EXECUTION COPY

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EXCHANGE AGREEMENT

by and between

BROADWAY FINANCIAL CORPORATION

and

THE UNITED STATES DEPARTMENT OF THE TREASURY

Dated as of February 10, 2012
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-iTABLE OF CONTENTS

Page

ARTICLE I THE CLOSING; CONDITIONS TO THE CLOSING...................................... 2

Section 1.1 The Closing ...................................................................................................... 2

Section 1.2 Interpretation .................................................................................................... 5

ARTICLE II EXCHANGE ...................................................................................................... 5

Section 2.1 Preferred Exchange; Dividend Exchange .......................................................... 5

Section 2.2 Exchange Documentation ................................................................................. 6

Section 2.3 Status of Preferred Shares after Closing ............................................................ 6

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE 

COMPANY..................................................................................................... 6

Section 3.1 Existence and Power......................................................................................... 6

Section 3.2 Authorization and Enforceability ...................................................................... 7

Section 3.3 Exchange Shares and Underlying Common Shares........................................... 8

Section 3.4 Non-Contravention ........................................................................................... 8

Section 3.5 Anti-Takeover Provisions and Rights Plan...................................................... 10

Section 3.6 No Company Material Adverse Effect ............................................................ 10

Section 3.7 Offering of Securities ..................................................................................... 10

Section 3.8 Brokers and Finders........................................................................................ 10

ARTICLE IV COVENANTS ................................................................................................. 11

Section 4.1 Commercially Reasonable Efforts................................................................... 11

Section 4.2 Expenses ........................................................................................................ 11

Section 4.3 Charter Amendment ....................................................................................... 11

Section 4.4 Exchange Listing ............................................................................................ 12

Section 4.5 Access, Information and Confidentiality ......................................................... 12

Section 4.6 Executive Compensation ................................................................................ 13

Section 4.7 Certain Notifications Until Closing................................................................. 14

Section 4.8 Sufficiency of Authorized Common Stock...................................................... 15

Section 4.9 Monthly Lending Reports............................................................................... 15

Section 4.10 Status Reports................................................................................................. 15

Section 4.11 Agreements Relating to Other Transactions.................................................... 16

Section 4.12 Issuance of Underlying Common Shares or Exchange 

Common Stock............................................................................................... 16

Section 4.13 Remaining Certification and Disclosure Requirements ................................... 16

Section 4.14 Transferability Restrictions Related to Long-Term

Restricted Stock.............................................................................................. 16

ARTICLE V ADDITIONAL AGREEMENTS ..................................................................... 17
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-iiSection 5.1 Unregistered Exchange Shares and Underlying Common 

Shares............................................................................................................. 17

Section 5.2 Legend ........................................................................................................... 17

Section 5.3 Certain Transactions....................................................................................... 18

Section 5.4 Transfer of Exchange Shares and Underlying Common 

Shares............................................................................................................. 19

Section 5.5 Registration Rights......................................................................................... 19

Section 5.6 Voting Matters................................................................................................ 20

Section 5.7 Restriction on Dividends and Repurchases...................................................... 21

Section 5.8 Repurchase of Investor Securities................................................................... 22

Section 5.9 Bank Holding Company Status....................................................................... 22

Section 5.10 Compliance with Employ American Workers Act........................................... 22

Section 5.11 Observer to the Board of Directors.................................................................. 23

ARTICLE VI MISCELLANEOUS ....................................................................................... 23

Section 6.1 Termination.................................................................................................... 23

Section 6.2 Survival of Representations and Warranties.................................................... 24

Section 6.3 Amendment .................................................................................................... 24

Section 6.4 Waiver of Conditions...................................................................................... 24

Section 6.5 Governing Law; Submission to Jurisdiction, etc.............................................. 24

Section 6.6 Notices........................................................................................................... 25

Section 6.7 Definitions...................................................................................................... 26

Section 6.8 Assignment..................................................................................................... 28

Section 6.9 Severability .................................................................................................... 29

Section 6.10 No Third-Party Beneficiaries.......................................................................... 29

Section 6.11 Entire Agreement, etc ..................................................................................... 29

Section 6.12 Counterparts and Facsimile............................................................................. 29

Section 6.13 Specific Performance...................................................................................... 29

LIST OF ANNEXES

ANNEX A: OTHER PREFERRED EXCHANGE SHARES

ANNEX B: FORM OF NEW CERTIFICATE OF DESIGNATIONS

ANNEX C: FORM OF OPINION

ANNEX D: FORM OF WAIVER

LIST OF SCHEDULES

SCHEDULE A: CAPITALIZATION

SCHEDULE B: COMPANY MATERIAL ADVERSE EFFECT
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-iiiTerm Section

Affiliate................................................................................................6.7(b)

Agreement................................................................................................ Preamble

Benefit Plans................................................................................................ 1.1(d)(viii)

Business Combination ................................................................................................ 6.7(c)

Capitalization Date ................................................................................................ 3.1(b)

Charter ................................................................................................ 1.1(d)(i)

Charter Amendment ................................................................................................ 3.3(b)(i)

Charter Amendment Approval Date................................................................ 4.3(c)

Closing................................................................................................ 1.1(a)

Closing Date................................................................................................ 11(a)

Code................................................................................................................................ 3.4(c)

Common Stock................................................................................................ Recitals

Common Stock Equivalents................................................................................................ Recitals

Company................................................................................................Preamble

Company Material Adverse Effect................................................................ 6.7(d)

Company Subsidiaries................................................................................................ 4.5(a)

Compensation Regulations ................................................................................................ 1.1(d)(viii)

Conversion Requirements................................................................................................ Recitals

Designated Matters................................................................................................ 6.7(e)

Dividend Exchange ................................................................................................ Recitals

EAWA ................................................................................................ 6.7(f)

EESA ................................................................................................................................ 1.1(d)(viii)

Equity Offering, ................................................................................................ Recitals

Exchange................................................................................................Recitals

Exchange Act ................................................................................................ 5.3(b)

Exchange Common Stock................................................................................................ 2.1(a)

Exchange Common Stock Equivalents................................................................ 2.1(a)

Exchange Shares ................................................................................................ Recitals

Fixed Rate Cumulative Perpetual Preferred Stock, Series E................................ Recitals

GAAP ................................................................................................................................ 5.7(a)(ii)

Governmental Entities................................................................................................ 1.1(c)

Information ................................................................................................ 45(c)

Investor ................................................................................................Preamble

Junior Stock................................................................................................ 67(g)

New Certificate of Designations................................................................ 11(d)(i)

Observer................................................................................................5.11

Other Conversion Shares................................................................................................ 3.3(b)(i)

Other Preferred Exchange................................................................................................ Recitals

Other Series of Preferred Stock................................................................ 67(h)

Other Transactions ................................................................................................ 4.10

Parity Stock................................................................................................ 67(i)

Preferred Exchange ................................................................................................ Recitals

Preferred Shares ................................................................................................ Recitals

Preferred Stock................................................................................................ 6.7(j)
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-ivTerm Section

Previously Disclosed ................................................................................................ 6.7(k)

Proxy Statement ................................................................................................ 4.3(a)

Recapitalization................................................................................................ Recitals

Relevant Period ................................................................................................ 1.1(d)(viii)

SEC................................................................................................................................ 3.4(b)

Section 4.6 Employee ................................................................................................ 4.6(b)

Securities Purchase Agreement................................................................ Recitals

Securities Purchase Agreements................................................................ Recitals

Senior Executive Officers................................................................................................ 1.1(d)(viii)

Series D Preferred Stock................................................................................................ Recitals

Series D Securities Purchase Agreement................................................................ Recitals

Series E Preferred Stock ................................................................................................ Recitals

Series E Securities Purchase Agreement ................................................................ Recitals

Share Dilution Amount................................................................................................ 5.7(a)(ii)

Shareholder Proposals ................................................................................................ 4.3(b)

Status Report................................................................................................ 4.10(d)

subsidiary................................................................................................ 67(a)

Targeted Completion Date................................................................................................ 4.10

Transfer................................................................................................5.4

Underlying Common Shares................................................................ 3.3(b)(i)
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EXCHANGE AGREEMENT, dated as of February 10, 2012 (this “Agreement”) 

by and between Broadway Financial Corporation, a Delaware corporation (the “Company”), and 

the United States Department of the Treasury (the “Investor”). All capitalized terms used herein 

and not otherwise defined shall have the respective meanings ascribed to them in the Securities 

Purchase Agreement.

BACKGROUND

WHEREAS, the Investor is, as of the date hereof, the beneficial owner of 9,000 

shares of the Company’s preferred stock designated as “Fixed Rate Cumulative Perpetual 

Preferred Stock, Series D”, having a liquidation amount of $1,000 per share (the “Series D 

Preferred Stock”), and 6,000 shares of the Company’s preferred stock designated as “Fixed Rate 

Cumulative Perpetual Preferred Stock, Series E”, having a liquidation amount of $1,000 per 

share (the “Series E Preferred Stock” and together with the Series D Preferred Stock, the 

“Preferred Shares”);

WHEREAS, the Company issued the Series D Preferred Stock pursuant to that 

certain Securities Purchase Agreement – Standard Terms incorporated into a Letter Agreement, 

dated as of November 14, 2008, as amended from time to time, between the Company and the 

Investor (the “Series D Securities Purchase Agreement”);

WHEREAS, the Company issued the Series E Preferred Stock pursuant to that 

certain Securities Purchase Agreement – Standard Terms incorporated into a Letter Agreement, 

dated as of December 4, 2009, as amended from time to time, between the Company and the 

Investor (the “Series E Securities Purchase Agreement,” and together with the Series D 

Securities Purchase Agreement, the “Securities Purchase Agreements” and each, a “Securities 

Purchase Agreement”); 

WHEREAS, the Company intends to (i) exchange all shares of the Other Series of 

Preferred Stock (as defined below) for (x) if the Shareholder Proposals (as defined below) have 

been approved by the Requisite Shareholder Votes (as defined below) and the Charter 

Amendment (as defined below) has been filed (together, the “Conversion Requirements”), shares 

of the Company’s common stock, par value $0.01 per share (the “Common Stock”) in such 

amounts as set forth on Annex A attached hereto, or (y), if the Conversion Requirements have 

not been completed, shares of the Company’s Preferred Stock designated as Series F Common 

Stock Equivalents (the “Common Stock Equivalents”) in such amounts as set forth on Annex A

attached hereto, which Common Stock Equivalents will convert to shares of Common Stock 

upon completion of the Conversion Requirements (such exchange as described in clauses (x) or 

(y), as applicable, the “Other Preferred Exchange”), and (ii) issue shares of Common Stock (or 

Common Stock Equivalents) for aggregate gross proceeds to the Company of not less than 

$5,000,000 (the “Equity Offering,” and together with the Other Preferred Exchange and the 

Exchange (as defined below), the “Recapitalization”); 
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WHEREAS, the Company and the Investor desire, in connection with the 

foregoing recapitalization of the Company, (i) to exchange (the “Preferred Exchange”) all of the 

Preferred Shares beneficially owned and held by the Investor for (x) if the Conversion 

Requirements have been completed, shares of Common Stock or (y) if the Conversion 

Requirements have not been completed, shares of Common Stock Equivalents, and (ii) to 

exchange (the “Dividend Exchange”, and together with the Preferred Exchange, the “Exchange”) 

all accrued and unpaid dividends on the Preferred Shares as of the Closing Date for (x) if the 

Conversion Requirements have been completed, shares of Common Stock or (y) if the 

Conversion Requirements have not been completed, shares of Common Stock Equivalents (such 

Common Stock or Common Stock Equivalents, as applicable, described in clauses (i) and (ii), 

the “Exchange Shares”).

