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to the extent supplemented or superseded by the terms set forth herein or in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

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPANY:
  UNITY BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James A. Hughes

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: James
  A. Hughes

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  



 


 


Date: December 5, 2008


 

















 


EXHIBIT A


 




 





SECURITIES PURCHASE AGREEMENT


 


STANDARD TERMS




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
  Article I

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Purchase; Closing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Purchase

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Closing

  	
   

  	
  1

  	
   

  
	
  1.3

  	
   

  	
  Interpretation

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article II

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Representations and Warranties

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Disclosure

  	
   

  	
  3

  	
   

  
	
  2.2

  	
   

  	
  Representations
  and Warranties of the Company

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article III

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Covenants

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Commercially
  Reasonable Efforts

  	
   

  	
  9

  	
   

  
	
  3.2

  	
   

  	
  Expenses

  	
   

  	
  10

  	
   

  
	
  3.3

  	
   

  	
  Sufficiency
  of Authorized Common Stock; Exchange Listing

  	
   

  	
  10

  	
   

  
	
  3.4

  	
   

  	
  Certain
  Notifications Until Closing

  	
   

  	
  10

  	
   

  
	
  3.5

  	
   

  	
  Access,
  Information and Confidentiality

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article IV

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Additional Agreements

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Purchase
  for Investment

  	
   

  	
  11

  	
   

  
	
  4.2

  	
   

  	
  Legends

  	
   

  	
  11

  	
   

  
	
  4.3

  	
   

  	
  Certain
  Transactions

  	
   

  	
  12

  	
   

  
	
  4.4

  	
   

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

  	
   

  	
  12

  	
   

  
	
  4.5

  	
   

  	
  Registration
  Rights

  	
   

  	
  13

  	
   

  
	
  4.6

  	
   

  	
  Voting
  of Warrant Shares

  	
   

  	
  20

  	
   

  
	
  4.7

  	
   

  	
  Depositary
  Shares

  	
   

  	
  20

  	
   

  
	
  4.8

  	
   

  	
  Restriction
  on Dividends and Repurchases

  	
   

  	
  20

  	
   

  
	
  4.9

  	
   

  	
  Repurchase
  of Investor Securities

  	
   

  	
  21

  	
   

  
	
  4.10

  	
   

  	
  Executive
  Compensation

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article V

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Miscellaneous

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Termination

  	
   

  	
  22

  	
   

  
	
  5.2

  	
   

  	
  Survival
  of Representations and Warranties

  	
   

  	
  22

  	
   

  
	
  5.3

  	
   

  	
  Amendment

  	
   

  	
  23

  	
   

  
	
  5.4

  	
   

  	
  Waiver
  of Conditions

  	
   

  	
  23

  	
   

  
	
  5.5

  	
   

  	
  Governing
  Law: Submission to Jurisdiction, Etc.

  	
   

  	
  23

  	
   

  
	
  5.6

  	
   

  	
  Notices

  	
   

  	
  23

  	
   

  
	
  5.7

  	
   

  	
  Definitions

  	
   

  	
  23

  	
   

  



 

















 


	
  5.8

  	
   

  	
  Assignment

  	
   

  	
  24

  	
   

  
	
  5.9

  	
   

  	
  Severability

  	
   

  	
  24

  	
   

  
	
  5.10

  	
   

  	
  No
  Third Party Beneficiaries

  	
   

  	
  24

  	
   

  



 


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


 

















 


INDEX OF DEFINED TERMS


 


	
  Term

  	
   

  	
  Location of

  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

  
	
  officers

  	
   

  	
  5.7(c)

  



 

















 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  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)

  



 

















 


SECURITIES PURCHASE AGREEMENT – STANDARD TERMS


 


Recitals:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Article I


Purchase; Closing


 


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


 


1.2 Closing.


 


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


 


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


 


(c) The
respective obligations of each of the Investor and the Company to consummate
the Purchase are subject to the fulfillment (or waiver by the Investor and the
Company, as applicable) prior to the Closing of the 


 


