to them. The Purchaser and the Other Purchasers are hereinafter sometimes collectivelyreferred to as the “Purchasers”, and this Agreement and the purchase agreements executed bythe Other Purchasers are hereinafter sometimes collectively referred to as the“Agreements”.          SECTION 3. Delivery of the Subordinated Note at the Closing. The completion of thepurchase and sale of Subordinated Note(s) to the Purchaser (the “Closing”) shall occur atthe offices of Haskell Slaughter Young & Rediker, LLC, 2001 Park Place North, 1400 Park PlaceTower, Birmingham, Alabama, 35203, within five business days following the execution of thisAgreement, or on such later date or at such different location as the parties hereto shall agree inwriting, but not prior to the date that the conditions for Closing set forth below have beensatisfied or waived by the appropriate party (the “Closing Date”).     At the Closing, the Purchaser shall deliver, in immediately available funds, the full amountof the purchase price for the Subordinated Note being purchased hereunder by wire transfer to anaccount designated by the Company, and the Company shall deliver to the Purchaser one [or more]Subordinated Note(s) registered in the name of the Purchaser in the aggregate principal amount setforth in Section 2 hereof. The Subordinated Notes set forth the terms, conditions and restrictionsgoverning the payment and any pre-payment of interest and principal as well as other terms,conditions and restrictions in connection therewith. The name(s) in which the Subordinated Notesare to be registered are set forth in the Subordinated Note Questionnaire attached hereto as partof Appendix I.     The Company’s obligation to complete the sale and delivery of the Subordinated Notes anddeliver such Subordinated Note(s) to the Purchaser at the Closing shall be subject to the followingconditions, any one or more of which may be waived by the Company: (a) receipt by
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the Company of same-day funds in the full amount of the purchase price for the SubordinatedNotes being purchased hereunder; (b) the accuracy of the representations and warranties made by thePurchaser and the fulfillment of those undertakings of the Purchaser to be fulfilled prior to theClosing; and (c) approval by the Office of Thrift Supervision (“OTS”) to include theproceeds of the Subordinated Notes in the Company’s supplementary capital.     The Purchaser’s obligation to pay for the Subordinated Notes and to accept delivery of suchSubordinated Note(s) evidenced thereby shall be subject to the following conditions: (a) each ofthe representations and warranties of the Company and the Parent made herein shall be accurate asof the Closing Date; (b) the delivery to the Purchaser by counsel to the Company and the Parent ofa legal opinion in a form reasonably satisfactory to counsel for the Purchaser; (c) receipt by thePurchaser of a certificate executed by the chief executive officer and the chief financial oraccounting officer of, respectively, the Company and the Parent, dated as of the Closing Date, tothe effect that the representations and warranties of the Company and the Parent set forth hereinare true and correct as of the date of this Agreement and as of such Closing Date and that theCompany and the Parent, each, has complied with all the agreements and satisfied all the conditionsherein on its part to be performed or satisfied on or prior to such Closing Date; (d) thefulfillment in all material respects of those undertakings of the Company to be fulfilled prior tothe Closing; and (e) the delivery to the Purchaser of warrants in the form of Exhibit B hereto (the“Warrants”) to purchase 1,000,000 shares of the Parent’s common stock, par value $.001 (the “CommonStock”) (the Subordinated Notes, Warrants, and Common Stock being sometimes collectively referredto herein as the “Securities”) on the terms and conditions set forth in Section 9. The Purchaser’sobligations hereunder are expressly not conditioned on the
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purchase by any or all of Other Purchasers, if any, of the Subordinated Notes that they haveagreed to purchase from the Company.          SECTION 4. Representations, Warranties and Covenants of the Company and the Parent.The Company and the Parent each respectively hereby, with respect to itself, represents andwarrants to, and covenants with, the Purchaser as follows:          4.1 Organization and Qualification. The Company is a federal savings bank, validlyexisting and in good standing under the laws of the United States and the Parent is a corporationvalidly existing and in good standing under the laws of the State of Delaware and each is qualifiedto do business as a foreign corporation in each jurisdiction in which qualification is required,except where failure to so qualify would not have a Material Adverse Effect. For the purposes ofthis Agreement, the term “Material Adverse Effect” shall mean a material adverse effect onthe business, financial condition or results of operations of the Parent or the Companyrespectively and its Subsidiaries, taken as a whole; provided, that a “Material Adverse Effect”shall not be deemed to include any effects to the extent resulting from (i) changes in accountingprinciples generally accepted in the United States or regulatory accounting requirements applicableto banks or their holding companies generally, (ii) changes in laws, rules or regulations ofgeneral applicability or interpretations thereof, (iii) changes in general economic or marketconditions in the United States or in the regions in which the Parent or the Company, respectively,and/or its Subsidiaries operate or conduct business or general changes in the industries in whichthe Parent or the Company, respectively, and/or its Subsidiaries participate, (iv) the announcementor disclosure of the sale of the Securities or other transactions contemplated by this Agreement or(v) effects caused by any event, occurrence or condition resulting from or relating to the takingof any action in accordance with this Agreement.
