Document:

Exhibit No. 10.1

 

UNITED STATES DEPARTMENT OF THE TREASURY

1500 PENNSYLVANIA
AVENUE, NW

WASHINGTON, D.C. 20220

 

Dear Ladies and
Gentlemen:

 

The company set forth on the signature page hereto (the “Company”) intends to issue in a private
placement the number of shares of a series of its preferred stock set forth on
Schedule A hereto (the “Preferred Shares”)
and a warrant to purchase the number of shares of a series of its preferred
stock set forth on Schedule A hereto (the “Warrant”
and, together with the Preferred Shares, the “Purchased
Securities”) and the United States Department of the Treasury (the “Investor”) intends to purchase from the
Company the Purchased Securities.

 

The purpose of this letter agreement is to confirm the terms and
conditions of the purchase by the Investor of the Purchased Securities. Except
to the extent supplemented or superseded by the terms set forth herein or in
the Schedules hereto, the provisions contained in the Securities Purchase
Agreement — Standard Terms attached hereto as Exhibit A (the “Securities Purchase Agreement”) are
incorporated by reference herein. Terms that are defined in the Securities
Purchase Agreement are used in this letter agreement as so defined. In the
event of any inconsistency between this letter agreement and the Securities
Purchase Agreement, the terms of this letter agreement shall govern.

 

Each of the Company and the Investor hereby confirms its agreement with
the other party with respect to the issuance by the Company of the Purchased
Securities and the purchase by the Investor of the Purchased Securities
pursuant to this letter agreement and the Securities Purchase Agreement on the
terms specified on Schedule A hereto.

 

This letter agreement (including the Schedules hereto), the Securities
Purchase Agreement (including the Annexes thereto), the Disclosure Schedules
and the Warrant 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. This
letter agreement constitutes the “Letter Agreement” referred to in the
Securities Purchase Agreement.

 

This letter 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 letter agreement may be delivered by facsimile and
such facsimiles will be deemed as sufficient as if actual signature pages had
been delivered.

 

UST Sequence Number: 318

 

* * *

 

 

In witness whereof, this letter agreement has
been duly executed and delivered by the duly authorized representatives of the
parties hereto as of the date written below.

 

 

	
   

  	
  UNITED
  STATES DEPARTMENT OF THE TREASURY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neel
  Kashkari

  
	
   

  	
   

  	
  Name:
  Neel Kashkari

  
	
   

  	
   

  	
  Title: Interim
  Assistant Secretary for

  Financial Stability

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
  CITIZENS
  BANCSHARES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  E. Young

  
	
   

  	
   

  	
  James E.
  Young

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  March 6,
  2009

  	
   

  	
   

  
					

 

 

EXHIBIT A

(Non-Exchange-Traded QFIs, excluding S Corps

and Mutual Organizations)

 

SECURITIES PURCHASE AGREEMENT

 

STANDARD TERMS

 

 

TABLE OF CONTENTS

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
  Article I

  	
   

  
	
   

  	
  Purchase; Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Purchase

  	
  2

  
	
  1.2

  	
  Closing

  	
  3

  
	
  1.3

  	
  Interpretation

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  Article II

  	
   

  
	
   

  	
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Disclosure

  	
  5

  
	
  2.2

  	
  Representations and Warranties of the Company

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  Article III

  	
   

  
	
   

  	
  Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Commercially Reasonable Efforts

  	
  14

  
	
  3.2

  	
  Expenses

  	
  14

  
	
  3.3

  	
  Sufficiency of Authorized Warrant Preferred Stock; Exchange Listing

  	
  14

  
	
  3.4

  	
  Certain Notifications Until Closing

  	
  14

  
	
  3.5

  	
  Access, Information and Confidentiality

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  Article IV

  	
   

  
	
   

  	
  Additional Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Purchase for Investment

  	
  16

  
	
  4.2

  	
  Legends

  	
  16

  
	
  4.3

  	
  Certain Transactions

  	
  18

  
	
  4.4

  	
  Transfer of Purchased Securities and Warrant Shares; Restrictions on
  Exercise

  	
   

  
	
   

  	
  of the Warrant

  	
  18

  
	
  4.5

  	
  Registration Rights

  	
  19

  
	
  4.6

  	
  Depositary Shares

  	
  29

  
	
  4.7

  	
  Restriction on Dividends and Repurchases

  	
  30

  
	
  4.8

  	
  Executive Compensation

  	
  32

  
	
  4.9

  	
  Related Party Transactions

  	
  32

  
	
  4.10

  	
  Bank and Thrift Holding Company Status

  	
  32

  
	
  4.11

  	
  Predominantly Financial

  	
  32

  

 

i

 

	
   

  	
  Article V

  	
   

  
	
   

  	
  Miscellaneous

  	
   

  
	
  5.1

  	
  Termination

  	
  32

  
	
  5.2

  	
  Survival of Representations and Warranties

  	
  33

  
	
  5.3

  	
  Amendment

  	
  33

  
	
  5.4

  	
  Waiver of Conditions

  	
  33

  
	
  5.5

  	
  Governing Law: Submission to Jurisdiction,
  Etc.

  	
  33

  
	
  5.6

  	
  Notices

  	
  34

  
	
  5.7

  	
  Definitions

  	
  34

  
	
  5.8

  	
  Assignment

  	
  35

  
	
  5.9

  	
  Severability

  	
  35

  
	
  5.10

  	
  No Third Party Beneficiaries

  	
  35

  

 

ii

 

LIST OF ANNEXES

 

	
  ANNEX A:

  	
   

  	
  FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

  
	
   

  	
   

  	
   

  
	
  ANNEX B:

  	
   

  	
  FORM OF CERTIFICATE OF DESIGNATIONS FOR WARRANT PREFERRED STOCK

  
	
   

  	
   

  	
   

  
	
  ANNEX C:

  	
   

  	
  FORM OF WAIVER

  
	
   

  	
   

  	
   

  
	
  ANNEX D:

  	
   

  	
  FORM OF OPINION

  
	
   

  	
   

  	
   

  
	
  ANNEX E:

  	
   

  	
  FORM OF WARRANT

  

 

iii

 

INDEX OF DEFINED TERMS

 

	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Affiliate

  	
   

  	
  5.7(b)

  
	
  Agreement

  	
   

  	
  Recitals

  
	
  Appropriate Federal Banking Agency

  	
   

  	
  2.2(s)

  
	
  Bank Holding Company

  	
   

  	
  4.10

  
	
  Bankruptcy Exceptions

  	
   

  	
  2.2(d)

  
	
  Benefit Plans

  	
   

  	
  1 .2(d)(iv)

  
	
  Board of Directors

  	
   

  	
  2.2(f)

  
	
  Business Combination

  	
   

  	
  5.8

  
	
  business day

  	
   

  	
  1.3

  
	
  Capitalization Date

  	
   

  	
  2.2(b)

  
	
  Certificates of Designations

  	
   

  	
  1.2(d) (iii)

  
	
  Charter

  	
   

  	
  1 .2(d)(iii)

  
	
  Closing

  	
   

  	
  1.2(a)

  
	
  Closing Date

  	
   

  	
  1.2(a)

  
	
  Code

  	
   

  	
  2.2(n)

  
	
  Common Stock

  	
   

  	
  2.2(b)

  
	
  Company

  	
   

  	
  Recitals

  
	
  Company Financial Statements

  	
   

  	
  2.2(h)

  
	
  Company Material Adverse Effect

  	
   

  	
  2.1(b)

  
	
  Company Reports

  	
   

  	
  2.2(i)(i)

  
	
  Company Subsidiary; Company Subsidiaries

  	
   

  	
  2.2(e)(ii)

  
	
  control; controlled by; under common control with

  	
   

  	
  5.7(b)

  
	
  Controlled Group

  	
   

  	
  2.2(n)

  
	
  CPP

  	
   

  	
  Recitals

  
	
  Disclosure Schedule

  	
   

  	
  2.1(a)

  
	
  EESA

  	
   

  	
  1.2(d)(iv)

  
	
  ERISA

  	
   

  	
  2.2(n)

  
	
  Exchange Act

  	
   

  	
  4.4

  
	
  Federal Reserve

  	
   

  	
  4.10

  
	
  GAAP

  	
   

  	
  2.1(b)

  
	
  Governmental Entities

  	
   

  	
  1.2(c)

  
	
  Holder

  	
   

  	
  4.5(l)(i)

  
	
  Holders’ Counsel

  	
   

  	
  4.5(l)(ii)

  
	
  Indemnitee

  	
   

  	
  4. 5(h)(i)

  
	
  Information

  	
   

  	
  3.5(c)

  
	
  Investor

  	
   

  	
  Recitals

  
	
  Junior Stock

  	
   

  	
  4.7(f)

  
	
  knowledge of the Company; Company’s knowledge

  	
   

  	
  5.7(c)

  
	
  Letter Agreement

  	
   

  	
  Recitals

  
	
  officers

  	
   

  	
  5.7(c)

  
	
  Parity Stock

  	
   

  	
  4.7(f)

  

 

iv

 

	
   

  	
   

  	
  Location of

  
	
  Term

  	
   

  	
  Definition

  
	
  Pending Underwritten Offering

  	
   

  	
  4.5(m)

  
	
  Permitted Repurchases

  	
   

  	
  4.7(c)

  
	
  Piggyback Registration

  	
   

  	
  4.5(b)(iv)

  
	
  Plan

  	
   

  	
  2.2(n)

  
	
  Preferred Shares

  	
   

  	
  Recitals

  
	
  Preferred Stock

  	
   

  	
  Recitals

  
	
  Previously Disclosed

  	
   

  	
  2.1(c)

  
	
  Proprietary Rights

  	
   

  	
  2.2(u)

  
	
  Purchase

  	
   

  	
  Recitals

  
	
  Purchase Price

  	
   

  	
  1.1

  
	
  Purchased Securities

  	
   

  	
  Recitals

  
	
  register; registered; registration

  	
   

  	
  4.5(l)(iii)

  
	
  Registrable Securities

  	
   

  	
  4.5(l)(iv)

  
	
  Registration Expenses

  	
   

  	
  4.5(l)(v)

  
	
  Regulatory Agreement

  	
   

  	
  2.2(s)

  
	
  Rule 144; Rule 144A; Rule 159A; Rule 405;
  Rule 415

  	
   

  	
  4.5(l)(vi)

  
	
  Savings and Loan Holding Company

  	
   

