Document:

Exhibit 4.9

 

 

  SIRIUS XM RADIO INC.

2009 LONG-TERM STOCK INCENTIVE PLAN

Section 1.  Purpose.  The purposes of this Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan are to promote the interests of Sirius XM Radio Inc. and its stockholders by (i) attracting and retaining employees and directors of, and consultants to, the Company and its Affiliates, as defined below; (ii) motivating such individuals by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the Company.

Section 2.  Definitions.  As used in the Plan, the following terms shall have the meanings set forth below:

“Affiliate” shall mean any entity (i) that, directly or indirectly, is controlled by, controls or is under common control with, the Company or (ii) in which the Company has a significant equity interest, in either case as determined by the Committee.

“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award, Other Stock-Based Award or Performance Compensation Award made or granted from time to time hereunder.

“Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

“Board” shall mean the Board of Directors of the Company.

“Cause” as a reason for a Participant’s termination of employment or service shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between the Participant and the Company or an Affiliate.  If the Participant is not a party to an employment, severance or similar agreement with the Company or an Affiliate in which such term is defined, then unless otherwise defined in the applicable Award Agreement, “Cause” shall mean: (i) the intentional engagement in any acts or omissions constituting dishonesty, breach of a fiduciary obligation, wrongdoing or misfeasance, in each case, in connection with a Participant’s duties or otherwise during the course of a Participant’s employment or service with the Company or an Affiliate;  (ii) the commission of a felony or the indictment for any felony, including, but not limited
to, any felony involving fraud, embezzlement, moral turpitude or theft;  (iii) the intentional and wrongful damaging of property, contractual interests or business relationships of the Company or an Affiliate;  (iv) the intentional and wrongful disclosure of secret processes or confidential information of the Company or an Affiliate in violation of an agreement with or a policy of the Company or an Affiliate; (v) the continued failure to substantially perform the Participant’s duties for the Company or an Affiliate; (vi) current alcohol or prescription drug abuse affecting work performance;  (vii) current illegal use of drugs; or  (viii) any intentional conduct contrary to the Company’s or an Affiliate’s written policies or practices.

“Change of Control” shall mean the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) any person or group is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the voting stock of the Company, including by way of merger, consolidation or otherwise or (iii) during
any period of two consecutive years, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company, then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, but excluding any director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent 

 

 

solicitation, relating to the election of directors of the Company) cease for any reason to constitute a majority of the Board, then in office.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Committee” shall mean a committee of the Board designated by the Board to administer the Plan and composed of not less than two directors, each of whom is required to be a ‘Non-Employee Director’ (within the meaning of Rule 16b-3) and an “outside director” (within the meaning of Section 162(m) of the Code) to the extent Rule 16b-3 and Section 162(m) of the Code, respectively, are applicable to the Company and the Plan.  If at any time such a committee has not been so designated, the Board shall constitute the Committee.

“Company” shall mean Sirius XM Radio Inc., together with any successor thereto.

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

“Existing Plans” shall mean, collectively, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan, and the XM Satellite Radio Holdings Inc. Talent Option Plan.

“Fair Market Value” shall mean (i) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (ii) with respect to the Shares, as of any date, (1) the closing sale price (excluding any “after hours” trading) of the Shares as reported on the Nasdaq Stock Market for such date (or if not then trading on the Nasdaq Stock Market, the closing sale price of the Shares on the stock exchange or over-the-counter market on which the Shares are principally trading on such date), or, if there were no sales on such date, on the closest preceding date on which there were sales of Shares or (2) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.

“Good Reason” as a reason for a Participant’s termination of employment or service shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between the Participant and the Company or an Affiliate.  If the Participant is not a party to an employment, severance or similar agreement with the Company or an Affiliate in which such term is defined, then unless otherwise defined in the applicable Award Agreement, for purposes of this Plan, the Participant shall not be entitled to terminate his or her employment or service for Good Reason.

“Incentive Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.  Incentive Stock Options may be granted only to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

“Negative Discretion” shall mean the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award; provided that the exercise of such discretion would not cause the Performance Compensation Award to fail to qualify as “performance-based compensation” under Section 162(m) of the Code.  By way of example and not by way of limitation, in no event shall any discretionary authority granted to the Committee by the Plan including, but not limited to, Negative Discretion, be used to (a) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained or (b) increase a Performance Compensation Award above the maximum amount payable under Section 4(a) or
11(d)(vi) of the Plan.  In no event shall Negative Discretion be exercised by the Committee with respect to any Option or Stock Appreciation Right (other than an Option or Stock Appreciation Right that is intended to be a Performance Compensation Award under Section 11 of the Plan).

“Non-Qualified Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is not intended to be an Incentive Stock Option.

 

2

 

 

 

“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

“Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.

“Participant” shall mean any employee of, or consultant to, the Company or its Affiliates, or non-employee director who is a member of the Board or the board of directors of an Affiliate, eligible for an Award under Section 5 and selected by the Committee to receive an Award under the Plan.

“Performance Award” shall mean any right granted under Section 9 of the Plan.

“Performance Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant to Section 11 of the Plan.

“Performance
    Criteria” shall mean the criterion or criteria that the Committee shall
    select for purposes of establishing the Performance Goal(s) for a Performance
    Period with respect to any Performance Compensation Award under the Plan.
    The Performance Criteria that will be used to establish the Performance Goal(s)
    shall be based on the attainment of specific levels of performance of the
    Company (or an Affiliate, division or operational unit of the Company) and
    shall be limited to the following:  return on net assets, return on stockholders’ equity,
    return on assets, return on capital, revenue, average revenue per subscriber,
    stockholder returns, profit margin, earnings per Share, net earnings,  operating
    earnings, free cash flow, earnings before interest, taxes, depreciation and
    amortization, number of subscribers, growth of subscribers, operating expenses,
     capital expenses, subscriber acquisition costs, Share price, enterprise
    value, equity market capitalization or sales or market share.  To the extent
    required under Section 162(m) of the Code, the Committee shall, within the
    first 90 days of a Performance Period (or, if longer,  within the maximum
    period allowed under Section 162(m) of the Code), define in an objective
    fashion the manner of calculating the Performance Criteria  it selects to
    use for such Performance Period.

“Performance Formula” shall mean, for a Performance Period, one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

“Performance Goals” shall mean, for a Performance Period, one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.  The Committee is authorized at any time during the first 90 days of a Performance Period, or at any time thereafter (but only to the extent the exercise of such authority after the first 90 days of a Performance Period would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as ‘performance-based compensation’ under Section 162(m) of the Code), in its sole discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the rights of Participants, (a) in the event of, or in anticipation of, any
unusual or extraordinary corporate item, transaction, event or development affecting the Company; or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

“Performance Period” shall mean the one or more periods of time of at least one year in duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.

“Person” shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization, government or political subdivision.

“Plan” shall mean this Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan.

“Restricted Stock” shall mean any Share granted under Section 8 of the Plan.

 

3

 

 

 

“Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.

“Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall include the Staff thereof.

“Shares” shall mean the common stock of the Company, $.001 par value, or such other securities of the Company (i) into which such common stock shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Committee pursuant to Section 4(b) of the Plan.

“Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.

“Substitute Awards” shall have the meaning specified in Section 4(c) of the Plan.

Section 3.  Administration.  (a) The Plan shall be administered by the Committee.  Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant and designate those Awards which shall constitute Performance Compensation Awards; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award (subject to Section 162(m) of the Code with respect to Performance Compensation Awards) shall be deferred either automatically or at the election of the holder thereof or of the Committee (in each case consistent with Section 409A of the Code); (vii) interpret, administer or reconcile any inconsistency, correct any defect, resolve ambiguities and/or supply any omission in the Plan, any Award Agreement, and any other instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (ix)
establish and administer Performance Goals and certify whether, and to what extent, they have been attained; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

(b)           Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder.

(c)           The mere fact that a Committee member shall fail to qualify as a “Non-Employee Director” or “outside director” within the meaning of Rule 16b-3 and Section 162(m) of the Code, respectively, shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan.

(d)           No member of the Committee shall be liable to any Person for any action or determination made in good faith with respect to the Plan or any Award hereunder.

(e)           With respect to any Performance Compensation Award granted to a Covered Employee (within the meaning of Section 162(m) of the Code) under the Plan, the Plan shall be interpreted and construed in accordance with Section 162(m) of the Code.

(f)            The Committee may delegate to one or more officers of the Company (or, in the case of awards of Shares, the Board may delegate to a committee made up of one or more directors) the authority to grant awards to 

4

 

 

Participants who are not executive officers or directors of the Company subject to Section 16 of the Exchange Act or Covered Employees (within the meaning of Section 162(m) of the Code).

Section 4.  Shares Available for Awards.

(a)        Shares
Available. 

(i)            Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with respect to which Awards may be granted from time to time under the Plan shall in the aggregate not exceed, at any time, 600 million; provided, that the aggregate number of Shares with respect to which Incentive Stock Options may be granted under the Plan shall be 120 million.  The maximum number of Shares with respect to which Options and Stock Appreciation Rights may be granted to any Participant in any fiscal year shall be 120 million and the maximum number of Shares which may be paid to a Participant in the Plan in connection with
the settlement of any Award(s) designated as “Performance Compensation Awards” in respect of a single Performance Period shall be 120 million or, in the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof.  