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          4.2 Bank Regulatory Authorities. The Company holds the requisite authority from theOTS to do business as a federal savings bank under the laws of the United States and to enter intoand perform this Agreement. The Parent holds the requisite authority to enter into and performthis Agreement. The Parent and the Company each is in compliance in all material respects with alllaws administered by the OTS and the Federal Deposit Insurance Corporation (the “FDIC”)(together, the “Bank Regulatory Authorities”) with jurisdiction over either the Parent orthe Company respectively and the subsidiaries of each, except for failures to be so in compliancethat would not, individually or in the aggregate, have a Material Adverse Effect.          4.3 Issuance, Sale and Delivery of the Subordinated Notes. The Subordinated Noteshave been duly authorized and, when issued, delivered and paid for in the manner set forth in thisAgreement, will be valid and enforceable against the Company, and will conform in all materialrespects to the description thereof set forth herein. No further approval or authority of theBoard of Directors of the Company will be required for the issuance and sale of the SubordinatedNotes to be sold by the Company as contemplated herein.          4.4 Issuance, Sale and Delivery of the Warrants and the Common Stock. The Warrantsand the Common Stock have been duly authorized and when issued, delivered and (in the case of theCommon Stock) paid for in the manner set forth in this Agreement, or the Exhibits incorporatedherein, will be valid and enforceable against the Parent and will conform in all material respectsto the description set forth herein. No further approval or authority of the Board of Directors ofthe Parent will be required for the issuance and (in the case of the Common Stock) sale of theWarrants and Common Stock, as contemplated herein.
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          4.5 Due Execution, Delivery and Performance of the Agreements. The Parent and theCompany each has full legal right, corporate power and authority to enter into this Agreement andperform the transactions contemplated hereby. This Agreement has been duly authorized, executedand delivered by the Company and the Parent. This Agreement constitutes a legal, valid and bindingagreement of the Company and the Parent, enforceable against the Company and the Parent inaccordance with its terms, except as enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or other laws of general application relating to oraffecting the enforcement of creditors’ rights and the application of equitable principles relatingto the availability of remedies, and subject to 12 U.S.C. §§1818(b)(6)(D), 1828(b) and 1831o(h) (orany successor statutes) and similar thrift regulatory powers and to the application of principlesof public policy, and except as rights to indemnity or contribution, including but not limited to,indemnification provisions set forth in Section 7.3 of this Agreement may be limited by federal orstate securities law or the public policy underlying such laws.          4.6 Accountants. Each of Carr Riggs and Ingram, LLC and Grant Thornton, LLP, who haveexpressed their opinions with respect to the consolidated financial statements contained in theAnnual Report on Form 10-K of the Parent for the year ended December 31, 2007, which isincorporated by reference into the Disclosure Materials, are registered independent publicaccountants as required by the Securities Act of 1933 (the “Securities Act”) and the rulesand regulations promulgated thereunder (the “1933 Act Rules and Regulations”) and by therules of the Public Accounting Oversight Board.          4.7 No Defaults or Consents. The execution and performance of this Agreement by theCompany and the Parent and the consummation of the transactions herein
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contemplated will not (i) violate any provision of the Charter or bylaws of the Company or theParent, and (ii) except as would not reasonably be expected to result in a Material Adverse Effect,will not (x) result in the creation of any lien, charge, security interest or encumbrance upon anyassets of the Company or the Parent pursuant to the terms or provisions of, and will not conflictwith, result in the breach or violation of, or constitute, either by itself or upon notice or thepassage of time or both, a default under, or give rise to the accelerated due date of any paymentdue under, any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit orother instrument to which the Company or the Parent is a party or by which the Company or theParent or, respectively, its properties may be bound or affected or (y) violate any statute or anyauthorization, judgment, decree, order, rule or regulation of any court or any regulatory body,administrative agency or other governmental agency or body applicable to the Company or the Parentor, respectively, any of its properties. No consent, approval, authorization or other order of anycourt, regulatory body, administrative agency or other governmental agency or body is required forthe execution and delivery of this Agreement or the consummation of the transactions contemplatedby this Agreement, except for the approval by the OTS to include the proceeds of the SubordinatedNotes in the Company’s supplementary capital.          4.8 Contracts. The material contracts to which the Parent or the Company is a partyhave been duly and validly authorized, executed and delivered by the Parent or the Company, as thecase may be, and constitute the legal, valid and binding agreements of the Parent or the Company,as the case may be, enforceable by and against it in accordance with their respective terms, exceptas such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or othersimilar laws relating to enforcement of creditors’ rights
