Exhibit No. 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 the United States Department of the Treasury (the “Investor”)
intends to purchase from the Company the Preferred Shares.


 


The purpose of this letter agreement is to confirm the
terms and conditions of the purchase by the Investor of the Preferred
Shares.  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supplemented or superseded by the terms set forth herein or in the Schedules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 Preferred Shares and the purchase by the Investor of the Preferred
Shares pursuant to this letter agreement and the Securities Purchase Agreement
on the terms specified on Schedule A hereto.


 


This letter agreement (including the Schedules
hereto), the Securities Purchase Agreement (including the Annexes thereto)  and the Disclosure Schedules (as defined in the Securities
Purchase Agreement) 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.


 


* * *


 


UST Sequence No. 318


 

















 


EXHIBIT A


 


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/ Herbert M. Allison, Jr.

  
	
   

  	
   

  	
  Name: Herbert M. Allison, Jr.

  
	
   

  	
   

  	
  Title: Asst. Secretary for Financial Stability

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIZENS BANCSHARES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James E. Young

  
	
   

  	
   

  	
  Name: James E. Young

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
  Date: September 17, 2010

  	
   

  



 

















 


EXHIBIT A


 


SECURITIES PURCHASE AGREEMENT


 


STANDARD TERMS


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Interpretation

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  
	
  PURCHASE; CLOSING

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchase

  	
  4

  
	
  2.2

  	
  Closing

  	
  4

  
	
  2.3

  	
  Closing Conditions

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Representations and Warranties of the Company

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Affirmative Covenants

  	
  18

  
	
  4.2

  	
  Negative Covenants

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  ADDITIONAL AGREEMENTS

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Purchase for Investment

  	
  27

  
	
  5.2

  	
  Legends

  	
  27

  
	
  5.3

  	
  Transfer of Preferred Shares

  	
  30

  
	
  5.4

  	
  Rule 144; Rule 144A; 4(11⁄2) Transactions

  	
  30

  
	
  5.5

  	
  Depositary Shares

  	
  32

  
	
  5.6

  	
  Expenses and Further Assurances

  	
  32

  



 


i

















 


	
  ARTICLE VI

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Termination

  	
  33

  
	
  6.2

  	
  Survival

  	
  33

  
	
  6.3

  	
  Amendment

  	
  35

  
	
  6.4

  	
  Waiver of Conditions

  	
  35

  
	
  6.5

  	
  Governing Law; Submission to Jurisdiction, etc

  	
  35

  
	
  6.6

  	
  Notices

  	
  35

  
	
  6.7

  	
  Assignment

  	
  37

  
	
  6.8

  	
  Severability

  	
  37

  
	
  6.9

  	
  No Third Party Beneficiaries

  	
  37

  
	
  6.10

  	
  Specific Performance

  	
  37

  



 


ii

















 


LIST OF ANNEXES


 


	
  ANNEX A:

  	
  FORM OF OFFICER’S CERTIFICATE

  	
   

  
	
  ANNEX B:

  	
  FORM OF CERTIFICATE OF DESIGNATIONS FOR
  PREFERRED STOCK

  	
   

  
	
  ANNEX C:

  	
  FORM OF WAIVER

  	
   

  
	
  ANNEX D:

  	
  FORM OF OPINION

  	
   

  
	
  ANNEX E:

  	
  REGISTRATION RIGHTS

  	
   

  
	
  ANNEX F:

  	
  FORM OF OFFICER’S CERTIFICATE (CDFI
  REQUIREMENTS)

  	
   

  



 


iii

















 


INDEX OF DEFINED TERMS


 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Affiliate

  	
   

  	
  1.1

  
	
  Agreement

  	
   

  	
  Recitals

  
	
  Appropriate Federal Banking Agency

  	
   

  	
  1.1

  
	
  Bank Holding Company

  	
   

  	
  1.1

  
	
  Bankruptcy Exceptions

  	
   

  	
  3.1(e)

  
	
  Benefit Plans

  	
   

  	
  2.3(f)

  
	
  Board of Directors

  	
   

  	
  3.1(f)

  
	
  Business Combination

  	
   

  	
  6.7

  
	
  business day

  	
   

  	
  1.2

  
	
  Capitalization Date

  	
   

  	
  3.1(b)

  
	
  CDCI

  	
   

  	
  Recitals

  
	
  CDFI

  	
   

  	
  3.1(d)(ii)

  
	
  CDFI Application

  	
   

  	
  2.3(m)

  
	
  CDFI Application Update

  	
   

  	
  2.3(m)

  
	
  Certificate of Designations

  	
   

  	
  2.3(d)

  
	
  Certified Entity

  	
   

  	
  1.1

  
	
  Charter

  	
   

  	
  2.3(d)

  
	
  Closing

  	
   

  	
  2.2(a)

  
	
  Closing Date

  	
   

  	
  2.2(a)

  
	
  Code

  	
   

  	
  3.1(n)

  
	
  Common Stock

  	
   

  	
  3.1(b)

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company Financial Statements

  	
   

  	
  2.3 (l)

  
	
  Company Material Adverse Effect

  	
   

  	
  1.1

  
	
  Company Reports

  	
   

  	
  3.1(i)(i)

  
	
  Company Subsidiary; Company Subsidiaries

  	
   

  	
  3.1(e)(ii)

  
	
  Compensation Regulations

  	
   

  	
  2.3(f)

  
	
  control; controlled by; under common control with

  	
   

  	
  1.1

  
	
  Controlled Group

  	
   

  	
  3.1(n)

  
	
  CPP

  	
   

  	
  3.1(x)

  
	
  CPP/CDCI Securities

  	
   

  	
  3.1(x)

  
	
  Disclosure Schedule

  	
   

  	
  1.1

  
	
  Disclosure Update

  	
   

  	
  2.3(k)

  
	
  EESA

  	
   

  	
  2.3(f)

  
	
  ERISA

  	
   

  	
  3.1(n)

  
	
  Exchange Act

  	
   

  	
  5.3

  
	
  Federal Reserve

  	
   

  	
  1.1

  
	
  Fund

  	
   

  	
  3.1(d)(ii)

  
	
  GAAP

  	
   

  	
  1.1

  
	
  Governmental Entities

  	
   

  	
  2.3(a)

  
	
  Holders

  	
   

  	
  5.4(a)

  
	
  Indemnitee

  	
   

  	
  5.4(b)

  



 


iv

















 


	
  Information

  	
   

  	
  4.1(c)(iii)

  
	
  Investor

  	
   

  	
  Recitals

  
	
  Junior Stock

  	
   

  	
  1.1

  
	
  knowledge of the Company; Company’s knowledge

  	
   

  	
  1.1

  
	
  Letter Agreement

  	
   

  	
  Recitals

  
	
  MHA

  	
   

  	
  4.1(i)

  
	
  officers

  	
   

  	
  1.1

  
	
  Parity Stock

  	
   

  	
  1.1

  
	
  Plan

  	
   

  	
  3.1(n)

  
	
  Preferred Shares

  	
   

  	
  Recitals

  
	
  Preferred Stock

  	
   

  	
  Recitals

  
	
  Previously Disclosed

  	
   

  	
  1.1

  
	
  Proprietary Rights

  	
   

  	
  3.1(u)

  
	
  Purchase

  	
   

  	
  Recitals

  
	
  Purchase Price

  	
   

  	
  2.1

  
	
  Regulatory Agreement

  	
   

  	
  3.1(s)

  
	
  Relevant Period

  	
   

  	
  2.3(f)

  
	
  Savings and Loan Holding Company

  	
   

  	
  1.1

  
	
  Schedules

  	
   

  	
  Recitals

  
	
  SEC

  	
   

  	
  3.1(k)

  
	
  Section 4.1(e) Employee

  	
   

  	
  4.1(e)(ii)

  
	
  Securities Act

  	
   

  	
  3.1(a)

  
	
  Senior Executive Officers

  	
   

  	
  1.1

  
	
  Share Dilution Amount

  	
   

  	
  1.1

  
	
  Signing Date

  	
   

  	
  1.1

  
	
  subsidiary

  	
   

  	
  1.1

  
	
  Tax; Taxes

  	
   

  	
  1.1

  
	
  Transfer

  	
   

  	
  5.3

  



 


v
















 


SECURITIES PURCHASE AGREEMENT — STANDARD TERMS


 


Recitals:


 


WHEREAS, the United States Department of the Treasury
(the “Investor”) may from time to time agree
to purchase shares of preferred stock from eligible financial institutions
which elect to participate in the Community Development Capital Initiative (“CDCI”);


 


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


 


WHEREAS, the Company agrees to support the
availability of credit and financial services to underserved populations and
communities in the United States to promote the expansion of small businesses
and the creation of jobs in such populations and communities;


 


WHEREAS, the Company agrees to work diligently, under
existing and any future 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 the Investor intends to purchase (the “Purchase”) from
the Company the Preferred Shares; 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.                 ARTICLE I


 


1.1          Definitions.  Except as otherwise specified herein or as
the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Agreement.


 


“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.


 


“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)).


 


“Bank Holding Company”
means a company registered as such with the Board of Governors of the Federal
Reserve System (the “Federal Reserve”)
pursuant to 12 U.S.C. §1842 and the regulations of the Federal Reserve
promulgated thereunder.


 


“Certified Entity”
means the Company or, if the Company itself has not been certified by the Fund
as a CDFI, each Affiliate of the Company that has been certified by the CDFI  and is specified on Schedule A of the
Letter Agreement.


 


“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 and each Certified Entity 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 authoritative interpretations thereof, or (C) changes
or proposed changes after the Signing Date in securities, banking and other
laws of general applicability or related policies or interpretations of
Governmental Entities (in the case of each of these clauses (A), (B) and
(C), other than changes or occurrences to the extent that such changes or
occurrences have or would reasonably be expected to have a materially
disproportionate adverse effect on the Company and its consolidated
subsidiaries taken as a whole relative to comparable U.S. banking or financial
services organizations); or (ii) the ability of the Company to consummate
the Purchase and other transactions contemplated by this Agreement and perform
its obligations hereunder or thereunder on a timely basis.


 


2

















 


“Disclosure Schedule” means
that certain schedule to this Agreement delivered to the Investor on or prior
to the Signing Date, setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 3.1.


 


“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.


 


“knowledge of the Company”
or “Company’s knowledge” means the actual
knowledge after reasonable and due inquiry of the “officers”
(as such term is defined in Rule 3b-2 under the Exchange Act) 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).


