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 a series of its preferred 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supplemented or superseded by the terms set forth herein or in the Schedules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), the Securities Purchase
Agreement (including the Annexes thereto), the Disclosure Schedules 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

                                
	 
      	 
      
	
                                  COMPANY:

                                
	 
      	 
      
	
                                  FIRST
      RELIANCE BANCSHARES, INC.

                                
	 
      	 
      
	
                                  By:

                                	
                                  /s/ F.R. Saunders, Jr.

                                
	 
      	 
      
	 
      	
                                  F.R.
      Saunders, Jr.

                                
	 
      	 
      
	 
      	
                                  President
      and Chief Executive Officer

                                
	 
      	 
      


                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        Date:
March 6, 2009

         

      

    

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
A

    (Non-Exchange-Traded
QFIs, excluding S Corps

    and
Mutual Organizations)

     

    
      
        

      

       

    

    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

                    	 
      	
                      13

                    
	
                      3.3

                    	 
      	
                      Sufficiency
      of Authorized Warrant Preferred Stock; Exchange Listing

                    	 
      	
                      13

                    
	
                      3.4

                    	 
      	
                      Certain
      Notifications Until Closing

                    	 
      	
                      14

                    
	
                      3.5

                    	 
      	
                      Access,
      Information and Confidentiality

                    	 
      	
                      14

                    
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                      Article
      IV

                    	 
      	 
      
	 
      	 
      	
                      Additional
      Agreements

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      4.1

                    	 
      	
                      Purchase
      for Investment

                    	 
      	
                      15

                    
	
                      4.2

                    	 
      	
                      Legends

                    	 
      	
                      15

                    
	
                      4.3

                    	 
      	
                      Certain
      Transactions

                    	 
      	
                      17

                    
	
                      4.4

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

                    	 
      	
                      17

                    
	
                      4.5

                    	 
      	
                      Registration
      Rights

                    	 
      	
                      18

                    
	
                      4.6

                    	 
      	
                      Depositary
      Shares

                    	 
      	
                      29

                    
	
                      4.7

                    	 
      	
                      Restriction
      on Dividends and Repurchases

                    	 
      	
                      30

                    
	
                      4.8

                    	 
      	
                      Executive
      Compensation

                    	 
      	
                      32

                    
	
                      4.9

                    	 
      	
                      Related
      Party Transactions

                    	 
      	
                      32

                    
	
                      4.10

                    	 
      	
                      Bank
      and Thrift Holding Company Status

                    	 
      	
                      32

                    
	
                      4.11

                    	
                        

                    	
                      Predominantly
      Financial

                    	
                        

                    	
                      32

                    


            

          

        

      

    


    
      
         


      

      
        -i-

        
          

        

      

      
         


      

    

     

    
      
        
          
            
              
                
                  
                    	 	 	
                            Article
      V

                          	 	 
	 	 	
                            Miscellaneous

                          	 	 
	 	 	 	 	 
	
                            5.1

                          	 
      	
                            Termination

                          	 
      	
                            32

                          
	
                            5.2

                          	 
      	
                            Survival
      of Representations and Warranties

                          	 
      	
                            33

                          
	
                            5.3

                          	 
      	
                            Amendment

                          	 
      	
                            33

                          
	
                            5.4

                          	 
      	
                            Waiver
      of Conditions

                          	 
      	
                            33

                          
	
                            5.5

                          	 
      	
                            Governing Law: Submission to
      Jurisdiction, Etc.

                          	 
      	
                            34

                          
	
                            5.6

                          	 
      	
                            Notices

                          	 
      	
                            34

                          
	
                            5.7

                          	 
      	
                            Definitions

                          	 
      	
                            34

                          
	
                            5.8

                          	 
      	
                            Assignment

                          	 
      	
                            35

                          
	
                            5.9

                          	 
      	
                            Severability

                          	 
      	
                            35

                          
	
                            5.10

                          	
                              

                          	
                            No
      Third Party Beneficiaries

                          	
                              

                          	
                            35

                          


                  

                

              

            

          

        

      

    


    
      
         


      

      
        -ii-

        
          

        

      

      
         


      

    


    LIST OF
ANNEXES

     

    
      
        
          	
                  ANNEX
      A:

                	 
      	
                  FORM
      OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

                
	
                  ANNEX
      B:

                	 
      	
                  FORM
      OF CERTIFICATE OF DESIGNATIONS FOR WARRANT PREFERRED
  STOCK

                
	
                  ANNEX
      C:

                	 
      	
                  FORM
      OF WAIVER

                
	
                  ANNEX
      D:

                	 
      	
                  FORM
      OF OPINION

                
	
                  ANNEX
      E:

                	
                    

                	
                  FORM
      OF WARRANT

                


        

      

    


    
      
         


      

      
        -iii-

        
          

        

      

      
         


      

    


    INDEX
OF DEFINED TERMS

     

    
      
