Exhibit 10.1


 


UNITED STATES DEPARTMENT OF THE
TREASURY


1500 PENNSYLVANIA AVENUE, NW


WASHINGTON, D.C. 20220


 


Dear
Ladies and Gentlemen:


 


The company set forth on the signature page hereto
(the “Company”) intends to issue
in a private placement the number of shares of a series of its preferred stock
set forth on Schedule A hereto (the “Preferred
Shares”) and a warrant to purchase the number of shares of its
common stock set forth on Schedule A hereto (the “Warrant” and, together with the Preferred Shares, the “Purchased Securities”) and the United
States Department of the Treasury (the “Investor”)
intends to purchase from the Company the Purchased Securities.


 


The purpose of this letter agreement is to confirm
the terms and conditions of the purchase by the Investor of the Purchased
Securities.  Except to the extent
supplemented or superseded by the terms set forth herein or in the Schedules
hereto, the provisions contained in the Securities Purchase Agreement —
Standard Terms attached hereto as Exhibit A (the “Securities Purchase Agreement”) are
incorporated by reference herein.  Terms
that are defined in the Securities Purchase Agreement are used in this letter
agreement as so defined.  In the event of
any inconsistency between this letter agreement and the Securities Purchase
Agreement, the terms of this letter agreement shall govern.


 


Each of the Company and the Investor hereby confirms
its agreement with the other party with respect to the issuance by the Company
of the Purchased Securities and the purchase by the Investor of the Purchased
Securities pursuant to this letter agreement and the Securities Purchase
Agreement on the terms specified on Schedule A hereto.


 


This letter agreement (including the Schedules
hereto) and the Securities Purchase Agreement (including the Annexes thereto)
and the Warrant constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, between the parties, with respect to the subject matter hereof.  This letter agreement constitutes the “Letter
Agreement” referred to in the Securities Purchase Agreement.


 


This letter agreement may be executed in any number
of separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement.  Executed signature pages to
this letter agreement may be delivered by facsimile and such facsimiles will be
deemed as sufficient as if actual signature pages had been delivered.


 


* * *


UST Sequence No. 1251


 

















 


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: Assistant Secretary for Financial Stability

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  YADKIN VALLEY FINANCIAL CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William A. Long

  
	
   

  	
   

  	
   

  	
  Name: William A. Long

  
	
   

  	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  July 24, 2009

  	
   

  	
   

  	
   

  
						



 

















 


EXHIBIT A


 


SECURITIES
PURCHASE AGREEMENT




 





 


SECURITIES PURCHASE AGREEMENT


 


STANDARD TERMS




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
  Article I

  	
   

  
	
  Purchase; Closing

  	
   

  
	
  1.1

  	
  Purchase

  	
  1

  
	
  1.2

  	
  Closing

  	
  2

  
	
  1.3

  	
  Interpretation

  	
  4

  
	
  Article II

  	
   

  
	
  Representations and Warranties

  	
   

  
	
  2.1

  	
  Disclosure

  	
  4

  
	
  2.2

  	
  Representations and Warranties of the Company

  	
  5

  
	
  Article III

  	
   

  
	
  Covenants

  	
   

  
	
  3.1

  	
  Commercially Reasonable Efforts

  	
  13

  
	
  3.2

  	
  Expenses

  	
  14

  
	
  3.3

  	
  Sufficiency of Authorized Common Stock; Exchange Listing

  	
  14

  
	
  3.4

  	
  Certain Notifications Until Closing

  	
  15

  
	
  3.5

  	
  Access, Information and Confidentiality

  	
  15

  
	
  Article IV

  	
   

  
	
  Additional Agreements

  	
   

  
	
  4.1

  	
  Purchase for Investment

  	
  16

  
	
  4.2

  	
  Legends

  	
  16

  
	
  4.3

  	
  Certain Transactions

  	
  18

  
	
  4.4

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

  	
  18

  
	
  4.5

  	
  Registration Rights

  	
  19

  
	
  4.6

  	
  Voting of Warrant Shares

  	
  30

  
	
  4.7

  	
  Depositary Shares

  	
  30

  
	
  4.8

  	
  Restriction on Dividends and Repurchases

  	
  31

  
	
  4.9

  	
  Repurchase of Investor Securities

  	
  32

  
	
  4.10

  	
  Executive Compensation

  	
  33

  
	
  Article V

  	
   

  
	
  Miscellaneous

  	
   

  
	
  5.1

  	
  Termination

  	
  33

  
	
  5.2

  	
  Survival of Representations and Warranties

  	
  34

  
	
  5.3

  	
  Amendment

  	
  34

  
	
  5.4

  	
  Waiver of Conditions

  	
  34

  
	
  5.5

  	
  Governing Law: Submission to Jurisdiction, Etc.

  	
  34

  
	
  5.6

  	
  Notices

  	
  35

  
	
  5.7

  	
  Definitions

  	
  35

  
	
  5.8

  	
  Assignment

  	
  36

  
	
  5.9

  	
  Severability

  	
  36

  
	
  5.10

  	
  No Third
  Party Beneficiaries

  	
  36

  



 


i

















 


LIST OF ANNEXES


 


	
  ANNEX
  A:

  	
  FORM OF
  CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

  
	
   

  	
   

  
	
  ANNEX
  B:

  	
  FORM OF
  WAIVER

  
	
   

  	
   

  
	
  ANNEX
  C:

  	
  FORM OF
  OPINION

  
	
   

  	
   

  
	
  ANNEX D:

  	
  FORM OF WARRANT

  



 


ii
















 


INDEX OF DEFINED TERMS


 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Affiliate

  	
   

  	
  5.7(b)

  
	
  Agreement

  	
   

  	
  Recitals

  
	
  Appraisal
  Procedure

  	
   

  	
  4.9(c)(i)

  
	
  Appropriate
  Federal Banking Agency

  	
   

  	
  2.2(s)

  
	
  Bankruptcy
  Exceptions

  	
   

  	
  2.2(d)

  
	
  Benefit
  Plans

  	
   

  	
  1.2(d)(iv)

  
	
  Board
  of Directors

  	
   

  	
  2.2(f)

  
	
  Business
  Combination

  	
   

  	
  4.4

  
	
  Business
  Day

  	
   

  	
  1.3

  
	
  Capitalization
  Date

  	
   

  	
  2.2(b)

  
	
  Certificate
  of Designations

  	
   

  	
  1.2(d)(iii)

  
	
  Charter

  	
   

  	
  1.2(d)(iii)

  
	
  Closing

  	
   

  	
  1.2(a)

  
	
  Closing
  Date

  	
   

  	
  1.2(a)

  
	
  Code

  	
   

  	
  2.2(n)

  
	
  Common
  Stock

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company
  Financial Statements

  	
   

  	
  2.2(h)

  
	
  Company
  Material Adverse Effect

  	
   

  	
  2.1(a)

  
	
  Company
  Reports

  	
   

  	
  2.2(i)(i)

  
	
  Company
  Subsidiary; Company Subsidiaries

  	
   

  	
  2.2(i)(i)