1

















 


conditions that (i) any approvals or
authorizations of all United States and other governmental, regulatory or
judicial authorities (collectively, “Governmental
Entities”) required for the consummation of the Purchase shall have
been obtained or made in form and substance reasonably satisfactory to each
party and shall be in full force and effect and all waiting periods required by
United States and other applicable law, if any, shall have expired and (ii) no
provision of any applicable United States or other law and no judgment,
injunction, order or decree of any Governmental Entity shall prohibit the
purchase and sale of the Purchased Securities as contemplated by this
Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2

















 


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


 


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


 


Article II


Representations and Warranties


 


2.1 Disclosure.


 


(a) “Company Material Adverse Effect” means a
material adverse effect on (i) the business, results of operation or
financial condition of the Company and its consolidated subsidiaries taken as a
whole; provided, however, that Company Material Adverse
Effect shall not be deemed to include the effects of (A) changes after the
date of the Letter Agreement (the “Signing
Date”) in general business, economic or market conditions (including
changes generally in prevailing interest rates, credit availability and
liquidity, currency exchange rates and price levels or trading volumes in the
United States or foreign securities or credit markets), or any outbreak or
escalation of hostilities, declared or undeclared acts of war or terrorism, in
each case generally affecting the industries in which the Company and its subsidiaries
operate, (B) changes or proposed changes after the Signing Date in
generally accepted accounting principles in the United States (“GAAP”) or regulatory accounting
requirements, or authoritative interpretations thereof, (C) changes or
proposed changes after the Signing Date in securities, banking and other laws
of general applicability or related policies or interpretations of Governmental
Entities (in the case of each of these clauses (A), (B) and (C), other
than changes 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.


 


3

















 


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


 


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


 


(b) Capitalization.
The authorized capital stock of the Company, and the outstanding capital stock
of the Company (including securities convertible into, or exercisable or
exchangeable for, capital stock of the Company) as of the most recent fiscal
month-end preceding the Signing Date (the “Capitalization
Date”) is set forth on Schedule B. The outstanding shares of
capital stock of the Company have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). Except as
provided in the Warrant, as of the Signing Date, the Company does not have
outstanding any securities or other obligations providing the holder the right
to acquire Common Stock that is not reserved for issuance as specified on Schedule
B, and the Company has not made any other commitment to authorize, issue or
sell any Common Stock. Since the Capitalization Date, the Company has not
issued any shares of Common Stock, other than (i) shares issued upon the
exercise of stock options or delivered under other equity-based awards or other
convertible securities or warrants which were issued and outstanding on the
Capitalization Date and disclosed on Schedule B and (ii) shares
disclosed on Schedule B.


 


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


 


(d) The
Warrant and Warrant Shares. The Warrant has been duly authorized and, when
executed and delivered as contemplated hereby, will constitute a valid and
legally binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and general equitable
principles, regardless of whether such enforceability is considered in a
proceeding at law or in equity (“Bankruptcy
Exceptions”). The shares of Common Stock issuable upon exercise of
the Warrant (the “Warrant Shares”)
have been duly authorized and reserved for issuance upon exercise of the
Warrant and when so issued in accordance with the terms of the Warrant will be
validly issued, fully paid and non-assessable, subject, if applicable, to the
approvals of its stockholders set forth on Schedule C.


 


(e) Authorization, Enforceability.


 


(i) The Company has the corporate power and
authority to execute and deliver this Agreement and the Warrant and, subject,
if applicable, to the approvals of its stockholders set forth on Schedule C,
to carry out its obligations hereunder and thereunder (which includes the
issuance of the Preferred Shares, Warrant and Warrant Shares). The execution,
delivery and performance by the Company of this Agreement and the Warrant and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Company
and its stockholders, and no further approval or authorization is required on
the part of the Company, subject, in each case, if applicable, to the approvals
of its stockholders set forth on Schedule C. This Agreement is a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to the Bankruptcy Exceptions.


 


4
















 


(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.


 


(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.


 


5

















 


(i) Reports.


 


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


 


(ii) The
records, systems, controls, data and information of the Company and the Company
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Company Subsidiaries or their accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership and
non-direct control that would not reasonably be expected to have a material
adverse effect on the system of internal accounting controls described below in
this Section 2.2(i)(ii). The Company (A) has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to ensure that material information relating to the Company,
including the consolidated Company Subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others
within those entities, and (B) has disclosed, based on its most recent
evaluation prior to the Signing Date, to the Company’s outside auditors and the
audit committee of the Board of Directors (x) any significant deficiencies
and material weaknesses in the design or operation of internal controls over
financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) that are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information and (y) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company’s internal controls over financial
reporting.


