Exhibit 10.1


 


UNITED STATES DEPARTMENT OF THE TREASURY


1500 PENNSYLVANIA AVENUE, NW


WASHINGTON, D.C.  20220


 


Dear Ladies and Gentlemen:


 


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


 


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superseded by the terms set forth herein or in the Schedules hereto, the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


 


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


 


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


 


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


 


* * *


 

















 


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


 


 


	
   

  	
  UNITED STATES DEPARTMENT OF THE
  TREASURY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neel Kashkari

  
	
   

  	
   

  	
  Name:

  	
  Neel Kashkari

  
	
   

  	
   

  	
  Title:

  	
  Interim Assistant Secretary for
  Financial Stability

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:  FIRST
  FEDERAL BANCSHARES OF ARKANSAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry J. Brandt

  
	
   

  	
   

  	
  Name:

  	
  Larry J. Brandt

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: March 6, 2009

  	
   

  



 
















 


EXHIBIT A


 


SECURITIES PURCHASE AGREEMENT


 

















 


EXHIBIT
A


 


 




 





 


SECURITIES PURCHASE AGREEMENT


 


STANDARD TERMS


 


 




 




















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article I

  	
   

  	
   

  
	
   

  	
   

  	
  Purchase; Closing

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Purchase

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Closing

  	
   

  	
  2

  
	
  1.3

  	
   

  	
  Interpretation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article II

  	
   

  	
   

  
	
   

  	
   

  	
  Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Disclosure

  	
   

  	
  4

  
	
  2.2

  	
   

  	
  Representations
  and Warranties of the Company

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article III

  	
   

  	
   

  
	
   

  	
   

  	
  Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Commercially
  Reasonable Efforts

  	
   

  	
  13

  
	
  3.2

  	
   

  	
  Expenses

  	
   

  	
  14

  
	
  3.3

  	
   

  	
  Sufficiency of
  Authorized Common Stock; Exchange Listing

  	
   

  	
  14

  
	
  3.4

  	
   

  	
  Certain
  Notifications Until Closing

  	
   

  	
  14

  
	
  3.5

  	
   

  	
  Access,
  Information and Confidentiality

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Article IV

  	
   

  	
   

  
	
   

  	
   

  	
  Additional Agreements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Purchase for
  Investment

  	
   

  	
  16

  
	
  4.2

  	
   

  	
  Legends

  	
   

  	
  16

  
	
  4.3

  	
   

  	
  Certain
  Transactions

  	
   

  	
  18

  
	
  4.4

  	
   

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

  	
   

  	
  18

  
	
  4.5

  	
   

  	
  Registration
  Rights

  	
   

  	
  18

  
	
  4.6

  	
   

  	
  Voting of
  Warrant Shares

  	
   

  	
  30

  
	
  4.7

  	
   

  	
  Depositary
  Shares

  	
   

  	
  30

  
	
  4.8

  	
   

  	
  Restriction on
  Dividends and Repurchases

  	
   

  	
  30

  
	
  4.9

  	
   

  	
  Repurchase of
  Investor Securities

  	
   

  	
  31

  
	
  4.10

  	
   

  	
  Executive
  Compensation

  	
   

  	
  32

  
	
  4.11

  	
   

  	
  Bank and Thrift
  Holding Company Status

  	
   

  	
  32

  
	
  4.12

  	
   

  	
  Predominantly
  Financial

  	
   

  	
  33

  



 


i

















 


	
   

  	
   

  	
  Article V

  	
   

  	
   

  
	
   

  	
   

  	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Termination

  	
   

  	
  33

  
	
  5.2

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  	
  33

  
	
  5.3

  	
   

  	
  Amendment

  	
   

  	
  34

  
	
  5.4

  	
   

  	
  Waiver of
  Conditions

  	
   

  	
  34

  
	
  5.5

  	
   

  	
  Governing
  Law: Submission to Jurisdiction, Etc.

