Exhibit 10.1


 


UNITED STATES DEPARTMENT OF THE TREASURY


1500 PENNSYLVANIA AVENUE, NW


WASHINGTON, D.C. 20220


 


Dear Ladies and Gentlemen:


 


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


 


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superseded by the terms set forth herein or in the Schedules hereto, the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


 


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


 


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


 


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


 


* * *


 

















 


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


 


 


	
   

  	
  UNITED
  STATES DEPARTMENT OF THE

  TREASURY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neel
  Kashkari

  
	
   

  	
   

  	
  Name: Neel Kashkari

  
	
   

  	
   

  	
  Title:

  	
  Interim
  Assistant Secretary For

  Financial Stability

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SANTA LUCIA
  BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry H.
  Putnam

  
	
   

  	
   

  	
  Name: Larry
  H. Putnam

  
	
   

  	
   

  	
  Title:
  President and 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

  	
  15

  
	
  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

  	
  31

  
	
  4.8

  	
  Restriction
  on Dividends and Repurchases

  	
  31

  
	
  4.9

  	
  Repurchase
  of Investor Securities

  	
  32

  
	
  4.10

  	
  Executive
  Compensation

  	
  33

  



 

















 


	
  Article V

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  5.1

  	
  Termination

  	
  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

  



 

















 


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


 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  Affiliate

  	
   

  	
  5.7(b)

  
	
  Agreement

  	
   

  	
  Recitals

  
	
  Appraisal
  Procedure

  	
   

  	
   

  
	
  Appropriate
  Federal Banking Agency

  	
   

  	
  2.2(s)

  
	
  Bankruptcy
  Exceptions

  	
   

  	
  2.2(d)

  
	
  Benefit
  Plans

  	
   

  	
   

  
	
  Board of
  Directors

  	
   

  	
  2.2(f)

  
	
  Business
  Combination

  	
   

  	
  4.4

  
	
  business day

  	
   

  	
  1.3

  
	
  Capitalization
  Date

  	
   

  	
  2.2(b)

  
	
  Certificate
  of Designations

  	
   

  	
   

  
	
  Charter

  	
   

  	
   

  
	
  Closing

  	
   

  	
   

  
	
  Closing Date

  	
   

  	
   

  
	
  Code

  	
   

  	
  2.2(n)

  
	
  Common Stock

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company
  Financial Statements

  	
   

  	
  2.2(h)

  
	
  Company
  Material Adverse Effect

  	
   

  	
   

  
	
  Company
  Reports

  	
   

  	
   

  
	
  Company
  Subsidiary; Company Subsidiaries

  	
   

  	
   

  
	
  control;
  controlled by; under common control with

  	
   

  	
  5.7(b)

  
	
  Controlled
  Group

  	
   

  	
  2.2(n)

  
	
  CPP

  	
   

  	
  Recitals

  
	
  EESA

  	
   

  	
   

  
	
  ERISA

  	
   

  	
  2.2(n)

  
	
  Exchange Act

  	
   

  	
   

  
	
  Fair Market
  Value

  	
   

  	
   

  
	
  GAAP

  	
   

  	
   

  
	
  Governmental
  Entities

  	
   

  	
   

  
	
  Holder

  	
   

  	
   

  
	
  Holders’
  Counsel

  	
   

  	
   

  
	
  Indemnitee

  	
   

  	
   

  
	
  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

  	
   

  	
   

  
	
  Letter
  Agreement

  	
   

  	
  Recitals

  
	
  officers

  	
   

  	
  5.7(c)

  



 


iv

















 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  Parity Stock

  	
   

  	
   

  
	
  Pending
  Underwritten Offering

  	
   

  	
  4.5(l)

  
	
  Permitted
  Repurchases

  	
   

  	
   

  
	
  Piggyback
  Registration

  	
   

  	
  4.5(a)(iv)

  
	
  Plan

  	
   

  	
  2.2(n)

  
	
  Preferred
  Shares

  	
   

  	
  Recitals

  
	
  Preferred
  Stock

  	
   

  	
  Recitals

  
	
  Previously
  Disclosed

  	
   

  	
   

  
	
  Proprietary
  Rights

  	
   

  	
  2.2(u)

  
	
  Purchase

  	
   

  	
  Recitals

  
	
  Purchase
  Price

  	
   

  	
  1.1

  
	
  Purchased
  Securities

  	
   

  	
  Recitals

  
	
  Qualified
  Equity Offering

  	
   

  	
  4.4

  
	
  register;
  registered; registration

  	
   

  	
   

  
	
  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

  	
   

  	
   

  
	
  Securities
  Act

  	
   

  	
  2.2(a)

  
	
  Selling
  Expenses

  	
   

  	
  4.5(k)(vii)

  
	
  Senior
  Executive Officers

  	
   

  	
  4.10

  
	
  Share
  Dilution Amount

  	
   

  	
   

  
	
  Shelf
  Registration Statement

  	
   

  	
   

  
	
  Signing Date

  	
   

  	
   

  
	
  Special
  Registration

  	
   

  	
   

  
	
  Stockholder
  Proposals

  	
   

  	
   

  
	
  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 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 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


 


2

















 


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 11 1(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


 


5

















 


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


 


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


 


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


 


(e)                                 Authorization,
Enforceability.


 


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


 


(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


 


6

















 


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


 


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


 


(f)                                    Anti-takeover
Provisions and Rights Plan. The Board of Directors of the Company (the “ Board of Director s”) 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


 


7

















 


Report on Form 10-K
with the SEC prior to the Signing Date, no fact, circumstance, event, change,
occurrence, condition or development has occurred that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect.


 


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


 


(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


 


8

















 


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


 


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


 


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


 


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


 


(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


 


9

















 


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


 


(n)                                 Employee
Benefit Matters. Except as would not reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect: (A) each
“employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) providing benefits to any
current or former employee, officer or director of the Company or any member of
its “Controlled Group” (defined
as any organization which is a member of a controlled group of corporations
within the meaning of Section 414 of the Internal Revenue Code of 1986, as
amended (the “Code”)) that is
sponsored, maintained or contributed to by the Company or any member of its
Controlled Group and for which the Company or any member of its Controlled
Group would have any liability, whether actual or contingent (each, a “Plan”) has been maintained in compliance
with its terms and with the requirements of all applicable statutes, rules and
regulations, including ERISA and the Code; (B) with respect to each Plan
subject to Title IV of ERISA (including, for purposes of this clause (B), any
plan subject to Title IV of ERISA that the Company or any member of its
Controlled Group previously maintained or contributed to in the six years prior
to the Signing Date), (1) no “reportable event” (within the meaning of Section 4043
(c) of ERISA), other than a reportable event for which the notice period
referred to in Section 4043(c) of ERISA has been waived, has occurred
in the three years prior to the Signing Date or is reasonably expected to
occur, (2) no “accumulated funding deficiency” (within the meaning of Section 302
of ERISA or Section 412 of the Code), whether or not waived, has occurred
in the three years prior to the Signing Date or is reasonably expected to
occur, (3) the fair market value of the assets under each Plan exceeds the
present value of all benefits accrued under such Plan (determined based on the
assumptions used to fund such Plan) and (4) neither the Company nor any
member of its Controlled Group has incurred in the six years prior to the
Signing Date, or reasonably expects to incur, any liability under Title IV of
ERISA (other than contributions to the Plan or premiums to the PBGC in the
ordinary course and without default) in respect of a Plan (including any Plan
that is a “multiemployer plan”, within the meaning of Section 4001(c)(3) of
ERISA); and (C) each Plan that is intended to be qualified under Section 401
(a) of the Code has received a favorable


 


10

















 


determination
letter from the Internal Revenue Service with respect to its qualified status
that has not been revoked, or such a determination letter has been timely
applied for but not received by the Signing Date, and nothing has occurred,
whether by action or by failure to act, which could reasonably be expected to cause
the loss, revocation or denial of such qualified status or favorable
determination letter.


 


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


 


(p)                                 Properties
and Leases. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, the Company
and the Company Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, 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.


 


11
















 


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


 


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


 


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


 


12

















 


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


 


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


 


Article III

Covenants


 


3.1                                 Commercially
Reasonable Efforts.


 


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


 


(b)                                 If
the Company is required to obtain any stockholder approvals set forth on Schedule
C, then the Company shall comply with this Section 3. 1(b) and Section 3.1(c).
The Company shall call a special meeting of its stockholders, as promptly as
practicable following the Closing, to vote on proposals (collectively, the “Stockholder Proposals”) to (i) approve
the exercise of the Warrant for Common Stock for purposes of the rules of
the national security exchange on which the Common Stock is listed and/or (ii) amend
the Company’s Charter to increase the number of authorized shares of Common
Stock to at least such number as shall be sufficient to permit the full
exercise of the Warrant for Common Stock and comply with the


 


13

















 


other
provisions of this Section 3.1(b) and Section 3.1(c). The Board
of Directors shall recommend to the Company’s stockholders that such
stockholders vote in favor of the Stockholder Proposals. In connection with
such meeting, the Company shall prepare (and the Investor will reasonably
cooperate with the Company to prepare) and file with the SEC as promptly as
practicable (but in no event more than ten business days after the Closing) a
preliminary proxy statement, shall use its reasonable best efforts to respond
to any comments of the SEC or its staff thereon and to cause a definitive proxy
statement related to such stockholders’ meeting to be mailed to the Company’s
stockholders not more than five business days after clearance thereof by the
SEC, and shall use its reasonable best efforts to solicit proxies for such
stockholder approval of the Stockholder Proposals. The Company shall notify the
Investor promptly of the receipt of any comments from the SEC or its staff with
respect to the proxy statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information
and will supply the Investor with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to such proxy statement. If at any time
prior to such stockholders’ meeting there shall occur any event that is
required to be set forth in an amendment or supplement to the proxy statement,
the Company shall as promptly as practicable prepare and mail to its
stockholders such an amendment or supplement. Each of the Investor and the
Company agrees promptly to correct any information provided by it or on its
behalf for 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.


 


14

















 


3.3                                 Sufficiency
of Authorized Common Stock; Exchange Listing.


 


(a)                                  During
the period from the Closing Date (or, if the approval of the Stockholder Proposals
is required, the date of such approval) until the date on which the Warrant has
been fully exercised, the Company shall at all times have reserved for
issuance, free of preemptive or similar rights, a sufficient number of
authorized and unissued Warrant Shares to effectuate such exercise. Nothing in
this Section 3.3 shall preclude the Company from satisfying its
obligations in respect of the exercise of the Warrant by delivery of shares of
Common Stock which are held in the treasury of the Company. As soon as
reasonably practicable following the Closing, the Company shall, at its
expense, cause the Warrant Shares to be listed on the same national securities
exchange on which the Common Stock is listed, subject to official notice of
issuance, and shall maintain such listing for so long as any Common Stock is
listed on such exchange.