 


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


 


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


 


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


 


6

















 


(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
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, 


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(t) Insurance. The Company and the
Company Subsidiaries are insured with reputable insurers against such risks and
in such amounts as the management of the Company reasonably has determined to
be prudent and consistent with industry practice. The Company and the Company
Subsidiaries are in material compliance with their insurance policies and are
not in default under any of the material terms thereof, each such policy is
outstanding and in full force and effect, all premiums and other payments due
under any material policy have been paid, and all 


 


8

















 


claims
thereunder have been filed in due and timely fashion, except, in each case, as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.


 


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


 


(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 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 


 


9

















 


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.


 


(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 


 


10

















 


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 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 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:


 


11

















 


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


 


THE SECURITIES
REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR SUCH LAWS. EACH PURCHASER OF THE SECURITIES REPRESENTED BY
THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. ANY TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY
ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT
IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED BY
THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH IS
THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES
REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE
ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO
EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.”


 


(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 


 


12

















 


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


 


4.5 Registration Rights.


 


(a) Registration.


 


(i) Subject
to the terms and conditions of this Agreement, the Company covenants and agrees
that as promptly as practicable after the Closing Date (and in any event no
later than 30 days after the Closing Date), the Company shall prepare and file
with the SEC a Shelf Registration Statement covering all Registrable Securities
(or otherwise designate an existing Shelf Registration Statement filed with the
SEC to cover the Registrable Securities), and, to the extent the Shelf
Registration Statement has not theretofore been declared effective or is not
automatically effective upon such filing, the Company shall use reasonable best
efforts to cause such Shelf Registration Statement to be declared or become
effective and to keep such Shelf Registration Statement continuously effective
and in compliance with the Securities Act and usable for resale of such
Registrable Securities for a period from the date of its initial effectiveness
until such time as there are no Registrable Securities remaining (including by
refiling such Shelf Registration Statement (or a new Shelf Registration
Statement) if the initial Shelf Registration Statement expires). So long as the
Company is a well-known seasoned issuer (as defined in Rule 405 under the
Securities Act) at the time of filing of the Shelf Registration Statement with
the SEC, such Shelf Registration Statement shall be designated by the Company
as an automatic Shelf Registration Statement. Notwithstanding the foregoing, if
on the Signing Date the Company is not eligible to file a registration
statement on Form S-3, then the Company shall not be obligated to file a
Shelf Registration Statement unless and until requested to do so in writing by
the Investor.


 


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


 


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


 


(iv) If
during any period when an effective Shelf Registration Statement is not
available, the Company proposes to register any of its equity securities, other
than a registration pursuant to Section 4.5(a)(i) or a Special
Registration, and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Investor and all other Holders
of its intention to effect such a registration (but in no event less than ten
days prior to the 


 


13

















 


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 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 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.


 


14
















 


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


 


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


 


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


 


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


 


(vi) Give written notice to the Holders:


 


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


 


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


 


(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 


 


15

















 


underwriters’
possession. The total number of days that any such suspension may be in effect
in any 12-month period shall not exceed 90 days.


 


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


 


(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 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.


 


16

















 


(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.


 


(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.


 


(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, 


 


17

















 


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


 


(h) Assignment
of Registration Rights. The rights of the Investor to registration of
Registrable Securities pursuant to Section 4.5(a) may be assigned by
the Investor to a transferee or assignee of Registrable Securities with a
liquidation preference or, in the case of Registrable Securities other than
Preferred Shares, a market value, no less than an amount equal to (i) 2%
of the initial aggregate liquidation preference of the Preferred Shares if such
initial aggregate liquidation preference is less than $2 billion and (ii) $200
million if the initial aggregate liquidation preference of the Preferred Shares
is equal to or greater than $2 billion; provided,
however, the transferor shall,
within ten days after such transfer, furnish to the Company written notice of
the name and address of such transferee or assignee and the number and type of
Registrable Securities that are being assigned. For purposes of this Section 4.5(h),
“market value” per share of Common Stock shall be the last reported sale price
of the Common Stock on the national securities exchange on which the Common
Stock is listed or admitted to trading on the last trading day prior to the
proposed transfer, and the “market value” for the Warrant (or any portion
thereof) shall be the market value per share of Common Stock into which the
Warrant (or such portion) is exercisable less the exercise price per share.


