Document:

EXHIBIT 10.8

Dated: ______________________

ETFS COLLATERALIZED COMMODITIES TRUST

FORM OF DIRECT AGREEMENT

(relating to Funds established each as a
separate series within the Trust)

between:

[COUNTERPARTY]

and

[AUTHORIZED PARTICIPANT]

1

Contents

	
  

 	
  

 	
  

 
	
 1. Defined terms and interpretation

 	
  

 	
 3

 
	
  

 	
  

 	
  

 
	
 2. Obligations Relating To Settlement Failures

 	
  

 	
 8

 
	
  

 	
  

 	
  

 
	
 3.
 Undertakings

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 4.
 Representations

 	
  

 	
 10

 
	
  

 	
  

 	
  

 
	
 5.
 Acknowledgements of Authorized Participant

 	
  

 	
 11

 
	
  

 	
  

 	
  

 
	
 6. Payments
 and Interest

 	
  

 	
 11

 
	
  

 	
  

 	
  

 
	
 7. Deduction
 or Withholding for Tax

 	
  

 	
 12

 
	
  

 	
  

 	
  

 
	
 8. Set-Off

 	
  

 	
 16

 
	
  

 	
  

 	
  

 
	
 9. Notices

 	
  

 	
 17

 
	
  

 	
  

 	
  

 
	
 10.
 Amendment

 	
  

 	
 18

 
	
  

 	
  

 	
  

 
	
 11.
 Termination

 	
  

 	
 18

 
	
  

 	
  

 	
  

 
	
 12.
 Assignment

 	
  

 	
 18

 
	
  

 	
  

 	
  

 
	
 13.  Survival

 	
  

 	
 18

 
	
  

 	
  

 	
  

 
	
 14.
 Miscellaneous

 	
  

 	
 18

 
	
  

 	
  

 	
  

 
	
 15.
 Governing law and Jurisdiction

 	
  

 	
 18

 
	
  

 	
  

 	
  

 
	
 16.
 Counterparts

 	
  

 	
 19

 
	
  

 	
  

 	
  

 
	
 Schedule 1
 Representations and Warranties by Authorized Participant

 	
  

 	
 20

 
	
  

 	
  

 	
  

 
	
 Schedule 2 Representations and Warranties by Counterparty

 	
  

 	
 21

 

2

DIRECT AGREEMENT

THIS AGREEMENT is made the [________] day of
[________],

Between:

	
  

 	
  

 
	
 (1)

 	
 ___________________ (“Counterparty”); and

 
	
  

 	
  

 
	
 (2)

 	
 ___________________
 (“Authorized Participant”);

 

whereas:

	
  

 	
  

 
	
 (A)

 	
 ETFS Collateralized Commodities Trust, a
 Delaware statutory trust (“Trust”), has established a platform pursuant to
 which shares issued by separate series thereof (“Funds”) will be subscribed
 by Authorized Participant and other parties each in their own capacity as an
 authorized participant.

 
	
  

 	
  

 
	
 (B)

 	
 Funds will enter into and terminate
 Commodity Contracts with Counterparty in accordance with the terms of the
 Facility Agreement and the Counterparty ISDA between Counterparty and each of
 the Funds.

 
	
  

 	
  

 
	
 (C)

 	
 Counterparty and Authorized Participant
 wish to record certain arrangements that they have made in relation to the
 issuance and redemption of Shares by the Funds and the entering into and
 terminating of Commodity Contracts between Counterparty and each of the
 Funds.

 

NOW IT IS HEREBY AGREED as follows:

DEFINED TERMS AND INTERPRETATION

Defined terms

In this Agreement, the
following words and expressions have the following meanings unless the context
otherwise requires:

“Additional Termination
Event” has the meaning given in the Master Agreement;

“Affected Party”
has the meaning given in the Master Agreement;

“Affected Transaction”
has the meaning given in the Master Agreement;

“Affiliate” means, in
relation to any person, any entity controlled, directly or indirectly, by that
person, any entity that controls, directly or indirectly, that person, or any
entity directly or indirectly under common control with that person; and for
this purpose, control
of any entity or person means ownership of a majority of the voting power of
the entity or person;

“Agreement”
means this agreement between Authorized Participant and Counterparty;

“Applicable Authorized
Participant Agreement” means each authorized participant
agreement deemed to have been entered into between Sponsor and Trust on behalf
of each Fund and Authorized Participant with respect to Counterparty as
“Commodity Contract Counterparty” (as defined in the Authorized Participant
Agreement) pursuant to Section 17 of the Authorized Participant Agreement;

3

“Authorized
Individual” means, in respect of a Party, a natural person having
authority on behalf of that Party to sign notices, give instructions and make
binding commitments on behalf of that Party in relation to activities
contemplated by the Facility Agreement and the Counterparty ISDA or this
Agreement as notified in writing by such Party from time to time;

“Authorized
Participant Delayed Settlement” means, in relation to any Commodity Contracts,
the [Creation Unit Capital Contribution] with respect to the corresponding
Shares not being paid into the Commodity Contract Counterparty Account in full
in cleared and immediately available US Dollar funds on the Payment Date for
the entering into of those Commodity Contracts, other than any such failure
which has occurred as a result of (i) the failure of Counterparty to comply
with its obligations in respect of such Commodity Contracts under the Facility
Agreement or (iii) an Authorized Participant Settlement Failure;

“Authorized
Participant Settlement Failure” means an Authorized Participant Settlement
Failure Event which has occurred and been continuing for a period of at
least three Business Days running from and including the Settlement Failure
Date;

“Authorized
Participant Settlement Failure Event” means, in relation to any Commodity
Contracts, the failure by Authorized Participant to comply with its obligations
in respect of the Purchase Order for the Shares relating to those Commodity Contracts
under the Applicable Authorized Participant Agreement (including without
limitation a failure to pay the Creation Unit Capital Contribution in respect
of those Shares on the Payment Date therefor in full in cleared and immediately
available US Dollar funds into the Commodity Contract Counterparty Account in
accordance with the Applicable Authorized Participant Agreement), other than
any such failure which has occurred as a result of (i) the failure of the
relevant Fund to comply with its obligations in respect of the issue of those
Shares under the Applicable Authorized Participant Agreement or (ii) the
failure of Counterparty to comply with its obligations in respect of the
entering into of the corresponding Commodity Contracts under the Facility Agreement
and the Counterparty ISDA; 

“Business Day” means a
Day (other than a Saturday or a Sunday) on which commercial banks and foreign
exchange markets settle payments and are open for general business (including
dealings in foreign exchange and foreign currency deposits) in New York;

 “Cancellation”
means the termination of Commodity Contracts in accordance with the Facility
Agreement and the Counterparty ISDA (and “Cancel”
and “Cancelled” shall be construed accordingly);

 “Cancellation
Amount” means, in respect of a
Cancellation, the amount determined in accordance with the Facility Agreement
and the Counterparty ISDA for that Cancellation;

“Change in Tax Law” means (a) any action taken by a
taxing authority, or brought by a taxing authority in a court of competent
jurisdiction after the date of this Agreement (regardless of whether such
action is taken or brought with respect to a Party); or (b) the announcement,
enactment, promulgation, execution or ratification or (in the case of sections
1471 to 1474 (inclusive) of the United States Internal Revenue Code of 1986)
the coming into force of, or (in any case) any change or proposed change in or
amendment or proposed amendment to, any law, regulation, order, guidance,
treaty or practice relating to tax (or in the application or official
interpretation by any competent authority of any law, treaty or practice
relating to tax) that occurs on or after the date of this Agreement;

“Close-out Amount”
has the meaning given in the Master Agreement;

“Commodity Contract”
means a contract between a Fund and Counterparty Created in accordance with the
Facility Agreement and the Counterparty ISDA, establishing obligations of
Counterparty to Fund and Fund to the Counterparty;

4

“Commodity Contract
Counterparty Account” means the bank account notified by
Counterparty to the relevant Fund as such under the Facility Agreement from
time to time;

“Compensation Amount”
has the meaning given in Section 2.4;

“Compensation Amount
Determination Date” has the meaning given in Section 2.3;

“Counterparty
Delayed Settlement” means, in relation to any Commodity
Contracts corresponding to Shares held by Authorized Participant which are to
be Redeemed, the Cancellation Amount with respect to those Commodity Contracts
not being paid into the applicable Redemption Account (as defined in the
Facility Agreement) in full in cleared and immediately available US Dollar
funds on the Payment Date for the Cancellation of those Commodity Contracts,
other than any such failure which has occurred as a result of (i) the failure
of Authorized Participant to comply with the provisions of the terms and
conditions of the Shares relating to the Redemption of such Shares under the
Applicable Authorized Participant Agreement, (ii) such payment being discharged
by way of set-off between Counterparty and the relevant Fund under the Facility
Agreement or the Counterparty ISDA, or (iii) a Counterparty Settlement Failure;

“Counterparty Group”
means the Counterparty and its Affiliates;

“Counterparty ISDA” means the
ISDA Master Agreement, dated as of __________, 2011, by and between the
relevant Fund and Counterparty, including the Master Confirmation thereunder
dated as of __________, 2011 between the Fund and Counterparty;

“Counterparty
Settlement Failure” means a Counterparty Settlement Failure Event has
occurred and has been continuing for a period of at least three Business
Days running from and including the Settlement Failure Date;

“Counterparty
Settlement Failure Event” means, in relation to any Commodity
Contracts, the failure by Counterparty to comply with its obligations in
respect of the Cancellation of those Commodity Contracts under the Facility
Agreement and the Counterparty ISDA (including without limitation a failure to
pay the Cancellation Amount in respect of those Commodity Contracts on the
Payment Date therefor in full in cleared and immediately available US Dollar
funds into the applicable Redemption Account (as defined in the Facility
Agreement) in accordance with clause [12.8] of the Facility Agreement), other
than any such failure which has occurred as a result of the failure of
Authorized Participant to comply with the provisions relating to the Redemption
of the corresponding Shares;

“Creation”
means the entering into of Commodity Contracts in accordance with the Facility
Agreement and the Counterparty ISDA and “Create” and “Created” shall be
construed accordingly;

“Creation Amount”
means, in respect of a Creation, the amount payable in accordance with the
Facility Agreement and the Counterparty ISDA by or on behalf of the relevant
Fund to Counterparty in respect of that Creation;

“Creation Unit Capital
Contribution” means the amount payable in respect of a Purchase
Order for the Shares comprised in a Creation Unit (as defined in the Trust
Agreement) by crediting such amount to the Commodity Contract Counterparty
Account in accordance with the Applicable Authorized Participant Agreement by
Authorized Participant to the relevant Fund;

“Default Rate” means a
rate per annum of interest equal to ________, compounding daily;

“Delayed Settlement” means
either a Counterparty Delayed Settlement or an Authorized Participant Delayed
Settlement;

5

“Determining Party”
means, in relation to any Settlement Failure, the Party which is not the
Settlement Failure Party;

“Early Termination Date”
has the meaning given in the Master Agreement;

“Facility Agreement”
means the Facility Agreement dated __________, 2011 between Counterparty and
the relevant Fund providing for the entering into and termination of Commodity
Contracts;

“Funding Rate” means a
rate per annum of interest equal to _______, compounding daily;

“Group”
means, in relation to a person, that person and any Affiliate of that person;

“Hedging Position”
means, with respect to one or more Shares (if Authorized Participant is the
Determining Party) or Commodity Contracts (if Counterparty is the Determining
Party), any transaction (or group or series or portions of transactions)
entered into by the Determining Party (or an Affiliate of the Determining
Party) with any other person or persons (including, without limitation,
Authorized Participant, Counterparty or an Affiliate of any of them) which it
is commercially reasonable to regard as limiting or having the effect of
limiting the extent to which the Determining Party (or an Affiliate of the
Determining Party) will be affected by any risk or other exposure arising under
or in respect of such Shares as a result of Authorized Participant giving an
[Application]Form or a Redemption Notice in respect of those Shares
(if Authorized Participant is the Determining Party), or in respect of such
Commodity Contracts as a result of the relevant Fund giving any Notice for
entering into or termination of those Commodity Contracts (if Counterparty is
the Determining Party);

“Indemnifiable Tax” means any
Tax other than a Tax that would not be imposed in respect of a payment under
this Agreement but for a present or former connection between the jurisdiction
of the government or taxation authority imposing such Tax and the recipient of
such payment or a person related to such recipient (including, without
limitation, a connection arising from such recipient or related person being or
having been a citizen or resident of such jurisdiction, or being or having been
organized, present or engaged in a trade or business in such jurisdiction, or
having or having had a permanent establishment or fixed place of business in
such jurisdiction, but excluding a connection arising solely from such
recipient or related person having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement);

 “law”
includes any treaty, law, rule or regulation as modified, in
the case of tax matters, by the practice of any relevant governmental revenue
authority;

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 “Master Agreement” means an agreement in the form of
 the 2002 ISDA Master Agreement (including the Schedule thereto) as if
 Counterparty and Authorized Participant had executed an agreement in such a
 form (but without any schedule thereto except for the election of New York
 law as the governing law;

 

“Notice”
has the meaning given in Section 9.1;

“Notional Transaction”
has the meaning given in Section 2.4;

“Other Amounts”
has the meaning given in Section 8.1;

“Party” means a
party to this Agreement;

“Payment Date”
has the meaning given in the Facility Agreement;

“Proceedings”
has the meaning given in Section 15.2;

6

“Prospectus” means the
prospectus dated ________;

“Purchase Order”
means an order for the issue of Shares by the relevant Fund given by the Authorized
Participant in accordance with the Applicable Authorized Participant Agreement
and the Trust Agreement;

“Redemption”
means the redemption of Shares in accordance with the Trust Agreement and the
Authorized Participant Agreement, and “Redeem” and “Redeemed” shall be
construed accordingly;

“Redemption Amount”
means the amount payable by or on behalf of a Fund to Authorized Participant
upon Redemption of Shares;

“Relevant Transaction”
has the meaning given in Section 4.3;

“Settlement Failure” means
either a Counterparty Settlement Failure or an Authorized Participant
Settlement Failure;

“Settlement Failure
Amounts” has the meaning given in Section 0;

“Settlement Failure
Date” means, in relation to a Settlement Failure Event, the date on
which such Settlement Failure Event occurred;

“Settlement Failure
Event” means a Counterparty Settlement Failure Event or an
Authorized Participant Settlement Failure Event;

“Settlement Failure
Party” means, in relation to a Settlement Failure, (a) Counterparty
if the Settlement Failure is a Counterparty Settlement Failure or (b)
Authorized Participant if the Settlement Failure is an Authorized Participant
Settlement Failure;

“Share”
means a Share issued by a Fund in accordance with and as defined in the
Facility Agreement;

“Sponsor” means ETF
Securities USA LLC, a Delaware limited liability company;

“Tax”
means any present or future tax, levy, impost, duty, charge, assessment or fee
of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax;

“Trust Agreement”
means the Trust
Agreement between the Sponsor and the Trustee under which the Trust is formed
and which sets forth the rights and duties of the Sponsor and the Trustee;

“Termination Currency”
has the meaning given in the Master Agreement;

“Transaction”
has the meaning given in the Master Agreement;

“US Dollars”
means the lawful currency of the United States of America.

Interpretation

The following rules shall apply
to the interpretation of this Agreement unless the context otherwise requires:

Headings to sections,
paragraphs, and other provisions of this Agreement are inserted for ease of
reference only and shall not affect the interpretation of this Agreement.

7

Any reference to a person or
persons includes reference to any individual, corporation, partnership, joint
venture, association, public body, governmental authority or other entity.

Words in the singular shall
also include the plural and vice versa.

Any reference to a Section or
Schedule is a reference to a Section or Schedule of this Agreement.

Any reference to this Agreement
or to any other agreement or document includes a reference to this Agreement,
or, as the case may be, such other agreement or document, as amended, varied,
novated, supplemented or replaced from time to time.

Any reference in this Agreement
to a time is a reference to local time in New York, New York, USA.

Non Waiver

No failure or delay by any
Party in exercising any right or remedy provided by law under or pursuant to
this Agreement shall impair such right or remedy or operate or be construed as
a waiver or variation of such right or remedy or preclude its exercise at any
subsequent time and no single or partial exercise of any such right or remedy
shall preclude any other or further exercise of it or the exercise of any other
right or remedy.

Consequence of
unenforceability

If at any time any provision of
this Agreement shall be found by any court or administrative body of competent
jurisdiction to be invalid, illegal or unenforceable:

such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement which
shall remain in full force and effect; and

the Parties shall attempt to
substitute for any invalid, illegal or unenforceable provision a valid, legal
or enforceable provision which achieves to the greatest extent possible the
same effect as would have been achieved by the invalid, illegal or
unenforceable provision.

Obligations
Relating To Settlement Failures 

Acknowledgements

Each of Counterparty and
Authorized Participant acknowledges that:

in respect of entering into
Commodity Contracts in respect of which notice has been delivered to
Counterparty, the relevant Fund will not be able to make payment of the
relevant Creation Amount unless and until Authorized Participant pays the
Creation Unit Capital Contribution in respect of the corresponding Shares in
accordance with the Applicable Authorized Participant Agreement [and the Trust
Agreement];

in respect of each Redemption
of Shares by Authorized Participant in relation to which notice has been
delivered to Counterparty, a Fund will not be able to make payment of
the relevant Redemption Amount to Authorized Participant unless and until
Counterparty pays the Cancellation Amount in respect of the corresponding
Commodity Contracts to that Fund; and

they have accordingly agreed to
make payments to one another in accordance with this Section 0 if a
Settlement Failure occurs.

Notification
of Commodity Contract Counterparty Account

8

Counterparty shall notify
Authorized Participant of the payment instruction and wiring details of the
Commodity Contract Counterparty Account from time to time.

Notification
of Compensation Amount Determination Date

If at any time a Settlement
Failure occurs, then the Determining Party may by notice in writing to the
Settlement Failure Party designate a day not earlier than the day such notice
is effective as a Compensation Amount Determination Date in respect of that
Settlement Failure. The Compensation Amount Determination
Date in respect of that Settlement Failure will then occur on
the date so designated, whether or not that Settlement Failure is then continuing.

