Document:

Exhibit
        10.2

    

     

     

    SECURITY
      AGREEMENT

    (Grantor)

    

    This
      SECURITY AGREEMENT is made as of December 1, 2008 (the “Agreement”), by RUBBER
      RESEARCH ELASTOMERICS, INC., a Minnesota corporation, with its chief executive
      office at 4500 Main Street NE, Fridley, MN 55421 (“Grantor”), in favor of
      RIVIERA INVESTMENTS, INC., with an office at 1138 Hartzell Street, Pacific
      Palisades, CA 90272 (“Lender”).

    

    RECITALS:

    

    A. Grantor
      has requested extensions of credit from Lender pursuant to the terms of that
      certain Letter Loan Agreement dated of even date herewith (the Letter Loan
      Agreement as it may be amended, modified, supplemented, increased or restated
      from time to time being the “Loan Agreement”) between Grantor and
      Lender.

    

    B. As
      a
      condition to such extensions of credit, Lender requires that Grantor grant
      a
      security interest in its assets in accordance with this Agreement.

    

    C. Grantor
      has determined that the execution, delivery and performance of this Agreement
      are in its best business and pecuniary interest.

    

    NOW,
      THEREFORE, for good and valuable consideration the receipt and adequacy of
      which
      are hereby acknowledged by each of the parties hereto, it is agreed as
      follows:

    

    ARTICLE
      I 

    DEFINITIONS

    

    As
      used
      herein, the following terms shall have the meanings set forth in this
      Section:

    

    “Accounts”
shall
      have the meaning provided in the UCC.

    

    “Chattel
      Paper”
shall
      have the meaning provided in the UCC and shall include, without limitation,
      all
      Electronic Chattel Paper and Tangible Chattel Paper.

    

    “Collateral”
shall
      mean all property in which a security interest is granted
      hereunder.

    

    “Commercial
      Tort Claim”
shall
      have the meaning provided in the UCC.

    

    “Controlled
      Property”
shall
      mean property of every kind and description in which Grantor has or may acquire
      any interest, now or hereafter at any time in the possession or control of
      Lender or any Lender Affiliate for any reason and all dividends and
      distributions on or other rights in connection with such property.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Data
      Processing Records and Systems”
shall
      mean all of Grantor’s now existing or hereafter acquired electronic data
      processing and computer records, software (including, without limitation, all
      “Software” as defined in the UCC), systems, manuals, procedures, disks, tapes
      and all other storage media and memory.

    

    “Default”
shall
      mean any event which if it continued uncured would, with notice or lapse of
      time
      or both, constitute an Event of Default.

     

    “Deposit
      Accounts”
shall
      have the meaning provided in the UCC and shall include, without limitation,
      any
      demand, time, savings, passbook or similar account maintained with a
      bank.

    

    “Document”
shall
      have the meaning provided in the UCC.

    

    “Electronic
      Chattel Paper”
shall
      have the meaning provided in the UCC.

    

    “Equipment”
shall
      have the meaning provided in the UCC.

    

    “Event
      of Default”
shall
      have the meaning specified in Article VI hereof.

    

    “Fixtures”
shall
      have the meaning provided in the UCC.

    

    “General
      Intangibles”
shall
      have the meaning provided in the UCC and shall include, without limitation,
      all
      Payment Intangibles and Trade Secrets.

    

    “Goods”
shall
      have the meaning provided in the UCC and shall include embedded “Software” to
      the extent included in “Goods” as defined in the UCC.

    

    “Grantor”
shall
      have the meaning provided in the preamble hereto.

    

    “Instruments”
shall
      have the meaning provided in the UCC.

    

    “Insurance
      Proceeds”
shall
      mean all proceeds of any and all insurance policies payable to Grantor with
      respect to any Collateral, or on behalf of any Collateral, whether or not such
      policies are issued to or owned by Grantor.

    

    “Inventory”
shall
      have the meaning provided in the UCC.

     

    “Investment
      Property”
shall
      have the meaning provided in the UCC.

    

    “Lender”
shall
      have the meaning provided in the preamble hereto.

    

    “Lender
      Affiliate”
shall
      mean any
      affiliate of the Lender which is party to a written agreement with Grantor
      providing for any extension of credit to Grantor.

    

    “Letter-of-Credit
      Rights”
shall
      have the meaning provided in the UCC.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Loan
      Agreement”
shall
      have the meaning provided in the recitals hereto.

     

    “Payment
      Intangibles”
shall
      have the meaning provided in the UCC.

    

    “Proceeds”
shall
      have the meaning provided in the UCC.

    

    “Products”
shall
      mean any goods now or hereafter manufactured, processed or assembled with any
      of
      the Collateral.

    

    “Supporting
      Obligations”
shall
      have the meaning provided in the UCC.

    

    “Tangible
      Chattel Paper”
shall
      have the meaning provided in the UCC.

    

    “Trade
      Secret”
      shall
      mean information, including a formula, pattern, compilation, program, device,
      method, technique, or process, that: (i) derives independent economic value,
      actual or potential, from not being generally known to, and not being readily
      ascertainable by proper means by, other persons who can obtain economic value
      from its disclosure or use, and (ii) is the subject of efforts that are
      reasonable under the circumstances to maintain its secrecy.

    

    “UCC”
shall
      mean the Uniform Commercial Code as enacted in the State of Minnesota, as
      amended from time to time; provided,
      however,
      that:
      (a) to the extent that the UCC is used to define any term herein, and such
      term
      is defined differently in different Articles of the UCC, the definition of
      such
      term contained in Article 9 shall govern; and (b) if, by reason of mandatory
      provisions of law, any or all of the attachment, perfection or priority of,
      or
      remedies with respect to, the Lender’s security interest in any Collateral is
      governed by the Uniform Commercial Code as enacted and in effect in a
      jurisdiction other than the State of Minnesota, the term “UCC” shall mean the
      Uniform Commercial Code as enacted and in effect in such other jurisdiction
      solely for purposes of the provisions thereof relating to such attachment,
      perfection or priority of, or remedies with respect to, the Lender’s security
      interest and for purposes of definitions related to such
      provisions.

    

    Other
      terms defined herein shall have the meanings ascribed to them herein. All
      capitalized terms used herein, not specifically defined herein, shall have
      the
      meaning ascribed to them in the Loan Agreement.

    

    ARTICLE
      II 

    SECURITY
      INTERESTS

    

    As
      security for the payment of all Obligations, Grantor hereby grants to Lender
      and
      each Lender Affiliate a security interest in all of Grantor’s right, title and
      interest in and to the following, whether now owned or existing or hereafter
      acquired or arising: 

    

    Accounts;

    Chattel
      Paper;

    
      	 	 	
              Commercial
                Tort Claims, if any, described on Exhibit B attached hereto and
                incorporated herein by reference;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Controlled
      Property;

    
      	 	 	
              Deposit
                Accounts;

            

    

    Documents;

    
      	 	 	
              Equipment
                and Fixtures;

            

    

    General
      Intangibles;

    Instruments;

    Inventory;

    
      	 	 	
              Investment
                Property;

            

    

    
      	 	 	
              Letter-of-Credit
                Rights;

            

    

    
      	 	 	
              Proceeds
                (whether cash or non-cash Proceeds, including Insurance Proceeds
                and
                non-cash Proceeds of all types);

            

    

    Products
      of all the foregoing; and

    Supporting
      Obligations.

    

    ARTICLE
      III 

    REPRESENTATIONS
      AND COVENANTS OF GRANTOR

    

      Grantor
      represents, warrants and covenants that:

    

    3.1  Authorization.
      The
      execution and performance of this Agreement have been duly authorized by all
      necessary action and do not and will not: (a) require any consent or approval
      of
      the stockholders of any entity, or the consent of any governmental entity which
      has not been obtained; or (b) violate any provision of any indenture, contract,
      agreement or instrument to which it is a party or by which it is
      bound.

    

    3.2  Title
      to Collateral.
      Grantor
      has good and marketable title to all of the Collateral and none of the
      Collateral is subject to any security interest except for the security interest
      created pursuant to this Agreement or other security interests permitted by
      the
      Loan Agreement (such other security interests being “Permitted
      Liens”).

    

    3.3  Disposition
      or Encumbrance of Collateral.
      Grantor
      will not encumber, sell or otherwise transfer or dispose of the Collateral
      without the prior written consent of Lender except as provided in this Section
      or for Permitted Liens. Until a Default or Event of Default has occurred and
      is
      continuing, Grantor may sell Collateral consisting of: (a) Inventory in the
      ordinary course of business provided that Grantor receives as consideration
      for
      such sale an amount not less than the fair market value of the Inventory at
      the
      time of such sale; and (b) Equipment and Fixtures which in the judgment of
      Grantor have become obsolete or unusable in the ordinary course of business,
      provided that all net Proceeds of such sales of Equipment and Fixtures are
      delivered directly to Lender for application to the Obligations in such order
      as
      the Lender may elect.

    

    3.4  Validity
      of Accounts.
      Grantor
      warrants that all Collateral consisting of Accounts, Chattel Paper and
      Instruments included in Grantor’s schedules, financial statements or books and
      records are bona fide existing obligations created by the sale and actual
      delivery of Inventory or the rendition of services to customers in the ordinary
      course of business, which Grantor then owns free and clear of any security
      interest other than the security interest created by this Agreement or other
      Permitted Liens, and which are then unconditionally owing to Grantor without
      defenses, offset or counterclaim except those arising in the ordinary course
      of
      business that are immaterial in the aggregate and that the unpaid principal
      amount of any such Chattel Paper or Instrument and any security therefor is
      and
      will be as represented to Lender on the date of the delivery thereof to
      Lender.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.5  Maintenance
      of Tangible Collateral.
      Grantor
      will maintain the tangible Collateral in good condition and repair. At the
      time
      of attachment and perfection of the security interest granted pursuant hereto
      and thereafter, all tangible Collateral will be located and will be maintained
      only at the locations set forth on Exhibit A hereto. Except as otherwise
      permitted by Section 3.3, Grantor will not remove such Collateral from such
      locations unless, prior to any such removal, Grantor has given written notice
      to
      Lender of the location or locations to which Grantor desires to remove the
      Collateral, Lender has given its written consent to such removal, and Grantor
      has delivered to Lender acknowledgment copies of financing statements filed
      where appropriate to continue the perfection of Lender’s security interest as a
      first priority security interest on such Collateral. Lender’s security interest
      attaches to all of the Collateral wherever located and Grantor’s failure to
      inform Lender of the location of any item or items of Collateral shall not
      impair Lender’s security interest thereon.

    

    3.6  Notation
      on Chattel Paper.
      For
      purposes of the security interest granted pursuant to this Agreement, Lender
      has
      been granted a direct security interest in all Chattel Paper constituting part
      of the Collateral and such Chattel Paper is not claimed merely as Proceeds
      of
      Inventory. Upon Lender’s request, Grantor will deliver to Lender the original of
      all Chattel Paper. Grantor will not execute any copies of such Chattel Paper
      constituting part of the Collateral other than those which are clearly marked
      as
      a copy. Lender may stamp any such Chattel Paper with a legend reflecting
      Lender’s security interest therein.

