Exhibit 10.6






Exhibit 10.6




United States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220




Dear Ladies and Gentlemen:



The company set forth on the signature page hereto (the “Company”) intends to issue in a
private placement the number of shares of a series of its preferred stock set forth on Schedule A
hereto (the “Preferred Shares”) and a warrant to purchase the number of shares of a series of its
preferred stock set forth on Schedule A hereto (the “Warrant” and, together with the Preferred
Shares, the “Purchased Securities”) and the United States Department of the Treasury (the
“Investor”) intends to purchase from the Company the Purchased Securities.



The purpose of this letter agreement is to confirm the terms and conditions of the purchase by
the Investor of the Purchased Securities. Except to the extent supplemented or superseded by the
terms set forth herein or in the Schedules hereto, the provisions contained in the Securities
Purchase Agreement — Standard Terms attached hereto as Exhibit A (the “Securities Purchase
Agreement”) are incorporated by reference herein. Terms that are defined in the Securities
Purchase Agreement are used in this letter agreement as so defined. In the event of any
inconsistency between this letter agreement and the Securities Purchase Agreement, the terms of
this letter agreement shall govern.



Each of the Company and the Investor hereby confirms its agreement with the other party with
respect to the issuance by the Company of the Purchased Securities and the purchase by the Investor
of the Purchased Securities pursuant to this letter agreement and the Securities Purchase Agreement
on the terms specified on Schedule A hereto.



This letter agreement (including the Schedules hereto), the Securities Purchase Agreement
(including the Annexes thereto), the Disclosure Schedules and the Warrant constitute the entire
agreement, and supersede all other prior agreements, understandings, representations and
warranties, both written and oral, between the parties, with respect to the subject matter hereof.
This letter agreement constitutes the “Letter Agreement” referred to in the Securities Purchase
Agreement.



This letter agreement may be executed in any number 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 letter agreement may be delivered
by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been
delivered.



* * *



 


 









 





In witness whereof, this letter agreement has been duly executed and delivered by the duly
authorized representatives of the parties hereto as of the date written below.



	 	 	 	 	 
	 	UNITED STATES DEPARTMENT OF THE TREASURY

 	 
	 	By:  	/s/ Neil Kashkari
 	 
	 	 	Name:  	Neil Kashkari 	 
	 	 	Title:  	Interim Assistant Secretary

For Financial Stability 	 
	 
	 	COMPANY: FIRST PRIORITY FINANCIAL CORP.

 	 
	 	By:  	/s/ David E. Sparks
 	 
	 	 	Name:  	David E. Sparks 	 
	 	 	Title:  	Chief Executive Officer 	 



Date: February 20, 2009



[Signature
Page to Letter Agreement]


 


 









 







EXHIBIT A


(Non-Exchange-Traded QFIs, excluding S Corps

and Mutual Organizations)




 





SECURITIES PURCHASE AGREEMENT




STANDARD TERMS




 





 


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TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Article I

	 
	 	 	 	 
	Purchase; Closing

	 
	 	 	 	 
	1.1 Purchase
	 	 	1	 
	1.2 Closing
	 	 	2	 
	1.3 Interpretation
	 	 	4	 
	 
	 	 	 	 
	Article II

	 
	 	 	 	 
	Representations and Warranties

	 
	 	 	 	 
	2.1 Disclosure
	 	 	4	 
	2.2 Representations and Warranties of the Company
	 	 	5	 
	 
	 	 	 	 
	Article III

	 
	 	 	 	 
	Covenants

	 
	 	 	 	 
	3.1 Commercially Reasonable Efforts
	 	 	13	 
	3.2 Expenses
	 	 	13	 
	3.3 Sufficiency of Authorized Warrant Preferred Stock; Exchange Listing
	 	 	13	 
	3.4 Certain Notifications Until Closing
	 	 	14	 
	3.5 Access, Information and Confidentiality
	 	 	14	 
	 
	 	 	 	 
	Article IV

	 
	 	 	 	 
	Additional Agreements

	 
	 	 	 	 
	4.1 Purchase for Investment
	 	 	15	 
	4.2 Legends
	 	 	16	 
	4.3 Certain Transactions
	 	 	17	 
	4.4 Transfer of Purchased Securities and Warrant Shares; Restrictions on Exercise
of the Warrant
	 	 	17	 
	4.5 Registration Rights
	 	 	18	 
	4.6 Depositary Shares
	 	 	29	 
	4.7 Restriction on Dividends and Repurchases
	 	 	30	 
	4.8 Executive Compensation
	 	 	32	 
	4.9 Related Party Transactions
	 	 	32	 
	4.10 Bank and Thrift Holding Company Status
	 	 	32	 
	4.11 Predominantly Financial
	 	 	32	 






 


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	 	 	Page	 
	 
	 	 	 	 
	Article V

	 
	 	 	 	 
	Miscellaneous

	 
	 	 	 	 
	5.1 Termination
	 	 	33	 
	5.2 Survival of Representations and Warranties
	 	 	33	 
	5.3 Amendment
	 	 	33	 
	5.4 Waiver of Conditions
	 	 	33	 
	5.5
Governing Law: Submission to Jurisdiction, Etc.
	 	 	34	 
	5.6 Notices
	 	 	34	 
	5.7 Definitions
	 	 	34	 
	5.8 Assignment
	 	 	35	 
	5.9 Severability
	 	 	35	 
	5.10 No Third Party Beneficiaries
	 	 	35	 






 


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LIST OF ANNEXES




	 	 	 	 	 
	ANNEX A:

	 	FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK
	 	 
	 
	 	 	 	 
	ANNEX B:

	 	FORM OF CERTIFICATE OF DESIGNATIONS FOR WARRANT PREFERRED STOCK	 	 
	 
	 	 	 	 
	ANNEX C:

	 	FORM OF WAIVER	 	 
	 
	 	 	 	 
	ANNEX D:

	 	FORM OF OPINION	 	 
	 
	 	 	 	 
	ANNEX E:

	 	FORM OF WARRANT	 	 






 


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INDEX OF DEFINED TERMS




	 	 	 
	 	 	Location of
	Term	 	Definition
	Affiliate
	 	5.7(b)
	Agreement
	 	Recitals
	Appropriate Federal Banking Agency
	 	2.2(s)
	Bank Holding Company
	 	4.10
	Bankruptcy Exceptions
	 	2.2(d)
	Benefit Plans
	 	1.2(d)(iv)
	Board of Directors
	 	2.2(f)
	Business Combination
	 	5.8
	business day
	 	1.3
	Capitalization Date
	 	2.2(b)
	Certificates of Designations
	 	1.2(d)(iii)
	Charter
	 	1.2(d)(iii)
	Closing
	 	1.2(a)
	Closing Date
	 	1.2(a)
	Code
	 	2.2(n)
	Common Stock
	 	2.2(b)
	Company
	 	Recitals
	Company Financial Statements
	 	2.2(h)
	Company Material Adverse Effect
	 	2.1(b)
	Company Reports
	 	2.2(i)(i)
	Company Subsidiary; Company Subsidiaries
	 	2.2(e)(ii)
	control; controlled by; under common control with
	 	5.7(b)
	Controlled Group
	 	2.2(n)
	CPP
	 	Recitals
	Disclosure Schedule
	 	2.1(a)
	EESA
	 	1.2(d)(iv)
	ERISA
	 	2.2(n)
	Exchange Act
	 	4.4
	Federal Reserve
	 	4.10
	GAAP
	 	2.1(b)
	Governmental Entities
	 	1.2(c)
	Holder
	 	4.5(l)(i)
	Holders’ Counsel
	 	4.5(l)(ii)
	Indemnitee
	 	4.5(h)(i)
	Information
	 	3.5(c)
	Investor
	 	Recitals
	Junior Stock
	 	4.7(f)
	knowledge of the Company; Company’s knowledge
	 	5.7(c)
	Letter Agreement
	 	Recitals
	officers
	 	5.7(c)
	Parity Stock
	 	4.7(f)






 


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	 	 	Location of
	Term	 	Definition
	Pending Underwritten Offering
	 	4.5(m)
	Permitted Repurchases
	 	4.7(c)
	Piggyback Registration
	 	4.5(b)(iv)
	Plan
	 	2.2(n)
	Preferred Shares
	 	Recitals
	Preferred Stock
	 	Recitals
	Previously Disclosed
	 	2.1(c)
	Proprietary Rights
	 	2.2(u)
	Purchase
	 	Recitals
	Purchase Price
	 	1.1
	Purchased Securities
	 	Recitals
	register; registered; registration
	 	4.5(l)(iii)
	Registrable Securities
	 	4.5(l)(iv)
	Registration Expenses
	 	4.5(l)(v)
	Regulatory Agreement
	 	2.2(s)
	Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415
	 	4.5(l)(vi)
	Savings and Loan Holding Company
	 	4.10
	Schedules
	 	Recitals
	SEC
	 	2.2(k)
	Securities Act
	 	2.2(a)
	Selling Expenses
	 	4.5(l)(vii)
	Senior Executive Officers
	 	4.8
	Shelf Registration Statement
	 	4.5(b)(ii)
	Signing Date
	 	2.1(b)
	Special Registration
	 	4.5(j)
	subsidiary
	 	5.7(a)
	Tax; Taxes
	 	2.2(o)
	Transfer
	 	4.4
	Warrant
	 	Recitals
	Warrant Preferred Stock
	 	Recitals
	Warrant Shares
	 	2.2(d)





 


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SECURITIES PURCHASE AGREEMENT — STANDARD TERMS




Recitals:




WHEREAS, the United States Department of the Treasury (the “Investor”) may from time to
time agree to purchase shares of preferred stock and warrants from eligible financial
institutions which elect to participate in the Troubled Asset Relief Program Capital Purchase
Program (“CPP”);



WHEREAS, an eligible financial institution electing to participate in the CPP and issue
securities to the Investor (referred to herein as the “Company”) shall enter into a letter
agreement (the “Letter Agreement”) with the Investor which incorporates this Securities Purchase
Agreement — Standard Terms;



WHEREAS, the Company agrees to expand the flow of credit to U.S. consumers and
businesses on competitive terms to promote the sustained growth and vitality of the U.S.
economy;



WHEREAS, the Company agrees to work diligently, under existing programs, to modify the terms
of residential mortgages as appropriate to strengthen the health of the U.S. housing market;



WHEREAS, the Company intends to issue in a private placement the number of shares of the
series of its Preferred Stock (“Preferred Stock”) set forth on Schedule A to the Letter
Agreement (the “Preferred Shares”) and a warrant to purchase the number of shares of the series of
its Preferred Stock (“Warrant Preferred Stock”) set forth on Schedule A to the Letter
Agreement (the “Warrant” and, together with the Preferred Shares, the “Purchased Securities”) and
the Investor intends to purchase (the “Purchase”) from the Company the Purchased Securities; and



WHEREAS, the Purchase will be governed by this Securities Purchase Agreement — Standard
Terms and the Letter Agreement, including the schedules thereto (the “Schedules”), specifying
additional terms of the Purchase. This Securities Purchase Agreement — Standard Terms
(including the Annexes hereto) and the Letter Agreement (including the Schedules thereto) are
together referred to as this “Agreement”. All references in this Securities Purchase Agreement
— Standard Terms to “Schedules” are to the Schedules attached to the Letter Agreement.



NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the parties agree as follows:



Article I

Purchase; Closing





1.1 Purchase. On the terms and subject to the conditions set forth in this
Agreement, the Company agrees to sell to the Investor, and the Investor agrees to purchase from the Company,
at the Closing (as hereinafter defined), the Purchased Securities for the price set forth on
Schedule A (the “Purchase Price”).


 


 









 






1.2 Closing.



(a) On the terms and subject to the conditions set forth in this Agreement, the closing of the
Purchase (the “Closing”) will take place at the location specified in Schedule A, at the
time and on the date set forth in Schedule A or as soon as practicable thereafter, or at
such other place, time and date as shall be agreed between the Company and the Investor. The time
and date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.



(b) Subject to the fulfillment or waiver of the conditions to the Closing in this Section 1.2,
at the Closing the Company will deliver the Preferred Shares and the Warrant, in each case as
evidenced by one or more certificates dated the Closing Date and bearing appropriate legends as
hereinafter provided for, in exchange for payment in full of the Purchase Price by wire transfer of
immediately available United States funds to a bank account designated by the Company on
Schedule A.



(c) The respective obligations of each of the Investor and the Company to consummate the
Purchase are subject to the fulfillment (or waiver by the Investor and the Company, as applicable)
prior to the Closing 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 Purchase shall have been obtained or made in form
and substance reasonably satisfactory to each party and shall be in full force and effect and all
waiting periods required by United States and other applicable law, if any, shall have expired and
(ii) no provision of any applicable United States or other law and no judgment, injunction, order
or decree of any Governmental Entity shall prohibit the purchase and sale of the Purchased
Securities as contemplated by this Agreement.



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




(i) (A) the representations and warranties of the Company set forth in (x)
Section 2.2(g) of this Agreement shall be true and correct in all respects as though made
on and as of the Closing Date, (y) Sections 2.2(a) through (f) shall be true and correct
in all material 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 material respects as of
such other date) and (z) Sections 2.2(h) through (v) (disregarding all qualifications or
limitations set forth in such representations and warranties as to “materiality”, “Company
Material Adverse Effect” and words of similar import) shall be true and correct 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 as of such other date), except to the extent that the failure of such
representations and warranties referred to in this Section 1.2(d)(i)(A)(z) to be so true
and correct, individually or in the aggregate, does not have and would not reasonably be
expected to have a Company Material Adverse Effect and (B) the Company shall have
performed in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing;


 


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




(iii) the Company shall have duly adopted and filed with the Secretary of State of
its jurisdiction of organization or other applicable Governmental Entity the amendments to
its certificate or articles of incorporation, articles of association, or similar
organizational document (“Charter”) in substantially the forms attached hereto as
Annex A and Annex B (the “Certificates of Designations”) and such
filing shall have been accepted;




(iv) (A) the Company shall have effected such changes to its compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”) with
respect to its Senior Executive Officers (and to the extent necessary for such changes to
be legally enforceable, each of its Senior Executive Officers shall have duly consented
in writing to such changes), as may be necessary, during the period that the Investor
owns any debt or equity securities of the Company acquired pursuant to this Agreement or
the Warrant, in order to comply with Section 111(b) of the Emergency Economic
Stabilization Act of 2008 (“EESA”) as implemented by guidance or regulation thereunder
that has been issued and is in effect as of the Closing Date, and (B) the Investor shall
have received a certificate signed on behalf of the Company by a senior executive officer
certifying to the effect that the condition set forth in Section 1.2(d)(iv)(A) has been
satisfied;




(v) each of the Company’s Senior Executive Officers shall have delivered to the
Investor a written waiver in the form attached hereto as Annex C releasing the
Investor from any claims that such Senior Executive Officers may otherwise have as a
result of the issuance, on or prior to the Closing Date, of any regulations which require
the modification of, and the agreement of the Company hereunder to modify, the terms of
any Benefit Plans with respect to its Senior Executive Officers to eliminate any
provisions of such Benefit Plans that would not be in compliance with the requirements of
Section 111(b) of the EESA as implemented by guidance or regulation thereunder that has
been issued and is in effect as of the Closing Date;




(vi) the Company shall have delivered to the Investor a written opinion from
counsel to the Company (which may be internal counsel), addressed to the Investor and
dated as of the Closing Date, in substantially the form attached hereto as Annex
D;




(vii) the Company shall have delivered certificates in proper form or, with the
prior consent of the Investor, evidence of shares in book-entry form, evidencing the
Preferred Shares to Investor or its designee(s); and




(viii) the Company shall have duly executed the Warrant in substantially the form
attached hereto as Annex E and delivered such executed Warrant to the Investor
or its designee(s).


 


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



Article II

Representations and Warranties





2.1 Disclosure.



(a) On or prior to the Signing Date, the Company delivered to the Investor a schedule
(“Disclosure Schedule”) setting forth, among other things, items the disclosure of which is
necessary or appropriate either in response to an express disclosure requirement contained in a
provision hereof or as an exception to one or more representations or warranties contained in
Section 2.2.



(b) “Company Material Adverse Effect” means a material adverse effect on (i) the business,
results of operation or financial condition of the Company and its consolidated subsidiaries taken
as a whole; provided, however, that Company Material Adverse Effect shall not be deemed to include
the effects of (A) changes after the date of the Letter Agreement (the “Signing Date”) in general
business, economic or market conditions (including changes generally in prevailing interest rates,
credit availability and liquidity, currency exchange rates and price levels or trading volumes in
the United States or foreign securities or credit markets), or any outbreak or escalation of
hostilities, declared or undeclared acts of war or terrorism, in
each case generally affecting the industries in which the Company and its subsidiaries
operate, (B) changes or proposed changes after the Signing Date in generally accepted accounting
principles in the United States (“GAAP”) or regulatory accounting requirements, or authoritative
interpretations thereof, or (C) changes or proposed changes after the Signing Date in securities,
banking and other laws of general applicability or related policies or interpretations of
Governmental Entities (in the case of each of these clauses (A), (B) and (C), other than changes or
occurrences to the extent that such changes or occurrences have or would reasonably be expected to
have a materially disproportionate adverse effect on the Company and its consolidated subsidiaries
taken as a whole relative to comparable U.S. banking or financial services organizations); or (ii)
the ability of the Company to consummate the Purchase and other transactions contemplated by this
Agreement and the Warrant and perform its obligations hereunder or thereunder on a timely basis.


 


-4-









 






(c) “Previously Disclosed” means information set forth on the Disclosure Schedule,
provided, however, that disclosure in any section of such Disclosure Schedule shall apply only to
the indicated section of this Agreement except to the extent that it is reasonably apparent from
the face of such disclosure that such disclosure is relevant to another section of this
Agreement.



2.2 Representations and Warranties of the Company. Except as Previously Disclosed, the
Company represents and warrants to the Investor that as of the Signing Date and as of the Closing
Date (or such other date specified herein):




(a) Organization, Authority and Significant Subsidiaries. The Company has been
duly incorporated and is validly existing and in good standing under the laws of its jurisdiction
of organization, with the necessary power and authority to own its properties and conduct its
business in all material respects as currently conducted, and except as has not, individually or
in the aggregate, had and would not reasonably be expected to have a Company Material Adverse
Effect, has been duly qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification; each subsidiary of the Company that
would be considered a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation
S-X under the Securities Act of 1933 (the “Securities Act”), has been duly organized and is
validly existing in good standing under the laws of its jurisdiction of organization. The Charter
and bylaws of the Company, copies of which have been provided to the Investor prior to the Signing
Date, are true, complete and correct copies of such documents as in full force and effect as of
the Signing Date.




(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 Signing Date
(the “Capitalization Date”) is set forth on Schedule B. 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 Signing Date, the Company does not have outstanding any securities
or other obligations providing the holder the right to
acquire its Common Stock (“Common Stock”) that is not reserved for issuance as specified on
Schedule B, and the Company has not made any other commitment to authorize, issue or sell any
Common Stock. Since the Capitalization Date, the Company has not issued any shares of Common
Stock, other than (i) shares issued upon the exercise 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 B and (ii) shares disclosed on
Schedule B. Each holder of 5% or more of any class of capital stock of the Company and such
holder’s primary address are set forth on Schedule B.


 


-5-









 






(c) Preferred Shares. The Preferred Shares have been duly and validly authorized,
and, when issued and delivered pursuant to this Agreement, such Preferred Shares will be duly
and validly issued and fully paid and non-assessable, will not be issued in violation of any
preemptive rights, and will rank pari passu with or senior to all other series or classes of
Preferred Stock, whether or not issued or outstanding, with respect to the payment of dividends
and the distribution of assets in the event of any dissolution, liquidation or winding up of
the Company.




(d) The Warrant and Warrant Shares. The Warrant has been duly authorized and,
when executed and delivered as contemplated hereby, will constitute a valid and legally binding
obligation of the Company enforceable against the Company in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and general equitable
principles, regardless of whether such enforceability is considered in a proceeding at law or in
equity (“Bankruptcy Exceptions”). The shares of Warrant Preferred Stock issuable upon exercise of
the Warrant (the “Warrant Shares”) have been duly authorized and reserved for issuance upon
exercise of the Warrant and when so issued in accordance with the terms of the Warrant will be
validly issued, fully paid and non-assessable, and will rank pari passu with or senior to all
other series or classes of Preferred Stock, whether or not issued or outstanding, with respect to
the payment of dividends and the distribution of assets in the event of any dissolution,
liquidation or winding up of the Company.




(e) Authorization, Enforceability.




(i) The Company has the corporate power and authority to execute and
deliver this Agreement and the Warrant and to carry out its obligations hereunder and
thereunder (which includes the issuance of the Preferred Shares, Warrant and Warrant
Shares). The execution, delivery and performance by the Company of this Agreement and the
Warrant and the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Company and its
stockholders, and no further approval or authorization is required on the part of the
Company. 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.


 


-6-









 






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




(iii) Other than the filing of the Certificates of Designations with the Secretary of
State of its jurisdiction of organization or other applicable Governmental Entity, such
filings and approvals as are required to be made or obtained under any state “blue sky”
laws and such as have been made or obtained, no notice to, filing with, exemption or review
by, or authorization, consent or approval of, any Governmental Entity is required to be
made or obtained by the Company in connection with the consummation by the Company of the
Purchase except for any such notices, filings, exemptions, reviews, authorizations,
consents and approvals the failure of which to make or obtain would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.