(ii)           Shares covered by an Award granted under the Plan shall not be counted unless and until they are actually issued and delivered to a Participant and, therefore, the total number of Shares available under the Plan as of a given date shall not be reduced by Shares relating to prior Awards that have expired or have been forfeited or cancelled, and upon payment in cash of the benefit provided by any Award, any Shares that were covered by such Award will be available for issue hereunder.  Notwithstanding anything to the contrary contained herein:  (A) if Shares are tendered or otherwise used in payment of the exercise price of an Option, the total number of Shares covered by the Option being exercised shall reduce the aggregate limit described in Section 4(a)(i); (B) Shares withheld by the Company to satisfy a tax withholding
obligation shall count against the aggregate limit described in Section 4(a)(i); and (C) the number of Shares covered by a Stock Appreciation Right, to the extent that it is exercised and settled in Shares, and whether or not Shares are actually issued to the Participant upon exercise of the Stock Appreciation Right, shall be considered issued or transferred pursuant to the Plan.  If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Shares based on fair market value, such Shares will not count against the aggregate limit described in Section 4(a)(i).

(b)           Adjustments.  Notwithstanding any provisions of the Plan to the contrary, in the event that the Committee determines in its sole discretion that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee
shall equitably adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award, which, in the case of Options and Stock Appreciation Rights shall equal the excess, if any, of the Fair Market Value of the Share subject to each such Option or Stock Appreciation Right over the per Share exercise price or grant price of such Option or Stock Appreciation Right.

(c)           Substitute Awards.  Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines (“Substitute Awards”).  The number of Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares available for Awards under the Plan.

(d)           Sources of Shares Deliverable Under Awards.  Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

 

5

 

 

 

Section 5.  Eligibility.  Any employee of, or consultant to, the Company or any of its Affiliates (including any prospective employee), or non-employee director who is a member of the Board or the board of directors of an Affiliate, shall be eligible to be selected as a Participant.

Section 6.  Stock Options.

(a)           Grant.  Subject to the terms of the Plan, the Committee shall have sole authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the exercise price thereof and the conditions and limitations applicable to the exercise of the Option.  The Committee shall have the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of Options.  In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute.  All Options when granted under the Plan are intended to be Non-Qualified Stock
Options, unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option.  If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Non-Qualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to Non-Qualified Stock Options.  No Option shall be exercisable more than ten years from the date of grant.

(b)           Exercise Price.  The Committee shall establish the exercise price at the time each Option is granted, which exercise price shall be set forth in the applicable Award Agreement and which shall not be less than the Fair Market Value per Share on the date of grant.

(c)           Exercise.  Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement.  The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or state securities laws, as it may deem necessary or advisable.  

(d)           Payment.  (i) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate exercise price therefor is received by the Company.  Such payment may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the optionee (which are not the subject of any pledge or other security interest and which have been owned by such optionee for at least six months), or (y) subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate exercise price.

(ii)           Wherever in this Plan or any Award Agreement a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

Section 7.  Stock Appreciation Rights.

(a)           Grant.  Subject to the provisions of the Plan, the Committee shall have sole authority to determine the Participants to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the conditions and limitations applicable to the exercise thereof.  Stock Appreciation Rights with a grant price equal to or greater than the Fair Market Value per Share as of the date of grant are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.  In the sole discretion of the Committee, Stock Appreciation Rights may, but need not, be intended to qualify as performance-based compensation in accordance with Section 11 hereof.  Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to another Award.  Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either before, at the same 

6

 

 

time as the Award or at a later time.  No Stock Appreciation Right shall be exercisable more than ten years from the date of grant.

(b)           Exercise and Payment.  A Stock Appreciation Right shall entitle the Participant to receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right over the grant price thereof (which shall not be less than the Fair Market Value on the date of grant).  The Committee shall determine in its sole discretion whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of cash and Shares.

(c)           Other Terms and Conditions.  Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine, at the grant of a Stock Appreciation Right, the term, methods of exercise, methods and form of settlement, and any other terms and conditions of any Stock Appreciation Right.  The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate.

Section 8.  Restricted Stock and Restricted Stock Units.

(a)           Grant.  Subject to the provisions of the Plan, the Committee shall have sole authority to determine the Participants to whom Shares of Restricted Stock and Restricted Stock Units shall be granted, the number of Shares of Restricted Stock and/or the number of Restricted Stock Units to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and the other terms and conditions of such Awards.

(b)           Transfer Restrictions.  Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered, except, in the case of Restricted Stock, as provided in the Plan or the applicable Award Agreements. Unless otherwise directed by the Committee, (i) certificates issued in respect of Shares of Restricted Stock shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company, or (ii) Shares of Restricted Stock shall be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Shares of Restricted Stock.  Upon the lapse of the restrictions applicable to such Shares of Restricted
Stock, the Company shall, as applicable, either deliver such certificates to the Participant or the Participant’s legal representative or the transfer agent shall remove the restrictions relating to the transfer of such Shares.

(c)           Payment.  Each Restricted Stock Unit shall have a value equal to the Fair Market Value of a Share.  Restricted Stock Units shall be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, upon the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement.  Dividends paid on any Shares of Restricted Stock shall be paid directly to the Participant, withheld by the Company subject to vesting of the Restricted Stock pursuant to the terms of the applicable Award Agreement, or may be reinvested in additional Shares of Restricted Stock or in additional Restricted Stock Units, as determined by the Committee in its sole discretion.

Section 9.  Performance Awards.

(a)           Grant.  The Committee shall have sole authority to determine the Participants who shall receive a “Performance Award”, which shall consist of a right which is (i) denominated in cash or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such Performance Goals during such Performance Periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine.

(b)           Terms and Conditions.  Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the Performance Goals to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Award.

 

7

 

 

 

(c)           Payment of Performance Awards.  Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period as set forth in the Award Agreement on the date of grant.

Section 10.  Other Stock-Based Awards.

(a)           General.  The Committee shall have authority to grant to Participants an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to be consistent with the purposes of the Plan; provided that any such rights must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable law.  Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the
terms and conditions of any such Other Stock-Based Award, including the price, if any, at which securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan.

(b)           Dividend Equivalents.  In the sole discretion of the Committee, an Award (other than Options or Stock Appreciation Rights), whether made as an Other Stock-Based Award under this Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities or other property on a current or deferred basis; provided, that in the case of Awards with respect to which any applicable Performance Criteria have not been achieved, dividend equivalents may be paid only on a deferred basis, to the extent the underlying Award vests.

Section 11.  Performance Compensation Awards.

(a)           General.  The Committee shall have the authority, at the time of grant of any Award described in Sections 6 through 10 (other than Options and Stock Appreciation Rights), to designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Section 162(m) of the Code.

(b)           Eligibility.  The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if longer, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period.  Designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period.  The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 11.  Moreover,
designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.

(c)           Discretion of Committee with Respect to Performance Compensation Awards.  With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) is/are to apply to the Company and the Performance Formula.  Within the first 90 days of a Performance Period (or, if longer, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters
enumerated in the immediately preceding sentence of this Section 11(c) and record the same in writing.

(d)           Payment
      of Performance Compensation Awards.
    (i) Unless otherwise provided in the applicable Award Agreement, a Participant
    must be employed by the Company on the last day of a Performance Period to
    be eligible for payment in respect of a Performance Compensation Award for
such Performance Period.

 

8

 

 

 

(ii)           Limitation.  A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (1) the Performance Goals for such period are achieved; and (2) the Performance Formula as applied against such Performance Goals determines that all or some portion of such Participant’s Performance Award has been earned for the Performance Period.

(iii)         Certification.  Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula.  The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion, if and when it deems appropriate.

(iv)          Negative Discretion.  In determining the actual size of an individual Performance Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate.

(v)           Timing of Award Payments.  The Awards granted for a Performance Period shall be paid to Participants as soon as administratively possible following completion of the certifications required by this Section 11; provided, that in no event shall any Award granted for a Performance Period be paid later than the fifteenth day of the third month following the end of such Performance Period.

(vi)          Maximum Award Payable.  Notwithstanding any provision contained in the Plan to the contrary, the maximum Performance Compensation Award payable to any one Participant under the Plan for a Performance Period is 120 million Shares or, in the event the Performance Compensation Award is paid in cash, the equivalent cash value thereof on the last day of the Performance Period to which such Award relates.  Furthermore, any Performance Compensation Award that has been deferred shall not (between the date as of which the Award is deferred and the payment date) increase (i) with respect to Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee or (ii) with respect to a
Performance Compensation Award that is payable in Shares, by an amount greater than the appreciation of a Share from the date such Award is deferred to the payment date.

Section 12.  Amendment and Termination.

(a)           Amendments to the Plan.  The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that if an amendment to the Plan that (i) would materially increase the benefits accruing to Participants under the Plan, (ii) would materially increase the number of securities which may be issued under the Plan, (iii) would materially modify the requirements for participation in the Plan or (iv) must otherwise be approved by the stockholders of the Company in order to comply with applicable law or the rules of the Nasdaq Stock Market, or, if the Shares are not traded on the Nasdaq Stock Market, the principal national securities exchange upon which the Shares are traded or quoted, such
amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained; and provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Award previously granted shall not be effective without the written consent of the affected Participant, holder or beneficiary.  

(b)           Amendments to Awards.  The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Participant or any holder or beneficiary of any Award previously granted shall not be effective without the written consent of the affected Participant, holder or beneficiary.