  	
   

  	
  34

  
	
  5.6

  	
   

  	
  Notices

  	
   

  	
  34

  
	
  5.7

  	
   

  	
  Definitions

  	
   

  	
  35

  
	
  5.8

  	
   

  	
  Assignment

  	
   

  	
  35

  
	
  5.9

  	
   

  	
  Severability

  	
   

  	
  35

  
	
  5.10

  	
   

  	
  No Third Party
  Beneficiaries

  	
   

  	
  36

  



 


ii

















 


LIST OF
ANNEXES


 


	
  ANNEX A:

  	
   

  	
  FORM OF
  CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEX B:

  	
   

  	
  FORM OF
  WAIVER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEX C:

  	
   

  	
  FORM OF
  OPINION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNEX D:

  	
   

  	
  FORM OF
  WARRANT

  	
   

  	
   

  



 


iii

















 


INDEX OF DEFINED TERMS


 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  Affiliate

  	
   

  	
  5.7(b)

  
	
  Agreement

  	
   

  	
  Recitals

  
	
  Appraisal Procedure

  	
   

  	
  4.9(c)(i)

  
	
  Appropriate Federal Banking Agency

  	
   

  	
  2.2(s)

  
	
  Bank Holding Company

  	
   

  	
  4.11

  
	
  Bankruptcy Exceptions

  	
   

  	
  2.2(d)

  
	
  Benefit Plans

  	
   

  	
  1.2(d)(iv)

  
	
  Board of Directors

  	
   

  	
  2.2(f)

  
	
  Business Combination

  	
   

  	
  4.4

  
	
  business day

  	
   

  	
  1.3

  
	
  Capitalization Date

  	
   

  	
  2.2(b)

  
	
  Certificate of Designations

  	
   

  	
  1.2(d)(iii)

  
	
  Charter

  	
   

  	
  1.2(d)(iii)

  
	
  Closing

  	
   

  	
  1.2(a)

  
	
  Closing Date

  	
   

  	
  1.2(a)

  
	
  Code

  	
   

  	
  2.2(n)

  
	
  Common Stock

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company Financial Statements

  	
   

  	
  2.2(h)

  
	
  Company Material Adverse Effect

  	
   

  	
  2.1(a)

  
	
  Company Reports

  	
   

  	
  2.2(i)(i)

  
	
  Company Subsidiary; Company Subsidiaries

  	
   

  	
  2.2(i)(i)

  
	
  control; controlled by; under common control with

  	
   

  	
  5.7(b)

  
	
  Controlled Group

  	
   

  	
  2.2(n)

  
	
  CPP

  	
   

  	
  Recitals

  
	
  EESA

  	
   

  	
  1.2(d)(iv)

  
	
  ERISA

  	
   

  	
  2.2(n)

  
	
  Exchange Act

  	
   

  	
  2.1(b)

  
	
  Fair Market Value

  	
   

  	
  4.9(c)(ii)

  
	
  Federal Reserve

  	
   

  	
  4.11

  
	
  GAAP

  	
   

  	
  2.1(a)

  
	
  Governmental Entities

  	
   

  	
  1.2(c)

  
	
  Holder

  	
   

  	
  4.5(k)(i)

  
	
  Holders’ Counsel

  	
   

  	
  4.5(k)(ii)

  
	
  Indemnitee

  	
   

  	
  4.5(g)(i)

  
	
  Information

  	
   

  	
  3.5(b)

  
	
  Initial Warrant Shares

  	
   

  	
  Recitals

  
	
  Investor

  	
   

  	
  Recitals

  
	
  Junior Stock

  	
   

  	
  4.8(c)

  
	
  knowledge of the Company; Company’s knowledge

  	
   

  	
  5.7(c)

  
	
  Last Fiscal Year

  	
   

  	
  2.1(b)

  



 


iv

















 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  Letter Agreement

  	
   

  	
  Recitals

  
	
  officers

  	
   

  	
  5.7(c)

  
	
  Parity Stock

  	
   

  	
  4.8(c)

  
	
  Pending Underwritten Offering

  	
   

  	
  4.5(l)

  
	
  Permitted Repurchases

  	
   

  	
  4.8(a)(ii)

  
	
  Piggyback Registration

  	
   

  	
  4.5(a)(iv)

  
	
  Plan

  	
   

  	
  2.2(n)

  
	
  Preferred Shares

  	
   

  	
  Recitals

  
	
  Preferred Stock

  	
   

  	
  Recitals

  
	
  Previously Disclosed

  	
   

  	
  2.1(b)

  
	
  Proprietary Rights

  	
   

  	
  2.2(u)

  
	
  Purchase

  	
   

  	
  Recitals

  
	