  	
  4.10

  
	
  Schedules

  	
   

  	
  Recitals

  
	
  SEC

  	
   

  	
  2.2(k)

  
	
  Securities Act

  	
   

  	
  2.2(a)

  
	
  Selling Expenses

  	
   

  	
  4.5(l)(vii)

  
	
  Senior Executive Officers

  	
   

  	
  4.8

  
	
  Shelf Registration Statement

  	
   

  	
  4.5(b)(ii)

  
	
  Signing Date

  	
   

  	
  2.1(b)

  
	
  Special Registration

  	
   

  	
  4.5(j)

  
	
  subsidiary

  	
   

  	
  5.7(a)

  
	
  Tax; Taxes

  	
   

  	
  2.2(o)

  
	
  Transfer

  	
   

  	
  4.4

  
	
  Warrant

  	
   

  	
  Recitals

  
	
  Warrant Preferred Stock

  	
   

  	
  Recitals

  
	
  Warrant Shares

  	
   

  	
  2.2(d)

  

 

v

 

SECURITIES PURCHASE AGREEMENT — STANDARD
TERMS

 

Recitals:

 

WHEREAS, the United States Department of the
Treasury (the “Investor”) may
from time to time agree to purchase shares of preferred stock and warrants from
eligible financial institutions which elect to participate in the Troubled
Asset Relief Program Capital Purchase Program (“CPP”);

 

WHEREAS, an eligible financial institution
electing to participate in the CPP and issue securities to the Investor
(referred to herein as the “Company”)
shall enter into a letter agreement (the “Letter
Agreement”) with the Investor which incorporates this Securities
Purchase Agreement — Standard Terms;

 

WHEREAS, the Company agrees to expand the
flow of credit to U.S. consumers and businesses on competitive terms to promote
the sustained growth and vitality of the U.S. economy;

 

WHEREAS, the Company agrees to work
diligently, under existing programs, to modify the terms of residential
mortgages as appropriate to strengthen the health of the U.S. housing market;

 

WHEREAS, the Company intends to issue in a private placement the number
of shares of the series of its Preferred Stock (“Preferred Stock”) set forth on Schedule A to the
Letter Agreement (the “Preferred Shares”)
and a warrant to purchase the number of shares of the series of its Preferred
Stock (“Warrant Preferred Stock”)
set forth on Schedule A to the Letter Agreement (the “Warrant” and, together with the Preferred
Shares, the “Purchased Securities”)
and the Investor intends to purchase (the “Purchase”)
from the Company the Purchased Securities; and

 

WHEREAS, the Purchase will be governed by
this Securities Purchase Agreement — Standard Terms and the Letter Agreement,
including the schedules thereto (the “Schedules”),
specifying additional terms of the Purchase. This Securities Purchase Agreement
— Standard Terms (including the Annexes hereto) and the Letter Agreement
(including the Schedules thereto) are together referred to as this “Agreement”.
All references in this Securities Purchase Agreement — Standard Terms to “Schedules”
are to the Schedules attached to the Letter Agreement.

 

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.
On the terms and subject to the conditions set forth in this Agreement, the
Company agrees to sell to the Investor, and the Investor agrees to purchase
from the Company, at the Closing (as hereinafter defined), the Purchased
Securities for the price set forth on Schedule A (the “Purchase Price”).

 

 

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 location
specified in Schedule A, at the time and on the date set forth in Schedule
A 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)             Subject to the fulfillment or waiver of
the conditions to the Closing in this Section 1.2, at the Closing the
Company will deliver the Preferred Shares and the Warrant, in each case as
evidenced by one or more certificates dated the Closing Date and bearing
appropriate legends as hereinafter provided for, in exchange for payment in
full of the Purchase Price by wire transfer of immediately available United
States funds to a bank account designated by the Company on Schedule A.

 

(c)             The
respective obligations of each of the Investor and the Company to consummate
the Purchase are subject to the fulfillment (or waiver by the Investor and the
Company, as applicable) prior to the Closing of the conditions that (i) any
approvals or authorizations of all United States and other governmental,
regulatory or judicial authorities (collectively, “Governmental Entities”) required for the consummation of the
Purchase shall have been obtained or made in form and substance reasonably satisfactory
to each party and shall be in full force and effect and all waiting periods
required by United States and other applicable law, if any, shall have expired
and (ii) no provision of any applicable United States or other law and no
judgment, injunction, order or decree of any Governmental Entity shall prohibit
the purchase and sale of the Purchased Securities as contemplated by this
Agreement.

 

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

 

(i)            (A) the representations and
warranties of the Company set forth in (x) Section 2.2(g) of
this Agreement shall be true and correct in all respects as though made on and
as of the Closing Date, (y) Sections 2.2(a) through (f) shall be
true and correct in all material respects 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 in all material respects as of such other date) and (z) Sections
2.2(h) through (v) (disregarding all qualifications or limitations
set forth in such representations and warranties as to “materiality”, “Company
Material Adverse Effect” and words of similar import) 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 other date), except to the
extent that the failure of such representations and warranties referred to in
this Section 1 .2(d)(i)(A)(z) to be so true and correct, individually
or in the aggregate, does not have and would not reasonably be expected to have
a Company 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;

 

3

 

(ii)             the Investor shall have received a
certificate signed on behalf of the Company by a senior executive officer
certifying to the effect that the conditions set forth in Section 1 .2(d)(i) have
been satisfied;

 

(iii)            the Company shall have duly adopted and
filed with the Secretary of State of its jurisdiction of organization or other
applicable Governmental Entity the amendments to its certificate or articles of
incorporation, articles of association, or similar organizational document (“Charter”) in substantially the forms
attached hereto as Annex  A and Annex
B (the “Certificates of Designations”)
and such filing shall have been accepted;

 

(iv)            (A) the Company shall have effected
such changes to its compensation, bonus, incentive and other benefit plans,
arrangements and agreements (including golden parachute, severance and
employment agreements) (collectively, “Benefit
Plans”) with respect to its Senior Executive Officers (and to the
extent necessary for such changes to be legally enforceable, each of its Senior
Executive Officers shall have duly consented in writing to such changes), as
may be necessary, during the period that the Investor owns any debt or equity
securities of the Company acquired pursuant to this Agreement or the Warrant,
in order to comply with Section 111(b) of the Emergency Economic
Stabilization Act of 2008 (“EESA”)
as implemented by guidance or regulation thereunder that has been issued and is
in effect as of the Closing Date, and (B) the Investor shall have received
a certificate signed on behalf of the Company by a senior executive officer
certifying to the effect that the condition set forth in Section 1
..2(d)(iv)(A) has been satisfied;

 

(v)             each of the Company’s Senior Executive
Officers shall have delivered to the Investor a written waiver in the form
attached hereto as Annex C releasing the Investor from any claims that
such Senior Executive Officers may otherwise have as a result of the issuance,
on or prior to the Closing Date, of any regulations which require the
modification of, and the agreement of the Company hereunder to modify, the
terms of any Benefit Plans with respect to its Senior Executive Officers to
eliminate any provisions of such Benefit Plans that would not be in compliance
with the requirements of Section 111(b) of the EESA as implemented by
guidance or regulation thereunder that has been issued and is in effect as of
the Closing Date;

 

(vi)            the Company shall have delivered to the
Investor a written opinion from counsel to the Company (which may be internal
counsel), addressed to the Investor and dated as of the Closing Date, in
substantially the form attached hereto as Annex D;

 

(vii)           the Company shall have delivered
certificates in proper form or, with the prior consent of the Investor,
evidence of shares in book-entry form, evidencing the Preferred Shares to
Investor or its designee(s); and

 

4

 

(viii) the Company shall have duly
executed the Warrant in substantially the form attached hereto as Annex E
and delivered such executed Warrant to the Investor or its designee(s).

 

1.3         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 Securities Purchase Agreement — Standard Terms, and a
reference to “Schedules” shall be to a Schedule to the Letter Agreement, in
each case, unless otherwise indicated. The terms defined in the singular have a
comparable meaning when used in the plural, and vice versa. References to “herein”,
“hereof”, “hereunder” and the like refer to this Agreement as a whole and not
to any particular section or provision, unless the context requires otherwise.
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
followed by the words “without limitation.” 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. All references to
“$” or “dollars” mean the lawful currency of the United States of America.
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 include any successor to
the section. References to a “business day”
shall mean any day except Saturday, Sunday and any day on which banking
institutions in the State of New York generally are authorized or required by
law or other governmental actions to close.

 

Article II

Representations and Warranties

 

2.1               Disclosure.

 

(a)           On or prior to the Signing Date, the Company
delivered to the Investor a schedule (“Disclosure
Schedule”) setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to
one or more representations or warranties contained in Section 2.2.

 

(b)           “Company
Material Adverse Effect” means a material adverse effect on (i) the
business, results of operation or financial condition of the Company and its
consolidated subsidiaries taken as a whole; provided,
however, that Company Material
Adverse Effect shall not be deemed to include the effects of (A) changes
after the date of the Letter Agreement (the “Signing
Date”) in general business, economic or market conditions (including
changes generally in prevailing interest rates, credit availability and
liquidity, currency exchange rates and price levels or trading volumes in the
United States or foreign securities or credit markets), or any outbreak or escalation
of hostilities, declared or undeclared acts of war or terrorism, in each case
generally affecting the industries in which the Company and its subsidiaries
operate, (B) changes or proposed changes after the Signing Date in
generally 

 

5

 

accepted accounting principles in the United
States (“GAAP”) or regulatory
accounting requirements, or authoritative interpretations thereof, or (C) changes
or proposed changes after the Signing Date in securities, banking and other
laws of general applicability or related policies or interpretations of
Governmental Entities (in the case of each of these clauses (A), (B) and
(C), other than changes or occurrences to the extent that such changes or
occurrences have or would reasonably be expected to have a materially
disproportionate adverse effect on the Company and its consolidated
subsidiaries taken as a whole relative to comparable U.S. banking or financial
services organizations); or (ii) the ability of the Company to consummate
the Purchase and other transactions contemplated by this Agreement and the
Warrant and perform its obligations hereunder or thereunder on a timely basis.

 

(c)           “Previously
Disclosed” means information set forth on the Disclosure Schedule,
provided, however, that disclosure in any section of such Disclosure Schedule
shall apply only to the indicated section of this Agreement except to the
extent that it is reasonably apparent from the face of such disclosure that
such disclosure is relevant to another section of this Agreement.

