EXHIBIT
10.1


 


UNITED STATES DEPARTMENT OF THE TREASURY


1500 PENNSYLVANIA AVENUE, NW


WASHINGTON, D.C. 20220


 


Dear Ladies and Gentlemen:


 


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


 


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extent supplemented or superseded by the terms set forth herein or in the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


 


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


 


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


 


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


 


* * *


 

















 


In witness whereof, this letter agreement has
been duly executed and delivered by the duly authorized representatives of the
parties hereto as of the date written below.


 


	
   

  	
  UNITED STATES DEPARTMENT OF THE 

  
	
   

  	
  TREASURY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neel Kashkan

  
	
   

  	
   

  	
  Name:

  	
  Neel Kashkan

  
	
   

  	
   

  	
  Title:

  	
  Interim Assistant Secretary For Financial

  Stability

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TIDELANDS BANCSHARES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert E. Coffee, Jr.

  
	
   

  	
   

  	
  Name:  Robert E. Coffee, Jr.

  	
   

  
	
   

  	
   

  	
  Title:  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  December 19, 2008

  	
   

  
						



 

















EXHIBIT A




 





 


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

  



 


i

















 


	
  Article V

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  5.1

  	
  Termination

  	
  34

  
	
  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.

  	
  35

  
	
  5.6

  	
  Notices

  	
  35

  
	
  5.7

  	
  Definitions

  	
  35

  
	
  5.8

  	
  Assignment

  	
  36

  
	
  5.9

  	
  Severability

  	
  36

  
	
  5.10

  	
  No Third
  Party Beneficiaries

  	
  36

  



 


ii

















 


	
  LIST OF ANNEXES

  
	
   

  
	
  ANNEX A:

  	
  FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

  
	
   

  	
   

  
	
  ANNEX B:

  	
  FORM OF WAIVER

  
	
   

  	
   

  
	
  ANNEX C:

  	
  FORM OF OPINION

  
	
   

  	
   

  
	
  ANNEX D:

  	
  FORM OF WARRANT

  
	
   

  	
   

  



iii

















 


INDEX OF DEFINED TERMS


 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Affiliate

  	
   

  	
   

  	
  5.7(b)

  
	
  Agreement

  	
   

  	
   

  	
  Recitals

  
	
  Appraisal Procedure

  	
   

  	
   

  	
  4.9(c)(i)

  
	
  Appropriate Federal Banking Agency

  	
   

  	
   

  	
  2.2(s)

  
	
  Bankruptcy Exceptions

  	
   

  	
   

  	
  2.2(d)

  
	
  Benefit Plans

  	
   

  	
   

  	
  1.2(d)(iv)

  
	
  Board of Directors

  	
   

  	
   

  	
  2.2(f)

  
	
  Business Combination

  	
   

  	
   

  	
  4.4

  
	
  business day

  	
   

  	
   

  	
  1.3

  
	
  Capitalization Date

  	
   

  	
   

  	
  2.2(b)

  
	
  Certificate of Designations

  	
   

  	
   

  	
  1.2(d)(iii)

  
	
  Charter

  	
   

  	
   

  	
  1.2(d)(iii)

  
	
  Closing

  	
   

  	
   

  	
  1.2(a)

  
	
  Closing Date

  	
   

  	
   

  	
  1.2(a)

  
	
  Code

  	
   

  	
   

  	
  2.2(n)

  
	
  Common Stock

  	
   

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
   

  	
  Recitals

  
	
  Company Financial Statements

  	
   

  	
   

  	
  2.2(h)

  
	
  Company Material Adverse Effect

  	
   

  	
   

  	
  2.1(a)

  
	
  Company Reports

  	
   

  	
   

  	
  2.2(i)(i)

  
	
  Company Subsidiary; Company Subsidiaries

  	
   

  	
   

  	
  2.2(i)(i)

  
	
  Control; Controlled By; Under Common Control with

  	
   

  	
   

  	
  5.7(b)

  
	
  Controlled Group

  	
   

  	
   

  	
  2.2(n)

  
	
  CPP

  	
   

  	
   

  	
  Recitals

  
	
  EESA

  	
   

  	
   

  	
  1.2(d)(iv)

  
	
  ERISA

  	
   

  	
   

  	
  2.2(n)

  
	
  Exchange Act

  	
   

  	
   

  	
  2.1(b)

  
	
  Fair Market Value

  	
   

  	
   

  	
  4.9(c)(ii)

  
	
  GAAP

  	
   

  	
   

  	
  2.1(a)

  
	
  Governmental Entities

  	
   

  	
   

  	
  1.2(c)

  
	
  Holder

  	
   

  	
   

  	
  4.5(k)(i)

  
	
  Holders’ Counsel

  	
   

  	
   

  	
  4.5(k)(ii)

  
	
  Indemnitee

  	
   

  	
   

  	
  4.5(g)(i)

  
	
  Information

  	
   