        
          	 
      	 
      	
                  Location of

                
	
                  Term

                	 
      	
                  Definition

                
	
                  Affiliate

                	 
      	
                  5.7(b)

                
	
                  Agreement

                	 
      	
                  Recitals

                
	
                  Appropriate
      Federal Banking Agency

                	 
      	
                  2.2(s)

                
	
                  Bank
      Holding Company

                	 
      	
                  4.10

                
	
                  Bankruptcy
      Exceptions

                	 
      	
                  2.2(d)

                
	
                  Benefit
      Plans

                	 
      	
                  1
      .2(d)(iv)

                
	
                  Board
      of Directors

                	 
      	
                  2.2(f)

                
	
                  Business
      Combination

                	 
      	
                  5.8

                
	
                  business
      day

                	 
      	
                  1.3

                
	
                  Capitalization
      Date

                	 
      	
                  2.2(b)

                
	
                  Certificates
      of Designations

                	 
      	
                  1.2(d)
      (iii)

                
	
                  Charter

                	 
      	
                  1
      .2(d)(iii)

                
	
                  Closing

                	 
      	
                  1.2(a)

                
	
                  Closing
      Date

                	 
      	
                  1.2(a)

                
	
                  Code

                	 
      	
                  2.2(n)

                
	
                  Common
      Stock

                	 
      	
                  2.2(b)

                
	
                  Company

                	 
      	
                  Recitals

                
	
                  Company
      Financial Statements

                	 
      	
                  2.2(h)

                
	
                  Company
      Material Adverse Effect

                	 
      	
                  2.1(b)

                
	
                  Company
      Reports

                	 
      	
                  2.2(i)(i)

                
	
                  Company
      Subsidiary; Company Subsidiaries

                	 
      	
                  2.2(e)(ii)

                
	
                  control;
      controlled by; under common control with

                	 
      	
                  5.7(b)

                
	
                  Controlled
      Group

                	 
      	
                  2.2(n)

                
	
                  CPP

                	 
      	
                  Recitals

                
	
                  Disclosure
      Schedule

                	 
      	
                  2.1(a)

                
	
                  EESA

                	 
      	
                  1.2(d)(iv)

                
	
                  ERISA

                	 
      	
                  2.2(n)

                
	
                  Exchange
      Act

                	 
      	
                  4.4

                
	
                  Federal
      Reserve

                	 
      	
                  4.10

                
	
                  GAAP

                	 
      	
                  2.1(b)

                
	
                  Governmental
      Entities

                	 
      	
                  1.2(c)

                
	
                  Holder

                	 
      	
                  4.5(l)(i)

                
	
                  Holders’
      Counsel

                	 
      	
                  4.5(l)(ii)

                
	
                  Indemnitee

                	 
      	
                  4.
      5(h)(i)

                
	
                  Information

                	 
      	
                  3.5(c)

                
	
                  Investor

                	 
      	
                  Recitals

                
	
                  Junior
      Stock

                	 
      	
                  4.7(f)

                
	
                  knowledge
      of the Company; Company’s knowledge

                	 
      	
                  5.7(c)

                
	
                  Letter
      Agreement

                	 
      	
                  Recitals

                
	
                  officers

                	 
      	
                  5.7(c)

                
	
                  Parity
      Stock

                	
                    

                	
                  4.7(f)

                


        

      

    


    
      
         


      

      
        -iv-

        
          

        

      

      
         


      

    

    


    
      
        
          	 
      	 
      	
                  Location of

                
	
                  Term

                	 
      	
                  Definition

                
	
                  Pending
      Underwritten Offering

                	 
      	
                  4.5(m)

                
	
                  Permitted
      Repurchases

                	 
      	
                  4.7(c)

                
	
                  Piggyback
      Registration

                	 
      	
                  4.5(b)(iv)

                
	
                  Plan

                	 
      	
                  2.2(n)

                
	
                  Preferred
      Shares

                	 
      	
                  Recitals

                
	
                  Preferred
      Stock

                	 
      	
                  Recitals

                
	
                  Previously
      Disclosed

                	 
      	
                  2.1(c)

                
	
                  Proprietary
      Rights

                	 
      	
                  2.2(u)

                
	
                  Purchase

                	 
      	
                  Recitals

                
	
                  Purchase
      Price

                	 
      	
                  1.1

                
	
                  Purchased
      Securities

                	 
      	
                  Recitals

                
	
                  register;
      registered; registration

                	 
      	
                  4.5(l)(iii)

                
	
                  Registrable
      Securities

                	 
      	
                  4.5(l)(iv)

                
	
                  Registration
      Expenses

                	 
      	
                  4.5(l)(v)

                
	
                  Regulatory
      Agreement

                	 
      	
                  2.2(s)

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

                	 
      	
                  4.5(l)(vi)

                
	
                  Savings
      and Loan Holding Company

                	 
      	
                  4.10

                
	