  Purchase Price

  	
   

  	
  1.1

  
	
  Purchased Securities

  	
   

  	
  Recitals

  
	
  Qualified Equity Offering

  	
   

  	
  4.4

  
	
  register; registered; registration

  	
   

  	
  4.5(k)(iii)

  
	
  Registrable Securities

  	
   

  	
  4.5(k)(iv)

  
	
  Registration Expenses

  	
   

  	
  4.5(k)(v)

  
	
  Regulatory Agreement

  	
   

  	
  2.2(s)

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

  	
   

  	
  4.5(k)(vi)

  
	
  Savings and Loan Holding Company

  	
   

  	
  4.11

  
	
  Schedules

  	
   

  	
  Recitals

  
	
  SEC

  	
   

  	
  2.1(b)

  
	
  Securities Act

  	
   

  	
  2.2(a)

  
	
  Selling Expenses

  	
   

  	
  4.5(k)(vii)

  
	
  Senior Executive Officers

  	
   

  	
  4.10

  
	
  Share Dilution Amount

  	
   

  	
  4.8(a)(ii)

  
	
  Shelf Registration Statement

  	
   

  	
  4.5(a)(ii)

  
	
  Signing Date

  	
   

  	
  2.1(a)

  
	
  Special Registration

  	
   

  	
  4.5(i)

  
	
  Stockholder Proposals

  	
   

  	
  3.1(b)

  
	
  subsidiary

  	
   

  	
  5.8(a)

  
	
  Tax; Taxes

  	
   

  	
  2.2(o)

  
	
  Transfer

  	
   

  	
  4.4

  
	
  Warrant

  	
   

  	
  Recitals

  
	
  Warrant Shares

  	
   

  	
  2.2(d)

  



 


v

















 


SECURITIES PURCHASE AGREEMENT — STANDARD TERMS


 


Recitals:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Article I

Purchase; Closing


 


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


 


1

















 


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


 


1.2           Closing.


 


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


 


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


 


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


 


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


 


(i)            (A) the
representations and warranties of the Company set forth in (x) Section 2.2(g) of
this Agreement shall be true and correct in all respects as though made on and
as of the Closing Date, (y) Sections 2.2(a) through (f) shall be
true and correct in all material respects as though made on and as of the
Closing Date (other than representations and warranties that by their terms
speak as of another date, which representations and warranties shall be true
and correct in all material respects as of such other date) and (z) Sections
2.2(h) through (v) (disregarding all qualifications or limitations
set forth in such representations and warranties as to “materiality”, “Company
Material Adverse Effect” and words of similar import) shall be true and correct
as though made on and as of the Closing Date (other than representations and
warranties that by their terms speak as of another date, which representations
and warranties shall be true and correct as of such other date), except to the
extent that the failure of such representations and warranties referred to in
this Section 1.2(d)(i)(A)(z) to be so true and correct, individually
or in the aggregate, does not have and would not reasonably be 


 


2

















 


expected to
have a Company Material Adverse Effect and (B) the Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing;


 


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


 


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


 


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


 


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


 


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


 


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


 


3

















 


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


 


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


 


Article II

Representations and Warranties


 


2.1           Disclosure.


 


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


 


4
















 


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


 


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


 


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


 


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


 


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


 


5

















 


issued and outstanding on the Capitalization Date and disclosed on Schedule
B and (ii) shares disclosed on Schedule B.


 


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


 


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


 


(e)           Authorization,
Enforceability.


 


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


 


(ii)           The
execution, delivery and performance by the Company of this Agreement and the
Warrant and the consummation of the transactions contemplated hereby and
thereby and compliance by the Company with the provisions hereof and thereof,
will not (A) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation of, any lien,
security interest, charge or encumbrance upon any of the properties or assets
of the Company or any Company Subsidiary under any of the terms, conditions or 


 


6

















 


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


 


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


 


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


 


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


 


(h)           Company Financial Statements.  Each of the consolidated financial statements
of the Company and its consolidated subsidiaries (collectively the “Company Financial Statements”) included or incorporated by
reference in the Company Reports filed with the SEC 


 


7

















 


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


 


(i)            Reports.


