Exhibit
10.3


 


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 its common stock set forth on Schedule A hereto (the “Warrant” and, together with the Preferred
Shares, the “Purchased Securities”)
and the United States Department 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the extent supplemented or superseded by the terms set forth herein or in the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) and the Securities Purchase Agreement (including the
Annexes thereto) and the Warrant constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties,
both written and oral, between the parties, with respect to the subject matter
hereof.  This letter agreement
constitutes the “Letter Agreement” referred to in the Securities Purchase
Agreement.


 


This letter agreement may be
executed in any number 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/ NEEL KASHKARI

  
	
   

  	
   

  	
    Name: Neel Kashkari

  
	
   

  	
   

  	
    Title: Interim Assistant
  Secretary for Financial Stability

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  YADKIN VALLEY FINANCIAL

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WILLIAM
  A. LONG

  
	
   

  	
   

  	
    Name: William A. Long

  
	
   

  	
   

  	
    Title: President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  January 16, 2009

  	
   

  	
   

  	
   

  
					



 

















 


EXHIBIT
A


 




 





 


SECURITIES PURCHASE AGREEMENT


 


STANDARD TERMS


 




 





 

















 


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

  	
  14

  
	
  3.3

  	
  Sufficiency of Authorized Common Stock;
  Exchange Listing

  	
  15

  
	
  3.4

  	
  Certain Notifications Until Closing

  	
  15

  
	
  3.5

  	
  Access, Information and Confidentiality

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  Article IV

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Additional Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Purchase for Investment

  	
  16

  
	
  4.2

  	
  Legends

  	
  16

  
	
  4.3

  	
  Certain Transactions

  	
  18

  
	
  4.4

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

  	
  18

  
	
  4.5

  	
  Registration Rights.

  	
  19

  
	
  4.6

  	
  Voting of Warrant Shares

  	
  31

  
	
  4.7

  	
  Depositary Shares

  	
  31

  
	
  4.8

  	
  Restriction on Dividends and Repurchases

  	
  31

  
	
  4.9

  	
  Repurchase of Investor Securities

  	
  32

  
	
  4.10

  	
  Executive Compensation

  	
  33

  
	
  4.11

  	
  Bank and Thrift Holding Company Status

  	
  34

  



 


i

















 


	
  4.12

  	
  Predominantly Financial

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  Article V

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Termination

  	
  34

  
	
  5.2

  	
  Survival of Representations and Warranties

  	
  35

  
	
  5.3

  	
  Amendment

  	
  35

  
	
  5.4

  	
  Waiver of Conditions

  	
  35

  
	
  5.5

  	
  Governing Law: Submission to
  Jurisdiction, Etc.

  	
  35

  
	
  5.6

  	
  Notices

  	
  36

  
	
  5.7

  	
  Definitions

  	
  36

  
	
  5.8

  	
  Assignment

  	
  37

  
	
  5.9

  	
  Severability

  	
  37

  
	
  5.10

  	
  No Third Party Beneficiaries

  	
  37

  



 


ii

















 


LIST OF
ANNEXES


 


ANNEX A:            FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED
STOCK


 


ANNEX B:                                      FORM OF
WAIVER


 


ANNEX C:                                      FORM OF
OPINION


 


ANNEX D:            FORM OF WARRANT


 


iii

















 


INDEX OF DEFINED TERMS


 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Affiliate

  	
   

  	
  5.7(b)

  
	
  Agreement

  	
   

  	
  Recitals

  
	
  Appraisal
  Procedure

  	
   

  	
  4.9(c)(i)

  
	
  Appropriate
  Federal Banking Agency

  	
   

  	
  2.2(s)

  
	
  Bank Holding
  Company

  	
   

  	
  4.11

  
	
  Bankruptcy
  Exceptions

  	
   

  	
  2.2(d)

  
	
  Benefit
  Plans

  	
   

  	
  1.2(d)(iv)

  
	
  Board of
  Directors

  	
   

  	
  2.2(f)

  
	
  Business
  Combination

  	
   

  	
  4.4

  
	
  business day

  	
   

  	
  1.3

  
	
  Capitalization
  Date

  	
   

  	
  2.2(b)

  
	
  Certificate
  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

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company
  Financial Statements

  	
   

  	
  2.2(h)

  
	
  Company
  Material Adverse Effect

  	
   

  	
  2.1(a)

  
	
  Company
  Reports

  	
   

  	
  2.2(i)(i)

  
	
  Company
  Subsidiary; Company Subsidiaries

  	
   

  	
  2.2(i)(i)

  
	
  control;
  controlled by; under common control with

  	
   

  	
  5.7(b)

  
	
  Controlled
  Group

  	
   

  	
  2.2(n)

  
	
  CPP

  	
   

  	
  Recitals

  
	
  EESA

  	
   

  	
  1.2(d)(iv)

  
	
  ERISA

  	
   

  	
  2.2(n)

  
	