  
	
  Control;
  Controlled By; Under Common Control With

  	
   

  	
  5.7(b)

  
	
  Controlled
  Group

  	
   

  	
  2.2(n)

  
	
  CPP

  	
   

  	
  Recitals

  
	
  EESA

  	
   

  	
  1.2(d)(iv)

  
	
  ERISA

  	
   

  	
  2.2(n)

  
	
  Exchange
  Act

  	
   

  	
  2.1(b)

  
	
  Fair
  Market Value

  	
   

  	
  4.9(c)(ii)

  
	
  GAAP

  	
   

  	
  2.1(a)

  
	
  Governmental
  Entities

  	
   

  	
  1.2(c)

  
	
  Holder

  	
   

  	
  4.5(k)(i)

  
	
  Holders’
  Counsel

  	
   

  	
  4.5(k)(ii)

  
	
  Indemnitee

  	
   

  	
  4.5(g)(i)

  
	
  Information

  	
   

  	
  3.5(b)

  
	
  Initial
  Warrant Shares

  	
   

  	
  Recitals

  
	
  Investor

  	
   

  	
  Recitals

  
	
  Junior
  Stock

  	
   

  	
  4.8(c)

  
	
  Knowledge
  of the Company; Company’s knowledge

  	
   

  	
  5.7(c)

  
	
  Last
  Fiscal Year

  	
   

  	
  2.1(b)

  
	
  Letter
  Agreement

  	
   

  	
  Recitals

  



 


iii

















 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Officers

  	
   

  	
  5.7(c)

  
	
  Parity
  Stock

  	
   

  	
  4.8(c)

  
	
  Pending
  Underwritten Offering

  	
   

  	
  4.5(l)

  
	
  Permitted
  Repurchases

  	
   

  	
  4.8(a)(ii)

  
	
  Piggyback
  Registration

  	
   

  	
  4.5(a)(iv)

  
	
  Plan

  	
   

  	
  2.2(n)

  
	
  Preferred
  Shares

  	
   

  	
  Recitals

  
	
  Preferred
  Stock

  	
   

  	
  Recitals

  
	
  Previously
  Disclosed

  	
   

  	
  2.1(b)

  
	
  Proprietary
  Rights

  	
   

  	
  2.2(u)

  
	
  Purchase
  Recitals Purchase Price

  	
   

  	
  1.1

  
	
  Purchased
  Securities Recitals Qualified Equity Offering

  	
   

  	
  4.4

  
	
  Register;
  Registered; Registration

  	
   

  	
  4.5(k)(iii)

  
	
  Registrable
  Securities

  	
   

  	
  4.5(k)(iv)

  
	
  Registration
  Expenses

  	
   

  	
  4.5(k)(v)

  
	
  Regulatory
  Agreement

  	
   

  	
  2.2(s)

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

  	
   

  	
  4.5(k)(vi)

  
	
  Schedules
  Recitals

  	
   

  	
  SEC
  2.1(b)

  
	
  Securities
  Act

  	
   

  	
  2.2(a)

  
	
  Selling
  Expenses

  	
   

  	
  4.5(k)(vii)

  
	
  Senior
  Executive Officers

  	
   

  	
  4.10

  
	
  Share
  Dilution Amount

  	
   

  	
  4.8(a)(ii)

  
	
  Shelf
  Registration Statement

  	
   

  	
  4.5(a)(ii)

  
	
  Signing
  Date

  	
   

  	
  2.1(a)

  
	
  Special
  Registration

  	
   

  	
  4.5(i)

  
	
  Stockholder
  Proposals

  	
   

  	
  3.1(b)

  
	
  Subsidiary

  	
   

  	
  5.8(a)

  
	
  Tax;
  Taxes

  	
   

  	
  2.2(o)

  
	
  Transfer

  	
   

  	
  4.4

  
	
  Warrant
  Recitals Warrant Shares

  	
   

  	
  2.2(d)

  



 


iv

















 


SECURITIES PURCHASE AGREEMENT —
STANDARD TERMS


 


Recitals:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Article I


Purchase; Closing


 


1.1                               Purchase. On the terms
and subject to the conditions set forth in this Agreement, the Company agrees
to sell to the Investor, and the Investor agrees to purchase from the 


 


1

















 


Company, at the Closing (as hereinafter defined), the Purchased
Securities for the price set forth on Schedule A (the “Purchase Price”).


 


1.2                               Closing.


 


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


 


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


 


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


 


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


 


(i)                                     (A) the representations
and warranties of the Company set forth in (x) Section 2.2(g) of
this Agreement shall be true and correct in all respects as though made on and
as of the Closing Date, (y) Sections 2.2(a) through (f) shall be
true and correct in all material respects as though made on and as of the
Closing Date (other than representations and warranties that by their terms
speak as of another date, which representations and warranties shall be true
and correct in all material respects as of such other date) and (z) Sections
2.2(h) through (v) (disregarding all qualifications or limitations
set forth in such representations and warranties as to “materiality”, “Company
Material Adverse Effect” and words of similar import) shall be true and correct
as though made on and as of the Closing Date (other than representations and
warranties that by their terms speak as of another date, which representations
and warranties shall be true and correct as of such other date), except to the
extent that the failure of such representations and warranties referred to in
this Section 1.2(d)(i)(A)(z) to be so true and 


 


2

















 


correct,
individually or in the aggregate, does not have and would not reasonably be
expected to have a Company Material Adverse Effect and (B) the Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing;


 


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


 


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


 


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


 


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


 


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


 


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


 


3

















 


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


 


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


 


Article II


Representations and Warranties


 


2.1                               Disclosure.


 


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


 


4

















 


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


 


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


 


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


 


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


 


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


 


5

















 


issue
or sell any Common Stock.  Since the
Capitalization Date, the Company has not issued any shares of Common Stock,
other than (i) shares issued upon the exercise of stock options or
delivered under other equity-based awards or other convertible securities or
warrants which were issued and outstanding on the Capitalization Date and
disclosed on Schedule B and (ii) shares disclosed on Schedule B.


 


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


 


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


 


(e)                                Authorization,
Enforceability.


 


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


 


(ii)                                  The execution, delivery and
performance by the Company of this Agreement and the Warrant and the
consummation of the transactions contemplated hereby and thereby and compliance
by the Company with the provisions hereof and thereof, will not (A) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would 


 


6

















 


constitute
a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
of, or result in the creation of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any Company
Subsidiary under any of the terms, conditions or provisions of (i) subject,
if applicable, to the approvals of the Company’s stockholders set forth on Schedule
C, its organizational documents or (ii) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by
which it or any Company Subsidiary may be bound, or to which the Company or any
Company Subsidiary or any of the properties or assets of the Company or any
Company Subsidiary may be subject, or (B) subject to compliance with the
statutes and regulations referred to in the next paragraph, violate any
statute, rule or regulation or any judgment, ruling, order, writ,
injunction or decree applicable to the Company or any Company Subsidiary or any
of their respective properties or assets except, in the case of clauses (A)(ii) and
(B), for those occurrences that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.