 


“Previously Disclosed”
means information set forth on the Disclosure Schedule or the Disclosure
Update, as applicable; provided, however, that disclosure in any section of such Disclosure
Schedule or Disclosure Update, as applicable, shall apply only to the indicated
section of this Agreement except to the extent that it is reasonably apparent
from the face of such disclosure that such disclosure is relevant to another
section of this Agreement; provided, further, that the existence of Previously Disclosed
information, pursuant to a Disclosure Update, shall neither obligate the
Investor to consummate the Purchase nor limit or affect any rights of or
remedies available to the Investor.


 


“Savings and Loan Holding
Company” means a company registered as such with the Office of
Thrift Supervision pursuant to 12 U.S.C. §1467(a) and the regulations of
the Office of Thrift Supervision promulgated thereunder.


 


“Senior Executive Officers”
means the Company’s “senior executive officers” as defined in Section 111
of EESA and the Compensation Regulations.


 


“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
recent consolidated 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.


 


“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.


 


3

















 


“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, penalty or addition imposed by any Governmental Entity.


 


1.2          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 entered into 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 or the District of Columbia generally are
authorized or required by law or other governmental actions to close.


 


Article II.               ARTICLE II


 


Purchase; Closing


 


2.1          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 Preferred Shares for the price set forth on Schedule
A (the “Purchase Price”).


 


2.2          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 Section 2.3,
at the Closing the Company will deliver the Preferred Shares 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.


 


4

















 


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


 


(a)           (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 Preferred Shares as contemplated by this Agreement;


 


(b)           (i) the
representations and warranties of the Company set forth in  Section 3.1 shall be true and correct in
all 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 respects
as of such other date) and (ii) the Company shall have performed in all
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing;


 


(c)           the
Company shall have delivered to the Investor a certificate signed on behalf of
the Company by a Senior Executive Officer certifying to the effect that the conditions
set forth in Section 2.3(b) have been satisfied, in substantially the
form attached hereto as Annex A;


 


(d)           the
Company shall have duly adopted and filed with the Secretary of State of its
jurisdiction of organization or other applicable Governmental Entity an
amendment to its certificate or articles of incorporation, articles of
association, or similar organizational document (“Charter”)
in substantially the form attached hereto as Annex B (the “Certificate
of Designations”) and the Company shall have delivered to the
Investor a copy of the filed Certificate of Designations with appropriate
evidence from the Secretary of State or other applicable Governmental Entity
that the filing has been accepted, or if a filed copy is unavailable, a
certificate signed on behalf of the Company by a Senior Executive Officer
certifying to the effect that the filing of the Certificate of Designation has
been accepted, in substantially the form attached hereto as Annex A;


 


(e)           the
Company shall have delivered to the Investor true, complete and correct
certified copies of the Charter and bylaws of the Company;


 


5

















 


(f)            (i) 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 any other employee of the Company or its Affiliates subject to Section 111
of the Emergency Economic Stabilization Act of 2008, as amended by the American
Recovery and Reinvestment Act of 2009, or otherwise from time to time (“EESA”), as implemented by any guidance, rule or
regulation thereunder, as the same shall be in effect from time to time
(collectively, the “Compensation Regulations”)
(and to the extent necessary for such changes to be legally enforceable, each
of its Senior Executive Officers and other employees shall have duly consented
in writing to such changes), as may be necessary, during the period in which
any obligation of the Company arising from financial assistance under the
Troubled Asset Relief Program remains outstanding (such period, as it may be
further described in the Compensation Regulations, the “Relevant
Period”), in order to comply with Section 111 of EESA or the
Compensation Regulations, and (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 condition set forth in Section 2.3(f)(i) has
been satisfied, in substantially the form attached hereto as Annex A;


 


(g)           each
of the Company’s Senior Executive Officers and any other employee of the
Company or its Affiliates subject to Section 111 of EESA shall have delivered
to the Investor a written waiver in the form attached hereto as Annex C
releasing the Investor and the Company from any claims that such Senior
Executive Officer or other employee may otherwise have as a result of the
modification of, or the agreement of the Company hereunder to modify, the terms
of any Benefit Plans with respect to its Senior Executive Officers or other
employees to eliminate any provisions of such Benefit Plans that would not be
in compliance with the requirements of Section 111 of EESA as implemented
by the Compensation Regulations;


 


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


 


(i)            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);


 


(j)            the
Company and the Company Subsidiaries shall have taken all necessary action to
ensure that the Company and the Company Subsidiaries and their executive
officers, respectively, are in compliance with (i) all guidelines put
forth by the Investor with respect to transparency, reporting and monitoring
and (ii) the provisions of EESA and any federal law respecting EESA,
including the Employ American Workers Act (Section 1611 of Division A,
Title XVI of the American Recovery and Reinvestment Act of 2009), Public Law No. 111-5,
effective as of February 17, 2009, and all rules, regulations and guidance
issued thereunder;


 


6

















 


(k)           the
Company shall have delivered to the Investor a copy of the Disclosure Schedule
on or prior to the Signing Date and, to the extent that any information set
forth on the Disclosure Schedule needs to be updated or supplemented to make it
true, complete and correct as of the Closing Date, (i) the Company shall
have delivered to the Investor an update to the Disclosure Schedule (the “Disclosure Update”), setting forth any information necessary
to make the Disclosure Schedule true, correct and complete as of the Closing
Date and (ii) the Investor, in its sole discretion, shall have approved
the Disclosure Update, provided, however, that the delivery and acceptance of the Disclosure
Update shall not limit or affect any rights of or remedies available to the
Investor;


 


(l)            the
Company shall have delivered to the Investor on or prior to the Signing Date
each of the consolidated financial statements of the Company and its
consolidated subsidiaries for each of the last three completed fiscal years of
the Company (which shall be audited to the extent audited financial statements
are available prior to the Signing Date) and each completed quarterly period
since the last completed fiscal year (collectively, the “Company
Financial Statements”); and


 


(m)          the
Company shall have delivered to the Investor prior to the Signing Date either (i) a
true, complete and correct certified copy of each CDFI Certification
Application that each Certified Entity submitted to the Fund in connection with
its certification as a CDFI along with any updates to the CDFI Certification
Application necessary to make it true, complete and correct as of the Signing
Date or (ii), to the extent a copy of the CDFI Certification Application that
any Certified Entity submitted to the Fund in connection with its certification
as a CDFI is not available, a newly completed CDFI Certification Application
with respect to such Certified Entity true, complete and correct as of the
Signing Date (the CDFI Certification Application delivered to the Investor
pursuant to this Section 2.3(m), the “CDFI Application”),
and, to the extent any information set forth in the CDFI Application is not
true, complete and correct as of the Closing Date, the Company shall have
delivered to the Investor an update to the CDFI Application (the “CDFI Application Update”), setting forth any information
necessary to make the information set forth in the CDFI Application true,
correct and complete as of the Closing Date.


 


7

















 


Article III.             ARTICLE III


 


Representations and
Warranties


 


3.1          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, operate and lease its properties and
conduct its business in all material respects as it is being 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 Certified Entity (if not the Company) and each subsidiary
of the Company that would be considered a “significant subsidiary” within the
meaning of Rule 1-02(w) of Regulation S-X under the Securities Act of 1933 (the
“Securities Act”), has been duly
organized and is validly existing in good standing under the laws of its
jurisdiction of organization.  The
Charter and bylaws of the Company and each Certified Entity (if not 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 and as of the Closing Date.


 


(b)           Capitalization.  The authorized capital stock of the Company,
and the outstanding capital stock of the Company (including securities
convertible into, or exercisable or exchangeable for, capital stock of the
Company) as of the most recent fiscal month-end preceding the Signing Date (the
“Capitalization Date”) is set forth on
Schedule B.  The outstanding shares of
capital stock of the Company have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). As of the
Signing Date, the Company does not have outstanding any securities or other
obligations providing the holder the right to acquire its common stock (“Common Stock”) or other capital 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 or other capital stock.  Since the Capitalization Date, the Company
has not issued any shares of Common Stock or other capital stock, other than
(i) shares issued upon the exercise of stock options or delivered under
other equity-based awards or other convertible securities or warrants which
were issued and outstanding on the Capitalization Date and disclosed on
Schedule B,  and (ii) shares disclosed on
Schedule B.  Each holder of 5% or more of
any class of capital stock of the Company and such holder’s primary address are
set forth on Schedule B.


 


8

















 


(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 designated, 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.


 


9

















 


(d)           Community
Development Financial Institution Status; Domestic Ownership.


 


The Company collectively with all of its “Affiliates”
(within the meaning of 12 C.F.R. 1805.104) satisfies the requirements of 12
C.F.R. 1805.200(b).


 


Each Certified Entity (A) is a regulated
community development financial institution (a “CDFI”)
currently certified by the Community Development Financial Institution Fund
(the “Fund”) of the United States Department
of the Treasury pursuant to 12 C.F.R. 1805.201(a) as having satisfied the
eligibility requirements of the Fund’s Community Development Financial
Institutions Program and (B) satisfies the eligibility requirements for a
CDFI set forth in 12 C.F.R. 1805.201 (b)(1) — (6).


 


The Company is not a Bank Holding Company, Savings and
Loan Holding Company, bank or savings association controlled (within the
meaning of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12
C.F.R. 225(a)(i) in the case of Bank Holding Companies and banks and the Home
Owners’ Loan Act of 1933 (12 U.S.C. 1467a (a)(2)) and 12 C.F.R. 583.7 in the
case of Savings and Loan Holding Companies and savings associations) by a
foreign bank or company.


 


(e)           Authorization,
Enforceability.


 


(i)       The Company has the corporate power and authority to execute and deliver
this Agreement and  to carry out
its obligations hereunder (which includes the issuance of the Preferred
Shares).  The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and its stockholders, and no
further approval or authorization is required on the part of the Company.  This Agreement is a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, subject to any limitations 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”).


 


10
















 


(ii)      The execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated hereby and compliance by
the Company with the provisions hereof, will not (A) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any subsidiary of the Company or
Certified Entity (if not the Company) (each subsidiary or Certified Entity, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”) under any of the terms, conditions or
provisions of (x) its organizational documents or (y) 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)(y) 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, such filings and
approvals as are required to be made or obtained under any state “blue sky”
laws and such as have been made or obtained, no notice to, filing with,
exemption or review by, or authorization, consent or approval of, any
Governmental Entity is required to be made or obtained by the Company in
connection with the consummation by the Company of the Purchase except for any
such notices, filings, exemptions, reviews, authorizations, consents and
approvals the failure of which to make or obtain would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect.