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generally, and general equitable principles relating to the availability of remedies, andsubject to 12 U.S.C. §1818(b)(6)(D) (or any successor statute) and similar thrift regulatory powersand to the application of principles of public policy, and except as rights to indemnity orcontribution may be limited by federal or state securities laws and the public policy underlyingsuch laws.          4.9 Deposit Accounts. The deposit accounts of the Company are insured up to themaximum amount provided by the FDIC and no proceedings for the modification, termination orrevocation of any such insurance are pending or threatened.          4.10 No Actions. Except as disclosed in the Disclosure Materials, there are no legalor governmental actions, suits or proceedings pending or, to the Company’s or the Parent’sknowledge, threatened against the Company or the Parent before or by any court, regulatory body oradministrative agency or any other governmental agency or body, domestic, or foreign, whichactions, suits or proceedings, individually or in the aggregate, would reasonably be expected tohave a Material Adverse Effect; and no labor disturbance by the employees of the Company or theParent exists or, to the knowledge of the Company or the Parent, is imminent, that would reasonablybe expected to have a Material Adverse Effect.          4.11 No Restrictions on the Company. As of the date hereof, neither the Company northe Parent is prohibited, directly or indirectly, under any order of the OTS, or any agreement orother instrument to which it is a party or is subject, from paying any dividends, from making anyother distribution on the Company’s or the Parent’s capital stock, from repaying any loans oradvances or from transferring any of the Company’s or the Parent’s properties or assets, provided,that,
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          (a) the Company is prohibited from paying any dividends or interest on the SubordinatedNotes (if such interest is required to be paid only out of net profits) or distributing anycapital assets if it is in default in the payment of any assessment due to the FDIC,provided further, that if such default is due to a dispute between the Company and the FDICover the amount of such assessment, such prohibition on the payment of dividends andinterest shall not apply if the Company deposits security satisfactory to the FDIC forpayment upon final determination of the issue; and     (b) if the Company becomes critically undercapitalized, then it is prohibited,beginning 60 days after becoming critically undercapitalized, from making any payment ofprincipal or interest on the Subordinated Notes, provided, further that, if the FDIC hastaken action with respect to such undercapitalization and determines that the payment ofprincipal and interest would further the purpose of 12 U.S.C. 1831o(h), then such paymentmay be permitted.          4.12 Properties. The Company or the Parent, as the case may be, has valid title toall the properties and assets described as owned by it in the consolidated financial statementsincluded in the Disclosure Materials, free and clear of all liens, mortgages, pledges, orencumbrances of any kind except (i) those, if any, reflected in such consolidated financialstatements, or (ii) those that would not reasonably be expected to have a Material Adverse Effect.The Company or the Parent hold its material leased properties under valid and binding leases. TheCompany or the Parent own or lease all such material properties as are necessary to its operationsas now conducted.
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          4.13 No Material Adverse Change. Except as disclosed in the Disclosure Materials,since December 31, 2007, (i) the Company and the Parent have conducted their respective businessesin all material respects in the ordinary course, consistent with prior practice, (ii) neither theCompany nor the Parent has incurred any liabilities or obligations of any nature (absolute,accrued, contingent or otherwise) which are not fully reflected or reserved against in thefinancial statements described in Section 4.18, except for liabilities that have arisen since suchdate in the ordinary and usual course of business and consistent with past practice and that,individually or in the aggregate, have not had and would not reasonably be expected to have aMaterial Adverse Effect and (iii) no event or events have occurred that, individually or in theaggregate, has had or would reasonably be expected to have a Material Adverse Effect.          4.14 Intellectual Property. The Company or the Parent, as the case may be, owns, islicensed or otherwise possesses all rights to use, all patents, patent rights, inventions, know-how(including trade secrets and other unpatented or unpatentable or confidential information, systems,or procedures), trademarks, service marks, trade names, copyrights and other intellectual propertyrights (collectively, the “Intellectual Property”) necessary for the conduct of itsbusiness as described in the Disclosure Materials, except as would not reasonably be expected tohave a Material Adverse Effect. No claims have been asserted against the Company or the Parent byany person with respect to the use of any such Intellectual Property or challenging or questioningthe validity or effectiveness of any such Intellectual Property except as would not reasonably beexpected to have a Material Adverse Effect.          4.15 Compliance. Neither the Company nor the Parent has been advised, nor does eitherof them have any reason to believe, that it is not conducting business in compliance with allapplicable laws, rules and regulations of the jurisdictions in which it is conducting
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business, including, without limitation, all applicable local, state and federal environmentallaws and regulations, except where failure to be so in compliance would not have a Material AdverseEffect.          4.16 Taxes. The Company and the Parent have filed on a timely basis (giving effect toextensions) all required federal, state and foreign income and franchise tax returns and has paidor accrued all taxes shown as due thereon, and neither the Company nor the Parent has knowledge ofa tax deficiency that has been or might be asserted or threatened against it, in each case, thatcould have a Material Adverse Effect except that the Alabama Department of Revenue has issued aNotice of Preliminary Assessment of Corporate Income Tax to a subsidiary of the Parent, TBC RealtyHoldings Corporation, for the tax years ended December 31, 2002 and December 31, 2003.Representatives of TBC Realty Holdings Corporation met with representatives of the AlabamaDepartment of Revenue to discuss and challenge the preliminary assessments. The matter is pendingwith the Alabama Department of Revenue. Final assessments have not been issued by the AlabamaRevenue Department on the basis of the preliminary assessments, but, if that were to occur, thenTBC Realty Holdings Corporation would have the right to appeal such assessments. All taxliabilities accrued through the date hereof have been adequately provided for on the books of theParent and the Company.          4.17 Transfer Taxes. On the Closing Date, any transfer or other taxes (other thanincome taxes) that are required to be paid in connection with the sale and delivery of theSubordinated Notes to be sold to the Purchaser hereunder will have been, fully paid or provided forby the Company and all laws imposing such taxes will have been fully complied with.