 


(iii)                               Other than the filing of the
Certificate of Designations with the Secretary of State of its jurisdiction of
organization or other applicable Governmental Entity, any current report on Form 8-K
required to be filed with the SEC, such filings and approvals as are required
to be made or obtained under any state “blue sky” laws, the filing of any proxy
statement contemplated by Section 3.1 and such as have been made or
obtained, no notice to, filing with, exemption or review by, or authorization,
consent or approval of, any Governmental Entity is required to be made or
obtained by the Company in connection with the consummation by the Company of
the Purchase except for any such notices, filings, exemptions, reviews,
authorizations, consents and approvals the failure of which to make or obtain
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.


 


(f)                                  Anti-takeover
Provisions and Rights Plan. The Board of Directors of
the Company (the “Board of Directors”)
has taken all necessary action to ensure that the transactions contemplated by
this Agreement and the Warrant and the consummation of the transactions
contemplated hereby and thereby, including the exercise of the Warrant in
accordance with its terms, will be exempt from any anti-takeover or similar
provisions of the Company’s Charter and bylaws, and any other provisions of any
applicable “moratorium”, “control share”, “fair price”, “interested stockholder”
or other anti-takeover laws and regulations of any jurisdiction.  The Company has taken all actions necessary
to render any stockholders’ rights plan of the Company inapplicable to this
Agreement and the Warrant and the consummation of the transactions contemplated
hereby and thereby, including the exercise of the Warrant by the Investor in
accordance with its terms.


 


(g)                               No Company Material
Adverse Effect. Since the last day of the last completed fiscal
period for which the Company has filed a Quarterly Report on Form 10-Q or
an Annual Report on Form 10-K with the SEC prior to the Signing Date, no
fact, circumstance, event, change, occurrence, condition or development has
occurred that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect.


 


7
















 


(h)                               Company
Financial Statements. Each of the consolidated financial statements of
the Company and its consolidated subsidiaries (collectively the “Company Financial Statements”) included or
incorporated by reference in the Company Reports filed with the SEC since December 31,
2006, present fairly in all material respects the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
indicated therein (or if amended prior to the Signing Date, as of the date of
such amendment) and the consolidated results of their operations for the
periods specified therein; and except as stated therein, such financial
statements (A) were prepared in conformity with GAAP applied on a
consistent basis (except as may be noted therein), (B) have been prepared
from, and are in accordance with, the books and records of the Company and the
Company Subsidiaries and (C) complied as to form, as of their respective
dates of filing with the SEC, in all material respects with the applicable
accounting requirements and with the published rules and regulations of
the SEC with respect thereto.


 


(i)                                   Reports.


 


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


 


(ii)                                  The records, systems,
controls, data and information of the Company and the Company Subsidiaries are
recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that
are under the exclusive ownership and direct control of the Company or the
Company Subsidiaries or their accountants (including all means of access
thereto and therefrom), except for any non-


 


8

















 


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


 


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


 


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


 


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


 


(m)                             Compliance with
Laws.  Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company and the Company Subsidiaries have all
permits, licenses, franchises, authorizations, orders and 


 


9

















 


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


 


(n)                               Employee
Benefit Matters. Except as would not reasonably be expected to
have, either individually or in the aggregate, a Company Material Adverse
Effect: (A) each “employee benefit plan” (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) providing benefits to any current
or former employee, officer or director of the Company or any member of its “Controlled Group” (defined as any
organization which is a member of a controlled group of corporations within the
meaning of Section 414 of the Internal Revenue Code of 1986, as amended
(the “Code”)) that is sponsored,
maintained or contributed to by the Company or any member of its Controlled
Group and for which the Company or any member of its Controlled Group would
have any liability, whether actual or contingent (each, a “Plan”) has been maintained in compliance
with its terms and with the requirements of all applicable statutes, rules and
regulations, including ERISA and the Code; (B) with respect to each Plan
subject to Title IV of ERISA (including, for purposes of this clause (B), any
plan subject to Title IV of ERISA that the Company or any member of its
Controlled Group previously maintained or contributed to in the six years prior
to the Signing Date), (1) no “reportable event” (within the meaning of Section 4043(c) of
ERISA),  other than a reportable event
for which the notice period referred to in Section 4043(c) of ERISA
has been waived, has occurred in the three years prior to the Signing Date or
is reasonably expected to occur, (2) no “accumulated funding deficiency”
(within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, has occurred in the three years prior to the
Signing Date or is reasonably expected to occur, (3) the fair market value
of the assets under each Plan exceeds the present value of all benefits accrued
under such Plan (determined based on the assumptions used to fund such Plan)
and (4) neither the Company nor any member of its Controlled Group has
incurred in the six years prior to the Signing Date, or reasonably expects to
incur, any liability under Title IV of ERISA (other than contributions to the
Plan or premiums to the PBGC in the ordinary course and without default) in
respect of a Plan (including any Plan that is a “multiemployer plan”, within
the meaning of Section 4001(c)(3) of ERISA); and (C) each Plan
that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
with respect to its qualified status that has not been revoked, or such a
determination letter has been timely applied for but not received by the
Signing Date, and nothing has occurred, whether by action or by failure to 


 


10

















 


act,
which could reasonably be expected to cause the loss, revocation or denial of
such qualified status or favorable determination letter.


 


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


 


(p)                               Properties and
Leases. Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, the Company and the Company
Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances, claims and defects that would affect the value thereof or interfere
with the use made or to be made thereof by them.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect,
the Company and the Company Subsidiaries hold all leased real or personal property
under valid and enforceable leases with no exceptions that would interfere with
the use made or to be made thereof by them.


 


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


 


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


 


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


 


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


 


(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 


 


11

















 


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


 


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


 


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


 


12

















 


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


 


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


 


Article III


Covenants


 


3.1                               Commercially
Reasonable Efforts.


 


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


 


(b)                               If the Company
is required to obtain any stockholder approvals set forth on Schedule C,
then the Company shall comply with this Section 3.1(b) and Section 3.1(c).
The Company shall call a special meeting of its stockholders, as promptly as
practicable following the Closing, to vote on proposals (collectively, the “Stockholder Proposals”) to (i) approve
the exercise of the Warrant for Common Stock for purposes of the rules of
the national security exchange on which the Common Stock is listed and/or (ii) amend
the Company’s Charter to increase the number of authorized shares of Common
Stock to at least such number as shall be sufficient to permit the full
exercise of the Warrant for Common Stock and comply with the other provisions
of this Section 3.1(b) and Section 3.1(c). The Board of
Directors shall recommend to the Company’s stockholders that such stockholders
vote in favor of the Stockholder Proposals. In connection with such meeting,
the Company shall prepare (and the 


 


13

















 


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


 


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


 


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


 


3.3                               Sufficiency of
Authorized Common Stock; Exchange Listing.


 


(a)                                During the
period from the Closing Date (or, if the approval of the Stockholder Proposals
is required, the date of such approval) until the date on which the Warrant has
been fully exercised, the Company shall at all times have reserved for
issuance, free of 


 


14

















 


preemptive
or similar rights, a sufficient number of authorized and unissued Warrant
Shares to effectuate such exercise. Nothing in this Section 3.3 shall
preclude the Company from satisfying its obligations in respect of the exercise
of the Warrant by delivery of shares of Common Stock which are held in the
treasury of the Company. As soon as reasonably practicable following the
Closing, the Company shall, at its expense, cause the Warrant Shares to be
listed on the same national securities exchange on which the Common Stock is
listed, subject to official notice of issuance, and shall maintain such listing
for so long as any Common Stock is listed on such exchange.