                  Schedules

                	 
      	
                  Recitals

                
	
                  SEC

                	 
      	
                  2.2(k)

                
	
                  Securities
      Act

                	 
      	
                  2.2(a)

                
	
                  Selling
      Expenses

                	 
      	
                  4.5(l)(vii)

                
	
                  Senior
      Executive Officers

                	 
      	
                  4.8

                
	
                  Shelf
      Registration Statement

                	 
      	
                  4.5(b)(ii)

                
	
                  Signing
      Date

                	 
      	
                  2.1(b)

                
	
                  Special
      Registration

                	 
      	
                  4.5(j)

                
	
                  subsidiary

                	 
      	
                  5.7(a)

                
	
                  Tax;
      Taxes

                	 
      	
                  2.2(o)

                
	
                  Transfer

                	 
      	
                  4.4

                
	
                  Warrant

                	 
      	
                  Recitals

                
	
                  Warrant
      Preferred Stock

                	 
      	
                  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 the series of its Preferred Stock
(“Warrant Preferred
Stock”) set forth on Schedule A to the
Letter Agreement (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 performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing;


    
      
         


      

      
        -2-

        
          

        

      

      
         


      

    

     

    (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
amendments to its certificate or articles of incorporation, articles of
association, or similar organizational document (“Charter”) in substantially
the forms attached hereto as Annex A and Annex B (the “Certificates of
Designations”) and such filing shall have been accepted;

     

    (iv)           (A)
the Company shall have effected such changes to its compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”) with respect
to its Senior Executive Officers (and to the extent necessary for such changes
to be legally enforceable, each of its Senior Executive Officers shall have duly
consented in writing to such changes), as may be necessary, during the period
that the Investor owns any debt or equity securities of the Company acquired
pursuant to this Agreement or the Warrant, in order to comply with Section
111(b) of the Emergency Economic Stabilization Act of 2008 (“EESA”) as implemented by
guidance or regulation thereunder that has been issued and is in effect as of
the Closing Date, and (B) the Investor shall have received a certificate signed
on behalf of the Company by a senior executive officer certifying to the effect
that the condition set forth in Section 1 .2(d)(iv)(A) has been
satisfied;

     

    (v)            each
of the Company’s Senior Executive Officers shall have delivered to the Investor
a written waiver in the form attached hereto as Annex C 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 D;

     

    (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 E 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)        
 On or prior to the Signing Date, the Company delivered to the Investor a
schedule (“Disclosure
Schedule”) setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 2.2.

     

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

     


    
      
         


      

      
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    (c)           “Previously Disclosed” means
information set forth on the Disclosure Schedule, provided, however, that
disclosure in any section of such Disclosure Schedule shall apply only to the
indicated section of this Agreement except to the extent that it is reasonably
apparent from the face of such disclosure that such disclosure is relevant to
another section of this Agreement.

     

    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 would be considered a “significant subsidiary” within the
meaning of Rule 1-02(w) of Regulation S-X under the Securities Act of 1933 (the
“Securities Act”), has
been duly organized and is validly existing in good standing under the laws of
its jurisdiction of organization. The Charter and bylaws of the Company, 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). As of the Signing Date, the Company does not have
outstanding any securities or other obligations providing the holder the right
to acquire its Common Stock (“Common Stock”) that is not
reserved for issuance as specified on Schedule B, and the
Company has not made any other commitment to authorize, issue or sell any Common
Stock. 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. Each
holder of 5% or more of any class of capital stock of the Company and such
holder’s primary address are set forth on Schedule
B.


    
      
         


      

      
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    (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 Warrant Preferred 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, 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.

     

    (e)          Authorization,
Enforceability.

     

    (i)          The
Company has the corporate power and authority to execute and deliver this
Agreement and the Warrant and 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. 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.


    
      
         


      

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

     

    (f)           Anti-takeover Provisions and
Rights Plan. The Board of Directors of the Company (the “Board of Directors”) has
taken all necessary action to ensure that the transactions contemplated by this
Agreement and the 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.

     

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


    
      
         


      

      
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    (h)           Company Financial
Statements. The Company has Previously Disclosed each of the consolidated
financial statements of the Company and its consolidated subsidiaries for each
of the last three completed fiscal years of the Company (which shall be audited
to the extent audited financial statements are available prior to the Signing
Date) and each completed quarterly period since the last completed fiscal year
(collectively the “Company
Financial Statements”). The Company Financial Statements present fairly
in all material respects the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates indicated therein and the
consolidated results of their operations for the periods specified therein; and
except as stated therein, such financial statements (A) were prepared in
conformity with GAAP applied on a consistent basis (except as may be noted
therein) and (B) have been prepared from, and are in accordance with, the books
and records of the Company and the Company Subsidiaries.

     

    (i)            Reports.