NOW, THEREFORE, in consideration of the mutual covenants and agreements 

contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, and 

intending to be legally bound, the parties hereby agree as follows:

ARTICLE I

THE CLOSING; CONDITIONS TO THE CLOSING

Section 1.1 The Closing.

(a) The closing of the Exchange (the “Closing”) will take place at the offices 

of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, 

New York, New York, 10019, or remotely via the electronic or other exchange of 

documents and signature pages, as the parties may agree. The Closing shall take place 

five business days after all of the conditions set forth in Section 1.1(c) and (d) shall have 

been satisfied or waived, or at such other place, time and date as shall be agreed between 

the Company and the Investor. The time and date on which the Closing occurs is referred 

to in this Agreement as the “Closing Date”.

(b) Subject to the fulfillment or waiver of the conditions to the Closing in this 

Section 1.1, at the Closing (i) the Company will deliver the Exchange Shares to the 

Investor, as evidenced by one or more certificates dated the Closing Date and registered 

in the name of the Investor or its designee(s) (or if shares of Common Stock are 

uncertificated, cause the transfer agent for the Common Stock to register the Exchange 

Shares in the name of the Investor and deliver reasonably satisfactory evidence of such 

registration to the Investor (if applicable)) and (ii) the Investor will deliver the certificate 

representing the Preferred Shares to the Company.

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

consummate the Exchange are subject to the fulfillment (or waiver by the Company and 

the Investor, as applicable) prior to the Closing of the conditions that (i) any approvals or 

authorizations of all United States and other governmental, regulatory or judicial 

authorities (collectively, “Governmental Entities”) required for the consummation of the 

Exchange shall have been obtained or made in form and substance reasonably 

satisfactory to each party and shall be in full force and effect and all waiting periods 
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required by United States and other applicable law, if any, shall have expired and (ii) no 

provision of any applicable United States or other law and no judgment, injunction, order 

or decree of any Governmental Entity shall prohibit consummation of the Exchange as 

contemplated by this Agreement.

(d) The obligation of the Investor to consummate the Exchange is also subject 

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

following conditions:

(i) if the Conversion Requirements have not been completed prior to 

the Closing Date, the Company shall have duly adopted and filed with the State of 

Delaware the amendment to its certificate of incorporation (the “Charter”) in 

substantially the form attached hereto as Annex B (the “New Certificate of 

Designations”) and such filing shall have been accepted;

(ii) the Company shall have completed the Other Preferred Exchange

on terms satisfactory to the Investor in its sole discretion;

(iii) the Company shall have completed the Equity Offering; 

(iv) (A) the representations and warranties of the Company set forth 

in Article III of this Agreement shall be true and correct in all respects as though 

made on and as of the Closing Date (other than representations and warranties 

that by their terms speak as of another date, which representations and warranties 

shall be true and correct in all respects as of such other date) and (B) the 

Company shall have performed in all material respects all obligations required to 

be performed by it under this Agreement at or prior to the Closing;

(v) the Investor shall have received a certificate signed on behalf of 

the Company by a senior executive officer certifying to the effect that the 

conditions set forth in Section 1.1(d) have been satisfied;

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

with the prior consent of the Investor, evidence in book-entry form, evidencing 

the Exchange Shares to the Investor or its designee(s);

(vii) the Company shall have delivered to the Investor written opinions 

from counsel to the Company, addressed to the Investor and dated as of the 

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

(viii) (A) the Company shall have effected such changes to its 

compensation, bonus, incentive and other benefit plans, arrangements and 

agreements (including golden parachute, severance and employment agreements) 

(collectively, “Benefit Plans”) with respect to its Senior Executive Officers and 

any other employee of the Company or its Affiliates subject to Section 111 of the 

Emergency Economic Stabilization Act of 2008, as amended by the American 

Recovery and Reinvestment Act of 2009, or otherwise from time to time 

(“EESA”), as implemented by any guidance, rule or regulation thereunder, as the 
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same shall be in effect from time to time (collectively, the “Compensation 

Regulations”) (and to the extent necessary for such changes to be legally 

enforceable, each of its Senior Executive Officers and other employees shall have 

duly consented in writing to such changes), as may be necessary, during the 

period in which any obligation of the Company arising from financial assistance 

under the Troubled Asset Relief Program remains outstanding (such period, as it

may be further described in the Compensation Regulations, the “Relevant 

Period”), in order to comply with Section 111 of EESA or the Compensation 

Regulations and (B) the Investor shall have received a certificate signed on behalf 

of the Company by a Senior Executive Officer certifying to the effect that the 

condition set forth in Section 1.1(d)(viii)(A) has been satisfied; “Senior Executive 

Officers” means the Company's “senior executive officers” as defined in 

Section 111 of the EESA and the Compensation Regulations; and

(ix) none of the following shall have occurred with respect to the 

Company or any Company Subsidiary:

(A) the Company or any Company Subsidiary shall have (1) 

dissolved (other than pursuant to a consolidation, amalgamation or 

merger); (2) become insolvent or unable to pay its debts or failed or 

admitted in writing its inability generally to pay its debts as they become

due; (3) made a general assignment, arrangement or composition with or 

for the benefit of its creditors; (4) instituted or have instituted against it a 

proceeding seeking a judgment of insolvency or bankruptcy or any other 

relief under any bankruptcy or insolvency law or other similar law 

affecting creditors’ rights, or a petition shall have been presented for its 

winding-up or liquidation, and, in the case of any such proceeding or 

petition instituted or presented against it, such proceeding or petition shall 

have resulted in a judgment of insolvency or bankruptcy or the entry of an 

order for relief or the making of an order for its winding-up or liquidation; 

(5) had a resolution passed for its winding-up, official management or 

liquidation (other than pursuant to a consolidation, amalgamation or 

merger); (6) sought or shall have become subject to the appointment of an 

administrator, provisional liquidator, conservator, receiver, trustee, 

custodian or other similar official for it or for all or substantially all its 

assets; (7) had a secured party take possession of all or substantially all its 

assets or had a distress, execution, attachment, sequestration or other legal

process levied, enforced or sued on or against all or substantially all its 

assets; (8) caused or shall have been subject to any event with respect to it 

which, under the applicable laws of any jurisdiction, had an analogous 

effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) 

taken any action in furtherance of, or indicating its consent to, approval of, 

or acquiescence in, any of the foregoing acts;

(B) a Governmental Entity in any jurisdiction shall have (1) 

commenced an action or proceeding against the Company or any 

Company Subsidiary; or (2) issued or entered a temporary restraining 
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order, preliminary or permanent injunction or other order applicable to the 

Company or any Company Subsidiary, which in the case of (1) and (2) 

shall have had or shall be reasonably expected to have a Company 

Material Adverse Effect;

(C) any fact, circumstance, event, change, occurrence, 

condition or development shall have occurred since September 30, 2011 

(other than as set forth on Schedule B) that, individually or in the 

aggregate, shall have had or shall be reasonably likely to have a Company 

Material Adverse Effect; or

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

hereof.

Section 1.2 Interpretation. When a reference is made in this Agreement to 

“Recitals,” “Articles,” “Sections,” “Annexes” or “Schedules” such reference shall be to a 

Recital, Article or Section of, or Annex or Schedule to, this Agreement, unless otherwise 

indicated. The terms defined in the singular have a comparable meaning when used in the plural, 

and vice versa. References to “herein”, “hereof”, “hereunder” and the like refer to this 

Agreement as a whole and not to any particular section or provision, unless the context requires 

otherwise. The table of contents and headings contained in this Agreement are for reference 

purposes only and are not part of this Agreement. Whenever the words “include,” “includes” or 

“including” are used in this Agreement, they shall be deemed followed by the words “without 

limitation.” No rule of construction against the draftsperson shall be applied in connection with 

the interpretation or enforcement of this Agreement, as this Agreement is the product of 

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

mean the lawful currency of the United States of America. Except as expressly stated in this 

Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation as 

amended, modified, supplemented or replaced from time to time (and, in the case of statutes, 

include any rules and regulations promulgated under the statute) and to any section of any 

statute, rule or regulation include any successor to the section. References to a “business day” 

shall mean any day except Saturday, Sunday and any day on which banking institutions in the 

State of New York or California generally are authorized or required by law or other 

governmental actions to close.

ARTICLE II

EXCHANGE

Section 2.1 Preferred Exchange; Dividend Exchange.

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

upon the Closing (i) the Company agrees to issue to the Investor, in exchange for its 

15,000 Preferred Shares, including the accrued and unpaid dividends thereon as of the 

Closing Date: (x) if the Exchange Shares are Common Stock Equivalents (such Exchange 

Shares, the “Exchange Common Stock Equivalents”), such number of Exchange Shares 

as shall have an aggregate liquidation preference equal to (A) 50% of the liquidation 
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preference of all of the Preferred Shares beneficially owned and held by the Investor, plus

(B) 100% of the accrued and unpaid dividends on all of the Preferred Shares beneficially 

owned and held by the Investor through and including the Closing Date, (in each case 

rounded up to the nearest whole number of Exchange Shares), or (y) if the Exchange 

Shares are Common Stock (such Exchange Shares, the “Exchange Common Stock”), 

such number of Exchange Shares equal to (A) (1) 50% of the liquidation preference of all 

of the Preferred Shares beneficially owned and held by the Investor, plus (2) 100% of the 

accrued and unpaid dividends on all of the Preferred Shares beneficially owned and held 

by the Investor through and including the Closing Date, divided by (B) the lowest price 

per share of Common Stock paid by investors in the Equity Offering (in each case 

rounded up to the nearest whole number of Exchange Shares); and (ii) the Investor agrees 

to deliver to the Company the Preferred Shares in exchange for such number of Exchange 

Shares.

(b) Following consummation of the Exchange, no further cash dividends shall 

be payable in respect of the Preferred Shares outstanding immediately prior to the 

Closing Date.

Section 2.2 Exchange Documentation.