 


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


 


18

















 


(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:


 


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


 


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


 


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


 


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


 


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


 


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


 


(vii) “Selling
Expenses” mean all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements 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.


 


19

















 


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


 


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


 


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


 


(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, 


 


20

















 


(B) redemptions,
purchases or other acquisitions of shares of Common Stock or other Junior
Stock, in each case in this clause (B) in connection with the
administration of any employee benefit plan in the ordinary course of business
(including purchases to offset the Share Dilution Amount (as defined below)
pursuant to a publicly announced repurchase plan) and consistent with past
practice; provided that any
purchases to offset the Share Dilution Amount shall in no event exceed the
Share Dilution Amount, (C) purchases or other acquisitions by a
broker-dealer subsidiary of the Company solely for the purpose of
market-making, stabilization or customer facilitation transactions in Junior
Stock or Parity Stock in the ordinary course of its business, (D) purchases
by a broker-dealer subsidiary of the Company of capital stock of the Company
for resale pursuant to an offering by the Company of such capital stock
underwritten by such broker-dealer subsidiary, (E) any redemption or
repurchase of rights pursuant to any stockholders’ rights plan, (F) the
acquisition by the Company or any of the Company Subsidiaries of record
ownership in Junior Stock or Parity Stock for the beneficial ownership of any
other persons (other than the Company or any other Company Subsidiary),
including as trustees or custodians, and (G) the exchange or conversion of
Junior Stock for or into other Junior Stock or of Parity Stock or trust
preferred securities for or into other Parity Stock (with the same or lesser
aggregate liquidation amount) or Junior Stock, in each case set forth in this
clause (G), solely to the extent required pursuant to binding contractual
agreements entered into prior to the Signing Date or any subsequent agreement
for the accelerated exercise, settlement or exchange thereof for Common Stock
(clauses (C) and (F), collectively, the “Permitted
Repurchases”). “Share Dilution
Amount” means the increase in the number of diluted shares
outstanding (determined in accordance with GAAP, and as measured from the date
of the Company’s most recently filed Company Financial Statements prior to the
Closing Date) resulting from the grant, vesting or exercise of equity-based
compensation to employees and equitably adjusted for any stock split, stock
dividend, reverse stock split, reclassification or similar transaction.


 


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


 


(c) “Junior Stock” means Common Stock and any
other class or series of stock of the Company the terms of which expressly
provide that it ranks junior to the Preferred Shares as to dividend rights
and/or as to rights on liquidation, dissolution or winding up of the Company. “Parity Stock” means any class or series of
stock of the Company the terms of which do not expressly provide that such
class or series will rank senior or junior to the Preferred Shares as to
dividend rights and/or as to rights on liquidation, dissolution or winding up
of the Company (in each case without regard to whether dividends accrue
cumulatively or non-cumulatively).


 


4.9 Repurchase of
Investor Securities.


 


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


 


(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 


 


21

















 


selection
of such third appraiser. If three appraisers shall be appointed and the
determination of one appraiser is disparate from the middle determination by
more than twice the amount by which the other determination is disparate from
the middle determination, then the determination of such appraiser shall be
excluded, the remaining two determinations shall be averaged and such average shall
be binding and conclusive upon the Company and the Investor; otherwise, the
average of all three determinations shall be binding upon the Company and the
Investor. The costs of conducting any Appraisal Procedure shall be borne by the
Company.


 


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


 


4.10 Executive
Compensation. Until such time as the Investor ceases to own any debt or
equity securities of the Company acquired pursuant to this Agreement or the
Warrant, the Company shall take all necessary action to ensure that its Benefit
Plans with respect to its Senior 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.


 


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.


 


22

















 


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 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.


 


23

















 


(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.


 


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.


 


*   *   *


 


24

















 


ANNEX A


 


FORM OF CERTIFICATE OF DESIGNATIONS


 


[SEE EXHIBIT
3.1]


 


25
















 


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.