 


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


 


(g)           No
Company Material Adverse Effect.  Since
the last day of the last completed fiscal period for which financial statements
are included in the Company Financial Statements, 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, except as disclosed on Schedule C.


 


11

















 


(h)           Company
Financial Statements.  The Company
Financial Statements present fairly in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates indicated therein and the consolidated results of their operations for
the periods specified therein; and except as stated therein, such financial
statements (i) were prepared in conformity with GAAP applied on a consistent
basis (except as may be noted therein) and (ii) have been prepared from, and
are in accordance with, the books and records of the Company and the Company
Subsidiaries.


 


12

















 


(i)            Reports.


 


(i)    Since
December 31, 2008, the Company and each Company Subsidiary has filed all
reports, registrations, documents, filings, statements and submissions,
together with any amendments thereto, that it was required to file with any
Governmental Entity (the foregoing, collectively, the “Company
Reports”) and has paid all fees and assessments due and payable in
connection therewith, except, in each case, as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect.  As of their respective dates of
filing, the Company Reports complied in all material respects with all statutes
and applicable rules and regulations of the applicable Governmental Entities.


 


(ii)   The
records, systems, controls, data and information of the Company and the Company
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Company Subsidiaries or their accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have a material
adverse effect on the system of internal accounting controls described below in
this Section 3.1(i)(ii).  The Company (A)
has implemented and maintains adequate disclosure controls and procedures to
ensure that material information relating to the Company, including the
consolidated Company Subsidiaries, is made known to the chief executive officer
and the chief financial officer of the Company by others within those entities,
and (B) has disclosed, based on its most recent evaluation prior to the Signing
Date, to the Company’s outside auditors and the audit committee of the Board of
Directors (x) any significant deficiencies and material weaknesses in the
design or operation of internal controls that are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information and (y) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal controls over financial reporting.


 


(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 (i) liabilities that have arisen since the last fiscal year end in
the ordinary and usual course of business and consistent with past practice and
(ii) liabilities that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect.


 


13

















 


(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 Preferred Shares
under the Securities Act, and the rules and regulations of the Securities and
Exchange Commission (the “SEC”) promulgated
thereunder), which might subject the offering, issuance or sale of any of the
Preferred Shares to Investor pursuant to this Agreement to the registration
requirements of the Securities Act.


 


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


 


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


 


14

















 


(n)           Employee
Benefit Matters.  Except as would not
reasonably be expected to have, either individually or in the aggregate, a
Company Material Adverse Effect: (i) 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; (ii) with
respect to each Plan subject to Title IV of ERISA (including, for purposes of
this clause (ii), 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 Pension Benefit
Guaranty Corporation 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 (iii) 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 (together with any schedules
and attached thereto) required to be filed through the Signing Date, subject to
permitted extensions, and have paid all Taxes due thereon, (ii) all such Tax
returns (together with any schedules and attached thereto) are true, complete
and correct in all material respects and were prepared in compliance with all
applicable laws and (iii) 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.


 


15

















 


(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 (including, without limitation,
liens for Taxes), 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:


 


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;


 


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


 


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.


 


16

















 


(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 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 is 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.


 


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


 


(u)           Intellectual
Property.  Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (i) the Company and each Company Subsidiary owns or
otherwise has the right to use, all intellectual property rights, including all
trademarks, trade dress, trade names, service marks, domain names, patents,
inventions, trade secrets, know-how, works of authorship and copyrights
therein, that are used in the conduct of their existing businesses and all
rights relating to the plans, design and specifications of any of its branch
facilities (“Proprietary Rights”) free and
clear of all liens and any claims of ownership by current or former employees,
contractors, designers or others and (ii) neither the Company nor any of the
Company Subsidiaries is materially infringing, diluting, misappropriating or
violating, nor has the Company or any of 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, 2007, alleging
that any person has infringed, diluted, misappropriated or violated, any of the
Proprietary Rights owned by the Company and the Company Subsidiaries.


 


17

















 


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


 


(w)          Disclosure
Schedule.  The Company has delivered the
Disclosure Schedule and, if applicable, the Disclosure Update to the Investor
and the information contained in the Disclosure Schedule, as modified by the
information contained in the Disclosure Update, if applicable, is true,
complete and correct.


 


(x)           CPP/CDCI
Securities.  To the extent that the
Company participated in the Troubled Asset Relief Program Capital Purchase
Program (“CPP”) or the CDCI prior to the Signing
Date and the Company has any Preferred Stock or other securities issued in
connection with its participation in the CPP or the CDCI (the “CPP/CDCI Securities”) outstanding, the Company has (i) not
breached any representation, warranty or covenant set forth in any of the
documents governing the CPP/CDCI Securities or its sale to Investor and (ii) paid
to Investor all accrued and unpaid dividends and/or interest then due on the
CPP/CDCI Securities.


 


Article IV.              ARTICLE
IV


 


COVENANTS


 


4.1          Affirmative
Covenants.  The Company hereby covenants and agrees with
Investor that:


 


(a)           Commercially
Reasonable Efforts.  Subject to the terms
and conditions of this Agreement, each of the parties will use its commercially
reasonable efforts in good faith to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or desirable, or
advisable under applicable laws, so as to permit consummation of the Purchase
as promptly as practicable and otherwise to enable consummation of the
transactions contemplated hereby and shall use commercially reasonable efforts
to cooperate with the other party to that end.


 


(b)           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
4.1(b) shall not limit or affect any rights of or remedies available to the
Investor.


 


18

















 


(c)           Access,
Information and Confidentiality.


 


From the Signing Date until the date when the Investor
owns an amount of Preferred Shares having an aggregate liquidation value of
less than 10% of the Purchase Price, the Company will permit the Investor and
its agents, consultants, contractors and advisors (x) acting through the
Appropriate Federal Banking Agency, or otherwise to the extent necessary to
evaluate, manage, or transfer its investment in the Company, to examine the
corporate books, Tax returns (including all schedules and attached thereto) and
other information reasonably requested by Investor relating to Taxes and make
copies thereof and to discuss the affairs, finances and accounts of the Company
and the Company Subsidiaries with the principal officers of the Company, all
upon reasonable notice and at such reasonable times and as often as the
Investor may reasonably request and (y) to review any information material to
the Investor’s investment in the Company provided by the Company to its
Appropriate Federal Banking Agency.  Any
investigation pursuant to this Section 4.1(c) 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 (A) prohibited by applicable law or regulation, or (B) 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 (i) apply).


 


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


 


(A)          as
soon as available after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, a consolidated balance sheet of the Company as
of the end of such fiscal year, and consolidated statements of income, retained
earnings and cash flows of the Company for such year, in each case prepared in
accordance with GAAP and setting forth in each case in comparative form the
figures for the previous fiscal year of the Company and which shall be audited
to the extent audited financial statements are available;(1)


 


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


 


(C)          as
soon as available after the Company receives any assessment of the Company’s
internal controls, a copy of such assessment;


 






(1)  To the extent that the Company informed the
Investor on the Signing Date that it does not prepare financial statements in
accordance with GAAP in the ordinary course, the Investor may consider other annual
financial reporting packages acceptable to it in its sole discretion.


 


19

















 


(D)          annually
on a date specified by the Investor, a completed survey, in a form specified by
the Investor, providing, among other things, a description of how the Company
has utilized the funds the Company received hereunder in connection with the
sale of the Preferred Shares and the effects of such funds on the operations
and status of the Company;


 


(E)           as
soon as such items become effective, any amendments to the Charter, bylaws or
other organizational documents of the Company; and


 


(F)           at
the same time as such items are sent to any stockholders of the Company, copies
of any information or documents sent by the Company to its stockholders.


 


(iii)     The Investor will use
reasonable best efforts to hold, and will use reasonable best efforts to cause
its agents, consultants, contractors and advisors and United States executive
branch officials and employees, 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.  The Investor understands that the Information
may contain commercially sensitive confidential information entitled to an
exception from a Freedom of Information Act request.


 


(iv)    The Investor’s information rights pursuant to Section 4.1(c)(ii)(A),
(B), (C), (E) and (F) and the Investor’s right to receive certifications from
the Company pursuant to Section 4.1(d)(ii) may be assigned by the Investor to a
transferee or assignee of the Preferred Shares with a liquidation preference of
no less than an amount equal to 2% of the initial aggregate liquidation
preference of the Preferred Shares.


 


(v)     From the Signing Date until the date when the Investor no longer owns
any Preferred Shares, the Company shall permit, and shall cause each of the Company’s
Subsidiaries to permit (A) the Investor and its agents, consultants,
contractors and advisors, (B) the Special Inspector General of the Troubled
Asset Relief Program, and (C) the Comptroller General of the United States
access to personnel and any books, papers, records or other data, in each case,
to the extent relevant to ascertaining compliance with the financing terms and
conditions; provided that prior to disclosing any
information pursuant to clause (B) or (C), the Special Inspector General of the
Troubled Asset Relief Program and the Comptroller General of the United States
shall have agreed, with respect to documents obtained under this Agreement in
furtherance of its function, to follow applicable law and regulation (and the
applicable customary policies and procedures) regarding the dissemination of
confidential materials, including redacting confidential information from the
public version of its reports and soliciting the input from the Company as to
information that should be afforded confidentiality, as appropriate.


 


20

















 


(vi)    Nothing in this Section shall be construed to limit the authority that
the Special Inspector General of the Troubled Asset Relief Program, the
Comptroller General of the United States or any other applicable regulatory
authority has under law.


 


(d)           CDFI
Requirements.