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          4.18 Investment Company. The Company is not and, after giving effect to the offeringand sale of the Subordinated Notes and the application of the proceeds thereof, will not be an“investment company,” as such term is defined in the Investment Company Act of 1940, as amended.          4.19 Offering Materials. The Company has furnished to the Purchaser or otherwise madeavailable a copy of each of the following: (i) the Parent’s Annual Report on Form 10-K for the yearended December 31, 2007, as filed with the Securities and Exchange Commission (the “SEC”);(ii) the Parent’s proxy statement for its Annual Meeting of Stockholders, held on April 23, 2008,as filed with the SEC on March 24, 2008, (iii) the Parent’s Quarterly Reports on Form 10-Q for thequarters ended March 31 and June 30, 2008; and (iv) the Parent’s Current Reports on Form 8-K asfiled with the SEC since June 30, 2008 pursuant to the reporting requirements of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”) (items (i) through (iv) together withother SEC filings incorporated therein and any other information about the Company or the Parent orrelating to their prospects that the Company may provide to the Purchaser in connection with thesale of the Subordinated Notes, collectively, the “Disclosure Materials”).          4.20 Insurance. The Company and the Parent, each, maintains insurance underwritten byinsurers of recognized financial responsibility, of the types and in the amounts that the Companyand the Parent, each, reasonably believes is adequate for its business, including, but not limitedto, insurance covering real and personal property owned or leased by the Company or the Parent, asthe case may be, against theft, damage, destruction, acts of vandalism and all other riskscustomarily insured against, with such deductibles as are customary for companies in the same orsimilar business, all of which insurance is in full force and effect.
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          4.21 Additional Information. The information contained in the Disclosure Materials,which the Company has furnished to the Purchaser (it being understood that all documents publiclyfiled with or publicly furnished to the Commission by the Parent shall be deemed “furnished” by theCompany for purposes of this Section 4.20), or will furnish prior to the Closing, as of the datesthereof, did not contain an untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary to make the statements therein in light of thecircumstances in which they were made not misleading.          The documents incorporated by reference in the Disclosure Materials or attached as exhibitsthereto, at the time they became effective or were filed with the Commission, as the case may be,complied in all material respects with the requirements of the Exchange Act, as applicable, and therules and regulations of the Commission thereunder (the “1934 Act Rules and Regulations”and, together with the 1933 Act Rule and Regulations, the “Rules and Regulations”).          4.22 Use of Proceeds. The Company shall use the proceeds from the sale of theSubordinated Notes for general corporate purposes.          4.23 Non-Public Information. Subject to Section 8 hereof, the Company and the Parent,each, hereby represents that it has not disclosed to the Purchaser, whether in the DisclosureMaterials or otherwise, information that would constitute material non-public information as of theClosing Date other than the existence of the transaction contemplated hereby.          4.24 Use of Purchaser Name. Except as otherwise required by applicable law orregulation neither the Company nor the Parent shall use the Purchaser’s name or the name of
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any of its affiliates in any advertisement, announcement, press release or other similarpublic communication unless it has received the prior written consent of the Purchaser for thespecific use contemplated which consent shall not be unreasonably withheld.          4.25 Governmental Permits, Etc. The Company or the Parent, as the case may be, haveall franchises, licenses, certificates and other authorizations from such federal, state or localgovernment or governmental agency, department or body that are currently necessary for theoperation of the business of the Company or the Parent as currently conducted, except where thefailure to possess currently such franchises, licenses, certificates and other authorizations isnot reasonably expected to have a Material Adverse Effect. Neither the Company nor the Parent hasreceived any notice of proceedings relating to the revocation or modification of any such permitthat, if the subject of an unfavorable decision, ruling or finding, could reasonably be expected tohave a Material Adverse Effect.          4.26 Financial Statements.          (a) The consolidated financial statements of the Parent and the related notes and schedulesthereto included in the Parent’s Exchange Act filings fairly present the financial position,results of operations, stockholders’ equity and cash flows of the Parent and its consolidatedSubsidiaries at the dates and for the periods specified therein. Such financial statements and therelated notes and schedules thereto have been prepared in accordance with accounting principlesgenerally accepted in the United States consistently applied throughout the periods involved(except as otherwise noted therein) and all adjustments necessary for a fair presentation ofresults for such periods have been made; provided, however, that the unaudited