  	
   

  	
  3.5(b)

  
	
  Initial Warrant Shares

  	
   

  	
   

  	
  Recitals

  
	
  Investor

  	
   

  	
   

  	
  Recitals

  
	
  Junior Stock

  	
   

  	
   

  	
  4.8(c)

  
	
  Knowledge of the Company; Company’s knowledge

  	
   

  	
   

  	
  5.7(c)

  
	
  Last Fiscal Year

  	
   

  	
   

  	
  2.1(b)

  
	
  Letter Agreement

  	
   

  	
   

  	
  Recitals

  
	
  officers

  	
   

  	
   

  	
  5.7(c)

  



 


iv

















 


 


	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Parity Stock

  	
   

  	
   

  	
  4.8(c)

  
	
  Pending Underwritten Offering

  	
   

  	
   

  	
  4.5(l)

  
	
  Permitted Repurchases

  	
   

  	
   

  	
  4.8(a)(ii)

  
	
  Piggyback Registration

  	
   

  	
   

  	
  4.5(a)(iv)

  
	
  Plan

  	
   

  	
   

  	
  2.2(n)

  
	
  Preferred Shares

  	
   

  	
   

  	
  Recitals

  
	
  Preferred Stock

  	
   

  	
   

  	
  Recitals

  
	
  Previously Disclosed

  	
   

  	
   

  	
  2.1(b)

  
	
  Proprietary Rights

  	
   

  	
   

  	
  2.2(u)

  
	
  Purchase Recitals Purchase Price

  	
   

  	
   

  	
  1.1

  
	
  Purchased Securities 

  	
   

  	
   

  	
  Recitals 

  
	
  Qualified Equity Offering

  	
   

  	
   

  	
  4.4

  
	
  register; registered; registration

  	
   

  	
   

  	
  4.5(k)(iii)

  
	
  Registrable Securities

  	
   

  	
   

  	
  4.5(k)(iv)

  
	
  Registration Expenses

  	
   

  	
   

  	
  4.5(k)(v)

  
	
  Regulatory Agreement

  	
   

  	
   

  	
  2.2(s)

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

  	
   

  	
   

  	
  4.5(k)(vi)

  
	
  Schedules 

  	
   

  	
   

  	
  Recitals 

  
	
  SEC

  	
   

  	
   

  	
  2.1(b)

  
	
  Securities Act

  	
   

  	
   

  	
  2.2(a)

  
	
  Selling Expenses

  	
   

  	
   

  	
  4.5(k)(vii)

  
	
  Senior Executive Officers

  	
   

  	
   

  	
  4.10

  
	
  Share Dilution Amount

  	
   

  	
   

  	
  4.8(a)(ii)

  
	
  Shelf Registration Statement

  	
   

  	
   

  	
  4.5(a)(ii)

  
	
  Signing Date

  	
   

  	
   

  	
  2.1(a)

  
	
  Special Registration

  	
   

  	
   

  	
  4.5(i)

  
	
  Stockholder Proposals

  	
   

  	
   

  	
  3.1(b)

  
	
  Subsidiary

  	
   

  	
   

  	
  5.8(a)

  
	
  Tax; Taxes

  	
   

  	
   

  	
  2.2(o)

  
	
  Transfer

  	
   

  	
   

  	
  4.4

  
	
  Warrant

  	
   

  	
   

  	
  Recitals

  
	
  Warrant Shares

  	
   

  	
   

  	
  2.2(d)

  



 


v
















 


SECURITIES
PURCHASE AGREEMENT – STANDARD TERMS


 


Recitals:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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 


 


4

















 


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


 


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


 


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


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


10

















 


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 Company Subsidiary owns
or otherwise has the right to use, all intellectual property rights,


 


12

















 


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


 


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


 


Article III


Covenants


 


3.1           Commercially
Reasonable Efforts.


 


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


 


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


 


13

















 


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 preemptive or similar rights, a sufficient number of
authorized and unissued Warrant Shares to effectuate such


 


14

















 


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


 


15

















 


(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 AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS


 


17

















 


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


 


18

















 


4.5                               Registration Rights.


 


(a)                                Registration.


 


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


 


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


 


(iii)                               The Company shall not be
required to effect a registration (including a resale of Registrable Securities
from an effective Shelf Registration Statement) or an


 


19

















 


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.


 


(ii)                                  Prepare and file with
the SEC such amendments and supplements to the applicable registration
statement and the prospectus or prospectus supplement used


 


21

















 


in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.


 


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


 


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


 


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


 


(vi)                              Give written notice to
the Holders:


 


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


 


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


 


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


 


(D)                               of the receipt by the
Company or its legal counsel of any notification with respect to the suspension
of the qualification of the


 


22

















 


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 Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company
available to


 


23

















 


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


 


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


 


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


 


(xiii)                          If requested by Holders of a
majority of the Registrable Securities being registered and/or sold in
connection therewith, or the managing underwriter(s), if


 


24

















 


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 


 


26

















 


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


 


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


 


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


 


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


 


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.