 


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


 


(ii)           The
records, systems, controls, data and information of the Company and the Company
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Company Subsidiaries or their accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have a material
adverse effect on the system of internal accounting controls described below in
this Section 2.2(i)(ii).  The
Company (A) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to
ensure that material information relating to the Company, including the
consolidated Company Subsidiaries, is made known to the chief executive officer
and the chief financial officer of the Company by others within those entities,
and (B) has disclosed, based on its most recent evaluation prior to the
Signing 


 


8

















 


Date, to the Company’s outside auditors and the audit committee of the
Board of Directors (x) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information and (y) any fraud, whether or
not material, that involves management or other employees who have a
significant role in the Company’s internal controls over financial reporting.


 


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


 


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


 


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


 


(m)          Compliance
with Laws.  Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company and the Company Subsidiaries have all
permits, licenses, franchises, authorizations, orders and approvals of, and
have made all filings, applications and registrations with, Governmental
Entities that are required in order to permit them to own or lease their
properties and assets and to carry on their business as presently conducted and
that are material to the business of the Company or such Company
Subsidiary.  Except as set forth on Schedule
E, the Company and the Company Subsidiaries have complied in all respects
and are not in default or violation of, and none of them is, to the knowledge
of the Company, under investigation with respect to or, to the knowledge of the
Company, have been threatened to be charged with or given notice of any
violation of, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license, rule, regulation, policy or guideline, order,
demand, writ, injunction, decree or judgment of any Governmental Entity, other
than such noncompliance, defaults or violations that would not, 


 


9

















 


individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.  Except for statutory or regulatory
restrictions of general application or as set forth on Schedule E, no
Governmental Entity has placed any restriction on the business or properties of
the Company or any Company Subsidiary that would, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.


 


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


 


10

















 


add on minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any Governmental
Entity.


 


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


 


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


 


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


 


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


 


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


 


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


 


11

















 


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


 


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


 


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


 


12

















 


Company Subsidiaries sent any written communications since January 1,
2006 alleging that any person has infringed, diluted, misappropriated or
violated, any of the Proprietary Rights owned by the Company and the Company
Subsidiaries.


 


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


 


Article III

Covenants


 


3.1           Commercially Reasonable Efforts.


 


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


 


(b)           If
the Company is required to obtain any stockholder approvals set forth on Schedule
C, then
the Company shall comply with this Section 3.1(b) and Section 3.1(c).
The Company shall call a special meeting of its stockholders, as promptly as
practicable following the Closing, to vote on proposals (collectively, the “Stockholder Proposals”) to (i) approve the exercise of
the Warrant for Common Stock for purposes of the rules of the national
security exchange on which the Common Stock is listed and/or (ii) amend
the Company’s Charter  to increase the number of
authorized shares of Common Stock to at least such number as shall be
sufficient to permit the full exercise of the Warrant for Common Stock and
comply with the other provisions of this Section 3.1(b) and Section 3.1(c).
The Board of Directors shall recommend to the Company’s stockholders that such
stockholders vote in favor of the Stockholder Proposals.  In connection with such meeting, the Company
shall prepare (and the Investor will reasonably cooperate with the Company to
prepare) and file with the SEC as promptly as practicable (but in no event more
than ten business days after the Closing) a preliminary proxy statement, shall
use its reasonable best efforts to respond to any comments of the SEC or its
staff thereon and to cause a definitive proxy statement related to such
stockholders’ meeting to be mailed to the Company’s stockholders not more than
five business days after clearance thereof by the SEC, and shall use its
reasonable best efforts to solicit proxies for such stockholder approval of the
Stockholder Proposals.  The Company shall
notify the Investor promptly of the receipt of any comments from the SEC or its
staff with respect to the proxy statement and of any request by the SEC or its
staff for amendments or supplements to such proxy statement or for additional
information and will supply the Investor with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to such proxy statement.  If at any time prior to such stockholders’
meeting there shall occur any event that is required to be set forth in an
amendment or supplement to the proxy statement, the Company shall as promptly
as practicable prepare and mail to its 


 


13

















 


stockholders such an amendment or supplement.  Each of the Investor and the Company agrees
promptly to correct any information provided by it or on its behalf for use in
the proxy statement if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall as
promptly as practicable prepare and mail to its stockholders an amendment or
supplement to correct such information to the extent required by applicable
laws and regulations.  The Company shall
consult with the Investor prior to filing any proxy statement, or any amendment
or supplement thereto, and provide the Investor with a reasonable opportunity
to comment thereon.  In the event that
the approval of any of the Stockholder Proposals is not obtained at such
special stockholders meeting, the Company shall include a proposal to approve
(and the Board of Directors shall recommend approval of) each such proposal at
a meeting of its stockholders no less than once in each subsequent six-month
period beginning on January 1, 2009 until all such approvals are obtained
or made.