 

2.2  Representations
and Warranties of the Company. Except as Previously Disclosed, the Company
represents and warrants to the Investor that as of the Signing Date and as of
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 and in good standing under the laws of its
jurisdiction of organization, with the necessary power and authority to own its
properties and conduct its business in all material respects as currently
conducted, and except as has not, individually or in the aggregate, had and
would not reasonably be expected to have a Company 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; each subsidiary of the Company that would be considered a “significant
subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X
under the Securities Act of 1933 (the “Securities
Act”), has been duly organized and is validly existing in good
standing under the laws of its jurisdiction of organization. The Charter and
bylaws of the Company, copies of which have been provided to the Investor prior
to the Signing Date, are true, complete and correct copies of such documents as
in full force and effect as of the Signing Date.

 

(b)           Capitalization. The authorized
capital stock of the Company, and the outstanding capital stock of the Company
(including securities convertible into, or exercisable or exchangeable for,
capital stock of the Company) as of the most recent fiscal month-end preceding
the Signing Date (the “Capitalization Date”)
is set forth on Schedule B. The outstanding shares of capital stock of
the Company have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights (and were not
issued in violation of any preemptive rights). As of the Signing Date, the
Company does not have outstanding any securities or other obligations providing
the holder the right to

 

6

 

acquire its Common Stock (“Common
Stock”) that is not reserved for issuance as specified on Schedule
B, and the Company has not made any other commitment to authorize, issue or
sell any Common Stock. Since the Capitalization Date, the Company has not
issued any shares of Common Stock, other than (i) shares issued upon the
exercise of stock options or delivered under other equity-based awards or other
convertible securities or warrants which were issued and outstanding on the
Capitalization Date and disclosed on Schedule B and (ii) shares
disclosed on Schedule B. Each holder of 5% or more of any class of
capital stock of the Company and such holder’s primary address are set forth on
Schedule B.

 

(c)             Preferred Shares. The Preferred
Shares have been duly and validly authorized, and, when issued and delivered
pursuant to this Agreement, such Preferred Shares will be duly and validly
issued and fully paid and non-assessable, will not be issued in violation of
any preemptive rights, and will rank pari
passu with or senior to all other series or classes of Preferred
Stock, whether or not issued or outstanding, with respect to the payment of
dividends and the distribution of assets in the event of any dissolution,
liquidation or winding up of the Company.

 

(d)             The Warrant and Warrant Shares. The
Warrant has been duly authorized and, when executed and delivered as
contemplated hereby, will constitute a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its 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”). The shares of
Warrant Preferred Stock issuable upon exercise of the Warrant (the “Warrant Shares”) have been duly authorized
and reserved for issuance upon exercise of the Warrant and when so issued in
accordance with the terms of the Warrant will be validly issued, fully paid and
non-assessable, and will rank pari passu
with or senior to all other series or classes of Preferred Stock, whether or
not issued or outstanding, with respect to the payment of dividends and the
distribution of assets in the event of any dissolution, liquidation or winding
up of the Company.

 

(e)             Authorization,
Enforceability.

 

(i)          The Company has the corporate power
and authority to execute and deliver this Agreement and the Warrant and to
carry out its obligations hereunder and thereunder (which includes the issuance
of the Preferred Shares, Warrant and Warrant Shares). The execution, delivery
and performance by the Company of this Agreement and the Warrant 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
stockholders, and no further approval or authorization is required on the part
of the Company. This Agreement is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to the
Bankruptcy Exceptions.

 

7

 

(ii)             The execution, delivery and performance by
the Company of this Agreement and the Warrant and the consummation of the
transactions contemplated hereby and thereby and compliance by the Company with
the provisions hereof and thereof, will not (A) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any subsidiary of the Company (each a “Company Subsidiary” and, collectively, the
“Company Subsidiaries”) under any
of the terms, conditions or provisions of (i) its organizational documents
or (ii) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any
Company Subsidiary is a party or by which it or any Company Subsidiary may be
bound, or to which the Company or any Company Subsidiary or any of the
properties or assets of the Company or any Company Subsidiary may be subject,
or (B) subject to compliance with the statutes and regulations referred to
in the next paragraph, violate any statute, rule or regulation or any
judgment, ruling, order, writ, injunction or decree applicable to the Company
or any Company Subsidiary or any of their respective properties or assets
except, in the case of clauses (A)(ii) and (B), for those occurrences
that, individually or in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect.

 

(iii)            Other than the filing of the Certificates
of Designations with the Secretary of State of its jurisdiction of organization
or other applicable Governmental Entity, such filings and approvals as are
required to be made or obtained under any state “blue sky” laws and such as
have been made or obtained, 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 consummation by
the Company of the Purchase except for any such notices, filings, exemptions,
reviews, authorizations, consents and approvals the failure of which to make or
obtain would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.

 

(f)            Anti-takeover
Provisions and Rights Plan. The Board of Directors of the Company (the “Board of Directors”) has taken all
necessary action to ensure that the transactions contemplated by this Agreement
and the Warrant and the consummation of the transactions contemplated hereby
and thereby, including the exercise of the Warrant in accordance with its
terms, will be exempt from any anti-takeover or similar provisions of the
Company’s Charter and bylaws, and any other provisions of any applicable “moratorium”,
“control share”, “fair price”, “interested stockholder” or other anti-takeover
laws and regulations of any jurisdiction.

 

(g)           No
Company Material Adverse Effect. Since the last day of the last completed
fiscal period for which financial statements are included in the Company
Financial Statements (as defined below), no fact, circumstance, event, change,
occurrence, condition or development

 

8

 

has occurred that, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect.

 

(h)             Company Financial Statements. The
Company has Previously Disclosed each of the consolidated financial statements
of the Company and its consolidated subsidiaries for each of the last three
completed fiscal years of the Company (which shall be audited to the extent
audited financial statements are available prior to the Signing Date) and each
completed quarterly period since the last completed fiscal year (collectively
the “Company Financial Statements”).
The Company Financial Statements 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 (A) were prepared in conformity with
GAAP applied on a consistent basis (except as may be noted therein) and (B) have
been prepared from, and are in accordance with, the books and records of the
Company and the Company Subsidiaries.

 

(i)              Reports.

 

(i)              Since December 31, 2006, the Company
and each Company Subsidiary has filed all reports, registrations, documents,
filings, statements and submissions, together with any amendments thereto, that
it was required to file with any Governmental Entity (the foregoing,
collectively, the “Company Reports”)
and has paid all fees and assessments due and payable in connection therewith,
except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. As of their
respective dates of filing, the Company Reports complied in all material
respects with all statutes and applicable rules and regulations of the
applicable Governmental Entities.

 

(ii)             The records, systems, controls, data and
information of the Company and the Company Subsidiaries are recorded, stored,
maintained and operated under means (including any electronic, mechanical or
photographic process, whether computerized or not) that are under the exclusive
ownership and direct control of the Company or the Company Subsidiaries or
their accountants (including all means of access thereto and therefrom), except
for any non-exclusive ownership and non-direct control that would not
reasonably be expected to have a material adverse effect on the system of
internal accounting controls described below in this Section 2.2(i)(ii).
The Company (A) has implemented and maintains adequate disclosure controls
and procedures to ensure that material information relating to the Company,
including the consolidated Company Subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others
within those entities, and (B) has disclosed, based on its most recent
evaluation prior to the Signing Date, to the Company’s outside auditors and the
audit committee of the Board of Directors (x) any significant deficiencies
and material weaknesses in the design or operation of internal controls that
are reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information and (y) any fraud,
whether or not material, that involves management or

 

9

 

other employees who have a significant role in the Company’s internal
controls over financial reporting.

 

(j)              No Undisclosed Liabilities.
Neither the Company nor any of the Company Subsidiaries has any liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) which
are not properly reflected or reserved against in the Company Financial
Statements to the extent required to be so reflected or reserved against in
accordance with GAAP, except for (A) liabilities that have arisen since
the last fiscal year end in the ordinary and usual course of business and
consistent with past practice and (B) liabilities that, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect.

 

(k)             Offering of Securities. Neither the
Company nor any person acting on its behalf has taken any action (including any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of any of the
Purchased Securities under the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder), which might
subject the offering, issuance or sale of any of the Purchased Securities to
Investor pursuant to this Agreement to the registration requirements of the
Securities Act.

 

(l)              Litigation and Other Proceedings.
Except (i) as set forth on Schedule C or (ii) as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, there is no (A) pending or, to the knowledge of
the Company, threatened, claim, action, suit, investigation or proceeding,
against the Company or any Company Subsidiary or to which any of their assets
are subject nor is the Company or any Company Subsidiary subject to any order,
judgment or decree or (B) unresolved violation, criticism or exception by
any Governmental Entity with respect to any report or relating to any
examinations or inspections of the Company or any Company Subsidiaries.

 

(m)            Compliance
with Laws. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, the Company
and the Company Subsidiaries have all permits, licenses, franchises,
authorizations, orders and approvals of, and have made all filings,
applications and registrations with, Governmental Entities that are required in
order to permit them to own or lease their properties and assets and to carry
on their business as presently conducted and that are material to the business
of the Company or such Company Subsidiary. Except as set forth on Schedule
D, the Company and the Company Subsidiaries have complied in all respects
and are not in default or violation of, and none of them is, to the knowledge
of the Company, under investigation with respect to or, to the knowledge of the
Company, have been threatened to be charged with or given notice of any
violation of, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license, rule, regulation, policy or guideline, order,
demand, writ, injunction, decree or judgment of any Governmental Entity, other
than such noncompliance, defaults or violations that would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Except for statutory or regulatory restrictions of general application
or as set forth on Schedule D, no Governmental Entity has placed any
restriction on the business or properties of

 

10

 

the Company or any Company Subsidiary that would, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect.