     

    (i)         
   Since December 31, 2006, the Company and each Company
Subsidiary has filed all reports, registrations, documents, filings, statements
and submissions, together with any amendments thereto, that it was required to
file with any Governmental Entity (the foregoing, collectively, the “Company Reports”) and has
paid all fees and assessments due and payable in connection therewith, except,
in each case, as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. As of their respective dates
of filing, the Company Reports complied in all material respects with all
statutes and applicable rules and regulations of the applicable Governmental
Entities.

     

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


    
      
         


      

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

     

    (m)          Compliance with Laws.
Except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, the Company and the Company Subsidiaries
have all permits, licenses, franchises, authorizations, orders and approvals of,
and have made all filings, applications and registrations with, Governmental
Entities that are required in order to permit them to own or lease their
properties and assets and to carry on their business as presently conducted and
that are material to the business of the Company or such Company Subsidiary.
Except as set forth on Schedule D, 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 D, 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.


    
      
         


      

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


    
      
         


      

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

     

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

     

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

     

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

     

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

     

    (r)            Risk Management
Instruments. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, all derivative
instruments, including, swaps, caps, floors and option agreements, whether
entered into for the 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.


    
      
         


      

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

     

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

     

    (u)           Intellectual
Property. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, (i) the
Company and each Company Subsidiary owns or otherwise has the right to use, all
intellectual property rights, 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.


    
      
         


      

      
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    (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. 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.

     

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

     

    3.3       
Sufficiency of
Authorized Warrant Preferred Stock; Exchange Listing.

     

    (a)         During
the period from the Closing Date 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.

     

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


    
      
         


      

      
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    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, or otherwise to the extent necessary to evaluate, manage, or transfer
its investment in the Company, to examine the corporate books and make copies
thereof and to discuss the affairs, finances and accounts of the Company and the
Company Subsidiaries with the principal officers of the Company, all upon
reasonable notice and at such reasonable times and as often as the Investor may
reasonably request and (y) to review any information material to the Investor’s
investment in the Company provided by the Company to its Appropriate Federal
Banking Agency. Any investigation pursuant to this Section 3.5 shall be
conducted during normal business hours and in such manner as not to interfere
unreasonably with the conduct of the business of the Company, and nothing herein
shall require the Company or any Company Subsidiary to disclose any information
to the Investor to the extent (i) prohibited by applicable law or regulation, or
(ii) that such disclosure would reasonably be expected to cause a violation of
any agreement to which the Company or any Company Subsidiary is a party or would
cause a risk of a loss of privilege to the Company or any Company Subsidiary
(provided that the
Company shall use commercially reasonable efforts to make appropriate substitute
disclosure arrangements under circumstances where the restrictions in this
clause (ii) apply).

     

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

     

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

     

    
      
        
        

      

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

     

    (c)        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 nonpublic 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.

     

    (d)       
The Investor’s information rights pursuant to Section 3.5(b) may be assigned by
the Investor to a transferee or assignee of the Purchased Securities or the
Warrant Shares or with a liquidation preference or, in the case of the Warrant,
the liquidation preference of the underlying shares of Warrant Preferred Stock,
no less than an amount equal to 2% of the initial aggregate liquidation
preference of the Preferred Shares.

     

    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 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.


    
      
         


      

      
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    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.”

     

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

     

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

     

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


    
      
         


      

      
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    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
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 (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 any Purchased Securities or Warrant Shares if such transfer
would require the Company to be subject to the periodic reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). In
furtherance of the foregoing, the Company shall provide reasonable cooperation
to facilitate any Transfers of the Purchased Securities or Warrant Shares,
including, as is reasonable under the circumstances, by furnishing such
information concerning the Company and its business as a proposed transferee may
reasonably request (including such information as is required by Section 4.5(k))
and making management of the Company reasonably available to respond to
questions of a proposed transferee in accordance with customary practice,
subject in all cases to the proposed transferee agreeing to a customary
confidentiality agreement.


    
      
         


      

      
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    4.5         
Registration
Rights.

     

    (a)            Unless
and until the Company becomes subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, the Company shall have no obligation to comply
with the provisions of this Section 4.5 (other than Section 4.5(b)(iv)-(vi));
provided that the
Company covenants and agrees that it shall comply with this Section 4.5 as soon
as practicable after the date that it becomes subject to such reporting
requirements.

     

    (b)            Registration.

     

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

     

    (ii)            Any
registration pursuant to Section 4.5(b)(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(d); 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.


    
      
         


      

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


    
      
         


      

      
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    (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(b)(ii) or (y) a Piggyback
Registration under Section 4.5(b)(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(b)(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(b)(ii) or Section 4.5(b)(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.

     

    (c)            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.

     

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

     

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


    
      
         


      

      
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    (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;


    
      
         


      

      
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    (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 applicable Registrable Securities
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(d)(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(d)(vi)(C) at the earliest practicable time.

     

    (viii)        Upon
the occurrence of any event contemplated by Section 4.5(d)(v) or 4.5(d)(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(d)(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).