 


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


 


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


 


3.5                                 Access,
Information and Confidentiality.


 


(a)                                  From
the Signing Date until the date when the Investor holds an amount of Preferred
Shares having an aggregate liquidation value of less than 10% of the Purchase
Price, the Company will permit the Investor and its agents, consultants,
contractors and advisors (x) acting through the Appropriate Federal
Banking Agency, to examine the corporate books and make copies thereof and to
discuss the affairs, finances and accounts of the Company and the Company
Subsidiaries with the principal officers of the Company, all upon reasonable
notice and 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


 


15

















 


expected to
cause a violation of any agreement to which the Company or any Company
Subsidiary is a party or would cause a risk of a loss of privilege to the
Company or any Company Subsidiary (provided
that the Company shall use commercially reasonable efforts to make
appropriate substitute disclosure arrangements under circumstances where the
restrictions in this clause (ii) apply).


 


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


 


Article IV


 


Additional Agreements


 


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


 


4.2                                 Legends.


 


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


 


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


 


16

















 


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


 


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


 


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


 


“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


 


17

















 


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


 


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


 


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


 


4.4                                 Transfer
of Purchased Securities and Warrant Shares; Restrictions on Exercise of the
Warrant. Subject to compliance with applicable securities laws, the Investor
shall be permitted to transfer, sell, assign or otherwise dispose of (“ Transfer”) all or a portion of the Purchased
Securities or Warrant Shares at any time, and the Company shall take all steps
as may be reasonably requested by the Investor to facilitate the Transfer of
the Purchased Securities and the Warrant Shares; provided that the Investor shall not Transfer a portion or
portions of the Warrant with respect to, and/or exercise the Warrant for, more
than one-half of the Initial Warrant Shares (as such number may be adjusted
from time to time pursuant to Section 13 thereof) in the aggregate until
the earlier of (a) the date on which the Company (or any successor by
Business Combination) has received aggregate gross proceeds of not less than
the Purchase Price (and the purchase price paid by the Investor to any such
successor for securities of such successor purchased under the CPP) from one or
more Qualified Equity Offerings (including Qualified Equity Offerings of such
successor) and (b) December 31, 2009. “Qualified Equity Offering” means the sale and issuance for
cash by the Company to persons other than the Company or any of the Company
Subsidiaries after the Closing Date of shares of perpetual Preferred Stock,
Common Stock or any combination of such stock, that, in each case, qualify as and
may be included in Tier 1 capital of the Company at the time of issuance under
the applicable risk-based capital guidelines of the Company’s Appropriate
Federal Banking Agency (other than any such sales and issuances made pursuant
to agreements or arrangements entered into, or pursuant to financing plans
which were publicly announced, on or prior to October 13, 2008).


 


18

















 


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


 


4.5                                 Registration
Rights. (a)


 


Registration.


 


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


 


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


 


19
















 


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


 


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


 


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


 


20

















 


to the Company, the managing underwriters and
the Investor (if the Investor is participating in the underwriting).


 


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


 


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


 


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


 


(i)                                    Prepare and file
with the SEC a prospectus supplement with respect to a proposed offering of
Registrable Securities pursuant to an effective registration statement, subject
to Section 4.5(d), keep such registration statement effective and keep


 


21

















 


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 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;


 


22

















 


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


 


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


 


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


 


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


 


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


 


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


 


23

















 


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


 


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


 


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


 


24

















 


Registrable Securities to be listed on such
securities exchange as the Investor may designate.


 


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


 


(xiv)                        Timely
provide to its security holders earning statements satisfying the provisions of
Section 1 1(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


 


25

















 


disposition of such securities as shall be
required to effect the registered offering of their Registrable Securities.


 


(g)                                 Indemnification.


 


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


 


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


 


26

















 


equitable considerations. The relative fault
of the Company, on the one hand, and of the Indemnitee, on the other hand,
shall be determined by reference to, among other factors, whether the untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Indemnitee and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; the Company and each Holder agree that it
would not be just and equitable if contribution pursuant to this Section 4.5(g)(ii) were
determined by pro rata allocation
or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 4.5(g)(i). No Indemnitee
guilty of fraudulent misrepresentation (within the meaning of Section 1 1(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,


 


27

















 


customers,
lenders or vendors of the Company or Company Subsidiaries or in connection with
dividend reinvestment plans.


 


(j)                                     Rule 144;
Rule 144A. With a view to making available to the Investor and Holders
the benefits of certain rules and regulations of the SEC which may permit
the sale of the Registrable Securities to the public without registration, the
Company agrees to use its reasonable best efforts to:


 


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


 


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


 


(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


 


28

















 


prospectus supplement in respect of an
appropriate effective registration statement on Form S-3.


 


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


 


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


 


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


 


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


 


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


 


29

















 


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.


 


(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.


 


30
















 


4.7                                 Depositary
Shares. Upon request by the Investor at any time following the Closing
Date, the Company shall promptly enter into a depositary arrangement, pursuant
to customary agreements reasonably satisfactory to the Investor and with a
depositary reasonably acceptable to the Investor, pursuant to which the
Preferred Shares may be deposited and depositary shares, each representing a
fraction of a Preferred Share as specified by the Investor, may be issued. From
and after the execution of any such depositary arrangement, and the deposit of
any Preferred Shares pursuant thereto, the depositary shares issued pursuant
thereto shall be deemed “Preferred Shares” and, as applicable, “Registrable
Securities” for purposes of this Agreement.


 


4.8                                 Restriction on Dividends
and Repurchases.


 


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


 


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


 


(ii)                                  redeem, purchase or
acquire any shares of Common Stock or other capital stock or other equity
securities of any kind of the Company, or any trust preferred securities issued
by the Company or any Affiliate of the Company, other than (A) redemptions,
purchases or other acquisitions of the Preferred Shares, (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


 


31

















 


other Junior Stock or of Parity Stock or
trust preferred securities for or into other Parity Stock (with the same or
lesser aggregate liquidation amount) or Junior Stock, in each case set forth in
this clause (G), solely to the extent required pursuant to binding contractual
agreements entered into prior to the Signing Date or any subsequent agreement
for the accelerated exercise, settlement or exchange thereof for Common Stock
(clauses (C) and (F), collectively, the “Permitted
Repurchases”). “Share Dilution Amount” means the increase in the
number of diluted shares outstanding (determined in accordance with GAAP, and
as measured from the date of the Company’s most recently filed Company
Financial Statements prior to the Closing Date) resulting from the grant,
vesting or exercise of equity-based compensation to employees and equitably
adjusted for any stock split, stock dividend, reverse stock split,
reclassification or similar transaction.


 


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


 


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


 


4.9                                 Repurchase
of Investor Securities.


 


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


 


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


 


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 11 1(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 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 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


 


CERTIFICATE OF DETERMINATION


 


OF


 


FIXED RATE CUMULATIVE PERPETUAL PREFERRED
STOCK, SERIES A


 


OF


 


SANTA LUCIA BANCORP


 


Pursuant to Section 401
of the Corporations Code of the State of California:


 


We, Larry H.
Putnam, President and Chief Executive Officer, and John C. Hansen, Executive
Vice President and Chief Financial Officer, of Santa Lucia Bancorp, a
corporation organized under the laws of the State of California (hereinafter
called the “Corporation”), do hereby certify as follows:


 


1.                                       On
December 17, 2008, the Board of Directors of the Corporation adopted a
resolution designating 4,000  shares
of Preferred Stock as Fixed Rate Cumulative Perpetual Preferred Stock, Series A.


 


2.                                       No
shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A  have been issued.


 


3.                                       Pursuant
to the authority conferred upon the Board of Directors by the Articles of
Incorporation of the Corporation, the following resolution was duly adopted by
the Board of Directors on December 17, 2008 creating the series of
Preferred Stock designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series A:


 


RESOLVED, that
pursuant to the provisions of the Articles of Incorporation of the Corporation
and applicable law, a series of Preferred Stock of the Corporation be and
hereby is created, and that the designation and number of shares of such
series, and the voting and other powers, preferences and relative,
participating, optional or other rights, and the qualifications, limitations
and restrictions thereof, of the shares of such series are as follows:


 


Part 1.               Designation and
Number of Shares. There is hereby created out of the authorized and
unissued shares of preferred stock of the Corporation a series of preferred
stock designated as the “Fixed Rate Cumulative Perpetual Preferred Stock, Series A”
(the “Designated Preferred Stock”). The authorized number of shares of
Designated Preferred Stock shall be 4,000.


 


Part 2.               Standard
Provisions. The Standard Provisions contained in Exhibit A
attached hereto are incorporated herein by reference in their entirety and
shall be deemed to be a part of this Certificate of Determination to the same
extent as if such provisions had been set forth in full herein.


 

















 


Part 3.               Definitions.
The following terms are used in this Certificate of Determination (including
the Standard Provisions in Exhibit A hereto) as defined below:


 


(a)                                  “Common
Stock” means the common stock of the Corporation.


 


(b)                                 “Dividend
Payment Date” means February 15, May 15, August 15 and November 15
of each year.


 


(c)                                  “Junior
Stock” means the Common Stock, the Company’s Series A Junior
Participating Preferred Shares and any other class or series of stock of the
Corporation the terms of which expressly provide that it ranks junior to
Designated Preferred Stock as to dividend rights and/or as to rights on
liquidation, dissolution or winding up of the Corporation.


 


(d)                                 “Liquidation
Amount” means $1,000 per share of Designated Preferred Stock.


 


(e)                                  “Minimum
Amount” means $1,000,000.


 


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


 


(g)                                 “Signing
Date” means Original Issue Date.


 


4.                                       Certain
Voting Matters. Holders of shares of Designated Preferred Stock will be
entitled to one vote for each such share on any matter on which holders of
Designated Preferred Stock are entitled to vote, including any action by
written consent.


 


[Remainder of Page Intentionally
Left Blank]


 


2

















 


We further
declare under penalty of perjury under the laws of the State of California that
the matters set forth in this certificate are true and correct to their own
knowledge.


 


	
  Date:
  December 17, 2008

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Larry H.
  Putnam

  
	
   

  	
  Title:

  	
  President
  and Chief Executive 

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  John C.
  Hansen

  
	
   

  	
  Title:

  	
  Executive
  Vice President and Chief 

  Financial Officer

  



 


3
















 


EXHIBIT
A


 


STANDARD PROVISIONS


 


Section 1. General Matters. Each share of Designated
Preferred Stock shall be identical in all respects to every other share of
Designated Preferred Stock. The Designated Preferred Stock shall be perpetual,
subject to the provisions of Section 5 of these Standard Provisions that
form a part of the Certificate of Determination. The Designated Preferred Stock
shall rank equally with Parity Stock and shall rank senior to Junior Stock with
respect to the payment of dividends and the distribution of assets in the event
of any dissolution, liquidation or winding up of the Corporation.