    

    3.7  Instruments
      as Proceeds; Deposit Accounts.
      Notwithstanding any other provision in this Agreement concerning Instruments,
      Grantor covenants that Instruments constituting cash Proceeds (for example,
      money and checks) shall be deposited in Deposit Accounts with the Depository
      Bank. Grantor has granted to the Lender a direct security interest in all
      Deposit Accounts constituting part of the Collateral and such Deposit Accounts
      are not claimed merely as Proceeds of other Collateral.

    

    3.8  Protection
      of Collateral.
      All
      expenses of protecting, storing, warehousing, insuring, handling and shipping
      of
      the Collateral, all costs of keeping the Collateral free of any liens,
      encumbrances and security interests prohibited by this Agreement and of removing
      the same if they should arise, and any and all excise, property, sales and
      use
      taxes imposed by any state, federal or local authority on any of the Collateral
      or in respect of the sale thereof, shall be borne and paid by Grantor and if
      Grantor fails to promptly pay any thereof when due, Lender may, at its option,
      but shall not be required to pay the same whereupon the same shall constitute
      Obligations and shall bear interest at the Default Rate specified in the
      Revolving Credit Note (the “Interest Rate”) and shall be secured by the security
      interest granted hereunder.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.9  Insurance.
      Grantor
      will procure and maintain, or cause to be procured and maintained, insurance
      issued by responsible insurance companies insuring the Collateral against damage
      and loss by theft, fire, collision (in the case of motor vehicles), and such
      other risks as are usually carried by owners of similar properties or as may
      be
      requested by Lender in an amount equal to the replacement value thereof, and,
      in
      any event, in an amount sufficient to avoid the application of any co-insurance
      provisions and payable, in the case of any loss in excess of $10,000.00, to
      Grantor and Lender jointly. All such insurance shall contain an agreement by
      the
      insurer to provide Lender with 30 days’ prior notice of cancellation and an
      agreement that the interest of Lender shall not be impaired or invalidated
      by
      any act or neglect of Grantor nor by the occupation of the premises wherein
      such
      Collateral is located for purposes more hazardous than are permitted by said
      policy. Grantor will maintain, with financially sound and reputable insurers,
      insurance with respect to its properties and business against such casualties
      and contingencies of such types (which may include, without limitation, public
      and product liability, larceny, embezzlement, business interruption or other
      criminal misappropriation insurance) and in such amounts as may from time to
      time be required by Lender. Grantor will deliver evidence of such insurance
      and
      the policies of insurance or copies thereof to Lender upon request.

    

    3.10  Compliance
      with Law.
      Grantor
      will not use the Collateral, or knowingly permit the Collateral to be used,
      for
      any unlawful purpose or in violation of any federal, state or municipal
      law.

    

    3.11  Books
      and Records; Access.

    

    (a)  Grantor
      will permit Lender and its representatives to examine Grantor’s books and
      records (including Data Processing Records and Systems) with respect to the
      Collateral and make extracts therefrom and copies thereof at any time and from
      time to time, and Grantor will furnish such information and reports to Lender
      and its representatives regarding the Collateral as Lender and its
      representatives may from time to time request. Grantor will also permit Lender
      and its representatives to inspect the Collateral at any time and from time
      to
      time as Lender and its representatives may request. 

    

    (b)  Lender
      shall have authority, at any time, to place, or require Grantor to place, upon
      Grantor’s books and records relating to Accounts, Chattel Paper and other rights
      to payment covered by the security interest granted hereby a notation or legend
      stating that such Accounts, Chattel Paper and other rights to payment are
      subject to Lender’s security interest. 

    

    3.12  Notice
      of Default.
      Immediately upon any officer of Grantor becoming aware of the existence of
      any
      Default or Event of Default, Grantor will give notice to Lender that such
      Default or Event of Default exists, stating the nature thereof, the period
      of
      existence thereof, and what action Grantor proposes to take with respect
      thereto.

    

    3.13  Additional
      Documentation.
      Grantor
      will execute, from time to time, and authorizes Lender to execute from time
      to
      time as Grantor’s attorney-in-fact and/or file, such financing statements,
      assignments, and other documents covering the Collateral, including Proceeds,
      as
      Lender may request in order to create, evidence, perfect, maintain or continue
      its security interest in the Collateral (including additional Collateral
      acquired by Grantor after the date hereof), and Grantor will pay the cost of
      filing the same in all public offices in which Lender may deem filing to be
      appropriate and will notify Lender promptly upon acquiring any additional
      Collateral that may require an additional filing. Upon request, Grantor will
      deliver to Lender all Grantor’s Documents, Chattel Paper and Instruments
      constituting part of the Collateral.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.14  Chief
      Executive Office; State of Incorporation.
      The
      location of the chief executive office of Grantor is located in the State set
      forth in the preamble hereto and will not be changed from such state without
      30
      days’ prior written notice to Lender. Grantor warrants that its books and
      records concerning Accounts and Chattel Paper constituting part of the
      Collateral are located at its chief executive office. Grantor’s State of
      organization is the State set forth in the preamble hereto and such State has
      been its State of organization since the date of Grantor’s organization. Grantor
      will not change its State of organization from such State without 30 days’ prior
      written notice to Lender, Lender has given its written consent to such change,
      and Grantor has delivered to Lender acknowledgment copies of financing
      statements filed where appropriate to continue the perfection of Lender’s
      security interest as a first priority security interest therein.

    

    3.15  Name
      of Grantor.
      Grantor’s exact legal name and type of legal entity is as set forth in the
      preamble hereto. Grantor will not change its legal name without 30 days’ prior
      written notice to the Lender, the Lender has given its written consent to such
      change, and Grantor has delivered to the Lender acknowledgment copies of
      financing statements filed where appropriate to continue the perfection of
      the
      Lender’s security interest as a first priority security interest in the
      Collateral. Grantor has not used any other name within the past five years
      except those described on Exhibit A attached hereto. Neither Grantor nor, to
      Grantor’s knowledge, any predecessor in title to any of the Collateral has
      executed any financing statements or security agreements presently effective
      as
      to the Collateral except those described on Exhibit A attached
      hereto.

    

    3.16  Disputes,
      Etc.
      Grantor
      shall advise Lender promptly of Inventory in excess of $10,000.00 for any one
      customer in any fiscal year or in excess of $25,000.00 in the aggregate for
      all
      customers in any fiscal year which are returned by a customer(s) or otherwise
      recovered from such customer(s) and unless instructed to deliver such Inventory
      to Lender, Grantor shall resell such Inventory for Lender and assign or deliver
      to Lender the resulting Accounts or other Proceeds. Grantor shall also advise
      Lender promptly of all disputes and claims in excess of $10,000.00 for any
      one
      obligor on the Collateral in any fiscal year or in excess of $25,000.00 in
      the
      aggregate for all obligors in any fiscal year and settle or adjust them at
      no
      expense to Lender. After the occurrence and during the continuance of an Event
      of Default, Lender may at all times settle or adjust such disputes and claims
      directly with the customers for amounts and upon terms which Lender considers
      commercially reasonable. No discount, credit, allowance, adjustment or return
      shall be granted by Grantor to any customer without Lender’s written consent
      other than discounts, credits, allowances, adjustments and returns made or
      granted by Grantor in the ordinary course of business prior to the occurrence
      and during the continuance of an Event of Default.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.17  Power
      of Attorney.
      Grantor
      appoints Lender, or any other person whom Lender may from time to time
      designate, as Grantor’s attorney with power, to: (a) endorse Grantor’s name on
      any checks, notes, acceptances, drafts or other forms of payment or security
      evidencing or relating to any Collateral that may come into Lender’s possession;
      (b) sign Grantor’s name on any invoice or bill of lading relating to any
      Collateral, on drafts against customers, on schedules and confirmatory
      assignments of Accounts, Chattel Paper, Documents or other Collateral, on
      notices of assignment, financing statements under the UCC and other public
      records, on verifications of accounts and on notices to customers; (c) notify
      the post office authorities to change the address for delivery of Grantor’s mail
      to an address designated by Lender; (d) receive and open all mail addressed
      to
      Grantor; (e) send requests for verification of Accounts, Chattel Paper,
      Instruments or other Collateral to customers; and (f) do all things necessary
      to
      carry out this Agreement. Grantor ratifies and approves all acts of the attorney
      taken within the scope of the authority granted. Neither Lender nor the attorney
      will be liable for any acts of commission or omission, or for any error in
      judgment or mistake of fact or law. This power, being coupled with an interest,
      is irrevocable so long as any Obligation remains unpaid. Grantor waives
      presentment and protest of all instruments and notice thereof, notice of default
      and dishonor and all other notices to which Grantor may otherwise be
      entitled.

    

    3.18  Patents
      and Trademarks, Etc.
      Grantor
      agrees with Lender that, until the security interest granted by this Agreement
      has been terminated in accordance with the terms hereof:

    

    (a)  Grantor
      will perform all acts and execute all documents including, without limitation,
      grants of security interest, in form suitable for filing with the United States
      Patent and Trademark Office, reasonably requested by Lender at any time to
      evidence, perfect, maintain, record and enforce Lender’s interest in the
      Collateral comprised of patents (collectively the “Patents”), patent
      applications (collectively the “Patent Applications”), trademarks or service
      marks (collectively the “Trademarks”) or of any applications therefor
      (collectively the “Trademark Applications”) or otherwise in furtherance of the
      provisions of this Agreement;

    

    (b)  Except
      to
      the extent that Lender shall consent in writing, Grantor (either itself or
      through licensees) will, unless Grantor shall reasonably determine that a
      Trademark (or the use of a Trademark in connection with a particular class
      of
      goods or products) is not of material economic value to Grantor: (i) continue
      to
      use each Trademark on each and every trademark class of goods in order to
      maintain each Trademark in full force free from any claim of abandonment for
      non-use; (ii) maintain as in the past the quality of products and services
      offered under each Trademark; (iii) employ each Trademark with the appropriate
      notice of application or registration to the extent required by applicable
      law
      to maintain such Trademark; (iv) not use any Trademark except for the uses
      for
      which registration or application for registration of such Trademark has been
      made, unless such use is otherwise lawful; and (v) not (and not permit any
      licensee or sublicensee thereof to) do any act or knowingly omit to do any
      act
      whereby any Trademark may become invalidated;

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Except
      to
      the extent that Lender shall consent in writing, Grantor will not, unless
      Grantor shall reasonably determine that a Patent is not of material economic
      value to Grantor, do any act, or not to do any act, whereby any Patent may
      become abandoned or dedicated;

    