 


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


 


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


 


3.3           Sufficiency of Authorized Common
Stock; Exchange Listing.


 


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


 


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


 


3.4           Certain Notifications Until Closing.
From the Signing Date until the Closing, the Company shall promptly notify the
Investor of (i) any fact, event or circumstance of which it is aware and
which would reasonably be expected to cause any representation or warranty of
the


 


14
















 


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


 


3.5           Access, Information and
Confidentiality.


 


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


 


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


 


15

















 


Article IV

Additional Agreements


 


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


 


4.2           Legends.


 


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


 


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


 


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


 


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


 


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


 


“THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT 


 


16

















 


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.”


 


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


 


17

















 


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


 


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


 


4.5           Registration
Rights.


 


(a)           Registration.


 


(i)            Subject
to the terms and conditions of this Agreement, the Company covenants and agrees
that as promptly as practicable after the Closing Date (and in any event no
later than 30 days after the Closing Date), the Company shall prepare and file
with the SEC a Shelf Registration Statement covering all Registrable Securities
(or otherwise designate an existing Shelf Registration Statement filed with the
SEC to cover the Registrable Securities), and, to the extent the Shelf
Registration Statement has not theretofore been declared effective or is not
automatically effective upon such filing, the Company shall use reasonable best
efforts to cause such Shelf Registration Statement to be declared or become
effective and to keep such Shelf Registration Statement continuously effective
and in compliance with the Securities Act and usable for resale of such
Registrable Securities for a period from the date of its initial effectiveness
until such time as there are no Registrable Securities remaining (including by
refiling such Shelf Registration Statement (or a new Shelf Registration
Statement) if the initial Shelf 


 


18

















 


Registration Statement expires). 
So long as the Company is a well-known seasoned issuer (as defined in Rule 405
under the Securities Act) at the time of filing of the Shelf Registration
Statement with the SEC, such Shelf Registration Statement shall be designated
by the Company as an automatic Shelf Registration Statement.  Notwithstanding the foregoing, if on the
Signing Date the Company is not eligible to file a registration statement on Form S-3,
then the Company shall not be obligated to file a Shelf Registration Statement
unless and until requested to do so in writing by the Investor.


 


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


 


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


 


(iv)          If
during any period when an effective Shelf Registration Statement is not
available, the Company proposes to register any of its equity securities, other
than a registration pursuant to Section 4.5(a)(i) or a Special
Registration, and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Investor and all other Holders
of its intention to effect such a registration (but in no event less than ten
days prior to the anticipated filing date) and will include in such
registration all 


 


19

















 


Registrable Securities with respect to which the Company has received
written requests for inclusion therein within ten business days after the date
of the Company’s notice (a “Piggyback Registration”).  Any
such person that has made such a written request may withdraw its Registrable
Securities from such Piggyback Registration by giving written notice to the
Company and the managing underwriter, if any, on or before the fifth business
day prior to the planned effective date of such Piggyback Registration. The
Company may terminate or withdraw any registration under this Section 4.5(a)(iv) prior
to the effectiveness of such registration, whether or not Investor or any other
Holders have elected to include Registrable Securities in such registration.


 


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


 


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


 


20

















 


hereby then it shall apply the order of
priority in such conflicting agreement to the extent that it would otherwise
result in a breach under such agreement.


 


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


 


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


 


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


 


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


 


21

















 


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


 


(vi)          Give
written notice to the Holders:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(viii)        Upon
the occurrence of any event contemplated by Section 4.5(c)(v) or
4.5(c)(vi)(E), promptly prepare a post-effective amendment to such registration
statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to the Holders and any underwriters,
the prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not 


 


22

















 


misleading.  If the Company
notifies the Holders in accordance with Section 4.5(c)(vi)(E) to
suspend the use of the prospectus until the requisite changes to the prospectus
have been made, then the Holders and any underwriters shall suspend use of such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holders’ or underwriters’ possession.  The total number of days that any such
suspension may be in effect in any 12-month period shall not exceed 90 days.