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financial statements are subject to normal year-end adjustments and do not contain allfootnotes required under generally accepted accounting principles.          (b) So long as any of the Subordinated Notes remain outstanding, the Company will provide tothe Purchaser a copy of its monthly unaudited financial statements with the understanding that theywill be subject to the proviso in the penultimate sentence of Section 5.2.          4.27 Foreign Corrupt Practices. Neither the Company nor the Parent, nor to theknowledge of the Company or the Parent, any director, officer, agent, employee or other Personacting on behalf of the Company or the Parent has, in the course of its actions for, or on behalfof, the Company or the Parent (i) used any corporate funds for any unlawful contribution, gift,entertainment or other unlawful expenses relating to political activity; (ii) made any direct orindirect unlawful payment to any foreign or domestic government official or employee from corporatefunds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Actof 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickbackor other unlawful payment to any foreign or domestic government official or employee.          4.28 ERISA. The Company and the Parent, each, is in compliance in all materialrespects with all presently applicable provisions of the Employee Retirement Income Security Act of1974, as amended, including the regulations and published interpretations thereunder (herein called“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any“pension plan” (as defined in ERISA) for which the Company or the Parent would have any materialliability; neither the Company nor the Parent has incurred nor expects
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to incur any material liability under (i) Title IV of ERISA with respect to termination of, orwithdrawal from, any “pension plan”; or (ii) Sections 412 or 4971 of the Internal Revenue Code of1986, as amended, including the regulations and published interpretations thereunder (the“Code”); and each “Pension Plan”, if any, for which the Company or the Parent would haveliability that is intended to be qualified under Section 401(a) of the Code is so qualified in allmaterial respects and nothing has occurred, whether by action or by failure to act, which wouldcause the loss of such qualification.          4.29 Filing of Form 8-K. Within four business days after the date hereof, the Parentshall file a Current Report on Form 8-K describing the material terms of the transactionscontemplated by this Agreement (for clarification purposes only and without implication to thecontrary, the transactions contemplated by this Agreement include only the transaction among theCompany, the Parent, and the Purchaser and do not include any other transaction among the Company,the Parent, and any other third party purchaser of the securities of the Company or the Parent),and attaching as an exhibit to such Form 8-K a form of this Agreement.          4.30 Solvency. The Company and the Parent, each, does and will, after giving effectto the transactions contemplated hereby to occur at the Closing and the sale of Subordinated Notesto the Other Purchasers, if any, and the issuance of the Warrants (a) own assets the fair saleablevalue of which are (i) greater than the total amount of its liabilities (including known contingentliabilities) and (ii) greater than the amount that will be required to pay the probable liabilitiesof its existing debts as they become absolute and matured considering the financing alternativesreasonably available to it, and (b) have capital that will not be unreasonably small in relation toits business as presently conducted or any contemplated. Neither the Parent nor the Company hasknowledge of any facts or circumstances which lead it
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to believe that it or any of its Subsidiaries will be required to file for reorganization orliquidation under the bankruptcy or reorganization laws of any jurisdiction, and has no presentintent to so file.          SECTION 5. Representations, Warranties and Covenants of the Purchaser. The Purchaserrepresents and warrants to, and covenants with, the Company and the Parent that:          5.1 Experience. (i) The Purchaser is knowledgeable, sophisticated and experienced infinancial and business matters, in making, and is qualified to make, decisions with respect to thepurchase of the Securities representing an investment decision like that involved in the purchaseof the Securities, including investments in securities issued by the Company, the Parent andcomparable entities, has the ability to bear the economic risks of an investment in the Securitiesand has reviewed carefully the Disclosure Materials and has requested, received, reviewed andconsidered all information the Purchaser deems relevant in making an informed decision to purchasethe Securities; (ii) the Purchaser is acquiring the aggregate principal amount of SubordinatedNotes set forth in Section 2 above, the Warrants and the Common Stock in the ordinary course of thePurchaser’s business and for the Purchaser’s own account for investment only and with no presentintention of distributing any of the Securities or any arrangement or understanding with any otherpersons regarding the resale of such Securities; (iii) the Purchaser has, in connection with thePurchaser’s decision to purchase the aggregate principal amount of Subordinated Notes set forth inSection 2 above, the Warrants and the Common Stock, relied solely upon the Disclosure Materials andthe representations and warranties of the Company or the Parent, as the case may be, containedherein; (iv) the Purchaser has had an opportunity to discuss this investment with representativesof the Company and the
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Parent and ask questions of them; and (v) the Purchaser is an “accredited investor” within themeaning of Rule 501(a) of Regulation D promulgated under the Securities Act.          5.2 Confidentiality. For the benefit of the Company and the Parent, the Purchaser hasagreed to keep confidential all information concerning this private placement. The Purchaserunderstands that the information contained in this Agreement and non-public documents, if any,included in the Disclosure Materials is strictly confidential and proprietary to the Company andthe Parent and has been prepared from the publicly available documents of the Company and theParent and other information and is being submitted to the Purchaser solely for such Purchaser’sconfidential use. The Purchaser agrees to use the non-public information contained in theDisclosure Materials for the sole purpose of evaluating a possible purchase of the Securities, andthe Purchaser acknowledges that it is prohibited from reproducing or distributing any non-publicinformation included in the Disclosure Materials, or any other offering materials or otherinformation provided by the Company or the Parent in connection with the Purchaser’s considerationof its purchase of the Securities, in whole or in part, or divulging or discussing any of theircontents, except to its financial, investment or legal advisors in connection with its proposedinvestment in the Securities, which or whom the Purchaser will cause to comply with the obligationsunder this Section 5.2. Further, the Purchaser understands that the existence and nature of allconversations and presentations, if any, regarding the Company or its Parent and this offering mustbe kept strictly confidential. The Purchaser understands that the federal securities laws imposerestrictions on trading in the Parent’s securities based on non-public information regarding thisoffering. In addition, the Purchaser hereby acknowledges that unauthorized disclosure ofnon-public information regarding this offering may result in a violation of Regulation FD. Theobligations under this Section 5.2 will