 


(i)       From the Signing Date until the date on which all of the Preferred
Shares have been redeemed in whole, each Certified Entity shall (A) be
certified by the Fund as a CDFI; (B) together with its Affiliates collectively
meet the eligibility requirements of 12 C.F.R. 1805.200(b); (C) have a primary
mission of promoting community development, as may be determined by Investor
from time to time, based on criteria set forth in 12 C.F.R. 1805.201(b)(1); (D)
provide Financial Products, Development Services, and/or other similar
financing as a predominant business activity in arm’s-length transactions; (E) serve
a Target Market by serving one or more Investment Areas and/or Targeted
Populations as may be determined by Investor from time to time, substantially
in the manner set forth in 12 C.F.R. 1805.201(b)(3); (F) provide Development
Services in conjunction with its Financial Products, directly, through an
Affiliate or through a contract with a third-party provider; (G) maintain
accountability to residents of the applicable Investment Area(s) or Targeted
Population(s) through representation on its governing Board of Directors or
otherwise; and (H) remain a non-governmental entity which is not an agency or
instrumentality of the United States of America, or any State or political
subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and within the
meaning of any supplemental regulations or interpretations of 12 C.F.R.
1805.201(b)(6) or such supplemental regulations published by the Fund.  Notwithstanding any other provision hereof,
as used in this Section 4.1(d), the terms “Affiliates”; “Financial Products”; “Development Services”;
“Target Market”; “Investment
Areas”; and “Targeted Populations”
have the meanings ascribed to such terms in 12 C.F.R. 1805.104.


 


21
















 


(ii)                 From
the Signing Date until the date on which all of the Preferred Shares have been
redeemed in whole, the Company shall deliver to Investor (1) (x) on
the date that is 180 days after the Closing Date and (y) annually on the
same date on which the Company delivers the documentation required under Section 4.1(c)(ii)(A) to
the Investor, a certificate signed on behalf of the Company by a Senior
Executive Officer, in substantially the form attached hereto as Annex F,
certifying (A) that the Company and each Certified Entity remains in
compliance with the covenants set forth in Section 4.1(d)(i); (B) that
the information in the CDFI Application, as modified by any updates to the CDFI
Application provided by the Company to the Investor on or prior to the date of
such certificate, with respect to the covenants set forth in Section 4.1(d)(i)(B) and
Section 4.1(d)(i)(D) remains true, correct and complete as of such
date or, to the extent any information set forth in the CDFI Application, as
modified by any updates to the CDFI Application provided by the Company to the
Investor on or prior to the date of such certificate, with respect to such
covenants needs to be updated or supplanted to make it true, complete and
correct as of such date, that an updated narrative to the CDFI Application
setting forth any information necessary to make the information set forth in
the CDFI Application is true, complete and correct as of such date; (C) either
(a) that the contracts and material agreements entered into by each Certified
Entity with respect to Development Services previously disclosed to the
Investor remain in effect or (b) that attached are any new contracts and
material agreements entered into by the Certified Entity with respect to
Development Services; (D) a list of the names and addresses of the
individuals which comprise the board of directors of each Certified Entity as
of such date and, to the extent any of such individuals was not a member of the
board of directors of such Certified Entity as of the last certification to the
Investor, a narrative describing such individual’s relationship to the
applicable Investment Area(s) and Targeted Population(s) or, if such
Certified Entity maintains accountability to residents of the applicable
Investment Area(s) or Target Population(s) through means other than
representation on its governing board of directors and such means have changed
since the date of the last certification to the Investor, a narrative
describing such change; (E) that each Certified Entity is not an agency of
the United States of America, or any State or political subdivision thereof, as
described in 12 C.F.R. 1805.201(b)(6) and within the meaning of any
supplemental regulations or interpretations of 12 C.F.R. 1805.201(b)(6) or
such supplemental regulations published by the Fund and (F) that the
Company remains in compliance with the covenants set forth in Section 4.1(f) and
Section 4.1(m) and (2) within five (5) business days of
receipt, copies of any notices, correspondence or other written communication
between each Certified Entity and the Fund, including any form that such
Certified Entity is required to provide to the Fund due to the occurrence of a “Material
Event” within the meaning of the Fund’s CDFI Certification Procedures.


 


(iii)              The
Company shall immediately notify the Investor upon the occurrence of any breach
of any of the covenants set forth in Section 4.1(d).


 


22

















 


(e)                                  Executive Compensation.


 


(i)                    Benefit Plans.  During the Relevant Period, the Company shall
take all necessary action to ensure that the Benefit Plans of the Company and
its Affiliates comply in all respects with, and shall take all other actions
necessary to comply with, Section 111 of EESA as implemented by the
Compensation Regulations, and neither the Company nor any of its Affiliates
shall adopt any new Benefit Plan (x) that does not comply therewith or (y) that
does not expressly state and require that such Benefit Plan and any
compensation thereunder shall be subject to any relevant Compensation
Regulations adopted, issued or released on or after the date any such Benefit
Plan is adopted.  To the extent that EESA
and/or the Compensation Regulations are amended or otherwise change during the
Relevant Period in a manner that requires changes to then-existing Benefit
Plans, or that requires other actions, the Company and its Affiliates shall
effect such changes to its or their Benefit Plans, and take such other actions,
as promptly as practicable after it has actual knowledge of such amendments or
changes in order to be in compliance with this Section 4.1(e) (and
shall be deemed to be in compliance for a reasonable period to effect such
changes).  In addition, the Company and
its Affiliates shall take all necessary action, other than to the extent
prohibited by applicable law or regulation applicable outside of the United
States, to ensure that the consummation of the transactions contemplated by
this Agreement will not accelerate the vesting, payment or distribution of any
equity-based awards, deferred cash awards or any nonqualified deferred
compensation payable by the Company or any of its Affiliates.


 


(ii)                 Additional
Waivers.  After
the Closing Date, in connection with the hiring or promotion of a Section 4.1(e) Employee
and/or the promulgation of applicable Compensation Regulations or otherwise, to
the extent any Section 4.1(e) Employee shall not have executed a
waiver in a form satisfactory to the Investor with respect to the application
to such Section 4.1(e) Employee of the Compensation Regulations, the
Company shall use its best efforts to (x) obtain from such Section 4.1(e) Employee
a waiver in substantially the form attached hereto as Annex C and (y) deliver
such waiver to the Investor as promptly as possible, in each case within sixty
days of such Section 4.1(e) Employee’s becoming subject to the
requirements of this section.  “Section 4.1(e) Employee” means (A) each
Senior Executive Officer and (B) any other employee of the Company or any
of its Affiliates determined at any time to be subject to Section 111 of
EESA as implemented by the Compensation Regulations.


 


(iii)              Clawback.  In the event that any Section 4.1(e) Employee
receives a payment in contravention of the provisions of this Section 4.1(e),
the Company shall promptly provide such individual with written notice that the
amount of such payment must be repaid to the Company in full within fifteen
business days following receipt of such notice or such earlier time as may be
required by the Compensation Regulations and shall promptly inform the Investor
(x) upon discovering that a payment in contravention of this Section 4.1(e) has
been made and (y) following the repayment to the Company of such amount,
and shall take such other actions as may be necessary to comply with the
Compensation Regulations.


 


23

















 


(iv)             Limitation
on Deductions.  During the Relevant Period, the Company
agrees that it shall not claim a deduction for remuneration for federal income
tax purposes in excess of $500,000 for each Senior Executive Officer that would
not be deductible if Section 162(m)(5) of the Code applied to the
Company.


 


(f)                                   Bank and Thrift Holding Company Status. 
If the Company is a Bank Holding Company or a Savings and Loan Holding Company
on the Signing Date, then the Company shall maintain its status as a Bank
Holding Company or Savings and Loan Holding Company, as the case may be, for as
long as the Investor owns any Preferred Shares. 
The Company shall redeem all Preferred Shares held by the Investor prior
to terminating its status as a Bank Holding Company or Savings and Loan Holding
Company, as applicable.


 


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


 


(h)                                 Capital Covenant.  From the
Signing Date until the date on which all of the Preferred Shares have been
redeemed in whole, the Company and the Company Subsidiaries shall maintain such
capital as may be necessary to meet the minimum capital requirements of the
Appropriate Federal Banking Agency, as in effect from time to time.


 


(i)                                     HAMP Modifications.  The Company
shall take all necessary action to ensure that (A) from and after the date
the Company or any Company Subsidiary that services residential mortgage loans
has 100 or more residential mortgage loans not owned or guaranteed by Fannie
Mae or Freddie Mac which have been past due for 60 or more days, the Company or
such Company Subsidiary shall, to the extent such programs are open for
participation, (1) participate in the United States Department of the
Treasury’s Making Home Affordable (“MHA”) program,
including MHA’s Second Lien Modification Program and (2) immediately
execute a Commitment to Purchase Financial Instrument and Servicer
Participation Agreement (in such form as may be set forth on the MHA website at
www.hmpadmin.com from time to time) with Fannie Mae (acting as the United States
Department of the Treasury’s fiscal agent) and (B) if the Company or any
Company Subsidiary owns mortgage loans that are serviced by a non-affiliated
mortgage servicer, the Company or such Company Subsidiary shall consent to any
MHA modification request made by such mortgage servicer.


 


24

















 


(j)                                    Reporting Requirements.  Prior to
the date on which all of the Preferred Shares have been redeemed in whole, the
Company covenants and agrees that, at all times on or after the Closing Date, (i) to
the extent it is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, it shall comply with the terms and conditions set forth in
Annex E or (ii) as soon as practicable after the date that the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, it shall comply with the terms and conditions set forth in
Annex E.


 


(k)                                 Compliance with Employ American Workers Act.  The Company shall agree to
comply, and take all necessary action to ensure that any Company Subsidiary
complies, in all respects with the provisions of EESA and any federal law
respecting EESA, including the Employ American Workers Act (Section 1611
of Division A, Title XVI of the American Recovery and Reinvestment Act of
2009), Public Law No. 111-5, effective as of February 17, 2009, as
implemented by any rules, regulation or guidance thereunder, as such may be
amended or supplemented from time to time, and any applicable guidance of the
United States Department of the Treasury with respect thereto.


 


(l)                                     Transfer of Proceeds to Certified Entities.  If the Company is not a Certified Entity, the
Company shall immediately transfer to its related Certified Entities, as
capital contributions, any proceeds it receives in connection with the sale of
Preferred Shares.


 


(m)                             Control by Foreign Bank or Company. 
Prior to the date on which all of the Preferred Shares have been
redeemed in whole, the Company shall not be controlled (within the meaning of
the Bank Holding Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12 C.F.R.
225(a)(i) in the case of Bank Holding Companies and banks and the Home
Owners’ Loan Act of 1933 (12 U.S.C. 1467a(a)(2)) and 12 C.F.R. 583.7 in the
case of Savings and Loan Holding Companies and savings associations) by a
foreign bank or company.


 


25

















 


4.2                               Negative Covenants.  The Company
hereby covenants and agrees with the Investor that:


 


(a)                                 Certain Transactions.


 


(i)                    The
Company shall 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.


