WARRANT AGREEMENT


 


 


WARRANT AGREEMENT
governs those Unit Certificates (the "Certificates") issued by The Bank of New Canaan (the "Bank") as part
of its Offering (the "Offering") pursuant to that certain Offering Circular dated as of October 26, 2006. Each Unit consists
of one share (the "Shares") of common stock of the Bank, par value $1.00 per share (the "Common Stock") and
one warrant (the "Warrants") to purchase shares of Common Stock, as set forth herein. The Certificates bear a legend
referencing the Warrants.


 


		1.	Transferability and Form of Warrant.



 


(a)The
Warrants shall not be separately registered, but shall be a part of the Units. The Shares and Warrants are not separately transferable
from the Units. A Warrant may be transferred only simultaneously with a transfer of the Share to which the Warrant relates as
part of the Unit, which transfer shall be recorded on the Unit register maintained by the Bank.


 


(b)Each Certificate shall bear
a legend referencing the Warrants. The Bank shall hold a master warrant certificate (the "Master Warrant Certificate")
which shall list the number of Warrants that accompany each Certificate. The number of shares of Common Stock a holder of a Unit
(each a "Holder") will be entitled to purchase (shown as a conversion ratio) is computed by multiplying the number of
Units a Holder purchased in the Offering by the conversion ratio. This conversion ratio is based on the number of Units subscribed
for in the Offering (862,289). The conversion ratio has been set at .3221 shares of Common Stock for each Warrant. The Master Warrant
Certificate shall be substantially as set forth in Exhibit A attached hereto.


 


		2.	Terms and Exercise of Warrants.



 


(a)Subject to
the terms of this Agreement, the Warrants shall be exercisable and each Holder shall have the right, which may be exercised at
any time from and including October 1, 2009 and prior to or on November 30, 2009 (the “Expiration Date”), unless extended
or accelerated per Section 2(c) below, to purchase from the Bank the number of Shares which the Holder may at the time be entitled
to purchase on exercise of such Warrants, as identified on the Master Warrant Certificate. The Bank shall provide each Holder with
a warrant exercise form (the "Exercise Form") prior to or contemporaneous with the commencement of the warrant exercise
period.


 






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(b)Warrants may only be exercised
for the purchase of whole Shares. Warrants may be exercised upon delivery to the Bank of a completed Exercise Form and upon payment
to the Bank of the Warrant Exercise Price (as defined herein), for the number of Shares in respect of which such Warrants are then
exercised. Payment of the aggregate Warrant Exercise Price shall be made by certified or official bank check, wire transfer or
debit from an account at the Bank.


 


Upon such delivery
of the Exercise Form and payment of the Warrant Exercise Price as aforesaid, the Bank shall issue and cause to be delivered as
promptly as possible to or upon the written order of the Holder, and in such name or names as the Holder may designate, a certificate
or certificates for the number of full Shares so purchased upon the exercise of such Warrants. Such certificate or certificates
shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of
record of such Shares as of the date of the delivery of the Exercise Form and payment of the Warrant Exercise Price, as aforesaid.


 


(c) The Bank may accelerate
or extend the Expiration Date at any time, in its discretion to a date not earlier than 60 days following mailing of notice. Notice
of the acceleration or extension, as applicable, shall contain the accelerated Expiration Date (the “Accelerated Expiration
Date”) or the extended Expiration date (the "Extended Expiration Date"), as applicable.


 


		3.	Payment of Taxes.



 


The Bank will pay all
documentary stamp taxes, if any, attributable to the initial issuance of Shares upon the exercise of Warrants; provided however,
that the Bank shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue
or delivery of any Unit Certificate or certificates for Shares in a name other than that of the registered Holder of Warrants in
respect of which such Shares are issued.