 


Section 2. Standard Definitions. As used herein with
respect to Designated Preferred Stock:


 


(a)                                  “Applicable
Dividend Rate” means (i) during the period from the Original Issue
Date to, but excluding, the first day of the first Dividend Period commencing
on or after the fifth anniversary of the Original Issue Date, 5% per annum and (ii) from
and after the first day of the first Dividend Period commencing on or after the
fifth anniversary of the Original Issue Date, 9% per annum.


 


(b)                                 “Appropriate
Federal Banking Agency” means the “appropriate Federal banking agency” with
respect to the Corporation as defined in Section 3(q) of the Federal
Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor
provision.


 


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


 


(d)                                 “Business
Day” means 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.


 


(e)                                  “Bylaws”
means the bylaws of the Corporation, as they may be amended from time to time.


 


(f)                                    “Certificate
of Determination” means the Certificate of Determination or comparable
instrument relating to the Designated Preferred Stock, of which these Standard
Provisions form a part, as it may be amended from time to time.


 


(g)                                 “Charter”
means the Corporation’s certificate or articles of incorporation, articles of
association, or similar organizational document.


 


(h)                                 “Dividend
Period” has the meaning set forth in Section 3(a).


 


(i)                                     “Dividend
Record Date” has the meaning set forth in Section 3(a).


 


(j)                                     “Liquidation
Preference” has the meaning set forth in Section 4(a).


 


(k)                                  “Original
Issue Date” means the date on which shares of Designated Preferred Stock
are first issued.


 


4

















 


(l)                                     “Preferred
Director” has the meaning set forth in Section 7(b).


 


(m)                               “Preferred
Stock” means any and all series of preferred stock of the Corporation,
including the Designated Preferred Stock.


 


(n)                                 “Qualified
Equity Offering” means the sale and issuance for cash by the Corporation to
persons other than the Corporation or any of its subsidiaries after the
Original Issue 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 Corporation at the time of issuance under the
applicable risk-based capital guidelines of the Corporation’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).


 


(o)                                 “Share
Dilution Amount” has the meaning set forth in Section 3(b).


 


(p)                                 “Standard
Provisions” mean these Standard Provisions that form a part of the
Certificate of Determination relating to the Designated Preferred Stock.


 


(q)                                 “Successor
Preferred Stock” has the meaning set forth in Section 5(a).


 


(r)                                    “Voting
Parity Stock” means, with regard to any matter as to which the holders of
Designated Preferred Stock are entitled to vote as specified in Sections 7(a) and
7(b) of these Standard Provisions that form a part of the Certificate of
Determination, any and all series of Parity Stock upon which like voting rights
have been conferred and are exercisable with respect to such matter.


 


Section 3. Dividends.


 


(a)                                  Rate.
Holders of Designated Preferred Stock shall be entitled to receive, on each
share of Designated Preferred Stock if, as and when declared by the Board of
Directors or any duly authorized committee of the Board of Directors, but only
out of assets legally available therefor, cumulative cash dividends with
respect to each Dividend Period (as defined below) at a rate per annum equal to
the Applicable Dividend Rate on (i) the Liquidation Amount per share of
Designated Preferred Stock and (ii) the amount of accrued and unpaid
dividends for any prior Dividend Period on such share of Designated Preferred
Stock, if any. Such dividends shall begin to accrue and be cumulative from the
Original Issue Date, shall compound on each subsequent Dividend Payment Date (i.e., no dividends shall accrue on other
dividends unless and until the first Dividend Payment Date for such other
dividends has passed without such other dividends having been paid on such
date) and shall be payable quarterly in arrears on each Dividend Payment Date,
commencing with the first such Dividend Payment Date to occur at least 20
calendar days after the Original Issue Date. In the event that any Dividend
Payment Date would otherwise fall on a day that is not a Business Day, the
dividend payment due on that date will be postponed to the next day that is a
Business Day and no additional dividends will accrue as a result of that
postponement. The period from and including any Dividend Payment Date to, but
excluding, the next Dividend Payment Date is a “Dividend Period”, provided that
the initial Dividend Period shall be the period from and including the Original
Issue Date to, but excluding, the next Dividend Payment Date.


 


Dividends that are payable on Designated Preferred Stock in respect of
any Dividend Period shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. The


 


5

















 


amount of dividends payable on
Designated Preferred Stock on any date prior to the end of a Dividend Period,
and for the initial Dividend Period, shall be computed on the basis of a
360-day year consisting of twelve 30-day months, and actual days elapsed over a
30-day month.


 


Dividends that are payable on Designated Preferred Stock on any
Dividend Payment Date will be payable to holders of record of Designated
Preferred Stock as they appear on the stock register of the Corporation on the
applicable record date, which shall be the 15th calendar day immediately
preceding such Dividend Payment Date or such other record date fixed by the
Board of Directors or any duly authorized committee of the Board of Directors
that is not more than 60 nor less than 10 days prior to such Dividend Payment
Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record
Date shall be a Dividend Record Date whether or not such day is a Business Day.


 


Holders of Designated Preferred Stock shall not be entitled to any
dividends, whether payable in cash, securities or other property, other than
dividends (if any) declared and payable on Designated Preferred Stock as
specified in this Section 3 (subject to the other provisions of the
Certificate of Determination).


 


(b)                                 Priority
of Dividends. So long as any share of Designated Preferred Stock remains
outstanding, no dividend or distribution shall be declared or paid on the
Common Stock or any other shares of Junior Stock (other than dividends payable
solely in shares of Common Stock) or Parity Stock, subject to the immediately
following paragraph in the case of Parity Stock, and no Common Stock, Junior
Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or
otherwise acquired for consideration by the Corporation or any of its subsidiaries
unless all accrued and unpaid dividends for all past Dividend Periods,
including the latest completed Dividend Period (including, if applicable as
provided in Section 3(a) above, dividends on such amount), on all
outstanding shares of Designated Preferred Stock have been or are
contemporaneously declared and paid in full (or have been declared and a sum
sufficient for the payment thereof has been set aside for the benefit of the
holders of shares of Designated Preferred Stock on the applicable record date).
The foregoing limitation shall not apply to (i) redemptions, purchases or
other acquisitions of shares of Common Stock or other Junior Stock 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; (ii) purchases or other acquisitions by a
broker-dealer subsidiary of the Corporation 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; (iii) purchases
by a broker-dealer subsidiary of the Corporation of capital stock of the
Corporation for resale pursuant to an offering by the Corporation of such
capital stock underwritten by such broker-dealer subsidiary; (iv) any
dividends or distributions of rights or Junior Stock in connection with a
stockholders’ rights plan or any redemption or repurchase of rights pursuant to
any stockholders’ rights plan; (v) the acquisition by the Corporation or
any of its subsidiaries of record ownership in Junior Stock or Parity Stock for
the beneficial ownership of any other persons (other than the Corporation or
any of its subsidiaries), including as trustees or custodians; and (vi) the
exchange or conversion of Junior Stock for or into other Junior Stock or of
Parity Stock for or into other Parity Stock (with the same or lesser aggregate
liquidation amount) or Junior Stock, in each case, solely to the extent
required pursuant to binding contractual agreements entered into prior to the
Signing Date or any subsequent agreement for the accelerated exercise,
settlement or exchange thereof for Common Stock. “Share Dilution Amount” means
the increase in the number of diluted shares outstanding (determined in 


 


6

















 


accordance with generally
accepted accounting principles in the United States, and as measured from the
date of the Corporation’s consolidated financial statements most recently filed
with the Securities and Exchange Commission prior to the Original Issue 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.


 


When dividends are not paid (or declared and a sum sufficient for
payment thereof set aside for the benefit of the holders thereof on the
applicable record date) on any Dividend Payment Date (or, in the case of Parity
Stock having dividend payment dates different from the Dividend Payment Dates,
on a dividend payment date falling within a Dividend Period related to such
Dividend Payment Date) in full upon Designated Preferred Stock and any shares
of Parity Stock, all dividends declared on Designated Preferred Stock and all
such Parity Stock and payable on such Dividend Payment Date (or, in the case of
Parity Stock having dividend payment dates different from the Dividend Payment
Dates, on a dividend payment date falling within the Dividend Period related to
such Dividend Payment Date) shall be declared pro
rata so that the respective amounts of such dividends declared shall
bear the same ratio to each other as all accrued and unpaid dividends per share
on the shares of Designated Preferred Stock (including, if applicable as
provided in Section 3(a) above, dividends on such amount) and all
Parity Stock payable on such Dividend Payment Date (or, in the case of Parity
Stock having dividend payment dates different from the Dividend Payment Dates,
on a dividend payment date falling within the Dividend Period related to such
Dividend Payment Date) (subject to their having been declared by the Board of
Directors or a duly authorized committee of the Board of Directors out of
legally available funds and including, in the case of Parity Stock that bears cumulative
dividends, all accrued but unpaid dividends) bear to each other. If the Board
of Directors or a duly authorized committee of the Board of Directors
determines not to pay any dividend or a full dividend on a Dividend Payment
Date, the Corporation will provide written notice to the holders of Designated
Preferred Stock prior to such Dividend Payment Date.


 


Subject to the foregoing, and not otherwise, such dividends (payable in
cash, securities or other property) as may be determined by the Board of Directors
or any duly authorized committee of the Board of Directors may be declared and
paid on any securities, including Common Stock and other Junior Stock, from
time to time out of any funds legally available for such payment, and holders
of Designated Preferred Stock shall not be entitled to participate in any such
dividends.


 


Section 4. Liquidation Rights.


 


(a)                                  Voluntary
or Involuntary Liquidation. In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
holders of Designated Preferred Stock shall be entitled to receive for each
share of Designated Preferred Stock, out of the assets of the Corporation or
proceeds thereof (whether capital or surplus) available for distribution to stockholders
of the Corporation, subject to the rights of any creditors of the Corporation,
before any distribution of such assets or proceeds is made to or set aside for
the holders of Common Stock and any other stock of the Corporation ranking
junior to Designated Preferred Stock as to such distribution, payment in full
in an amount equal to the sum of (i) the Liquidation Amount per share and (ii) the
amount of any accrued and unpaid dividends (including, if applicable as
provided in Section 3(a) above, dividends on such amount), whether or
not declared, to the date of payment (such amounts collectively, the “Liquidation
Preference”).


 


7

















 


(b)                                 Partial
Payment. If in any distribution described in Section 4(a) above the
assets of the Corporation or proceeds thereof are not sufficient to pay in full
the amounts payable with respect to all outstanding shares of Designated
Preferred Stock and the corresponding amounts payable with respect of any other
stock of the Corporation ranking equally with Designated Preferred Stock as to
such distribution, holders of Designated Preferred Stock and the holders of
such other stock shall share ratably in any such distribution in proportion to
the full respective distributions to which they are entitled.


 


(c)                                  Residual
Distributions. If the Liquidation Preference has been paid in full to all
holders of Designated Preferred Stock and the corresponding amounts payable
with respect of any other stock of the Corporation ranking equally with
Designated Preferred Stock as to such distribution has been paid in full, the
holders of other stock of the Corporation shall be entitled to receive all
remaining assets of the Corporation (or proceeds thereof) according to their
respective rights and preferences.