 


(ii)                 Without
the prior written consent of the Investor, until such time as the Investor
shall cease to own any Preferred Shares, the Company shall not permit any of
its “significant subsidiaries” (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) to (i) engage in any merger,
consolidation, statutory share exchange or similar transaction following the
consummation of which such significant subsidiary is not wholly-owned by the
Company, (ii) dissolve or sell all or substantially all of its assets or
property other than in connection with an internal reorganization or
consolidation involving wholly-owned subsidiaries of the Company or (iii) issue
or sell any shares of its capital stock or any securities convertible or
exercisable for any such shares, other than issuances or sales in connection
with an internal reorganization or consolidation involving wholly-owned
subsidiaries of the Company.


 


(b)                                 Restriction on Dividends and Repurchases.


 


(i)                    The
Company covenants and agrees that it shall not violate any of the restrictions
on dividends, distributions, redemptions, repurchases, acquisitions and related
actions set forth in the Certificate of Designations, which are incorporated by
reference herein as if set forth in full.


 


(ii)                 During
the period beginning on the eighth anniversary of the Closing and ending on the
date on which the Investor no longer owns any of the Preferred Shares, neither
the Company nor any Company Subsidiary shall, without the consent of the
Investor, (i) declare or pay any dividend or make any distribution on
capital stock or other equity securities of any kind of the Company or any
Company Subsidiary; or (ii) redeem, purchase or acquire any shares of
Common Stock or other capital stock or other equity securities of any kind of
the Company or any Company Subsidiary, or any trust preferred securities issued
by the Company or any Affiliate of the Company, other than (A) redemptions,
purchases or other acquisitions of the Preferred Shares, (B) regular
dividends on shares of preferred stock in accordance with the terms thereof and
which are permitted under the terms of the Preferred Shares, or (C) dividends
or distributions by any wholly-owned Company Subsidiary.


 


26

















 


(c)                                  Related Party Transactions.  Until
such time as the Investor ceases to own any debt or equity securities of the
Company, including the Preferred Shares, the Company and the Company
Subsidiaries shall not enter into transactions with Affiliates or related
persons (within the meaning of Item 404 under the SEC’s Regulation S-K) unless (A) such
transactions are on terms no less favorable to the Company and the Company
Subsidiaries than could be obtained from an unaffiliated third party, and (B) have
been approved by the audit committee of the Board of Directors or comparable
body of independent directors of the Company, or if there are no independent
directors, the Board of Directors, provided that
the Board of Directors shall maintain written documentation which supports its
determination that the transaction meets the requirements of clause (A) of
this Section 4.2(c).


 


(d)                                 Restriction on Repurchase of Preferred Shares Not Held by Investor.  Prior to the date on which the Investor no
longer owns any of the Preferred Shares the Company shall not repurchase,
redeem, call or otherwise reacquire any Preferred Shares from any holder
thereof, whether by means of open market purchase, negotiated transaction, or
otherwise, unless it offers to repurchase, redeem, call or otherwise reacquire
a ratable portion of the Preferred Shares, as the case may be, then held by the
Investor on the same terms and conditions.


 


Article V.                                            ARTICLE V


 


ADDITIONAL AGREEMENTS


 


5.1                               Purchase for Investment.  The Investor acknowledges that the Preferred
Shares have not been registered under the Securities Act or under any state securities
laws. The Investor (a) is acquiring the Preferred Shares 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 Preferred 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.


 


5.2                               Legends.  (a) The Investor
agrees that all certificates or other instruments representing the Preferred
Shares will bear a legend substantially to the following effect:


 


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


 


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF 


 


27

















 


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.


 


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.”


 


28

















 


(a)                                 In the event that any Preferred 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 Preferred
Shares, which shall not contain the applicable legends in Section 5.2(a) above;
provided that the Investor surrenders to
the Company the previously issued certificates or other instruments.


 


29

















 


5.3                               Transfer of Preferred Shares. 
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 Preferred 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 Preferred Shares, including
without limitation, as set forth in Section 5.4, provided that
the Investor shall not Transfer any Preferred Shares if such transfer would
require the Company to be subject to the periodic reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)
and the Company was not already subject to such requirements.  In furtherance of the foregoing, the Company
shall provide reasonable cooperation to facilitate any Transfers of the
Preferred Shares, including, as is reasonable under the circumstances, by
furnishing such information concerning the Company and its business as a
proposed transferee may reasonably request and making management of the Company
reasonably available to respond to questions of a proposed transferee in
accordance with customary practice, subject in all cases to the proposed
transferee agreeing to a customary confidentiality agreement.


 


5.4                               Rule 144; Rule 144A; 4(11⁄2) Transactions.  (a)  At all times after the Signing
Date, the Company covenants that (1) it will, upon the request of the
Investor or any subsequent holders of the Preferred Shares (“Holders”), use its reasonable best efforts
to (x), to the extent any Holder is relying on Rule 144 under the
Securities Act to sell any of the Preferred Shares, make “current public
information” available, as provided in Section (c)(1) of Rule 144
(if the Company is a “Reporting Issuer” within the meaning of Rule 144) or
in Section (c)(2) of Rule 144 (if the Company is a “Non-Reporting
Issuer” within the meaning of Rule 144), in either case for such time
period as necessary to permit sales pursuant to Rule 144, (y), to the
extent any Holder is relying on the so-called “Section 4(11⁄2)”
exemption to sell any of its Preferred Shares, prepare and provide to such
Holder such information, including the preparation of private offering
memoranda or circulars or financial information, as the Holder may reasonably
request to enable the sale of the Preferred Shares pursuant to such exemption,
or (z) to the extent any Holder is relying on Rule 144A under the
Securities Act to sell any of its Preferred Shares, prepare and provide to such
Holder the information required pursuant to Rule 144A(d)(4), and (2) it
will take such further action as any Holder may reasonably request from time to
time to enable such Holder to sell Preferred Shares without registration under
the Securities Act within the limitations of the exemptions provided by (i) the
provisions of the Securities Act or any interpretations thereof or related
thereto by the SEC, including transactions based on the so-called “Section 4(11⁄2)”
and other similar transactions, (ii) Rule 144 or 144A under the
Securities Act, as such rules may be amended from time to time, or (iii) any
similar rule or regulation hereafter adopted by the SEC; provided that the Company shall not be
required to take any action described in this Section 5.4(a) that
would cause the Company to become subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act if the Company was not subject to such
requirements prior to taking such action. 
Upon the request of any Holder, the Company will deliver to such Holder
a written statement as to whether it has complied with such requirements and,
if not, the specifics thereof.


 


30

















 


(b)                                 The Company agrees to indemnify Investor, Investor’s officers,
directors, employees, agents, representatives and Affiliates, and each person,
if any, that controls Investor 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
document or report provided by the Company pursuant to this Section 5.4 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.


 


(c) If the indemnification provided for in Section 5.4(b) is
unavailable to an Indemnitee with respect to any losses, claims, damages,
actions, liabilities, costs or expenses referred to therein or is insufficient
to hold the Indemnitee harmless as contemplated therein, then the Company, in
lieu of indemnifying such Indemnitee, shall contribute to the amount paid or
payable by such Indemnitee as a result of such losses, claims, damages,
actions, liabilities, costs or expenses in such proportion as is appropriate to
reflect the relative fault of the Indemnitee, on the one hand, and the Company,
on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, actions, liabilities, costs or
expenses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one
hand, and of the Indemnitee, on the other hand, shall be determined by reference
to, among other factors, whether the untrue statement of a material fact or
omission to state a material fact relates to information supplied by the
Company or by the Indemnitee and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission;  the Company and Investor agree
that it would not be just and equitable if contribution pursuant to this Section 5.4(c) 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 5.4(b).  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.


 


31
















 


5.5                                 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, as applicable, pursuant thereto, the depositary shares issued pursuant
thereto shall be deemed “Preferred Shares” and, as applicable, “Registrable
Securities” for purposes of this Agreement.


 


5.6                                 Expenses and Further Assurances.  (a) 
Unless otherwise provided in this Agreement, 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, including
fees and expenses of its own financial or other consultants, investment
bankers, accountants and counsel.


 


(b)                                 The Company shall, at the Company’s sole cost and expense, (i) furnish
to the Investor all instruments, documents and other agreements required to be
furnished by the Company pursuant to the terms of this Agreement, including,
without limitation, any documents required to be delivered pursuant to Section 5.4
above, or which are reasonably requested by the Investor in connection
therewith; (ii) execute and deliver to the Investor such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the Preferred
Shares purchased by the Investor, as Investor may reasonably require; and (iii) do
and execute all and such further lawful and reasonable acts, conveyances and
assurances for the better and more effective carrying out of the intents and
purposes of this Agreement, as the Investor shall reasonably require from time
to time.


 


32

















 


Article VI.                                        ARTICLE V


 


MISCELLANEOUS


 


6.1                                 Termination.  This Agreement shall
terminate upon the earliest to occur of:


 


(a)                                  termination at any time prior to the Closing:


 


(i)                    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
calendar 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 6.1(a)(i) 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


 


(ii)                 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


 


(iii)              by
the mutual written consent of the Investor and the Company; or


 


(b)                                 the date on which all of the Preferred Shares have been redeemed in
whole; or


 


(c)                                  the date on which the Investor has transferred all of the Preferred
Shares to third parties which are not Affiliates of the Investor; or


 


(d)                                 if the Closing shall not have occurred by September 30, 2010, on
such date.


 


In the event of termination of this Agreement as
provided in this Section 6.1, 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.


 


6.2                                 Survival.


 


(a)                                  This Agreement and all representations, warranties, covenants and
agreements made herein shall survive the Closing without limitation.


 


33

















 


(b)                                 The covenants set forth in Article IV and Annex E and the
agreements set forth in Article V shall, to the extent such covenants do
not explicitly terminate at such time as the Investor no longer owns any Preferred
Shares, survive the termination of this Agreement pursuant to Section 6.1(c) hereof
without limitation until the date on which all of the Preferred Shares have
been redeemed in whole.


 


34

















 


6.3                                 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 for so long as the Preferred Shares are
outstanding, the Investor may at any time and from time to time
unilaterally amend Section 4.1(d) to the extent the Investor deems
necessary, in its sole discretion, to comply with, or conform to, any changes
after the Signing Date in any federal statutes, any rules and regulations
promulgated thereunder and any other publications or interpretative releases of
the Fund governing CDFIs, including, without limitation, any changes in the
criteria for certification as a CDFI by the Fund.  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.