    
      
         


      

      
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    (x)      
     If an underwritten offering is requested pursuant
to Section 4.5(b)(ii), enter into an underwriting agreement in customary form,
scope and substance and take all such other actions reasonably requested by the
Holders of a majority of the Registrable Securities being sold in connection
therewith or by the managing underwriter(s), if any, to expedite or facilitate
the underwritten disposition of such Registrable Securities, and in connection
therewith in any underwritten offering (including making members of management
and executives of the Company available to participate in “road shows”, similar
sales events and other marketing activities), (A) make such representations and
warranties to the Holders that are selling stockholders and the managing
underwriter(s), if any, with respect to the business of the Company and its
subsidiaries, and the Shelf Registration Statement, prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in customary form, substance and scope, and, if true, confirm the same if
and when requested, (B) use its reasonable best efforts to furnish the
underwriters with opinions of counsel to the Company, addressed to the managing
underwriter(s), if any, covering the matters customarily covered in such
opinions requested in underwritten offerings, (C) use its reasonable best
efforts to obtain “cold comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any business acquired by the Company for which financial
statements and financial data are included in the Shelf Registration Statement)
who have certified the financial statements included in such Shelf Registration
Statement, addressed to each of the managing underwriter(s), if any, such
letters to be in customary form and covering matters of the type customarily
covered in “cold comfort” letters, (D) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures customary
in underwritten offerings (provided that the Investor shall not be obligated to
provide any indemnity), and (E) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority of the Registrable
Securities being sold in connection therewith, their counsel and the managing
underwriter(s), if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company.

     

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

     

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


    
      
         


      

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

     

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

     

    (e)           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.

     

    (f)    
       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.

     

    (g)   
       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(d) that Investor and/or the selling Holders and
the underwriters, if any, shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to effect the
registered offering of their Registrable Securities.


    
      
         


      

      
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    (h) 
         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 1 59A) a “free writing prospectus” (as defined in Rule 405) that was not
authorized in writing by the Company.

     


    
      
         


      

      
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    (ii)       
   If the indemnification provided for in Section 4.5(h)(i) is
unavailable to an Indemnitee with respect to any losses, claims, damages,
actions, liabilities, costs or expenses referred to therein or is insufficient
to hold the Indemnitee harmless as contemplated therein, then the Company, in
lieu of indemnifying such Indemnitee, shall contribute to the amount paid or
payable by such Indemnitee as a result of such losses, claims, damages, actions,
liabilities, costs or expenses in such proportion as is appropriate to reflect
the relative fault of the Indemnitee, on the one hand, and the Company, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, actions, liabilities, costs or expenses as well as
any other relevant equitable considerations. The relative fault of the Company,
on the one hand, and of the Indemnitee, on the other hand, shall be determined
by reference to, among other factors, whether the untrue statement of a material
fact or omission to state a material fact relates to information supplied by the
Company or by the Indemnitee and the parties’ relative intent, knowledge, access
to information and opportunity to correct or 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(h)(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(h)(i). No Indemnitee guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from the Company if the
Company was not guilty of such fraudulent misrepresentation.

     

    (i)    
       Assignment of Registration
Rights. The rights of the Investor to registration of Registrable
Securities pursuant to Section 4.5(b) may be assigned by the Investor to a
transferee or assignee of Registrable Securities with a liquidation preference
or, in the case of the Warrant, the liquidation preference of the underlying
shares of Warrant Preferred Stock, 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.

     

    (j)          
 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 any preferred stock of the Company or any securities
convertible into or exchangeable or exercisable for preferred stock of the
Company, during the period not to exceed ten days prior and 60 days following
the effective date of such offering or such longer period up to 90 days as may
be requested by the managing underwriter for such underwritten offering. The
Company also agrees to cause such of its directors and senior executive officers
to execute and 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 S4 or Form S-8 (or successor form)
or (B) shares of equity securities and/or options or other rights in respect
thereof to be offered to directors, members of management, employees,
consultants, customers, lenders or vendors of the Company or Company
Subsidiaries or in connection with dividend reinvestment plans.

     

    (k)           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:


    
      
         


      

      
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    (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.

     

    (l)           
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 or
amendment thereto in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of effectiveness of such
registration statement or amendment thereto or (B) filing a prospectus and/or
prospectus supplement in respect of an appropriate effective registration
statement on Form S-3.

     

    (iv)          “Registrable Securities” means
(A) all Preferred Shares, (B) the Warrant (subject to Section 4.5(q)) 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(p), 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.


    
      
         


      

      
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    (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).

     

    (m)           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(b)(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(g)
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(m), any underwritten offering of Registrable Securities in which such Holder
has advised the Company of its intent to register its Registrable Securities
either pursuant to Section 4.5(b)(ii) or 4.5(b)(iv) prior to the date of such
Holder’s forfeiture.

     

    (n)           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.


