Document:

f10k2008a1ex10v_amersrgical.htm

    

     

    Exhibit
10.5

     

    AMERICAN
SURGICAL

    HOLDINGS,
INC.

     

     

     

    MASTER
SECURED

    PROMISSORY
NOTE

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
    

     

     

    THIS
MASTER SECURED PROMISSORY NOTE HAS BEEN ACQUIRED FO INVESTMENT PURPOSES ONLY AND
MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT
REQUIRED
IN CONNECTION WITH SUCH PROPOSED TRANSFER
NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.

     

    AMERICAN
S1TRGICAL HOLDINGS, INC.

    Master
Secured Promissory Note

    $2,715,000.00                                                                                                               

    Dated:
July 23, 2008

     

    RECITALS

     

    WHEREAS,
American Surgical Holdings, Inc., a Delaware corporation with its principal
executive office at 10039 Bissonnet #250, Houston, Texas 77036-7852 (the "Company")
has previously received loans in the form of Promissory Notes (the "Notes")
from each of the noteholders set forth on Schedule
A hereto, each having an address set forth thereon (each a "Holder", and
collectively, the "Holders") in the aggregate face principal amounts set forth
thereon and on the dates set forth thereon;

     

    WHEREAS,
pursuant to the terms of that certain Noteholder Agency Agreement, dated
as of May 2, 2007, by and among the Holders and Dawson James Securities, Inc., a
Florida corporation ("Dawson
James"), the Company and the Holders appointed Dawson James as agent for
the Holders and Dawson James accepted such appointment (in such capacity, the
"Note
Holder's Agent");

     

    WHEREAS,
the Company has requested that the Holders agree to waive as Events of
Default the Company's failure to make interest payments as required under
Section 4 of the Notes and the failure to pay when due the principal amounts due
thereunder (the "Existing
Defaults");

     

    WHEREAS,
subject to the terms hereunder, the Holders have consented to such
request to waive the Existing Defaults;

     

    WHEREAS,
the Company hereby issues this Master Secured Promissory Note (as the same may
be amended, restated, modified or supplemented from time to time, the "Master
Note" and, together with all related agreements, instruments and
documents, including but not limited to the Security Agreement, dated as of the
date hereof, by and among the Company and the Holders (the "Security
Agreement") and any UCC Financing Statement Filings made by or on behalf
of the Company to or in favor of the Holders, as the same may be amended,
restated, modified or supplemented from time to time, the "Loan
Documents") in place of each of the Notes; and

     

    WHEREAS,
each of the Holders acknowledge receipt of this Master Note as a
replacement for the Notes.

     

    FOR VALUE
RECEIVED, the Company hereby promises to pay to the order of each of the
Holders, or his/her/its registered assigns, on the earlier of March 31, 2009, as
same may be extended in accordance with Section 2D, or upon the completion of a
Qualified Offering (as defined herein) or a Liquidity Event (as defined herein),
unless accelerated due to the occurrence of an Event of Default (the earlier of
such dates is referred to as the "Maturity
Date"), the aggregate face principal amount set forth next to
each of their names on Schedule A hereto
(collectively, the "Principal
Amount"), and interest on the Principal Amount (as set forth in Section
4) in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts.
Interest on this Master Note shall accrue on the Principal Amount outstanding
from time to time at a rate per annum computed in accordance with Section 4
hereof.

     

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    As of the
date of this Master Note, by virtue of the Company's execution of this Master
Note and each of the Holders acceptance hereof , each of the Notes shall be
cancelled and shall cease to exist and the Holders shall cease to have any
rights with respect thereto.

     

    A "Qualified Offering" means the
completion of an offering or offerings of Company securities, including any
offering of debt or equity securities, or securities convertible into debt or
equity securities, in the amount of no less than $3.0 million, For the purposes
of this definition, if the Company completes multiple discrete offerings of
securities, such securities shall be aggregated in order to determine if the
$3.0 million amount has been obtained.

     

    A "Liquidity Event" means any of
the following: (i) a merger of the Company into or with another person or any
sale or transfer of the equity interests of the Company in any such case in
which the equity holders of the Company immediately prior to such transaction
possess less than 50% of the Company's or the surviving entity's issued and
outstanding equity interests immediately after such transaction; or (ii) the
sale by the Company of all or substantially all of its assets.

    Copies of
all payments shall be sent to Dawson James Securities, Inc., 925 South Federal
Highway, 6` Floor,
Boca Raton FL 33432, Attn: Donald Shek.

     

    Any
payment by the Company pursuant to this Master Note shall be made without
set-off or counterclaim and in immediately available funds and shall be applied
first toward interest, then toward any fees, expenses and costs due, and then
toward principal.

     

    The
Principal Amount of this Master Note may be prepaid in whole or in part at any
time, without penalty or premium and without any prior written notice to the
Holders before the Maturity Date; provided, that all accrued and unpaid interest
and any other charges accrued as of the date of prepayment are also paid in
full; provided further, that any prepayments will be distributed to the Holders
in accordance with their percentage interests as set forth on Schedule A hereto.
Any prepayments shall not result in deferment or delay of the due date of any
subsequent payment(s).

     

    The
Company (i) waives presentment, demand, protest or notice of any kind in
connection with this Master Note and (ii) agrees, in the event of an Event of
Default that continues for more than thirty (30) days, to pay to the holders of
this Master Note, on demand, all costs and expenses (including reasonable legal
fees) incurred in connection with the enforcement and collection of this Master
Note.

     

    1. Acknowledgment and Waiver of
Defaults. The Company hereby acknowledges and confirms that the Existing
Defaults have occurred under the Notes. Upon the acceptance of this Master Note
by the Note Holder's Agent for and on behalf of each of the Holders, the Holders
shall be deemed to have waived the Existing Defaults, provided that such
execution, delivery and effectiveness of this Waiver shall not operate as a
waiver of any right, power or remedy of any Holder under the Notes, nor
constitute a waiver of any subsequent violations of any of the provisions of
this Master Note or a waiver of any other Events of Defaults which may have
occurred.

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

               2.Security; Unit Offering;
Extension.

     

    A. The
obligations of the Company hereunder shall be secured obligations of the
Company, to be secured by the collateral set forth in the Security Agreement and
any UCC Financing Statement Filings made by or on behalf of the Company to or in
favor of the Holders; provided that the Company is and shall be permitted to use
its current trade accounts receivables in connection with obtaining working
capital financing, so long as a minimum of $1,000,000 of the proceeds from any
such financing facility are used to pay down the outstanding Principal Amount on
this Master Note, and that upon the payment of an aggregate of such $1,000,000
on this Master Note, the security interests of the Holders in such receivables
shall be automatically released, and Debtor shall be authorized to file a
termination statement terminating any UCC-1 financing statements with respect to
such lien and security interest.

     

    B. Reference
is hereby made to the Loan Documents (which are incorporated herein by reference
as fully and with the same effect as if set forth herein at length) for a
statement of the covenants and agreements contained therein, a statement of the
rights, remedies, and security afforded thereby, and all matters therein
contained.

     

    C. The Notes
were part of a Unit issue (the "Offering") conducted by the
Company pursuant to its Private Placement Memorandum dated May 4, 2007
(including all exhibits and appendices thereto, the "Offering Documents") pursuant
to which the Company issued $2,715,000 in principal amount of
Notes.

     

    D. If, on or
before March 31, 2009, (i) the Company has paid down $1,357,500 of the Principal
Amount without using any of the amounts held in the Escrow Fund (as defined
herein) and (ii) no Event of Default is then continuing for more than thirty
(30) days, the Maturity Date shall automatically be extended to December 31,
2009 for the remaining Principal balance of this Master Note and any accrued and
unpaid interest.

     

    3.Right of Participation in a
Qualified Offering.

     

    A. If the
Company commences a Qualified Offering prior to the Maturity Date, in lieu of
repayment of principal and interest on this Master Note, a Holder, at its
option, may acquire securities in the Qualified Offering in the amount of such
principal and interest at a purchase price per security equal to eighty-five
percent (85%) of the price per security sold in the Qualified
Offering.

     

    B. If the
Company commences a Qualified Offering prior to the Maturity Date, the Company
will deliver to the Holders a notice (the "Offer Notice"), stating the price and
other terms and conditions thereof not later than fifteen (15) business days
prior to the closing date of the Qualified Offering. The Holders will thereafter
have the right to convert the Principal Amount and interest accrued pursuant to
this Master Note into the securities issuable in the Qualified Offering at a
purchase price per security equal to eighty-five percent (85%) of the price per
security sold in the Qualified Offering, calculated as of the date the Qualified
Offering is completed, by providing written notice to the Company delivered not
later than ten (10) days after the receipt of the Offer Notice. The notice
requirements set forth herein will apply to any Qualified Offerings commenced
prior to the Maturity Date. This right of conversion under this Section 3(B)
shall be available to the Holders only prior to (and not on or after) the Master
Note has been paid in full.

     

    4.            Computation of Interest;
Payments.

     

                                 
A.            Base Interest Rate.
Subject to Section 4B, the outstanding Principal Amount shall
bear a
simple interest at the rate of fifteen percent (15%) per annum, provided that in
no event shall the
interest rate exceed the Maximum Rate provided in Section 4B below. Accrued
interest will be due and payable on the Maturity Date. Interest shall be based
on a 360 day year.

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    B.             Maximum Rate. In the
event that it is determined that, under the laws relating to usury applicable to
the Company or the indebtedness evidenced by this Master Note ("Applicable Usury Laws"), the interest charges
and fees payable by the Company in connection herewith or in connection with any
other document or instrument executed and delivered in connection herewith cause
the effective interest rate applicable to the indebtedness evidenced by this
Master Note to exceed the maximum rate allowed by law (the "Maximum Rate"), then such
interest shall be recalculated for the period in question and any excess over
the Maximum Rate paid with respect to such period shall be credited, without
further agreement or notice, to the Principal Amount outstanding hereunder to
reduce said balance by such amount with the same force and effect as though the
Company had specifically designated such extra sums to be so applied to
principal and the Holders had agreed to accept such extra payment(s) as a
premium-free prepayment. All such deemed prepayments shall be applied to the
principal balance payable at maturity, In no event shall any agreed-to or actual
exaction as consideration for this Master Note exceed the limits imposed or
provided by Applicable Usury Laws in the jurisdiction in which the Company is
resident applicable to the use or detention of money or to forbearance in
seeking its collection in the jurisdiction in which the Company is
resident.

     

    C.            Initial Payment. Upon
execution of this Master Note, $419,934.42 shall be due and payable by the
Company to the Holders to pay down outstanding interest owed through June 30,
2008 on the Principal Amount pursuant to the terms of the original
Notes.

     

    D.            Escrow. The Monthly
Payments described in Section 4E below required to be made by the Company shall
be placed in an escrow account for the benefit of the Holders pursuant to, and
subject to the conditions of, an escrow agreement, dated as of the Effective
Date, by and among [Sterling Bank], as escrow agent (the "Escrow Agent"), the Note
Holder's Agent and the Company (the "Escrow Agreement").

     

    E.            Monthly Payments. So
long as any amounts due hereunder remain outstanding, the Company shall be
required to make monthly payments to the Escrow Agent to be to be held in escrow
and disbursed pursuant to and in accordance with the terms of the Escrow
Agreement as follows (collectively, the "Escrow Fund"):

     

    (i) $50,000
due on the last day of each month with the first such payment due August 30,
2008; provided that the $50,000 shall be increased to $65,000 starting with the
payment due January 31, 2009 until the Master Note has been repaid in full;
provided further that, at a minimum, such funds shall be used to pay down
interest due on the Principal Amount on a quarterly basis and that any amounts
remaining shall continue be held as part of the Escrow Fund to be released in
accordance with the terms of the Escrow Agreement, including to pay down
principal as may be determined in the Note Holder's Agent's sole and absolute
discretion; and

     

    (ii) $52,000,
representing a holdback of compensation and expense allowances of the four
principals of the Company as calculated on Exhibit A, with the
first of such monthly payments due upon execution of the Escrow Agreement and,
thereafter, each payment shall be due on the first day of the month thereafter
until the Maturity Date.

     

    5.            Covenants of
Company.

     

                                   
A.              Affirmative Covenants. The
Company (for this purpose to include all subsidiaries
of the Company) covenants and agrees that, so long as this Master Note shall be
outstanding, it will perform the obligations set forth in this Section
5A:

     

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    (i)            Maintenance of Existence.
The Company will do or cause to be done all things reasonably necessary
to preserve and keep in full force and effect its corporate existence, rights
and franchises and comply with all laws applicable to the Company, except where
the failure to comply would not have a material adverse effect on the
Company;

     

    (ii)            Maintenance of Property.
The Company will at all times maintain, preserve, protect and keep its
property used or useful in the conduct of its business in good repair, working
order and condition, and from time to time make all needful and proper repairs,
renewals, replacements and improvements thereto as shall be reasonably required
in the conduct of its business;

     

    (iii)            Books and Records.
The Company will at all times keep true and correct books, records and
accounts reflecting all of its business affairs and transactions in accordance
with GAAP. Such books and records shall be open at reasonable times and upon
reasonable notice to the inspection of the Holders or their agents;

     

    (iv)            Monthly Financial Reports.
From the date hereof until the Maturity Date, the Company will submit a
financial reporting package to the Note Holder's Agent on a monthly basis which
shall include a sales/billing journal, a receivables collection report, payroll
register reports (salaried, 1099 and principals) and any other information as
may be requested by the Note Holder's Agent (the "Monthly Report"). The Company
shall be required to deliver the Monthly Report to the Note Holder's Agent
within twenty (20) calendar days of the end of each calendar month prior to the
Maturity Date and until such time as this Master Note has been repaid in
full;

     

    (v)            Certain Expenses.
Within five (5) business days of approving any individual expenses in
excess of $25,000 and/or any expenditures not in the ordinary course of
business, the Company shall deliver to the Note Holder's Agent a copy of the
relevant board or audit committee minutes or written consent setting forth the
resolutions approving such expense(s);

     

    (vi)            Notice of Certain Events.
The Company will give prompt written notice (with a
description in reasonable detail) to the Holders of:

     

    (a) the
occurrence of any Event of Default or any event which, with the
giving of notice or the lapse of time, would constitute an Event of Default;
and

     

    (b) the
delivery of any notice effecting the acceleration of any indebtedness.

     

    B. Negative Covenants,
The Company (for this purpose to include all subsidiaries of the Company)
covenants and agrees that, so long as this Master Note shall be outstanding, it
will perform the obligations set forth in this Section 5B (unless waived by or
on behalf of the Holders):

     

                  
(i)            
Liquidation,
Dissolution, etc. The Company will not engage in a Liquidity
Event;

     

                                                                    (a)
Sales of Assets.
The Company will not sell, transfer, lease or otherwise
dispose of any of its properties or assets to any person or entity, provided
that this clause (ii) shall not restrict any disposition made in the ordinary
course of business

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (ii)            Redemptions. The
Company will not redeem or repurchase any outstanding equity securities of the
Company;

     

    (iii)            Indebtedness. The
Company will hereafter not create, incur, assume or suffer to exist,
contingently or otherwise, any indebtedness for borrowed money (except for the
incurrence of trade and vendor payables in the ordinary course of business)
except that outstanding on the date hereof and indebtedness which has the prior
approval of the Holders or their representative;

     

    (iv)             Transactions with
Affiliates, Except as set forth in the Offering Documents, without the
prior consent of the Holders or any of his/her/its representative, which consent
shall not be unreasonably withheld, the Company will not enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, the purchase or sale of any security,
the borrowing or lending of any money, or the rendering of any service, with any
person or entity affiliated directly or indirectly with the Company (including
officers, directors and shareholders owning five percent (5%) or more of the
Company's outstanding capital stock), except in the ordinary course of and
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms not less favorable than would be obtained in a comparable
arms-length transaction with any other person or entity not affiliated with the
Company.

     

    (v)            Dividends. The
Company will not declare or pay any cash dividends or distributions on its
outstanding capital stock.