 


6.4                                 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.


 


6.5                                 Governing Law; Submission to Jurisdiction, etc.  This Agreement and any claim, controversy or
dispute arising under or related to this Agreement, the relationship of the
parties, and/or the interpretation and enforcement of the rights and duties of
the parties shall be enforced, governed, and construed in all respects (whether
in contract or in tort) 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 Purchase contemplated hereby 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 6.6 and (ii) the
Investor at the address and in the manner set forth for notices to the Company
in Section 6.6, but otherwise 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 PURCHASE CONTEMPLATED HEREBY.


 


6.6                                 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.


 


35

















 


If to the Investor:


 


United States Department of the Treasury 


1500 Pennsylvania Avenue, NW


Washington, D.C. 20220


Attention: Chief Counsel, Office of Financial
Stability


Facsimile: (202) 927-9225


E-mail: CDCINotice@do.treas.gov


 


with a copy to:


 


E-mail: OFSChiefCounselNotices@do.treas.gov


 


36

















 


6.7                                 Assignment.  Neither this
Agreement nor any right, remedy, obligation nor liability arising hereunder or
by reason hereof shall be assignable by any party hereto without the prior
written consent of the other party, and any attempt to assign any right,
remedy, obligation or liability hereunder without such consent shall be void,
except (a) an assignment, in the case of a merger, consolidation,
statutory share exchange or similar transaction that requires the approval of
the Company’s stockholders (a “Business Combination”)
where such party is not the surviving entity, or a sale of substantially all of
its assets, to the entity which is the survivor of such Business Combination or
the purchaser in such sale, (b) an assignment of certain rights as
provided in Sections 4.1(c) or 4.1(j) or Annex E or (c) an
assignment by the Investor of this Agreement to an Affiliate of the Investor; provided that if the Investor assigns this Agreement to an
Affiliate, the Investor shall be relieved of its obligations under this
Agreement but (i) all rights, remedies and obligations of the Investor
hereunder shall continue and be enforceable by such Affiliate, (ii) the
Company’s obligations and liabilities hereunder shall continue to be
outstanding and (iii) all references to the Investor herein shall be
deemed to be references to such Affiliate.


 


6.8                                 Severability.  If any provision of
this Agreement, 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.


 


6.9                                 No Third Party Beneficiaries. 
Other than as expressly provided herein, nothing contained in this
Agreement, expressed or implied, is intended to confer upon any person or
entity other than the Company and the Investor (and any Indemnitee) any
benefit, right or remedies.


 


6.10                           Specific Performance.  The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms.  It is accordingly agreed that the parties
shall be entitled (without the necessity of posting a bond) to specific
performance of the terms hereof, this being in addition to any other remedies
to which they are entitled at law or equity.


 


*  *  *


 


37

















 


ANNEX A


(a)


 


FORM OF OFFICER’S CERTIFICATE


 


OFFICER’S CERTIFICATE


 


OF


 


[COMPANY]


 


In connection with that certain letter agreement,
dated [                        ], 2010 (the “Agreement”) by
and between [COMPANY]
(the “Company”) and the United States
Department of the Treasury which incorporates that certain Securities Purchase
Agreement —Standard Terms referred to therein (the “Standard
Terms”), the undersigned does hereby certify as follows:


 


1.                                       I am a duly elected/appointed [                        ] of the Company.


 


2.                                       The representations and warranties of the Company set forth in Section 3.1
of the Standard Terms are true and correct in all respects as though as of the
date hereof (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 respects as of such other date) and the Company has
performed in all material respects all obligations required to be performed by
it under the Agreement.


 


3.                                       The Certificate of Designations, a true, complete and correct copy of
which is attached as Exhibit A hereto, has been filed with, and
accepted by, the Secretary of State of the State of [                      ].


 


4.                                       The Company has effected such changes to its Benefit Plans with respect
to its Senior Executive Officers and any other employee of the Company or its
Affiliates subject to Section 111 of EESA, as implemented by any
Compensation Regulations (and to the extent necessary for such changes to be
legally enforceable, each of its Senior Executive Officers and other employees
has duly consented in writing to such changes), as may be necessary, during the
Relevant Period, in order to comply with Section 111 of EESA or the
Compensation Regulations.


 


The foregoing certifications are made and delivered as
of [                  ] pursuant to Section 2.3 of the Standard
Terms.


 


Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to them in the Standard Terms.


 


[SIGNATURE PAGE FOLLOWS]


 

















 


IN WITNESS WHEREOF, this Officer’s Certificate has
been duly executed and delivered as of the [    ] day of [                    ], 20[    ].


 


 


	
   

  	
  [COMPANY]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-39

















 


EXHIBIT A


 


A-1

















 


ANNEX B


 


FORM OF CERTIFICATE OF DESIGNATIONS FOR
PREFERRED STOCK


 


[SEE ATTACHED]


 


B-1
















 


ANNEX C


 


FORM OF WAIVER


 


In consideration for the benefits I will receive as a
result of the participation of [NAME OF
COMPANY] (together with its subsidiaries and
affiliates, the “Company”) in the United States
Department of the Treasury’s (“Treasury”) Community
Development Capital Initiative and/or any other economic stabilization program
implemented by Treasury under the Emergency Economic Stabilization Act of 2008
(as amended, supplemented or otherwise modified, “EESA”)
(any such initiative or program, including the Community Development Capital
Initiative, a “Program”), I hereby voluntarily
waive any claim against the United States (and each of its departments and
agencies) or the Company or any of its directors, officers, employees and
agents for any changes to my compensation or benefits that are required to
comply with the executive compensation and corporate governance requirements of
Section 111 of EESA, as implemented by any guidance or regulation thereunder,
including the rules set forth in 31 C.F.R. Part 30, or any other guidance or
regulations under EESA, and the applicable requirements of the Securities
Purchase Agreement by and between the Company and Treasury dated as of [        ], 2010, as amended (such requirements, the “Limitations”).


 


I acknowledge that the Limitations may require
modification or termination of the employment, compensation, bonus, incentive,
severance, retention and other benefit plans, arrangements, policies and
agreements (including so-called “golden parachute” agreements), whether or not
in writing, that I may have with the Company or in which I may participate as
they relate to the period the United States holds any equity or debt securities
of the Company acquired through a Program or for any other period applicable under
such Program or Limitations, as the case may be, and I hereby consent to all
such modifications.


 


This waiver includes all claims I may have under the
laws of the United States or any other jurisdiction (whether or not in
existence as of the date hereof) related to the requirements imposed by the
Limitations, including without limitation a claim for any compensation or other
payments or benefits I would otherwise receive, any challenge to the process by
which the Limitations are or were adopted and any tort or constitutional claim
about the effect of the Limitations on my employment relationship and I hereby
agree that I will not at any time initiate, or cause or permit to be initiated
on my behalf, any such claim against the United States (or any of its
departments or agencies) or the Company or any of its directors, officers,
employees or agents in or before any local, state, federal or other agency,
court or body.


 


I agree that, in the event and to the extent that the
Compensation Committee of the Board of Directors of the Company or similar
governing body (the “Committee”)
reasonably determines that any compensatory payment or benefit provided to me,
including any bonus or incentive compensation based on materially inaccurate
financial statements or performance criteria, would cause the Company to fail
to be in compliance with the Limitations (such payment or benefit, an “Excess Payment”), upon notification from the Company, I
shall repay such Excess Payment to the Company within 15 business days.  In addition, I agree that the Company shall
have the right 


 


C-1

















 


to postpone any such payment or benefit for a
reasonable period of time to enable the Committee to determine whether such
payment or benefit would constitute an Excess Payment.


 


I understand that any determination by the Committee
as to whether or not, including the manner in which, a payment or benefit needs
to be modified, terminated or repaid in order for the Company to be in
compliance with Section 111 of EESA and/or the Limitations shall be a final and
conclusive determination of the Committee which shall be binding upon me.  I further understand that the Company is
relying on this letter from me in connection with its participation in a Program.


 


In witness whereof, I execute this waiver on my own
behalf, thereby communicating my acceptance and acknowledgement to the
provisions herein.


 


 


	
   

  	
  Respectfully,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Date:

  



 


C-2

















 


ANNEX D


 


FORM OF OPINION


 


(a)                                  The Company has been duly formed and is validly existing as a [TYPE OF ORGANIZATION] and is in good standing under the
laws of the jurisdiction of its organization. 
The Company has all necessary power and authority to own, operate and
lease its properties and to carry on its business as it is being conducted.


 


(b)                                 The Company has been duly qualified as a foreign entity for the
transaction of business and is in good standing under the laws of [                          ], [                          ] and [                          ].


 


(c)                                  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.


 


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


 


(e)                                  The execution, delivery and performance by the Company of the Agreement
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, including, without limitation, by any rule or requirement of
any national stock exchange.


 


(f)                                    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.


 


(g)                                 The execution and delivery by the Company of this Agreement and the
performance by the Company of its obligations thereunder (i) do not require any
approval by any Governmental Entity to be obtained on the part of the Company,
except those that have been obtained, (ii) do not violate or conflict with any
provision of the Charter, (iii) do not 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 its organizational documents or under any agreement,
contract, 


 


D-1

















 


indenture, lease, mortgage, power of attorney,
evidence of indebtedness, letter of credit, license, instrument, obligation,
purchase or sales order, or other commitment, whether oral or written, to which
it is a party or by which it or any of its properties is bound or (iv) do
not conflict with, breach or result in a violation of, or default under any
judgment, decree or order known to us that is applicable to the Company and,
pursuant to any applicable laws, is issued by any Governmental Entity having
jurisdiction over the Company.


 


(h)                                 Other than the filing of the Certificate of Designations with the
Secretary of State of its jurisdiction of organization or other applicable
Governmental Entity, such filings and approvals as are required to be made or
obtained under any state “blue sky” laws and such consents and approvals that
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.


 


(i)                                     The Company is not nor, after giving effect to the issuance of the
Preferred Shares pursuant to the Agreement, would be on the date hereof an “investment
company” or an entity “controlled” by an “investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended.


 


(j)                                     Each Certified Entity (A) is a regulated community development financial
institution (a “CDFI”) currently certified by the
Community Development Financial Institution Fund (the “Fund”)
of the United States Department of the Treasury pursuant to 12 C.F.R.
1805.201(a) and (B) satisfies all of the eligibility requirements of the Fund’s
Community Development Financial Institutions Program for a CDFI.