 


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


 


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


 


23

















 


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


 


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


 


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


 


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


 


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


 


24
















 


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


 


(f)            Furnishing
Information.


 


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


 


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


 


(g)           Indemnification.


 


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


 


25

















 


such Indemnitee “by means of” (as defined in Rule 159A) a “free
writing prospectus” (as defined in Rule 405) that was not authorized in
writing by the Company.


 


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


 


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


 


(i)            Clear
Market.  With respect to any
underwritten offering of Registrable Securities by the Investor or other
Holders pursuant to this Section 4.5, the Company agrees not to effect
(other than pursuant to such registration or pursuant to a Special
Registration) any public sale or distribution, or to file any Shelf
Registration Statement (other than such registration or a Special Registration)
covering, in the case of an underwritten offering of Common Stock or Warrants,
any of its equity securities or, in the case of an underwritten offering of
Preferred Shares, any 


 


26

















 


Preferred Stock of the Company, or, in each case, any securities
convertible into or exchangeable or exercisable for such securities, during the
period not to exceed ten days prior and 60 days following the effective date of
such offering or such longer period up to 90 days as may be requested by the
managing underwriter for such underwritten offering.  The Company also agrees to cause such of its
directors and senior executive officers to execute and deliver customary
lock-up agreements in such form and for such time period up to 90 days as may
be requested by the managing underwriter. 
“Special Registration”  means the registration of (A) equity
securities and/or options or other rights in respect thereof solely registered
on Form S-4 or Form S-8 (or successor form) or (B) shares of
equity securities and/or options or other rights in respect thereof to be
offered to directors, members of management, employees, consultants, customers,
lenders or vendors of the Company or Company Subsidiaries or in connection with
dividend reinvestment plans.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


(l)            At any time, any holder of Securities
(including any Holder) may elect to forfeit its rights set forth in this Section 4.5
from that date forward; provided, that
a Holder forfeiting such rights shall nonetheless be entitled to participate
under Section 4.5(a)(iv) — (vi) in any 


 


28

















 


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


 


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


 


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


 


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


 


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


 


29

















 


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


 


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


 


4.8           Restriction on Dividends and
Repurchases.


 


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


 


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


 


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


 


30

















 


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


 


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


 


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


 


4.9           Repurchase of Investor Securities.


 


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


 


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


 


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


 


31

















 


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


 


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


 


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


 


4.11         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 


 


32

















 


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.


 


4.12         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:


 


(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 


 


33

















 


the Closing. The representations and warranties of the Company made
herein or in any certificates delivered in connection with the Closing shall
survive the Closing without limitation.


 


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


 


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


 


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


 


34

















 


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.


 


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


 


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


 


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


 


35

















 


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


 


*  *  *


 


36
















 


SCHEDULE A


 


ADDITIONAL TERMS AND CONDITIONS


 


Company Information:


 


Name of the Company: 
First Federal Bancshares of
Arkansas, Inc.


 


Corporate or other organizational form:  Corporation


 


Jurisdiction of Organization:  State of Texas


 


Appropriate Federal Banking Agency:  Office of Thrift Supervision


 


Notice Information:


 


First Federal Bancshares of Arkansas, Inc.


1401 Highway 62-65 North


Harrison, Arkansas 
72601


Attention: Sherri R. Billings, Chief Financial Officer


Telephone: (870) 365-8310


Facsimile: (870) 365-8355


 


Terms of the Purchase:


 


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


 


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


 


Number of Shares of Preferred Stock Purchased:  16,500


 


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


 


Number of Initial Warrant Shares:  321,847


 


Exercise Price of the Warrant:  $7.69 per share


 


Purchase Price: 
$16,500,000


 


Closing:


 


Location of Closing:


 


Squire,
Sanders & Dempsey L.L.P.


221 E.
Fourth Street, Suite 2900


Cincinnati,
Ohio 45202


 


Time of Closing: 
10:00 AM EST


 


Date of Closing: 
March 6, 2009


 

















 


	
  Wire Information for Closing:

  	
  ABA Number:

  
	
   

  	
  Bank:

  
	
   

  	
  Account Name:

  
	
   

  	
  Account Number:

  
	
   

  	
  Beneficiary: