Document Tab

ML&Co. Executed Letter Agreement 1

Exhibit A - Securities Purchase Agreement - Standard Terms 2

Schedule A - Additional Terms and Conditions 3

Redacted Schedule B - Capitalization 4

Schedule C - Required Stockholder Approvals 5

Schedule D - Litigation 6

Schedule E - Compliance with Laws 7

Redacted Schedule F - Regulatory Agreements 8

Certificate of Designations (Draft) 9

Executed Officer's Certifcate (EESA Compliance) 10

Executed SEO Waivers 11

I

UNITED STATES DEPARTMENT OF THE TREASURY

1500 PENNSYLVANlA AVENUE, NW

WASHINGTON, D.C. 20220

Dear Ladies and Gentlemen:

The company set forth on the signature page hereto (the "Company") intends to issue in a

private placement the number ofshares of a series ofits preferred stock set forth on Schedule A

hereto (the "Preferred Slwres") and a warrant to purchase the number ofshares of its common

stock set forth on Schedule A hereto (the "Warrant" and, together with the Preferred Shares, the

"Purchased Securities") and the United States Department ofthe Treasury (the "Investor')

intends to purchase from the Company the Purchased Securities.

The purpose ofthis letter agreement is to confirm the terms and conditions ofthe

purchase by the Investor ofthe Purchased Securities. Except to the extent supplemented or

superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in

the Securities Purchase Agreement - Standard Tenns attached hereto as Exhibit A (the

"Securities Purclwse Agreement') are incorporated by reference herein. Terms that are defmed

in the Securities Purchase Agreement are used in this letter agreement as so defmed. In the event

of any inconsistency between this letter agreement and the Securities Purchase Agreement, the

terms ofthis letter agreement shall govern.

Each ofthe Company and the Investor hereby agrees that the Closing shall take place on

the earlier of(i) the second business day following the termination ofthe Agreement and Plan of

Merger (the "Merger Agreement"), dated as of September 15,2008, by and between the

Company and Bank of America Corporation ("'Bank ofAmerica") and (ii) a date during the

period beginning on January 2, 2009 and ending on January 31,2009 specified by the Company

on no less than three business days' prior notice to the Investor, ifthe Merger Agreement is still

in effect but the closing ofthe transactions contemplated by the Merger Agreement (the "Merger

Closing'') has not occurred by such specified date, but, in the case of either clauses (i) or (ii), in

no event later than January 31, 2009. Notwithstanding the foregoing sentence, prior to January

2, 2009, ifthe Merger Agreement is still in effect but the Merger Closing has not occurred the

Company shall have the right, after consultation with the Federal Reserve and Bank of America,

to request that the Investor consummate the Purchase on or prior to January 1, 2009 and, ifthe

Investor so agrees. the Closing shall occur at such place, time and date as shall be agreed

between the Company and the Investor. The Company agrees that the Investor will have no

obligation to purchase any Purchased Securities from the Company pursuant to clause (ii) ofthe

first sentence ofthis paragraph or the second sentence ofthis paragraph ifthe issuance and sale

ofsuch Purchased Securities by the Company would be in breach ofits obligations and

covenants under the Merger Agreement, as modified by that certain letter agreement, dated the

date hereof, between the Company and Bank ofAmerica (a copy of which has been provided to

the Investor).

Ifthe Merger Closing occurs prior to the Closing, this letter agreement shall

automatically tenninate upon the Merger Closing without any further action by the parties hereto

09S~31-0002-IOO33-NY02.2689l140.R

._...._. ---------.----__...__._. ._.-_- -- --.----.- J
and this letter agreement shall forthwith become void and there shaH be no liability on the part of

either party hereto except that nothing herein shall relieve either party from liability for any

breach ofthis letter agreement. IfClosing has not occurred by January 31,2009, this letter

agreement shall automatically terminate at 12:01 a.m., New York time, on February 1, 2009.

without any further action by the parties hereto and this letter agreement shall forthwith become

void and there shall be no liability on the part ofeither party hereto except that nothing herein

shall relieve either party from liability for any breach ofthis letter agreement.

For the avoidance ofdoubt, the parties agree that the restrictions set forth in Sections 4.8

and 4.10 ofthe Securities Purchase Agreement shall apply to the Company as ifthe Closing had

occurred on October 28,2008 and the Investor had acquired the Purchased Securities as ofsuch

date. In addition, the Company shall take all actions necessary to satisfy the conditions set forth

in Sections 1.2(d)(iv) and (v) ofthe Securities Purchase Agreement by October 28,2008 as fully

as ifthe purchase ofthe Purchased Securities shall have occurred on such date. For purposes of

Section 4.4 ofthe Securities Purchase Agreement, issuances of capital stock to Bank ofAmerica

or any ofits Affiliates shall not be considered a Qualified Equity Offering. For purposes of

Section 1.2(d)(Q(A) ofthe Securities Purchase Agreement, the representations and warranties set

forth in Sections 2.2(g) and 2.2(1) thereofshall be deemed made as of October 28, 2008,

provided that the Company has, at or prior to the Closing, provided the Investor with written

notice of any events, changes or developments which constitute an exception thereto.

Each ofthe Company and the Investor hereby confirms its agreement with the other party

with respect to the issuance by the Company ofthe Purchased Securities and the purchase by the

Investor ofthe Purchased Securities pursuant to this letter agreement and the SecuritIes Purchase

Agreement on the terms spec.ified on Schedule A hereto.

This letter agreement (including the Schedules hereto) and the Securities Purchase

Agreement (including the Annexes thereto) and the Warrant constitute the entire agreement, and

supersede all other prior agreements, understandings, representations and warranties, both

written and oral, between the parties. with respect to the subject matter hereof. This letter

agreement constitutes the "Letter Agreement" referred to in the Securities Purchase Agreement.

This letter agreement may be executed in any number ofseparate counterparts. each such

counterpart being deemed to be an original instrument, and all such counterparts will together

constitute the sarne agreement. Executed signature pages to this letter agreement may be

delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature

pages had been delivered.

... ......
In witness whereof, this letter agreement has been duly executed and delivered by the

duly authorized representatives ofthe parties hereto as ofthe date written below.

UNITED STATES DEPARTMENT OF THE

TREASU9"/

By: 7ik~' Name: }JUj; ~H~\

Title: INft.£.f""'- An "'~ ~"J n.-a..

RN~,41.- 9Tpl'c.,.1"ry

COMPANY: MERRILL LYNCH & CO,. INC.

By: _

Name:

Title:

Date: to/~" ':~CJO;...:.i__ I f!!
UNfI'B.I) S1'A1ESDJiPAllThfBNTOF11m

tRMSURY

8y.: .

N..:-'0...~.-:------------

COMPANY.: lNn:\'.! 1'1DQ:

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~. c;.::~ .__ N_ ."1(0. ..De...~

~CM'\W>Nt~- T~o.So~

1lIIeC: October 26,2008

09533 J-0002·\0033-NV02.2689840.8

SECURITIES PURCHASE AGREEMENT

EXHIBIT A
095331-0002-IOO33-NY02.2689565.11

SECURITIES PURCHASE AGREEMENT

STANDARD TERMS

EXHIBIT A
TABLE OF CONTENTS

Page

Article I

Purchase; Closing

1.1 Purchase " 1

1.2 Closing 2

1.3 Interpretation 4

Article II

Representations and Warranties

2.1 Disclosure 4

2.2 Representations and Warranties ofthe Company 5

Article III

Covenants

3.1 Commercially Reasonable Efforts 13

3.2 Expenses 14

3.3 Sufficiency of Authorized Common Stock; Exchange Listing 14

3.4 Certain Notifications Until Closing 15

3.5 Access, Information and Confidentiality .15

Article IV

Additional Agreements

4.1 Purchase for Investment.. 16

4.2 Legends 16

4.3 Certain Transactions 18

4.4 Transfer of Purchased Securities and Warrant Shares; Restrictions on Exercise of

the Warrant. 18

4.5 Registration Rights 19

4.6 Voting ofWarrant Shares 30

4.7 Depositary Shares 31

4.8 Restriction on Dividends and Repurchases 31

4.9 Repurchase ofInvestor Securities 32

4.10 Executive Compensation 33

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095331-0002-IOO33-NY02.2689565.11
Article V

Miscellaneous

5.1 Tennination 34

5.2 Survival ofRepresentations and Warranties 34

5.3 Amendment 34

5.4 Waiver ofConditions 34

5.5 Governing Law: Submission to Jurisdiction, Etc 35

5.6 Notices 35

5.7 Definitions : 35

5.8 Assignment 36

5.9 Severability 36

5.10 No Third Party Beneficiaries 36

-ii095331-0002-10033-NY02.2689565.11
ANNEXA:

ANNEXB:

ANNEXC:

ANNEXD:

LIST OF ANNEXES

FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

FORM OF WAIVER

FORM OF OPINION

FORM OF WARRANT

-lll095331-0002-IOO33-NY02.2689565.11
INDEX OF DEFINED TERMS

Term

Affiliate

Agreement

Appraisal Procedure

Appropriate Federal Banking Agency

Bankruptcy Exceptions

Benefit Plans

Board of Directors

Business Combination

business day

Capitalization Date

Certificate of Designations

Charter

Closing

Closing Date

Code

Common Stock

Company

Company Financial Statements

Company Material Adverse Effect

Company Reports

Company Subsidiary; Company Subsidiaries

control; controlled by; under common control with

Controlled Group

cpp

EESA

ERISA

Exchange Act

Fair Market Value

GAAP

Governmental Entities

Holder

Holders' Counsel

Indemnitee

Information

Initial Warrant Shares

Investor

Junior Stock

knowledge ofthe Company; Company's knowledge

Last Fiscal Year

Letter Agreement

officers

-IV095331-0002-1 0033·NY02.2689565 .11

Location of

Definition

5.7(b)

Recitals

4.9(c)(i)

2.2(s)

2.2(d)

1.2(d)(iv)

2.2(f)

4.4

1.3

2.2(b)

1.2(d)(iii)

1.2(d)(iii)

1.2(a)

1.2(a)

2.2(n)

Recitals

Recitals

2.2(h)

2.I(a)

2.2(i)(i)

2.2(i)(i)

5.7(b)

2.2(n)

Recitals

1.2(d)(iv)

2.2(n)

2.1 (b)

4.9(c)(ii)

2.1 (a)

1.2(c)

4.5(k)(i)

4.5(k)(ii)

4.5(g)(i)

3.5(b)

Recitals

Recitals

4.8(c)

5.7(c)

2.I(b)

Recitals

5.7(c)
Term

Parity Stock

Pending Underwritten Offering

Permitted Repurchases

Piggyback Registration

Plan

Preferred Shares

Preferred Stock

Previously Disclosed

Proprietary Rights

Purchase

Purchase Price

Purchased Securities

Qualified Equity Offering

register; registered; registration

Registrable Securities

Registration Expenses

Regulatory Agreement

Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415

Schedules

SEC

Securities Act

Selling Expenses

Senior Executive Officers

Share Dilution Amount

ShelfRegistration Statement

Signing Date

Special Registration

Stockholder Proposals

subsidiary

Tax; Taxes

Transfer

Warrant

Warrant Shares

-v095331-0002-10033-NY02.2689565.11

Location of

Definition

4.8(c)

4.5(1)

4.8(a)(ii)

4.5(a)(iv)

2.2(n)

Recitals

Recitals

2.1(b)

2.2(u)

Recitals

1.1

Recitals

4.4

4.5(k)(iii)

4.5(k)(iv)

4.5(k)(v)

2.2(s)

4.5(k)(vi)

Recitals

2.1(b)

2.2(a)

4.5(k)(vii)

4.10

4.8(a)(ii)

4.5(a)(ii)

2.1 (a)

4.5(i)

3.1 (b)

5.8(a)

2.2(0)

4.4

Recitals

2.2(d)
SECURITIES PURCHASE AGREEMENT - STANDARD TERMS

Recitals:

WHEREAS, the United States Department ofthe Treasury (the "Investor") may from

time to time agree to purchase shares of preferred stock and warrants from eligible financial

institutions which elect to participate in the Troubled Asset Relief Program Capital Purchase

Program ("CPP");

WHEREAS, an eligible financial institution electing to participate in the CPP and issue

securities to the Investor (referred to herein as the "Company") shall enter into a letter agreement

(the "Letter Agreement") with the Investor which incorporates this Securities Purchase

Agreement - Standard Terms;

WHEREAS, the Company agrees to expand the flow of credit to U.S. consumers and

businesses on competitive terms to promote the sustained growth and vitality ofthe U.S.

economy;

WHEREAS, the Company agrees to work diligently, under existing programs, to modify

the tenns ofresidential mortgages as appropriate to strengthen the health of the U.S. housing

market;

WHEREAS, the Company intends to issue in a private placement the number ofshares of

the series ofits Preferred Stock ("Preferred Stoc/(') set forth on Schedule A to the Letter

Agreement (the "Preferred Shares") and a warrant to purchase the number ofshares of its

Common Stock ("Common Stoc/(') set forth on Schedule A to the Letter Agreement (the "Initial

Warrant Shares") (the "Warrant" and, together with the Preferred Shares, the "Purchased

Securities") and the Investor intends to purchase (the "Purchase") from the Company the

Purchased Securities; and

WHEREAS, the Purchase will be governed by this Securities Purchase Agreement -

Standard Terms and the Letter Agreement, including the schedules thereto (the "Schedules"),

specifying additional terms ofthe Purchase. This Securities Purchase Agreement - Standard

Terms (including the Annexes hereto) and the Letter Agreement (including the Schedules

thereto) are together referred to as this "Agreement". All references in this Securities Purchase

Agreement - Standard Terms to "Schedules" are to the Schedules attached to the Letter

Agreement.

NOW, THEREFORE, in consideration ofthe premises, and ofthe representations,

warranties, covenants and agreements set forth herein, the parties agree as follows:

Article I

Purchase; Closing

1.1 Purchase. On the tenns and subject to the conditions set forth in this Agreement,

the Company agrees to sell to the Investor, and the Investor agrees to purchase from the

Company, at the Closing (as hereinafter defined), the Purchased Securities for the price set forth

on Schedule A (the "Purchase Price").

095331-0002-10033-NY02.2689565.11
1.2 Closing.

(a) On the terms and subject to the conditions set forth in this Agreement, the closing

ofthe Purchase (the "Closing") will take place at the location specified in Schedule A, at the

time and on the date set forth in Schedule A or as soon as practicable thereafter, 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 ofthe conditions to the Closing in this Section

1.2, at the Closing the Company will deliver the Preferred Shares and the Warrant, in each case

as evidenced by one or more certificates dated the Closing Date and bearing appropriate legends

as hereinafter provided for, in exchange for payment in full ofthe Purchase Price by wire

transfer ofimmediately available United States funds to a bank account designated by the

Company on Schedule A.

(c) The respective obligations of each ofthe Investor and the Company to

consummate the Purchase are subject to the fulfillment (or waiver by the Investor and the

Company, as applicable) prior to the Closing ofthe 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 ofthe Purchase 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 the

purchase and sale ofthe Purchased Securities as contemplated by this Agreement.