 

(n)             Employee Benefit Matters. Except as
would not reasonably be expected to have, either individually or in the aggregate,
a Company Material Adverse Effect: (A) each “employee benefit plan”
(within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”))
providing benefits to any current or former employee, officer or director of
the Company or any member of its “Controlled
Group” (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the
Internal Revenue Code of 1986, as amended (the “Code”)) that is sponsored, maintained or contributed to by
the Company or any member of its Controlled Group and for which the Company or
any member of its Controlled Group would have any liability, whether actual or
contingent (each, a “Plan”) has
been maintained in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations, including ERISA and the Code; (B) with
respect to each Plan subject to Title IV of ERISA (including, for purposes of
this clause (B), any plan subject to Title IV of ERISA that the Company or any
member of its Controlled Group previously maintained or contributed to in the
six years prior to the Signing Date), (1) no “reportable event” (within
the meaning of Section 4043(c) of ERISA), other than a reportable event
for which the notice period referred to in Section 4043(c) of ERISA
has been waived, has occurred in the three years prior to the Signing Date or
is reasonably expected to occur, (2) no “accumulated funding deficiency”
(within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, has occurred in the three years prior to the
Signing Date or is reasonably expected to occur, (3) the fair market value
of the assets under each Plan exceeds the present value of all benefits accrued
under such Plan (determined based on the assumptions used to fund such Plan)
and (4) neither the Company nor any member of its Controlled Group has
incurred in the six years prior to the Signing Date, or reasonably expects to
incur, any liability under Title IV of ERISA (other than contributions to the
Plan or premiums to the PBGC in the ordinary course and without default) in
respect of a Plan (including any Plan that is a “multiemployer plan”, within
the meaning of Section 4001(c)(3) of ERISA); and (C) each Plan
that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
with respect to its qualified status that has not been revoked, or such a
determination letter has been timely applied for but not received by the
Signing Date, and nothing has occurred, whether by action or by failure to act,
which could reasonably be expected to cause the loss, revocation or denial of
such qualified status or favorable determination letter.

 

(o)             Taxes.
Except as would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect, (i) the Company and the Company
Subsidiaries have filed all federal, state, local and foreign income and franchise
Tax returns required to be filed through the Signing Date, subject to permitted
extensions, and have paid all Taxes due thereon, and (ii) no Tax
deficiency has been determined adversely to the Company or any of the Company
Subsidiaries, nor does the Company have any knowledge of any Tax deficiencies. “Tax” or “Taxes”
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, imposed by any
Governmental Entity.

 

11

 

(p)           Properties and
Leases. Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, the Company and the
Company Subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from liens,
encumbrances, claims and defects that would affect the value thereof or
interfere with the use made or to be made thereof by them. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company and the Company Subsidiaries hold all
leased real or personal property under valid and enforceable leases with no
exceptions that would interfere with the use made or to be made thereof by
them.

 

(q)           Environmental
Liability. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect:

 

(i)           there is no
legal, administrative, or other proceeding, claim or action of any nature
seeking to impose, or that would reasonably be expected to result in the
imposition of, on the Company or any Company Subsidiary, any liability relating
to the release of hazardous substances as defined under any local, state or
federal environmental statute, regulation or ordinance, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
pending or, to the Company’s knowledge, threatened against the Company or any
Company Subsidiary;

 

(ii)          to the Company’s
knowledge, there is no reasonable basis for any such proceeding, claim or
action; and

 

(iii)         neither the
Company nor any Company Subsidiary is subject to any agreement, order, judgment
or decree by or with any court, Governmental Entity or third party imposing any
such environmental liability.

 

(r)            Risk Management
Instruments. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, all
derivative instruments, including, swaps, caps, floors and option agreements,
whether entered into for the Company’s own account, or for the account of one
or more of the Company Subsidiaries or its or their customers, were entered
into (i) only in the ordinary course of business, (ii) in accordance
with prudent practices and in all material respects with all applicable laws,
rules, regulations and regulatory policies and (iii) with counterparties
believed to be financially responsible at the time; and each of such
instruments constitutes the valid and legally binding obligation of the Company
or one of the Company Subsidiaries, enforceable in accordance with its terms,
except as may be limited by the Bankruptcy Exceptions. Neither the Company or
the Company Subsidiaries, nor, to the knowledge of the Company, any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement other than such breaches that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

12

 

(s)          Agreements with
Regulatory Agencies. Except as set forth on Schedule E, neither
the Company nor any Company Subsidiary is subject to any material
cease-and-desist or other similar order or enforcement action issued by, or is
a party to any material written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any capital directive by, or since December 31,
2006, has adopted any board resolutions at the request of, any Governmental
Entity (other than the Appropriate Federal Banking Agencies with jurisdiction
over the Company and the Company Subsidiaries) that currently restricts in any
material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its liquidity and funding policies and
practices, its ability to pay dividends, its credit, risk management or
compliance policies or procedures, its internal controls, its management or its
operations or business (each item in this sentence, a “Regulatory Agreement”), nor has the
Company or any Company Subsidiary been advised since December 31, 2006 by
any such Governmental Entity that it is considering issuing, initiating,
ordering, or requesting any such Regulatory Agreement. The Company and each
Company Subsidiary are in compliance in all material respects with each
Regulatory Agreement to which it is party or subject, and neither the Company
nor any Company Subsidiary has received any notice from any Governmental Entity
indicating that either the Company or any Company Subsidiary is not in
compliance in all material respects with any such Regulatory Agreement. “Appropriate Federal Banking Agency” means
the “appropriate Federal banking agency” with respect to the Company or such
Company Subsidiaries, as applicable, as defined in Section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)).

 

(t)          Insurance. The Company
and the Company Subsidiaries are insured with reputable insurers against such
risks and in such amounts as the management of the Company reasonably has
determined to be prudent and consistent with industry practice. The Company and
the Company Subsidiaries are in material compliance with their insurance
policies and are not in default under any of the material terms thereof, each
such policy is outstanding and in full force and effect, all premiums and other
payments due under any material policy have been paid, and all claims
thereunder have been filed in due and timely fashion, except, in each case, as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.

 

(u)         Intellectual
Property. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) the
Company and each Company Subsidiary owns or otherwise has the right to use, all
intellectual property rights, including all trademarks, trade dress, trade
names, service marks, domain names, patents, inventions, trade secrets,
know-how, works of authorship and copyrights therein, that are used in the
conduct of their existing businesses and all rights relating to the plans,
design and specifications of any of its branch facilities (“Proprietary Rights”) free and clear of all
liens and any claims of ownership by current or former employees, contractors,
designers or others and (ii) neither the Company nor any of the Company
Subsidiaries is materially infringing, diluting, misappropriating or violating,
nor has the Company or any or the Company Subsidiaries received any written
(or, to the knowledge of the Company, oral) communications alleging that any of
them has materially infringed, diluted, misappropriated or violated, any of the
Proprietary Rights owned by any other person. Except as would not, individually
or in the aggregate, reasonably be

 

13

 

expected
to have a Company Material Adverse Effect, to the Company’s knowledge, no other
person is infringing, diluting, misappropriating or violating, nor has the
Company or any or the Company Subsidiaries sent any written communications
since January 1, 2006 alleging that any person has infringed, diluted,
misappropriated or violated, any of the Proprietary Rights owned by the Company
and the Company Subsidiaries.

 

(v)         Brokers and
Finders. No broker, finder or investment banker is entitled to any
financial advisory, brokerage, finder’s or other fee or commission in
connection with this Agreement or the Warrant or the transactions contemplated
hereby or thereby based upon arrangements made by or on behalf of the Company
or any Company Subsidiary for which the Investor could have any liability.

 

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 use commercially reasonable efforts to cooperate with the other party to
that end.

 

3.2         Expenses.
Unless otherwise provided in this Agreement or the Warrant, 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 this Agreement and the Warrant,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.

 

3.3         Sufficiency of
Authorized Warrant Preferred Stock; Exchange Listing.

 

(a)           During the
period from the Closing Date until the date on which the Warrant has been fully
exercised, the Company shall at all times have reserved for issuance, free of
preemptive or similar rights, a sufficient number of authorized and unissued
Warrant Shares to effectuate such exercise.

 

(b)           If the Company
lists its Common Stock on any national securities exchange, the Company shall,
if requested by the Investor, promptly use its reasonable best efforts to cause
the Preferred Shares and Warrant Shares to be approved for listing on a
national securities exchange as promptly as practicable following such request.

 

3.4         Certain
Notifications Until Closing. From the Signing Date until the Closing, the
Company shall promptly notify the Investor of (i) any fact, event or
circumstance of which it is aware and which would reasonably be expected to
cause any representation or warranty of the Company contained in this Agreement
to be untrue or inaccurate in any material respect or to

 

14

 

cause
any covenant or agreement of the Company contained in this Agreement not to be
complied with or satisfied in any material respect and (ii) except as
Previously Disclosed, any fact, circumstance, event, change, occurrence,
condition or development of which the Company is aware and which, individually
or in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect; provided,
however, that delivery of any
notice pursuant to this Section 3.4 shall not limit or affect any rights
of or remedies available to the Investor; provided,
further, that a failure to comply
with this Section 3.4 shall not constitute a breach of this Agreement or
the failure of any condition set forth in Section 1.2 to be satisfied
unless the underlying Company Material Adverse Effect or material breach would
independently result in the failure of a condition set forth in Section 1.2
to be satisfied.

 

3.5           Access,
Information and Confidentiality.

 

(a)             From the
Signing Date until the date when the Investor holds an amount of Preferred
Shares having an aggregate liquidation value of less than 10% of the Purchase
Price, the Company will permit the Investor and its agents, consultants,
contractors and advisors (x) acting through the Appropriate Federal
Banking Agency, or otherwise to the extent necessary to evaluate, manage, or
transfer its investment in the Company, to examine the corporate books and make
copies thereof and to discuss the affairs, finances and accounts of the Company
and the Company Subsidiaries with the principal officers of the Company, all
upon reasonable notice and at such reasonable times and as often as the
Investor may reasonably request and (y) to review any information material
to the Investor’s investment in the Company provided by the Company to its
Appropriate Federal Banking Agency. Any investigation pursuant to this Section 3.5
shall be conducted during normal business hours and in such manner as not to
interfere unreasonably with the conduct of the business of the Company, and
nothing herein shall require the Company or any Company Subsidiary to disclose
any information to the Investor to the extent (i) prohibited by applicable
law or regulation, or (ii) that such disclosure would reasonably be
expected to cause a violation of any agreement to which the Company or any
Company Subsidiary is a party or would cause a risk of a loss of privilege to
the Company or any Company Subsidiary (provided
that the Company shall use commercially reasonable efforts to make appropriate
substitute disclosure arrangements under circumstances where the restrictions
in this clause (ii) apply).