    
      
         


      

      
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    (o)           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(b)(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.

     

    (p)           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(b)(ii), clauses (iv),
(ix) and (x)-(xii) of Section 4.5(d), Section 4.5(h) and Section 4.5(j) 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.

     

    (q)           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           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 or
the Warrant Shares may be deposited and depositary shares, each representing a
fraction of a Preferred Share or Warrant Share, as applicable, 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 or Warrant Shares, as
applicable, pursuant thereto, the depositary shares issued pursuant thereto
shall be deemed “Preferred Shares”, “Warrant Shares” and, as applicable,
“Registrable Securities” for purposes of this Agreement.


    
      
         


      

      
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    4.7          
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 all of the Preferred Shares and Warrant Shares have been redeemed in
whole or the Investor has transferred all of the Preferred Shares and Warrant
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,
declare or pay any dividend or make any distribution on capital stock or other
equity securities of any kind of the Company or any Company Subsidiary (other
than (i) regular quarterly cash dividends of not more than the amount of the
last quarterly cash dividend per share declared or, if lower, announced to its
holders of Common Stock an intention to declare, on the Common Stock prior to
November 17, 2008, as adjusted for any stock split, stock dividend, reverse
stock split, reclassification or similar transaction, (ii) dividends payable
solely in shares of Common Stock, (iii) regular dividends on shares of preferred
stock in accordance with the terms thereof and which are permitted under the
terms of the Preferred Shares and the Warrant Shares, (iv) dividends or
distributions by any wholly-owned Company Subsidiary or (v) dividends or
distributions by any Company Subsidiary required pursuant to binding contractual
agreements entered into prior to November 17, 2008).

     

    (b)           During
the period beginning on the third anniversary of the Closing Date and ending on
the earlier of (i) the tenth anniversary of the Closing Date and (ii) the date
on which all of the Preferred Shares and Warrant Shares have been redeemed in
whole or the Investor has transferred all of the Preferred Shares and Warrant
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,
(A) pay any per share dividend or distribution on capital stock or other equity
securities of any kind of the Company at a per annum rate that is in excess of
103% of the aggregate per share dividends and distributions for the immediately
prior fiscal year (other than regular dividends on shares of preferred stock in
accordance with the terms thereof and which are permitted under the terms of the
Preferred Shares and the Warrant Shares); provided that no increase in
the aggregate amount of dividends or distributions on Common Stock shall be
permitted as a result of any dividends or distributions paid in shares of Common
Stock, any stock split or any similar transaction or (B) pay aggregate dividends
or distributions on capital stock or other equity securities of any kind of any
Company Subsidiary that is in excess of 103% of the aggregate dividends and
distributions paid for the immediately prior fiscal year (other than in the case
of this clause (B), (1) regular dividends on shares of preferred stock in
accordance with the terms thereof and which are permitted under the terms of the
Preferred Shares and the Warrant Shares, (2) dividends or distributions by any
wholly-owned Company Subsidiary, (3) dividends or distributions by any Company
Subsidiary required pursuant to binding contractual agreements entered into
prior to November 17, 2008) or (4) dividends or distributions on newly issued
shares of capital stock for cash or other property.


    
      
         


      

      
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    (c)       Prior
to the earlier of (x) the tenth anniversary of the Closing Date and (y) the date
on which all of the Preferred Shares and Warrant Shares have been redeemed in
whole or the Investor has transferred all of the Preferred Shares and Warrant
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,
redeem, purchase or acquire any shares of Common Stock or other capital stock or
other equity securities of any kind of the Company or any Company Subsidiary, or
any trust preferred securities issued by the Company or any Affiliate of the
Company, other than (i) redemptions, purchases or other acquisitions of the
Preferred Shares and Warrant Shares, (ii) in connection with the administration
of any employee benefit plan in the ordinary course of business and consistent
with past practice, (iii) 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, (iv) the exchange or
conversion of Junior Stock for or into other Junior Stock or of Parity Stock or
trust preferred securities for or into other Parity Stock (with the same or
lesser aggregate liquidation amount) or Junior Stock, in each case set forth in
this clause (iv), 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 (ii) and (iii), collectively, the “Permitted Repurchases”), (v)
redemptions of securities held by the Company or any wholly- owned Company
Subsidiary or (vi) redemptions, purchases or other acquisitions of capital stock
or other equity securities of any kind of any Company Subsidiary required
pursuant to binding contractual agreements entered into prior to November 17,
2008.

     

    (d)       Until
such time as the Investor ceases to own any Preferred Shares or Warrant Shares,
the Company shall not repurchase any Preferred Shares or Warrant 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 or Warrant Shares, as the
case may be, then held by the Investor on the same terms and
conditions.