 


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


 


3.4                               Certain
Notifications Until Closing. From the Signing Date
until the Closing, the Company shall promptly notify the Investor of (i) any
fact, event or circumstance of which it is aware and which would reasonably be
expected to cause any representation or warranty of the Company contained in
this Agreement to be untrue or inaccurate in any material respect or to cause
any covenant or agreement of the Company contained in this Agreement not to be
complied with or satisfied in any material respect and (ii) except as
Previously Disclosed, any fact, circumstance, event, change, occurrence,
condition or development of which the Company is aware and which, individually
or in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect; provided,
however, that delivery of any
notice pursuant to this Section 3.4 shall not limit or affect any rights
of or remedies available to the Investor; provided,
further, that a failure to comply
with this Section 3.4 shall not constitute a breach of this Agreement or
the failure of any condition set forth in Section 1.2 to be satisfied
unless the underlying Company Material Adverse Effect or material breach would
independently result in the failure of a condition set forth in Section 1.2
to be satisfied.


 


3.5                               Access,
Information and Confidentiality.


 


(a)                                From the
Signing Date until the date when the Investor holds an amount of Preferred
Shares having an aggregate liquidation value of less than 10% of the Purchase
Price, the Company will permit the Investor and its agents, consultants,
contractors and advisors (x) acting through the Appropriate Federal
Banking Agency, to examine the corporate books and make copies thereof and to
discuss the affairs, finances and accounts of the Company and the Company
Subsidiaries with the principal officers of the Company, all upon reasonable
notice and at such reasonable times and as often as the Investor may reasonably
request and (y) to review any information material to the Investor’s
investment in the Company provided by the Company to its Appropriate Federal
Banking Agency. Any investigation pursuant to this Section 3.5 shall be
conducted during normal business hours and in such manner as not to interfere
unreasonably with the conduct of the business of the Company, and nothing
herein shall require the Company or any Company Subsidiary to disclose any
information to the Investor to the extent (i) prohibited by applicable law
or regulation, or (ii)  that such disclosure would reasonably be expected
to cause a violation of any agreement to which the Company or any Company
Subsidiary is a party or would cause a risk of a loss of privilege to the
Company or any Company Subsidiary (provided
that the Company shall use commercially reasonable efforts to make 


 


15

















 


appropriate
substitute disclosure arrangements under circumstances where the restrictions
in this clause (ii) apply).


 


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


 


Article IV


Additional Agreements


 


4.1                               Purchase for
Investment. The Investor acknowledges that the Purchased
Securities and the Warrant Shares have not been registered under the Securities
Act or under any state securities laws. The Investor (a) is acquiring the
Purchased Securities pursuant to an exemption from registration under the
Securities Act solely for investment with no present intention to distribute
them to any person in violation of the Securities Act or any applicable U.S.
state securities laws, (b) will not sell or otherwise dispose of any of
the Purchased Securities or the Warrant Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
applicable U.S. state securities laws, and (c) has such knowledge and
experience in financial and business matters and in investments of this type
that it is capable of evaluating the merits and risks of the Purchase and of
making an informed investment decision.


 


4.2                               Legends.


 


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


 


“THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.”


 


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


 


16
















 


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


 


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


 


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


 


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


 


17

















 


AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS
INSTRUMENT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.”


 


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


 


4.3           Certain Transactions.  The Company will not merge or consolidate
with, or sell, transfer or lease all or substantially all of its property or
assets to, any other party unless the successor, transferee or lessee party (or
its ultimate parent entity), as the case may be (if not the Company), expressly
assumes the due and punctual performance and observance of each and every
covenant, agreement and condition of this Agreement to be performed and
observed by the Company.


 


4.4           Transfer of Purchased Securities
and Warrant Shares; Restrictions on Exercise of the Warrant.  Subject to compliance with applicable
securities laws, the Investor shall be permitted to transfer, sell, assign or
otherwise dispose of (“Transfer”)
all or a portion of the Purchased Securities or Warrant Shares at any time, and
the Company shall take all steps as may be reasonably requested by the Investor
to facilitate the Transfer of the Purchased Securities and the Warrant Shares; provided that the Investor shall not
Transfer a portion or portions of the Warrant with respect to, and/or exercise
the Warrant for, more than one-half of the Initial Warrant Shares (as such
number may be adjusted from time to time pursuant to Section 13 thereof)
in the aggregate until the earlier of (a) the date on which the Company
(or any successor by Business Combination) has received aggregate gross
proceeds of not less than the Purchase Price (and the purchase price paid by
the Investor to any such successor for securities of such successor purchased
under the CPP) from one or more Qualified Equity Offerings (including Qualified
Equity Offerings of such successor) and (b) December 31, 2009.  “Qualified
Equity Offering” means the sale and issuance for cash by the Company
to persons other than the Company or any of the Company Subsidiaries after the
Closing Date of shares of perpetual Preferred Stock, Common Stock or any
combination of such stock, that, in each case, qualify as and may be included
in Tier 1 capital of the Company at the time of issuance under the applicable
risk-based capital guidelines of the Company’s Appropriate Federal Banking
Agency (other than any such sales and issuances made pursuant to agreements or
arrangements entered into, or pursuant to financing plans which were publicly
announced, on or prior to October 13, 


 


18

















 


2008).
“Business Combination” means a
merger, consolidation, statutory share exchange or similar transaction that
requires the approval of the Company’s stockholders.


 


4.5           Registration Rights.


 


(a)           Registration.


 


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


 


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


 


19

















 


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


 


(iv)          If during any period
when an effective Shelf Registration Statement is not available, the Company
proposes to register any of its equity securities, other than a registration
pursuant to Section 4.5(a)(i) or a Special Registration, and the
registration form to be filed may be used for the registration or qualification
for distribution of Registrable Securities, the Company will give prompt
written notice to the Investor and all other Holders of its intention to effect
such a registration (but in no event less than ten days prior to the
anticipated filing date) and will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within ten business days after the date of the Company’s
notice (a “Piggyback Registration”).
Any such person that has made such a written request may withdraw its
Registrable Securities from such Piggyback Registration by giving written
notice to the Company and the managing underwriter, if any, on or before the
fifth business day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this
Section 4.5(a)(iv) prior to the effectiveness of such registration,
whether or not Investor or any other Holders have elected to include Registrable
Securities in such registration.