Determination
of Compensation Amounts

If a Compensation Amount
Determination Date has been designated in respect of a Settlement Failure in
accordance with Section 0, then the Determining Party will determine the Compensation Amount
with respect to that Settlement Failure as the amount (denominated in US
Dollars) that would have been its Close-out Amount under the Master Agreement
if:

in relation to each Commodity
Contract to which the Settlement Failure relates, Counterparty and Authorized
Participant had entered into a Transaction the material terms of which are
identical to the material terms of that Commodity Contract (but as if
Authorized Participant had been a party thereto in place of the relevant Fund)
(each such Transaction being a Notional Transaction);

the occurrence of the
Settlement Failure constituted an Additional Termination Event under the Master
Agreement, with respect to which:

Counterparty would be the sole
Affected Party if the Settlement Failure were a Counterparty Settlement Failure,
and Authorized Participant would be the sole Affected Party if the Settlement
Failure were an Authorized Participant Settlement Failure; and

the only Affected Transactions
were the Notional Transactions;

an Early Termination Date had
occurred under the Master Agreement in respct of the Notional Transactions
pursuant to the occurrence of such Additional Termination Event on the
Compensation Amount Determination Date; and

the Termination Currency were
US Dollars,

[and on the basis that the
reference to “loss or cost incurred in connection with its terminating,
liquidating or re-establishing any hedge related to a Terminated Transaction or
group of Terminated Transactions (or any gain resulting from any of them)” in
the definition of “Close-out Amount” shall include, without limitation, any
loss or cost incurred, or gain realized, by the Determining Party or any of its
Affiliates as a result of such person terminating, liquidating, obtaining or
re-establishing any Hedging Position with respect to the Commodity Contracts
(if Counterparty is the Determining Party) or the Shares (if Authorized
Participant is the Determining Party) to which the Settlement Failure relates.]1

Calculations

The Determining Party will
determine the Compensation Amount with respect to a Settlement Failure in
accordance with Section 0 on or as soon as reasonably practicable
following the occurrence of the Compensation Amount Determination Date for that Settlement Failure, and will
provide to the

1
See comment above re 1992 ISDA.

9

 Settlement Failure Party a statement showing, in reasonable
detail, such calculations (including all relevant quotations, if any, and
specifying the Compensation Amount).

Payment of
Compensation Amounts

If the Compensation Amount is a
positive number, the Settlement Failure Party will pay it to the Determining
Party; if it is a negative number, the Determining Party will pay the absolute
value of the Compensation Amount to the Settlement Failure Party. Such amount
shall be payable by the relevant Party on the day on which the notice given by
the Determining Party in respect of such Compensation Amount is effective. The
Compensation Amount is payable for the loss of bargain and the loss of
protection against future risks, and, except as otherwise provided in this
Agreement, neither Party will be entitled to recover any additional damages as
a consequence of the occurrence of a Settlement Failure

Undertakings

Authorized Participant
undertakes that it shall comply with its obligations and undertakings under the
Applicable Authorized Participant Agreement, and further undertakes that it
shall not represent or suggest to any potential investors in or distributors of
Commodity Contracts that either Counterparty or any of its Affiliates has
[structured] Shares, or provided any advice or information in respect of
Shares, or accepted any responsibility in respect of the Prospectus.

Counterparty undertakes that it
shall comply with its obligations and undertakings under the Facility Agreement
and the Counterparty ISDA.

Representations

Authorized Participant hereby
gives, as at the date of this Agreement and on each day on which Shares are
issued to Authorized Participant, or Shares held by Authorized Participant are
Redeemed, by Fund, the representations and warranties set out in
Schedule 1.

Counterparty hereby gives, as
at the date of this Agreement and on each day on which Commodity Contracts are
Created or Cancelled between Counterparty and Fund under the Facility Agreement
and Counterparty ISDA in connection with the issue or Redemption of Shares, the
representations and warranties set out in Schedule 2.

Each
of Authorized Participant and Counterparty represents to one another as follows
on the date of this Agreement and on each day on which Shares are issued to
Authorized Participant, or Shares held by Authorized Participant are Redeemed,
by Fund and Commodity Contracts are Created or Cancelled between Counterparty
and Fund under the Facility Agreement and Counterparty ISDA in connection with
such issue or Redemption (each such issue, Redemption, entering into or
Cancellation being a Relevant Transaction):

that it is acting for its own
account, and it has made its own independent decisions to enter into this
Agreement and (in the case of Authorized Participant) the Applicable Authorized
Participant Agreement and (in the case of Counterparty) the Facility Agreement
and the Counterparty ISDA and as to whether each Relevant Transaction is
appropriate or proper for it based upon its own judgment and upon advice from
such advisers as it has deemed necessary;

that it is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into any Relevant Transaction; it being understood that
information and explanations related to the terms and conditions of a Relevant
Transaction shall not be considered investment advice or a recommendation to
enter into that Relevant Transaction;

10

that no communication (written
or oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of any Relevant Transaction;

that it is capable of assessing
the merits of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions and
risks of each Relevant Transaction, and it is also capable of assuming, and
assumes, the risks of any Relevant Transaction;

that the other party is not
acting as a fiduciary for or an adviser to it in respect of any Relevant
Transaction; and

that it is entering into (i)
this Agreement, each Relevant Transaction, (in the case of Authorized
Participant only) the Authorized Participant Agreement and (in the case of
Counterparty only) the Facility Agreement and the Counterparty ISDA and (ii)
any other documentation relating to this Agreement, each Relevant Transaction,
(in the case of Authorized Participant only) the Authorized Participant
Agreement and (in the case of Counterparty only) the Facility Agreement and the
Counterparty ISDA as principal (and not as agent or in any other capacity,
fiduciary or otherwise).

Acknowledgements
of Authorized Participant

Authorized Participant
acknowledges and agrees that:

the Shares have been structured
and are being marketed or promoted to authorized participants (being persons
who have entered into an “Authorized Participant Agreement” (as defined in the
Facility Agreement) with the Fund and an agreement with the Counterparty in
substantially the same form as this agreement) by Sponsor and/or the Funds
alone, and that Counterparty has had and has no involvement in either of these
processes;

Counterparty has not made, nor
does it make, any representations to Authorized Participant as to (i) the
suitability of Shares for Authorized Participant or any other investor; (ii)
the appropriate accounting treatment or possible tax consequences of an
investment in any Shares; or (iii) the expected performance of any Shares,
either in absolute terms or relative to competing investments;

Counterparty has not verified
the information contained in the Prospectus (other than the information
expressly referred to in Section ___ of the Facility Agreement as having been
provided by Counterparty) and has not made any representation, warranty or
undertaking, express or implied, to any person or accepted any responsibility
or liability as to the accuracy or completeness of any information contained in
the Prospectus or any other information supplied in connection with Shares or
their distribution;

Shares represent an interest in
the Funds only and do not represent an interest in or obligation of
Counterparty; 

the interests in the Funds
represented by the Shares are not guaranteed by Counterparty or any other
member of the Counterparty Group; and

if it is in material breach of
any selling restrictions to which it is subject under the Authorized
Participant Agreement or this Agreement, and for any of the other reasons
specified in the Facility Agreement, Counterparty shall be entitled to
designate Authorized Participant an Unacceptable Authorized Participant for the
purposes of the Facility Agreement.

Payments and
Interest

Where a day on which a payment
would otherwise be due and payable is not a Business Day, such payment shall be
due and payable by the payer on the next following Business Day without
interest.

11

All monies payable under this
Agreement shall be paid in US Dollars in cleared and immediately available
funds and without set-off or counterclaim (other than any set-off expressly
contemplated by this Agreement purusuant to Clause 8).

Interest on any amount
outstanding under this Agreement shall accrue from and including the date on
which such outstanding amount was due to but excluding the date on which such
outstanding amount is paid:

at the Funding Rate from and
including the date on which such outstanding amount was due to but excluding
the date falling three Business Days after that date; and

thereafter at
the Default Rate.

Following the occurrence of a
Delayed Settlement, the Counterparty shall calculate the Delayed Settlement
Compensation Amount to be paid between Counterparty and Authorized Participant
under this Section 6.4 on account of that Delayed Settlement. The Delayed Settlement
Compensation Amount payable between the parties in relation to a
Delayed Settlement shall be determined as an amount of interest accruing on the
balance of the [Creation Unit Capital Contribution] (if an Authorized
Participant Delayed Settlement) or Cancellation Amount (if a Counterparty
Delayed Settlement) that is the subject of the Delayed Settlement from the
Payment Date to which the Delayed Settlement relates. Such interest shall be
determined as:

	
  

 	
  

 	
  

 
	
 (a)

 	
 accruing at
 the Funding Rate; and:

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 ceasing to
 accrue:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 in relation to the balance of a [Creation
 Unit Capital Contribution], (A) on the date on which the Commodity Contracts
 relating to such balance are Cancelled, or (B) if such Commodity Contracts
 are not so Cancelled, on the date on which such balance is paid by Authorized
 Participant into the Commodity Contract Counterparty Account in accordance
 with the Authorized Participant Agreement; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 in relation to the balance of a
 Cancellation Amount, on the date on which such balance is paid by
 Counterparty into the relevant Redemption Account (as defined in the Facility
 Agreement).

 

6.5 If the Delayed Settlement
is a Counterparty Delayed Settlement, the Delayed Settlement Compensation
Amount determined pursuant to Section 6.4 above shall be payable by
Counterparty to Authorized Participant within 2 Business Days of written demand
being made by Authorized Participant, and if the Delayed Settlement is an
Authorized Participant Delayed Settlement, the Delayed Settlement Compensation
Amount so determined shall be payable by Authorized Participant to Counterparty
within 2 Business Days of written demand being made by Counterparty.

Deduction or
Withholding for Tax

Gross-up

All payments under this
Agreement will be made without any deduction or withholding for or on account
of any Tax unless such deduction or withholding is required by any applicable
law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a Party is so required to deduct or withhold,
then that Party (X) will:

promptly notify the other Party
(Y) of such requirement;

12

pay to the relevant authorities
the full amount required to be deducted or withheld (including the full amount
required to be deducted or withheld from any additional amount paid by X to Y
under this Section 0) promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such amount has
been assessed against Y;

promptly forward to Y an
official receipt (or a certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such authorities; and

if such Tax is an Indemnifiable
Tax, pay to Y, in addition to the payment to which Y is otherwise entitled
under this Agreement, such additional amount as is necessary to ensure that the
net amount actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full amount Y would have
received had no such deduction or withholding been required. However, X will
not be required to pay any additional amount to Y to the extent that it would not
be required to be paid but for:

the failure by Y to comply with
or perform any agreement contained in Section 0 (if Y is Authorized
Participant) or Section 0 (if Y is Counterparty) of this Agreement; or 

the failure of a representation
made by Y pursuant to Section 0 (if Y is Authorized Participant) or
Section 0 (if Y is Counterparty) to be accurate and true unless such
failure would not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on or after the
date on which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a Party) or (II) a Change in Tax Law.

Liability

If:

X is required by any applicable
law, as modified by the practice of any relevant governmental revenue
authority, to make any deduction or withholding in respect of which X would not
be required to pay an additional amount to Y under Section 0; and

X does not so deduct or
withhold; and

a liability resulting from such
Tax is assessed directly against X,

then, except to the extent Y
has satisfied or then satisfies the liability resulting from such Tax, Y will
promptly pay to X the amount of such liability (including any related liability
for interest, but including any related liability for penalties only if Y has
failed to comply with or perform any agreement contained in Section 7.3 (if Y
is Authorized Participant) or Section 7.4 (if Y is Counterparty) of this
Agreement.

Tax Covenants
of Authorized Participant

Authorized Participant agrees:

to deliver a correct, complete
and executed U.S. Internal Revenue Service Form W-9 (establishing an exemption
from back-up withholding), W-8BEN, W-8ECI, W-8IMY, and/or W-8EXP or any
successor thereto, including appropriate attachments, whichever is appropriate,
(i) upon the execution of this Agreement, (ii) promptly upon reasonable demand
by Counterparty, and (iii) before any such form previously provided by
Authorized Participant has become obsolete or incorrect;

to deliver, with respect to any
“withholdable payment” (within the meaning of section 1471 or 1472 of the
Internal Revenue Code of 1986, as amended (the “Code”), as in effect on the
date hereof), any forms required to be delivered pursuant to the Code and the
US Treasury regulations promulgated

13

thereunder so that such
payments may be made without any obligation on the part of the other party to
withhold under section 1471 or 1472 of the Code, (i) promptly upon reasonable
demand by Counterparty and (ii) before any such form previously provided by
Authorized Participant has become obsolete or incorrect; and

to complete (accurately and in
a manner reasonably satisfactory to Counterparty), execute, arrange for any
required certification of, and deliver to Counterparty or such government or taxing
authority as Counterparty directs, any form or document that is not referred to
in Section 7.3(a) or other procedural formalities that may reasonably be
required or reasonably requested in order to enable Counterparty to make, or
obtain authorization to make, a payment under this Agreement without any
deduction or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as compliance with the paragraph does
not materially prejudice the legal or commercial position of the Authorized
Participant), as soon as reasonably practicable upon learning that the form or
document is required. 

Tax Covenants
of Counterparty

Counterparty agrees:

to deliver a correct, complete
and executed U.S. Internal Revenue Service Form W-9 (establishing an exemption
from back-up withholding), W-8BEN, W-8ECI, W-8IMY, and/or W-8EXP or any
successor thereto, including appropriate attachments, (i) upon the execution of
this Agreement, (ii) promptly upon reasonable demand by Authorized Participant,
and (iii) before any such form previously provided by Counterparty has become
obsolete or incorrect;

to deliver, with respect to any
“withholdable payment” (within the meaning of section 1471 or 1472 of the Code,
as in effect on the date hereof), any forms required to be delivered pursuant
to the Code and the US Treasury regulations promulgated thereunder, and in the
case of a “foreign financial institution” within the meaning of section 1471 of
the Code to enter into an agreement with the Treasury as described in section
1471 of the Code, so that such payments may be made without any obligation on
the part of the other party to withhold under section 1471 or 1472 of the Code,
(i) promptly upon reasonable demand by Authorized Participant and (ii) before
any such form previously provided by Counterparty has become obsolete or
incorrect; and

to complete, accurately and in
a manner reasonably satisfactory to Authorized Participant, execute, arrange
for any required certification of, and deliver to Authorized Participant or
such government or taxing authority as Authorized Participant directs, any form
or document that is not referred to in Section 7.4(a) that may be reasonably
required or reasonably requested in order to allow Authorized Participant to
make a payment under this Agreement without any deduction or withholding for or
on account of any Tax or with such deduction or withholding at a reduced rate
(so long as compliance with the paragraph does not materially prejudice the
legal or commercial position of the Authorized Participant), as soon as
reasonably practicable upon learning that the form or document is required.

Tax
Representations of Authorized Participant

Authorized Participant makes
the following representations to Counterparty at all times during the term of
this Agreement:

if Authorized
Participant is not a US person and provides a W-8BEN:

it is a “non-U.S. branch of a
foreign person” (as that term used in section 1.1441-4(a)(3)(ii) of U.S.
Treasury Regulations) and a “foreign person” (as that term is used in section
1.6041 4(a)(4) of U.S. Treasury Regulations) for U.S. federal income tax
purposes;

14

it is fully eligible for the
benefits of the “Business Profits” provision, the “Interest” provision or the
“Other Income” provision of the Treaty with respect to Taxes on Income and on
Capital Gains between the United States and Authorized Participant’s
jurisdiction of tax residence (as amended or substituted from time to time)
with respect to any payment described in such provisions and received or to be
received by it in connection with this Agreement;

as of the time any payment is
made in connection with this Agreement after December 31, 2012, (x) if
Authorized Participant is a “foreign financial institution” within the meaning
of section 1471(d)(4) of the the Code), it meets the requirements of section
1471(b) of the Code and has not elected the application of section 1471(b)(3)
of the Code, and (y) if Authorized Participant is a “non-financial foreign
entity” within the meaning of section 1472(d) of the Code, it meets the
requirements of section 1472(b) of the Code, unless one or more exceptions of
Code section 1472(c) are applicable with respect to such payment.

no payment received or to be
received by it in connection with this Agreement is attributable to a trade or
business carried on by it through a permanent establishment in the United
States; and

Authorized Participant is not a
bank that has entered into this Agreement in the ordinary course of its trade
or business of making loans, as described in section 881(c)(3)(A) of the Code,
(ii) Authorized Participant is not (and if Authorized Participant is not
treated as a corporation for U.S. federal income tax purposes, each beneficial
owner, if any, of Authorized Participant is not) a 10% shareholder of
Counterparty within the meaning of Code section 871(h)(3)(B), and (iii)
Authorized Participant is not (and if Authorized Participant is not treated as
a corporation for U.S. federal income tax purposes, each beneficial owner, if
any, of Authorized Participant is not) a controlled foreign corporation with
respect to Counterparty within the meaning of Code section 881(c)(3)(C).

or, if Authorized
Participant is a US person and provides a W-9: 

it is a “United States Person”
(as that term is defined in Section 7701(a)(30) of the Code 

or, if Authorized
Participant is not a United States Person and delivers a W-8BEN or W-8ECI: 

	
  

 	
  

 
	
 (a)

 	
 with respect to payments made to an address
 within the United States or made by a transfer of funds to an account within
 the United States, such payment will be effectively connected with the
 conduct by Authorized Participant of a trade or business in the United
 States, unless Authorized Participant notifies Counterparty that a payment is
 not so effectively connected, in which case clauses (i) – (iv) of paragraph
 (b) shall apply with respect to such payments; and

 

with respect to payments made
to an address outside the United States or made by a transfer of funds to an
account outside the United States, unless Authorized Participant notifies
Counterparty that such payments are effectively connected with the conduct by
the Authorized Participant of a trade or business in the United States:

Authorized Participant is a
“non-U.S. branch of a foreign person” (as that term used in
section 1.1441-4(a)(3)(ii) of U.S. Treasury Regulations) and a “foreign
person” (as that term is used in section 1.6041-4(a)(4) of U.S. Treasury
Regulations) for U.S. federal income tax purposes;

Authorized Participant is fully
eligible for the benefits of the “Business Profits” provision, the “Interest”
provision or the “Other Income” provision of the Treaty with respect to Taxes
on Income and on Capital Gains between the United States and Authorized
Participant’s jurisdiction of tax residence (as amended or substituted from
time to time) with respect to any payment described in such provisions and
received or to be received by it in connection with this Agreement; and

15

no payment received or to be
received by Authorized Participant in connection with this Agreement is
attributable to a trade or business carried on by it through a permanent
establishment in the United States.

Authorized Participant is not a
bank that has entered into this Agreement in the ordinary course of its trade
or business of making loans, as described in section 881(c)(3)(A) of the Code,
(ii) Authorized Participant is not (and if Authorized Participant is not
treated as a corporation for U.S. federal income tax purposes, each beneficial
owner, if any, of Authorized Participant is not) a 10% shareholder of
Counterparty within the meaning of Code section 871(h)(3)(B), and (iii)
Authorized Participant is not (and if Authorized Participant is not treated as
a corporation for U.S. federal income tax purposes, each beneficial owner, if
any, of Authorized Participant is not) a controlled foreign corporation with
respect to Counterparty within the meaning of Code section 881(c)(3)(C); and

	
  

 	
  

 
	
 (c)

 	
 as of the time any payment is made in
 connection with this Agreement after December 31,2013, (x) if Authorized
 Participant is a “foreign financial institution” within the meaning of
 section 1471(d)(4) of the US Internal Revenue Code of 1986, as amended (the
 “Code”), it meets the requirements of section 1471(b) of the Code and has not
 elected the application of section 1471(b)(3) of the Code, and (y) if
 Authorized Participant is a “non-financial foreign entity” within the meaning
 of section 1472(d) of the Code, it meets the requirements of section 1472(b)
 of the Code, unless one or more exceptions of Code section 1472(c) are
 applicable with respect to such payment.

 

or, if Authorized
Participant is not a US person and provides a W-8ECI:

all payments received or to be
received by it in connection with this Agreement is effectively connected to a
trade or business carried on by it in the United States

or, if Authorized
Participant is not a US person and provides a W-8IMY:

it has attached to the W-8IMY
one or more of the forms otherwise described under this section 7.5 on behalf
of each person for whom it is acting as an intermediary, and the person on
whose behalf such form has been provided makes the applicable representation
described in this section 7.5

Tax
Representations of Counterparty

Counterparty makes the
following representation to Authorized Participant at all times during the term
of this Agreement: Counterparty is a “United States Person” (as that term is
defined in Section 7701(a)(30) of the Code) for U.S. federal income tax
purposes.

SET-OFF

If a Compensation Amount
Determination Date has been designated in respect of a Settlement Failure in
accordance with Section 0, then any Compensation Amounts, including any
interest payable thereon pursuant to Clause 6.3 (“Settlement Failure Amounts”) payable to one
Party (the “Payee”)
by the other Party (the “Payer”) under this Agreement pursuant to the occurrence of
that Settlement Failure will, at the option of the Determining Party in
relation to the relevant Settlement Failure (and without prior notice to the
Settlement Failure Party) be reduced by set-off against any other amounts (“Other Amounts”)
payable by the Payee to the Payer (whether or not arising under this Agreement,
matured or contingent and irrespective of the currency, place of payment or
place of booking of the obligation). To the extent that any Other Amounts are
so set off, those Other Amounts will be discharged promptly and in all
respects. The Determining Party will give notice to the Settlement Failure
Party of any set-off effected under this Section 8.1.  

For the purpose of this
Section 8, either the Settlement Failure Amounts or the Other Amounts (or
the relevant portion of such amounts) may be converted by the Determining Party
into the currency in 

16

which the other is denominated
at the rate of exchange at which such Party would be able, in good faith and
using commercially reasonable procedures, to purchase the relevant amount of
such currency.

If, for the purposes of
Section 0, an obligation is unascertained, the Determining Party may in
good faith estimate that obligation and set off in respect of the estimate,
subject to the relevant Party accounting to the other when the obligation is
ascertained.

Nothing in this Section 8
will be effective to create a charge or other security interest. This
Section 8 will be without prejudice and in addition to any right of
set-off, offset, combination of accounts, lien, right of retention or
withholding or similar right or requirement to which any Party is at any time
otherwise entitled or subject (whether by operation of law, contract or
otherwise).

Notices

A notice given between
Authorized Participant and Counterparty under or in connection with this
Agreement (a Notice):

shall be in writing, in English
and signed by an Authorized Individual; and

delivered personally or sent by
first class post (and air mail if abroad) or by fax to the Party due to receive
the Notice to the address set out in Section 0 or to another address,
person or fax number specified by that Party by not less than seven days’
written notice to the other Party received before the Notice was despatched.

Unless there is evidence that
it was received earlier, a Notice is deemed given if:

if delivered by hand, at the
time of actual delivery; 

if sent by prepaid recorded
delivery or registered post (or registered airmail in the case of an address
outside the United States), on the date it is delivered or its delivery is
attempted; or 

if sent by fax, upon sending,
subject to confirmation of uninterrupted and error-free transmission by a
transmission report.

The addresses referred to in
Section 0 are:

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name of Party

 	
  

 	
 Address

 	
  

 	
 Facsimile No.

 	
  

 	
 Marked for the attention of

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Counterparty

 	
  

 	
  

 	
  

 	
 To be notified to Authorized Participant from time to time

 	
  

 	
 Chief [___][Financial]

 [___][Operating] Officer (with a copy to the General Counsel)

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Authorized

 Participant

 	
  

 	
 [address of
 Authorized Participant]

 	
  

 	
 [fax of
 Authorized Participant]

 	
  

 	
 [name]

 

17

Amendment

This Agreement may only be
amended by a written instrument signed by the Parties or their duly Authorized
Individuals, and provisions of this Agreement may only be waived by a written
instrument signed by the Party giving the waiver or its duly Authorized
Individual.

Termination

This Agreement shall terminate
automatically without any action required to be taken by the parties upon
termination of the Facility Agreement (but any such termination shall not
affect the liability of parties for obligations incurred prior to such
termination), and may otherwise be terminated by either party upon __ days’
prior written notice to the other party.

Assignment

Neither this Agreement nor any
interest or obligation in or under this Agreement may be transferred by
Authorized Participant to another entity without the prior written consent of
Counterparty (other than pursuant to a consolidation or amalgamation with, or
merger with or into, or transfer of all or substantially all of Authorized
Participant’s assets to another entity in the same jurisdiction as Authorized
Participant) and any purported transfer without such consent will be void. If a
transfer is permitted pursuant to this Section 0, Authorized Participant
shall pay all stamp and documentary duties and taxes arising as a result of or
in connection with any such transfer.

Neither this Agreement nor any
interest or obligation in or under this Agreement may be transferred by
Counterparty to another entity without the prior written consent of Authorized
Participant (and any purported transfer without such consent will be void),
unless such transfer is:

pursuant to a consolidation or
amalgamation with, or merger with or into, or transfer of all or substantially
all of Counterparty’s assets to another entity in the same jurisdiction as
Counterparty; or

to a transferee to whom
Counterparty has transferred its rights and obligations under the Facility
Agreement and the Counterparty ISDA pursuant to clause 8.1 thereof,

in which case no such consent
shall be required. If a transfer is permitted pursuant to this Section 0,
Counterparty shall pay all stamp and documentary duties and taxes arising as a
result of or in connection with any such transfer.

Survival

Until this Agreement is
terminated in accordance with its terms, the provisions of this Agreement shall
continue in full force and effect notwithstanding the completion of the arrangements
set out herein and regardless of any investigation by any Party.

Miscellaneous 

Nothing in this Agreement shall
make a Party a partner or an agent of the other Party.

Governing Law
and Jurisdiction

This Agreement shall be
governed by and construed in accordance with New York law.

With respect to any suit,
action or proceedings relating to this Agreement (Proceedings),
each Party irrevocably: (i) submits to the non-exclusive jurisdiction of New York courts; and (ii)
waives any objection which it may have at any time to the laying of venue of
any Proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and 

18

further waives the right to
object, with respect to such Proceedings, that such court does not have any
jurisdiction over such Party. The Parties further hereby knowingly, voluntarily
and intentionally waive, to the fullest extent permitted by applicable law, any
right to a trial by jury with respect to any such lawsuit or judicial
proceeding arising or relating to this agreement or the transactions
contemplated hereby.

Nothing in this Agreement
precludes either Party from bringing Proceedings in any other jurisdiction nor
will the bringing of Proceedings in any one or more jurisdictions preclude the
bringing of Proceedings in any other jurisdiction.

COUNTERPARTS

This Agreement may be executed
in any number of counterparts and by different Parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when so executed shall constitute one and the same binding
agreement between the Parties.

19

SCHEDULE 1

REPRESENTATIONS AND WARRANTIES BY AUTHORIZED
PARTICIPANT

Authorized Participant
represents and warrants:

that at any time when it
submits a request for the Redemption of any Shares, it will be the only person
who is a beneficial owner of such Shares;

that it is a company duly
incorporated and validly existing under the laws of _________________;

that it has the requisite power
and authority to enter into and perform this Agreement and the Authorized
Participant Agreement (including without limitation the Authorized Participant
Agreement) and all such actions have been duly Authorized by all necessary
procedures on its part;

that its obligations under this Agreement and the Authorized
Participant Agreement constitute its legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors’ rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law));

that the execution and delivery
by it of this Agreement and the Authorized Participant Agreement and the
performance by it of this Agreement and the Authorized Participant Agreement
will not:

result in a breach of any
provision of its memorandum and articles of association or other constituent
documents;

result in a breach of, or
constitute a default under, any instrument to which it is a party or by which
it is bound; or

result in a breach of any
order, judgment or regulation by which it is bound; and

that it has not done or omitted
to do anything which constitutes a breach of this Agreement or the Authorized
Participant Agreement.

20

SCHEDULE 2

REPRESENTATIONS
AND WARRANTIES BY COUNTERPARTY

Counterparty represents and
warrants:

(b) that it is a corporation
domiciled in _________;

that it has the requisite power
and authority to enter into and perform this Agreement, the Facility Agreement
and the Counterparty ISDA and all such actions have been duly Authorized by all
necessary procedures on its part;

that its obligations under this Agreement constitute its legal,
valid and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors’ rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law));

that the execution, delivery
and performance by it of this Agreement and the Facility Agreement and the
Counterparty ISDA will not:

result in a breach of any
provision of its memorandum and articles of association or other constituent
documents;

result in a breach of, or
constitute a default under, any instrument to which it is a party or by which
it is bound; or

result in a breach of any
order, judgment or regulation by which it is bound;

that it has not done or omitted
to do anything which constitutes a breach of this Agreement; and

that:

the information which
Counterparty has expressly provided to Fund in writing for inclusion in the
Prospectus or in a supplementary prospectus; and

any subsequent information
which Counterparty may provide to Fund and expressly permit Fund in writing to
include in any supplementary prospectus or listing particulars or otherwise to
disclose in respect of its listing or offering of Shares,

	
  

 	
  

 
	
  

 	
 and which is included in the Prospectus or
 in a supplementary prospectus or listing particulars or any other formal
 disclosure document as disclosure on Counterparty is true and accurate in all
 material respects as at the date and time given.

 

21

SIGNED by the Parties:

	
  

 	
  

 	
  

 
	
 Signed by:

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	

 	
  

 	
 )

 
	
  [Authorized Participant]

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	
  

 	
  

 	
  

 
	
 Signed by:

 	
  

 	
  

 
	
  

 	
  

 	
 )

 
	

 	
  

 	
 )

 
	
  [Counterparty]

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 
	
  

 	
  

 	
 )

 

22Exhibit 10.26

EXHIBIT 10.26

STOCK PURCHASE AGREEMENT

between

MIDDLEFIELD BANC CORP.

and

BANK OPPORTUNITY FUND LLC

Dated as of August 15, 2011

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I THE PURCHASED SECURITIES
	 	 	1	 
	 
	 	 	 	 
	Section 1.01 Issuance, Sale and Delivery of the Securities
	 	 	1	 
	Section 1.02 Closing
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	2	 
	 
	 	 	 	 
	Section 2.01 Organization, Standing, and Power
	 	 	2	 
	Section 2.02 Authority; No Breach by Agreement
	 	 	3	 
	Section 2.03 Authorized Capital Stock
	 	 	4	 
	Section 2.04 Subsidiaries
	 	 	5	 
	Section 2.05 Financial Statements
	 	 	5	 
	Section 2.06 Absence of Undisclosed Liabilities
	 	 	5	 
	Section 2.07 Loan and Investment Portfolios
	 	 	6	 
	Section 2.08 Absence of Certain Changes or Events
	 	 	6	 
	Section 2.09 Tax Matters
	 	 	8	 
	Section 2.10 Allowance for Possible Loan Losses
	 	 	8	 
	Section 2.11 Assets
	 	 	8	 
	Section 2.12 Environmental Matters
	 	 	9	 
	Section 2.13 Compliance with Laws
	 	 	10	 
	Section 2.14 Labor Relations
	 	 	10	 
	Section 2.15 Employee Benefit Plans
	 	 	11	 
	Section 2.16 Material Contracts
	 	 	13	 
	Section 2.17 Legal Proceedings
	 	 	13	 
	Section 2.18 Reports
	 	 	13	 
	Section 2.19 Community Reinvestment Act
	 	 	14	 
	Section 2.20 Privacy of Customer Information
	 	 	14	 
	Section 2.21 Bank Secrecy Act Compliance
	 	 	14	 
	Section 2.22 Insurance
	 	 	14	 
	Section 2.23 Conflict of Interest Transactions
	 	 	15	 
	Section 2.24 Deposits
	 	 	15	 
	Section 2.25 Change in Business Relationships
	 	 	15	 
	Section 2.26 Brokers
	 	 	16	 
	Section 2.27 Private Placement; No integration
	 	 	16	 
	Section 2.28 FDIC Approval
	 	 	16	 
	Section 2.29 Disclosure
	 	 	16	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
	 	 	17	 
	 
	 	 	 	 
	Section 3.01 Representations and Warranties of the Purchaser
	 	 	17	 
	Section 3.02 Compliance with Laws
	 	 	17	 
	Section 3.03 Disclosure
	 	 	18	 
	Section 3.04 Organization
	 	 	18	 
	Section 3.05 Company Shares
	 	 	18	 

 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE IV COVENANTS
	 	 	18	 
	 
	 	 	 	 
	Section 4.01 Conduct of the Company
	 	 	18	 
	Section 4.02 Conduct of the Purchaser
	 	 	20	 
	Section 4.03 Agreement as to Efforts to Consummate
	 	 	21	 
	Section 4.04 Stockholder Approval
	 	 	21	 
	Section 4.05 Regulatory Filings
	 	 	22	 
	Section 4.06 Investigation and Confidentiality
	 	 	22	 
	Section 4.07 Most Favored Nation
	 	 	23	 
	Section 4.08 Use of Proceeds
	 	 	23	 
	Section 4.09 Publicity
	 	 	23	 
	Section 4.10 Interim Financial Statements
	 	 	23	 
	Section 4.11 Directors’ and Officers’ Insurance
	 	 	24	 
	Section 4.12 Board of Directors’ Notice and Minutes
	 	 	24	 
	Section 4.13 Registration Rights
	 	 	25	 
	Section 4.14 Avoidance of Control
	 	 	34	 
	Section 4.15 Legend
	 	 	34	 
	Section 4.16 Transfer Restrictions
	 	 	35	 
	 
	 	 	 	 
	ARTICLE V ADDITIONAL AGREEMENTS
	 	 	35	 
	 
	 	 	 	 
	Section 5.01 Subsequent Capital Raises; Use of Proceeds
	 	 	35	 
	Section 5.02 Appointment of Director
	 	 	36	 
	Section 5.03 Approval of Additional Agreements
	 	 	36	 
	 
	 	 	 	 
	ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND THE COMPANY
	 	 	36	 
	 
	 	 	 	 
	Section 6.01 Conditions to the Purchaser’s Obligations at the Closing
	 	 	36	 
	Section 6.02 Conditions to the Company’s Obligations at the Closing
	 	 	39	 
	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS
	 	 	40	 
	 
	 	 	 	 
	Section 7.01 Expenses
	 	 	40	 
	Section 7.02 Survival of Representations and Covenants
	 	 	40	 
	Section 7.03 Specific Performance
	 	 	40	 
	Section 7.04 Further Assurances
	 	 	41	 
	Section 7.05 Notices
	 	 	41	 
	Section 7.06 Governing Law
	 	 	42	 
	Section 7.07 Entire Agreement
	 	 	42	 
	Section 7.08 Counterparts
	 	 	42	 
	Section 7.09 Amendments and Waivers
	 	 	42	 
	Section 7.10 Successors and Assigns
	 	 	42	 
	Section 7.11 Severability
	 	 	43	 

 

ii

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 7.12 Titles and Subtitles
	 	 	43	 
	Section 7.13 Adjustments for Stock Splits, Etc.
	 	 	43	 
	Section 7.14 Construction
	 	 	43	 
	Section 7.15 Remedies
	 	 	44	 
	Section 7.16 Incorporation of Exhibits and Schedules
	 	 	44	 
	Section 7.17 Certain Defined Terms
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION
	 	 	48	 
	 
	 	 	 	 
	Section 8.01 Termination of Agreement Prior to Closing
	 	 	48	 
	Section 8.02 Effect of Termination Prior to Closing
	 	 	49	 

 

iii

 

This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of August 15, 2011, is entered into
by and between Middlefield Banc Corp., an Ohio corporation (the “Company”), and Bank Opportunity
Fund LLC, a Delaware limited liability company (the “Purchaser”). Certain capitalized terms used
herein are defined in Section 7.17 of this Agreement.

RECITALS

WHEREAS, the Company is engaged in a private offering of its common stock, without par value
(the “Common Stock”), at a per share offering price of $16.00 to raise up to $25 million (the
“Offering”);

WHEREAS, the Company wishes to issue and sell to the Purchaser as part of the Offering that
number of shares of the Common Stock (the “Shares”) calculated pursuant to Section 1.01, and
warrants to purchase up to the number of Shares calculated pursuant to Section 1.01 at an exercise
price of $16.00 per share (the “Warrants,” and together with the Shares, the “Securities”) for an
aggregate purchase price to be calculated pursuant to Section 1.01; and

WHEREAS, the Purchaser agrees to purchase the Shares and Warrants from the Company upon the
terms and conditions described in this Agreement;

NOW, THEREFORE, in consideration of the premises, representations, warranties and the mutual
covenants contained in this Agreement, the Parties agree as follows:

ARTICLE I

THE PURCHASED SECURITIES

Section 1.01 Issuance, Sale and Delivery of the Securities.
At the Closing (as defined in Section 1.02), on the terms and subject to the conditions of
this Agreement, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase
from the Company, (a) a number of Shares of Common Stock equal to 24.9% of the Company’s total
outstanding shares of Common Stock as of the Closing Date, rounded down to the nearest whole share
(which such amount shall include any shares issued to Purchaser pursuant to the Offering); and (b)
Warrants to purchase an aggregate number of shares equal to fifteen (15) percent of the Shares
purchased by the Purchaser pursuant to clause (a) of this Section 1.01 at an exercise price of
$16.00 per share in accordance with the terms and substantially in the form set forth in
Exhibit A, which form shall include a restriction prohibiting any purchase if the purchase
would cause the Purchaser to control more than 24.9% of the Company’s then total outstanding shares
of Common Stock. In consideration, the Purchaser shall pay to the Company a Purchase Price of
$16.00 multiplied by the number of shares purchased pursuant to clause (a) of this Section 1.01
(the “Purchase Price”).

 

 

 

Section 1.02 Closing.
The Closing shall take place on such date and time as may be agreed upon by the Company and
the Purchaser at the offices of Grady & Associates in Rocky River, Ohio, or at such other location
as may be agreed upon between the Parties (such closing being called the “Closing” and such date
and at such time being called the “Closing Date”). At the Closing, the Company shall issue and
deliver to the Purchaser stock certificates, in definitive form, registered in the name of the
Purchaser, representing the Shares and the Warrants in the form attached hereto as Exhibit
A. As payment in full for the Securities being purchased by it under this Agreement, and
against delivery of the stock certificates and the Warrants on the Closing Date, the Purchaser
shall pay the Purchase Price to the Company by wire transfer or by such other method as may be
reasonably acceptable to the Company.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Purchaser that, except as set forth on the
Disclosure Schedules corresponding to the provisions of this Agreement, as of the date of this
Agreement and as of the Closing Date:

Section 2.01 Organization, Standing, and Power.

(a) The Company is an Ohio corporation, duly organized, validly existing, and in good standing
under the Laws of the State of Ohio and is duly qualified or licensed to transact business as a
foreign corporation in good standing in the jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed except in such
jurisdictions where the failure to be so qualified or licensed is not reasonably likely to have a
Material Adverse Effect. The stock registers, minute books and other Organizational Documents of
the Company have been made available to Purchaser for its review and accurately reflect, in each
case in all material respects, all meetings, consents, and other actions of the organizers,
incorporators, shareholders, board of directors, and committees of the board of directors of the
Company.