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terminate upon the filing by the Parent of the 8-K filing contemplated by Section 4.28 hereof;provided, however, that if the Purchaser receives any future non-public information such as themonthly Company financials contemplated by Section 4.26(b), Purchaser will treat that informationas confidential and will not trade on the basis of that information (if it is material) until it ismade public or subsumed in an Exchange Act filing of the Parent.. The foregoing agreements shallnot apply to any information that was non-public that is or becomes publicly available through nofault of the Purchaser, or that the Purchaser is legally required to disclose; provided, however,that if the Purchaser is requested or ordered to disclose any such non-public information pursuantto any court or other government order or any other applicable legal procedure, to the extentpermitted by applicable law it shall provide the Company and the Parent with prompt notice of anysuch request or order in time sufficient to enable the Parent or the Company to seek an appropriateprotective order.          5.3 Investment Decision. The Purchaser understands that nothing in this Agreement orany other materials presented to the Purchaser in connection with the purchase of the Securitiesconstitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax andinvestment advisors as it, in its sole discretion, has deemed necessary or appropriate inconnection with its purchase of the Securities.          5.4 Risk of Loss. The Purchaser understands that its investment in the Securitiesinvolves a significant degree of risk, including a risk of total loss of the Purchaser’sinvestment, and the Purchaser has full cognizance of and understands all of the risk factorsrelated to the Purchaser’s purchase of the Securities, including, but not limited to, those setforth under the caption “Risk Factors” in the Parent’s Form 10-K filing for the year ended December31, 2007.
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          5.5 Residency. The Purchaser’s principal executive offices or residence address is inthe jurisdiction set forth immediately below the Purchaser’s name on the signature pages hereto.          5.6 Organization; Validity; Enforcements. The Purchaser further represents andwarrants to, and covenants with, the Company and the Purchaser that (i) the Purchaser has fullright, power, authority and capacity to enter into this Agreement and to consummate thetransactions contemplated hereby and has taken all necessary action to authorize the execution,delivery and performance of this Agreement, (ii) the making and performance of this Agreement bythe Purchaser and the consummation of the transactions herein contemplated will not violate orconflict with, result in the breach or violation of, or constitute, either by itself or upon noticeor the passage of time or both, a default under any material agreement, mortgage, deed of trust,lease, franchise, license, indenture, permit or other instrument to which the Purchaser is a partyor, any statute or any authorization, judgment, decree, order, rule or regulation of any court orany regulatory body, administrative agency or other governmental agency or body applicable to thePurchaser, (iii) no consent, approval, authorization or other order of any court, regulatory body,administrative agency or other governmental agency or body is required on the part of the Purchaserfor the execution and delivery of this Agreement or the consummation of the transactionscontemplated by this Agreement, (iv) upon the execution and delivery of this Agreement, thisAgreement shall constitute a legal, valid and binding obligation of the Purchaser, enforceable inaccordance with its terms, except as such enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or other laws of general application relating to or theenforcement of creditor’s rights and the application of equitable principles relating to theavailability of remedies, and except as rights to indemnity or
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contribution, including, but not limited to, the indemnification provisions set forth inSection 7.3 of this Agreement, may be limited by federal or state securities laws or the publicpolicy underlying such laws and (v) there is not in effect any order enjoining or restraining thePurchaser from entering into or engaging in any of the transactions contemplated by this Agreement.          SECTION 6. Survival of Agreements; Non-Survival of Company and Parent Representations andWarranties. Notwithstanding any investigation made by any party to this Agreement, allcovenants and agreements made by the Company, the Parent and the Purchaser herein and in theSecurities sold pursuant hereto shall survive the execution of this Agreement, the delivery to thePurchaser of the Warrants and the Subordinated Notes being purchased and the payment therefor. Allrepresentations and warranties, made by the Company, the Parent and the Purchaser herein and in theSubordinated Notes and Warrants sold pursuant hereto shall survive for a period of three yearsfollowing the later of the execution of this Agreement, the delivery to the Purchaser of theSubordinated Notes and Warrants being purchased and the payment therefor.          SECTION 7. Indemnification           7.1 Company Indemnity. The Company and the Parent, each, agrees to indemnify and holdharmless the Purchaser and each Purchaser/Affiliate, against any and all losses, claims, damages,liabilities or expenses, joint or several, to which the Purchaser or Purchaser/Affiliates maybecome subject (including in settlement of any litigation or any investigation or proceeding by anygovernmental agency or body, commenced or threatened, if such settlement is effected with thewritten consent of the Company or the Parent, as the case