(c)           Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee is hereby authorized to make equitable adjustments in the terms and conditions of, and the criteria included in, all outstanding Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Affiliate, or the financial statements of the 

9

 

 

Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

(d)           Repricing.  Except in connection with a corporate transaction or event described in Section 4(b) hereof, the terms of outstanding Awards may not be amended to reduce the exercise price of Options or the grant price of Stock Appreciation Rights, or cancel Options or Stock Appreciation Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with an exercise price or grant price, as applicable, that is less than the exercise price of the original Options or grant price of the original Stock Appreciation Rights, as applicable, without stockholder approval.

Section 13.  Change of Control.  

(a)           Except as otherwise provided in an Award Agreement or by the Committee in a written resolution at the date of grant, to the extent outstanding Awards granted under this Plan are not assumed, converted or replaced by the resulting entity in the event of a Change of Control, all outstanding Awards that may be exercised shall become fully exercisable, all restrictions with respect to outstanding Awards shall lapse and become vested and non-forfeitable, and any specified Performance Goals with respect to outstanding Awards shall be deemed to be satisfied at target. 

(b)            Except as otherwise provided in an Award Agreement or by the Committee in a written resolution at the date of grant or thereafter, to the extent outstanding Awards granted under this Plan are assumed, converted or replaced by the resulting entity in the event of a Change of Control, (i) any outstanding Awards that are subject to Performance Goals shall be converted by the resulting entity as if target performance had been achieved as of the date of the Change of Control, (ii) each Performance Award or Performance Compensation Award with service requirements shall continue to vest with respect to such requirements during the remaining period set forth in the Award Agreement, and (iii) all other Awards shall continue to vest (and/or the restrictions thereon shall continue to lapse) during the remaining period set forth in the Award Agreement. 

(c)            Except
    as otherwise provided in an Award Agreement or by the Committee in a written
    resolution at the date of grant or thereafter, to the extent outstanding
    Awards granted under this Plan are either assumed, converted or replaced
    by the resulting entity in the event of a Change of Control, if a Participant’s
    employment or service is terminated without Cause by the Company or an Affiliate
    or a Participant terminates his or her employment or service with the Company
    or an Affiliate for Good Reason (if applicable), in either case, during the
    two year period following a Change of Control, all outstanding Awards held
    by the Participant that may be exercised shall become fully exercisable and
    all restrictions with respect to outstanding Awards shall lapse and become
    vested and non-forfeitable. 

(d)            Notwithstanding anything in this Plan or any Award Agreement to the contrary, to the extent any provision of this Plan or an Award Agreement would cause a payment of deferred compensation that is subject to Section 409A of the Code to be made upon the occurrence of (i) a Change of Control, then such payment shall not be made unless such Change of Control also constitutes a “change in ownership”, “change in effective control” or “change in ownership of a substantial portion of the Company’s assets” within the meaning of Section 409A of the Code or (ii) a termination of employment or service, then such payment shall not be made unless such termination of employment or service also constitutes a “separation from service” within the meaning of Section 409A of the Code.  Any
payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a Change of Control or termination of employment or service, but disregarding any future service or performance requirements.

Section 14.  General Provisions.

(a)        Nontransferability.

(i)            Each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative.

 

10

 

 

 

(ii)           No Award may be sold, assigned, alienated, pledged, attached or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute a sale, assignment, alienation, pledge, attachment, transfer or encumbrance.  

(b)           No Rights to Awards.  No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards.  The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

(c)           Share Certificates.  Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(d)           Withholding.  (i) A Participant may be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.  

 

11

 

 

 

(ii)            Without
    limiting the generality of clause (i) above, a Participant may satisfy, in
    whole or in part, the foregoing withholding liability by delivery of Shares
    owned by the Participant (which are not subject to any pledge or other security
    interest and which have been owned by the Participant for at least six months)
    with a Fair Market Value equal to such withholding liability or by having
    the Company withhold from the number of Shares otherwise issuable pursuant
    to the exercise of the option a number of Shares with a Fair Market Value
    equal to such withholding liability.

(e)           Award Agreements.  Each Award hereunder shall be evidenced by an Award Agreement which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including but not limited to the effect on such Award of the death, disability or termination of employment or service of a Participant and the effect, if any, of such other events as may be determined by the Committee.

(f)            No Limit on Other Compensation Arrangements.  Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, Shares and other types of Awards provided for hereunder (subject to stockholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.

(g)           No Right to Employment.  The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in any consulting relationship to, or as a director on the Board or board of directors, as applicable, of, the Company or any Affiliate.  Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or any applicable employment contract or agreement.

(h)           No Rights as Stockholder.  Subject to the provisions of the applicable Award, no Participant or holder or beneficiary of any Award shall have any rights as a stockholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares.  Notwithstanding the foregoing, in connection with each grant of Restricted Stock hereunder, the applicable Award shall specify if and to what extent the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Stock.

(i)            Governing Law.  The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of New York, applied without giving effect to its conflict of laws principles.

(j)            Severability.  If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

(k)           Other Laws.  The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.  Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee
in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws.

 

12

 

 

 

(l)            No Trust or Fund Created.  Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person.  To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

(m)          No Fractional Shares.  No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.

(n)           Deferrals.  In the event the Committee permits a Participant to defer any Award payable in the form of cash, all such elective deferrals shall be accomplished by the delivery of a written, irrevocable election by the Participant on a form provided by the Company.  All deferrals shall be made in accordance with administrative guidelines established by the Committee to ensure that such deferrals comply with all applicable requirements of Section 409A of the Code.

(o)           Headings.  Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

Section 15.  Compliance with Section 409A of the Code.

(a)           To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants.  This Plan and any grants made hereunder shall be administered in a manner consistent with this intent.  

(b)           Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Affiliates. 

(c)           If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, with interest, on the earlier of the first business day of
the seventh month or death.

(d)           Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company shall amend this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, a Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

 

13

 

 

 

Section 16. Term of the Plan.

(a)           Effective Date.  The Plan shall be effective as of the date of its approval by the Board (the “Effective Date”), subject to approval of the Plan by the stockholders of the Company.  No grants will be made under the Existing Plans on or after the date the Plan is first approved by the stockholders of the Company, except that outstanding awards granted under the Existing Plans will continue unaffected following the Effective Date.  

(b)           Expiration Date.  No grant will be made under this Plan more than ten years after the Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.

 

14SUBSCRIPTION AGREEMENT

                                       for

                               ES BANCSHARES, INC.
                             A MARYLAND CORPORATION

                    COMMON SHARES, PAR VALUE $0.01 PER SHARE

THE COMMON SHARES ("COMMON  SHARES") REFERRED TO HEREIN HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED  ("SECURITIES  ACT"), AND ARE BEING
OFFERED  AND  SOLD  IN  RELIANCE  UPON  AN  EXEMPTION   FROM  THE   REGISTRATION
REQUIREMENTS  OF THE SECURITIES  ACT. THE OFFERING OF COMMON SHARES HAS NOT BEEN
REVIEWED OR APPROVED BY ANY FEDERAL OR STATE  REGULATORY  AUTHORITIES AND IS NOT
REGISTERED UNDER APPLICABLE FEDERAL OR STATE SECURITIES LAWS.

A PURCHASER OF THE COMMON SHARES MUST BE PREPARED TO BEAR THE ECONOMIC  RISKS OF
THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE SHARES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND ARE RESTRICTED AS TO TRANSFERABILITY.

<PAGE>

                                TABLE OF CONTENTS

Article I  Purchase; Closing...................................................1
         1.1      Purchase.....................................................1
         1.2      Closing......................................................2

Article II  Representations and Warranties.....................................3
         2.1      Disclosure...................................................3
         2.2      Representations and Warranties of the Company................4
         2.3      Representations and Warranties of the Investor...............7

Article III  Covenants.........................................................9
         3.1      Commercially Reasonable Efforts..............................9
         3.2      Expenses.....................................................9
         3.3      Publicity....................................................9
         3.4      Further Assurances...........................................9

Article IV  Additional Agreements of the Investor.............................10
         4.1      Transfer Restrictions.......................................10
         4.2      Legend......................................................10
         4.3      Registration Rights.........................................11

Article V  Miscellaneous......................................................16
         5.1      Survival....................................................16
         5.2      Interpretation..............................................16
         5.3      Amendment...................................................16
         5.4      Waiver of Conditions........................................16
         5.5      Counterparts and Facsimile..................................17
         5.6      Governing Law; Submission to Jurisdiction, Etc..............17
         5.7      Notices.....................................................17
         5.8      Entire Agreement, Etc.......................................17
         5.10     Definitions of "Subsidiary" and "Affiliate".................18
         5.11     Severability................................................18
         5.12     No Third Party Beneficiaries................................18

                                       i

<PAGE>

                                 LIST OF ANNEXES

Annex A

Accredited Investor Questionnaire

                                       ii
<PAGE>

                             INDEX OF DEFINED TERMS

                                                             Location of
Term                                                         Definition
--------------------------------------------------------  ---------------------

Affiliate                                                    5.9(b)
Agreement                                                    Preamble
Bankruptcy Exceptions                                        2.2(d)(1)
Closing                                                      1.2(a)
Closing Date                                                 1.2(a)
Common Shares                                                Recital A
Company                                                      Preamble
Exchange Act                                                 2.1(b)
FDIC                                                         2.2(a)
Federal Reserve                                              2.2(h)(2)
GAAP                                                         2.1(a)
Governmental Entities                                        2.1(a)
Hedging Transaction                                          4.1(a)
Investor                                                     Preamble
Knowledge                                                    5.2
Material Adverse Effect                                      2.1(a)
Offering                                                     Recital B
Payment                                                      1.1(b)
Previously Disclosed                                         2.1(b)
Purchase                                                     1.1
Purchased Securities                                         Recital B
Register                                                     4.3(h)
Registrable Securities                                       4.3(h)
Registration Expenses                                        4.3(h)
SEC                                                          2.1(b)
SEC Reports                                                  2.1(b)
Securities Act                                               2.2(a)
Selling Expenses                                             4.3(h)
Shelf Registration Statement                                 4.3(a)(2)
Significant Subsidiaries                                     2.2(a)
Significant Subsidiary                                       2.2(a)
Stock Option Plan                                            2.2(b)(4)
Subsidiary                                                   5.9(a)
Transaction Documents                                        Recital B
Transfer                                                     4.1(a)

                                      iii

<PAGE>

     Subscription   Agreement,   dated  June  ___,  2009   (together   with  any
attachments,  annexes  or  exhibits  hereto,  collectively,  this  "Agreement"),
between ES Bancshares, Inc., a corporation organized under the laws of the State
of Maryland  (the  "Company"),  and the Investor  listed on the  signature  page
hereof (the "Investor").