Settlement of the Exchange will take place on the Closing Date, at which time the 

Investor will cause delivery of the Preferred Shares to be made to the Company or its designated 

agent and the Company will cause delivery of the Exchange Shares to be made to the Investor or 

its designated agent.

Section 2.3 Status of Preferred Shares after Closing.

The Preferred Shares exchanged for the Exchange Shares pursuant to this 

Article II are being reacquired by the Company and shall have the status of authorized but 

unissued shares of Preferred Stock of the Company undesignated as to series and may be 

designated or redesignated and issued or reissued, as the case may be, as part of any series of 

preferred stock of the Company; provided that such shares shall not be reissued as Preferred 

Shares.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as Previously Disclosed, the Company represents and warrants to the 

Investor as of the date hereof and as of the Closing Date that:

Section 3.1 Existence and Power.

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

duly organized, validly existing and in good standing under the laws of the State of 

Delaware and has all necessary power and authority to own, operate and lease its 

properties and to carry on its business in all material respects as it is being currently 
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conducted, and except as has not, individually or in the aggregate, had and would not 

reasonably be expected to have a Company Material Adverse Effect, has been duly 

qualified as a foreign corporation for the transaction of business and is in good standing 

under the laws of each other jurisdiction in which it owns or leases properties or conducts 

any business so as to require such qualification; each subsidiary of the Company that is a 

“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the 

Securities Act, including, without limitation, Broadway Federal Bank, f.s.b., has been duly 

organized and is validly existing in good standing under the laws of its jurisdiction of 

organization. The Charter and bylaws of the Company, copies of which have been 

provided to the Investor prior to the date hereof, are true, complete and correct copies of 

such documents as in full force and effect as of the date hereof.

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

outstanding capital stock of the Company (including securities convertible into, or 

exercisable or exchangeable for, capital stock of the Company) as of the most recent 

fiscal month-end preceding the date hereof (the “Capitalization Date”) is set forth on 

Schedule A. The outstanding shares of capital stock of the Company have been duly 

authorized and are validly issued and outstanding, fully paid and nonassessable, and 

subject to no preemptive rights (and were not issued in violation of any preemptive 

rights). As of the date hereof, the Company does not have outstanding any securities or 

other obligations providing the holder the right to acquire Common Stock that is not 

reserved for issuance as specified on Schedule A, and the Company has not made any 

other commitment to authorize, issue or sell any Common Stock except pursuant to this 

Agreement and pursuant to the Recapitalization. Since the Capitalization Date, except 

pursuant to this Agreement or pursuant to the Recapitalization, the Company has not 

issued any shares of Common Stock other than (i) shares issued upon the exercise of 

stock options or delivered under other equity-based awards or other convertible securities 

or warrants which were issued and outstanding on the Capitalization Date and disclosed 

on Schedule A and (ii) shares disclosed on Schedule A.

Section 3.2 Authorization and Enforceability.

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

deliver this Agreement and to carry out its obligations hereunder and thereunder (which 

includes the issuance of the Exchange Shares and, if applicable, the Underlying Common 

Shares (as defined below)).

(b) The execution, delivery and performance by the Company of this 

Agreement and the consummation of the transactions contemplated hereby and thereby 

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

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

the Company or its stockholders. This Agreement is a valid and binding obligation of the 

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

Bankruptcy Exceptions.
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Section 3.3 Exchange Shares and Underlying Common Shares.

(a) The Exchange Shares have been duly and validly authorized by all 

necessary action, and, when issued and delivered pursuant to this Agreement, such 

Exchange Shares will be duly and validly issued and fully paid and nonassessable, will 

not be issued in violation of any preemptive rights, will represent nonassessable 

undivided beneficial interests in the assets of the Company, will not subject the holder 

thereof to personal liability and, if such shares are Exchange Common Stock Equivalents, 

such shares will rank pari passu with or senior to all other series or classes of Preferred 

Stock, whether or not issued or outstanding. 

(b) The Board of Directors has approved: 

(i) an amendment to the Charter reflecting an increase in the number 

of authorized shares of Common Stock sufficient to issue the greater of (x) all 

shares of Common Stock to be issued (I) upon conversion of the Common Stock 

Equivalents that may be issued pursuant to the Other Preferred Exchange and the 

Equity Offering (such converted shares, the “Other Conversion Shares”) and (II) 

upon conversion of the Exchange Common Stock Equivalents that may be issued 

pursuant to the Exchange (such converted shares, the “Underlying Common 

Shares”) or (y) all shares of Exchange Common Stock that may be issued 

pursuant to the Other Preferred Exchange, the Equity Offering and the Exchange 

(such amendment as described in clauses (x) or (y), as applicable, the “Charter 

Amendment”);

(ii) if the Conversion Requirements have not been completed prior to 

the Closing Date, (1) the New Certificate of Designations, (2) the issuance of the 

Exchange Common Stock Equivalents; (3) the issuance of the Underlying 

Common Shares, (4) the issuance of the Common Stock Equivalents to be issued 

in the Other Preferred Exchange and (5) the issuance of the Other Conversion 

Shares;

(iii) if the Conversion Requirements have been completed prior to the 

Closing Date, (1) the issuance of the Exchange Common Stock and (2) the 

issuance of the Common Stock to be issued in the Other Preferred Exchange.

(c) After the Shareholder Proposals have been approved and the Charter 

Amendment has been filed, the Underlying Common Shares, when issued in accordance 

with the terms of the New Certificate of Designations, will be validly issued, fully paid 

and nonassessable.

Section 3.4 Non-Contravention.

(a) The execution, delivery and performance by the Company of this 

Agreement and the consummation of the transactions contemplated hereby and thereby, 

and compliance by the Company with the provisions hereof and thereof, will not 

(A) violate, conflict with, or result in a breach of any provision of, or constitute a default 
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(or an event which, with notice or lapse of time or both, would constitute a default) 

under, or result in the termination of, or accelerate the performance required by, or result 

in a right of termination or acceleration of, or result in the creation of, any lien, security 

interest, charge or encumbrance upon any of the properties or assets of the Company or 

any Company Subsidiary under any of the terms, conditions or provisions of (i) its 

organizational documents or (ii) any note, bond, mortgage, indenture, deed of trust, 

license, lease, agreement or other instrument or obligation to which the Company or any 

Company Subsidiary is a party or by which it or any Company Subsidiary may be bound, 

or to which the Company or any Company Subsidiary or any of the properties or assets of 

the Company or any Company Subsidiary may be subject, or (B) subject to compliance 

with the statutes and regulations referred to in the next paragraph, violate any statute, rule 

or regulation or any judgment, ruling, order, writ, injunction or decree applicable to the 

Company or any Company Subsidiary or any of their respective properties or assets 

except, in the case of clauses (A)(ii) and (B), for those occurrences that, individually or in 

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

Material Adverse Effect.

(b) Other than the approval of the Office of Thrift Supervision, or its 

successors, the Office of the Comptroller of the Currency and the Federal Reserve Board, 

filing of the New Certificate of Designations as contemplated by Section 1.1(d)(i) with 

the State of Delaware, any current report on Form 8-K required to be filed with the 

Securities and Exchange Commission (“SEC”), such filings and approvals as are required 

to be made or obtained under any state “blue sky” laws and such consents and approvals 

as have been made or obtained, no notice to, filing with or review by, or authorization,

consent or approval of, any Governmental Entity is required to be made or obtained by 

the Company in connection with the consummation by the Company of the Exchange 

except for any such notices, filings, reviews, authorizations, consents and approvals the 

failure of which to make or obtain would not, individually or in the aggregate, reasonably 

be expected to have a Company Material Adverse Effect.

(c) Except as would not, individually or in the aggregate, reasonably be 

expected to have a Company Material Adverse Effect, (A) the execution, delivery and 

performance by the Company of this Agreement and the consummation of the 

transactions contemplated hereby (including for this purpose the consummation of the 

Exchange) and compliance by the Company with the provisions hereof will not (1) result 

in any payment (including any severance payment, payment of unemployment 

compensation, “excess parachute payment” (within the meaning of the Internal Revenue 

Code of 1986, as amended (the “Code”)), “golden parachute payment” (as defined in the 

EESA, as implemented by the Compensation Regulations) or forgiveness of indebtedness 

or otherwise) becoming due to any current or former employee, officer or director of the 

Company or any Company Subsidiary from the Company or any Company Subsidiary 

under any benefit plan or otherwise, (2) increase any benefits otherwise payable under 

any benefit plan, (3) result in any acceleration of the time of payment or vesting of any 

such benefits, (4) require the funding or increase in the funding of any such benefits or 

(5) result in any limitation on the right of the Company or any Company Subsidiary to 

amend, merge, terminate or receive a reversion of assets from any benefit plan or related 

trust and (B) neither the Company nor any Company Subsidiary has taken, or permitted 
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to be taken, any action that required, and no circumstances exist that will require the 

funding, or increase in the funding, of any benefits or resulted, or will result, in any 

limitation on the right of the Company or any Company Subsidiary to amend, merge, 

terminate or receive a reversion of assets from any benefit plan or related trust.

Section 3.5 Anti-Takeover Provisions and Rights Plan.

The Board of Directors has taken all necessary action to ensure that the 

transactions contemplated by this Agreement and the consummation of the transactions 

contemplated hereby and thereby including the conversion of the Exchange Shares in accordance 

with the terms of the New Certificate of Designations will be exempt from any anti-takeover or 

similar provisions of the Company’s Charter and bylaws, and any other provisions of any 

applicable “moratorium”, “control share”, “fair price”, “interested stockholder” or other antitakeover laws and regulations of any jurisdiction. The Company has taken all actions necessary 

to render any stockholders’ rights plan of the Company inapplicable to this Agreement, the 

Exchange Shares and the consummation of the transactions contemplated hereby and thereby 

including the conversion of the Exchange Shares in accordance with the terms of the New 

Certificate of Designations. 

Section 3.6 No Company Material Adverse Effect.

Since September 30, 2011, no fact, circumstance, event, change, occurrence, 

condition or development has occurred that, individually or in the aggregate, has had or would 

reasonably be likely to have a Company Material Adverse Effect, except as disclosed on 

Schedule B.

Section 3.7 Offering of Securities.

Neither the Company nor any person acting on its behalf has taken any action 

(including any offering of any securities of the Company under circumstances which would 

require the integration of such offering with the offering of the Exchange Shares under the 

Securities Act and the rules and regulations of the SEC promulgated thereunder), which might 

subject the offering, issuance or sale of the Exchange Shares to the Investor pursuant to this 

Agreement to the registration requirements of the Securities Act.

Section 3.8 Brokers and Finders.

No broker, finder or investment banker is entitled to any financial advisory, 

brokerage, finder’s or other fee or commission in connection with this Agreement or the 

transactions contemplated hereby based upon arrangements made by or on behalf of the 

Company or any Company Subsidiary for which the Investor could have any liability.
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ARTICLE IV

COVENANTS

Section 4.1 Commercially Reasonable Efforts.