  Exchange Act

  	
   

  	
  2.1(b)

  
	
  Fair Market
  Value

  	
   

  	
  4.9(c)(ii)

  
	
  Federal
  Reserve

  	
   

  	
  4.11

  
	
  GAAP

  	
   

  	
  2.1(a)

  
	
  Governmental
  Entities

  	
   

  	
  1.2(c)

  
	
  Holder

  	
   

  	
  4.5(k)(i)

  
	
  Holders’
  Counsel

  	
   

  	
  4.5(k)(ii)

  
	
  Indemnitee

  	
   

  	
  4.5(g)(i)

  
	
  Information

  	
   

  	
  3.5(b)

  
	
  Initial
  Warrant Shares

  	
   

  	
  Recitals

  
	
  Investor

  	
   

  	
  Recitals

  
	
  Junior Stock

  	
   

  	
  4.8(c)

  
	
  knowledge of
  the Company; Company’s knowledge

  	
   

  	
  5.7(c)

  
	
  Last Fiscal
  Year

  	
   

  	
  2.1(b)

  



 


iv

















 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Letter
  Agreement

  	
   

  	
  Recitals

  
	
  officers

  	
   

  	
  5.7(c)

  
	
  Parity Stock

  	
   

  	
  4.8(c)

  
	
  Pending
  Underwritten Offering

  	
   

  	
  4.5(l)

  
	
  Permitted
  Repurchases

  	
   

  	
  4.8(a)(ii)

  
	
  Piggyback
  Registration

  	
   

  	
  4.5(a)(iv)

  
	
  Plan

  	
   

  	
  2.2(n)

  
	
  Preferred
  Shares

  	
   

  	
  Recitals

  
	
  Preferred
  Stock

  	
   

  	
  Recitals

  
	
  Previously
  Disclosed

  	
   

  	
  2.1(b)

  
	
  Proprietary
  Rights

  	
   

  	
  2.2(u)

  
	
  Purchase

  	
   

  	
  Recitals

  
	
  Purchase
  Price

  	
   

  	
  1.1

  
	
  Purchased
  Securities

  	
   

  	
  Recitals

  
	
  Qualified
  Equity Offering

  	
   

  	
  4.4

  
	
  register;
  registered; registration

  	
   

  	
  4.5(k)(iii)

  
	
  Registrable
  Securities

  	
   

  	
  4.5(k)(iv)

  
	
  Registration
  Expenses

  	
   

  	
  4.5(k)(v)

  
	
  Regulatory
  Agreement

  	
   

  	
  2.2(s)

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

  	
   

  	
  4.5(k)(vi)

  
	
  Savings and
  Loan Holding Company

  	
   

  	
  4.11

  
	
  Schedules

  	
   

  	
  Recitals

  
	
  SEC

  	
   

  	
  2.1(b)

  
	
  Securities
  Act

  	
   

  	
  2.2(a)

  
	
  Selling
  Expenses

  	
   

  	
  4.5(k)(vii)

  
	
  Senior
  Executive Officers

  	
   

  	
  4.10

  
	
  Share
  Dilution Amount

  	
   

  	
  4.8(a)(ii)

  
	
  Shelf
  Registration Statement

  	
   

  	
  4.5(a)(ii)

  
	
  Signing Date

  	
   

  	
  2.1(a)

  
	
  Special
  Registration

  	
   

  	
  4.5(i)

  
	
  Stockholder
  Proposals

  	
   

  	
  3.1(b)

  
	
  subsidiary

  	
   

  	
  5.8(a)

  
	
  Tax; Taxes

  	
   

  	
  2.2(o)

  
	
  Transfer

  	
   

  	
  4.4

  
	
  Warrant

  	
   

  	
  Recitals

  
	
  Warrant
  Shares

  	
   

  	
  2.2(d)

  



 


v
















 


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 its Common Stock (“Common Stock”)
set forth on Schedule A to the Letter Agreement (the “Initial Warrant Shares”) (the “Warrant” and, together with the  Preferred
Shares, the “Purchased Securities”) and the
Investor intends to purchase (the “Purchase”) from
the Company the Purchased Securities; and


 


WHEREAS, the Purchase will be
governed by this Securities Purchase Agreement — Standard Terms and the Letter
Agreement, including the schedules thereto (the “Schedules”), specifying additional terms 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 


 


2

















 


performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing;


 


(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 amendment to its certificate or articles of incorporation, articles
of association, or similar organizational document (“Charter”)  in
substantially the form attached hereto as Annex A  (the “Certificate 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 B
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 C;


 


(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


 


3

















 


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


 


1.3           Interpretation.
When a reference is made in this Agreement to “Recitals,” “Articles,” “Sections,”
or “Annexes” such reference shall be to a Recital, Article or Section of,
or Annex to, this Securities Purchase Agreement — Standard 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)           “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, (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 


 


4

















 


or occurrences to the extent that such changes or occurrences have or
would reasonably be expected to have a materially disproportionate adverse
effect on the Company and its consolidated subsidiaries taken as a whole relative
to comparable U.S. banking or financial services organizations), or (D) changes
in the market price or trading volume of the Common Stock or any other equity,
equity-related or debt securities of the Company or its consolidated
subsidiaries (it being understood and agreed that the exception set forth in
this clause (D) does not apply to the underlying reason giving rise to or
contributing to any such change); or (ii) the ability of the Company to
consummate the Purchase and the other transactions contemplated by this
Agreement and the Warrant and perform its obligations hereunder or thereunder
on a timely basis.