                                    Recitals:

     A. The  Company.  As of the date  hereof,  the  Company  has (i)  5,000,000
authorized Common Shares,  par value $0.01 per share (the "Common  Shares"),  of
which 1,868,505 shares are outstanding,  and (ii) 5,000,000 authorized Preferred
Shares, par value $0.01 per share, of which no shares are outstanding.

     B. The  Issuance.  The Company  intends to issue Common Shares in a private
placement  (the  "Offering"),  and the  Investor  intends to  purchase  from the
Company  the number of Common  Shares  indicated  on the  signature  page hereof
(collectively,  the "Purchased Securities"). For purposes of this Agreement, the
term "Transaction Documents" refers collectively to this Agreement and any other
documents,   agreements  and  instruments   delivered  in  connection   herewith
(including  prior to the date  hereof),  in each case,  as amended,  modified or
supplemented from time to time in accordance with their respective terms.

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

                                    Article I

                                Purchase; Closing

     1.1 Purchase.
         --------

          (a)      Subscription.  The Investor hereby irrevocably  subscribes to
purchase the number of Purchased  Securities  indicated  on the  signature  page
hereof for a period of 30 days from the  subscription  date, in accordance  with
the terms of this  Subscription  Agreement  (the  "Purchase").  To  effect  such
subscription,  the  Investor  shall  deliver  an  executed  counterpart  of this
Agreement,  including  all  Annexes  hereto,  to the  Company or its  authorized
representative.

          (b)      Payment. Together with delivery of an executed counterpart of
this Agreement, including all Annexes hereto, the Investor shall deliver and pay
in full the aggregate purchase price for the Purchased  Securities  specified on
the  signature  page  hereof  (the  "Payment")  in United  States  funds,  to ES
Bancshares,  Inc. in the form of (1) a certified  or bank  cashier's  check,  in
immediately  available  funds,  made payable to "ES Bancshares,  Inc." or (2) an
immediately available wire transfer to the following account:  Empire State Bank
ABA #021913862, for credit to ES Bancshares, Inc. #190001150.

          (c)      Acceptance.  This  Agreement  shall be effective  immediately
upon  acceptance by the Company of the Investor's  executed  counterpart of this
Agreement and shall  thereupon be binding upon the Company.  Such  acceptance by
the Company shall be evidenced  only by  counter-execution  and delivery of this
Agreement by the Company,  and the Company  shall have no  obligation  hereunder
until the Company  shall have executed and delivered to the Investor an executed

                                       1
<PAGE>

counterpart of this  Agreement.  The Investor  acknowledges  and agrees that the
Company,  in its sole  discretion,  reserves  the right to accept or reject  the
Purchase,  in whole or in part; provided,  however,  that if the Company rejects
the  Purchase  by  notice  to the  Investor,  such  rejection  shall  serve as a
termination of this Agreement,  and the Investor shall have no further rights or
obligations  under  this  Agreement  (but any other  Transaction  Document  that
expires  by its terms as of a  different  date  shall  remain in full  force and
effect).

          (d)      Termination.
                   -----------

                   (1)    This  Agreement  may not be terminated by the Investor
                          at any time  following the  Investor's  delivery of an
                          executed  counterpart of this Agreement to the Company
                          (even if the Company has not yet  accepted or rejected
                          the Purchase).

                   (2)    Notwithstanding  the foregoing,  this Agreement may be
                          terminated  by either the Company or the Investor upon
                          written  notice to the other if the Closing  shall not
                          have occurred on or before ________________, 2009.

                   (3)    In the  event  of  termination  of this  Agreement  as
                          provided  in this  Section  1.1(c)  or (d),  (A)  this
                          Agreement shall forthwith become void, and there shall
                          be no liability  on the part of either  party  hereto,
                          except that nothing  herein shall relieve either party
                          from   liability  for  any  willful   breach  of  this
                          Agreement,  and (B) the Company shall promptly  return
                          any  previously  delivered  Payment  to the  Investor,
                          without interest.

     1.2 Closing.
         -------

          (a)      On  the terms and subject to the conditions set forth in this
Agreement,  the closing of the Purchase (the  "Closing")  will take place at the
offices of special counsel to the Company,  Luse Gorman  Pomerenk & Schick,  PC,
5335 Wisconsin  Avenue,  NW, Suite 400,  Washington,  D.C. 20015, at 10:00 a.m.,
Washington, D.C. time, on June 29, 2009 or as soon as practicable thereafter, or
at such other  place,  time and date as shall be agreed  between the Company and
the  Investor.  The time and date on which the Closing  occurs is referred to in
this Agreement as the "Closing Date."

          (b)      At the Closing,  the Company will deliver to the Investor the
Purchased Securities, as evidenced by one or more certificates dated the Closing
Date and bearing appropriate legends as hereinafter  provided for, registered on
the books and records of the Company in such Investor's name.

          (c)      The  obligation of the Investor to consummate  the Closing is
also subject to the  fulfillment  (or waiver by the Investor) at or prior to the
Closing of the following  condition:  the  representations and warranties of the
Company set forth in this Agreement  shall be true and correct as though made on
and as of the Closing Date (other than  representations  and warranties  that by
their terms speak as of another date, which representations and warranties shall
be true and correct as of such  date),  except to the extent that the failure of
such  representations  and warranties to be so true and correct  (without giving
effect to any qualifiers or exceptions relating to materiality), individually or
in the  aggregate,  does not have and would not reasonably be expected to have a

                                       2
<PAGE>

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

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

                   (1)    (A) the representations and warranties of the Investor
                          set forth in this Agreement  shall be true and correct
                          as though  made on and as of the  Closing  Date (other
                          than  representations  and  warranties  that by  their
                          terms speak as of another date, which  representations
                          and  warranties  shall be true and  correct as of such
                          date),  except to the extent  that the failure of such
                          representations  and  warranties  to  be so  true  and
                          correct  (without  giving effect to any  qualifiers or
                          exceptions relating to materiality or Material Adverse
                          Effect (as hereinafter  defined)),  individually or in
                          the aggregate,  does not have and would not reasonably
                          be expected to have a Material  Adverse Effect and (B)
                          the  Investor  shall have  performed  in all  material
                          respects all  obligations  required to be performed by
                          it under this  Agreement  at or prior to the  Closing;
                          and

                   (2)    the Company shall have received a certificate dated as
                          of the  Closing  Date  signed  by the  Investor  or an
                          authorized  representative of the Investor  certifying
                          compliance with Section 1.2(d)(1).

                                   Article II

                         Representations and Warranties

     2.1 Disclosure.
         ----------

          (a)      "Material  Adverse Effect" means a material adverse effect on
(1) the business, results of operation or financial condition of the Company and
its subsidiaries  taken as a whole;  provided that Material Adverse Effect shall
not be deemed to include  the effects of (A) any facts,  circumstances,  events,
changes or occurrences  generally  affecting  businesses and industries in which
the Company operates,  companies engaged in such businesses or industries or the
economy, or the financial or securities markets and credit markets in the United
States  or  elsewhere  in the  world,  including  effects  on  such  businesses,
industries,  economy or  markets  resulting  from any  regulatory  or  political
conditions  or  developments,  or any  outbreak or  escalation  of  hostilities,
declared or undeclared acts of war, terrorism, or work stoppages, (B) changes or
proposed  changes in  generally  accepted  accounting  principles  in the United
States ("GAAP") or regulatory accounting  requirements  applicable to depository
institutions   and  their  holding   companies   generally   (or   authoritative
interpretations  thereof),  (C) changes or proposed changes in banking and other
laws of general  applicability  or related  policies or  interpretations  of all
United   States   governmental   or   regulatory   authorities    (collectively,
"Governmental  Entities"),  or (D) changes in the market price or trading volume
of Common Shares (it being understood and agreed that the exception set forth in
this  clause  (D) does not  apply to the  underlying  reason  giving  rise to or

                                       3
<PAGE>

contributing  to any such change),  or (2) the ability of the Company  timely to
consummate  the  Purchase  and  the  other  transactions   contemplated  by  the
Transaction Documents.

          (b)      "Previously  Disclosed"  means  information  contained in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 2008, or
its other reports and forms filed with the  Securities  and Exchange  Commission
(the "SEC") under Sections 13(a), 14(a) or 15(d) of the Securities  Exchange Act
of 1934 (the "Exchange Act") on or after January 1, 2009 (the "SEC Reports") and
prior to the execution and delivery of this Agreement.

