Document:

exv10w3

Exhibit 10.3

Director Compensation Summary

(to be effective as of the May 2011 Annual Meeting of the Board of Directors) 

     Directors who also are employees of Quanta or any of its subsidiaries do not receive additional
compensation for serving as directors. Each non-employee director receives a fee for attendance at
each meeting of the Board of Directors or any committee according to the following schedule: $2,000
for attendance at a board meeting in person; $1,000 for attendance at a board meeting by telephone;
$1,000 for attendance at a committee meeting in person; and $500 for attendance at a committee
meeting by telephone. Upon initial appointment to the Board of Directors other than at an annual
meeting of stockholders, for the period from the appointment through the end of the director
service year during which the appointment is made, each such initially appointed non-employee
director receives a pro rata portion of both (i) an annual cash retainer payment of $50,000 and
(ii) an annual award of shares of restricted Common Stock having a value of $150,000. Upon initial
election to the Board of Directors at an annual meeting of stockholders, each such initially
elected non-employee director receives an annual cash retainer payment of $50,000 and an annual
award of shares of restricted Common Stock having a value of $150,000. At every annual meeting of
stockholders at which a non-employee director is re-elected or remains a director, each such
re-elected or remaining non-employee director receives an annual cash retainer payment of $50,000
and an annual award of shares of restricted Common Stock having a value of $100,000. In addition,
at every annual meeting of the Board of Directors, the chairman of the Audit Committee receives an
annual cash retainer payment of $14,000, the chairman of the Compensation Committee receives an
annual cash retainer payment of $10,000 and the chairman of the Governance and Nominating Committee
receive an annual cash retainer payment of $7,500. Unless the director’s service is interrupted,
shares of restricted Common Stock awarded to non-employee directors vest over three years in three
equal annual installments. Any unvested shares of restricted Common Stock will vest in full if the
non-employee director is not nominated for or elected to a new term or resigns at our convenience,
which shall be deemed to include any resignation resulting from the non-employee director’s failure
to receive a majority of the votes cast in an election for directors as required by Quanta’s
Bylaws. Upon any other termination of the non-employee director’s service, all unvested shares of
restricted Common Stock will be forfeited. Directors are reimbursed for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors or the committees thereof, and
for other expenses reasonably incurred in their capacity as directors of Quanta.Exhibit 10.1

Exhibit 10.1

 

 

INVESTMENT AGREEMENT

dated as of May 5, 2011

among

GREEN BANKSHARES, INC.,

GREENBANK

and

NORTH AMERICAN FINANCIAL HOLDINGS, INC.

 

 

 

 

TABLE OF CONTENTS

ARTICLE I

PURCHASE; CLOSING

	 	 	 	 	 	 	 	 	 

	 	1.1	 	 	Purchase

	 	 	2	 
	 	1.2	 	 	Closing

	 	 	2	 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

	 	 	 	 	 	 	 	 	 

	 	2.1	 	 	Disclosure

	 	 	7	 
	 	2.2	 	 	Representations and Warranties of the Company and the Bank

	 	 	8	 
	 	2.3	 	 	Representations and Warranties of Purchaser

	 	 	32	 

ARTICLE III

COVENANTS

	 	 	 	 	 	 	 	 	 

	 	3.1	 	 	Filings; Other Actions

	 	 	36	 
	 	3.2	 	 	Access, Information and Confidentiality

	 	 	38	 
	 	3.3	 	 	Conduct of the Business

	 	 	38	 
	 	3.4	 	 	Acquisition Proposals

	 	 	43	 
	 	3.5	 	 	Repurchase

	 	 	46	 
	 	3.6	 	 	D&O Indemnification

	 	 	46	 
	 	3.7	 	 	Notice of Developments

	 	 	47	 

ARTICLE IV

ADDITIONAL AGREEMENTS

	 	 	 	 	 	 	 	 	 

	 	4.1	 	 	Governance Matters

	 	 	48	 
	 	4.2	 	 	Legend

	 	 	48	 
	 	4.3	 	 	Exchange Listing

	 	 	49	 
	 	4.4	 	 	Registration Rights

	 	 	49	 
	 	4.5	 	 	Employees

	 	 	49	 
	 	4.6	 	 	Reservation for Issuance

	 	 	49	 
	 	4.7	 	 	Additional Investment

	 	 	49	 

ARTICLE V

TERMINATION

	 	 	 	 	 	 	 	 	 

	 	5.1	 	 	Termination

	 	 	49	 
	 	5.2	 	 	Effects of Termination

	 	 	51	 
	 	5.3	 	 	Fees

	 	 	51	 

i

 

ARTICLE VI

MISCELLANEOUS

	 	 	 	 	 	 	 	 	 

	 	6.1	 	 	No Survival

	 	 	52	 
	 	6.2	 	 	Expenses

	 	 	52	 
	 	6.3	 	 	Amendment; Waiver

	 	 	52	 
	 	6.4	 	 	Counterparts and Facsimile

	 	 	53	 
	 	6.5	 	 	Governing Law

	 	 	53	 
	 	6.6	 	 	Notices

	 	 	53	 
	 	6.7	 	 	Entire Agreement, Assignment

	 	 	54	 
	 	6.8	 	 	Interpretation; Other Definitions

	 	 	54	 
	 	6.9	 	 	Captions

	 	 	55	 
	 	6.10	 	 	Severability

	 	 	55	 
	 	6.11	 	 	No Third Party Beneficiaries

	 	 	56	 
	 	6.12	 	 	Time of Essence

	 	 	56	 
	 	6.13	 	 	Certain Adjustments

	 	 	56	 
	 	6.14	 	 	Public Announcements

	 	 	56	 
	 	6.15	 	 	Specific Performance; Limitation on Damages

	 	 	56	 

ii

 

INDEX OF DEFINED TERMS

	 	 	 	 	 
	Term	 	 	Location of Definition
	409A Plan
	 	 	 	2.2(s)(8)
	Acquisition Agreement
	 	 	 	3.4(b)
	Acquisition Proposal
	 	 	 	3.4(c)
	Adverse Recommendation Change
	 	 	 	3.4(b)
	Affiliate
	 	 	 	6.8(a)
	Agency
	 	 	 	2.2(w)(5)(D)
	Agreement
	 	Preamble
	Authorizations
	 	 	 	2.2(a)(1)
	Bank
	 	Preamble
	Bank Charter
	 	 	 	2.2(a)(2)
	beneficial owner
	 	 	 	6.8(g)
	beneficially own
	 	 	 	6.8(g)
	Benefit Plan
	 	 	 	2.2(s)(1)
	Burdensome Condition
	 	 	 	1.2(c)(2)(F)
	business day
	 	 	 	6.8(e)
	Capitalization Date
	 	 	 	2.2(b)
	CERCLA
	 	 	 	2.2(v)
	Charge-Offs
	 	 	 	1.2(c)(2)(L)
	Charter
	 	 	 	2.2(a)(1)
	Closing
	 	 	 	1.2(a)
	Closing Date
	 	 	 	1.2(a)
	Closing Expense Reimbursement
	 	 	 	6.2
	Code
	 	 	 	2.2(j)
	Common Stock
	 	Recitals
	Company
	 	Preamble
	Company 10-K
	 	 	 	2.1(c)(2)(A)
	Company Insurance Policies
	 	 	 	2.2(x)
	Company Preferred Stock
	 	 	 	2.2(b)
	Company Recommendation
	 	 	 	3.1(b)
	Company Reports
	 	 	 	2.2(h)(1)
	Company Representatives
	 	 	 	3.2(a)
	Company Significant Agreement
	 	 	 	2.2(m)(i)
	Company’s knowledge
	 	 	 	2.1(d)
	Confidentiality Agreement
	 	 	 	3.2(b)
	control
	 	 	 	6.8(a)
	controlled by
	 	 	 	6.8(a)
	CVRs
	 	Recitals
	Disclosure Schedule
	 	 	 	2.1(a)
	EESA
	 	 	 	2.2(s)(10)
	ERISA
	 	 	 	2.2(s)(1)
	ERISA Affiliate
	 	 	 	2.2(s)(1)
	Exchange Act
	 	 	 	2.2(h)(1)
	Existing D&O Policies
	 	 	 	1.2(c)(2)(H)(i)
	Expense Reimbursement
	 	 	 	5.3(c)

iii

 

	 	 	 	 	 
	Term	 	 	Location of Definition
	FDIC
	 	 	 	2.2(a)(2)
	Federal Reserve
	 	 	 	1.2(c)(1)(B)
	GAAP
	 	 	 	2.2(g)
	Governmental Entity
	 	 	 	1.2(c)(1)(A)
	herein
	 	 	 	6.8(d)
	hereof
	 	 	 	6.8(d)
	hereunder
	 	 	 	6.8(d)
	include
	 	 	 	6.8(c)
	included
	 	 	 	6.8(c)
	includes
	 	 	 	6.8(c)
	including
	 	 	 	6.8(c)
	knowledge of the Company
	 	 	 	2.1(d)
	Laws
	 	 	 	2.1(b)
	Liens
	 	 	 	1.2(b)(1)
	Loan Portfolio Committee
	 	 	 	4.1(c)
	Loans
	 	 	 	2.2(w)(1)
	Loan Tape
	 	 	 	2.2(w)(9)
	Material Adverse Effect
	 	 	 	2.1(b)
	NASDAQ
	 	 	 	1.2(c)(2)(I)
	Nominees
	 	 	 	4.1(b)
	Notice of Recommendation Change
	 	 	 	3.4(b)
	or
	 	 	 	6.8(b)
	Option
	 	Recitals
	Organizational Common Stock
	 	 	 	2.2(b)
	Permits
	 	 	 	2.2(q)
	Permitted Liens
	 	 	 	2.2(i)
	Per Share Purchase Price
	 	 	 	1.2(b)(2)
	person
	 	 	 	6.8(f)
	Pool
	 	 	 	2.2(w)(8)
	Previously Disclosed
	 	 	 	2.1(c)
	Proprietary Rights
	 	 	 	2.2(y)
	Purchased Shares
	 	 	 	1.1
	Purchaser
	 	Preamble
	Purchaser Designees
	 	 	 	1.2(c)(2)(G)
	Registration Rights Agreement
	 	 	 	4.4
	Regulatory Agreement
	 	 	 	2.2(u)
	Resigning Directors
	 	 	 	1.2(c)(2)(G)
	Representatives
	 	 	 	3.4(a)
	Repurchase
	 	Recitals
	Required Approvals
	 	 	 	2.2(f)
	Sarbanes-Oxley Act
	 	 	 	2.2(h)(2)
	SEC
	 	 	 	2.1(c)(2)(A)
	Securities Act
	 	 	 	2.2(h)(1)
	Series A Preferred
	 	Recitals
	Shareholder Meeting
	 	 	 	3.1(b)
	Shareholder Proposal
	 	 	 	3.1(b)

iv

 

	 	 	 	 	 
	Term	 	 	Location of Definition
	SRO
	 	 	 	2.2(h)(1)
	Subsidiaries
	 	 	 	2.2(a)(1)
	Subsidiary
	 	 	 	2.2(a)(1)
	Superior Proposal
	 	 	 	3.4(c)
	Tax Return
	 	 	 	2.2(j)
	Taxes
	 	 	 	2.2(j)
	Tennessee DFI
	 	 	 	1.2(c)(1)(B)
	Termination Fee
	 	 	 	5.3(c)
	Treasury
	 	Recitals
	Treasury Warrants
	 	Recitals
	Trust Preferred Securities
	 	 	 	2.2(d)(2)
	under common control with
	 	 	 	6.8(a)
	VA
	 	 	 	2.2(w)(5)
	Voting Debt
	 	 	 	2.2(b)

v

 

LIST OF SCHEDULES AND EXHIBITS

	 	 	 

	Schedule A

	List of Subsidiaries
	 
	 	 
	Exhibit A

	Terms of Contingent Value Rights
	Exhibit B

	Terms of Repurchase
	Exhibit C

	Form of Registration Rights Agreement

vi

 

INVESTMENT AGREEMENT, dated as of May 5, 2011 (this “Agreement”), among Green
Bankshares, Inc., a corporation organized under the laws of the State of Tennessee (the
“Company”), GreenBank, a Tennessee state-chartered banking corporation and a banking
subsidiary of the Company (the “Bank”), and North American Financial Holdings, Inc., a
Delaware corporation (“Purchaser”).

RECITALS:

WHEREAS, the Company intends to issue and sell to Purchaser, and Purchaser intends to purchase
from the Company, as an investment in the Company, 119,900,000 shares of common stock, $2.00 par
value per share, of the Company (the “Common Stock”) at a purchase price of $1.81 per share
on the terms and conditions described herein;

WHEREAS, on the date hereof, the Company has granted to the Purchaser an option to acquire up
to 2,628,183 shares of Common Stock (but not to exceed 19.9% of the Company’s issued and
outstanding shares of Common Stock without giving effect to any shares subject to or issued
pursuant to such option) at a price per share equal to the closing price on the Nasdaq Global
Select Market for shares of Common Stock on the first trading day following the date hereof (the
“Option”);

WHEREAS, in addition to the purchase price described above, the Company shall, immediately
prior to the issuance of shares of Common Stock to Purchaser, issue to the holders of its Common
Stock (excluding the Purchaser) contingent value rights (the “CVRs”) on substantially the
terms set forth in Exhibit A;

WHEREAS, in connection with the investment by Purchaser, the Purchaser shall enter into a
binding definitive agreement with the United States Department of the Treasury
(“Treasury”), pursuant to which, among other things and subject to the terms and conditions
set forth therein, contemporaneous with the Closing, the Purchaser will purchase from Treasury all
of the outstanding shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series
A (the “Series A Preferred”) (including all obligations with respect to accrued but unpaid
dividends on the Series A Preferred) and related warrants to purchase shares of Company Common
Stock (the “Treasury Warrants”) (the “Repurchase”) (the terms of the Repurchase
being set forth in Exhibit B); and

WHEREAS, the Company intends to amend its Charter and its bylaws, in form and substance
reasonably satisfactory to Purchaser, to permit the transactions contemplated by this Agreement.

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

 

1

 

ARTICLE I

PURCHASE; CLOSING

1.1 Purchase. On the terms and subject to the conditions set forth herein, at the Closing,
Purchaser will purchase from the Company, and the Company will issue and sell to Purchaser,
119,900,000 shares of Common Stock (the “Purchased Shares”).

1.2 Closing.

(a) The Closing. The closing of the purchase and sale of the Purchased Shares
referred to in Section 1.1 (the “Closing”) shall occur at 10:00 a.m., New York City
time, on the third business day after the satisfaction or, if permissible, waiver (by the
party entitled to grant such waiver) of the conditions to the Closing set forth in this
Agreement (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to fulfillment or waiver of those conditions), at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 or such other
date or location as agreed by the parties. The date of the Closing is referred to as the
“Closing Date.”

(b) Closing Deliveries. Subject to the satisfaction or waiver on the Closing
Date of the applicable conditions to the Closing set forth in Section 1.2(c), at the
Closing:

(1) the Company will deliver to Purchaser (A) the Closing Expense Reimbursement
in accordance with Section 6.2 hereof, by wire transfer of immediately available
funds to an account or accounts designated by Purchaser, and (B) the Purchased
Shares, as evidenced by one or more certificates dated the Closing Date and bearing
the appropriate legends as set forth herein and free and clear of all liens,
charges, encumbrances and security interests of any kind or nature whatsoever (other
than restrictions on transfer imposed by applicable securities Laws) (collectively,
“Liens”); and

(2) Purchaser will deliver to the Company, by wire transfer of immediately
available funds to an account or accounts designated by the Company, an amount equal
to the product of $1.81 per share (the “Per Share Purchase Price”)
multiplied by the number of Purchased Shares.

(c) Closing Conditions. (1) The obligation of Purchaser, on the one hand, and
the Company and the Bank, on the other hand, to effect the Closing is subject to the
fulfillment or written waiver by Purchaser, the Company and the Bank prior to the Closing of
the following conditions:

(A) no provision of any applicable Law and no judgment, injunction,
order or decree of any court, administrative agency or commission or other
governmental authority or instrumentality, whether federal, state, local or
foreign (each, a “Governmental Entity”) shall prohibit the Closing
or shall prohibit or restrict Purchaser or its Affiliates from owning or
voting any Purchased Shares, and no lawsuit or formal administrative
proceeding
shall have been commenced by any Governmental Entity seeking to effect
any of the foregoing;

 

2

 

(B) any Required Approvals of the Tennessee Department of Financial
Institutions (the “Tennessee DFI”), Office of the Comptroller of the
Currency and the Board of Governors of the Federal Reserve System (the
“Federal Reserve”) required to consummate the transactions
contemplated by this Agreement shall have been made or obtained and shall be
in full force and effect as of the Closing Date; and

(C) the holders of shares of Common Stock of the Company shall have
approved the Shareholder Proposal (other than the proposal set forth in
clause (1)(iii) of the definition of “Shareholder Proposal”) by the
requisite vote of such holders and the corresponding amendments to the
Charter shall have become effective.

(2) The obligation of Purchaser to purchase the Purchased Shares at the Closing
is also subject to the fulfillment or written waiver by Purchaser prior to the
Closing of each of the following conditions:

(A) all representations and warranties of the Company and the Bank
contained in this Agreement shall be true and correct (without regard to
materiality or Material Adverse Effect qualifiers contained therein), both
individually and in the aggregate, except where the failure of such
representations and warranties to be so true and correct, individually or in
the aggregate, has not had and would not be reasonably expected to have a
Material Adverse Effect (other than the representations and warranties set
forth in Sections 2.2(b), (d)(1), (o), (z), and (bb), which shall be true
and correct in all material respects (subject to materiality or Material
Adverse Effect qualifiers contained therein)) as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent any such representation and warranty expressly
relates to a specified date, in which case such representation and warranty
need only be true and correct as of such specified date);

(B) each of the Company and the Bank shall have performed in all
material respects all obligations required to be performed by it at or prior
to the Closing;

(C) Purchaser shall have received a certificate signed on behalf of
each of the Company and the Bank by a senior executive officer certifying to
the effect that the conditions set forth in Sections 1.2(c)(2)(A) and
1.2(c)(2)(B) have been satisfied;

(D) since December 31, 2010, except as set forth in any section of the
Company Disclosure Schedule corresponding to Section 2.2 of this
Agreement, no fact, event, change, condition, development, circumstance
or effect shall have occurred that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect;

 

3

 

(E) (i) The Treasury shall have entered into a binding definitive
agreement with Purchaser providing for, contemporaneous with the Closing,
the sale to Purchaser of all of the issued and outstanding shares of the
Series A Preferred (including all obligations with respect to accrued but
unpaid dividends on the Series A Preferred) and the Treasury Warrants in
accordance with the terms set forth in Exhibit B and such agreement
shall remain in full force and effect; and (ii) the Company shall have
received from each employee of the Company listed on Schedule 1.2(c)(2)(E)
who has waived any compensation or benefits in connection with the Company’s
issuance of the Series A Preferred and Treasury Warrants pursuant to the
interim final rule issued by Treasury or who would be prohibited from
receiving compensation or benefits under the interim final rule issued by
Treasury, a binding waiver (in a form acceptable to Purchaser) stipulating
that such compensation and benefits that are not payable as of the date of
this Agreement will not become payable at or following the Closing;

(F) no Required Approval issued by any Governmental Entity shall impose
or contain any restraint, condition or requirement, that, individually or in
the aggregate, is adverse to Purchaser or any of its Affiliates in any
material respect (in the case this clause, “adverse” shall mean reducing the
economic benefit or increasing the economic burden of the transactions
contemplated hereby), as determined by Purchaser in its reasonable good
faith judgment (any restraint, condition, or requirement of the type
described in this clause (F), a “Burdensome Condition”);

(G) each of the individuals designated by the Purchaser in its sole
discretion prior to the Closing (the “Purchaser Designees”) shall
have been appointed to the Board of Directors of the Company and of the
Bank, and an equal number of individuals shall have resigned from the Board
of Directors of the Company and of the Bank (the “Resigning
Directors”), in each case effective as of the Closing, such that
immediately after the Closing, the Purchaser Designees constitute a majority
of the Board of Directors of each of the Company and the Bank; provided,
however, in no event shall the Board of Directors of the Company contain
fewer than two of the members of the Company’s Board of Directors as of the
date hereof, which members shall also be appointed to the board of directors
of Purchaser immediately following the Closing;

(H) either (i) the existing directors and officers liability and errors
and omissions insurance policies of the Company, the Bank and any
Subsidiary (the “Existing D&O Policies”) shall remain in full
force and effect as of the date of this Agreement and shall continue in full
force and effect until they expire upon the expiration dates set forth in
Section 2.2(x) of the Company Disclosure Schedule and the insurers
thereunder shall have provided to the Company an endorsement in writing to
the effect that neither the execution and delivery of this Agreement, nor
the

 

4

 

consummation of the transactions contemplated by this Agreement shall
result in a termination of such policies, or a reduction in coverage of any
such policies; or (ii) the Company shall have obtained a policy (or
policies) of directors and officers liability and errors and omissions
insurance coverage with insurance carriers believed to be financially sound
and reputable with coverage substantially identical to the coverage provided
by the Existing D&O Policies;

(I) the shares of Common Stock included in the Purchased Shares shall
have been authorized for listing on the NASDAQ Stock Market
(“NASDAQ”) or such other market on which the Common Stock is then
listed or quoted, subject to official notice of issuance;

(J) the Company shall have entered into the Registration Rights
Agreement pursuant to Section 4.4, having the terms set forth in Exhibit
C;

(K) as measured immediately prior to the Closing and excluding any
deposits withdrawn by Purchaser or its controlled Affiliates, core deposits
(i.e., money market, demand, checking, savings and transactional accounts
for retail customers) of the Bank shall not have decreased by more than
twenty percent (20%) from the amount thereof as of March 31, 2011;

(L) excluding Charge-Offs made at the written direction of Purchaser or
any controlled Affiliate of Purchaser, (i) the Charge-Offs in any completed
calendar fiscal quarter commencing after March 31, 2011 shall not exceed
$40,000,000 and (ii) the Charge-Offs in the most recent interim quarterly
period commencing after the date hereof and ending five calendar days prior
to the Closing Date shall not exceed an amount equal to $40,000,000
pro-rated by the number of days in such interim quarterly period; for the
purposes of this Section 1.2(c)(2)(L), “Charge-Offs” shall mean the
loans charged-off as reflected in the Company Reports, if then publicly
filed, and otherwise derived from the books and records of the Bank in a
manner consistent with past practice, with the preparation of the financial
statements in the Company Reports and with the Company’s or Bank’s written
policies in effect as of the date of this Agreement; and three calendar days
prior to the Closing Date, the Company shall provide Purchaser with a
schedule reporting Charge-Offs for the periods referred to in clauses (i)
and (ii);

(M) The Board of Directors of the Company shall have declared a
distribution of the CVRs, effective immediately prior to the Closing,
pursuant to a contingent value right agreement substantially on the terms
set forth on Exhibit A and in form and substance reasonably
acceptable to the Purchaser;

 

5

 

(N) Either (i) the holders of shares of Common Stock of the Company
shall have approved the proposal set forth in clause (1)(iii) of the
definition of “Shareholder Proposal” by the requisite vote of such holders
and the corresponding amendment to the Charter shall have become effective
or (ii) the merger of the Bank with and into a Subsidiary of the Purchaser
on terms reasonably satisfactory to Purchaser and consistent with
Exhibit D shall have been approved by the Boards of Directors of the
Company and the Bank and by any Governmental Entity the approval of which is
required, and such merger is reasonably capable of being consummated not
later than three (3) business days following the Closing; and

(3) The obligations of the Company and the Bank to effect the Closing are
subject to the fulfillment or written waiver by both of the Company and the Bank
prior to the Closing of the following additional conditions:

(A) all representations and warranties of Purchaser contained in this
Agreement shall be true and correct (without regard to materiality or
material adverse effect qualifiers contained therein) in all material
respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except to the extent any such
representation and warranty expressly relates to a specified earlier date,
in which case such representation and warranty need only be true and correct
as of such specified earlier date, and except where the failure of any such
representation or warranty to be true and correct would not, individually or
in the aggregate, impair in any material respect the ability of Purchaser to
consummate the transactions contemplated by this Agreement;

(B) Purchaser shall have performed in all material respects all
obligations required to be performed by it at or prior to the Closing;

(C) the Company and the Bank each shall have received a certificate
signed on behalf of Purchaser by a senior executive officer certifying to
the effect that the conditions set forth in Sections 1.2(c)(3)(A) and (B)
have been satisfied; and

(D) Purchaser and the Treasury shall have entered into a binding
definitive agreement reflecting Purchaser’s agreement to repurchase all of
the issued and outstanding Series A Preferred (including all obligations
with respect to accrued but unpaid dividends on the Series
A Preferred) and the Treasury Warrants in accordance with the terms set
forth in Exhibit B and such agreement shall remain in full force and
effect.