 


(b)           “Previously Disclosed” means information set forth or
incorporated in the Company’s Annual Report on Form 10-K for the most
recently completed fiscal year of the Company filed with the Securities and
Exchange Commission (the “SEC”)
prior to the Signing Date (the “Last Fiscal
Year”) or in its other reports and forms filed with or furnished to
the SEC under Sections 13(a), 14(a) or 15(d) of
the Securities Exchange Act of 1934 (the “Exchange Act”)
on or after the last day of the Last Fiscal Year and prior to the Signing Date.


 


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 is 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). Except as provided
in the Warrant, as of the Signing Date, the Company does not have outstanding
any securities or other obligations providing the holder the right to acquire
Common Stock that is not reserved for issuance as 


 


5

















 


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.


 


(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 Common 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, subject, if applicable, to the
approvals of its stockholders set forth on Schedule C.


 


(e)           Authorization,
Enforceability.


 


(i)            The Company has the corporate power and
authority to execute and deliver this Agreement and the Warrant and, subject,
if applicable, to the approvals of its stockholders set forth on Schedule C,  to carry out its obligations hereunder and
thereunder (which includes the issuance 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, subject, in each case, if
applicable, to the approvals of its stockholders set forth on Schedule C.
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.


 


(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



 


6

















 


thereof, will not (A) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
of, or result in the creation of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any Company
Subsidiary under any of the terms, conditions or provisions of (i) subject,
if applicable, to the approvals of the Company’s stockholders set forth on Schedule
C, 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 Certificate of Designations with the
Secretary of State of its jurisdiction of organization or other applicable
Governmental Entity, any current report on Form 8-K required to be filed
with the SEC, such filings and approvals as are required to be made or obtained under
any state “blue sky” laws, the filing of  any proxy statement contemplated by Section 3.1
and such as have been made or obtained, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any Governmental Entity is
required to be made or obtained by the Company in connection with the
consummation by the Company 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. 
The Company has taken all actions necessary to render any stockholders’
rights plan of the Company inapplicable to this Agreement and the Warrant and
the consummation of the transactions contemplated hereby and thereby, including
the exercise of the Warrant by the Investor in accordance with its terms.


 


(g)           No
Company
Material Adverse Effect.
Since the last day of the last
completed fiscal period for which the Company has filed a Quarterly Report on Form 10-Q
or an Annual 


 


7

















 


Report on Form 10-K with the SEC prior
to the Signing Date, no
fact, circumstance, event, change, occurrence, condition or development has
occurred that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect.


 


(h)           Company Financial
Statements.  Each of the consolidated
financial statements of the Company and its consolidated subsidiaries
(collectively the “Company Financial
Statements”) included or incorporated by reference in the Company
Reports filed with the SEC since December 31,
2006, present fairly in all material respects the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
indicated therein (or if amended prior to the Signing Date, as of the date of
such amendment) 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), (B) have been prepared
from, and are in accordance with, the books and records of the Company and the
Company Subsidiaries and (C) complied as to form, as of their respective
dates of filing with the SEC, in
all material respects with the applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto.


 


(i)            Reports.


 


(i)            Since December 31, 2006, the Company and
each subsidiary of the Company (each a “Company Subsidiary”
and, collectively, the “Company Subsidiaries”)
has timely filed all reports, registrations, documents, filings, statements and
submissions, together with any amendments thereto, that it was required to file
with any Governmental Entity (the foregoing, collectively, the “Company Reports”) and has paid all fees
and assessments due and payable in connection therewith, except, in each case,
as would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect.  As 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.  In the
case of each such Company Report filed with or furnished to the SEC, such
Company Report (A) did not, as of its date or if amended prior to the
Signing Date, as of the date of such amendment, contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and (B) complied as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange
Act.  With respect to all other Company
Reports, the Company Reports were complete and accurate in all material
respects as of their respective dates. 
No executive officer of the Company or any Company Subsidiary has failed
in any respect to make the certifications required of him or her under Section 302
or 906 of the Sarbanes-Oxley Act of 2002.


 


(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 


 


8

















 


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 disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to ensure that material information relating to the Company,
including the consolidated Company Subsidiaries, is made known to the chief
executive officer and the chief financial officer 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 over
financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) that are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information and (y) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company’s internal controls over financial
reporting.