          (c)      Each  party  acknowledges  that it is not  relying  upon  any
representation  or  warranty  not set forth in the  Transaction  Documents.  The
Investor  acknowledges  that it has  conducted  a  review  and  analysis  of the
business,  assets,  condition,  operations  and prospects of the Company and its
subsidiaries,  together with the  representations  and warranties of the Company
set forth in the Transaction Documents,  which the Investor considers sufficient
for purposes of the Purchase.

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

          (a)      Organization,  Authority and  Significant  Subsidiaries.  The
Company has been duly  incorporated  and is validly existing as a corporation in
good standing under the laws of the State of Maryland,  with corporate power and
authority  to own its  properties  and  conduct  its  business  in all  material
respects  as  currently  conducted,  and,  except  as has not had or  would  not
reasonably  be  expected  to have a  Material  Adverse  Effect,  has  been  duly
qualified as a foreign  corporation  for the  transaction  of business and is in
good  standing  under the laws of each  other  jurisdiction  in which it owns or
leases properties or conducts any business so as to require such  qualification;
and each  Subsidiary  (as defined in Section  5.10(a)) of the Company  that is a
"significant  subsidiary"  within the meaning of Rule 1-01(w) of Regulation  S-X
under the  Securities  Act of 1933, as amended (the  "Securities  Act") (each, a
"Significant Subsidiary" and, collectively,  the "Significant Subsidiaries") has
been duly  organized and is validly  existing in good standing under the laws of
its jurisdiction of organization. The Company's principal depository institution
Subsidiary is duly organized and validly  existing as a New York State chartered
bank,  and its  deposit  accounts  are  insured up to  applicable  limits by the
Federal Deposit Insurance Corporation (the "FDIC").

          (b)      Capitalization.
                   --------------

                   (1)    As of the date hereof,  the authorized and outstanding
                          capital  stock  of  the  Company  is as set  forth  in
                          Recital A.

                   (2)    All of the outstanding  shares of capital stock of the
                          Company  have been  duly and  validly  authorized  and
                          issued and are fully paid and  non-assessable and were
                          not  issued in  violation  of any  preemptive  rights,
                          resale  rights,  rights of first  refusal  or  similar
                          rights.

                                       4
<PAGE>

                   (3)    All of the outstanding shares of capital stock of each
                          Significant  Subsidiary  have  been  duly and  validly
                          authorized   and   issued,    are   fully   paid   and
                          non-assessable and were not issued in violation of any
                          preemptive  rights,  resale  rights,  rights  of first
                          refusal or similar  rights,  and are owned directly or
                          indirectly  by the  Company,  free  and  clear  of all
                          security interests,  liens, encumbrances,  equities or
                          claims.

                   (4)    Except for the options issued pursuant to Empire State
                          Bank's (the "Bank") 2004 Stock Option Plan (the "Stock
                          Option Plan") and 92,652 warrants issued to organizers
                          of the  Bank in  connection  with the  opening  of the
                          Bank, there are no options,  warrants or other rights,
                          agreements,  arrangements  or commitments to which the
                          Company  is a party or by which the  Company  is bound
                          relating  to the issued or unissued  Common  Shares of
                          the Company.

          (c)      The  Purchased Securities.  The Purchased Securities will be,
as of the Closing Date, duly authorized by all necessary corporate action on the
part  of the  Company  and,  when  issued  and  delivered  as  provided  in this
Agreement,  will be duly and validly issued, fully paid and non-assessable,  and
the issuance thereof will not be subject to any preemptive or similar rights.

          (d)      Authorization and Enforceability of Transaction Documents.
                   ---------------------------------------------------------

                   (1)    The Company has the  corporate  power and authority to
                          execute and deliver the Transaction Documents to which
                          it  is a  party  and  to  carry  out  its  obligations
                          hereunder and thereunder  (which includes the issuance
                          of the Purchased Securities). The execution,  delivery
                          and  performance  by the  Company  of the  Transaction
                          Documents to which it is a party and the  consummation
                          of the  transactions  contemplated  hereby and thereby
                          have been duly  authorized by all necessary  corporate
                          action   on  the   part   of  the   Company   and  its
                          shareholders, and no further approval or authorization
                          is  required  on  the  part  of  the  Company  or  its
                          shareholders.  The Transaction  Documents to which the
                          Company  is a party are or will be valid  and  binding
                          obligations  of the  Company  enforceable  against the
                          Company in  accordance  with their  respective  terms,
                          except  as the  same  may  be  limited  by  applicable
                          bankruptcy, insolvency, reorganization,  moratorium or
                          similar laws  affecting the  enforcement of creditors'
                          rights  generally  and general  equitable  principles,
                          regardless   of   whether   such   enforceability   is
                          considered  in  a  proceeding  at  law  or  in  equity
                          ("Bankruptcy Exceptions").

                   (3)    Other than in  connection  or in  compliance  with the
                          provisions of the Securities Act and the securities or
                          "blue  sky"  laws  of  the  various  states,   to  the
                          Company's  Knowledge  without  inquiry,  no notice to,
                          filing with, exemption or review by, or authorization,
                          consent or  approval  of, any  Governmental  Entity is
                          required  to be made or  obtained  by the  Company  in
                          connection   with   the   Purchase   and   the   other
                          transactions    contemplated    by   the   Transaction
                          Documents.

                                       5
<PAGE>

          (e)      Company  Financial  Statements.  The  consolidated  financial
statements of the Company and its subsidiaries  (including the related notes and
supporting  schedules)  contained  in the  SEC  Reports  present  fairly  in all
material  respects the  consolidated  financial  position of the Company and its
consolidated subsidiaries as of the dates indicated therein and the consolidated
results of their  operations for the periods  specified  therein;  and except as
stated therein,  such financial statements were prepared in conformity with GAAP
applied on a consistent basis.

          (f)      No  Material  Adverse Effect.  Since March 31, 2009, no fact,
circumstance,  event, change, occurrence,  condition or development has occurred
that, individually or in the aggregate,  has had or would reasonably be expected
to have a Material Adverse Effect.

          (g)      Proceedings.  As of the date of this  Agreement,  there is no
litigation or similar  proceeding or governmental  proceeding pending or, to the
Company's Knowledge,  threatened to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its subsidiaries is
the subject  that the  Company's  management  believes,  individually  or in the
aggregate,  has had or would  reasonably be expected to have a Material  Adverse
Effect.

          (h)      Reports.
                   -------

                   (1)    Since  December 31, 2007, the Company has timely filed
                          all  documents  required  to be  filed  with  the  SEC
                          pursuant  to  Sections  13(a),  14(a) and 15(d) of the
                          Exchange Act.

                   (2)    Since   December  31,  2007,   the  Company  and  each
                          Subsidiary   have   filed   all   material    reports,
                          registrations   and  statements,   together  with  any
                          required amendments  thereto,  that it was required to
                          file  with  the  Board  of  Governors  of the  Federal
                          Reserve System (the "Federal Reserve"),  the FDIC, the
                          New  York  State  Banking  Department  and  any  other
                          applicable  federal  or state  securities  or  banking
                          authorities, except where the failure to file any such
                          report, registration or statement,  individually or in
                          the aggregate, has not had and would not reasonably be
                          expected  to have a  Material  Adverse  Effect.  As of
                          their respective  dates, each of the foregoing reports
                          complied  with all  applicable  rules and  regulations
                          promulgated by the Federal Reserve,  the FDIC, the New
                          York State Banking Department and any other applicable
                          foreign,   federal  or  state  securities  or  banking
                          authorities,  as the  case  may  be,  except  for  any
                          failures that, individually or in the aggregate,  have
                          not had and would not reasonably be expected to have a
                          Material Adverse Effect.

          (i)     No General  Solicitation or General  Advertising.  Neither the
Company  nor any person  acting on its behalf has  engaged or will engage in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with any offer or sale of
the Purchased Securities.

                                       6
<PAGE>

          (j)      No Integration.  The Company has not, directly or indirectly,
solicited  any offer to buy or offer to sell any Common  Shares in a manner that
would  require the  registration  of the  Purchased  Securities  pursuant to the
Securities Act and has no present intention to solicit any offer to buy or offer
to sell any Purchased  Securities  or any other  securities of the Company other
than  pursuant to (1) this form of  Subscription  Agreement,  (2)  pursuant to a
registered  public offering of the Purchased  Securities and other Common Shares
offered and sold in the Offering as  contemplated  by this form of  Subscription
Agreement or (3)  pursuant to the  Company's  Stock  Option Plan or  outstanding
warrant agreements.

     2.3  Representations  and Warranties of the Investor.  The Investor  hereby
represents  and  warrants  to the  Company  that as of the date  hereof  and the
Closing Date:

          (a)      Organization  and  Authority.  The  Investor (1) is a natural
person,  or (2) has been duly organized and is validly existing in good standing
under the laws of the jurisdiction of its organization, with the requisite power
and  authority  to own its  properties  and  conduct its  business as  currently
conducted.