    (d)  Unless
      Grantor shall reasonably determine that a Patent, Patent Application, Trademark
      or Trademark Application is not of material economic value to Grantor, Grantor
      shall notify Lender immediately if it knows, or has reason to know, of any
      reason that any Patent, Patent Application, Trademark or Trademark Application
      may become abandoned or dedicated, or of any adverse determination or
      development (including, without limitation, the institution of, or any such
      determination or development in, any proceeding in the United States Patent
      and
      Trademark Office or any court) regarding Grantor’s ownership of any Patent or
      Trademark, its rights to register the same, or to keep and maintain the
      same;

    

    (e)  If
      Grantor, either itself or through any agent, employee, licensee or designee,
      shall file a Patent Application or Trademark Application for the registration
      of
      any Trademark with the United States Patent and Trademark Office, or any similar
      office or agency in any other country or any political subdivision thereof,
      Grantor shall promptly inform Lender, and, upon request of Lender, shall
      promptly execute and deliver any and all agreements, instruments, documents
      and
      papers as Lender may reasonably request to evidence Lender’s security interest
      in such Patent or Trademark and the goodwill and general intangibles of Grantor
      relating thereto or represented thereby;

    

    (f)  Unless
      Grantor shall reasonably determine that a Patent Application or Trademark
      Application is not of material economic value to Grantor, Grantor will take
      all
      necessary steps, including, without limitation, in any proceeding before the
      United States Patent and Trademark Office, or any similar office or agency
      in
      any other country or any political subdivision thereof, to maintain and pursue
      each Patent Application and Trademark Application (and to obtain the relevant
      registration) and to maintain each registration of the Patents and Trademarks,
      including, without limitation, filing of applications for renewal and affidavits
      of use;

    

    (g)  Unless
      Grantor shall reasonably determine that a Patent or Trademark is not of material
      economic value to Grantor, Grantor shall promptly notify Lender if any Patent
      or
      Trademark is infringed, misappropriated or diluted by a third party and either
      shall promptly sue for infringement, misappropriation or dilution and to recover
      any and all damages for such infringement, misappropriation or dilution, or
      take
      such other actions as Grantor shall reasonably deem appropriate under the
      circumstances to protect such Patent or Trademark; and

    

    (h)  Grantor
      agrees that it will not enter into any agreement (for example, a license
      agreement) which is inconsistent with Grantor’s obligations under this
      Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.19  Copyrights.
      Grantor
      agrees with Lender that, until the security interest granted by this Agreement
      has been terminated in accordance with the terms hereof:

    

    (a)  Grantor
      will perform all acts and execute all documents including, without limitation,
      grants of security interest, in form suitable for filing with the United States
      Copyright Office, reasonably requested by Lender at any time to evidence,
      perfect, maintain, record and enforce Lender’s interest in the Collateral
      comprised of copyrights or copyright applications (collectively the
“Copyrights”) or otherwise in furtherance of the provisions of this
      Agreement;

    

    (b)  Except
      to
      the extent that the Lender shall consent in writing, Grantor (either itself
      or
      through licensees) will, unless Grantor shall reasonably determine that a
      Copyright is not of material economic value to Grantor, publish the materials
      for which a Copyright has been obtained (the “Works”) with any notice of
      copyright registration required by applicable law to preserve the
      Copyright;

    

    (c)  Unless
      Grantor shall reasonably determine that a Copyright is not of material economic
      value to Grantor, Grantor shall notify the Lender immediately if it knows,
      or
      has reason to know, of any reason that any application or registration relating
      to any Copyright may become abandoned or dedicated or of any adverse
      determination or development (including, without limitation, the institution
      of,
      or any such determination or development in, any proceeding in the United States
      Copyright Office or any court) regarding Grantor’s ownership of any Copyright,
      its right to register the same, or to keep and maintain the same;

    

    (d)  If
      Grantor, either itself or through any agent, employee, licensee or designee,
      shall file an application for the registration of any Copyright with the United
      States Copyright Office or any similar office or agency in any other country
      or
      any political subdivision thereof, Grantor shall promptly inform Lender, and,
      upon request of Lender, execute and deliver any and all agreements, instruments,
      documents and papers as Lender may request to evidence Lender’s security
      interest in such Copyright and the Works relating thereto or represented
      thereby;

    

    (e)  Unless
      Grantor shall reasonably determine that a Copyright is not of material economic
      value to Grantor, Grantor will take all commercially reasonable steps,
      including, without limitation, in any proceeding before the United States
      Copyright Office or any similar office or agency in any other country or any
      political subdivision thereof, to maintain and pursue each application (and
      to
      obtain the relevant registration) and to maintain each registration of the
      Copyrights;

    

    (f)  In
      the
      event that any Copyright is infringed by a third party, Grantor shall promptly
      notify Lender and shall, unless Grantor shall reasonably determine that such
      Copyright is not of material economic value to Grantor, promptly sue to recover
      any and all damages or take such other actions as Grantor shall reasonably
      deem
      appropriate under the circumstances to protect such Copyright; and

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g)  Grantor
      agrees that it will not enter into any agreement (for example, a license
      agreement) which is inconsistent with Grantor’s obligations under this
      Agreement.

    

    3.20  Control.
      Grantor
      will cooperate with Lender in obtaining control with respect to Collateral
      consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights,
      and Electronic Chattel Paper. Without limiting the foregoing, if Grantor becomes
      a beneficiary of a letter of credit, then Grantor shall promptly notify the
      Lender thereof and enter into a tri-party agreement with the Lender and the
      issuer and/or confirmation bank with respect to such letter of credit assigning
      the Letter-of-Credit Rights to the Lender and directing all payments thereunder
      to the Lender, all in form and substance reasonably satisfactory to the
      Lender.

    

    3.21  Further
      Acts.
      Where
      Collateral is in the possession of a third party, Grantor will join with Lender
      in notifying such third party of Lender’s security interest and in obtaining an
      acknowledgment from such third party that it is holding such Collateral for
      the
      benefit of the Lender.

    

    3.22  Commercial
      Tort Claims.
      Grantor
      shall promptly notify the Lender of any Commercial Tort Claim acquired by it
      and, unless otherwise consented to by the Lender, Grantor shall promptly enter
      into a supplement to this Agreement granting to the Lender a security interest
      in such Commercial Tort Claim.

    

    ARTICLE
      IV 

    COLLECTIONS

     

    Except
      as
      otherwise provided in this Article IV, Grantor shall continue to collect, at
      its
      own expense, all amounts due or to become due to Grantor under the Accounts
      constituting part of the Collateral and all other Collateral. In connection
      with
      such collections, Grantor may take (and, at Lender’s direction given after the
      occurrence and during the continuance of an Event of Default, shall take) such
      action as Grantor or Lender may deem necessary or advisable to enforce
      collection of the Accounts and such other Collateral; provided,
      however,
      that
      Lender shall have the right at any time, without giving written notice to
      Grantor of Lender’s intention to do so, to notify the account debtors under any
      Accounts or obligors with respect to such other Collateral of the assignment
      of
      such Accounts and such other Collateral to Lender and to direct such account
      debtors or obligors to make payment of all amounts due or to become due to
      Grantor thereunder directly to Lender and, upon such notification and at the
      expense of Grantor, to enforce collection of any such Accounts or other
      Collateral, and to adjust, settle or compromise the amount or payment thereof
      in
      the same manner and to the same extent as Grantor might have done, but unless
      and until Lender does so or gives Grantor other instructions, Grantor shall
      make
      all collections for Lender. In addition to its rights under the preceding
      sentence to this Section, Lender, at any time, may require that Grantor instruct
      all current and future account debtors and obligors on other Collateral to
      make
      all payments directly to a lockbox (the “Lockbox”) controlled by Lender. All
      payments received in the Lockbox shall be transferred to a special bank account
      (the “Collateral Account”) maintained for the benefit of Lender subject to
      withdrawal by Lender only. After the earliest to occur of an Event of Default,
      Lender’s exercise of its right to direct account debtors or other obligors on
      any Collateral to make payments directly to Lender or to require Grantor to
      establish a Lockbox, Grantor shall immediately deliver all full and partial
      payments on any Collateral received by Grantor to Lender in their original
      form,
      except for endorsements where necessary. Lender, at its sole discretion, may
      hold any collections on the Collateral delivered to it or deposited in the
      Collateral Account as cash collateral or may apply such collections to the
      payment of the Obligations in such order as Lender may elect; provided,
      however,
      that
      after an Event of Default has occurred and is continuing, Lender shall apply
      all
      collections in accordance with Section 7.7. Until such payments are so delivered
      to Lender, such payments shall be held in trust by Grantor for and as Lender’s
      property, and shall not be commingled with any funds of Grantor. Any application
      of any collection to the payment of any Obligation is conditioned upon final
      payment of any check or other instrument.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
      V 

    ASSIGNMENT
      OF INSURANCE

    

    Grantor
      hereby assigns to Lender, as additional security for payment of the Obligations,
      any and all monies due or to become due under, and any and all other rights
      of
      Grantor with respect to, any and all policies of insurance covering the
      Collateral. So long as no Default or Event of Default has occurred and is
      continuing, Grantor may itself adjust and collect for any losses of up to an
      aggregate amount of $10,000.00 for all occurrences during any of Grantor’s
      fiscal years and Grantor may use the resulting Insurance Proceeds for the
      replacement, restoration or repair of the Collateral. After the occurrence
      and
      during the continuance of a Default or an Event of Default, or after the
      aggregate amount of losses arising out of all occurrences during any of
      Grantor’s fiscal years exceeds $10,000.00, Lender may (but need not) in its own
      name or in Grantor’s name execute and deliver proofs of claim, receive such
      monies, and settle or litigate any claim against the issuer of any such policy
      and Grantor directs the issuer to pay any such monies directly to Lender and
      Lender, at its sole discretion and regardless of whether Lender exercises its
      right to collect Insurance Proceeds under this Section, may apply any Insurance
      Proceeds to the payment of the Obligations, whether due or not, in such order
      and manner as Lender may elect or may permit Grantor to use such Insurance
      Proceeds for the replacement, restoration or repair of the Collateral.

    

    ARTICLE
      VI 

    EVENTS
      OF DEFAULT

    

    The
      occurrence of any Event of Default as defined in the Loan Agreement shall
      constitute an Event of Default hereunder (“Event of Default”).

    

    ARTICLE
      VII 

    RIGHTS
      AND REMEDIES ON DEFAULT

    

    Upon
      the
      occurrence of an Event of Default, and at any time thereafter until such Event
      of Default is cured to the satisfaction of Lender, and in addition to the rights
      granted to Lender under Articles IV and V hereof, Lender may exercise any one
      or
      more of the following rights and remedies:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.1  Acceleration
      of Obligations.
      Declare
      any and all Obligations to be immediately due and payable, and the same shall
      thereupon become immediately due and payable without further notice or
      demand.

    

    7.2  Right
      of Offset.
      Offset
      any deposits, including unmatured time deposits, then maintained by Grantor
      with
      Lender, whether or not then due, against any indebtedness then owed by Grantor
      to Lender whether or not then due.