 

6

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

2.1 Disclosure. (a) On or prior to the date hereof, the Company and the Bank delivered to
Purchaser and Purchaser delivered to the Company and the Bank a schedule (a “Disclosure
Schedule”) setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more representations or warranties contained in Section 2.2 with
respect to the Company or the Bank, or in Section 2.3 with respect to Purchaser, or to one or more
covenants contained in Article III.

(b) “Material Adverse Effect” means any fact, event, change, development,
circumstance or effect that, individually or in the aggregate, (1) is or would be reasonably
likely to be material and adverse to the business, assets, liabilities, results of
operations or condition (financial or otherwise) of the Company, the Bank and the
Subsidiaries, taken as a whole (provided, however, that with respect to this clause (1), a
“Material Adverse Effect” shall not be deemed to include any fact, event, change, condition,
development, circumstance or effect to the extent resulting from actions or omissions by the
Company taken or not taken with the prior written consent or at the written direction of
Purchaser or as expressly required by this Agreement), or (2) materially impairs or would be
reasonably likely to materially impair the ability of the Company or the Bank to perform its
obligations under this Agreement or to consummate the Closing. Notwithstanding the
foregoing, any adverse change, event or effect to the extent arising from: (i) conditions
generally affecting the United States economy or generally affecting the banking industry
except to the extent the Company and the Bank, taken as a whole, are affected in a
materially disproportionate manner as compared to other community banks in the southeastern
United States; (ii) national or international political or social conditions, including
terrorism or the engagement by the United States in hostilities or acts of war except to the
extent the Company and the Bank, taken as a whole, are affected in a materially
disproportionate manner as compared to other community banks in the southeastern United
States; (iii) changes in any federal, state, local or foreign Laws, any rule or regulation
of any SRO, statutes, regulations, rules, ordinances and judgments, decrees, orders, writs
and injunctions (collectively, “Laws”) issued by any Governmental Entity; (iv) any
action taken by Purchaser prior to or at the Closing; (v) any failure, in and of itself, by
the Company or the Bank to meet any internal or disseminated projections, forecasts or
revenue or earnings predictions for any period (provided that any underlying causes of such
failure shall not be excluded in determining whether a Material Adverse Effect has occurred
or would reasonably be expected to occur); (vi) any natural disaster except to the extent
the Company and the Bank, taken as a whole, are affected in a materially disproportionate
manner as compared to other community banks in the southeastern United States (vii) any
compliance by the Company or the Bank with any express written request made by Purchaser;
(viii) a decline in the price, or a change in the trading volume,
of the Common Stock on the NASDAQ (provided that any underlying causes of such decline
or change shall not be excluded in determining whether a Material Adverse Effect has
occurred or would reasonably be expected to occur); or (ix) the public announcement,
pendency or completion of the transactions contemplated by this Agreement, including any
action taken in response thereto by any person with which the Company or the Bank does
business shall not, in any such case, be taken into account in determining whether a
“Material Adverse Effect” has occurred or would reasonably be expected to occur.

 

7

 

(c) “Previously Disclosed” with regard to (1) a party means information set
forth in its Disclosure Schedule, and (2) the Company or the Bank means information publicly
disclosed by the Company in (A) its Annual Report on Form 10-K for the fiscal year ended
December 31, 2010, as filed by it with the Securities and Exchange Commission
(“SEC”) on March 15, 2010 (including all exhibits included or incorporated by
reference therein) (the “Company 10-K”), or (B) any Current Report on Form 8-K filed
or furnished by it with the SEC since January 1, 2011 and publicly available prior to the
date of this Agreement (excluding any risk factor disclosures contained in such documents
under the heading “Risk Factors” and any disclosure of risks included in any
“forward-looking statements” disclaimer or other statements that are similarly non-specific
and are predictive or forward-looking in nature).

(d) “To the knowledge of the Company,” “to the knowledge of the Bank,”
or any similar phrase means, (i) with respect to any fact or matter, the actual knowledge of
Stephen M. Rownd or James E. Adams, and (ii) with respect to facts or matters relating to
representations and warranties set forth in Section 2.2(w), Stephen M. Rownd, James E. Adams
or Steve Droke, in the case of each of clauses (i) and (ii) without any duty to investigate.

2.2 Representations and Warranties of the Company and the Bank. The Company and the Bank,
jointly and severally, represent and warrant to Purchaser, as of the date of this Agreement and as
of the Closing Date (except to the extent made only as of a specified date in which case as of such
date), that, except as Previously Disclosed:

(a) Organization and Authority. (1) The Company is, and at the Closing Date
will be, a corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee. The Company is a bank holding company duly registered under the
Bank Holding Company Act of 1956, as amended. The Company has, and at the Closing Date will
have, the power and authority (corporate, governmental, regulatory and otherwise) and has or
will have all necessary approvals, orders, licenses, certificates, permits and other
governmental authorizations (collectively, the “Authorizations”) to own or lease all
of the assets owned or leased by it and to conduct its business in all material respects in
the manner Previously Disclosed, and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted except where
the failure to have such power and authority or such Authorizations has not had,
individually or in the aggregate, a Material Adverse Effect. The Company is, and at the
Closing Date will be, duly licensed or qualified to do business and in good standing as a
foreign corporation in all jurisdictions
in which the nature of the activities conducted by the Company requires such
qualification except for jurisdictions in which the failure to be so qualified or authorized
has not had, individually or in the aggregate, a Material Adverse Effect. The Charter, as
amended, of the Company (the “Charter”) complies in all material respects with
applicable Law. A complete and correct copy of the Charter and bylaws of the Company, as
amended and as currently in effect, has been delivered or made available to Purchaser. The
Company’s direct and indirect subsidiaries (other than the Bank) (each a
“Subsidiary” and collectively the “Subsidiaries”) are listed on Schedule
A to this Agreement.

 

8

 

(2) The Bank is a wholly owned subsidiary of the Company and is a corporation
and state chartered bank duly organized, validly existing and in good standing under
the Laws of the State of Tennessee. The deposit accounts of the Bank are insured up
to applicable limits by the Deposit Insurance Fund, which is administered by the
Federal Deposit Insurance Corporation (the “FDIC”); all premiums and
assessments required to be paid in connection therewith have been paid when due; and
no proceedings for the termination or revocation of such insurance are pending or,
to the knowledge of the Company, threatened. The Bank has the power and authority
(corporate, governmental, regulatory and otherwise) and has or will have all
necessary Authorizations to own or lease all of the assets owned or leased by it and
to conduct its business in all material respects in the manner Previously Disclosed,
except where the failure to have such power and authority or such Authorizations has
not had, individually or in the aggregate, a Material Adverse Effect. The Bank is
duly licensed or qualified to do business and in good standing in all jurisdictions
in which the nature of the activities conducted by the Bank requires such
qualification except for jurisdictions in which the failure to be so qualified or
authorized has not had, individually or in the aggregate, a Material Adverse Effect.
The charter (“Bank Charter”) of the Bank complies in all material respects
with applicable Law. A complete and correct copy of the Bank Charter and the bylaws
of the Bank, as amended and as currently in effect, has been delivered or made
available to Purchaser.

(3) Each of the Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing under the Laws of its jurisdiction
of organization. Each such Subsidiary has the power and authority (corporate,
governmental, regulatory and otherwise) and has or will have all necessary
Authorizations to own or lease all of the assets owned or leased by it and to
conduct its business in all material respects as Previously Disclosed, except where
the failure to have such power and authority or such Authorizations has not had,
individually or in the aggregate, a Material Adverse Effect. Each such Subsidiary
is duly licensed or qualified to do business and in good standing as a foreign
corporation or other legal entity in all jurisdictions in which the nature of the
activities conducted by such Subsidiary requires such qualification except for
jurisdictions in which the failure to be so qualified or authorized has not had,
individually or in the aggregate, a Material Adverse Effect. The charter, articles
or certificate of incorporation, certificate of trust or other organizational
document of each Subsidiary comply in all material respects with applicable Law. A
complete and correct copy of the charter, articles or certificate of incorporation
or certificate of trust and bylaws of each Subsidiary (or similar governing
documents), as amended and as currently in effect, has been delivered or made
available to Purchaser.

 

9

 

(b) Capitalization. The authorized capital stock of the Company consists of
130 shares of organizational common stock, par value $10.00 per share, of the Company (the
“Organizational Common Stock”), 20,000,000 shares of Common Stock and 1,000,000
shares of preferred stock, no par value, of the Company (the “Company Preferred
Stock”). As of the close of business on May 2, 2011 (the “Capitalization
Date”), there were no shares of Organizational Common Stock and no more than 13,206,952
shares of Common Stock outstanding (which includes restricted shares) and 72,278 shares of
Series A Preferred and no other shares of Company Preferred Stock outstanding. Since the
Capitalization Date and through the date of this Agreement, except in connection with this
Agreement and the transactions contemplated hereby, and as set forth in Section 2.2(b) of
the Company Disclosure Schedule, the Company has not (1) issued or authorized the issuance
of any shares of Organizational Common Stock, Common Stock or Company Preferred Stock, or
any securities convertible into or exchangeable or exercisable for shares of Organizational
Common Stock, Common Stock or Company Preferred Stock, (2) reserved for issuance any shares
of Organizational Common Stock, Common Stock or Company Preferred Stock or (3) repurchased
or redeemed, or authorized the repurchase or redemption of, any shares of Organizational
Common Stock, Common Stock or Company Preferred Stock. As of the close of business on the
Capitalization Date, other than in respect of shares of Common Stock reserved for issuance
in connection with the Treasury Warrants, any stock option or other equity incentive plan in
respect of which an aggregate of no more than 146,169 shares of Common Stock have been
reserved for issuance and under the Company’s Dividend Reinvestment Plan, no shares of
Organizational Common Stock, Common Stock or Company Preferred Stock were reserved for
issuance. All of the issued and outstanding shares of Organizational Common Stock, Common
Stock and Company Preferred Stock have been duly authorized and validly issued and are fully
paid and nonassessable, and have been issued in compliance with all federal and state
securities laws, and were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities. All shares of Organizational Common
Stock are callable by the Company at any time at a price of $10.00 per share by the Company.
No bonds, debentures, notes or other indebtedness having the right to vote on any matters
on which the shareholders of the Company may vote (“Voting Debt”) are issued and
outstanding. As of the date of this Agreement, except (A) pursuant to any cashless exercise
provisions of any Company stock options or pursuant to the surrender of shares to the
Company or the withholding of shares by the Company to cover tax withholding obligations
under the Benefit Plans, (B) the warrant to purchase up to 635,504 shares of Common Stock
sold by the Company to the Treasury pursuant to that certain Letter Agreement and Securities
Purchase Agreement dated as of December 23, 2008 or (C) as set forth elsewhere in this
Section 2.2(b) or on the Company
Disclosure Schedule, the Company does not have and is not bound by any outstanding
subscriptions, options, calls, commitments or agreements of any character calling for the
purchase or issuance of, or securities or rights convertible into or exchangeable for, any
shares of Organizational Common Stock, Common Stock or Company Preferred Stock or any other
equity securities of the Company or Voting Debt or any securities representing the right to
purchase or otherwise receive any shares of capital stock of the Company (including any
rights plan or agreement). Section 2.2(b) of the Company Disclosure Schedule sets forth a
table listing the outstanding series of trust preferred and subordinated debt securities of
the Company and the Bank and certain information with respect thereto, including the holders
of such securities as of the date of this Agreement if known to the Company, and all such
information is accurate and complete to the knowledge of the Company and the Bank.

 

10

 

(c) Subsidiaries. With respect to the Bank and each of the Subsidiaries, (1)
all the issued and outstanding shares of such entity’s capital stock have been duly
authorized and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities Laws, and were not issued in violation of
or subject to any preemptive rights or other rights to subscribe for or purchase securities,
and (2) there are no outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations convertible into or
exchangeable for, or any contracts or commitments to issue or sell, shares of such entity’s
capital stock, any other equity security or any Voting Debt, or any such options, rights,
convertible securities or obligations. Except as set forth in Section 2.2(c) of the Company
Disclosure Schedule, the Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Bank and the Subsidiaries, free and clear
of all Liens. Except as set forth in Section 2.2(c) of the Company Disclosure Schedule, the
Company does not own, directly or indirectly, any capital stock or other equity securities
of any person that is not a Subsidiary or the Bank.

(d) Authorization. (1) Each of the Company and the Bank has the full legal
right, corporate power and authority to enter into this Agreement and the other agreements
referenced herein to which it will be a party and to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the other
agreements referenced herein to which each of the Company and the Bank will be a party and
the consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Boards of Directors of each of the Company and the Bank. This Agreement
has been, and the other agreements referenced herein to which they will be a party, when
executed, will be, duly and validly executed and delivered by the Company and the Bank and,
assuming due authorization, execution and delivery by Purchaser, is and will be a valid and
binding obligation of each of the Company and the Bank enforceable against each of the
Company and the Bank in accordance with its terms (except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors’ rights or by
general equity principles). No other corporate proceedings are necessary for the execution
and delivery by the Company or the Bank of this Agreement and the other agreements
referenced herein to which it will be a party, the performance by them of their obligations
hereunder
and thereunder or the consummation by them of the transactions contemplated hereby,
subject to receipt of the approval by the Company’s shareholders of the Shareholder
Proposal. Except as set forth in Section 2.2(d) of the Company Disclosure Schedule, the
only vote of the shareholders of the Company required in connection with the approval of the
Shareholder Proposal is the affirmative vote of the holders of not less than a majority of
the outstanding Common Stock entitled to vote at the meeting at which such a vote is taken.
All shares of Common Stock outstanding on the record date for a meeting at which a vote is
taken with respect to the Shareholder Proposal shall be eligible to vote on such proposal.

 

11

 

(2) Neither the execution and delivery by the Company or the Bank of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance by the Company or the Bank with any of the provisions hereof, will (A)
violate, conflict with, or result in a breach of any provision of, or constitute a
default (or an event that, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or result in the loss of any
benefit or creation of any right on the part of any third party under, or accelerate
the performance required by, or result in a right of termination or acceleration of,
or result in the creation of any Liens upon any of the material properties or assets
of the Company, the Bank or any Subsidiary under any of the terms, conditions or
provisions of (i) its charter or bylaws (or similar governing documents) or the
certificate of incorporation, charter, bylaws or other governing instrument of any
Subsidiary or (ii) except as set forth in Section 2.2(d) of the Company Disclosure
Schedule, and except for defaults that would not have nor reasonably be expected to
have a Material Adverse Effect, any material note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which the
Company, the Bank or any Subsidiary is a party or by which it may be bound,
including without limitation the trust preferred securities issued by Greene County
Capital Trust I, Greene County Capital Trust II, GreenBank Capital Trust I, Civitas
Statutory Trust I, Cumberland Capital Statutory Trust II or the related indentures
(collectively, the “Trust Preferred Securities”), or to which the Company,
the Bank or any Subsidiary or any of the properties or assets of the Company, the
Bank or any Subsidiary may be subject, or (B) except for violations that would not
have nor reasonably be expected to have a Material Adverse Effect, assuming the
consents referred to in Section 2.2(f) are duly obtained, violate any Law applicable
to the Company, the Bank or any Subsidiary or any of their respective properties or
assets.

(e) Accountants. Dixon Hughes PLLC, who has expressed its opinion with respect
to the consolidated financial statements contained in the Company 10-K, is as of the date of
such opinion a registered independent public accountant, within the meaning of the Code of
Professional Conduct of the American Institute of Certified Public Accountants, as required
by the Securities Act and the rules and regulations promulgated thereunder and by the rules
of the Public Accounting Oversight Board.

(f) Consents. Schedule 2.2(f) of the Company Disclosure Schedule lists all
governmental and any other material consents, approvals, authorizations, applications,
registrations and qualifications that are required to be obtained in connection with or
for the consummation of the transactions contemplated by this Agreement (the “Required
Approvals”). Other than the securities or blue sky laws of the various states and the
Required Approvals, no material notice to, registration, declaration or filing with,
exemption or review by, or authorization, order, consent or approval of, any Governmental
Entity or SRO, or expiration or termination of any statutory waiting period, is necessary
for the consummation by the Company or the Bank of the transactions contemplated by this
Agreement.

 

12

 

(g) Financial Statements. The Company has previously made available to
Purchaser copies of the consolidated statements of financial condition of the Company, the
Bank and the Subsidiaries as of December 31 for the fiscal years 2008, 2009 and 2010, and
the related consolidated statements of operations, of comprehensive income, of changes in
shareholders’ equity, and of cash flows for the fiscal years 2008 through 2010, inclusive,
as reported in the Company 10-K, in each case accompanied by the audit report of Dixon
Hughes PLLC. The December 31, 2010 consolidated statement of financial condition of the
Company (including the related notes, where applicable) fairly presents in all material
respects the consolidated financial position of the Company, the Bank and the Subsidiaries
as of the date thereof, and the other financial statements referred to in this Section
2.2(g) (including the related notes, where applicable) fairly present in all material
respects, and the financial statements to be filed by the Company with the SEC after the
date of this Agreement will fairly present in all material respects (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations, comprehensive income, changes in shareholders’
equity, cash flows and the consolidated financial position of the Company, the Bank and the
Subsidiaries for the respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where applicable) in all
material respects complies, and the financial statements to be filed by the Company with the
SEC after the date of this Agreement will comply, with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and the financial
statements to be filed by the Company with the SEC after the date of this Agreement will be,
prepared in accordance with generally accepted accounting principles (“GAAP”)
consistently applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. There is no
transaction, arrangement or other relationship between the Company, the Bank or any
Subsidiary and an unconsolidated or other Affiliated entity that is not reflected on the
financial statements specified in this Section 2.2(g). The books and records of the
Company, the Bank and the Subsidiaries in all material respects have been, and are being,
maintained in accordance with applicable Law and GAAP accounting requirements and reflect
only actual transactions. Dixon Hughes PLLC has not resigned or been dismissed as
independent public accountants of the Company as a result of or in connection with any
disagreements with the Company on a matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure.

(h) Reports. (1) Since December 31, 2008, the Company, the Bank and each
Subsidiary has timely filed all material reports, registrations, documents, filings,
statements and submissions, together with any amendments thereto, that it was required to
file with any Governmental Entity or self-regulatory organization having jurisdiction over
the Company (“SRO”) (the foregoing, collectively, the “Company Reports”) and
has paid all material fees and assessments due and payable in connection therewith. As of
their respective dates of filing, the Company Reports complied in all material respects

 

13

 

with
all statutes and applicable rules and regulations of the applicable Governmental Entities or
SROs. Except as set forth in Section 2.2(h)(1) of the Company Disclosure Schedule, to the
knowledge of the Company, as of the date of this Agreement, there are no outstanding
comments from the SEC or any other Governmental Entity or any SRO with respect to any
Company Report. In the case of each such Company Report filed with or furnished to the SEC,
such Company Report did not, as of its date or if amended prior to the date of this
Agreement, as of the date of such amendment, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make
the statements made in it, in light of the circumstances under which they were made, not
misleading and complied as to form in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). With respect to all other
Company Reports, the Company Reports were complete and accurate in all material respects as
of their respective dates, or the dates of their respective amendments. No executive
officer of the Company, the Bank or any Subsidiary has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act.
Copies of all Company Reports not otherwise publicly filed have, to the extent allowed by
applicable Law, been made available to Purchaser by the Company. Except for normal
examinations conducted by a Governmental Entity or SRO in the regular course of the business
of the Company, the Bank and the Subsidiaries, no Governmental Entity or SRO has initiated
any proceeding or, to the knowledge of the Company, investigation into the business or
operations of the Company, the Bank or any Subsidiary since December 31, 2008. Except as
set forth in Section 2.2(h)(1) of the Company Disclosure Schedule, to the knowledge of the
Company and the Bank, there is no unresolved violation, criticism or exception by any
Governmental Entity or SRO with respect to any report or statement relating to any
examinations of the Company, the Bank or any of the Subsidiaries.

(2) The Company (i) keeps books, records and accounts that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company, the Bank and the Subsidiaries, and (ii) maintains 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. The
Company (A) has implemented and maintains disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information
relating to the Company, including the Bank and the Subsidiaries, is made known to
the chief executive officer and the chief financial officer of the Company by others
within those entities, and (B) has disclosed, based on its most recent evaluation
prior to the date hereof, to the Company’s outside auditors and the audit committee
of the Board of Directors (x) any significant deficiencies and material weaknesses
in the design or operation of internal controls over financial

 

14

 

reporting (as defined
in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
information and (y) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls over
financial reporting. Since December 31, 2008, (A) none of the Company, the Bank or
any Subsidiary or, to the knowledge of the Company or the Bank, any director,
officer, employee, auditor, accountant or representative of the Company, the Bank or
any Subsidiary has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company, the Bank or any Subsidiary or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that the
Company, the Bank or any Subsidiary has engaged in questionable accounting or
auditing practices, and (B) no attorney representing the Company, the Bank or any
Subsidiary, whether or not employed by the Company, the Bank or any Subsidiary, has
reported evidence of a material violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents to the Company’s Board of Directors or any committee thereof or
to any director or officer of the Company. The Company is otherwise in compliance
in all material respects with all applicable provisions of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”), as amended and the rules and regulations
promulgated thereunder and as of the date of this Agreement, the Company has no
knowledge of any reason that its outside auditors and its chief executive officer
and chief financial officer shall not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.

(i) Properties and Leases. The Company, the Bank and the Subsidiaries have
good and marketable title to all real properties and transferable title to all other
properties and assets, tangible or intangible, owned by them (other than any assets or
properties classified as other real estate owned) that are material to the operation of
their businesses, in each case free from Liens (other than (i) Liens for current taxes and
assessments not yet past due or being contested in good faith, (ii) inchoate Liens for
construction in progress, (iii) mechanics’, materialmen’s, workmen’s, repairmen’s,
warehousemen’s and carriers’ Liens arising in the ordinary course of business of the
Company, the Bank or such Subsidiary consistent with past practice for sums not yet
delinquent or being
contested in good faith by appropriate proceedings and (iv) Liens with respect to
tenant personal property, fixtures and/or leasehold improvements at the subject premises
arising under state statutes and/or principles of common law (collectively, “Permitted
Liens”)) that would impair in any material respect the value thereof or interfere with
the use made or to be made thereof by them in any material respect. The Company, the Bank
and the Subsidiaries own, lease or otherwise have valid easement rights to use all
properties as are necessary to their operations as now conducted. To the knowledge of the
Company, the Company, the Bank and the Subsidiaries hold all leased real or personal
property under valid and enforceable leases with no exceptions that would interfere with the
use made or to be made thereof by them in any material respect. None of the Company, the

 

15

 

Bank or any Subsidiary or, to the knowledge of the Company, any other party thereto is in
default in any material respect under any lease described in the immediately preceding
sentence. There are no condemnation or eminent domain proceedings pending or, to the
knowledge of the Company, threatened in writing, with respect to any of the real properties
owned, or to the Company’s knowledge, any of the real properties leased, by the Company, the
Bank or any of the Subsidiaries. None of the Company, the Bank or any of the Subsidiaries
has, within the last two (2) years, made any material title claims, or has outstanding any
material title claims, under any policy of title insurance respecting any parcel of real
property.