(b) The Middlefield Banking Company (“Bank 1” or “MB”) is an Ohio state-chartered commercial
bank headquartered in Middlefield, Ohio, is duly organized, validly existing, and in good standing
under the laws of the State of Ohio and is duly qualified or licensed to transact business as a
foreign corporation in good standing in the jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed except in such
jurisdictions where the failure to be so qualified or licensed is not reasonably likely to have a
Material Adverse Effect. The stock registers, minute books and other Organizational Documents of
Bank 1 have been made available to Purchaser for its review and accurately reflect, in each case in
all material respects, all meetings, consents, and other actions of the organizers,
incorporators, shareholders, board of directors, and committees of the board of directors of
Bank 1.

 

2

 

(c) Emerald Bank (“Bank 2” or “EB”, and, together with Bank 1, the “Banks” and individually, a
“Bank”) is an Ohio state-chartered commercial bank headquartered in Dublin, Ohio, is duly
organized, validly existing, and in good standing under the laws of the State of Ohio and is duly
qualified or licensed to transact business as a foreign corporation in good standing in the
jurisdictions where the character of its Assets or the nature or conduct of its business requires
it to be so qualified or licensed except in such jurisdictions where the failure to be so qualified
or licensed is not reasonably likely to have a Material Adverse Effect. The stock registers,
minute books and other Organizational Documents of Bank 2 have been made available to Purchaser for
its review and accurately reflect, in each case in all material respects, all meetings, consents,
and other actions of the organizers, incorporators, shareholders, board of directors, and
committees of the board of directors of Bank 2.

(d) EMORECO, Inc. (“EMORECO”), is an Ohio corporation headquartered in Middlefield, Ohio, is
duly organized, validly existing, and in good standing under the laws of the State of Ohio and is
duly qualified or licensed to transact business as a foreign corporation in good standing in the
jurisdictions where the character of its Assets or the nature or conduct of its business requires
it to be so qualified or licensed except in such jurisdictions where the failure to be so qualified
or licensed is not reasonably likely to have a Material Adverse Effect. One hundred percent of the
stock of EMORECO is owned by the Company. EMORECO is engaged in the business of asset resolution,
which is a permissible activity for a subsidiary of the Company pursuant to Section 4(c)(8) of the
Bank Holding Company Act and Sections 225.28(b)(1) and (b)(2) of the Federal Reserve’s Regulation
Y.

Section 2.02 Authority; No Breach by Agreement.

(a) The Company has the corporate power and authority necessary to execute, deliver, and
perform its obligations under the Transaction Documents. The Company has obtained all necessary
board approvals of the Transaction Documents and the transactions contemplated therein. Except for
the stockholder approvals contemplated by this Agreement, the execution, delivery, and performance
of the Transaction Documents and the consummation of the transactions contemplated therein have
been duly and validly authorized by all necessary corporate action in respect thereof on the part
of the Company and the Banks. The Transaction Documents represent legal, valid, and binding
obligations of the Company, enforceable against the Company in accordance with their respective
terms (except in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or similar Laws affecting
the enforcement of creditors’ rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).

 

3

 

(b) Neither the execution and delivery of the Transaction Documents by the Company, nor the
consummation by the Company or the Banks of the transactions contemplated thereby, nor compliance
by the Company or the Banks with any of the provisions hereof, will (i) conflict with or result in
a breach of any provision of the Company’s or Banks’ Articles of Incorporation or Regulations, any
amendment thereof or any resolution adopted by the board of directors or the shareholders of the
Company or the Banks that is currently in effect, (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any Asset of the Company
or the Banks under, any Contract or Permit of the Company or Banks, or (iii) except as contemplated
by Sections 4.04 and 4.05 hereof, constitute or result in a Default under, or require any Consent
pursuant to, any Law or Order applicable to the Company or the Banks or any of their Assets; except
in the cases of clauses (ii) or (iii), where such Default or Lien, or any failure to obtain such
Consent, is not reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.

(c) Subject to the accuracy of the Purchaser’s representations and warranties set forth in
Article III, except as contemplated by Sections 4.04 and 4.05 hereof, and as necessary to fulfill
the Company’s obligation to provide registration rights under Section 4.13, and except for any
filing or other obligation of the Company under the Securities Act of 1933, rules and regulations
of the SEC, and state blue sky laws, no registration or filing with, or Consent or approval of or
other action by, any Regulatory Authority or any third party which, if not obtained or made, are
not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, is or
will be necessary for the Company’s valid execution, delivery and performance of the Transaction
Documents and the issuance, sale and delivery of the Securities, other than those which have
previously been obtained or made.

Section 2.03 Authorized Capital Stock.

(a) As of the date hereof, the Company is authorized to issue 10,000,000 shares of capital
stock consisting of Common Stock, without par value, of which 1,747,060 shares are issued and
outstanding as of the date hereof. All of the issued and outstanding shares of capital stock of
the Company are duly and validly issued and outstanding and are fully paid and nonassessable under
the Ohio General Corporation Law. As of the date hereof, 90,528 shares of Common Stock are subject
to outstanding options to acquire shares of Common Stock from the Company. None of the outstanding
shares of capital stock of the Company has been issued in violation of any preemptive or other
rights of the current or past shareholders of the Company.

(b) There is no commitment by the Company or either of the Banks to issue shares, Equity
Rights, or other such rights or to distribute to holders of any of its equity securities, any
evidence of indebtedness or any Asset, and no agreements, Contracts, or other proposals with
respect thereto are to the Knowledge of Company currently being contemplated by the Company or the
Banks, except as otherwise set forth herein. The Company and the Banks have no obligation
(contingent or other) to
purchase, repurchase, redeem, retire or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in respect thereof.

(c) When issued in accordance with this Agreement, the Shares will be duly authorized, validly
issued, fully paid and nonassessable and will be free and clear of all Liens other than Liens that
were created by the Purchaser and restrictions on transfer imposed by this Agreement.

 

4

 

Section 2.04 Subsidiaries. Other than the Banks and EMORECO, the Company has no Subsidiaries. All of the capital stock
of the Banks and EMORECO have been duly authorized and validly issued, and are fully paid and
nonassessable. The Company owns all of the capital stock of the Banks and EMORECO, free and clear
of any Liens, security interests, pledges, charges, encumbrances, agreements and restrictions of
any kind or nature.

Section 2.05 Financial Statements. The Company has delivered to Purchaser copies of all Company Financial Statements and will
promptly deliver to Purchaser copies of all similar financial statements prepared subsequent to the
date hereof. To the Knowledge of the Company, the Company Financial Statements and any
supplemental financial statements (as of the date thereof and for the periods covered thereby) (a)
are, or if dated after the date of this Agreement will be, in accordance with the books and records
of the Company, which are and will be, as the case may be, complete and correct in all material
respects and which have been or will have been, as the case may be, maintained in accordance with
good business practices, (b) fairly present or will fairly present, as the case may be, the
financial position of the Company as of the dates indicated and the results of operation, changes
in shareholders’ equity, and cash flows of the Company for the periods indicated, in accordance
with GAAP (subject to any exceptions as to consistency specified therein or as may be indicated in
the notes thereof or, in the case of interim financial statements, to the normal recurring year-end
adjustments that are not material in any amount or effect), and (c) do not or will not, as the case
may be, 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, in light of the circumstances in
which they were made, not misleading. The Company represents and warrants in respect of the
Company Financial Statements, that the Company has conducted a review of each Bank’s financial
condition and records and to its Knowledge: (a) the books and records of each Bank, are and will
be, as the case may be, complete and correct in all material respects and have been or will be, as
the case may be, maintained in accordance with good business practices and (b) reflect all
transactions, arrangements and other relationships between the Company and each Bank as of the
dates indicated.

Section 2.06 Absence of Undisclosed Liabilities. The Company, the Banks and EMORECO have no Liabilities of a nature required to be reflected on
a balance sheet prepared in accordance with GAAP, except for Liabilities that are accrued or
reserved against in the balance sheet of the Company as of March 31, 2011, included in the Company
Financial Statements or reflected in the notes thereto. The Company, the Banks and EMORECO have
not incurred or paid any Liability since March 31, 2011, except for such Liabilities incurred or
paid in the ordinary course of business consistent with past business practice and that are not
reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

 

5

 

Section 2.07 Loan and Investment Portfolios. As of the date of this Agreement and as of the Closing:

(a) all loans, discounts and financing leases reflected on the Company Financial Statements
were, and with respect to the Company Financial Statements delivered as of the dates subsequent to
the execution of this Agreement, will be as of the dates thereof, (i) at the time and under the
circumstances in which made, made for good, valuable and adequate consideration in the ordinary
course of business and (ii) evidenced by genuine notes, agreements or other evidences of
indebtedness;

(b) no obligor named in any loan has provided notice (whether written or, to the Knowledge of
the Company, oral) to the Company or the Banks that such obligor intends to attempt to avoid the
enforceability of any term of any loan;

(c) to the Knowledge of the Company, no loan is subject to any valid defense, set-off, or
counterclaim that has been asserted with respect to such loan;

(d) all loans that are secured are to the Knowledge of the Company secured by valid and
enforceable Liens;

(e) to the Knowledge of the Company, the servicing practices of the Banks and their respective
agents used with respect to loans have been in accordance with all applicable Laws and regulations
and customary industry practices in all material respects; and

(f) the Company and the Banks have not entered into any loan repurchase agreements.

Section 2.08 Absence of Certain Changes or Events. Except as disclosed in the Company’s filings with the SEC or as contemplated in this
Agreement, (i) there have been no events, changes, or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect, (ii) neither the
Company nor either of the Banks has declared, set aside for payment or paid any dividend to holders
of, or declared or made any distribution on, any shares of the Company’s Common Stock and (iii)
neither the Company nor either of the Banks has taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken after the date of this
Agreement, would
represent or result in a material breach or violation of any of the covenants and agreements
of the Company or the Banks provided for in the Transaction Documents. Except as may be disclosed
in the Company’s SEC filings, the Company and the Banks have not, since the date of the Company
Financial Statements delivered prior to the date of this Agreement:

(a) borrowed any money other than deposits or overnight federal funds or entered into any
capital lease or leases; or, except in the ordinary course of business and consistent with past
practices: (i) lent any money or pledged any of its credit in connection with any aspect of its
business whether as a guarantor, surety, issuer of a letter of credit or otherwise, (ii) mortgaged
or otherwise subjected to any Lien any of its assets, sold, assigned or transferred any of its
assets in excess of $500,000 in the aggregate or (iii) incurred any other Liability or loss
representing, individually or in the aggregate, over $250,000;

(b) suffered over $50,000 in damage, destruction or loss to immovable or movable property,
whether or not covered by insurance;

 

6

 

(c) experienced any material adverse increase in Asset concentrations as to customers or
industries or in the nature and source of its Liabilities or in the mix or interest-bearing versus
noninterest-bearing deposits;

(d) failed to operate its business in the ordinary course consistent with past practices, or
failed to use reasonable efforts to preserve its business or to preserve the goodwill of its
customers and others with whom it has business relations;

(e) forgiven any debt owed to it in excess of $100,000, or canceled any of its claims or paid
any of its noncurrent obligations or Liabilities;

(f) made any capital expenditure or capital addition or betterment in excess of $250,000;

(g) entered into any agreement requiring the payment, conditionally or otherwise, of any
salary, bonus, extra compensation (including payments for unused vacation or sick time), pension or
severance payment to any of its present or former directors, officers or employees, except such
agreements as are terminable at will without any penalty or other payment by it or increased
(except for increases of not more than 5% consistent with past practices) the compensation
(including salaries, fees, bonuses, profit sharing, incentive, pension, retirement or other similar
payments) of any such Person whose annual compensation would, following such increase, exceed
$100,000;

(h) except as required in accordance with GAAP, changed any accounting practice followed or
employed in preparing the Company Financial Statements;

(i) authorized or issued any additional shares of Common Stock, preferred stock, or other
Equity Rights;

(j) made any loan or other extension or renewal of credit (i) other than in the ordinary
course of business and consistent with past practices, (ii) in excess of each respective Bank’s
legal lending limit, (iii) to its Knowledge, in violation of any applicable Law;

(k) materially changed the characteristics of its loan portfolio;

(l) granted any change in control, severance, retention or termination compensation or
benefits, or increase therein, or established, adopted, entered into, amended or terminated any
employment or consulting agreement with, any participant in any Company benefit plan, except
pursuant to such benefit plan, (i) established, adopted, entered into, amended, waived or
terminated any benefit plan except as required by Law, (ii) accelerated the time of payment or
vesting of any rights or benefits, or make any material determinations, under any benefit plan,
(iii) granted any awards under any bonus, incentive, performance or other compensation plan or
arrangement or benefit plan or (iv) taken any action to fund or in any other way secure the payment
of compensation or benefits under any employee plan, agreement, contract or arrangement outside of
the ordinary course; or

(m) entered into any agreement, Contract or commitment to do any of the foregoing set forth in
Sections 2.08(a) through (l) above.

 

7

 

Section 2.09 Tax Matters. All Tax Returns required to be filed by or on behalf of the Company and the Banks have been
timely filed or requests for extensions have been timely filed, granted, and have not expired for
all periods ended on or before the date of the most recent fiscal year end immediately preceding
the Closing Date except to the extent that all such failures to file, taken together, are not
reasonably likely to have a Material Adverse Effect on the Company or either of the Banks, and all
returns filed are complete and accurate in all material respects to the Knowledge of the Company.
All Taxes shown on filed Tax Returns have been paid. There is no audit examination, deficiency, or
refund Litigation with respect to any Taxes that is reasonably likely to result in a determination
that would have, individually or in the aggregate, a Material Adverse Effect, except as reserved
against in the Company Financial Statements delivered prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid. There are no Liens with respect to Taxes upon any of the Assets of the
Company or either of the Banks.

Section 2.10 Allowance for Possible Loan Losses. The Company and the Banks maintain an allowance for loan and credit losses in accordance with
regulatory requirements and the requirements of GAAP. As of December 31, 2010, management of the
Company reasonably believed that the ALLL of the Company and the Banks was in compliance in all
material respects with their existing
methodology for determining the adequacy of their ALLL, as well as the standards established
by the Federal Reserve Board and the Financial Accounting Standards Board, and was adequate under
all such standards.

Section 2.11 Assets.

(a) Except as reserved against in the Company Financial Statements delivered prior to the date
of this Agreement, the Company and the Banks each has good and marketable title, free and clear of
all Liens, to its Assets, except for (i) mortgages and encumbrances that secure indebtedness that
is properly reflected in the Company Financial Statements or that secure deposits of public funds
as required by Law; (ii) Liens for Taxes accrued but not yet payable; (iii) Liens arising as a
matter of law in the ordinary course of business, provided that the obligations secured by such
Liens are not delinquent or are being contested in good faith; (iv) such imperfections of title and
encumbrances, if any, as do not materially detract from the value or materially interfere with the
present use of any of such properties or Assets or the potential sale of any of such owned
properties or Assets; and (v) capital leases and leases, if any, to third parties for fair and
adequate consideration. All material tangible properties used in the business of the Company and
the Banks are in good condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with the

 

8

 

Company’s and each Bank’s past practice except for
deficiencies that are not reasonably likely to have individually or in the aggregate a Material
Adverse Effect. All Assets which are material to the Company’s and each of the Bank’s business
held under leases or subleases by the Company or either of the Banks, respectively, are held under
valid Contracts enforceable by the Company or either Bank, respectively, in accordance with their
respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of creditors’ rights generally
and except that the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect.

(b) The Company and each of the Banks have paid all amounts due and payable under any
insurance policies and guarantees applicable to the Company and the respective Bank, and their
Assets and operations; all such insurance policies and guarantees are in full force and effect, and
all the Company’s and each Bank’s material properties are insured against fire, casualty, theft,
loss, and such other events against which it is customary to insure, all such insurance policies
being in amounts and with deductibles that are adequate and consistent with past practice and
experience. Neither the Company nor to its Knowledge, either of the Banks, has received notice
from any insurance carrier that (i) any policy of insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. There are presently no claims for amounts exceeding in
any individual case $10,000 pending under such policies of
insurance and no notices of claims in excess of such amounts have been given by the Company or
to its Knowledge, either of the Banks, under such policies.

Section 2.12 Environmental Matters.

(a) To the Knowledge of the Company, the Company and each of the Banks are in compliance with
all applicable federal, state and local environmental Laws and regulations, including those
applicable to emissions to the environment, waste management, and waste disposal (collectively, the
“Environmental Laws”), except where such noncompliance, individually or in the aggregate, would not
be reasonably likely to have a Material Adverse Effect.

(b) There is no claim under any Environmental Law, including common law, pending or, to the
Knowledge of the Company, threatened against the Company or either of the Banks (an “Environmental
Claim”), which would be reasonably likely to have a Material Adverse Effect, and, to the Knowledge
of the Company, under applicable law, there are no past or present actions, activities,
circumstances, events or incidents, including releases of any material into the environment, that
are reasonably likely to form the basis of any Environmental Claim against the Company or either of
the Banks which would be reasonably likely to have a Material Adverse Effect.

 

9

 

Section 2.13 Compliance with Laws. The Company and each of the Banks are not:

(a) in Default under any of the provision of their Articles of Incorporation or Regulations;

(b) in Default under any Laws, Orders, or Permits applicable to their business or employees
conducting their businesses, except for Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect;

(c) in receipt of any notification or communication from any agency or department of federal,
state, or local government or any Regulatory Authority or the staff thereof (i) asserting that the
Company or either of the Banks or any of their respective employees (including officers and
directors) is not in compliance with any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect (ii) threatening to revoke any Permits the
revocation of which is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect or (iii) requiring the Company or either of the Banks to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any board resolution or similar undertaking, which restricts materially
the conduct of its respective business or in any manner relates to capital adequacy, credit or
reserve policies or management; or

(d) aware of any civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings before any court or governmental agency or, otherwise pending or
threatened by any Person against any directors or officers of the Company or either of the Banks,
alleging any violation of any securities, banking, or other Laws.

Section 2.14 Labor Relations. Neither the Company nor either of the Banks is a party to any Litigation asserting that it has
committed an unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it to bargain with any labor organization or other
employee representative with respect to wages or conditions of employment, nor is the Company or
either of the Banks party to any collective bargaining agreement, nor is there any pending or
threatened strike, slowdown, picketing, work stoppage or other labor dispute involving the Company
or either of the Banks. To the Knowledge of the Company, there is no activity involving any of the
Company’s or either of the Banks’ employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.

 

10

 

Section 2.15 Employee Benefit Plans.