 

(b)             From the
Signing Date until the date on which all of the Preferred Shares and Warrant
Shares have been redeemed in whole, the Company will deliver, or will cause to
be delivered, to the Investor:

 

(i)            as soon as available after the end of each fiscal year of
the Company, and in any event within 90 days thereafter, a consolidated balance
sheet of the Company as of the end of such fiscal year, and consolidated
statements of income, retained earnings and cash flows of the Company for such
year, in each case prepared in accordance with GAAP and setting forth in each
case in comparative form the figures for the previous fiscal year of the
Company, and which shall be audited to the extent audited financial statements
are available; and

 

15

 

(ii)           as soon as available after the end of the first, second
and third quarterly periods in each fiscal year of the Company, a copy of any
quarterly reports provided to other stockholders of the Company or Company
management.

 

(c)             The Investor
will use reasonable best efforts to hold, and will use reasonable best efforts
to cause its agents, consultants, contractors and advisors to hold, in
confidence all nonpublic records, books, contracts, instruments, computer data
and other data and information (collectively, “Information”)
concerning the Company furnished or made available to it by the Company or its
representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (i) previously known by such party
on a non-confidential basis, (ii) in the public domain through no fault of
such party or (iii) later lawfully acquired from other sources by the
party to which it was furnished (and without violation of any other
confidentiality obligation)); provided
that nothing herein shall prevent the Investor from disclosing any Information
to the extent required by applicable laws or regulations or by any subpoena or
similar legal process.

 

(d)             The Investor’s information
rights pursuant to Section 3.5(b) may be assigned by the Investor to
a transferee or assignee of the Purchased Securities or the Warrant Shares or
with a liquidation preference or, in the case of the Warrant, the liquidation
preference of the underlying shares of Warrant Preferred Stock, no less than an
amount equal to 2% of the initial aggregate liquidation preference of the
Preferred Shares.

 

Article IV

Additional Agreements

 

4.1           Purchase for
Investment. The Investor acknowledges that the Purchased Securities and the
Warrant Shares have not been registered under the Securities Act or under any
state securities laws. The Investor (a) is acquiring the Purchased
Securities pursuant to an exemption from registration under the Securities Act
solely for investment with no present intention to distribute them to any
person in violation of the Securities Act or any applicable U.S. state
securities laws, (b) will not sell or otherwise dispose of any of the
Purchased Securities or the Warrant Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
applicable U.S. state securities laws, and (c) has such knowledge and
experience in financial and business matters and in investments of this type
that it is capable of evaluating the merits and risks of the Purchase and of
making an informed investment decision.

 

4.2           Legends.

 

(a)           The Investor agrees
that all certificates or other instruments representing the Warrant 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

 

16

 

OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS
IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

THIS
INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER
PROVISIONS OF A SECURITIES PURCHASE

 

AGREEMENT
BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A
COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS
INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE
WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID
AGREEMENT WILL BE VOID.”

 

(b)           In addition, the
Investor agrees that all certificates or other instruments representing the
Preferred Shares and the Warrant Shares will bear a legend substantially to the
following effect:

 

“THE
SECURITIES REPRESENTED BY THIS INSTRUMENT ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

 

THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT OR SUCH LAWS. EACH PURCHASER OF THE SECURITIES
REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. ANY TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS
INSTRUMENT BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES
THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED
BY THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE
SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL
BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER

 

17

 

TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO
THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS INSTRUMENT
ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

THIS
INSTRUMENT IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER
PROVISIONS OF A SECURITIES PURCHASE

 

AGREEMENT
BETWEEN THE ISSUER OF THESE SECURITIES AND THE INVESTOR REFERRED TO THEREIN, A
COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS
INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE
WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID
AGREEMENT WILL BE VOID.”

 

(c)           In the event that
any Purchased Securities or Warrant Shares (i) become registered under the
Securities Act or (ii) are eligible to be transferred without restriction
in accordance with Rule 144 or another exemption from registration under
the Securities Act (other than Rule 144A), the Company shall issue new
certificates or other instruments representing such Purchased Securities or
Warrant Shares, which shall not contain the applicable legends in Sections 4.2(a) and
(b) above; provided that the
Investor surrenders to the Company the previously issued certificates or other
instruments.

 

4.3           Certain
Transactions. The Company will not merge or consolidate with, or sell,
transfer or lease all or substantially all of its property or assets to, any
other party unless the successor, transferee or lessee party (or its ultimate
parent entity), as the case may be (if not the Company), expressly assumes the
due and punctual performance and observance of each and every covenant, agreement
and condition of this Agreement to be performed and observed by the Company.

 

4.4           Transfer of
Purchased Securities and Warrant Shares; Restrictions on Exercise of the
Warrant. Subject to compliance with applicable securities laws, the
Investor shall be permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the
Purchased Securities or Warrant Shares at any time, and the Company shall take
all steps as may be reasonably requested by the Investor to facilitate the Transfer
of the Purchased Securities and the Warrant Shares; provided that the Investor shall not Transfer any Purchased
Securities or Warrant Shares if such transfer would require the Company to be
subject to the periodic reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the “Exchange
Act”). In furtherance of the foregoing, the Company shall provide
reasonable cooperation to facilitate any Transfers of the Purchased Securities
or Warrant Shares, including, as is reasonable under the circumstances, by
furnishing such information concerning the Company and its business as a
proposed transferee may reasonably request (including such information as is
required by Section 4.5(k)) and making management of the Company

 

18

 

reasonably
available to respond to questions of a proposed transferee in accordance with
customary practice, subject in all cases to the proposed transferee agreeing to
a customary confidentiality agreement.

 

4.5           Registration
Rights.

 

(a)             Unless and
until the Company becomes subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall have no obligation to
comply with the provisions of this Section 4.5 (other than Section 4.5(b)(iv)-(vi));
provided that the Company
covenants and agrees that it shall comply with this Section 4.5 as soon as
practicable after the date that it becomes subject to such reporting
requirements.

 

(b)             Registration.

 

(i)           Subject to the
terms and conditions of this Agreement, the Company covenants and agrees that
as promptly as practicable after the date that the Company becomes subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act
(and in any event no later than 30 days thereafter), the Company shall prepare
and file with the SEC a Shelf Registration Statement covering all Registrable
Securities (or otherwise designate an existing Shelf Registration Statement
filed with the SEC to cover the Registrable Securities), and, to the extent the
Shelf Registration Statement has not theretofore been declared effective or is
not automatically effective upon such filing, the Company shall use reasonable
best efforts to cause such Shelf Registration Statement to be declared or
become effective and to keep such Shelf Registration Statement continuously
effective and in compliance with the Securities Act and usable for resale of
such Registrable Securities for a period from the date of its initial
effectiveness until such time as there are no Registrable Securities remaining
(including by refiling such Shelf Registration Statement (or a new Shelf
Registration Statement) if the initial Shelf Registration Statement expires).
Notwithstanding the foregoing, if the Company is not eligible to file a registration
statement on Form S-3, then the Company shall not be obligated to file a
Shelf Registration Statement unless and until requested to do so in writing by
the Investor.

 

(ii)          Any
registration pursuant to Section 4.5(b)(i) shall be effected by means
of a shelf registration on an appropriate form under Rule 415 under the
Securities Act (a “Shelf Registration
Statement”). If the Investor or any other Holder intends to
distribute any Registrable Securities by means of an underwritten offering it
shall promptly so advise the Company and the Company shall take all reasonable
steps to facilitate such distribution, including the actions required pursuant
to Section 4.5(d); provided
that the Company shall not be required to facilitate an underwritten offering
of Registrable Securities unless the expected gross proceeds from such offering
exceed (i) 2% of the initial aggregate liquidation preference of the
Preferred Shares if such initial aggregate liquidation preference is less than
$2 billion and (ii) $200 million if the initial aggregate liquidation
preference of the Preferred Shares is equal to or greater than $2 billion. The
lead underwriters in any such distribution shall be selected by the Holders of
a majority of the Registrable Securities to be distributed; provided that to the extent appropriate
and 

 

 

permitted
under applicable law, such Holders shall consider the qualifications of any
broker-dealer Affiliate of the Company in selecting the lead underwriters in
any such distribution.

 

(iii)         The Company shall
not be required to effect a registration (including a resale of Registrable
Securities from an effective Shelf Registration Statement) or an underwritten
offering pursuant to Section 4.5(b): (A) with respect to securities
that are not Registrable Securities; or (B) if the Company has notified
the Investor and all other Holders that in the good faith judgment of the Board
of Directors, it would be materially detrimental to the Company or its
securityholders for such registration or underwritten offering to be effected
at such time, in which event the Company shall have the right to defer such
registration for a period of not more than 45 days after receipt of the request
of the Investor or any other Holder; provided
that such right to delay a registration or underwritten offering shall be
exercised by the Company (1) only if the Company has generally exercised
(or is concurrently exercising) similar black-out rights against holders of
similar securities that have registration rights and (2) not more than three
times in any 12-month period and not more than 90 days in the aggregate in any
12-month period.

 

(iv)        If during any period when an effective Shelf
Registration Statement is not available, the Company proposes to register any
of its equity securities, other than a registration pursuant to Section 4.5(b)(i) or
a Special Registration, and the registration form to be filed may be used for
the registration or qualification for distribution of Registrable Securities,
the Company will give prompt written notice to the Investor and all other
Holders of its intention to effect such a registration (but in no event less
than ten days prior to the anticipated filing date) and will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within ten business days after
the date of the Company’s notice (a “Piggyback
Registration”). Any such person that has made such a written request
may withdraw its Registrable Securities from such Piggyback Registration by
giving written notice to the Company and the managing underwriter, if any, on
or before the fifth business day prior to the planned effective date of such
Piggyback Registration. The Company may terminate or withdraw any registration
under this Section 4.5(b)(iv) prior to the effectiveness of such
registration, whether or not Investor or any other Holders have elected to
include Registrable Securities in such registration.

 

(v)         If the
registration referred to in Section 4.5(b)(iv) is proposed to be
underwritten, the Company will so advise Investor and all other Holders as a
part of the written notice given pursuant to Section 4. 5(b)(iv). In such
event, the right of Investor and all other Holders to registration pursuant to Section 4.5(b) will
be conditioned upon such persons’ participation in such underwriting and the
inclusion of such person’s Registrable Securities in the underwriting if such
securities are of the same class of securities as the securities to be offered
in the underwritten offering, and each such person will (together with the
Company and the other persons distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company; provided that the Investor (as opposed to
other Holders) shall not be required 

 

 

to
indemnify any person in connection with any registration. If any participating
person disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to the Company, the managing underwriters
and the Investor (if the Investor is participating in the underwriting).

 

(vi)          If
either (x) the Company grants “piggyback” registration rights to one or more
third parties to include their securities in an underwritten offering under the
Shelf Registration Statement pursuant to Section 4.5(b)(ii) or (y) a
Piggyback Registration under Section 4.5(b)(iv) relates to an
underwritten offering on behalf of the Company, and in either case the managing
underwriters advise the Company that in their reasonable opinion the number of
securities requested to be included in such offering exceeds the number which
can be sold without adversely affecting the marketability of such offering
(including an adverse effect on the per share offering price), the Company will
include in such offering only such number of securities that in the reasonable
opinion of such managing underwriters can be sold without adversely affecting
the marketability of the offering (including an adverse effect on the per share
offering price), which securities will be so included in the following order of
priority: (A) first, in the case of a Piggyback Registration under Section 4.5(b)(iv),
the securities the Company proposes to sell, (B) then the Registrable
Securities of the Investor and all other Holders who have requested inclusion
of Registrable Securities pursuant to Section 4.5(b)(ii) or Section 4.5(b)(iv),
as applicable, pro rata on the
basis of the aggregate number of such securities or shares owned by each such
person and (C) lastly, any other securities of the Company that have been
requested to be so included, subject to the terms of this Agreement; provided, however, that if the Company
has, prior to the Signing Date, entered into an agreement with respect to its
securities that is inconsistent with the order of priority contemplated hereby
then it shall apply the order of priority in such conflicting agreement to the
extent that it would otherwise result in a breach under such agreement.

 

(c)             Expenses of
Registration. All Registration Expenses incurred in connection
with any registration, qualification or compliance hereunder shall be borne by
the Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the holders of the securities so registered pro rata on the basis of the aggregate
offering or sale price of the securities so registered.

 

(d)             Obligations of
the Company. Whenever required to effect the registration of any
Registrable Securities or facilitate the distribution of Registrable Securities
pursuant to an effective Shelf Registration Statement, the Company shall, as
expeditiously as reasonably practicable:

 

(i)           Prepare and file with the SEC a prospectus supplement or
post-effective amendment with respect to a proposed offering of Registrable
Securities pursuant to an effective registration statement, subject to Section 4.5(d),
keep such registration statement effective and keep such prospectus supplement
current until the securities described therein are no longer Registrable
Securities.

 

 

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

 

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

 

(iv)          Use its
reasonable best efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders or any managing
underwriter(s), to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and to take any other
action which may be reasonably necessary to enable such seller to consummate
the disposition in such jurisdictions of the securities owned by such Holder; 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.

 

(v)           Notify each
Holder of Registrable Securities at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the applicable prospectus, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.

 

(vi)          Give written
notice to the Holders:

 

(A)          when any
registration statement filed pursuant to Section 4.5(a) or any
amendment thereto has been filed with the SEC (except for any amendment
effected by the filing of a document with the SEC pursuant to the Exchange Act)
and when such registration statement or any post-effective amendment thereto
has become effective;

 

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

 

 

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

 

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

 

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

 

(F)           if at any time the
representations and warranties of the Company contained in any underwriting
agreement contemplated by Section 4.5(d)(x) cease to be true and
correct.

 

(vii)         Use its reasonable best
efforts to prevent the issuance or obtain the withdrawal of any order
suspending the effectiveness of any registration statement referred to in Section 4.5(d)(vi)(C) at
the earliest practicable time.

 

(viii)        Upon the occurrence of any
event contemplated by Section 4.5(d)(v) or 4.5(d)(vi)(E), promptly
prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to the Holders and any underwriters, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with Section 4.5(d)(vi)(E) to
suspend the use of the prospectus until the requisite changes to the prospectus
have been made, then the Holders and any underwriters shall suspend use of such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holders’ or underwriters’ possession. The total number of
days that any such suspension may be in effect in any 12-month period shall not
exceed 90 days.

 

(ix)           Use reasonable best
efforts to procure the cooperation of the Company’s transfer agent in settling
any offering or sale of Registrable Securities, including with respect to the
transfer of physical stock certificates into book-entry form in accordance with
any procedures reasonably requested by the Holders or any managing
underwriter(s).

 

(x)            If an underwritten
offering is requested pursuant to Section 4.5(b)(ii), enter into an
underwriting agreement in customary form, scope and substance and take all

 

22

 

such other actions reasonably requested by the Holders of a majority of
the Registrable Securities being sold in connection therewith or by the
managing underwriter(s), if any, to expedite or facilitate the underwritten
disposition of such Registrable Securities, and in connection therewith in any
underwritten offering (including making members of management and executives of
the Company available to participate in “road shows”, similar sales events and
other marketing activities), (A) make such representations and warranties
to the Holders that are selling stockholders and the managing underwriter(s),
if any, with respect to the business of the Company and its subsidiaries, and
the Shelf Registration Statement, prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case,
in customary form, substance and scope, and, if true, confirm the same if and
when requested, (B) use its reasonable best efforts to furnish the
underwriters with opinions of counsel to the Company, addressed to the managing
underwriter(s), if any, covering the matters customarily covered in such
opinions requested in underwritten offerings, (C) use its reasonable best
efforts to obtain “cold comfort” letters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any business acquired by the Company for which financial
statements and financial data are included in the Shelf Registration Statement)
who have certified the financial statements included in such Shelf Registration
Statement, addressed to each of the managing underwriter(s), if any, such
letters to be in customary form and covering matters of the type customarily
covered in “cold comfort” letters, (D) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
customary in underwritten offerings (provided that the Investor shall not be obligated
to provide any indemnity), and (E) deliver such documents and certificates
as may be reasonably requested by the Holders of a majority of the Registrable
Securities being sold in connection therewith, their counsel and the managing
underwriter(s), if any, to evidence the continued validity of the
representations and warranties made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.

 

(xi)           Make available for
inspection by a representative of Holders that are selling stockholders, the
managing underwriter(s), if any, and any attorneys or accountants retained by
such Holders or managing underwriter(s), at the offices where normally kept,
during reasonable business hours, financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers,
directors and employees of the Company to supply all information in each case
reasonably requested (and of the type customarily provided in connection with
due diligence conducted in connection with a registered public offering of
securities) by any such representative, managing underwriter(s), attorney or
accountant in connection with such Shelf Registration Statement.

 

(xii)          Use reasonable best
efforts to cause all such Registrable Securities to be listed on each national
securities exchange on which similar securities issued by the Company are then
listed or, if no similar securities issued by the Company are then listed on
any national securities exchange, use its reasonable best efforts to cause all
such

 

23

 

Registrable Securities to be listed on such securities exchange as the
Investor may designate.

 

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

 

(xiv)        Timely provide to its
security holders earning statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder.

 

(e)            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 or may omit 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 inadvisable use of such
registration statement, prospectus or prospectus supplement, the Investor and
each Holder of Registrable Securities shall forthwith discontinue disposition
of Registrable Securities until the Investor and/or Holder has received copies
of a supplemented or amended prospectus or prospectus supplement, or until the
Investor and/or such Holder 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/or such Holder shall
deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies then in the Investor and/or such Holder’s possession, of
the prospectus and, if applicable, prospectus supplement covering such
Registrable Securities current at the time of receipt of such notice. The total
number of days that any such suspension may be in effect in any 12-month period
shall not exceed 90 days.

 

(f)            Termination of
Registration Rights. A Holder’s registration rights as to any securities
held by such Holder (and its Affiliates, partners, members and former members)
shall not be available unless such securities are Registrable Securities.

 

(g)           Furnishing
Information.

 

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

 

(ii)           It shall be a condition
precedent to the obligations of the Company to take any action pursuant to Section 4.5(d) that
Investor and/or the selling Holders and the underwriters, if any, shall furnish
to the Company such information regarding themselves, the Registrable
Securities held by them and the intended method of

 

24

 

disposition of such securities as shall be required to effect the registered
offering of their Registrable Securities.

 

(h)           Indemnification.

 

(i)            The Company agrees to
indemnify each Holder and, if a Holder is a person other than an individual,
such Holder’s officers, directors, employees, agents, representatives and
Affiliates, and each Person, if any, that controls a Holder within the meaning
of the Securities Act (each, an “Indemnitee”),
against any and all losses, claims, damages, actions, liabilities, costs and
expenses (including reasonable fees, expenses and disbursements of attorneys
and other professionals incurred in connection with investigating, defending,
settling, compromising or paying any such losses, claims, damages, actions,
liabilities, costs and expenses), joint or several, arising out of or based
upon any untrue statement or alleged untrue statement of material fact
contained in any registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto
or any documents incorporated therein by reference or contained in any free
writing prospectus (as such term is defined in Rule 405) prepared by the
Company or authorized by it in writing for use by such Holder (or any amendment
or supplement thereto); or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided, that the Company shall not be
liable to such Indemnitee in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon (A) an untrue statement or omission
made in such registration statement, including any such preliminary prospectus
or final prospectus contained therein or any such amendments or supplements
thereto or contained in any free writing prospectus (as such term is defined in
Rule 405) prepared by the Company or authorized by it in writing for use
by such Holder (or any amendment or supplement thereto), in reliance upon and
in conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing to the
Company by such Indemnitee for use in connection with such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto, or (B) offers
or sales effected by or on behalf of such Indemnitee “by means of” (as defined
in Rule 1 59A) a “free writing prospectus” (as defined in Rule 405)
that was not authorized in writing by the Company.

 

(ii)           If the indemnification
provided for in Section 4.5(h)(i) is unavailable to an Indemnitee
with respect to any losses, claims, damages, actions, liabilities, costs or
expenses referred to therein or is insufficient to hold the Indemnitee harmless
as contemplated therein, then the Company, in lieu of indemnifying such
Indemnitee, shall contribute to the amount paid or payable by such Indemnitee
as a result of such losses, claims, damages, actions, liabilities, costs or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnitee, on the one hand, and the Company, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, actions, liabilities, costs or expenses as well as any other
relevant

 

25

 

equitable considerations. The relative fault of the Company, on the one
hand, and of the Indemnitee, on the other hand, shall be determined by
reference to, among other factors, whether the untrue statement of a material
fact or omission to state a material fact relates to information supplied by
the Company or by the Indemnitee and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; the Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 4.5(h)(ii) were determined
by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in Section 4.5(h)(i). No Indemnitee guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from the Company if the
Company was not guilty of such fraudulent misrepresentation.