Subject to the terms and conditions of this Agreement, each of the parties will use 

its commercially reasonable efforts in good faith to take, or cause to be taken, all actions, and to 

do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable 

laws, so as to permit consummation of the Exchange, including transactions constituting the 

Recapitalization, as promptly as practicable and otherwise to enable consummation of the 

transactions contemplated hereby and shall use commercially reasonable efforts to cooperate 

with the other party to that end.

Section 4.2 Expenses.

If requested by the Investor, the Company shall pay all reasonable out of pocket 

and documented costs and expenses associated with the Exchange, including, but not limited to, 

the reasonable fees, disbursements and other charges of the Investor’s legal counsel and financial 

advisors.

Section 4.3 Charter Amendment.

If the Conversion Requirements have not been completed prior to the Closing 

Date:

(a) Promptly following the date of this Agreement, the Company shall prepare 

and, in no event more than 30 days after the Closing Date, file with the Commission a 

proxy statement soliciting the votes of the shareholders of the Company to approve the 

Shareholder Proposals, containing the information required by Schedule 14A in 

accordance with all applicable rules and regulations of the SEC (the “Proxy Statement”). 

The Company shall use its best efforts to cause the SEC to clear the Proxy Statement for 

mailing to stockholders. As soon as reasonably practicable after the SEC has cleared the 

Proxy Statement, the Company shall mail the Proxy Statement to the holders of its 

Common Stock. The Company shall provide the Investor with a copy of the Proxy 

Statement and all modifications thereto prior to filing or delivery to the SEC (and the 

Investor shall have a reasonable period to review and comment on such Proxy 

Statement), and the Company shall consult with the Investor in connection therewith. 

(b) Promptly following the clearance of the Proxy Statement by the SEC, the 

Company shall call and hold a meeting of its shareholders to (i) approve the Charter 

Amendment and (ii) approve the issuance of, as applicable, (x) the Underlying Common 

Shares and the Other Conversion Shares or (y) the Exchange Common Stock and the 

Common Stock to be delivered in the Other Preferred Exchange ((i) and (ii) together, the 

“Shareholder Proposals”). The Company shall use its reasonable best efforts to solicit or 

cause to be solicited from its shareholders proxies in favor of adoption of the Shareholder
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Proposals and take all other action necessary or advisable to secure the Requisite 

Shareholder Vote in respect of each Shareholder Proposal.

(c) Immediately upon the approval by the shareholders of the Company of the 

Shareholder Proposals (such date, the “Charter Amendment Approval Date”), the 

Company will file with the State of Delaware the Charter Amendment

Section 4.4 Exchange Listing.

If requested by the Investor, the Company shall, at the Company’s expense, cause 

the Exchange Common Stock Equivalents, to the extent the Exchange Common Stock 

Equivalents comply with applicable listing requirements, to be listed on the Nasdaq Global 

Select Market or other national stock exchange, subject to official notice of issuance, and shall 

maintain such listing for so long as any Common Stock is listed on such exchange. At the 

Investor’s request, the Company agrees to take such action as may be necessary to change the 

minimum denominations of the Exchange Common Stock Equivalents to $25 or such other 

amount as the Investor shall reasonably request. As soon as reasonably practicable following the 

Closing, the Company shall, at its expense, cause the Underlying Common Shares or the 

Exchange Common Stock, as applicable, to be listed on the same national securities exchange on 

which the Common Stock is listed, subject to official notice of issuance, and shall maintain such 

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

Section 4.5 Access, Information and Confidentiality.

(a) From the date hereof until the date when the Investor no longer holds any 

debt or equity securities of the Company or an Affiliate of the Company acquired 

pursuant to this Agreement, the Company will permit the Investor and its agents, 

consultants, contractors and advisors (i) acting through the Company’s Appropriate 

Federal Banking Agency, to examine the corporate books and make copies thereof and to 

discuss the affairs, finances and accounts of the Company and the subsidiaries of the 

Company (the “Company Subsidiaries”) with the principal officers of the Company, all 

upon reasonable notice and at such reasonable times and as often as the Investor may 

reasonably request and (ii) to review any information material to the Investor’s 

investment in the Company provided by the Company to its Appropriate Federal Banking 

Agency.

(b) From the date hereof until the date when the Investor no longer holds any 

debt or equity securities of the Company or an Affiliate of the Company acquired 

pursuant to this Agreement, the Company shall permit, and shall cause each of the 

Company’s Subsidiaries to permit (A) the Investor and its agents, consultants, 

contractors, (B) the Special Inspector General of the Troubled Asset Relief Program, and 

(C) the Comptroller General of the United States access to personnel and any books, 

papers, records or other data, in each case, to the extent relevant to ascertaining 

compliance with the financing terms and conditions; provided that prior to disclosing any 

information pursuant to clause (B) or (C), the Special Inspector General of the Troubled 

Asset Relief Program and the Comptroller General of the United States shall have agreed, 

with respect to documents obtained under this Agreement in furtherance of its function,
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to follow applicable law and regulation (and the applicable customary policies and 

procedures) regarding the dissemination of confidential materials, including redacting 

confidential information from the public version of its reports and soliciting the input 

from the Company as to information that should be afforded confidentiality, as 

appropriate.

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

reasonable best efforts to cause its agents, consultants, contractors, advisors, and United 

States executive branch officials and employees, to hold, in confidence all non-public 

records, books, contracts, instruments, computer data and other data and information 

(collectively, “Information”) concerning the Company furnished or made available to it 

by the Company or its representatives pursuant to this Agreement (except to the extent 

that such information can be shown to have been (i) previously known by such party on a 

non-confidential basis, (ii) in the public domain through no fault of such party or 

(iii) later lawfully acquired from other sources by the party to which it was furnished (and 

without violation of any other confidentiality obligation)); provided that nothing herein 

shall prevent the Investor from disclosing any Information to the extent required by 

applicable laws or regulations or by any subpoena or similar legal process. The Investor 

understands that the Information may contain commercially sensitive confidential 

information entitled to an exception from a Freedom of Information Act request.

(d) Nothing in this Section shall be construed to limit the authority that the 

Special Inspector General of the Troubled Asset Relief Program, the Comptroller General 

of the United States or any other applicable regulatory authority has under law.

Section 4.6 Executive Compensation.

(a) Benefit Plans. During the Relevant Period, the Company shall take all 

necessary action to ensure that the Benefit Plans of the Company and its Affiliates 

comply in all respects with, and shall take all other actions necessary to comply with,

Section 111 of the EESA, as implemented by the Compensation Regulations, and neither 

the Company nor any Affiliate shall adopt any new Benefit Plan (i) that does not comply

therewith or (ii) that does not expressly state and require that such Benefit Plan and any 

compensation thereunder shall be subject to any relevant Compensation Regulations 

adopted, issued or released on or after the date any such Benefit Plan is adopted. To the 

extent that EESA and/or the Compensation Regulations are amended or otherwise change 

during the Relevant Period in a manner that requires changes to then-existing Benefit

Plans, or that requires other actions, the Company and its Affiliates shall effect such 

changes to its or their Benefit Plans, and take such other actions, as promptly as 

practicable after it has actual knowledge of such amendments or changes in order to be in 

compliance with this Section 4.6(a) (and shall be deemed to be in compliance for a 

reasonable period to effect such changes). In addition, the Company and its Affiliates 

shall take all necessary action, other than to the extent prohibited by applicable law or 

regulation applicable outside of the United States, to ensure that the consummation of the 

transactions contemplated by this Agreement will not accelerate the vesting, payment or 

distribution of any equity-based awards, deferred cash awards or any nonqualified 

deferred compensation payable by the Company or any of its Affiliates.
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(b) Additional Waivers. After the Closing Date, in connection with the hiring 

or promotion of a Section 4.6 Employee and/or the promulgation of applicable 

Compensation Regulations or otherwise, to the extent any Section 4.6 Employee shall not 

have executed a waiver with respect to the application to such Section 4.6 Employee of 

the Compensation Regulations, the Company shall use its best efforts to (i) obtain from 

such Section 4.6 Employee a waiver in substantially the form attached hereto as Annex D

and (ii) deliver such waiver to the Investor as promptly as possible, in each case, within 

sixty days of the Closing Date or, if later, within sixty days of such Section 4.6 Employee 

becoming subject to the requirements of this Section. “Section 4.6 Employee” means 

(A) each Senior Executive Officer and (B) any other employee of the Company or its 

Affiliates determined at any time to be subject to Section 111 of EESA and the 

Compensation Regulations.

(c) Clawback. In the event that any Section 4.6 Employee receives a payment 

in contravention of the provisions of this Section 4.6, the Company shall promptly 

provide such individual with written notice that the amount of such payment must be 

repaid to the Company in full within fifteen business days following receipt of such 

notice or such earlier time as may be required by the Compensation Regulations and shall 

promptly inform the Investor (i) upon discovering that a payment in contravention of this 

Section 4.6 has been made and (ii) following the repayment to the Company of such 

amount and shall take such other actions as may be necessary to comply with the 

Compensation Regulations.

(d) Limitation on Deductions. During the Relevant Period, the Company 

agrees that it shall not claim a deduction for remuneration for federal income tax 

purposes in excess of $500,000 for each Senior Executive Officer, which would not be 

deductible if Section 162(m)(5) of the Code applied to the Company.Amendment to Prior 

Agreement. The parties agree that, effective as of the date hereof, Section 4.10 of each of 

the Securities Purchase Agreements shall be amended in its entirety by replacing such 

Section 4.10 with the provisions set forth in this Section 4.6 and any terms included in 

this Section 4.6 that are not otherwise defined in such Securities Purchase Agreement

shall have the meanings ascribed to such terms in this Agreement.

Section 4.7 Certain Notifications Until Closing.

From the date hereof until the Closing, the Company shall promptly notify the 

Investor of (i) any fact, event or circumstance of which it is aware and which would reasonably 

be likely to cause any representation or warranty of the Company contained in this Agreement to 

be untrue or inaccurate in any material respect or to cause any covenant or agreement of the 

Company contained in this Agreement not to be complied with or satisfied in any material 

respect and (ii) except as Previously Disclosed, any fact, circumstance, event, change, 

occurrence, condition or development of which the Company is aware and which, individually or 

in the aggregate, has had or would reasonably be likely to have a Company Material Adverse 

Effect; provided, however, that delivery of any notice pursuant to this Section 4.7 shall not limit

or affect any rights of or remedies available to the Investor; provided, further, that a failure to 

comply with this Section 4.7 shall not constitute a breach of this Agreement or the failure of any 

condition set forth in Section 1.1 to be satisfied unless the underlying Company Material 
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Adverse Effect or material breach would independently result in the failure of a condition set 

forth in Section 1.1 to be satisfied.