 


(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 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 D
or (ii) as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, there is no (A) pending or, to the knowledge 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 


 


9

















 


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 E, 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 E, no Governmental Entity has placed any restriction
on the business or properties of the Company or any Company Subsidiary that
would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.


 


(n)           Employee Benefit
Matters.  Except as would not
reasonably be expected to have, either individually or in the aggregate, a Company Material Adverse Effect: (A) each
“employee benefit plan” (within the meaning of Section 3(3) 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


 


10
















 


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.


 


(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.


 


11

















 


(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.


 


(s)                                  Agreements
with Regulatory Agencies.  Except as
set forth on Schedule F, neither the Company nor any Company Subsidiary
is subject to any material cease-and-desist or other similar order or
enforcement action issued by, or is a party to any material written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any capital
directive by, or since December 31, 2006, has adopted any board
resolutions at the request of, any Governmental Entity (other than the
Appropriate Federal Banking Agencies with jurisdiction over the Company and the
Company Subsidiaries) that currently restricts in any material respect the
conduct 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 


 


12

















 


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.


 


(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.


 


(a)                                  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.


 


(b)                                 If the Company is required to obtain any
stockholder approvals set forth on Schedule C, then the Company shall comply with this Section 3.1(b) and
Section 3.1(c). The Company shall call a special meeting of its
stockholders, as promptly as practicable following the Closing, to vote on
proposals (collectively, the “Stockholder Proposals”)
to (i) approve the exercise of the Warrant for Common Stock for purposes
of the rules of the national security 


 


13

















 


exchange on which the Common Stock is listed and/or (ii) amend the
Company’s Charter  to increase the number of authorized shares of Common Stock to at least
such number as shall be sufficient to permit the full exercise of the Warrant
for Common Stock and comply with the other provisions of this Section 3.1(b) and
Section 3.1(c). The Board of Directors shall recommend to the Company’s
stockholders that such stockholders vote in favor of the Stockholder
Proposals.  In connection with such
meeting, the Company shall prepare (and the Investor will reasonably cooperate
with the Company to prepare) and file with the SEC as promptly as practicable
(but in no event more than ten business days after the Closing) a preliminary
proxy statement, shall use its reasonable best efforts to respond to any
comments of the SEC or its staff thereon and to cause a definitive proxy
statement related to such stockholders’ meeting to be mailed to the Company’s
stockholders not more than five business days after clearance thereof by the
SEC, and shall use its reasonable best efforts to solicit proxies for such
stockholder approval of the Stockholder Proposals.  The Company shall notify the Investor
promptly of the receipt of any comments from the SEC or its staff with respect
to the proxy statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information
and will supply the Investor with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to such proxy statement.  If at any time prior to such stockholders’
meeting there shall occur any event that is required to be set forth in an
amendment or supplement to the proxy statement, the Company shall as promptly
as practicable prepare and mail to its stockholders such an amendment or
supplement.  Each of the Investor and the
Company agrees promptly to correct any information provided by it or on its
behalf for use in the proxy statement if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company shall as promptly as practicable prepare and mail to its
stockholders an amendment or supplement to correct such information to the
extent required by applicable laws and regulations.  The Company shall consult with the Investor
prior to filing any proxy statement, or any amendment or supplement thereto,
and provide the Investor with a reasonable opportunity to comment thereon.  In the event that the approval of any of the
Stockholder Proposals is not obtained at such special stockholders meeting, the
Company shall include a proposal to approve (and the Board of Directors shall
recommend approval of) each such proposal at a meeting of its stockholders no
less than once in each subsequent six-month period beginning on January 1,
2009 until all such approvals are obtained or made.


 


(c)                                  None of the information supplied by the
Company or any of the Company Subsidiaries for inclusion in any proxy statement
in connection with any such stockholders meeting of the Company will, at the
date it is filed with the SEC, when first mailed to the Company’s stockholders
and at the time of any stockholders meeting, and at the time of any amendment
or supplement thereof, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading.


 


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


 


14

















 


fees and expenses of its own financial or other consultants, investment
bankers, accountants and counsel.


 


3.3                                 Sufficiency
of Authorized Common Stock; Exchange Listing.


 


(a)                                  During the period from the Closing Date (or,
if the approval of the Stockholder Proposals is required, the date of such
approval)  until the date on which
the Warrant has been fully exercised, the Company shall at all times have
reserved for issuance, free of preemptive or similar rights, a sufficient
number of authorized and unissued Warrant Shares to effectuate such exercise.
Nothing in this Section 3.3 shall preclude the Company from satisfying its
obligations in respect of the exercise of the Warrant by delivery of shares of
Common Stock which are held in the treasury of the Company. As soon as
reasonably practicable following the Closing, the Company shall, at its
expense, cause the Warrant Shares to be listed on the same national
securities exchange on which the Common Stock is listed, subject to official notice of issuance, and
shall maintain such listing for so long as any Common Stock is listed on such exchange.