 


(v)           If the registration
referred to in Section 4.5(a)(iv) is proposed to be underwritten, the
Company will so advise Investor and all other Holders as a part of the written
notice given pursuant to Section 4.5(a)(iv).  In such event, the right of Investor and all
other Holders to registration pursuant to Section 4.5(a) will be
conditioned upon such persons’ participation in such underwriting and the
inclusion of such person’s Registrable Securities in the underwriting if such
securities are of the same class of securities as the securities to be offered
in the underwritten offering, and each such person will (together with the
Company and the other persons distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company; provided that the Investor (as opposed to
other Holders) shall not be required to indemnify any person in connection with
any registration. If any participating person disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriters and the Investor (if the Investor is
participating in the underwriting).


 


20

















 


(vi)          If either (x) the
Company grants “piggyback” registration rights to one or more third parties to
include their securities in an underwritten offering under the Shelf
Registration Statement pursuant to Section 4.5(a)(ii) or (y) a
Piggyback Registration under Section 4.5(a)(iv) relates to an
underwritten offering on behalf of the Company, and in either case the managing
underwriters advise the Company that in their reasonable opinion the number of
securities requested to be included in such offering exceeds the number which
can be sold without adversely affecting the marketability of such offering
(including an adverse effect on the per share offering price), the Company will
include in such offering only such number of securities that in the reasonable
opinion of such managing underwriters can be sold without adversely affecting
the marketability of the offering (including an adverse effect on the per share
offering price), which securities will be so included in the following order of
priority: (A) first, in the case of a Piggyback Registration under Section 4.5(a)(iv),
the securities the Company proposes to sell, (B) then the Registrable
Securities of the Investor and all other Holders who have requested inclusion
of Registrable Securities pursuant to Section 4.5(a)(ii) or Section 4.5(a)(iv),
as applicable, pro rata on the
basis of the aggregate number of such securities or shares owned by each such
person and (C) lastly, any other securities of the Company that have been
requested to be so included, subject to the terms of this Agreement; provided, however, that if the Company
has, prior to the Signing Date, entered into an agreement with respect to its
securities that is inconsistent with the order of priority contemplated hereby
then it shall apply the order of priority in such conflicting agreement to the
extent that it would otherwise result in a breach under such agreement.


 


(b)           Expenses of Registration. All
Registration Expenses incurred in connection with any registration,
qualification or compliance hereunder shall be borne by the Company.  All Selling Expenses incurred in connection
with any registrations hereunder shall be borne by the holders of the
securities so registered pro rata
on the basis of the aggregate offering or sale price of the securities so
registered.


 


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


 


(i)            Prepare
and file with the SEC a prospectus supplement with respect to a proposed
offering of Registrable Securities pursuant to an effective registration
statement, subject to Section 4.5(d), keep such registration statement
effective and keep such prospectus supplement current until the securities
described therein are no longer Registrable Securities.


 


21

















 


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


 


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


 


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


 


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


 


(vi)          Give
written notice to the Holders:


 


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


 


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


 


(C)           of
the issuance by the SEC of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that purpose;


 


22

















 


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


 


(E)           of
the happening of any event that requires the Company to make changes in any
effective registration statement or the prospectus related to the registration
statement in order to make the statements therein not misleading (which notice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made); and


 


(F)           if
at any time the representations and warranties of the Company contained in any
underwriting agreement contemplated by Section 4.5(c)(x) cease to be
true and correct.


 


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


 


(viii)        Upon
the occurrence of any event contemplated by Section 4.5(c)(v) or
4.5(c)(vi)(E), promptly prepare a post-effective amendment to such registration
statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to the Holders and any underwriters,
the prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.  If the Company notifies the Holders in
accordance with Section 4.5(c)(vi)(E) to suspend the use of the
prospectus until the requisite changes to the prospectus have been made, then
the Holders and any underwriters shall suspend use of such prospectus and use
their reasonable best efforts to return to the Company all copies of such
prospectus (at the Company’s expense) other than permanent file copies then in
such Holders’ or underwriters’ possession. 
The total number of days that any such suspension may be in effect in
any 12-month period shall not exceed 90 days.


 


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


 


(x)            If
an underwritten offering is requested pursuant to Section 4.5(a)(ii),
enter into an underwriting agreement in customary form, scope and substance and
take all such other actions reasonably requested by the Holders of a majority
of the Registrable Securities being sold in connection therewith or by the
managing underwriter(s), if any, to expedite or facilitate the underwritten
disposition of such 


 


23

















 


Registrable
Securities, and in connection therewith in any underwritten offering (including
making members of management and executives of the Company available to
participate in “road shows”, similar sales events and other marketing
activities), (A) make such representations and warranties to the Holders
that are selling stockholders and the managing underwriter(s), if any, with
respect to the business of the Company and its subsidiaries, and the Shelf
Registration Statement, prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in customary
form, substance and scope, and, if true, confirm the same if and when
requested, (B) use its reasonable best efforts to furnish the underwriters
with opinions of counsel to the Company, addressed to the managing
underwriter(s), if any, covering the matters customarily covered in such
opinions requested in underwritten offerings, (C) use its reasonable best
efforts to obtain “cold comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any business acquired by the Company for which financial
statements and financial data are included in the Shelf Registration Statement)
who have certified the financial statements included in such Shelf Registration
Statement, addressed to each of the managing underwriter(s), if any, such
letters to be in customary form and covering matters of the type customarily
covered in “cold comfort” letters, (D) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
customary in underwritten offerings (provided that the Investor shall not be
obligated to provide any indemnity), and (E) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith, their counsel and
the managing underwriter(s), if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.


 


(xi)           Make
available for inspection by a representative of Holders that are selling
stockholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information
in each case reasonably requested (and of the type customarily provided in
connection with due diligence conducted in connection with a registered public
offering of securities) by any such representative, managing underwriter(s),
attorney or accountant in connection with such Shelf Registration Statement.


 


(xii)          Use
reasonable best efforts to cause all such Registrable Securities to be listed
on each national securities exchange on which similar securities issued by the
Company are then listed or, if no similar securities issued by the Company are
then listed on any national securities exchange, use its reasonable best
efforts to cause all such Registrable Securities to be listed on such
securities exchange as the Investor may designate.


 


24

















 


(xiii)         If
requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s),
if any, promptly include in a prospectus supplement or amendment such
information as the Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith or managing underwriter(s), if
any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such
prospectus supplement or such amendment as soon as practicable after the
Company has received such request.


 


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


 


(d)           Suspension of Sales. Upon
receipt of written notice from the Company that a registration statement,
prospectus or prospectus supplement contains or may contain an untrue statement
of a material fact or omits or may omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that circumstances exist that make inadvisable use of such registration
statement, prospectus or prospectus supplement, the Investor and each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until the Investor and/or Holder has received copies of a
supplemented or amended prospectus or prospectus supplement, or until the
Investor and/or such Holder is advised in writing by the Company that the use
of the prospectus and, if applicable, prospectus supplement may be resumed,
and, if so directed by the Company, the Investor and/or such Holder shall
deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies then in the Investor and/or such Holder’s possession, of
the prospectus and, if applicable, prospectus supplement covering such
Registrable Securities current at the time of receipt of such notice.  The total number of days that any such
suspension may be in effect in any 12-month period shall not exceed 90 days.