Section 4.8 Sufficiency of Authorized Common Stock.

During the period from the Charter Amendment Approval Date until the date on 

which all the Exchange Common Stock Equivalents have been converted, the Company shall at 

all times have reserved for issuance, free of preemptive or similar rights, a sufficient number of 

authorized and unissued shares of Common Stock to effectuate such conversion. Nothing in this 

Section 4.8 shall preclude the Company from satisfying its obligations in respect of the 

conversion of Exchange Common Stock Equivalents by delivery of shares of Common Stock 

which are held in the treasury of the Company. 

Section 4.9 Monthly Lending Reports.

During the Relevant Period, the Company will detail in monthly reports submitted 

to the Investor the information required by the CPP Monthly Lending Reports, as published on 

www.financialstability.gov from time to time.

Section 4.10 Status Reports.

The Company has informed the Investor that the Company intends to pursue 

certain other transactions described below (the “Other Transactions”) each with a target date for 

consummation as indicated (a “Targeted Completion Date”):

(a) The closings of the transactions constituting the Recapitalization on or 

before the Closing Date; 

(b) The filing of the New Certificate of Designations on or before the Closing 

Date (if applicable); 

(c) The approval of the Shareholder Proposals on or before 120 days after the 

Closing Date; and

(d) The filing of the Charter Amendment on or before 10 days after approval 

of the Shareholder Proposals.

The Company will use its commercially reasonable efforts to consummate each of 

the Other Transactions by its applicable Targeted Completion Date. Until all of the Other 

Transactions have been consummated (or the Company and the Investor agree that one or more 

of the Other Transactions is no longer susceptible to consummation on terms and conditions that

are in the Company’s best interest), the Company shall provide the Investor with a reasonably 

detailed written report regarding the status of each of the Other Transactions at least once every 

two weeks and more frequently if reasonably requested by the Investor; provided, however, that 

if any one or more of the Other Transactions is not consummated by the time of its Targeted 

Completion Date, the Company shall, with respect to any such non-consummated Other 

Transaction, (x) within five business days after the Targeted Completion Date for such Other 
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Transaction provide to the Investor a reasonably detailed written description of the status of such 

Other Transaction including the Company’s best estimate of the steps and timeline to complete 

such Other Transaction (the “Status Report”) and (y) thereafter, no less frequently than monthly 

and more frequently if reasonably requested by the Investor until such Other Transactions have 

been consummated, provide to the Investor an updated version of the Status Report.

Section 4.11 Agreements Relating to Other Transactions.

The Company will not, without the prior written consent of the Investor, (i) agree 

to any amendment, waiver or modification of any agreement relating to the Recapitalization or 

(ii) enter into any agreements relating to the Recapitalization.

Section 4.12 Issuance of Underlying Common Shares or Exchange Common 

Stock.

Following the effectiveness of the Charter Amendment that has been approved 

pursuant to the Stockholder Proposals, but no later than the issuance by the Company to the 

Investor of the Underlying Common Shares or the Exchange Common Stock, as applicable, the 

Company shall deliver to the Investor a customary legal opinion from counsel to the Company, 

addressed to the Investor, covering the due and valid issuance of such securities; provided that 

the failure to deliver such legal opinion shall not affect the Company’s obligation to deliver such 

securities.

Section 4.13 Remaining Certification and Disclosure Requirements. 

The Company acknowledges and agrees to continue to comply with the 

certification and disclosure requirements set forth in the Compensation Regulations, including 

without limitation those submissions that are required with respect to the final portion of the 

Relevant Period (see, for example, Sections 30.7(c) and (d), Sections 30.11(b) and (c) and 

Section 30.15(a)(3) of the Compensation Regulations and FAQ-14 in the Frequently Asked 

Questions to the Compensation Regulations, available at www.financialstability.gov). For this 

purpose, the Relevant Period will not end so long as Investor holds Common Stock.

Section 4.14 Transferability Restrictions Related to Long-Term Restricted 

Stock. 

The Company acknowledges that any long-term restricted stock (as defined in 

Section 30.1 of the Compensation Regulations) awarded by the Company that has otherwise 

vested may not become transferable, or payable in the case of a restricted stock unit, at any time 

earlier than as permitted under the schedule set forth in the definition of long-term restricted 

stock in Section 30.1 of the Compensation Regulations. For this purpose, (a) aggregate financial 

assistance received (for purposes of the definition of long-term restricted stock) continues to 

include the full original liquidation amount with respect to 15,000 Preferred Shares regardless of 

the value of the Common Stock on the date of the conversion, and (b) repayments (as defined in 

Section 30.1 of the Compensation Regulations) include the net proceeds received by Investor 

upon the sale of the Common Stock (see FAQ-15 in the Frequently Asked Questions to the 

Compensation Regulations, available at www.financialstability.gov). Following the Relevant 
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Period, in the event that any long-term restricted stock awarded by the Company will not become 

transferable, or payable in the case of a restricted stock unit, under the terms of the 

Compensation Regulations, the Company shall cancel such long-term restricted stock and/or 

restricted stock units.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.1 Unregistered Exchange Shares and Underlying Common 

Shares.

The Investor acknowledges that the Exchange Shares and any Underlying 

Common Shares, if applicable, have not been registered under the Securities Act or under any 

state securities laws. The Investor (a) is acquiring the Exchange Shares pursuant to an 

exemption from registration under the Securities Act solely for investment with no present 

intention to distribute them to any person in violation of the Securities Act or any applicable U.S. 

state securities laws, (b) will not sell or otherwise dispose of any of the Exchange Shares or the 

Underlying Common Shares except in compliance with the registration requirements or 

exemption provisions of the Securities Act and any applicable U.S. state securities laws, and 

(c) has such knowledge and experience in financial and business matters and in investments of 

this type that it is capable of evaluating the merits and risks of the Exchange and of making an 

informed investment decision.

Section 5.2 Legend.

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

the Exchange Common Stock or Underlying Common Shares, as applicable, will bear a 

legend substantially to the following effect:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT 

BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE 

SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR 

OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT 

RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE 

SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION 

UNDER SUCH ACT OR SUCH LAWS.”

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

the Exchange Common Stock Equivalents 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.
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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 REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT 

IT WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY 

THIS INSTRUMENT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE 

EFFECT OF THIS LEGEND.”

(c) In the event that any Exchange Shares or Underlying Common 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 Exchange Shares or Underlying Common Shares, which 

shall not contain the applicable legend in Section 5.2(a) above; provided that the Investor 

surrenders to the Company the previously issued certificates or other instruments.

Section 5.3 Certain Transactions.

(a) The Company will not merge or consolidate with, or sell, transfer or lease 

all or substantially all of its property or assets to, any other party unless the successor, 

transferee or lessee party (or its ultimate parent entity), as the case may be (if not the 

Company), expressly assumes the due and punctual performance and observance of each 

and every covenant, agreement and condition of this Agreement to be performed and 

observed by the Company.

(b) Without the prior written consent of the Investor, until such time as the 

Investor shall cease to own any securities of the Company acquired pursuant to this 
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Agreement (including, for the avoidance of doubt, the Exchange Shares and the 

Underlying Common Shares), the Company shall not permit any of its “significant 

subsidiaries” (as such term is defined in Rule 12b-2 promulgated under the Securities 

Exchange Act of 1934, as amended (the “Exchange Act”)) to (i) engage in any merger, 

consolidation, statutory share exchange or similar transaction following the 

consummation of which such significant subsidiary is not wholly-owned by the 

Company, (ii) dissolve or sell all or substantially all of its assets or property other than in 

connection with an internal reorganization or consolidation involving wholly-owned 

subsidiaries of the Company or (iii) issue or sell any shares of its capital stock or any 

securities convertible or exercisable for any such shares, other than issuances or sales in 

connection with an internal reorganization or consolidation involving wholly-owned 

subsidiaries of the Company.

Section 5.4 Transfer of Exchange Shares and Underlying Common Shares.

Subject to compliance with applicable securities laws, the Investor shall be 

permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the 

Exchange Shares or Underlying Common Shares, as applicable, at any time, and the Company 

shall take all steps as may be reasonably requested by the Investor to facilitate the Transfer of the 

Exchange Shares or Underlying Common Shares. The Investor shall deliver to the Company a 

written notice of its intent to effect any Transfer at least thirty (30) days in advance of such 

Transfer.

Section 5.5 Registration Rights.

(a) The Exchange Shares and the Underlying Common Shares, if applicable, 

shall be Registrable Securities under the Securities Purchase Agreements and the 

Exchange Common Stock Equivalents shall be Preferred Shares under the Securities 

Purchase Agreements and, upon their issuance, the provisions of Section 4.5 of each of 

the Securities Purchase Agreements shall be applicable to them, including with the 

benefit, to the extent available, of the tacking of any holding period from the date of 

issuance of the Preferred Shares. The Investor acknowledges that, on the date hereof, the 

Company is not eligible to file a registration statement on Form S-3 covering the 

Exchange Shares and the Company shall not be obligated to file a Shelf Registration 

Statement (as defined in Section 4.5 of each of the Securities Purchase Agreements) 

unless and until requested to do so in writing by the Investor.

(b) In connection with any underwritten offering of the Exchange Shares or 

Underlying Common Shares, if applicable, by the Investor, the Company shall cause each 

of its directors, officers and all holders of its shares who beneficially own in excess of 

four (4) percent of the then outstanding shares of the Company, to execute and deliver 

customary lock up agreements, in such form and for such time period as may be 

requested by the managing underwriter.

(c) Notwithstanding anything to the contrary set forth in the Securities 

Purchase Agreements, all Selling Expenses (as defined in Section 4.5 of each of the 
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Securities Purchase Agreements) relating to any offering of the Exchange Shares or the 

Underlying Common Shares, if applicable, shall be borne by the Company.

(d) Section 4.5(a)(vi) of each of the Securities Purchase Agreements is hereby 

amended and restated as follows:

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, and in either case, following consultation 

with the Investor, the managing underwriters advise the Company and the Investor that in 

their reasonable opinion the number of securities requested to be included in such 

offering exceeds the number which can be sold without adversely affecting the 

marketability of such offering (including any adverse effect on the per share offering 

price), the Company will include in such offering only such number of securities that in 

the reasonable opinion of such managing underwriters can be sold without adversely 

affecting the marketability of the 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 either case, the Registrable Securities of the Investor, (B) second, in the case 

of a Piggyback Registration under Section 4.5(iv), the securities the Company proposes 

to sell, (C) third, the Registrable Securities of all other Holders who have requested 

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

applicable, pro rata on the basis of the aggregate number of such securities or shares 

owned by each such person and (D) fourth, any other securities of the Company that have 

been requested to be so included, subject to the terms of this Agreement.

Section 5.6 Voting Matters.