 


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


 


3.4                                 Certain
Notifications Until Closing. From the Signing Date until the Closing, the
Company shall promptly notify the Investor of (i) any fact, event or
circumstance 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, 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 


 


15

















 


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)                                 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 non-public records, books, contracts, instruments, computer data
and other data and information (collectively, “Information”)
concerning the Company furnished or made available to it by the Company or its
representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (i) previously known by such party
on a non-confidential basis, (ii) in the public domain through no fault of
such party or (iii) later lawfully acquired from other sources by the
party to which it was furnished (and without violation of any other
confidentiality obligation)); provided
that nothing herein shall prevent the Investor from disclosing any Information
to the extent required by applicable laws or regulations or by any subpoena or
similar legal process.


 


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.


 


4.2                                 Legends.


 


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


 


“THE SECURITIES REPRESENTED BY
THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE 


 


16

















 


SECURITIES LAWS OF ANY STATE
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS.”


 


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


 


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


 


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


 


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


 


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


 


17

















 


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.”


 


(d)                                 In the event that any Purchased Securities or
Warrant Shares (i) become registered under the Securities Act or (ii) are
eligible to be transferred without restriction in accordance with Rule 144
or another exemption from registration under the Securities Act (other than Rule 144A),
the Company shall issue new certificates or other instruments representing such
Purchased Securities or Warrant Shares, which shall not contain the applicable
legends in Sections 4.2(a) and (c) above; provided that the Investor surrenders to the Company the
previously issued certificates or other instruments.  Upon Transfer of all or a portion of the
Warrant in compliance with Section 4.4, the Company shall issue new
certificates or other instruments representing the Warrant, which shall not
contain the applicable legend in Section 4.2(b) above; provided that the Investor surrenders to
the Company the previously issued certificates or other instruments.


 


4.3                                 Certain
Transactions.  The Company will not
merge or consolidate with, or sell, transfer or lease all or substantially all
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 a portion or portions of the Warrant with respect to, and/or exercise
the Warrant for, more than one-half of the Initial Warrant Shares (as such
number may be adjusted from time to time pursuant to Section 13 thereof)
in the aggregate until the earlier of (a) the date on which the Company
(or any successor by Business Combination) has received aggregate gross
proceeds of not less than the Purchase Price (and the purchase price paid by
the Investor to any such successor for securities of such successor purchased
under the CPP) from one or more Qualified Equity Offerings (including Qualified
Equity Offerings of such successor) and (b) December 31, 2009.  “Qualified
Equity Offering” means the sale and issuance for
cash by the Company  to persons
other than the 


 


18

















 


Company or any of the Company Subsidiaries
after the Closing Date of shares of perpetual Preferred Stock, Common Stock or
any combination of such stock, that, in each case, qualify as and may be
included in Tier 1 capital of the Company at the time of issuance under the
applicable risk-based capital guidelines of the Company’s Appropriate Federal
Banking Agency (other than any such sales and issuances made pursuant to
agreements or arrangements entered into, or pursuant to financing plans which
were publicly announced, on or prior to October 13, 2008). “Business Combination” means a merger,
consolidation, statutory share exchange or similar transaction that requires
the approval of the Company’s stockholders.


 


4.5                                 Registration
Rights.


 


(a)                                  Registration.


 


(i)                                     Subject to the terms and conditions of this
Agreement, the Company covenants and agrees that as promptly as practicable after
the Closing Date (and in any event no later than 30 days after the Closing
Date), the Company shall prepare and file with the SEC a Shelf Registration
Statement covering all Registrable Securities (or otherwise designate an
existing 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). 
So long as the Company is a well-known seasoned issuer (as defined in Rule 405
under the Securities Act) at the time of filing of the Shelf Registration
Statement with the SEC, such Shelf Registration Statement shall be designated
by the Company as an automatic Shelf Registration Statement.  Notwithstanding the foregoing, if on the
Signing Date the Company is not eligible to file a registration statement on Form S-3,
then the Company shall not be obligated to file a Shelf Registration Statement
unless and until requested to do so in writing by the Investor.


 


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


 


19

















 


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(a):  (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(a)(i) or
a Special Registration, and the registration form to be filed may be used for
the registration or qualification for distribution of Registrable Securities,
the Company will give prompt written notice to the Investor and all other
Holders 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(a)(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.


 


(v)                                 If the registration referred to in Section 4.5(a)(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(a)(iv).  In such event, the right of Investor and all
other Holders to registration pursuant to Section 4.5(a) will be
conditioned upon such persons’ participation in such underwriting and the
inclusion 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


 


20
















 


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(a)(ii) or (y) a
Piggyback Registration under Section 4.5(a)(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(a)(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(a)(ii) or Section 4.5(a)(iv),
as applicable, pro rata on the basis of the
aggregate number of such securities or shares owned by each such person and (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.


 


(b)           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.