 


D-2

















 


ANNEX E


 


REGISTRATION RIGHTS


 


1.1                                 Definitions.  Terms not defined in this Annex shall have
the meaning ascribed to such terms in the Agreement. As used in this Annex E,
the following terms shall have the following respective meanings:


 


(a)                                  “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 1.9 hereof.


 


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


 


(c)                                  “Pending Underwritten Offering” means,
with respect to any Holder forfeiting its rights pursuant to Section 1.11 of
this Annex E, 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 1.2(b) or Section 1.2(d) of
this Annex E prior to the date of such Holder’s forfeiture.


 


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


 


(e)                                  “Registrable Securities”  means (A) all Preferred Shares and (B) any
equity securities issued or issuable directly or indirectly with respect to the
securities referred to in the foregoing clause (A) by way of conversion,
exercise or exchange thereof, 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) they shall have ceased to be outstanding or (3) they have been sold in
any 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.


 


(f)                                    “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 Annex E, 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 


 


E-1

















 


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.


 


(g)                                 “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.


 


(h)                                 “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).


 


(i)                                     “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.


 


1.2                                 Registration.


 


(a)                                  The Company covenants and agrees that as promptly as practicable after
the date that the Company becomes subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act (and in any event no later than 30 days
thereafter), the Company shall prepare and file with the SEC a Shelf
Registration Statement covering all Registrable Securities (or otherwise
designate an existing shelf registration on an appropriate form under Rule 415
under the Securities Act (a “Shelf Registration
Statement”) filed with the SEC to cover the Registrable Securities),
and, to the extent the Shelf Registration Statement has not theretofore been
declared effective or is not automatically effective upon such filing, the
Company shall use reasonable best efforts to cause such Shelf Registration
Statement to be declared or become effective and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities for a
period from the date of its initial effectiveness until such time as there are
no Registrable Securities remaining (including by refiling such Shelf
Registration Statement (or a new Shelf Registration Statement) if the initial
Shelf Registration Statement expires). 
Notwithstanding the foregoing, if the Company is not eligible to file a
registration statement on Form S-3, then the Company shall not be obligated to
file a Shelf Registration Statement unless and until requested to do so in
writing by the Investor.


 


(b)                                 Any registration pursuant to Section 1.2(a) of this Annex E shall
be effected by means of a Shelf Registration Statement 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 1.2(d) of this Annex E;
provided that the Company shall not be
required to facilitate an underwritten offering of Registrable Securities
unless (i) the expected gross proceeds from such offering exceed $200,000 or
(ii) such 


 


E-2

















 


underwritten offering includes all of the outstanding
Registrable Securities held by such Holder. 
The lead underwriters in any such distribution shall be selected by the
Holders of a majority of the Registrable Securities to be distributed.


 


(c)                                  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 1.2 of this Annex
E:  (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.


 


(d)                                 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 1.2(a) of this Annex E or
a Special Registration, and the registration form to be filed may be used for
the registration or qualification for distribution of Registrable Securities,
the Company will give prompt written notice to the Investor and all other
Holders of its intention to effect such a registration (but in no event less
than ten days prior to the anticipated filing date) and will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within ten business days after
the date of the Company’s notice (a “Piggyback Registration”).  Any such person that has made such a written
request may withdraw its Registrable Securities from such Piggyback
Registration by giving written notice to the Company and the managing
underwriter, if any, on or before the fifth business day prior to the planned
effective date of such Piggyback Registration. 
The Company may terminate or withdraw any registration under this
Section 1.2(d) prior to the effectiveness of such registration, whether or not
Investor or any other Holders have elected to include Registrable Securities in
such registration.


 


(e)                                  If the registration referred to in Section 1.2(d) of this Annex E
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 1.2(d)
of this Annex E.  In such event,
the right of Investor and all other Holders to registration pursuant to Section
1.2 of this Annex E 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 


 


E-3

















 


withdraw therefrom by written notice to the Company,
the managing underwriters and the Investor (if the Investor is participating in
the underwriting).


 


(f)                                    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 1.2(b) of this Annex
E or (y) a Piggyback Registration under Section 1.2(d) of this Annex E
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 1.2(d) of this Annex E, 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 1.2(b) or Section 1.2(d) of this Annex E,
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.


 


1.3                                 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.


 


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


 


(a)                                  Prepare and file with the SEC a prospectus supplement or post-effective
amendment with respect to a proposed offering of Registrable Securities
pursuant to an effective registration statement, subject to Section 1.4 of this
Annex E, keep such registration statement effective and keep such
prospectus supplement current until the securities described therein are no
longer Registrable Securities.


 


(b)                                 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.


 


E-4

















 


(c)                                  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.


 


(d)                                 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.


 


(e)                                  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.


 


(f)                                    Give written notice to the Holders:


 


(i)                                     when any registration statement filed pursuant to Section 4.1(j) of the
Agreement 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;


 


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


 


(iii)                               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;


 


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


 


(v)                                 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 


 


E-5

















 


(which notice shall be accompanied by an instruction
to suspend the use of the prospectus until the requisite changes have been
made); and


 


(vi)                              if at any time the representations and warranties of the Company
contained in any underwriting agreement contemplated by Section 1.4(j) of this Annex
E cease to be true and correct.


 


(g)                                 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 1.4(f)(iii) of this Annex E at the
earliest practicable time.


 


(h)                                 Upon the occurrence of any event contemplated by Section 1.4(e) or
1.4(f)(v) of this Annex 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 1.4(f)(v) to suspend
the use of the prospectus until the requisite changes to the prospectus have
been made, then the Holders and any underwriters shall suspend use of such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holders’ or underwriters’ possession.  The total number of days that any such
suspension may be in effect in any 12-month period shall not exceed 90 days.


 


(i)                                     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).


 


(j)                                     If an underwritten offering is requested pursuant to Section 1.2(b) of
this Annex E, 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


 


E-6
















 


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 (A) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.


 


(k)           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.


 


(l)            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.


 


(m)          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.


 


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


 


1.5          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 


 


E-7

















 


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.


 


1.6          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.


 


1.7          Furnishing
Information.


 


(a)           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.


 


(b)           It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to Section 1.4 of this Annex E 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.


 


1.8          Indemnification.


 


(a)           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 


 


E-8

















 


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.


 


(b)           If
the indemnification provided for in Section 1.8(a) of this Annex E
is unavailable to an Indemnitee with respect to any losses, claims, damages,
actions, liabilities, costs or expenses referred to therein or is insufficient
to hold the Indemnitee harmless as contemplated therein, then the Company, in
lieu of indemnifying such Indemnitee, shall contribute to the amount paid or
payable by such Indemnitee as a result of such losses, claims, damages,
actions, liabilities, costs or expenses in such proportion as is appropriate to
reflect the relative fault of the Indemnitee, on the one hand, and the Company,
on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, actions, liabilities, costs or
expenses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one
hand, and of the Indemnitee, on the other hand, shall be determined by
reference to, among other factors, whether the untrue statement of a material
fact or omission to state a material fact relates to information supplied by
the Company or by the Indemnitee and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission;  the Company and each Holder
agree that it would not be just and equitable if contribution pursuant to this Section 1.8(b) of
this Annex E 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 1.8(a) of this Annex
E.  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.


 


1.9          Assignment
of Registration Rights.  The rights
of the Investor to registration of Registrable Securities pursuant to Section 1.2
of this Annex E may be assigned by the Investor to a transferee or
assignee of Registrable Securities; 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.


 


1.10        Clear
Market.  With respect to any
underwritten offering of Registrable Securities by the Investor or other
Holders pursuant to this Annex E, the Company agrees not to effect
(other than pursuant to such registration or pursuant to a Special
Registration) any public sale or distribution, or to file any Shelf
Registration Statement (other than such registration or a Special Registration)
covering any preferred stock of the Company or any securities convertible into
or exchangeable or exercisable for preferred stock of the Company, during the
period not to exceed ten days prior and 60 days following the effective date of
such offering or such longer period up to 90 days as may be requested by the
managing underwriter for such underwritten offering.  The Company also agrees to cause such of its
directors and senior executive officers to execute and 


 


E-9

















 


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.


 


1.11        Forfeiture
of Rights.  At any time, any holder
of Registrable Securities (including any Holder) may elect to forfeit its
rights set forth in this Annex E from that date forward; provided, that a Holder forfeiting such rights shall
nonetheless be entitled to participate under Section 1.2(d) — (f) of
this Annex E 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 1.7
of this Annex E with respect to any prior registration or Pending
Underwritten Offering.


 


1.12        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 Annex E 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 Annex
E in accordance with the terms and conditions of this Annex E.


 


1.13        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 Annex E 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 Annex E.  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
Annex E (including agreements that are inconsistent with the order of
priority contemplated by Section 1.2(f) of Annex E) 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 Annex E.


 


1.14        Certain
Offerings by the Investor.  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.


 


E-10

















 


ANNEX F


 


OFFICER’S CERTIFICATE


 


OF


 


[COMPANY]


 


In connection with that certain letter agreement,
dated  [                        ], 2010 (the “Agreement”)
by and between [COMPANY]
(the “Company”) and the United States
Department of the Treasury (“Investor”)
which incorporates that certain Securities Purchase Agreement —Standard Terms
referred to therein (the “Standard Terms”),
the undersigned does hereby certify as follows:


 


1.             I
am a duly elected/appointed [                        ] of the Company.


 


2.             Each
Certified Entity (as defined in the Standard Terms) (A) is certified by
the Community Development Financial Institution Fund (the “Fund”)
of the United States Department of the Treasury as a regulated community development
financial institution (a “CDFI”); (B) together
with its Affiliates collectively meets the eligibility requirements of 12
C.F.R. 1805.200(b); (C) has a primary mission of promoting community
development, as may be determined by Investor from time to time, based on
criteria set forth in 12 C.F.R. 1805.201(b)(1); (D) provides Financial
Products, Development Services, and/or other similar financing as a predominant
business activity in arm’s-length transactions; (E) serves a Target Market
by serving one or more Investment Areas and/or Targeted Populations in the
manner set forth in 12 C.F.R. 1805.201(b)(3); (F) provides Development
Services in conjunction with its Financial Products, directly, through an
Affiliate or through a contract with a third-party provider; (G) maintains
accountability to residents of the applicable Investment Area(s) or
Targeted Population(s) through representation on its governing Board of
Directors or otherwise; and (H) remains a non-governmental entity which is
not an agency or instrumentality of the United States of America, or any State
or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and
within the meaning of any supplemental regulations or interpretations of 12
C.F.R. 1805.201(b)(6) or such supplemental regulations published by the
Fund.  As used herein, the terms “Affiliates”;
“Financial Products”; “Development Services”; “Target Market”;
“Investment Areas”; and “Targeted Populations” have the meanings ascribed to such
terms in 12 C.F.R. 1805.104.