(d) The obligation ofthe Investor to consummate the Purchase is also subject to the

fulfillment (or waiver by the Investor) at or prior to the Closing of each ofthe following

conditions:

(i) (A) the representations and warranties ofthe Company set forth in (x)

Section 2.2(g) ofthis Agreement shall be true and correct in all respects as though made

on and as ofthe Closing Date, (y) Sections 2.2(a) through (f) shall be true and correct in

all material respects as though made on and as ofthe 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 material respects as ofsuch

other date) and (z) Sections 2.2(h) through (v) (disregarding all qualifications or

limitations set forth in such representations and warranties as to "materiality", "Company

Material Adverse Effect" and words ofsimilar import) shall be true and correct as though

made on and as ofthe 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 as ofsuch other date), except to the extent that the failure ofsuch

representations and warranties referred to in this Section 1.2(d)(i)(A)(z) to be so true and

correct, individually or in the aggregate, does not have and would not reasonably be

expected to have a Company Material Adverse Effect and (B) the Company shall have

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095331-oo02-10033-NY02.2689565.11
perfonned in all material respects all obligations required to be perfonned by it under this

Agreement at or prior to the Closing;

(ii) the Investor shall have received a certificate signed on behalf ofthe

Company by a senior executive officer certifying to the effect that the conditions set forth

in Section 1.2(d)(i) have been satisfied;

(iii) the Company shall have duly adopted and filed with the Secretary of State

ofits jurisdiction of organization or other applicable Governmental Entity the amendment

to its certificate or articles ofincorporation, articles of association, or similar

organizational document ("Charter") in substantially the fonn attached hereto as Annex

A (the "Certificate ojDesignations") and such filing shall have been accepted;

(iv) (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 to the extent necessary for such changes to

be legally enforceable, each ofits Senior Executive Officers shall have duly consented in

writing to such changes), as may be necessary, during the period that the Investor owns

any debt or equity securities of the Company acquired pursuant to this Agreement or the

Warrant, in order to comply with Section lll(b) ofthe Emergency Economic

Stabilization Act of 2008 ("EESA") as implemented by guidance or regulation thereunder

that has been issued and is in effect as ofthe Closing Date, and (B) the Investor shall

have received a certificate signed on behalf ofthe Company by a senior executive officer

certifying to the effect that the condition set forth in Section 1.2(d)(iv)(A) has been

satisfied;

(v) each ofthe Company's Senior Executive Officers shall have delivered to

the Investor a written waiver in the form attached hereto as Annex B releasing the

Investor from any claims that such Senior Executive Officers may otherwise have as a

result ofthe issuance, on or prior to the Closing Date, of any regulations which require

the modification of, and the agreement ofthe Company hereunder to modify, the terms of

any Benefit Plans with respect to its Senior Executive Officers to eliminate any

provisions ofsuch Benefit Plans that would not be in compliance with the requirements

of Section III(b) ofthe EESA as implemented by guidance or regulation thereunder that

has been issued and is in effect as ofthe Closing Date;

(vi) the Company shall have delivered to the Investor a written opinion from

counsel to the Company (which may be internal counsel), addressed to the Investor and

dated as ofthe Closing Date, in substantially the form attached hereto as Annex C;

(vii) the Company shall have delivered certificates in proper form or, with the

prior consent ofthe Investor, evidence ofshares in book-entry form, evidencing the

Preferred Shares to Investor or its designee(s); and

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095331-0002-10033-NY02.2689565.11
(viii) the Company shall have duly executed the Warrant in substantially the

fonn attached hereto as Annex D and delivered such executed Warrant to the Investor or

its designee(s).

1.3 Interpretation. When a reference is made in this Agreement to "Recitals,"

"Articles," "Sections," or "Annexes" such reference shall be to a Recital, Article or Section of,

or Annex to, this Securities Purchase Agreement - Standard Tenns, and a reference to

"Schedules" shall be to a Schedule to the Letter Agreement, in each case, unless otherwise

indicated. The tenns 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 ofthis Agreement. Whenever the words "include," "iricludes" 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 ofthis Agreement, as this Agreement is the product of

negotiation between sophisticated parties advised by counsel. All references to "$" or "dollars"

mean the lawful currency ofthe 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 ofstatutes,

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 ofNew York generally are authorized or required by law or other governmental actions to

close.

Article II

Representations and Warranties

2.1 Disclosure.

(a) "Company Material Adverse Effect" means a material adverse effect on (i) 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 the effects of(A) changes after the date ofthe Letter Agreement (the

"Signing Date") 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 ofwar or terrorism, in

each case generally affecting the industries in which the Company and its subsidiaries operate,

(B) changes or proposed changes after the Signing Date in generally accepted accounting

principles in the United States ("GAAP") or regulatory accounting requirements, or authoritative

interpretations thereof, (C) changes or proposed changes after the Signing Date in securities,

banking and other laws of general applicability or related policies or interpretations of

Governmental Entities (in the case of each ofthese clauses (A), (B) and (C), other than changes

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095331-0002-10033-NY02.2689565.11
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 ofthe Common

Stock or any other equity, equity-related or debt securities ofthe 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 ofthe Company to consummate the Purchase and the other transactions contemplated by

this Agreement and the Warrant and perform its obligations hereunder or thereunder on a timely

basis.

(b) "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 ofthe

Company filed with the Securities and Exchange Commission (the "SEC') prior to the Signing

Date (the "Last Fiscal Year") or in its other reports and forms filed with or furnished to the SEC

under Sections l3(a), 14(a) or 15(d) ofthe Securities Exchange Act of 1934 (the "Exchange

Act") on or after the last day ofthe Last Fiscal Year and prior to the Signing Date.

2.2 Representations and Warranties ofthe Company. Except as Previously Disclosed,

the Company represents and warrants to the Investor that as ofthe Signing Date and as ofthe

Closing Date (or such other date specified herein):

(a) Organization, Authority and Significant Subsidiaries. The Company has been

duly incorporated and is validly existing and in good standing under the laws ofits jurisdiction of

organization, with the necessary power and authority to own its properties and conduct its

business in all material respects as 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 ofthe Company that is

a "significant subsidiary" within the meaning ofRule 1-02(w) ofRegulation S-X under the

Securities Act of 1933 (the "Securities Act") has been duly organized and is validly existing in

good standing under the laws ofits jurisdiction of organization. The Charter and bylaws of the

Company, copies of which have been provided to the Investor prior to the Signing Date, are true,

complete and correct copies ofsuch documents as in full force and effect as ofthe Signing Date.

(b) Capitalization. The authorized capital stock ofthe Company, and the outstanding

capital stock ofthe Company (including securities convertible into, or exercisable or

exchangeable for, capital stock ofthe Company) as ofthe most recent fiscal month-end

preceding the Signing Date (the "Capitalization Date") is set forth on Schedule B. The

outstanding shares of capital stock ofthe 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 Warrant, as of

the Signing Date, 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

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095331-0002-IOO33-NY02.2689565.11
specified on Schedule B, 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 Common Stock, other than (i) shares issued upon the exercise ofstock 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 Band (ii) shares

disclosed on Schedule B.

(c) Preferred Shares. The Preferred Shares have been duly and validly authorized,

and, when issued and delivered pursuant to this Agreement, such Preferred Shares will be duly

and validly issued and fully paid and non-assessable, will not be issued in violation of any

preemptive rights, and will rank pari passu with or senior to all other series or classes of

Preferred Stock, whether or not issued or outstanding, with respect to the payment of dividends

and the distribution of assets in the event of any dissolution, liquidation or winding up ofthe

Company.

(d) The Warrant and Warrant Shares. The Warrant has been duly authorized and,

when executed and delivered as contemplated hereby, will constitute a valid and legally binding

obligation ofthe Company enforceable against the Company in accordance with its 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 ("Bankruptcy Exceptions"). The shares of Common Stock issuable upon exercise of the

Warrant (the "Warrant Shares") have been duly authorized and reserved for issuance upon

exercise ofthe Warrant and when so issued in accordance with the terms ofthe Warrant will be

validly issued, fully paid and non-assessable, subject, if applicable, to the approvals ofits

stockholders set forth on Schedule C.

(e) Authorization, Enforceability.

(i) The Company has the corporate power and authority to execute and

deliver this Agreement and the Warrant and, subject, if applicable, to the approvals of its

stockholders set forth on Schedule C, to carry out its obligations hereunder and

thereunder (which includes the issuance ofthe Preferred Shares, Warrant and Warrant

Shares). The execution, delivery and performance by the Company ofthis Agreement and

the Warrant and the consummation ofthe transactions contemplated hereby and thereby

have been duly authorized by all necessary corporate action on the part ofthe Company

and its stockholders, and no further approval or authorization is required on the part of

the Company, subject, in each case, if applicable, to the approvals ofits stockholders set

forth on Schedule C. This Agreement is a valid and binding obligation ofthe Company

enforceable against the Company in accordance with its terms, subject to the Bankruptcy

Exceptions.

(ii) The execution, delivery and performance by the Company ofthis

Agreement and the Warrant and the consummation ofthe transactions contemplated

hereby and thereby and compliance by the Company with the provisions hereof and

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095331-0002-IOO33-NY02.2689565.11
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 oftime or both, would

constitute a default) under, or result in the termination of, or accelerate the performance

required by, or result in a right oftermination or acceleration of, or result in the creation

of, any lien, security interest, charge or encumbrance upon any ofthe properties or assets

ofthe Company or any Company Subsidiary under any ofthe terms, conditions or

provisions of(i) subject, if applicable, to the approvals ofthe Company's stockholders set

forth on Schedule C, its organizational documents or (ii) any note, bond, mortgage,

indenture, deed oftrust, 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 ofthe properties or assets ofthe 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 oftheir 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.

(iii) Other than the filing ofthe Certificate of Designations with the Secretary

of State ofits jurisdiction of organization or other applicable Governmental Entity, 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, the filing of any

proxy statement contemplated by Section 3.1 and such as 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 ofthe Purchase except for any such

notices, filings, exemptions, 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.

(f) Anti-takeover Provisions and Rights Plan. The Board ofDirectors ofthe

Company (the "Board ofDirectors") has taken all necessary action to ensure that the transactions

contemplated by this Agreement and the Warrant and the consummation ofthe transactions

contemplated hereby and thereby, including the exercise ofthe Warrant in accordance with its

terms, will be exempt from any anti-takeover or similar provisions ofthe 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 ofthe Company

inapplicable to this Agreement and the Warrant and the consummation ofthe transactions

contemplated hereby and thereby, including the exercise ofthe Warrant by the Investor in

accordance with its terms.

(g) No Company Material Adverse Effect. Since the last day ofthe last completed

fiscal period for which the Company has filed a Quarterly Report on Form 10-Q or an Annual

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095331·0002-10033-NY02.2689565.11
Report on Fonn 10-K with the SEC prior to the Signing Date, no fact, circumstance, event,

change, occurrence, condition or development has occurred that, individually or in the aggregate,

has had or would reasonably be expected to have a Company Material Adverse Effect.

(h) Company Financial Statements. Each ofthe consolidated financial statements of

the Company and its consolidated subsidiaries (collectively the "Company Financial

Statements") included or incorporated by reference in the Company Reports filed with the SEC

since December 31, 2006, present fairly in all material respects the consolidated financial

position ofthe Company and its consolidated subsidiaries as of the dates indicated therein (or if

amended prior to the Signing Date, as ofthe date ofsuch amendment) and the consolidated

results oftheir operations for the periods specified therein; and except as stated therein, such

financial statements (A) were prepared in confonnity with GAAP applied on a consistent basis

(except as may be noted therein), (B) have been prepared from, and are in accordance with, the

books and records ofthe Company and the Company Subsidiaries and (C) complied as to fonn,

as oftheir respective dates offiling with the SEC, in all material respects with the applicable

accounting requirements and with the published rules and regulations ofthe SEC with respect

thereto.

(i) Reports.

(i) Since December 31, 2006, the Company and each subsidiary ofthe

Company (each a "Company Subsidiary" and, collectively, the "Company Subsidiaries")

has timely filed all reports, registrations, documents, filings, statements and submissions,

together with any amendments thereto, that it was required to file with any Governmental

Entity (the foregoing, collectively, the "Company Reports") and has paid all fees and

assessments due and payable in connection therewith, except, in each case, as would not,

individually or in the aggregate, reasonably be expected to have a Company Material

Adverse Effect. As oftheir respective dates offiling, the Company Reports complied in

all material respects with all statutes and applicable rules and regulations of the

applicable Governmental Entities. In the case of each such Company Report filed with or

furnished to the SEC, such Company Report (A) did not, as ofits date or if amended

prior to the Signing Date, as ofthe date ofsuch amendment, contain an untrue statement

of a material fact or omit to state a material fact necessary in order to make the statements

made therein, in light ofthe circumstances under which they were made, not misleading,

and (B) complied as to fonn in all material respects with the applicable requirements of

the Securities Act and the Exchange Act. With respect to all other Company Reports, the

Company Reports were complete and accurate in all material respects as oftheir

respective dates. No executive officer ofthe Company or any Company Subsidiary has

failed in any respect to make the certifications required of him or her under Section 302

or 906 ofthe Sarbanes-Oxley Act of 2002.

(ii) The records, systems, controls, data and infonnation ofthe Company and

the Company Subsidiaries are recorded, stored, maintained and operated under means

(including any electronic, mechanical or photographic process, whether computerized or

not) that are under the exclusive ownership and direct control ofthe Company or the

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09533 I·OOO2·10033·NY02.2689565. I1
Company Subsidiaries or their accountants (including all means of access thereto and

therefrom), except for any non-exclusive ownership and non-direct control that would not

reasonably be expected to have a material adverse effect on the system ofinternal

accounting controls described below in this Section 2.2(i)(ii). The Company (A) has

implemented and maintains disclosure controls and procedures (as defined in

Rule 13a-15(e) ofthe Exchange Act) to ensure that material information relating to the

Company, including the consolidated Company Subsidiaries, is made known to the chief

executive officer and the chief financial officer ofthe Company by others within those

entities, and (B) has disclosed, based on its most recent evaluation prior to the Signing

Date, to the Company's outside auditors and the audit committee ofthe Board of

Directors (x) any significant deficiencies and material weaknesses in the design or

operation ofinternal controls over financial reporting (as defined in Rule 13a-15(f) ofthe

Exchange Act) that are reasonably likely to adversely affect the Company's ability to .

record, process, summarize and report financial information and (y) any fraud, whether or

not material, that involves management or other employees who have a significant role in

the Company's internal controls over financial reporting.

U) No Undisclosed Liabiiities. Neither the Company nor any ofthe Company

Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or

otherwise) which are not properly reflected or reserved against in the Company Financial

Statements to the extent required to be so reflected or reserved against in accordance with

GAAP, except for (A) liabilities that have arisen since the last fiscal year end in the ordinary and

usual course of business and consistent with past practice and (B) liabilities that, individually or

in the aggregate, have not had and would not reasonably be expected to have a Company

Material Adverse Effect.

(k) Offering of Securities. Neither the Company nor any person acting on its behalf

has taken any action (including any offering of any securities ofthe Company under

circumstances which would require the integration ofsuch offering with the offering of any of

the Purchased Securities under the Securities Act, and the rules and regulations ofthe SEC

promulgated thereunder), which might subject the offering, issuance or sale of any ofthe

Purchased Securities to Investor pursuant to this Agreement to the registration requirements of

the Securities Act.

(1) Litigation and Other Proceedings. Except (i) as set forth on Schedule D or (ii) as

would not, individually or in the aggregate, reasonably be expected to have a Company Material

Adverse Effect, there is no (A) pending or, to the knowledge ofthe Company, threatened, claim,

action, suit, investigation or proceeding, against the Company or any Company Subsidiary or to

which any oftheir assets are subject nor is the Company or any Company Subsidiary subject to

any order, judgment or decree or (B) unresolved violation, criticism or exception by any

Governmental Entity with respect to any report or relating to any examinations or inspections of

the Company or any Company Subsidiaries.

(m) Compliance with Laws. Except as would not, individually or in the aggregate,

reasonably be expected to have a Company Material Adverse Effect, the Company and the

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09S331.0002·!OO33·NY02.2689S6S.11
Company Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals

of, and have made all filings, applications and registrations with, Governmental Entities that are

required in order to permit them to own or lease their properties and assets and to carry on their

business as presently conducted and that are material to the business ofthe Company or such

Company Subsidiary. Except as set forth on Schedule E, the Company and the Company

Subsidiaries have complied in all respects and are not in default or violation of, and none ofthem

is, to the knowledge ofthe Company, under investigation with respect to or, to the knowledge of

the Company, have been threatened to be charged with or given notice of any violation of, any

applicable domestic (federal, state or local) or foreign law, statute, ordinance, license, rule,

regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any

Governmental Entity, other than such noncompliance, defaults or violations that would not,

individually or in the aggregate, reasonably be expected to have a Company Material Adverse

Effect. Except for statutory or regulatory restrictions of general application or as set forth on

Schedule E, no Governmental Entity has placed any restriction on the business or properties of

the Company or any Company Subsidiary that would, individually or in the aggregate,

reasonably be expected to have a Company Material Adverse Effect.