 


32

















 


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


 


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


 


(ii)                                  “Fair Market Value” means, with respect to any security, the
fair market value of such security as determined by the Board of Directors,
acting in good faith in reliance on an opinion of a nationally recognized
independent investment banking firm retained by the Company for this purpose
and certified in a resolution to the Investor. 
If the Investor does not agree with the Board of Director’s determination,
it may object in writing within 10 days of receipt of the Board of Director’s
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.


 


33

















 


Article V


Miscellaneous


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


34

















 


writing
signed by a duly authorized officer of the waiving party that makes express
reference to the provision or provisions subject to such waiver.


 


5.5                                 Governing
Law: Submission to Jurisdiction, Etc. 
This Agreement will be governed by and construed in accordance with the
federal law of the United States if and to the extent such law is applicable,
and otherwise in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely within such State. Each of the
parties hereto agrees (a) to submit to the exclusive jurisdiction and
venue of the United States District Court for the District of Columbia and the
United States Court of Federal Claims for any and all civil actions, suits or
proceedings arising out of or relating to this Agreement or the Warrant or the
transactions contemplated hereby or thereby, and (b) that notice may be
served upon (i) the Company at the address and in the manner set forth for
notices to the Company in Section 5.6 and (ii) the Investor in
accordance with federal law.  To the
extent permitted by applicable law, each of the parties hereto hereby
unconditionally waives trial by jury in any civil legal action or proceeding
relating to this Agreement or the Warrant or the transactions contemplated
hereby or thereby.


 


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


 


If
to the Investor:


 


United
States Department of the Treasury


1500 Pennsylvania Avenue, NW, Room 2312


Washington, D.C. 20220


Attention: Assistant General Counsel (Banking and
Finance)


Facsimile: (202) 622-1974


 


5.7                                 Definitions.


 


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


 


35
















 


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


 


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


 


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


 


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


 


[Opinion provided to Treasury]


 

















 


ANNEX D


 


FORM OF WARRANT


 


[SEE ATTACHED]


 

















 


SCHEDULE A


 


ADDITIONAL
TERMS AND CONDITIONS


 


	
  Company Information:

  
	
   

  	
   

  	
   

  
	
  Name of the Company: Tidelands
  Bancshares, Inc.

  
	
   

  
	
  Corporate or other organizational form:
  Corporation

  
	
   

  
	
  Jurisdiction of Organization: South Carolina

  
	
   

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

  
	
   

  	
   

  	
   

  
	
  Notice
  Information:

  	
  Tidelands
  Bancshares, Inc.

  
	
   

  	
  875
  Lowcountry Blvd.

  
	
   

  	
  Mount
  Pleasant, South Carolina 29464

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
  Nelson
  Mullins Riley & Scarborough LLP

  
	
   

  	
  J.
  Brennan Ryan

  
	
   

  	
  Atlantic
  Station

  
	
   

  	
  201
  17th Street NW, Suite 1700

  
	
   

  	
  Atlanta, Georgia 30363

  
	
   

  	
   

  	
   

  
	
  Terms of the Purchase:

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

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

  
	
   

  
	
  Number of Shares of Preferred Stock Purchased:
  14,448

  
	
   

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

  
	
   

  
	
  Number of Initial Warrant Shares: 571,821

  
	
   

  
	
  Exercise Price of the Warrant: $3.79

  
	
   

  
	
  Purchase Price: $14,448,000

  
	
   

  	
   

  
	
  Closing:

  
	
   

  	
   

  	
   

  
	
  Location of Closing:

  	
  Hughes Hubbard & Reed LLP

  
	
   

  	
  One Battery Park Plaza

  
	
   

  	
  New York, New York 10004-1482

  
	
   

  	
  Facsimile: (212) 422-4726

  
	
   

  	
   

  	
   

  
	
  Time of Closing: 9:00 a.m. (Eastern time)

  
	
   

  	
   

  	
   

  
	
  Date of Closing: December 19, 2008

  
				



 

















 


Wire Information for Closing:


 

















 


SCHEDULE B


 


CAPITALIZATION


 


Capitalization
Date:  November 30, 2008


 


Common Stock


 


Par value: 
$0.01


 


Total Authorized: 10,000,000


 


Outstanding: 
4,277,176


 


Subject to warrants,
options, convertible securities, etc.: 
743,665


 


Reserved for benefit plans and other issuances:  111,770


 


Remaining authorized but unissued:  4,867,389


 


Shares issued after Capitalization Date


(other than pursuant to
warrants, options,


convertible securities, etc. as set forth above):  0


 


Preferred Stock


 


Par value: 
$0.01


 


Total Authorized: 
10,000,000


 


Outstanding (by series): 0


 


Reserved for issuance:  14,448


 


Remaining authorized but unissued:  9,985,552