    

    7.3  Deal
      with Collateral.
      In the
      name of Grantor or otherwise, demand, collect, receive and give receipt for,
      compound, compromise, settle and give acquittance for and prosecute and
      discontinue any suits or proceedings in respect of any or all of the
      Collateral.

    

    7.4  Realize
      on Collateral.
      Take
      any action which Lender may deem reasonably necessary or desirable in order
      to
      realize on the Collateral, including, without limitation, the power to perform
      any contract, to endorse in the name of Grantor any checks, drafts, notes,
      or
      other instruments or documents received in payment of or on account of the
      Collateral. Lender may comply with any applicable state or federal law
      requirements in connection with a disposition of the Collateral and compliance
      will not be considered adversely to affect the commercial reasonableness of
      any
      sale of the Collateral. Lender may sell the Collateral without giving any
      warranties as to the Collateral. Lender may specifically disclaim any warranties
      of title or the like. This procedure will not be considered adversely to affect
      the commercial reasonableness of any sale of the Collateral.

    

    7.5  Access
      to Property.
      Enter
      upon and into and take possession of all or such part or parts of the properties
      of Grantor, including lands, plants, buildings, machinery, equipment, Data
      Processing Records and Systems and other property as may be necessary or
      appropriate in the reasonable judgment of Lender, to permit or enable Lender
      to
      store, lease, sell or otherwise dispose of or collect all or any part of the
      Collateral, and use and operate said properties for such purposes and for such
      length of time as Lender may deem necessary or appropriate for said purposes
      without the payment of any compensation to Grantor therefor. Grantor shall
      provide Lender with all information and assistance requested by Lender to
      facilitate the storage, leasing, sale or other disposition or collection of
      the
      Collateral after an Event of Default has occurred and is
      continuing.

    

    7.6  Other
      Rights.
      Exercise any and all other rights and remedies available to it by law or by
      agreement, including rights and remedies under the UCC as adopted in the
      relevant jurisdiction or any other applicable law, or under the Loan Agreement
      and, in connection therewith, Lender may require Grantor to assemble the
      Collateral and make it available to Lender at a place to be designated by
      Lender, and any notice of intended disposition of any of the Collateral required
      by law shall be deemed reasonable if such notice is mailed or delivered to
      Grantor at its address as shown on Lender’s records at least 10 days before the
      date of such disposition.

    

    7.7  Application
      of Proceeds.
      All
      Proceeds of Collateral shall be applied in accordance with the UCC, and such
      Proceeds applied toward the Obligations shall be applied in such order as Lender
      may elect.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.8  Patents
      and Trademarks.
      Upon
      the occurrence and during the continuance of an Event of Default:

    

    (a)  Lender
      may, at any time and from time to time, upon thirty (30) days’ prior notice to
      Grantor, license or, to the extent permitted by an applicable license,
      sublicense, whether general, special or otherwise, and whether on an exclusive
      or non-exclusive basis, any Trade Secret, Patent or Trademark, throughout the
      world for such term or terms, on such conditions, and in such manner, as Lender
      shall in its sole discretion determine;

    

    (b)  Lender
      may (without assuming any obligations or liability thereunder), at any time
      enforce (and shall have the exclusive right to enforce) against any licensor,
      licensee or sublicensee all rights and remedies of Grantor in, to and under
      any
      one or more license or other agreements with respect to any Trade Secret, Patent
      or Trademark and take or refrain from taking any action under any such license
      or other agreement, and Grantor hereby releases Lender from, and agrees to
      hold
      Lender free and harmless from and against, any claims arising out of, any action
      taken or omitted to be taken with respect to any such license or
      agreement;

    

    (c)  Any
      and
      all payments received by Lender under or in respect of any Trade Secret, Patent
      or Trademark (whether from Grantor or otherwise), or received by Lender by
      virtue of the exercise of the license granted to Lender by subsection (g) below,
      shall be applied to the Obligations in accordance with Section 7.7
      hereof;

    

    (d)  Lender
      may exercise in respect of the Trade Secrets, Patents and Trademarks, in
      addition to other rights and remedies provided for herein or otherwise available
      to it, all the rights and remedies of a secured party on default under the
      UCC;

    

    (e)  In
      order
      to implement the sale, lease, assignment, license, sublicense or other
      disposition of any of the Trade Secrets, Patents and Trademarks pursuant to
      this
      Section 7.8, Lender may, at any time, execute and deliver on behalf of
      Grantor one or more instruments of assignment of the Trade Secrets. Patents
      and
      Trademarks (or any application or registration thereof), in form suitable for
      filing, recording or registration in any country. Grantor agrees to pay when
      due
      all reasonable costs incurred in any such transfer of the Trade Secrets, Patents
      and Trademarks, including any taxes, fees and reasonable attorneys’ fees;

    

    (f)  In
      the
      event of any sale, lease, assignment, license, sublicense or other disposition
      of any of the Trade Secrets, Patents or Trademarks pursuant to this Section,
      Grantor shall supply to Lender or its designee its know-how and expertise
      relating to the manufacture and sale of the products relating to any Patent
      or
      Trademark subject to such disposition, and its customer lists and other records
      relating to such Trade Secrets, Patents or Trademarks and to the distribution
      of
      said products; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g)  For
      the
      purpose of enabling Lender to exercise rights and remedies under this Agreement
      at such time as Lender shall be lawfully entitled to exercise such rights and
      remedies, and for no other purpose, Grantor hereby grants to Lender, an
      irrevocable, non-exclusive license (exercisable without payment of royalty
      or
      other compensation to Grantor) to use, license or sublicense at such time any
      Trade Secret, Patent or Trademark, now owned or hereafter acquired by Grantor,
      and wherever the same may be located, and including in such license reasonable
      access to all media in which any of the licensed items may be recorded or stored
      and to all computer and automatic machinery software and programs used for
      the
      compilation or printout thereof.

    

    7.9  Copyrights.
      Upon
      the occurrence and during the continuance of an Event of Default:

    

    (a)  Lender
      may, at any time and from time to time, upon thirty (30) days’ prior notice to
      Grantor, license or, to the extent permitted by an applicable license,
      sublicense, whether general, special or otherwise, and whether on an exclusive
      or non-exclusive basis, any Copyright, for such term or terms, on such
      conditions, and in such manner, as Lender shall in its sole discretion
      determine;

    

    (b)  Lender
      may (without assuming any obligations or liability thereunder), at any time,
      enforce (and shall have the exclusive right to enforce) against any licensor,
      licensee or sublicensee all rights and remedies of Grantor in, to and under
      any
      one or more license or other agreements with respect to any Copyright and take
      or refrain from taking any action under any such license or other agreement
      and
      Grantor hereby releases Lender from, and agrees to hold Lender free and harmless
      from and against, any claims arising out of, any action taken or omitted to
      be
      taken with respect to any such license or agreement; 

    

    (c)  Any
      and
      all payments received by Lender under or in respect of any Copyright (whether
      from Grantor or otherwise), or received by Lender by virtue of the exercise
      of
      the license granted to Lender by subsection (f) below, shall be applied to
      the
      Obligations in accordance with Section 7.7;

    

    (d)  Lender
      may exercise in respect of the Copyrights, in addition to other rights and
      remedies provided for herein or otherwise available to it, all the rights and
      remedies of a secured party on default under the UCC;

    

    (e)  In
      order
      to implement the sale, lease, assignment, license, sublicense or other
      disposition of any of the Copyrights pursuant to this Section 7.9, Lender may,
      at any time, execute and deliver on behalf of Grantor one or more instruments
      of
      assignment of the Copyrights (or any application or registration thereof),
      in
      form suitable for filing, recording or registration in the Copyright Office
      or
      any country where the relevant Copyright is of material economic value to
      Grantor. Grantor agrees to pay when due all reasonable costs incurred in any
      such transfer of the Copyrights, including any taxes, fees and reasonable
      attorneys’ fees; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f)  For
      the
      purpose of enabling Lender to exercise rights and remedies under this Agreement
      at such time as Lender shall be lawfully entitled to exercise such rights and
      remedies, and for no other purpose, Grantor hereby grants to Lender an
      irrevocable, non-exclusive license (exercisable without payment of royalty
      or
      other compensation to Grantor) to use, license or sublicense any Copyright,
      now
      owned or hereafter acquired by Grantor, and wherever the same may be located,
      and including in such license reasonable access to all media in which any of
      the
      licensed items may be recorded or stored and to all computer and automatic
      machinery software and programs used for the compilation or printout
      thereof.

    

    ARTICLE
      VIII 

    MISCELLANEOUS

    

    8.1  No
      Liability on Collateral.
      It is
      understood that Lender does not in any way assume any of Grantor’s obligations
      under any of the Collateral. Grantor hereby agrees to indemnify Lender against
      all liability arising in connection with or on account of any of the Collateral,
      except for any such liabilities arising on account of Lender’s negligence or
      willful misconduct.

    

    8.2  No
      Waiver.
      Lender
      shall not be deemed to have waived any of its rights hereunder or under any
      other agreement, instrument or paper signed by Grantor unless such waiver is
      in
      writing and signed by Lender. No delay or omission on the part of Lender in
      exercising any right shall operate as a waiver of such right or any other right.
      A waiver on any one occasion shall not be construed as a bar to or waiver of
      any
      right or remedy on any future occasion.

    

    8.3  Remedies
      Cumulative.
      All
      rights and remedies of Lender shall be cumulative and may be exercised
      singularly or concurrently, at their option, and the exercise or enforcement
      of
      any one such right or remedy shall not bar or be a condition to the exercise
      or
      enforcement of any other.

    

    8.4  Governing
      Law.
      This
      Agreement shall be construed and enforced in accordance with, and the rights
      of
      the parties shall be governed by, the laws of the State of Minnesota, except
      to
      the extent that the perfection of the security interest hereunder, or the
      enforcement of any remedies hereunder, with respect to any particular Collateral
      shall be governed by the laws of a jurisdiction other than the State of
      Minnesota.

    

    8.5  Expenses.
      Grantor
      agrees to pay the reasonable attorneys’ fees and legal expenses incurred by
      Lender in the exercise of any right or remedy available to it under this
      Agreement, whether or not suit is commenced, including, without limitation,
      attorneys’ fees and legal expenses incurred in connection with any appeal of a
      lower court’s order or judgment.

    

    8.6  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the successors
      and
      assigns of Grantor and Lender.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    8.7  Recitals.
      The
      above Recitals are true and correct as of the date hereof and constitute a
      part
      of this Agreement.

    

    8.8  Severability.
      Wherever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement shall be prohibited by or invalid under such law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Agreement. 

    

    8.9  No
      Obligation to Pursue Others.
      Lender
      has no obligation to attempt to satisfy the Obligations by collecting them
      from
      any other person liable for them and Lender may release, modify or waive any
      Collateral provided by any other person to secure any of the Obligations, all
      without affecting Lender’s rights against Grantor. Grantor waives any right it
      may have to require Lender to pursue any third person for any of the
      Obligations. 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
      and
      year first above written.