     

    (vi)
Compensation of
Principals. The Company will not, in any form or any manner, increase or
add to the compensation and/or benefits received by the four principals set
forth on Exhibit A
unless unanimously consented to by the independent members of the board
of directors;

     

    6.            Events of
Default,

     

    A.            General. The term
"Event of Default" shall
mean any of the events set forth in

     

    this
Section 6A (the term "Company" for this purpose shall include all subsidiaries
of the Company):

     

    (i)            Non-Payment of Obliaations.
The Company shall default in the payment of the principal or accrued
interest of this Master Note as and when the same shall become due and payable,
whether by acceleration or otherwise, and such amount shall remain unpaid for a
period of thirty (30) days after the due date.

     

    (ii)            Non-Performance of
Affirmative Covenants. The Company shall default in the due observance or
performance of any covenant set forth in Section 5A, which default shall
continue uncured for thirty (30) days after notice thereof.

     

    (iii)            Non-Performance of Negative
Covenants. The Company shall default in the due observance or performance
of any covenant set forth in Section 5B, which default shall continue uncured
for thirty (30) days after notice thereof.

     

    (iv)            Bankruptcy, Insolvency, etc.
The Company shall:

     

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    (a)admit
in writing its inability to pay its debts as they become due;

     

    (b) apply
for, consent to, or acquiesce in, the appointment of a trustee, receiver,
sequestrator or other custodian for the Company or any of its property, or make
a
general assignment for the benefit of creditors;

     

    (c) in the
absence of such application, consent or acquiesce in, permit or suffer to exist
the appointment of a trustee, receiver, sequestrator or other custodian for the
Company or for any part of its property;

     

    (d) permit or
suffer to exist the commencement of any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution, winding up or liquidation proceeding, in respect of the
Company, and, if such case or proceeding is not commenced by the Company or
converted to a voluntary case, such case or proceeding shall be consented to or
acquiesced in by the Company or shall result in the entry of an order for
relief; or

     

    (e) take any
corporate or other action authorizing, or in furtherance of, any
of the foregoing.

     

                  
(v)           Cross-Default. The
Company shall default in the payment when due of any amount payable under any
other obligation of the Company for money borrowed in excess of $50,000 or the
Company breaches any of the terms of any Agreement with the Holders, including
but not limited to this Master Note, the Security Agreement or the Escrow
Agreement, and such is not cured within thirty (30) days.

     

    B.             Action if Bankruptcy.
If any Event of Default described in clauses (iv)(a) through (d) of
Section 6A shall occur, the outstanding Principal Amount of this Master Note and
all other obligations hereunder shall automatically be and become immediately
due and payable, without notice or demand.

     

    C.             Action if Other Event of
Default. If any Event of Default (other than any Event of Default
described in clauses (iv)(a) through (d) of Section 6A) shall occur for any
reason, whether voluntary or involuntary, and be continuing, for thirty (30)
days after notice, the Holders may, upon notice to the Company, declare all or
any portion of the outstanding Principal Amount of this Master Note, together
with interest accrued thereon, to be due and payable and any or all other
obligations hereunder to be due and payable, whereupon the full unpaid Principal
Amount hereof, such accrued interest and any and all other such obligations
which shall be so declared due and payable shall be and become immediately due
and payable, without further notice, demand, or presentment.

     

    7.Reimbursement of
Expenses.

     

    A. From and
after the Effective Date, the Company shall be required to reimburse the Note
Holder's Agent's expenses and costs in equal monthly installments of $3,000 per
month for so long as any amounts under this Master Note remain outstanding. The
first such payment shall be due upon execution of this Master Note and each such
monthly payment shall be due on the 15th of the
month until the Master Note has been paid in full and shall be paid directly to
the Note Holder's Agent.

     

    B. Upon
execution, legal fees in the amount of not more than $          
NEED O
DETERMINE] shall be due and payable directly to Greenberg Traurig,
P.A.

    

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    8  Miscellaneous.

     

    A.              Parties in Interest.
All covenants, agreements and undertakings in this Master Note binding
upon the Company or the Holders shall bind and inure to the benefit of the
successors and permitted assigns of the Company and the Holders, respectively,
whether so expressed or not.

     

    B.              Governing Law. This
Master Note shall be governed by the laws of the State of Texas as applied to
contracts entered into and to be performed entirely within the State of Texas
..

     

    C.              Consent to Jurisdiction.
The Debtor irrevocably consents to the jurisdiction of the Courts of the
State of Texas, County of Harris or the United States District Court for the
Southern District of Texas located in the County of Harris in any and all
actions and proceedings whether arising hereunder or under any other agreement
or undertaking and irrevocably agrees to service of process to the address of
the Debtor set forth herein by certified mail, return receipt
requested.

     

    D.              Notice. All notices
shall be in writing, and shall be deemed given when actually delivered to a
party at its address set forth herein personally, by a reputable overnight
messenger.

     

    E.            
No Waiver. No
delay in exercising any right hereunder shall be deemed a waiver thereof, and no
waiver shall be deemed to have any application to any future default or exercise
of rights hereunder.

     

    [Signature
Page Follows]

     

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

     

    IN
WITNESS WHEREOF, this Master Note has been executed and delivered on the date
first above written by a duly authorized representative of the
Company.

     

    
      
        	
                AMERICAN
      SURGICAL HOLDINGS, INC

                a
      Delaware corporation

              
	 
	By: /s/
      Zak W.
  Elgamal

      

    

    
      
        	
                Name:
      Zak W. Elgamal

                Title:
      Chairman and Chief Executive
      Officer

              

      

    

     

    
       

    

    AGREED TO
AND ACCEPTED:

     

    Note
Holder's Agent,

    for and
on behalf of the Holders

     

    DAWSON
JAMES SECURITIES, INC

    a
Florida corporation

     

    By: /s/
Albert J. Pollak  

    Name:
Albert J. Pollak 

    Title:
President

     

     

     

    
      
         

      

      
        -9-

        
          
 

      

      
         

      

    

     

     

    
      
        	

              	
                SCHEDULE
      A

              

      

    

     

     

    Promissory
Notes

     

    
      
        
          
            
              
                
                  
                    	 
      	
                            NOTEHOLDER

                          	
                            AGGREGATE
      FACE PRINCIPAL AMOUNT

                          	
                            ORIGINAL
      ISSUE

                            /DATE

                          	
                            PERCENTAGE
      

                          
	
                            1.

                          	
                             

                          	 
      	
                             

                             

                             

                          	 
      
	
                            2.

                          	 
      	 
      	 
      	 
      
	
                            3.

                          	 
      	 
      	 
      	 
      
	
                            4.

                          	 
      	 
      	 
      	 
      
	
                            5.

                          	 
      	 
      	
                             

                          	 
      
	
                            6.

                          	 
      	 
      	 
      	 
      
	
                            7.

                          	 
      	 
      	 
      	 
      
	
                            TOTAL:

                          	 
      	 
      	 
      

                  

                

              

            

          

        

      

    

     

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

     

     

     

    
    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	
                                                                      American
      Surgical Holdings, Inc.

                                                                    
	
                                                                      Noteholders
      pursuant to Master Secured Promissory Note dated July 23,
    2008

                                                                    	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                                                      Name

                                                                    	 
      	
                                                                      Address

                                                                    	
                                                                      Amount

                                                                    	
                                                                      Closing

                                                                      Date

                                                                    	
                                                                      %
      Note owned

                                                                    	 
      
	
                                                                      Samax
      Family Ltd. Partnership

                                                                    	 
      	
                                                                      Attn:
      Dr. Andrew Margulies

                                                                      413
      N. Queens Ave.  

                                                                      Massapequa,
      NY
      11758

                                                                    	
                                                                      $10,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.368%

                                                                    	 
      
	
                                                                      Barbour,
      Catherine C.

                                                                    	 
      	
                                                                      551
      Park Estates Square  

                                                                      Venice,
      FL 34293

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Booth,
      Robert & Miriam

                                                                    	 
      	
                                                                      5364
      Lakemont Himrod Rd. 

                                                                      Dundee,
      NY 14837

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Halprin,
      Robert & Jacqueline JT/WROS

                                                                    	 
      	
                                                                      16541
      Greenview Lane 

                                                                      Huntington
      Beach, CA 92649

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Zippmart,
      Lisa

                                                                    	 
      	
                                                                      1759
      Praire View 

                                                                      Lane
      Ovieda, FL, 32765

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      VlacDonald,
      Evan

                                                                    	 
      	
                                                                      17
      Ester
      Drive                                  

                                                                      Bedford,
      NJ 03110

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Raz,
      James

                                                                    	 
      	
                                                                      4482
      Ashlwn Drive  

                                                                      Flint,
      MI 48507

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Roesch,
      Ben

                                                                    	 
      	
                                                                      331
      McKinley
Blvd.        

                                                                      Paramus,
      NJ07652

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Schroeder,
      Harold & Patricia

                                                                    	 
      	
                                                                      7584
      Congress Road     

                                                                      Lodi,
      OH 44254

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Witt,
      Steve

                                                                    	 
      	
                                                                      134
      Sunrise Court      

                                                                      Oconto
      Falls, WI
      54154

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Bodenstein,
      Dr. Alvin

                                                                    	 
      	
                                                                      53
      Bristol Drive    

                                                                      Boynton
      Beach,
      FL 33436

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Caranfiiian,
      James

                                                                    	 
      	
                                                                      235
      S. Dwight
      Place        

                                                                      Englewood,
      NJ 07631

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Ezratty,
      Era S. 

                                                                      Ezratty,
      Rochelle B.

                                                                    	 
      	
                                                                      2105
      Holland
      Way         

                                                                      Merrick,
      NY 11566

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Burgess,
      Robert E.

                                                                    	 
      	
                                                                      28455
      SW Herd
      Lane         

                                                                      Hillsboro,
      OR
      97123

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Calaco,
      Cleto

                                                                    	 
      	
                                                                      383
      Durnsford
      Road         

                                                                      London
      SW198EF

                                                                      United
      Kingdom

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Habbyshaw,
      Patricia Habbyshaw, James

                                                                    	 
      	
                                                                      12061
      Chamberlain Road 

                                                                      Aurora,
      OH 44202

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Friedman,
      Jack

                                                                    	 
      	
                                                                      506
      NW Skyline Crest Road Portland, OR 97229

                                                                    	
                                                                      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      White,
      Michael R.

                                                                    	 
      	
                                                                      2117
      Kelton Ave.        

                                                                      Los
      Angeles, CA
      90025

                                                                    	
                                                                              
      $25,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      0.921%

                                                                    	 
      
	
                                                                      Liu,
      Douglas

                                                                    	 
      	
                                                                      6801
      Wolf Creet
      Court         

                                                                      Clarksville,
      MD
      21029

                                                                    	
                                                                               $30,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.105%

                                                                    	 
      
	
                                                                      Samax
      Family Ltd. Partnership

                                                                    	 
      	
                                                                      Attn:
      Dr. Andrew Margulies

                                                                      413
      N. Queens Ave.  

                                                                      Massapequa,
      NY
      11758

                                                                    	
                                                                                $35,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.289%

                                                                    	 
      
	
                                                                      Gulati,
      Subhash

                                                                    	 
      	
                                                                      157
      Davenport Ave.   

                                                                      New
      Rochelle, NY
      10805

                                                                    	
                                                                               
      $40,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.473%

                                                                    	 
      
	
                                                                      Dunkin,
      Art

                                                                    	 
      	
                                                                      5028
      Hunting Hills Circle 

                                                                      Roanoke,
      VA 24014

                                                                    	
                                                                               
      $50,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.842%

                                                                    	 
      
	
                                                                      Inghilterra,
      Carmela

                                                                    	 
      	
                                                                      320
      Greens Ridge Road     

                                                                      Stuartsville,
      NJ
      08886

                                                                    	
                                                                                
      $50,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.842%

                                                                    	 
      

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                                 

                                                 

                                                 

                                                
                                                  
                                                     

                                                  

                                                  
                                                    -11-

                                                    
                                                      

                                                    

                                                  

                                                  
                                                     

                                                  

                                                

                                                 

                                                 

                                                 

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	
                                                                      Meikrantz,
      James

                                                                    	 
      	
                                                                      677
      Linden Ave.       

                                                                      Los
      Altos, CA
      94022

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Curley,
      John - Curley-Jennings Patricia

                                                                    	 
      	
                                                                      58
      Valley View Ave.     

                                                                      Summit,
      NJ 07901

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      IVM
      Productions C/O Rosenberg, Alex

                                                                    	 
      	
                                                                      IVM
      Productions - 321 190th Street, Sunny Isle Beach, FL 33160

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Genna,
      Thomas

                                                                    	 
      	
                                                                      126
      Bold Maine Shore Rd. Barnegat, NJ 08005

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Burley,
      John IRA

                                                                    	 
      	
                                                                      58
      Valley View Ave. 

                                                                      Summit,
      NJ 07901

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Equidebt
      Financial Group, Inc. 

                                                                      Attn:
      Gharitzis, Mark

                                                                    	 
      	
                                                                      88885
      S. Hwy AlA       

                                                                      Melbourne
      Beach,
      FL 32951

                                                                    	
                                                                       

                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                       

                                                                      1.842%

                                                                    
	
                                                                      Giamanco,
      Joseph

                                                                    	 
      	
                                                                      4
      Whiterock Terrance      

                                                                      Holmdel,
      NJ 07733

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Brunker,
      Philip

                                                                    	 
      	
                                                                      38
      Cromwell Road       

                                                                      Luton
      Bedfordshire
      Lu31D-N UK

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Marcin,
      Mary Lou

                                                                    	 
      	
                                                                      8752
      W. Leland Ave.    

                                                                      Chicago,
      IL 60656    

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Fitzmaurice,
      M. Paul Shean, M. Lisabeth

                                                                    	 
      	
                                                                      130
      Linden Ave.   

                                                                      Haddonfield,
      NJ 08033

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Blan,
      Jay R.

                                                                    	 
      	
                                                                      15
      Mohawk Drive      

                                                                      Livingston,
      NJ 07039

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Garofalo,
      Frank J.

                                                                    	 
      	
                                                                      One
      Devonshire Place #3109 

                                                                      Boston,
      MA 02109

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      O'Mara,
      Robert

                                                                    	 
      	
                                                                      8
      Youngs Road       

                                                                      Basking
      Ridge,
      NJ 07920

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Mirotznik,
      Michael

                                                                    	 
      	
                                                                      2995
      Judith Drive South 

                                                                      Bellmore,
      NY 11710

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Gugerman,
      Nathan

                                                                    	 
      	
                                                                      205
      Harding Drive      

                                                                      South
      Orange, NJ
      07079

                                                                    	
                                                                      $50,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      1.842%

                                                                    
	
                                                                      Christensen,
      John

                                                                    	 
      	
                                                                      2900
      N. Flagler
      Drive             

                                                                      West
      Palm Beach,
      FL 33407

                                                                    	
                                                                      S100,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      3.683%

                                                                    
	
                                                                      Bourge,
      Dr. Robert

                                                                    	 
      	
                                                                      UAB
      School of Medicine

                                                                      311
      Tinsley Harrison Tower

                                                                      1900
      University Blvd. 

                                                                      Birmingham,
      AL 35294

                                                                    	
                                                                      $100,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      3.683%

                                                                    
	
                                                                      Rockmore
      Investment Master Fund LTD

                                                                    	 
      	
                                                                      Rock:more
      Capital   

                                                                      Attn:
      Brian Daly

                                                                      150
      E. 58th St. 28th Floor

                                                                      New
      York, NY
      10155

                                                                    	
                                                                      $100,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                      3.683%

                                                                    
	
                                                                      Jenkins,
      David

                                                                    	 
      	
                                                                      1342
      N. Lakeway       

                                                                      Palm
      Beach, FL
      33480

                                                                    	
                                                                      $125,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      4.604%

                                                                    
	
                                                                      David
      J. Jenkins Family Foundation

                                                                    	 
      	
                                                                      Attn.
      David Jenkins , 

                                                                      Trustee
      1342
      N. Lakeway     

                                                                      Palm
      Beach, FL
      33480

                                                                    	
                                                                      $125,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      4.604%

                                                                    
	
                                                                      Sack,
      Steve

                                                                    	 
      	
                                                                      1795
      Harvard
      Ave.          

                                                                      Merrick,
      NY 11566

                                                                    	
                                                                      $150,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                         
      5.525%

                                                                    
	
                                                                      Sack,
      Steve

                                                                    	 
      	
                                                                      1795
      Harvard Ave.  

                                                                      Merrick,
      NY 11566

                                                                    	
                                                                      $150,000

                                                                    	
                                                                      07/02/07

                                                                    	
                                                                         
      5.525%

                                                                    
	
                                                                      Vestal
      Venture Capital

                                                                    	 
      	
                                                                      Attn.
      Mr Allan Lyons 6471 Enclave Way Boca Raton, FL 33496

                                                                    	
                                                                      $475,000

                                                                    	
                                                                      06/07/07

                                                                    	
                                                                      17.495%

                                                                    
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                      Totals

                                                                    	
                                                                      $2,715,000

                                                                    	 
      	
                                                                      100.000%

                                                                    
	 
      	 
      	 
      	 
      	 
      	 
      

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    
 

     

    AMERICAN
SURGICAL

    HOLDINGS,
INC.