 


26

















 


ANNEX C


 


FORM OF OPINION


 


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


 


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


 


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


 


(d) The shares of
Common Stock issuable upon exercise of the Warrant have been duly authorized
and reserved for issuance upon exercise of the Warrant and when so issued in
accordance with the terms of the Warrant will be validly issued, fully paid and
non-assessable [insert, if applicable: , subject to the approvals
of the Company’s stockholders set forth on Schedule C].


 


(e) The Company
has the corporate power and authority to execute and deliver the Agreement and
the Warrant and [insert, if applicable: , subject to the approvals
of the Company’s stockholders set forth on Schedule C,] to carry out its obligations thereunder
(which includes the issuance of the Preferred Shares, Warrant and Warrant
Shares).


 


(f) The
execution, delivery and performance by the Company of the Agreement and the
Warrant and the consummation of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of the Company
and its stockholders, and no further approval or authorization is required on
the part of the Company [insert, if applicable: ,
subject, in each case, to the approvals of the Company’s stockholders set forth
on Schedule C].


 


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


 


27

















 


ANNEX D


 


FORM OF WARRANT


 


[SEE Exhibit 4.1]


 


28

















 


SCHEDULE
A


 


ADDITIONAL TERMS AND CONDITIONS


 


Company Information:


 


Name of the Company: Unity
Bancorp, Inc.


 


Corporate or other
organizational form: Corporation


 


Jurisdiction of
Organization: New Jersey


 


Appropriate Federal Banking
Agency:  Federal Reserve


 


Notice
Information:                   Mr. James
A. Hughes


President &
CEO


Unity
Bancorp, Inc.


64
Old Highway 22


Clinton, NJ 08809


 


Terms of the Purchase:


 


Series of Preferred
Stock Purchased:  Series B


 


Per Share Liquidation
Preference of Preferred Stock: $1,000


 


Number of Shares of
Preferred Stock Purchased: 20,649


 


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


 


Number of Initial Warrant
Shares:  764,778


 


Exercise Price of the
Warrant:  $4.05


 


Purchase Price:  $20,649,000


 


Closing:


 


Location
of Closing:  Hughes Hubbard &
Reed, LLP One Battery Park Plaza, New York, NY 10004


 


Time of Closing: 9:00 a.m
EST


 


Date of Closing:  December 5, 2008


 


Wire Information for Closing:                                          ABA Number: 
XXXXXXXXXXX


Bank: Unity Bank


Account Name: XXXXXXXXXX


Account Number: XXXXXXXX


Beneficiary: Unity Bancorp, Inc.


 


29

















 


SCHEDULE
B


 


CAPITALIZATION


 


Capitalization
Date:  November 30, 2008


 


Common
Stock


 


Par value:  no par value


 


Total Authorized:  12,500,000


 


Outstanding:  7,110,938


 


Subject to warrants, options, convertible
securities, etc.: 0


 


Reserved for benefit plans and other
issuances:  1,520,529


 


Remaining authorized but unissued: 3,868,533


 


Shares issued after Capitalization Date (other than pursuant to
warrants, options, convertible securities, etc. as set forth above): 0


 


Preferred
Stock


 


Par
value:  no par value


 


Total
Authorized: 500,000


 


Outstanding (by series):  Series A
remains authorized, but no shares remain outstanding


 


Reserved for
issuance:  None


 


Remaining authorized
but unissued: 500,000


 


30

















 


SCHEDULE
C


 


REQUIRED STOCKHOLDER APPROVALS


 


	
   

  	
   

  	
  Required(1)

  	
   

  	
  % Vote Required

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants — Common Stock Issuance

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charter Amendment

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stock Exchange Rules

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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


 






(1) If stockholder approval is required, indicate
applicable class/series of capital stock that are required to vote. 095331-0002-10033-NY02.2689570.6


 


31

















 


SCHEDULE
D


 


LITIGATION


 


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


 


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


 


32

















 


SCHEDULE
E


 


COMPLIANCE WITH LAWS


 


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


 


If none, please
so indicate by checking the box: x


 


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


 


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


 


33

















 


SCHEDULE
F


 


REGULATORY AGREEMENTS


 


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


 


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


 


34