     

    (e)       During
the period beginning on the tenth anniversary of the Closing and ending on the
date on which all of the Preferred Shares and Warrant Shares have been redeemed
in whole or the Investor has transferred all of the Preferred Shares and Warrant
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 capital stock or
other equity securities of any kind of the Company or any Company Subsidiary; or
(ii) redeem, purchase or acquire any shares of Common Stock or other capital
stock or other equity securities of any kind of the Company or any Company
Subsidiary, or any trust preferred securities issued by the Company or any
Affiliate of the Company, other than (A) redemptions, purchases or other
acquisitions of the Preferred Shares and Warrant Shares, (B) regular dividends
on shares of preferred stock in accordance with the terms thereof and which are
permitted under the terms of the Preferred Shares and the Warrant Shares, or (C)
dividends or distributions by any wholly-owned Company Subsidiary.

     

    (f)        “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).


    
      
         


      

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

     

    4.9           Related Party
Transactions. Until such time as the Investor ceases to own any Purchased
Securities or Warrant Shares, the Company and the Company Subsidiaries shall not
enter into transactions with Affiliates or related persons (within the meaning
of Item 404 under the SEC’s Regulation S-K) unless (i) such transactions are on
terms no less favorable to the Company and the Company Subsidiaries than could
be obtained from an unaffiliated third party, and (ii) have been approved by the
audit committee of the Board of Directors or comparable body of independent
directors of the Company.

     

    4.10   
     Bank and Thrift Holding
Company Status. If the Company is a Bank Holding Company or a Savings and
Loan Holding Company on the Signing Date, then the Company shall maintain its
status as a Bank Holding Company or Savings and Loan Holding Company, as the
case may be, for as long as the Investor owns any Purchased Securities or
Warrant Shares. The Company shall redeem all Purchased Securities and Warrant
Shares held by the Investor prior to terminating its status as a Bank Holding
Company or Savings and Loan Holding Company, as applicable. “Bank Holding Company” means a
company registered as such with the Board of Governors of the Federal Reserve
System (the “Federal
Reserve”) pursuant to 12 U.S.C. § 1842 and the regulations of the Federal
Reserve promulgated thereunder. “Savings and Loan Holding Company”
means a company registered as such with the Office of Thrift Supervision
pursuant to 12 U.S.C. § 1467(a) and the regulations of the Office of Thrift
Supervision promulgated thereunder.

     

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

     

    Article
V

    Miscellaneous

     

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


    
      
         


      

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

     

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

     

    (c)           by
the mutual written consent of the Investor and the Company in the event of
termination of this Agreement as provided in this Section 5.1, this Agreement
shall forthwith become void and there shall be no liability on the part of
either party hereto except that nothing herein shall relieve either party from
liability for any breach of this Agreement.

     

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

     

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

     

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


    
      
         


      

      
        -33-

        
          

        

      

      
         


      

    


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

     

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

     

    If to the
Investor:

     

    United
States Department of the Treasury

     

    1500
Pennsylvania Avenue, NW, Room 2312

     

    Washington,
D.C. 20220

     

    Attention:
Assistant General Counsel (Banking and Finance) Facsimile: (202)
622-1974

     

    5.7          
Definitions

     

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

     

    (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.


    
      
         


      

      
        -34-

        
          

        

      

      
         


      

    


    (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 merger, consolidation, statutory share exchange
or similar transaction that requires the approval of the Company’s stockholders
(a “Business
Combination”) where such party is not the surviving entity, or a sale of
substantially all of its assets, to the entity which is the survivor of such
Business Combination or the purchaser in such sale and (b) as provided in
Sections 3.5 and 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.

     

    * *
*


    
      
         


      

      
        -35-

        
          

        

      

      
         


      

    


    ANNEX
A

     

    FORM OF CERTIFICATE OF
DESIGNATIONS FOR PREFERRED STOCK


     

    [OMITTED.  SEE
EXHIBIT 3.2, ANNEX A TO THIS FORM 8-K]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX
B

     

    FORM
OF CERTIFICATE OF DESIGNATIONS

    FOR WARRANT PREFERRED
STOCK


     

    [OMITTED.  SEE
EXHIBIT 3.2, ANNEX B TO THIS FORM 8-K]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX
C

     

    FORM OF
WAIVER

     

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

     

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

     

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


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ANNEX
D

     

    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 Warrant Preferred 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, 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.

     

    (e)           The
Company has the corporate power and authority to execute and deliver the
Agreement and the Warrant and 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.

     

    (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(h) or the severability provisions
of the Agreement insofar as Section 4.5(h) is concerned.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    FORM OF
WARRANT


     

    [OMITTED.  SEE
EXHIBIT 4.3 TO THIS FORM 8-K]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
A

     

    ADDITIONAL TERMS AND
CONDITIONS

    


    
      Company
Information:

    

     

    Name of
the Company:  First
Reliance Bancshares, Inc.