(j) Taxes. Except as set forth in Section 2.2(j) of the Company Disclosure
Schedule, (1) each of the Company, the Bank and the Subsidiaries has duly and timely filed
(including, pursuant to applicable extensions granted without penalty) all material Tax
Returns required to be filed by it and all such Tax Returns are correct and complete in all
material respects. Each of the Company, the Bank and the Subsidiaries have paid in full, or
made adequate provision in the financial statements of the Company (in accordance with GAAP)
for, all Taxes shown as due on such Tax Returns; (2) no material deficiencies for any Taxes
have been proposed, asserted or assessed against or with respect to any Taxes due by, or Tax
Returns of, the Company, the Bank or any of the Subsidiaries which deficiencies have not
since been resolved; and (3) there are no material Liens for Taxes upon the assets of either
the Company, the Bank or the Subsidiaries except for statutory Liens for Taxes not yet due
or that are being contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP have been provided. None of the Company, the Bank or any
of the Subsidiaries has been a “distributing corporation” or a “controlled corporation” in
any distribution occurring during the last two years in which the parties to such
distribution treated the distribution as one to which Section 355 of the U.S. Internal
Revenue Code of 1986, as amended and the Treasury Regulations promulgated thereunder (the
“Code”) is applicable. None of the Company, the Bank or any Subsidiary has engaged
in any transaction that is the same as or substantially similar to a “listed transaction”
for United States federal income tax purposes within the meaning of Treasury Regulations
section 1.6011-4. None of the Company, the Bank or any of the Subsidiaries has engaged in a
transaction of which it made disclosure to any taxing authority to avoid penalties under
Section 6662(d) or any comparable provision of state, foreign or local Law. None of the
Company, the Bank or any of the Subsidiaries has participated in any “tax amnesty” or
similar program offered by any taxing authority to avoid the assessment of penalties or
other additions to Tax. The Company, the Bank and each of the Subsidiaries have
complied in all material respects with all requirements to report information for Tax
purposes to any individual or taxing authority, and have collected and maintained all
requisite certifications and documentation in valid and complete form with respect to any
such reporting obligation, including, without limitation, valid Internal Revenue Service
Forms W-8 and W-9. No claim has been made by a Tax Authority in writing to the Company, the
Bank or any of the Subsidiaries in a jurisdiction where the Company, the Bank or any of the
Subsidiaries, as the case may be, does not file Tax Returns that the Company, the Bank or
any of such Subsidiaries, as the case may be, is or may be subject to Tax by that
jurisdiction. None of the Company, the Bank or any of the Subsidiaries has granted any
waiver, extension or comparable consent regarding the application of the

 

16

 

statute of
limitations with respect to any Taxes or Tax Return that is outstanding, nor has any request
for any such waiver or consent been made. None of the Company, the Bank or any of the
Subsidiaries has been or is in violation (or with notice or lapse of time or both, would be
in violation) of any applicable Law relating to the payment or withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code or any similar provisions of state, local or foreign Law). Each of the Company,
the Bank and its Subsidiaries has duly and timely withheld from employee salaries, wages and
other compensation and paid over to the appropriate taxing authority all amounts required to
be so withheld and paid over for all periods under all applicable Laws. No audits or
material investigations by any taxing authority relating to any Tax Returns of any of the
Company, the Bank or any of the Subsidiaries is in progress, nor has the Company, the Bank
or any of the Subsidiaries received notice from any taxing authority of the commencement of
any audit not yet in progress. There are no outstanding powers of attorney enabling any
person or entity not a party to this Agreement to represent the Company, the Bank or any
Subsidiary with respect to Tax matters. None of the Company, the Bank or any of the
Subsidiaries has applied for, been granted, or agreed to any accounting method change for
which it will be required to take into account any adjustment under Code Section 481 or any
similar provision. There are no material elections regarding Taxes affecting the Company,
the Bank or any of the Subsidiaries. None of the Company, the Bank or any of the
Subsidiaries has undergone an “ownership change” within the meaning of Code Section
382(g) provided that the Company makes no representations as to whether the
execution of this Agreement or the consummation of the transactions contemplated hereby will
constitute an “ownership change” under Code Section 382(g). For purposes of this Agreement,
“Taxes” shall mean all taxes, charges, levies, penalties or other assessments
imposed by any United States federal, state, local or foreign taxing authority, including
any income, excise, property, sales, transfer, franchise, payroll, withholding, social
security, abandoned or unclaimed property or other taxes, together with any interest,
penalties or additions to tax attributable thereto, and any payments made or owing to any
other person measured by such taxes, charges, levies, penalties or other assessment, whether
pursuant to a tax indemnity agreement, tax sharing payment or otherwise (other than pursuant
to commercial agreements or Benefit Plans). For purposes of this Agreement, “Tax
Return” shall mean any return, report, information return or other document (including
any related or supporting information) required to be filed with any taxing authority with
respect to Taxes, including, without
limitation, all information returns relating to Taxes of third parties, any claims for
refunds of Taxes and any amendments or supplements to any of the foregoing.

(k) Absence of Certain Changes. Since December 31, 2010, except as Previously
Disclosed, (1) the Company, the Bank and the Subsidiaries have conducted their respective
businesses in all material respects in the ordinary and usual course of business and
consistent with prior practice, (2) none of the Company, the Bank or any Subsidiary has
issued any securities or incurred any liability or obligation, direct or contingent, for
borrowed money, except borrowings in the ordinary course of business, (3) except for
publicly disclosed ordinary dividends on the Common Stock and outstanding Company Preferred
Stock or as contemplated by Section 2.2(b) of this Agreement, the Company has not made or
declared any distribution in cash or in kind to its shareholders

 

17

 

or issued or repurchased
any shares of its capital stock or other equity interests, (4) no fact, event, change,
condition, development, circumstance or effect has occurred that has had or would reasonably
be expected to have a Material Adverse Effect and (5) no material default (or event that,
with notice or lapse of time, or both, would constitute a material default) exists on the
part of the Company, the Bank or any Subsidiary or, to their knowledge, on the part of any
other party, in the due performance and observance of any term, covenant or condition of any
Company Significant Agreement that would, individually or in the aggregate, constitute a
Material Adverse Effect.

(l) No Undisclosed Liabilities. Except as set forth in Section 2.2(l) of the
Company Disclosure Schedule, none of the Company, the Bank or any of the Subsidiaries has
any liabilities or obligations of any nature and is not an obligor under any guarantee,
keepwell or other similar agreement (absolute, accrued, contingent or otherwise) except for
(1) liabilities or obligations reflected in or reserved against in the Company’s
consolidated balance sheet as of December 31, 2010, (2) current liabilities that have arisen
since December 31, 2010 in the ordinary and usual course of business and consistent with
past practice and that have either been Previously Disclosed or would not have, individually
or in the aggregate, a material impact on the Company, the Bank or any Subsidiary and (3)
contractual liabilities under (other than liabilities arising from any breach or violation
of) agreements made in the ordinary and usual course of business and consistent with past
practice and that have either been Previously Disclosed or would not have, individually or
in the aggregate, a material impact on the Company, the Bank or any Subsidiary.

(m) Commitments and Contracts. (i) The Company has Previously Disclosed or
made available to Purchaser or its representatives true, correct and complete copies of,
each of the following written contracts to which the Company, the Bank or any Subsidiary is
a party (each, a “Company Significant Agreement”):

(1) any contract or agreement which is a “material contract” within the meaning
of Item 601(b)(10) of Regulation S-K to be performed in whole or in part after the
date of this Agreement;

(2) any contract or agreement with respect to the employment or service of any
current or former directors, officers, or consultants of the Company, the Bank or
any of the Subsidiaries;

(3) any contract or agreement with any director, officer, or Affiliate of the
Company, the Bank or any of the Subsidiaries;

(4) any contract or agreement materially limiting the freedom of the Company,
the Bank or any Subsidiary to engage in any line of business or to compete with any
other person or prohibiting the Company, the Bank or any Subsidiary from soliciting
customers, clients or employees, in each case whether in any specified geographic
region or business or generally;

 

18

 

(5) any contract or agreement with a labor union or guild (including any
collective bargaining agreement);

(6) any contract or agreement which grants any person a right of first refusal,
right of first offer or similar right with respect to any material properties,
assets or businesses of the Company, the Bank or the Subsidiaries other than other
real estate owned;

(7) any trust indenture, mortgage, promissory note, loan agreement or other
contract, agreement or instrument for the borrowing of money, any currency exchange,
commodities or other hedging arrangement or any leasing transaction of the type
required to be capitalized in accordance with GAAP, in each case, where the Company,
the Bank or any Subsidiary is a lender, borrower or guarantor other than those
entered into in the ordinary course of business;

(8) any contract or agreement entered into since January 1, 2005 (and any
contract or agreement entered into at any time to the extent that material
obligations remain as of the date hereof) relating to the acquisition or disposition
of any material business or material assets (whether by merger, sale of stock or
assets or otherwise), which acquisition or disposition is not yet complete or where
such contract contains continuing material obligations, including continuing
material indemnity obligations, of the Company, the Bank or any of the Subsidiaries;

(9) any agreement of guarantee, support or indemnification by the Company, the
Bank or any Subsidiary, assumption or endorsement by the Company, the Bank or any
Subsidiary of, or any similar commitment by the Company, the Bank or any Subsidiary
with respect to, the obligations, liabilities (whether accrued, absolute, contingent
or otherwise) or indebtedness of any other person other than those entered into in
the ordinary course of business;

(10) any alliance, cooperation, joint venture, stockholders’ partnership or
similar agreement involving a sharing of profits or losses relating to the Company,
the Bank or any Subsidiary;

(11) any agreement, option or commitment or right with, or held by, any third
party to acquire, use or have access to any assets or properties, or any interest
therein, of the Company, the Bank or any Subsidiary; and

(12) any material contract or agreement that would require any consent or
approval of a counterparty as a result of the consummation of the transactions
contemplated by this Agreement.

(ii) (A) Each of the Company Significant Agreements has been duly and validly
authorized, executed and delivered by the Company, the Bank or any Subsidiary and is binding
on the Company, the Bank and the Subsidiaries, as applicable, and to the Company’s
knowledge, is in full force and effect; (B) the Company, the Bank and each of the
Subsidiaries, as applicable, are in all material respects in compliance with and have

 

19

 

in all
material respects performed all obligations required to be performed by them to date under
each Company Significant Agreement; (C) as of the date hereof, none of the Company, the Bank
or any of the Subsidiaries has received notice of any material violation or default (or any
condition that with the passage of time or the giving of notice would cause such a violation
of or a default) by any party under any Company Significant Agreement; and (D) no other
party to any Company Significant Agreement is, to the knowledge of the Company, in default
in any material respect thereunder.

(n) Offering of Purchased Shares. Neither the Company nor any person acting on
its behalf has taken any action (including any offering of any securities of the Company)
under circumstances that would require the integration of such offering with the offering of
any of the Purchased Shares, the shares underlying the Option or CVRs to be issued pursuant
to this Agreement, in each case under the Securities Act, and the rules and regulations of
the SEC promulgated thereunder, which might subject the offering, issuance or sale of any of
the Purchased Shares or the shares underlying the Option to Purchaser or the CVRs to the
Company’s shareholders (excluding the Purchaser) pursuant to this Agreement to the
registration requirements of the Securities Act.

(o) Status of Purchased Shares. The Purchased Shares to be issued pursuant to
this Agreement have been duly authorized by all necessary corporate action, in each case
subject to the approval of the Shareholder Proposal. When issued, delivered and sold
against receipt of the consideration therefor as provided in this Agreement, the Purchased
Shares will be validly issued, fully paid and nonassessable, will not be issued in violation
of or subject to preemptive rights of any other shareholder of the Company and will not
result in the violation or triggering of any price-based antidilution adjustments under any
agreement to which the Company, the Bank or any Subsidiary is a party. The voting rights of
the holders of the Purchased Shares will be enforceable in accordance with the terms of the
Charter, the bylaws of the Company and applicable Law.

(p) Litigation and Other Proceedings. Except as set forth in Section 2.2(p) of
the Company Disclosure Schedule, none of the Company, the Bank or any Subsidiary is a party
to any, and there are no pending or, to the Company’s knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature (1) against the Company, the Bank or any
Subsidiary (excluding those of the type contemplated by the following clause (2)) that,
if adversely determined, would reasonably be expected to result in damages, costs or any
other liability owed by the Company, the Bank or such Subsidiary, as applicable, in excess
of $1,000,000 individually or $5,000,000 in the aggregate or (2) as of the date hereof,
challenging the validity or propriety of the transactions contemplated by this Agreement.
There is no material injunction, order, judgment, decree or regulatory restriction (other
than regulatory restrictions of general application that apply to similarly situated
companies) imposed upon the Company, the Bank, any Subsidiary or the assets of the Company,
the Bank or any Subsidiary. There is no material unresolved violation, criticism or
exception by any Governmental Entity with respect to any report or relating to any
examinations or inspections of the Company, the Bank or any Subsidiary.

 

20

 

(q) Compliance with Laws. (1) The Company, the Bank and each Subsidiary have
all material permits, licenses, franchises, authorizations, orders and approvals of
(“Permits”), and have made all filings, applications and registrations with,
Governmental Entities and SROs that are required in order to permit them to own or lease
their properties and assets and to carry on their business as presently conducted, except
where the failure to have, or the suspension or cancellation of, any Permit has not had a
Material Adverse Effect. Except as has not had a Material Adverse Effect, each of the
Company, the Bank and each Subsidiary is and has been in compliance with and is not in
default or violation of, and none of them is, to the knowledge of the Company, under
investigation with respect to or, to the knowledge of the Company, has been threatened to be
charged with or given notice of any material violation of, any applicable material domestic
(federal, state or local) or foreign Law or order, demand, writ, injunction, decree or
judgment of any Governmental Entity or SRO. Except for statutory or regulatory restrictions
of general application, no Governmental Entity or SRO has placed any material restriction on
the business or properties of the Company, the Bank or any Subsidiary. Except as set forth
in Section 2.2(q) of the Company Disclosure Schedule, since December 31, 2009, none of the
Company, the Bank or any Subsidiary has received any written notification or communication
from any Governmental Entity or SRO (A) asserting that the Company, the Bank or any
Subsidiary is not in material compliance with any applicable Law, (B) threatening to revoke
any permit, license, franchise, authorization, order or approval, or (C) threatening or
contemplating revocation or limitation of, or which would have the effect of revoking or
limiting, FDIC deposit insurance.

(2) Except as would not be material to the Company, the Bank and the
Subsidiaries, taken as a whole, the Bank and each Subsidiary have properly
administered all accounts for which the Bank or any Subsidiary acts as a fiduciary,
including accounts for which the Bank or any Subsidiary serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment adviser, in
accordance with the terms of the governing documents, applicable state and federal
law and regulation and common law in all material respects. None of the Bank or any
Subsidiary, or any director, officer or employee of the Bank or any Subsidiary, has
committed any breach of trust with respect to any such fiduciary account that would
be material to the Bank and the Subsidiaries, taken as a whole, and the accountings
for each such fiduciary account are true and correct in all
material respects and accurately reflect in all material respects the assets of
such fiduciary account.

(r) Labor. Employees of the Company, the Bank and the Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements otherwise in
effect with respect to such employees. No labor organization or group of employees of the
Company, the Bank or any Subsidiary has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal or authority.
There are no organizing activities (to the Company’s knowledge), strikes, work stoppages,
slowdowns, lockouts, material arbitrations or material grievances, or
other material labor

 

21

 

disputes pending or to the Company’s knowledge threatened against or involving the Company,
the Bank or any Subsidiary. The Company, the Bank and each Subsidiary believe that their
relations with their employees are good. As of the date hereof, no executive officer of the
Company, the Bank or any Subsidiary has notified the Company, the Bank or any Subsidiary
that such officer intends to leave the employ of the Company, the Bank or any Subsidiary or
otherwise terminate such executive officer’s employment with the Company, the Bank or any
Subsidiary. To the knowledge of the Company, no executive officer of the Company, the Bank
or any Subsidiary is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other agreement or any restrictive covenant, and to the
knowledge of Company the continued employment of each such executive officer does not
subject the Company, the Bank or any Subsidiary to any liability with respect to any of the
foregoing matters. The Company, the Bank and the Subsidiaries are in compliance with all
notice and other requirements under the Worker Adjustment and Retraining Notification Act of
1988, and any other similar applicable foreign, state, or local Laws relating to facility
closings and layoffs.

(s) Company Benefit Plans.

(1) (A) Section 2.2(s)(1)(A) of the Company Disclosure Schedule sets forth a
complete list of the Company’s Benefit Plans. With respect to each Benefit Plan,
except as set forth in Section 2.2(s)(1)(A) of the Company Disclosure Schedule, the
Company, the Bank and the Subsidiaries have complied, and are now in compliance, in
both instances in all material respects, with all provisions of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), the Code and
all Laws and regulations applicable to such Benefit Plan; and (B) each Benefit Plan
has been administered in all material respects in accordance with its terms.
“Benefit Plan” means any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, any employee pension benefit plan within the meaning of
Section 3(2) of ERISA, and any bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control, fringe
benefit, or other compensation or employee benefit plan, program, agreement,
arrangement or policy sponsored, maintained or contributed
to or required to be contributed to by the Company or by any trade or business,
whether or not incorporated (an “ERISA Affiliate”), that together with the
Company would be deemed a “single employer” within the meaning of section 4001(b) of
ERISA, or to which the Company, the Bank, any Subsidiary or any of their respective
ERISA Affiliates is party, whether written or oral, for the benefit of any director,
former director, consultant, former consultant, employee or former employee of the
Company, the Bank or any Subsidiary.

(2) With respect to each Benefit Plan, the Company has heretofore delivered or
made available to Purchaser or Previously Disclosed true and complete copies of each
of the following documents, to the extent applicable: (A) a copy of the Benefit
Plan and any amendments thereto (or if the Benefit Plan is not a written Benefit
Plan, a description thereof); (B) a copy of the two most

 

22

 

recent annual reports and
actuarial reports, and the most recent report prepared with respect thereto in
accordance with Statement of Financial Accounting Standards No. 87; (C) a copy of
the most recent summary plan description required under ERISA with respect thereto;
(D) if the Benefit Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement and the latest financial
statements thereof; and (E) the most recent determination or opinion letter received
from the Internal Revenue Service with respect to each Benefit Plan intended to
qualify under section 401 of the Code.

(3) Except as set forth in Section 2.2(s)(3) of the Company Disclosure
Schedule, no claim has been made, or to the knowledge of the Company threatened,
against the Company, the Bank or any of the Subsidiaries related to the employment
and compensation of employees or any Benefit Plan, including, without limitation,
any claim related to the purchase of employer securities or to expenses paid under
any defined contribution pension plan other than ordinary course claims for
benefits.

(4) No Benefit Plans are subject to Title IV or described in Section 3(37) of
ERISA, and none of the Company, the Bank or its Subsidiaries has at any time within
the past six (6) years sponsored or contributed to, or has or had within the past
six (6) years any liability or obligation in respect of, any plan subject to Title
IV or described in Section 3(37) of ERISA. Except as set forth in Section 2.2(s)(4)
of the Company Disclosure Schedule, neither the Company, the Bank, nor any
Subsidiary has incurred any current or projected liability in respect of
post-retirement health, medical or life insurance benefits for Company Employees,
except as required to avoid an excise tax under Section 4980B of the Code or
comparable State benefit continuation laws.

(5) Each Benefit Plan intended to be “qualified” within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are exempt
from taxation under section 501(a) of the Code, and, to the knowledge of
the Company, no condition exists that could reasonably be expected to
jeopardize any such qualification or exemption.

(6) None of the Company, the Bank or any Subsidiary, any Benefit Plan, any
trust created thereunder, or any trustee or administrator thereof has engaged in a
transaction in connection with which the Company, the Bank or any Subsidiary, any
Benefit Plan, any such trust, or any trustee or administrator thereof, or any party
dealing with any Benefit Plan or any such trust could be subject to either a civil
penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed
pursuant to section 4975 or 4976 of the Code.

(7) There has been no material failure of a Benefit Plan that is a group health
plan (as defined in section 5000(b)(1) of the Code) to meet the requirements of
section 4980B(f) of the Code with respect to a qualified beneficiary (as defined in
section 4980B(g) of the Code).

 

23

 

(8) Except as set forth in Section 2.2(s)(8) of the Company Disclosure
Schedule, each Benefit Plan that is a “non-qualified deferred compensation plan”
within the meaning of Section 409A(d)(1) of the Code (a “409A Plan”)
complies in all material respects with the requirements of Section 409A of the Code
and the guidance promulgated thereunder. From January 1, 2005 through December 31,
2008, each 409A Plan and any award thereunder was maintained in good faith
operational compliance with the requirements of (i) Section 409A of the Code and
(ii) (x) the proposed regulations issued thereunder, (y) the final regulations
issued thereunder or (z) Internal Revenue Service Notice 2005-1. From and after
January 1, 2009, each 409A Plan and any award thereunder has been maintained in
operational compliance with the requirements of Section 409A of the Code the final
regulations issued thereunder. Except as set forth in Section 2.2(s)(8) of the
Company Disclosure Schedule, as of and since December 31, 2008, each 409A Plan and
any award thereunder has been in documentary compliance with the requirements of
Section 409A of the Code and the final regulations issued thereunder. Except as set
forth in Section 2.2(s)(8) of the Company Disclosure Schedule, no payment to be made
under any 409A Plan is or will be subject to the interest and additional tax payable
pursuant to Section 409A(a)(1)(B) of the Code. None of the Company, the Bank or any
Subsidiary is party to, or otherwise obligated under, any contract, agreement, plan
or arrangement that provides for the gross-up of taxes imposed by Section
409A(a)(1)(B) of the Code.

(9) (A) Except as set forth in Section 2.2(s)(9) of the Company Disclosure
Schedule or as required by applicable Law, neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby will
(i) result in any payment (including severance, unemployment compensation, “excess
parachute payment” (within the meaning of Section 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any current or former employee, officer
or director of the Company, the Bank or any Subsidiary from the Company, the Bank or
any
Subsidiary under any Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Benefit Plan, (iii) result in any acceleration of the
time of payment or vesting of any such benefits, (iv) require the funding or
increase in the funding of any such benefits or (v) result in any limitation on the
right of the Company, the Bank or any Subsidiary to amend, merge, terminate or
receive a reversion of assets from any Benefit Plan or related trust and (B) except
as set forth in Section 2.2(s)(9) of the Company Disclosure Schedule or as required
by applicable Law, none of the Company, the Bank or any Subsidiary has taken, or
permitted to be taken, any action that required, and no circumstances exist that
will require the funding, or increase in the funding, of any benefits, or will
result, in any limitation on the right of the Company, the Bank or any Subsidiary to
amend, merge, terminate any Benefit Plan or receive a reversion of assets from any
Benefit Plan or related trust. Except as set forth in Section 2.2(s)(9) of the
Company Disclosure Schedule, none of the Company, the Bank or any Subsidiary is
party to, or otherwise obligated under, any contract, agreement, plan or arrangement
that provides for the gross-up of excise taxes imposed by Section 4999 of the Code.

