Exhibit 10.1


 


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extent supplemented or superseded by the terms set forth herein or in the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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST COMMUNITY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael C. Crapps

  
	
   

  	
   

  	
  Name: Michael C. Crapps

  
	
   

  	
   

  	
  Title: President and Chief Executive Office

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  November 21, 2008

  	
   

  	
   

  	
   

  
					



 
















 


EXHIBIT A


 




 





SECURITIES
PURCHASE AGREEMENT


 


STANDARD
TERMS




 





 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Article I

  
	
   

  	
   

  	
   

  
	
  Purchase; Closing

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Purchase

  	
  2

  
	
  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

  	
  14

  
	
  3.2

  	
  Expenses

  	
  15

  
	
  3.3

  	
  Sufficiency
  of Authorized Common Stock; Exchange Listing

  	
  15

  
	
  3.4

  	
  Certain
  Notifications Until Closing

  	
  16

  
	
  3.5

  	
  Access,
  Information and Confidentiality

  	
  16

  
	
   

  	
   

  	
   

  
	
  Article IV

  
	
   

  	
   

  	
   

  
	
  Additional Agreements

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Purchase for
  Investment

  	
  17

  
	
  4.2

  	
  Legends

  	
  17

  
	
  4.3

  	
  Certain
  Transactions

  	
  19

  
	
  4.4

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

  	
  19

  
	
  4.5

  	
  Registration
  Rights

  	
  20

  
	
  4.6

  	
  Voting of
  Warrant Shares

  	
  32

  
	
  4.7

  	
  Depositary
  Shares

  	
  32

  
	
  4.8

  	
  Restriction
  on Dividends and Repurchases

  	
  32

  
	
  4.9

  	
  Repurchase
  of Investor Securities

  	
  34

  
	
  4.10

  	
  Executive
  Compensation

  	
  35

  



 


i

















 


	
  Article V

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Termination

  	
  35

  
	
  5.2

  	
  Survival of
  Representations and Warranties

  	
  36

  
	
  5.3

  	
  Amendment

  	
  36

  
	
  5.4

  	
  Waiver of
  Conditions

  	
  36

  
	
  5.5

  	
  Governing Law: Submission to Jurisdiction, Etc.

  	
  36

  
	
  5.6

  	
  Notices

  	
  36

  
	
  5.7

  	
  Definitions

  	
  37

  
	
  5.8

  	
  Assignment

  	
  37

  
	
  5.9

  	
  Severability

  	
  38

  
	
  5.10

  	
  No Third
  Party Beneficiaries

  	
  38

  



 


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)

  
	
  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)

  
	
  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)

  
	
  Letter Agreement

  	
   

  	
   

  	
  Recitals

  



 


iv

















 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  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)

  
	
  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:


 


1

















 


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


 


2

















 


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


 


(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


 


3

















 


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


 


(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


 


4

















 


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 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


 


5

















 


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 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


 


6

















 


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 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.


 


7
















 


(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 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


 


8

















 


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 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,


 


9

















 


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 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


 


10

















 


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


 


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


 


(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


 


11

















 


and defects that would affect the value thereof or interfere with the
use made or to be made thereof by them. 
Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, the Company and the Company
Subsidiaries hold all leased real or personal property under valid and
enforceable leases with no exceptions that would interfere with the use made or
to be made thereof by them.


 


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


 


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


 


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


 


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


 


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


 


(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


 


12

















 


Governmental Entity (other than the Appropriate Federal Banking
Agencies with jurisdiction over the Company and the Company Subsidiaries) that
currently restricts in any material respect the conduct of its business or that
in any material manner relates to its capital adequacy, its liquidity and
funding policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies or procedures, its internal controls, its
management or its operations or business (each item in this sentence, a “Regulatory Agreement”), nor has the
Company or any Company Subsidiary been advised since December 31, 2006 by
any such Governmental Entity that it is considering issuing, initiating,
ordering, or requesting any such Regulatory Agreement.  The Company and each Company Subsidiary are
in compliance in all material respects with each Regulatory Agreement to which
it is party or subject, and neither the Company nor any Company Subsidiary has
received any notice from any Governmental Entity indicating that either the
Company or any Company Subsidiary is not in compliance in all material respects
with any such Regulatory Agreement.  “Appropriate Federal Banking Agency” means
the “appropriate Federal banking agency” with respect to the Company or such
Company Subsidiaries, as applicable, as defined in Section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)).