(a) The Investor agrees that it will vote, or cause to be voted, or exercise its 

right to consent (or cause its right to consent to be exercised) with respect to, all 

Exchange Common Stock or Underlying Common Shares, as applicable, beneficially 

owned by it and its controlled Affiliates (and which are entitled to vote on such matter) 

with respect to each matter on which holders of Common Stock are entitled to vote or 

consent, other than a Designated Matter, in the same proportion (for, against or abstain) 

as all other shares of the Company's Common Stock (other than those shares held by 

holders of greater than 20% of the Company’s Common Stock) are voted or consents are 

given with respect to each such matter. The Investor agrees to attend all meetings of the 

Company's stockholders in person or by proxy for purposes of obtaining a quorum. In 

order to effectuate the foregoing agreements, to the maximum extent permitted by 

applicable law, the Investor hereby grants a proxy appointing each of the Chief Executive 

Officer and the Chief Financial Officer of the Company attorney-in-fact and proxy for it 

and its controlled Affiliates with full power of substitution, for and in the name of it and 

its controlled Affiliates, to vote, express consent or dissent, or otherwise to utilize such 

voting power in the manner and solely on the terms provided by this Section 5.6 with 

respect to the Exchange Common Stock or Underlying Common Shares, as applicable, 

and the Investor hereby revokes any and all previous proxies granted with respect to the 

Exchange Common Stock or Underlying Common Shares, as applicable, for purposes of 
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the matters contemplated in this Section 5.6; provided that such proxy may only be 

exercised if the Investor fails to comply with the terms of this Section 5.6. The proxy 

granted hereby is irrevocable prior to the termination of this Agreement, is coupled with 

an interest and is granted in consideration of the Company entering into this Agreement 

and issuing the Exchange Shares to the Investor.

(b) The Investor shall retain the right to vote in its sole discretion all 

Exchange Common Stock or Underlying Common Shares, as applicable, beneficially 

owned by it and its controlled Affiliates (and which are entitled to vote on such matter) 

on any Designated Matter. 

Section 5.7 Restriction on Dividends and Repurchases.

(a) Until the earlier of (i) November 14, 2011, or (ii) such time as the Investor 

ceases to own any debt or equity securities of the Company or an Affiliate of the 

Company acquired pursuant to this Agreement, neither the Company nor any Company 

Subsidiary shall, without the consent of the Investor:

(i) declare or pay any dividend or make any distribution on the 

Common Stock (other than (A) regular quarterly cash dividends of not more than 

the amount of the last quarterly cash dividend per share declared or, if lower, 

publicly announced an intention to declare, on the Common Stock prior to 

November 14, 2008, as adjusted for any stock split, stock dividend, reverse stock 

split, reclassification or similar transaction and (B) dividends payable solely in 

shares of Common Stock); or

(ii) redeem, purchase or acquire any shares of Common Stock or other 

capital stock or other equity securities of any kind of the Company, or any trust 

preferred securities issued by the Company or any Affiliate of the Company, other 

than (A) redemptions, purchases or other acquisitions of shares of Common Stock 

or other Junior Stock, in each case in this clause (A) 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, (B) purchases or other acquisitions 

by a broker-dealer subsidiary of the Company solely for the purpose of marketmaking, stabilization or customer facilitation transactions in trust preferred 

securities of the Company or an Affiliate of the Company, Junior Stock or Parity 

Stock in the ordinary course of its business, (C) purchases by a broker-dealer 

subsidiary of the Company of trust preferred securities or capital stock of the 

Company or an Affiliate of the Company for resale pursuant to an offering by the 

Company of such trust preferred securities or capital stock underwritten by such 

broker-dealer subsidiary, (D) any redemption or repurchase of rights pursuant to 

any stockholders’ rights plan, (E) the acquisition by the Company or any of the 

Company Subsidiaries of record ownership in Junior Stock, Parity Stock or trust 

preferred securities of the Company or an Affiliate of the Company for the 
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beneficial ownership of any other persons (other than the Company or any other 

Company Subsidiary), including as trustees or custodians, and (F) the exchange or 

conversion of Junior Stock for or into other Junior Stock or of Parity Stock or of 

trust preferred securities of the Company or an Affiliate of the Company for or 

into other Parity Stock (with the same or lesser aggregate liquidation amount) or 

Junior Stock, in each case set forth in this clause (F), solely to the extent required 

pursuant to binding contractual agreements entered into prior to the date hereof or 

any subsequent agreement for the accelerated exercise, settlement or exchange 

thereof for Common Stock. “Share Dilution Amount” means the increase in the 

number of diluted shares outstanding (determined in accordance with United 

States generally accepted accounting principles (“GAAP”), and as measured from 

the date of the Company’s most recently filed consolidated financial statements 

prior to the Closing Date) resulting from the grant, vesting or exercise of equitybased compensation to employees and equitably adjusted for any stock split, stock 

dividend, reverse stock split, reclassification or similar transaction.

(b) The parties agree that, effective as of the date hereof, Section 4.8 of each 

of the Securities Purchase Agreements shall be amended in its entirety by replacing such 

Section 4.8 with the provisions set forth in this Section 5.7 and any terms included in this 

Section 5.7 that are not otherwise defined in such Securities Purchase Agreement shall 

have the meanings ascribed to such terms in this Agreement.

Section 5.8 Repurchase of Investor Securities.

From and after the date of this Agreement, the agreements set forth in Section 4.9 

of each of the Securities Purchase Agreements shall be applicable following the Transfer by the 

Investor of all of the Exchange Shares held by the Investor to one or more third parties not 

affiliated with the Investor. For the avoidance of doubt, the Exchange Shares may not be 

repurchased by the Company pursuant to this Section 5.8 or Section 4.9 of the Securities 

Purchase Agreements.

Section 5.9 Bank Holding Company Status.

The Company shall maintain its status as a savings and loan holding company for 

as long as the Investor owns any debt or equity securities of the Company or an Affiliate of the 

Company acquired pursuant to this Agreement. 

Section 5.10 Compliance with Employ American Workers Act.

Until the Company is no longer deemed a recipient of funding under Title I of 

EESA or Section 13 of the Federal Reserve Act for purposes of the EAWA, as the same may be 

determined pursuant to any regulations or other legally binding guidance promulgated under 

EAWA, the Company shall comply, and the Company shall take all necessary action to ensure 

that its subsidiaries comply, in all respects with the provisions of the EAWA and any regulations 

or other legally binding guidance promulgated under the EAWA.
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Section 5.11 Observer to the Board of Directors.

So long as the Investor and its Affiliates beneficially own at least 5% of the issued 

and outstanding Common Stock (treating all securities beneficially owned by the Investor and its 

Affiliates that are convertible into or exchangeable or exercisable for Common Stock as 

converted, exchanged or exercised), the Investor shall be entitled to designate one individual to 

serve as an observer (the “Observer”) to the Board of Directors of the Company, which 

designation may be changed from time to time in the sole discretion of the Investor. The 

Observer shall be entitled to (i) attend all meetings of the Board of Directors of the Company and 

the board of directors of each subsidiary of the Company, including any committee meetings of 

such boards of directors, (ii) receive notices of such meetings concurrently with the members of 

the Board of Directors of the Company or such boards of directors or committees thereof and 

(iii) receive all information provided to members of the Board of Directors of the Company or 

such boards of directors or committees thereof at such meetings.

The Observer shall have no voting rights and his or her presence shall not be 

required for determining a quorum at any meeting he or she is entitled to attend pursuant to this 

Section 5.11.

ARTICLE VI

MISCELLANEOUS

Section 6.1 Termination.

This Agreement may be terminated at any time prior to the Closing:

(a) by either the Investor or the Company if the Closing shall not have 

occurred by June 30, 2012; provided, however, that in the event the Closing has not 

occurred by such date, the parties will consult in good faith to determine whether to 

extend the term of this Agreement, it being understood that the parties shall be required to 

consult only until the fifth day after such date and not be under any obligation to extend 

the term of this Agreement thereafter; provided, further, that the right to terminate this 

Agreement under this Section 6.1(a) shall not be available to any party whose breach of 

any representation or warranty or failure to perform any obligation under this Agreement 

shall have caused or resulted in the failure of the Closing to occur on or prior to such 

date;

(b) by either the Investor or the Company in the event that any Governmental 

Entity shall have issued an order, decree or ruling or taken any other action restraining, 

enjoining or otherwise prohibiting the transactions contemplated by this Agreement and 

such order, decree, ruling or other action shall have become final and nonappealable; or

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

In the event of termination of this Agreement as provided in this Section 6.1, this 

Agreement shall forthwith become void and there shall be no liability on the part of either party 
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hereto except that nothing herein shall relieve either party from liability for any breach of this 

Agreement.

Section 6.2 Survival of Representations and Warranties.

The representations and warranties of the Company made herein or in any 

certificates delivered in connection with the Closing shall survive the Closing without limitation.

Section 6.3 Amendment.

No amendment of any provision of this Agreement will be effective unless made 

in writing and signed by an officer or a duly authorized representative of each of the Company 

and the Investor; provided that the Investor may unilaterally amend any provision of this 

Agreement to the extent required to comply with any changes after the date hereof in applicable 

federal statutes. No failure or delay by any party in exercising any right, power or privilege 

hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof 

preclude any other or further exercise of any other right, power or privilege. The rights and 

remedies herein provided shall be cumulative of any rights or remedies provided by law.

Section 6.4 Waiver of Conditions.

The conditions to each party’s obligation to consummate the Exchange are for the 

sole benefit of such party and may be waived by such party in whole or in part to the extent 

permitted by applicable law. No waiver will be effective unless it is in a writing signed by a duly 

authorized officer of the waiving party that makes express reference to the provision or 

provisions subject to such waiver.

Section 6.5 Governing Law; Submission to Jurisdiction, etc.

This Agreement and any claim, controversy or dispute arising under or related to 

this Agreement, the relationship of the parties, and/or the interpretation and enforcement of the 

rights and duties of the parties shall be enforced, governed, and construed in all respects 

(whether in contract or in tort) in accordance with the federal law of the United States if and to 

the extent such law is applicable, and otherwise in accordance with the laws of the State of 

New York applicable to contracts made and to be performed entirely within such State. Each of 

the parties hereto agrees (a) to submit to the exclusive jurisdiction and venue of the United States 

District Court for the District of Columbia and the United States Court of Federal Claims for any 

and all civil actions, suits or proceedings arising out of or relating to this Agreement or the 

Exchange contemplated hereby and (b) that notice may be served upon (i) the Company at the 

address and in the manner set forth for notices to the Company in Section 6.6 and (ii) the 

Investor at the address and in the manner set forth for notices to the Investor in Section 6.6, but 

otherwise in accordance with federal law. To the extent permitted by applicable law, each of the 

parties hereto hereby unconditionally waives trial by jury in any civil legal action or proceeding 

relating to this Agreement or the Exchange contemplated hereby.
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Section 6.6 Notices.