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may be, subject to Section 7.3 hereof), insofar as such losses, claims, damages, liabilitiesor expenses (or actions in respect thereof as contemplated below) arise out of any breach of therepresentations, warranties, covenants or agreements of the Company or the Parent, as the case maybe, set forth herein or are based upon any untrue statement or alleged untrue statement of anymaterial fact contained in the Disclosure Materials and will promptly reimburse the Purchaser andany Purchaser/Affiliate for any reasonable legal and other expenses as such expenses are reasonablyincurred by such Purchaser in connection with investigating, defending or preparing to defend,settling, compromising or paying any such loss, claim, damage, liability, expense or action;provided, however, that, subject to Section 7.3 hereof, neither the Company nor the Parent will beliable for amounts paid in settlement of any such loss, claim, damage, liability or action if suchsettlement is effected without the consent of the Company or the Parent, as the case may be, whichconsent shall not be unreasonably withheld, and neither the Company nor the Parent will be liablein any such case to the extent that any such loss, claim, damage, liability or expense arises outof or is based upon (i)  any breach of the representations, warranties or covenants of thePurchaser set forth herein, or (ii) the inaccuracy of any representation or warranty made by suchPurchaser herein.          7.2 Purchaser Indemnity. The Purchaser will severally, but not jointly with any otherPurchaser, indemnify and hold harmless the Company and the Purchaser, each of their respectivedirectors, each of their respective officers and each person, if any, who controls the Company orthe Parent against any losses, claims, damages, liabilities or expenses to which the Company or theParent, each of their respective directors, each of their respective officers or any controllingperson may become subject (including in settlement of any litigation, but only if such settlementis effected with the written consent of such Purchaser) insofar as such losses, claims,
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damages, liabilities or expenses (or actions in respect thereof as contemplated below) ariseout of or are based upon any untrue or alleged untrue statements or omissions made by the Purchaserto the Company or the Parent in connection with the transactions contemplated by this Agreement;and will reimburse the Company or the Parent, each of their respective directors, each of theirrespective officers or controlling person for any legal and other expense reasonably incurred bythe Company or the Parent, each of their respective directors, each of their respective officers orcontrolling person in connection with investigating, defending, settling, compromising or payingany such loss, claim, damage, liability, expense or action.          7.3 Indemnification Procedures. Promptly after receipt by an indemnified party underthis Section 7.3 of notice of the threat or commencement of any action, such indemnified partywill, if a claim in respect thereof is to be made against an indemnifying party under thisSection 7.3 promptly notify the indemnifying party in writing thereof, but the omission to notifythe indemnifying party will not relieve it from any liability that it may have to any indemnifiedparty for contribution or otherwise under the indemnity agreement contained in this Section 7.3 tothe extent it is not prejudiced as a result of such failure. In case any such action is broughtagainst any indemnified party and such indemnified party seeks or intends to seek indemnity from anindemnifying party, the indemnifying party will be entitled to participate in, and, to the extentthat it may wish, jointly with all other indemnifying parties similarly notified, to assume thedefense thereof with counsel reasonably satisfactory to such indemnified party; provided, however,if the defendants in any such action include both the indemnified party, and the indemnifying partyand the indemnified party shall have reasonably concluded, based on an opinion of counsel, thatthere may be a conflict of interest between the positions of the indemnifying party and theindemnified party in conducting the defense of any such action or
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that there may be legal defenses available to it and/or other indemnified parties that aredifferent from or additional to those available to the indemnifying party, the indemnified party orparties shall have the right to select separate counsel to assume such legal defenses and tootherwise participate in the defense of such action on behalf of such indemnified party or parties.Upon receipt of notice from the indemnifying party to such indemnified party of its election toassume the defense of such action and approval by the indemnified party of counsel, theindemnifying party will not be liable to such indemnified party under this Section 7.3 for anylegal or other expenses subsequently incurred by such indemnified party in connection with thedefense thereof unless (i) the indemnified party shall have employed such counsel in connectionwith the assumption of legal defenses in accordance with the proviso to the preceding sentence (itbeing understood, however, that the indemnifying party shall not be liable for the expenses of morethan one separate counsel representing all of the indemnified parties who are parties to suchaction) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory tothe indemnified party to represent the indemnified party within a reasonable time after notice ofcommencement of action, in each of which cases the reasonable fees and expenses of counsel shall beat the expense of the indemnifying party. The indemnifying party shall not be liable for anysettlement of any action without its written consent; provided that such consent shall not beunreasonably withheld. No indemnifying party shall, without the prior written consent of theindemnified party, effect any settlement of any pending or threatened proceeding in respect ofwhich any indemnified party is or could have been a party and indemnification could have beensought hereunder by such indemnified party from all liability on claims that are the subject matterof such proceeding.