     

     

     

    LOAN AND
SECURITY

     

    AGREEMENT

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    LOAN AND SECURITY
AGREEMENT

     

     

    This LOAN
AND SECURITY AGREEMENT (this "Agreement"), dated as of July
23, 2008, by American Surgical Holdings, Inc., a Delaware corporation with its
principal executive office at 10039 Bissonnet #250, Houston, Texas 77036-7852
(the "Debtor"),
and each of the noteholders listed on Annex A
hereto, or any oftheir designees or assignees (each, a "Secured
Party", collectively, the "Secured
Parties").

     

    BACKGROUND

     

    A. The
Debtor has entered into a Master Secured Promissory Note, dated as of the date
hereof, in favor of the Secured Parties in aggregate face principal amount of
Two Million Seven Hundred Fifteen Thousand Dollars and 00/100 (82,715,00.00) (as
the same may be amended, restated, modified or supplemented from time to time,
the "Master
Note" and, together with all related agreements, instruments and
documents, including but not limited to this Agreement, as the same may be
amended, restated, modified or supplemented from time to time, the "Loan
Documents"). Capitalized terms used but not defined herein shall have the
meanings given to such terms as set forth in the Master Note.

     

    B. The
Debtor desires to grant to the Secured Parties security interests in the
property described herein to secure all of the Debtor's obligations and
undertakings to the Secured Parties under the Loan Documents.

     

    C.
Pursuant to the terms of that certain Noteholder Agency Agreement, dated as of
May 2, 2007, by and among the Secured Parties and Dawson James Securities, Inc.,
a Florida corporation ("Dawson
James"), the Secured Parties appointed Dawson James as agent for the
Secured Parties and Dawson James accepted such appointment (in such capacity,
the "Note
Holder's Agent");

     

    NOW,
THEREFORE, the Note Holder's Agent, for and on behalf of the Secured Parties,
and the Debtor, intending to be legally bound hereby, agrees as
follows:

     

    SECTION
1

    SECURITY
INTEREST

     

    1.1 Description. As
security for the payment of all obligations and undertakings of every kind or
nature whatsoever of the Debtor to the Secured Parties, whether now existing or
hereafter incurred, matured or unmatured, direct or indirect, primary or
secondary, related or unrelated or due or to become due, arising under the Loan
Documents, and any extensions, modifications, substitutions, increases and
renewals thereof, and substitutions therefor; the payment of all amounts
advanced by the Secured Parties to preserve, protect, defend, and enforce its
rights hereunder and in the following property in accordance with the terms of
this Agreement; and the payment of all expenses incurred by the Secured Parties
in connection therewith, the Debtor hereby assigns and grants to the Secured
Parties a continuing
lien on and security interest in, upon and to the following property (the "Collateral"):

     

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

     

    (a)             Accounts, Contract Rights,
Etc. All of the Debtor's now owned and hereafter acquired, created, or
arising accounts, accounts receivable, notes receivable, contract rights,
chattel paper, documents (including documents of title), instruments, letters of
credit and goods; provided however, that the Debtor's current trade accounts
receivables may be used in connection with obtaining working capital financing
so long as a minimum of One Million Dollars and 00/100 ($1,000,000.00) of
proceeds from any such financing facility are used to pay down principal on the
Master Note, provided, however, that upon receipt of an aggregate of such
$1,000,000 by the Holders, this lien and security interest on Debtor's trade
accounts receivable created under this Section 1(a) shall be automatically
released, and Debtor shall be authorized to file a termination statement
terminating any UCC-1 financing statements with respect to such lien and
security interest.

     

    (b)             Litigation. All of
the Debtor's right, title and interest to pending and threatened claims,
actions, suits, etc., including, but not limited to the pending and threatened
claims with the United Healthcare Insurance Company ("United")
with respect to charge-backs in 2007 and 2008; the denied and underpaid
reimbursement claims by United and the claims against Aetna Insurance ("Aetna")
for underpayments of reimbursement claims during the Debtor's Aetna
contract period from March 2007 to May 2008.

     

    (c)             Commercial Tort Claims.
All of the Debtor's commercial tort claims executed and delivered by the
Debtor to the Secured Parties; and

     

    (d)             Proceeds. The
proceeds specified in section 1.1(a) and (b) less any expenses, fees and
attorneys fees accrued in the course of realizing such proceeds.

     

    All terms
defined in the Uniform Commercial Code as in effect in the State of Texas from
time to time (the "UCC")
and used herein shall have the same definitions as specified in the UCC.
However, if a term is defined in Article 9 of the UCC differently than in
another Article of the UCC, the term has the meaning specified in
Article 9.

     

    1.2 Lien Documents. As
the Secured Parties deems necessary, the Debtor shall execute and deliver to the
Secured Parties, or have executed and delivered (all in form and substance
satisfactory to the Secured Parties), any agreements, documents, instruments and
writings, required to evidence, perfect or protect the Secured Parties' lien and
security interest in the Collateral required hereunder or as the Secured Parties
may request from time to time. Each Secured Party agrees not to exercise any of
its rights or remedies with respect to any of the Collateral unless and until
the Debtor incurs an Event of Default.

     

    1.3 Other
Actions.

     

    (a) Each
Secured Party is hereby authorized to file financing statements and amendments
to financing statements without the Debtor's signature in accordance with the
UCC. The Debtor hereby authorizes each Secured Party to file all financing
statements and amendments to financing statements describing the Collateral in
any filing office as a Secured Party, in its sole discretion may determine,
including financing statements listing the Collateral described in section 1.1
The Debtor agrees to comply with the requirements of all state and federal laws
and requests of a Secured Party in order for a Secured Party to have and
maintain a valid and
perfected first security interest in the Collateral including, without
limitation, executing such documents as a Secured Party may require to obtain
control (as defined in the UCC) over all deposit accounts, letter of credit
rights and investment property.

     

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    (b) In
addition to the foregoing, the Debtor shall do anything further that may be
reasonably required by the Secured Parties to secure the Secured Parties and
effectuate the intentions and objects of this Agreement, including, without
limitation, the execution and delivery of security agreements, contracts and any
other documents required hereunder. At the Secured Parties request, the Debtor
shall also immediately deliver (with execution by the Debtor of all necessary
documents or forms to reflect, implement or enforce the security interest of the
Secured Parties described herein) to the Secured Parties all items of which the
Secured Parties must receive possession to obtain a perfected security interest,
including without limitation, all notes, stock powers, letters of credit,
certificates and documents of title, chattel paper, warehouse receipts,
instruments, and any other similar instruments constituting
Collateral.

     

    1.4 Filing Security Agreement.
A carbon, photographic or other reproduction or other copy of this
Agreement or of a financing statement is sufficient as and may be filed in lieu
of a financing statement.

     

    1.5 Landlord/Warehouseman
Waiver. The Debtor will cause each owner of any premises occupied by the
Debtor or to be occupied by the Debtor and each warehouseman of any warehouse,
where, in either event, Collateral is held, to execute and deliver to the
Secured Parties an instrument, in form and substance satisfactory to the Secured
Parties, under which such owner(s) or warehouseman subordinates its/his/their
interests in and waives its/his/their right to distrain on or foreclose against
the Collateral and agrees to allow the Secured Parties to remain on such
premises to dispose of or deal with any Collateral located thereon.

     

    1.6 Power of Attorney.
Zak Elgamal or his representative is hereby irrevocably made, constituted
and appointed the true and lawful attorney for the Debtor (without requiring it
to act as such) with full power of substitution to do the following: (a) execute
in the name of the Debtor, schedules, assignments, instruments, documents and
statements that the Debtor is obligated to give the Secured Parties hereunder or
is necessary to perfect (or continue to evidence the perfection of such security
interest); (b) during the continuance of an Event of Default, endorse the name
of the Debtor upon any and all checks, drafts, money orders and other
instruments for the payment of monies that are payable to the Debtor and
constitute collections on the Debtor's accounts or other Collateral; and (c)
during the continuance of any Event of Default, do such other and further acts
and deeds in the name of the Debtor that the Secured Parties may reasonably deem
necessary or desirable to enforce any Account or other Collateral or perfect a
Secured Party's security interest in the Collateral.

     

    SECTION 2

    REPRESENTATIONS
AND WARRANTIES

     

    The
Debtor represents and warrants to the Secured Parties each of the
following:

     

    2.1 Corporate Organization.
The Debtor (i) is duly organized and validly existing under the laws of
its state of formation, (ii) has the power and authority to operate its business
and to
own its property and (iii) is duly qualified, is validly existing and in good
standing and has lawful power and authority to engage in the business it
conducts in each state where the nature and extent of its business requires
qualification.

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    2.2 Non-Contravention.
The making and performance of this Agreement and other agreements
executed in connection herewith will not (immediately, with the passage of time
or with the giving of notice or both):

     

    (a) violate
the certificate of incorporation or by-laws of the Debtor or result in a default
under any contract, agreement or instrument to which the Debtor is a party or by
which the Debtor or its property is or may be bound, or

     

    (b) result in
the creation or imposition of any security interest in, or lien or encumbrance
upon, any of the assets of the Debtor, except such as are in favor of the
Secured Parties.

     

    2.3 Power and Authority,
The Debtor has the power and authority to enter into and perform this
Agreement and to incur the obligations herein and therein provided for, and has
taken all proper and necessary action, corporate or otherwise, to authorize the
execution, delivery and performance of this Agreement.

     

    2.4 Enforceable. This
Agreement is valid, binding and enforceable against the Debtor in accordance
with its terms.

     

    2.5 Consents and Approvals.
All necessary consents, approvals or authorizations of, or filing,
registration or qualification with, any person, required to be obtained by the
Debtor in connection with the execution and delivery of this Agreement or the
undertaking or performance of any obligation hereunder has been
obtained.

     

    2.6 Names and Intellectual
Property.

     

    (a) For
the past five (5) years, the Debtor has not conducted business under or used any
other name (whether corporate or assumed). The Debtor is the sole owner of the
corporate name identified in this Agreement as American Surgical Holdings, Inc.
and any and all business done and all invoices issued in such trade name are the
Debtor's sales, business and invoices.

     

    2.7
Title. The Collateral is free and clear of any and all liens, claims,
encumbrances or security interests other than the security interests, except for
any security arrangement resulting from selling or pledging of trade accounts
receivable provided that the Secured Party receives a minimum of One Million
Dollars ($1,000,000) from such financing to be applied towards any outstanding
balance owing on the Master Note at the time of such financing.

     

    2.8 Perfection. This
Agreement is effective to create in favor of the Secured Parties legal, valid
and enforceable security interest in all right, title and interest of the Debtor
in the Collateral, and when financing statements and mortgages have been filed
in the offices of the jurisdiction of formation
under the Debtor's name, the Secured Parties will have a perfected security
interest in the Collateral, superior in right to any and all other liens,
security interest or other encumbrances existing or future, other than the
security interest in favor of the Secured Parties, and provided, however, that
upon receipt of an aggregate of such $1,000,000 by the Holders, the Security
Holders' lien and security interest on Debtor's trade accounts receivable
created under this Section 1(a) shall be automatically released, and Debtor
shall be authorized to file a termination statement terminating any UCC-1
financing statements with respect to such lien and security
interest.

     

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

     

    2.8 Places of Business.
The only places of business of the Debtor, and the places where the
Debtor keeps and intends to keep its Collateral, are at the addresses set forth
below:

     

    10039
Bissonnet #250, Houston, Texas 77036-7852;

     

    2.9 Insurance. The Debtor
currently maintains insurance from reputable insurance carriers and which is
adequate for the business of the Debtor.

     

    2.10
Litigation.
There is no claim, suit, litigation, proceeding or investigation pending
or (to best of the Debtor's knowledge) threatened by or against or affecting the
Debtor in any court or before any governmental agency (or any basis therefore
known to the Debtor) which may result, either separately or in the aggregate, in
a material adverse effect on the Debtor. The Debtor will promptly inform the
Secured Parties in writing of any claim, proceeding, litigation or investigation
in the future threatened or instituted by or against the Debtor.

     

    SECTION
3

    COVENANTS

     

    3.1 The
Debtor covenants that:

     

    (a)            Payment of Taxes and Claims.
The Debtor shall pay, before they become delinquent,
the following:

     

    (i) All
taxes, assessments and governmental charges or levies imposed upon it or upon
the Debtor's property, and

     

    (ii) All
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other persons entitled to the benefit of statutory or common law liens or
other encumbrances, which, if unpaid, would result in the imposition of a lien
or other encumbrance upon its property; provided, however, that the Debtor shall
not be required to pay any such tax, assessment, charge, levy, claim or demand
if the amount, applicability or validity thereof shall at the time be contested
in good faith and by appropriate proceedings by the Debtor, and if the Debtor
shall have set aside on its books adequate reserves in respect thereof, if so
required in accordance with generally accepted accounting principles ("GAAP");
which deferment of payment is permissible so long as no lien or other
encumbrance has been entered and the Debtor's title to, and its right to use,
its property are not materially adversely affected thereby.

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

     

    (b)             Property. The Debtor
shall maintain its property in its current condition (normal wear and tear
excepted) and make all necessary renewals, replacements, additions, betterments
and improvements thereto and will pay and discharge when due the cost of repairs
and maintenance to its property, and will pay all rentals when due for all real
estate leased by the Debtor.

     

    (c)             Property Insurance, Public
and Products Liability Insurance. The Debtor shall maintain insurance (i)
on all insurable tangible property against fire, flood, casualty and such other
hazards (including, without limitation, extended coverage, workmen's
compensation, boiler and machinery, with inflation coverage by endorsement) and
(ii) against public liability, product liability and business interruption, in
each case in such amounts, with such deductibles and with such insurers as are
customarily used by companies operating in the same industry as the Debtor. In
the event the Debtor fails to procure or cause to be procured any such insurance
or to timely pay or cause to be paid the premium(s) on any such insurance, a
Secured Party may do so for the Debtor, but the Debtor shall continue to be
liable for the same. The policies of all such casualty insurance shall contain
standard lender loss payable clauses (and, with respect to liability and
interruption insurance, additional insured clauses) issued in favor of the
Secured Parties under which all losses thereunder shall be paid to the Secured
Parties as the Secured Parties interest may appear. Such policies shall
expressly provide that the requisite insurance cannot be altered or canceled
without thirty (30) days prior written notice to the Secured Parties and shall
insure the Secured Parties notwithstanding the act or neglect of the Debtor. The
Debtor further covenants that all insurance premiums owing under its current
policies have been paid. The Debtor shall notify the Secured Parties,
immediately, upon the Debtor's receipt of a notice of termination, cancellation,
or non-renewal from its insurance company of any such policy.

     

    (d)             Financial Records.
The Debtor shall keep current and accurate books of records and accounts
in which full and correct entries will be made of all of its business
transactions, and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Debtor shall not
change its fiscal year end date without the prior written consent of the Secured
Parties.