(f) Anti-takeover Provisions and Rights Plan. The Board of Directors of the
Company (the “Board of Directors”) has taken all necessary action to ensure that the transactions
contemplated by this Agreement and the Warrant and the consummation of the transactions
contemplated hereby and thereby, including the exercise of the Warrant in accordance with its
terms, will be exempt from any anti-takeover or similar provisions of the Company’s Charter and
bylaws, and any other provisions of any applicable “moratorium”, “control share”, “fair price”,
“interested stockholder” or other anti-takeover laws and regulations of any jurisdiction.



(g) No Company Material Adverse Effect. Since the last day of the last completed
fiscal period for which financial statements are included in the Company Financial Statements (as
defined below), no fact, circumstance, event, change, occurrence, condition or development
has occurred that, individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect.


 


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(h) Company Financial Statements. The Company has Previously Disclosed each of the
consolidated financial statements of the Company and its consolidated subsidiaries for each of the
last three completed fiscal years of the Company (which shall be audited to the extent audited
financial statements are available prior to the Signing Date) and each completed quarterly period
since the last completed fiscal year (collectively the “Company Financial Statements”). The Company
Financial Statements present fairly in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates indicated therein and the
consolidated results of their operations for the periods specified therein; and except as stated
therein, such financial statements (A) were prepared in conformity with GAAP applied on a
consistent basis (except as may be noted therein) and (B) have been prepared from, and are in
accordance with, the books and records of the Company and the Company Subsidiaries.




(i) Reports.




(i) Since December 31, 2006, the Company and each Company Subsidiary has filed all
reports, registrations, documents, filings, statements and submissions, together with any
amendments thereto, that it was required to file with any Governmental Entity (the
foregoing, collectively, the “Company Reports”) and has paid all fees and assessments due
and payable in connection therewith, except, in each case, as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect. As of
their respective dates of filing, the Company Reports complied in all material respects
with all statutes and applicable rules and regulations of the applicable Governmental
Entities.




(ii) The records, systems, controls, data and information of the Company and the
Company Subsidiaries are recorded, stored, maintained and operated under means (including
any electronic, mechanical or photographic process, whether computerized or not) that are
under the exclusive ownership and direct control of the Company or the Company Subsidiaries
or their accountants (including all means of access thereto and therefrom), except for any
non-exclusive ownership and non-direct control that would not reasonably be expected to
have a material adverse effect on the system of internal accounting controls described
below in this Section 2.2(i)(ii). The Company (A) has implemented and maintains adequate
disclosure controls and procedures to ensure that material information relating to the
Company, including the consolidated Company Subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others within those
entities, and (B) has disclosed, based on its most recent evaluation prior to the Signing
Date, to the Company’s outside auditors and the audit committee of the Board of Directors
(x) any significant deficiencies and material weaknesses in the design or operation of
internal controls that are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information and (y) any fraud, whether or
not material, that involves management or
other employees who have a significant role in the Company’s internal controls over
financial reporting.


 


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(j) No Undisclosed Liabilities. Neither the Company nor any of the Company
Subsidiaries has any liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) which are not properly reflected or reserved against in the Company Financial Statements
to the extent required to be so reflected or reserved against in accordance with GAAP, except for
(A) liabilities that have arisen since the last fiscal year end in the ordinary and usual course of
business and consistent with past practice and (B) liabilities that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company Material Adverse
Effect.



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



(l) Litigation and Other Proceedings. Except (i) as set forth on Schedule C or (ii) as
would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, there is no (A) pending or, to the knowledge of the Company, threatened, claim,
action, suit, investigation or proceeding, against the Company or any Company Subsidiary or to
which any of their assets are subject nor is the Company or any Company Subsidiary subject to any
order, judgment or decree or (B) unresolved violation, criticism or exception by any Governmental
Entity with respect to any report or relating to any examinations or inspections of the Company or
any Company Subsidiaries.



(m) Compliance with Laws. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, the Company and the Company
Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals of, and
have made all filings, applications and registrations with, Governmental Entities that are required
in order to permit them to own or lease their properties and assets and to carry on their business
as presently conducted and that are material to the business of the Company or such Company
Subsidiary. Except as set forth on Schedule D, the Company and the Company Subsidiaries
have complied in all respects and are not in default or violation of, and none of them is, to the
knowledge of the Company, under investigation with respect to or, to the knowledge of the Company,
have been threatened to be charged with or given notice of any violation of, any applicable
domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation,
policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental
Entity, other than such noncompliance, defaults or violations that would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect. Except for
statutory or regulatory restrictions of general application or as set forth on Schedule D,
no Governmental Entity has placed any restriction on the business or properties of
the Company or any Company Subsidiary that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.


 


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(n) Employee Benefit Matters. Except as would not reasonably be expected to have,
either individually or in the aggregate, a Company Material Adverse Effect: (A) each “employee
benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”)) providing benefits to any current or former employee, officer or
director of the Company or any member of its “Controlled Group” (defined as any organization which
is a member of a controlled group of corporations within the meaning of Section 414 of the Internal
Revenue Code of 1986, as amended (the “Code”)) that is sponsored, maintained or contributed to by
the Company or any member of its Controlled Group and for which the Company or any member of its
Controlled Group would have any liability, whether actual or contingent (each, a “Plan”) has been
maintained in compliance with its terms and with the requirements of all applicable statutes, rules
and regulations, including ERISA and the Code; (B) with respect to each Plan subject to Title IV of
ERISA (including, for purposes of this clause (B), any plan subject to Title IV of ERISA that the
Company or any member of its Controlled Group previously maintained or contributed to in the six
years prior to the Signing Date), (1) no “reportable event” (within the meaning of Section 4043(c)
of ERISA), other than a reportable event for which the notice period referred to in Section 4043(c)
of ERISA has been waived, has occurred in the three years prior to the Signing Date or is
reasonably expected to occur, (2) no “accumulated funding deficiency” (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived, has occurred in the three
years prior to the Signing Date or is reasonably expected to occur, (3) the fair market value of
the assets under each Plan exceeds the present value of all benefits accrued under such Plan
(determined based on the assumptions used to fund such Plan) and (4) neither the Company nor any
member of its Controlled Group has incurred in the six years prior to the Signing Date, or
reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the
Plan or premiums to the PBGC in the ordinary course and without default) in respect of a Plan
(including any Plan that is a “multiemployer plan”, within the meaning of Section 4001(c)(3) of
ERISA); and (C) each Plan that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service with respect to its
qualified status that has not been revoked, or such a determination letter has been timely applied
for but not received by the Signing Date, and nothing has occurred, whether by action or by failure
to act, which could reasonably be expected to cause the loss, revocation or denial of such
qualified status or favorable determination letter.



(o) Taxes. Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries
have filed all federal, state, local and foreign income and franchise Tax returns required to be
filed through the Signing Date, subject to permitted extensions, and have paid all Taxes due
thereon, and (ii) no Tax deficiency has been determined adversely to the Company or any of the
Company Subsidiaries, nor does the Company have any knowledge of any Tax deficiencies. “Tax” or
“Taxes” means any federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or add on minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity.


 


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(p) Properties and Leases. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, the Company and the Company
Subsidiaries have good and marketable title to all real properties and all other properties and
assets owned by them, in each case free from liens, encumbrances, claims and defects that would
affect the value thereof or interfere with the use made or to be made thereof by them. Except as
would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, the Company and the Company Subsidiaries hold all leased real or personal property
under valid and enforceable leases with no exceptions that would interfere with the use made or to
be made thereof by them.



(q) Environmental Liability. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect:




(i) there is no legal, administrative, or other proceeding, claim or action of any
nature seeking to impose, or that would reasonably be expected to result in the imposition
of, on the Company or any Company Subsidiary, any liability relating to the release of
hazardous substances as defined under any local, state or federal environmental statute,
regulation or ordinance, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, pending or, to the Company’s knowledge, threatened against the
Company or any Company Subsidiary;




(ii) to the Company’s knowledge, there is no reasonable basis for any such proceeding,
claim or action; and




(iii) neither the Company nor any Company Subsidiary is subject to any agreement,
order, judgment or decree by or with any court, Governmental Entity or third party imposing
any such environmental liability.



(r) Risk Management Instruments. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, all derivative
instruments, including, swaps, caps, floors and option agreements, whether entered into for the
Company’s own account, or for the account of one or more of the Company Subsidiaries or its or
their customers, were entered into (i) only in the ordinary course of business, (ii) in accordance
with prudent practices and in all material respects with all applicable laws, rules, regulations
and regulatory policies and (iii) with counterparties believed to be financially responsible at the
time; and each of such instruments constitutes the valid and legally binding obligation of the
Company or one of the Company Subsidiaries, enforceable in accordance with its terms, except as may
be limited by the Bankruptcy Exceptions. Neither the Company or the Company Subsidiaries, nor, to
the knowledge of the Company, any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement other than such breaches that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.


 


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(s) Agreements with Regulatory Agencies. Except as set forth on Schedule E, neither
the Company nor any Company Subsidiary is subject to any material cease-and-desist or other similar
order or enforcement action issued by, or is a party to any material written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any capital directive by, or since December 31, 2006, has adopted
any board resolutions at the request of, any Governmental Entity (other than the Appropriate
Federal Banking Agencies with jurisdiction over the Company and the Company Subsidiaries) that
currently restricts in any material respect the conduct of its business or that in any material
manner relates to its capital adequacy, its liquidity and funding policies and practices, its
ability to pay dividends, its credit, risk management or compliance policies or procedures, its
internal controls, its management or its operations or business (each item in this sentence, a
“Regulatory Agreement”), nor has the Company or any Company Subsidiary been advised since December
31, 2006 by any such Governmental Entity that it is considering issuing, initiating, ordering, or
requesting any such Regulatory Agreement. The Company and each Company Subsidiary are in compliance
in all material respects with each Regulatory Agreement to which it is party or subject, and
neither the Company nor any Company Subsidiary has received any notice from any Governmental Entity
indicating that either the Company or any Company Subsidiary is not in compliance in all material
respects with any such Regulatory Agreement. “Appropriate Federal Banking Agency” means the
“appropriate Federal banking agency” with respect to the Company or such Company Subsidiaries, as
applicable, as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section
1813(q)).



(t) Insurance. The Company and the Company Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of the Company reasonably has
determined to be prudent and consistent with industry practice. The Company and the Company
Subsidiaries are in material compliance with their insurance policies and are not in default under
any of the material terms thereof, each such policy is outstanding and in full force and effect,
all premiums and other payments due under any material policy have been paid, and all claims
thereunder have been filed in due and timely fashion, except, in each case, as would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.