    

    

    
      	
              RUBBER
                RESEARCH ELASTOMERICS, INC., a Minnesota
                corporation

            
	 
	
              By:
                /s/ Michael Nugent

            
	
              Name:Michael
                Nugent

            
	
              Its:
                Chairman of the Board of Directors

            
	 

    

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    

    

    
      	
              I.

            	
              Financing
                Statements on File Listing Grantor or Any Predecessor in Title as
                Debtor

            

    

    

    See
      Schedule 8(a) to the Loan Agreement which is incorporated herein by
      reference.

    

    
      	
              II.

            	
              Location
                of Inventory

            

    

    

    1. 4500
      Main
      Street NE, Fridley, MN 55421

    2. 

    

    
      	
              III.

            	
              Prior
                Names within the last five
                years.

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      B

    

    COMMERCIAL
      TORT CLAIMSEXHIBIT
      4.2

     

    

    WARRANT
      TO PURCHASE COMMON STOCK

     

    THE
      SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
      MAY
      NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
      STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
      SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
      OR
      SUCH LAWS. THIS INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER
      AND
      OTHER PROVISIONS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE ISSUER OF THESE
      SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE
      WITH
      THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR
      OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR
      OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID. 

     

    WARRANT

    to
      purchase

    1,846,374

    Shares
      of Common Stock

    of
      Cathay General Bancorp

     

    Issue
      Date: December 5, 2008

     

    1. Definitions.
      Unless
      the context otherwise requires, when used herein the following terms shall
      have
      the meanings indicated.

     

    “Affiliate”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Appraisal
      Procedure”
means
      a
      procedure whereby two independent appraisers, one chosen by the Company and
      one
      by the Original Warrantholder, shall mutually agree upon the determinations
      then
      the subject of appraisal. Each party shall deliver a notice to the other
      appointing its appraiser within 15 days after the Appraisal Procedure is
      invoked. If within 30 days after appointment of the two appraisers they are
      unable to agree upon the amount in question, a third independent appraiser
      shall
      be chosen within 10 days thereafter by the mutual consent of such first two
      appraisers. The decision of the third appraiser so appointed and chosen shall
      be
      given within 30 days after the selection of such third appraiser. If three
      appraisers shall be appointed and the determination of one appraiser is
      disparate from the middle determination by more than twice the amount by which
      the other determination is disparate from the middle determination, then the
      determination of such appraiser shall be excluded, the remaining two
      determinations shall be averaged and such average shall be binding and
      conclusive upon the Company and the Original Warrantholder; otherwise, the
      average of all three determinations shall be binding upon the Company and the
      Original Warrantholder. The costs of conducting any Appraisal Procedure shall
      be
      borne by the Company.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Board
      of Directors”
means
      the board of directors of the Company, including any duly authorized committee
      thereof.

     

    “Business
      Combination”
means
      a
      merger, consolidation, statutory share exchange or similar transaction that
      requires the approval of the Company’s stockholders.

     

    “business
      day”
means
      any day except Saturday, Sunday and any day on which banking institutions in
      the
      State of New York generally are authorized or required by law or other
      governmental actions to close.

     

    “Capital
      Stock”
means
      (A) with respect to any Person that is a corporation or company, any and
      all shares, interests, participations or other equivalents (however designated)
      of capital or capital stock of such Person and (B) with respect to any
      Person that is not a corporation or company, any and all partnership or other
      equity interests of such Person.

     

    “Charter”
means,
      with respect to any Person, its certificate or articles of incorporation,
      articles of association, or similar organizational document.

     

    “Common
      Stock”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Company”
means
      the Person whose name, corporate or other organizational form and jurisdiction
      of organization is set forth in Item 1 of Schedule A hereto.

     

    “conversion”
has
      the
      meaning set forth in Section 13(B).

     

    “convertible
      securities”
has
      the
      meaning set forth in Section 13(B).

     

    “CPP”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, or any successor statute,
      and
      the rules and regulations promulgated thereunder.

     

    “Exercise
      Price”
means
      the amount set forth in Item 2 of Schedule A hereto.

     

    “Expiration
      Time”
has
      the
      meaning set forth in Section 3.

     

    “Fair
      Market Value”
means,
      with respect to any security or other property, the fair market value of such
      security or other property as determined by the Board of Directors, acting
      in
      good faith or, with respect to Section 14, as determined by the Original
      Warrantholder acting in good faith. For so long as the Original Warrantholder
      holds this Warrant or any portion thereof, it may object in writing to the
      Board
      of Director’s calculation of fair market value within 10 days of receipt of
      written notice thereof. If the Original Warrantholder and the Company are unable
      to agree on fair market value during the 10-day period following the delivery
      of
      the Original Warrantholder’s objection, the Appraisal Procedure may be invoked
      by either party to determine Fair Market Value by delivering written
      notification thereof not later than the 30th
      day
      after delivery of the Original Warrantholder’s objection.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Governmental
      Entities”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Initial
      Number”
has
      the
      meaning set forth in Section 13(B).

     

    “Issue
      Date”
      means
      the date set forth in Item 3 of Schedule A hereto.

     

    “Market
      Price”
means,
      with respect to a particular security, on any given day, the last reported
      sale
      price regular way or, in case no such reported sale takes place on such day,
      the
      average of the last closing bid and ask prices regular way, in either case
      on
      the principal national securities exchange on which the applicable securities
      are listed or admitted to trading, or if not listed or admitted to trading
      on
      any national securities exchange, the average of the closing bid and ask prices
      as furnished by two members of the Financial Industry Regulatory Authority,
      Inc.
      selected from time to time by the Company for that purpose. “Market Price” shall
      be determined without reference to after hours or extended hours trading. If
      such security is not listed and traded in a manner that the quotations referred
      to above are available for the period required hereunder, the Market Price
      per
      share of Common Stock shall be deemed to be (i) in the event that any
      portion of the Warrant is held by the Original Warrantholder, the fair market
      value per share of such security as determined in good faith by the Original
      Warrantholder or (ii) in all other circumstances, the fair market value per
      share of such security as determined in good faith by the Board of Directors
      in
      reliance on an opinion of a nationally recognized independent investment banking
      corporation retained by the Company for this purpose and certified in a
      resolution to the Warrantholder. For the purposes of determining the Market
      Price of the Common Stock on the “trading day” preceding, on or following the
      occurrence of an event, (i) that trading day shall be deemed to commence
      immediately after the regular scheduled closing time of trading on the New
      York
      Stock Exchange or, if trading is closed at an earlier time, such earlier time
      and (ii) that trading day shall end at the next regular scheduled closing
      time, or if trading is closed at an earlier time, such earlier time (for the
      avoidance of doubt, and as an example, if the Market Price is to be determined
      as of the last trading day preceding a specified event and the closing time
      of
      trading on a particular day is 4:00 p.m. and the specified event occurs at
      5:00
      p.m. on that day, the Market Price would be determined by reference to such
      4:00
      p.m. closing price).

     

    “Ordinary
      Cash Dividends”
means
      a
      regular quarterly cash dividend on shares of Common Stock out of surplus or
      net
      profits legally available therefor (determined in accordance with generally
      accepted accounting principles in effect from time to time), provided
      that
      Ordinary Cash Dividends shall not include any cash dividends paid subsequent
      to
      the Issue Date to the extent the aggregate per share dividends paid on the
      outstanding Common Stock in any quarter exceed the amount set forth in
      Item 4 of Schedule A hereto, as adjusted for any stock split, stock
      dividend, reverse stock split, reclassification or similar
      transaction.

     

    “Original
      Warrantholder”
means
      the United States Department of the Treasury. Any actions specified to be taken
      by the Original Warrantholder hereunder may only be taken by such Person and
      not
      by any other Warrantholder.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Transactions”
has
      the
      meaning set forth in Section 13(B).

     

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

     

    “Per
      Share Fair Market Value”
has
      the
      meaning set forth in Section 13(C).

     

    “Preferred
      Shares”
means
      the perpetual preferred stock issued to the Original Warrantholder on the Issue
      Date pursuant to the Purchase Agreement.

     

    “Pro
      Rata Repurchases”
means
      any purchase of shares of Common Stock by the Company or any Affiliate thereof
      pursuant to (A) any tender offer or exchange offer subject to
      Section 13(e) or 14(e) of the Exchange Act or Regulation 14E promulgated
      thereunder or (B) any other offer available to substantially all holders of
      Common Stock, in the case of both (A) or (B), whether for cash, shares of
      Capital Stock of the Company, other securities of the Company, evidences of
      indebtedness of the Company or any other Person or any other property
      (including, without limitation, shares of Capital Stock, other securities or
      evidences of indebtedness of a subsidiary), or any combination thereof, effected
      while this Warrant is outstanding. The “Effective
      Date”
of
      a
      Pro Rata Repurchase shall mean the date of acceptance of shares for purchase
      or
      exchange by the Company under any tender or exchange offer which is a Pro Rata
      Repurchase or the date of purchase with respect to any Pro Rata Repurchase
      that
      is not a tender or exchange offer.

     

    “Purchase
      Agreement”
means
      the Securities Purchase Agreement - Standard Terms incorporated into the Letter
      Agreement, dated as of the date set forth in Item 5 of Schedule A hereto,
      as amended from time to time, between the Company and the United States
      Department of the Treasury (the “Letter
      Agreement”),
      including all annexes and schedules thereto.

     

    “Qualified
      Equity Offering”
has
      the
      meaning ascribed to it in the Purchase Agreement.

     

    “Regulatory
      Approvals”
with
      respect to the Warrantholder, means, to the extent applicable and required
      to
      permit the Warrantholder to exercise this Warrant for shares of Common Stock
      and
      to own such Common Stock without the Warrantholder being in violation of
      applicable law, rule or regulation, the receipt of any necessary approvals
      and
      authorizations of, filings and registrations with, notifications to, or
      expiration or termination of any applicable waiting period under, the
      Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
      and regulations thereunder.

     

    “SEC”
means
      the U.S. Securities and Exchange Commission.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any successor statute, and the rules
      and regulations promulgated thereunder.

     

    “Shares”
has
      the
      meaning set forth in Section 2.

     

    “Trading
      day”
      means
      (A) if the shares of Common Stock are not traded on any national or
      regional securities exchange or association or over-the-counter market, a
      business day or (B) if the shares of Common Stock are traded on any
      national or regional securities exchange or association or over-the-counter
      market, a business day on which such relevant exchange or quotation system
      is
      scheduled to be open for business and on which the shares of Common Stock
      (i) are not suspended from trading on any national or regional securities
      exchange or association or over-the-counter market for any period or periods
      aggregating one half hour or longer; and (ii) have traded at least once on
      the national or regional securities exchange or association or over-the-counter
      market that is the primary market for the trading of the shares of Common
      Stock.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “U.S.
      GAAP”
means
      United States generally accepted accounting principles.

     

    “Warrantholder”
has
      the
      meaning set forth in Section 2.