 


3.             The
information set forth in the CDFI Certification Application delivered to the
Investor pursuant to Section 2.3(m) of the Standard Terms (the “CDFI Application”), as modified by any updates to the CDFI
Application provided on [Insert
Date(s)] by the Company to the Investor on or prior to
the date hereof, with respect to the covenants set forth in Section 4.1(d)(i)(B) and
Section 4.1(d)(i)(D) of the Standard Terms remains true, correct and
complete as of the date hereof.


 


F-1

















 


4.             The
contracts and material agreements entered into by each Certified Entity with
respect to Development Services previously disclosed to the Investor remain in
effect   and copies of any new contracts and material
agreements entered into by the Certified Entity with respect to Development
Services are attached hereto as Exhibit A.


 


5.             Attached
hereto as Exhibit B is (A) a list of the names and addresses of the
individuals which comprise the board of directors of each Certified Entity as
of the date hereof, (B) to the extent any member of the board of directors
listed on Exhibit B was not a member of the board of directors as of the
last certification provided to the Investor pursuant to Section 4.1(d)(ii) of
the Standard Terms, a narrative describing such individual’s relationship to
the applicable Investment Area(s) and Targeted Population(s) and (C) to
the extent any Certified Entity maintains accountability to residents of the
applicable Investment Area(s) or Target Population(s) through means
other than representation on its governing board of directors and such means
have changed since the date of the last certification provided to the Investor
pursuant to Section 4.1(d)(ii) of the Standard Terms on [Insert Date], a narrative describing
such change.


 


6.             Each
Certified Entity is not an agency of the United States of America, or any State
or political subdivision thereof, as described in 12 C.F.R. 1805.201(b)(6) and
within the meaning of any supplemental regulations or interpretations of 12
C.F.R. 1805.201(b)(6) or such supplemental regulations published by the
Fund.


 


7.             [Insert if the Company was a Bank Holding Company or
a Savings and Loan Holding Company on the Signing Date:  The Company is and has been at all times
since the date of the last certification provided to the Investor pursuant to Section 4.1(d)(ii) of
the Standard Terms, a [Insert if
the Company is a Bank Holding Company: Bank Holding
Company] [Insert if the Company is a Savings and Loan Holding Company: Savings
and Loan Holding Company].]  The
Company is not, and has not been at any time since the date of the last
certification provided to the Investor pursuant to Section 4.1(d)(ii) of
the Standard Terms on [Insert Date],
controlled (within the meaning of [Insert for
banks and Bank Holding Companies: the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(a)(2)) and 12 C.F.R. 225(a)(i)][Insert for savings associations and Savings and
Loan Holding Companies: the Home Owners’ Loan Act of 1933
(12 U.S.C. 1467a (a)(2)) and 12 C.F.R. 583.7])
by a foreign bank or company.


 


The foregoing certifications are made and delivered as
of [                  ] pursuant to Section 4.1(d)(ii) of the Standard
Terms.


 


Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to them in the Standard Terms.


 


[SIGNATURE PAGE FOLLOWS]


 


F-2

















 


IN WITNESS WHEREOF, this Officer’s Certificate has
been duly executed and delivered as of the [    ] day of [                    ], 20[    ].


 


 




	
   

  	
  [COMPANY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  






 


F-3

















 


EXHIBIT A


 


NEW CONTRACTS AND MATERIAL AGREEMENTS


 


A-1

















 


EXHIBIT B


 


BOARD OF DIRECTORS


 


CERTIFIED ENTITY: [CERTIFIED ENTITY](2)


 


	
  NAME

  	
   

  	
  ADDRESS

  	
   

  	
  NARRATIVE(3)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 






(2)  Include chart for each
Certified Entity.


(3)  To the extent (x) any
of the individuals was not a member of the board of directors of such Certified
Entity as of the last certification to the Investor, include a narrative
describing such individual’s relationship to the applicable Investment Area(s) and
Targeted Population(s) or, (y) if such Certified Entity maintains
accountability to residents of the applicable Investment Area(s) or Target
Population(s) through means other than representation on its governing
board of directors and such means have changed since the date of the last
certification to the Investor, a narrative describing such change.


 






 












 


SCHEDULE  A


 


ADDITIONAL TERMS AND CONDITIONS


 


Company
Information:


 


Name
of the Company:  Citizens
Bancshares Corporation


 


Corporate
or other organizational form of Company: 
C Corporation


 


Jurisdiction
of Organization of Company:  Georgia


 


Appropriate
Federal Banking Agency of Company:  Board of Governors of the Federal Reserve


 


Name
of Certified Entities:


 


Citizens Trust Bank


Citizens Bancshares Corporation


 


Corporate or other organizational form of each
Certified Entity:


 


Citizens Trust Bank:  State Member
Bank


Citizens Bancshares Corporation: 
C Corporation


 


Jurisdiction of Organization of each Certified
Entity:  Georgia


 


Appropriate Federal Banking Agency of each Certified
Entity:  Board of
Governors of the Federal Reserve


 


Notice
Information:


 




	
   

  	
  James
  E. Young

  	
   

  	
  With
  Copy To:

  	
   

  
	
   

  	
  President
  and Chief Executive Officer

  	
   

  	
  Beth
  Lanier, Esq.

  	
   

  
	
   

  	
  Citizens
  Bancshares Corporation

  	
   

  	
  Bryan
  Cave LLP

  	
   

  
	
   

  	
  75
  Piedmont Avenue, S.E.

  	
   

  	
  1201
  West Peachtree Street, S.W.

  	
   

  
	
   

  	
  Atlanta,
  GA 30303

  	
   

  	
  Suite 1400

  	
   

  
	
   

  	
  Fax: [REDACTED]

  	
   

  	
  Atlanta,
  GA 30309

  	
   

  
	
   

  	
   

  	
   

  	
  Fax: [REDACTED]

  	
   

  






 


Terms
of the Purchase:


 


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


 


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


 

















 


Number
of Shares of Preferred Stock Purchased: 4,379


 


Dividend
Payment Dates on the Preferred Stock: Payable quarterly in
arrears on February 15, May 15, August 15 and November 15
of each year.


 


Purchase
Price: $4,379,000


 


Closing:


 




	
  Location
  of Closing:

  	
  Cadwalader,
  Wickersham & Taft LLP

  
	
   

  	
  One
  World Financial Center

  
	
   

  	
  New
  York, NY  10281

  






 


Time
of Closing: 12:00PM Noon


 


Date
of Closing:  September 17,
2010


 

















 




	
  Wire
  Information for Closing:

  	
   

  	
  ABA
  Number: [REDACTED]

  
	
   

  	
   

  	
  Bank: [REDACTED]

  
	
   

  	
   

  	
  Account
  Name: [REDACTED]

  
	
   

  	
   

  	
  Account
  Number: [REDACTED]

  
	
   

  	
   

  	
  Beneficiary: [REDACTED]

  
	
   

  	
   

  	
   

  
	
  Contact
  for Confirmation of Wire Information:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Mr. Samuel
  J. Cox

  EVP & Chief Financial Officer

  Phone: (404) 575-8400

  Email: SJCox@ctbatl.com

  	
   

  	
   

  






 

















 


SCHEDULE B


 


CAPITALIZATION


 


Capitalization
Date:  August 31,
2010


 


Common
Stock


 


Par
value:  $1.00


 


Total
Authorized:  20,000,000


 


Outstanding:  2,026,124 (1)


 


Subject
to warrants, options, convertible securities, etc.:  120,003 (2)


 


Reserved
for benefit plans and other issuances:  215,107 (3)


 


 


Remaining
authorized but unissued:  17,973,876


 


Shares
issued after Capitalization Date (other than pursuant to warrants, options,
convertible securities, etc. as set forth above):  None


 


Preferred
Stock


 


Par
value:  None


 


Total
Authorized:  10,000,000


 


Outstanding
(by series):


 


Fixed Rate Cumulative Perpetual Preferred Stock,  Series A — 0 shares


Fixed Rate Cumulative Perpetual Preferred Stock, Series B — 7,462
shares


 


Reserved
for issuance:  None


 


Remaining
authorized but unissued:  9,992,538


 


	
  Holders of 5% or more of any class of capital stock

  	
   

  	
   

  	
   

  	
  Primary Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Herman
  J. Russell

  	
   

  	
  30.15

  	
  %

  	
  504
  Fair Street, SW, Atlanta, GA 30313

  
	
  Hot
  Creek Capital, LLC

  	
   

  	
  9.18

  	
  %

  	
  6900
  South McCarran Blvd., Reno, NV 89509

  
	
  National
  Community Investment Fund

  	
   

  	
  5.23

  	
  %

  	
  2230
  South Michigan Ave., Chicago, IL 60616

  



 






(1)  Does not include 90,000
shares of non-voting common stock, $1.00 par value, held by one shareholder.


(2)  Includes options granted
(exercisable and non-exercisable) pursuant to vesting schedule.


(3)  Includes options
authorized and reserved, but not granted.


 




	
  Letter
  Agreement · Schedule B

  	
   

  	
  UST
  Sequence Number: 318

  






 


1

















 


SCHEDULE C


 


MATERIAL ADVERSE EFFECT


 


List
any exceptions to the representation and warranty in
Section 3.1(g) of the Securities Purchase Agreement — Standard Terms.


 


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


 

















 


SCHEDULE D


 


LITIGATION


 


List
any exceptions to the representation and warranty in
Section 3.1(l) of the Securities Purchase Agreement — Standard Terms.


 


 


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


 

















 


SCHEDULE E


 


COMPLIANCE WITH LAWS


 


List
any exceptions to the representation and warranty in the second sentence of
Section 3.1(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 3.1(m) of the Securities Purchase Agreement — Standard Terms.


 


 


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


 

















 


SCHEDULE F


 


REGULATORY AGREEMENTS


 


List
any exceptions to the representation and warranty in
Section 3.1(s) of the Securities Purchase Agreement — Standard Terms.


 


 


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


 


1