 


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


 


(f)            Furnishing Information.


 


(i)            Neither
the Investor nor any Holder shall use any free writing prospectus (as defined
in Rule 405) in connection with the sale of Registrable Securities without
the prior written consent of the Company.


 


(ii)           It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to Section 4.5(c) that Investor and/or the selling
Holders and the underwriters, if any, shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to
effect the registered offering of their Registrable Securities.


 


25

















 


(g)           Indemnification.


 


(i)            The
Company agrees to indemnify each Holder and, if a Holder is a person other than
an individual, such Holder’s officers, directors, employees, agents,
representatives and Affiliates, and each Person, if any, that controls a Holder
within the meaning of the Securities Act (each, an “Indemnitee”), against any and all losses, claims, damages,
actions, liabilities, costs and expenses (including reasonable fees, expenses
and disbursements of attorneys and other professionals incurred in connection
with investigating, defending, settling, compromising or paying any such
losses, claims, damages, actions, liabilities, costs and expenses), joint or
several, arising out of or based upon any untrue statement or alleged untrue
statement of material fact contained in any registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto or any documents incorporated therein by
reference or contained in any free writing prospectus (as such term is defined
in Rule 405) prepared by the Company or authorized by it in writing for
use by such Holder (or any amendment or supplement thereto); or any omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided,
that the Company shall not be liable to such Indemnitee in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon (A) an untrue
statement or omission made in such registration statement, including any such
preliminary prospectus or final prospectus contained therein or any such
amendments or supplements thereto or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or
authorized by it in writing for use by such Holder (or any amendment or
supplement thereto), in reliance upon and in conformity with information
regarding such Indemnitee or its plan of distribution or ownership interests
which was furnished in writing to the Company by such Indemnitee for use in
connection with such registration statement, including any such preliminary
prospectus or final prospectus contained therein or any such amendments or
supplements thereto, or (B)  offers or sales effected by or on behalf of
such Indemnitee “by means of” (as defined in Rule 159A) a “free writing
prospectus” (as defined in Rule 405) that was not authorized in writing by
the Company.


 


(ii)           If
the indemnification provided for in Section 4.5(g)(i) is unavailable
to an Indemnitee with respect to any losses, claims, damages, actions, liabilities,
costs or expenses referred to therein or is insufficient to hold the Indemnitee
harmless as contemplated therein, then the Company, in lieu of indemnifying
such Indemnitee, shall contribute to the amount paid or payable by such
Indemnitee as a result of such losses, 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 


 


26

















 


prevent
such statement or omission;  the Company
and each Holder agree that it would not be just and equitable if contribution
pursuant to this Section 4.5(g)(ii) were determined by pro rata allocation or by any other method
of allocation that does not take account of the equitable considerations
referred to in Section 4.5(g)(i). 
No Indemnitee guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Company if the Company was not guilty of such fraudulent
misrepresentation.


 


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


 


(i)            Clear Market. With respect to
any underwritten offering of Registrable Securities by the Investor or other
Holders pursuant to this Section 4.5, the Company agrees not to effect
(other than pursuant to such registration or pursuant to a Special
Registration) any public sale or distribution, or to file any Shelf
Registration Statement (other than such registration or a Special Registration)
covering, in the case of an underwritten offering of Common Stock or Warrants,
any of its equity securities or, in the case of an underwritten offering of
Preferred Shares, any Preferred Stock of the Company, or, in each case, any
securities convertible into or exchangeable or exercisable for such securities,
during the period not to exceed ten days prior and 60 days following the
effective date of such offering or such longer period up to 90 days as may be
requested by the managing underwriter for such underwritten offering.  The Company also agrees to cause such of its
directors and senior executive officers to execute and deliver customary
lock-up agreements in such form and for such time period up to 90 days as may
be requested by the managing underwriter. 
“Special Registration”
means the registration of (A) equity securities and/or options or other rights
in respect thereof solely registered on Form S-4 or Form S-8 (or
successor form) or (B) shares of equity securities and/or options or other
rights in respect thereof to be offered to directors, members of management,
employees, consultants, customers, lenders or vendors of the Company or Company
Subsidiaries or in connection with dividend reinvestment plans.


 


(j)            Rule 144; Rule 144A.
With a view to making available to the Investor and Holders the benefits of
certain rules and regulations of the SEC which may permit the sale of the


 


27






 


 


 












 


Registrable
Securities to the public without registration, the Company agrees to use its
reasonable best efforts to:


 


(i)            make
and keep public information available, as those terms are understood and
defined in Rule 144(c)(1) or any similar or analogous rule promulgated
under the Securities Act, at all times after the Signing Date;


 


(ii)           (A) file
with the SEC, in a timely manner, all reports and other documents required of
the Company under the Exchange Act, and (B) if at any time the Company is
not required to file such reports, make available, upon the request of any
Holder, such information necessary to permit sales pursuant to Rule 144A
(including the information required by Rule 144A(d)(4) under the
Securities Act);


 


(iii)          so
long as the Investor or a Holder owns any Registrable Securities, furnish to
the Investor or such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of Rule 144
under the Securities Act, and of the Exchange Act; a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents
as the Investor or Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities to the public
without registration; and


 


(iv)          take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act.


 


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


 


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


 


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


 


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


 


(iv)          “Registrable Securities” means (A) all
Preferred Shares, (B) the Warrant (subject to Section 4.5(p)) and (C) any
equity securities issued or issuable directly or indirectly with respect to the
securities referred to in the 


 


28

















 


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


 


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


 


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


 


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


 


(l)            At any time, any holder of
Securities (including any Holder) may elect to forfeit its rights set forth in
this Section 4.5 from that date forward; provided,
that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Section 4.5(a)(iv) — (vi) in any Pending
Underwritten Offering to the same extent that such Holder would have been
entitled to if the holder had not withdrawn; and provided, further,
that no such forfeiture shall terminate a Holder’s rights or obligations under Section 4.5(f) with
respect to any prior registration or Pending Underwritten Offering.  “Pending
Underwritten Offering” means,
with respect to any Holder forfeiting its rights pursuant to this Section 4.5(l),
any underwritten offering of Registrable Securities in which such Holder has
advised the Company of its intent to register its Registrable Securities either
pursuant to Section 4.5(a)(ii) or 4.5(a)(iv) prior to the date
of such Holder’s forfeiture.


 


29

















 


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


 


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


 


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


 


(p)           Registered Sales of the Warrant.
The Holders agree to sell the Warrant or any portion thereof under the Shelf
Registration Statement only beginning 30 days after notifying the Company of
any such sale, during which 30-day period the Investor and all Holders of the
Warrant shall take reasonable steps to agree to revisions to the Warrant to
permit a public distribution of the Warrant, including entering into a warrant
agreement and appointing a warrant agent.