(a) Each employee benefit plan, within the meaning of Section 3(3) of ERISA, that is
maintained, administered or contributed to by the Company or the Banks or any of their affiliates
for employees or former employees of the Company or the Banks and their affiliates has been
maintained in substantial compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including, but not limited to, ERISA and the Internal
Revenue Code; no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975
of the Internal Revenue Code, has occurred with respect to any such plan excluding transactions
effected pursuant to a statutory or administrative exemption; and for each such plan that is
subject to the funding rules of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
no “accumulated funding deficiency” as defined in Section 412 of the Internal Revenue Code has been
incurred, whether or not waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeds the present value of all
benefits accrued under such plan determined using reasonable actuarial assumptions. The Company has
delivered or otherwise made available to Purchaser copies of all employee benefit plans for it and
each of the Banks, including plan documents and all amendments thereto, plan agreements, trust
agreements, recordkeeping or service agreements, insurance Contracts, summary plan descriptions or
summaries thereof if no written plan document or summary plan description is available, for each of
the two (2) most recent plan years. No audits, inquiries, reviews, proceedings, claims or demands
are pending with the Internal Revenue Service or Department of Labor.

(b) Each nonqualified deferred compensation plan, within the meaning of Section 409A of the
Internal Revenue Code, maintained by the Company or either of the Banks has been operated in
compliance in all material respects with the requirements of Section 409A (or an available
exemption therefrom) such that amounts of compensation deferred thereunder will not be includible
in gross income under Section 409A prior to the distribution of benefits in accordance with the
terms of the plan and will not be subject to the additional Tax under Section 409A(a)(1)(B)(ii).

(c) Neither the Company nor either of the Banks has entered into or maintained at any time any
benefit plan which would require the payment of retention, separation, severance, termination or
similar benefits as a result of any transaction contemplated by this Agreement or as a result of a
“change in control” (as such term is defined in Code Section 280G) or which would cause an increase
or acceleration of benefits (including the acceleration of the exercisability or vesting of any
stock options or other stock rights) or benefit entitlements to employees or former employees of
the Company or the Banks or any other increase in the liabilities of the Company or the Banks under
any benefit plan as a result of the transactions contemplated by this Agreement.

(d) Other than routine claims for benefits submitted by participants and beneficiaries under
the benefit plans of the Company and the Banks, none of which are material in amount, there is no
Litigation, claim or assessment pending or, to the Knowledge of the Company, threatened by, on
behalf of, or against any of the benefit plans or against the administrators or trustees or other
fiduciaries of any of the benefit plans that alleges a violation of applicable state or federal
Law. To the Knowledge of the Company, there is no reasonable basis for any such Litigation, claim
or assessment.

 

11

 

(e) To the Knowledge of the Company, no benefit plan fiduciary or any other Person has, or has
had, any Liability to any benefit plan participant, beneficiary or any other Person under any
provisions of ERISA or any other applicable Law by reason of any action or failure to act in
connection with any benefit plan, including any Liability by any reason of any payment of, or
failure to pay, benefits or any other amounts (except to the extent such benefits or other amounts
are currently due in the normal course of business) or by reason of any credit or failure to give
credit for any benefits or rights.

(f) All accrued contributions and other payments to be made by the Company and the Banks to
any benefit plan through the date hereof have been made or reserves adequate for such purposes have
been set aside therefor and reflected in the Company Financial Statements. Neither the Company nor
either of the Banks is in Default in performing any of its contractual obligations under any of the
benefit plans or any related trust agreement or insurance Contract. There are no outstanding
liabilities with respect to any benefit plan other than liabilities for benefits to be paid to
participants in such benefit plan and their beneficiaries in accordance with the terms of such
benefit plan.

(g) Neither the Company nor either of the Banks is legally obligated to make a payment either
before, or as a result of the transactions contemplated by this Agreement, that would constitute an
“excess parachute payment” within the meaning of Code Section 280G.

(h) The Company and each of the Banks have complied with in all material respects their
requirements under (i) the applicable health care continuation and notice provisions of COBRA and
any similar state Law and (ii) the Health Insurance Portability and Accountability Act of 1996, as
amended and the regulations promulgated thereunder.

(i) To the extent that any benefit plan constitutes a “non-qualified deferred compensation
plan” within the meaning of Code Section 409A, such benefit plan has been amended to conform to the
requirements of, and operated in compliance with, Code Section 409A, including the final
regulations promulgated thereunder. No award of equity, Equity Rights or an option to purchase any
equity interest has been made under any benefit plan with an exercise price less than fair market
value as of the grant date or which has been backdated, altered or granted with an effective date
which is other than the date on which the award was actually made.

(j) There is no unfunded actual or potential Liability relating to any employment Contract,
benefit plan or deferred compensation plan that is not reflected in the Company Financial
Statements or, with respect to accruals properly made after the date of the balance sheet included
in the Company Financial Statements, in the books and records of the Company or the respective
Bank.

 

12

 

Section 2.16 Material Contracts. Neither the Company nor either of the Banks is a party to, nor is it or any of its Assets
bound or affected by, (i) any employment, severance, termination, consulting or retirement or other
Contract providing for aggregate payments to any Person in any calendar year in excess of $250,000
or (ii) any Contract relating to the borrowing of money by the Company or either of the Banks or
the guarantee by the Company or either of the Banks of any such obligation (other than Contracts
evidencing deposit liabilities, Federal Home Loan Bank advances, purchases of federal funds,
fully-secured repurchase agreements, trade payables, letters of credit and Contracts relating to
borrowings or guarantees made in the ordinary course of business) (collectively, the “Company
Contracts”). With respect to each Company or Bank Contract (i) the Contract is in full force and
effect, (ii) the Company or each Bank, as applicable, is not in Default thereunder, other than
Defaults which are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect, (iii) the Company or each of the Banks, as applicable, has not repudiated or waived
any material provision of any such Contract, and (iv) no other party to any such Contract is, to
the Knowledge of the Company, in Default in any respect, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, or has
repudiated or waived any material provision thereunder.

Section 2.17 Legal Proceedings. There is no Litigation instituted or pending, or to the Knowledge of the Company, threatened
or contemplated (or unasserted but considered probable of assertion and which if asserted would
have at least a reasonable probability of a material unfavorable outcome) against the Company or
either of the Banks or against any Asset, interest, or right of any of them that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect, nor are there any
Orders of any Regulatory Authorities, other governmental authorities, or arbitrators outstanding
against the Company or either of the Banks that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect. Neither the Company nor either of the Banks has received
from any Regulatory Authorities any notice or threat (whether written or, to the Knowledge of the
Company, oral) of enforcement actions, or any criticism or recommended action that would reasonably
be determined to be material to the Assets and operations, taken as a whole, of the Company or
either of the Banks, and neither the Company nor either of the Banks has any reasonable basis for
believing that any such notice, threat, criticism or recommended action not otherwise disclosed
herein is contemplated, concerning capital, compliance with applicable Laws, safety or soundness,
fiduciary duties or other banking or business practices that has not been resolved to the
reasonable satisfaction of such Regulatory Authority.

Section 2.18 Reports. The Company and each of the Banks have timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that they were required to file with
Regulatory Authorities, and have paid all fees and assessments due and payable in connection
therewith or have recorded an adequate reserve or accrual for the payment thereof, except failures
to file and pay which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect. As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report and document did
not, in all material respects, 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 made therein, in
light of the circumstances under which they were made, not misleading.

 

13

 

Section 2.19 Community Reinvestment Act. To the extent applicable, each of the Banks has complied in all material respects with the
provisions of the Community Reinvestment Act (“CRA”), and the rules and regulations thereunder, has
a CRA rating of not less than “satisfactory,” has received no material criticism from Regulatory
Authorities with respect to discriminatory lending practices, and the Company has no Knowledge of
any conditions or circumstances that are likely to result in a CRA rating of less than
“satisfactory” or material criticism from regulators with respect to discriminatory lending
practices.

Section 2.20 Privacy of Customer Information.

(a) Each of the Banks is the sole owner or, in the case of participated loans, a co-owner with
the other participant(s), of all individually identifiable personal information (“IIPI”) relating
to customers, former customers and prospective customers. For purposes of this Section 2.20,
“IIPI” shall include any information relating to an identified or identifiable natural person.

(b) The collection and use of such IIPI by each of the Banks complies in all material respects
with all applicable privacy policies, the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act and
all other applicable state, federal and foreign privacy Law, and any Contract or industry standard
relating to privacy.

Section 2.21 Bank Secrecy Act Compliance. Each of the Banks is in compliance in all material respects with the provisions of the Bank
Secrecy Act of 1970, as amended (the “Bank Secrecy Act”), and all regulations promulgated
thereunder including, but not limited to, those provisions that address suspicious activity reports
and compliance programs, and all applicable requirements of the Office of Foreign Assets Control.
Without limiting the foregoing, each of the Banks has implemented a Bank Secrecy Act compliance
program that adequately covers in all material respects all of the required program elements as
required by 12 C.F.R. § 326.8.

Section 2.22 Insurance. The Company and each of the Banks is presently insured, and since on or around January 1,
2007, have been insured without interruption during their existence, for reasonable amounts with
financially sound and reputable insurance companies against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily be insured,
including but not limited to directors’ and officers’ liability insurance. The Company has
provided the Purchaser with a complete and correct list of all policies of insurance in which the
Company and either of the Banks is named as an insured party or which otherwise relate to or cover
any Assets, operations or personnel of the Company and either of the Banks, and which are owned or
carried by the Company and either of the Banks. As of the date hereof, to the Company’s Knowledge,
all such insurance policies are in full force and effect and neither the Company nor either of the
Banks has received any notice (whether written or, to the Knowledge of the Company, oral) from any
party of interest in or to any such policies claiming any Default, or any breach or violation of
any provisions thereof, disclaiming or denying coverage thereof or canceling or threatening
cancellation of any such insurance Contracts.

 

14

 

Section 2.23 Conflict of Interest Transactions.

(a) To the Company’s Knowledge, no principal officer or director of the Company or of either
of the Banks, or holder of 10% or more of the
Company’s or either Bank’s Common Stock or any member of the immediate family or a related
interest (as such terms are defined in 12 C.F.R. § 215.2) or Affiliate of such Person: (i) has any
direct or indirect ownership interest in (A) any entity which does business with, or is a
competitor of, the Company or either of the Banks (other than the ownership of not more than 5% of
the outstanding capital stock of such entity if such stock is listed on a national securities
exchange or market or is regularly traded in the over-the-counter market by a member of a national
securities exchange or market) or (B) any Asset which is owned or used by the Company or either of
the Banks in the conduct of its business; or (ii) has any financial, business or contractual
relationship or arrangement with the Company or either of the Banks, excluding any agreements and
commitments entered into in respect of the Company’s or either Bank’s acceptance of deposits and
investments or the making of any loans, in each case in the ordinary course of business of the
Company and the Banks, that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.

(b) To the Company’s Knowledge, no loan participation (each, a “Participation”) has been
acquired or sold to or from any parties set forth in Section 2.23(a) by either of the Banks. The
Company represents and warrants that each Participation, if any, was duly authorized and approved
in accordance with applicable Laws.

Section 2.24 Deposits. The deposit accounts, certificates of deposit, and any similar accounts maintained by any
Person with either of the Banks (the “Deposits”) are insured by the Federal Deposit Insurance
Corporation to the fullest extent permitted by Law, and all premiums and assessments required to be
paid in connection therewith, to the Company’s Knowledge, have been paid upon each Bank’s receipt
of an invoice.

Section 2.25 Change in Business Relationships. Since March 31, 2011, neither the Company nor either of the Banks has received any notice
(whether written or, to the Knowledge of the Company, oral), whether on account of the transactions
contemplated by this Agreement or otherwise, (a) that any customer, agent, representative,
supplier, vendor or business referral source of the Company or either of the Banks intends to
discontinue, diminish or change its relationship with the Company or such Bank, the effect of which
would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, or
(b) that any executive officer of the Company or either of the Banks intends to terminate or
substantially alter the terms of his or her employment. Since March 31, 2011, there have been no
complaints or disputes (in each case set forth in writing) with any customer, employee, agent,
representative, supplier, vendor, business referral source or other parties that have not been
resolved which are reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.

 

15

 

Section 2.26 Brokers. None of the Company, either of the Banks or any of the respective officers, directors,
employees or agents of any such entity have 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 it in connection with this Agreement or the
transactions contemplated hereby.

Section 2.27 Private Placement; No integration. Other than in connection with the Offering, neither the Company nor any of the Banks has taken
any action (including any other offering of any securities of the Company under circumstances which
would require the integration of such other offering with the offering of any of the Shares to be
issued pursuant to this Agreement or any other agreement entered into with one or more other
investors in the Offering under the Securities Act and the rules and regulations of the SEC
promulgated thereunder) which would subject the Offering, to the registration requirements of the
Securities Act. Neither the Company nor any of the Banks has engaged or will engage in any form of
general solicitation or general advertising (within the meaning of Regulation D under the
Securities Act) in connection with any offer or sale of the Shares pursuant to the transactions
contemplated by the Transaction Documents. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in this Agreement, no registration under the Securities
Act is required for the offer and sale of the Shares by the Company to the Purchaser.

Section 2.28 FDIC Approval. The Banks have been invited by the FDIC to participate in transactions involving failed
financial institutions. As of the date hereof, to the Knowledge of the Company, neither the
Company nor either of the Banks has received any notice or other communication from the Regulatory
Authorities that it will not be eligible to participate in such transactions in the future.

Section 2.29 Disclosure. No representation or warranty of the Company made hereunder contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the statements contained
herein or therein not misleading.

 

16

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Section 3.01 Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company that, as of the date hereof and as of the
Closing:

(a) it has sufficient knowledge and experience in investing in companies similar to the
Company so as to be able to evaluate the risks and merits of its investment in the Company and it
is able financially to bear the risks thereof;

(b) it has received or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the Securities to be purchased
by the Purchaser under this Agreement. The Purchaser further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions of the offering
of the Securities and to obtain additional information necessary to verify any information
furnished to the Purchaser or to which the Purchaser had access. The foregoing, however, does not
in any way limit or modify the representations and warranties made by the Company in Article II;

(c) it acknowledges that the Securities have not been registered under the Securities Act or
under any state securities laws;

(d) it is acquiring the Securities pursuant to an exemption from registration under the
Securities Act solely for its own account for the purpose of investment and not with a view to, or
for resale in connection with, any distribution thereof within the meaning of the Securities Act;

(e) it will not sell or otherwise dispose of any of the Securities, except in compliance with
the registration requirements or exemption provisions of the Securities Act and any other
applicable securities laws;

(f) it is an “accredited investor” (as that term is defined in Rule 501 of the Securities
Act);

(g) subject to the stockholder approval required by Section 4.04, each Transaction Document to
which it is a party constitutes the Purchaser’s valid and legally binding obligation, enforceable
in accordance with its terms except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other Laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the availability of
equitable remedies. The Purchaser represents that it has full power and authority to enter into
each Transaction Document to which it is a party.

Section 3.02 Compliance with Laws. The Purchaser is not:

(a) in Default under any of the provisions of its Certificate of Formation or Operating
Agreement; or

(b) in Default under any Laws, Orders, or Permits applicable to its business or employees
conducting its businesses, except for Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect; or

 

17

 

(c) in receipt of any notification or communication from any agency or department of federal,
state, or local government or any Regulatory Authority or the staff thereof (i) asserting that the
Purchaser is not in compliance with any of the Laws or Orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect (ii) threatening to revoke any Permits of the
Purchaser the revocation of which is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect or (iii) requiring the Purchaser to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any board resolution or similar undertaking, which restricts materially
the conduct of its respective business or in any manner relates to capital adequacy, credit or
reserve policies or management.

Section 3.03 Disclosure. No representation or warranty of the Purchaser made hereunder contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.

Section 3.04 Organization. (a) The Purchaser is a Delaware limited liability company, duly organized, validly existing,
and in good standing under the Laws of the State of Delaware and is duly qualified or licensed to
transact business as a foreign corporation in good standing in the jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to be so qualified or
licensed except in such jurisdictions where the failure to be so qualified or licensed is not
reasonably likely to have a Material Adverse Effect.

Section 3.05 Company Shares. (a) As of the date of this Agreement, the Purchaser does not own any shares of the Company’s
capital stock and has not entered into any agreement or understanding with any Person to purchase
or sell shares of the Company’s capital stock or any agreement or understanding concerning the
voting or disposition of Company capital stock or rights to acquire Company capital stock.

ARTICLE IV

COVENANTS

Section 4.01 Conduct of the Company. From the date hereof until the earlier of the Closing or the termination of this Agreement,
the Company shall preserve (and shall cause each of the Banks to preserve) its material Assets,
maintain its rights and franchises and conduct its businesses in the ordinary course consistent
with past practice and to use its reasonable best efforts to preserve intact its business
organizations and relationships with third parties and to keep available the services of its
present officers and employees. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date, the Company shall
not (and shall cause each of the Banks not to), except as otherwise contemplated by the Transaction
Documents, without the consent of the Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed:

(a) adopt or propose any change in its Organizational Documents;

(b) adopt a plan of complete or partial liquidation or resolutions providing for or
authorizing a liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or
other reorganization of the Company or any Bank;

 

18

 

(c) acquire a material amount of Assets from any other Person;

(d) sell, lease, license or otherwise dispose of a material amount of Assets, either
individually or in the aggregate, except (i) pursuant to the Company and Banks’ Contracts or (ii)
in the ordinary course consistent with past practice, and (iii) for dispositions of assets by
EMORECO;

(e) (i) split, combine, or reclassify any of the shares of Company’s Common Stock; (ii)
declare, set aside, or pay any dividend or other distribution in respect of any of the Company’s
securities; or (iii) repurchase, redeem, or otherwise acquire any of the Company’s securities;

(f) other than the Offering, and any other agreements to issue shares to investors to which
the provisions of Section 4.07 may apply, issue or commit to issue any additional shares of the
Company’s Common Stock, capital stock or other securities of any kind (whether through the issuance
or granting of options, warrants, commitments, subscriptions, stock appreciation rights, rights to
purchase or any other Equity Rights); or amend in any respect any of the terms of any such Common
Stock outstanding as of the date of this Agreement; or

(g) take any action that would (i) materially adversely affect the ability of either Party to
obtain any Consents required for the transactions contemplated by the Transaction Documents without
imposition of a material condition or restriction, or (ii) materially adversely affect the ability
of either Party to perform its covenants and agreements under the Transaction Documents;

(h) solicit or initiate, or encourage others to solicit or initiate, inquiries or proposals or
enter into any Contract with respect to any (i) merger of the Company or sale of all or
substantially all of the Assets of the Company (including the Banks), or (ii) sale of the Company’s
capital stock in an amount that exceeds 9.9% of the Company’s total outstanding capital stock
(other than through the Offering); provided, however, that nothing contained herein shall prohibit
any officer or director of the Company from taking any action that the board of directors of the
Company shall determine in good faith, after consulting with legal counsel, is required by Law or
is required to discharge his or her fiduciary duties to the Company and its shareholders. The
Company shall promptly (and in no event later than three (3) business days after receipt
of any inquiry, proposal, or any indication of interest that could lead to an inquiry,
proposal or other request for nonpublic information) advise Purchaser orally and in writing of any
such inquiry, proposal or indication of interest that is made or submitted by any Person during the
period prior to the Closing Date. The Company shall keep Purchaser fully informed with respect to
the status of any such inquiry, proposal, or any indication of interest;

 

19

 

(i) since the date of the Company Financial Statements, there has not been any material change
in the compensation practices of the Company or the Banks, nor any material increase in the
compensation payable or to become payable to any of the Company’s or the Banks’ officers, directors
or key employees, except for any annual merit pay increases consistent with past practices;

(j) the Company and each of the Banks shall use commercially reasonable efforts to maintain
their present insurance coverage or insurance coverage substantially comparable thereto in respect
to their Assets;

(k) no material changes shall be made in the general nature of the business conducted by the
Company or the Banks taken as a whole;

(l) no employment, consulting or similar agreements with any executive shall be amended or
entered into by the Company or either of the Banks that are not terminable by the Company or the
respective Bank on 30 or fewer days’ notice without penalty or obligation;

(m) neither the Company nor either of the Banks shall intentionally take or intentionally fail
to take any action that will cause a breach by the Company or the Bank of, or Default by the
Company or Bank under, any Contract, which would result in a Material Adverse Effect on the
financial condition or operations of the Company or the Bank;

(n) no changes of a material nature shall be made in the Company’s or the Banks accounting
procedures, methods, policies or practices or the manner in which the Company or Bank maintains its
records; except changes required pursuant to GAAP or any Regulatory Authorities that are generally
applicable to banks or bank holding companies; or

(o) agree or commit to do any of the foregoing, or encourage any other Persons to agree or
commit to do any of the foregoing.