     

    “Warrant”
means
      this Warrant, issued pursuant to the Purchase Agreement.

     

    2. Number
      of Shares; Exercise Price.
      This
      certifies that, for value received, the United States Department of the Treasury
      or its permitted assigns (the “Warrantholder”)
      is
      entitled, upon the terms and subject to the conditions hereinafter set forth,
      to
      acquire from the Company, in whole or in part, after the receipt of all
      applicable Regulatory Approvals, if any, up to an aggregate of the number of
      fully paid and nonassessable shares of Common Stock set forth in Item 6 of
      Schedule A hereto, at a purchase price per share of Common Stock equal to the
      Exercise Price. The number of shares of Common Stock (the “Shares”)
      and
      the Exercise Price are subject to adjustment as provided herein, and all
      references to “Common Stock,” “Shares” and “Exercise Price” herein shall be
      deemed to include any such adjustment or series of adjustments.

     

    3. Exercise
      of Warrant; Term.
      Subject
      to Section 2, to the extent permitted by applicable laws and regulations,
      the right to purchase the Shares represented by this Warrant is exercisable,
      in
      whole or in part by the Warrantholder, at any time or from time to time after
      the execution and delivery of this Warrant by the Company on the date hereof,
      but in no event later than 5:00 p.m., New York City time on the tenth
      anniversary of the Issue Date (the “Expiration
      Time”),
      by
      (A) the surrender of this Warrant and Notice of Exercise annexed hereto,
      duly completed and executed on behalf of the Warrantholder, at the principal
      executive office of the Company located at the address set forth in Item 7
      of Schedule A hereto (or such other office or agency of the Company in the
      United States as it may designate by notice in writing to the Warrantholder
      at
      the address of the Warrantholder appearing on the books of the Company), and
      (B) payment of the Exercise Price for the Shares thereby purchased:

     

    (i) by
      having
      the Company withhold, from the shares of Common Stock that would otherwise
      be
      delivered to the Warrantholder upon such exercise, shares of Common stock
      issuable upon exercise of the Warrant equal in value to the aggregate Exercise
      Price as to which this Warrant is so exercised based on the Market Price of
      the
      Common Stock on the trading day on which this Warrant is exercised and the
      Notice of Exercise is delivered to the Company pursuant to this Section 3,
      or 

     

    (ii) with
      the
      consent of both the Company and the Warrantholder, by tendering in cash, by
      certified or cashier’s check payable to the order of the Company, or by wire
      transfer of immediately available funds to an account designated by the
      Company.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    If
      the
      Warrantholder does not exercise this Warrant in its entirety, the Warrantholder
      will be entitled to receive from the Company within a reasonable time, and
      in
      any event not exceeding three business days, a new warrant in substantially
      identical form for the purchase of that number of Shares equal to the difference
      between the number of Shares subject to this Warrant and the number of Shares
      as
      to which this Warrant is so exercised. Notwithstanding anything in this Warrant
      to the contrary, the Warrantholder hereby acknowledges and agrees that its
      exercise of this Warrant for Shares is subject to the condition that the
      Warrantholder will have first received any applicable Regulatory
      Approvals.

     

    4. Issuance
      of Shares; Authorization; Listing.
      Certificates for Shares issued upon exercise of this Warrant will be issued
      in
      such name or names as the Warrantholder may designate and will be delivered
      to
      such named Person or Persons within a reasonable time, not to exceed three
      business days after the date on which this Warrant has been duly exercised
      in
      accordance with the terms of this Warrant. The Company hereby represents and
      warrants that any Shares issued upon the exercise of this Warrant in accordance
      with the provisions of Section 3 will be duly and validly authorized and
      issued, fully paid and nonassessable and free from all taxes, liens and charges
      (other than liens or charges created by the Warrantholder, income and franchise
      taxes incurred in connection with the exercise of the Warrant or taxes in
      respect of any transfer occurring contemporaneously therewith). The Company
      agrees that the Shares so issued will be deemed to have been issued to the
      Warrantholder as of the close of business on the date on which this Warrant
      and
      payment of the Exercise Price are delivered to the Company in accordance with
      the terms of this Warrant, notwithstanding that the stock transfer books of
      the
      Company may then be closed or certificates representing such Shares may not
      be
      actually delivered on such date. The Company will at all times reserve and
      keep
      available, out of its authorized but unissued Common Stock, solely for the
      purpose of providing for the exercise of this Warrant, the aggregate number
      of
      shares of Common Stock then issuable upon exercise of this Warrant at any time.
      The Company will (A) procure, at its sole expense, the listing of the
      Shares issuable upon exercise of this Warrant at any time, subject to issuance
      or notice of issuance, on all principal stock exchanges on which the Common
      Stock is then listed or traded and (B) maintain such listings of such
      Shares at all times after issuance. The Company will use reasonable best efforts
      to ensure that the Shares may be issued without violation of any applicable
      law
      or regulation or of any requirement of any securities exchange on which the
      Shares are listed or traded.

     

    5. No
      Fractional Shares or Scrip.
      No
      fractional Shares or scrip representing fractional Shares shall be issued upon
      any exercise of this Warrant. In lieu of any fractional Share to which the
      Warrantholder would otherwise be entitled, the Warrantholder shall be entitled
      to receive a cash payment equal to the Market Price of the Common Stock on
      the
      last trading day preceding the date of exercise less the pro-rated Exercise
      Price for such fractional share.

     

    6. No
      Rights as Stockholders; Transfer Books.
      This
      Warrant does not entitle the Warrantholder to any voting rights or other rights
      as a stockholder of the Company prior to the date of exercise hereof. The
      Company will at no time close its transfer books against transfer of this
      Warrant in any manner which interferes with the timely exercise of this
      Warrant.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    7. Charges,
      Taxes and Expenses.
      Issuance of certificates for Shares to the Warrantholder upon the exercise
      of
      this Warrant shall be made without charge to the Warrantholder for any issue
      or
      transfer tax or other incidental expense in respect of the issuance of such
      certificates, all of which taxes and expenses shall be paid by the
      Company.

     

    8. Transfer/Assignment.

     

    (A) Subject
      to compliance with clause (B) of this Section 8, this Warrant and all
      rights hereunder are transferable, in whole or in part, upon the books of the
      Company by the registered holder hereof in person or by duly authorized
      attorney, and a new warrant shall be made and delivered by the Company, of
      the
      same tenor and date as this Warrant but registered in the name of one or more
      transferees, upon surrender of this Warrant, duly endorsed, to the office or
      agency of the Company described in Section 3. All expenses (other than
      stock transfer taxes) and other charges payable in connection with the
      preparation, execution and delivery of the new warrants pursuant to this
      Section 8 shall be paid by the Company.

     

    (B) The
      transfer of the Warrant and the Shares issued upon exercise of the Warrant
      are
      subject to the restrictions set forth in Section 4.4 of the Purchase
      Agreement. If and for so long as required by the Purchase Agreement, this
      Warrant shall contain the legends as set forth in Sections 4.2(a) and 4.2(b)
      of
      the Purchase Agreement.

     

    9. Exchange
      and Registry of Warrant.
      This
      Warrant is exchangeable, upon the surrender hereof by the Warrantholder to
      the
      Company, for a new warrant or warrants of like tenor and representing the right
      to purchase the same aggregate number of Shares. The Company shall maintain a
      registry showing the name and address of the Warrantholder as the registered
      holder of this Warrant. This Warrant may be surrendered for exchange or exercise
      in accordance with its terms, at the office of the Company, and the Company
      shall be entitled to rely in all respects, prior to written notice to the
      contrary, upon such registry.

     

    10. Loss,
      Theft, Destruction or Mutilation of Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant, and in the case of any such
      loss, theft or destruction, upon receipt of a bond, indemnity or security
      reasonably satisfactory to the Company, or, in the case of any such mutilation,
      upon surrender and cancellation of this Warrant, the Company shall make and
      deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
      Warrant of like tenor and representing the right to purchase the same aggregate
      number of Shares as provided for in such lost, stolen, destroyed or mutilated
      Warrant.

     

    11. Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a business day, then such action
      may be taken or such right may be exercised on the next succeeding day that
      is a
      business day.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    12. Rule
      144 Information.
      The
      Company covenants that it will use its reasonable best efforts to timely file
      all reports and other documents required to be filed by it under the Securities
      Act and the Exchange Act and the rules and regulations promulgated by the SEC
      thereunder (or, if the Company is not required to file such reports, it will,
      upon the request of any Warrantholder, make publicly available such information
      as necessary to permit sales pursuant to Rule 144 under the Securities Act),
      and
      it will use reasonable best efforts to take such further action as any
      Warrantholder may reasonably request, in each case to the extent required from
      time to time to enable such holder to, if permitted by the terms of this Warrant
      and the Purchase Agreement, sell this Warrant without registration under the
      Securities Act within the limitation of the exemptions provided by (A) Rule
      144 under the Securities Act, as such rule may be amended from time to time,
      or
      (B) any successor rule or regulation hereafter adopted by the SEC. Upon the
      written request of any Warrantholder, the Company will deliver to such
      Warrantholder a written statement that it has complied with such
      requirements.

     

    13. Adjustments
      and Other Rights.
      The
      Exercise Price and the number of Shares issuable upon exercise of this Warrant
      shall be subject to adjustment from time to time as follows; provided,
      that if
      more than one subsection of this Section 13 is applicable to a single
      event, the subsection shall be applied that produces the largest adjustment
      and
      no single event shall cause an adjustment under more than one subsection of
      this
      Section 13 so as to result in duplication: 

     

    (A) Stock
      Splits, Subdivisions, Reclassifications or Combinations.
      If the
      Company shall (i) declare and pay a dividend or make a distribution on its
      Common Stock in shares of Common Stock, (ii) subdivide or reclassify the
      outstanding shares of Common Stock into a greater number of shares, or
      (iii) combine or reclassify the outstanding shares of Common Stock into a
      smaller number of shares, the number of Shares issuable upon exercise of this
      Warrant at the time of the record date for such dividend or distribution or
      the
      effective date of such subdivision, combination or reclassification shall be
      proportionately adjusted so that the Warrantholder after such date shall be
      entitled to purchase the number of shares of Common Stock which such holder
      would have owned or been entitled to receive in respect of the shares of Common
      Stock subject to this Warrant after such date had this Warrant been exercised
      immediately prior to such date. In such event, the Exercise Price in effect
      at
      the time of the record date for such dividend or distribution or the effective
      date of such subdivision, combination or reclassification shall be adjusted
      to
      the number obtained by dividing (x) the product of (1) the number of
      Shares issuable upon the exercise of this Warrant before such adjustment and
      (2) the Exercise Price in effect immediately prior to the record or
      effective date, as the case may be, for the dividend, distribution, subdivision,
      combination or reclassification giving rise to this adjustment by (y) the
      new number of Shares issuable upon exercise of the Warrant determined pursuant
      to the immediately preceding sentence.