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          7.4 Payments in Lieu of Indemnification. If the indemnification provided for inSection 7.3 hereof is required by its terms but is for any reason held to be unavailable to orotherwise insufficient to hold harmless an indemnified party here in respect to any losses, claims,damages, liabilities or expenses referred to herein, then each applicable indemnifying party shallcontribute to the amount paid or payable by such indemnified party as a result of any losses,claims, damages, liabilities or expenses referred to herein (i) in such proportion as isappropriate to reflect the relative benefits received by the Parent, the Company and the Purchaserfrom the transactions contemplated by this Agreement. The amount paid or payable by a party as aresult of the losses, claims, damages, liabilities and expenses referred to above shall be deemedto include, subject to the limitations set forth in Section 7.3, any legal or other fees orexpenses reasonably incurred by such party in connection with investigating or defending any actionor claim. The provisions set forth in Section 7.3 with respect to the notice of the threat orcommencement of any threat or action shall apply if a claim for contribution is to be made underthis Section 7.4; provided, however, that no additional notice shall be required with respect toany threat or action for which notice has been given under Section 7.3 for purposes ofindemnification.          SECTION 8. Purchaser May Receive Non-Public Information. Notwithstanding anythingcontained herein to the contrary, the Purchaser may have elected to receive (and thereforereceived) certain information that may be deemed to be material non-public information (the“Confidential Information”). If so, the Purchaser hereby agrees (i) not to use theConfidential Information for any purpose other than in connection with its evaluation of a possibleinvestment in the Subordinated Notes, (ii) to keep all Confidential Information confidential andnot to disclose or reveal in any manner whatsoever any Confidential Information to
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any person other than such Purchaser’s representatives who are actively and directlyparticipating in the evaluation of a possible investment in the Securities or otherwise need toknow the Confidential Information for such purpose and who have been advised by such Purchaser of,and have agreed to be bound by, the restrictions contained in this Section 8, and (iii) not toeffect any transaction in (other than as contemplated by this Agreement) any securities of theParent until the earlier of (A) six months from the date of this Agreement and (B) such time as theCompany or its Parent in its reasonable opinion determines that the Confidential Information is nolonger considered material non-public information. The Company and the Parent agree promptly toadvise the Purchaser if the Confidential Information has been made public or if, in theirdiscretion, the Confidential Information is no longer considered material non-public information.          SECTION 9. Issuance of Warrants and Registration of Underlying Stock.          (a) Issuance of Warrants. In consideration of Purchaser’s agreement to purchase theSubordinated Note, the Parent, simultaneously with the delivery of the Subordinated Note, willissue to the Purchaser a Warrant to purchase one million shares of the Parent’s Common Stock at aprice per share equal to the greater of (i) $7.00 or (ii) the average closing price of the Parent’sCommon Stock on NASDAQ for the ten trading days immediately preceding the Closing Date. ThePurchaser’s right to exercise the Warrant, in whole, may be subject to the receipt of certainregulatory approvals.          (b) Registration of Warrant Shares. Within 90 days following the Closing Date, theParent will register the Warrant Shares with the Securities and Exchange Commission (the “SEC”)pursuant to Rule 415(a)(iii) promulgated under the Securities Act of 1933 in
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anticipation of a possible future sale by the Purchaser of the Warrant Shares should thePurchaser exercise the Warrants.          SECTION 10. Notices. All notices, requests, consents and other communicationshereunder shall be in writing, shall be mailed by first-class registered or nationally recognizedovernight express courier postage prepaid, and shall be deemed given when so mailed and shall bedelivered as addressed as follows:(a) if to the Company or the Parent, to:Superior Bank