(n) Employee Benefit Matters. Except as would not reasonably be expected to have,

either individually or in the aggregate, a Company Material Adverse Effect: (A) each "employee

benefit plan" (within the meaning of Section 3(3) ofthe Employee Retirement Income Security

Act of 1974, as amended ("ERISA")) providing benefits to any current or former employee,

officer or director ofthe Company or any member ofits "Controlled Group" (defined as any

organization which is a member of a controlled group of corporations within the meaning of

Section 414 ofthe Internal Revenue Code of 1986, as amended (the "Code")) that is sponsored,

maintained or contributed to by the Company or any member ofits Controlled Group and for

which the Company or any member ofits Controlled Group would have any liability, whether

actual or contingent (each, a "Plan") has been maintained in compliance with its terms and with

the requirements of all applicable statutes, rules and regulations, including ERISA and the Code;

(B) with respect to each Plan subject to Title IV of ERISA (including, for purposes ofthis clause

(B), any plan subject to Title IV ofERISA that the Company or any member ofits Controlled

Group previously maintained or contributed to in the six years prior to the Signing Date), (1) no

"reportable event" (within the meaning of Section 4043(c) ofERISA), othet: than a reportable

event for which the notice period referred to in Section 4043(c) of ERISA has been waived, has

occurred in the three years prior to the Signing Date or is reasonably expected to occur, (2) no

"accumulated funding deficiency" (within the meaning of Section 302 ofERISA or Section 412

ofthe Code), whether or not waived, has occurred in the three years prior to the Signing Date or

is reasonably expected to occur, (3) the fair market value ofthe assets under each Plan exceeds

the present value of all benefits accrued under such Plan (determined based on the assumptions

used to fund such Plan) and (4) neither the Company nor any member ofits Controlled Group

has incurred in the six years prior to the Signing Date, or reasonably expects to incur, any

liability under Title IV ofERISA (other than contributions to the Plan or premiums to the PBGC

in the ordinary course and without default) in respect of a Plan (including any Plan that is a

"multiemployer plan", within the meaning of Section 4001(c)(3) ofERISA); and (C) each Plan

that is intended to be qualified under Section 401 (a) ofthe Code has received a favorable

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095331-0002-1 0033-NY02.2689565.11
detennination letter from the Internal Revenue Service with respect to its qualified status that has

not been revoked, or such a determination letter has been timely applied for but not received by

the Signing Date, and nothing has occurred, whether by action or by failure to act, which could

reasonably be expected to cause the loss, revocation or denial ofsuch qualified status or

favorable determination letter.

(0) Taxes. Except as would not, individually or in tJ1e aggregate, reasonably be

expected to have a Company Material Adverse Effect, (i) the Company and the Company

Subsidiaries have filed all federal, state, local and foreign income and franchise Tax returns

required to be filed through the Signing Date, subject to pennitted extensions, and have paid all

Taxes due thereon, and (ii) no Tax deficiency has been determined adversely to the Company or

any ofthe Company Subsidiaries, nor does the Company have any knowledge of any Tax

deficiencies. "Tax" or "Taxes" means any federal, state, local or foreign income, gross receipts,

property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or

add on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,

governmental fee or other like assessment or charge of any kind whatsoever, together with any

interest or penalty, imposed by any Governmental Entity.

(p) Properties and Leases. Except as would not, individually or in the aggregate,

reasonably be expected to have a Company Material Adverse Effect, the Company and the

Company Subsidiaries have good and marketable title to all real properties and all other

properties and assets owned by them, in each case free from liens, encumbrances, claims and

defects that would affect the value thereof or interfere with the use made or to be made thereof

by them. Except as would not, individually or in the aggregate, reasonably be expected to have a

Company Material Adverse Effect, the Company and the Company Subsidiaries hold all leased

real or personal property under valid and enforceable leases with no exceptions that would

interfere with the use made or to be made thereof by them.

(q) Environmental Liability. Except as would not, individually or in the aggregate,

reasonably be expected to have a Company Material Adverse Effect:

(i) there is no legal, administrative, or other proceeding, claim or action of

any nature seeking to impose, or that would reasonably be expected to result in the

imposition of, on the Company or any Company Subsidiary, any liability relating to the

release of hazardous substances as defined under any local, state or federal environmental

statute, regulation or ordinance, including the Comprehensive Environmental Response,

Compensation and Liability Act of 1980, pending or, to the Company's knowledge,

threatened against the Company or any Company Subsidiary;

(ii) to the Company's knowledge, there is no reasonable basis for any such

proceeding, claim or action; and

(iii) neither the Company nor any Company Subsidiary is subject to any

agreement, order, judgment or decree by or with any court, Governmental Entity or third

party imposing any such environmental liability.

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095331-oo02-10033-NY02.2689565.ll
(r) Risk Management Instruments. Except as would not, individually or in the

aggregate, reasonably be expected to have a Company Material Adverse Effect, all derivative

instruments, including, swaps, caps, floors and option agreements, whether entered into for the

Company's own account, or for the account of one or more ofthe Company Subsidiaries or its or

their customers, were entered into (i) only in the ordinary course of business, (ii) in accordance

with prudent practices and in all material respects with all applicable laws, rules, regulations and

regulatory policies and (iii) with counterparties believed to be financially responsible at the time;

and each ofsuch instruments constitutes the valid and legally binding obligation ofthe Company

or one ofthe Company Subsidiaries, enforceable in accordance with its terms, except as may be

limited by the Bankruptcy Exceptions. Neither the Company or the Company Subsidiaries, nor,

to the knowledge ofthe Company, any other party thereto, is in breach of any ofits obligations

under any such agreement or arrangement other than such breaches that would not, individually

or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(s) Agreements with Regulatory Agencies. Except as set forth on Schedule F, neither

the Company nor any Company Subsidiary is subject to any material cease-and-desist or other

similar order or enforcement action issued by, or is a party to any material written agreement,

consent agreement or memorandum of understanding with, or is a party to any commitment letter

or similar undertaking to, or is subject to any capital directive by, or since December 31,2006,

has adopted any board resolutions at the request of, any Governmental Entity (other than the

Appropriate Federal Banking Agencies with jurisdiction over the Company and the Company

Subsidiaries) that currently restricts in any material respect the conduct ofits business or that in

any material manner relates to its capital adequacy, its liquidity and funding policies and

practices, its ability to pay dividends, its credit, risk management or compliance policies or

procedures, its internal controls, its management or its operations or business (each item in this

sentence, a "Regulatory Agreement"), nor has the Company or any Company Subsidiary been

advised since December 31, 2006 by any such Governmental Entity that it is considering issuing,

initiating, ordering, or requesting any such Regulatory Agreement. The Company and each

Company Subsidiary are in compliance in all material respects with each Regulatory Agreement

to which it is party or subject, and neither the Company nor any Company Subsidiary has

received any notice from any Governmental Entity indicating that either the Company or any

Company Subsidiary is not in compliance in all material respects with any such Regulatory

Agreement. "Appropriate Federal Banking Agency" means the "appropriate Federal banking

agency" with respect to the Company or such Company Subsidiaries, as applicable, as defined in

Section 3(q) ofthe Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)).

(t) Insurance. The Company and the Company Subsidiaries are insured with

reputable insurers against such risks and in such amounts as the management ofthe Company

reasonably has determined to be prudent and consistent with industry practice. The Company

and the Company Subsidiaries are in material compliance with their insurance policies and are

not in default under any ofthe material terms thereof, each such policy is outstanding and in full

force and effect, all premiums and other payments due under any material policy have been paid,

and all claims thereunder have been filed in due and timely fashion, except, in each case, as

would not, individually or in the aggregate, reasonably be expected to have a Company Material

Adverse Effect.

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095331-0002-IOO33-NY02.2689565.11
(u) Intellectual Property. Except as would not, individually or in the aggregate,

reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each

Company Subsidiary owns or otherwise has the right to use, all intellectual property rights,

including all trademarks, trade dress, trade names, service marks, domain names, patents,

inventions, trade secrets, know-how, works of authorship and copyrights therein, that are used in

the conduct oftheir existing businesses and all rights relating to the plans, design and

specifications of any ofits branch facilities ("Proprietary Rights") free and clear of all liens and

any claims of ownership by current or former employees, contractors, designers or others and (ii)

neither the Company nor any ofthe Company Subsidiaries is materially infringing, diluting,

misappropriating or violating, nor has the Company or any or the Company Subsidiaries received

any written (or, to the knowledge ofthe Company, oral) communications alleging that any of

them has materially infringed, diluted, misappropriated or violated, any ofthe Proprietary Rights

owned by any other person. Except as would not, individually or in the aggregate, reasonably be

expected to have a Company Material Adverse Effect, to the Company's knowledge, no other

person is infringing, diluting, misappropriating or violating, nor has the Company or any or the

Company Subsidiaries sent any written communications since January 1, 2006 alleging that any

person has infringed, diluted, misappropriated or violated, any ofthe Proprietary Rights owned

by the Company and the Company Subsidiaries.

(v) 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 Warrant or the transactions contemplated hereby or thereby based upon

arrangements made by or on behalf ofthe Company or any Company Subsidiary for which the

Investor could have any liability.

Article III

Covenants

3.1 Commercially Reasonable Efforts.

(a) Subject to the terms and conditions ofthis Agreement, each ofthe 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 ofthe Purchase as promptly as practicable and otherwise to

enable consummation ofthe transactions contemplated hereby and shall use commercially

reasonable efforts to cooperate with the other party to that end.

(b) Ifthe Company is required to obtain any stockholder approvals set forth on

Schedule C, then the Company shall comply with this Section 3.1 (b) and Section 3.1 (c). The

Company shall call a special meeting ofits stockholders, as promptly as practicable following

the Closing, to vote on proposals (collectively, the "Stockholder Proposals") to (i) approve the

exercise ofthe Warrant for Common Stock for purposes ofthe rules ofthe national security

exchange on which the Common Stock is listed and/or (ii) amend the Company's Charter to

increase the number of authorized shares ofCommon Stock to at least such number as shall be

sufficient to permit the full exercise ofthe Warrant for Common Stock and comply with the

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095331-0002-1 0033-NY02.2689565.1 1
other provisions ofthis Section 3.1 (b) and Section 3.1 (c). The Board of Directors shall

recommend to the Company's stockholders that such stockholders vote in favor of the

Stockholder Proposals. In connection with such meeting, the Company shall prepare (and the

Investor will reasonably cooperate with the Company to prepare) and file with the SEC as

promptly as practicable (but in no event more than ten business days after the Closing) a

preliminary proxy statement, shall use its reasonable best efforts to respond to any comments of

the SEC or its staffthereon and to cause a definitive proxy statement related to such

stockholders' meeting to be mailed to the Company's stockholders not more than five business

days after clearance thereof by the SEC, and shall use its reasonable best efforts to solicit proxies

for such stockholder approval ofthe Stockholder Proposals. The Company shall notify the

Investor promptly ofthe receipt of any comments from the SEC or its staffwith respect to the

proxy statement and of any request by the SEC or its staff for amendments or supplements to

such proxy statement or for additional information and will supply the Investor with copies of all

correspondence between the Company or any ofits representatives, on the one hand, and the

SEC or its staff, on the other hand, with respect to such proxy statement. If at any time prior to

such stockholders' meeting there shall occur any event that is required to be set forth in an

amendment or supplement to the proxy statement, the Company shall as promptly as practicable

prepare and mail to its stockholders such an amendment or supplement. Each ofthe Investor and

the Company agrees promptly to correct any information provided by it or on its behalf for use in

the proxy statement if and to the extent that such information shall have become false or

misleading in any material respect, and the Company shall as promptly as practicable prepare

and mail to its stockholders an amendment or supplement to correct such information to the

extent required by applicable laws and regulations. The Company shall consult with the Investor

prior to filing any proxy statement, or any amendment or supplement thereto, and provide the

Investor with a reasonable opportunity to comment thereon. In the event that the approval of any

ofthe Stockholder Proposals is not obtained at such special stockholders meeting, the Company

shall include a proposal to approve (and the Board of Directors shall recommend approval of)

each such proposal at a meeting ofits stockholders no less than once in each subsequent sixmonth period beginning on January 1,2009 until all such approvals are obtained or made.

(c) None ofthe information supplied by the Company or any ofthe Company

Subsidiaries for inclusion in any proxy statement in connection with any such stockholders

meeting ofthe Company will, at the date it is filed with the SEC, when first mailed to the

Company's stockholders and at the time of any stockholders meeting, and at the time of any

amendment or supplement thereof, contain any untrue statement of a material fact or omit to

state any material fact necessary in order to make the statements therein, in light ofthe

circumstances under which they are made, not misleading.

3.2 Expenses. Unless otherwise provided in this Agreement or the Warrant, each of

the parties hereto will bear and pay all costs and expenses incurred by it or on its behalfin

connection with the transactions contemplated under this Agreement and the Warrant, including

fees and expenses ofits own fmancial or other consultants, investment bankers, accountants and

counsel.

3.3 Sufficiency of Authorized Common Stock; Exchange Listing.

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095331-0002-10033-NY02.2689S6S.11
(a) During the period from the Closing Date (or, ifthe approval ofthe Stockholder

Proposals is required, the date ofsuch approval) until the date on which the 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 Warrant Shares to effectuate such

exercise. Nothing in this Section 3.3 shall preclude the Company from satisfying its obligations

in respect ofthe exercise ofthe Warrant by delivery ofshares ofCommon Stock which are held

in the treasury ofthe Company. As soon as reasonably practicable following the Closing, the

Company shall, at its expense, cause the Warrant Shares to be listed on the same national

securities exchange on which the Common Stock is listed, subject to official notice ofissuance,

and shall maintain such listing for so long as any Common Stock is listed on such exchange.

(b) Ifrequested by the Investor, the Company shall promptly use its reasonable best

efforts to cause the Preferred Shares to be approved for listing on a national securities exchange

as promptly as practicable following such request.

3.4 Certain Notifications Until Closing. From the Signing Date until the Closing, the

Company shall promptly notify the Investor of(i) any fact, event or circumstance ofwhich it is

aware and which would reasonably be expected 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 ofthe 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 expected to

have a Company Material Adverse Effect; provided, however, that delivery of any notice

pursuant to this Section 3.4 shall not limit or affect any rights of or remedies available to the

Investor; provided,further, that a failure to comply with this Section 3.4 shall not constitute a

breach ofthis 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.

3.5 Access, Information and Confidentiality.

(a) From-the Signing Date until the date when the Investor holds an amount of

Preferred Shares having an aggregate liquidation value ofless than 10% ofthe Purchase Price,

the Company will permit the Investor and its agents, consultants, contractors and advisors (x)

acting through the Appropriate Federal Banking Agency, to examine the corporate books and

make copies thereof and to discuss the affairs, finances and accounts ofthe Company and the

Company Subsidiaries with the principal officers ofthe Company, all upon reasonable notice and

at such reasonable times and as often as the Investor may reasonably request and (y) to review

any information material to the Investor's investment in the Company provided by the Company

to its Appropriate Federal Banking Agency. Any investigation pursuant to this Section 3.5 shall

be conducted during normal business hours and in such manner as not to interfere unreasonably

with the conduct ofthe business ofthe Company, and nothing herein shall require the Company

or any Company Subsidiary to disclose any information to the Investor to the extent (i)

prohibited by applicable law or regulation, or (ii) that such disclosure would reasonably be

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095331-0002-10033-NY02.2689565.11
expected to cause a violation of any agreement to which the Company or any Company

Subsidiary is a party or would cause a risk of a loss of privilege to the Company or any Company

Subsidiary (provided that the Company shall use commercially reasonable efforts to make

appropriate substitute disclosure arrangements under circumstances where the restrictions in this

clause (ii) apply).

(b) The Investor will use reasonable best efforts to hold, and will use reasonable best

efforts to cause its agents, consultants, contractors and advisors to hold, in confidence all nonpublic 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 suc.h

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 ofsuch 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.

Article IV

Additional Agreements

4.1 Purchase for Investment. The Investor acknowledges that the Purchased Securities

and the Warrant Shares have not been registered under the Securities Act or under any state

securities laws. The Investor (a) is acquiring the Purchased 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 ofthe Securities Act or any applicable U.S. state

securities laws, (b) will not sell or otherwise dispose of any ofthe Purchased Securities or the

Warrant Shares, except in compliance with the registration requirements or exemption provisions

ofthe 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 ofthis type that it is capable

of evaluating the merits and risks ofthe Purchase and ofmaking an informed investment

decision.

4.2 Legends.

(a) The Investor agrees that all certificates or other instruments representing the

Warrant 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."

-16-

095331-ooo2-IOO33-NY02.2689565.11
(b) The Investor agrees that all certificates or other instruments representing the

Warrant will also bear a legend substantially to the following effect:

"THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON

TRANSFER AND OTHER PROVISIONS OF A SECURITIES PURCHASE

AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE

INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE

ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT

BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH

SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE

WITH SAID AGREEMENT WILL BE YOID."

(c) In addition, the Investor agrees that all certificates or other instruments

representing the Preferred Shares will bear a legend substantially to the following effect:

"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 IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE

EXEMPTION FROM SECTION 5 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

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09533 1-0002-IOO33-NY02.2689565. 11
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."

(d) In the event that any Purchased Securities 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), the Company shall issue new certificates or other instruments representing such

Purchased Securities or Warrant Shares, which shall not contain the applicable legends in

Sections 4.2(a) and (c) above; provided that the Investor surrenders to the Company the

previously issued certificates or other instruments. Upon Transfer of all or a portion ofthe

Warrant in compliance with Section 4.4, the Company shall issue new certificates or other

instruments representing the Warrant, which shall not contain the applicable legend in Section

4.2(b) above; provided that the Investor surrenders to the Company the previously issued

certificates or other instruments.

4.3 Certain Transactions. The Company will not merge or consolidate with, or sell,

transfer or lease all or substantially all ofits 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 assumes the due and punctual performance and observance of each and

every covenant, agreement and condition ofthis Agreement to be performed and observed by the

Company.