          (b)      Authorization  and  Enforceability of Transaction  Documents.
The Investor has the  requisite  power and  authority to execute and deliver the
Transaction  Documents  to which it is a party and to carry out its  obligations
hereunder  and  thereunder.  The  execution,  delivery  and  performance  by the
Investor  of  the  Transaction  Documents  to  which  it  is  a  party  and  the
consummation of the transactions  contemplated hereby and thereby have been duly
authorized by all necessary  action on the part of the Investor,  and no further
approval  or  authorization  is  required  on  the  part  of the  Investor.  The
Transaction  Documents to which the Investor is a party are or will be valid and
binding  obligations  of  the  Investor  enforceable  against  the  Investor  in
accordance  with their  respective  terms,  except as the same may be limited by
Bankruptcy Exceptions.

          (c)      Ownership.  Giving effect to the Purchase,  as of the Closing
Date,  the Investor  and all of its  Affiliates  on an aggregate  basis will not
beneficially  own,  control  or  have  the  power  to  vote  10% or  more of the
outstanding Common Shares. The Investor does not have any agreement, arrangement
or  understanding  with any person  (other than the  Company  and any  Permitted
Transferee (as defined in Section 4.1(b)(1))) to acquire, dispose of or vote any
securities of the Company.

          (d)      No   Registration;   Purchase  for   Investment;   Accredited
Investor; Sophistication. The Investor:

                   (1)    understands  that the  Purchased  Securities  have not
                          been   registered   under  the   Securities  Act  and,
                          therefore, cannot be resold unless they are registered
                          under the Securities Act or (without limitation on the
                          restrictions  set  forth  in  Article  IV)  unless  an
                          exemption from registration is available;

                   (2)    understands  that the  Purchased  Securities  have not
                          been   registered   under  any  United   States  state
                          securities laws;

                                       7
<PAGE>

                   (3)    is acquiring the Purchased  Securities  pursuant to an
                          exemption from  registration  under the Securities Act
                          solely  for  investment  and  not  with a view  to any
                          resale or transfer of any of the Purchased  Securities
                          to any person;

                   (4)    confirms that it is aware of the transfer restrictions
                          on the  Purchased  Securities  described in Article IV
                          and will not sell or  otherwise  dispose of any of the
                          Purchased  Securities,  except in compliance  with the
                          registration  requirements  of the  Securities Act and
                          any applicable  United States state securities laws or
                          in compliance with all of the  requirements of Section
                          4.1;

                   (5)    confirms  that all  information  that the Investor has
                          provided to the  Company  concerning  the  Investor in
                          this Agreement or otherwise is correct and complete;

                   (6)    is an Accredited  Investor (as that term is defined in
                          Rule 501 under the  Securities  Act) and has certified
                          to  the  Company  the  basis  for   qualifying  as  an
                          Accredited Investor on Annex A;

                   (7)    has such  knowledge  and  experience  in financial and
                          business  matters and in investments of this type that
                          it is capable of (A)  evaluating  the merits and risks
                          of the Purchase  and of making an informed  investment
                          decision  and (B)  bearing the  financial  risks of an
                          investment   in  the  Purchased   Securities   for  an
                          indefinite period of time;

                   (8)    has  conducted a review of the business and affairs of
                          the Company and the Bank that it considers  sufficient
                          and reasonable for purposes of making the Purchase;

                   (9)    has been provided the  opportunity to ask questions of
                          and  receive  answers  from   representatives  of  the
                          Company  concerning  the terms and  conditions  of the
                          Purchase and to obtain any additional information that
                          the  Company   possesses   or  can   acquire   without
                          unreasonable  effort or expense  that is  necessary to
                          verify the  accuracy of the  information  contained in
                          the SEC Reports;

                   (10)   has read the SEC Reports carefully,  is fully familiar
                          with and  understands the contents of the SEC Reports;
                          and

                   (11)   has not relied on any  representation  or  warranty in
                          connection   with  the   Purchase   other  than  those
                          contained in the Transaction Documents.

          (e)      Financial Capability. The Investor has or will have available
funds to make the  Purchase  on the terms and  conditions  contemplated  by this
Agreement.

          (f)      No  Legal, Tax,  Accounting or Business Advice.  The Investor
understands  that neither the Company nor any of its agents has given any legal,

                                       8
<PAGE>

tax,  accounting or business advice  regarding the consequences of the Purchase,
and the Investor has consulted the  Investor's  own legal,  tax,  accounting and
business advisors with respect to the Purchase.

          (g)      No General Solicitation or General  Advertising.  Neither the
Investor,  any of its Affiliates (as defined in Section  5.10(b)) nor any person
acting  on its or their  behalf,  has made or will  make  offers or sales of the
Purchased  Securities  by means of any form of general  solicitation  or general
advertising (within the meaning of Regulation D under the Securities Act).

          (h)      Possible  Dilutive Effect of Private Placement.  The Investor
understands that the Company is currently  involved in discussions to sell up to
$2.0 million of its common  stock to up to 35  investors on a private  placement
basis.  Any  such  sale may  have a  dilutive  effect  on the  ownership  of the
Investor.  There can be no  assurance  as to whether the Company will be able to
sell any or all of these shares.

          (i)      Confidentiality   Agreement.  The  Investor  understands  and
acknowledges that unless expressly set forth in this Agreement,  nothing in this
Agreement shall supersede the provisions of the Confidentiality Agreement, dated
June ___, 2009, entered into between the Company and the Investor.

                                   Article III

                                    Covenants

     3.1 Commercially Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each of the parties will use its commercially reasonable efforts
in good faith to take, or cause to be taken, all actions, and to do, or cause to
be  done,  all  things  necessary,  proper  or  desirable,  or  advisable  under
applicable  laws,  so as to permit  consummation  of the Purchase as promptly as
practicable   and  otherwise  to  enable   consummation   of  the   transactions
contemplated  hereby and shall cooperate fully with the other party to that end,
including  cooperating  in  seeking  to obtain  any  consent,  authorization  or
approval that might be required from Governmental Entities.

     3.2 Expenses.  Except to the extent  otherwise  provided in any Transaction
Document  executed by the Company and the Investor,  each of the parties  hereto
will bear and pay all  costs and  expenses  incurred  by it or on its  behalf in
connection with the transactions  contemplated under the Transaction  Documents,
including  fees  and  expenses  of  its  own  financial  or  other  consultants,
investment bankers, accountants and counsel.

     3.3   Publicity.   No  public  release  or   announcement   concerning  the
transactions  contemplated  hereby shall be issued by the  Investor  without the
prior  consent of the Company.  The Company  shall use  commercially  reasonable
efforts to file with the SEC, as promptly as practicable after counter-execution
and  delivery  of this  Agreement  by the  Company,  but no later  than the time
required by SEC Form 8-K, the material  terms of this Agreement and the Offering
if that constitutes material non-public  information with respect to the Company
within the meaning of United States federal securities laws.

     3.4 Further  Assurances.  Within three days of receipt of a written request
from the Company,  the Investor agrees to provide such  information  relevant to

                                       9
<PAGE>

the Purchase and to execute and deliver such documents as the Company determines
in good faith to be  necessary  or  advisable  to comply  with any and all laws,
regulations and ordinances to which the Company is subject.

                                   Article IV

                      Additional Agreements of the Investor

     4.1 Transfer Restrictions.
         ---------------------

          (a)      Restrictions on Transfer. The Investor shall not, directly or
indirectly,  transfer,  sell, assign, pledge,  convey,  hypothecate or otherwise
encumber  or  dispose  of, or engage in a Hedging  Transaction  (as  hereinafter
defined)  with  respect  to  (collectively,  "Transfer"),  any of the  Purchased
Securities.  For purposes of this  Agreement,  "Hedging  Transaction"  means any
short sale  (whether or not against the box) or any  purchase,  sale or grant of
any right (including any put or call option) with respect to any security (other
than a broad-based market basket or index) that includes,  relates to or derives
any significant part of its value from the Purchased Securities.

          (b)      Permitted  Transfers.  Notwithstanding  Section  4.1(a),  the
Investor and Permitted  Transferees (as hereinafter  defined) shall be permitted
to Transfer any Purchased Securities:

                   (1)    at any time a Shelf Registration Statement (as defined
                          in  Section  4.3(a)(2))  shall  be  effective  and  in
                          compliance  with the  Securities  Act and  usable  for
                          resale of the Purchased Securities as permitted by and
                          subject to the  limitations  set forth in Section 4.3;
                          and

                   (2)    at times or under  circumstances  not  contemplated by
                          clause  (1) of this  Section  4.1(b) if in  compliance
                          with Rule 144A or Rule 144 under the  Securities  Act;
                          provided  that, if the Investor is an Affiliate of the
                          Company or has been an Affiliate of the Company during
                          the three months  preceding the date of such Transfer,
                          any such Transfer  shall be subject to approval by the
                          Company in its sole discretion,  which approval may be
                          conditioned  on  the  receipt  by the  Company  or its
                          agents  or   representatives   of  such   information,
                          documentation,   opinions  or   assurances   or  other
                          agreements  as the Company may  determine  in its sole
                          discretion to be necessary or advisable.

     4.2 Legend.  The Investor agrees that all certificates or other instruments
representing  Purchased  Securities  will  bear a  legend  substantially  to the
following effect:

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

                                       10
<PAGE>

SUBSCRIPTION  AGREEMENT,  DATED  JUNE ___,  2009,  BETWEEN  THE  ISSUER OF THESE
SECURITIES AND THE INVESTOR REFERRED TO THEREIN, IN A TRANSACTION COMPLYING WITH
RULE 144A OR RULE 144 UNDER SUCH ACT AND AN  EXEMPTION  UNDER  SUCH  LAWS.  THIS
INSTRUMENT IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND
OTHER PROVISIONS OF THE SUBSCRIPTION  AGREEMENT, 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."