Section 4.02 Conduct of the Purchaser. From the date hereof until the earlier of the Closing or the termination of this Agreement,
the Purchaser shall preserve its material Assets, maintain its rights and franchises and conduct
its businesses in the ordinary course consistent with past practice and to use its best reasonable
efforts to preserve intact its business organizations and relationships with third parties. From
the date hereof until the Closing Date, the Purchaser shall not except as otherwise contemplated by
the Transaction Documents:

(a) take any action that would (i) materially adversely affect the ability of either Party to
obtain any Consents required for the transactions contemplated by the Transaction Documents without
imposition of a material condition or restriction, or (ii) materially adversely affect the ability
of either Party to perform its covenants and agreements under the Transaction Documents;

 

20

 

(b) no material changes shall be made in the general nature of the business conducted by the
Purchaser taken as a whole as set forth in the Confidential Offering Memorandum of the Purchaser,
dated August, 2011 as amended and supplemented, and Operating Agreement of the Purchaser;

(c) the Purchaser shall not intentionally take or intentionally fail to take any action that
will cause a breach by the Purchaser of, or Default by the Purchaser under, any Contract, which
would result in a Material Adverse Effect on the Purchaser’s ability to perform its obligations
under the Transaction Documents; or

(d) agree or commit to do any of the foregoing, or encourage any other Persons to agree or
commit to do any of the foregoing.

Section 4.03 Agreement as to Efforts to Consummate. Subject to the terms and conditions of this Agreement, each Party agrees to use its reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions contemplated by the
Transaction Documents; provided that nothing herein shall preclude either Party from
exercising its rights under the Transaction Documents.

Section 4.04 Stockholder Approval. The Company shall call a meeting of its stockholders as promptly as practicable after the date
hereof to vote on the transactions contemplated by the Transaction Documents pursuant to Ohio
Revised Code section 1701.831. The Board of Directors of the Company shall unanimously recommend
to the Company’s stockholders that such stockholders approve the transactions and shall not
withdraw, modify or qualify in any manner adverse to the Purchaser such recommendation or approve,
adopt or otherwise take any action inconsistent with such recommendation. The Company shall
promptly prepare (and the Purchaser shall reasonably cooperate with the Company to prepare) and
file with the SEC a preliminary Proxy Statement, shall use its reasonable best efforts to solicit
proxies for such stockholder approval, and shall use its reasonable best efforts to cause a
definitive Proxy Statement to be mailed to the Company’s stockholders as promptly as practicable
after clearance thereof by the SEC. The recommendation of the Board of Directors of the Company
described in this Section 4.04 shall be included in the Proxy Statement. The Company shall notify
the purchaser promptly of the receipt of any comments from the SEC with respect to the Proxy
Statement and of any request by the SEC for amendments or supplements to such Proxy Statement or
for additional
information, and shall supply the Purchaser with copies of all correspondence between the
Company and the SEC with respect to such Proxy Statement.

 

21

 

Section 4.05 Regulatory Filings. As soon as practicable following the date of this Agreement, but in no event later than 30
days thereafter, (a) the Purchaser shall prepare and file with the Federal Reserve and the ODFI a
notice pursuant to the Change in Bank Control Act of 1978, as amended (the “CBCA”) and Ohio
Rev.Code § 1115.06, respectively, including entering into and submitting such appropriate passivity
and anti-association commitments as the Federal Reserve may require to obtain confirmation from the
Federal Reserve and the ODFI to the effect that the purchase of the Common Stock will not result in
the Purchaser being deemed in control of the Company for purposes of the Bank Holding Company Act
of 1956, as amended, and (b) Company shall request approval from the Federal Reserve, FDIC and the
ODFI of the Business Plan referenced in Section 6.01(d). Each Party shall cooperate in the
preparation and, where appropriate, filing of their respective notices or applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated by the Transaction
Documents, seeking the requisite Consents necessary to consummate the transactions contemplated by
the Transaction Documents. The Company or the Purchaser, as applicable, shall permit the other
Party to review those portions of such notices or applications containing information pertaining to
such Party for a reasonable time prior to filing the same. To the extent available, the Parties
shall request expedited treatment of such applications, and shall use each of their commercially
reasonable efforts to pursue approval of the notices or applications. Neither Party’s obligations
under this Section 4.05 shall be construed as including an obligation to accept any terms of or
conditions to a Consent, authorization, order, or approval of, or any exemption by, any Regulatory
Authority or other Party that are not acceptable to that respective Party, in its sole reasonable
discretion, or to change the business practices of that respective Party in a manner not acceptable
to that respective Party, in its sole reasonable discretion. In advance of filing any notices or
applications for such regulatory approvals, each Party shall provide the other Party and its
counsel with a copy of such applications (including the Revised Business Plan contemplated by
Section 6.01(d) hereof), and provide the other Party a reasonable opportunity to comment thereon
with respect to any portion thereof containing information pertaining to such Party, and thereafter
shall promptly advise the other Party and its counsel of any material communication received by the
filing Party or its counsel from any Regulatory Authorities with respect to such notices or
applications.

Section 4.06 Investigation and Confidentiality.

(a) Prior to the Closing, each Party shall keep the other Party advised of all material
developments relevant to its respective business and the consummation of the transactions
contemplated by the Transaction Documents.

(b) Prior to the Closing, each Party shall permit the other Party to make or cause to be made
such investigation of the business, properties, and records of the other Party and of their
respective financial and legal conditions as either Party reasonably requests; provided
that such investigation shall be reasonably related to the transactions contemplated by the
Transaction Documents and shall not interfere unnecessarily with either Party’s normal operations.
No investigation by either Party shall affect the representations and warranties of the other
Party.

 

22

 

(c) Each Party shall, and shall cause its advisers and agents to, maintain the confidentiality
of all confidential information furnished to it by the other Party concerning its and its
subsidiaries’ businesses, operations, and financial positions and shall not use such information
for any purpose except in furtherance of the transactions contemplated by the Transaction
Documents. If this Agreement is terminated prior to the Closing, each Party shall promptly return
or certify the destruction of all documents and copies thereof and all work papers containing
confidential information received from the other Party. Notwithstanding the foregoing, each Party
may retain copies of any documents or other materials that it controls or possesses as may be
required by its record retention policies or applicable laws, regulations or rules; provided,
however, that any such documents or other materials which are so retained shall be subject to the
non-disclosure and use provisions hereof.

(d) Each Party agrees to give the other Party notice as soon as practicable after any
determination by it of any fact or occurrence relating to the other Party which it has discovered
through the course of its investigation and which represents, or is reasonably likely to represent,
either a material breach of any representation, warranty, covenant or agreement of the other Party
or, with respect to the Company, which has had or is reasonably likely to have a Material Adverse
Effect.

Section 4.07 Most Favored Nation. During the period from the date of this Agreement through the end of the Closing, the Company
shall not, and shall cause the Banks not to, enter into any additional or modify any existing,
agreements with any existing or future investors in the Company or either Bank that have the effect
of establishing rights or otherwise benefiting such investor in a manner more favorable in any
material respect to such investor than the rights and benefits established in favor of the
Purchaser by the Transaction Documents, unless, in any such case, the Purchaser has been provided
with such same rights and benefits.

Section 4.08 Use of Proceeds. The Company shall use the proceeds received from the Purchase Price for general corporate
purposes, including, without limitation, to support the growth of the Company and the Banks,
including through FDIC-assisted transactions or other acquisitions of all or parts of other
financial institutions as set forth in the Revised Business Plan contemplated by Section 6.01(d).

Section 4.09 Publicity. The Purchaser and the Company shall coordinate all publicity relating to the transactions
contemplated by this Agreement and, except as otherwise required by applicable Laws, neither Party
shall issue any press release, publicity statement or other public notice or communication, whether
written or oral, relating to this Agreement or any of the transactions contemplated hereby without
obtaining the prior consent of the other, which consent shall not be unreasonably withheld,
conditioned or delayed.

Section 4.10 Interim Financial Statements. Prior to the Closing Date, the Company shall deliver to Purchaser a monthly balance sheet,
income statement and statement of stockholders’ equity of the Company as of the end of each month
as promptly as practicable after they become available. Such monthly financial statements shall be
prepared consistent with past practice and in conformity in all material respects with GAAP
(excluding footnote disclosure) applied on a basis consistent with the Company Financial
Statements.

 

23

 

Section 4.11 Directors’ and Officers’ Insurance. The Company and each of the Banks have, and shall continue to maintain in full force and
effect, a policy of directors’ and officers’ liability insurance and shall ensure, that all rights
to indemnification now existing in favor of any individual who, at or prior to the Closing Date,
was a director, officer, employee or agent of either the Company or either of the Banks or who, at
the request of either the Company or either of the Banks, served as a director, officer, member,
trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise (collectively, with such individual’s heirs, executors or
administrators, the “Covered Representatives”) as provided in the respective governing documents or
Organizational Documents shall survive the Closing and shall continue in full force and effect for
a period of not less than three years from the Closing Date and the provisions with respect to
indemnification and limitations on Liability set forth in such governing documents or
Organizational Documents shall not be amended, repealed or otherwise modified; provided, that in
the event any claim or claims are asserted or made within such period, all rights to
indemnification in respect of any such claim or claims shall continue until final disposition of
any and all such claims.

Section 4.12 Board of Directors’ Notice and Minutes. To the extent permissible under applicable Law, the Company shall give reasonable notice to
the Purchaser of all meetings of the board of directors of the Company and any of its committees,
and if known, the agenda for or business to be discussed at such meetings. The Parties agree to
permit the Purchaser or its designee to attend, as observers, all Company’s and each of the Banks’
shareholder, Board of Directors and executive meetings through the Closing Date; provided, however
that any individuals designated by Purchaser to attend such meetings may be excluded from any
portions of any such meetings involving and will not be permitted access to (i)
discussions relating to the transactions contemplated by this Agreement, (ii) any examination
reports of the Company or the Banks provided by a regulatory agency without the prior written
consent of such regulatory agency, (iii) any personal or confidential information regarding any
customer of a Bank, (iv) with respect to Persons designated by the Purchaser, involving matters
with respect to which such Person may have a conflict of interest as determined in good faith by
the Chairman of the Board, and (v) discussions relating to any alternative transaction or other
matters which are otherwise deemed in good faith by the Board of Directors of the Company or a Bank
to be confidential.

 

24

 

Section 4.13 Registration Rights.

(a) Registration.

(i) Subject to the terms and conditions of this Agreement, the Company covenants and
agrees that as promptly as practicable after the Closing Date, and in any event by the
later of ninety (90) days after the Closing Date or April 15, 2012 (the “Filing Deadline”),
the Company shall have prepared and filed with the SEC a Shelf Registration Statement
covering the resale of all of the Registrable Securities, and, to the extent the Shelf
Registration Statement is not automatically effective upon such filing, the Company shall
use reasonable best efforts to cause such Shelf Registration Statement to be declared or
become effective as soon as practicable, and to keep such Shelf Registration Statement
continuously effective and in compliance with the Securities Act for a period from the date
of its initial effectiveness until the time as there are no such Registrable Securities
remaining (including by refiling such Shelf Registration Statement if the initial Shelf
Registration Statement expires). In the event that Form S-3 is not available for the
registration of the resale of the Registrable Securities under this Section 4.13(a)(i), the
Company shall (A) register the resale of the Registrable Securities on another appropriate
form, including, without limitation, Form S-1, and (B) undertake to register the
Registrable Securities on Form S-3 promptly after such form is available.

(ii) Demand Registration.

(A) The Purchaser shall have the right, by written notice (the “Demand
Notice”) given to the Company, to request, at any time and from time to time during
such periods when a Shelf Registration Statement covering all of the Purchaser’s
Registrable Securities is not existing and effective, that the Company register,
under and in accordance with the provisions of the Securities Act, all or any
portion of the Registrable Securities designated by the Purchaser. Upon receipt of
a Demand Notice from the Purchaser pursuant to this Section 4.13(a)(ii), the
Company shall promptly file with the SEC, and the Company shall thereafter use its
reasonable best efforts to cause to be
declared effective as promptly as practicable, a registration statement on the
appropriate form as shall be selected by the Company and as shall be reasonably
acceptable to the Purchaser in accordance with the intended method or methods of
distribution (which may be by an underwritten offering) for the registration and
sale of the total number of Registrable Securities specified in the Demand Notice
(a “Demand Registration Statement”).

(B) The Company shall use reasonable best efforts to keep each Demand
Registration Statement filed pursuant to this Section 4.13(a)(ii) continuously
effective and usable for the resale of the Registrable Securities covered thereby
for a period of one hundred eighty (180) days from the date on which the SEC
declares such Demand Registration Statement effective.

(iii) Any registration (except for any registration made pursuant to Section
4.13(a)(ii)) pursuant to this Section 4.13(a) shall be effected by means of a shelf
registration under the Securities Act (a “Shelf Registration Statement”) in accordance with
the methods and distribution set forth in the Shelf Registration Statement and Rule 415.

 

25

 

(iv) If the Company proposes to register any of its securities, whether or not for its
own account (including, without limitation, pursuant to the exercise of any demand
registration rights pursuant to Section 4.13(a)(ii)), other than a registration pursuant to
Section 4.13(a)(i), and the registration form to be filed may be used for the registration
or qualification for distribution of Registrable Securities, the Company shall give prompt
written notice to the Purchaser of its intention to effect such a registration (but in no
event less than ten (10) Business Days prior to the anticipated filing date) and shall
include in such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within five (5) Business Days after the
date of the Company’s notice (a “Piggyback Registration”). If the Purchaser has made such
a request, the Purchaser may withdraw its Registrable Securities from such Piggyback
Registration by giving written notice to the Company and the managing underwriter, if any,
on or before the fifth Business Day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this Section
4.13(a)(iv) prior to the effectiveness of such registration, whether or not the Purchaser
has elected to include Registrable Securities in such registration.

(v) If the registration referred to in Section 4.13(a)(iv) is proposed to be
underwritten, the Company shall so advise the Purchaser as a part of the written notice
given pursuant to Section 4.13(a)(iv). In such event, the right of the Purchaser to
registration pursuant to this Section 4.13(a) shall be conditioned upon the Purchaser’s
participation in such underwriting and the inclusion of Purchaser’s Registrable Securities
in the underwriting.

(vi) In the event (x) that the Company grants Piggyback Registration rights to one or
more third parties to include their securities in an underwritten offering under the Shelf
Registration Statement pursuant to Section 4.13(a)(i) or (y) that a Piggyback Registration
under Section 4.13(a)(iv) relates to an underwritten offering, and in any such case the
managing underwriters advise the Company that in their reasonable opinion the number of
securities requested to be included in such offering exceeds the number which can be sold
without adversely affecting the marketability of such offering (including an adverse effect
on the per share offering price), the Company shall include in such registration or
prospectus only such number of securities that in the reasonable opinion of such
underwriters can be sold without adversely affecting the marketability of the offering
(including an adverse effect on the per share offering price), which securities shall be so
included in the following order of priority: (1) first, solely in the case of a Piggyback
Registration under Section 4.13(a)(iv) relating to a primary offering on behalf of the
Company, any securities the Company proposes to sell for its own account, and (2) second,
Registrable Securities of the Purchaser and any other securities of the Company that have
been requested to be so included, on a pro rate basis, subject to the terms of the
Agreement.

(b) Expenses of Registration. All Registration Expenses incurred in connection with
any registration, qualification or compliance hereunder shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder shall be borne by the Purchaser
pro rata on the basis of the aggregate number of securities or shares being sold.

 

26

 

(c) Obligations of the Company. The Company shall use its reasonable best efforts for
so long as there are Registrable Securities outstanding, to take such actions as are under its
control to not become an ineligible issuer (as defined in Rule 405 under the Securities Act). In
addition, whenever required to effect the registration of any Registrable Securities or facilitate
the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement,
the Company shall, as expeditiously as reasonably practicable:

(i) file a final prospectus with the SEC, as required by Rule 424(b) under the
Securities Act;

(ii) provide to the Purchaser a copy of any disclosure regarding the plan of
distribution with respect to the Purchaser, at least three (3) Business Days in advance of
any filing with the SEC of any registration statement or any amendment or supplement
thereto that includes such information;

(iii) prepare and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in connection with
such registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;

(iv) furnish to the Purchaser and any underwriters such number of correct and complete
copies of the applicable registration statement and each such amendment and supplement
thereto (including in each case all exhibits) and of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned or to be distributed by them;

(v) use its reasonable best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Purchaser or any managing
underwriter(s), to keep such registration or qualification in effect for so long as such
registration statement remains in effect, and to take any other action which may be
reasonably necessary to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by the Purchaser; provided, that the Company shall
not be required in connection therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such states or jurisdictions;

(vi) notify the Purchaser at any time when a prospectus relating thereto is required
to be delivered under the Securities Act of the happening of any event as a result of which
the applicable prospectus, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then existing (which
notice shall not contain any material non-public information);

 

27

 

(vii) give prompt written notice to the Purchaser (which notice shall not contain any
material, non-public information):

(A) when any registration statement filed pursuant to Section 4.13(a) or any
amendment thereto has been filed with the SEC (except for any amendment effected by
the filing of a document with the SEC pursuant to the Exchange Act) and when such
registration statement or any post-effective amendment thereto has become
effective;

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

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

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

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

(F) if at any time the representations and warranties of the Company contained
in any underwriting agreement contemplated by Section 4.13(c)(xi) cease to be true
and correct.