4.4 Transfer of Purchased Securities and Warrant Shares; Restrictions on Exercise of

the Warrant. 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 ofthe

Purchased Securities 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 ofthe Purchased Securities and

the Warrant Shares; provided that the Investor shall not Transfer a portion or portions ofthe

Warrant with respect to, and/or exercise the Warrant for, more than one-half ofthe Initial

Warrant Shares (as such number may be adjusted from time to time pursuant to Section 13

thereof) in the aggregate until the earlier of(a) the date on which the Company (or any successor

by Business Combination) has received aggregate gross proceeds of not less than the Purchase

Price (and the purchase price paid by the Investor to any such successor for securities ofsuch

successor purchased under the CPP) from one or more Qualified Equity Offerings (including

Qualified Equity Offerings ofsuch successor) and (b) December 31,2009. "Qualified Equity

Offering" means the sale and issuance for cash by the Company to persons other than the

Company or any ofthe Company Subsidiaries after the Closing Date ofshares of perpetual

Preferred Stock, Common Stock or any combination ofsuch stock, that, in each case, qualify as

and may be included in Tier 1 capital ofthe Company at the time ofissuance under the

applicable risk-based capital guidelines ofthe Company's Appropriate Federal Banking Agency

(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 October 13,

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095331-0002-1 0033-NY02.2689565 .11
2008). "Business Combination" means a merger, consolidation, statutory share exchange or

similar transaction that requires the approval ofthe Company's stockholders.

4.5 Registration Rights.

(a) Registration.

(i) Subject to the terms and conditions ofthis Agreement, the Company

covenants and agrees that as promptly as practicable after the Closing Date (and in any

event no later than 30 days after the Closing Date), the Company shall prepare and file

with the SEC a Shelf Registration Statement covering all Registrable Securities (or

otherwise designate an existing ShelfRegistration Statement filed with the SEC to cover

the Registrable Securities), and, to the extent the ShelfRegistration Statement has not

theretofore been declared effective or is not automatically effective upon such filing, the

Company shall use reasonable best efforts to cause such Shelf Registration Statement to

be declared or become effective and to keep such Shelf Registration Statement

continuously effective and in compliance with the Securities Act and usable for resale of

such Registrable Securities for a period from the date ofits initial effectiveness until such

time as there are no Registrable Securities remaining (including by refiling such Shelf

Registration Statement (or a new Shelf Registration Statement) ifthe initial Shelf

Registration Statement expires). So long as the Company is a well-known seasoned

issuer (as defined in Rule 405 under the Securities Act) at the time offiling of the Shelf

Registration Statement with the SEC, such ShelfRegistration Statement shall be

designated by the Company as an automatic ShelfRegistration Statement.

Notwithstanding the foregoing, if on the Signing Date the Company is not eligible to file

a registration statement on Form S-3, then the Company shall not be obligated to file a

ShelfRegistration Statement unless and until requested to do so in writing by the

Investor.

(ii) Any registration pursuant to Section 4.5(a)(i) shall be effected by means of

a shelfregistration on an appropriate form under Rule 415 under the Securities Act (a

"ShelfRegistration Statement"). Ifthe Investor or any other Holder intends to distribute

any Registrable Securities by means of an underwritten offering it shall promptly so

advise the Company and the Company shall take all reasonable steps to facilitate such

distribution, including the actions required pursuant to Section 4.5(c); provided that the

Company shall not be required to facilitate an underwritten offering ofRegistrable

Securities unless the expected gross proceeds from such offering exceed (i) 2% ofthe

initial aggregate liquidation preference ofthe Preferred Shares ifsuch initial aggregate

liquidation preference is less than $2 billion and (ii) $200 million ifthe initial aggregate

liquidation preference ofthe Preferred Shares is equal to or greater than $2 billion. The

lead underwriters in any such distribution shall be selected by the Holders of a majority

ofthe Registrable Securities to be distributed; provided that to the extent appropriate and

permitted under applicable law, such Holders shall consider the qualifications of any

broker-dealer Affiliate ofthe Company in selecting the lead underwriters in any such

distribution.

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095331-0oo2-10033-NY02.2689565.11
(iii) The Company shall not be required to effect a registration (including a

resale of Registrable Securities from an effective Shelf Registration Statement) or an

underwritten offering pursuant to Section 4.5(a): (A) with respect to securities that are

not Registrable Securities; or (B) ifthe Company has notified the Investor and all other

Holders that in the good faith judgment ofthe Board of Directors, it would be materially

detrimental to the Company or its securityholders for such registration or underwritten

offering to be effected at such time, in which event the Company shall have the right to

defer such registration for a period of not more than 45 days after receipt ofthe request of

the Investor or any other Holder; provided that such right to delay a registration or

underwritten offering shall be exercised by the Company (1) only ifthe Company has

.generally exercised (or is concurrently exercising) similar black-out rights against holders

ofsimilar securities that have registration rights and (2) not more than three times in any

12-month period and not more than 90 days in the aggregate in any 12-month period.

(iv) If during any period when an effective ShelfRegistration Statement is not

available, the Company proposes to register any ofits equity securities, other than a

registration pursuant to Section 4.5(a)(i) or a Special Registration, and the registration

form to be filed may be used for the registration or qualification for distribution of

Registrable Securities, the Company will give prompt written notice to the Investor and

all other Holders ofits intention to effect such a registration (but in no event less than ten

days prior to the anticipated filing date) and will include in such registration all

Registrable Securities with respect to which the Company has received written requests

for inclusion therein within ten business days after the date ofthe Company's notice (a

"Piggyback Registration"). Any such person that has made such a written request may

withdraw its Registrable Securities from such Piggyback Registration by giving written

notice to the Company and the managing underwriter, if any, on or before the fifth

business day prior to the planned effective date ofsuch Piggyback Registration. The

Company may terminate or withdraw any registration under this Section 4.5(a)(iv) prior

to the effectiveness ofsuch registration, whether or not Investor or any other Holders

have elected to include Registrable Securities in such registration.

(v) Ifthe registration referred to in Section 4.5(a)(iv) is proposed to be

underwritten, the Company will s~ advise Investor and all other Holders as a part ofthe

written notice given pursuant to Section 4.5(a)(iv). In such event, the right ofInvestor

and all other Holders to registration pursuant to Section 4.5(a) will be conditioned upon

such persons' participation in such underwriting and the inclusion ofsuch person's

Registrable Securities in the underwriting ifsuch securities are ofthe same class of

securities as the securities to be offered in the underwritten offering, and each such

person will (together with the Company and the other persons distributing their securities

through such underwriting) enter into an underwriting agreement in customary form with

the underwriter or underwriters selected for such underwriting by the Company; provided

that the Investor (as opposed to other Holders) shall not be required to indemnify any

person in connection with any registration. If any participating person disapproves ofthe

terms ofthe underwriting, such person may elect to withdraw therefrom by written notice

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09533 1-0002-IOO33-NY02.2689565.I 1
to the Company, the managing underwriters and the Investor (ifthe Investor is

participating in the underwriting).

(vi) If either (x) the Company grants "piggyback" registration rights to one or

more third parties to include their securities in an underwritten offering under the Shelf

Registration Statement pursuant to Section 4.5(a)(ii) or (y) a Piggyback Registration

under Section 4.5(a)(iv) relates to an underwritten offering on behalf ofthe Company,

and in either case the managing underwriters advise the Company that in their reasonable

opinion the number ofsecurities requested to be included in such offering exceeds the

number which can be sold without adversely affecting the marketability ofsuch offering

(including an adverse effect on the per share offering price), the Company will include in

such offering only such number ofsecurities that in the reasonable opinion ofsuch

managing underwriters can be sold without adversely affecting the marketability ofthe

offering (including an adverse effect on the per share offering price), which securities

will be so included in the following order of priority: (A) first, in the case of a Piggyback

Registration under Section 4.5(a)(iv), the securities the Company proposes to sell, (B)

then the Registrable Securities ofthe Investor and all other Holders who have requested

inclusion ofRegistrable Securities pursuant to Section 4.5(a)(ii) or Section 4.5(a)(iv), as

applicable, pro rata on the basis ofthe aggregate number ofsuch securities or shares

owned by each such person and (C) lastly, any other securities ofthe Company that have

been requested to be so included, subject to the terms ofthis Agreement; provided,

however, that ifthe Company has, prior to the Signing Date, entered into an agreement

with respect to its securities that is inconsistent with the order of priority contemplated

hereby then it shall apply the order of priority in such conflicting agreement to the extent

that it would otherwise result in a breach under such agreement.

(b) Expenses ofRegistration. All Registration Expenses incurred in connection with

any registration, qualification or compliance hereunder shall be borne by the Company. All

Selling Expenses incurred in connection with any registrations hereunder shall be borne by the

holders ofthe securities so registered pro rata on the basis ofthe aggregate offering or sale price

ofthe securities so registered.

(c) Obligations ofthe Company. The Company shall use its reasonable best efforts,

for so long as there are Registrable Securities outstanding, to take such actions as are under its

control to not become an ineligible issuer (as defined in Rule 405 under the Securities Act) and

to remain a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) ifit

has such status on the Signing Date or becomes eligible for such status in the future. In addition,

whenever required to effect the registration of any Registrable Securities or facilitate the

distribution ofRegistrable Securities pursuant to an effective ShelfRegistration Statement, the

Company shall, as expeditiously as reasonably practicable:

(i) Prepare and file with the SEC a prospectus supplement with respect to a

proposed offering ofRegistrable Securities pursuant to an effective registration

statement, subject to Section 4.5(d), keep such registration statement effective and keep

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09533 l_OOO2_10033_NY02.2689565. 1I
such prospectus supplement current until the securities described therein are no longer

Registrable Securities.

(ii) Prepare and file with the SEC such amendments and supplements to the

applicable registration statement and the prospectus or prospectus supplement used in

connection with such registration statement as may be necessary to comply with the

provisions ofthe Securities Act with respect to the disposition of all securities covered by

such registration statement.

(iii) Furnish to the Holders and any underwriters such number of copies ofthe

applicable registration statement and each such amendment and supplement thereto

(including in each case all exhibits) and of a prospectus, including a preliminary

prospectus, in conformity with the requirements ofthe Securities Act, and such other

documents as they may reasonably request in order to facilitate the disposition of

Registrable Securities owned or to be distributed by them.

(iv) Use its reasonable best efforts to register and qualify the securities covered

by such registration statement under such other securities or Blue Sky laws ofsuch

jurisdictions as shall be reasonably requested by the Holders or any managing

underwriter(s), to keep such registration or qualification in effect for so long as such

registration statement remains in effect, and to take any other action which may be

reasonably necessary to enable such seller to consummate the disposition in such

jurisdictions ofthe securities owned by such Holder; provided that the Company shall not

be required in connection therewith or as a condition thereto to qualify to do business or

to file a general consent to service of process in any such states or jurisdictions.

(v) Notify each Holder of Registrable Securities at any time when a

prospectus relating thereto is required to be delivered under the Securities Act of the

happening of any event as a result ofwhich the applicable prospectus, as then in effect,

includes an untrue statement of a material fact or omits to state a material fact required to

be stated therein or necessary to make the statements therein not misleading in light of

the circumstances then existing.

(vi) Give written notice to the Holders:

(A) when any registration statement filed pursuant to Section 4.5(a) or

any amendment thereto has been filed with the SEC (except for any amendment

effected by the filing of a document with the SEC pursuant to the Exchange Act)

and when such registration statement or any post-effective amendment thereto has

become effective;

(B) of any request by the SEC for amendments or supplements to any

registration statement or the prospectus included therein or for additional

information;

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095331-0002-IOO33-NY02.2689565.11
(C) ofthe issuance by the SEC of any stop order suspending the

effectiveness of any registration statement or the initiation of any proceedings for

that purpose;

(D) ofthe receipt by the Company or its legal counsel of any

notification with respect to the suspension ofthe qualification of the Common

Stock for sale in any jurisdiction or the initiation or threatening of any proceeding

for such purpose;

(E) ofthe happening of any event that requires the Company to make

changes in any effective registration statement or the prospectus related to the

registration statement in order to make the statements therein not misleading

(which notice shall be accompanied by an instruction to suspend the use ofthe

prospectus until the requisite changes have been made); and

(F) if at any time the representations and warranties ofthe Company

contained in any underwriting agreement contemplated by Section 4.5(c)(x) cease

to be true and correct.

(vii) Use its reasonable best efforts to prevent the issuance or obtain the

withdrawal of any order suspending the effectiveness of any registration statement

referred to in Section 4.5(c)(vi)(C) at the earliest practicable time.

(viii) Upon the occurrence of any event contemplated by Section 4.5(c)(v) or

4.5(c)(vi)(E), promptly prepare a post-effective amendment to such registration statement

or a supplement to the related prospectus or file any other required document so that, as

thereafter delivered to the Holders and any underwriters, the prospectus will not contain

an untrue statement of a material fact or omit to state any material fact necessary to make

the statements therein, in light ofthe circumstances under which they were made, not

misleading. Ifthe Company notifies the Holders in accordance with Section 4.5(c)(vi)(E)

to suspend the use ofthe prospectus until the requisite changes to the prospectus have

been made, then the Holders and any underwriters shall suspend use ofsuch prospectus

and use their reasonable best efforts to return to the Company all copies ofsuch

prospectus (at the Company's expense) other than permanent file copies then in such

Holders' or underwriters' possession. The total number of days that any such suspension

may be in effect in any 12-month period shall not exceed 90 days.

(ix) Use reasonable best efforts to procure the cooperation ofthe Company's

transfer agent in settling any offering or sale of Registrable Securities, including with

respect to the transfer of physical stock certificates into book-entry form in accordance

with any procedures reasonably requested by the Holders or any managing

underwriter(s).

(x) If an underwritten offering is requested pursuant to Section 4.5(a)(ii), enter

into an underwriting agreement in customary form, scope and substance and take all such

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09533 1-0002-IOO33-NY02.2689565. 11
other actions reasonably requested by the Holders of a majority ofthe Registrable

Securities being sold in connection therewith or by the managing underwriter(s), if any,

to expedite or facilitate the underwritten disposition ofsuch Registrable Securities, and in

connection therewith in any underwritten offering (including making members of

management and executives ofthe Company available to participate in "road shows",

similar sales events and other marketing activities), (A) make such representations and

warranties to the Holders that are selling stockholders and the managing underwriter(s), if

any, with respect to the business ofthe Company and its subsidiaries, and the Shelf

Registration Statement, prospectus and documents, if any, incorporated or deemed to be

incorporated by reference therein, in each case, in customary form, substance and scope,

and, iftrue, confirm the same if and when requested, (B) use its reasonable best efforts to

furnish the underwriters with opinions of counsel to the Company, addressed to the

managing underwriter(s), ifany, covering the matters customarily covered in such

opinions requested in underwritten offerings, (C) use its reasonable best efforts to obtain

"cold comfort" letters from the independent certified public accountants ofthe Company

(and, if necessary, any other independent certified public accountants of any business

acquired by the Company for which financial statements and financial data are included

in the ShelfRegistration Statement) who have certified the financial statements included

in such ShelfRegistration Statement, addressed to each ofthe managing underwriter(s), if

any, such letters to be in customary form and covering matters ofthe type customarily

covered in "cold comfort" letters, (D) if an underwriting agreement is entered into, the

same shall contain indemnification provisions and procedures customary in underwritten

offerings (provided that the Investor shall not be obligated to provide any indemnity), and

(E) deliver such documents and certificates as may be reasonably requested by the

Holders of a majority ofthe Registrable Securities being sold in connection therewith,

their counsel and the managing underwriter(s), if any, to evidence the continued validity

ofthe representations and warranties made pursuant to clause (i) above and to evidence

compliance with any customary conditions contained in the underwriting agreement or

other agreement entered into by the Company.

(xi) Make available for inspection by a representative of Holders that are

selling stockholders, the managing underwriter(s), if any, and any attorneys or

accountants retained by such Holders or managing underwriter(s), at the offices where

normally kept, during reasonable business hours, financial and other records, pertinent

corporate documents and properties ofthe Company, and cause the officers, directors and

employees ofthe Company to supply all information in each case reasonably requested

(and ofthe type customarily provided in connection with due diligence conducted in

connection with a registered public offering ofsecurities) by any such representative,

managing underwriter(s), attorney or accountant in connection with such Shelf

Registration Statement.

(xii) Use reasonable best efforts to cause all such Registrable Securities to be

listed on each national securities exchange on which similar securities issued by the

Company are then listed or, if no similar securities issued by the Company are then listed

on any national securities exchange, use its reasonable best efforts to cause all such

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09533 I-0002-IOO33-NY02.2689565. II
Registrable Securities to be listed on such securities exchange as the Investor may

designate.