 


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


 


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


 


13

















 


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 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


 


14

















 


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 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.


 


15
















 


(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 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


 


16

















 


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 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


 


17

















 


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 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


 


18

















 


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 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.


 


19

















 


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 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.


 


20

















 


(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 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


 


21

















 


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 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


 


22

















 


registration statement, subject to Section 4.5(d), keep such
registration statement effective and keep such prospectus supplement current
until the securities described therein are no longer Registrable Securities.


 


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


 


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


 


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


 


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


 


(vi)          Give written notice to the Holders:


 


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


 


23

















 


(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.


 


(ix)           Use reasonable best efforts to procure the
cooperation of the Company’s transfer agent in settling any offering or sale of
Registrable Securities,


 


24

















 


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 (and of the type customarily provided in connection with due
diligence conducted in connection with a registered public offering of
securities) by any such


 


25

















 


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.


 


26
















 


(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.


 


27

















 


(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 


 


28

















 


Common Stock or Warrants, any of its equity securities or, in the case
of an underwritten offering of Preferred Shares, any 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:


 


29

















 


(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.


 


30

















 


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


 


(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 


 


31

















 


include any purchase agreement entered into by such broker-dealers, and
any “registration statement” or “prospectus” shall include any offering
document approved by the Company and used in connection with such distribution.


 


(p)           Registered Sales 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 


 


32

















 


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 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).


 


33

















 


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.


 


(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 


 


34

















 


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
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.


 


Article V


Miscellaneous


 


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


 


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


 


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


 


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


 


35
















 


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 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 


 


36

















 


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.


 


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.


 


37

















 


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.


 


* * *


 


38

















 


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


 


[Opinion provided to Treasury]


 

















 


ANNEX D


 


FORM OF
WARRANT


 


[SEE ATTACHED]


 
















 


SCHEDULE A


 


ADDITIONAL
TERMS AND CONDITIONS


 


Company Information:


 


Name of the Company: 
First Community Corporation


 


Corporate or other organizational form:  Corporation


 


Jurisdiction of Organization: South Carolina


 


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


 


	
  Notice Information:

  	
  First Community Corporation,

  
	
   

  	
  5455 Sunset Boulevard,

  
	
   

  	
  Lexington, South Carolina 29072

  
	
   

  	
  Attention: Michael C. Crapps, President and CEO.

  
	
   

  	
  Facsimile No.  (803) 951-1722.

  
	
   

  	
   

  
	
  With a copy to:

  	
  Nelson Mullins Riley & Scarborough LLP,

  
	
   

  	
  104 South Main Street,

  
	
   

  	
  Greenville South Carolina, 29601

  
	
   

  	
  Attention: Neil Grayson and John Jennings.

  
	
   

  	
  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:
11,350


 


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


 


Number of Initial Warrant Shares: 195,915


 


Exercise Price of the Warrant: $8.69


 


Purchase Price: $11,350,000


 


Closing:


 


	
  Location of Closing:

  	
  Squire, Sanders & Dempsey L.L.P.

  
	
   

  	
  221 E. Fourth St.

  
	
   

  	
  Suite 2900

  
	
   

  	
  Cincinnati, OH 45202-4095

  
	
   

  	
  Facsimile (513) 361-1201

  



 

















 


Time of Closing: 
10:00 a.m., New York time.


 


Date of Closing: November 21, 2008


 


Wire Information for Closing:


 

















 


SCHEDULE
B


 


CAPITALIZATION


 


Capitalization Date: As of October 31, 2008


 


Common Stock


 


Par value: $1.00


 


Total Authorized: 10,000,000


 


Outstanding: 3,221,199


 


Subject to
warrants, options, convertible securities, etc.: 333,328


 


Reserved for benefit plans and other issuances:
51,979


 


Remaining authorized but unissued: 6,393,494


 


Shares issued
after Capitalization Date

(other than pursuant to warrants, options, convertible securities, etc. as set
forth above): 5,840, which shares are included in the shares reserved for
benefit plans and other issuances above, were issued in November 2008.


 


Preferred Stock


 


Par value: $1.00


 


Total Authorized: 10,000,000


 


Outstanding (by series): 0


 


Reserved for issuance: 12,000


 


Remaining authorized but unissued: 9,988,00