 


		4.	Mutilated or Missing Unit Certificate.



 


In case any of the
Certificates evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the Bank may, in its discretion, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated Certificate, or in lieu of and substitution for
the Certificate if lost, stolen or destroyed, a new Certificate of like tenor and representing an equivalent right or interest;
but only upon receipt of evidence satisfactory to the Bank of such loss, theft or destruction of such Certificate and indemnity,
if requested, also satisfactory to the Bank. An applicant for such a substitute Certificate shall also comply with such other reasonable
requirements and pay such other reasonable charges as the Bank may prescribe.


 






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		5.	Reservation of Shares, Purchase of Warrants.



 


There have been
reserved, and the Bank shall at all times keep reserved, out of its authorized and unissued Common Stock, a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase represented by the outstanding Warrants.


 


		6.	Warrant Price.



 


The price per share
at which Shares shall be purchasable upon exercise of Warrants (the “Warrant Exercise Price”) shall be $18.00.


 


		7.	Expiration of Warrants.



 


On the Expiration Date
or on the Accelerated Expiration Date or Extended Expiration Date, as the case may be, if the Bank accelerates or extends the Expiration
Date pursuant to Section 2(b), all outstanding Warrants shall become void and all rights of all holders thereof and thereunder
shall cease.


 


		8.	Adjustment of Warrant Price and Number of Shares.



 


The number and kind
of securities purchasable upon the exercise of each Warrant and the Warrant Exercise Price shall be subject to adjustment from
time to time upon the happening of certain events, as hereinafter defined.


 


8.1Mechanical
Adjustments. The number of Shares purchasable upon the exercise of each Warrant and the Warrant Exercise Price shall be subject
to adjustment as follows:


 


(a) In case the Bank
shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock, (ii) subdivide or “split”
its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification or recapitalization of its shares of Common Stock other securities of the Bank,
the Holder of the Warrant shall be entitled to purchase the number of Shares or other securities of the Bank which he would have
been able to purchase after the happening of any of the events described above, had such Warrant been exercised immediately prior
to the happening of such event or any record date with respect thereto. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.


 






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(b) In case the Bank
shall distribute to all holders of its shares of Common Stock evidences of its indebtedness or assets (excluding cash dividends
or distributions payable out of consolidated earnings or earned surplus and dividends or distributions referred to in paragraph
(a) above) or rights, options or warrants or convertible or exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock, then in each case the number of Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Shares purchasable upon the exercise of each Warrant before the occurrence of such event,
by a fraction, of which the numerator shall be the then current market price per share of Common Stock (as defined in paragraph
(c) below) on the date of such distribution, and of which the denominator shall be the then current market price per share of Common
Stock, less the then fair value (as determined by the Board of Directors of the Bank, whose determination shall be conclusive)
of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or
of such convertible or exchangeable securities applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination
of shareholders entitled to receive such distribution.


 


(c) For the purpose
of any computation under paragraph (b) of this Section, the current market price per share of Common Stock at any date shall be
the average representative closing bid quotation as reported on NASDAQ or, in the event the Common Stock is listed on a securities
exchange, the average closing sales price on the principal such exchange for the Common Stock for the five consecutive trading
days ending the day prior to the date as of which such computation is made. In the event that none of the above sources are available,
the Board of Directors of the Bank shall determine the current market price based upon such information and evidence as they determine
to be credible and relevant at the time.


 


(d) No adjustment
in the number of Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of
at least 1% in the number of Shares purchasable upon the exercise of each Warrant; provided, however, that any adjustments which
by reason of this paragraph (d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest share.


 


(e) Whenever the number
of Shares purchasable upon the exercise of each Warrant is adjusted, as herein provided, the Warrant Exercise Price payable upon
exercise of each Warrant shall be adjusted by multiplying such Warrant Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Shares purchasable upon the exercise of each Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of Shares so purchasable immediately thereafter.