 

24

 

(10) The Company, the Bank and the Subsidiaries will be in compliance, as of
the Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization
Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of 2009,
including all guidance issued thereunder by a Governmental Entity (collectively
“EESA”). Except as set forth in Section 2.2(s)(10) of the Company
Disclosure Schedule, without limiting the generality of the foregoing, each employee
of the Company, the Bank, and the Subsidiaries who is subject to the limitations
imposed under EESA has executed a waiver of claims against the Company, the Bank and
the Subsidiaries with respect to limiting or reducing rights to compensation for so
long as the EESA limitations are required to be imposed.

(t) Risk Management Instruments. All material derivative instruments,
including, swaps, caps, floors and option agreements, whether entered into for the Company’s
own account, or for the account of the Bank or one or more of the Subsidiaries, were entered
into (1) only in the ordinary and usual course of business and consistent with past
practice, (2) in accordance with commercially reasonable banking practices and in all
material respects with all applicable laws, rules, regulations and regulatory policies and
(3) with counterparties believed to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of the Company, the Bank or one of the
Subsidiaries, enforceable in accordance with its terms. None of the Company, the Bank or
the Subsidiaries, or, to the knowledge of the Company, any other party thereto, is in breach
of any of its material obligations under any such agreement or arrangement.

(u) Agreements with Regulatory Agencies. Except as set forth in Section 2.2(u)
of the Company Disclosure Schedule, none of the Company, the Bank or any Subsidiary is
subject to any cease-and-desist or other similar order or enforcement action issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar undertaking to,
or is subject to any capital directive by, or has adopted any board resolutions at the
request of, any Governmental Entity or SRO (each item in this sentence, a “Regulatory
Agreement”), nor has the Company, the Bank or any Subsidiary been advised since December
31, 2008 by any Governmental Entity or SRO that it is considering issuing, initiating,
ordering, or requesting any such Regulatory Agreement. Except as set forth in Section
2.2(u) of the Company Disclosure Schedule, the Company, the Bank and each Subsidiary are in
compliance in all material respects with each Regulatory Agreement to which it is a party or
subject, and none of the Company, the Bank or any Subsidiary has received any notice from
any Governmental Entity or SRO indicating that either the Company, the Bank or any
Subsidiary is not in compliance in all material respects with any such Regulatory Agreement.

 

25

 

(v) Environmental Liability. The Company, the Bank and the Subsidiaries have,
and at the Closing Date will have, complied in all material respects with all laws,
regulations, ordinances and orders relating to public health, safety or the environment
(including without limitation all laws, regulations, ordinances and orders relating to
releases, discharges, emissions or disposals to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use, handling or disposal of polychlorinated
biphenyls, asbestos or urea formaldehyde, to the treatment, storage, disposal or management
of hazardous substances, pollutants or contaminants, or to exposure to toxic, hazardous or
other controlled, prohibited or regulated substances), the violation of which would or might
have a material impact on the Company, the Bank or any Subsidiary or the consummation of the
transactions contemplated by this Agreement. There is no legal, administrative, arbitral or
other proceeding, claim, action or notice of any nature seeking to impose, or that could
result in the imposition of, on the Company, the Bank or any Subsidiary, any liability or
obligation of the Company, the Bank or any Subsidiary with respect to any environmental
health or safety matter or any private or governmental, environmental health or safety
investigation or remediation activity of any nature arising under common law or under any
local, state or federal environmental, health or safety statute, regulation or ordinance,
including the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (“CERCLA”), pending or, to the Company’s knowledge, threatened against
the Company, the Bank or any Subsidiary or any property in which the Company, the Bank or
any Subsidiary has taken a security interest the result of which has had or would reasonably
be expected to have a Material Adverse Effect; to the Company’s knowledge, there is no
reasonable basis for, or circumstances that could reasonably be expected to give rise to,
any such proceeding, claim, action, investigation or remediation; and to the Company’s
knowledge, none of the Company, the Bank or any Subsidiary is subject to any agreement,
order, judgment, decree, letter or memorandum by or with any Governmental Entity or third
party that could impose any such environmental obligation or liability.

(w) Loan Portfolio.

(1) Except as set forth in Section 2.2(w)(1) of the Company Disclosure
Schedule, as of April 29, 2011, none of the Company, the Bank or any Subsidiary is a
party to (A) any written or oral loan, loan agreement, note or borrowing
arrangement (including leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, “Loans”), other than any Loan the
unpaid principal balance of which does not exceed $50,000, under the terms of which
the obligor was, as of March 31, 2011, over 90 days delinquent in payment of
principal or interest or in default of any other provision, or (B) Loan in excess of
$100,000 with any director, executive officer or five percent or greater shareholder
of the Company, the Bank or any Subsidiary, or to the knowledge of the Company, any
person, corporation or enterprise controlling, controlled by or under common control
with any of the foregoing. Section 2.2(w) of the Company Disclosure Schedule sets
forth (x) all of the Loans in original principal amount in excess of $100,000 of the
Company, the Bank or any of the Subsidiaries that as of March 31, 2011 were
classified by the Company or the Bank or any regulatory examiner as “Other Loans
Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,” “Loss,”
“Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,” “Watch List” or
words of similar import, together with the principal amount of and accrued and
unpaid interest on each such Loan as of March 31, 2011 and the identity of the
borrower thereunder, (y) by category of Loan (i.e., commercial, consumer, etc.), all
of the other Loans of the Company, the Bank and the Subsidiaries that as of March
31, 2011 were classified as such, together with the aggregate principal amount of
and accrued and unpaid interest on such Loans by category as of March 31, 2011 and
(z) each asset of the Company or the Bank that as of March 31, 2011 was classified
as “Other Real Estate Owned” and the book value thereof.

 

26

 

(2) Each Loan of the Company, the Bank or any of the Subsidiaries (A) is
evidenced by notes, agreements or other evidences of indebtedness that are true,
genuine and what they purport to be, (B) to the extent secured, has been secured by
valid Liens which have been perfected and (C) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles.

(3) Each outstanding Loan (including Loans held for resale to investors) has
been solicited and originated and is administered and serviced (to the extent
administered and serviced by the Company, the Bank or any Subsidiary), and the
relevant Loan files are being maintained in all material respects in accordance with
the relevant loan documents, the Company’s and the Bank’s underwriting standards
(and, in the case of Loans held for resale to investors, the underwriting standards,
if any, of the applicable investors) and in material compliance with all applicable
requirements of federal, state and local Laws, regulations and rules.

(4) Except as set forth in Section 2.2(w)(4) of the Company Disclosure
Schedule, none of the agreements pursuant to which the Company, the Bank or any of
the Subsidiaries has sold Loans or pools of Loans or participations in
Loans or pools of Loans contains any obligation to repurchase such Loans or
interests therein.

(5) Each of the Company, the Bank and the Subsidiaries, as applicable, is
approved by and is in good standing: (A) as a supervised mortgagee by the Department
of Housing and Urban Development to originate and service Title I FHA mortgage
loans; (B) as a GNMA I and II Issuer by the Government National Mortgage
Association; (C) by the Department of Veterans Affairs (“VA”) to originate
and service VA loans; and (D) as a seller/servicer by the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation to originate and service
conventional residential mortgage Loans (each such entity being referred to herein
as an “Agency”).

(6) Except as set forth in Section 2.2(w)(6) of the Company Disclosure
Schedule, none of the Company, the Bank or any of the Subsidiaries is now nor has it
ever been since December 31, 2008 subject to any fine, suspension, settlement or
other agreement or other administrative agreement or sanction by, or any reduction
in any loan purchase commitment from, any Agency or any federal or state agency
relating to the origination, sale or servicing of mortgage or consumer Loans. None
of the Company, the Bank or any of the Subsidiaries has received any notice, nor
does it have any reason to believe as of the date of this Agreement, that any Agency
proposes to limit or terminate the underwriting authority of the Company, the Bank
or any of the Subsidiaries or to increase the guarantee fees payable to any such
Agency.

 

27

 

(7) Each of the Company, the Bank and the Subsidiaries is in compliance in all
material respects with all applicable federal, state and local Laws, rules and
regulations, including the Truth-In-Lending Act and Regulation Z, the Equal Credit
Opportunity Act and Regulation B, the Real Estate Settlement Procedures Act and
Regulation X, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act
and all Agency and other investor and mortgage insurance company requirements
relating to the origination, sale and servicing of mortgage and consumer Loans.

(8) To the knowledge of the Company, each Loan included in a pool of Loans
originated, acquired or serviced by the Company, the Bank or any of the Subsidiaries
(a “Pool”) meets all eligibility requirements (including all applicable
requirements for obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool. All such Pools have been finally certified
or, if required, recertified in accordance with all applicable Laws, rules and
regulations, except where the time for certification or recertification has not yet
expired. To the knowledge of the Company, no Pools have been improperly certified,
and no Loan has been bought out of a Pool without all required approvals of the
applicable investors.

(9) The information with respect to each Loan set forth in the Loan Tape, and,
to the knowledge of the Company, any third party information set forth in the Loan
Tape is true, correct and accurate as of the dates specified therein, or, if no such
date is indicated therein, as of December 31, 2010. As used herein, “Loan
Tape” means a data storage disk produced by the Company from its management
information systems regarding the Loans.

(x) Insurance. The Company, the Bank and each of the Subsidiaries maintain,
and have maintained for the two years prior to the date of this Agreement, insurance
underwritten by insurers of recognized financial responsibility, of the types and in the
amounts that the Company, the Bank and the Subsidiaries reasonably believe are adequate for
their respective businesses and as constitute reasonably adequate coverage against all risks
customarily insured against by banking institutions and their subsidiaries of comparable
size and operations, including, but not limited to, insurance covering all real and personal
property owned or leased by the Company, the Bank and any Subsidiary against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against, with such
deductibles as are customary for companies in the same or similar business. True, correct
and complete copies of all policies and binders of insurance currently maintained in respect
of the assets, properties, business, operations, employees, officers or directors of the
Company, the Bank and the Subsidiaries, excluding such policies pursuant to which the
Company, the Bank, any Subsidiary or an

 

28

 

Affiliate of any them acts as the insurer and that
are identified with respective expiration dates on Section 2.2(x) of the Company Disclosure
Schedule (collectively, the “Company Insurance Policies”), and all correspondence
relating to any material claims under the Company Insurance Policies, have been previously
made available to Purchaser. All of the Company Insurance Policies are in full force and
effect, the premiums due and payable thereon have been timely paid, and there is no breach
or default (and no condition exists or event has occurred which, with the giving of notice
or lapse of time or both, would constitute such a breach or default) by the Company, the
Bank or any of the Subsidiaries under any of the Company Insurance Policies or, to the
knowledge of the Company, by any other party to the Company Insurance Policies, except for
any such breach or default that would not reasonably be expected to have, individually or in
the aggregate, a material impact on the Company, the Bank or any Subsidiary. None of the
Company, the Bank or any of the Subsidiaries has received any written notice of cancellation
or non-renewal of any Company Insurance Policy nor, to the knowledge of the Company, is the
termination of any such policies threatened, and, except as set forth in Section 2.2(x) of
the Company Disclosure Schedule, there is no claim for coverage by the Company, the Bank or
any of the Subsidiaries, pending under any of such Company Policies as to which coverage has
been questioned, denied or disputed by the underwriters of such Company Policies or in
respect of which such underwriters have reserved their rights.

(y) Intellectual Property. The Company, the Bank and the Subsidiaries own, or
are licensed or otherwise possess rights to use free and clear of all Liens all patents,
patent rights, licenses, inventions, copyrights, know-how (including trade secrets,
applications and other unpatented or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names (collectively,
“Proprietary Rights”) used in the conduct of the business of the Company, the Bank
and the Subsidiaries as now conducted, except where the failure to own such Proprietary
Rights would not have any material impact on the Company, the Bank or any Subsidiary. The
Company, the Bank and the Subsidiaries have the right to use all Proprietary Rights used in
or necessary for the conduct of their respective businesses without infringing the rights of
any person or violating the terms of any licensing or other agreement to which the Company,
the Bank or any Subsidiary is a party, except for such infringements or violations that have
not had a Material Adverse Effect, and, to the Company’s knowledge, no person is infringing
upon any of the Proprietary Rights, except where the infringement of or lack of a right to
use such Proprietary Rights would not have any material impact on the Company, the Bank or
any Subsidiary. Except as Previously Disclosed, no charges, claims or litigation have been
asserted or, to the Company’s knowledge, threatened against the Company, the Bank or any
Subsidiary contesting the right of the Company, the Bank or any Subsidiary to use, or the
validity of, any of the Proprietary Rights or challenging or questioning the validity or
effectiveness of any license or agreement pertaining thereto or asserting the misuse
thereof, and, to the Company’s knowledge, no valid basis exists for the assertion of any
such charge, claim or litigation. All licenses and other agreements to which the Company,
the Bank or any Subsidiary is a party relating to Proprietary Rights are in full force and
effect and constitute valid, binding and enforceable obligations of the Company, the Bank or
such Subsidiary, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws

 

29

 

of general applicability relating to or affecting creditors’
rights and to general equity principles, as the case may be, and there have not been and
there currently are not any defaults (or any event that, with notice or lapse of time, or
both, would constitute a default) by the Company, the Bank or any Subsidiary under any
license or other agreement affecting Proprietary Rights used in or necessary for the conduct
of the business of the Company, the Bank or any Subsidiary, except for defaults, if any,
which would not have any material impact on the Company, the Bank or any Subsidiary. The
validity, continuation and effectiveness of all licenses and other agreements relating to
the Proprietary Rights and the current terms thereof will not be affected by the
transactions contemplated by this Agreement.

(z) Anti-takeover Provisions Not Applicable. The Company has taken all action
required to be taken by it in order to exempt this Agreement, the purchase of the Purchased
Shares, the merger of the Bank into a depository subsidiary of the Purchaser and the other
transactions to be consummated pursuant to the express terms of this Agreement from, and
this Agreement and the transactions contemplated hereby are exempt from, any anti-takeover
or similar provisions of the Charter, and its bylaws and the requirements of any
“moratorium,” “control share,” “fair price,” “affiliate transaction,” “business combination”
or other antitakeover Laws and regulations of any state, including the Tennessee Business
Corporation Act.

(aa) Knowledge as to Conditions. As of the date of this Agreement, each of the
Company and the Bank knows of no reason why any regulatory approvals and, to the extent
necessary, any other approvals, authorizations, filings, registrations and notices required
for the consummation of the transactions contemplated by this Agreement will
not be obtained or that any Required Approval will not be granted without the
imposition of a Burdensome Condition, provided, however, that neither the
Company nor the Bank makes any representation or warranty with respect to the management,
capital or ownership structure of Purchaser or any of its Affiliates.

(bb) Brokers and Finders. Except as set forth in Section 2.2(bb) of the
Company Disclosure Schedule, none of the Company, the Bank or any Subsidiary or any of their
respective officers, directors, employees or agents has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees, commissions or
finder’s fees, and no broker or finder has acted directly or indirectly for the Company, the
Bank or any Subsidiary, in connection with this Agreement or the transactions contemplated
hereby.

(cc) Related Party Transactions.

(1) Except as set forth in Section 2.2(cc) of the Company Disclosure Schedule
or as part of the normal and customary terms of an individual’s employment or
service as a director, none of the Company, the Bank or any of the Subsidiaries is
party to any extension of credit (as debtor, creditor, guarantor or otherwise),
contract for goods or services, lease or other agreement with any (A) affiliate, (B)
insider or related interest of an insider, (C) shareholder owning 5% or more of the
outstanding Common Stock or related interest of such a

 

30

 

shareholder, or (D) to the
knowledge of the Company, and other than credit and consumer banking transactions in
the ordinary course of business, employee who is not an executive officer. For
purposes of the preceding sentence, the term “affiliate” shall have the meaning
assigned in Regulation W issued by the Federal Reserve, as amended, and the terms
“insider,” “related interest,” and “executive officer” shall have the meanings
assigned in the Federal Reserve’s Regulation O, as amended.

(2) Except as set forth in Section 2.2(cc) of the Company Disclosure Schedule,
the Bank is in compliance with, and has since December 31, 2008, complied with,
Sections 23A and 23B of the Federal Reserve Act, its implementing regulations, and
the Federal Reserve’s Regulation O.

(dd) Foreign Corrupt Practices. None of the Company, the Bank or any
Subsidiary, or, to the knowledge of the Company, any director, officer, agent, employee or
other person acting on behalf of the Company, the Bank or any Subsidiary has, in the course
of its actions for, or on behalf of, the Company, the Bank or any Subsidiary (A) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (B) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds; (C) violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (D) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or employee.

(ee) Customer Relationships.

(1) Each trust or wealth management customer of the Company, the Bank or any
Subsidiary has been in all material respects originated and serviced (A) in
conformity with the applicable policies of the Company, the Bank and the
Subsidiaries, (B) in accordance with the terms of any applicable instrument or
agreement governing the relationship with such customer, (C) in accordance with any
instructions received from such customers, (D) consistent with each customer’s risk
profile and (E) in compliance with all applicable laws and the Company’s, the Bank’s
and the Subsidiaries’ constituent documents, including any policies and procedures
adopted thereunder. Each instrument or agreement governing a relationship with a
trust or wealth management customer of the Company, the Bank or any Subsidiary has
been duly and validly executed and delivered by the Company, the Bank and each
Subsidiary and, to the knowledge of the Company, the other contracting parties, each
such instrument of agreement constitutes a valid and binding obligation of the
parties thereto, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar Laws affecting creditors’ rights generally
and by general principles of equity, and the Company, the Bank and the Subsidiaries
and the other parties thereto have duly performed in all material respects their
obligations thereunder and the Company, the Bank and the Subsidiaries and such other
person is in compliance with each of the terms thereof.

 

31

 

(2) No instrument or agreement governing a relationship with a trust or wealth
management customer of the Company, the Bank or any Subsidiary provides for any
material reduction of fees charged (or in other compensation payable to the Company,
the Bank or any Subsidiary thereunder) at any time subsequent to the date of this
Agreement.

(3) None of the Company, the Bank or any Subsidiary or any of their respective
directors or senior officers (A) is the beneficial owner of any interest in any of
the accounts maintained on behalf of any trust or wealth management customer of the
Company, the Bank or any Subsidiary or (B) is a party to any contract pursuant to
which it is obligated to provide service to, or receive compensation or benefits
from, any of the trust or wealth management customers of the Company, the Bank or
any Subsidiary after the Closing Date.

(4) Each account opening document, margin account agreement, investment
advisory agreement and customer disclosure statement with respect to any trust or
wealth management customer of the Company, the Bank or any Subsidiary conforms in
all material respects to the forms provided to Purchaser prior to the Closing Date.

(5) Except as would not have any material impact on the Company, the Bank or
any Subsidiary, all other books and records primarily related to the trust and
wealth management businesses of the Company, the Bank and each Subsidiary include
documented risk profiles signed by each such customer.

(ff) Investment Company; Investment Adviser. Neither the Company, the Bank nor
any Subsidiary is required to be registered as, and is not an affiliate of, and immediately
following the Closing will not be required to register as, an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. Neither the Company, the
Bank nor any Subsidiary is required to be registered, licensed or qualified as an investment
adviser under the Investment Advisers Act of 1940, as amended, or in another capacity
thereunder with the SEC or any other Governmental Entity.

2.3 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants
to the Company and the Bank, as of the date of this Agreement and as of the Closing Date (except to
the extent made only as of a specified date, in which case as of such date), that, except as
Previously Disclosed:

(a) Organization and Authority. Purchaser is duly organized, validly existing
and in good standing under the Laws of the jurisdiction of its organization, is duly
qualified to do business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so qualified, and
Purchaser has the power and authority and governmental authorizations to own its properties
and assets and to carry on its business in all material respects as it is now being
conducted.

 

32

 

(b) Authorization. (1) Purchaser has the power and authority to enter into
this Agreement and the other agreements referenced herein to which it will be a party and to
carry out its obligations hereunder and thereunder. The execution, delivery and performance
of this Agreement and the other agreements referenced herein to which it will be a party by
Purchaser and the consummation of the transactions contemplated hereby and thereby have been
duly authorized by Purchaser’s board of directors, and no further approval or authorization
by any of its shareholders or other equity owners, as the case may be, is required. This
Agreement has been, and the other agreements referenced herein to which it will be a party,
when executed, will be, duly and validly executed and delivered by Purchaser and assuming
due authorization, execution and delivery by both the Company and the Bank, is and will be a
valid and binding obligation of Purchaser enforceable against Purchaser in accordance with
its terms (except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general applicability
relating to or affecting creditors’ rights or by general equity principles).

(2) Neither the execution, delivery and performance by Purchaser of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance by Purchaser with any of the provisions hereof, will (A) violate,
conflict with, or result in a breach of any provision of, or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required by,
or result in a right of termination or acceleration of, or result in the creation of
any Lien upon any of the properties or assets of Purchaser under any of the terms,
conditions or provisions of (i) its certificate of incorporation or similar
governing
documents or (ii) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Purchaser is a
party or by which it may be bound, or to which Purchaser or any of the properties or
assets of Purchaser may be subject, or (B) subject to compliance with the statutes
and regulations referred to in Section 2.3(b)(3), violate any Law, statute,
ordinance, rule or regulation, permit, concession, grant, franchise or any judgment,
ruling, order, writ, injunction or decree applicable to Purchaser or any of its
properties or assets except in the case of clauses (A)(ii) and (B) for such
violations, conflicts and breaches as would not reasonably be expected to materially
and adversely affect Purchaser’s ability to perform its obligations under this
Agreement or consummate the transactions contemplated hereby.

(3) Assuming the Company’s and the Bank’s representations contained in Section
2.2(f) are true and correct and other than the securities or blue sky Laws of the
various states or as set forth in Section 2.3(b)(3) of the Purchaser Disclosure
Schedule, no material notice to, registration, declaration or filing with, exemption
or review by, or authorization, order, consent or approval of, any Governmental
Entity, or expiration or termination of any statutory waiting period, is necessary
for the consummation by Purchaser of the transactions contemplated by this
Agreement.

 

33

 

(c) Restricted Securities; Limitation on Resale. Purchaser acknowledges that
the Purchased Shares have not been registered under the Securities Act or under any state
securities Laws and Purchaser understands that the Purchased Shares are “restricted
securities” under applicable federal and state securities Laws and that, pursuant to these
Laws, the Purchaser must hold the Purchased Shares indefinitely unless they are registered
with the SEC and qualified by state authorities, or an exemption from such registration and
qualification requirements is available.

(d) Purchase for Investment. Purchaser (1) is acquiring the Purchased Shares
pursuant to an exemption from registration under the Securities Act solely for investment
with no present intention to resell or distribute any of the Purchased Shares to any person,
(2) will not sell or otherwise dispose of any of the Purchased Shares, except in compliance
with the registration requirements or exemption provisions of the Securities Act and any
other applicable securities Laws, (3) has such knowledge, sophistication and experience in
financial and business matters and in investments of this type that it is capable of
evaluating the merits and risks of its investment in the Purchased Shares, of making an
informed investment decision and of bearing the economic risk of such investment for an
indefinite period of time, and (4) is an “accredited investor” (as that term is defined by
Rule 501 of the Securities Act ). Purchaser has not been formed for the specific purpose of
acquiring the Purchased Shares. Purchaser has had an opportunity to discuss the business,
management, financial affairs of the Company and of the Bank and the terms and conditions of
the offering of the Purchased Shares with management of the Company and of the Bank and has
had an opportunity to review the facilities of the Company and the Bank. The foregoing,
however, does not limit or modify the representations and warranties of the Company or of
the Bank in Section 2.2 of this Agreement or the right of Purchaser to rely thereon.

(e) Financial Capability. Purchaser currently has, and at the Closing will
have, available funds necessary to pay the funds described in Section 1.2(b)(2) and to
consummate the Closing on the terms and conditions contemplated by this Agreement.