     

    (e)             Corporate Existence and
Rights, The Debtor shall do (or cause to be done) all things necessary to
preserve and keep in full force and effect its existence, good standing, rights
and franchises. The Debtor shall maintain any and all licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its property or to the conduct of its businesses.

     

    (f) Compliance with Laws,
The Debtor: (i) shall be in compliance with any and all laws, ordinances,
governmental rules and regulations, and court or administrative orders or
decrees to which it is subject, whether federal, state or local, (including,
without limitation, environmental laws) and (ii) shall obtain any and all
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its property or to the conduct of its businesses. The Debtor
shall timely satisfy all assessments, fines, costs and penalties imposed (after
exhaustion of all appeals, provided a stay has been put in effect during such
appeal) by any governmental authority against Debtor or any property of the
Debtor.

     

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

     

    (g)             Issue Taxes. The
Debtor shall pay all taxes (other than taxes based upon or measured by any of
the Secured Party's income or revenues or any personal property tax), if any, in
connection with the recording of any lien documents. The obligations of the
Debtor hereunder shall survive the termination of this Agreement

     

    (h)             Merger, Consolidation,
Dissolution or Liquidation. The Debtor shall not merge or consolidate
with any other person or commence a dissolution or liquidation.

     

    (i) Sale of Property. The
Debtor shall not engage in any sale of its assets, except in the ordinary course
of business and other than equipment that is replaced by other equipment of
comparable or superior quality and value within ninety (90) days of such sale
and such equipment becomes part of the Collateral.

     

    0) Liens and
Encumbrances/Indebtedness. The Debtor shall not: (i) execute a negative
pledge agreement with any person covering any of the Collateral, or (ii) cause
or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), the Collateral, whether now owned or
hereafter acquired, to be subject to a lien, security interest or other claim or
encumbrance except for Permitted Liens. As used herein, "Permitted Liens" means: (i)
liens securing taxes, assessments or governmental charges or levies or the
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords,
and other like persons; (ii) liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, social security and other like laws; and (iii) provided however, that
the Debtor's current trade accounts receivables may be used as collateral in
connection with obtaining working capital financing so long as a minimum of One
Million Dollars and 00/100 ($1,000,000.00) of proceeds from any such financing
facility are used to pay down principal on the Master Note, provided, however,
that upon receipt of an aggregate of such $1,000,000 by the Holders, this lien
and security interest on Debtor's trade accounts receivable created under this
Section 1(a) shall be automatically released, and Debtor shall be authorized to
file a termination statement terminating any UCC-1 financing statements with
respect to such lien and security interest..

     

    (k) First Priority Lien.
Subject to the provisions of Section 1.1, the Secured Parties shall have
a perfected, first priority lien in and upon all of the Collateral. The Debtor
represents and warrants that it has no indebtedness of any kind, other than
trade payables in the ordinary course of business as of the date hereof, and
shall not enter into any loan, credit agreement, revolver, debenture transaction
or incur any other indebtedness during the time any outstanding balance is due
under the Master Note, provided, however, that the Debtor's current trade
accounts receivables may be used as collateral in connection with obtaining
working capital financing so long as a minimum of One Million Dollars and 00/100
($1,000,000.00) of proceeds from any such financing facility are used to pay
down principal on the Master Note, provided, however, that upon receipt of an
aggregate of such $1,000,000 by the Holders, this lien and security interest on
Debtor's trade accounts receivable created under this Section 1(a) shall be
automatically released, and Debtor shall be authorized to file a termination
statement terminating any UCC-1 financing statements with respect to such lien
and security interest,

     

    (l)           Other Agreements. The
Debtor shall not become or be a party to any contract
or agreement which at the time of becoming a party to such contract or agreement
materially
impairs the Debtor's ability to perform under this Agreement, or under any other
instrument, agreement or document to which the Debtor is a party or by which it
is or may be bound.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

     

    (m)             Change of Location or
Jurisdiction of Organization. The Debtor agrees that it shall not change
its name or jurisdiction of organization without thirty (30) days prior written
notice to the Secured Parties and that if the location of the Collateral changes
from the locations set forth herein or if its principal place of business
changes from that indicated in Section 2.9 of this Agreement, the Debtor will
immediately notify each Secured Party in writing of the additions or changes to
the locations of the Collateral,

     

    (n)             Commercial Tort Claims.
The Debtor shall provide written notice to each Secured Party of any
commercial tort claim claiming to which the Debtor is or becomes a party or
which otherwise inures to the benefit of the Debtor. Such notice shall contain a
sufficient description of the commercial tort claim including the parties, the
court in which the claim was commenced (if applicable), the docket number
assigned to the case (if applicable) and an explanation of the events giving
rise to such claim. If requested by the Secured Parties, the Debtor shall grant
the Secured Parties a security interest in such commercial tort claim in which
the Debtor is plaintiff or cross-claimant as additional Collateral. The Debtor
shall execute and deliver such instruments, documents and agreements as
the Secured Parties may require in order to obtain and perfect such
security interest including, without limitation, a security agreement or
amendment to any existing security agreement all in form and substance
satisfactory to the Secured Parties. The Debtor authorizes the Secured Parties
to file (without the Debtor's signature), financing statements or amendments to
existing financing statements as the Secured Parties deems necessary to perfect
the security interest.

     

    (o)            Maintenance of Collateral,
The Debtor will maintain the Collateral in good order, and the Debtor
will not use the Collateral for any unlawful purpose and will not sell any
Collateral without the written consent of the Secured Parties, except if such
sale is in the ordinary course of business or as otherwise permitted by this
Agreement. The Debtor will immediately advise the Secured Parties in writing of
any material loss or damage to the Collateral.

     

    (p)            Litigation Matters.
The Debtor shall provide monthly reports on the status of the United and
Aetna matters set forth in Section 1.1(b) above

     

    (q)            Master Note Compliance.
The Debtor shall comply with all covenants contained
in the Master Note.

     

    SECTION
4 

    DEFAULT

     

    4.1 Events of Default.
The breach or non-performance of any covenant, representation or warranty
in this Agreement and the occurrence of a default under any of the Loan
Documents (after any applicable cure or grace period) shall constitute an event
of default hereunder (each, an "Event
of Default") and the Secured Parties shall thereupon have the option to
declare the Debtor in default under this Agreement, and all other existing and
future agreements
of any kind (related or unrelated) with the Secured Parties, and declare all
existing and future liabilities, indebtedness and obligations of the Debtor to
the Secured Parties, whether matured or contingent, related or unrelated, due or
to become due, immediately due and payable including, but not limited to,
interest, principal, reasonable and actual expenses, advances to protect the
Secured Parties position and all of the Secured Parties rights hereunder and
thereunder, all without demand, notice, presentment or protest or further action
of any kind.

     

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    4.2 Rights and Remedies on
Default. In addition to all other rights, options and remedies granted to
the Secured Parties under this Agreement (each of which is also then exercisable
by the Secured Parties), the Secured Parties may, upon the occurrence of an
Event of Default, exercise any other rights granted to it under the UCC and any
other applicable law, including, without limitation, the following rights and
remedies:

     

    (a) the right
to take possession of, send notices, and directly collect the Collateral, with
or without judicial process (including, without limitation the right to notify
the United States postal authority to redirect all mail addressed to the Debtor
to an address designated by the Secured Parties);

     

    (b) by its
own means or with judicial assistance, enter the Debtor's premises and take
possession of the Collateral, or render it unusable, or dispose of the
Collateral on such premises without any liability for rent, storage, utilities
or other sums, and the Debtor shall not resist or interfere with such
action;

     

    (c) require
the Debtor at the Debtor's expense to assemble all or any part of the Collateral
and make it available to the Secured Parties at any place designated by the
Secured Parties;

     

    (d) The
Debtor hereby agrees that a notice received by it at least ten (10) days before
the time of any intended public sale or of the time after which any private sale
or other disposition of the Collateral is to be made, shall be deemed to be
reasonable notice of such sale or other disposition. If permitted by applicable
law, any perishable inventory or Collateral which threatens to speedily decline
in value or which is sold on a recognized market may be sold immediately by the
Secured Parties without prior notice to the Debtor. The Debtor covenants and
agrees not to interfere with or impose any obstacle to the Secured Parties'
exercise of its rights and remedies with respect to the Collateral, after the
occurrence of an Event of Default hereunder; and

     

    (e) To
the extent that applicable law imposes duties on the Secured Parties to exercise
remedies in a commercially reasonable manner, the Debtor acknowledges and agrees
that it is not commercially unreasonable for the Secured Parties to do any of
the following:

     

    (i) fail to
incur expenses reasonably deemed significant by the Secured Parties to prepare
the Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for
disposition;

     

    (ii) fail to
obtain third party consents for access to the Collateral to be disposed of or to
obtain or, if not required by other law, to fail to obtain governmental or
third
party consents for the collection or disposition of the Collateral to be
collected or disposed of;

     

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

     

    (iii) fail to
exercise collection remedies against account debtors or other persons obligated
on the Collateral or to remove liens, security interests or other encumbrances
on or any adverse claims against the Collateral;

     

    (iv) exercise
collection remedies against account debtors and other persons obligated on the
Collateral directly or through the use of collection agencies and other
collection specialists;

     

    (v) advertise
dispositions of the Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized
nature;

     

    (vi) contact
other persons, whether or not in the same business as the Debtor, for
expressions of interest in acquiring all or any portion of the
Collateral;

     

    (vii) hire one
or more professional auctioneers to assist in the disposition of the Collateral,
whether or not the collateral is of a specialized nature;

     

    (viii) dispose
of the Collateral by utilizing Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets;

     

    (ix) dispose
of assets in wholesale rather than retail markets;

     

    (x) disclaim
disposition warranties;

     

    (xi) purchase
insurance or credit enhancements to insure the Secured Parties against risks of
loss, collection or disposition of the Collateral or to provide to the Secured
Parties a guaranteed return from the collection or disposition of the
Collateral; or

     

    (xii) (1) to
the extent deemed appropriate by the Secured Parties, obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Secured Parties in the collection or disposition of any of the
Collateral.

     

    The
Debtor acknowledges that the purpose of this Section 4.2(e) is to provide
non-exhaustive indications of what actions or omissions by the Secured Parties
would not be commercially unreasonable in the Secured Parties' exercise of
remedies against the Collateral and that other actions or omissions by the
Secured Parties shall not be deemed commercially unreasonable solely on account
of not being indicated in this Section 4.2(e). Without limitation upon the
foregoing, nothing contained in this Section 4.2(e) shall be construed to grant
any rights to the Debtor or to impose any duties on the Secured Parties that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this Section 4.2(e)

     

    4.3 Nature of Remedies.
The Secured Parties shall have the right to proceed against all or any
portion of the Collateral in any order and may apply such Collateral to the
liabilities and obligations of the Debtor to the Secured Parties in any order.
All rights and remedies granted
the Secured Parties hereunder and under any agreement referred to herein, or
otherwise available at law or in equity, shall be deemed concurrent and
cumulative, and not alternative remedies, and the Secured Parties may proceed
with any number of remedies at the same time until all existing and future
liabilities and obligations of the Debtor to the Secured Parties, are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and the Secured Parties, upon the
occurrence of an Event of Default, may proceed against the Debtor, and/or the
Collateral, at any time, under any agreement, with any available remedy and in
any order.

     

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

     

    SECTION
5

    MISCELLANEOUS

     

    5.1 Governing Law. This
Agreement, and all related agreements and documents shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
its otherwise applicable principles of conflicts of laws. The provisions of this
Agreement and other agreements and documents referred to herein are to be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect or impair the remaining provisions which shall continue in full force and
effect.

     

       
5.2 Waiver,

     

    (a) No
omission or delay by the Secured Parties in exercising any right or power under
this Agreement or any other document will impair such right or power or be
construed to be a waiver of any default, or Event of Default or an acquiescence
therein, and any single or partial exercise of any such right or power will not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver of the Secured Parties' rights hereunder will be valid unless in
writing and signed by the Secured Parties, and then only to the extent
specified.

     

    (b) The
Debtor releases the Secured Parties, their agents, administrators and executors,
their officers, employees and agents, of and from any claims for loss or damage
resulting from acts or conduct of any or all of them arising through the date
hereof, unless caused solely by wilful misconduct or gross
negligence.

     

    5.3 Modification. No
modification hereof or any agreement referred to herein shall be binding or
enforceable unless in writing and signed on behalf of the party against whom
enforcement is sought.

     

    5.4 Signatories. Each
individual signatory hereto represents and warrants that he/she/it is duly
authorized to execute this Agreement on behalf of his/her/its principal and that
he/she/it executes the Agreement in such capacity and not as a
party.

     

    5.5 Successors and Assigns.
All provisions herein shall inure to, become binding upon the successors,
representatives, trustees, administrators, executors, heirs and assigns of
the parties hereto.

     

     

    
 

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

     

      
5.6 Consent to
Jurisdiction. The Debtor irrevocably consents to the jurisdiction of the
Courts of the State of Texas, County of Harris or the United States District
Court for the Southern District of Texas located in the County of Harris in any
and all actions and proceedings whether arising hereunder or under any other
agreement or undertaking and irrevocably agrees to service of process to the
address of the Debtor set forth herein by certified mail, return receipt
requested.

     

      
 5.7 Waiver of
Jury Trial. The Debtor and the Secured Parties hereby waive any and all
rights any may have to a jury trial in connection with any litigation commenced
by or against the Secured Parties with respect to rights and obligations of the
parties hereto.

     

      
5.8 No Marshalling.
The Secured Parties shall not be required to marshal any present or
future collateral security (including but not limited to this Agreement and the
Collateral) for, or other assurances of payment of, the obligations (or any of
them) secured hereunder or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that it lawfully may, the Debtor hereby agrees that it will not
invoke any law relating to the marshalling of collateral which might cause delay
in or impede the enforcement of the Secured Parties' rights under this Agreement
or under any other instrument creating or evidencing any of the obligations
secured hereunder or under which any of such obligations is outstanding or by
which any of such obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, the Debtor hereby irrevocably
waives the benefits of all such laws.

     

    [Signature
Page Follows]

     

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    
 

     

    IN
WITNESS WHEREOF, the undersigned parties have executed this Agreement the day
and year first above written.

    
       

      
        
          	
                  AMERICAN
      SURGICAL HOLDINGS, INC

                  a
      Delaware corporation

                
	 
	By: /s/
      Zak W.
  Elgamal

        

      

      
        
          	
                  Name:
      Zak W. Elgamal

                  Title:
      Chairman and Chief Executive
      Officer

                

        

      

       

      
         

      

      AGREED TO
AND ACCEPTED:

       

      Note
Holder's Agent,

      for and
on behalf of the Holders

       

      DAWSON
JAMES SECURITIES, INC

      a
Florida corporation

       

      By: /s/
Albert J. Pollak  

      Name:
Albert J. Pollak 

      Title:
President

       

       

       

       

      -13-ex10_1.htm

  
    Exhibit 10.1

    
      

      

      VALLEY
NATIONAL BANCORP

      

      Up to
5,670,000

      Shares of
Common Stock

      (no par
value)

      

      EQUITY DISTRIBUTION
AGREEMENT

      

      

      June
8,
2009

      

      STIFEL,
NICOLAUS & COMPANY, INCORPORATED

      One South
Street, 15th
Floor

      Baltimore,
Maryland 21202

      

      RBC
CAPITAL MARKETS CORPORATION

      Three
World Financial Center

      200 Vesey
Street, 8th
Floor

      New York,
New York 10281

      

      Ladies
and Gentlemen:

      

      Valley
National Bancorp, a New Jersey corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell from time
to time to or through Stifel, Nicolaus & Company, Incorporated (“Stifel Nicolaus”) and
RBC Capital Markets Corporation (“RBC” and, together
with Stifel Nicolaus, the “Agents”), as sales
agent and/or principal, up to 5,670,000 shares (the “Shares”) of the Company’s common
stock, no par value (the “Common Stock”) on the
terms set forth in Section 2 of this Equity Distribution Agreement (the “Agreement”).  The
Company agrees that whenever it determines to sell Shares directly to an Agent,
as principal, it will enter into a separate agreement (each, a “Terms Agreement”) in
substantially the form of Annex I hereto, relating to such sale in accordance
with Section 3 of this Agreement.