 


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


 


4.7           Depositary Shares. Upon
request by the Investor at any time following the Closing Date, the Company
shall promptly enter into a depositary arrangement, pursuant to customary
agreements reasonably satisfactory to the Investor and with a depositary
reasonably acceptable to the Investor, pursuant to which the Preferred Shares
may be deposited and depositary shares, each representing a fraction of a
Preferred Share as specified by the Investor,


 


30

















 


may
be issued. From and after the execution of any such depositary arrangement, and
the deposit of any Preferred Shares pursuant thereto, the depositary shares
issued pursuant thereto shall be deemed “Preferred Shares” and, as applicable, “Registrable
Securities” for purposes of this Agreement.


 


4.8           Restriction on Dividends and
Repurchases.


 


(a)           Prior to the earlier of (x) the
third anniversary of the Closing Date and (y) the date on which the
Preferred Shares have been redeemed in whole or the Investor has transferred
all of the Preferred Shares to third parties which are not Affiliates of the
Investor, neither the Company nor any Company Subsidiary shall, without the
consent of the Investor:


 


(i)            declare
or pay any dividend or make any distribution on the Common Stock (other than (A) regular
quarterly cash dividends of not more than the amount of the last quarterly cash
dividend per share declared or, if lower, publicly announced an intention to
declare, on the Common Stock prior to October 14, 2008, as adjusted for
any stock split, stock dividend, reverse stock split, reclassification or
similar transaction, (B) dividends payable solely in shares of Common
Stock and (C) dividends or distributions of rights or Junior Stock in
connection with a stockholders’ rights plan); or


 


(ii)           redeem,
purchase or acquire any shares of Common Stock or other capital stock or other
equity securities of any kind of the Company, or any trust preferred securities
issued by the Company or any Affiliate of the Company, other than (A) redemptions,
purchases or other acquisitions of the Preferred Shares, (B) redemptions,
purchases or other acquisitions of shares of Common Stock or other Junior
Stock, in each case in this clause (B) in connection with the
administration of any employee benefit plan in the ordinary course of business
(including purchases to offset the Share Dilution Amount (as defined below)
pursuant to a publicly announced repurchase plan) and consistent with past
practice; provided that any
purchases to offset the Share Dilution Amount shall in no event exceed the
Share Dilution Amount, (C) purchases or other acquisitions by a
broker-dealer subsidiary of the Company solely for the purpose of
market-making, stabilization or customer facilitation transactions in Junior
Stock or Parity Stock in the ordinary course of its business, (D) purchases
by a broker-dealer subsidiary of the Company of capital stock of the Company
for resale pursuant to an offering by the Company of such capital stock
underwritten by such broker-dealer subsidiary, (E) any redemption or
repurchase of rights pursuant to any stockholders’ rights plan, (F) the
acquisition by the Company or any of the Company Subsidiaries of record
ownership in Junior Stock or Parity Stock for the beneficial ownership of any
other persons (other than the Company or any other Company Subsidiary),
including as trustees or custodians, and (G) the exchange or conversion of
Junior Stock for or into other Junior Stock or of Parity Stock or trust
preferred securities for or into other Parity Stock (with the same or lesser
aggregate liquidation amount) or Junior Stock, in each case set forth in this
clause (G), solely to the extent required pursuant to binding contractual
agreements entered into prior to 


 


31

















 


the
Signing Date or any subsequent agreement for the accelerated exercise,
settlement or exchange thereof for Common Stock (clauses (C) and (F),
collectively, the “Permitted Repurchases”).
“Share Dilution Amount” means the
increase in the number of diluted shares outstanding (determined in accordance
with GAAP, and as measured from the date of the Company’s most recently filed
Company Financial Statements prior to the Closing Date) resulting from the
grant, vesting or exercise of equity-based compensation to employees and
equitably adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.


 


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


 


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


 


4.9           Repurchase of Investor Securities.


 


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


 


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


 


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


 


32

















 


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


 


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


 


4.10         Executive Compensation. Until
such time as the Investor ceases to own any debt or equity securities of the
Company acquired pursuant to this Agreement or the Warrant, the Company shall
take all necessary action to ensure that its Benefit Plans with respect to its
Senior Executive Officers comply in all respects with Section 111(b) of
the EESA as implemented by any guidance or regulation thereunder that has been
issued and is in effect as of the Closing Date, and shall not adopt any new
Benefit Plan with respect to its Senior Executive Officers that does not comply
therewith.  “Senior Executive Officers” means the Company’s “senior
executive officers” as defined in subsection 111(b)(3) of the EESA and
regulations issued thereunder, including the rules set forth in 31 C.F.R. Part 30.


 


Article V


Miscellaneous


 


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


 


33

















 


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


 


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


 


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


 


In
the event of termination of this Agreement as provided in this Section 5.1,
this Agreement shall forthwith become void and there shall be no liability on
the part of either party hereto except that nothing herein shall relieve either
party from liability for any breach of this Agreement.


 


5.2           Survival of Representations and
Warranties. All covenants and agreements, other than those which by their
terms apply in whole or in part after the Closing, shall terminate as of the
Closing. The representations and warranties of the Company made herein or in
any certificates delivered in connection with the Closing shall survive the
Closing without limitation.


 


5.3           Amendment. No amendment of any
provision of this Agreement will be effective unless made in writing and signed
by an officer or a duly authorized representative of each party; provided that the Investor may
unilaterally amend any provision of this Agreement to the extent required to
comply with any changes after the Signing Date in applicable federal
statutes.  No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any other right, power or privilege.  The rights and remedies herein provided shall
be cumulative of any rights or remedies provided by law.


 


5.4           Waiver of Conditions. The
conditions to each party’s obligation to consummate the Purchase are for the
sole benefit of such party and may be waived by such party in whole or in part
to the extent permitted by applicable law. No waiver will be effective unless
it is in a writing signed by a duly authorized officer of the waiving party
that makes express reference to the provision or provisions subject to such
waiver.


 


5.5           Governing Law: Submission
to Jurisdiction, Etc.  This
Agreement will be governed by and construed in accordance with the federal law
of the United States if and to the extent such law is applicable, and otherwise
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within such State. 


 


34

















 


Each of
the parties hereto agrees (a) to submit to the exclusive jurisdiction and
venue of the United States District Court for the District of Columbia and the
United States Court of Federal Claims for any and all civil actions, suits or
proceedings arising out of or relating to this Agreement or the Warrant or the
transactions contemplated hereby or thereby, and (b) that notice may be
served upon (i) the Company at the address and in the manner set forth for
notices to the Company in Section 5.6 and (ii) the Investor in
accordance with federal law.  To the
extent permitted by applicable law, each of the parties hereto hereby
unconditionally waives trial by jury in any civil legal action or proceeding
relating to this Agreement or the Warrant or the transactions contemplated
hereby or thereby.


 


5.6           Notices. Any notice, request,
instruction or other document to be given hereunder by any party to the other
will be in writing and will be deemed to have been duly given (a) on the
date of delivery if delivered personally, or by facsimile, upon confirmation of
receipt, or (b) on the second business day following the date of dispatch
if delivered by a recognized next day courier service. All notices to the
Company shall be delivered as set forth in Schedule A, or pursuant to
such other instruction as may be designated in writing by the Company to the
Investor. All notices to the Investor shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the
Investor to the Company.