(f) No General Solicitation. Neither Purchaser, nor any of its officers,
directors, employees, agents, stockholders or partners has either directly or indirectly,
including through a broker or finder (i) engaged in any general solicitation, or (ii)
published any advertisement in connection with the offer and sale of the Purchased Shares.

(g) Brokers and Finders. Neither Purchaser nor its Affiliates, any of their
respective officers, directors, employees or agents has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees, commissions or
finder’s fees, and no broker or finder has acted directly or indirectly for Purchaser, in
connection with this Agreement or the transactions contemplated hereby, in each case, whose
fees the Company, the Bank or any Subsidiary would be required to pay (other than pursuant
to the reimbursement of expenses provisions of Section 6.2).

 

34

 

(h) Litigation and Other Proceedings. Neither Purchaser nor any Affiliate of
Purchaser is a party to any, and there are no pending or, to Purchaser’s knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature (i) against Purchaser or any
Affiliate of Purchaser (excluding those of the type contemplated by the following clause
(ii)) that, if adversely determined, would reasonably be expected to have a material adverse
effect on Purchaser or (ii) challenging the validity or propriety of the transactions
contemplated by this Agreement. There is no material injunction, order, judgment, decree or
regulatory restriction (other than regulatory restrictions of general application that apply
to similarly situated companies) imposed upon Purchaser or any of its Affiliates or their
respective assets. There is no material unresolved violation, criticism or exception by any
Governmental Entity with respect to any report or relating to any examinations or
inspections of Purchaser or any of its Affiliates.

(i) Compliance with Laws. Each of Purchaser and its Affiliates is and has been
in compliance in all material respects with and is not in default or violation in any
material respect of, and none of them is, to the knowledge of Purchaser, under investigation
with respect to or, to the knowledge of Purchaser, has been threatened to be charged with or
given notice of any material violation of, any applicable material domestic (federal, state
or local) or foreign Law, statute, ordinance, license, rule, regulation, policy or
guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity,
except for such noncompliance that has not had nor reasonably would be expected to have a
material adverse effect on Purchaser.

(j) Agreements with Regulatory Agencies. None of Purchaser or any of its
Affiliates is subject to any Regulatory Agreement, nor has Purchaser or any of its
Affiliates been advised since December 31, 2009 by any Governmental Entity or SRO that it is
considering issuing, initiating, ordering, or requesting any such Regulatory Agreement.
Purchaser and its Affiliates are in compliance in all material respects with
each Regulatory Agreement to which it is a party or subject, and none of Purchaser and
its Affiliates has received any notice from any Governmental Entity or SRO indicating that
either Purchaser or its Affiliates is not in compliance in all material respects with any
such Regulatory Agreement.

(k) Information in the Proxy Statement. The information supplied in writing by
Purchaser expressly for inclusion in the Proxy Statement will not contain at the time it is
first mailed to the shareholders of the Company or at the time of the Shareholder Meeting,
any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.

(l) Knowledge as to Conditions. As of the date of this Agreement, Purchaser
knows of no reason why any regulatory approvals and, to the extent necessary, any other
approvals, authorizations, filings, registrations, and notices required for the consummation
of the transactions contemplated by this Agreement will not be obtained.

 

35

 

ARTICLE III

COVENANTS

3.1 Filings; Other Actions.

(a) Subject to the conditions set forth in this Agreement and the last sentence of this
Section 3.1(a), Purchaser, on the one hand, and the Company and the Bank, on the other hand,
will cooperate and consult with the other and use reasonable best efforts to prepare and
file all necessary documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to obtain all necessary permits, consents, orders,
approvals and authorizations of, or any exemption by, all third parties and Governmental
Entities, including, without limitation, the Required Approvals, and the expiration or
termination of any applicable waiting period, necessary or advisable to consummate the
transactions contemplated by this Agreement, at the earliest practicable date, and to
perform the covenants contemplated by this Agreement. Each party shall execute and deliver
both before and after the Closing such further certificates, agreements and other documents
and take such other actions as the other party may reasonably request to consummate or
implement such transactions or to evidence such events or matters. In furtherance (but not
in limitation) of the foregoing, Purchaser shall use reasonable best efforts to file any
required applications, notices or other filings with the Federal Reserve Board and the
Tennessee DFI within twenty (20) calendar days of the date hereof. Purchaser, the Company
and the Bank will have the right to review in advance, and to the extent practicable, each
will consult with the others with respect to, in each case subject to applicable Laws
relating to the exchange of information, all the information relating to such other party,
and any of their respective Affiliates, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection with the
transactions to which it will be party contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees to keep the other party apprised of the status of
matters referred to in this Section 3.1(a). Purchaser shall promptly furnish the Company
and the Bank, and the Company and the Bank shall promptly furnish Purchaser, to the extent
permitted by applicable Law, with copies of written communications received by it or their
subsidiaries from, or delivered by any of the foregoing to, any Governmental Entity in
respect of the transactions contemplated by this Agreement. Notwithstanding anything in
this Agreement to the contrary, Purchaser shall not be required to furnish the Company with
any (1) personal biographical or financial information of any of the directors, officers,
employees, managers or partners of Purchaser or any of its present of former Affiliates
(other than the personal biographical information of any of the directors, officers,
employees, managers, investors or partners of Purchaser or any of its present of former
Affiliates required to be disclosed by the Company by reason of the fact that such person
will be appointed or elected to the Company’s Board of Directors) or (2) proprietary and
non-public information related to the organizational terms of, or investors in, Purchaser or
any of its present or former Affiliates. Notwithstanding anything to the contrary herein,
nothing contained in this Agreement shall require Purchaser or any of its present or
former Affiliates to take or refrain from taking or agree to take or refrain from taking any
action or suffer to exist any condition, limitation, restriction or requirement that
individually or in the aggregate with any other actions, conditions, limitations,
restrictions or requirements would or would be reasonably likely to result in a Burdensome
Condition.

 

36

 

(b) The Company shall call and hold a special meeting of its shareholders (the
“Shareholder Meeting”), as promptly as practicable following the date hereof to vote
on a proposal (the “Shareholder Proposal”) to (1) amend the Charter to (i) increase
the number of authorized shares of Common Stock to at least 300,000,000 shares, (ii) reduce
the par value per share of Common Stock to an amount equal to or less than $0.01 and (iii)
expressly exempt Purchaser, its Affiliates and associates and their respective successors
and assigns from the provisions Section 9 of the Charter (the form of such amendment being
acceptable to the Purchaser in its sole discretion), (2) approve the issuance and sale of
the Purchased Shares and any shares purchased pursuant to Section 4.7, (3) approve the
merger of the Bank with and into a subsidiary of Purchaser on terms consistent with
Exhibit D and (4) remove Section 8(j) from the Charter. The Board of Directors of
the Company shall recommend to the Company’s shareholders that such shareholders vote in
favor of the Shareholder Proposal (subject to any legally required abstentions and subject
to Section 3.4(b)) (such recommendation, the “Company Recommendation”) and Purchaser
shall, to the extent permitted by applicable Law, vote all shares owned by it in favor of
the Shareholder Proposal. In connection with such meeting, the Company shall promptly
prepare (and Purchaser will reasonably cooperate with the Company to prepare) and file with
the SEC a preliminary proxy statement, shall use its reasonable best efforts to respond to
any comments of the SEC or its staff and to cause a definitive proxy statement related to
such shareholders’ meeting to be mailed to the Company’s shareholders not more than five
business days after clearance thereof by the SEC, and shall use its reasonable best efforts
to solicit proxies for such shareholder approval. The Company shall notify Purchaser
promptly of the receipt of any comments from the SEC or its staff with respect to the proxy
statement and of any request by the SEC or its staff for amendments or supplements to such
proxy statement or for additional information and will supply Purchaser with copies of all
correspondence between the Company or any of its representatives, on the one hand, and the
SEC or its staff, on the other hand, with respect to such proxy statement. If at any time
prior to the Shareholder Meeting there shall occur any event that should, upon the advice of
the Company’s outside legal counsel, be set forth in an amendment or supplement to the Proxy
Statement so that the Proxy Statement shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they are made, not
misleading, the Company shall as promptly as practicable prepare and mail to its
shareholders such an amendment or supplement. Each of Purchaser and the Company agrees
promptly to correct any information provided by it or on its behalf for use in the proxy
statement if and to the extent that such information shall have become false or misleading
in any material respect, and the Company shall, as promptly as practicable, prepare and mail
to its shareholders an amendment or supplement to correct such information to the extent
required by applicable Laws and regulations. The Company
shall consult with Purchaser prior to filing any proxy statement, or any amendment or
supplement thereto, and provide Purchaser with a reasonable opportunity to comment thereon.
For the avoidance of doubt, the obligations of the Company to call and hold the Shareholder
Meeting and to file, finalize and mail the proxy statement related thereto shall not be
affected by the receipt of any Acquisition Proposal or by any Adverse Recommendation Change.

 

37

 

3.2 Access, Information and Confidentiality.

(a) From the date hereof until the Closing Date, the Company and the Bank will permit
Purchaser and Purchaser’s officers, directors, employees, accountants, counsel, financial
advisors, agents and other representatives to visit and inspect, at Purchaser’s expense
(subject to Section 6.2), the properties of the Company, the Bank and the Subsidiaries, to
examine the corporate books and records and to discuss the affairs, finances and accounts of
the Company, the Bank and the Subsidiaries with the officers, directors, employees,
accountants, counsel, financial advisors, agents and other representatives of the Company
(the “Company Representatives”), all upon reasonable advance notice and at such
reasonable times and as often as Purchaser may reasonably request. Any investigation
pursuant to this Section 3.2 shall be conducted during normal business hours and in such
manner as not to interfere unreasonably with the conduct of the business of the Company, the
Bank or any Subsidiary, and nothing herein shall require any Company Representative to
disclose any information to the extent (1) prohibited by applicable Law or regulation, or
(2) that such disclosure would reasonably be expected to cause a violation of any agreement
to which the Company, the Bank or such Company Representative is a party as of the date of
this Agreement or would cause a material risk of a loss of privilege to the Company, the
Bank or any Subsidiary (provided that the Company and the Bank shall use
commercially reasonable efforts to make appropriate substitute disclosure arrangements that
would not cause such a violation under circumstances where such restrictions apply).

(b) All information furnished by the Company, the Bank or any Subsidiary to Purchaser
or any of its representatives pursuant hereto shall be subject to, and Purchaser shall hold
all such information in confidence in accordance with, the provisions of the confidentiality
agreement between North American Financial Holdings, Inc. and the Company dated September
28, 2010 (the “Confidentiality Agreement”).

3.3 Conduct of the Business. Each of the Company and the Bank agree that, prior to the earlier
of the Closing Date and the termination of this Agreement pursuant to Section 5.1, except as
Previously Disclosed in Section 3.3 of the Company Disclosure Schedule or as otherwise expressly
permitted or required by this Agreement, without the prior written consent of Purchaser (not to be
unreasonably withheld, conditioned or delayed), it will not, and will cause each of the
Subsidiaries not to:

(1) Ordinary Course. Fail to carry on its business in the ordinary and
usual course of business and in all material respects consistent with past practice
or fail to use reasonable best efforts to maintain and preserve its business
(including its organization, assets, properties, goodwill and insurance coverage)
and to preserve its current business relationships with customers, strategic
partners, suppliers, distributors and others with whom it has significant business
dealings.

 

38

 

(2) Operations. Enter into any new line of business or materially
change its lending, investment, underwriting, risk and asset liability management,
and other banking and operating policies in effect as of December 31, 2010, except
as required by applicable Law or policies imposed by any Governmental Entity.

(3) Deposits. Alter materially its interest rate or fee pricing
policies with respect to depository accounts of the Bank or waive any material fees
with respect thereto, in each case except as required by applicable Law or policies
imposed by any Governmental Entity.

(4) Capital Expenditures. Make any capital expenditures on information
technology or systems or in excess of $100,000 individually or $1,000,000 in the
aggregate in any fiscal quarter, other than as required pursuant to Previously
Disclosed commitments already entered into.

(5) Material Contracts. Except as permitted by Section 4.5(a),
terminate, enter into, amend, modify (including by way of interpretation) or renew
any contract that would be a Company Significant Agreement if entered into prior to
the date hereof, other than in the ordinary course of business and consistent with
past practice.

(6) Capital Stock. Issue, sell or otherwise permit to become
outstanding, or dispose of or encumber or pledge, or authorize or propose the
creation of, any additional shares of its stock or any additional options or other
rights, grants or awards with respect to the Common Stock, and any shares of Common
Stock issued pursuant to the exercise of stock options, warrants or vesting of
restricted stock, in each case only to the extent outstanding as of the date of this
Agreement and set forth in Section 2.2(b) of the Company Disclosure Schedule.

(7) Dividends, Distributions, Repurchases. Make, declare, pay or set
aside for payment any dividend on or in respect of, or declare or make any
distribution on any shares of its capital stock (other than dividends from its
wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries) or
directly or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its stock or any options or other rights, grants or
awards with respect to the Common Stock or other securities other than (i) the
repurchase or cancellation of restricted stock or other shares of Common Stock in
accordance with the terms of the applicable award agreements or similar arrangements
to satisfy withholding obligations upon the vesting of restricted stock, stock
appreciation rights or the exercise of options or (ii) the acceptance of shares of
Common Stock as payment of the exercise price of options or for
withholding taxes incurred in connection with the exercise of options
provided that nothing herein shall prohibit the making, declaration,
payment, or setting aside for payment of dividends or distributions with respect to
the Series A Preferred or the Trust Preferred Securities in accordance with the
terms thereof.

 

39

 

(8) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its material assets, deposits, business or
properties, except for sales, transfers, mortgages, encumbrances or other
dispositions or discontinuances (including without limitation dispositions of
problem assets or mortgage loans held for sale which are sold at or above the value
reflected for such assets or loans on the Company’s books as of the date hereof) in
the ordinary and usual course of business consistent with past practice and in a
transaction that individually or taken together with all other such transactions is
not material to it and the Subsidiaries, taken as a whole.

(9) Incurrence of Indebtedness. Incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or otherwise
become responsible for the obligations of, any other person, except in the ordinary
and usual course of business and consistent with past practice.

(10) Extensions of Credit and Interest Rate Instruments. Make, renew
or amend (except in the ordinary and usual course of business and consistent with
past practice where there has been no material change in the relationship with the
borrower or in an attempt to mitigate loss with respect to the borrower) any
extension of credit in excess of $2,500,000 for any new extension of credit and
$7,500,000 for any renewal of an existing extension of credit in accordance with the
Bank’s policies (except for commitments in writing made prior to the date of this
Agreement and disclosed to Purchaser prior to the execution of this Agreement) or
enter into, renew or amend any interest rate swaps, caps, floors or option
agreements or other interest rate risk management arrangements, whether entered into
for the account of it or for the account of a customer of it or one of the
Subsidiaries, except in the ordinary and usual course of business and consistent
with past practice.

(11) Acquisitions. Acquire (other than by way of foreclosures, deeds
in lieu of foreclosure, acquisitions of control in a fiduciary or similar capacity,
acquisitions of loans or participation interests, or in satisfaction of debts
previously contracted in good faith, in each case in the ordinary and usual course
of business and consistent with past practice) all or any portion of the assets,
business, deposits or properties of any other person.

(12) Banking Offices. File any application to establish, or to
relocate or terminate the operations of, any banking office.

(13) Constituent Documents. Except for such amendments as have been
proposed in the Company’s proxy statement on Form DEF14A filed with the
SEC on April 8, 2011, amend its certificate of incorporation or bylaws or
similar organizational documents.

 

40

 

(14) Accounting Practices. Implement or adopt any change in its
accounting principles, practices or methodologies, other than as may be required by
GAAP (or any interpretation thereof), or applicable accounting requirements of a
Governmental Entity or by Law.

(15) Tax Matters. Make, change or revoke any Tax accounting method or
Tax election, prepare any Tax Returns inconsistent in any material respect with past
practice, file any amended Tax Return, consent to any extension or waiver of any
statute of limitations with respect to Tax, enter into any closing agreement, settle
any material Tax claim or assessment, or surrender any right to claim a refund of
Taxes.

(16) Claims. Settle any action, suit, claim or proceeding against it,
except for an action, suit, claim or proceeding that is settled in the ordinary and
usual course of business and consistent with past practice in an amount or for
consideration not in excess of $150,000 individually or $1,500,000 in the aggregate
and that would not impose any material restriction on the business of the Company,
the Bank or the Subsidiaries or, after the Closing, Purchaser or any of its
Affiliates.

(17) Compensation. Terminate, enter into, amend, modify (including by
way of interpretation) or renew any employment, officer, consulting, severance,
change in control or similar contract, agreement or arrangement with any director,
officer, employee or consultant, or grant any salary or wage increase or increase
any employee benefit, including incentive or bonus payments (or, with respect to any
of the preceding, communicate any intention to take such action) or pay to any such
individual any amount or benefit not due, except to make changes that are required
by applicable Law or by the terms of a Benefit Plan existing as of the date hereof
and disclosed on Section 2.2(s)(1)(A) of the Company Disclosure Schedule.

(18) Benefit Arrangements. Terminate, enter into, establish, adopt,
amend, modify (including by way of interpretation), make new grants or awards under
or renew any Benefit Plan (or any arrangement that would following the applicable
action be a Benefit Plan), amend the terms of any outstanding equity-based award,
take any action to accelerate the vesting, exercisability or payment (or fund or
secure the payment) of stock options, restricted stock or other compensation or
benefits payable thereunder or add any new participants to any non-qualified
retirement plans (or, with respect to any of the preceding, communicate any
intention to take such action), except as required by applicable Law or by the terms
of a Benefit Plan existing as of the date hereof and disclosed on Section
2.2(s)(1)(A) of the Company Disclosure Schedule.

 

41

 

(19) Labor Matters. Effectuate (1) a plant closing (as defined in the
Worker Adjustment and Retraining Notification Act of 1988, and any other similar
applicable foreign, state, or local Laws relating to plant closings and
layoffs)affecting any site of employment or one or more facilities or operating
units within any site of employment of the Company, the Bank or any of the
Subsidiaries; (2) a mass layoff as defined in such Laws affecting any site of
employment of the Company, the Bank or any of the Subsidiaries; or (3) any similar
action under such Laws requiring notice to employees in the event of an employment
loss or layoff.

(20) Intellectual Property. (1) Grant, extend, amend (except as
required in the diligent prosecution of the Proprietary Rights owned (beneficially,
and of record where applicable) by or developed for the Company, the Bank and the
Subsidiaries), waive, or modify any material rights in or to, sell, assign, lease,
transfer, license, let lapse, abandon, cancel, or otherwise dispose of, or extend or
exercise any option to sell, assign, lease, transfer, license, or otherwise dispose
of, any Proprietary Rights, or (2) fail to exercise a right of renewal or extension
under any material agreement under which the Company, the Bank or any of the
Subsidiaries is licensed or otherwise permitted by a third party to use any
Proprietary Rights (other than “shrink wrap” or “click through” licenses).

(21) Communication. Make any written or oral communications to the
officers or employees of the Company, the Bank or any of the Subsidiaries pertaining
to compensation or benefit matters that are affected by the transactions
contemplated by this Agreement without providing Purchaser with a copy or written
description of the intended communication and a reasonable period of time to review
and comment on such communication; provided, however, that the
foregoing shall not prevent senior management or human resources personnel of the
Company, the Bank or any Subsidiary from orally answering questions of individual
employees pertaining to compensation or benefit matters with respect to such
individual employee that are affected by the transactions contemplated by this
Agreement on an individual basis with such employee.

(22) Related Party Transactions. Engage in (or modify in a manner
adverse to the Company, the Bank or the Subsidiaries) any transactions (except for
any ordinary course banking relationships permitted under applicable Law) with any
Affiliate of the Company or any director or officer (senior vice president or above)
of the Company, the Bank or the Subsidiaries (or any Affiliate of any such person).

(23) Receivership or Liquidation. Commence a voluntary procedure for
reorganization, arrangement, adjustment, relief or composition of indebtedness or
bankruptcy, receivership or a similar proceeding, or consent to the entry of an
order for relief in an involuntary procedure for reorganization, arrangement,
adjustment, relief or composition of indebtedness or bankruptcy, receivership or a
similar proceeding or consent to the appointment of a receiver, liquidator,
custodian or trustee, in each case, with respect to the Company, the Bank or any
of the Subsidiaries, or any other liquidation or dissolution of the Company,
the Bank or any of the Subsidiaries.

 

42

 

(24) Credit Policy; Underwriting. Make or permit any material
exceptions or changes to the Company’s or the Bank’s credit, underwriting, lending,
investment, risk and asset-liability management and other material banking or
operating policies in effect as of the date hereof except as to update these
policies to conform to recent regulatory or accounting guidance or to update these
policies to address recently identified internal audit or regulatory examination
deficiencies, in each case to reduce the Bank’s risk exposure.

(25) Adverse Actions. Notwithstanding any other provision hereof,
knowingly take any action that is reasonably likely to materially impair its ability
to perform its obligations under this Agreement or to consummate the transactions
contemplated hereby, except as required by applicable Law or this Agreement.

(26) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.

3.4 Acquisition Proposals.

(a) No Solicitation or Negotiation. The Company and the Bank agree that none
of the Company, the Bank or any of the Subsidiaries or any of the officers or directors of
the Company, the Bank or any of the Subsidiaries shall, and that they shall instruct and use
their reasonable best efforts to cause their and the Subsidiaries’ employees, investment
bankers, attorneys, accountants and other advisors or representatives (such directors,
officers, employees, investment bankers, attorneys, accountants and other advisors or
representatives, collectively, “Representatives”) not to (it being understood and
agreed that any violation of the restrictions set forth in this Section 3.4 by a
Representative, whether or not such Representative is so authorized and whether or not such
Representative is purporting to act on behalf of the Company, the Bank or any Subsidiary or
otherwise, shall be deemed to be a breach of this Agreement by the Company and the Bank),
directly or indirectly:

(1) initiate, solicit or knowingly facilitate or encourage any inquiries or the
making of any proposal or offer that constitutes, or could reasonably be expected to
lead to, any Acquisition Proposal;

(2) make or authorize any statement, recommendation or solicitation in support
of any Acquisition Proposal;

(3) engage in, continue or otherwise participate in any discussions or
negotiations or enter into an agreement regarding, or provide any non-public
information or data to any person relating to, any Acquisition Proposal; or

(4) otherwise knowingly facilitate any effort or attempt to make an Acquisition
Proposal.

 

43

 

Notwithstanding the foregoing, at any time prior to obtaining the approval of the
Shareholder Proposal (other than the proposal set forth in clause (1)(iii) of the definition
of “Shareholder Proposal”), in response to a bona fide written Acquisition Proposal that the
Board of Directors of the Company determines in good faith (after consultation with outside
counsel and a financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, and which Acquisition Proposal was not
solicited after the date of this Agreement and was made after the date of this Agreement and
prior to the Shareholder Meeting and did not otherwise result from a breach of this Section
3.4(a), the Company and the Bank may, subject to compliance with Section 3.4(f), (x) furnish
information with respect to the Company and the Bank to the person making such Acquisition
Proposal (provided that all such information has previously been provided to the Purchaser
or is provided to the Purchaser prior to or substantially concurrent with the time it is
provided to such person) pursuant to a customary confidentiality agreement not less
restrictive of such person than the Confidentiality Agreement (other than with respect to
standstill provisions), and (y) participate in discussions regarding the terms of such
Acquisition Proposal and the negotiation of such terms with, and only with, the person
making such Acquisition Proposal.