      

      Section
1.  Representations and
Warranties.  The Company represents and warrants to the Agents
that as of the date of this Agreement, any applicable Registration Statement
Amendment Date (as defined in Section 3 below), each Company Periodic Report
Date (as defined in Section 3 below), each Company Earnings Report date (as
defined in Section 3 below), each Applicable Time (as defined in Section 1(c)
below) and each Settlement Date (as defined in Section 2 below):

      

      (a)           Compliance with Registration
Requirements.  The Company has filed with the Securities and
Exchange Commission (the “Commission”) an
“automatic shelf registration statement” as defined under Rule 405 under the
Securities Act of 1933, as amended (the “1933 Act”), on Form
S-3 (File No. 333-157561), in respect of the Company’s Common Stock (including
the Shares) (collectively, the “Securities”) not
earlier than three years prior to the date hereof; such registration statement,
and any post-effective amendment thereto, became effective on filing; and no
stop order suspending the effectiveness of such registration statement or any
part thereof has been issued and no proceeding for that purpose has been
initiated or, to the knowledge of the Company, threatened by the Commission, and
no notice of objection of the Commission to the use of such form of registration
statement or any post-effective amendment thereto pursuant to Rule 401(g)(2)
under the 1933 Act has been received by the Company (the base prospectus filed
as part of such registration statement, in the form in which it has most
recently been filed with the Commission on or prior to the date of this
Agreement, is hereinafter called the “Basic Prospectus”;
the various parts of such registration statement, including all exhibits thereto
and any prospectus supplement relating to the Shares that is filed with the
Commission and deemed by virtue of Rule 430B to be part of such registration
statement, each as amended at the time such part of the registration statement
became effective, are hereinafter collectively called the “Registration
Statement”; the prospectus supplement specifically relating to the Shares
prepared and filed with the Commission pursuant to Rule 424(b) under the 1933
Act is hereinafter called the “Prospectus
Supplement”; the Basic Prospectus, as amended and supplemented by the
Prospectus Supplement, is hereinafter called the “Prospectus”; any
reference herein to the Basic Prospectus, the Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act; any
reference to any amendment or supplement to the Basic Prospectus, the Prospectus
Supplement or the Prospectus shall be deemed to refer to and include any
post-effective amendment to the Registration Statement, any prospectus
supplement relating to the Shares filed with the Commission pursuant to Rule
424(b) under the 1933 Act and any documents filed under the Securities Exchange
Act of 1934, as amended (the “1934 Act”), and
incorporated therein, in each case after the date of the Basic Prospectus, the
Prospectus Supplement or the Prospectus, as the case may be; any reference to
any amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the 1934 Act after the effective date of the Registration Statement
that is incorporated by reference in the Registration Statement; and any “issuer
free writing prospectus” as defined in Rule 433 under the 1933 Act relating to
the Shares is hereinafter called an “Issuer Free Writing
Prospectus”).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2

       

      No order
preventing or suspending the use of the Basic Prospectus, the Prospectus
Supplement, the Prospectus or any Issuer Free Writing Prospectus has been issued
by the Commission, and the Basic Prospectus and the Prospectus Supplement, at
the time of filing thereof, conformed in all material respects to the
requirements of the 1933 Act and the rules and regulations of the Commission
thereunder (the “1933
Act Regulations”) and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

      

      For the
purposes of this Agreement, the “Applicable Time”
means, with respect to any Shares, the time of sale of such Shares pursuant to
this Agreement; the Prospectus and the applicable Issuer Free Writing
Prospectus(es) issued at or prior to such Applicable Time, taken together
(collectively, and, with respect to any Shares, together with the public
offering price of such Shares, the “General Disclosure
Package”) as of each Applicable Time and each Settlement Date, will not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each applicable
Issuer Free Writing Prospectus will not conflict with the information contained
in the Registration Statement, the Prospectus Supplement or the Prospectus and
each such Issuer Free Writing Prospectus, as supplemented by and taken together
with the General Disclosure Package as of such Applicable Time, will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Agent expressly for use therein.

      

      (b)           Incorporation of Documents
by Reference.  The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
complied in all material respects with the requirements of the 1934 Act and the
1934 Act Regulations, and, when read together with the other information in the
Prospectus, (a) at the time the Registration Statement became effective, (b) at
the time the Prospectus was issued and (c) on the date of this Agreement, did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.

      

      (c)           Independent
Accountants.  The accountants who certified the financial
statements and supporting schedules included in the Registration Statement are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.

      

      (d)           Financial
Statements.  The financial statements included or incorporated
by reference in the Registration Statement, the General Disclosure Package and
the Prospectus, together with the related schedules and notes, present fairly,
in all material respects, the financial position of the Company and its
consolidated subsidiaries  at the dates indicated and the statement of
operations, shareholders’ equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
in the United States (“GAAP”) applied on a
consistent basis throughout the periods involved.  The supporting
schedules, if any, present fairly, in all material respects, in accordance with
GAAP the information required to be stated therein.  The selected
financial data and the summary financial information included in the Prospectus
present fairly, in all material respects, the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included or incorporated by reference in the Registration
Statement.  All disclosures contained in the Registration Statement,
the General Disclosure Package or the Prospectus, or incorporated by reference
therein, regarding “non-GAAP financial measures” (as such term is defined by the
rules and regulations of the Commission) comply with Regulation G of the 1934
Act and Item 10 of Regulation S-K of the 1933 Act, to the extent
applicable.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3

       

      (e)           No Material Adverse Change
in Business.  Since the respective dates as of which
information is given in the Registration Statement, the General Disclosure
Package or the Prospectus, except as otherwise stated therein, (A) there
has been no material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
consolidated direct or indirect subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a “Material Adverse
Effect”), (B) there have been no transactions entered into by the
Company or any of its consolidated direct or indirect subsidiaries, other than
those in the ordinary course of business, which are material with respect to the
Company and its direct or indirect subsidiaries considered as one enterprise,
and (C) except for cash and stock dividends on the Common Stock as
described in the Registration Statement, the General Disclosure Package and the
Prospectus in amounts per share that are consistent with past practice, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.

      

      (f)           Good Standing of the
Company.  The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its organization and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.  The Company is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the “BHCA”).

      

      (g)           Status of Significant
Subsidiaries.  Valley National Bank (the “Bank”) is a duly
organized and validly existing national banking association and each of VNB
Realty, Inc., VNB Capital Corp., Shrewsbury Capital Corporation, VN Investments,
Inc. and Shrewsbury State Investment Co., Inc. (each, including the Bank, a
“significant subsidiary” (as such term is defined in Rule 1-02(w) of Regulation
S-X under the 1933 Act) (collectively with the Bank, the “Significant
Subsidiaries”)) has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of each
such Significant Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of capital stock of
any Significant Subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such Significant Subsidiary.  The Bank
is the only depository institution subsidiary of the Company.

      

      (h)           Capitalization.  The
shares of issued and outstanding Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable; none of the outstanding
shares of capital stock was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.  The Company’s
Common Stock has been registered pursuant to Section 12(b) of the 1934 Act and
is listed on the New York Stock Exchange (the “NYSE”), and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration or listing of the Common Stock from the NYSE, nor
has the Company received any notification that the Commission or the NYSE is
contemplating terminating such registration or listing.  The
outstanding shares of the Common Stock have been approved for listing and the
Shares being sold hereunder have been approved for listing, subject only to
official notice of issuance, on the NYSE.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4

       

      (i)           Authorization of
Agreements.  This Agreement and any Terms Agreement have been
duly authorized by the Company.  This Agreement has been, and any
Terms Agreement will be, duly executed and delivered by the
Company.

      

      (j)           Authorization and
Description of Securities.  The Shares have been duly
authorized and reserved for issuance and sale pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement or any Terms
Agreement against payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable; the Common Stock conforms to all
statements relating thereto contained in the Prospectus in all material respects
and such description conforms to the rights set forth in the Certificate of
Incorporation of the Company; no holder of the Shares will be subject to
personal liability by reason of being such a holder; and the issuance of the
Shares is not subject to the preemptive or other similar rights of any
securityholder of the Company.

      

      (k)           Absence of Defaults and
Conflicts.  (a) Neither the Company nor the Significant
Subsidiaries is (i) in violation of its charter or by-laws, (ii) in default, and
no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or the Significant Subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or the Significant Subsidiaries is subject (collectively, “Agreements and
Instruments”), except for such default that would not, individually or in
the aggregate, have a Material Adverse Effect, or (iii) in violation of any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or the Significant Subsidiaries or any of their
assets, properties or operations, except for such violation that would not,
individually or in the aggregate, have a Material Adverse Effect; (b)(i) and the
execution, delivery and performance of this Agreement or of any Terms Agreement
and the consummation of the transactions contemplated herein or in any Terms
Agreement and in the Registration Statement (including the issuance and sale of
the Shares and the use of the proceeds from the sale of the Shares as described
in the Prospectus under the caption “Use of Proceeds”) and compliance by the
Company with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Significant Subsidiaries pursuant to, the
Agreements and Instruments, (ii) nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or the Significant
Subsidiaries, (iii) nor will such action result in any violation of any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or the Significant Subsidiaries or any of their
assets, properties or operations, except for such violation that would not,
individually or in the aggregate, have a Material Adverse Effect.  As
used herein, a “Repayment Event”
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or the Significant
Subsidiaries.

      

      (l)           Absence of Labor
Dispute.  No labor dispute with the employees of the Company or
the Significant Subsidiaries exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or the Significant Subsidiaries’
principal suppliers, manufacturers, customers or contractors.

       

      (m)           Absence of
Proceedings.  There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or the Significant Subsidiaries,
which is required to be disclosed in the Registration Statement or the
Prospectus (other than as disclosed therein), or which would reasonably be
expected to result in a Material Adverse Effect, or which might materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or any Terms Agreement or the
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or the Significant Subsidiaries is a party or of which any of their respective
property or assets is the subject which are not described in the Registration
Statement or the Prospectus, including ordinary routine litigation incidental to
the business, would not reasonably be expected to result in a Material Adverse
Effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5

       

      (n)           Accuracy of
Exhibits.  There are no contracts or documents which are
required to be described in the Registration Statement or the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits thereto
which have not been so described and filed as required.

      

      (o)           Possession of Intellectual
Property.  The Company and the Significant Subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other intellectual
property (collectively, “Intellectual
Property”) necessary to carry on the business now operated by them, and
neither the Company nor the Significant Subsidiaries has received any notice or
is otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or the Significant Subsidiaries
therein.

      

      (p)           Absence of Further
Requirements.  No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the performance by
the Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Shares hereunder or the consummation of the transactions
contemplated by this Agreement or any Terms Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws.

      

      (q)           Absence of
Manipulation.   Neither the Company nor any affiliate of
the Company has taken, nor will the Company take, directly or indirectly, any
action which is designed to or which has constituted or which would be expected
to cause or result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares.

       

      (r)           Possession of Licenses and
Permits.  The Company and the Significant Subsidiaries possess
such permits, licenses, approvals, consents and other authorizations
(collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
them; the Company and the Significant Subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses; all of the Governmental
Licenses are valid and in full force and effect; and neither the Company nor the
Significant Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses.

      

      (s)           Title to
Property.  The Company and the Significant Subsidiaries have
good and marketable title to all real property owned by the Company and the
Significant Subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such as (a)
are described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or the Significant
Subsidiaries; and all of the leases and subleases material to the business of
the Company and the Significant Subsidiaries, considered as one enterprise, and
under which the Company or the Significant Subsidiaries holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor the Significant Subsidiaries has any notice of any material claim of
any sort that has been asserted by anyone adverse to the rights of the Company
or the Significant Subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or the Significant
Subsidiaries to the continued possession of the leased or subleased premises
under any such lease or sublease.

      

      (t)           Investment Company
Act.  The Company is not required, and upon the issuance and
sale of the Shares as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be required, to
register as an “investment company” within the meaning of the Investment Company
Act of 1940, as amended (the “1940
Act”).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6

       

      (u)           Environmental
Laws.  Except as described in the Prospectus and as would not,
individually or in the aggregate, have a Material Adverse Effect, (A) neither
the Company nor the Significant Subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or mold
(collectively, “Hazardous Materials”)
or to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”),
(B) the Company and the Significant Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or the Significant Subsidiaries and (D) there are no events or
circumstances that would reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the Company or the
Significant Subsidiaries relating to Hazardous Materials or any Environmental
Laws.

      

      (v)           Registration
Rights.  Other than pursuant to agreements for which the
Company has fully satisfied its registration obligations, there are no persons
with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.

      

      (w)           Accounting Controls and
Disclosure Controls.  The Company and the Significant
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with management’s general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.  Except as described in the Prospectus,
since the end of the Company’s most recent audited fiscal year, there has been
(1) no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and (2) no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

       

      The
Company and its consolidated subsidiaries employ disclosure controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.

       

      (x)           Well-Known Seasoned
Issuer.  (A)(i)  At the time of filing the
Registration Statement, (ii) at the time of the most recent amendment thereto
for the purposes of complying with Section 10(a)(3) of the 1933 Act (whether
such amendment was by post-effective amendment, incorporated report filed
pursuant to Section 13 or 15(d) of the 1934 Act or form of prospectus), and
(iii) at the time the Company or any person acting on its behalf (within the
meaning, for this clause only, of Rule 163(c) under the 1933 Act) made any offer
relating to the Shares in reliance on the exemption of Rule 163 under the 1933
Act, the Company was a “well-known seasoned issuer” as defined in Rule 405 under
the 1933 Act and (B) at the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) under the 1933 Act) of the Shares,
the Company was not an “ineligible issuer” as defined in Rule 405 under the 1933
Act.

      

      (y)           No
Commissions.  Neither the Company nor the Significant
Subsidiaries is a party to any contract, agreement or understanding with any
person (other than as contemplated by this Agreement or any Terms Agreement)
that would give rise to a valid claim against the Company or the Significant
Subsidiaries or the Agents for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the Shares.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      7

       

      (z)           Actively-Traded
Security.  The Common Stock is an “actively-traded security”
exempted from the requirements of Rule 101 of Regulation M under the 1934 Act by
subsection (c)(1) of such rule.

      

      (aa)           Deemed
Representation.  Any certificate signed by any officer of the
Company delivered to the Agents or to counsel for the Agents pursuant to or in
connection with this Agreement or any Terms Agreement shall be deemed a
representation and warranty by the Company to the Agent as to the matters
covered thereby as of the date or dates indicated in such
certificate.

      

      (bb)           Compliance with the
Sarbanes-Oxley Act.  There is and has been no failure on the
part of the Company or any of the Company’s directors or officers, in their
capacities as such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (the “Sarbanes-Oxley Act”),
including Section 402 related to loans and Sections 302 and 906 related to
certifications.

       

      (cc)           Payment of
Taxes.  All United States federal income tax returns of the
Company and the Significant Subsidiaries required by law to be filed have been
filed and all taxes shown by such returns or otherwise assessed, which are due
and payable, have been paid, except assessments against which appeals have been
or will be promptly taken and as to which adequate reserves have been
provided.  The United States federal income tax returns of the Company
through the fiscal year ended December 31, 2008 have been settled and no
assessment in connection therewith has been made against the Company. The
Company and the Significant Subsidiaries have filed all other tax returns that
are required to have been filed by them pursuant to applicable foreign, state,
local or other law and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Company and the Significant
Subsidiaries, except for such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company in respect of any income and
corporation tax liability for any years not finally determined are adequate to
meet any assessments or re-assessments for additional income tax for any years
not finally determined.

       

      (dd)           Insurance.  The
Company and the Significant Subsidiaries carry or are entitled to the benefits
of insurance, with, to the best knowledge of each of the Company and the
Significant Subsidiaries, financially sound and reputable insurers, in such
amounts and covering such risks as is generally maintained by companies of
established repute engaged in the same or similar business, and all such
insurance is in full force and effect.  The Company has no reason to
believe that it or the Significant Subsidiaries will not be able (A) to
renew its existing insurance coverage as and when such policies expire or
(B) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a cost
that would not result in a Material Adverse Effect.  Neither of the
Company nor the Significant Subsidiaries has been denied any insurance coverage
which it has sought or for which it has applied.