(xiii) Ifrequested by Holders of a majority of the Registrable Securities being

registered and/or sold in connection therewith, or the managing underwriter(s), if any,

promptly include in a prospectus supplement or amendment such information as the

Holders of a majority ofthe Registrable Securities being registered and/or sold in

connection therewith or managing underwriter(s), if any, may reasonably request in order

to permit the intended method of distribution ofsuch securities and make all required

filings ofsuch prospectus supplement or such amendment as soon as practicable after the

Company has received such request.

(xiv) Timely provide to its security holders earning statements satisfying the

provisions of Section 11 (a) ofthe Securities Act and Rule 158 thereunder.

(d) Suspension of Sales. Upon receipt ofwritten notice from the Company that a

registration statement, prospectus or prospectus supplement contains or may contain an untrue

statement of a material fact or omits or may omit to state a material fact required to be stated

therein or necessary to make the statements therein not misleading or that circumstances exist

that make inadvisable use ofsuch registration statement, prospectus or prospectus supplement,

the Investor and each Holder ofRegistrable Securities shall forthwith discontinue disposition of

Registrable Securities until the Investor and/or Holder has received copies of a supplemented or

amended prospectus or prospectus supplement, or until the Investor and/or such Holder is

advised in writing by the Company that the use ofthe prospectus and, if applicable, prospectus

supplement may be resumed, and, ifso directed by the Company, the Investor and/or such

Holder shall deliver to the Company (at the Company's expense) all copies, other than

permanent file copies then in the Investor and/or such Holder's possession, ofthe prospectus

and, if applicable, prospectus supplement covering such Registrable Securities current at the time

ofreceipt ofsuch notice. The total number of days that any such suspension may be in effect in

any 12-month period shall not exceed 90 days.

(e) Termination of Registration Rights. A Holder's registration rights as to any

securities held by such Holder (and its Affiliates, partners, members and former members) shall

not be available unless such securities are Registrable Securities.

(f) Furnishing Information.

(i) Neither the Investor nor any Holder shall use any free writing prospectus

(as defmed in Rule 405) in connection with the sale ofRegistrable Securities without the

prior written consent ofthe Company.

(ii) It shall be a condition precedent to the obligations ofthe Company to take

any action pursuant to Section 4.5(c) that Investor and/or the selling Holders and the

underwriters, if any, shall furnish to the Company such information regarding

themselves, the Registrable Securities held by them and the intended method of

-25-

095331-0002-IOO33-NY02.2689565.11
disposition ofsuch securities as shall be required to effect the registered offering of their

Registrable Securities.

(g) Indemnification.

(i) The Company agrees to indemnify each Holder and, if a Holder is a

person other than an individual, such Holder's officers, directors, employees, agents,

representatives and Affiliates, and each Person, if any, that controls a Holder within the

meaning ofthe Securities Act (each, an "Indemnitee"), against any and all losses, claims,

damages, actions, liabilities, costs and expenses (including reasonable fees, expenses and

disbursements of attorneys and other professionals incurred in connection with

investigating, defending, settling, compromising or paying any such losses, claims,

damages, actions, liabilities, costs and expenses), joint or several, arising out of or based

upon any untrue statement or alleged untrue statement ofmaterial fact contained in any

registration statement, including any preliminary prospectus or final prospectus contained

therein or any amendments or supplements thereto or any documents incorporated therein

by reference or contained in any free writing prospectus (as such term is defined in Rule

405) prepared by the Company or authorized by it in writing for use by such Holder (or

any amendment or supplement thereto); or any omission to state therein a material fact

required to be stated therein or necessary to make the statements therein, in light of the

circumstances under which they were made, not misleading; provided, that the Company

shall not be liable to such Indemnitee in any such case to the extent that any such loss,

claim, damage, liability (or action or proceeding in respect thereof) or expense arises out

of or is based upon (A) an untrue statement or omission made in such registration

statement, including any such preliminary prospectus or final prospectus contained

therein or any such amendments or supplements thereto or contained in any free writing

prospectus (as such term is defined in Rule 405) prepared by the Company or authorized

by it in writing for use by such Holder (or any amendment or supplement thereto), in

reliance upon and in conformity with information regarding such Indemnitee or its plan

of distribution or ownership interests which was furnished in writing to the Company by

such Indemnitee for use in connection with such registration statement, including any

such preliminary prospectus or final prospectus contained therein or any such

amendments or supplements thereto, or (B) offers or sales effected by or on behalf of

such Indemnitee "by means of' (as defmed in Rule 159A) a "free writing prospectus" (as

defmed in Rule 405) that was not authorized in writing by the Company.

(ii) Ifthe indemnification provided for in Section 4.5(g)(i) is unavailable to an

Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or

expenses referred to therein or is insufficient to hold the Indemnitee harmless as

contemplated therein, then the Company, in lieu ofindemnifying such Indemnitee, shall

contribute to the amount paid or payable by such Indemnitee as a result ofsuch losses,

claims, damages, actions, liabilities, costs or expenses in such proportion as is appropriate

to reflect the relative fault ofthe Indemnitee, on the one hand, and the Company, on the

other hand, in connection with the statements or omissions which resulted in such losses,

claims, damages, actions, liabilities, costs or expenses as well as any other relevant

-26-

095331-0002-IOO33-NY02.2689565.11
equitable considerations. The relative fault of the Company, on the one hand, and ofthe

Indemnitee, on the other hand, shall be det~rmined by reference to, among other factors,

whether the untrue statement of a material fact or omission to state a material fact relates

to information supplied by the Company or by the Indemnitee and the parties' relative

intent, knowledge, access to information and opportunity to correct or prevent such

statement or omission; the Company and each Holder agree that it would not be just and

equitable if contribution pursuant to this Section 4.5(g)(ii) were determined by pro rata

allocation or by any other method of allocation that does not take account ofthe equitable

considerations referred to in Section 4.5(g)(i). No Indemnitee guilty offraudulent

misrepresentation (within the meaning of Section 11 (f) ofthe Securities Act) shall be

entitled to contribution from the Company ifthe Company was not guilty ofsuch

fraudulent misrepresentation.

(h) Assignment ofRegistration Rights. The rights ofthe Investor to registration of

Registrable Securities pursuant to Section 4.5(a) may be assigned by the Investor to a transferee

or assignee of Registrable Securities with a liquidation preference or, in the case ofRegistrable

Securities other than Preferred Shares, a market value, no less than an amount equal to (i) 2% of

the initial aggregate liquidation preference ofthe Preferred Shares ifsuch initial aggregate

liquidation preference is less than $2 billion and (ii) $200 million if the initial aggregate

liquidation preference ofthe Preferred Shares is equal to or greater than $2 billion; provided,

however, the transferor shall, within ten days after such transfer, furnish to the Company written

notice ofthe name and address ofsuch transferee or assignee and the number and type of

Registrable Securities that are being assigned. For purposes ofthis Section 4.5(h), "market

value" per share ofCommon Stock shall be the last reported sale price ofthe Common Stock on

the national securities exchange on which the Common Stock is listed or admitted to trading on

the last trading day prior to the proposed transfer, and the "market value" for the Warrant (or any

portion thereof) shall be the market value per share ofCommon Stock into which the Warrant (or

such portion) is exercisable less the exercise price per share.

(i) Clear Market. With respect to any underwritten offering of Registrable Securities

by the Investor or other Holders pursuant to this Section 4.5, the Company agrees not to effect

(other than pursuant to such registration or pursuant to a Special Registration) any public sale or

distribution, or to file any Shelf Registration Statement (other than such registration or a Special

Registration) covering, in the case of an underwritten offering ofCommon Stock or Warrants,

any ofits equity securities or, in the case of an underwritten offering of Preferred Shares, any

Preferred Stock ofthe Company, or, in each case, any securities convertible into or exchangeable

or exercisable for such securities, during the period not to exceed ten days prior and 60 days

following the effective date ofsuch offering or such longer period up to 90 days as may be

requested by the managing underwriter for such underwritten offering. The Company also

agrees to cause such ofits directors and senior executive officers to execute and deliver

customary lock-up agreements in such form and for such time period up to 90 days as may be

requested by the managing underwriter. "Special Registration" means the registration of(A)

equity securities and/or options or other rights in respect thereofsolely registered on Form S-4 or

Form S-8 (or successor form) or (B) shares of equity securities and/or options or other rights in

respect thereofto be offered to directors, members ofmanagement, employees, consultants,

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095331-ooo2-10033-NY02.2689565.11
customers, lenders or vendors ofthe Company or Company Subsidiaries or in connection with

dividend reinvestment plans.

(j) Rule 144; Rule 144A. With a view to making available to the Investor and

Holders the benefits of certain rules and regulations ofthe SEC which may permit the sale ofthe

Registrable Securities to the public without registration, the Company agrees to use its

reasonable best efforts to:

(i) make and keep public information available, as those terms are understood

and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the

Securities Act, at all times after the Signing Date;

(ii) (A) file with the SEC, in a timely manner, all reports and other documents

required ofthe Company under the Exchange Act, and (B) if at any time the Company is

not required to file such reports, make available, upon the request of any Holder, such

information necessary to permit sales pursuant to Rule 144A (including the information

required by Rule 144A(d)(4) under the Securities Act);

(iii) so long as the Investor or a Holder owns any Registrable Securities,

furnish to the Investor or such Holder forthwith upon request: a written statement by the

Company as to its compliance with the reporting requirements ofRule 144 under the

Securities Act, and ofthe Exchange Act; a copy ofthe most recent annual or quarterly

report ofthe Company; and such other reports and documents as the Investor or Holder

may reasonably request in availing itself of any rule or regulation ofthe SEC allowing it

to sell any such securities to the public without registration; and

(iv) take such further action as any Holder may reasonably request, all to the

extent required from time to time to enable such Holder to sell Registrable Securities

without registration under the Securities Act.

(k) As used in this Section 4.5, the following terms shall have the following

respective meanings:

(i) "Holder" means the Investor and any other holder ofRegistrable

Securities to whom the registration rights conferred by this Agreement have been

transferred in compliance with Section 4.5(h) hereof.

(ii) "Holders' Counsel" means one counsel for the selling Holders chosen by

Holders holding a majority interest in the Registrable Securities being registered.

(iii) "Register," "registered," and "registration" shall refer to a registration

effected by preparing and (A) filing a registration statement in compliance with the

Securities Act and applicable rules and regulations thereunder, and the declaration or

ordering of effectiveness ofsuch registration statement or (B) filing a prospectus and/or

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095331-oo02-1oo33-NY02.2689565.11
prospectus supplement in respect of an appropriate effective registration statement on

Form S-3.

(iv) "Registrable Securities" means (A) all Preferred Shares, (B) the Warrant

(subject to Section 4.5(p)) and (C) any equity securities issued or issuable directly or

indirectly with respect to the securities referred to in the foregoing clauses (A) or (B) by

way of conversion, exercise or exchange thereof, including the Warrant Shares, or share

dividend or share split or in connection with a combination ofshares, recapitalization,

reclassification, merger, amalgamation, arrangement, consolidation or other

reorganization, provided that, once issued, such securities will not be Registrable

Securities when (1) they are sold pursuant to an effective registration statement under the

Securities Act, (2) except as provided below in Section 4.5(0), they may be sold pursuant

to Rule 144 without limitation thereunder on volume or manner ofsale, (3) they shall

have ceased to be outstanding or (4) they have been sold in a private transaction in which

the transferor's rights under this Agreement are not assigned to the transferee ofthe

securities. No Registrable Securities may be registered under more than one registration

statement at anyone time.

(v) "Registration Expenses" mean all expenses incurred by the Company in

effecting any registration pursuant to this Agreement (whether or not any registration or

prospectus becomes effective or final) or otherwise complying with its obligations under

this Section 4.5, including all registration, filing and listing fees, printing expenses, fees

and disbursements of counsel for the Company, blue sky fees and expenses, expenses

incurred in connection with any "road show", the reasonable fees and disbursements of

Holders' Counsel, and expenses ofthe Company's independent accountants in

connection with any regular or special reviews or audits incident to or required by any

such registration, but shall not include Selling Expenses.

(vi) "Rule 144", "Rule 144A", "Rule 159A", "Rule 405" and "Rule 415" mean,

in each case, such rule promulgated under the Securities Act (or any successor provision),

as the same shall be amended from time to time.

(vii) "Selling Expenses" mean all discounts, selling commissions and stock

transfer taxes applicable to the sale of Registrable Securities and fees and disbursements

of counsel for any Holder (other than the fees and disbursements of Holders' Counsel

included in Registration Expenses).

(1) At any time, any holder of Securities (including any Holder) may elect to forfeit

its rights set forth in this Section 4.5 from that date forward; provided, that a Holder forfeiting

such rights shall nonetheless be entitled to participate under Section 4.5(a)(iv) - (vi) in any

Pending Underwritten Offering to the same extent that such Holder would have been entitled to

ifthe holder had not withdrawn; and provided,further, that no such forfeiture shall terminate a

Holder's rights or obligations under Section 4.5(f) with respect to any prior registration or

Pending Underwritten Offering. "Pending Underwritten Offering" means, with respect to any

Holder forfeiting its rights pursuant to this Section 4.5(1), any underwritten offering of

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09533 I-0002-IOO33-NY02.2689565. I I
Registrable Securities in which such Holder has advised the Company ofits intent to register its

Registrable Securities either pursuant to Section 4.5(a)(ii) or 4.5(a)(iv) prior to the date ofsuch

Holder's forfeiture.

(m) Specific Performance. The parties hereto acknowledge that there would be no

adequate remedy at law ifthe Company fails to perform any ofits obligations under this Section

4.5 and that the Investor and the Holders from time to time may be irreparably harmed by any

such failure, and accordingly agree that the Investor and such Holders, in addition to any other

remedy to which they may be entitled at law or in equity, to the fullest extent permitted and

enforceable under applicable law shall be entitled to compel specific performance ofthe

obligations ofthe Company under this Section 4.5 in accordance with the terms and conditions

of this Section 4.5.

(n) No Inconsistent Agreements. The Company shall not, on or after the Signing

Date, enter into any agreement with respect to its securities that may impair the rights granted to

the Investor and the Holders under this Section 4.5 or that otherwise conflicts with the provisions

hereof in any manner that may impair the rights granted to the Investor and the Holders under

this Section 4.5. In the event the Company has, prior to the Signing Date, entered into any

agreement with respect to its securities that is inconsistent with the rights granted to the Investor

and the Holders under this Section 4.5 (including agreements that are inconsistent with the order

of priority contemplated by Section 4.5(a)(vi)) or that may otherwise conflict with the provisions

hereof, the Company shall use its reasonable best efforts to amend such agreements to ensure

they are consistent with the provisions of this Section 4.5.

(0) Certain Offerings by the Investor. In the case of any securities held by the

Investor that cease to be Registrable Securities solely by reason of clause (2) in the definition of

"Registrable Securities," the provisions of Sections 4.5(a)(ii), clauses (iv), (ix) and (x)-(xii) of

Section 4.5(c), Section 4.5(g) and Section 4.5(i) shall continue to apply until such securities

otherwise cease to be Registrable Securities. In any such case, an "underwritten" offering or

other disposition shall include any distribution ofsuch securities on behalf ofthe Investor by one

or more broker-dealers, an "underwriting agreement" shall include any purchase agreement

entered into by such broker-dealers, and any "registration statement" or "prospectus" shall

include any offering document approved by the Company and used in connection with such

distribution.

(P) Registered Sales ofthe Warrant. The Holders agree to sell the Warrant or any

portion thereof under the ShelfRegistration Statement only beginning 30 days after notifying the

Company of any such sale, during which 30-day period the Investor and all Holders ofthe

Warrant shall take reasonable steps to agree to revisions to the Warrant to permit a public

distribution ofthe Warrant, including entering into a warrant agreement and appointing a warrant

agent.

4.6 Voting ofWarrant Shares. Notwithstanding anything in this Agreement to the

contrary, the Investor shall not exercise any voting rights with respect to the Warrant Shares.

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095331-0002-10033-NY02.2689565.11
4.7 Depositary Shares. Upon request by the Investor at any time following the

Closing Date, the Company shall promptly enter into a depositary arrangement, pursuant to

customary agreements reasonably satisfactory to the Investor and with a depositary reasonably

acceptable to the Investor, pursuant to which the Preferred Shares may be deposited and

depositary shares, each representing a fraction of a Preferred Share as specified by the Investor,

may be issued. From and after the execution of any such depositary arrangement, and the deposit

of any Preferred Shares pursuant thereto, the depositary shares issued pursuant thereto shall be

deemed "Preferred Shares" and, as applicable, "Registrable Securities" for purposes ofthis

Agreement.