(viii) use its reasonable best efforts to prevent the issuance or obtain the
withdrawal of any order suspending the effectiveness of any registration statement referred
to in Section 4.13(c)(vii)(C) at the earliest practicable time;

(ix) upon the occurrence of any event contemplated by Section 4.13(c)(vi) or
4.13(c)(vii)(E) and subject to the Company’s rights under Section 4.13(d), the Company
shall promptly prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so that, as
thereafter delivered to the Purchaser and any underwriters, the prospectus shall not
contain an untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which they were made,
not misleading;

 

28

 

(x) use reasonable best efforts to procure the cooperation of the Company’s transfer
agent in settling any offering or sale of Registrable Securities;

(xi) in the event of an underwritten offering pursuant to Section 4.13(a)(i) or
Section 4.13(a)(iv), enter into an underwriting agreement in customary form, scope and
substance and take all such other actions reasonably requested by a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition of such
Registrable Securities;

(xii) make available for inspection by a representative of the selling shareholders,
the managing underwriter(s), if any, and any attorneys or accountants retained by such
sellers or managing underwriter(s), at the offices where normally kept, during reasonable
business hours, financial and other records, pertinent corporate documents and properties
of the Company, and cause the officers, directors and employees of the Company to supply
all information, in each case, reasonably requested by any such representative, managing
underwriter(s), attorney or accountant in connection with such Shelf Registration
Statement;

(xiii) cause all such Registrable Securities to be listed on each securities exchange,
if any, on which the same class of securities issued by the Company are then listed;

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

(xv) timely provide to its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(d) Termination of Registration Rights. Purchaser’s registration rights as to any
securities held by it shall not be available unless such securities are Registrable Securities.

 

29

 

(e) Furnishing Information. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to Section 4.13(c) that the Purchaser, and the
underwriters, if any, shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of such securities as
shall be required to effect the registered offering of their Registrable Securities.

(f) Indemnification.

(i) The Company agrees to indemnify Purchaser and its officers, directors, employees,
agents, representatives and Affiliates, (each, an “Indemnitee”), against any and all
losses, joint or several, arising out of or based upon any untrue statement or alleged
untrue statement of material fact contained in any registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or
supplements thereto or any documents incorporated therein by reference or contained in any
free writing prospectus (as such term is defined in Rule 405) prepared by the Company or
authorized by it in writing for use by the Purchaser (or any amendment or supplement
thereto), or any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided that the Company shall not be liable to such Indemnitee
in any such case to the extent that
any such loss is based solely upon (i) an untrue statement or omission made in such
registration statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto or contained in any free
writing prospectus (as such term is defined in Rule 405) prepared by the Company or
authorized by it in writing for use by the Purchaser (or any amendment or supplement
thereto), in reliance upon and in conformity with information regarding such Indemnitee or
its plan of distribution or ownership interests which was furnished in writing to the
Company by such Indemnitee expressly for use in connection with such registration
statement, including any such preliminary prospectus or final prospectus contained therein
or any such amendments or supplements thereto. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of an Indemnitee and shall
survive the transfer of the Registrable Securities by the Purchaser.

(ii) If any proceeding shall be brought or asserted against any Indemnitee, such
Indemnitee shall promptly notify the Company in writing, and the Company shall have the
right to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnitee and the payment of all reasonable fees and expenses incurred
in connection with defense thereof; provided, that the failure of any Indemnitee to give
such notice shall not relieve the Company of its obligations or liabilities pursuant to
this Agreement, except to the extent that it shall be finally determined by a court of
competent jurisdiction that such failure shall have materially and adversely prejudiced the
Company. An Indemnitee shall have

 

30

 

the right to employ separate
counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnitee or Indemnitees unless: (1) the Company
has agreed in writing to pay such fees and expenses; (2) the Company shall have failed
promptly to assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnitee in any such proceeding; or (3) the named parties to any
such proceeding (including any impleaded parties) include both such Indemnitee and the
Company, and such Indemnitee shall have been advised by counsel that a conflict of interest
exists if the same counsel were to represent such Indemnitee and the Company; provided,
that the Company shall not be liable for the fees and expenses of more than one separate
firm of attorneys at any time

(iii) for all Indemnitees. The Company shall not be liable for any settlement of any
such proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. The Company shall not, without the prior written consent
of the Indemnitee, effect any settlement of any pending proceeding in respect of which any
Indemnitee is a party, unless such settlement includes an unconditional release of such
Indemnitee from all liability on claims that are the subject matter of such proceeding.
Subject to the terms of this Agreement, all fees and expenses of the Indemnitee (including
reasonable fees and expenses to the extent incurred in connection with investigating or
preparing to defend such proceeding in a manner not inconsistent
with this Section 4.13(f)(ii)) shall be paid to the Indemnitee, as incurred, within
thirty (30) days of written notice thereof to the Company; provided, that the Indemnitee
shall promptly reimburse the Company for that portion of such fees and expenses applicable
to such actions for which such Indemnitee is finally judicially determined to not be
entitled to indemnification hereunder). The failure to deliver written notice to the
Company within a reasonable time of the commencement of any such action shall not relieve
the Company of any liability to the Indemnitee under this Section 4.13(f), except to the
extent that the Company is materially and adversely prejudiced in its ability to defend
such action.

(iv) If the indemnification provided for in Section 4.13(f)(i) is unavailable to an
Indemnitee with respect to any losses or is insufficient to hold the Indemnitee harmless as
contemplated therein, then the Company, in lieu of indemnifying such Indemnitee, shall
contribute to the amount paid or payable by such Indemnitee as a result of such losses in
such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the
one hand, and the Company, on the other hand, in connection with the statements or
omissions which resulted in such losses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the Indemnitee,
on the other hand, shall be determined by reference to, among other factors, whether the
untrue statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Indemnitee and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or
omission; the Company and Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 4.13(f)(iii) were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in Section 4.13(f)(i). No Indemnitee guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from the Company if the Company was not guilty of such fraudulent
misrepresentation.

 

31

 

(v) The indemnity and contribution agreements contained in this Section 4.13(f) are in
addition to any liability that the Company may have to the Indemnitees.

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

(i) make and keep adequate current public information with respect to the Company
available, as those terms are understood and defined in Rule 144(c)(1) or any similar or
analogous rule promulgated under the Securities Act, at all times after the effective date
of this Agreement;

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

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

(h) As used in this Section 4.13, the following terms shall have the following respective
meanings:

(i) “Effective Date” means the date that the Shelf Registration Statement filed
pursuant to Section 4.13(a)(i) is first declared effective by the SEC.

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

 

32

 

(iii) “Registrable Securities” means (A) all Common Stock held by the Purchaser from
time to time and (B) any equity securities issued or issuable directly or indirectly with
respect to the securities referred to in clause (A) by way of conversion, exercise or
exchange thereof or stock dividend or stock split or in connection with a combination of
 shares, recapitalization, reclassification, merger, amalgamation, arrangement,
consolidation or other reorganization, provided that, once issued, such securities shall
not be Registrable Securities when (1) they are sold pursuant to an effective registration
statement under the Securities Act, (2) they may be sold pursuant to Rule 144 without
limitation thereunder on volume or manner of sale and without the requirement for the
Company to be in compliance with the current public information required under Rule
144(e)(1) (or Rule 144(i)(2), if applicable), (3) they shall have ceased to be outstanding
or (4) they have been sold in a private transaction in which the transferor’s rights under
the Transaction Documents are not assigned to the transferee of the securities. No
Registrable Securities may be registered under more than one registration statement at one
time.

(iv) “Registration Expenses” means all expenses incurred by the Company in effecting
any registration pursuant to this Agreement
(whether or not any registration or prospectus becomes effective or final) or
otherwise complying with its obligations under this Section 4.13, including, without
limitation, all registration, filing and listing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, expenses incurred in
connection with any “road show,” the reasonable fees and disbursements of Counsel, and
expenses of the Company’s independent accountants in connection with any regular or special
reviews or audits incident to or required by any such registration, but shall not include
Selling Expenses and the compensation of regular employees of the Company, which shall be
paid in any event by the Company.

(v) “Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each case, such rule
promulgated under the Securities Act (or any successor provision), as the same shall be
amended from time to time.

(vi) “SEC Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the SEC staff and (ii) the Securities Act.

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

 

33

 

Section 4.14 Avoidance of Control.

(a) Notwithstanding anything to the contrary in this Agreement, the Company shall not take
any action (including any redemption, repurchase, or recapitalization of Common Stock, or
securities or rights, options or warrants to purchase Common Stock, or securities of any type
whatsoever that are, or may become, convertible into or exchangeable into or exercisable for Common
Stock in each case, where the Purchaser is not given the right to participate in such redemption,
repurchase or recapitalization to the extent of the Purchaser’s pro rata proportion) that would
cause the Purchaser’s ownership of voting securities (as defined in the BHC Act) to increase above
24.99%, without the prior written consent of the Purchaser, or to increase to an amount that would
constitute “control” under the BHC Act, or otherwise cause the Purchaser to “control” the Company
under and for purposes of the BHC Act. Notwithstanding anything to the contrary in this Agreement,
the Purchaser shall not have the ability to exercise any voting rights of any securities in excess
of 24.99% of the total outstanding voting securities (as defined in the BHC Act).

(b) In the event that the Company breaches its obligations under this Section 4.14 or believes
that it is reasonably likely to breach such obligations, it shall notify the Purchaser as promptly
as practicable and shall cooperate in good faith
with the Purchaser to modify any ownership or other arrangements or take any other action, in
each case, as is necessary to cure or avoid such breach.

Section 4.15 Legend.

(a) The Purchaser agrees that all certificates or other instruments representing the Shares
subject to this Agreement shall bear a legend substantially to the following effect, until such
time as they are not required under Section 4.15(b):

“(i) 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.

(ii) THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND
OTHER RESTRICTIONS SET FORTH IN A STOCK PURCHASER AGREEMENT, DATED AS OF AUGUST
15, 2011, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.”

 

34

 

(b) Upon request of the Purchaser, upon receipt by the Company of an opinion of counsel to the
Purchaser reasonably satisfactory to the Company to the effect that such legend is no longer
required under the Securities Act or applicable state laws, as the case may be, the Company shall
promptly cause clause (i) of the legend to be removed from any certificate for any Shares to be so
transferred and clause (ii) of the legend shall be removed upon the expiration of such transfer and
other restrictions set forth in this Agreement. The Purchaser acknowledges that the Shares have
not been registered under the Securities Act or under any state securities laws and agrees that it
shall not sell or otherwise dispose of any of the Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any other applicable
securities laws.

Section 4.16 Transfer Restrictions.

(i) The Purchaser may transfer, sell, assign or otherwise dispose of the Shares (1)
only in a privately negotiated transaction to any person or group of persons that would not
acquire pursuant to such Transfer beneficial ownership of Capital Stock of the Company in
violation of any commitments made to the Federal Reserve, (2) into the public market (in a
registered public offering, pursuant to Rule 144 under the Securities Act or
otherwise, including through any broker, dealer or underwriter, acting in a capacity as
such, that purchases Shares for distribution), or (3) as part of a merger, tender offer or
exchange offer or other business combination, acquisition of assets or similar transaction
that has, without the participation of the Purchaser, resulted in a change in control, as
the term “control” is defined in the BHC Act.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.01 Subsequent Capital Raises; Use of Proceeds. In the event the Company raises additional capital in one or more offerings during the
twenty-four (24) months following the Closing (each a “Capital Raise”), the Purchaser shall have
preemptive rights to purchase any securities offered and sold by the Company (any such security, a
“New Security”) at the price and on the other terms of the Capital Rise so as to maintain its then
current ownership percentage in the Company. The preemptive rights granted by this Section 5.01(a)
shall not apply to the sale or issuance by the Company of shares in a merger or similar transaction
or to the sale or issuance of shares upon exercise of stock options or under the Company’s 2007
Omnibus Equity Plan. The Company shall promptly (but in any case no later than five business days
prior to each such Capital Raise) give written notice to the Purchaser that such Capital Raise will
take place, which such notice shall contain the terms of the Capital Raise. From the date of
Purchaser’s receipt of written notice from the Company as described in the immediately preceding
sentence, the Purchaser shall have the lesser of fifteen (15) calendar days or such shorter period
of time provided to other investors within which to notify of the Company of its election whether
or not to participate in the applicable Capital Raise. The Purchaser’s notice to the Company of its
election shall constitute a binding agreement of the Purchaser to purchase the amount of shares
specified in the notice at the price and on the other terms of the Capital Raise. The Company
agrees that the proceeds from the Capital Raises will be used to support additional growth of the
Company as set forth in the Revised Business Plan described in Section 6.01(d), including through
the execution of FDIC-assisted acquisitions or other acquisitions that the Board of Directors of
the Company determines to be in the best interest of the Company.

 

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(a) If the Purchaser exercises its rights provided in Section 5.01(a), each of the Company and
the Purchaser agrees to use commercially reasonable efforts to secure any regulatory or shareholder
approvals or other consents, and to comply with any Law necessary in connection with the offer,
sale and purchase of such New Securities.

(b) The Company and the Purchaser shall cooperate in good faith to facilitate the exercise of
the Purchaser’s rights under this Section 5.01, including securing any required approvals or
consents.

Section 5.02 Appointment of Director. Subject to approval by the Regulatory Authorities, the Company agrees to appoint one director
to each of the boards of directors of the Company and each of the Banks, in each case designated by
the Purchaser and approved by the Company, which approval shall not be unreasonably withheld or
delayed, to fill a current vacancy in each such board of directors (the “Appointed Director”). The
Appointed Director is currently expected to be Eric D. Hovde, who shall also be appointed to the
Executive Committee, should one exist, of each such board of directors.

Section 5.03 Approval of Additional Agreements.
The Company shall, through the Company’s board of directors, recommend to its shareholders,
except under circumstances in which the Company’s board of directors determines that doing so is
reasonably likely to result in a breach of its fiduciary duties or impose a conflict of interest
under applicable Law, approval of the actions and agreements contemplated under this Article V to
the extent action by the Company’s shareholders is required to take such action and/or to effect
the transactions contemplated by such agreements.

ARTICLE VI

CONDITIONS TO THE OBLIGATIONS OF THE

PURCHASER AND THE COMPANY

Section 6.01 Conditions to the Purchaser’s Obligations at the Closing. Purchaser’s obligation to purchase and pay for the Securities being purchased by it on the
Closing Date is, at its option, subject to the satisfaction, on or before the Closing Date, of the
following conditions, any of which may be waived in whole or in part by the Purchaser:

(a) Representations and Warranties to be True and Correct. The representations and warranties
of the Company under this Agreement shall be true, complete and correct in all material respects at
and as of the Closing, with the same effect as though such representations and warranties had been
made on and as of such date; provided, however, to the extent that any representation or warranty
of the Company contains a materiality qualification, the representation or warranty as qualified
shall remain as stated and such qualification shall not be deemed to be lessened or otherwise
modified by the use of “material respects” in this Section 6.01(a);

 

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(b) Number of Shares. The Purchaser and the Company shall have mutually agreed upon the number
of Shares and Warrants to be issued to Purchaser in accordance with Section 1.01.

(c) Performance. The Company shall have performed and complied in all material respects with
all agreements and covenants contained herein required to be performed or complied with by it prior
to or at the Closing Date.

(d) Business Plan. The Company’s revised business plan (the “Revised Business Plan”), which
shall address, among other things, the growth strategy of the Company (including its plans to
engage in transactions involving the acquisition of one or more failed banks from the FDIC and its
plans to supplement the existing management team with additional staff).

(e) Approvals. The Parties shall have received all necessary approvals, Consents or
non-objections from the Regulatory Authorities on such terms and conditions reasonably satisfactory
to the Purchaser for the consummation of the transactions and activities contemplated by the
Transaction Documents, including the approval of the Revised Business Plan contemplated by Section
6.01(d).

(f) Stockholder Approval. The Company shall have obtained the required stockholder approval
of the transactions pursuant to Ohio Revised Code section 1701.831.

(g) No Injunction. No governmental body or any other Person shall have issued an order,
injunction, judgment, decree, ruling or assessment which shall then be in effect restraining or
prohibiting the completion of the transactions contemplated hereby or under any of the other
Transaction Documents, nor, shall any such order, injunction, judgment, decree, ruling or
assessment be pending or, to the Company’s Knowledge, threatened.

(h) Appointment of Director. Pursuant to Section 5.02, but subject to any necessary
regulatory approval, the Appointed Director, shall have been appointed as a director of the Company
and of each of the Banks and shall hold such position effective as of the Closing Date, unless the
failure to hold such position is caused by the individual or the Purchaser, in which case, the
Purchaser shall select an alternate individual to hold such position, which such alternate
individual shall be subject to the approval of the Company, which such approval shall not be
unreasonably withheld or delayed.

 

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(i) Supporting Documents. The Purchaser and its counsel shall have received copies of the
following documents:

(i) (A) the Articles of Incorporation, as amended, certified as of a recent date by
the Secretary of State of the State of Ohio and (B) a certificate of said Secretary dated
as of a recent date as to the Company’s valid existence in good standing;

(ii) a certificate of the Company’s Secretary dated the Closing Date, certifying: (A)
that attached thereto is a true, correct and complete copy of the Regulations as in effect
on the date of such certification and that no amendments or modifications to such By-laws
have been authorized; (B) that attached thereto is a true, correct and complete copy of all
resolutions adopted by the Company’s board of directors authorizing the execution, delivery
and performance of each of the Transaction Documents, the issuance, sale and
delivery of the Securities, and that all such resolutions are in full force and
effect, have not been amended, modified or rescinded and are the only resolutions adopted
in connection with the transactions contemplated by the Transaction Documents; and (C) that
the Articles of Incorporation have not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (i) (A) above;

(iii) a certificate, executed by an officer of the Company, dated the Closing Date,
certifying to the fulfillment by the Company of the conditions set forth in this Article
VI; and

(iv) such additional supporting documents and other information with respect to the
Company’s operations and affairs as the Purchaser or its counsel reasonably may request.
All such documents shall be satisfactory in form and substance to the Purchaser and its
counsel.

(j) No Litigation. No suit or other action shall have been instituted or threatened in
writing seeking to enjoin the transactions contemplated hereby or to obtain other relief in
connection with this Agreement or the transactions contemplated herein.

(k) No Material Adverse Effect. Between the date of this Agreement and the Closing Date,
there shall not have occurred, any change or any condition, event, circumstance, fact or occurrence
that would have a Material Adverse Effect on the Company or the Bank.

(l) Purchaser’s Rights and Voting Agreement. The Company shall have executed and delivered
the Purchaser’s Rights and Voting Agreement in substantially the form attached hereto as Exhibit B.

 

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Section 6.02 Conditions to the Company’s Obligations at the Closing. The Company’s obligation to sell and issue the Securities being sold and issued by it on the
Closing Date is, at its option, subject to the satisfaction, on or before such Closing Date, of the
following conditions, any of which may be waived in whole or in part by the Company:

(a) Representations and Warranties to be True and Correct. The representations and warranties
of the Purchaser contained in Article III shall be true, complete and correct in all material
respects at and as of the Closing, with the same effect as though such representations and
warranties had been made on and as of such date provided, however, to the extent that any
representation or warranty of the Purchaser contains a materiality qualification, the
representation or warranty as qualified shall remain as stated and such qualification shall not be
deemed to be lessened or otherwise modified by the use of “material respects” in this Section
6.02(a).