     4.3 Registration Rights.
         -------------------

          (a)      Registration.
                   ------------

                   (1)    Subject to the terms and conditions of this Agreement,
                          the Company  covenants and agrees to use  commercially
                          reasonable  efforts to (A)  prepare  and file with the
                          SEC a Shelf  Registration  Statement  (as  hereinafter
                          defined) covering all Registrable  Securities no later
                          than   August   15,   2009,   (B)  cause   such  Shelf
                          Registration  Statement  to become  effective no later
                          than  November  15,  2009,  and (C)  keep  such  Shelf
                          Registration  Statement  continuously effective and in
                          compliance  with the  Securities  Act and  usable  for
                          resale of such  Registrable  Securities  (including by
                          filing   post-effective   amendments   to  such  Shelf
                          Registration  Statement  (or a new Shelf  Registration
                          Statement if the initial Shelf Registration  Statement
                          expires))  for a period  from the date of its  initial
                          effectiveness  until  the  earlier  of (x) the  second
                          anniversary  of the Closing  Date and (y) such time as
                          there are no Registrable Securities remaining.

                   (2)    Any registration pursuant to this Section 4.3(a) shall
                          be effected by means of a shelf registration under the
                          Securities Act (a "Shelf Registration Statement"), and
                          any  such   registration   (including   a  resale   of
                          Registrable   Securities   from  an  effective   Shelf
                          Registration   Statement)   shall   be   effected   in
                          accordance with the methods of distribution  set forth
                          in the Shelf Registration Statement and Rule 415 under
                          the Securities Act.

                   (3)    The  Company   shall  not  be  required  to  effect  a
                          registration   (including  a  resale  of   Registrable
                          Securities  from  an  effective   Shelf   Registration
                          Statement)  pursuant to this Section 4.3(a):  (A) with
                          respect  to  securities   that  are  not   Registrable
                          Securities;  or (B) if the  Company has  notified  the
                          Investor that in the good faith  judgment of the Chief
                          Executive   Officer  of  the  Company,   it  would  be
                          materially   detrimental   to  the   Company   or  its
                          securityholders  for such  registration to be effected
                          at such time until the Chief Executive  Officer of the
                          Company  shall  have  withdrawn  such   determination;
                          provided  that the Company may not  exercise its right
                          pursuant to this clause (B) for a continuous period of
                          more  than  45 days  or for  more  than 90 days in any
                          calendar year.

                                       11
<PAGE>

          (b)      Expenses of Registration.  All Registration Expenses incurred
in connection  with any  registration,  qualification  or compliance  under this
Section  4.3 shall be borne by the  Company.  All Selling  Expenses  incurred in
connection with any registrations hereunder,  shall be borne by the Investor and
any Permitted  Transferees  pro rata on the basis of the  aggregate  offering or
sale price of the securities so registered.

          (c)      Obligations  of the Company.  Whenever required to effect the
registration  of  any  Registrable   Securities  or  facilitate  the  resale  of
Registrable  Securities  from an effective  Shelf  Registration  Statement,  the
Company shall, as  expeditiously  as reasonably  practicable,  use  commercially
reasonable efforts to:

                   (1)    (A)  Prepare  and  file  with  the  SEC  a  prospectus
                          supplement  with  respect  to a proposed  offering  of
                          Registrable  Securities pursuant to an effective Shelf
                          Registration Statement and (B) subject to this Section
                          4.3(c),   keep  such  Shelf   Registration   Statement
                          effective or such  prospectus  supplement  current for
                          the  period   reasonably   required  to  complete  the
                          distribution of such Registrable Securities.

                   (2)    Prepare  and file  with the SEC  such  amendments  and
                          supplements  to  the  applicable  Shelf   Registration
                          Statement and the prospectus or prospectus  supplement
                          used  in  connection  with  such  Shelf   Registration
                          Statement  as may be  necessary  to  comply  with  the
                          provisions of the  Securities  Act with respect to the
                          disposition of all of such Registrable Securities.

                   (3)    Furnish to the Investor or a Permitted  Transferee and
                          any   underwriters   such  number  of  copies  of  the
                          applicable Shelf Registration  Statement and each such
                          amendment or  supplement  thereto  (including  in each
                          case all exhibits) and of a prospectus,  including any
                          preliminary   prospectus,   in  conformity   with  the
                          requirements  of the  Securities  Act,  and such other
                          documents as they may  reasonably  request in order to
                          facilitate the  disposition of Registrable  Securities
                          to be resold by them.

                   (4)    Register  and qualify the  securities  covered by such
                          Shelf   Registration   Statement   under   such  other
                          securities or Blue Sky laws of such  jurisdictions  in
                          the United States as shall be reasonably  requested by
                          the Investor or a Permitted  Transferee,  to keep such
                          registration or qualification in effect for so long as
                          such Shelf  Registration  Statement remains in effect,
                          and to take any other action  which may be  reasonably
                          necessary  to enable  such  seller to  consummate  the
                          disposition  in such  jurisdictions  of the securities
                          owned by the Investor; provided that the Company shall
                          not  be  required  in  connection  therewith  or  as a
                          condition thereto to qualify to do business or to file
                          a general  consent  to  service of process in any such
                          states or jurisdictions.

                   (5)    Notify  the  Investor,  at any time when a  prospectus
                          relating to any Registrable  Securities is required to
                          be  delivered   under  the  Securities   Act,  of  the
                          happening  of any  event  as a  result  of  which  the

                                       12
<PAGE>

                          applicable prospectus,  as then in effect, includes an
                          untrue  statement of a material fact or omits to state
                          a  material  fact  required  to be stated  therein  or
                          necessary   to  make  the   statements   therein   not
                          misleading   in  light  of  the   circumstances   then
                          existing.

                   (6)    Give prompt notice to the Investor:

                          (A)   when  any  Shelf  Registration  Statement  filed
                                pursuant  to  Section  4.3(a)  or any  amendment
                                thereto  has  been  filed  with the SEC and when
                                such  Shelf   Registration   Statement   or  any
                                post-effective   amendment  thereto  has  become
                                effective;

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

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

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

                          (E)   of the  happening of any event that requires the
                                Company  to  make   changes  in  any   effective
                                registration statement or the prospectus related
                                to such registration  statement in order to make
                                the statements therein not misleading.

                   (7)    Use its commercially reasonable efforts to prevent the
                          issuance  or  obtain  the   withdrawal  of  any  order
                          suspending the effectiveness of any Shelf Registration
                          Statement  referred to in Section  4.3(c)(6)(C) at the
                          earliest practicable time.

                   (8)    Except  under the  circumstances  described  in clause
                          (A),  (B)  or  (C)  of  Section  4.3(a)(3),  upon  the
                          occurrence  of  any  event   contemplated  by  Section
                          4.3(c)(5) or 4.3(c)(6)(E),  prepare and furnish to the
                          Investor,  as  soon  as  reasonably   practicable,   a
                          reasonable   number   of   copies   of  a   prospectus
                          supplemented or amended so that such prospectus  shall
                          conform in all  material  respects  to the  applicable
                          requirements  of the  Securities Act and the rules and
                          regulations  of  the  SEC  thereunder  and  shall  not
                          include an untrue statement of a material fact or omit
                          to state a material fact required to be stated therein
                          or  necessary  to  make  the  statements  therein  not
                          misleading   in  light  of  the   circumstances   then
                          existing.

                                       13
<PAGE>

                   (9)    Procure  the  cooperation  of the  Company's  transfer
                          agent in settling any offering or sale of  Registrable
                          Securities.

                   (10)   Cause all such Registrable  Securities to be listed on
                          each  securities  exchange,  if any,  on which  Common
                          Shares of the Company are then listed.

                   (11)   Timely   provide   to  its   securityholders   earning
                          statements  satisfying the provisions of Section 11(a)
                          of the  Securities  Act (which the  Company  may do by
                          complying with Rule 158 under the Securities Act).

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

          (e)      The  Investor's registration rights as to any securities held
by the Investor (and its Affiliates, partners, members and former members) shall
not be available unless such securities are Registrable Securities.

          (f)      Furnishing Information.

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

                   (2)    It shall be a condition  precedent to the  obligations
                          of the Company to take any action  pursuant to Section
                          4.3 that the Investor,  any Permitted  Transferees and
                          their  underwriters,  if  any,  shall  furnish  to the
                          Company  a  reasonable   time  before  the   Company's
                          proposed  filing  date  for  the  Shelf   Registration
                          Statement such information regarding  themselves,  the
                          Registrable  Securities  held by them and the intended
                          method of disposition  of such  securities as shall be
                          required  to effect the  registered  offering of their
                          Registrable Securities.

          (g)      Rule  144 Reporting.  With a view to making  available to the
Investor or a Permitted Transferee the benefits of certain rules and regulations
of the SEC which may permit the sale of the Registrable Securities to the public
without registration,  the Company agrees to use commercially reasonable efforts
to:

                                       14
<PAGE>

                   (1)    remain in compliance  with the  reporting  obligations
                          under the Exchange Act; and

                   (2)    so long as the Investor or such  Permitted  Transferee
                          owns  any  Registrable  Securities,   furnish  to  the
                          Investor or such  Permitted  Transferee  promptly upon
                          request a written  statement  by the Company as to its
                          compliance  with  the  reporting   requirements  under
                          Exchange Act.