Any notice, request, instruction or other document to be given hereunder by any 

party to the other will be in writing and will be deemed to have been duly given (a) on the date of 

delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the 

second business day following the date of dispatch if delivered by a recognized next day courier 

service. All notices hereunder shall be delivered as set forth below or pursuant to such other 

instructions as may be designated in writing by the party to receive such notice.

If to the Company:

Broadway Financial Corporation.

4800 Wilshire Boulevard

Los Angeles, CA 90010

Attention: Wayne-Kent A. Bradshaw

President & Chief Operating Officer

Telephone: (323) 556-3248

Facsimile: (323) 634-1717

With a copy to:

Mayer Brown LLP

350 South Grand Avenue

Los Angeles, California 90071

Attention: James R. Walther, Esq.

Telephone: (213) 229-9597

Facsimile: (213) 625-0248

If to the Investor:

United States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, DC 20220

Attention: Chief Counsel Office of Financial Stability

Facsimile: (202) 927-9225

Email: OFSChiefCounselNotices@do.treas.gov
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With a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention: John C. Kennedy, Esq.

David K. Lakhdhir, Esq.

Telephone: (212) 373-3000

Facsimile: (212) 757-3990

Section 6.7 Definitions.

(a) When a reference is made in this Agreement to a subsidiary of a person, 

the term “subsidiary” means any corporation, partnership, joint venture, limited liability 

company or other entity (x) of which such person or a subsidiary of such person is a 

general partner or (y) of which a majority of the voting securities or other voting 

interests, or a majority of the securities or other interests of which having by their terms 

ordinary voting power to elect a majority of the board of directors or persons performing 

similar functions with respect to such entity, is directly or indirectly owned by such 

person and/or one or more subsidiaries thereof.

(b) The term “Affiliate” means, with respect to any person, any person 

directly or indirectly controlling, controlled by or under common control with, such other 

person. For purposes of this definition, “control” (including, with correlative meanings, 

the terms “controlled by” and “under common control with”) when used with respect to 

any person, means the possession, directly or indirectly, of the power to cause the 

direction of management and/or policies of such person, whether through the ownership 

of voting securities by contract or otherwise.

(c) The term “Business Combination” means a merger, consolidation,

statutory share exchange or similar transaction that requires the approval of the 

Company’s stockholders.

(d) The term “Company Material Adverse Effect” means a material adverse 

effect on the business, results of operation or financial condition of the Company and its 

consolidated subsidiaries taken as a whole; provided, however, that Company Material 

Adverse Effect shall not be deemed to include: (i) the effects of (A) changes after the 

date hereof in general business, economic or market conditions (including changes 

generally in prevailing interest rates, credit availability and liquidity, currency exchange 

rates and price levels or trading volumes in the United States or foreign securities or 

credit markets), or any outbreak or escalation of hostilities, declared or undeclared acts of 

war or terrorism, in each case generally affecting the industries or geographic areas in 

which the Company and its subsidiaries operate, (B) changes or proposed changes after 

the date hereof in GAAP or regulatory accounting requirements, or authoritative 

interpretations thereof, (C) changes or proposed changes after the date hereof in 

securities, banking and other laws of general applicability or related policies or 

interpretations of Governmental Entities (in the case of each of these clauses (A), (B) and 
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(C), other than changes or occurrences to the extent that such changes or occurrences 

have or would reasonably be expected to have a materially disproportionate adverse 

effect on the Company and its consolidated subsidiaries taken as a whole relative to 

comparable U.S. banking or financial services organizations), (D) changes in the market 

price or trading volume of the Common Stock or any other equity, equity-related or debt 

securities of the Company or its consolidated subsidiaries (it being understood and agreed 

that the exception set forth in this clause (D) does not apply to the underlying reason 

giving rise to or contributing to any such change); (E) actions or omissions of the 

Company or any Company Subsidiary expressly required by the terms of the Exchange; 

or (ii) the ability of the Company to consummate the Exchange and the other transactions 

contemplated by this Agreement and perform its obligations hereunder on a timely basis.

(e) The term “Designated Matters” means (i) the election and removal of 

directors, (ii) the approval of any Business Combination, (iii) the approval of a sale of all 

or substantially all of the assets or property of the Company, (iv) the approval of a 

dissolution of the Company, (v) the approval of any issuance of any securities of the 

Company on which holders of Common Stock are entitled to vote, (vi) the approval of 

any amendment to the Charter or bylaws of the Company on which holders of Common 

Stock are entitled to vote and (vii) the approval of any other matters reasonably incidental 

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

(f) The term “EAWA” means the Employ American Workers Act 

(Section 1611 of Division A, Title XVI of the American Recovery and Reinvestment Act 

of 2009), Public Law No. 111-5, effective as of February 17, 2009, as may be amended 

and in effect from time to time.

(g) The term “Junior Stock” means the Common Stock and any other class or 

series of stock of the Company the terms of which expressly provide that it ranks junior 

to the Exchange Shares as to dividend rights and/or as to rights on liquidation, dissolution 

or winding up of the Company. 

(h) The term “Other Series of Preferred Stock” means the Series A 

Noncumulative Perpetual Preferred Stock, Series B Noncumulative Perpetual Preferred 

Stock, Series C Noncumulative Perpetual Convertible Preferred Stock and Series A 

Junior Participating Preferred Shares, each of the Company.

(i) The term “Parity Stock” means any class or series of stock of the 

Company the terms of which do not expressly provide that such class or series will rank 

senior or junior to the Exchange Shares as to dividend rights and/or as to rights on 

liquidation, dissolution or winding up of the Company (in each case without regard to 

whether dividends accrue cumulatively or non-cumulatively).

(j) The term “Preferred Stock” means any and all series of preferred stock of 

the Company.

(k) The term “Previously Disclosed” means information set forth or 

incorporated in the Company’s Annual Report on Form 10-K for the most recently 
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completed fiscal year of the Company filed with the SEC prior to the date hereof or in its 

other reports and forms filed with or furnished to the SEC under Section 13(a), 14(a) or 

15(d) of the Exchange Act on or after the last day of the most recently completed fiscal 

year of the Company and prior to the date hereof.

(l) The term “Regulatory Event” means, with respect to the Company, that (i) 

the Federal Deposit Insurance Corporation or any other governmental authority shall be 

appointed as conservator or receiver for the Company; (ii) the Company shall have been 

considered in “troubled condition” for the purposes of 12 U.S.C. Sec. 1831i or any 

regulation promulgated thereunder; (iii) the Company shall qualify as 

“Undercapitalized,” “Significantly Undercapitalized,” or “Critically Undercapitalized” as 

those terms are defined in 12 C.F.R. Sec. 208.43; or (iv) the Company shall have become 

subject to any formal or informal regulatory action requiring the Company to materially 

improve its capital, liquidity or safety and soundness.

(m) The term “Requisite Shareholder Vote” means, in respect of each of the 

Shareholder Proposals, that such Shareholder Proposal shall have been approved by a 

majority of the votes cast on such Shareholder Proposal at any meeting for the purpose of 

voting thereon provided that the total vote cast on such Shareholder Proposal represents 

over fifty percent (50%) in interest of all securities entitled to vote thereon.

(n) To the extent any securities issued pursuant to this Agreement or the 

transactions contemplated hereby are registered in the name of a designee of the Investor 

pursuant to Section 1.1 or 6.8 or transferred to an Affiliate of the Investor, all references 

herein to the Investor holding or owning any debt or equity securities of the Company,

Exchange Shares, Underlying Common Shares or Registrable Securities (and any like 

variations thereof) shall be deemed to refer to the Investor, together with such designees 

and/or Affiliates, holding or owning any debt or equity securities, Exchange Shares, 

Underlying Common Shares or Registrable Securities (and any like variations thereof), as 

applicable.

Section 6.8 Assignment.

Neither this Agreement nor any right, remedy, obligation nor liability arising 

hereunder or by reason hereof shall be assignable by any party hereto without the prior written 

consent of each other party, and any attempt to assign any right, remedy, obligation or liability 

hereunder without such consent shall be void, except (a) an assignment, in the case of a Business 

Combination where such party is not the surviving entity, or a sale of substantially all of its 

assets, to the entity which is the survivor of such Business Combination or the purchaser in such 

sale, (b) as provided in Sections 5.4 and 5.5 and (c) an assignment by the Investor of this 

Agreement to an Affiliate of the Investor; provided that if the Investor assigns this Agreement to 

an Affiliate, the Investor shall be relieved of its obligations under this Agreement but (i) all 

rights, remedies and obligations of the Investor hereunder shall continue and be enforceable and 

exercisable by such Affiliate, and (ii) the Company's obligations and liabilities hereunder shall 

continue to be outstanding.
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Section 6.9 Severability.

If any provision of this Agreement, or the application thereof to any person or 

circumstance, is determined by a court of competent jurisdiction to be invalid, void or 

unenforceable, the remaining provisions hereof, or the application of such provision to persons 

or circumstances other than those as to which it has been held invalid or unenforceable, will 

remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, 

so long as the economic or legal substance of the transactions contemplated hereby is not 

affected in any manner materially adverse to any party. Upon such determination, the parties 

shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute 

provision to effect the original intent of the parties.

Section 6.10 No Third-Party Beneficiaries.

Nothing contained in this Agreement, expressed or implied, is intended to confer 

upon any person or entity other than the Company and the Investor any benefit, right or 

remedies, except that (i) the provisions of Section 4.5 shall inure to the benefit of the persons 

referred to in that Section and (ii) the provisions of Section 5.5 shall inure to the benefit of the 

persons holding Exchange Shares during any tacked holding period, as contemplated by that 

Section.

Section 6.11 Entire Agreement, etc.

This Agreement (including the Annexes and Schedules hereto) constitutes the 

entire agreement, and supersedes all other prior agreements, understandings, representations and 

warranties, both written and oral, between the parties, with respect to the subject matter hereof. 

For the avoidance of doubt, the Securities Purchase Agreements shall remain in full force and 

effect, but shall be deemed amended hereby, and any provisions in this Agreement that 

supplement, duplicate or contradict any provision of the Securities Purchase Agreements shall be 

deemed to supersede the corresponding provision of the Securities Purchase Agreements from 

and after the effective date hereof.

Section 6.12 Counterparts and Facsimile.

For the convenience of the parties hereto, this Agreement may be executed in any 

number of separate counterparts, each such counterpart being deemed to be an original 

instrument, and all such counterparts will together constitute the same agreement. Executed 

signature pages to this Agreement may be delivered by facsimile and such facsimiles will be 

deemed as sufficient as if actual signature pages had been delivered.

Section 6.13 Specific Performance.