     

    (B) Certain
      Issuances of Common Shares or Convertible Securities.
      Until
      the earlier of (i) the date on which the Original Warrantholder no longer
      holds this Warrant or any portion thereof and (ii) the third anniversary of
      the Issue Date, if the Company shall issue shares of Common Stock (or rights
      or
      warrants or other securities exercisable or convertible into or exchangeable
      (collectively, a “conversion”)
      for
      shares of Common Stock) (collectively, “convertible
      securities”)
      (other
      than in Permitted Transactions (as defined below) or a transaction to which
      subsection (A) of this Section 13 is applicable) without consideration
      or at a consideration per share (or having a conversion price per share) that
      is
      less than 90% of the Market Price on the last trading day preceding the date
      of
      the agreement on pricing such shares (or such convertible securities) then,
      in
      such event:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (A) the
      number of Shares issuable upon the exercise of this Warrant immediately prior
      to
      the date of the agreement on pricing of such shares (or of such convertible
      securities) (the “Initial
      Number”)
      shall
      be increased to the number obtained by multiplying the Initial Number by a
      fraction (A) the numerator of which shall be the sum of (x) the number
      of shares of Common Stock of the Company outstanding on such date and
      (y) the number of additional shares of Common Stock issued (or into which
      convertible securities may be exercised or convert) and (B) the denominator
      of which shall be the sum of (I) the number of shares of Common Stock
      outstanding on such date and (II) the number of shares of Common Stock which
      the
      aggregate consideration receivable by the Company for the total number of shares
      of Common Stock so issued (or into which convertible securities may be exercised
      or convert) would purchase at the Market Price on the last trading day preceding
      the date of the agreement on pricing such shares (or such convertible
      securities); and 

     

    (B) the
      Exercise Price payable upon exercise of the Warrant shall be adjusted by
      multiplying such Exercise Price in effect immediately prior to the date of
      the
      agreement on pricing of such shares (or of such convertible securities) by
      a
      fraction, the numerator of which shall be the number of shares of Common Stock
      issuable upon exercise of this Warrant prior to such date and the denominator
      of
      which shall be the number of shares of Common Stock issuable upon exercise
      of
      this Warrant immediately after the adjustment described in clause
      (A) above.

     

    For
      purposes of the foregoing, the aggregate consideration receivable by the Company
      in connection with the issuance of such shares of Common Stock or convertible
      securities shall be deemed to be equal to the sum of the net offering price
      (including the Fair Market Value of any non-cash consideration and after
      deduction of any related expenses payable to third parties) of all such
      securities plus the minimum aggregate amount, if any, payable upon exercise
      or
      conversion of any such convertible securities into shares of Common Stock;
      and
“Permitted
      Transactions”
shall
      mean issuances (i) as consideration for or to fund the acquisition of
      businesses and/or related assets, (ii) in connection with employee benefit
      plans and compensation related arrangements in the ordinary course and
      consistent with past practice approved by the Board of Directors, (iii) in
      connection with a public or broadly marketed offering and sale of Common Stock
      or convertible securities for cash conducted by the Company or its affiliates
      pursuant to registration under the Securities Act or Rule 144A thereunder on
      a
      basis consistent with capital raising transactions by comparable financial
      institutions and (iv) in connection with the exercise of preemptive rights
      on terms existing as of the Issue Date. Any adjustment made pursuant to this
      Section 13(B) shall become effective immediately upon the date of such
      issuance.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (C) Other
      Distributions.
      In case
      the Company shall fix a record date for the making of a distribution to all
      holders of shares of its Common Stock of securities, evidences of indebtedness,
      assets, cash, rights or warrants (excluding Ordinary Cash Dividends, dividends
      of its Common Stock and other dividends or distributions referred to in
      Section 13(A)), in each such case, the Exercise Price in effect prior to
      such record date shall be reduced immediately thereafter to the price determined
      by multiplying the Exercise Price in effect immediately prior to the reduction
      by the quotient of (x) the Market Price of the Common Stock on the last
      trading day preceding the first date on which the Common Stock trades regular
      way on the principal national securities exchange on which the Common Stock
      is
      listed or admitted to trading without the right to receive such distribution,
      minus the amount of cash and/or the Fair Market Value of the securities,
      evidences of indebtedness, assets, rights or warrants to be so distributed
      in
      respect of one share of Common Stock (such amount and/or Fair Market Value,
      the
“Per
      Share Fair Market Value”)
      divided by (y) such Market Price on such date specified in clause (x); such
      adjustment shall be made successively whenever such a record date is fixed.
      In
      such event, the number of Shares issuable upon the exercise of this Warrant
      shall be increased to the number obtained by dividing (x) the product of
      (1) the number of Shares issuable upon the exercise of this Warrant before
      such adjustment, and (2) the Exercise Price in effect immediately prior to
      the distribution giving rise to this adjustment by (y) the new Exercise
      Price determined in accordance with the immediately preceding sentence. In
      the
      case of adjustment for a cash dividend that is, or is coincident with, a regular
      quarterly cash dividend, the Per Share Fair Market Value would be reduced by
      the
      per share amount of the portion of the cash dividend that would constitute
      an
      Ordinary Cash Dividend. In the event that such distribution is not so made,
      the
      Exercise Price and the number of Shares issuable upon exercise of this Warrant
      then in effect shall be readjusted, effective as of the date when the Board
      of
      Directors determines not to distribute such shares, evidences of indebtedness,
      assets, rights, cash or warrants, as the case may be, to the Exercise Price
      that
      would then be in effect and the number of Shares that would then be issuable
      upon exercise of this Warrant if such record date had not been
      fixed.

     

    (D) Certain
      Repurchases of Common Stock.
      In case
      the Company effects a Pro Rata Repurchase of Common Stock, then the Exercise
      Price shall be reduced to the price determined by multiplying the Exercise
      Price
      in effect immediately prior to the Effective Date of such Pro Rata Repurchase
      by
      a fraction of which the numerator shall be (i) the product of (x) the
      number of shares of Common Stock outstanding immediately before such Pro Rata
      Repurchase and (y) the Market Price of a share of Common Stock on the
      trading day immediately preceding the first public announcement by the Company
      or any of its Affiliates of the intent to effect such Pro Rata Repurchase,
      minus
      (ii) the aggregate purchase price of the Pro Rata Repurchase, and of which
      the denominator shall be the product of (i) the number of shares of Common
      Stock outstanding immediately prior to such Pro Rata Repurchase minus the number
      of shares of Common Stock so repurchased and (ii) the Market Price per
      share of Common Stock on the trading day immediately preceding the first public
      announcement by the Company or any of its Affiliates of the intent to effect
      such Pro Rata Repurchase. In such event, the number of shares of Common Stock
      issuable upon the exercise of this Warrant shall be increased to the number
      obtained by dividing (x) the product of (1) the number of Shares
      issuable upon the exercise of this Warrant before such adjustment, and
      (2) the Exercise Price in effect immediately prior to the Pro Rata
      Repurchase giving rise to this adjustment by (y) the new Exercise Price
      determined in accordance with the immediately preceding sentence. For the
      avoidance of doubt, no increase to the Exercise Price or decrease in the number
      of Shares issuable upon exercise of this Warrant shall be made pursuant to
      this
      Section 13(D).

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (E) Business
      Combinations.
      In case
      of any Business Combination or reclassification of Common Stock (other than
      a
      reclassification of Common Stock referred to in Section 13(A)), the
      Warrantholder’s right to receive Shares upon exercise of this Warrant shall be
      converted into the right to exercise this Warrant to acquire the number of
      shares of stock or other securities or property (including cash) which the
      Common Stock issuable (at the time of such Business Combination or
      reclassification) upon exercise of this Warrant immediately prior to such
      Business Combination or reclassification would have been entitled to receive
      upon consummation of such Business Combination or reclassification; and in
      any
      such case, if necessary, the provisions set forth herein with respect to the
      rights and interests thereafter of the Warrantholder shall be appropriately
      adjusted so as to be applicable, as nearly as may reasonably be, to the
      Warrantholder’s right to exercise this Warrant in exchange for any shares of
      stock or other securities or property pursuant to this paragraph. In determining
      the kind and amount of stock, securities or the property receivable upon
      exercise of this Warrant following the consummation of such Business
      Combination, if the holders of Common Stock have the right to elect the kind
      or
      amount of consideration receivable upon consummation of such Business
      Combination, then the consideration that the Warrantholder shall be entitled
      to
      receive upon exercise shall be deemed to be the types and amounts of
      consideration received by the majority of all holders of the shares of common
      stock that affirmatively make an election (or of all such holders if none make
      an election).

     

    (F) Rounding
      of Calculations; Minimum Adjustments.
      All
      calculations under this Section 13 shall be made to the nearest one-tenth
      (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a
      share, as the case may be. Any provision of this Section 13 to the contrary
      notwithstanding, no adjustment in the Exercise Price or the number of Shares
      into which this Warrant is exercisable shall be made if the amount of such
      adjustment would be less than $0.01 or one-tenth (1/10th) of a share of
      Common Stock, but any such amount shall be carried forward and an adjustment
      with respect thereto shall be made at the time of and together with any
      subsequent adjustment which, together with such amount and any other amount
      or
      amounts so carried forward, shall aggregate $0.01 or 1/10th of a share of Common
      Stock, or more.

     

    (G) Timing
      of Issuance of Additional Common Stock Upon Certain Adjustments.
      In any
      case in which the provisions of this Section 13 shall require that an
      adjustment shall become effective immediately after a record date for an event,
      the Company may defer until the occurrence of such event (i) issuing to the
      Warrantholder of this Warrant exercised after such record date and before the
      occurrence of such event the additional shares of Common Stock issuable upon
      such exercise by reason of the adjustment required by such event over and above
      the shares of Common Stock issuable upon such exercise before giving effect
      to
      such adjustment and (ii) paying to such Warrantholder any amount of cash in
      lieu of a fractional share of Common Stock; provided,
      however,
      that
      the Company upon request shall deliver to such Warrantholder a due bill or
      other
      appropriate instrument evidencing such Warrantholder’s right to receive such
      additional shares, and such cash, upon the occurrence of the event requiring
      such adjustment.

     

    (H) Completion
      of Qualified Equity Offering.
      In the
      event the Company (or any successor by Business Combination) completes one
      or
      more Qualified Equity Offerings on or prior to December 31, 2009 that
      result in the Company (or any such successor ) receiving aggregate gross
      proceeds of not less than 100% of the aggregate liquidation preference of the
      Preferred Shares (and any preferred stock issued by any such successor to
      the Original Warrantholder under the CPP), the number of shares of Common Stock
      underlying the portion of this Warrant then held by the Original Warrantholder
      shall be thereafter reduced by a number of shares of Common Stock equal to
      the
      product of (i) 0.5 and (ii) the number of shares underlying the
      Warrant on the Issue Date (adjusted to take into account all other theretofore
      made adjustments pursuant to this Section 13).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (I) Other
      Events.
      For so
      long as the Original Warrantholder holds this Warrant or any portion thereof,
      if
      any event occurs as to which the provisions of this Section 13 are not
      strictly applicable or, if strictly applicable, would not, in the good faith
      judgment of the Board of Directors of the Company, fairly and adequately protect
      the purchase rights of the Warrants in accordance with the essential intent
      and
      principles of such provisions, then the Board of Directors shall make such
      adjustments in the application of such provisions, in accordance with such
      essential intent and principles, as shall be reasonably necessary, in the good
      faith opinion of the Board of Directors, to protect such purchase rights as
      aforesaid. The Exercise Price or the number of Shares into which this Warrant
      is
      exercisable shall not be adjusted in the event of a change in the par value
      of
      the Common Stock or a change in the jurisdiction of incorporation of the
      Company.