 


(d)                                 Merger,
Consolidation and Sale of Assets Not Liquidation. For purposes of this Section 4,
the merger or consolidation of the Corporation with any other corporation or
other entity, including a merger or consolidation in which the holders of Designated
Preferred Stock receive cash, securities or other property for their shares, or
the sale, lease or exchange (for cash, securities or other property) of all or
substantially all of the assets of the Corporation, shall not constitute a
liquidation, dissolution or winding up of the Corporation.


 


Section 5. Redemption.


 


(a)                                  Optional
Redemption. Except as provided below, the Designated Preferred Stock may
not be redeemed prior to the first Dividend Payment Date falling on or after
the third anniversary of the Original Issue Date. On or after the first
Dividend Payment Date falling on or after the third anniversary of the Original
Issue Date, the Corporation, at its option, subject to the approval of the
Appropriate Federal Banking Agency, may redeem, in whole or in part, at any
time and from time to time, out of funds legally available therefor, the shares
of Designated Preferred Stock at the time outstanding, upon notice given as
provided in Section 5(c) below, at a redemption price equal to the
sum of (i) the Liquidation Amount per share and (ii) except as
otherwise provided below, any accrued and unpaid dividends (including, if
applicable as provided in Section 3(a) above, dividends on such
amount) (regardless of whether any dividends are actually declared) to, but
excluding, the date fixed for redemption.


 


Notwithstanding the foregoing, prior to the first Dividend Payment Date
falling on or after the third anniversary of the Original Issue Date, the
Corporation, at its option, subject to the approval of the Appropriate Federal
Banking Agency, may redeem, in whole or in part, at any time and from time to
time, the shares of Designated Preferred Stock at the time outstanding, upon
notice given as provided in Section 5(c) below, at a redemption price
equal to the sum of (i) the Liquidation Amount per share and (ii) except
as otherwise provided below, any accrued and unpaid dividends (including, if
applicable as provided in Section 3(a) above, dividends on such
amount) (regardless of whether any dividends are actually declared) to, but
excluding, the date fixed for redemption; provided
that (x) the Corporation (or any successor by Business
Combination) has received aggregate gross proceeds of not less than the Minimum
Amount (plus the “Minimum Amount” as defined in the relevant certificate of
determination for each other outstanding series of preferred stock of such
successor that was originally issued to the United States Department of the
Treasury (the “Successor Preferred Stock”) in connection with the Troubled
Asset Relief Program Capital Purchase Program) from one or more Qualified
Equity


 


8

















 


Offerings (including Qualified
Equity Offerings of such successor), and (y) the aggregate redemption
price of the Designated Preferred Stock (and any Successor Preferred Stock)
redeemed pursuant to this paragraph may not exceed the aggregate net cash
proceeds received by the Corporation (or any successor by Business Combination)
from such Qualified Equity Offerings (including Qualified Equity Offerings of
such successor).


 


The redemption price for any shares of Designated Preferred Stock shall
be payable on the redemption date to the holder of such shares against
surrender of the certificate(s) evidencing such shares to the Corporation
or its agent. Any declared but unpaid dividends payable on a redemption date
that occurs subsequent to the Dividend Record Date for a Dividend Period shall
not be paid to the holder entitled to receive the redemption price on the
redemption date, but rather shall be paid to the holder of record of the
redeemed shares on such Dividend Record Date relating to the Dividend Payment
Date as provided in Section 3 above.


 


(b)                                 No
Sinking Fund. The Designated Preferred Stock will not be subject to any
mandatory redemption, sinking fund or other similar provisions. Holders of
Designated Preferred Stock will have no right to require redemption or
repurchase of any shares of Designated Preferred Stock.


 


(c)                                  Notice
of Redemption. Notice of every redemption of shares of Designated Preferred
Stock shall be given by first class mail, postage prepaid, addressed to the
holders of record of the shares to be redeemed at their respective last
addresses appearing on the books of the Corporation. Such mailing shall be at
least 30 days and not more than 60 days before the date fixed for redemption.
Any notice mailed as provided in this Subsection shall be conclusively presumed
to have been duly given, whether or not the holder receives such notice, but
failure duly to give such notice by mail, or any defect in such notice or in
the mailing thereof, to any holder of shares of Designated Preferred Stock
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Designated Preferred Stock.  Notwithstanding the foregoing, if shares of
Designated Preferred Stock are issued in book-entry form through The Depository
Trust Corporation or any other similar facility, notice of redemption may be
given to the holders of Designated Preferred Stock at such time and in any
manner permitted by such facility. Each notice of redemption given to a holder
shall state: (1) the redemption date; (2) the number of shares of
Designated Preferred Stock to be redeemed and, if less than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (3) the redemption price; and (4) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price.


 


(d)                                 Partial
Redemption. In case of any redemption of part of the shares of Designated
Preferred Stock at the time outstanding, the shares to be redeemed shall be
selected either pro rata or in
such other manner as the Board of Directors or a duly authorized committee
thereof may determine to be fair and equitable. Subject to the provisions
hereof, the Board of Directors or a duly authorized committee thereof shall
have full power and authority to prescribe the terms and conditions upon which
shares of Designated Preferred Stock shall be redeemed from time to time. If
fewer than all the shares represented by any certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without charge
to the holder thereof.


 


(e)                                  Effectiveness
of Redemption. If notice of redemption has been duly given and if on or
before the redemption date specified in the notice all funds necessary for the
redemption have been deposited by the Corporation, in trust for the pro rata benefit of the holders of the
shares called for redemption, with a bank or trust company doing business in
the Borough of 


 


9

















 


Manhattan, The City of New
York, and having a capital and surplus of at least $500 million and selected by
the Board of Directors, so as to be and continue to be available solely
therefor, then, notwithstanding that any certificate for any share so called
for redemption has not been surrendered for cancellation, on and after the
redemption date dividends shall cease to accrue on all shares so called for
redemption, all shares so called for redemption shall no longer be deemed
outstanding and all rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the holders
thereof to receive the amount payable on such redemption from such bank or
trust company, without interest. Any funds unclaimed at the end of three years
from the redemption date shall, to the extent permitted by law, be released to
the Corporation, after which time the holders of the shares so called for
redemption shall look only to the Corporation for payment of the redemption
price of such shares.


 


(f)                                    Status
of Redeemed Shares. Shares of Designated Preferred Stock that are redeemed,
repurchased or otherwise acquired by the Corporation shall revert to authorized
but unissued shares of Preferred Stock (provided
that any such cancelled shares of Designated Preferred Stock may be
reissued only as shares of any series of Preferred Stock other than Designated
Preferred Stock).


 


Section 6. Conversion. Holders of Designated Preferred
Stock shares shall have no right to exchange or convert such shares into any
other securities.


 


Section 7. Voting Rights.


 


(a)                                  General.
The holders of Designated Preferred Stock shall not have any voting rights
except as set forth below or as otherwise from time to time required by law.


 


(b)                                 Preferred
Stock Directors. Whenever, at any time or times, dividends payable on the
shares of Designated Preferred Stock have not been paid for an aggregate of six
quarterly Dividend Periods or more, whether or not consecutive, the holders of
the Designated Preferred Stock shall have the right, with holders of shares of
any one or more other classes or series of Voting Parity Stock outstanding at
the time, voting together as a class, to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”)
at the Corporation’s next annual meeting of stockholders (or at a special
meeting called for that purpose prior to such next annual meeting) and at each
subsequent annual meeting of stockholders until all accrued and unpaid
dividends for all past Dividend Periods, including the latest completed
Dividend Period (including, if applicable as provided in Section 3(a) above,
dividends on such amount), on all outstanding shares of Designated Preferred
Stock have been declared and paid in full at which time such right shall
terminate with respect to the Designated Preferred Stock, except as herein or
by law expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned; provided that it shall be a qualification for election for
any Preferred Director that the election of such Preferred Director shall not
cause the Corporation to violate any corporate governance requirements of any
securities exchange or other trading facility on which securities of the
Corporation may then be listed or traded that listed or traded companies must
have a majority of independent directors. Upon any termination of the right of
the holders of shares of Designated Preferred Stock and Voting Parity Stock as
a class to vote for directors as provided above, the Preferred Directors shall
cease to be qualified as directors, the term of office of all Preferred
Directors then in office shall terminate immediately and the authorized number
of directors shall be reduced by the number of Preferred Directors elected
pursuant hereto. Any Preferred Director may be removed at any time, with or without
cause, and any vacancy created thereby may be filled, only by the affirmative
vote of the holders 


 


10

















 


a majority of the shares of
Designated Preferred Stock at the time outstanding voting separately as a class
together with the holders of shares of Voting Parity Stock, to the extent the
voting rights of such holders described above are then exercisable. If the
office of any Preferred Director becomes vacant for any reason other than
removal from office as aforesaid, the remaining Preferred Director may choose a
successor who shall hold office for the unexpired term in respect of which such
vacancy occurred.


 


(c)                                  Class Voting
Rights as to Particular Matters. So long as any shares of Designated
Preferred Stock are outstanding, in addition to any other vote or written
consent of stockholders required by law or by the Charter, the vote or written
consent of the holders of at least 66 2/3% of the shares of Designated
Preferred Stock at the time outstanding, voting as a separate class, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:


 


(i) Authorization of Senior Stock.
Any amendment or alteration of the Certificate of Determination for the
Designated Preferred Stock or the Charter to authorize or create or increase
the authorized amount of, or any issuance of, any shares of, or any securities
convertible into or exchangeable or exercisable for shares of, any class or
series of capital stock of the Corporation ranking senior to Designated
Preferred Stock with respect to either or both the payment of dividends and/or
the distribution of assets on any liquidation, dissolution or winding up of the
Corporation;


 


(ii)                                  Amendment of
Designated Preferred Stock. Any amendment, alteration or repeal of any
provision of the Certificate of Determination for the Designated Preferred
Stock or the Charter (including, unless no vote on such merger or consolidation
is required by Section 7(c)(iii) below, any amendment, alteration or
repeal by means of a merger, consolidation or otherwise) so as to adversely
affect the rights, preferences, privileges or voting powers of the Designated
Preferred Stock; or


 


(iii)                               Share Exchanges,
Reclassifications, Mergers and Consolidations. Any consummation of a
binding share exchange or reclassification involving the Designated Preferred
Stock, or of a merger or consolidation of the Corporation with another
corporation or other entity, unless in each case (x) the shares of
Designated Preferred Stock remain outstanding or, in the case of any such
merger or consolidation with respect to which the Corporation is not the
surviving or resulting entity, are converted into or exchanged for preference
securities of the surviving or resulting entity or its ultimate parent, and (y) such
shares remaining outstanding or such preference securities, as the case may be,
have such rights, preferences, privileges and voting powers, and limitations
and restrictions thereof, taken as a whole, as are not materially less
favorable to the holders thereof than the rights, preferences, privileges and
voting powers, and limitations and restrictions thereof, of Designated
Preferred Stock immediately prior to such consummation, taken as a whole;


 


provided, however, that for all purposes of this Section 7(c),
any increase in the amount of the authorized Preferred Stock, including any
increase in the authorized amount of Designated Preferred Stock necessary to
satisfy preemptive or similar rights granted by the Corporation to other
persons prior to the Signing Date, or the creation and issuance, or an increase
in the authorized or issued amount, whether pursuant to preemptive or similar
rights or otherwise, of any other series of Preferred Stock, or any securities
convertible into or exchangeable or exercisable for any other series of
Preferred Stock, ranking equally with and/or junior to 


 


11

















 


Designated
Preferred Stock with respect to the payment of dividends (whether such
dividends are cumulative or non-cumulative) and the distribution of assets upon
liquidation, dissolution or winding up of the Corporation will not be deemed to
adversely affect the rights, preferences, privileges or voting powers, and
shall not require the affirmative vote or consent of, the holders of
outstanding shares of the Designated Preferred Stock.