     

    Corporate
or other organizational form:  C Corporation

     

    Jurisdiction
of Organization:  South Carolina

     

    Appropriate
Federal Banking Agency:  Federal Deposit Insurance
Corporation

     

    
      
        
          
            	
                    Notice
      Information:

                  	
                    With
      Copy to:

                  
	 	 
	
                    Mr. Jeff A.
      Paolucci

                  	
                    Mr.
      B.T. Atkinson

                  
	
                    Senior
      VP and Chief Financial Officer

                  	
                    Bryan
      Cave LLP

                  
	
                    First
      Reliance Bancshares, Inc.

                  	
                    One
      Wachovia Center, Suite 3700

                  
	
                    2170
      W. Palmetto Street

                  	
                    301
      S. College St.

                  
	
                    Florence,
      SC 29501

                  	
                    Charlotte,
      NC 28202

                  
	
                    Tel:
      (843) 674-3250

                  	
                    Tel:
      (704) 749-8954

                  
	
                    Fax:
      (843) 674-3045

                  	
                    Fax:
      (704) 749-8990

                  
	
                    Email:
      jpaolucci@firstreliance.com

                  	
                    Email:
      bt.atkinson@bryancave.com

                  


          

        

      

    

     

    Terms of the
Purchase:

    


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

     

    Per Share
Liquidation Preference of Preferred Stock:  One Thousand Dollars
($1,000.00)

     

    Number of
Shares of Preferred Stock Purchased:  15,349

     

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

     

    Series of
Warrant Preferred Stock:  Fixed Rate Cumulative Perpetual
Preferred Stock, Series B

     

    Number of
Warrant Shares:  767.00767

     

    Number of
Net Warrant Shares (after net settlement):  767

     

    Exercise
Price of the Warrant:  $0.01 per share

     

    Purchase
Price:  $15,349,000

     

    Closing:

     

    
      Location
of Closing:   To be mutually agreed upon by the
Parties

    

    


    Time of
Closing:  9:00 a.m.,
Eastern Time

     

    Date of
Closing:  March 6,
2009


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      
        
          	
                  Wire
      Information for Closing:

                	
                  ABA
      Number:

                
	 
      	
                  Bank:

                
	 
      	
                  Account
      Name:

                
	 
      	
                  Account
      Number:

                
	 
      	
                  Beneficiary:

                


        

      

    

     

    Contact
for Confirmation of Wire Information:


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
B

     

    CAPITALIZATION

     

    Capitalization
Date:  February 28,
2009

     

    Common
Stock

     

    Par
value:  $0.01

     

    Total
Authorized:  20,000,000

     

    Outstanding:  3,525,004*

     

    ________

    *         Includes
10,184 treasury shares.

    


    
      Subject
to warrants, options, convertible securities, etc.: 269,447

    

     

    Reserved
for benefit plans and other issuances:  305,586

     

    Remaining
authorized but unissued:  15,899,963*

    ________

    
      	
               
      

            	
              *

            	
              The
      Company had outstanding on the Capitalization Date 45,774 stock
      appreciation rights with a strike price of $14.85 per share and 62,481
      stock appreciation rights with a strike price of $15.00 per
      share.  The rights are subject to settlement in shares of Common
      Stock.  Based on the closing price of the Company’s Common Stock
      on the Capitalization Date, the number of shares of Common Stock the
      Company was obligated to issue pursuant to these rights was
    0.

            


    

    


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

     

    Preferred
Stock

     

    Par
value:  None

     

    Total
Authorized:    10,000,000

     

    Outstanding
(by series):  0

     

    Reserved
for issuance:  0

     

    Remaining
authorized but
unissued:              10,000,000

     

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

                    	
                      Primary Address

                    
	 
      	 
      
	
                      Paul C. Saunders

                    	
                      2170 W. Palmetto Street

                    
	  	
                      Florence, SC 29501

                    
	  	  
	
                      F.R. Saunders, Jr.

                    	
                      2170 W. Palmetto Street

                    
	  	
                      Florence, SC 29501

                    
	  	  
	
                      Service Capital Partners, LP; Service Capital Advisors,

                    	
                      1700 Pacific Avenue

                    
	
                      LLC; and Doris Wiley

                    	
                      Suite 2000

                    
	  	
                      Dallas, TX 75201

                    


            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
C

     

    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
D

     

    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
E

     

    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


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
F

    


    COMPANY FINANCIAL
STATEMENTS

    


    The
December 31, 2008 financial statements are not yet completed and will be
provided to the Investor promptly when available.  The remaining
Company Financial Statements that were Previously Disclosed pursuant to Section
2.2(h) of the Securities Purchase Agreement – Standard Terms are attached
hereto.

    


    [OMITTED.  SEE
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FIRST RELIANCE BANCSHARES, INC.
ANNUAL REPORTS ON FORM 10-K FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2007 AND
ITS QUARTERLY REPORTS ON FORM 10-Q FOR THE QUARTERS ENDED MARCH 31, 2008, JUNE
30, 2008 AND SEPTEMBER 30, 2008]