     

    (J) Statement
      Regarding Adjustments.
      Whenever the Exercise Price or the number of Shares into which this Warrant
      is
      exercisable shall be adjusted as provided in Section 13, the Company shall
      forthwith file at the principal office of the Company a statement showing in
      reasonable detail the facts requiring such adjustment and the Exercise Price
      that shall be in effect and the number of Shares into which this Warrant shall
      be exercisable after such adjustment, and the Company shall also cause a copy
      of
      such statement to be sent by mail, first class postage prepaid, to each
      Warrantholder at the address appearing in the Company’s records.

     

    (K) Notice
      of Adjustment Event.
      In the
      event that the Company shall propose to take any action of the type described
      in
      this Section 13 (but only if the action of the type described in this
      Section 13 would result in an adjustment in the Exercise Price or the
      number of Shares into which this Warrant is exercisable or a change in the
      type
      of securities or property to be delivered upon exercise of this Warrant), the
      Company shall give notice to the Warrantholder, in the manner set forth in
      Section 13(J), which notice shall specify the record date, if any, with
      respect to any such action and the approximate date on which such action is
      to
      take place. Such notice shall also set forth the facts with respect thereto
      as
      shall be reasonably necessary to indicate the effect on the Exercise Price
      and
      the number, kind or class of shares or other securities or property which shall
      be deliverable upon exercise of this Warrant. In the case of any action which
      would require the fixing of a record date, such notice shall be given at least
      10 days prior to the date so fixed, and in case of all other action, such notice
      shall be given at least 15 days prior to the taking of such proposed action.
      Failure to give such notice, or any defect therein, shall not affect the
      legality or validity of any such action.

     

    (L) Proceedings
      Prior to Any Action Requiring Adjustment.
      As a
      condition precedent to the taking of any action which would require an
      adjustment pursuant to this Section 13, the Company shall take any action
      which may be necessary, including obtaining regulatory, New York Stock Exchange,
      NASDAQ Stock Market or other applicable national securities exchange or
      stockholder approvals or exemptions, in order that the Company may thereafter
      validly and legally issue as fully paid and nonassessable all shares of Common
      Stock that the Warrantholder is entitled to receive upon exercise of this
      Warrant pursuant to this Section 13.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (M) Adjustment
      Rules.
      Any
      adjustments pursuant to this Section 13 shall be made successively whenever
      an event referred to herein shall occur. If an adjustment in Exercise Price
      made
      hereunder would reduce the Exercise Price to an amount below par value of the
      Common Stock, then such adjustment in Exercise Price made hereunder shall reduce
      the Exercise Price to the par value of the Common Stock.

     

    14. Exchange.
      At any
      time following the date on which the shares of Common Stock of the Company
      are
      no longer listed or admitted to trading on a national securities exchange (other
      than in connection with any Business Combination), the Original Warrantholder
      may cause the Company to exchange all or a portion of this Warrant for an
      economic interest (to be determined by the Original Warrantholder after
      consultation with the Company) of the Company classified as permanent equity
      under U.S. GAAP having a value equal to the Fair Market Value of the portion
      of
      the Warrant so exchanged. The Original Warrantholder shall calculate any Fair
      Market Value required to be calculated pursuant to this Section 14, which
      shall not be subject to the Appraisal Procedure.

     

    15. No
      Impairment.
      The
      Company will not, by amendment of its Charter or through any reorganization,
      transfer of assets, consolidation, merger, dissolution, issue or sale of
      securities or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed hereunder by
      the
      Company, but will at all times in good faith assist in the carrying out of
      all
      the provisions of this Warrant and in taking of all such action as may be
      necessary or appropriate in order to protect the rights of the
      Warrantholder.

     

    16. Governing
      Law.
      This
      Warrant will be governed by and construed in accordance with the federal law
      of
      the United States if and to the extent such law is applicable, and otherwise
      in
      accordance with the laws of the State of New York applicable to contracts made
      and to be performed entirely within such State. Each of the Company and the
      Warrantholder agrees (a) to submit to the exclusive jurisdiction and venue
      of the United States District Court for the District of Columbia for any civil
      action, suit or proceeding arising out of or relating to this Warrant or the
      transactions contemplated hereby, and (b) that notice may be served upon
      the Company at the address in Section 20 below and upon the Warrantholder
      at the address for the Warrantholder set forth in the registry maintained by
      the
      Company pursuant to Section 9 hereof. To the extent permitted by applicable
      law, each of the Company and the Warrantholder hereby unconditionally waives
      trial by jury in any civil legal action or proceeding relating to the Warrant
      or
      the transactions contemplated hereby or thereby.

     

    17. Binding
      Effect.
      This
      Warrant shall be binding upon any successors or assigns of the
      Company.

     

    18. Amendments.
      This
      Warrant may be amended and the observance of any term of this Warrant may be
      waived only with the written consent of the Company and the
      Warrantholder.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    19. Prohibited
      Actions.
      The
      Company agrees that it will not take any action which would entitle the
      Warrantholder to an adjustment of the Exercise Price if the total number of
      shares of Common Stock issuable after such action upon exercise of this Warrant,
      together with all shares of Common Stock then outstanding and all shares of
      Common Stock then issuable upon the exercise of all outstanding options,
      warrants, conversion and other rights, would exceed the total number of shares
      of Common Stock then authorized by its Charter.

     

    20. Notices.
      Any
      notice, request, instruction or other document to be given hereunder by any
      party to the other will be in writing and will be deemed to have been duly
      given
      (a) on the date of delivery if delivered personally, or by facsimile, upon
      confirmation of receipt, or (b) on the second business day following the
      date of dispatch if delivered by a recognized next day courier service. All
      notices hereunder shall be delivered as set forth in Item 8 of Schedule A
      hereto, or pursuant to such other instructions as may be designated in writing
      by the party to receive such notice.

     

    21. Entire
      Agreement.
      This
      Warrant, the forms attached hereto and Schedule A hereto (the terms of which
      are
      incorporated by reference herein), and the Letter Agreement (including all
      documents incorporated therein), contain the entire agreement between the
      parties with respect to the subject matter hereof and supersede all prior and
      contemporaneous arrangements or undertakings with respect thereto. 

     

     

    [Remainder
      of page intentionally left blank] 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      4.2

    

    [Form
      of Notice of Exercise]

     

    Date:

     

    
      	TO:	
              Cathay
                General Bancorp

            

    

     

    
      	RE:	
              Election
                to Purchase Common Stock

            

    

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant,
      hereby agrees to subscribe for and purchase the number of shares of the Common
      Stock set forth below covered by such Warrant. The undersigned, in accordance
      with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise
      Price for such shares of Common Stock in the manner set forth below. A new
      warrant evidencing the remaining shares of Common Stock covered by such Warrant,
      but not yet subscribed for and purchased, if any, should be issued in the name
      set forth below. 

     

    Number
      of
      Shares of Common Stock _____________________________

     

    Method
      of
      Payment of Exercise Price (note if cashless exercise pursuant to
      Section 3(i) of the Warrant or cash exercise pursuant to Section 3(ii)
      of the Warrant, with consent of the Company and the Warrantholder)
      ______________________________

     

    Aggregate
      Exercise Price: ___________________________

     

     

    
      	 	 Holder:
	 
	 	 By:  	 
	 	 Name:
	 
	 	 Title:
	 

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      a
      duly authorized officer. 

     

    Dated:
      December 5, 2008

     

    
      	 	 	 
	 	CATHAY
              GENERAL
              BANCORP
	 
 	 
 	 
 
	 	By:  	/s/
              Dunson K.
              Cheng
	 	
              Name:
                Dunson K. Cheng

              Title:  
                Chairman, President and Chief 

              Executive
                Officer

            

    

     

    

    
      	
            	 	 
	 	Attest:
	 
 	 
 	 
 
	 	By:  	/s/
              Heng W.
              Chen
	 	
              Name:
                Heng W. Chen

              Title:  
                Executive Vice President and Chief 

              Financial
                Officer

            

       

    

    [Signature
      Page to Warrant] 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

      EXHIBIT
        4.2

    

    SCHEDULE
      A

     

    Item 1

    Name:
      Cathay General Bancorp

    Corporate
      or other organizational form: Corporation 

    Jurisdiction
      of organization: Delaware

     

    Item 2
      

    Exercise
      Price:1 
      $20.96

     

    Item 3
      

    Issue
      Date: December 5, 2008

     

    Item 4
      

    Amount
      of
      last dividend declared prior to the Issue Date: $.105

     

    Item 5
      

    Date
      of
      Letter Agreement between the Company and the United States Department of the
      Treasury: December 5, 2008

     

    Item 6
      

    Number
      of
      shares of Common Stock: 1,846,374

     

    Item 7
      

    
      	Company’s
              address: 	
              777
                North Broadway

            

    

    Los
      Angeles, CA 90012

    Item 8
      

    Notice
      information: 

     

    
      	
              Primary
                Contact

              Heng
                W. Chen

              Executive
                Vice President and Chief Financial Officer

              Cathay
                General Bancorp

              777
                North Broadway

              Los
                Angeles, California 90012

              Phone:
                (213) 625-4752

              Fax:
                (213) 617-0981

              eMail:
                Heng_Chen@cathaybank.com

            	
              Secondary
                Contact

              Perry
                Oei

              General
                Counsel

              Cathay
                General Bancorp

              777
                North Broadway

              Los
                Angeles, California 90012

              Phone:
                (213) 346-3488

              Fax:
                (213) 617-0981

              eMail:
                Perry_Oei@cathaybank.com

            
	
              Legal
                Contact

              Craig
                D. Miller, Esq.

              Manatt,
                Phelps & Phillips, LLP

              One
                Embarcadero Center, 30th Floor

              San
                Francisco, CA 94111

              Phone:
                (415) 291-7415

              Fax:
                (415).291-7474

              eMail:
                cmiller@manatt.com

            	 

    

    

      
        

      

    

    1
      Initial
      exercise price to be calculated based on the average of closing prices of the
      Common Stock on the 20 trading days ending on the last trading day prior to
      the
      date the Company’s application for participation in the Capital Purchase Program
      was approved by the United States Department of the Treasury.

     

    
      
        
        

      

      
        1

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