 

(i)            Assignment
of Registration Rights. The rights of the Investor to registration of
Registrable Securities pursuant to Section 4.5(b) may be assigned by
the Investor to a transferee or assignee of Registrable Securities with a
liquidation preference or, in the case of the Warrant, the liquidation
preference of the underlying shares of Warrant Preferred Stock, no less than an
amount equal to (i) 2% of the initial aggregate liquidation preference of
the Preferred Shares if such initial aggregate liquidation preference is less
than $2 billion and (ii) $200 million if the initial aggregate liquidation
preference of the Preferred Shares is equal to or greater than $2 billion; provided, however,
the transferor shall, within ten days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the number and type of Registrable Securities that are being assigned.

 

(j)            Clear
Market. With respect to any underwritten offering of Registrable Securities
by the Investor or other Holders pursuant to this Section 4.5, the Company
agrees not to effect (other than pursuant to such registration or pursuant to a
Special Registration) any public sale or distribution, or to file any Shelf
Registration Statement (other than such registration or a Special Registration)
covering any preferred stock of the Company or any securities convertible into
or exchangeable or exercisable for preferred stock of the Company, during the
period not to exceed ten days prior and 60 days following the effective date of
such offering or such longer period up to 90 days as may be requested by the
managing underwriter for such underwritten offering. The Company also agrees to
cause such of its directors and senior executive officers to execute and
deliver customary lock-up agreements in such form and for such time period up
to 90 days as may be requested by the managing underwriter. “Special Registration” means the
registration of (A) equity securities and/or options or other rights in
respect thereof solely registered on Form S4 or Form S-8 (or
successor form) or (B) shares of equity securities and/or options or other
rights in respect thereof to be offered to directors, members of management,
employees, consultants, customers, lenders or vendors of the Company or Company
Subsidiaries or in connection with dividend reinvestment plans.

 

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

 

26

 

(i)            make and keep public
information available, as those terms are understood and defined in Rule 144(c)(1) or
any similar or analogous rule promulgated under the Securities Act, at all
times after the Signing Date;

 

(ii)           (A) file with the
SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act, and (B) if at any time the Company is not
required to file such reports, make available, upon the request of any Holder,
such information necessary to permit sales pursuant to Rule 144A
(including the information required by Rule 144A(d)(4) under the
Securities Act);

 

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

 

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

 

(l)            As
used in this Section 4.5, the following terms shall have the following
respective meanings:

 

(i)            “Holder” means the Investor and any other
holder of Registrable Securities to whom the registration rights conferred by
this Agreement have been transferred in compliance with Section 4.5(h) hereof.

 

(ii)           “Holders’ Counsel” means one counsel for
the selling Holders chosen by Holders holding a majority interest in the
Registrable Securities being registered.

 

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

 

(iv)          “Registrable Securities” means (A) all
Preferred Shares, (B) the Warrant (subject to Section 4.5(q)) and (C) any
equity securities issued or issuable directly or indirectly with respect to the
securities referred to in the foregoing clauses (A) or (B) by way of
conversion, exercise or exchange thereof, including the Warrant Shares, or
share dividend or share split or in connection with a combination of shares,
recapitalization, reclassification, merger, amalgamation, arrangement,
consolidation or other

 

27

 

reorganization, provided
that, once issued, such securities will not be Registrable Securities when (1) they
are sold pursuant to an effective registration statement under the Securities
Act, (2) except as provided below in Section 4.5(p), they may be sold
pursuant to Rule 144 without limitation thereunder on volume or manner of
sale, (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.

 

(v)           “Registration Expenses” mean 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 4.5,
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”, the reasonable fees and
disbursements of  Holders’ Counsel,
and expenses of the Company’s independent accountants in connection with any
regular or special reviews or audits incident to or required by any such
registration, but shall not include Selling Expenses.

 

(vi)          “Rule 144”, “Rule 144A”, “Rule 159A”, “Rule 405” and “Rule 415” mean, in each case, such rule promulgated
under the Securities Act (or any successor provision), as the same shall be
amended from time to time.

 

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

 

(m)          At
any time, any holder of Securities (including any Holder) may elect to forfeit
its rights set forth in this Section 4.5 from that date forward; provided, that a Holder forfeiting such
rights shall nonetheless be entitled to participate under Section 4.5(b)(iv) —
(vi) in any Pending Underwritten Offering to the same extent that such
Holder would have been entitled to if the holder had not withdrawn; and provided, further,
that no such forfeiture shall terminate a Holder’s rights or obligations under Section 4.5(g) with
respect to any prior registration or Pending Underwritten Offering. “Pending Underwritten Offering” means, with respect to any Holder forfeiting
its rights pursuant to this Section 4.5(m), any underwritten offering of
Registrable Securities in which such Holder has advised the Company of its
intent to register its Registrable Securities either pursuant to Section 4.5(b)(ii) or
4.5(b)(iv) prior to the date of such Holder’s forfeiture.

 

(n)           Specific
Performance. The parties hereto acknowledge that there would be no adequate
remedy at law if the Company fails to perform any of its obligations under this
Section 4.5 and that the Investor and the Holders from time to time may be
irreparably harmed by any such failure, and accordingly agree that the Investor
and such Holders, in addition to any other remedy to which they may be entitled
at law or in equity, to the fullest extent permitted and

 

28

 

enforceable under applicable law shall be entitled to compel specific
performance of the obligations of the Company under this Section 4.5 in
accordance with the terms and conditions of this Section 4.5.

 

(o)           No
Inconsistent Agreements. The Company shall not, on or after the Signing
Date, enter into any agreement with respect to its securities that may impair
the rights granted to the Investor and the Holders under this Section 4.5
or that otherwise conflicts with the provisions hereof in any manner that may
impair the rights granted to the Investor and the Holders under this Section 4.5.
In the event the Company has, prior to the Signing Date, entered into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Investor and the Holders under this Section 4.5 (including
agreements that are inconsistent with the order of priority contemplated by Section 4.5(b)(vi))
or that may otherwise conflict with the provisions hereof, the Company shall
use its reasonable best efforts to amend such agreements to ensure they are
consistent with the provisions of this Section 4.5.

 

(p)           Certain
Offerings by the Investor. In the case of any securities held by the
Investor that cease to be Registrable Securities solely by reason of clause (2) in
the definition of “Registrable Securities,” the provisions of Sections
4.5(b)(ii), clauses (iv), (ix) and (x)-(xii) of Section 4.5(d), Section 4.5(h) and
Section 4.5(j) shall continue to apply until such securities
otherwise cease to be Registrable Securities. In any such case, an “underwritten”
offering or other disposition shall include any distribution of such securities
on behalf of the Investor by one or more broker-dealers, an “underwriting
agreement” shall include any purchase agreement entered into by such
broker-dealers, and any “registration statement” or “prospectus” shall include
any offering document approved by the Company and used in connection with such
distribution.

 

(q)           Registered
Sales of the Warrant. The Holders agree to sell the Warrant or any portion
thereof under the Shelf Registration Statement only beginning 30 days after
notifying the Company of any such sale, during which 30-day period the Investor
and all Holders of the Warrant shall take reasonable steps to agree to
revisions to the Warrant to permit a public distribution of the Warrant,
including entering into a warrant agreement and appointing a warrant agent.

 

4.6           Depositary Shares.
Upon request by the Investor at any time following the Closing Date, the
Company shall promptly enter into a depositary arrangement, pursuant to
customary agreements reasonably satisfactory to the Investor and with a
depositary reasonably acceptable to the Investor, pursuant to which the
Preferred Shares or the Warrant Shares may be deposited and depositary shares,
each representing a fraction of a Preferred Share or Warrant Share, as
applicable, as specified by the Investor, may be issued. From and after the
execution of any such depositary arrangement, and the deposit of any Preferred
Shares or Warrant Shares, as applicable, pursuant thereto, the depositary
shares issued pursuant thereto shall be deemed “Preferred Shares”, “Warrant
Shares” and, as applicable, “Registrable Securities” for purposes of this
Agreement.

 

29

 

4.7           Restriction
on Dividends and Repurchases.

 

(a)           Prior
to the earlier of (x) the third anniversary of the Closing Date and (y) the
date on which all of the Preferred Shares and Warrant Shares have been redeemed
in whole or the Investor has transferred all of the Preferred Shares and
Warrant Shares to third parties which are not Affiliates of the Investor,
neither the Company nor any Company Subsidiary shall, without the consent of
the Investor, declare or pay any dividend or make any distribution on capital
stock or other equity securities of any kind of the Company or any Company
Subsidiary (other than (i) regular quarterly cash dividends of not more
than the amount of the last quarterly cash dividend per share declared or, if
lower, announced to its holders of Common Stock an intention to declare, on the
Common Stock prior to November 17, 2008, as adjusted for any stock split,
stock dividend, reverse stock split, reclassification or similar transaction, (ii) dividends
payable solely in shares of Common Stock, (iii) regular dividends on
shares of preferred stock in accordance with the terms thereof and which are
permitted under the terms of the Preferred Shares and the Warrant Shares, (iv) dividends
or distributions by any wholly-owned Company Subsidiary or (v) dividends
or distributions by any Company Subsidiary required pursuant to binding
contractual agreements entered into prior to November 17, 2008).

 

(b)           During
the period beginning on the third anniversary of the Closing Date and ending on
the earlier of (i) the tenth anniversary of the Closing Date and (ii) the
date on which all of the Preferred Shares and Warrant Shares have been redeemed
in whole or the Investor has transferred all of the Preferred Shares and
Warrant Shares to third parties which are not Affiliates of the Investor,
neither the Company nor any Company Subsidiary shall, without the consent of
the Investor, (A) pay any per share dividend or distribution on capital
stock or other equity securities of any kind of the Company at a per annum rate
that is in excess of 103% of the aggregate per share dividends and
distributions for the immediately prior fiscal year (other than regular
dividends on shares of preferred stock in accordance with the terms thereof and
which are permitted under the terms of the Preferred Shares and the Warrant
Shares); provided that no
increase in the aggregate amount of dividends or distributions on Common Stock
shall be permitted as a result of any dividends or distributions paid in shares
of Common Stock, any stock split or any similar transaction or (B) pay
aggregate dividends or distributions on capital stock or other equity
securities of any kind of any Company Subsidiary that is in excess of 103% of
the aggregate dividends and distributions paid for the immediately prior fiscal
year (other than in the case of this clause (B), (1) regular dividends on
shares of preferred stock in accordance with the terms thereof and which are
permitted under the terms of the Preferred Shares and the Warrant Shares, (2) dividends
or distributions by any wholly-owned Company Subsidiary, (3) dividends or
distributions by any Company Subsidiary required pursuant to binding
contractual agreements entered into prior to November 17, 2008) or (4) dividends
or distributions on newly issued shares of capital stock for cash or other
property.

