rate Cumulative Mandatorily Convertible Preferred Stock, Series G”.

RESOLVED, that pursuant to the provisions of the certificate of incorporation and the
bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $1.00 per
share, of the Corporation be and hereby is created, and that the designation and number of shares
of such series, and the voting and other powers, preferences and relative, participating, optional
or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such
series, are as follows:

Part 1. Designation and Number of Shares. There is hereby created out of the authorized
and unissued shares of preferred stock of the Corporation a series of preferred stock designated
as the "Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series G" (the
"Designated Preferred Stock"). The authorized number of shares of Designated Preferred Stock
shall be 425,000.

Part 2. Standard Provisions. The Standard Provisions contained in Annex A attached
hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of
this Certificate of Designations to the same extent as if such provisions had been set forth in full
herein.

Part 3. Definitions. The following terms are used in this Certificate of Designations
(including the Standard Provisions in Annex A hereto) as defined below:

(a) "Common Stock” means the common stock of the Corporation, which currently
has a par value of $1.00 per share.

(b) "Dividend Payment Date" means February 15, May15, August 15 and
November 15 of each year.

USActive 18962165.2


date, on the date for such vote or consent. For purposes of determining the voting rights of the
holders of the Designation Preferred Stock under Section 13 of the Standard Provisions forming
part of this Certificate of Designations, each holder will be entitled to one vote for each $1,000
of liquidation preference to which such holder’s shares are entitled.

[Remainder of Page Intentionally Left Blank|


redacting confidential information from the public version of its reports and soliciting the input
from the Company as to information that should be afforded confidentiality, as appropriate.

(c) The Investor will use reasonable best efforts to hold, and will use reasonable best
efforts to cause its agents, consultants, contractors, advisors, and United States executive branch
officials and employees, to hold, in confidence all non-public records, books, contracts,
instruments, computer data and other data and information (collectively, “Information”)
concerning the Company furnished or made available to it by the Company or its representatives
pursuant to this Agreement (except to the extent that such information can be shown to have
been (i) previously known by such party on a non-confidential basis, (ii) in the public domain
through no fault of such party or (iii) later lawfully acquired from other sources by the party to
which it was furnished (and without violation of any other confidentiality obligation)); provided
that nothing herein shall prevent the Investor from disclosing any Information to the extent
required by applicable laws or regulations or by any subpoena or similar legal process). The
Investor understands that the Information may contain commercially sensitive confidential
information entitled to an exception from a Freedom of Information Act request.

(d) Nothing in this Section shall be construed to limit the authority that the Special
Inspector General of the Troubled Asset Relief Program, the Comptroller General of the United
States or any other applicable regulatory authority has under law.

Section 4.5 Executive Compensation.

(a) Benefit Plans. During the Relevant Period, the Company shall take all necessary
action to ensure that the Benefit Plans of the Company and its Affiliates comply in all respects
with, and shall take all other actions necessary to comply with, Section 111 of the EESA, as
implemented by the Compensation Regulations, and neither the Company nor any Affiliate shall
adopt any new Benefit Plan (i) that does not comply therewith or (ii) that does not expressly state
and require that such Benefit Plan and any compensation thereunder shall be subject to any
relevant Compensation Regulations adopted, issued or released on or after the date any such
Benefit Plan is adopted. To the extent that EESA and/or the Compensation Regulations are
amended or otherwise change during the Relevant Period in a manner that requires changes to
then-existing Benefit Plans, or that requires other actions, the Company and its Affiliates shall
effect such changes to its or their Benefit Plans, and take such other actions, as promptly as
practicable after it has actual knowledge of such amendments or changes in order to be in
compliance with this Section 4.5(a) (and shall be deemed to be in compliance for a reasonable
period to effect such changes). In addition, the Company and its Affiliates shall take all
necessary action, other than to the extent prohibited by applicable law or regulation applicable
outside of the United States, to ensure that the consummation of the transactions contemplated
by this Agreement will not accelerate the vesting, payment or distribution of any equity-based
awards, deferred cash awards or any nonqualified deferred compensation payable by the
Company or any of its Affiliates.

(b) Additional Waivers. After the Closing Date, in connection with the hiring or
promotion of a Section 4.5 Employee and/or the promulgation of applicable Compensation
Regulations or otherwise, to the extent any Section 4.5 Employee shall not have executed a
waiver with respect to the application to such Section 4.5 Employee of the Compensation

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