 


(c)           Obligations of the Company.  The Company shall use its reasonable best
efforts, for so long as there are Registrable Securities outstanding, to take
such actions as are under its control to not become an ineligible issuer (as
defined in Rule 405 under the Securities Act) and to remain a well-known
seasoned issuer (as defined in Rule 405 under the Securities Act) if it
has such status on the Signing Date or becomes eligible for such status in the
future.  In addition, whenever required
to effect the registration of any Registrable Securities or facilitate the 


 


21

















 


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 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) 


 


22

















 


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;


 


(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 Common Stock 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(c)(x) cease to be true and
correct.


 


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


 


(viii)        Upon the occurrence of any
event contemplated by Section 4.5(c)(v) or 4.5(c)(vi)(E), promptly
prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to the Holders and any underwriters, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.  If the Company notifies the Holders in
accordance with Section 4.5(c)(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.


 


23

















 


(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).


 


(x)            If an underwritten offering
is requested pursuant to Section 4.5(a)(ii), enter into an underwriting
agreement in customary form, scope and substance and take all such 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 


 


24

















 


(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.


 


(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.


 


(d)           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.


 


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


 


25

















 


(f)            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(c) that
Investor and/or the selling Holders and the underwriters, if any, shall furnish
to the Company such information regarding themselves, the Registrable
Securities held by them and the intended method of disposition of such
securities as shall be required to effect the registered offering of their
Registrable Securities.


 


(g)           Indemnification.


 


(i)            The Company agrees to
indemnify each Holder and, if a Holder is a person other than an individual,
such Holder’s officers, directors, employees, agents, representatives and
Affiliates, and each Person, if any, that controls a Holder within the meaning
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.


 


26

















 


(ii)           If the indemnification
provided for in Section 4.5(g)(i) is unavailable to an Indemnitee
with respect to any losses, claims, damages, actions, liabilities, costs or expenses
referred to therein or is insufficient to hold the Indemnitee harmless as contemplated
therein, then the Company, in lieu 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(g)(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(g)(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.


 


(h)           Assignment of Registration Rights.  The rights of the Investor to registration of
Registrable Securities pursuant to Section 4.5(a) may be assigned by
the Investor to a transferee or assignee of Registrable Securities with a
liquidation preference or, in the case of Registrable Securities other than
Preferred Shares, a market value, 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.  For purposes of this
Section 4.5(h), “market value” per share of Common Stock shall be the last
reported sale price of the Common Stock on the national securities exchange on
which the Common Stock is listed or admitted to trading on the last trading day
prior to the proposed transfer, and the “market value” for the Warrant (or any
portion thereof) shall be the market value per share of Common Stock into which
the Warrant (or such portion) is exercisable less the exercise price per share.


 


(i)            Clear Market.  With respect to any underwritten offering of
Registrable Securities by the Investor or other Holders pursuant to this Section 4.5,
the Company agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Shelf Registration Statement (other than such registration or a Special
Registration) covering, in the case of an underwritten offering of Common Stock
or Warrants, any of its equity securities or, in the case of an underwritten
offering of Preferred Shares, any 


 


27

















 


Preferred Stock of the Company, or, in each case, any securities
convertible into or exchangeable or exercisable for such securities, during the
period not to exceed ten days prior and 60 days following the effective date 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 S-4 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.


 


(j)            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.


 


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


 


28

















 


(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 in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of effectiveness of
such registration statement or (B) filing a prospectus and/or prospectus
supplement in respect of an appropriate effective registration statement on Form S-3.


 


(iv)          “Registrable Securities”  means
(A) all Preferred Shares, (B) the Warrant (subject to Section 4.5(p))
and (C) any equity securities issued or issuable directly or indirectly
with respect to the securities referred to in the foregoing clauses (A) or
(B) by way of conversion, exercise or exchange thereof, including the
Warrant Shares, or share dividend or share split or in connection with a
combination 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(o), 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 


 


29

















 


of counsel for any Holder
(other than the fees and disbursements of Holders’ Counsel included in
Registration Expenses).


 


(l)            At  any  time,  any  holder  of  Securities  (including  any  Holder)  may  elect  to  forfeit  its  rights  set  forth  in  this  Section  4.5  from  that  date  forward;  provided,  that  a  Holder  forfeiting  such  rights  shall  nonetheless  be  entitled  to  participate  under  Section  4.5(a)(iv)  –  (vi) in  any  Pending  Underwritten  Offering  to  the  same  extent  that  such  Holder  would  have  been  entitled  to  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(f)  with  respect  to  any  prior  registration  or  Pending  Underwritten  Offering.  “Pending  Underwritten  Offering”  means,  with  respect  to  any  Holder  forfeiting  its  rights  pursuant  to  this  Section  4.5(l),  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(a)(ii)  or  4.5(a)(iv)  prior  to  the  date  of  such  Holder’s  forfeiture.


 


(m)          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.