 


(d)                                 Changes
after Provision for Redemption. No vote or consent of the holders of
Designated Preferred Stock shall be required pursuant to Section 7(c) above
if, at or prior to the time when any such vote or consent would otherwise be
required pursuant to such Section, all outstanding shares of the Designated
Preferred Stock shall have been redeemed, or shall have been called for
redemption upon proper notice and sufficient funds shall have been deposited in
trust for such redemption, in each case pursuant to Section 5 above.


 


(e)                                  Procedures
for Voting and Consents. The rules and procedures for calling and conducting
any meeting of the holders of Designated Preferred Stock (including, without
limitation, the fixing of a record date in connection therewith), the
solicitation and use of proxies at such a meeting, the obtaining of written
consents and any other aspect or matter with regard to such a meeting or such
consents shall conform to the requirements of the Charter, the Bylaws, and
applicable law and the rules of any national securities exchange or other
trading facility on which Designated Preferred Stock is listed or traded at the
time.


 


Section 8. Record Holders. To the fullest extent permitted
by applicable law, the Corporation and the transfer agent for Designated
Preferred Stock may deem and treat the record holder of any share of Designated
Preferred Stock as the true and lawful owner thereof for all purposes, and
neither the Corporation nor such transfer agent shall be affected by any notice
to the contrary.


 


Section 9. Notices. All notices or communications in
respect of Designated Preferred Stock shall be sufficiently given if given in
writing and delivered in person or by first class mail, postage prepaid, or if
given in such other manner as may be permitted in this Certificate of
Determination, in the Charter or Bylaws or by applicable law. Notwithstanding
the foregoing, if shares of Designated Preferred Stock are issued in book-entry
form through The Depository Trust Corporation or any similar facility, such
notices may be given to the holders of Designated Preferred Stock in any manner
permitted by such facility.


 


Section 10. No Preemptive Rights. No share of Designated
Preferred Stock shall have any rights of preemption whatsoever as to any
securities of the Corporation, or any warrants, rights or options issued or
granted with respect thereto, regardless of how such securities, or such
warrants, rights or options, may be designated, issued or granted.


 


Section 11. Replacement Certificates. The Corporation shall
replace any mutilated certificate at the holder’s expense upon surrender of
that certificate to the Corporation. The Corporation shall replace certificates
that become destroyed, stolen or lost at the holder’s expense upon delivery to
the Corporation of reasonably satisfactory evidence that the certificate has
been destroyed, stolen or lost, together with any indemnity that may be
reasonably required by the Corporation.


 


Section 12. Other Rights. The shares of Designated
Preferred Stock shall not have any rights, preferences, privileges or voting
powers or relative, participating, optional or other special rights, or
qualifications, limitations or restrictions thereof, other than as set forth
herein or in the


 


12

















 


Charter or as provided by
applicable law.


 


13
















 


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.


 


1

















 


ANNEX C


 


FORM OF OPINION


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


1

















 


ANNEX D


 


FORM OF WARRANT
TO PURCHASE COMMON STOCK


 


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. 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.


 


WARRANT


to purchase


 


37,360


 


Shares of Common
Stock


 


of Santa Lucia
Bancorp


 


	
  Issue Date:  

  	
  December 19,
  2008

  	
   

  



 


1.                                       Definitions.
Unless the context otherwise requires, when used herein the following terms
shall have the meanings indicated.


 


“Affiliate” has the
meaning ascribed to it in the Purchase Agreement.


 


“Appraisal Procedure” means a procedure
whereby two independent appraisers, one chosen by the Company and one by the
Original Warrantholder, shall mutually agree upon the determinations then the
subject of appraisal. Each party shall deliver a notice to the other appointing
its appraiser within 15 days after the Appraisal Procedure is invoked. If
within 30 days after appointment of the two appraisers they are unable to agree
upon the amount in question, 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 Original Warrantholder; otherwise, the average of all three determinations
shall be binding upon the Company and the Original Warrantholder. The costs of
conducting any Appraisal Procedure shall be borne by the Company.


 


“Board of Directors” means the board of
directors of the Company, including any duly authorized committee thereof.


 


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


 


“business day” means 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.


 


“Capital Stock” means (A) with respect to
any Person that is a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of capital or capital
stock of such Person and (B) with respect to any Person that is not a
corporation or company, any and all partnership or other equity interests of
such Person.


 


“Charter” means, with respect to any Person,
its certificate or articles of incorporation, articles of association, or
similar organizational document.


 


“Common Stock” has the meaning ascribed to it
in the Purchase Agreement.


 


“Company” means the Person whose name,
corporate or other organizational form and jurisdiction of organization is set
forth in Item 1 of Schedule A hereto.


 


“conversion” has the meaning set forth in Section 13(B).


 


“convertible securities” has the meaning set
forth in Section 13(B).


 


“CPP” has the meaning ascribed to it in the
Purchase Agreement.


 


“Exchange Act” means the Securities Exchange
Act of 1934, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Exercise Price” means the amount set forth in
Item 2 of Schedule A hereto. 


 


“Expiration Time” has the meaning set forth in
Section 3.


 


“Fair Market Value” means, with respect to any
security or other property, the fair market value of such security or other
property as determined by the Board of Directors, acting in good faith or, with
respect to Section 14, as determined by the Original Warrantholder acting
in good faith. For so long as the Original Warrantholder holds this Warrant or
any portion thereof, it may object in writing to the Board of Director’s
calculation of fair market value within 10 days of receipt of written notice
thereof. If the Original Warrantholder and the Company are unable to agree on
fair market value during the 10-day period following the delivery of the
Original Warrantholder’s objection, the Appraisal Procedure may be invoked by
either party to


 


2

















 


determine Fair
Market Value by delivering written notification thereof not later than the 30th
day after delivery of the Original Warrantholder’s objection.


 


“Governmental Entities” has the meaning
ascribed to it in the Purchase Agreement.


 


“Initial Number” has the meaning set forth in Section 13(B).


 


“Issue Date ” means the date set forth in Item
3 of Schedule A hereto.


 


“Market Price” means, with respect to a
particular security, on any given day, the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
last closing bid and ask prices regular way, in either case on the principal
national securities exchange on which the applicable securities are listed or
admitted to trading, or if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and ask prices as furnished
by two members of the Financial Industry Regulatory Authority, Inc.
selected from time to time by the Company for that purpose. “Market Price”
shall be determined without reference to after hours or extended hours trading.
If such security is not listed and traded in a manner that the quotations
referred to above are available for the period required hereunder, the Market
Price per share of Common Stock shall be deemed to be (i) in the event
that any portion of the Warrant is held by the Original Warrantholder, the fair
market value per share of such security as determined in good faith by the
Original Warrantholder or (ii) in all other circumstances, the fair market
value per share of such security as determined in good faith by the Board of
Directors in reliance on an opinion of a nationally recognized independent
investment banking corporation retained by the Company for this purpose and
certified in a resolution to the Warrantholder. For the purposes of determining
the Market Price of the Common Stock on the “trading day” preceding, on or
following the occurrence of an event, (i) that trading day shall be deemed
to commence immediately after the regular scheduled closing time of trading on
the New York Stock Exchange or, if trading is closed at an earlier time, such
earlier time and (ii) that trading day shall end at the next regular
scheduled closing time, or if trading is closed at an earlier time, such
earlier time (for the avoidance of doubt, and as an example, if the Market
Price is to be determined as of the last trading day preceding a specified
event and the closing time of trading on a particular day is 4:00 p.m. and
the specified event occurs at 5:00 p.m. on that day, the Market Price
would be determined by reference to such 4:00 p.m. closing price).


 


“Ordinary Cash Dividends” means a regular
quarterly cash dividend on shares of Common Stock out of surplus or net profits
legally available therefor (determined in accordance with generally accepted
accounting principles in effect from time to time), provided that Ordinary Cash Dividends shall not include any cash
dividends paid subsequent to the Issue Date to the extent the aggregate per
share dividends paid on the outstanding Common Stock in any quarter exceed the
amount set forth in Item 4 of Schedule A hereto, as adjusted for any stock
split, stock dividend, reverse stock split, reclassification or similar
transaction.


 


“Original Warrantholder” means the United
States Department of the Treasury. Any actions specified to be taken by the
Original Warrantholder hereunder may only be taken by such Person and not by
any other Warrantholder.


 


3

















 


“Permitted Transactions” has the meaning set
forth in Section 13(B).


 


“Person” has the
meaning given to it in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.


 


“Per Share Fair Market Value” has
the meaning set forth in Section 13(C).


 


“Preferred Shares” means
the perpetual preferred stock issued to the Original Warrantholder on the Issue
Date pursuant to the Purchase Agreement.


 


“Pro Rata Repurchases” means
any purchase of shares of Common Stock by the Company or any Affiliate thereof
pursuant to (A) any tender offer or exchange offer subject to Section 13(e) or
14(e) of the Exchange Act or Regulation 14E promulgated thereunder or (B) any
other offer available to substantially all holders of Common Stock, in the case
of both (A) or (B), whether for cash, shares of Capital Stock of the
Company, other securities of the Company, evidences of indebtedness of the
Company or any other Person or any other property (including, without
limitation, shares of Capital Stock, other securities or evidences of
indebtedness of a subsidiary), or any combination thereof, effected while this
Warrant is outstanding. The “Effective Date”
of a Pro Rata Repurchase shall mean the date of acceptance of shares
for purchase or exchange by the Company under any tender or exchange offer
which is a Pro Rata Repurchase or the date of purchase with respect to any Pro
Rata Repurchase that is not a tender or exchange offer.


 


“Purchase Agreement”
means the Securities Purchase Agreement - Standard
Terms incorporated into the Letter Agreement, dated as of the date set forth in
Item 5 of Schedule A hereto, as amended from time to time, between the Company
and the United States Department of the Treasury (the “Letter Agreement”), including all annexes
and schedules thereto.