       

      (ee)           Statistical and
Market-Related Data.  Any statistical and market-related data
included in the Registration Statement, the General Disclosure Package and the
Prospectus are based on or derived from sources that the Company believes to be
reliable and accurate, and, where required, the Company has obtained the written
consent to the use of such data from such sources.

       

      (ff)           Foreign Corrupt Practices
Act.  Neither the Company nor, to the knowledge of the Company,
any director, officer, agent, employee, affiliate or other person acting on
behalf of the Company or the Significant Subsidiaries is aware of or has taken
any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA and the Company and, to the knowledge of
the Company, its affiliates have conducted their businesses in compliance with
the FCPA and have instituted and maintain policies and procedures designed to
ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      8

       

      (gg)           Money Laundering
Laws.  Except as set forth on Schedule I hereto, the operations
of the Company are and have been conducted at all times in compliance in all
material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.

       

      (hh)           OFAC.  Neither the Company nor,
to the knowledge of the Company, any director, officer, agent, employee,
affiliate or person acting on behalf of the Company is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly
or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to the Significant Subsidiaries, joint venture
partner or other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by
OFAC.

       

      (ff)           Regulatory.  The
Company and the Significant Subsidiaries are in compliance with all laws, rules
and regulations of, or administered or promulgated by, the Office of the
Comptroller of Currency (the “OCC”), the Federal
Deposit Insurance Corporation (“FDIC”) and the Board
of Governors of the Federal Reserve System (the “Federal Reserve
Board”) and any other federal or state bank, insurance or other financial
regulatory authorities (collectively with the OCC, FDIC and the Federal Reserve
Board, the “Regulatory
Authorities”) with jurisdiction over the Company or any of its
Significant Subsidiaries to the extent such laws or regulations apply to the
Company or any of its Significant Subsidiaries, except where the failure to be
so in compliance would not, individually or in the aggregate, have a Material
Adverse Effect; and neither the Company nor any of its Significant Subsidiaries
is a party to any written agreement or memorandum of understanding with, or is
subject to any order or directive by, or has adopted any board resolutions at
the request of, any Regulatory Authority which restricts materially the conduct
of its business, or in any material manner relates to its capital adequacy, its
credit policies or its management, nor have any of them been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding or similar
submission, or any such board resolutions; the deposit accounts of the Bank are
insured with the FDIC up to applicable limits to the fullest extent permitted by
law; and no proceeding for the termination or revocation of such insurance is
pending or, to the knowledge of the Company or the Bank,
threatened.

       

      (gg)           No Restrictions on
Subsidiaries.  No direct or indirect subsidiary of the Company
is currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to
the Company, from making any other distribution on such subsidiary’s capital
stock, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiary’s properties or
assets to the Company or any other direct or indirect subsidiary of the Company,
except, in each case, as described in the Registration Statement, the General
Disclosure Package or the Prospectus and for generally applicable laws, rules
and regulations.

       

      (hh)           Margin
Rules.  Neither the issuance, sale and delivery of the Shares
nor the application of the proceeds thereof by the Company as described in the
Registration Statement, the General Disclosure Package and the Prospectus will
violate Regulation T, U or X of the Federal Reserve Board or any other
regulation of the Federal Reserve Board.

       

      Section 2.  Sale and Delivery of
Shares.

      

      (a)           Subject
to the terms and conditions set forth herein, the Company agrees to issue and
sell exclusively through Stifel Nicolaus or RBC, as the case may be, acting as
sales agent or directly to such Agent acting as principal from time to time, and
such Agent agrees to use its commercially reasonable efforts to sell as sales
agent for the Company, the Shares.  Sales of the Shares, if any,
through Stifel Nicolaus or RBC, as the case may be, acting as sales agent or
directly to such Agent acting as principal will be made by means of ordinary
brokers’ transactions on the NYSE, in privately negotiated transactions or
otherwise at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      9

       

      (b)           The
Shares are to be sold on a daily basis or otherwise as shall be agreed to by the
Company and Stifel Nicolaus or RBC, as the case may be, on that trading day
(other than a day on which the NYSE is scheduled to close prior to its regular
weekday closing time, each, a “Trading Day”) that
the Company has satisfied its obligations under Section 6 of this Agreement and
that the Company has instructed such Agent to make such sales.  For
the avoidance of doubt, the foregoing limitation shall not apply to sales solely
to employees or security holders of the Company or its direct or indirect
subsidiaries, or to a trustee or other person acquiring such securities for the
accounts of such persons in which Stifel Nicolaus or RBC, as the case may be, is
acting for the Company in a capacity other than as Agent under this
Agreement.  On any Trading Day, the Company may instruct Stifel
Nicolaus or RBC, as the case may be, by telephone or email (confirmed promptly
by telecopy or email, which confirmation will be promptly acknowledged by such
Agent) as to the maximum number of Shares to be sold by such Agent on such day
(in any event not in excess of the number available for issuance under the
Prospectus and the currently effective Registration Statement) and the minimum
price per Share at which such Shares may be sold.  Subject to the
terms and conditions hereof, Stifel Nicolaus or RBC, as the case may be, shall
use its commercially reasonable efforts to sell as sales agent all of the Shares
so designated by the Company.  The Company and the Agents, acting
severally and not jointly, each acknowledge and agree that (A) there can be no
assurance that Stifel Nicolaus or RBC, as the case may be, will be successful in
selling the Shares, (B) such Agent will incur no liability or obligation to the
Company or any other person or entity if they do not sell Shares for any reason
other than a failure by such Agent to use its commercially reasonable efforts
consistent with its normal trading and sales practices and applicable law and
regulations to sell such Shares as required by this Agreement and (C) such Agent
shall be under no obligation to purchase Shares on a principal basis except as
otherwise specifically agreed by each of such Agent and the Company pursuant to
a Terms Agreement.  In the event of a conflict between the terms of
this Agreement and the terms of a Terms Agreement, the terms of such Terms
Agreement will control.

      

      (c)  Notwithstanding
the foregoing, the Company shall not authorize the issuance and sale of, and
Stifel Nicolaus or RBC, as the case may be, as sales agent shall not be
obligated to use its commercially reasonable efforts to sell, any Shares (i) at
a price lower than the minimum price therefor authorized from time to time, or
(ii) in a number in excess of the number of Shares authorized from time to time
to be issued and sold under this Agreement, in each case, by the Company’s board
of directors, or a duly authorized committee thereof, and notified to such Agent
in writing.  In addition, the Company may, upon notice to Stifel
Nicolaus or RBC, as the case may be, suspend the offering of the Shares or such
Agent may, upon notice to the Company, suspend the offering of the Shares with
respect to which such Agent is acting as sales agent for any reason and at any
time; provided,
however, that
such suspension or termination shall not affect or impair the parties’
respective obligations with respect to the Shares sold hereunder prior to the
giving of such notice.  Any notice given pursuant to the preceding
sentence may be given by telephone or email (confirmed promptly by telecopy or
email, which confirmation will be promptly acknowledged).

      

      (d)  The
gross sales price of any Shares sold pursuant to this Agreement by Stifel
Nicolaus or RBC, as the case may be, acting as sales agent of the Company shall
be the market price prevailing at the time of sale for shares of the Company’s
Common Stock sold by such Agent on the NYSE or otherwise, at prices relating to
prevailing market prices or at negotiated prices.  The compensation
payable to the Agents for sales of Shares with respect to which the Agents act
as sales agent shall be equal to 1.75% of the gross sales price of the Shares
for amounts of Shares sold pursuant to this Agreement.  The Company
may sell Shares to Stifel Nicolaus or RBC, as the case may be, acting as
principal, at a price agreed upon with such Agent at the relevant Applicable
Time and pursuant to a separate Terms Agreement.  The remaining
proceeds, after further deduction for any transaction fees imposed by any
governmental, regulatory or self-regulatory organization in respect of such
sales, shall constitute the net proceeds to the Company for such Shares (the
“Net
Proceeds”).  Stifel Nicolaus or RBC, as the case may be, shall
notify the Company as promptly as practicable if any deduction referenced in the
preceding sentence will be required.

      

      (e)  If
acting as a sales agent hereunder, Stifel Nicolaus or RBC, as the case may be,
shall provide written confirmation to the Company following the close of trading
on the NYSE, each day in which Shares are sold under this Agreement setting
forth the number of Shares sold on such day, the aggregate gross sales proceeds
of the Shares, the Net Proceeds to the Company and the compensation payable by
the Company to such Agent with respect to such sales.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      10

       

      (f)  Under
no circumstances shall the aggregate offering price or number, as the case may
be, of Shares sold pursuant to this Agreement and any Terms Agreement
exceed the aggregate offering price or number, as the case may be, of Shares of
Common Stock (i) set forth in the preamble paragraph of this Agreement, (ii)
available for issuance under the Prospectus and the then currently effective
Registration Statement or (iii) authorized from time to time to be issued and
sold under this Agreement or any Terms Agreement by the Company’s board of
directors, or a duly authorized committee thereof, and notified to Stifel
Nicolaus or RBC, as the case may be, in writing. In addition, under no
circumstances shall any Shares with respect to which Stifel Nicolaus or RBC, as
the case may be, acts as sales agent be sold at a price lower than the minimum
price therefor authorized from time to time by the Company’s board of directors,
or a duly authorized committee thereof, and notified to such Agent in
writing.

      

      (g)           If
either the Company or Stifel Nicolaus or RBC, as the case may be, believes that
the exemptive provisions set forth in Rule 101(c)(1) of Regulation M under the
1934 Act (applicable to securities with an average daily trading volume of
$1,000,000 that are issued by an issuer whose common equity securities have a
public float value of at least $150,000,000) are not satisfied with respect to
the Company or the Shares, such party shall promptly notify the other parties
and sales of Shares under this Agreement and any Terms Agreement shall be
suspended until that or other exemptive provisions have been satisfied in the
judgment of each party.

      

      (h)           Settlement
for sales of Shares pursuant to this Section 2 will occur on the third business
day that is also a Trading Day following the trade date on which such sales are
made, unless another date shall be agreed to by the Company and Stifel Nicolaus
or RBC, as the case may be (each such day, a “Settlement
Date”).  On each Settlement Date, the Shares sold through
Stifel Nicolaus or RBC, as the case may be, for settlement on such date shall be
delivered by the Company to such Agent against payment of the Net Proceeds from
the sale of such Shares.  Settlement for all Shares shall be effected
by book-entry delivery of Shares to Stifel Nicolaus’s or RBC’s, as the case may
be, account at The Depository Trust Company against payments by such Agent of
the Net Proceeds from the sale of such Shares in same day funds delivered to an
account designated by the Company.  If the Company shall default on
its obligation to deliver Shares on any Settlement Date, the Company shall (i)
indemnify and hold Stifel Nicolaus or RBC, as the case may be, harmless against
any loss, claim or damage arising from or as a result of such default by the
Company and (ii) pay such Agent any commission to which it would otherwise be
entitled absent such default.

      

      (i)           Notwithstanding
any other provision of this Agreement, the Company and the Agents agree that no
sales of Shares shall take place, and the Company shall not request the sale of
any Shares that would be sold, and the Agents shall not be obligated to sell,
during any period (x) unless otherwise agreed by the Company and the Agents, in
which the Company’s insider trading policy, as it exists on the date of the
Agreement, would prohibit the purchases or sales of the Company’s Common Stock
by its officers or directors, or (y) in which the Company is, or could be deemed
to be, in possession of material non-public information; provided that, unless
otherwise agreed between the Company and such Agent, for purposes of clause (y)
of this paragraph (i) any such period shall be deemed to end on the date on
which the Company’s next subsequent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as the case may be, is filed with the
Commission.

      

      (j)           At
each Applicable Time, Settlement Date, Registration Amendment Date, Company
Earnings Report Date (as defined below) and each Company Periodic Report Date,
the Company shall be deemed to have affirmed each representation and warranty
contained in this Agreement.  Any obligation of the Agents to use
their commercially reasonable efforts to sell the Shares on behalf of the
Company as sales agent shall be subject to the continuing accuracy of the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder and to the continuing satisfaction of the
additional conditions specified in Section 6 of this Agreement.

      

      Section 3.  Covenants.   The
Company agrees with the Agents:

      

      (a)           During
any period when the delivery of a prospectus is required in connection with the
offering or sale of Shares (whether physically or through compliance with Rule
153 or 172, or in lieu thereof, a notice referred to in Rule 173(a) under the
1933 Act), (i) to make no further amendment or any supplement to the
Registration Statement or the Prospectus prior to any Settlement Date which
shall be disapproved by either Agent promptly after reasonable notice thereof
and to advise the Agents, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any amendment or supplement to the Prospectus has been filed and to
furnish the Agents with copies thereof, (ii) to file promptly all other material
required to be filed by the Company with the Commission pursuant to Rule 433(d)
under the 1933 Act, (iii) to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act, (iv)
to advise the Agents, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of the Prospectus or other prospectus in respect of the Shares, of any
notice of objection of the Commission to the use of the form of the Registration
Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2)
under the 1933 Act, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the form of the Registration Statement or the
Prospectus or for additional information, and (v) in the event of the issuance
of any such stop order or of any such order preventing or suspending the use of
the Prospectus in respect of the Shares or suspending any such qualification, to
promptly use its commercially reasonable efforts to obtain the withdrawal of
such order; and in the event of any such issuance of a notice of objection,
promptly to take such reasonable steps as may be necessary to permit offers and
sales of the Shares by the Agents, which may include, without limitation,
amending the Registration Statement or filing a new registration statement, at
the Company’s expense (references herein to the Registration Statement shall
include any such amendment or new registration statement).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      11

       

      (b)           Promptly
from time to time to take such action as either Agent may reasonably request to
qualify the Shares for offering and sale under the securities laws of such
jurisdictions as such Agent may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the sale of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction; and to
promptly advise the Agents of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for offer or
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose.

      

      (c)           During
any period when the delivery of a prospectus is required (whether physically or
through compliance with Rules 153 or 172, or in lieu thereof, a notice referred
to in Rule 173(a) under the 1933 Act) in connection with the offering or sale of
Shares, the Company will make available to the Agents, as soon as practicable
after the execution of this Agreement, and thereafter from time to time furnish
to the Agents, copies of the most recent Prospectus in such quantities and at
such locations as either Agent may reasonably request for the purposes
contemplated by the 1933 Act.  During any period when the delivery of
a prospectus is required (whether physically or through compliance with Rules
153 or 172, or in lieu thereof, a notice referred to in Rule 173(a) under the
1933 Act) in connection with the offering or sale of Shares, and if at such time
any event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or to
file under the 1934 Act any document incorporated by reference in the Prospectus
in order to comply with the 1933 Act or the 1934 Act, to notify the Agents and
to file such document and to prepare and furnish without charge to the Agents as
many written and electronic copies as either Agent may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such
compliance.

      

      (d)           (i)           To
make generally available to its securityholders as soon as practicable, but in
any event not later than sixteen months after the effective date of the
Registration Statement (as defined in Rule 158(c) under the 1933 Act), an
earnings statement of the Company and the Significant Subsidiaries (which need
not be audited) complying with Section 11(a) of the 1933 Act and the rules
and regulations of the Commission thereunder (including, at the option of the
Company, Rule 158).

      

      (ii)           If
the Company makes any public announcement or release disclosing its results of
operations or financial condition for a completed quarterly or annual fiscal
period and the Company has not yet filed a Quarterly Report on Form 10-Q or an
Annual Report on Form 10-K with respect to such information, as applicable,
then, prior to any sale of Shares, the Company shall be obligated to either (x)
file a prospectus supplement with the Commission under the applicable paragraph
of Rule 424(b), which prospectus supplement shall include the applicable
financial information, (y) file a Current Report on Form 8-K, which report shall
include the applicable financial information or (z) furnish a Current Report on
Form 8-K pursuant to Item 2.02 thereof, which current report shall specifically
state that the applicable financial information shall be deemed “filed” under
the 1934 Act.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      12

       

      (e)           To
pay the required Commission filing fees relating to the Shares within the time
required by Rule 456(b)(1) under the 1933 Act without regard to the proviso
therein and otherwise in accordance with Rules 456(b) and 457(r) under the 1933
Act.