(b) Change in Recommendation. Except as set forth below, neither the Board of
Directors of the Company nor any committee thereof shall (i) (A) withdraw (or modify in any
manner adverse to the Purchaser), or propose publicly to withdraw (or modify in any manner
adverse to the Purchaser), the Company Recommendation or any other approval, recommendation
or declaration of advisability by the Board of Directors of the Company or any such
committee thereof with respect to this Agreement or (B) approve, recommend or declare
advisable, or propose publicly to approve, recommend or declare advisable, any Acquisition
Proposal (any action in this clause (i) being referred to as a “Adverse Recommendation
Change”) or (ii) approve, recommend or declare advisable, or propose publicly to
approve, recommend or declare advisable, or allow the Company, the Bank, or any of their
Affiliates to execute or enter into, any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option agreement, joint
venture agreement, alliance agreement, partnership agreement or other agreement or
arrangement (an “Acquisition Agreement”) constituting or related to, or that is
intended to or would reasonably be expected to lead to, any Acquisition Proposal, or
requiring, or reasonably expected to cause, the Company or the Bank to abandon, terminate,
delay or fail to consummate, or that would otherwise impede, interfere with or be
inconsistent with, the transactions contemplated by this Agreement, or requiring, or
reasonably expected to cause, the Company or the Bank to fail to comply with this Agreement
(other than a confidentiality agreement referred to in Section 3.4(a)). Notwithstanding the
foregoing, at any time prior to obtaining the approval of the Shareholder Proposal (other
than the proposal set forth in clause (1)(iii) of the definition of “Shareholder Proposal”),
the Board of Directors of the Company may make an Adverse Recommendation Change in favor of
a Superior Proposal if the Board of Directors of the Company determines in good faith (after
consultation with outside counsel and a financial advisor of nationally recognized
reputation) that the failure to do so would be a breach of its fiduciary duties under
applicable Law; provided, however, that the Company shall not be entitled to exercise its
right to make an Adverse
Recommendation Change until after the second Business Day following the Purchaser’s
receipt of written notice (a “Notice of Recommendation Change”) from the Company
advising the Purchaser that the Board of Directors of the Company intends to take such

 

44

 

action and specifying the reasons therefor, including the terms and conditions of the
Superior Proposal that is the basis of the proposed action by the Board of Directors of the
Company (it being understood and agreed that any amendment to any material term of such
Superior Proposal shall require a new Notice of Recommendation Change and a new two
business-day period). In determining whether to make an Adverse Recommendation Change, the
Board of Directors of the Company shall take into account any changes to the terms of this
Agreement proposed by the Purchaser in response to a Notice of Recommendation Change or
otherwise.

(c) Definitions. For purposes of this Agreement, the term “Acquisition
Proposal” means (1) any proposal or offer with respect to a merger, joint venture,
partnership, consolidation, dissolution, liquidation, tender offer, recapitalization,
reorganization, rights offering, share exchange, business combination or similar transaction
involving the Company, the Bank or any of the Subsidiaries and (2) any acquisition by any
person resulting in, or proposal or offer, that, if consummated, would result in any person
becoming the beneficial owner, directly or indirectly, in one or a series of related
transactions, of ten percent (10%) or more of the total voting power of any class of equity
securities of the Company or the Bank or those of any of the Subsidiaries, or ten percent
(10%) or more of the consolidated total assets (including, without limitation, equity
securities of any subsidiaries) of the Company, in each case other than the transactions
contemplated by this Agreement. For purposes of this Agreement, the term “Superior
Proposal” means any bona fide written proposal or offer made by a third party or group
pursuant to which such third party or group would acquire, directly or indirectly more than
50% of the Common Stock or assets of the Company, the Bank, or their Subsidiaries (i) on
terms which the Board of Directors of the Company determines in good faith (after
consultation with the Company’s outside legal counsel and its financial advisor) to be
superior from a financial point of view to the holders of Common Stock than the transactions
contemplated by this Agreement (including any changes proposed by the Purchaser to the terms
of this Agreement) and (ii) that is reasonably likely to be completed, on a timely basis,
taking into account all material financial, regulatory, legal and other aspects of such
proposal on or before the date that the transactions contemplated by this Agreement are
reasonably likely to be completed.

(d) Federal Securities Laws. Nothing contained in this Section 3.4 shall
prohibit the Company from (i) taking and disclosing to its shareholders a position required
by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or (ii) making any
disclosure to its shareholders if the Board of Directors of the Company has determined in
good faith, after consultation with outside legal counsel, that the failure to do so would
be inconsistent with any applicable Law; provided, that the Board of Directors of the
Company may not effect an Adverse Recommendation Change unless permitted to do so by Section
3.4(b); provided, however, that compliance with such Rule 14e-2(a) or Rule
14d-9 shall not in any way limit or modify the effect that any action taken pursuant to
such rules has under any other provision of this Agreement, including under Article V
hereof.

 

45

 

(e) Existing Discussions. The Company and the Bank each agrees that it will
immediately cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any Acquisition Proposal
and, between the date hereof and the Closing, take such action as is necessary to enforce
any “standstill” provisions or provisions of similar effect to which the Company is a party
or of which the Company is a beneficiary. The Company and the Bank each agrees that it will
take the necessary steps to promptly inform the individuals or entities referred to in the
first sentence hereof of the obligations undertaken in this Section 3.4. The Company and
the Bank each also agrees that it will promptly request each person that has heretofore
executed a confidentiality agreement in connection with its consideration of acquiring the
Company, the Bank or any of the Subsidiaries to return or destroy all confidential
information heretofore furnished to such person by or on behalf of it or any of the
Subsidiaries.

(f) Notice; Specific Performance. The Company and the Bank each agrees that it
will promptly (and, in any event, within 24 hours) notify Purchaser if any inquiries,
proposals or offers with respect to an Acquisition Proposal are received by, any such
information is requested from, or any such discussions or negotiations are sought to be
initiated or continued with, the Company, the Bank or any Subsidiary or any of their
respective Representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any proposals or offers (including, if
applicable, copies of any written requests, proposals or offers, including proposed
agreements) and thereafter shall keep Purchaser informed, on a current basis, of the status
and terms of any such proposals or offers (including any amendments thereto) and the status
of any such discussions or negotiations, including any change in the Company’s or the Bank’s
intentions as previously notified. Notwithstanding anything contained herein to the
contrary, each of the Company and the Bank agrees that a non-exclusive right and remedy for
noncompliance with this Section 3.4 is to have such provision specifically enforced by any
court having equity jurisdiction; it being acknowledged and agreed that any such breach will
cause irreparable injury to Purchaser and that money damages may not provide an adequate
remedy to Purchaser.

3.5 Repurchase. The Company and the Bank shall use reasonable best efforts to facilitate the
entry into and maintenance in effect of a definitive agreement with the Treasury providing for the
Repurchase on the terms set forth in Exhibit B prior to the Closing; provided that
Purchaser from and after the date hereof shall be responsible for all communications and/or
negotiations with the Treasury in respect of such definitive agreement and neither the Company nor
the Bank shall, without the prior written consent of Purchaser, contact or communicate with the
Treasury in respect of the Repurchase. Purchaser shall provide the Company and the Bank with the
reasonable opportunity to participate in substantive telephone conversations and meetings that
Purchaser or its representatives may have from time to time with the Treasury with respect to the
Repurchase and shall advise the Company and the Bank of the material terms of any discussions
between Purchaser and the Treasury. Subject to the foregoing, Purchaser will permit the Company to
review in advance, and to the extent practicable, will consult with the Company with respect to, in
each case subject to applicable Laws relating to the exchange of information, all the information
and documentation relating to the Repurchase.

 

46

 

3.6 D&O Indemnification.

(a) On or before the Closing, the Company shall offer to enter into a Directors &
Officers Indemnification Agreement, containing terms no less favorable than those set out in
the Charter and the Company’s bylaws as of the date hereof, with each director serving on
its Board of Directors, including each of the Purchaser Designees and any other directors or
officers of the Company, the Bank or any of the Subsidiaries designated by or affiliated
with Purchaser in form and substance reasonably satisfactory to such individuals.

(b) From and after the Closing, to the extent permitted by applicable Law and in
accordance with the Charter in effect as of the date hereof and the Company’s bylaws in
effect as of the date hereof, the Company (and any successor or assign thereof) shall and
from and after any merger of the Company into Purchaser, to the extent permitted by
applicable Law and in accordance with the Amended and Restated Articles of Incorporation of
Purchaser and Amended and Restated Bylaws of Purchaser (which shall provide for
indemnification and advancement rights no less favorable than those contained in the Charter
in effect as of the date hereof and the Company’s bylaws in effect as of the date hereof),
the Purchaser (and any successor or assign thereof) shall, indemnify, defend and hold
harmless, and provide advancement of defense costs and other expenses (including attorneys’
fees) to, each person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Closing, an officer or director of the Company or any of its
subsidiaries against all losses, claims, damages, costs, expenses (including attorneys’
fees), liabilities or judgments or amounts that are paid in settlement of or in connection
with any claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a director or officer
of the Company, the Bank or any of its Subsidiaries, and pertaining to any matter existing
or occurring, or any acts or omissions occurring, at or prior to the Closing, whether
asserted or claimed prior to, at or after the Closing (including matters, acts or omissions
occurring in connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby). Notwithstanding anything in this Agreement to the
contrary, prior to the Closing, the Company may purchase tail insurance coverage under its
current policies of directors’ and officers’ liability insurance or a comparable policy from
another insurer for a term not to exceed six years from the Closing with respect to claims
arising from facts or events which occurred prior to the Closing; provided,
however, that the total premium payment for such insurance shall not exceed three
times the amount of the last premium paid by the Company in respect of such insurance prior
to the date hereof; provided further that if the Company is unable to
maintain such policy (or any substitute policy) as a result of the preceding proviso, the
Company shall obtain as much comparable insurance as is available for such annual premium
amount.

3.7 Notice of Developments. Each party to this Agreement will give prompt written notice to
each of the other parties of any adverse development causing a breach of any of its own
representations and warranties contained in Article II of this Agreement. No disclosure by any
party pursuant to this Section 3.7 shall be deemed to amend or supplement the Disclosure Schedules
or to prevent or cure any misrepresentation or breach of warranty.

 

47

 

ARTICLE IV

ADDITIONAL AGREEMENTS

4.1 Governance Matters.

(a) Prior to the Closing, the Company and the Bank shall use reasonable best efforts to
cause the Resigning Directors to resign from their respective Boards of Directors and, if
such Resigning Directors do not resign, the Company and the Bank shall take all requisite
corporate action to remove such Resigning Directors or increase the size of their respective
Boards of Directors to accommodate the appointment of each of the Purchaser Designees to
their respective Boards of Directors effective as of the Closing, to elect or appoint each
of the Purchaser Designees to their respective Boards of Directors effective as of the
Closing, and to permit the Purchaser Designees to constitute a majority of each of their
respective Boards of Directors immediately after the Closing.

(b) Following the Closing, the Purchaser, the Company and the Bank shall take all
requisite action to re-elect two members of the Company’s board as of the date hereof
designated by the Purchaser (the “Nominees”) to the Company’s, the Bank’s and the
Purchaser’s Boards of Directors until the consolidation of the Company and the Bank with the
other bank holding companies and banks controlled by the Purchaser, at which time the
Purchaser shall take all requisite action to elect the Nominees to such consolidated bank
and bank holding company Boards of Directors.

(c) Following the Closing, the Purchaser, the Company and the Bank shall take all
requisite action to (i) establish a Loan Portfolio Committee (the “Loan Portfolio
Committee”) as a committee of the Board of Directors of the Bank, which Loan Portfolio
Committee shall monitor and review the status of the Bank’s loan portfolio and any the level
of credit losses, payments, collections and savings realized in such portfolio and (ii)
elect or appoint Stephen M. Rownd as the chairman of the Loan Portfolio Committee.

4.2 Legend. (a) Purchaser agrees that all certificates or other instruments representing the
Purchased Shares will bear a legend substantially to the following effect:

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

(b) Upon request of Purchaser, upon receipt by the Company of an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend is no longer required
under the Securities Act and applicable state Laws, the Company shall promptly
cause the legend set forth above to be removed from any certificate for any securities
purchased pursuant to this Agreement (or issued upon exercise thereof).

 

48

 

4.3 Exchange Listing. The Company shall promptly use its reasonable best efforts to cause the
Purchased Shares to be approved for listing on the NASDAQ or such other nationally recognized
securities exchange on which the Common Stock may be listed, if any, subject to official notice of
issuance, as promptly as practicable, and in any event before the Closing if permitted by the rules
of the NASDAQ.

4.4 Registration Rights. Prior to the Closing, the Company shall enter into the Registration
Rights Agreement with Purchaser in substantially the form attached as Exhibit C (the
“Registration Rights Agreement”).

4.5 Employees. It is the intention of Purchaser to maintain in place the management
team of the Bank, subject to the establishment of, and acceptance of, performance criteria in
accordance with the Purchaser’s anticipated business plan. Notwithstanding the foregoing, nothing
in this Agreement, including this Section 4.5, shall be construed to guarantee or extend any offer
of employment to, or to prevent the termination of employment of any employee or the amendment or
termination of any particular Benefit Plan to the extent permitted by its terms.

4.6 Reservation for Issuance. The Company will reserve that number of shares of Common Stock
sufficient for issuance of the Purchased Shares; provided that solely to the extent the
Company is unable to reserve such number of shares under the Charter the Company will reserve such
sufficient number of shares of Common Stock following the approval of the Shareholder Proposal
(other than the proposal set forth in clause (1)(iii) of the definition of “Shareholder Proposal”)
pursuant to Section 3.1(b).

4.7 Additional Investment. Following the Closing and until the Bank is combined with another
bank controlled by the Purchaser, in the event that the tier 1 leverage ratio of either the Company
or the Bank falls below 10% (or such other capital ratio as may be required to be maintained by
applicable Governmental Entities), the Purchaser will be permitted to purchase a sufficient
quantity of shares of Common Stock from the Company to cause the Company or the Bank (as
applicable) to meet such capital ratio. The purchase price for any shares of Common Stock
purchased pursuant to the preceding sentence shall be equal to the lesser of (i) $1.81 per share of
Common Stock and (ii) the Company’s tangible book value per share of Common Stock as of end of the
then most recently completed fiscal quarter.

ARTICLE V

TERMINATION

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

(a) by mutual written agreement of the Company, the Bank and Purchaser;

 

49

 

(b) by Purchaser, upon written notice to the Company and the Bank, or by the Company,
upon written notice to Purchaser, in the event that the Closing Date does not occur on or
before the date that is 150 calendar days from the date hereof; provided,
however, that the respective rights to terminate this Agreement pursuant to
this Section 5.1(b) shall not be available to any party whose failure, in any material
respect, (or, in the case of the Company, the failure of the Bank) to fulfill any obligation
under this Agreement shall have been the proximate cause of, or shall have resulted in, the
failure of the Closing Date to occur on or prior to such date;

(c) by the Company or Purchaser, upon written notice to the other, in the event that
any Governmental Entity shall have issued any order, decree or injunction or taken any other
action restraining, enjoining or prohibiting any of the transactions contemplated by this
Agreement, and such order, decree, injunction or other action shall have become final and
nonappealable;

(d) by Purchaser or the Company, if Purchaser or any of its Affiliates, or the Company,
receives written notice from or is otherwise advised by a Governmental Entity that it will
not grant (or intends to rescind or revoke if previously approved) any Required Approval or
receives written notice from such Governmental Entity that it will not grant such Required
Approval on the terms contemplated by this Agreement without imposing any Burdensome
Condition, provided that, (A) prior to Purchaser terminating this Agreement, Purchaser shall
have complied with its obligations under Section 3.1(a) in all material respects, and (B)
prior to the Company terminating this Agreement, the Company shall have complied with its
obligations under Section 3.1(a) in all material respects;

(e) by the Company, if neither the Company nor the Bank is in material breach of any of
the terms of this Agreement, and there has been a breach of any representation, warranty,
covenant or agreement made by Purchaser in this Agreement, or any such representation and
warranty shall have become untrue after the date of this Agreement, such that the condition
set forth in Section 1.2(c)(3)(A) or (B) would not be satisfied and such breach is not
curable or, if curable, is not cured within thirty (30) days after written notice thereof is
given by the Company to Purchaser;

(f) by Purchaser, if Purchaser is not in material breach of any of the terms of this
Agreement, and there has been a breach of any representation, warranty, covenant or
agreement made by the Company or the Bank in this Agreement, or any such representation and
warranty shall have become untrue after the date of this Agreement, such that the condition
set forth in Section 1.2(c)(2)(A) or (B) would not be satisfied and such breach is not
curable or, if curable, is not cured within thirty (30) days after written notice thereof is
given by Purchaser to the Company and the Bank;

(g) by Purchaser on or prior to the day before the date of the Shareholder Meeting (as
may be adjourned or postponed), if the Company or the Bank shall have breached the covenants
contained in Section 3.4 hereof or if the Company’s Board of Directors shall have made any
Adverse Recommendation Change; and

(h) by Purchaser or the Company, if the approval of the Shareholder Proposal (other
than the proposal set forth in clause (1)(iii) of the definition of “Shareholder Proposal”)
is not obtained at the Shareholder Meeting.

 

50

 

5.2 Effects of Termination. In the event of any termination of this Agreement as provided in
Section 5.1, subject to Section 5.3, this Agreement (other than Section 3.2(b) and Articles V and
VI, which shall remain in full force and effect) shall forthwith become wholly void and of no
further force and effect; provided that nothing herein shall relieve any party from
liability (x) for fraud or (y) except to the extent set forth in the third sentence of Section
5.3(d) in the case an expense reimbursement is payable by Purchaser, for intentional breach of this
Agreement.

5.3 Fees.

(a) If, after the date hereof, an Acquisition Proposal is made to the Company, the
Bank, any Subsidiary, or the Company’s shareholders generally, or becomes public and
thereafter this Agreement is terminated pursuant to Section 5.1(f) on the basis of a breach
of a covenant or agreement made by the Company or the Bank in this Agreement, Section 5.1(g)
or Section 5.1(h), the Company and the Bank shall be jointly and severally obligated to pay
to Purchaser (1) an amount equal to the Expense Reimbursement and, in the case of such a
termination pursuant to Section 5.1(g) because the Company’s Board of Directors shall have
made any Adverse Recommendation Change, 50% of the Termination Fee, promptly, but in any
event not later than two (2) business days, following such termination and (2), in the case
of a termination referred to in this subsection, if within twelve months after such
termination the Company and/or the Bank enters into a definitive agreement to effect, or
consummates, an Acquisition Proposal, an amount equal to the Termination Fee minus the
portion of the Termination Fee already paid by the Company to Purchaser pursuant to the
preceding clause (1) promptly, but in any event not later than two (2) business days,
following the consummation of such Acquisition Proposal.

(b)

(1) If this Agreement is terminated pursuant to Section 5.1(e) due to a breach
of a covenant, Purchaser shall be obligated to pay to the Company an amount equal to
eight million dollars ($8,000,000) in respect of the Company’s and the Bank’s
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated hereby promptly, but in any event not later than two (2)
business days, following such termination.

(2) If this Agreement is terminated pursuant to Section 5.1(f) due to a breach
of a covenant other than in circumstances where fees are payable pursuant to 5.3(a),
the Company and the Bank shall be jointly and severally obligated to pay to
Purchaser an amount equal to the Expense Reimbursement promptly, but in any event no
later than two (2) business days, following such termination.

(c) “Termination Fee” means an amount in cash equal to eight million dollars
($8,000,000), which Termination Fee shall be paid by wire transfer of immediately available
funds to the account or accounts designated by Purchaser at the time specified in this
Section 5.3. “Expense Reimbursement” means an amount in cash equal to seven hundred
and fifty thousand dollars ($750,000) in respect of Purchaser’s out-of-pocket expenses
incurred in connection with due diligence, the negotiation and preparation of
this Agreement. To the extent not paid when due, any amount payable pursuant to this
Section 5.3 shall accrue interest at a rate equal to eighteen percent (18%) per annum or, if
lower, the maximum rate allowable by Law.

 

51

 

(d) Each of the Company, the Bank and Purchaser acknowledges that the agreements
contained in this Section 5.3 are an integral part of the transactions contemplated by this
Agreement. The amounts payable pursuant to Section 5.3 hereof constitute liquidated damages
and not a penalty and shall be the sole monetary remedy in the event a Termination Fee or
Expense Reimbursement paid in connection with a termination of this Agreement on the bases
specified in Section 5.3 hereof. The amounts payable pursuant to Section 5.3 hereof
constitute liquidated damages and not a penalty and shall be the sole remedy in the event an
expense reimbursement by Purchaser is paid in connection with a termination of this
Agreement on the bases specified in Section 5.3 hereof. In the event that the Company or
the Bank shall fail to make any payment pursuant to this Section 5.3 when due, the Company
and the Bank shall be jointly and severally obligated to reimburse Purchaser for all
reasonable expenses actually incurred or accrued by Purchaser (including reasonable expenses
of counsel) in connection with the collection under and enforcement of this Section 5.3. In
the event Purchaser fails to make any payment pursuant to this Section 5.3 when due,
Purchaser shall be obligated to reimburse the Company and the Bank for all reasonable
expenses actually incurred or accrued by the Company and the Bank (including reasonable
expenses of counsel) in connection with the collection under and enforcement of this Section
5.3.

ARTICLE VI

MISCELLANEOUS

6.1 No Survival. None of the representations and warranties set forth in this Agreement shall
survive the Closing. Except as otherwise provided herein, all covenants and agreements contained
herein, other than those which by their terms are to be performed in whole or in part after the
Closing Date, shall terminate as of the Closing Date.

6.2 Expenses. Subject to Section 5.3, each of the parties will bear and pay all other costs
and expenses incurred by it or on its behalf in connection with the transactions contemplated
pursuant to this Agreement; except that if the Closing occurs, the Company and the Bank shall
jointly and severally be obligated to reimburse Purchaser, without duplication, for all of its
reasonable out-of-pocket expenses incurred in connection with due diligence, the negotiation and
preparation of this Agreement and undertaking of the transactions contemplated pursuant to this
Agreement (including all stamp and other Taxes payable with respect to the issuance of the
Purchased Stock, the Option and CVRs, filing fees, fees and expenses of attorneys, consultants and
accounting and financial advisers incurred by or on behalf of Purchaser or its Affiliates in
connection with the transactions contemplated pursuant to this Agreement) (the “Closing Expense
Reimbursement”).

 

52

 

6.3 Amendment; Waiver. No amendment or waiver of any provision of this Agreement will be
effective with respect to any party unless made in writing and signed by an officer or a duly
authorized representative of such party. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The conditions to each party’s obligation to consummate the Closing are for
the sole benefit of such party and may be waived by such party in whole or in part to the extent
permitted by applicable Law. No waiver of any party to this Agreement, as the case may be, will be
effective unless it is in a writing signed by a duly authorized officer of the waiving party that
makes express reference to the provision or provisions subject to such waiver. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided
by Law.

6.4 Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may
be executed in any number of separate counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts will together constitute the same agreement.
Executed signature pages to this Agreement may be delivered by facsimile or pdf and such facsimiles
or pdfs will be deemed as sufficient as if actual signature pages had been delivered.

6.5 Governing Law. This Agreement will be governed by and construed in accordance with the
Laws of the State of Delaware applicable to contracts made and to be performed entirely within such
State. The parties hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the federal courts of the United States of America located in the State of
Delaware, or, if jurisdiction in such federal courts is not available, the courts of the State of
Delaware, for any actions, suits or proceedings arising out of or relating to this Agreement and
the transactions contemplated hereby.

6.6 Notices. Any notice, request, instruction or other document to be given hereunder by any
party to another will be in writing and will be deemed to have been duly given (a) on the date of
delivery if delivered personally or by telecopy or facsimile, upon confirmation of receipt, (b) on
the first business day following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the second business day following the date of mailing if delivered by registered
or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.