 


“Qualified Equity Offering” has
the meaning ascribed to it in the Purchase Agreement.


 


“Regulatory Approvals” with
respect to the Warrantholder, means, to the extent applicable and required to
permit the Warrantholder to exercise this Warrant for shares of Common Stock
and to own such Common Stock without the Warrantholder being in violation of
applicable law, rule or regulation, the receipt of any necessary approvals
and authorizations of, filings and registrations with, notifications to, or
expiration or termination of any applicable waiting period under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder.


 


“SEC” means the U.S.
Securities and Exchange Commission.


 


“Securities Act” means
the Securities Act of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Shares” has the
meaning set forth in Section 2.


 


“trading day” means (A) if the shares of
Common Stock are not traded on any national or regional securities exchange or
association or over-the-counter market, a business day or (B) if the
shares of Common Stock are traded on any national or regional securities
exchange or


 


4

















 


association or over-the-counter market, a
business day on which such relevant exchange or quotation system is scheduled
to be open for business and on which the shares of Common Stock (i) are
not suspended from trading on any national or regional securities exchange or
association or over-the-counter market for any period or periods aggregating
one half hour or longer; and (ii) have traded at least once on the
national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the shares of Common
Stock.


 


“U.S. GAAP” means United States generally
accepted accounting principles.


 


“Warrantholder” has
the meaning set forth in Section 2.


 


“Warrant” means this
Warrant, issued pursuant to the Purchase Agreement.


 


2.                                       Number
of Shares; Exercise Price. This certifies that, for value received, the United
States Department of the Treasury or its permitted assigns (the “Warrantholder”) is entitled, upon the
terms and subject to the conditions hereinafter set forth, to acquire from the Company,
in whole or in part, after the receipt of all applicable Regulatory Approvals,
if any, up to an aggregate of the number of fully paid and nonassessable shares
of Common Stock set forth in Item 6 of Schedule A hereto, at a purchase price
per share of Common Stock equal to the Exercise Price. The number of shares of
Common Stock (the “Shares”) and
the Exercise Price are subject to adjustment as provided herein, and all
references to “Common Stock,” “Shares” and “Exercise Price” herein shall be
deemed to include any such adjustment or series of adjustments.


 


3.                                       Exercise
of Warrant; Term. Subject to Section 2, to the extent permitted by applicable
laws and regulations, the right to purchase the Shares represented by this
Warrant is exercisable, in whole or in part by the Warrantholder, at any time
or from time to time after the execution and delivery of this Warrant by the
Company on the date hereof, but in no event later than 5:00 p.m., New York
City time on the tenth anniversary of the Issue Date (the “Expiration Time”), by (A) the
surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the principal executive office
of the Company located at the address set forth in Item 7 of Schedule A hereto
(or such other office or agency of the Company in the United States as it may
designate by notice in writing to the Warrantholder at the address of the
Warrantholder appearing on the books of the Company), and (B) payment of
the Exercise Price for the Shares thereby purchased:


 


(i) by having the Company withhold, from
the shares of Common Stock that would otherwise be delivered to the Warrantholder
upon such exercise, shares of Common stock issuable upon exercise of the
Warrant equal in value to the aggregate Exercise Price as to which this Warrant
is so exercised based on the Market Price of the Common Stock on the trading
day on which this Warrant is exercised and the Notice of Exercise is delivered
to the Company pursuant to this Section 3, or


 


(ii) with the consent of both the
Company and the Warrantholder, by tendering in cash, by certified or cashier’s
check payable to the order of the Company, or by wire transfer of immediately
available funds to an account designated by the Company.


 


5

















 


If the Warrantholder does not exercise this
Warrant in its entirety, the Warrantholder will be entitled to receive from the
Company within a reasonable time, and in any event not exceeding three business
days, a new warrant in substantially identical form for the purchase of that
number of Shares equal to the difference between the number of Shares subject
to this Warrant and the number of Shares as to which this Warrant is so
exercised. Notwithstanding anything in this Warrant to the contrary, the
Warrantholder hereby acknowledges and agrees that its exercise of this Warrant
for Shares is subject to the condition that the Warrantholder will have first
received any applicable Regulatory Approvals.


 


4.                                       Issuance
of Shares; Authorization; Listing. Certificates for Shares issued upon exercise
of this Warrant will be issued in such name or names as the Warrantholder may designate
and will be delivered to such named Person or Persons within a reasonable time,
not to exceed three business days after the date on which this Warrant has been
duly exercised in accordance with the terms of this Warrant. The Company hereby
represents and warrants that any Shares issued upon the exercise of this
Warrant in accordance with the provisions of Section 3 will be duly and validly
authorized and issued, fully paid and nonassessable and free from all taxes,
liens and charges (other than liens or charges created by the Warrantholder,
income and franchise taxes incurred in connection with the exercise of the
Warrant or taxes in respect of any transfer occurring contemporaneously
therewith). The Company agrees that the Shares so issued will be deemed to have
been issued to the Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are delivered to the
Company in accordance with the terms of this Warrant, notwithstanding that the stock
transfer books of the Company may then be closed or certificates representing
such Shares may not be actually delivered on such date. The Company will at all
times reserve and keep available, out of its authorized but unissued Common
Stock, solely for the purpose of providing for the exercise of this Warrant,
the aggregate number of shares of Common Stock then issuable upon exercise of this
Warrant at any time. The Company will (A) procure, at its sole expense,
the listing of the Shares issuable upon exercise of this Warrant at any time,
subject to issuance or notice of issuance, on all principal stock exchanges on
which the Common Stock is then listed or traded and (B) maintain such
listings of such Shares at all times after issuance. The Company will use reasonable
best efforts to ensure that the Shares may be issued without violation of any applicable
law or regulation or of any requirement of any securities exchange on which the
Shares are listed or traded.


 


5.                                       No
Fractional Shares or Scrip. No fractional Shares or scrip representing fractional
Shares shall be issued upon any exercise of this Warrant. In lieu of any
fractional Share to which the Warrantholder would otherwise be entitled, the
Warrantholder shall be entitled to receive a cash payment equal to the Market
Price of the Common Stock on the last trading day preceding the date of
exercise less the pro-rated Exercise Price for such fractional share.


 


6.                                       No
Rights as Stockholders; Transfer Books. This Warrant does not entitle the Warrantholder
to any voting rights or other rights as a stockholder of the Company prior to
the date of exercise hereof. The Company will at no time close its transfer
books against transfer of this Warrant in any manner which interferes with the
timely exercise of this Warrant.


 


6
















 


7.                                      Charges,
Taxes and Expenses. Issuance of certificates for Shares to the Warrantholder
upon the exercise of this Warrant shall be made without charge to the Warrantholder
for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company.


 


8.                                      Transfer/Assignment.


 


(A)                              Subject
to compliance with clause (B) of this Section 8, this Warrant and all
rights hereunder are transferable, in whole or in part, upon the books of the
Company by the registered holder hereof in person or by duly authorized
attorney, and a new warrant shall be made and delivered by the Company, of the
same tenor and date as this Warrant but registered in the name of one or more
transferees, upon surrender of this Warrant, duly endorsed, to the office or
agency of the Company described in Section 3. All expenses (other than
stock transfer taxes) and other charges payable in connection with the
preparation, execution and delivery of the new warrants pursuant to this Section 8
shall be paid by the Company.


 


(B)                                The
transfer of the Warrant and the Shares issued upon exercise of the Warrant are
subject to the restrictions set forth in Section 4.4 of the Purchase
Agreement. If and for so long as required by the Purchase Agreement, this
Warrant shall contain the legends as set forth in Sections 4.2(a) and 4.2(b) of
the Purchase Agreement.


 


9.                                      Exchange
and Registry of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Warrantholder to the Company, for a new warrant or warrants of
like tenor and representing the right to purchase the same aggregate number of
Shares. The Company shall maintain a registry showing the name and address of
the Warrantholder as the registered holder of this Warrant. This Warrant may be
surrendered for exchange or exercise in accordance with its terms, at the
office of the Company, and the Company shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.


 


10.                                Loss,
Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of a bond, indemnity or security reasonably
satisfactory to the Company, or, in the case of any such mutilation, upon surrender
and cancellation of this Warrant, the Company shall make and deliver, in lieu
of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like
tenor and representing the right to purchase the same aggregate number of
Shares as provided for in such lost, stolen, destroyed or mutilated Warrant.


 


11.                                Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall not be a
business day, then such action may be taken or such right may be exercised on
the next succeeding day that is a business day.


 


12.                                Rule 144
Information. The Company covenants that it will use its reasonable best efforts
to timely file all reports and other documents required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations
promulgated by the SEC thereunder (or, if the Company is not required to file
such reports, it will, upon the request of any


 


7

















 


Warrantholder,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will use reasonable best
efforts to take such further action as any Warrantholder may reasonably
request, in each case to the extent required from time to time to enable such
holder to, if permitted by the terms of this Warrant and the Purchase Agreement,
sell this Warrant without registration under the Securities Act within the
limitation of the exemptions provided by (A) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (B) any
successor rule or regulation hereafter adopted by the SEC. Upon the
written request of any Warrantholder, the Company will deliver to such
Warrantholder a written statement that it has complied with such requirements.


 


13.                                 Adjustments
and Other Rights. The Exercise Price and the number of Shares issuable upon
exercise of this Warrant shall be subject to adjustment from time to time as
follows; provided, that if more
than one subsection of this Section 13 is applicable to a single event,
the subsection shall be applied that produces the largest adjustment and no
single event shall cause an adjustment under more than one subsection of this Section 13
so as to result in duplication:


 


(A)                              Stock
Splits, Subdivisions, Reclassifications or Combinations. If the Company shall
(i) declare and pay a dividend or make a distribution on its Common Stock
in shares of Common Stock, (ii) subdivide or reclassify the outstanding
shares of Common Stock into a greater number of shares, or (iii) combine
or reclassify the outstanding shares of Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this Warrant at the time
of the record date for such dividend or distribution or the effective date of
such subdivision, combination or reclassification shall be proportionately adjusted
so that the Warrantholder after such date shall be entitled to purchase the
number of shares of Common Stock which such holder would have owned or been
entitled to receive in respect of the shares of Common Stock subject to this
Warrant after such date had this Warrant been exercised immediately prior to
such date. In such event, the Exercise Price in effect at the time of the record
date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted to the number
obtained by dividing (x) the product of (1) the number of Shares
issuable upon the exercise of this Warrant before such adjustment and (2) the
Exercise Price in effect immediately prior to the record or effective date, as
the case may be, for the dividend, distribution, subdivision, combination or
reclassification giving rise to this adjustment by (y) the new number of
Shares issuable upon exercise of the Warrant determined pursuant to the
immediately preceding sentence.


 


(B)                                Certain
Issuances of Common Shares or Convertible Securities. Until the earlier of (i) the
date on which the Original Warrantholder no longer holds this Warrant or any
portion thereof and (ii) the third anniversary of the Issue Date, if the
Company shall issue shares of Common Stock (or rights or warrants or other
securities exercisable or convertible into or exchangeable (collectively, a “conversion”) for shares of Common Stock)
(collectively, “convertible securities”) (other
than in Permitted Transactions (as defined below) or a transaction to which
subsection (A) of this Section 13 is applicable) without
consideration or at a consideration per share (or having a conversion price per
share) that is less than 90% of the Market Price on the last trading day preceding
the date of the agreement on pricing such shares (or such convertible
securities) then, in such event:


 


8

















 


(A)      the number of Shares issuable upon the exercise
of this Warrant immediately prior to the date of the agreement on pricing of
such shares (or of such convertible securities) (the “Initial Number”) shall be increased to the number obtained
by multiplying the Initial Number by a fraction (A) the numerator of which
shall be the sum of (x) the number of shares of Common Stock of the
Company outstanding on such date and (y) the number of additional shares
of Common Stock issued (or into which convertible securities may be exercised
or convert) and (B) the denominator of which shall be the sum of (I) the
number of shares of Common Stock outstanding on such date and (II) the
number of shares of Common Stock which the aggregate consideration receivable
by the Company for the total number of shares of Common Stock so issued (or
into which convertible securities may be exercised or convert) would purchase
at the Market Price on the last trading day preceding the date of the agreement
on pricing such shares (or such convertible securities); and


 


(B)        the Exercise Price payable upon exercise of the
Warrant shall be adjusted by multiplying such Exercise Price in effect
immediately prior to the date of the agreement on pricing of such shares (or of
such convertible securities) by a fraction, the numerator of which shall be the
number of shares of Common Stock issuable upon exercise of this Warrant prior
to such date and the denominator of which shall be the number of shares of
Common Stock issuable upon exercise of this Warrant immediately after the
adjustment described in clause (A) above.


 


For purposes of the foregoing, the aggregate
consideration receivable by the Company in connection with the issuance of such
shares of Common Stock or convertible securities shall be deemed to be equal to
the sum of the net offering price (including the Fair Market Value of any non-cash
consideration and after deduction of any related expenses payable to third
parties) of all such securities plus the minimum aggregate amount, if any,
payable upon exercise or conversion of any such convertible securities into
shares of Common Stock; and “Permitted
Transactions” shall mean issuances (i) as consideration for or
to fund the acquisition of businesses and/or related assets, (ii) in
connection with employee benefit plans and compensation related arrangements in
the ordinary course and consistent with past practice approved by the Board of
Directors, (iii) in connection with a public or broadly marketed offering
and sale of Common Stock or convertible securities for cash conducted by the
Company or its affiliates pursuant to registration under the Securities Act or Rule 144A
thereunder on a basis consistent with capital raising transactions by
comparable financial institutions and (iv) in connection with the exercise
of preemptive rights on terms existing as of the Issue Date. Any adjustment made
pursuant to this Section 13(B) shall become effective immediately
upon the date of such issuance.


 


(C)                                Other
Distributions. In case the Company shall fix a record date for the making
of a distribution to all holders of shares of its Common Stock of securities,
evidences of indebtedness, assets, cash, rights or warrants (excluding Ordinary
Cash Dividends, dividends of its Common Stock and other dividends or
distributions referred to in Section 13(A)), in each such case, the
Exercise Price in effect prior to such record date shall be reduced immediately
thereafter to the price determined by multiplying the Exercise Price in effect
immediately prior to the reduction by the quotient of (x) the Market Price
of the Common Stock on the last trading day preceding the first date on which
the Common Stock trades regular way on the principal


 


9

















 


national
securities exchange on which the Common Stock is listed or admitted to trading
without the right to receive such distribution, minus the amount of cash and/or
the Fair Market Value of the securities, evidences of indebtedness, assets,
rights or warrants to be so distributed in respect of one share of Common Stock
(such amount and/or Fair Market Value, the “Per
Share Fair Market Value”) divided by (y) such Market Price on
such date specified in clause (x); such adjustment shall be made successively
whenever such a record date is fixed. In such event, the number of Shares
issuable upon the exercise of this Warrant shall be increased to the number
obtained by dividing (x) the product of (1) the number of Shares
issuable upon the exercise of this Warrant before such adjustment, and (2) the
Exercise Price in effect immediately prior to the distribution giving rise to
this adjustment by (y) the new Exercise Price determined in accordance
with the immediately preceding sentence. In the case of adjustment for a cash
dividend that is, or is coincident with, a regular quarterly cash dividend, the
Per Share Fair Market Value would be reduced by the per share amount of the
portion of the cash dividend that would constitute an Ordinary Cash Dividend.
In the event that such distribution is not so made, the Exercise Price and the
number of Shares issuable upon exercise of this Warrant then in effect shall be
readjusted, effective as of the date when the Board of Directors determines not
to distribute such shares, evidences of indebtedness, assets, rights, cash or
warrants, as the case may be, to the Exercise Price that would then be in effect
and the number of Shares that would then be issuable upon exercise of this
Warrant if such record date had not been fixed.


 


(D)                               Certain
Repurchases of Common Stock. In case the Company effects a Pro Rata Repurchase
of Common Stock, then the Exercise Price shall be reduced to the price
determined by multiplying the Exercise Price in effect immediately prior to the
Effective Date of such Pro Rata Repurchase by a fraction of which the numerator
shall be (i) the product of (x) the number of shares of Common Stock
outstanding immediately before such Pro Rata Repurchase and (y) the Market
Price of a share of Common Stock on the trading day immediately preceding the
first public announcement by the Company or any of its Affiliates of the intent
to effect such Pro Rata Repurchase, minus (ii) the aggregate purchase
price of the Pro Rata Repurchase, and of which the denominator shall be the
product of (i) the number of shares of Common Stock outstanding immediately
prior to such Pro Rata Repurchase minus the number of shares of Common Stock so
repurchased and (ii) the Market Price per share of Common Stock on the
trading day immediately preceding the first public announcement by the Company
or any of its Affiliates of the intent to effect such Pro Rata Repurchase. In
such event, the number of shares of Common Stock issuable upon the exercise of
this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares issuable upon the exercise of this
Warrant before such adjustment, and (2) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence. For the avoidance of doubt, no increase to the Exercise Price or
decrease in the number of Shares issuable upon exercise of this Warrant shall
be made pursuant to this Section 13(D).


 


(E)                                 Business
Combinations. In case of any Business Combination or reclassification of
Common Stock (other than a reclassification of Common Stock referred to in Section 13(A)),
the Warrantholder’s right to receive Shares upon exercise of this Warrant shall
be converted into the right to exercise this Warrant to acquire the number of
shares of stock or other securities or property (including cash) which the
Common Stock issuable (at the time of such Business Combination or
reclassification) upon exercise of this Warrant immediately prior to such


 


10

















 


Business
Combination or reclassification would have been entitled to receive upon
consummation of such Business Combination or reclassification; and in any such
case, if necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted
so as to be applicable, as nearly as may reasonably be, to the Warrantholder’s
right to exercise this Warrant in exchange for any shares of stock or other
securities or property pursuant to this paragraph. In determining the kind and
amount of stock, securities or the property receivable upon exercise of this
Warrant following the consummation of such Business Combination, if the holders
of Common Stock have the right to elect the kind or amount of consideration
receivable upon consummation of such Business Combination, then the
consideration that the Warrantholder shall be entitled to receive upon exercise
shall be deemed to be the types and amounts of consideration received by the
majority of all holders of the shares of common stock that affirmatively make
an election (or of all such holders if none make an election).


 


(F)                                 Rounding
of Calculations; Minimum Adjustments. All calculations under this Section 13
shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 13
to the contrary notwithstanding, no adjustment in the Exercise Price or the
number of Shares into which this Warrant is exercisable shall be made if the
amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a
share of Common Stock, but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate $0.01 or 1/1 0th of a share of
Common Stock, or more.


 


(G)                                Timing
of Issuance of Additional Common Stock Upon Certain Adjustments. In any
case in which the provisions of this Section 13 shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to
the Warrantholder of this Warrant exercised after such record date and before
the occurrence of such event the additional shares of Common Stock issuable
upon such exercise by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such exercise before giving
effect to such adjustment and (ii) paying to such Warrantholder any amount
of cash in lieu of a fractional share of Common Stock; provided, however, that the Company upon
request shall deliver to such Warrantholder a due bill or other appropriate
instrument evidencing such Warrantholder’s right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such adjustment.


 


(H)                               Completion
of Qualified Equity Offering. In the event the Company (or any successor by
Business Combination) completes one or more Qualified Equity Offerings on or
prior to December 31, 2009 that result in the Company (or any such
successor ) receiving aggregate gross proceeds of not less than 100% of the
aggregate liquidation preference of the Preferred Shares (and any preferred
stock issued by any such successor to the Original Warrantholder under the
CPP), the number of shares of Common Stock underlying the portion of this
Warrant then held by the Original Warrantholder shall be thereafter reduced by
a number of shares of Common Stock equal to the product of (i) 0.5 and (ii) the
number of shares underlying


 


11

















 


the Warrant on
the Issue Date (adjusted to take into account all other theretofore made adjustments
pursuant to this Section 13).


 


(I)                                    Other
Events. For so long as the Original Warrantholder holds this Warrant or any
portion thereof, if any event occurs as to which the provisions of this Section 13
are not strictly applicable or, if strictly applicable, would not, in the good
faith judgment of the Board of Directors of the Company, fairly and adequately
protect the purchase rights of the Warrants in accordance with the essential
intent and principles of such provisions, then the Board of Directors shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of the Board of Directors, to protect such purchase rights
as aforesaid. The Exercise Price or the number of Shares into which this
Warrant is exercisable shall not be adjusted in the event of a change in the
par value of the Common Stock or a change in the jurisdiction of incorporation
of the Company.


 


(J)                                   Statement
Regarding Adjustments. Whenever the Exercise Price or the number of Shares
into which this Warrant is exercisable shall be adjusted as provided in Section 13,
the Company shall forthwith file at the principal office of the Company a
statement showing in reasonable detail the facts requiring such adjustment and
the Exercise Price that shall be in effect and the number of Shares into which
this Warrant shall be exercisable after such adjustment, and the Company shall
also cause a copy of such statement to be sent by mail, first class postage
prepaid, to each Warrantholder at the address appearing in the Company’s
records.


 


(K)                               Notice
of Adjustment Event. In the event that the Company shall propose to take
any action of the type described in this Section 13 (but only if the
action of the type described in this Section 13 would result in an
adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable or a change in the type of securities or property to be
delivered upon exercise of this Warrant), the Company shall give notice to the
Warrantholder, in the manner set forth in Section 13(J), which notice
shall specify the record date, if any, with respect to any such action and the
approximate date on which such action is to take place. Such notice shall also
set forth the facts with respect thereto as shall be reasonably necessary to
indicate the effect on the Exercise Price and the number, kind or class of
shares or other securities or property which shall be deliverable upon exercise
of this Warrant. In the case of any action which would require the fixing of a
record date, such notice shall be given at least 10 days prior to the date so
fixed, and in case of all other action, such notice shall be given at least 15
days prior to the taking of such proposed action. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of any such
action.


 


(L)                                 Proceedings
Prior to Any Action Requiring Adjustment. As a condition precedent to the
taking of any action which would require an adjustment pursuant to this Section 13,
the Company shall take any action which may be necessary, including obtaining
regulatory, New York Stock Exchange, NASDAQ Stock Market or other applicable
securities exchange or stockholder approvals or exemptions, in order that the
Company may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock that the Warrantholder is entitled to
receive upon exercise of this Warrant pursuant to this Section 13.


 


12

















 


(M)                            Adjustment
Rules. Any adjustments pursuant to this Section 13 shall be made
successively whenever an event referred to herein shall occur. If an adjustment
in Exercise Price made hereunder would reduce the Exercise Price to an amount
below par value of the Common Stock, then such adjustment in Exercise Price
made hereunder shall reduce the Exercise Price to the par value of the Common
Stock.


 


14.                                 Exchange.
At any time following the date on which the shares of Common Stock of the
Company are no longer listed or admitted to trading on a national securities
exchange (other than in connection with any Business Combination), the Original
Warrantholder may cause the Company to exchange all or a portion of this Warrant
for an economic interest (to be determined by the Original Warrantholder after
consultation with the Company) of the Company classified as permanent equity
under U.S. GAAP having a value equal to the Fair Market Value of the portion of
the Warrant so exchanged.  The Original
Warrantholder shall calculate any Fair Market Value required to be calculated
pursuant to this Section 14, which shall not be subject to the Appraisal
Procedure.


 


15.                                 No
Impairment. The Company will not, by amendment of its Charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in taking of all such action
as may be necessary or appropriate in order to protect the rights of the
Warrantholder.


 


16.                                 Governing
Law. This Warrant 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 Company and the Warrantholder agrees (a) to
submit to the exclusive jurisdiction and venue of the United States District
Court for the District of Columbia for any civil action, suit or proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby, and (b) that notice may be served upon the Company at the address
in Section 20 below and upon the Warrantholder at the address for the
Warrantholder set forth in the registry maintained by the Company pursuant to Section 9
hereof. To the extent permitted by applicable law, each of the Company and the
Warrantholder hereby unconditionally waives trial by jury in any civil legal
action or proceeding relating to the Warrant or the transactions contemplated
hereby or thereby.


 


17.                                 Binding
Effect. This Warrant shall be binding upon any successors or assigns of the
Company.


 


18.                                 Amendments.
This Warrant may be amended and the observance of any term of this Warrant may
be waived only with the written consent of the Company and the Warrantholder.


 


19.                                 Prohibited
Actions. The Company agrees that it will not take any action which would
entitle the Warrantholder to an adjustment of the Exercise Price if the total
number of shares of Common Stock issuable after such action upon exercise of
this Warrant, together with


 


13

















 


all shares of
Common Stock then outstanding and all shares of Common Stock then issuable upon
the exercise of all outstanding options, warrants, conversion and other rights,
would exceed the total number of shares of Common Stock then authorized by its
Charter.


 


20.                                 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 hereunder shall be delivered as set forth in Item 8 of
Schedule A hereto, or pursuant to such other instructions as may be designated
in writing by the party to receive such notice.


 


21.                                 Entire
Agreement. This Warrant, the forms attached hereto and Schedule A hereto
(the terms of which are incorporated by reference herein), and the Letter
Agreement (including all documents incorporated therein), contain the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous arrangements or undertakings with
respect thereto.


 


[Remainder of page intentionally
left blank]


 


14

















 


[Form of Notice
of Exercise]


 


Date:
             


 


TO:                           Santa Lucia Bancorp


 


RE:                              Election to Purchase
Common Stock


 


The undersigned, pursuant to the provisions
set forth in the attached Warrant, hereby agrees to subscribe for and purchase
the number of shares of the Common Stock set forth below covered by such Warrant.
The undersigned, in accordance with Section 3 of the Warrant, hereby
agrees to pay the aggregate Exercise Price for such shares of Common Stock in
the manner set forth below. A new warrant evidencing the remaining shares of
Common Stock covered by such Warrant, but not yet subscribed for and purchased,
if any, should be issued in the name set forth below.


 


Number of Shares of Common Stock


 


Method of Payment of Exercise Price (note if
cashless exercise pursuant to Section 3(i) of the Warrant or cash exercise
pursuant to Section 3(ii) of the Warrant, with consent of the Company
and the Warrantholder)


 


	
  Aggregate
  Exercise Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Holder:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 


15
















 


IN WITNESS WHEREOF, the Company has caused
this Warrant to be duly executed by a duly authorized officer.


 


	
  Dated:

  	
  December 19,
  2008

  



 


	
   

  	
  Santa Lucia Bancorp

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Larry
  H. Putnam

  
	
   

  	
  Title:   President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: John
  C. Hansen

  
	
   

  	
  Title:   Secretary

  



 


 


[Signature Page to
Warrant]


 

















 


SCHEDULE A


 


	
  Item 1

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Santa Lucia Bancorp

  
	
   

  	
   

  
	
  Corporate or
  other organizational form:

  	
  Corporation

  
	
   

  	
   

  
	
  Jurisdiction
  of organization:

  	
  California

  
	
   

  	
   

  
	
  Item 2

  	
   

  
	
   

  	
   

  
	
  Exercise
  Price: 16.06(1)

  	
   

  
	
   

  	
   

  
	
  Item 3

  	
   

  
	
   

  	
   

  
	
  Issue Date:

  	
  December 19,
  2008

  
	
   

  	
   

  
	
  Item 4

  	
   

  
	
   

  	
   

  
	
  Amount of
  last dividend declared prior to the Issue Date:

  	
  $.25 on
  10/17/2008

  
	
   

  	
   

  
	
  Item 5

  	
   

  
	
   

  	
   

  
	
  Date of
  Letter Agreement between the Company and the United States Department of the Treasury:

  
	
   

  	
   

  
	
  December 19,
  2008

  	
   

  
						



 






(1) Initial exercise price was calculated based on the average of
closing prices of the Common Stock on the 20 trading days ending on the last
trading day prior to the date the Company’s application for participation in
the Capital Purchase Program was approved by the United States Department of
the Treasury.


 

















 


Item 6


 


Number of shares of Common Stock:                                                                                                                                              37,360


 


Item 7


 


Company’s address:


 


Santa Lucia Bancorp


7480 El Camino Real


Atascadero, CA 93422


 


Item 8


 


Notice information:


 


If to the Company:


 


Larry H. Putnam


Santa Lucia Bancorp


7480 El Camino Real


Atascadero, CA 93422


Tel: (805) 466-7087


Fax: (805) 466-0402


 

















 


SCHEDULE A 


 


ADDITIONAL TERMS AND CONDITIONS


 


Company Information:


 


Name
of the Company: Santa Lucia Bancorp


 


Corporate
or other organizational form: CORPORATION


 


Jurisdiction
of Organization: CALIFORNIA


 


Appropriate
Federal Banking Agency: Federal Reserve Bank
of San Francisco 


Notice
Information:


 


	
  To the Company:

  	
  SANTA
  LUCIA BANCORP

  
	
   

  	
  ATTN:
  JOHN C. HANSEN, CFO

  
	
   

  	
  7480 EL
  CAMINO REAL

  
	
   

  	
  ATASCADERO,
  CA 93422

  
	
   

  	
  Tel:
  (805) 466-7087

  
	
   

  	
  Fax:
  (805) 466-0402

  
	
   

  	
   

  
	
   

  	
   

  
	
  With a copy to the

  	
  Reitner,
  Stuart & Moore

  
	
  Company’s Counsel:

  	
  Attn:
  Kenneth E. Moore

  
	
   

  	
  1319
  Marsh Street

  
	
   

  	
  San Luis
  Obispo, CA 93401

  
	
   

  	
  Tel:
  (805) 545-8590

  
	
   

  	
  Fax:
  (805) 545-8599

  
	
   

  	
   

  
	
  With a copy to:

  	
  Katten
  Muchin Rosenman LLP

  
	
   

  	
  Attn:
  Mark Fisher

  
	
   

  	
  575
  Madison Avenue

  
	
   

  	
  New York,
  NY 10022

  
	
   

  	
  Tel:   
  (212) 940-8877

  
	
   

  	
  Fax:  
  (212) 894-5877

  



 


Terms of the Purchase:


 


Series of Preferred Stock Purchased: SERIES A


 


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


 


Number of Shares of Preferred Stock Purchased: 4,000


 


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


 


Number of Initial Warrant Shares: 37,360


 


Exercise Price of the Warrant: $16.06


 

















 


Purchase Price: 
$4,000,000


 


Closing:


 


Location
of Closing:


Hughes
Hubbard


One
Battery Park Plaza


New
York, NY 10004-1482


 


	
  Time of Closing:

  	
   

  	
  9:00 a.m. Eastern
  Standard Time

  
	
   

  	
   

  	
   

  
	
  Date of Closing:

  	
   

  	
  December 19, 2008

  



 


Wire Information for Closing:


 


	
   

  	
  ABA
  Number:

  	
  122241213

  
	
   

  	
  Bank:

  	
  Santa
  Lucia Bank

  
	
   

  	
  Account
  Name:

  	
  Santa
  Lucia Bancorp

  
	
   

  	
  Account
  Number:

  	
  1999060

  
	
   

  	
  Beneficiary:

  	
  Santa
  Lucia Bancorp

  



 

















 


SCHEDULE B


 


CAPITALIZATION


 


Capitalization Date: November 30, 2008


 


Common Stock


 


	
   

  	
  Par value: ZERO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Total
  Authorized: 20,000,000 SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Outstanding:
  1,923,053 SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Subject to
  warrants, options, convertible securities, etc.: 228,560 SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Reserved for
  benefit plans and other issuances: 90,000
  SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Remaining
  authorized but unissued: 17,758,387 SHARES

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  



 


Preferred Stock


 


Par value: ZERO


 


Total Authorized: 20,000,000


 


Outstanding (by series): ZERO


 


Reserved for issuance: ZERO


 


Remaining authorized but unissued: 20,000,000 SHARES


 

















 


SCHEDULE C 


 


REQUIRED STOCKHOLDER
APPROVALS


 


	
   

  	
   

  	
  Required(1)

  	
   

  	
  % Vote Required

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants — Common Stock Issuance

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charter Amendment Stock Exchange

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rules

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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


 






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


 

















 


SCHEDULE D


 


LITIGATION


 


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


 


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


 

















 


SCHEDULE E


 


COMPLIANCE WITH LAWS


 


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


 


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


 


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


 


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


 

















 


SCHEDULE F


 


REGULATORY AGREEMENTS


 


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


 


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