(u) Intellectual Property. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, (i) the Company and each Company
Subsidiary owns or otherwise has the right to use, all intellectual property rights, including all
trademarks, trade dress, trade names, service marks, domain names, patents, inventions, trade
secrets, know-how, works of authorship and copyrights therein, that are used in the conduct of
their existing businesses and all rights relating to the plans, design and specifications of any of
its branch facilities (“Proprietary Rights”) free and clear of all liens and any claims of
ownership by current or former employees, contractors, designers or others and (ii) neither the
Company nor any of the Company Subsidiaries is materially infringing, diluting, misappropriating or
violating, nor has the Company or any or the Company Subsidiaries received any written (or, to the
knowledge of the Company, oral) communications alleging that any of them has materially infringed,
diluted, misappropriated or violated, any of the Proprietary Rights owned by any other person.
Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, to the Company’s knowledge, no other person
is infringing, diluting, misappropriating or violating, nor has the Company or any or the Company
Subsidiaries sent any written communications since January 1, 2006 alleging that any person has
infringed, diluted, misappropriated or violated, any of the Proprietary Rights owned by the
Company and the Company Subsidiaries.


 


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



Article III

Covenants




3.1 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 Purchase 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.



3.2 Expenses. Unless otherwise provided in this Agreement or the Warrant, each of the
parties hereto will bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated under this Agreement and the Warrant, including fees
and expenses of its own financial or other consultants, investment bankers, accountants and
counsel.




3.3 Sufficiency of Authorized Warrant Preferred Stock; Exchange Listing.



(a) During the period from the Closing Date until the date on which the Warrant has been fully
exercised, the Company shall at all times have reserved for issuance, free of preemptive or similar
rights, a sufficient number of authorized and unissued Warrant Shares to effectuate such exercise.



(b) If the Company lists its Common Stock on any national securities exchange, the Company
shall, if requested by the Investor, promptly use its reasonable best efforts to cause the
Preferred Shares and Warrant Shares to be approved for listing on a national securities exchange as
promptly as practicable following such request.


 


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3.4 Certain Notifications Until Closing. From the Signing Date until the Closing, the
Company shall promptly notify the Investor of (i) any fact, event or circumstance of which it is
aware and which would reasonably be expected to cause any representation or warranty of the
Company contained in this Agreement to be untrue or inaccurate in any material respect or to
cause any covenant or agreement 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 expected to have a
Company Material Adverse Effect; provided, however, that delivery of any notice pursuant to this
Section 3.4 shall not limit or affect any rights of or remedies available to the Investor;
provided, further, that a failure to comply with this Section 3.4 shall not constitute a breach of
this Agreement or the failure of any condition set forth in Section 1.2 to be satisfied unless the
underlying Company Material Adverse Effect or material breach would independently result in the
failure of a condition set forth in Section 1.2 to be satisfied.




3.5 Access, Information and Confidentiality.



(a) From the Signing Date until the date when the Investor holds an amount of Preferred Shares
having an aggregate liquidation value of less than 10% of the Purchase Price, the Company will
permit the Investor and its agents, consultants, contractors and advisors (x) acting through the
Appropriate Federal Banking Agency, or otherwise to the extent necessary to evaluate, manage, or
transfer its investment in the Company, to examine the corporate books and make copies thereof and
to discuss the affairs, finances and accounts of the Company and 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 (y) to review any information material to the
Investor’s investment in the Company provided by the Company to its Appropriate Federal Banking
Agency. Any investigation pursuant to this Section 3.5 shall be conducted during normal business
hours and in such manner as not to interfere unreasonably with the conduct of the business of the
Company, and nothing herein shall require the Company or any Company Subsidiary to disclose any
information to the Investor to the extent (i) prohibited by applicable law or regulation, or (ii)
that such disclosure would reasonably be expected to cause a violation of any agreement to which
the Company or any Company Subsidiary is a party or would cause a risk of a loss of privilege to
the Company or any Company Subsidiary (provided that the Company shall use commercially reasonable
efforts to make appropriate substitute disclosure arrangements under circumstances where the
restrictions in this clause (ii) apply).



(b) From the Signing Date until the date on which all of the Preferred Shares and Warrant
Shares have been redeemed in whole, the Company will deliver, or will cause to be delivered, to the
Investor:




(i) as soon as available after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, a consolidated balance sheet of the Company as of the end
of such fiscal year, and consolidated statements of income, retained earnings and cash
flows of the Company for such year, in each case prepared in accordance with GAAP and
setting forth in each case in comparative form the figures for the previous fiscal year of
the Company, and which shall be audited to the extent audited financial statements are
available; and


 


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(ii) as soon as available after the end of the first, second and third quarterly
periods in each fiscal year of the Company, a copy of any quarterly reports provided to
other stockholders of the Company or Company management.



(c) The Investor will use reasonable best efforts to hold, and will use reasonable best
efforts to cause its agents, consultants, contractors and advisors to hold, in confidence all
nonpublic records, books, contracts, instruments, computer data and other data and information
(collectively, “Information”) concerning the Company furnished or made available to it by the
Company or its representatives pursuant to this Agreement (except to the extent that 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.



(d) The Investor’s information rights pursuant to Section 3.5(b) may be assigned by the
Investor to a transferee or assignee of the Purchased Securities or the Warrant Shares or with a
liquidation preference or, in the case of the Warrant, the liquidation preference of the underlying
shares of Warrant Preferred Stock, no less than an amount equal to 2% of the initial aggregate
liquidation preference of the Preferred Shares.



Article IV

Additional Agreements




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




 


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4.2 Legends.



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




THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF
A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR
REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES
REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID
AGREEMENT WILL BE VOID.”



(b) In addition, the Investor agrees that all certificates or other instruments representing
the Preferred Shares and the Warrant Shares will bear a legend substantially to the following
effect:




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




THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT
RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. EACH PURCHASER OF
THE SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. ANY
TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (2) AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE
SECURITIES REPRESENTED BY THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES
REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C)
TO THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
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.



 


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THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF
A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR
REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES
REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID
AGREEMENT WILL BE VOID.”



(c) In the event that any Purchased Securities or Warrant Shares (i) become registered under
the Securities Act or (ii) are eligible to be transferred without restriction in accordance with
Rule 144 or another exemption from registration under the Securities Act (other than Rule 144A),
the Company shall issue new certificates or other instruments representing such Purchased
Securities or Warrant Shares, which shall not contain the applicable legends in Sections 4.2(a) and
(b) above; provided that the Investor surrenders to the Company the previously issued certificates
or other instruments.



4.3 Certain Transactions. The Company will not merge or consolidate with, or sell,
transfer or lease all or substantially all 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.



4.4 Transfer of Purchased Securities and Warrant Shares; Restrictions on Exercise of the
Warrant. Subject to compliance with applicable securities laws, the Investor shall be
permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the
Purchased Securities or Warrant Shares at any time, and the Company shall take all steps as may be
reasonably requested by the Investor to facilitate the Transfer of the Purchased Securities and the
Warrant Shares; provided that the Investor shall not Transfer any Purchased Securities or Warrant
Shares if such transfer would require the Company to be subject to the periodic reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). In
furtherance of the foregoing, the Company shall provide reasonable cooperation to facilitate any
Transfers of the Purchased Securities or Warrant Shares, including, as is reasonable under the
circumstances, by furnishing such information concerning the Company and its business as a proposed
transferee may reasonably request (including such information as is required by Section 4.5(k)) and
making management of the Company
reasonably available to respond to questions of a proposed transferee in accordance with
customary practice, subject in all cases to the proposed transferee agreeing to a
customary confidentiality agreement.


 


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4.5 Registration Rights.



(a) Unless and until the Company becomes subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall have no obligation to comply with the provisions of
this Section 4.5 (other than Section 4.5(b)(iv)-(vi)); provided that the Company covenants and
agrees that it shall comply with this Section 4.5 as soon as practicable after the date that it
becomes subject to such reporting requirements.




(b) Registration.




(i) Subject to the terms and conditions of this Agreement, the Company covenants and
agrees that as promptly as practicable after the date that the Company becomes subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act (and in any event no
later than 30 days thereafter), the Company shall prepare and file with the SEC a Shelf
Registration Statement covering all Registrable Securities (or otherwise designate an
existing Shelf Registration Statement filed with the SEC to cover the Registrable
Securities), and, to the extent the Shelf Registration Statement has not theretofore been
declared effective or is not automatically effective upon such filing, the Company shall use
reasonable best efforts to cause such Shelf Registration Statement to be declared or become
effective and to keep such Shelf Registration Statement continuously effective and in
compliance with the Securities Act and usable for resale of such Registrable Securities for
a period from the date of its initial effectiveness until such time as there are no
Registrable Securities remaining (including by refiling such Shelf Registration Statement
(or a new Shelf Registration Statement) if the initial Shelf Registration Statement
expires). Notwithstanding the foregoing, if the Company is not eligible to file a
registration statement on Form S-3, then the Company shall not be obligated to file a Shelf
Registration Statement unless and until requested to do so in writing by the Investor.




(ii) Any registration pursuant to Section 4.5(b)(i) shall be effected by means of a
shelf registration on an appropriate form under Rule 415 under the Securities Act (a “Shelf
Registration Statement”). If the Investor or any other Holder intends to distribute any
Registrable Securities by means of an underwritten offering it shall promptly so advise the
Company and the Company shall take all reasonable steps to facilitate such distribution,
including the actions required pursuant to Section 4.5(d); provided that the Company shall
not be required to facilitate an underwritten offering of Registrable Securities unless the
expected gross proceeds from such offering exceed (i) 2% of the initial aggregate
liquidation preference of the Preferred Shares if such initial aggregate liquidation
preference is less than $2 billion and (ii) $200 million if the initial aggregate
liquidation preference of the Preferred Shares is equal to or greater than $2 billion. The
lead underwriters in any such distribution shall be selected by the Holders of a majority
of the Registrable Securities to be distributed; provided that to the extent
appropriate and permitted under applicable law, such Holders shall consider the
qualifications of any broker-dealer Affiliate of the Company in selecting the lead
underwriters in any such distribution.




(iii) The Company shall not be required to effect a registration (including a resale of
Registrable Securities from an effective Shelf Registration Statement) or an underwritten
offering pursuant to Section 4.5(b): (A) with respect to securities that are not Registrable
Securities; or (B) if the Company has notified the Investor and all other Holders that in
the good faith judgment of the Board of Directors, it would be materially detrimental to the
Company or its securityholders for such registration or underwritten offering to be effected
at such time, in which event the Company shall have the right to defer such registration for
a period of not more than 45 days after receipt of the request of the Investor or any other
Holder; provided that such right to delay a registration or underwritten offering shall be
exercised by the Company (1) only if the Company has generally exercised (or is concurrently
exercising) similar black-out rights against holders of similar securities that have
registration rights and (2) not more than three times in any 12-month period and not more
than 90 days in the aggregate in any 12-month period.