4.8 Restriction on Dividends and Repurchases.

(a) Prior to the earlier of(x) the third anniversary ofthe Closing Date and (y) the date

on which the Preferred Shares have been redeemed in whole or the Investor has transferred all of

the Preferred Shares to third parties which are not Affiliates ofthe Investor, neither the Company

nor any ~ompany Subsidiary shall, without the consent ofthe 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 ofthe

last quarterly cash dividend per share declared or, iflower, 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 ofCommon 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 ofthe Company, or any trust preferred

securities issued by the Company or any Affiliate ofthe Company, other than (A)

redemptions, purchases or other acquisitions ofthe Preferred Shares, (B) redemptions,

purchases or other acquisitions ofshares ofCommon Stock or other Junior Stock, in each

case in this clause (B) 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, (C) purchases or other

acquisitions by a broker-dealer subsidiary ofthe Company solely for the purpose of

market-making, stabilization or customer facilitation transactions in Junior Stock or

Parity Stock in the ordinary course ofits business, (D) purchases by a broker-dealer

subsidiary ofthe Company of capital stock ofthe Company for resale pursuant to an

offering by the Company ofsuch capital stock underwritten by such broker-dealer

subsidiary, (E) any redemption or repurchase ofrights pursuant to any stockholders'

rights plan, (F) the acquisition by the Company or any ofthe Company Subsidiaries of

record ownership in Junior Stock or Parity Stock for the beneficial ownership of any

other persons (other than the Company or any other Company Subsidiary), including as

trustees or custodians, and (0) the exchange or conversion ofJunior Stock for or into

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095331-0002-1 0033-NY02.2689565.11
other Junior Stock or of Parity Stock or trust preferred securities 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 (G), solely to the extent required pursuant to binding

contractual agreements entered into prior to the Signing Date or any subsequent

agreement for the accelerated exercise, settlement or exchange thereoffor 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 GAAP, and as measured from the date ofthe Company's most recently

filed Company 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 Preferred Shares, the Company

shall not repurchase any Preferred Shares 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 Preferred Shares then held by the Investor on the

same terms and conditions.

(c) "Junior Stock" means Common Stock and any other class or series ofstock of the

Company the terms of which expressly provide that it ranks junior to the Preferred Shares as to

dividend rights and/or as to rights on liquidation, dissolution or winding up ofthe Company.

"Parity Stock" means any class or series ofstock ofthe Company the terms of which do not

expressly provide that such class or series will rank senior or junior to the Preferred Shares as to

dividend rights and/or as to rights on liquidation, dissolution or winding up ofthe Company (in

each case without regard to whether dividends accrue cumulatively or non-cumulatively).

4.9 Repurchase ofInvestor Securities.

(a) Following the redemption in whole ofthe Preferred Shares held by the Investor or

the Transfer by the Investor of all ofthe Preferred Shares to one or more third parties not

affiliated with the Investor, the Company may repurchase, in whole or in part, at any time any

other equity securities ofthe Company purchased by the Investor pursuant to this Agreement or

the Warrant and then held by the Investor, upon notice given as provided in clause (b) below, at

the Fair Market Value ofthe equity security.

(b) Notice of every repurchase of equity securities ofthe Company held by the

Investor shall be given at the address and in the manner set forth for such party in Section 5.6.

Each notice ofrepurchase given to the Investor shall state: (i) the number and type ofsecurities

to be repurchased, (ii) the Board of Director's determination of Fair Market Value ofsuch

securities and (iii) the place or places where certificates representing such securities are to be

surrendered for payment ofthe repurchase price. The repurchase ofthe securities specified in

the notice shall occur as soon as practicable following the determination ofthe Fair Market

Value ofthe securities.

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095331-0002-IOO33-NY02.268956S.l1
(c) As used in this Section 4.9, the following tenns shall have the following

respective meanings:

(i) "Appraisal Procedure" means a procedure whereby two independent

appraisers, one chosen by the Company and one by the Investor, shall mutually agree

upon the Fair Market Value. Each party shall deliver a notice to the other appointing its

appraiser within 10 days after the Appraisal Procedure is invoked. If within 30 days after

appointment ofthe two appraisers they are unable to agree upon the Fair Market Value, a

third independent appraiser shall be chosen within 10 days thereafter by the mutual

consent ofsuch first two appraisers. The decision ofthe third appraiser so appointed and

chosen shall be given within 30 days after the selection ofsuch third appraiser. Ifthree

appraisers shall be appointed and the detennination of one appraiser is disparate from the

middle detennination by more than twice the amount by which the other detennination is

disparate from the middle detennination, then the detennination ofsuch appraiser shall

be excluded, the remaining two detenninations shall be averaged and such average shall

be binding and conclusive upon the Company and the Investor; otherwise, the average of

all three detenninations shall be binding upon the Company and the Investor. The costs

of conducting any Appraisal Procedure shall be borne by the Company.

(ii) "Fair Market Value" means, with respect to any security, the fair market

value ofsuch security as detennined by the Board of Directors, acting in good faith in

reliance on an opinion of a nationally recognized independent investment banking finn

retained by the Company for this purpose and certified in a resolution to the Investor. If

the Investor does not agree with the Board of Director's detennination, it may object in

writing within 10 days ofreceipt of the Board of Director's detennination. In the event of

such an objection, an authorized representative ofthe Investor and the chief executive

officer ofthe Company shall promptly meet to resolve the objection and to agree upon

the Fair Market Value. Ifthe chief executive officer and the authorized representative are

unable to agree on the Fair Market Value during the IO-day period following the delivery

of the Investor's objection, the Appraisal Procedure may be invoked by either party to

detennine the Fair Market Value by delivery of a written notification thereof not later

than the 30th day after delivery ofthe Investor's objection.

4.10 Executive Compensation. Until such time as the Investor ceases to own any debt

or equity securities ofthe Company acquired pursuant to this Agreement or the Warrant, the

Company shall take all necessary action to ensure that its Benefit Plans with respect to its Senior

Executive Officers comply in all respects with Section 111(b) ofthe EESA as implemented by

any guidance or regulation thereunder that has been issued and is in effect as ofthe Closing Date,

and shall not adopt any new Benefit Plan with respect to its Senior Executive Officers that does

not comply therewith. "Senior Executive Officers" means the Company's "senior executive

officers" as defined in subsection 111(b)(3) ofthe EESA and regulations issued thereunder,

including the rules set forth in 31 C.F.R. Part 30.

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095331-0oo2-IOO33-NY02.2689565.11
Article V

Miscellaneous

5.1 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 30th calendar day following the Signing Date; prOVided, however, that in the event the

Closing has not occurred by such 30th calendar day, the parties will consult in good faith to

determine whether to extend the term ofthis Agreement, it being understood that the parties shall

be required to consult only until the fifth day after such 30th calendar day and not be under any

obligation to extend the term ofthis Agreement thereafter; provided,further, that the right to

terminate this Agreement under this Section 5.I(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 ofthe Closing to occur on or prior to such

date; or

(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 ofthe Investor and the Company.

In the event oftermination ofthis Agreement as provided in this Section 5.1, this Agreement

shall forthwith become void and there shall be no liability on the part of either party hereto

except that nothing herein shall relieve either party from liability for any breach ofthis

Agreement.

5.2 Survival of Representations and Warranties. All covenants and agreements, other

than those which by their terms apply in whole or in part after the Closing, shall terminate as of

the Closing. The representations and warranties ofthe Company made herein or in any

certificates delivered in connection with the Closing shall survive the Closing without limitation.

5.3 Amendment. No amendment of any provision ofthis Agreement will be effective

unless made in writing and signed by an officer or a duly authorized representative of each party;

provided that the Investor may unilaterally amend any provision ofthis Agreement to the extent

required to comply with any changes after the Signing Date 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.

5.4 Waiver ofConditions. The conditions to each party's obligation to consummate

the Purchase are for the sole benefit ofsuch 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

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09533 I-0002-IOO33-NY02.2689565. I I
writing signed by a duly authorized officer ofthe waiving party that makes express reference to

the provision or provisions subject to such waiver.

5.5 Governing Law: Submission to Jurisdiction, Etc. This Agreement will be

governed by and construed 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 Warrant or the transactions contemplated hereby or thereby, 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 5.6 and (ii) the Investor 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 Warrant or the transactions contemplated hereby or thereby.

5.6 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 ofreceipt, or (b) on

the second business day following the date of dispatch if delivered by a recognized next day

courier service. All notices to the Company shall be delivered as set forth in Schedule A, or

pursuant to such other instruction as may be designated in writing by the Company to the

Investor. All notices to the Investor shall be delivered as set forth below, or pursaant to such

other instructions as may be designated in writing by the Investor to the Company.

Ifto the Investor:

United States Department ofthe Treasury

1500 Pennsylvania Avenue, NW, Room 2312

Washington, D.C. 20220

Attention: Assistant General Counsel (Banking and Finance)

Facsimile: (202) 622-1974

5.7 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

entity (x) ofwhich such person or a subsidiary ofsuch person is a general partner or (y) of which

a majority ofthe voting securities or other voting interests, or a majority ofthe securities or other

interests ofwhich having by their terms ordinary voting power to elect a majority ofthe 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.

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095331-0002-10033-NY02.2689565.11
(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 ofthis 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, ofthe power to cause the direction ofmanagement and/or

policies ofsuch person, whether through the ownership of voting securities by contract or

otherwise.

(c) The terms "knowledge ofthe Company" or "Company's knowledge" mean the

actual knowledge after reasonable and due inquiry ofthe "officers" (as such term is defined in

Rule 3b-2 under the Exchange Act, but excluding any Vice President or Secretary) ofthe

Company.

5.8 Assignment. Neither this Agreement nor any right, remedy, obligation nor

liability arising hereunder or by reason hereofshall be assignable by any party hereto without the

prior written consent ofthe 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 ofsubstantially all

ofits assets, to the entity which is the survivor ofsuch Business Combination or the purchaser in

such sale and (b) as provided in Section 4.5.

5.9 Severability. If any provision ofthis Agreement or the Warrant, 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 ofsuch

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 ofthe 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 ofthe parties.

5.10 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 the provisions of Section 4.5 shall inure to the benefit

ofthe persons referred to in that Section.

* * *

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095331-0002-10033-NY02.2689565.ll
FORM OF CERTIFICATE OF DESIGNATIONS

[SEE AITACHED]

095331-0002-10033-NY02.2689565.11

ANNEXA
ANNEXB

FORM OF WAIVER

In consideration for the benefits I will receive as a result of my employer's participation in the

United States Department ofthe Treasury's TARP Capital Purchase Program, I hereby

voluntarily waive any claim against the United States or my employer for any changes to my

compensation or benefits that are required to comply with the regulation issued by the

Department ofthe Treasury as published in the Federal Register on October 20,2008.

I acknowledge that this regulation may require modification ofthe compensation, bonus,

incentive and other benefit plans, arrangements, policies and agreements (including so-called

"golden parachute" agreements) that I have with my employer or in which I participate as they

relate to the period the United States holds any equity or debt securities ofmy employer acquired

through the TARP Capital Purchase Program.

This waiver includes all claims I may have under the laws ofthe United States or any state

related to the requirements imposed by the aforementioned regulation, including without

limitation a claim for any compensation or other payments I would otherwise receive, any

challenge to the process by which this regulation was adopted and any tort or constitutional

claim about the effect ofthese regulations on my employment relationship.

095331-0002-10033-NY02.2689565.1 I
ANNEXC

FORM OF OPINION

(a) The Company has been duly incorporated and is validly existing as a corporation

in good standing under the laws of the state ofits incorporation.

(b) The Preferred Shares have been duly and validly authorized, and, when issued and

delivered pursuant to the Agreement, the Preferred Shares will be duly and validly issued and

fully paid and non-assessable, will not be issued in violation of any preemptive rights, and will

rank pari passu with or senior to all other series or classes of Preferred Stock issued on the

Closing Date with respect to the payment of dividends and the distribution of assets in the event

of any dissolution, liquidation or winding up ofthe Company.

(c) The Warrant has been duly authorized and, when executed and delivered as

contemplated by 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, 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.

(d) The shares ofCommon Stock issuable upon exercise ofthe Warrant have been

duly authorized and reserved for issuance upon exercise ofthe Warrant and when so issued in

accordance with the terms of the Warrant will be validly issued, fully paid and non-assessable

[insert, ifapplicable: , subject to the approvals ofthe Company's stockholders set forth on

Schedule C].

(e) The Company has the corporate power and authority to execute and deliver the

Agreement and the Warrant and [insert, ifapplicable: , subject to the approvals ofthe

Company's stockholders set forth on Schedule C,] to carry out its obligations thereunder (which

includes the issuance ofthe Preferred Shares, Warrant and Warrant Shares).

(f) The execution, delivery and performance by the Company ofthe Agreement and

the Warrant and the consummation ofthe transactions contemplated thereby have been duly

authorized by all necessary corporate action on the part ofthe Company and its stockholders, and.

no further approval or authorization is required on the part ofthe Company [insert, ifapplicable:

, subject, in each case, to the approvals ofthe Company's stockholders set forth on Schedule C].

(g) The Agreement is a valid and binding obligation ofthe Company enforceable

against the Company in accordance with its 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; provided, however, such

counsel need express no opinion with respect to Section 4.5(g) or the severability provisions of

the Agreement insofar as Section 4.5(g) is concerned.

095331-0002-10033-NY02.2689565.11
095331-0002-IOO33-NY02.2689565.11

FORM OF WARRANT

[SEE AITACHED]

ANNEXD

SCHEDULE A

ADDITIONAL TERMS AND CONDITIONS

Company Information:

Name ofthe Company:

Corporate or other organizational form:

Jurisdiction ofOrganization:

Appropriate Federal Banking Agency:

Notice lnfonnation:

Tenns ofthe Purchase:

Merrill Lynch & Co., Jnc.

Corporation

Delaware

Office of Thrift SupelVision

Merrill Lynch & Co., Inc.

4 World Financial Center

250 Vesey Street

New York, NY 10080

Attention: Rosemary T. Berkery

Vice-Chainnan and General Counsel

For notices prior to tennination of the Merger

Agreement. provide a copy to:

Bank of America Corporation

Bank of America Corporate Center

100 North Tryon Street

Charlotte, NC 28255

Attention: Timothy J. Mayopoulos

Executive Vice President and General

Counsel

Facsimile: (704) 370-3515

Series ofPreferred Stock Purchased: Fixed Rate Cumulative Perpetual Preferred Stock,

Series T

Per Share Liquidation Preference ofPreferred Stock: $25,000

Number ofShares of Preferred Stock Purchased: 400,000

Dividend Payment Dates on the Preferred Stock: February 15, May IS, August 15, November 15.

Number of Initial Warrant Shares: 64,991,334

Exercise Price ofthe Warrant: $23.08

Pwchase Price: $10,000,000,000

Closing:

I

Location ofClosing: Simpson Thacher & Bartlett LLP

425 Lexington Avenue
Time ofClosing:

Date ofClosing:

Wire Information for Closing:

New York, NY 10017

As determined pursuant to the Letter Agreement.

As determined pursuant to the Letter Agreement.

To be advised in notice ofClosing.

----------------------
I
l ... _.

SCHEDULED

CAPITALIZATION

Capitalization Date:

Common Stock

Par value:

Total Authorized:

Outstanding:

Subject to warrants, options, convertible

securities, etc.:

Reserved for benefit plans and other issuances:

Remaining authorized but unissued:

Shares issued after Capitalization Date (other than

pursuant to warrants, options, convertible

securities, etc. as set forth above):

Preferred Stock

Par value:

Total Authorized:

Outstanding (by series):
Reserved for issuance:

Remaining authorized but unissued"

SCHEDULEC

REQUIRED STOCIgIOLDER APPROVALS

ReQuired4

Warrants·- Common Stock Issuance

Charter Amendment

Stock Exchange Rules

% Vote ReQyired

1fno stockholder approvals are required, please so indicate by checking the box: 181.

4 Tf stockholder approval is required, indicate applicable class/series ofcapital stock that are required 10 vote.

09S331.0002.10033.NY02.26119ll40.•
SCHEDULED

LITIGATION

List any exceptions to the representation and warranty in Section 2.2(1) ofthe Securities

Purchase Agreement - Standard Terms.

The following supplements the descriptions ofMerrill Lynch's litigation in its public filings.

Merrill Lynch is vigorously defending itself against the claims described below.

Merger-Related Litigation: On September 15, 2008, Merrill Lynch and Bank ofAmerica

Corporation entered into an Agreement and Plan of Merger that provides that, upon the tenns

and subject to the conditions set forth in the Merger Agreement, a wholly owned subsidiary of

Bank ofAmerica will merge with and into Merrill Lynch with Merrill Lynch continuing as the

surviving corporation and as a wholly owned subsidiary of Bank ofAmerica (the "Merger").