	 	(a)	 	If to Purchaser:
	 
	 	 	 	North American Financial Holdings, Inc.

4725 Piedmont Row Drive

Charlotte, North Carolina 28210

Attention:    Christopher G. Marshall

Telephone:  (704) 554-5901

Fax:              (704) 964-2442
	 
	 	 	 	with a copy to (which copy alone shall not constitute notice):

 

53

 

	 	 	 	Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention:    David E. Shapiro

Telephone:  (212) 403-1000

Fax:              (212) 403-2000
	 
	 	(b)	 	If to the Company or the Bank:
	 
	 	 	 	Green Bankshares, Inc.

100 North Main Street

Greeneville, Tennessee 37743

Attention:    Stephen M. Rownd

Telephone:  (423) 278-3323

Fax:              (866) 550-2336
	 
	 	 	 	with a copy to (which copy alone shall not constitute notice):
	 
	 	 	 	Bass, Berry & Sims PLC

150 Third Avenue South, Suite 2800

Nashville, Tennessee 37201

Attention:    D. Scott Holley

Telephone:  (615) 742-7721

Fax:              (615) 742-2813

6.7 Entire Agreement, Assignment. (a) This Agreement (including the Exhibits, Schedules and
Disclosure Schedules hereto) constitutes the entire agreement, and except for the Confidentiality
Agreement, supersedes all other prior agreements, understandings, representations and warranties,
both written and oral, among the parties, with respect to the subject matter hereof; and (b) this
Agreement will not be assignable by operation of Law or otherwise (any attempted assignment in
contravention hereof being null and void); provided that Purchaser may assign its rights
and obligations under this Agreement to any person, but only if immediately after the Closing,
North American Financial Holdings, Inc. and/or its Affiliates shall collectively own at least a
majority of the pro forma outstanding Common Stock of the Company; provided
further, that no such assignment shall relieve Purchaser of its obligations hereunder.

6.8 Interpretation; Other Definitions. Wherever required by the context of this Agreement, the
singular shall include the plural and vice versa, and the masculine gender shall include the
feminine and neuter genders and vice versa, and references to any agreement, document or instrument
shall be deemed to refer to such agreement, document or instrument as amended, supplemented or
modified from time to time. All article, section, paragraph or clause references not attributed to
a particular document shall be references to such parts of this Agreement, and all exhibit, annex
and schedule references not attributed to a particular document shall be references to such
exhibits, annexes and schedules to this Agreement. The disclosure of any matter or item in the
Company Disclosure Schedule shall not be deemed to constitute an acknowledgement that such matter
or item is required to be disclosed therein or is a material exception to a representation,
warranty, covenant or condition set forth in this Agreement and

 

54

 

shall not be used as a basis for interpreting the terms “material,” “materially,” “materiality,”
“Material Adverse Effect” or any word or phrase of similar import and does not mean that such
matter or item would, with any other matter or item, have or be reasonably expected, individually
or in the aggregate, to have a Material Adverse Effect. Certain matters have been disclosed in the
Company Disclosure Schedule for informational purposes only. In addition, the following terms are
ascribed the following meanings:

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

(b) the word “or” is not exclusive;

(c) the words “including,” “includes,” “included” and
“include” are deemed to be followed by the words “without limitation”; and

(d) the terms “herein,” “hereof” and “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision;

(e) “business day” means any day except Saturday, Sunday and any day that shall
be a legal holiday or a day on which banking institutions in the State of New York or in the
State of Tennessee generally are authorized or required by Law or other governmental action
to close;

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

(g) a person shall be deemed to “beneficially own” any securities of which such
person is considered to be a “beneficial owner” under Rule 13d-3 under the Exchange
Act.

6.9 Captions. The article, section, paragraph and clause captions herein are for convenience
of reference only, do not constitute part of this Agreement and will not be deemed to limit or
otherwise affect any of the provisions hereof.

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

 

55

 

6.11 No Third Party Beneficiaries. Nothing contained in this Agreement, express or implied,
including Section 4.5 hereof, is intended to confer upon any person other than the parties hereto,
any benefit, right or remedies, except that the provisions of Sections 3.6, 4.1(b) and 4.1(c) shall
inure to the benefit of the persons referred to in such Sections.

6.12 Time of Essence. Time is of the essence in the performance of each and every term of
this Agreement.

6.13 Certain Adjustments. Without limiting the generality of Purchaser’s rights and remedies
under this Agreement, if the representations and warranties set forth in Section 2.2(b) shall not
be true and correct as of the Closing Date, the number of shares of Common Stock to be purchased
hereunder, and the number of shares of Common Stock for which the Option is exercisable, shall be,
at Purchaser’s option, proportionately adjusted to provide Purchaser the same economic effect as
contemplated by this Agreement in the absence of such failure to be true and correct.

6.14 Public Announcements. Subject to each party’s disclosure obligations imposed by Law or the
rules of any stock exchange upon which its securities are listed, the parties hereto will cooperate
with each other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement and any of the transactions contemplated by
this Agreement, and none of the Company, the Bank or Purchaser will make any such news release or
public disclosure without first consulting with the other two parties, and, in each case, also
receiving the other’s consent (which shall not be unreasonably withheld or delayed) and each party
shall coordinate with the party whose consent is required with respect to any such news release or
public disclosure.

6.15 Specific Performance; Limitation on Damages.

(a) The Company and the Bank agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed by them in accordance with
their specific terms. It is accordingly agreed that Purchaser shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedies to which
Purchaser is entitled at law or equity. Notwithstanding anything to the contrary herein, in
no event shall Purchaser be responsible to the Company or the Bank for any consequential,
special or punitive damages or any fees or expenses other than pursuant to Section
5.3(b)(1).

(b) Notwithstanding anything to the contrary in this Agreement, the parties acknowledge
that neither the Company nor the Bank shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by Purchaser or any remedy to enforce specifically the
terms and provisions of this Agreement.

 

56

 

[Remainder of Page Intentionally Left Blank]

 

57

 

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly
authorized officers of the parties hereto as of the date first herein above written.

	 	 	 	 	 
	 	GREEN BANKSHARES, INC.

 	 
	 	By:  	/s/ Stephen M. Rownd
 	 
	 	 	Name:  	Stephen M. Rownd 	 
	 	 	Title:  	Chairman and CEO 	 
	 
	 	GREENBANK

 	 
	 	By:  	/s/ Stephen M. Rownd
 	 
	 	 	Name:  	Stephen M. Rownd 	 
	 	 	Title:  	Chairman and CEO 	 
	 

[Signature Page to Investment Agreement]

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officers of the parties hereto as of the date first herein above written.

	 	 	 	 	 
	 	NORTH AMERICAN FINANCIAL HOLDINGS, INC.

 	 
	 	By:  	/s/ Christopher G. Marshall
 	 
	 	 	Name:  	Christopher G. Marshall 	 
	 	 	Title:  	EVP, CFO 	 
	 

[Signature Page to Investment Agreement]

 

 

Schedule A

	 	 	 
	 	 	State or Other Jurisdiction of
	Name of Subsidiary	 	Incorporation/Organization
	Company Subsidiaries
	 	 
	Greene County Capital Trust I

	 	Delaware
	Greene County Capital Trust II

	 	Delaware
	GreenBank Capital Trust I

	 	Delaware
	Civitas Statutory Trust I

	 	Delaware
	Cumberland Capital Statutory Trust II

	 	Connecticut
	Bank Subsidiaries
	 	 
	Superior Financial Services, Inc.

	 	Tennessee
	GCB Acceptance Corporation

	 	Tennessee
	Fairway Title Company

	 	Tennessee
	GB Holdings, LLC

	 	Tennessee

Schedule A

 

 

Exhibit A

Form of Contingent Value Rights

Exhibit A

Term Sheet for Contingent Value Rights

	 	 	 
	Recipients

	 	Immediately prior to the Closing, existing shareholders of the Company
as of a predetermined record date mutually agreeable to the Purchaser and the Company will be issued one right (a “CVR”) for each share of Common Stock owned by such shareholder. Each CVR would entitle the holder to a cash payment based on the amount of Credit Losses (as defined below) prior to the Maturity Date up to a maximum of $0.75 per CVR in the aggregate.
	 
	Maturity Date

	 	5 years from the Closing Date
	 
	Settlement Obligation at Maturity

	 	If the amount of Credit Losses is less than the Stipulated Amount, the
Issuer will pay to holders of the CVRs, within 60 days of the Maturity
Date, an amount equal to:
	 
	 

	 	(A) If the difference between the Stipulated Amount and the amount of
Credit Losses expressed on a per CVR basis (such difference, the “Loss
Shortfall”) is less than or equal to $0.50, then 100% of the Loss
Shortfall; and

	 
	 

	 	(B) If the Loss Shortfall is greater than $0.50, then $0.50 plus 50% of
the excess of the Loss Shortfall over $0.50 with a maximum of $0.75 per
CVR.

	 
	 

	 	If the amount of Credit Losses equals or exceeds the Stipulated Amount
(as defined below), the CVRs will expire and the Company shall not be
required to make any payment with respect to them.
	 
	Credit Losses

	 	“Credit Losses” means the Charge-Offs for any loans existing as of the
date hereof for the period commencing on the date hereof and ending on
the Maturity Date less any recoveries in respect of such Charge-Offs.
	 
	Stipulated Amount

	 	$178,000,000.
	 
	Determinations

	 	All determinations with respect to Credit Losses calculations for
purposes of the CVRs and amounts payable in respect of the CVRs shall
be made by the Loan Portfolio Committee of the Company’s Board of
Directors in its sole discretion.
	 
	Early Redemption

	 	The Company may redeem the CVRs at any time at a price of $0.75 per CVR.
	 
	Voting rights

	 	Any modifications of the terms of the CVRs that are adverse to the
holders will require the consent of the holders of a majority of the
CVRs. Otherwise, no voting rights attach to the CVRs.
	 
	Dividend rights

	 	None.

Exhibit A-1

 

 

	 	 	 

	Merger, Acquisition
or Change in
Control

	 	In the event that the Company experiences a Change in Control, all
rights under the CVRs shall be redeemed upon closing at $0.75 per CVR.
	 
	Change in Control

	 	A “Change in Control” shall mean any transaction resulting in the
holders of the equity interests of the Parent immediately prior to such
transaction owning, directly or indirectly, less than 50% of the equity
interests of the Parent immediately following such transaction. For
purposes of the preceding sentence, the “Parent” shall mean the
ultimate holder that directly or indirectly owns or controls, by share
ownership, contract or otherwise, a majority of the equity interests of
the Company.
	 
	Transferability;
Attachment; Death

	 	The rights of a holder of a CVR may not be assigned or transferred
except by will or the laws of descent or distribution. The CVR shall
not be subject, in whole or in part, to attachment, execution, or levy
of any kind, and any attempt to sell, pledge, assign, hypothecate,
transfer or otherwise dispose of the CVR shall be void. If a holder of
a CVR should die, the designee, legal representative, or legatee, the
successor trustee of such holder’s inter vivos trust or the person who
acquired the right to the CVR by reason of the death of such holder
(individually, a “Successor”) shall succeed to such holder’s rights
with respect to the CVR.

Exhibit A-2

 

 

Exhibit B

Terms of Repurchase

Purchaser shall have entered into a binding definitive agreement with the Treasury to purchase
substantially contemporaneous with the Closing, on terms and conditions consistent with those
disclosed to the Company’s Board of Directors by Purchaser’s representatives on April 26, 2011, all
of the outstanding shares of the Series A Preferred (including all obligations with respect to
accrued but unpaid dividends on the Series A Preferred) and the Treasury Warrants. For the
avoidance of doubt, at the Closing, such agreement shall remain in full force and effect.

Exhibit B

 

 

Exhibit C

Form of Registration Rights Agreement

Exhibit C

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

dated as of [•], 2011

by and between

GREEN BANKSHARES, INC.

and

NORTH AMERICAN FINANCIAL HOLDINGS, INC.

 

 

 

 

 

Table of Contents

	 	 	 	 	 	 	 

	1.

	 	Certain Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	Shelf Registration Statements
	 	 	4	 
	 
	 	 	 	 	 	 
	3.

	 	Additional Demand Registrations
	 	 	4	 
	 
	 	 	 	 	 	 
	4.

	 	Piggyback Registrations
	 	 	6	 
	 
	 	 	 	 	 	 
	5.

	 	Other Registrations
	 	 	7	 
	 
	 	 	 	 	 	 
	6.

	 	Selection of Underwriters
	 	 	7	 
	 
	 	 	 	 	 	 
	7.

	 	Holdback Agreements
	 	 	8	 
	 
	 	 	 	 	 	 
	8.

	 	Procedures
	 	 	8	 
	 
	 	 	 	 	 	 
	9.

	 	Registration Expenses	 	 	13	 
	 
	 	 	 	 	 	 
	10.

	 	Indemnification
	 	 	14	 
	 
	 	 	 	 	 	 
	11.

	 	Rule 144
	 	 	15	 
	 
	 	 	 	 	 	 
	12.

	 	Transfer of Registration Rights
	 	 	16	 
	 
	 	 	 	 	 	 
	13.

	 	Conversion or Exchange of Other Securities
	 	 	16	 
	 
	 	 	 	 	 	 
	14.

	 	Miscellaneous
	 	 	16	 
	 
	 	 	 	 	 	 

 

 

 

REGISTRATION RIGHTS AGREEMENT, dated as of [•], 2011, by and between Green Bankshares, Inc., a
corporation organized under the laws of the State of Tennessee (the “Company”), and North
American Financial Holdings, Inc., a Delaware corporation (“Purchaser”).

In consideration of the mutual covenants and agreements herein contained and other good and
valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:

1. Certain Definitions.

In addition to the terms defined elsewhere in this Agreement, the following terms shall have
the following meanings:

“Affiliate” of any Person means any other Person that, directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common control with, such
Person. The term “control” (including the terms “controlling,” “controlled by” and “under common
control with”) as used with respect to any Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Registration Rights Agreement as the same may be in effect at the time such reference
becomes operative.

“Blackout Period” has the meaning set forth in Section 8(e) hereof.

“Business Day” means any day, except a Saturday, Sunday or legal holiday on which
banking institutions in the State of New York or State of Tennessee are authorized or obligated by
law or executive order to close.

“Closing Date” has the meaning set forth in the Investment Agreement.

“Common Stock” means common stock, $[0.01] par value, of the Company.

“Company” has the meaning set forth in the introductory paragraph and includes any
other person referred to in the second sentence of Section 14(c) hereof.

“Delay Period” has the meaning set forth in Section 3(d) hereof.

“Demand Registration” has the meaning set forth in Section 3(a) hereof.

“Demand Registration Statement” has the meaning set forth in Section 3(a) hereof.

 

 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Full Cooperation” means, in connection with any underwritten offering, where, in
addition to the cooperation otherwise required by this Agreement, (a) members of senior management
of the Company (including the chief executive officer and chief financial officer) fully cooperate
with the underwriter(s) in connection therewith and, at the recommendation or request of the
underwriters, make themselves available to participate in “road-show” and other customary marketing
activities in such locations (domestic and foreign) as recommended by the underwriter(s) (including
one-on-one meetings with prospective purchasers of the Registrable Common Stock) and (b) the
Company prepares preliminary and final prospectuses (preliminary and final prospectus supplements
in the case of an offering pursuant to the Shelf Registration Statement) for use in connection
therewith containing such additional information as reasonably requested by the underwriter(s) (in
addition to the minimum amount of information required by law, rule or regulation).

“Fully Marketed Underwritten Offering” means an underwritten offering in which there
is Full Cooperation.

“Governmental Entity” means any national, federal, state, municipal, local,
territorial, foreign or other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral
body or public or private tribunal.

“Investment Agreement” means the Investment Agreement, dated as of May 5, 2011, by and
among the Company, GreenBank, a Tennessee state-chartered banking corporation and a banking
subsidiary of the Company, and Purchaser. All capitalized terms used herein but not otherwise
defined shall have those meanings set forth in the Investment Agreement.

“NASDAQ” means The NASDAQ Stock Market LLC.

“Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association, corporation, institution,
public benefit corporation, Governmental Entity or any other entity.

“Piggyback Registration” has the meaning set forth in Section 4(a) hereof.

“Piggyback Registration Statement” has the meaning set forth in Section 4(a) hereof.

 

2

 

“Prospectus” means the prospectus or prospectuses forming a part of, or deemed to form
a part of, or included in, or deemed included in, any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Common Stock covered by such Registration Statement and by all
other amendments and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus or prospectuses.

“Registrable Common Stock” means (i) any shares of Common Stock issued as Stock
Consideration, (ii) any other security into or for which the Common Stock referred to in clause (i)
has been converted, substituted or exchanged, and any security issued or issuable with respect
thereto upon any stock dividend or stock split or in connection with a combination of shares,
reclassification, recapitalization, merger, consolidation or other reorganization or otherwise.

“Registration Expenses” has the meaning set forth in Section 9(a) hereof.

“Registration Statement” means any registration statement of the Company that covers
any of the Registrable Common Stock pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all materials incorporated by reference in such Registration
Statement.

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the SEC as a replacement thereto having substantially the same effect as such rule.

“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the SEC as a replacement thereto having substantially the same effect as such rule.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Shelf Registration Statement” has the meaning set forth in Section 2(a) hereof.

“Stock Consideration” means the shares of Common Stock issued to Purchaser pursuant to
the Investment Agreement.

“Purchaser” has the meaning set forth in the introductory paragraph.

“Suspension Notice” has the meaning set forth in Section 8(e) hereof.

 

3

 

“underwritten registration or underwritten offering” means an offering in which
securities of the Company are sold to one or more underwriters (as defined in Section 2(a)(11) of
the Securities Act) for resale to the public.

2. Shelf Registration Statements.

(a) Right to Request Registration. At the request of Purchaser, the Company shall use
its reasonable best efforts to promptly file a registration statement on Form S-3 or such other
form under the Securities Act then available to the Company providing for the resale pursuant to
Rule 415 from time to time by Purchaser of such number of shares of Registrable Common Stock
requested by Purchaser to be registered thereby (including the Prospectus, amendments and
supplements to the shelf registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such shelf registration statement, the “Shelf
Registration Statement”). The Company shall use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective by the SEC as promptly as practicable following
such filing. The Company shall maintain the effectiveness of the Shelf Registration Statement for
a period of at least eighteen (18) months in the aggregate plus the duration of any Blackout
Period. The plan of distribution contained in the Shelf Registration Statement (or related
Prospectus supplement) shall be determined by Purchaser in consultation with the Company.

(b) Number of Fully Marketed Underwritten Offerings. Purchaser shall be entitled to
request an aggregate of four (4) Fully Marketed Underwritten Offerings pursuant to the Shelf
Registration Statement; provided, however, that Purchaser shall be entitled to
request no more than two (2) underwritten offerings pursuant to the Shelf Registration Statement in
any twelve (12)-month period that require involvement by management of the Company in “road-show”
or similar marketing activities. If Purchaser requests a Fully Marketed Underwritten Offering, the
Company shall cause there to occur Full Cooperation in connection therewith. An underwritten
offering shall not count as one of the permitted Fully Marketed Underwritten Offerings if there is
not Full Cooperation in connection therewith or Purchaser is not able to sell at least 50% of the
Registrable Common Stock desired to be sold in such Fully Marketed Underwritten Offering. Except
as provided in this Section 2(b), there shall be no limitation on the number of takedowns off the
Shelf Registration Statement.

3. Additional Demand Registrations.

(a) Right to Request Registration. Any time after the date hereof, Purchaser may
request registration for resale under the Securities Act of all or part of the Registrable Common
Stock pursuant to a
Registration Statement separate from the Shelf Registration Statement (a “Demand
Registration”). As promptly as practicable after such request, but in any event within twenty
(20) days of such request by Purchaser, the

 

4

 

Company shall file a registration statement registering
for resale such number of shares of Registrable Common Stock held by Purchaser as requested to be
so registered (including the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference, if any, in such registration
statement, a “Demand Registration Statement”). In connection with each such Demand
Registration, the Company shall cause there to occur Full Cooperation.

(b) Number of Demand Registrations. Purchaser will be entitled to request four (4)
Demand Registrations pursuant to Section 3(a) minus the number of Fully Marketed Underwritten
Offerings completed off of the Shelf Registration Statement. A registration shall not count as one
of the permitted Demand Registrations pursuant to Section 3(a) (i) until the related Demand
Registration Statement has become effective, (ii) if Purchaser is not able to register and sell at
least 50% of the Registrable Common Stock requested to be included in such registration, or (iii)
if there was not Full Cooperation in connection therewith. For avoidance of doubt, the aggregate
number of Demand Registrations and Fully Marketed Underwritten Offerings completed off of the Shelf
Registration Statement shall not exceed four (4).

(c) Priority on Demand Registrations. If a Demand Registration pursuant to this
Section 3 involves an underwritten offering and the managing underwriter shall advise the Company
that in its opinion the number of securities requested to be included in such registration exceeds
the number of securities that can be sold in such offering without having an adverse effect on such
offering, including the price at which such securities can be sold, then the Company shall include
in such registration the maximum number of shares that such underwriter advises can be so sold
without having such effect, allocated (i) first, to Registrable Common Stock requested by Purchaser
to be included in such registration and (ii) second, among all shares of Common Stock requested to
be included in such registration by any other Persons (including securities to be sold for the
account of the Company) allocated among such Persons in such manner as they may agree.

(d) Restrictions on Demand Registrations. The Company may postpone the filing or the
effectiveness of a Demand Registration Statement if, based on the good faith judgment of the
Company’s Board of Directors, such postponement is necessary in order to avoid premature disclosure
of a matter the Board of Directors has determined would not be in the best interest of the Company
to be disclosed at such time; provided, however, that Purchaser requesting such
Demand Registration Statement shall be entitled, at any time after receiving notice of
such postponement and before such Demand Registration Statement becomes effective, to withdraw
such request and, if such request is withdrawn, such Demand Registration shall not count as one of
the permitted Demand Registrations. The Company shall provide written notice to Purchaser of (x)
any postponement of the filing or effectiveness of a Demand Registration Statement pursuant

 

5

 

to this
Section 3(d), (y) the Company’s decision to file or seek effectiveness of such Demand Registration
Statement following such postponement and (z) the effectiveness of such Demand Registration
Statement. The Company may defer the filing or effectiveness of a particular Demand Registration
Statement pursuant to this Section 3(d) only once during any twelve (12)-month period.
Notwithstanding the provisions of this Section 3(d), the Company may not postpone the filing or
effectiveness of a Demand Registration Statement past the date that is the earliest of (a) the date
upon which any disclosure of a matter the Board of Directors has determined would not be in the
best interest of the Company to be disclosed is disclosed to the public or ceases to be material,
(b) forty-five (45) days after the date upon which the Board of Directors has determined such
matter should not be disclosed and (c) such date that, if such postponement continued, would result
in there being more than ninety (90) days in the aggregate in any twelve (12)-month period during
which the filing or effectiveness of one or more Registration Statements has been so postponed. The
period during which filing or effectiveness is so postponed hereunder is referred to as a
“Delay Period.”

(e) Effective Period of Demand Registrations. After any Demand Registration filed
pursuant to this Agreement has become effective, the Company shall use its reasonable best efforts
to keep such Demand Registration Statement effective for a period of at least 90 days from the date
on which the SEC declares such Demand Registration Statement effective plus the duration of any
Delay Period and any Blackout Period, or such shorter period that shall terminate when all of the
Registrable Common Stock covered by such Demand Registration Statement has been sold pursuant to
such Demand Registration Statement in accordance with the plan of distribution set forth therein.