The parties agree that irreparable damage would occur in the event that any of the 

provisions of this Agreement were not performed in accordance with their specific terms. It is 

accordingly agreed that the parties shall be entitled (without the necessity of posting a bond) to 

specific performance of the terms hereof, this being in addition to any other remedies to which 

they are entitled at law or equity.
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[Remainder of Page Intentionally Left Blank]


ANNEX A

OTHER PREFERRED EXCHANGE SHARES

The terms of the Other Preferred Exchanges have not been finalized as of the date of execution 

of this Agreement, but will be determined before the Closing. Accordingly, the Company will 

provide an updated Annex A to the Investor at the Closing. Based upon current information for 

the Company’s stock price, the proposed Equity Offering, and negotiations that have occurred 

to-date with the holders of the Other Series of Preferred Stock, the Company has made the 

following estimates for the Other Preferred Exchanges:

(A) In the event that the Conversion Requirements have been met prior to the Closing:

At September 30, 2011

Aggregate Value of Assumed Estimated

# Shares Liquidation Estimated Common Stk Stock Price # Shares of 

of Preferred Preference Exchange to be issued for Equity Common 

Stock (1) Discount in the Exchange Offering Stock Issued

Series A 55,199 $ 551,990 50.0% $ 275,995 $ 1.75 157,711

Series B 100,000 1,000,000 50.0% 500,000 1.75 285,714

Series C 76,950 1,000,350 50.0% 500,175 1.75 285,814

Total Other Series of Preferred Stock $ 2,552,340 $ 1,276,170 729,240

(1) Total per amount recorded on the Company's Balance Sheet

(B) In the event that the Conversion Requirements have not been met prior to the Closing:

At September 30, 2011 Liquidation Estimated

Aggregate Value of Series F Amount # Shares of 

# Shares Liquidation Estimated Common Stock of Series F Series F Common 

of Preferred Preference Exchange Equivalents Issued Common Equivalents 

Stock (1) Discount in the Exchange Equivalents Issued

Series A 55,199 $ 551,990 50.0% $ 275,995 $ 1,000.00 276

Series B 100,000 1,000,000 50.0% 500,000 1,000.00 500

Series C 76,950 1,000,350 50.0% 500,175 1,000.00 500

Total Other Series of Preferred Stock $ 2,552,340 $ 1,276,170 1,276

(1) Total per amount recorded on the Company's Balance Sheet
ANNEX B

FORM OF NEW CERTIFICATE OF DESIGNATIONS
ANNEX C

FORM OF OPINION

Subject to customary limitations, qualifications, and exceptions to be set forth in the letter as 

delivered at Closing:

a) The Company is a corporation duly organized, validly existing and in good standing 

under the laws of the State of Delaware and has the corporate power and authority to 

own, operate and lease its properties and to carry on its business as it is currently 

conducted.

b) Broadway Federal Bank is a federal savings bank duly organized, validly existing and in 

good standing under the laws of the United States and has the full corporate power and 

authority to own, operate and lease its properties and to carry on its business as it is 

currently conducted.

c) The outstanding shares of capital stock of the Company have been duly authorized and 

are validly issued and outstanding, fully paid and nonassessable, are subject to no 

preemptive rights and were not issued in violation of any preemptive rights.

d) The Company has the corporate power and authority to execute and deliver the 

Agreement and to perform its obligations thereunder (which includes the issuance of the 

Exchange Shares and the Underlying Common Shares, if applicable).

e) The Agreement constitutes a valid and binding agreement of the Company, enforceable 

against the Company in accordance with its terms. 

f) The execution, delivery and performance by the Company of the Agreement, and the 

consummation of the transactions contemplated thereby, have been duly authorized by all 

necessary corporate action on the part of the Company, and, subject to receipt of the 

Requisite Shareholder Votes, no further approval or authorization is required in 

connection with such execution, delivery and performance, either on the part of the 

Company or its shareholders, including, without limitation, by any applicable rule or 

requirement of any national stock exchange.

g) The Exchange Shares have been duly and validly authorized, and, when issued and 

delivered pursuant to the Agreement, the Exchange Shares will be duly and validly 

issued, fully paid and nonassessable, will not be issued in violation of any preemptive 

rights, rights of first refusal or similar rights and, if the Exchange Shares are Common 

Stock Equivalents, such shares 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 of the Company, and will not subject the holder thereof to 

personal liability.
h) If applicable, the Underlying Common Shares have been duly authorized by the Board of 

Directors of the Company and after the Shareholder Proposals have been approved and 

the Charter Amendment has been filed, the Underlying Common Shares, when issued in 

accordance with the terms of the New Certificate of Designations will be validly issued, 

fully paid and nonassessable and will not be issued in violation of any preemptive rights, 

rights of first refusal or similar rights.

i) The execution, delivery and performance by the Company of the Agreement and the 

consummation of the transactions contemplated thereby, and compliance by the 

Company with the provisions thereof, will not (A) violate, conflict with, or result in a 

breach of any provision of the Company’s Articles of Incorporation or By-laws or 

(B) constitute a default (or an event which, with notice or lapse of time or both, would 

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

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

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

of the Company or any Company Subsidiary under any of the terms, conditions or 

provisions of its organizational documents or under any material agreement, contract, 

indenture, lease, mortgage, power of attorney, evidence of indebtedness, letter of credit, 

license, instrument, obligation, purchase or sales order, or other commitment, whether 

oral or written, to which it is a party or by which it or any of its properties is bound or 

(C) subject to compliance with the statute and regulations referred to in Section 3.5(b) of 

the Agreement violate any statute, rule or regulation or any judgment, ruling, order, writ, 

injunction or decree applicable to the Company or any Company Subsidiary or any of 

their respective properties or assets except, in the case of clause (C), 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.

j) Other than the filing of any current report on Form 8-K required to be filed with the SEC, 

such filings and approvals as are required to be made or obtained under any state “blue 

sky” laws and such consents and approvals that have been made or obtained, no notice to, 

filing with, exemption or review by, or authorization, consent or approval of, any 

Governmental Entity is required to be made or obtained by the Company in connection 

with the consummation by the Company of the Exchange.

k) The Company is not and, after giving effect to the issuance of the Exchange Shares 

pursuant to the Agreement, the issuance of the Underlying Common Shares, if applicable, 

the issuance of Other Conversion Shares, if applicable and the issuance of Common 

Stock Equivalents issued in the Recapitalization, if applicable, as contemplated by this 

Agreement, would not be on the date hereof an “investment company” or an entity 

“controlled” by an “investment company,” as such terms are defined in the Investment 

Company Act of 1940, as amended.
ANNEX D

FORM OF WAIVER

In consideration for the benefits I will receive as a result of the participation of BROADWAY 

FINANCIAL CORPORATION (together with its subsidiaries and affiliates, the “Company”), 

which is either my employer or the sole shareholder of my employer, in the United States 

Department of the Treasury’s (the “Treasury”) Capital Purchase Program and/or any other 

economic stabilization program implemented by the Treasury under the Emergency Economic 

Stabilization Act of 2008 (as amended, supplemented, or otherwise modified, the “EESA”) (any 

such program, including the Capital Purchase Program, a “Program”), I hereby voluntarily waive 

any claim against the United States (and each of its departments and agencies) or the Company 

or my employer, or any of their respective directors, officers, employees and agents for any 

changes to my compensation or benefits that are required to comply with the executive 

compensation and corporate governance requirements of Section 111 of the EESA, as 

implemented by any guidance or regulations issued and/or to be issued thereunder, including 

without limitation the provisions for the Capital Purchase Program, as implemented by any 

guidance or regulation thereunder, including the rules set forth in 31 C.F.R. Part 30, or any other 

guidance or regulations under the EESA and the applicable requirements of the Exchange 

Agreement by and among the Company and the Treasury dated as of February 10, 2012 (such 

requirements, the “Limitations”).

I acknowledge that the Limitations may require modification or termination of the employment, 

compensation, bonus, incentive, severance, retention and other benefit plans, arrangements, 

policies and agreements (including so-called “golden parachute” agreements), whether or not in 

writing, that I may have with the Company or my employer or in which I may participate as they 

relate to the period the United States holds any equity or debt securities of the Company acquired 

through a Program or for any other period applicable under such Program or Limitations, as the 

case may be, and I hereby consent to all such modifications. 

This waiver includes all claims I may have under the laws of the United States or any other 

jurisdiction (whether or not in existence as of the date hereof) related to the requirements 

imposed by the Limitations, including without limitation a claim for any compensation or other 

payments or benefits I would otherwise receive, any challenge to the process by which the 

Limitations are or were adopted and any tort or constitutional claim about the effect of these 

Limitations on my employment relationship and I hereby agree that I will not at any time initiate, 

or cause or permit to be initiated on my behalf, any such claim against the United States, the 

Company, my employer or their respective directors, officers, employees or agents in or before 

any local, state, federal or other agency, court or body. 

I agree that, in the event and to the extent that the Compensation Committee of the Board of 

Directors of the Company or similar governing body (the “Committee”) reasonably determines 

that any compensatory payment and benefit provided to me, including any bonus or incentive 

compensation based on materially inaccurate financial statements or performance criteria, would 

cause the Company to fail to be in compliance with the Limitations (such payment or benefit, an 

“Excess Payment”), upon notification from the Company, I shall repay such Excess Payment to 
the Company within 15 business days. In addition, I agree that the Company shall have the right

to postpone any such payment or benefit for a reasonable period of time to enable the Committee 

to determine whether such payment or benefit would constitute an Excess Payment.

I understand that any determination by the Committee as to whether or not, including the manner 

in which, a payment or benefit needs to be modified, terminated or repaid in order for the 

Company to be in compliance with Section 111 of the EESA and/or the Limitations shall be a 

final and conclusive determination of the Committee which shall be binding upon me. I further 

understand that the Company is relying on this letter from me in connection with its participation 

in a Program.

IN WITNESS WHEREOF, I execute this waiver on my own behalf, thereby communicating my 

acceptance and acknowledgement to the provisions herein.

Respectfully, 

____________________________

Name:

Title:

Date:
SCHEDULE A

Capitalization

Authorized Capital Stock of the Company (as of December 31, 2011)

Common Stock: 8,000,000 shares, $.01 par value

Preferred Stock: 1,000,000, $.01 par value

Outstanding Capital Stock of the Company (as of December 31, 2011)

Common Stock: 1,744,565 shares

Preferred Stock: 

55,199 shares of Series A non-cumulative, non-voting Preferred Stock

100,000 shares of Series B non-cumulative, non-voting Preferred Stock

76,950 shares of Series C non-cumulative, non-voting Preferred Stock

15,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock: 

9,000 shares of Series D

6,000 shares of Series E

As of December 31, 2011, 439,190 shares of common stock have been reserved for issuance 

under the following equity based benefit plans:

2008 Long-Term Incentive Plan
SCHEDULE B