(b) Performance. The Purchaser shall have performed and complied in all material respects
with all agreements and covenants contained herein required to be performed or complied with by it
prior to or at the Closing Date.

(c) Approvals. The Parties shall have received all necessary approvals, Consents or
non-objections from the Regulatory Authorities on such terms and conditions reasonably satisfactory
to the Company for the consummation of the transactions and activities contemplated by the
Transaction Documents, including the approval of the Revised Business Plan contemplated by Section
6.01(d).

(d) Stockholder Approval. The Company shall have obtained the required stockholder approval
of the transactions pursuant to Ohio Revised Code section 1701.831.

(e) No Injunction. No governmental body or any other Person shall have issued an order,
injunction, judgment, decree, ruling or assessment which shall then be in effect restraining or
prohibiting the completion of the transactions contemplated hereby or under any of the other
Transaction Documents, nor, shall any such order, injunction, judgment, decree, ruling or
assessment be pending or, to the Purchaser’s Knowledge, threatened.

(f) Number of Shares. The Purchaser and the Company shall have mutually agreed upon the
number of Shares and Warrants to be issued to the Purchaser in accordance with Section 1.01.

(g) Purchase Price Paid. The Purchaser shall have paid the Purchase Price for the Securities
to the Company as set forth in Section 1.01.

(h) No Material Adverse Effect. Between the date of this Agreement and the Closing Date,
there shall not have occurred, any change or any condition, event, circumstance, fact or occurrence
that would have a Material Adverse Effect on the Purchaser.

(i) Purchaser’s Rights and Voting Agreement. The Purchaser shall have executed and delivered
the Purchaser’s Rights and Voting Agreement in substantially the form attached hereto as Exhibit B.

 

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(j) Supporting Documents. The Company and its counsel shall have received copies of the
following documents:

(A) the Certificate of Formation, certified as of a recent date by the
Secretary of State of the State of Delaware and (B) a certificate of said Secretary
dated as of a recent date as to the Purchaser’s valid existence in good standing;
and

(B) a certificate, executed by an officer of the Purchaser, dated the Closing
Date, certifying to the fulfillment by the Purchaser of the conditions set forth in
this Article VI; and

(k) No Litigation. No suit or other action shall have been instituted or threatened in
writing seeking to enjoin the transactions contemplated hereby or to obtain other relief in
connection with this Agreement or the transactions contemplated herein.

ARTICLE VII

MISCELLANEOUS

Section 7.01 Expenses. At the Closing, the Company shall reimburse the Purchaser up to $50,000 incurred by the
Purchaser in connection with due diligence expenses on the Company’s loan portfolio (the “Due
Diligence Expenses”). The Company agrees that the Due Diligence Expenses may at the election of
the Purchaser be (a) paid to those parties directed by Purchaser to receive such payments, or (b)
deducted from the Purchase Price payable at the Closing. In the event that the Closing does not
occur due to the Company’s material breach of this Agreement, the Company shall reimburse the
Purchaser up to $50,000 for the Due Diligence Expenses incurred by Purchaser. In the event that the
Closing does not occur due to the Purchaser’s material breach of this Agreement, the Company will
not be obligated to reimburse the Purchaser for the Due Diligence Expenses. For all other
expenses, each of the Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated by the Transaction Documents.

Section 7.02 Survival of Representations and Covenants. Except as otherwise provided herein, the respective representations, warranties, covenants and
agreements of the Parties shall survive for twelve (12) months after the Closing, except for this
Section 7.02 and Sections 4.06(c), 7.01 and Article V, which shall survive indefinitely or until
satisfied.

Section 7.03 Specific Performance. Each Party hereto acknowledges and agrees that the other Parties hereto would be irreparably
damaged if any provision of this Agreement is not performed in accordance with its specific terms
or is otherwise breached. Accordingly, each Party hereto agrees that the other Parties hereto will
be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement
and to specifically enforce this Agreement and its terms and provisions in any action instituted in
any court of the United States or any state thereof having jurisdiction over the Parties in the
matter in addition to any other remedy to which they may be entitled, at law or in equity.

 

40

 

Section 7.04 Further Assurances. The Company and the Purchaser each agree to take such actions and execute and deliver such
other documents or agreements as may be necessary or desirable for the
implementation of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.

Section 7.05 Notices. Any notice, request, demand or other communication required or permitted to be given to a
Party pursuant to the provisions of this Agreement will be in writing and will be effective and
deemed given under this Agreement on the earliest of: (a) the date of personal delivery, (b) the
date of transmission by facsimile, with confirmed transmission and receipt, (c) two days after
deposit with a nationally-recognized courier or overnight service such as FedEx, or (d) five days
after mailing via certified mail, return receipt requested. All notices not delivered personally
or by facsimile will be sent with postage and other charges prepaid and properly addressed to the
Party to be notified at the address set forth for such Party:

If to the Purchaser:

Bank Opportunity Fund LLC

1826 Jefferson Place, NW

Washington, DC 20036

Phone: 202-822-8117

Fax: 202-775-8365

Attn: Joseph J. Thomas

with a copy to (which does not constitute notice):

Perry & Associates PLLC

1826 Jefferson Place, NW

Washington, DC 20036

Phone: 202-822-8117

Fax: 202-775-8365

Attn: Richard J. Perry, Jr.

If to the Company:

Middlefield Banc Corp.

15985 East High Street

Middlefield, Ohio 44062

Phone: 440-632-1666

Fax: 440-632-1700

Attn: Thomas G. Caldwell

with a copy to (which does not constitute notice):

Grady & Associates

20950 Center Ridge Road

Suite 100

Rocky River, Ohio 44116

Phone: (440)356-7255

Fax: (440) 356-7254

Attn: Francis X. Grady

 

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Any Party hereto (and such Party’s permitted assigns) may change such Party’s address for
receipt of future notices hereunder by giving written notice to the other Parties hereto.

Section 7.06 Governing Law. This Agreement and the performance of the transactions and the obligations of the Parties
hereunder will be governed by and construed and enforced in accordance with the Laws of the State
of Ohio, without giving effect to any choice of law principles.

Section 7.07 Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto, the certificates, documents,
instruments and writings that are delivered pursuant hereto and each Transaction Document,
constitutes the entire agreement and understanding of the Parties hereto in respect of its subject
matters and supersedes all prior understandings, agreements, or representations by or among the
Parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof
or the transactions contemplated hereby.

Section 7.08 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an
original but all of which together will constitute one and the same instrument.

Section 7.09 Amendments and Waivers. This Agreement may not be amended or modified, and no provisions hereof may be waived, without
the written consent of the Company and the Purchaser. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by
the Party taking such action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any Party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a further or continuing waiver of such breach or as a waiver
of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such Party preclude any other or
further exercise thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by law.

Section 7.10 Successors and Assigns. This Agreement and the rights and obligations of the Parties hereunder shall inure to the
benefit of, and be binding upon, their respective successors, assigns and legal representatives.
Without limiting the foregoing, Purchaser shall have the right to assign its rights and obligations
under this Agreement to an Affiliate of Purchaser as along as such assignment would not adversely
affect the consummation of the transactions contemplated by this Agreement, provided, that
Purchaser provides advanced written notice of such assignment to the Company and the Company
consents to such assignment, which shall not be unreasonably withheld or delayed.

 

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Section 7.11 Severability. The provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision hereof will not affect the validity or enforceability of the
other provisions hereof; provided that if any provision of this Agreement, as applied to any Party
or to any circumstance, is adjudged by a court, governmental body or arbitrator not to be
enforceable in accordance with its terms, the Parties hereto agree that the court, governmental
body, or arbitrator making such determination will have the power to modify the provision in a
manner consistent with its objectives such that it is enforceable, and/or to delete specific words
or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.

Section 7.12 Titles and Subtitles. The article and section headings contained in this Agreement are inserted for convenience only
and will not affect in any way the meaning or interpretation of this Agreement.

Section 7.13 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a reference to a specific number of shares purchased,
then, upon the occurrence of any subdivision, combination, reorganization, or stock dividend of
such class or series of stock, the specific number of shares so referenced in this Agreement
(including the shares underlying the Warrants) will automatically be proportionally adjusted to
reflect the effect of such subdivision, combination or stock dividend on the outstanding shares of
such class or series of stock.

Section 7.14 Construction. The Parties hereto have jointly participated in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the Parties hereto and no presumption or burden of proof will
arise favoring or disfavoring any Party hereto because of the authorship of any provision of this
Agreement. Any reference to any federal, state, local or foreign Law will also be deemed to refer
to such Law as amended and all rules and regulations promulgated thereunder, unless the context
otherwise requires. The words “include,” “includes” and “including” will be deemed to be followed
by “without limitation.” Pronouns in masculine, feminine and neuter genders will be construed to
include any other gender, and words in the singular form will be construed to include the plural
and
vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,”
“hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The Parties hereto intend that each
representation, warranty and covenant contained herein will have independent significance. If any
Party hereto has breached any representation, warranty or covenant contained herein in any respect,
the fact that there exists another representation, warranty or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which such Party has breached,
will not detract from or mitigate the fact that such Party is in breach of the first
representation, warranty or covenant.

 

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Section 7.15 Remedies. The Parties hereto shall have all remedies for breach of this Agreement available to them as
provided by law or equity. In the event that any Party hereto institutes any suit or other action
to enforce the obligations of this Agreement, both Parties agree that the non-prevailing Party, its
successors or assigns shall pay to the prevailing Party, its successors or assigns, all reasonable
costs and any counsels’ or attorneys’ fees incurred as a result of the institution of such suit or
action; provided, however that neither Party shall be liable to the other Party or any other Person
under any circumstances or due to any event whatsoever, for punitive, treble, consequential or
indirect damages, including, without limitation, loss of profit, diminution of value, loss of use
or business stoppage.

Section 7.16 Incorporation of Exhibits and Schedules. The exhibits and schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.

Section 7.17 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Affiliate” of a Person shall mean: (i) any other Person directly, or indirectly through one
or more intermediaries, controlling, controlled by or under common control with such Person; (ii)
any officer, director, partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.

“Assets” of a Person shall mean all of the assets, properties, businesses and rights of such
Person of every kind, nature, character and description, whether real, personal or mixed, tangible
or intangible, accrued or contingent, or otherwise relating to or utilized in such Person’s
business, directly or indirectly, in whole or in part, whether or not carried on the books and
records of such Person, and whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.

“BHC Act” shall mean the Bank Holding Company Act of 1956, as amended.

“Business Day” shall mean any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York or in the State of Ohio
generally are authorized or required by Law or other governmental actions to close.

“Company Financial Statements” shall mean (i) the audited balance sheets (including related
notes and schedules, if any) of the Company as of December 31, 2010 and 2009, and the related
statements of income, changes in shareholders’ equity, and cash flows (including related notes and
schedules, if any), and (ii) the unaudited balance sheet (including related notes and schedules, if
any) of the Company as of March 31, 2011, and the related statements of income, changes in
shareholders’ equity, and cash flows (including related notes and schedules, if any) for March 31,
2011, as delivered by the Company to Purchaser prior to execution of this Agreement.

 

44

 

“Consent” shall mean any consent, approval, authorization, clearance, exemption, waiver, or
similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit.

“Contract” shall mean any written or oral agreement, arrangement, authorization, commitment,
contract, indenture, instrument, lease, obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets or business.

“Default” shall mean (i) any breach or violation of, default under, contravention of, or
conflict with, any Contract, Law, Order, or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or violation of, default
under, contravention of, or conflict with, any Contract, Law, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving of notice would give
rise to a right of any Person to exercise any remedy or obtain any relief under, terminate or
revoke, suspend, cancel, or modify or change the current terms of, or renegotiate, or to accelerate
the maturity or performance of, or to increase or impose any Liability under, any Contract, Law,
Order, or Permit.

“Disclosure Schedule” shall mean a schedule attached to this Agreement setting forth, among
other things, items the disclosure of which is necessary or appropriate as an exception to one or
more representations or warranties contained in the corresponding provision in Article II.

“Equity Rights” shall mean all arrangements, calls, commitments, Contracts, options, rights to
subscribe to, script, understandings, warrants, or other binding obligations of any character
whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Equity Rights.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“FDIC” shall mean the Federal Deposit Insurance Corporation.

“Federal Reserve” shall mean the Board of Governors of the Federal Reserve System and/or the
Federal Reserve Bank of Cleveland, as the case may be.

“GAAP” shall mean generally accepted accounting principles in the United States, consistently
applied during the periods involved.

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

“Knowledge” as used with respect to a Person (including references to such Person being aware
of a particular matter) shall mean the personal knowledge after due inquiry of the president, chief
executive officer, chief financial officer or chief credit officer of such Person.

 

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“Law” shall mean any code, law (including common law), ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets, Liabilities, or
business, including those promulgated, interpreted or enforced by any Regulatory Authority.

“Liability” shall mean any direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary course of business)
of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.

“Lien” shall mean a mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance,
lien (statutory or otherwise, including any lien for Taxes), security interest, preference,
participation interest, priority or security agreement or preferential arrangement of any kind or
nature whatsoever, including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and the filing of any
document under the Law of any applicable jurisdiction to evidence any of the foregoing.

“Litigation” shall mean any action, arbitration, cause of action, claim, charge, complaint,
criminal prosecution, governmental or other examination or investigation, hearing, administrative
or other proceeding relating to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by Regulatory Authorities.

“Material Adverse Effect” shall mean an event, change, condition or occurrence which has a
material adverse impact on (i) the financial position, Assets, business or results of operations of
such Party and its Subsidiaries, taken as a whole, or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the transactions or agreements contemplated by
this Agreement; provided that “Material Adverse Effect” shall not be deemed to include the impact
of (x) changes in banking and similar Laws of general applicability or interpretations thereof by
courts or governmental
authorities and (y) changes in GAAP or regulatory accounting principles generally applicable
to banks.

“ODFI” shall mean the Ohio Division of Financial Institutions.

“Order” shall mean any administrative decision or award, decree, injunction, judgment, order,
quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign or other
court, arbitrator, mediator, tribunal, administrative agency, or Regulatory Authority.

“Organizational Documents” shall mean any charter, certificate of incorporation, articles of
association, limited liability company agreement, partnership agreement, membership agreement,
by-laws, operating agreement or similar formation or governing documents and instruments, and any
amendments thereto.

 

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“Party” shall mean either of the Company or Purchaser, and “Parties” shall mean both the
Company and Purchaser.

“Permit” shall mean any federal, state, local, and foreign governmental approval,
authorization, certificate, easement, filing, franchise, license, notice, permit, or right to which
any Person is a party or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.

“Person” shall mean a natural person or any legal, commercial or governmental entity, such as,
but not limited to, a corporation, general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in concert, or any person acting in a
representative capacity.

“Regulatory Authorities” shall mean, collectively, the ODFI, the FDIC, the Federal Reserve,
and all other federal, state, county, local or other governmental or regulatory agencies,
authorities (including self-regulatory authorities), instrumentalities, commissions, boards or
bodies having jurisdiction over the Company and its Subsidiaries.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Subsidiary” shall mean, as to the Company, any Person of which more than fifty percent (50%)
of the outstanding voting power of such Person (irrespective of whether or not at the time stock of
any other class or classes of such Person shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly controlled by the Company, or
by one or more of its subsidiaries, or by the Company and one or more of its subsidiaries.

“Tax Return” shall mean any report, return, information return, or other information required
to be supplied to a taxing authority in connection with Taxes, including any return of an
affiliated or combined or unitary group that includes a Party or its Subsidiaries.

“Tax” or “Taxes” shall mean any federal, state, county, local, or foreign taxes, charges,
fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise,
employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation,
windfall profits, environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business and unemployment,
disability, real property, personal property, registration, ad valorem, value added, alternative or
add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposes or
required to be withheld by the United States or any state, county, local or foreign government or
subdivision or agency thereof, including any interest, penalties, and additions imposed thereon or
with respect thereto.

 

47

 

“Transaction Documents” shall mean this Agreement, the Warrant, and the Purchaser’s Rights
Agreement.

ARTICLE VIII

TERMINATION

Section 8.01 Termination of Agreement Prior to Closing.
This Agreement and the transactions contemplated hereby may be terminated at any time prior to
the Closing, as follows:

(a) Mutual Consent. By mutual written consent of all of the Parties to this Agreement;

(b) Termination by Purchaser. By the Purchaser upon written notice to the Company (i) in the
event of the breach by the Company in any material respect of any of its representations,
warranties, covenants or agreements made to Purchaser contained in this Agreement, and such breach
is not curable or, if curable, is not cured within the thirty (30) days after written notice
thereof is given by Purchaser to the Company; or (ii) in the event that the conditions precedent to
Purchaser’s obligations contained in Section 6.01 hereof have not been met in all respects at the
Closing through no fault of Purchaser, or (iii) the Purchaser shall have failed to obtain from
Regulatory Authorities the approvals necessary to consummate the transactions and agreements set
forth in this Agreement, or (iv) the Company shall have failed to obtain from the Regulatory
Authorities, the approvals necessary to consummate the transactions and agreements set forth in
this Agreement, including the approval of the Revised Business Plan;

(c) Termination by Company. By the Company upon written notice to the Purchaser (i) in the
event of the breach by the Purchaser in any material respect of any of its representations,
warranties, covenants or agreements made to the Company contained in this Agreement, and such
breach is not curable or, if curable, is not cured within the thirty (30) days after written notice
thereof is given by Company to the Purchaser; or (ii) in the event that the conditions precedent to
the Company’s
obligations contained in Section 6.02 hereof have not been met in all respects at the Closing
through no fault of the Company, or (iii) the Company shall have failed to obtain from the
Regulatory Authorities, the approvals necessary to consummate the transactions and agreements set
forth in this Agreement, including the approval of the Revised Business Plan; or (iv) the
Purchaser shall have failed to obtain from Regulatory Authorities, the approvals necessary to
consummate the transactions and agreements set forth in this Agreement; or

(d) by written notice by the Company or the Purchaser, as the case may be, in the event the
Closing has not occurred on or prior to March 31, 2012 for any reason other than delay or
nonperformance of or breach by the Party seeking such termination.

 

48

 

Section 8.02 Effect of Termination Prior to Closing.
If this Agreement is terminated pursuant to Section 8.01 above, all rights and obligations of
the Parties hereunder shall terminate without any Liability on the part of any Party, except for
(i) any liability of any Party then in breach of any representations, warranties, covenants or
obligations, or (ii) any liability for any expenses due under Section 7.01.

[SIGNATURE PAGE FOLLOWS]

 

49

 

IN WITNESS WHEREOF, the Company and the Purchaser have executed this Agreement as of the day
and year first above written.

	 	 	 	 	 
	 	COMPANY:

MIDDLEFIELD BANC CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	Thomas G. Caldwell 	 
	 	 	Title:  	President and Chief Executive
Officer 	 
	 
	 	PURCHASER:

BANK OPPORTUNITY FUND LLC

 	 
	 	By:  	Bank Acquisitions LLC, its managing member
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Eric D. Hovde 	 
	 	 	Title:  	Managing Member

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