 


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


 


(o)           Certain Offerings by the Investor.  In the case of any securities held by the
Investor that cease to be Registrable Securities solely by reason of clause (2) in
the definition of “Registrable Securities,” the provisions of Sections
4.5(a)(ii), clauses (iv), (ix) and (x)-(xii) of Section 4.5(c), Section 4.5(g) and
Section 4.5(i) shall continue to apply until such securities
otherwise cease to be Registrable Securities. 
In any such case, an “underwritten” offering or other disposition shall
include any distribution 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.


 


30
















 


(p)           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           Voting of Warrant
Shares.  Notwithstanding anything in
this Agreement to the contrary, the Investor shall not exercise any voting
rights with respect to the Warrant Shares.


 


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


 


4.8           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 the Preferred Shares have been redeemed in whole or the Investor
has transferred all of the Preferred Shares to third parties which are not
Affiliates 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 the Common Stock (other than (A) regular quarterly cash
dividends of not more than the amount of the last quarterly cash dividend per
share declared or, if lower, publicly announced an intention to declare, on the
Common Stock prior to October 14, 2008, as adjusted for any stock split,
stock dividend, reverse stock split, reclassification or similar transaction, (B) dividends
payable solely in shares of Common Stock and (C) dividends or distributions
of rights or Junior Stock in connection with a stockholders’ rights plan); or


 


(ii)           redeem, purchase or acquire any shares of Common Stock or other capital
stock or other equity securities of any kind of the Company, or any trust
preferred securities issued by the Company or any Affiliate of the Company,
other than (A) redemptions, purchases or other acquisitions of the
Preferred Shares, (B) redemptions, purchases or other acquisitions of
shares of Common Stock or other Junior Stock, in each case in this clause (B) in
connection with the administration of any employee benefit plan in the ordinary
course of business (including purchases to offset the Share Dilution Amount (as
defined below) pursuant to a publicly announced repurchase plan) and consistent
with past practice; provided that
any purchases to offset the Share Dilution Amount shall in no event exceed the
Share Dilution Amount, (C) purchases or other 


 


31

















 


acquisitions by a
broker-dealer subsidiary of the Company solely for the purpose of
market-making, stabilization or customer facilitation transactions in Junior
Stock or Parity Stock in the ordinary course of its business, (D) purchases
by a broker-dealer subsidiary of the Company of capital stock of the Company
for resale pursuant to an offering by the Company of such capital stock
underwritten by such broker-dealer subsidiary, (E) any redemption or
repurchase of rights pursuant to any stockholders’ rights plan, (F) the
acquisition by the Company or any of the Company Subsidiaries of record
ownership in Junior Stock or Parity Stock for the beneficial ownership of any
other persons (other than the Company or any other Company Subsidiary),
including as trustees or custodians, and (G) 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 (G), solely to the extent required pursuant to binding contractual
agreements entered into prior to the Signing Date or any subsequent agreement
for the accelerated exercise, settlement or exchange thereof for Common Stock
(clauses (C) and (F), collectively, the “Permitted
Repurchases”).  “Share Dilution Amount” means the increase
in the number of diluted shares outstanding (determined in accordance with
GAAP, and as measured from the date of the Company’s most recently filed
Company Financial Statements prior to the Closing Date) resulting from the
grant, vesting or exercise of equity-based compensation to employees and
equitably adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.


 


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


 


(c)           “Junior Stock” means Common Stock and any
other class or series 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).


 


4.9           Repurchase of Investor Securities.


 


(a)           Following
the redemption in whole of the Preferred Shares held by the Investor or the
Transfer by the Investor of all of the Preferred Shares to one or more third
parties not affiliated with the Investor, the Company may repurchase, in whole
or in part, at any time any other equity securities of the Company purchased by
the Investor pursuant to this Agreement or the Warrant and then held by the
Investor, upon notice given as provided in clause (b) below, at the Fair
Market Value of the equity security.


 


32

















 


(b)           Notice
of every repurchase of equity securities of the Company held by the Investor
shall be given at the address and in the manner set forth for such party in Section 5.6.  Each notice of repurchase given to the
Investor shall state: (i) the number and type of securities to be
repurchased, (ii) the Board of Director’s determination of Fair Market
Value of such securities and (iii) the place or places where certificates
representing such securities are to be surrendered for payment of the
repurchase price.  The repurchase of the
securities specified in the notice shall occur as soon as practicable following
the determination of the Fair Market Value of the securities.


 


(c)           As
used in this Section 4.9, the following terms shall have the following
respective meanings:


 


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


 


(ii)           “Fair Market Value”
means, with respect to any security, the fair market value of such security as
determined by the Board of Directors, acting in good faith in reliance on an
opinion of a nationally recognized independent investment banking firm retained
by the Company for this purpose and certified in a resolution to the
Investor.  If the Investor does not agree
with the Board of Director’s determination, it may object in writing within 10
days of receipt of the Board of Director’s determination. In the event of such
an objection, an authorized representative of the Investor and the chief
executive officer of the Company shall promptly meet to resolve the objection
and to agree upon the Fair Market Value. If the chief executive officer and the
authorized representative are unable to agree on the Fair Market Value during
the 10-day period following the delivery of the Investor’s objection, the
Appraisal Procedure may be invoked by either party to determine the Fair Market
Value by delivery of a written notification thereof not later than the 30th day after delivery of the
Investor’s objection.


 


4.10         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 


 


33

















 


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.


 


4.11         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.


 


4.12         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.


 


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 


 


34

















 


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.


 


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 


 


35

















 


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.


 


(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.


 


36

















 


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 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 Section 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.


 


*  *  *


 


37

















 


ANNEX A


 


FORM OF CERTIFICATE OF DESIGNATIONS


 


[SEE ATTACHED]


 

















 


ANNEX B


 


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.


 
















 


ANNEX C


 


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 Common 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 [insert, if applicable:  ,
subject to the approvals of
the Company’s stockholders set forth on Schedule C].


 


(e)           The
Company has the corporate power and authority to execute and deliver the
Agreement and the Warrant and [insert, if applicable:  ,
subject to the approvals of the
Company’s stockholders set forth on Schedule C,] 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  [insert,
if applicable:  ,  subject, in each case, to the approvals of
the Company’s stockholders set forth on Schedule C].


 


(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(g) or the severability
provisions of the Agreement insofar as Section 4.5(g) is concerned.


 

















 


ANNEX D


 


FORM OF WARRANT


 


[SEE ATTACHED]


 


2

















 


SCHEDULE A


 


ADDITIONAL
TERMS AND CONDITIONS


 


Company Information:


 


Name of the Company: 
Yadkin Valley Financial Corporation


 


Corporate or other organizational form:  Corporation


 


Jurisdiction of Organization: North Carolina


 


Appropriate Federal Banking Agency: The Board of
Governors of the Federal Reserve System (Richmond Branch)


 


Notice Information:         Yadkin Valley Financial
Corporation


5209 North Bridge Street,


Elkin, North Carolina 28621


Attention: William A. Long, President and CEO


Facsimile No.  (336) 526-6330


 


With a copy to:                                Nelson Mullins Riley &
Scarborough LLP


104 South Main Street, Suite 900


Greenville, South Carolina, 29601


Attention: 
Neil E. Grayson


Facsimile No.  (864) 250-2389


 


Terms of the Purchase:


 


Series of Preferred Stock Purchased: Fixed Rate
Cumulative Perpetual Preferred Stock, Series T


 


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


 


Number of Shares of Preferred Stock Purchased: 36,000


 


Dividend Payment Dates on the Preferred Stock:  February 15, May 15, August 15,
November 15


 


Number of Initial Warrant Shares: 385,990


 


Exercise Price of the Warrant: $13.99


 


Purchase Price: $36,000,000


 


Closing:


 


Location of Closing:            Squire, Sanders & Dempsey L.L.P.


221 E. Fourth St.


Suite 2900


Cincinnati, OH  45202-4095


Facsimile (513) 361-1201


 


3

















 


Time of Closing:   9:00 a.m.,
New York time.


 


Date of Closing: January 16, 2008


 


Wire Information for Closing:       ABA Number:


 


Bank:


 


Account Name:


 


Account Number:


 


Beneficiary:


 


4

















 


SCHEDULE B


 


CAPITALIZATION


 


Capitalization Date: As of December 31,
2008


 


Common Stock


 


Par value: $1.00


 


Total Authorized: 20,000,000


 


Outstanding: 11,536,487


 


Subject to
warrants, options, convertible securities, etc.: 475,195


 


Reserved for benefit plans and
other issuances: 4,982,862 (includes the 475,195 reserved for option plans, and
4,507,667 shares to be issued in connection with the proposed merger with
American Community Bancshares, Inc.)


 


Remaining authorized but
unissued: 3,483,839


 


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


 


Preferred Stock


 


Par value: no par value


 


Total Authorized: 1,000,000


 


Outstanding (by series): 0


 


Reserved for issuance: 36,000 (to
be issued to the US Treasury)


 


Remaining authorized but
unissued: 964,000


 


5

















 


SCHEDULE C


 


REQUIRED STOCKHOLDER APPROVALS


 


	
   

  	
   

  	
  Required  %(1)

  	
   

  	
  Vote Required

  	
   

  
	
  Warrants — Common Stock Issuance

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charter Amendment

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stock Exchange Rules

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


If no stockholder approvals are required,
please so indicate by checking the box:  x.


 






(1) If stockholder approval is required,
indicate applicable class/series of capital stock that are required to vote.


 


6

















 


SCHEDULE D


 


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: x.


 


7

















 


SCHEDULE E


 


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:  x.


 


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: x.


 


8

















 


SCHEDULE F


 


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: x.