4. Piggyback Registrations.

(a) Right to Piggyback. Whenever the Company proposes to publicly sell or register
for sale any of its common equity securities pursuant to a registration statement (a “Piggyback
Registration Statement”) under the Securities Act (other than a registration statement on Form
S-8 or on Form S-4 or any similar successor forms thereto), whether for its own account or for the
account of one or more securityholders of the Company (a “Piggyback Registration”), the
Company shall give prompt written notice to Purchaser of its intention to effect such sale or
registration and, subject to Sections 4(b) and 4(c), shall include in such transaction all
Registrable Common Stock with respect to which the Company has received a written
request from Purchaser for inclusion therein within fifteen (15) days after the receipt of the
Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a
Piggyback Registration at any time in its sole discretion, without prejudice to Purchaser’s right
to immediately request a Demand Registration or Shelf Registration Statement hereunder. A Piggyback
Registration shall not be considered a Demand Registration for purposes of Section 3 of this
Agreement or a Shelf Registration Statement for purposes of Section 2 of this Agreement.

 

6

 

(b) Priority on Primary Registrations. If a Piggyback Registration is initiated as an
underwritten primary registration on behalf of the Company where the primary use of proceeds does
not include the repurchase, redemption, subscription or retirement of capital stock of the Company
(a “Stock Repurchase”), and the managing underwriter advises the Company in writing that in
its opinion the number of securities requested to be included in such registration exceeds the
number of securities that can be sold in such offering without having an adverse effect on such
offering, including the price at which such securities can be sold, then the Company shall include
in such registration the maximum number of shares that such underwriter advises can be so sold
without having such effect, allocated (i) first, to the securities the Company proposes to sell,
(ii) second, to the Registrable Common Stock requested to be included therein by Purchaser, and
(iii) third, among other securities requested to be included in such registration by other security
holders of the Company on such basis as such holders may agree among themselves and the Company.

(c) Priority on Secondary Registrations. If a Piggyback Registration is initiated as
an underwritten registration on behalf of a holder of the Company’s securities other than
Registrable Common Stock or on behalf of the Company where the use of proceeds includes a Stock
Repurchase, and the managing underwriter advises the Company in writing that in its opinion the
number of securities requested to be included in such registration exceeds the number that can be
sold in such offering without having an adverse effect on such offering, including the price at
which such securities can be sold, then the Company shall include in such registration the maximum
number of shares that such underwriter advises can be so sold without having such effect, allocated
(i) first, to the securities requested to be included therein by the holder(s) requesting such
registration and the Registrable Common Stock requested to be included in such registration, pro
rata among the holders of such securities on the basis of the number of shares requested to be
registered by such holders and (ii) second, to other securities (including Registrable Common
Stock) requested to be included in such registration by other security holders, the Company and
Purchaser, pro rata among such holder(s), the Company and Purchaser on the basis of the number of
shares requested to be registered by them.

5. Other Registrations

The Company shall not grant to any Person the right, other than as set forth herein, to
request the Company to register any securities of the Company except such rights as are not more
favorable than or not inconsistent with the rights granted to Purchaser and that do not adversely
affect the priorities set forth herein of Purchaser.

6. Selection of Underwriters.

If any of the Registrable Common Stock covered by a Demand Registration Statement or a Shelf
Registration Statement is to be sold in an underwritten offering, Purchaser shall have the right to
select the managing underwriter(s) to administer the offering subject to the prior approval of the
Company, which approval shall not be unreasonably withheld.

 

7

 

7. Holdback Agreements.

The Company agrees not to, and shall exercise its reasonable best efforts to obtain agreements
(in the underwriters’ customary form) from its directors, executive officers and beneficial owners
of 5% or more of the Company’s outstanding voting stock not to, directly or indirectly offer, sell,
pledge, contract to sell, (including any short sale), grant any option to purchase or otherwise
dispose of any equity securities of the Company or enter into any hedging transaction relating to
any equity securities of the Company during the ninety (90) days beginning on the effective date of
any underwritten Demand Registration Statement or any underwritten Piggyback Registration Statement
or the pricing date of any underwritten offering pursuant to any Registration Statement (except as
part of such underwritten offering or pursuant to registrations on Form S-8 or S-4 or any successor
forms thereto) unless the underwriter managing the offering otherwise agrees to a shorter period.

8. Procedures.

(a) In connection with the registration and sale of Registrable Common Stock pursuant to this
Agreement, the Company shall use its reasonable best efforts to effect the registration and the
sale of such Registrable Common Stock in accordance with Purchaser’s intended methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as reasonably
practicable:

(i) prepare and file with the SEC a Registration Statement with respect to
such Registrable Common Stock and use its reasonable best efforts to cause such
Registration Statement to become effective as soon as practicable thereafter; and
before filing a Registration Statement or Prospectus or any amendments or
supplements thereto (including any prospectus supplement for a shelf takedown),
furnish to Purchaser and the underwriter or underwriters, if any, copies of all
such documents proposed
to be filed, including documents incorporated by reference in the Prospectus
and, if requested by Purchaser, the exhibits incorporated by reference, and
Purchaser (and the underwriter(s), if any) shall have the opportunity to review and
comment thereon, and the Company will make such changes and additions thereto as
reasonably requested by Purchaser (and the underwriter(s), if any) prior to filing
any Registration Statement or amendment thereto or any Prospectus or any supplement
thereto;

 

8

 

(ii) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for a period of not less
than 90 days, in the case of a Demand Registration Statement or an aggregate of
eighteen (18) months, in the case of a Shelf Registration Statement (plus, in each
case, the duration of any Delay Period and any Blackout Period), or such shorter
period as is necessary to complete the distribution of the securities covered by
such Registration Statement and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of disposition
by Purchaser thereof set forth in such Registration Statement and, in the case of
the Shelf Registration Statement, prepare such prospectus supplements containing
such disclosures as may be reasonably requested by Purchaser or any underwriter(s)
in connection with each shelf takedown;

(iii) furnish to Purchaser such number of copies of such Registration
Statement, each amendment and supplement thereto, each Prospectus (including each
preliminary Prospectus and Prospectus supplement) and such other documents as
Purchaser and any underwriter(s) may reasonably request in order to facilitate the
disposition of the Registrable Common Stock, provided, however,
that the Company shall have no such obligation to furnish copies of a final
prospectus if the conditions of Rule 172(c) under the Securities Act are satisfied
by the Company;

(iv) use its reasonable best efforts to register or qualify such Registrable
Common Stock under such other securities or blue sky laws of such jurisdictions
(domestic or foreign) as Purchaser and any underwriter(s) reasonably requests and
do any and all other acts and things that may be reasonably necessary or advisable
to enable Purchaser and any underwriter(s) to consummate the disposition in such
jurisdictions of the Registrable Common Stock (provided, that the Company will not
be required to (1) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph (iv),
(2) subject itself to taxation in any such jurisdiction or (3) consent to
general service of process in any such jurisdiction);

(v) notify Purchaser and any underwriter(s), at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of any event as a result of which any Prospectus contains an untrue
statement of a material fact or omits any material fact necessary to make the
statements therein not misleading, and, at the request of Purchaser or any
underwriter(s), the Company shall prepare a supplement or amendment to such
Prospectus so that, as thereafter supplemented and/or amended, such Prospectus
shall not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;

 

9

 

(vi) in the case of an underwritten offering, (i) enter into such customary
agreements (including underwriting agreements in customary form), (ii) take all
such other actions as Purchaser or the underwriter(s) reasonably request in order
to expedite or facilitate the disposition of such Registrable Common Stock
(including, without limitation, causing senior management and other Company
personnel to cooperate with Purchaser and the underwriter(s) in connection with
performing due diligence) and (iii) cause its counsel to issue opinions of counsel
in form, substance and scope as are customary in primary underwritten offerings,
addressed and delivered to the underwriter(s) and Purchaser;

(vii) in connection with each Demand Registration pursuant to Section 3 and
each Fully Marketed Underwritten Offering requested by Purchaser under Section 2,
cause there to occur Full Cooperation and, in all other cases, cause members of
senior management of the Company to be available to participate in, and to
cooperate with the underwriter(s) in connection with customary marketing activities
(including select conference calls and one-on-one meetings with prospective
purchasers);

(viii) make available for inspection by Purchaser, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney, accountant or other agent retained by Purchaser or underwriter, all
pertinent financial and other records, pertinent corporate documents and properties
of the Company, and cause the Company’s officers, directors, employees and
independent accountants to supply all information reasonably requested by
Purchaser, any underwriter, any attorney, any accountant or any agent in connection
with such Registration Statement;

(ix) use its reasonable best efforts to cause all such Registrable Common
Stock to be listed on NASDAQ, or any exchange on which securities of the same class
issued by the Company are then listed or, if no such similar securities are then
listed, on a national securities exchange selected by the Company and agreed to by
Purchaser;

(x) provide a transfer agent and registrar for all such Registrable Common
Stock not later than the effective date of such Registration Statement;

 

10

 

(xi) if requested, cause to be delivered, immediately prior to the pricing of
any underwritten offering, immediately prior to effectiveness of each Registration
Statement (and, in the case of an underwritten offering, at the time of closing of
the sale of Registrable Common Stock pursuant thereto), letters from the Company’s
independent registered public accountants addressed to Purchaser and each
underwriter, if any, stating that such accountants are independent public
accountants within the meaning of the Securities Act and the applicable rules and
regulations adopted by the SEC thereunder, and otherwise in customary form and
covering such financial and accounting matters as are customarily covered by
letters of the independent registered public accountants delivered in connection
with primary underwritten public offerings;

(xii) make generally available to Purchaser and its Affiliates a consolidated
earnings statement (which need not be audited) for the 12 months beginning after
the effective date of a Registration Statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy the
requirements of an earning statement under Section 11(a) of the Securities Act; and

(xiii) promptly notify Purchaser and the underwriter or underwriters, if any:

(1) when the Registration Statement, any pre-effective amendment,
the Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement has been filed and, with
respect to the Registration Statement or any post-effective
amendment, when the same has become effective;

(2) of any written request by the SEC for amendments or
supplements to the Registration Statement or any Prospectus or of
any inquiry by the SEC relating to the Registration Statement or
the Company’s status as a well-known seasoned issuer;

(3) of the notification to the Company by the SEC of its
initiation of any proceeding with respect to the issuance by the
SEC of any stop order suspending the effectiveness of the
Registration Statement; and

(4) of the receipt by the Company of any notification with respect
to the suspension of the qualification of any Registrable Common
Stock for sale under the applicable securities or blue sky laws of
any jurisdiction.

 

11

 

(b) The Company represents and warrants that no Registration Statement (including any
amendments or supplements thereto and Prospectuses contained therein) shall contain any 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 (except that the Company makes no
representation or warranty with respect to information relating to Purchaser furnished to the
Company by or on behalf of Purchaser specifically for use therein).

(c) The Company shall make available to Purchaser (i) promptly after the same is prepared and
publicly distributed, filed with the SEC, or received by the Company, one copy of each Registration
Statement and any amendment thereto, each preliminary Prospectus and Prospectus and each amendment
or supplement thereto, each letter written by or on behalf of the Company to the SEC or the staff
of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction,
including any domestic or foreign securities exchange), and each item of correspondence from the
SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body
having jurisdiction, including any domestic or foreign securities exchange), in each case relating
to such Registration Statement or to any of the documents incorporated by reference therein, and
(ii) such number of copies of each Prospectus, including a preliminary Prospectus, and all
amendments and supplements thereto and such other documents as Purchaser or any underwriter may
reasonably request in order to facilitate the disposition of the Registrable Common Stock. The
Company will promptly notify Purchaser of the effectiveness of each Registration Statement or any
post-effective amendment or the filing of any supplement or amendment to such Shelf Registration
Statement or of any Prospectus supplement. The Company will promptly respond to any and all
comments received from the SEC, with a view towards causing each Registration Statement or any
amendment thereto to be declared effective by the SEC as soon as practicable and shall file an
acceleration request, if necessary, as soon as practicable following the resolution or clearance of
all SEC comments or, if applicable, following notification by the SEC that any such Registration
Statement or any amendment thereto will not be subject to review.

(d) The Company may require Purchaser to furnish to the Company any other information
regarding Purchaser and the distribution of such securities as the Company
reasonably determines, based on the advice of counsel, is required to be included in any
Registration Statement.

(e) Purchaser agrees that, upon notice from the Company of the happening of any event as a
result of which the Prospectus included (or deemed included) in such Registration Statement
contains an untrue statement of a material fact or omits any material fact necessary to make the
statements therein not misleading (a “Suspension Notice”), Purchaser will forthwith
discontinue disposition of Registrable Common Stock pursuant to such Registration Statement for a
reasonable length of time not to exceed 10 days (45 days in the case of an event described in
Section 3(d)) until Purchaser is advised in writing by the Company that the use of the Prospectus
may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by
Section 8(a)

 

12

 

hereof; provided, however, that such postponement of sales of
Registrable Common Stock by Purchaser shall not exceed ninety (90) days in the aggregate in any 12
month period. If the Company shall give Purchaser any Suspension Notice, the Company shall extend
the period of time during which the Company is required to maintain the applicable Registration
Statements effective pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such Suspension Notice to and including the date Purchaser
either is advised by the Company that the use of the Prospectus may be resumed or receives the
copies of the supplemented or amended Prospectus contemplated by Section 8(a) (a “Blackout
Period”). In any event, the Company shall not be entitled to deliver more than a total of
three (3) Suspension Notices or notices of any Delay Period in any twelve (12)-month period.

(f) The Company shall not permit any officer, director, underwriter, broker or any other
person acting on behalf of the Company to use any free writing prospectus (as defined in Rule 405
under the Securities Act) in connection with any registration statement covering Registrable Common
Stock, without the prior written consent of Purchaser and any underwriter.

9. Registration Expenses.

(a) All expenses incident to the Company’s performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees (including SEC registration fees
and FINRA filing fees), fees and expenses of compliance with securities or blue sky laws, listing
application fees, printing expenses, transfer agent’s and registrar’s fees, cost of distributing
Prospectuses in preliminary and final form as well as any supplements thereto, and fees and
disbursements of counsel for the Company and all accountants and other Persons retained by the
Company (all such expenses being herein called “Registration Expenses”) (but not including
any underwriting discounts or commissions or transfer taxes, if any, attributable to the sale of
Registrable Common Stock), shall be borne by the Company. In addition, the Company shall pay its
internal expenses (including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any
annual audit or quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on which they are to
be listed.

(b) The Company shall pay, or shall reimburse Purchaser for, the reasonable fees and
disbursements of one law firm chosen by Purchaser as its counsel in connection with each
Registration Statement and sale of Registrable Common Stock pursuant thereto.

 

13

 

(c) The obligation of the Company to bear the expenses described in Section 9(a) and to pay or
reimburse Purchaser for the expenses described in Section 9(b) shall apply irrespective of whether
any sales of Registrable Common Stock ultimately take place.

10. Indemnification.

(a) The Company shall indemnify, to the fullest extent permitted by law, Purchaser and its
officers, directors, employees and Affiliates and each Person who controls Purchaser (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of material fact contained in
any Registration Statement, Prospectus, preliminary Prospectus or any “issuer free writing
prospectus” (as defined in Securities Act Rule 433) or any amendment thereof or supplement thereto
or any omission or alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading or any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or applicable “blue sky” laws, except insofar as the same
are made in reliance and in conformity with information relating to Purchaser furnished in writing
to the Company by Purchaser expressly for use therein. In connection with an underwritten
offering, the Company shall indemnify such underwriter(s), their officers, employees and directors
and each Person who controls such underwriter(s) (within the meaning of the Securities Act) at
least to the same extent as provided above with respect to the indemnification of Purchaser.

(b) In connection with any Registration Statement in which Purchaser is participating,
Purchaser shall furnish to the Company in writing such information as the Company reasonably
determines, based on the advice of counsel, is required to be included in any such Registration
Statement or Prospectus and shall indemnify, to the fullest extent permitted by law, the Company,
its officers, employees, directors, Affiliates, and each Person who controls the Company (within
the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of material fact contained in
the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only to
the extent that the same are made in reliance and in conformity with information relating to
Purchaser furnished in writing to the Company by Purchaser expressly for use therein.

(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless
in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not be

 

14

 

unreasonably
withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a
claim shall not be obligated to pay the fees and expenses of more than one counsel (in addition to
any local counsel) for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or
equitable defenses available to such indemnified party that are in addition to or may conflict with
those available to another indemnified party with respect to such claim. Failure to give prompt
written notice shall not release the indemnifying party from its obligations hereunder.

(d) The indemnification provided for under this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and shall survive the transfer of
securities.

(e) If the indemnification provided for in or pursuant to this Section 10 is due in accordance
with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified Person as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection with the statements
or omissions that result in such losses, claims, damages, liabilities or expenses as well as any
other relevant equitable considerations. The relative fault of the indemnifying party on the one
hand and of the indemnified party on the other 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 indemnifying party
or by the indemnified party, and by such party’s relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. In no event shall the liability
of Purchaser be greater in amount than the amount of net proceeds received by Purchaser upon such
sale.

11. Rule 144.

The Company covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder,
and it will take such further action as Purchaser may reasonably request to make available adequate
current public information with respect to the Company meeting the current public information
requirements of Rule 144(c) under the Securities Act, to the extent required to enable Purchaser to
sell Registrable Common Stock without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of Purchaser, the Company will deliver to Purchaser a written statement as to whether it
has complied with such information and requirements.

 

15

 

12. Transfer of Registration Rights.

(a) Purchaser may transfer all or any portion of its then-remaining rights under this
Agreement to any transferee who acquires at least ten percent (10%) of the Stock Consideration
(each, a “transferee”). Any transfer of registration rights pursuant to this Section 12
shall be effective upon receipt by the Company of (x) written notice from Purchaser stating the
name and address of any transferee and identifying the amount of Registrable Common Stock with
respect to which the rights under this Agreement are being transferred and the nature of the rights
so transferred and (y) a written agreement from the transferee to be bound by all of the terms of
this Agreement. In connection with any such transfer, the term “Purchaser” as used in this
Agreement shall, where appropriate to assign such rights to such transferee, be deemed to refer to
the transferee holder of such Registrable Common Stock. Purchaser and such transferees may
exercise the registration rights hereunder in such proportion (not to exceed the then-remaining
rights hereunder) as they shall agree among themselves.

(b) After such transfer, Purchaser shall retain its rights under this Agreement with respect
to all other Registrable Common Stock owned by Purchaser. Upon the request of Purchaser, the
Company shall execute a Registration Rights Agreement with such transferee or a proposed transferee
substantially similar to the applicable sections of this Agreement.

13. Conversion or Exchange of Other Securities.

If Purchaser offers Registrable Common Stock by forward sale, or any options, rights, warrants
or other securities issued by it or any other person that are offered with, convertible into or
exercisable or exchangeable for any Registrable Common Stock, the Registrable Common Stock subject
to such forward sale or underlying such options, rights, warrants or other securities shall be
eligible for registration pursuant to Sections 2, 3 and 4 of this Agreement.

14. Miscellaneous.

(a) Notices. All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by
registered or certified mail or by facsimile transmission (with immediate telephone confirmation
thereafter) and, in the case of Purchaser, shall also be sent via e-mail,

 

16

 

(a) If to Purchaser to it at:

North American Financial Holdings, Inc.

4725 Piedmont Row Drive

Charlotte, North Carolina 28210

Attn: Christopher G. Marshall

Telephone: 704-554-5901

Fax: 704-964-2442

with a copy to (which copy alone shall not constitute notice):

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attn: David E. Shapiro

Telephone: (212) 403-1000

Fax: (212) 403-2000

(b) If to the Company:

Green Bankshares, Inc.

100 North Main Street

Greeneville, Tennessee 37743

Attention:      [•]

Telephone:    [•]

Fax:               [•]

with a copy (which copy alone shall not constitute notice):

Bass, Berry & Sims PLC

150 Third Avenue South, Suite 2800

Nashville, TN 37201

Attention:      D. Scott Holley

Telephone:    (615) 742-7721

Fax:               (615) 742-2813

or at such other address as such party each may specify by written notice to the others, and each
such notice, request, consent and other communication shall for all purposes of the Agreement be
treated as being effective or having been given when delivered personally, upon one business day
after being deposited with a courier if delivered by courier, upon receipt of facsimile
confirmation if transmitted by facsimile, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for the deposit of
United States mail, addressed and postage prepaid as aforesaid.

 

17

 

(b) No Waivers. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

(c) Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns. If the
outstanding Common Stock is converted into or exchanged or substituted for other securities issued
by any other Person, as a condition to the effectiveness of the merger, consolidation,
reclassification, share exchange or other transaction pursuant to which such conversion, exchange,
substitution or other transaction takes place, such other Person shall automatically become bound
hereby with respect to such other securities constituting Registrable Common Stock and, if
requested by Purchaser or a permitted transferee, shall further evidence such obligation by
executing and delivering to Purchaser and such transferee a written agreement to such effect in
form and substance satisfactory to Purchaser.

(d) Governing Law. This Agreement will be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be performed entirely
within such State.

(e) Jurisdiction. The parties hereby irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the federal courts of the United States of America located in the
State of Delaware, or, if jurisdiction in such federal courts is not available, the courts of the
State of Delaware, for any actions, suits or proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby, and each party hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an inconvenient forum.
Without limiting the foregoing, each party agrees that service of process on such party as provided
in Section 14(a) shall be deemed effective service of process on such party.

(f) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(g) Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts (including by facsimile) and by different parties hereto in separate counterparts,
with the same effect as if all parties had signed the same document. All such counterparts shall
be deemed an original, shall be construed together and shall constitute one and the same
instrument. This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

 

18

 

(h) Entire Agreement. This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes and replaces all other
prior agreements, written or oral, among the parties hereto with respect to the subject matter
hereof.

(i) Captions. The headings and other captions in this Agreement are for convenience
and reference only and shall not be used in interpreting, construing or enforcing any provision of
this Agreement.

(j) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

(k) Amendments. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given, without the written consent of the Company and
Purchaser.

(l) Aggregation of Stock. All Registrable Common Stock held by or acquired by any
Affiliated Persons will be aggregated together for the purpose of determining the availability of
any rights under this Agreement.

(m) Equitable Relief. The parties hereto agree that legal remedies may be inadequate
to enforce the provisions of this Agreement and that equitable relief, including specific
performance and injunctive relief, may be used to enforce the provisions of this Agreement.

 

19

 

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first herein above written.

	 	 	 	 	 
	 	GREEN BANKSHARES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	NORTH AMERICAN FINANCIAL
 HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Registration Rights Agreement]

 

20

 

Exhibit D

Subsequent Transactions

Merger of the Bank

The Bank and a Subsidiary of the Purchaser (the “Purchaser Entity”) propose to engage
in a merger transaction pursuant to an agreement and plan of merger on terms and conditions
reasonably satisfactory to Purchaser, the Company and the Bank in which merger transaction each
share of capital stock of the Bank will be exchanged for shares of capital stock of the Purchaser
Entity at an exchange ratio that is equal to the ratio of the tangible book value per share of the
Bank to the tangible book value per share of the Purchaser Entity. In the event that the financial
terms of such merger transaction are materially different than as set forth in the preceding
sentence such that they are not within the approval of the Board of Directors of the Bank and the
Company as of the date hereof, the Board of Directors of the Bank and the Board of Directors of the
Company following the Closing shall approve the terms of such merger prior to its consummation.

Merger of the Company

Subsequent to the merger of the Bank and the Purchaser Entity, the Purchaser intends to cause
the Company to merge with and into Purchaser in a stock-for-stock transaction on terms and
conditions reasonably satisfactory to Purchaser in which transaction the Purchaser expects the
merger to be effected based on the ratio of the relative tangible book values per share of the
Purchaser and the Company. In the event that the financial terms of such merger transaction are
materially different than as set forth in the preceding sentence such that they are not within the
approval of the Board of Directors of the Company as of the date hereof, the Board of Directors of
the Company after the Closing shall approve the terms of such merger prior to its consummation.

 

Exhibit D

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