(iv) If during any period when an effective Shelf Registration Statement is not
available, the Company proposes to register any of its equity securities, other than a
registration pursuant to Section 4.5(b)(i) or a Special Registration, and the registration
form to be filed may be used for the registration or qualification for distribution of
Registrable Securities, the Company will give prompt written notice to the Investor and all
other Holders of its intention to effect such a registration (but in no event less than ten
days prior to the anticipated filing date) and will include in such registration all
Registrable Securities with respect to which the Company has received written requests for
inclusion therein within ten business days after the date of the Company’s notice (a
“Piggyback Registration”). Any such person that has made such a written request may withdraw
its Registrable Securities from such Piggyback Registration by giving written notice to the
Company and the managing underwriter, if any, on or before the fifth business day prior to
the planned effective date of such Piggyback Registration. The Company may terminate or
withdraw any registration under this Section 4.5(b)(iv) prior to the effectiveness of such
registration, whether or not Investor or any other Holders have elected to include
Registrable Securities in such registration.


 


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(v) If the registration referred to in Section 4.5(b)(iv) is proposed to be
underwritten, the Company will so advise Investor and all other Holders as a part of the
written notice given pursuant to Section 4.5(b)(iv). In such event, the right of Investor
and all other Holders to registration pursuant to Section 4.5(b) will be conditioned upon
such persons’ participation in such underwriting and the inclusion of such person’s
Registrable Securities in the underwriting if such securities are of the same class of
securities as the securities to be offered in the underwritten offering, and each such
person will (together with the Company and the other persons distributing their securities
through such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company; provided
that the Investor (as opposed to other Holders) shall not be required to indemnify any
person in connection with any registration. If any participating person disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by written notice
to the Company, the managing underwriters and the Investor (if the Investor is
participating in the underwriting).




(vi) If either (x) the Company grants “piggyback” registration rights to one or more
third parties to include their securities in an underwritten offering under the Shelf
Registration Statement pursuant to Section 4.5(b)(ii) or (y) a Piggyback Registration under
Section 4.5(b)(iv) relates to an underwritten offering on behalf of the Company, and in
either case the managing underwriters advise the Company 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 an
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 the case of a Piggyback Registration under
Section 4.5(b)(iv), the securities the Company proposes to sell, (B) then the Registrable
Securities of the Investor and all other Holders who have requested inclusion of Registrable
Securities pursuant to Section 4.5(b)(ii) or Section 4.5(b)(iv), as applicable, pro rata on
the basis of the aggregate number of such securities or shares owned by each such person and
(C) lastly, any other securities of the Company that have been requested to be so included,
subject to the terms of this Agreement; provided, however, that if the Company has, prior to
the Signing Date, entered into an agreement with respect to its securities that is
inconsistent with the order of priority contemplated hereby then it shall apply the order of
priority in such conflicting agreement to the extent that it would otherwise result in a
breach under such agreement.



(c) Expenses of Registration. All Registration Expenses incurred in connection with
any registration, qualification or compliance hereunder shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder shall be borne by the holders of
the securities so registered pro rata on the basis of the aggregate offering or sale price of the
securities so registered.



 


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(d) Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an
effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably
practicable:



(i) Prepare and file with the SEC a prospectus supplement or post-effective amendment
with respect to a proposed offering of Registrable Securities pursuant to an effective
registration statement, subject to Section 4.5(d), keep such registration
statement effective and keep such prospectus supplement current until the securities
described therein are no longer Registrable Securities.




(ii) Prepare and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in connection with
such registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.




(iii) Furnish to the Holders and any underwriters such number of copies of the
applicable registration statement and each such amendment and supplement thereto (including
in each case all exhibits) and of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable Securities owned or
to be distributed by them.




(iv) Use its reasonable best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders or any managing
underwriter(s), to keep such registration or qualification in effect for so long as such
registration statement remains in effect, and to take any other action which may be
reasonably necessary to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such Holder; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or jurisdictions.




(v) Notify each Holder of Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of any event
as a result of which the applicable prospectus, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the circumstances
then existing.




(vi) Give written notice to the Holders:




(A) when any registration statement filed pursuant to Section 4.5(a) or any
amendment thereto has been filed with the SEC (except for any amendment effected by
the filing of a document with the SEC pursuant to the Exchange Act) and when such
registration statement or any post-effective amendment thereto has become effective;




(B) of any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein or for additional information;


 


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(C) of the issuance by the SEC of any stop order suspending the effectiveness of
any registration statement or the initiation of any proceedings for that purpose;




(D) of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the applicable Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;




(E) of the happening of any event that requires the Company to make changes in
any effective registration statement or the prospectus related to the registration
statement in order to make the statements therein not misleading (which notice shall
be accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made); and




(F) if at any time the representations and warranties of the Company contained
in any underwriting agreement contemplated by Section 4.5(d)(x) cease to be true and
correct.



(vii) Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement
referred to in Section 4.5(d)(vi)(C) at the earliest practicable time.




(viii) Upon the occurrence of any event contemplated by Section 4.5(d)(v) or
4.5(d)(vi)(E), promptly prepare a post-effective amendment to such registration statement or
a supplement to the related prospectus or file any other required document so that, as
thereafter delivered to the Holders and any underwriters, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not
misleading. If the Company notifies the Holders in accordance with Section 4.5(d)(vi)(E) to
suspend the use of the prospectus until the requisite changes to the prospectus have been
made, then the Holders and any underwriters shall suspend use of such prospectus and use
their reasonable best efforts to return to the Company all copies of such prospectus (at the
Company’s expense) other than permanent file copies then in such Holders’ or underwriters’
possession. The total number of days that any such suspension may be in effect in any
12-month period shall not exceed 90 days.




(ix) Use reasonable best efforts to procure the cooperation of the Company’s transfer
agent in settling any offering or sale of Registrable Securities, including with respect to
the transfer of physical stock certificates into book-entry form in accordance with any
procedures reasonably requested by the Holders or any managing underwriter(s).


 


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(x) If an underwritten offering is requested pursuant to Section 4.5(b)(ii), enter
into an underwriting agreement in customary form, scope and substance and take all
such other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition of such
Registrable Securities, and in connection therewith in any underwritten offering
(including making members of management and executives of the Company available to
participate in “road shows”, similar sales events and other marketing activities), (A)
make such representations and warranties to the Holders that are selling stockholders and
the managing underwriter(s), if any, with respect to the business of the Company and its
subsidiaries, and the Shelf Registration Statement, prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in customary
form, substance and scope, and, if true, confirm the same if and when requested, (B) use
its reasonable best efforts to furnish the underwriters with opinions of counsel to the
Company, addressed to the managing underwriter(s), if any, covering the matters
customarily covered in such opinions requested in underwritten offerings, (C) use its
reasonable best efforts to obtain “cold comfort” letters from the independent certified
public accountants of the Company (and, if necessary, any other independent certified
public accountants of any business acquired by the Company for which financial statements
and financial data are included in the Shelf Registration Statement) who have certified
the financial statements included in such Shelf Registration Statement, addressed to each
of the managing underwriter(s), if any, such letters to be in customary form and covering
matters of the type customarily covered in “cold comfort” letters, (D) if an underwriting
agreement is entered into, the same shall contain indemnification provisions and
procedures customary in underwritten offerings (provided that the Investor shall not be
obligated to provide any indemnity), and (E) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the Registrable Securities
being sold in connection therewith, their counsel and the managing underwriter(s), if any,
to evidence the continued validity of the representations and warranties made pursuant to
clause (i) above and to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.




(xi) Make available for inspection by a representative of Holders that are selling
stockholders, the managing underwriter(s), if any, and any attorneys or accountants
retained by such Holders or managing underwriter(s), at the offices where normally kept,
during reasonable business hours, financial and other records, pertinent corporate
documents and properties of the Company, and cause the officers, directors and employees
of the Company to supply all information in each case reasonably requested (and of the
type customarily provided in connection with due diligence conducted in connection with a
registered public offering of securities) by any such representative, managing
underwriter(s), attorney or accountant in connection with such Shelf Registration
Statement.




(xii) Use reasonable best efforts to cause all such Registrable Securities to be
listed on each national securities exchange on which similar securities issued by the
Company are then listed or, if no similar securities issued by the Company are then listed
on any national securities exchange, use its reasonable best efforts to cause all such
Registrable Securities to be listed on such securities exchange as the Investor may

designate.


 


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(xiii) If requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s), if any,
promptly include in a prospectus supplement or amendment such information as the Holders
of a majority of the Registrable Securities being registered and/or sold in connection
therewith or managing underwriter(s), if any, may reasonably request in order to permit
the intended method of distribution of such securities and make all required filings of
such prospectus supplement or such amendment as soon as practicable after the Company has
received such request.




(xiv) Timely provide to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.



(e) Suspension of Sales. Upon receipt of written notice from the Company that a
registration statement, prospectus or prospectus supplement contains or may contain an untrue
statement of a material fact or omits or may omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that circumstances exist
that make inadvisable use of such registration statement, prospectus or prospectus supplement,
the Investor and each Holder of Registrable Securities shall forthwith discontinue disposition of
Registrable Securities until the Investor and/or Holder has received copies of a supplemented or
amended prospectus or prospectus supplement, or until the Investor and/or such Holder is advised
in writing by the Company that the use of the prospectus and, if applicable, prospectus
supplement may be resumed, and, if so directed by the Company, the Investor and/or such Holder
shall deliver to the Company (at the Company’s expense) all copies, other than permanent file
copies then in the Investor and/or such Holder’s possession, of the prospectus and, if
applicable, prospectus supplement covering such Registrable Securities current at the time of
receipt of such notice. The total number of days that any such suspension may be in effect in any
12-month period shall not exceed 90 days.



(f) Termination of Registration Rights. A Holder’s registration rights as to any
securities held by such Holder (and its Affiliates, partners, members and former members) shall not
be available unless such securities are Registrable Securities.



 


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(g) Furnishing Information.




(i) Neither
the Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without
the prior written consent of the Company.




(ii) It shall be a condition precedent to the obligations of the Company to take any
action pursuant to Section 4.5(d) that Investor and/or the selling Holders and the
underwriters, if any, shall furnish to the Company such information regarding themselves,
the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the registered offering
of their Registrable Securities.



(h) Indemnification.




(i) The Company agrees to indemnify each Holder and, if a Holder is a person other than
an individual, such Holder’s officers, directors, employees, agents, representatives and
Affiliates, and each Person, if any, that controls a Holder within the meaning of the
Securities Act (each, an “Indemnitee”), against any and all losses, claims, damages,
actions, liabilities, costs and expenses (including reasonable fees, expenses and
disbursements of attorneys and other professionals incurred in connection with
investigating, defending, settling, compromising or paying any such losses, claims, damages,
actions, liabilities, costs and expenses), joint or several, arising out of or based upon
any untrue statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto or any documents incorporated therein by
reference or contained in any free writing prospectus (as such term is defined in Rule 405)
prepared by the Company or authorized by it in writing for use by such Holder (or any
amendment or supplement thereto); or any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that the Company shall
not be liable to such Indemnitee in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises out of or
is based upon (A) an untrue statement or omission made in such registration statement,
including any such preliminary prospectus or final prospectus contained therein or any such
amendments or supplements thereto or contained in any free writing prospectus (as such term
is defined in Rule 405) prepared by the Company or authorized by it in writing for use by
such Holder (or any amendment or supplement thereto), in reliance upon and in conformity
with information regarding such Indemnitee or its plan of distribution or ownership
interests which was furnished in writing to the Company by such Indemnitee for use in
connection with such registration statement, including any such preliminary prospectus or
final prospectus contained therein or any such amendments or supplements thereto, or (B)
offers or sales effected by or on behalf of such Indemnitee “by means of” (as defined in
Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not authorized in
writing by the Company.




 


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(ii) If the indemnification provided for in Section 4.5(h)(i) is unavailable to an
Indemnitee with respect to any losses, claims, damages, actions, liabilities, costs or
expenses referred to therein or is insufficient to hold the Indemnitee harmless as
contemplated therein, then the Company, in lieu of indemnifying such Indemnitee, shall
contribute to the amount paid or payable by such Indemnitee as a result of such losses,
claims, damages, actions, liabilities, costs or expenses in such proportion as is
appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the
Company, on the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, actions, liabilities, costs or expenses as well as any other
relevant equitable considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other factors,
whether the untrue statement of a material fact or omission to state a material fact
relates to information supplied by the Company or by the Indemnitee and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; the Company and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 4.5(h)(ii) were determined by pro
rata allocation or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 4.5(h)(i). No Indemnitee guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from the Company if the Company was not guilty of such
fraudulent misrepresentation.


 


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(i) Assignment of Registration Rights. The rights of the Investor to registration of
Registrable Securities pursuant to Section 4.5(b) may be assigned by the Investor to a transferee
or assignee of Registrable Securities with a liquidation preference or, in the case of the Warrant,
the liquidation preference of the underlying shares of Warrant Preferred Stock, no less than an
amount equal to (i) 2% of the initial aggregate liquidation preference of the Preferred Shares if
such initial aggregate liquidation preference is less than $2 billion and (ii) $200 million if the
initial aggregate liquidation preference of the Preferred Shares is equal to or greater than $2
billion; provided, however, the transferor shall, within ten days after such transfer, furnish to
the Company written notice of the name and address of such transferee or assignee and the number
and type of Registrable Securities that are being assigned.



(j) Clear Market. With respect to any underwritten offering of Registrable Securities
by the Investor or other Holders pursuant to this Section 4.5, the Company agrees not to effect
(other than pursuant to such registration or pursuant to a Special Registration) any public sale or
distribution, or to file any Shelf Registration Statement (other than such registration or a
Special Registration) covering any preferred stock of the Company or any securities convertible
into or exchangeable or exercisable for preferred stock of the Company, during the period not to
exceed ten days prior and 60 days following the effective date of such offering or such longer
period up to 90 days as may be requested by the managing underwriter for such underwritten
offering. The Company also agrees to cause such of its directors and senior executive officers to
execute and deliver customary lock-up agreements in such form and for such time period up to 90
days as may be requested by the managing underwriter. “Special Registration” means the registration
of (A) equity securities and/or options or other rights in respect thereof solely registered on
Form S4 or Form S-8 (or successor form) or (B) shares of equity securities and/or options or other
rights in respect thereof to be offered to directors, members of management, employees,
consultants, customers, lenders or vendors of the Company or Company Subsidiaries or in connection
with dividend reinvestment plans.



 


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(k) Rule 144; Rule 144A. With a view to making available to the Investor and Holders
the benefits of certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees to use its reasonable
best efforts to:




(i) make and keep public information available, as those terms are understood and
defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities
Act, at all times after the Signing Date;




(ii) (A) file with the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act, and (B) if at any time the Company is not
required to file such reports, make available, upon the request of any Holder, such
information necessary to permit sales pursuant to Rule 144A (including the information
required by Rule 144A(d)(4) under the Securities Act);




(iii) so long as the Investor or a Holder owns any Registrable Securities, furnish to
the Investor or such Holder forthwith upon request: a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 under the Securities Act, and of
the Exchange Act; a copy of the most recent annual or quarterly report of the Company; and
such other reports and documents as the Investor or Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing it to sell any such securities
to the public without registration; and




(iv) take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act.



(l) As used in this Section 4.5, the following terms shall have the following respective
meanings:




(i) “Holder” means the Investor and any other holder of Registrable Securities to whom
the registration rights conferred by this Agreement have been transferred in compliance with
Section 4.5(h) hereof.




(ii) “Holders’ Counsel” means one counsel for the selling Holders chosen by Holders
holding a majority interest in the Registrable Securities being registered.




(iii) “Register,” “registered,” and “registration” shall refer to a registration
effected by preparing and (A) filing a registration statement or amendment thereto in
compliance with the Securities Act and applicable rules and regulations thereunder, and the
declaration or ordering of effectiveness of such registration statement or amendment thereto
or (B) filing a prospectus and/or prospectus supplement in respect of an appropriate
effective registration statement on Form S-3.


 


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(iv) “Registrable Securities” means (A) all Preferred Shares, (B) the Warrant (subject
to Section 4.5(q)) and (C) any equity securities issued or issuable directly or indirectly
with respect to the securities referred to in the foregoing clauses (A) or (B) by way of
conversion, exercise or exchange thereof, including the Warrant Shares, or share dividend or
share split or in connection with a combination of shares, recapitalization,
reclassification, merger, amalgamation, arrangement, consolidation or other
reorganization, provided that, once issued, such securities will not be Registrable
Securities when (1) they are sold pursuant to an effective registration statement under the
Securities Act, (2) except as provided below in Section 4.5(p), they may be sold pursuant
to Rule 144 without limitation thereunder on volume or manner of sale, (3) they shall have
ceased to be outstanding or (4) they have been sold in a private transaction in which the
transferor’s rights under this Agreement are not assigned to the transferee of the
securities. No Registrable Securities may be registered under more than one registration
statement at any one time.




(v) “Registration Expenses” mean all expenses incurred by the Company in effecting any
registration pursuant to this Agreement (whether or not any registration or prospectus
becomes effective or final) or otherwise complying with its obligations under this Section
4.5, including all registration, filing and listing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, expenses incurred in
connection with any “road show”, the reasonable fees and disbursements of Holders’ Counsel,
and expenses of the Company’s independent accountants in connection with any regular or
special reviews or audits incident to or required by any such registration, but shall not
include Selling Expenses.




(vi) “Rule 144”, “Rule 144A”, “Rule 159A”, “Rule 405” and “Rule 415” mean,
in each case, such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.




(vii) “Selling Expenses” mean all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel
for any Holder (other than the fees and disbursements of Holders’ Counsel included in
Registration Expenses).



(m) At any time, any holder of Securities (including any Holder) may elect to forfeit its
rights set forth in this Section 4.5 from that date forward; provided, that a Holder forfeiting
such rights shall nonetheless be entitled to participate under Section 4.5(b)(iv) — (vi) in any
Pending Underwritten Offering to the same extent that such Holder would have been entitled to if
the holder had not withdrawn; and provided, further, that no such forfeiture shall terminate a
Holder’s rights or obligations under Section 4.5(g) with respect to any prior registration or
Pending Underwritten Offering. “Pending Underwritten Offering” means, with respect to any Holder
forfeiting its rights pursuant to this Section 4.5(m), any underwritten offering of Registrable
Securities in which such Holder has advised the Company of its intent to register its Registrable
Securities either pursuant to Section 4.5(b)(ii) or 4.5(b)(iv) prior to the date of such Holder’s
forfeiture.


 


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(n) Specific Performance. The parties hereto acknowledge that there would be no
adequate remedy at law if the Company fails to perform any of its obligations under this Section
4.5 and that the Investor and the Holders from time to time may be irreparably harmed by any such
failure, and accordingly agree that the Investor and such Holders, in addition to any other remedy
to which they may be entitled at law or in equity, to the fullest extent permitted and
enforceable under applicable law shall be entitled to compel specific performance of the
obligations of the Company under this Section 4.5 in accordance with the terms and conditions
of this Section 4.5.



(o) No Inconsistent Agreements. The Company shall not, on or after the Signing Date,
enter into any agreement with respect to its securities that may impair the rights granted to the
Investor and the Holders under this Section 4.5 or that otherwise conflicts with the provisions
hereof in any manner that may impair the rights granted to the Investor and the Holders under this
Section 4.5. In the event the Company has, prior to the Signing Date, entered into any agreement
with respect to its securities that is inconsistent with the rights granted to the Investor and
the Holders under this Section 4.5 (including agreements that are inconsistent with the order of
priority contemplated by Section 4.5(b)(vi)) or that may otherwise conflict with the provisions
hereof, the Company shall use its reasonable best efforts to amend such agreements to ensure they
are consistent with the provisions of this Section 4.5.



(p) Certain Offerings by the Investor. In the case of any securities held by the
Investor that cease to be Registrable Securities solely by reason of clause (2) in the definition
of “Registrable Securities,” the provisions of Sections 4.5(b)(ii), clauses (iv), (ix) and
(x)-(xii) of Section 4.5(d), Section 4.5(h) and Section 4.5(j) shall continue to apply until such
securities otherwise cease to be Registrable Securities. In any such case, an “underwritten”
offering or other disposition shall include any distribution of such securities on behalf of the
Investor by one or more broker-dealers, an “underwriting agreement” shall include any purchase
agreement entered into by such broker-dealers, and any “registration statement” or “prospectus”
shall include any offering document approved by the Company and used in connection with such
distribution.



(q) Registered Sales of the Warrant. The Holders agree to sell the Warrant or any
portion thereof under the Shelf Registration Statement only beginning 30 days after notifying the
Company of any such sale, during which 30-day period the Investor and all Holders of the Warrant
shall take reasonable steps to agree to revisions to the Warrant to permit a public distribution
of the Warrant, including entering into a warrant agreement and appointing a warrant agent.



4.6 Depositary Shares. Upon request by the Investor at any time following the Closing
Date, the Company shall promptly enter into a depositary arrangement, pursuant to customary
agreements reasonably satisfactory to the Investor and with a depositary reasonably acceptable to
the Investor, pursuant to which the Preferred Shares or the Warrant Shares may be deposited and
depositary shares, each representing a fraction of a Preferred Share or Warrant Share, as
applicable, as specified by the Investor, may be issued. From and after the execution of any such
depositary arrangement, and the deposit of any Preferred Shares or Warrant Shares, as applicable,
pursuant thereto, the depositary shares issued pursuant thereto shall be deemed “Preferred Shares”,
“Warrant Shares” and, as applicable, “Registrable Securities” for purposes of this Agreement.


 


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4.7 Restriction on Dividends and Repurchases.



(a) Prior to the earlier of (x) the third anniversary of the Closing Date and (y) the date on
which all of the Preferred Shares and Warrant Shares have been redeemed in whole or the Investor
has transferred all of the Preferred Shares and Warrant Shares to third parties which are not
Affiliates of the Investor, neither the Company nor any Company Subsidiary shall, without the
consent of the Investor, declare or pay any dividend or make any distribution on capital stock or
other equity securities of any kind of the Company or any Company Subsidiary (other than (i)
regular quarterly cash dividends of not more than the amount of the last quarterly cash dividend
per share declared or, if lower, announced to its holders of Common Stock an intention to declare,
on the Common Stock prior to November 17, 2008, as adjusted for any stock split, stock dividend,
reverse stock split, reclassification or similar transaction, (ii) dividends payable solely in
shares of Common Stock, (iii) regular dividends on shares of preferred stock in accordance with the
terms thereof and which are permitted under the terms of the Preferred Shares and the Warrant
Shares, (iv) dividends or distributions by any wholly-owned Company Subsidiary or (v) dividends or
distributions by any Company Subsidiary required pursuant to binding contractual agreements entered
into prior to November 17, 2008).



(b) During the period beginning on the third anniversary of the Closing Date and ending on the
earlier of (i) the tenth anniversary of the Closing Date and (ii) the date on which all of the
Preferred Shares and Warrant Shares have been redeemed in whole or the Investor has transferred all
of the Preferred Shares and Warrant Shares to third parties which are not Affiliates of the
Investor, neither the Company nor any Company Subsidiary shall, without the consent of the
Investor, (A) pay any per share dividend or distribution on capital stock or other equity
securities of any kind of the Company at a per annum rate that is in excess of 103% of the
aggregate per share dividends and distributions for the immediately prior fiscal year (other than
regular dividends on shares of preferred stock in accordance with the terms thereof and which are
permitted under the terms of the Preferred Shares and the Warrant Shares); provided that no
increase in the aggregate amount of dividends or distributions on Common Stock shall be permitted
as a result of any dividends or distributions paid in shares of Common Stock, any stock split or
any similar transaction or (B) pay aggregate dividends or distributions on capital stock or other
equity securities of any kind of any Company Subsidiary that is in excess of 103% of the aggregate
dividends and distributions paid for the immediately prior fiscal year (other than in the case of
this clause (B), (1) regular dividends on shares of preferred stock in accordance with the terms
thereof and which are permitted under the terms of the Preferred Shares and the Warrant Shares, (2)
dividends or distributions by any wholly-owned Company Subsidiary, (3) dividends or distributions
by any Company Subsidiary required pursuant to binding contractual agreements entered into prior to
November 17, 2008) or (4) dividends or distributions on newly issued shares of capital stock for
cash or other property.


 


-30-









 





(c) Prior to the earlier of (x) the tenth anniversary of the Closing Date and (y) the date on
which all of the Preferred Shares and Warrant Shares have been redeemed in whole or the Investor
has transferred all of the Preferred Shares and Warrant Shares to third parties which are not
Affiliates of the Investor, neither the Company nor any Company Subsidiary shall, without the
consent of the Investor, 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 Company Subsidiary, or any trust
preferred securities issued by the Company or any Affiliate of the Company, other
than (i) redemptions, purchases or other acquisitions of the Preferred Shares and Warrant Shares,
(ii) in connection with the administration of any employee benefit plan in the ordinary course of
business and consistent with past practice, (iii) the acquisition by the Company or any of the
Company Subsidiaries of record ownership in Junior Stock or Parity Stock for the beneficial
ownership of any other persons (other than the Company or any other Company Subsidiary), including
as trustees or custodians, (iv) the exchange or conversion of Junior Stock for or into other Junior
Stock or of Parity Stock or trust preferred securities for or into other Parity Stock (with the
same or lesser aggregate liquidation amount) or Junior Stock, in each case set forth in this clause
(iv), solely to the extent required pursuant to binding contractual agreements entered into prior
to the Signing Date or any subsequent agreement for the accelerated exercise, settlement or
exchange thereof for Common Stock (clauses (ii) and (iii), collectively, the “Permitted
Repurchases”), (v) redemptions of securities held by the Company or any wholly- owned Company
Subsidiary or (vi) redemptions, purchases or other acquisitions of capital stock or other equity
securities of any kind of any Company Subsidiary required pursuant to binding contractual
agreements entered into prior to November 17, 2008.



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



(e) During the period beginning on the tenth anniversary of the Closing and ending on the date
on which all of the Preferred Shares and Warrant Shares have been redeemed in whole or the Investor
has transferred all of the Preferred Shares and Warrant Shares to third parties which are not
Affiliates of the Investor, 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 capital stock
or other equity securities of any kind of the Company or any Company Subsidiary; 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 Company Subsidiary, or any trust preferred securities issued by the
Company or any Affiliate of the Company, other than (A) redemptions, purchases or other
acquisitions of the Preferred Shares and Warrant Shares, (B) regular dividends on shares of
preferred stock in accordance with the terms thereof and which are permitted under the terms of the
Preferred Shares and the Warrant Shares, or (C) dividends or distributions by any wholly-owned
Company Subsidiary.



(f) “Junior Stock” means 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 Preferred Shares as to dividend
rights and/or as to rights on liquidation, dissolution or winding up of the Company. “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 Preferred 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).


 


-31-









 





4.8 Executive Compensation. Until such time as the Investor ceases to own any debt or
equity securities of the Company acquired pursuant to this Agreement or the Warrant, the Company
shall take all necessary action to ensure that its Benefit Plans with respect to its Senior
Executive Officers comply in all respects with Section 111(b) of the EESA as implemented by any
guidance or regulation thereunder that has been issued and is in effect as of the Closing Date, and
shall not adopt any new Benefit Plan with respect to its Senior Executive Officers that does not
comply therewith. “Senior Executive Officers” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of the EESA and regulations issued thereunder, including the rules
set forth in 31 C.F.R. Part 30.



4.9 Related Party Transactions. Until such time as the Investor ceases to own any
Purchased Securities or Warrant Shares, the Company and the Company Subsidiaries shall not enter
into transactions with Affiliates or related persons (within the meaning of Item 404 under the
SEC’s Regulation S-K) unless (i) such transactions are on terms no less favorable to the Company
and the Company Subsidiaries than could be obtained from an unaffiliated third party, and (ii) have
been approved by the audit committee of the Board of Directors or comparable body of independent
directors of the Company.



4.10 Bank and Thrift Holding Company Status. If the Company is a Bank Holding Company
or a Savings and Loan Holding Company on the Signing Date, then the Company shall maintain its
status as a Bank Holding Company or Savings and Loan Holding Company, as the case may be, for as
long as the Investor owns any Purchased Securities or Warrant Shares. The Company shall redeem all
Purchased Securities and Warrant Shares held by the Investor prior to terminating its status as a
Bank Holding Company or Savings and Loan Holding Company, as applicable. “Bank Holding Company”
means a company registered as such with the Board of Governors of the Federal Reserve System (the
“Federal Reserve”) pursuant to 12 U.S.C. §1842 and the regulations of the Federal Reserve
promulgated thereunder. “Savings and Loan Holding Company” means a company registered as such with
the Office of Thrift Supervision pursuant to 12 U.S.C. § 1467(a) and the regulations of the Office
of Thrift Supervision promulgated thereunder.



4.11 Predominantly Financial. For as long as the Investor owns any Purchased
Securities or Warrant Shares, the Company, to the extent it is not itself an insured depository
institution, agrees to remain predominantly engaged in financial activities. A company is
predominantly engaged in financial activities if the annual gross revenues derived by the company
and all subsidiaries of the company (excluding revenues derived from subsidiary depository
institutions), on a consolidated basis, from engaging in activities that are financial in nature or
are incidental to a financial activity under subsection (k) of Section 4 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(k)) represent at least 85 percent of the consolidated annual
gross revenues of the company.


 


-32-









 





Article V

Miscellaneous




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



(a) by either the Investor or the Company if the Closing shall not have occurred by the
30th calendar day following the Signing Date; provided, however, that in the event the
Closing has not occurred by such 30th calendar day, the parties will consult in good
faith to determine whether to extend the term of this Agreement, it being understood that the
parties shall be required to consult only until the fifth day after such 30th calendar
day and not be under any obligation to extend the term of this Agreement thereafter; provided,
further, that the right to terminate this Agreement under this Section 5.1(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; or



(b) by either the Investor or the Company in the event that any Governmental Entity shall have
issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; or




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



In the event of termination of this Agreement as provided in this Section 5.1, this Agreement
shall forthwith become void and there shall be no liability on the part of either party hereto
except that nothing herein shall relieve either party from liability for any breach of this
Agreement.



5.2 Survival of Representations and Warranties. All covenants and agreements, other
than those which by their terms apply in whole or in part after the Closing, shall terminate as of
the Closing. The representations and warranties of the Company made herein or in any certificates
delivered in connection with the Closing shall survive the Closing without limitation.



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



5.4 Waiver of Conditions. The conditions to each party’s obligation to consummate the
Purchase 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.


 


-33-









 





5.5 Governing Law: Submission to Jurisdiction, Etc. This Agreement will be governed by
and construed in accordance with the federal law of the United States if and to
the extent such law is applicable, and otherwise in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely within such State. Each of the
parties hereto agrees (a) to submit to the exclusive jurisdiction and venue of the United States
District Court for the District of Columbia and the United States Court of Federal Claims for any
and all civil actions, suits or proceedings arising out of or relating to this Agreement or the
Warrant or the transactions contemplated hereby or thereby, and (b) that notice may be served upon
(i) the Company at the address and in the manner set forth for notices to the Company in Section
5.6 and (ii) the Investor in accordance with federal law. To the extent permitted by applicable
law, each of the parties hereto hereby unconditionally waives trial by jury in any civil legal
action or proceeding relating to this Agreement or the Warrant or the transactions contemplated
hereby or thereby.



5.6 Notices. Any notice, request, instruction or other document to be given hereunder
by any party to the other will be in writing and will be deemed to have been duly given (a) on the
date of delivery if delivered personally, or by facsimile, upon confirmation 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 to the Company shall be delivered as set forth in Schedule A,
or pursuant to such other instruction as may be designated in writing by the Company to the
Investor. All notices to the Investor shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the Investor to the Company.



If to the Investor:




United States Department of the Treasury

1500 Pennsylvania Avenue, NW, Room 2312

Washington, D.C. 20220

Attention: Assistant General Counsel (Banking and Finance)

Facsimile: (202) 622-1974





5.7 Definitions



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


 


-34-









 





(c) The terms “knowledge of the Company” or “Company’s knowledge” mean the actual knowledge
after reasonable and due inquiry of the “officers” (as such term is defined in Rule 3b-2 under the
Exchange Act, but excluding any Vice President or Secretary) of the Company.



5.8 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 the 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
merger, consolidation, statutory share exchange or similar transaction that requires the approval
of the Company’s stockholders (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 and (b) as provided in Sections 3.5 and 4.5.



5.9 Severability. If any provision of this Agreement or the Warrant, or the
application thereof to any person or circumstance, is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the
application 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.



5.10 No Third Party Beneficiaries. Nothing contained in this Agreement, expressed or
implied, is intended to confer upon any person or entity other than the Company and the Investor
any benefit, right or remedies, except that the provisions of Section 4.5 shall inure to the
benefit of the persons referred to in that Section.



* * *





 


-35-











 




ANNEX A




FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK




[SEE
EXHIBIT 3.3 TO THIS FORM 10-K]



 


-36-









 





ANNEX B




FORM OF CERTIFICATE OF DESIGNATIONS

FOR WARRANT PREFERRED STOCK




[SEE
EXHIBIT 3.4 TO THIS FORM 10-K]


 


-37-









 





ANNEX C




FORM OF WAIVER




In consideration for the benefits I will receive as a result of my employer’s participation in
the United States Department of the Treasury’s TARP Capital Purchase Program, I hereby
voluntarily waive any claim against the United States or my employer for any changes to my
compensation or benefits that are required to comply with the regulation issued by the
Department of the Treasury as published in the Federal Register on October 20, 2008.



I acknowledge that this regulation may require modification of the compensation, bonus, incentive
and other benefit plans, arrangements, policies and agreements (including so-called “golden
parachute” agreements) that I have with my employer or in which I participate as they relate to the
period the United States holds any equity or debt securities of my employer acquired through the
TARP Capital Purchase Program.



This waiver includes all claims I may have under the laws of the United States or any state
related to the requirements imposed by the aforementioned regulation, including without
limitation a claim for any compensation or other payments I would otherwise receive, any
challenge to the process by which this regulation was adopted and any tort or constitutional
claim about the effect of these regulations on my employment relationship.


 


-38-









 





ANNEX D




FORM OF OPINION




(a) The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the state of its incorporation.



(b) The Preferred Shares have been duly and validly authorized, and, when issued and
delivered pursuant to the Agreement, the Preferred Shares will be duly and validly issued and
fully paid and non-assessable, will not be issued in violation of any preemptive rights, and will
rank pari passu with or senior to all other series or classes of Preferred Stock issued on the
Closing Date with respect to the payment of dividends and the distribution of assets in the event
of any dissolution, liquidation or winding up of the Company.



(c) The Warrant has been duly authorized and, when executed and delivered as
contemplated by the Agreement, will constitute a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in equity.



(d) The shares of Warrant Preferred Stock issuable upon exercise of the Warrant have
been duly authorized and reserved for issuance upon exercise of the Warrant and when so issued in
accordance with the terms of the Warrant will be validly issued, fully paid and non-assessable, and
will rank pari passu with or senior to all other series or classes of Preferred Stock, whether or
not issued or outstanding, with respect to the payment of dividends and the distribution of assets
in the event of any dissolution, liquidation or winding up of the Company.



(e) The Company has the corporate power and authority to execute and deliver the
Agreement and the Warrant and to carry out its obligations thereunder (which includes the
issuance of the Preferred Shares, Warrant and Warrant Shares).



(f) The execution, delivery and performance by the Company of the Agreement and
the Warrant and the consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of the Company and its stockholders, and no further
approval or authorization is required on the part of the Company.



(g) The Agreement is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles, regardless of whether such
enforceability is considered in a proceeding at law or in equity; provided, however, such counsel
need express no opinion with respect to Section 4.5(h) or the severability provisions of the
Agreement insofar as Section 4.5(h) is concerned.


 


-39-









 





ANNEX E




FORM OF WARRANT




[SEE
EXHIBIT 4.1 TO THIS FORM 10-K]



 


-40-









 





SCHEDULE A




ADDITIONAL TERMS AND CONDITIONS




	 	 	 	 	 
	Company Information:	 	 
	 
	 	 	 	 
	 

	 	Name of the Company:
	 	First Priority Financial Corp.
	 
	 	 	 	 
	 

	 	Corporate or other organizational form:
	 	Business corporation
	 
	 	 	 	 
	 

	 	Jurisdiction of Organization:
	 	Commonwealth of Pennsylvania
	 
	 	 	 	 
	 

	 	Appropriate Federal Banking Agency:
	 	Board of Governors of the Federal
Reserve
 System and Federal
Deposit
 Insurance Corporation
	 
	 	 	 	 
	 

	 	Notice Information:
	 	First Priority Financial Corp.

2 West Liberty Blvd.

Suite 104

Malvern, Pennsylvania 19355

Attn: Lawrence E. Donato, Chief

Financial Officer

Phone: (484) 527-4022

Facsimile: (484) 527-4037


With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Stevens & Lee

111 North Sixth Street

Reading, Pennsylvania 19603

Attn: Sunjeet S. Gill, Esquire

Phone: (610) 478-2254

Facsimile: (610) 371-1228
	 
	 	 	 	 
	Terms of the Purchase:	 	 
	 
	 	 	 	 
	 

	 	Series of Preferred Stock Purchased:
	 	Fixed Rate Cumulative Perpetual 

Preferred Stock, Series A
	 
	 	 	 	 
	 

	 	Per Share Liquidation Preference of Preferred
Stock:
	 	$ 1,000.00
	 
	 	 	 	 
	 

	 	Number of Shares of Preferred Stock Purchased:
	 	 4,579
	 
	 	 	 	 
	 

	 	Dividend Payment Dates on the Preferred Stock:
	 	 February 15, May 15, August 15
and
 November 15 of each year






 


 









 





	 	 	 	 	 
	 

	 	Series of Warrant Preferred Stock:
	 	Fixed Rate Cumulative Perpetual
Preferred Stock, Series B
	 
	 	 	 	 
	 

	 	Number of Warrant Shares:
	 	254.44444
	 
	 	 	 	 
	 

	 	Number of Net Warrant Shares (after net
settlement):

	 	 229
	 
	 	 	 	 
	 

	 	Exercise Price of the Warrant:
	 	$100.00
	 
	 	 	 	 
	 

	 	Purchase Price:
	 	$4,579,000
	 
	 	 	 	 
	Closing:	 	 
	 
	 	 	 	 
	 

	 	Location of Closing:
	 	Hughes Hubbard and Reed LLP 

One Battery Park Plaza 

New York, New York 10004-1482
	 
	 	 	 	 
	 

	 	Time of Closing:
	 	9:00 A.M. ET
	 
	 	 	 	 
	 

	 	Date of Closing:
	 	February 20, 2009
	 
	 	 	 	 
	Wire Information for Closing:	 	ABA Number: 0313-0175-2

Bank: ATL CENT CAMP HILL

Account Name: First Priority
Bank,
 Malvern, PA 19355

Account Number: 220445

Beneficiary: First Priority
Financial Corp.
	 
	 	 	 	 
	Contact for Confirmation of Wire Information:	 	Mark Myers, Chief Accounting
Officer

First Priority Financial Corp.

2 West Liberty Blvd.

Suite 104

Malvern, Pennsylvania 19355

Phone: (484) 527-4041

Cell: (610) 350-9511

Facsimile: (484) 527-4037

Email: mmyers@fpbk.com






 


 









 





SCHEDULE B




CAPITALIZATION




	 	 	 	 	 
	Capitalization Date:	 	January 31, 2009
	 
	 	 	 	 
	Common Stock	 	 
	 
	 	 	 	 
	 

	 	Par value:
	 	$1.00 per share
	 
	 	 	 	 
	 

	 	Total Authorized:
	 	10,000,000 shares
	 
	 	 	 	 
	 

	 	Outstanding:
	 	3,122,929 shares
	 
	 	 	 	 
	 

	 	Subject to warrants, options, convertible securities,
etc.:
	 	1,171,477 shares
	 
	 	 	 	 
	 

	 	Reserved for benefit plans and other
issuances1:
	 	169,836 shares
	 
	 	 	 	 
	 

	 	Remaining authorized but unissued:
	 	5,535,758 shares
	 
	 	 	 	 
	 

	 	Shares issued after Capitalization Date (other than
pursuant to warrants, options, convertible securities,
etc. as set forth above):

	 	0 shares
	 
	 	 	 	 
	Preferred Stock	 	 
	 
	 	 	 	 
	 

	 	Par value:
	 	$100.00 per share
	 
	 	 	 	 
	 

	 	Total Authorized:
	 	10,000,000 shares
	 
	 	 	 	 
	 

	 	Outstanding (by series):
	 	0 shares
	 
	 	 	 	 
	 

	 	Reserved for issuance:
	 	0 shares
	 
	 	 	 	 
	 

	 	Remaining authorized but unissued:
	 	10,000,000 shares
	 
	 	 	 	 






 




	 	 	 
	1	 	The shares are reserved under the First Priority
Financial Corp. 2005 Stock Compensation Plan.


 


 









 






	 	 	 	 	 
	Holders of 5% or more of any class of capital stock	 	Primary Address
	David E. Sparks2                                   5.91% of outstanding shares	 	1572 Melville Road

Pottstown, Pennsylvania 19465






	 	 	 
	Starboard Fund for                                7.89% of outstanding shares

New Bancs, LP

Martin Fiascone,

General Partner3

	 	200 West Adams Street,

Suite 1015

Chicago, Illinois 60606
	 
	 	 
	Conwell Limited Partnership                4.58% of outstanding shares


Jerome S. Goodman,

General Partner4

	 	131-A-Gaither Drive,

Mount Laurel, NJ 08054
	 
	 	 
	Wellington Limited Partnership          2.11% of outstanding shares


Jerome S. Goodman,

General Partner5

	 	131-A-Gaither Drive,

Mount Laurel, NJ 08054







 





	 	 	 
	2	 	Mr. Sparks beneficially owns 186,371 shares of common stock,
including 75,000 shares in the name of his wife and 2,000 shares in the name
of his adult children, and 30,200 warrants to purchase common stock, of which,
15,000 are in his wife’s name and 400 are in the name of this adult children.
	 
	3	 	Starboard Fund for New Bancs beneficially owns 249,600
shares, including 41,600 warrants.
	 
	4	 	The Conwell Limited Partnership beneficially owns
144,000 shares, including 24,000 warrants. The Conwell
Limited Partnership and Wellington Limited Partnership have the same general
partner.
	 
	5	 	The Wellington Limited Partnership beneficially owns
66,000 shares, including 11,000 warrants. The Conwell Limited Partnership and
Wellington Limited Partnership have the same general partner.



 


 









 









SCHEDULE C




LITIGATION




List any exceptions to the representation and warranty in Section 2.2(l) of the Securities Purchase
Agreement – Standard Terms.



If none, please so indicate by checking the box: þ.




 


 









 







SCHEDULE D




COMPLIANCE WITH LAWS




List any exceptions to the representation and warranty in the second sentence of Section 2.2(m) of
the Securities Purchase Agreement – Standard Terms.



If none, please so indicate by checking the box: þ.



List any exceptions to the representation and warranty in the last sentence of Section 2.2(m) of
the Securities Purchase Agreement – Standard Terms.



If none, please so indicate by checking the box: þ.


 


 









 





SCHEDULE E




REGULATORY AGREEMENTS




List any exceptions to the representation and warranty in Section 2.2(s) of the Securities Purchase
Agreement – Standard Terms.



If none, please so indicate by checking the box: þ.