 


If
to the Investor:


 


United
States Department of the Treasury


1500 Pennsylvania Avenue, NW, Room 2312


Washington, D.C. 20220


Attention: Assistant General Counsel (Banking and
Finance)


Facsimile: (202) 622-1974


 


5.7           Definitions.


 


 


(a)           When a reference is made in this
Agreement to a subsidiary of a person, the term “subsidiary” means any corporation, partnership, joint
venture, limited liability company or other entity (x) of which such
person or a subsidiary of such person is a general partner or (y) of which
a majority of the voting securities or other voting interests, or a majority of
the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the board of directors or persons
performing similar functions with respect to such entity, is directly or
indirectly owned by such person and/or one or more subsidiaries thereof.


 


(b)           The term “Affiliate” means, with respect to any person, any person
directly or indirectly controlling, controlled by or under common control with,
such other person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with
respect to any person, means the possession, directly or indirectly, of the
power to cause the direction of management and/or policies of such person,
whether through the ownership of voting securities by contract or otherwise.


 


35

















 


(c)           The terms “knowledge of the Company” or “Company’s knowledge” mean the actual knowledge after
reasonable and due inquiry of the “officers”
(as such term is defined in Rule 3b-2 under the Exchange Act, but
excluding any Vice President or Secretary) of the Company.


 


5.8           Assignment. Neither this
Agreement nor any right, remedy, obligation nor liability arising hereunder or
by reason hereof shall be assignable by any party hereto without the prior
written consent of the other party, and any attempt to assign any right,
remedy, obligation or liability hereunder without such consent shall be void,
except (a) an assignment, in the case of a Business Combination where such
party is not the surviving entity, or a sale of substantially all of its
assets, to the entity which is the survivor of such Business Combination or the
purchaser in such sale and (b) as provided in Section 4.5.


 


5.9           Severability. If any provision
of this Agreement or the Warrant, or the application thereof to any person or
circumstance, is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid or unenforceable, will remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original
intent of the parties.


 


5.10         No Third Party Beneficiaries.
Nothing contained in this Agreement, expressed or implied, is intended to
confer upon any person or entity other than the Company and the Investor any
benefit, right or remedies, except that the provisions of Section 4.5
shall inure to the benefit of the persons referred to in that Section.


 


* * *


 


36

















 


ANNEX A


 


FORM OF CERTIFICATE OF DESIGNATIONS


 


[SEE ATTACHED]


 






 












 


ANNEX B


 


FORM OF WAIVER


 


In
consideration for the benefits I will receive as a result of my employer’s
participation in the United States Department of the Treasury’s TARP Capital
Purchase Program, I hereby voluntarily waive any claim against the United States
or my employer for any changes to my compensation or benefits that are required
to comply with the regulation issued by the Department of the Treasury as
published in the Federal Register on October 20, 2008.


 


I
acknowledge that this regulation may require modification of the compensation,
bonus, incentive and other benefit plans, arrangements, policies and agreements
(including so-called “golden parachute” agreements) that I have with my
employer or in which I participate as they relate to the period the United
States holds any equity or debt securities of my employer acquired through the
TARP Capital Purchase Program.


 


This
waiver includes all claims I may have under the laws of the United States or
any state related to the requirements imposed by the aforementioned regulation,
including without limitation a claim for any compensation or other payments I
would otherwise receive, any challenge to the process by which this regulation
was adopted and any tort or constitutional claim about the effect of these
regulations on my employment relationship.


 

















 


ANNEX C


 


FORM OF OPINION


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


ANNEX D


 


FORM OF WARRANT


 


[SEE ATTACHED]


 

















 


SCHEDULE A


 


ADDITIONAL
TERMS AND CONDITIONS


 


Company Information:


 


Name of the Company: 
Yadkin Valley Financial Corporation


 


Corporate or other organizational form:  Corporation


 


Jurisdiction of Organization: North Carolina


 


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


 


	
  Notice Information:

  	
  Yadkin Valley Financial Corporation

  
	
   

  	
  209 North Bridge Street,

  
	
   

  	
  Elkin, North Carolina 28621

  
	
   

  	
  Attention: William A. Long, President and CEO

  
	
   

  	
  Facsimile No.  (336) 835-8858

  
	
   

  	
   

  
	
  With a copy to:

  	
  Nelson Mullins Riley & Scarborough LLP

  
	
   

  	
  104 South Main Street, Suite 900

  
	
   

  	
  Greenville, South Carolina, 29601

  
	
   

  	
  Attention: Neil E. Grayson

  
	
   

  	
  Facsimile No.  (864) 250-2389

  



 


Terms of the Purchase:


 


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


 


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


 


Number of Shares of Preferred Stock Purchased: 13,312


 


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


 


Number of Initial Warrant Shares: 273,534


 


Exercise Price of the Warrant: $7.30 per share


 


Purchase Price: $13,312,000


 


Closing:


 


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


221
E. Fourth St.


Suite 2900


Cincinnati,
OH  45202-4095


Facsimile
(513) 361-1201


 

















 


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


 


Date of Closing: 
July 24, 2009


 


Wire Information for Closing:


 

















 


SCHEDULE B


 


CAPITALIZATION


 


Capitalization
Date: As of June 30, 2009


 


Common Stock


 


Par value: $1.00


 


Total Authorized: 20,000,000


 


Outstanding: 16,129,640


 


Subject to warrants,
options, convertible


securities, etc.:  1,002,350


 


Reserved for benefit plans and other


issuances:  On May 22, 2008, the shareholders
approved the 2008 Omnibus Stock Ownership and Long Term Incentive Plan (the “Omnibus
Plan”). An aggregate of 700,000 shares has been reserved for issuance by the
Company under the terms of the Omnibus Plan pursuant to the grant of incentive
stock options (not to exceed 200,000 shares), non-statutory stock options,
restricted stock and restricted stock units, long-term incentive compensation
units and stock appreciation rights.


 


Remaining authorized but unissued:  2,168,010


 


Shares issued after Capitalization Date


(other than pursuant to
warrants, options,


convertible securities, etc. as set forth


above): N/A


 


Preferred Stock


 


Par value: no par value


 


Total Authorized: 1,000,000


 


Outstanding (by series): 36,000 shares of Fixed Rate
Cumulative Perpetual Preferred Stock, Series T


 


Reserved for issuance: 13,312 (to be issued to the
Investor)


 


Remaining authorized but unissued: 950,688


 

















 


SCHEDULE C


 


REQUIRED
STOCKHOLDER APPROVALS


 


	
   

  	
   

  	
  Required %(1)

  	
   

  	
  Vote Required

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants — Common Stock
  Issuance

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charter Amendment

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stock Exchange Rules

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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


 






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


 

















 


SCHEDULE D


 


LITIGATION


 


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


 


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


 

















 


SCHEDULE E


 


COMPLIANCE
WITH LAWS


 


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


 


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


 


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


 


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


 

















 


SCHEDULE F


 


REGULATORY
AGREEMENTS


 


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


 


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