 






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(f) For the purpose
of this subsection 8.1, the term “shares of Common Stock” shall mean (i) the class of stock designated as the Common
Stock of the Bank at the date of this Agreement, or (ii) any other class of stock resulting from successive changes or reclassification
of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value.
In the event that at any time, as a result of an adjustment made pursuant to paragraph (a) above, the Holders shall become entitled
to purchase any shares of the Bank other than shares of Common Stock, thereafter the number of such other shares so purchasable
upon exercise of each Warrant and the Warrant Exercise Price of such shares shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Shares contained in paragraphs
(a) through (e), inclusive, above.


 


8.2Notice of Adjustment. Whenever
the number of Shares purchasable upon the exercise of each Warrant or the Warrant Exercise Price of such Shares is adjusted, as
herein provided, the Bank shall promptly to mail by first class mail, postage prepaid, to each Holder notice of such adjustment
or adjustments.


 


8.3No Adjustment for Dividends.
Except as provided in subsection 8.1, no adjustment in respect of any cash dividend shall be made during the term of a Warrant
or upon the exercise of a Warrant.


 


8.4Presentation of Purchase
Rights Upon Consolidation, etc. In case of any consolidation of the Bank with or merger of the Bank into another corporation,
the Bank or such successor or purchasing corporation, as the case may be, shall execute an agreement providing that each Holder
shall have the right thereafter upon payment of the Warrant Exercise Price in effect immediately prior to such action to purchase
upon exercise of each Warrant the kind and amount of shares and other securities and property which he would have owned or have
been entitled to receive after the happening of such consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. The Bank shall mail by first class mail, postage prepaid, to each Holder, notice of the execution
of any such agreement. In the event of reorganization of the Bank into a bank holding company structure, wherein all of the shareholders
of the Bank at the effective time of the reorganization exchange their shares of Bank common stock for an equivalent number of
shares of bank holding company common stock, this Agreement shall automatically become the obligation of the bank holding company
to issue shares of common stock of the bank holding company upon the exercise of Warrants as provided herein with respect to Bank
common stock.


 






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		9.	Acceptance by Holder.



 


A Holder's receipt
of a Certificate shall be deemed his acceptance of the terms and conditions set forth herein.


 


 




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EXHIBIT
A


 


THE BANK OF
NEW CANAAN


 


MASTER WARRANT
CERTIFICATE


 


 


 


	
         UNIT CERTIFICATE HOLDER NAME/ADDRESS
	
        UNIT CERTIFICATE NUMBER(S)
	NUMBER OF WARRANTS EXERCISED
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 


 




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November 23, 2010


 


Bauer Foundation


206 Dudley Rd


Wilton, CT 06897


 


RE: EXTENSION OF WARRANT EXERCISE PERIOD


related to BNC Financial Units CUSIP number 05570E 20 7


 


Dear Mr. Bauer,


 


You currently own 55,556 Units of BNC Financial Group, Inc.
(the “Company”) that were issued during our 2006 public offering and 2007 Private Placement. Each Unit consists of
one share of the Company’s common stock and an attached warrant. Each warrant originally gave you the right, but not the
obligation, to purchase .3221 shares of the Company’s common stock at $18.00 per share and were exercisable between October
1, 2012 and December 1, 2012.


 


At our June 23, 2010 Annual Meeting, our shareholders approved
lowering the exercise price of the warrants to $14.00 and extending the exercise period. This means that each warrant now gives
you the right, but not the obligation, to purchase .3221 shares of the Company’s common stock at $14.00 per share and the
new exercise period for the warrants begins on October 1, 2014 and expires at 5:00 pm EST on December 1, 2014.


 


Based on the warrant conversion ratio, you are entitled to buy
up to 17,895 shares of Company common stock at $14.00 per share during the exercise period.


 


The Board of Directors periodically evaluates the Company’s
capital requirements and, based on changes in the Company’s capital needs or relevant market conditions may, as allowed for
in the warrant agreement, revise the warrant exercise period (including possible acceleration of the time) based on those considerations.


 


If you have any questions regarding the above, please do not
hesitate to contact Mr. Jay Forgotson or myself at (203) 972-3838.


 


Sincerely,


 


 


 


Ernest J. Verrico, Sr.


Chief Financial Officer


 






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