      

      (f)           To
use the Net Proceeds received by it from the sale of the Shares pursuant to this
Agreement and any Terms Agreement in the manner specified in the General
Disclosure Package.

      

      (g)           In
connection with the offering and sale of the Shares, the Company will file with
the NYSE all documents and notices, and make all certifications, required by the
NYSE of companies that have securities that are listed or quoted on the NYSE and
will maintain such listings or quotations.

      

      (h)           To
not take, directly or indirectly, and to cause its affiliates to refrain from
taking, any action designed to cause or result in, or that has constituted or
might reasonably be expected to constitute, under the 1934 Act or otherwise, the
stabilization or manipulation of the price of any securities of the Company to
facilitate the sale or resale of the Shares.

      

      (i)           At
each Applicable Time, each Settlement Date, each Registration Statement
Amendment Date (as defined below), each Company Earnings Report Date (as defined
below), each Company Periodic Report Date (as defined below) and each date on
which Shares are delivered to the Agents pursuant to a Terms Agreement, the
Company shall be deemed to have affirmed each representation, warranty, covenant
and other agreement contained in this Agreement or any Terms
Agreement.  In each Annual Report on Form 10-K or Quarterly Report on
Form 10-Q filed by the Company in respect of any quarter in which sales of
Shares were made by or through the Agents under this Agreement or any Terms
Agreement (each date on which any such document is filed, and any date on which
an amendment to any such document is filed, a “Company Periodic Report
Date”), the Company shall set forth with regard to such quarter the
number of Shares sold through such Agent under this Agreement or any Terms
Agreement and the Net Proceeds received by the Company with respect to sales of
Shares pursuant to this Agreement or any Terms Agreement.

      

      (j)           Upon
commencement of the offering of Shares under this Agreement and each time the
Shares are delivered to the Agents as principal on a Settlement Date and
promptly after each (i) date the Registration Statement or the Prospectus shall
be amended or supplemented (other than (1) by an amendment or supplement
providing solely for the determination of the terms of the Shares, (2) in
connection with the filing of a prospectus supplement that contains solely the
information set forth in Section 3(i), (3) in connection with the filing of any
current reports on Form 8-K (other than any current reports on Form 8-K which
contain financial statements, supporting schedules or other financial data,
including any current report on Form 8-K under Item 2.02 of such form that is
considered “filed” under the 1934 Act) or (4) by a prospectus supplement
relating to the offering of other securities (including, without limitation,
other shares of Common Stock)) (each such date, a “Registration Statement
Amendment Date”), (ii) date on which a current report on Form 8-K shall
be furnished by the Company under Item 2.02 of such form in respect of a public
disclosure or material non-public information regarding the Company’s results of
operations or financial condition for a completed quarterly or annual fiscal
period (a “Company
Earnings Report Date”) and (iii) Company Periodic Report Date, the
Company will furnish or cause to be furnished forthwith to the Agents a
certificate dated the date of effectiveness of such amendment or the date of
filing with the Commission of such supplement or other document, as the case may
be, in a form reasonably satisfactory to the Agents to the effect that the
statements contained in the certificate referred to in Section 6(e) of this
Agreement which were last furnished to the Agents are true and correct at the
time of such amendment, supplement or filing, as the case may be, as though made
at and as of such time (except that such statements shall be deemed to relate to
the Registration Statement, the General Disclosure Package and the Prospectus as
amended and supplemented to such time) or, in lieu of such certificate, a
certificate of the same tenor as the certificate referred to in said Section
6(e), but modified as necessary to relate to the Registration Statement and the
Prospectus as amended and supplemented, or to the document incorporated by
reference into the Prospectus, to the time of delivery of such certificate. As
used in this paragraph, to the extent there shall be an Applicable Time on or
following the date referred to in clause (i), (ii) or (iii) above, promptly
shall be deemed to be on or prior to the next succeeding Applicable
Time.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      13

       

      (k)           Upon
commencement of the offering of Shares under this Agreement and each time the
Shares are delivered to the Agents as principal on a Settlement Date, and
promptly after each (i) Registration Statement Amendment Date, (ii) Company
Earnings Report Date and (iii) Company Periodic Report Date, the Company will
furnish or cause to be furnished to the Agents and to counsel to the Agents the
written opinion and letter of each Company Counsel or other counsel reasonably
satisfactory to the Agents, dated the date of effectiveness of such amendment or
the date of filing with the Commission of such supplement or other document, as
the case may be, in a form and substance reasonably satisfactory to the Agents
and their counsel, of the same tenor as the opinions and letters referred to in
Section 6(c) of this Agreement, but modified as necessary to relate to the
Registration Statement, the General Disclosure Package and the Prospectus as
amended and supplemented, or to the document incorporated by reference into the
Prospectus, to the time of delivery of such opinion and letter or, in lieu of
such opinion and letter, counsel last furnishing such letter to the Agents shall
furnish the Agents with a letter substantially to the effect that the Agents may
rely on such last opinion and letter to the same extent as though each were
dated the date of such letter authorizing reliance (except that statements in
such last letter shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of such letter
authorizing reliance). As used in this paragraph, to the extent there shall be
an Applicable Time on or following the date referred to in clause (i), (ii) or
(iii) above, promptly shall be deemed to be on or prior to the next succeeding
Applicable Time.

      

      (l)           Upon
commencement of the offering of Shares under this Agreement and each time the
Shares are delivered to the Agents as principal on a Settlement Date, and
promptly after each (i) Registration Statement Amendment Date, (ii) Company
Earnings Report Date and (iii) Company Periodic Report Date, the Company will
cause KPMG LLP, or other independent accountants reasonably satisfactory to the
Agents, to furnish to the Agents a letter, dated the date of effectiveness of
such amendment or the date of filing of such supplement or other document with
the Commission, as the case may be, in form reasonably satisfactory to the
Agents and its counsel, of the same tenor as the letter referred to in Section
6(d) hereof, but modified as necessary to relate to the Registration Statement,
the General Disclosure Package and the Prospectus, as amended and supplemented,
or to the document incorporated by reference into the Prospectus, to the date of
such letter. As used in this paragraph, to the extent there shall be an
Applicable Time on or following the date referred to in clause (i), (ii) or
(iii) above, promptly shall be deemed to be on or prior to the next succeeding
Applicable Time.

      

      (m)           The
Company consents to Stifel Nicolaus and RBC trading in the Company’s Common
Stock for their respective accounts and for the account of their respective
clients at the same time as sales of Shares occur pursuant to this Agreement or
any Terms Agreement.

      

      (n)           If,
to the knowledge of the Company, all filings required by Rule 424 in connection
with this offering shall not have been made or the representations in Section
1(a) shall not be true and correct on the applicable Settlement Date, the
Company will offer to any person who has agreed to purchase Shares from the
Company as the result of an offer to purchase solicited by the Agents the right
to refuse to purchase and pay for such Shares.

      

      (o)           The
Company will cooperate timely with any reasonable due diligence review conducted
by the Agents or their counsel from time to time in connection with the
transactions contemplated hereby or in any Terms Agreement, including, without
limitation, and upon reasonable notice providing information and making
available documents and appropriate corporate officers, during regular business
hours and at the Company’s principal offices, as the Agents may reasonably
request.

      

      (p)           The
Company will not, without (i) giving the Agents at least five business days’
prior written notice specifying the nature of the proposed sale and the date of
such proposed sale and (ii) the Agents suspending activity under this program
for such period of time as requested by the Company or as deemed appropriate by
the Agents in light of the proposed sale, (A) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, lend or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or securities convertible into or
exchangeable or exercisable for or repayable with Common Stock, or file any
registration statement under the 1933 Act with respect to any of the foregoing
(other than a shelf registration statement under Rule 415 under the 1933 Act, a
registration statement on Form S-8 or post-effective amendment to the
Registration Statement) or (B) enter into any swap or other agreement or any
transaction that transfers in whole or in part, directly or indirectly, any of
the economic consequence of ownership of the Common Stock, or any securities
convertible into or exchangeable or exercisable for or repayable with Common
Stock, whether any such swap or transaction described in clause (A) or (B) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (y) the Shares to be
offered and sold through the Agents pursuant to this Agreement or any Terms
Agreement and (z) equity incentive awards approved by the board of directors of
the Company or the compensation committee thereof or the issuance of Common
Stock upon exercise thereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      14

       

      (q)           If
immediately prior to the third anniversary (the “Renewal Deadline”) of
the initial effective date of the Registration Statement, any of the Shares
remain unsold, the Company will, prior to the Renewal Deadline file, if it has
not already done so and is eligible to do so, an “automatic shelf registration
statement” (as defined in Rule 405 under the 1933 Act) relating to the Shares,
in a form satisfactory to the Agents.  If the Company is not eligible
to file an automatic shelf registration statement, the Company will, prior to
the Renewal Deadline, if it has not already done so, file a new shelf
registration statement relating to the Shares, in a form satisfactory to the
Agents, and will use its best efforts to cause such registration statement to be
declared effective within 60 days after the Renewal Deadline.  The
Company will take all other action necessary or appropriate to permit the
issuance and sale of the Shares to continue as contemplated in the expired
registration statement relating to the Shares.  References herein to
the Registration Statement shall include such new automatic shelf registration
statement or such new shelf registration statement, as the case may
be.

      

      (r)           During
the term of this Agreement, the Company agrees that any offer to sell, any
solicitation of an offer to buy, or any sales of the Shares pursuant to this
Agreement by the Company, shall only be effected by or through only one of
Stifel Nicolaus or RBC on any single given day, but in no event by more than one
Agent, and the Company shall in no event request that Stifel Nicolaus and RBC
sell Shares on the same day.

      

      Section 4.  Free Writing
Prospectus.

       

      
        (a)           (i)           The
Company represents and agrees that without the prior consent of the Agents, it
has not made and will not make any offer relating to the Shares that would
constitute a “free writing prospectus” as defined in Rule 405 under the
1933 Act; and

        

        (ii)           each
of the Agents, acting severally and not jointly, represents and agrees that,
without the prior consent of the Company, it has not made and will not make any
offer relating to the Shares that would constitute a free writing prospectus
required to be filed with the Commission.

        

        (b)           The
Company has complied and will comply with the requirements of Rule 433 under the
1933 Act applicable to any Issuer Free Writing Prospectus (including any free
writing prospectus identified in Section 4(a) hereof), including timely filing
with the Commission or retention where required and
legending.

      

      
        
Section
5.  Payment
of Expenses.

      

      

      (a)           The
Company covenants and agrees with the Agents that the Company will pay or cause
to be paid the following: (i) the fees, disbursements and expenses of the
Company’s counsel and accountants in connection with the registration of the
Shares under the 1933 Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, the Basic
Prospectus, Prospectus Supplement, any Issuer Free Writing Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to the Agents; (ii) the cost of printing or producing this
Agreement or any Terms Agreement, any Blue Sky and Legal Investment Memoranda,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 3(b)
hereof, including the reasonable fees and disbursements of counsel for the
Agents in connection with such qualification and in connection with the Blue Sky
and Legal Investment Surveys; (iv) any filing fees incident to, and the
reasonable fees and disbursements of counsel for the Agents in connection with,
any required review by the Financial Industry Regulatory Authority, Inc. (“FINRA”) of the terms
of the sale of the Shares; (v) all fees and expenses in connection with listing
or quoting the Shares on the NYSE; (vi) the cost of preparing the Shares; (vii)
the costs and charges of any transfer agent or registrar or any dividend
distribution agent; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Section 7 hereof, each Agent will pay all of its
own costs and expenses, including the fees of its counsel, transfer taxes on
resale of any of the Shares by it, and any advertising expenses connected with
any offers it may make.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      15

       

      (b)           If
either (i) an aggregate of 1,134,000 Shares or (ii) a lesser number of Shares
having an aggregate offering price of at least $14,000,000.00 have not been
offered and sold under this Agreement by six months from the date hereof (or
such earlier date on which the Company terminates this Agreement), the Company
shall reimburse the Agents for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of a single counsel for the
Agents incurred by the Agents in connection with the offering contemplated by
this Agreement.

      

      Section 6.  Conditions of Agents’
Obligation.  The obligations of each of the Agents hereunder
shall be subject, in its discretion, to the condition that all representations
and warranties and other statements of the Company herein or in certificates of
any officer of the Company delivered pursuant to the provisions hereof are true
and correct as of the time of the execution of this Agreement, the date of any
executed Terms Agreement and as of each Registration Statement Amendment Date,
Company Earnings Report Date, Company Periodic Report Date, Applicable Time and
Settlement Date, to the condition that the Company shall have performed all of
its obligations hereunder theretofore to be performed, and the following
additional conditions:

      

      (a)           The
Prospectus Supplement shall have been filed with the Commission pursuant to Rule
424(b) under the 1933 Act on or prior to the date hereof and in accordance with
Section 3(a) hereof, any other material required to be filed by the Company
pursuant to Rule 433(d) under the 1933 Act shall have been filed with the
Commission within the applicable time periods prescribed for such filings by
Rule 433; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission and no notice
of objection of the Commission to the use of the form of the Registration
Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2)
under the 1933 Act shall have been received; no stop order suspending or
preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to the reasonable satisfaction of the Agents.

      

      (b)           On
every date specified in Section 3(k) hereof and on such other dates as
reasonably requested by the Agents, Simpson Thacher & Bartlett LLP, counsel
for the Agents, shall have furnished to the Agents such written opinion or
opinions, dated as of such date, with respect to such matters as the Agents may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.

      

      (c)           (i)           On
every date specified in Section 3(k) hereof and on such other dates as
reasonably requested by the Agents, Day Pitney LLP, counsel for the Company,
shall have furnished to the Agents written opinion or opinions, dated as of such
date, in form and substance reasonably satisfactory to the Agents, to the effect
set forth in Annex II hereto.

      

      (ii)           On
every date specified in Section 3(k) hereof and on such other dates as
reasonably requested by the Agents, the General Counsel of the Company shall
have furnished to the Agents written opinion or opinions, dated as of such date,
in form and substance reasonably satisfactory to the Agents, to the effect set
forth in Annex III hereto

      

      (d)           At
the dates specified in Section 3(l) hereof and on such other dates as
reasonably requested by the Agents, the independent accountants of the Company
who have certified the financial statements of the Company and the Significant
Subsidiaries included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus shall have
furnished to the Agents a letter dated as of the date of delivery thereof and
addressed to the Agents in form and substance reasonably satisfactory to the
Agents and their counsel, containing statements and information of the type
ordinarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements of the Company and the Significant
Subsidiaries included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      16

       

      (e)           (i)
Upon commencement of the offering of Shares under this Agreement and on such other dates as
reasonably requested by the Agents, the Company will furnish or cause to be
furnished promptly to the Agents a certificate of an officer in a form
satisfactory to the Agents stating the minimum price for the sale of such Shares
pursuant to this Agreement and the maximum number of Shares that may be issued
and sold pursuant to this Agreement or, alternatively, maximum gross proceeds
from such sales, as authorized from time to time by the Company’s board of
directors or a duly authorized committee thereof or, in connection with any
amendment, revision or modification of such minimum price or maximum Share
number or amount, a new certificate with respect thereto and (ii) on each date
specified in Section 3(j) and on such other dates as
reasonably requested by an Agent (which may include, without limitation, each
date on which the Company requests that sales of Shares be effected), the Agents
shall have received a certificate of executive officers of the Company, one of
whom shall be the Chief Financial Officer, dated as of the date thereof, to the
effect that (A) there has been no Material Adverse Effect since the date as of
which information is given in the General Disclosure Package and the Prospectus
as then amended or supplemented, (B) the representations and warranties in
Section 1 hereof are true and correct as of such date and (C) the Company
has complied with all of the agreements entered into in connection with the
transaction contemplated herein and satisfied all conditions on its part to be
performed or satisfied.

      

      (f)           Since
the date of the latest audited financial statements then included or
incorporated by reference in the General Disclosure Package and the Prospectus,
no Material Adverse Effect shall have occurred.

      

      (g)           The
Company shall have complied with the provisions of Section 3(c) hereof with
respect to the timely furnishing of prospectuses.

      

      (h)           On
such dates as reasonably requested by the Agents, the Company shall have
conducted due diligence sessions, in form and substance satisfactory to the
Agents.

      

      (i)           All
filings with the Commission required by Rule 424 under the 1933 Act to have been
filed by each Applicable Time or related Settlement Date shall have been made
within the applicable time period prescribed for such filing by Rule 424
(without reliance on Rule 424(b)(8)).

      

      (j)           The
Shares shall have received approval for listing on the NYSE prior to the first
Settlement Date.

      

      (k)           Prior
to any Settlement Date, the Company shall have furnished to the Agents such
further information, documents or certificates as the Agents may reasonably
request.

      

      Section 7.  Indemnification.

      

      (a)           The
Company will indemnify and hold harmless each of the Agents against any losses,
claims, damages or liabilities, joint or several, to which such Agent may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, the Prospectus
Supplement or the Prospectus or any amendment or supplement thereto, any Issuer
Free Writing Prospectus or any “issuer information” filed or required to be
filed pursuant to Rule 433(d) under the 1933 Act, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse such Agent for any legal or other expenses reasonably
incurred by such Agent in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing
Prospectus, in reliance upon and in strict conformity with written information
furnished to the Company by such Agent expressly for use therein.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      17

       

      (b)           Each
Agent, acting severally and not jointly, will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Basic Prospectus, the
Prospectus Supplement or the Prospectus, or any amendment or supplement thereto,
or any Issuer Free Writing Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Prospectus, or any such amendment or supplement thereto, or any Issuer Free
Writing Prospectus, in reliance upon and in strict conformity with written
information furnished to the Company by such Agent expressly for use therein (it
being understood that such information shall consist solely of the following:
the first (only the third sentence thereof), second (only the first and third
sentences thereof) and fourth paragraphs under the heading “Plan of
Distribution”); and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.

      

      (c)           Promptly
after receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection except and then only to the extent such indemnifying party
is materially prejudiced thereby. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 7 for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.

      

      (d)           If
the indemnification provided for in this Section 7 is unavailable to hold
harmless an indemnified party under subsection (a) or (b) above in respect of
any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agents on the other from the offering of the Shares to which such
loss, claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Agents on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Agents on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total commissions received by the
Agents.  The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Agents on the other
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  The
Company and the Agents agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection
(d).  The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.  Notwithstanding
the provisions of this subsection (d), an Agent shall not be required to
contribute any amount in excess of the amount by which the total compensation
received by such Agent with respect to sales of the Shares sold by it to the
public exceeds the amount of any damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.  No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      18

       

      (e)           The
obligations of the Company under this Section 7 shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same
terms and conditions, to the directors, officers, employees, attorneys and
agents of each of the Agents and to each person, if any, who controls such Agent
within the meaning of the 1933 Act and each broker dealer affiliate of such
Agent; and the obligations of such Agent under this Section 7 shall be in
addition to any liability which such Agent may otherwise have and shall extend,
upon the same terms and conditions, to each director, officer, employee,
attorney and agent of the Company and to each person, if any, who controls the
Company within the meaning of the 1933 Act.

      

      Section 8.  Representations, Warranties
and Agreements to Survive Delivery.  The respective
indemnities, agreements, representations, warranties and other statements of the
Company and the Agents, as set forth in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement, shall remain in full force
and effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of the Agents or any controlling person of the
Agents, or the Company, or any officer or director or controlling person of the
Company, and shall survive delivery of and payment for the Shares.

      

      Section 9.  No Advisory or Fiduciary
Relationship.  The Company acknowledges and agrees that (i)
each Agent is acting solely in the capacity of an arm’s length contractual
counterparty to the Company with respect to the offering of Shares contemplated
hereby (including in connection with determining the terms of such offering) and
(ii) neither Agent has assumed an advisory or fiduciary responsibility in favor
of the Company with respect to the offering contemplated hereby or the process
leading thereto (irrespective of whether such Agent has advised or is currently
advising the Company on other matters) or any other obligation to the Company
except the obligations expressly set forth in this Agreement and (iii) the
Company has consulted its own legal and financial advisors to the extent it
deemed appropriate. The Company agrees that it will not claim that any Agent has
rendered advisory services of any nature or respect, or owes a fiduciary or
similar duty to the Company, in connection with such transaction or the process
leading thereto.

      

      Section 10. Termination.

      

      (a)           The
Company shall have the right, by giving written notice to all parties to this
Agreement as hereinafter specified, to terminate this Agreement in its sole
discretion at any time.  Any such termination shall be without
liability of any party to any other party, except that (i) with respect to any
pending sale through the Agents for the Company, the obligations of the Company,
including in respect of compensation of the Agents, shall remain in full force
and effect notwithstanding such termination; and (ii) the provisions of Section
1, Section 5(b), Section 7 and Section 8 of this Agreement shall remain in full
force and effect notwithstanding such termination.

      

      (b)           Each
Agent shall have the right, by giving written notice to all parties to this
Agreement as hereinafter specified, to terminate this Agreement with respect to
such Agent in its sole discretion at any time.  Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 1, Section 5(b), Section 7 and Section 8 of this Agreement
shall remain in full force and effect notwithstanding such
termination.

      

      (c)           This
Agreement shall remain in full force and effect until and unless terminated
pursuant to Section 10(a) or (b) above or otherwise by mutual agreement of the
parties; provided that any such
termination by mutual agreement or pursuant to this clause (c) shall in all
cases be deemed to provide that Section 1, Section 5(b), Section 7 and Section 8
of this Agreement shall remain in full force and effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      19

       

      (d)           Any
termination of this Agreement shall be effective on the date specified in such
notice of termination; provided that such termination
shall not be effective until the close of business on the date of receipt of
such notice by the Agent or the Company, as the case may be.  If such
termination shall occur prior to the Settlement Date for any sale of Shares,
such sale shall settle in accordance with the provisions of Section 2(h)
hereof.

      

      (e)           In
the case of any purchase by an Agent pursuant to a Terms Agreement, such Agent
may terminate this Agreement, at any time at or prior to the Settlement Date (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the General Disclosure
Package or the Prospectus, any Material Adverse Effect, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of such Agent, impracticable or inadvisable to market the Shares
or to enforce contracts for the sale of Shares, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission, the NYSE or NASDAQ, or if trading generally on the NYSE Alternext US
or the NYSE or NASDAQ has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, FINRA or any other governmental authority, or (iv) a material
disruption has occurred in commercial banking or securities settlement or
clearance services in the United States, or (v) if a banking moratorium has been
declared by either Federal or New York authorities.

      

      Section 11.  Notices.  All
statements, requests, notices and agreements hereunder shall be in writing, and
if to the Agents shall be delivered or sent by mail, telex or facsimile
transmission to:

      

      Stifel,
Nicolaus & Company, Incorporated

      One South
Street, 15th
Floor

      Baltimore,
Maryland 21202

      Fax
No.  (443) 224-1257

      Attention:
Syndicate Department

      

      RBC
Capital Markets Corporation

      Three World Financial
Center

      200 Vesey Street, 8th
Floor

      New York,
New York 10281

      Fax
No.  (212) 428-6260

      Attention:
Equity Capital Markets Group

      

      and if to
the Company to:

      

      Valley
National Bancorp

      1455
Valley Road

      Wayne,
New Jersey 07470

      Fax
No.  (973) 305-8415

      Attention:
Alan D. Eskow, Executive Vice President and Chief Financial
Officer.

      

      Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.

      

      Section 12.  Parties.  This
Agreement shall be binding upon, and inure solely to the benefit of, the Agents
and the Company and, to the extent provided in Sections 7 and 8 hereof, the
officers, directors, employees, attorneys and agents of the Company and the
Agents and each person who controls the Company or the Agents, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement.  No purchaser of Shares through the Agents shall be deemed
a successor or assign by reason merely of such purchase.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      20

       

      Section 13.  Time of the
Essence.  Time shall be of the essence of this
Agreement.  As used herein, the term “business day” shall mean any day
when the Commission’s office in Washington, D.C. is open for
business.

      

      Section 14.  Waiver of Jury
Trial.  The Company and the Agents hereby irrevocably waive, to
the fullest extent permitted by applicable law, any and all right to jury trial
by jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.

      

      Section 15.  Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
PRINCIPLES OF CONFLICTS OF LAW.

      

      Section 16.  Counterparts.  This
Agreement and any Terms Agreement may be executed by any one or more of the
parties hereto and thereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall together
constitute one and the same instrument.  This Agreement and any Terms
Agreement may be delivered by any party by facsimile or other electronic
transmission.

      

      Section 17.   Severability.  The
invalidity or unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof.  If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      If the
foregoing is in accordance with your understanding of our agreement, please sign
and return to the Company a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between the Agents and
the Company in accordance with its terms.

      

      

      
        
          
            
              
                
                  
                    
                      
                        
                          	 	Very
      truly yours,	 
	 	 	 
	 	VALLEY
      NATIONAL BANCORP	 
	 	 	 	 
	
                                    
      

                                	
                                  By:
      

                                	
                                  /s/
      Gerald H. Lipkin 

                                	 
	 	 	Name: 
      	Gerald H.
      Lipkin 	 
	 	 	Title:	
                                  Chairman,
      President and

                                  Chief Executive Officer

                                	 

                        

                      

                    

                  

                

              

            

          

        

      
 

       

       

      Accepted
as of the date hereof:

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	STIFEL,
      NICOLAUS & COMPANY, INCORPORATED	 
	 	 
	 	 	 
	
                                    By:
      

                                  	
                                    /s/ Ben
      A. Plotkin

                                  	 
	 	Name: 
      	Ben A.
      Plotkin	 
	 	Title:	EVP 	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	RBC
      CAPITAL MARKETS CORPORATION	 
	 	 
	 	 	 
	
                                        By:
      

                                      	
                                        /s/ Michael
      D. Bennett

                                      	 
	 	Name: 
      	Michael
      D. Bennett	 
	 	Title:	Director 	 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ANNEX I

       

      VALLEY
NATIONAL BANCORP

       

      Common
Stock

      (no par
value)

       

      TERMS
AGREEMENT

       

      

       

      [STIFEL,
NICOLAUS & COMPANY, INCORPORATED

      One South
Street, 15th
Floor

      Baltimore,
Maryland 21202

      Attn:
Syndicate Department]

      

      [RBC
CAPITAL MARKETS CORPORATION

      Three
World Financial Center

      200 Vesey
Street, 8th
Floor

      New York,
New York 10281

      Attn:
Equity Capital Markets Group]

      

       

      Ladies
and Gentlemen:

       

      Valley
National Bancorp, a New Jersey corporation (the “Company”), proposes,
subject to the terms and conditions stated herein and in the Equity Distribution
Agreement, dated June 8,
2009 (the “Distribution
Agreement”), between the Company and Stifel, Nicolaus & Company,
Incorporated (“Stifel Nicolaus”) and RBC Capital Markets Corporation (“RBC” and, together
with Stifel Nicolaus, the “Agents”), to issue
and sell to [Stifel Nicolaus][RBC] the securities specified in the Schedule
hereto (the “Purchased
Securities”) [, and solely for the purpose of covering over-allotments,
to grant to [Stifel Nicolaus][RBC] the option to purchase the additional
securities specified in the Schedule hereto (the “Additional
Securities”)]*.

       

      [[Stifel
Nicolaus][RBC] shall have the right to purchase from the Company all or a
portion of the Additional Securities as may be necessary to cover
over-allotments made in connection with the offering of the Purchased
Securities, at the same purchase price per share to be paid by such Agent to the
Company for the Purchased Securities.  This option may be exercised by
[Stifel Nicolaus][RBC] at any time (but not more than once) on or before the
thirtieth day following the date hereof, by written notice to the Company. Such
notice shall set forth the aggregate number of shares of Additional Securities
as to which the option is being exercised, and the date and time when the
Additional Securities are to be delivered (such date and time being herein
referred to as the “Option Closing
Date”); provided, however, that the
Option Closing Date shall not be earlier than the Time of Delivery (as set forth
in the Schedule hereto) nor earlier than the second business day after the date
on which the option shall have been exercised nor later than the fifth business
day after the date on which the option shall have been exercised. Payment of the
purchase price for the Additional Securities shall be made at the Option Closing
Date in the same manner and at the same office as the payment for the Purchased
Securities.]*

       

      Each of
the provisions of the Distribution Agreement not specifically related to the
solicitation by [Stifel Nicolaus][RBC], as agent of the Company, of offers to
purchase securities is incorporated herein by reference in its entirety, and
shall be deemed to be part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein. Each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Terms Agreement [and] [,] the Applicable Time [and any Option
Closing Date]*, except that each representation and warranty in Section 1
of the Distribution Agreement which makes reference to the Prospectus (as
therein defined) shall be deemed to be a representation and warranty as of the
date of the Distribution Agreement in relation to the Prospectus, and also a
representation and warranty as of the date of this Terms Agreement [and] [,] the
Settlement Date [and any Option Closing Date]* in relation to the Prospectus as
amended and supplemented to relate to the Purchased Securities.

       

      
        
          
          

        

        
          Annex
I-1

          
            

          

        

        
          
          

        

      

       

      An
amendment to the Registration Statement (as defined in the Distribution
Agreement), or a supplement to the Prospectus, as the case may be, relating to
the Purchased Securities [and the Additional Securities]*, in the form
heretofore delivered to [Stifel Nicolaus][RBC] is now proposed to be filed with
the Securities and Exchange Commission.

       

      Subject
to the terms and conditions set forth herein and in the Distribution Agreement
which are incorporated herein by reference, the Company agrees to issue and sell
to [Stifel Nicolaus][RBC] and the latter agrees to purchase from the Company the
number of shares of the Purchased Securities at the time and place and at the
purchase price set forth in the Schedule hereto.

       

      If the
foregoing is in accordance with your understanding of our agreement, please sign
and return to the Company a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement between [Stifel
Nicolaus][RBC] and the Company in accordance with its terms.

       

       

       

      
        
          
            
              
                
                  
                    
                      
                        	 	Very
      truly yours,	 
	 	 	 
	 	VALLEY
      NATIONAL BANCORP	 
	 	 	 
	 	 	 
	 	 	 	 
	
                                 

                              	
                                By:
      

                              	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

                      

                    

                  

                

              

            

          

        

      

       

      
 

      

      

      

      Accepted
as of the date hereof:

       

      
        
          
            
              
                
                  
                    
                      
                        	
                                [STIFEL,
      NICOLAUS & COMPANY, INCORPORATED]

                                [RBC
      CAPITAL MARKETS CORPORATION]

                              	 
	 	 
	 	 
	 	 	 
	
                                By:
      

                              	 	 
	 	Name:	 
	 	Title:	 

                      

                    

                  

                

              

            

          

        

      

      

      *           Include
only if the Agents has an over-allotment option.

       

       

       

      
        
          
          

        

        
          Annex
I-2

          
            

          

        

        
          
          

        

      

       

      Schedule
to Terms Agreement

       

       

      
        	
                1.  

              	
                Title
      of Purchased Securities [and Additional
  Securities]:

              

      

       

      Common Stock, no par value

       

      
        	
                2.  

              	
                Number
      of Shares of Purchased Securities:

              

      

       

      
        	
                3.  

              	
                [Number
      of Shares of Additional
Securities:]

              

      

       

      
        	
                4.  

              	
                Price
      to Public:

              

      

       

      
        	
                5.  

              	
                Purchase
      Price by [Stifel][RBC]:

              

      

       

      
        	
                6.  

              	
                Settlement
      Date:

              

      

       

      
        	
                7.  

              	
                Closing
      Location:

              

      

       

      
        	
                8.  

              	
                Lock-up
      Agreements:

              

      

       

       

      
         

        
           Annex I-3

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