Since the date ofthe announcement, actions have been filed in state court in New York and

Delaware and the U.S. District Court for the Southern District ofNew York challenging the

Merger. The complaints allege that the price to be paid for Merrill Lynch is too low, that the

process by which the Merrill Lynch Board agreed to the merger was inadequate, and that the

proxy disclosures are incomplete.

Louisiana Sheriffs' Pension &ReliefFund v. Conway, el aJ.: On October 3, 2008, the Louisiana

Sheriffs' Pension & Relief Fund and the Louisiana Municipal Police Employees' Retirement

System filed a class action against Merrill Lynch & Co., certain of its officers and directors, its

underwriters, and its outside auditors in New York Supreme Court. The complaint seeks relief

on behalfofall persons who purchased or otherwise acquired Merrill Lynch securities issued

pursuant to a shelfregistration statement dated March 31,2006. The complaint alleges that

Merrill Lynch's prospectus misstated Merrill Lynch's financial condition and failed to disclose

its exposures to losses from investments tied to subprime and other mortgages, and well as its

significant liability arising from its participation in the market for auction rate securities.

Auction Rate Securities Litigation: Merrill Lynch is among the defendants named in antitrust

actions in connection with various auction rate securities (<OARS") issues. Mayor and City of

Baltimore Marylandv. Ciligroup, Inc" et al., (S.D.N.Y.); Mayfield v. Ciligroup, Inc., et al.

(S.D.N.Y.). Shareholder derivative actions have also been filed against the Company related to

auction rate securities issues, and a demand has been made to the Company's board ofdirectors

to commence litigation against officers, directors, and various employees in connection with the

Company's auction rate issues. There are agreements in place to settle the various regulatory

actions. As part ofthese settlements, the Company has agreed to offer to buy back ARS held by

individuals, charities, and non-profit corporations by October I, 2008 for investors with accounts

0[$4 million or less in assets and by January 2, 2009 tbr other individuals, charities and nonprofit corporations. The Company also agreed to reimburse these investors for losses (if any) on

their auction rate securities and to pay a tine of$125 million. The Company also agreed to work

09S331·0002·10033·NY02.2639S40.8
with institutional customers and business customers with accounts of more than $100 million to

provide liquidity solutions.

American International Group, Inc. Securities .Litigation. In October 2008, a class action was

filed in the U.S. District Court for the Southern District ofNew York against American

Intemational Group, Inc. ("AIG"), its officers and directors, and its underwriters, including

Merrill Lynch, in connection with the sale ofsecurities issued by AIG. The case alleges that

representations made in AIG's prospectus were materially false and misleading because they did

not disclose the extent ofAIG's financial problems. The complaint seeks damages in an

unspecified amount.

Fannie Mae Securities Litigation: Beginning in September 2008, multiple class actions were

filed in New York Supreme Court, the U.S. District Court for the Southern District ofNew York,

against the Federal National Mortgage Association ("Fannie Mae"), its officers and directors,

and its underwriters, including Merrill Lynch, in connection with the sale ofsecurities issued by

Fannie Mae. The cases allege that representations made in Fannie Mae's prospectus were

materially false and misleading because they did not disclose the extent ofFannie Mae's

financial problems. The complaints seek damages in an unspecified amount.

Lehman Brothers, Inc., Securities Litigation: Beginning in September 2008, multiple class

actions were filed in the U.S. District Court for the Southern District ofNew York against

officers and directors ofLehman Brothers and its underwriters, including Merrill Lynch, in

connection with the sale ofsecurities issued by Lehman Brothers. On September 15, 2008,

Lehman Brothers filed a voluntary petition to reorganize until Chapter 11 ofthe Federal

Bankruptcy Code. The complaints allege that the repreSentations made in Lehman Brothers'

prospectus were materially false and misleading because they did not disclose the extent of

Lehman Brother's financial problems. The complaints seek damages in an unspecified amount.

Opes Prime Litigation. The Company is a defendant in litigation filed in Australia involving the

Company's sale ofsecurities pledged by Opes Prime, a now defunct Australian margin lending

and stockbroking finn that defaulted on loans in 2008. Plaintiffs allege that the Company was

not permitted to sell roughly $600 million ofsecurities that Opes Prime pledged to the Company

as collateral for loans extended to Opes Prime.

Sales Practice Litigation. In April 2008, the Company commenced an action in New York state

court against various personal holding companies owned by the Nasser family, and the

individuals who established these companies, to collect unsecured debits in excess of$78 million

arising primarily from Josses incurred selling put options on Bear Stearns stock prior to the

collapse ofBear in March 2008. Defendants have filed counterclaims against the Company

claiming $312 million in damages and alleging that the Company engaged in various negligent

and/or fraudulent activities and failed to supervise our employees who handled the Nasserrelated accounts. There are related litigations pending in New York state court and in arbitration

before FINRA involving claims by and against other Nasser-related personal holding companies

and individuals also arising from losses in Bear Stearns put options.
Mediafiction Litigation. Approximately a decade ago, Merrill Lynch International acted as

manager for a $284 million issuance of notes for an Italian library ofmovies, backed by the

future flow ofreceivables to such movie rights. Mediafiction S.p.A ("Mediafiction") was

responsible for collecting payments in connection with the rights to the movies and forwarding

the payments to Merrill Lynch International Bank Limited ("MLIB'j. MLIB was responsible for

distributing the payments received for such movie rights to the note holders. Mediafiction failed

to make the required payments to MLIB and subsequently filed for protection under the

bankruptcy laws ofItaly. MLIB has filed claims in tbe Mediafiction bankruptcy proceeding for

amounts that Mediafiction failed to pay on the notes and Mediafiction has filed a counterclaim

alleging that the agreement between MLIB and Mediafiction is null and void and that MLlB is

required to return the payments, approximately $150 million, previously made by Mediafiction

to MLlB.ln October, the bankruptcy section ofthe Court ofRome provided Merrill Lynch a

half-page "clerk's notice" stating that the Court ofRome had denied MLIB's claims and granted

Mediafiction's claim against MLIB in the amount of$137 million. Merrill Lynch plans to

appeal that judgment to the Court of Appeals ofthe Court ofRome.

If none, please so indicate by checking the box: D.

SCHEDULEE

COMPLIANCE WITH LAWS

List any exceptions to the representation and warranty in the second sentence ofSection 2.2(m)

ofthe Securities Purchase Agreement - Standard Terms.

If none, please so indicate by checking the box: l8I.

List any exceptions to the representation and warranty in the last sentence of Section 2.2(m) of

the Securities Purchase Agreement - Standard Terms.

If none, please so indicate by checking the box: ~.

S~HEDULEF

REGULATORY AGREEMENTS

List any exceptions to the representation and warranty in Section 2.2(s) ofthe Securities

Purchase Agreement - Standard Terms.

If none, please so indicate by checking the box: D.

CERTIFICATE OF DESIGNATIONS

OF

FIXED RATE CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES T

OF

MERRILL LYNCH & CO., INC.

Merrill Lynch & Co., Inc., a corporation organized and existing under the laws ofthe

State of Delaware (the "Corporation"), in accordance with the provisions of Section 141 (c) ofthe

General Corporation Law ofthe State of Delaware, does hereby certify:

The finance committee, pursuant to authority conferred by the board of directors ofthe

Corporation (the "Board of Directors"), in accordance with the certificate of incorporation and

by-laws ofthe Corporation and applicable law, adopted the following resolution on

______ creating a series of 400,000 shares of Preferred Stock ofthe Corporation

designated as "Fixed Rate Cumulative Perpetual Preferred Stock, Series T".

RESOLVED, that pursuant to the provisions of the certificate of incorporation and the

by-laws of the Corporation and applicable law, a series of Preferred Stock, par value $1.00 per

share, ofthe Corporation be and hereby is created, and that the designation and number ofshares

ofsuch series, and the voting and other powers, preferences and relative, participating, optional

or other rights, and the qualifications, limitations and restrictions thereof, ofthe shares of such

series, are as follows:

Part 1. Designation and Number of Shares. There is hereby created out ofthe authorized

and unissued shares of preferred stock ofthe Corporation a series of preferred stock designated

as the "Fixed Rate Cumulative Perpetual Preferred Stock, Series T" (the "Designated Preferred

Stock"). The authorized number ofshares of Designated Preferred Stock shall be 400,000.

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 ifsuch 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, par value $1.33 1/3 per share, ofthe

Corporation.

(b) "Dividend Payment Date" means February 15, May 15, August 15 and November

15 of each year.

(c) "Junior Stock" means the Common Stock, the Series A junior preferred stock,

which is authorized and unissued, and any other class or series ofstock ofthe Corporation the

095331-0002-11515-NY02.2690251.3
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 ofthe Corporation.

(d) "Liquidation Amount" means $25,000 per share of Designated Preferred Stock.

(e) "Minimum Amount" means $2,500,000,000.

(f) "Parity Stock" means any class or series ofstock ofthe Corporation (other than

Designated Preferred Stock) the terms of which do not expressly provide that such class or series

will rank senior orjunior to Designated Preferred Stock as to dividend rights and/or as to rights

on liquidation, dissolution or winding up ofthe 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 (i) Floating Rate Non-Cumulative Preferred Stock,

Series 1; (ii) Floating Rate Non-Cumulative Preferred Stock, Series 2; (iii) 6.375% NonCumulative Preferred Stock, Series 3; (iv) Floating Rate Non-Cumulative Preferred Stock, Series

4; (v) Floating Rate Non-Cumulative Preferred Stock, Series 5; (vi) 6.70% Non-Cumulative

Perpetual Preferred Stock, Series 6; (vii) 6.25% Non-Cumulative Perpetual Preferred Stock,

Series 7; (viii) 8.625% Non-Cumulative Preferred Stock, Series 8; (ix) 9.00% Non-Voting

Mandatory Convertible Non-Cumulative Preferred Stock, Series 2; and (x) 9.00% Non-Voting

Mandatory Convertible Non-Cumulative Preferred Stock, Series 3.

(g) "Signing Date" means October 26,2008.

Part. 4. Certain Voting Matters. Holders ofshares of Designated Preferred Stock will be

entitled to one vote for each such share on any matter on which holders of Designated Preferred

Stock are entitled to vote, including any action by written consent.

[Remainder ofPage Intentionally Left Blank]

2 095331-0002-1 1515-NY02.269025 1.3
IN WITNESS WHEREOF, Merrill Lynch & Co" Inc. has caused this Certificate of

Designations to be signed by [.], its [.], this [.] day of [.].

MERRILL LYNCH & CO., INC.

By: _

Name:

Title:

3 09S33 1-0002-1 ISIS-NY02.269025 1.3
ANNEXA

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 be perpetual, subject to the provisions of Section 5 ofthese Standard Provisions that

form a part ofthe Certificate of Designations. 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) "Applicable Dividend Rate" means (i) during the period from the Original Issue

Date to, but excluding, the first day ofthe first Dividend Period commencing on or after the fifth

anniversary ofthe Original Issue Date, 5% per annum and (ii) from and after the first day ofthe

first Dividend Period commencing on or after the fifth anniversary ofthe Original Issue Date,

9% per annum.

(b) "Appropriate Federal Banking Agency" means the "appropriate Federal banking

agency" with respect to the Corporation as defined in Section 3(q) ofthe Federal Deposit

Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision.

(c) "Business Combination" means a merger, consolidation, statutory share exchange

or similar transaction that requires the approval ofthe Corporation's stockholders.

(d) "Business Day" means any day except Saturday, Sunday and any day on which

banking institutions in the State ofNew York generally are authorized or required by law or

other governmental actions to close.

(e) "Bylaws" means the bylaws ofthe Corporation, as they may be amended from

time to time.

(f) "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.

(g) "Charter" means the Corporation's certificate or articles of incorporation, articles

of association, or similar organizational document.

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

(i) "Dividend Record Date" has the meaning set forth in Section 3(a).

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

A-l

095331-0002-1 1515-NY02.269025 1.3
(k) "Original Issue Date" means the date on which shares of Designated Preferred

Stock are first issued.

(I) "Preferred Director" has the meaning set forth in Section 7(b).

(m) "Preferred Stock" means any and all series of preferred stock ofthe Corporation,

including the Designated Preferred Stock.

(n) "Qualified Equity 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 ofshares of perpetual Preferred Stock, Common Stock or any combination ofsuch

stock, that, in each case, qualify as and may be included in Tier 1 capital ofthe Corporation at

the time of issuance under the applicable risk-based capital guidelines ofthe Corporation's

Appropriate Federal Banking Agency (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 October 13, 2008).

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

(p) "Standard Provisions" mean these Standard Provisions that form a part ofthe

Certificate of Designations relating to the Designated Preferred Stock.

(q) "Successor Preferred Stock" has the meaning set forth in Section Sea).

(r) "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 7(a) and 7(b) of these

Standard Provisions that form a part ofthe 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.

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 ofthe Board of Directors, but only out of assets legally available

therefor, cumulative cash dividends 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 will be

postponed to the next day that is a Business Day and no additional dividends will accrue as a

result ofthat postponement. The period from and including any Dividend Payment Date to, but

A-2

095331-0002-11515-NY02.269025J.3
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 oftwelve 30-day months. The

amount of dividends payable on Designated Preferred Stock on any date prior to the end of a

Dividend Period, and for the initial Dividend Period, shall be computed on the basis of a 360-day

year consisting oftwelve 30-day months, and actual days elapsed over a 30-day month.

Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date

will be payable to holders of record of Designated Preferred Stock as they appear on the stock

register ofthe 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 ofthe 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 ofJunior 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 ofthe holders ofshares of Designated

Preferred Stock on the applicable record date). The foregoing limitation shall not apply to (i)

redemptions, purchases or other acquisitions ofshares ofCommon 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 ofthe 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 brokerdealer subsidiary ofthe Corporation of capital stock ofthe Corporation for resale pursuant to an

offering by the Corporation ofsuch capital stock underwritten by such broker-dealer subsidiary;

(iv) any dividends or distributions of rights or Junior Stock in connection with a stockholders'

A-3 095331-0002-1 1515-NY02.269025 1.3
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 ofJunior 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 contractual agreements 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 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 ofthe 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, 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 ofsuch 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 Board 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. Ifthe Board of

Directors or a duly authorized committee ofthe Board of Directors determines not to pay any

dividend or a full dividend on a Dividend Payment Date, the Corporation will 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 ofthe 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-4 095331-0002-1 1515-NY02.269025 1.3
(a) Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution

or winding up ofthe affairs ofthe Corporation, whether voluntary or involuntary, holders of

Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred

Stock, out ofthe assets ofthe Corporation or proceeds thereof (whether capital or surplus)

available for distribution to stockholders ofthe Corporation, subject to the rights of any creditors

ofthe Corporation, before any distribution ofsuch 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

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

ofthe 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 ofthe 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. Ifthe 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 ofthe Corporation ranking equally with Designated Preferred Stock as to such

distribution has been paid in full, the holders of other stock ofthe Corporation shall be entitled to

receive all remaining assets of the Corporation (or proceeds thereot) according to their respective

rights and preferences.

(d) Merger, Consolidation and Sale of Assets Not Liquidation. For purposes ofthis

Section 4, the merger or consolidation ofthe 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 ofthe assets ofthe Corporation, shall not

constitute a liquidation, dissolution or winding up ofthe Corporation.

Section 5. Redemption.

(a) Optional Redemption. Except as provided below, the Designated Preferred Stock

may not be redeemed prior to the first Dividend Payment Date falling on or after the third

anniversary ofthe Original Issue Date. On or after the first Dividend Payment Date falling on or

after the third anniversary ofthe Original Issue Date, the Corporation, at its option, subject to the

approval ofthe 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) the Liquidation Amount per share and (ii) except as

otherwise provided below, any accrued and unpaid dividends (including, if applicable as

A-5

095331-0002-1 15 IS-NY02.26902S 1.3
provided in Section 3(a) above, dividends on such amount) (regardless of whether any dividends

are actually declared) to, but excluding, the date fixed for redemption.

Notwithstanding the foregoing, prior to the first Dividend Payment Date falling on or

after the third anniversary ofthe Original Issue Date, the Corporation, at its option, subject to the

approval ofthe Appropriate Federal Banking Agency, may redeem, in whole or in part, at any

time and from time to time, 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)

the Liquidation Amount per share and (ii) except as otherwise provided below, any accrued and

unpaid dividends (including, if applicable as provided in Section 3(a) above, dividends on such

amount) (regardless of whether any dividends are actually declared) to, but excluding, the date

fixed for redemption; provided that (x) the Corporation (or any successor by Business

Combination) has received aggregate gross proceeds of not less than the Minimum Amount (plus

the "Minimum Amount" as defined in the relevant certificate of designations for each other

outstanding series of preferred stock ofsuch successor that was originally issued to the United

States Department ofthe Treasury (the "Successor Preferred Stock") in connection with the

Troubled Asset Relief Program Capital Purchase Program) from one or more Qualified Equity

Offerings (including Qualified Equity Offerings ofsuch successor), and (y) the aggregate

redemption price of the Designated Preferred Stock (and any Successor Preferred Stock)

redeemed pursuant to this paragraph may not exceed the aggregate net cash proceeds received by

the Corporation (or any successor by Business Combination) from such Qualified Equity

Offerings (including Qualified Equity Offerings ofsuch successor).