          (h)      As  used in this Section 4.3, the following  terms shall have
the following respective meanings:

     "Register,"  "registered" and "registration"  shall refer to a registration
effected by preparing and (1) filing a registration statement in compliance with
the Securities  Act and applicable  rules and  regulations  thereunder,  and the
declaration or ordering of effectiveness of such registration  statement, or (2)
filing a prospectus  and/or  prospectus  supplement in respect of an appropriate
effective registration statement on Form S-3.

     "Registrable  Securities"  means the Purchased  Securities  (and any Common
Shares  issued or  issuable  to the  Investor  with  respect  to such  Purchased
Securities  by way of stock  dividends or stock splits or in  connection  with a
combination  of  shares,  recapitalization,  merger  or  other  reorganization);
provided  that the  Investor is not an Affiliate of the Company and has not been
an Affiliate for a period of at least three months; and provided, further, that,
once issued, such Purchased  Securities will not be Registrable  Securities when
(1) they are sold  pursuant to an  effective  registration  statement  under the
Securities  Act, (2) they may be sold pursuant to Rule 144 under the  Securities
Act, (3) they shall have ceased to be  outstanding or (4) they have been sold in
a private  transaction in which the transferor's rights under this Agreement are
not assigned to the transferee of the securities.  No Registrable Securities may
be registered under more than one registration statement at any one time.

     "Registration  Expenses"  means all  expenses  incurred  by the  Company in
effecting  any  registration  pursuant  to this  Agreement  (whether  or not any
registration or prospectus  becomes  effective or final) or otherwise  complying
with its obligations under this Section 4.3, including all registration,  filing
and listing fees,  printing expenses,  fees and disbursements of counsel for the
Company,  blue sky fees and expenses,  expenses  incurred in connection with any
"road show" and expenses of the Company's independent  accountants in connection
with any  regular or special  reviews or audits  incident  to or required by any
such  registration,  but shall not include Selling Expenses and the compensation
of regular  employees  of the  Company,  which shall be paid in any event by the
Company.

     "Selling Expenses" means all discounts, selling commissions, stock transfer
taxes and fees and  disbursements  of counsel for the Investor and any Permitted
Transferee applicable to the sale of Registrable Securities.

          (i)      At any time, the Investor may elect to forfeit its rights set
forth  in this  Section  4.3  from  that  date  forward;  provided  that no such
forfeiture  shall terminate the Investor's  rights or obligations  under Section
4.3(f).

                                       15
<PAGE>

                                    Article V

                                  Miscellaneous

     5.1 Survival.  The  representations and warranties of the Company contained
in this Agreement shall survive until the date two years after the Closing Date,
at  which  time  such   representations   and  warranties   shall  expire.   The
representations and warranties of the Investor contained in this Agreement shall
survive  until the date two years  after the  Closing  Date,  at which time such
representations  and warranties shall expire;  provided that the representations
and warranties  made in Sections  2.3(a) and (b) shall survive the Closing until
the expiration of the applicable statute of limitations.

     5.2  Interpretation.  When  a  reference  is  made  in  this  Agreement  to
"Recitals,"  "Articles,"  "Sections" or "Annexes,"  such reference shall be to a
Recital,  Article or Section of, or Annex to, this  Agreement  unless  otherwise
indicated. The terms defined in the singular have a comparable meaning when used
in the plural,  and vice versa. The table of contents and headings  contained in
this  Agreement  are for  reference  purposes  only  and  are  not  part of this
Agreement.  Whenever the words "include,"  "includes" or "including" are used in
this  Agreement,  they  shall be deemed  to be  followed  by the words  "without
limitation."  The words  "contained in" shall be deemed to mean "set forth in or
incorporated by reference  into," and the words  "contain" and "contains"  shall
have corresponding  meanings.  No rule of construction  against the draftsperson
shall be applied in connection  with the  interpretation  or enforcement of this
Agreement, as this Agreement is the product of negotiation between sophisticated
parties advised by counsel.  Except as expressly  stated in this Agreement,  all
references  to any  statute,  rule or  regulation  are to the  statute,  rule or
regulation  as amended,  modified,  supplemented  or replaced  from time to time
(and,  in the case of statutes,  include any rules and  regulations  promulgated
under  the  statute)  and to any  section  of any  statute,  rule or  regulation
including any successor to the section. All references to the "Knowledge" of the
Company  mean the  actual  knowledge  of the Chief  Executive  Officer  or Chief
Financial  Officer of the Company;  all  references  to the  "Knowledge"  of the
Investor mean the actual  knowledge of the  "executive  officers" (as defined in
Rule 3b-7 under the  Exchange  Act) of the  Investor  (or, if the  Investor is a
natural person, the Investor himself or herself). For the avoidance of doubt, at
any time when this Agreement  requires a calculation of the number or percentage
of shares of Common Shares owned or controlled by a person, the number of shares
of  Common  Shares   underlying  any  convertible  or  exchangeable   securities
beneficially  owned or  controlled  by such person are to be included as if such
securities were fully converted in the hands of such person as of that time.

     5.3  Amendment.  No amendment of any  provision of this  Agreement  will be
effective  unless made in writing and signed by an officer of a duly  authorized
representative of each party.

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

                                       16
<PAGE>

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

     5.6 Governing Law; Submission to Jurisdiction, Etc. This Agreement shall be
governed by and construed in  accordance  with the laws of the State of New York
applicable to contracts made and to be performed  entirely within such State. In
connection with any dispute,  controversy or claim arising out of or relating to
the  Transaction  Documents,   or  the  validity,   interpretation,   breach  or
termination of any such Transaction Documents,  including claims seeking redress
or asserting  rights  under any law,  each of the parties  hereto  agrees (a) to
submit to the personal  jurisdiction  of the State or Federal  courts in the New
York Counties of Orange and Ulster,  (b) that exclusive  jurisdiction  and venue
shall lie in the State or  Federal  courts in the State of New York and (c) that
notice may be served  upon such party at the address and in the manner set forth
for such party in Section 5.8.

     5.7 Notices.  All notices,  requests,  claims,  demands,  waivers and other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given when  delivered by hand, if delivered  personally  or by courier,  or
three days after being  deposited in the mail  (registered  or  certified  mail,
postage  prepaid,  return receipt  requested).  All notices  hereunder  shall be
delivered as set forth below,  or pursuant to such other  instructions as may be
designated in writing by the party to receive such notice.

         (A)   If to the Investor, to the person and the address indicated on
               the signature page to this Agreement.

         (B)   If to the Company:

               ES Bancshares, Inc.
               68 North Plank Road
               Newburgh, New York 12550
               Attention:  Philip Guarnieri, President and Co-Chief
                           Executive Officer
               E-Mail:  pguarnieri@esbna.com
               Facsimile: (845) 451-7878

               with a copy to:

               Luse Gorman Pomerenk & Schick, PC
               5335 Wisconsin Avenue, NW, Suite 400
               Washington, D.C. 20015
               Attention:  Kip Weissman, Esq.
               E-Mail:     kweissman@luselaw.com
               Facsimile:  (202) 362-2902

     5.8  Entire  Agreement,  Etc.  (a) This  Agreement,  the other  Transaction
Documents  executed  and  delivered  on the date hereof and the  confidentiality

                                       17
<PAGE>

letter  agreement,  as  amended,  and entered  into  between the Company and the
Investor,  constitute  the  entire  agreement,  and  supersede  all other  prior
agreements,  understandings,  representations  and warranties,  both written and
oral,  between the parties,  with respect to the subject matter hereof,  and (b)
this  Agreement  will not be  assignable  by any party without the prior written
consent of the other party (any  attempted  assignment in  contravention  hereof
being null and void ab initio).  The Investor  agrees to treat all  confidential
information  provided  by  the  Company  in  connection  with  the  transactions
contemplated by the Transaction  Documents as Proprietary  Information under the
confidentiality   provisions  of  the  aforementioned   confidentiality   letter
agreement.

     5.9 Definitions of "Subsidiary" and "Affiliate".

          (a)      When a reference is made in this Agreement to a Subsidiary of
a person, the term "Subsidiary" means those corporations,  banks, savings banks,
associations  and other entities of which such person owns or controls more than
50% of the outstanding  equity securities either directly or through an unbroken
chain of  entities as to each of which more than 50% of the  outstanding  equity
securities is owned directly or indirectly by its parent.

          (b)      The term "Affiliate"  means, with respect to any person,  any
person directly or indirectly controlling, controlled by or under common control
with, such other person.  For purposes of this  definition,  "control" when used
with respect to any person, means the possession, directly or indirectly, of the
power to cause the  direction  of  management  and/or  policies of such  person,
whether through the ownership of voting securities, by contract or otherwise.

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

     5.11 No Third Party  Beneficiaries.  Nothing  contained in this  Agreement,
expressed or implied, is intended to confer upon any person or entity other than
the Company and the Investor, any benefits, rights, or remedies.

                     [The next page is the signature page.]

                                       18
<PAGE>

     In Witness Whereof,  this Agreement has been duly executed and delivered by
the duly  authorized  officers of the parties hereto as of the date first herein
above written.

                                            ES Bancshares, Inc.

                                        By:
                                            -----------------------------------
                                            Name:
                                            Title:

INVESTOR:
          -----------------------------
Address:

By:
     ----------------------------------
     Name:
     Title:

Common Shares Subscribed For:
                                             ----------------------------------

Aggregate Purchase Price Delivered Herewith:
                                             ----------------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]