The redemption price for any shares of Designated Preferred Stock shall be payable on

the redemption date to the holder ofsuch shares against surrender ofthe 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 ofthe 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 will not be subject to any

mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred

Stock will have no right to require redemption or repurchase of any shares of Designated

Preferred Stock.

(c) Notice ofRedemption. Notice of every redemption ofshares of Designated

Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of

record ofthe shares to be redeemed at their respective last addresses appearing on the books of

the Corporation. Such mailing shall be at least 30 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 ofshares of Designated Preferred Stock designated for redemption shall not affect the

validity ofthe proceedings for the redemption of any other shares of Designated Preferred Stock.

Notwithstanding the foregoing, ifshares of Designated Preferred Stock are issued in book-entry

form through The Depository Trust Corporation or any other similar facility, notice of

A-6

095331-0002-11515-NY02.2690251.3
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: (l) the

redemption date; (2) the number ofshares of Designated Preferred Stock to be redeemed and, if

less than all the shares held by such holder are to be redeemed, the number ofsuch shares to be

redeemed from such holder; (3) the redemption price; and (4) the place or places where

certificates for such shares are to be surrendered for payment ofthe redemption price.

(d) Partial Redemption. In case of any redemption of part ofthe 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 ofDesignated Preferred Stock shall be redeemed from time to

time. If fewer than all the shares represented by any certificate are redeemed, a new certificate

shall be issued representing the unredeemed shares without charge to the holder thereof.

(e) Effectiveness of Redemption. If notice ofredemption has been duly given and if

on or before the redemption date specified in the notice all funds necessary for the redemption

have been deposited by the Corporation, in trust for the pro rata benefit ofthe holders of the

shares called for redemption, with a bank or trust company doing business in the Borough of

Manhattan, The City ofNew 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 so called for redemption has not been

surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on

all shares so called for redemption, all shares so called for redemption shall no longer be deemed

outstanding and all rights with respect to such shares shall forthwith on such redemption date

cease and terminate, except only the right ofthe holders thereof to receive the amount payable on

such redemption from such bank or trust company, without interest. Any funds unclaimed at the

end ofthree years from the redemption date shall, to the extent permitted by law, be released to

the Corporation, after which time the holders ofthe shares so called for redemption shall look

only to the Corporation for payment of the redemption price ofsuch shares.

(f) Status ofRedeemed 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).

Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right

to exchange or convert such shares into any other securities.

Section 7. 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.

A-7 095331-0002- J1515-NY02.2690251.3
(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 ofsix quarterly

Dividend Periods or more, whether or not consecutive, the authorized number of directors ofthe

Corporation shall automatically be increased by two and the holders of the Designated Preferred

Stock shall have the right, with holders ofshares of anyone 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 ofstockholders (or at a special

meeting called for that purpose prior to such next annual meeting) and at each subsequent annual

meeting ofstockholders 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 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 ofsuch

Preferred Director shall not cause the Corporation to violate any corporate governance

requirements of any securities exchange or other trading facility on which securities ofthe

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 ofthe holders ofshares 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 ofthe shares of Designated Preferred

Stock at the time outstanding voting separately as a class together with the holders ofshares of

Voting Parity Stock, to the extent the voting rights ofsuch holders described above are then

exercisable. Ifthe 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 ofstockholders required

by law or by the Charter, the vote or consent ofthe holders of at least 66 2/3% ofthe 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:

(i) Authorization of Senior Stock. Any amendment or alteration ofthe

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 e,xchangeable or exercisable for shares of, any class or series

of capital stock ofthe 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 ofthe Corporation;

A-8 095331-0002-1 1515-NY02.2690251.3
(ii) Amendment of Designated Preferred Stock. Any amendment, alteration

or repeal of any provision ofthe Certificate of Designations for the Designated Preferred

Stock or the Charter (including, unless no vote on such merger or consolidation is

required by Section 7(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 ofthe 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

exchanged for preference securities ofthe 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 ofthis Section 7(c), any increase in the amount ofthe

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 ofthe Corporation will not be deemed to adversely affect the rights, prp,ferences,

privileges or voting powers, and shall not require the affirmative vote or consent of, the holders

of outstanding shares ofthe Designated Preferred Stock.

(d) Changes after Provision for Redemption. No vote or consent ofthe holders of

Designated Preferred Stock shall be required pursuant to Section 7(c) above if, at or prior to the

time when any such vote or consent would otherwise be required pursuant to such Section, all

outstanding shares ofthe 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.

(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 ofthe Board of Directors or any

duly authorized committee ofthe Board of Directors, in its discretion, may adopt from time to

A-9

095331-0002-1 15 15-NY02.269025 1.3
time, which rules and procedures shall conform to the requirements ofthe 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 8. Record Holders. To the fullest extent permitted by applicable law, the

Corporation and the transfer agent for Designated Preferred Stock 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 shall be affected by any notice to

the contrary.

Section 9. 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 Depository

Trust Corporation or any similar facility, such notices may be given to the holders of Designated

Preferred Stock in any manner permitted by such facility.

Section 10. No Preemptive Rights. No share of Designated Preferred Stock shall have

any rights of preemption whatsoever as to any securities ofthe 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 11. Replacement Certificates. The Corporation shall replace any mutilated

certificate at the holder's expense upon surrender ofthat 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 12. 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-IO 095331-0002-1 15 15-NY02.269025 1.3

NYl 6834433v.1

:\'lERRILL LYNCH & CO.~ It'1C.

Officer's (enifi catc

OClobcr 28~ 2008

This Offic<:r's Ccrti~icale (this "Certificate·') is deJiverc-{f in connection wilh

S~ction L2(d)(iv) oftlle Sccuritir.s Purchase Agreement - Siandard Terms (the ··SPA")

incorporated into the Lener Agreement, dated as ofOctober 26, 2008, between Merrill

Lynch & Co., [nco (the ··Company") and lhe United States Department ofthe Treasury

(the "/m'c!s/fJr") (the "Leuer Agret.'mem" and. together with the SPA. the ·'Agreemc:.'m").

Capitalized temlS us.:d but not defined herein have the meaning ascribed to them

in the Agreement.

The undersigm:d duly authori7.cd f>eniOf executive officer of thl: Comp,lnY hereby

celtities to the Investor, on behalf or the Compan)', that [he Company has effected such

changes to its compensation, bonus, incentive and other benefit plans, .lrr<ntgements and

agreements (including golden p;mlchulc. severance and employment agreements) with

respect to itl> Sellior Ex~cutivc Officers (and to the extent necessary for such changes to

be legally enforceable, e.a.:h of it.s Senior Executive Omcers has duly cun~ented ill

writing to such changes), as may be m:c.:cssnry, dUring the period that the Investor owns

.my debt (lJ' eqult~' securities of the Company acquired pursuarU to the Agreement or the

Warrant, in order to comply with Section Ill(b) oftile Emergency Economic

Stabilization Act of 2008 as implemented by guidance 01' regulation thereunder thal has

bt:en issued and is in effect as of the date ht~rcof.

(Remainder ofpage i1lte1fti(JIl(lI~)' lefl blank)
IN WlTNESS \VHEREOf, the undersigned ha~ executed this Certitic~ne on the

date ftrst written above.

COMPAN'Y; MERRILL LYNCH & CO.,

INC.

."~ .I /7

By: /~t LJ<y~i _ Name: Peter R. Stangl

Title: Senior Vicr Pn:sida:nl and

Head of Human Resources

WAIVER

In consideration for the benefits I will receive as a result 01 my employer's participation

in me Uniled Swea Depanmenl oflbeTreasury'sTARP Capital Purchase Program, I

hereby vohmtarily waive all claim against the Uniaed States or my employer for any

cbanps 10 my compensation or benefits Ihat required to comply wi1h 1he £esuJation

issued by the Department ofthe Treasmy published in the Federal .RegiS(ef' on October

20,2008.

Isclmowledp that mis replatioD may require modifation ofthe compensation, bonus,

incentive and other berJefit plans, arrangements, policies and agrccmcnts (including socalled "SOlden parachute" aareemenlS) thai I have with my employer or in which I

panicipale as they rel* to the period the UBi1ed States holds 8fty equity or debt

securities ofmy employer acquiral through the TARP Capital Purchue Program.

This waiver includea aU claims I may have under the laws ofthe United Slates or any

state related to the requirements imposed by the aforementioned regulation, including,

without limitation, a claim for May cOftII)CnSluon or odier paymcnlS I would otbetwise

receive, any chalJc:nle to the proeess by which this ~1ati0il was adopted and any ton or

constitutional claim about the effect ofthese reguwions on my employment relationship.

Aarecd and Accepted

~,
WAIVER

In considera<ion for the bcncfit$ ! will rccci\·c as II n::slIll Ornl)' c:mpk'ycr":-, par1lCIllatirm

IIl.he lJnit..'cd ~t3~CS DI.'1)lo,nrnem o(the Tr~<lStlry·.s TARfl Capital Purehasc Progrum. I

hcrc,y vQluntarily waiw llll claim agtlillSI tht: l'nilc~1 Stl:ah.':l; or my ~nll'!oyel' tor .my

ch:mges to rllY I:l)mpen~tion or benefits that rCGlIircd to (umply wiLh 1)1<: f1:glllntiolt

i~l>1.IOO by the DCplutmcnl of the Trtd~T)' puhlliJled ill the Federal RegJ:~lcT on ()clobcr

2(1. 2001:\.

I w.:L.I1\)\\·kd~< Ihat [tu~ :~~u::.nIOI1 may l'e'4ll!r~ r:1l)dific3tiQIl of Ih.: l'nmp,,'ns:;fiHI'l. ht)IItIS,

irKcllli\'l:' ~1ll'" ".1cli~1' l...:lIdit p14111.'i, aJTaJI~t=melil~, J}Oltciei and agrNmcnls lind\ldin~ -';0-

,~lllcd "gQldcn p;;rr;u:hlm:" ~~Jl:l;fllCnlS' tlli!t I ba"c "Hlh m:- cmplo~ ('I' Of in whidl I

paltkipalt as. they rd,ltI: W 1h<.- p.:oriud lhe t:ni:cd St.. le.. IIt~kl!i all)' equit}' Of J~bl

l'C:Curilk:S uf lUi' elllplt)y~r 3"'-llllr~d thr(~i.Igh lLc TAR PC'apit.l,l Plm.-h<l~c rro~'r M1I

This \\';Iiwr iut.:lu,[~~ ~ll claim...;; I milY hi1n~ under thc !;J\1I~ ofth\,.' linih."d SlUl ..,;> 01 ~lI1Y

s~al(' rdmro 10 Ibe rcqtJirclllcnt~ 101J)l.)Sc,,1 b)o' lh~ atfir.::n~lUioncJ rt'guiatioJl. includil~,

wilhtlll! lirnitiCtiufI. dllim t~...r ;I11Y compcnsat;Ol1 or oLber (\.ly:ncllt.'i l "ould u{,h..:m·l~

:c(d,,~, aay dlilllcflgc tll till: pr()'':-~ss by whIch tlH~ regulalion was mJopLcd llllt! :InY lm1 M

t',)usli1\IHOnal chum abou1lbc ..:fi\~·,'r ofthl:'SI;:" r:."guliLti(Jn~ On my ~mp]oymcnL rdalionship.
WAIVF:R

In con~ideralion fi)r the 'bcndils r will n:cei~'e as;} result ofmy employer's participation

in the United Statcs Department ofthe Treasury's TARP Capilal Purchase Program. I

hereby \'oluIHarily waive all clallH against the United States or my employer for any

dmng':5 10 my ,olTlpcns4llior\ or bcnents tbm required to comply with the regulation

issued by the Department of Ihe Treasury published in lhe federal Register on October

20,2008.

I acknowledge thou this n:gulati(lTl flUlY require modifkatlon oftbc compellsation. bonus.

incentive and other ~ncfit plansj arrangements. polieit.'S .md agreements (including sorailed "gold&:n parachute" __lgreemC'lUs) thar I have with my employer or in which I

partidpate as they relate to the period the Cniled States 110Ids allY e~uity or debt

sr:l~urities ofmy employer' acquired through the TARP Capital Purcha~~ Program.

This waiver includes iiI! claims I l11ay have under the l~l\\'S ofthe United Stales or any

st:M related to the rcquin:mclI13 imposed by the aforementioned regulation, induding,

without limitation, a claim for any cOmpC1l!;'illlOIl or other payments I \vould olhcn\'is~

re~eive, any challenge co the process by which this regubtion was adopted and :.m:y lort or

cOllstitulil)llal claim about the effect of these n:glllaliol15 on my c-rnp)oymelU relationship.

Agreed and Accepted

/f(T/MRobert J. McCann
,,,..\IVER

In consideration for the bencl1ts [ wIll f~cejve as::l result nfmy employer's pm1icipatioll

in the l)1Jih:d ShJle~ DI:]Xlrtmeol orlhe Tn::asl:£)''s TARP Capital Purchase Progmm. I

hereby \'olulltarily waive all claim against the United States or my employer for :my

changes to my compensation (If beneiih Ihat required h> compl)" with the regululion

issued by tht; Dcp.utmcnt ofthe Trcasu£)' published in the Federal Register on OClObcr

20, :!OOR.

I acknowledge that tbis regulation may require mot:hfication oftbe compensation, oonus,

incentive and other berldit plan.~, armngelllcnls. pol icies and .\grcC'mcllIS (including ~)­

called "golden pnradmtc" agrcl:mcnls) 1twl I have with my employer or in which r

participate as they rcl~ltc lO the period the Unilcd States holds any equity or debt

securities of my employer acquired through the TARl· Capital Purcha...c Program.

This waiver includes all claims I may have under tb.,; laws of the United States or any

gtatt: related to the requirements impose-d hy the aforclllCfltioncd regulation, mchlding,

witho\.lt limit<ltion, a ch\im for any compensation or other payments I would olhef\vist:'

receive, any challenge to the process by \Vliich this regulation \vas adopted and 3ny tort or

constitutional claim aooulthe etTrxl ufllu:se n.:glllalions on lily employmenl relationship.

Agreed al)9 Accepted ~--- )

, /~',

/

I ..". I

f ·" I

---r--- ." /".L----__............

j- ' <' -----

l 1'\cbon Clmi --------~
WAIVlm.

hI c(ltlsideratiolt lOr [he bendl1S 1will ~ecei'i~ U$ a n~!'ull or my etnplop:'r'$ parlidpatl<lll

in the United States Dcpartm<:m of the Trcasmy's TAR? Capital PlIrchnst' Progrtlm. I

h~'t'ch>' vo!uJltanly Wal\'C all claim agaJnst the Untted States or my empJoyer tor any

change~ to tn)' COtnpeltfiatioll Or beJle11 Il> Ihat reqLiired 10 c()mpl)' witll []It: l'e~lJta[ion

j~s\Jed by lilt: Depmtment oflhe: Tre:1~~1JTY Pllhlhht:d in Ibe F~lcT<d Rcgislc:r lln O...~obcr

~O. 2008.

I acl.:no\\'ledg.e that this l'cgulation may rcqLllr~ moddJcauon of Ule ~ompensatjon. bonus.

incentive and othr:r benefit plans. ammgr:mr:rus. policic:s and ~lgrt:e1H"'llts lindUliing Sl)-

called "g.olden parachute" 3greements) that I have with my employer or in which I

participutt" as Illey relate' to the period tllC l!tlited Slates hold... any equilY Of debt

se~urities of my employer acqUIred through tll(' TARP Capital PUKnasr Program.

This w3h'er includ~s till claims i may h:n'e under Ih~ law~ ~)fthe 1.:1ll!('d States. or any

stal~ related w {h~ n.'qllircmcnt:; imposed by llC afor~mc:nti(1nt:d r~gLJI:-~1i(\1I, il!L:ludin&

withoL!t(ulUtabon. a daim ~or any ..:ompcns..mon or othcr payment:; f wmlld olh~n\"ii;~

n:\:civc. any dml1~lf!c to tILe process by wl1:~h tblS regu:ation was aooptcd ul1d ~my ton or

constitutional claim ahou~ lh~ rnt.'(;! c)f;llcS~ regl:1atil),l~ on my employment r~jatlol15hi?