 

(c)           Prior
to the earlier of (x) the tenth anniversary of the Closing Date and (y) the
date on which all of the Preferred Shares and Warrant Shares have been redeemed
in whole or the Investor has transferred all of the Preferred Shares and
Warrant Shares to third parties which are not Affiliates of the Investor,
neither the Company nor any Company Subsidiary shall, without the consent of
the Investor, redeem, purchase or acquire any shares of Common Stock or other
capital stock or other equity securities of any kind of the Company or any
Company Subsidiary, or any trust preferred securities issued by the Company or
any Affiliate of the Company, other

 

30

 

than (i) redemptions, purchases or other acquisitions of the
Preferred Shares and Warrant Shares, (ii) in connection with the
administration of any employee benefit plan in the ordinary course of business
and consistent with past practice, (iii) the acquisition by the Company or
any of the Company Subsidiaries of record ownership in Junior Stock or Parity
Stock for the beneficial ownership of any other persons (other than the Company
or any other Company Subsidiary), including as trustees or custodians, (iv) the
exchange or conversion of Junior Stock for or into other Junior Stock or of
Parity Stock or trust preferred securities for or into other Parity Stock (with
the same or lesser aggregate liquidation amount) or Junior Stock, in each case
set forth in this clause (iv), solely to the extent required pursuant to
binding contractual agreements entered into prior to the Signing Date or any
subsequent agreement for the accelerated exercise, settlement or exchange
thereof for Common Stock (clauses (ii) and (iii), collectively, the “Permitted Repurchases”), (v) redemptions
of securities held by the Company or any wholly- owned Company Subsidiary or (vi) redemptions,
purchases or other acquisitions of capital stock or other equity securities of
any kind of any Company Subsidiary required pursuant to binding contractual
agreements entered into prior to November 17, 2008.

 

(d)           Until
such time as the Investor ceases to own any Preferred Shares or Warrant Shares,
the Company shall not repurchase any Preferred Shares or Warrant Shares from
any holder thereof, whether by means of open market purchase, negotiated
transaction, or otherwise, other than Permitted Repurchases, unless it offers
to repurchase a ratable portion of the Preferred Shares or Warrant Shares, as
the case may be, then held by the Investor on the same terms and conditions.

 

(e)           During
the period beginning on the tenth anniversary of the Closing and ending on the
date on which all of the Preferred Shares and Warrant Shares have been redeemed
in whole or the Investor has transferred all of the Preferred Shares and
Warrant Shares to third parties which are not Affiliates of the Investor,
neither the Company nor any Company Subsidiary shall, without the consent of
the Investor, (i) declare or pay any dividend or make any distribution on
capital stock or other equity securities of any kind of the Company or any
Company Subsidiary; or (ii) redeem, purchase or acquire any shares of
Common Stock or other capital stock or other equity securities of any kind of
the Company or any Company Subsidiary, or any trust preferred securities issued
by the Company or any Affiliate of the Company, other than (A) redemptions,
purchases or other acquisitions of the Preferred Shares and Warrant Shares, (B) regular
dividends on shares of preferred stock in accordance with the terms thereof and
which are permitted under the terms of the Preferred Shares and the Warrant
Shares, or (C) dividends or distributions by any wholly-owned Company
Subsidiary.

 

(f)            “Junior Stock” means Common Stock and any
other class or series of stock of the Company the terms of which expressly
provide that it ranks junior to the Preferred Shares as to dividend rights
and/or as to rights on liquidation, dissolution or winding up of the Company. “Parity Stock” means any class or series of
stock of the Company the terms of which do not expressly provide that such
class or series will rank senior or junior to the Preferred Shares as to
dividend rights and/or as to rights on liquidation, dissolution or winding up
of the Company (in each case without regard to whether dividends accrue
cumulatively or non-cumulatively).

 

31

 

4.8           Executive
Compensation. Until such time as the Investor ceases to own any debt or
equity securities of the Company acquired pursuant to this Agreement or the
Warrant, the Company shall take all necessary action to ensure that its Benefit
Plans with respect to its Senior Executive Officers comply in all respects with
Section 111(b) of the EESA as implemented by any guidance or
regulation thereunder that has been issued and is in effect as of the Closing
Date, and shall not adopt any new Benefit Plan with respect to its Senior
Executive Officers that does not comply therewith. “Senior Executive Officers” means the Company’s “senior
executive officers” as defined in subsection 111 (b)(3) of the EESA and
regulations issued thereunder, including the rules set forth in 31 C.F.R. Part 30.

 

4.9           Related
Party Transactions. Until such time as the Investor
ceases to own any Purchased Securities or Warrant Shares, the Company and the
Company Subsidiaries shall not enter into transactions with Affiliates or
related persons (within the meaning of Item 404 under the SEC’s Regulation S-K)
unless (i) such transactions are on terms no less favorable to the Company
and the Company Subsidiaries than could be obtained from an unaffiliated third
party, and (ii) have been approved by the audit committee of the Board of
Directors or comparable body of independent directors of the Company.

 

4.10         Bank
and Thrift Holding Company Status. If the Company is a Bank Holding Company
or a Savings and Loan Holding Company on the Signing Date, then the Company
shall maintain its status as a Bank Holding Company or Savings and Loan Holding
Company, as the case may be, for as long as the Investor owns any Purchased
Securities or Warrant Shares. The Company shall redeem all Purchased Securities
and Warrant Shares held by the Investor prior to terminating its status as a
Bank Holding Company or Savings and Loan Holding Company, as applicable. “Bank Holding Company” means a company
registered as such with the Board of Governors of the Federal Reserve System
(the “Federal Reserve”) pursuant
to 12 U.S.C. § 1842 and the regulations of the Federal Reserve promulgated
thereunder. “Savings and Loan Holding
Company” means a company registered as such with the Office of
Thrift Supervision pursuant to 12 U.S.C. § 1467(a) and the regulations of
the Office of Thrift Supervision promulgated thereunder.

 

4.11         Predominantly
Financial. For as long as the Investor owns any Purchased Securities or
Warrant Shares, the Company, to the extent it is not itself an insured
depository institution, agrees to remain predominantly engaged in financial
activities. A company is predominantly engaged in financial activities if the
annual gross revenues derived by the company and all subsidiaries of the
company (excluding revenues derived from subsidiary depository institutions),
on a consolidated basis, from engaging in activities that are financial in
nature or are incidental to a financial activity under subsection (k) of Section 4
of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)) represent at least
85 percent of the consolidated annual gross revenues of the company.

 

Article V

Miscellaneous

 

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

 

32

 

(a)          by either the Investor or the Company
if the Closing shall not have occurred by the 30th calendar day following the Signing Date; provided, however,
that in the event the Closing has not occurred by such 30th calendar day, the parties will consult in good
faith to determine whether to extend the term of this Agreement, it being
understood that the parties shall be required to consult only until the fifth
day after such 30th calendar day and not be under any obligation
to extend the term of this Agreement thereafter; provided, further,
that the right to terminate this Agreement under this Section 5.1(a) shall
not be available to any party whose breach of any representation or warranty or
failure to perform any obligation under this Agreement shall have caused or
resulted in the failure of the Closing to occur on or prior to such date; or

 

(b)         by either the Investor or the Company
in the event that any Governmental Entity shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and nonappealable; or

 

(c)          by the mutual written consent of the
Investor and the Company in the event of termination of this Agreement as
provided in this Section 5.1, 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 breach of this
Agreement.

 

5.2           Survival
of Representations and Warranties. All covenants and agreements, other than
those which by their terms apply in whole or in part after the Closing, shall
terminate as of the Closing. The representations and warranties of the Company
made herein or in any certificates delivered in connection with the Closing
shall survive the Closing without limitation.

 

5.3           Amendment.
No amendment of any provision of this Agreement will be effective unless made
in writing and signed by an officer or a duly authorized representative of each
party; provided that the Investor
may unilaterally amend any provision of this Agreement to the extent required
to comply with any changes after the Signing Date in applicable federal
statutes. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative of any rights or remedies provided by law.

 

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

 

5.5           Governing Law: Submission to
Jurisdiction, Etc. This
Agreement will be governed by and construed in accordance with the federal law
of the United States if and to

 

33

 

the extent such law is applicable, and
otherwise in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State. Each of the
parties hereto agrees (a) to submit to the exclusive jurisdiction and
venue of the United States District Court for the District of Columbia and the
United States Court of Federal Claims for any and all civil actions, suits or
proceedings arising out of or relating to this Agreement or the Warrant or the
transactions contemplated hereby or thereby, and (b) that notice may be
served upon (i) the Company at the address and in the manner set forth for
notices to the Company in Section 5.6 and (ii) the Investor in
accordance with federal law. To the extent permitted by applicable law, each of
the parties hereto hereby unconditionally waives trial by jury in any civil
legal action or proceeding relating to this Agreement or the Warrant or the
transactions contemplated hereby or thereby.

 

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

 

If to the
Investor:

 

United States Department of the Treasury

 

1500 Pennsylvania Avenue, NW, Room 2312

 

Washington, D.C. 20220

 

Attention: Assistant General Counsel (Banking
and Finance) Facsimile: (202) 622-1974

 

5.7           Definitions

 

(a)          When a reference is made in this
Agreement to a subsidiary of a person, the term “subsidiary” means any corporation, partnership, joint
venture, limited liability company or other entity (x) of which such
person or a subsidiary of such person is a general partner or (y) of which
a majority of the voting securities or other voting interests, or a majority of
the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the board of directors or persons
performing similar functions with respect to such entity, is directly or
indirectly owned by such person and/or one or more subsidiaries thereof.

 

(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” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with
respect to any person, means the possession, directly or indirectly, of the
power to cause the direction of management and/or

 

34

 

policies of such person, whether through the ownership of voting
securities by contract or otherwise.

 

(c)           The
terms “knowledge of the Company”
or “Company’s knowledge” mean the

 

actual knowledge after reasonable and due inquiry of the “officers” (as such term is defined in Rule 3b-2
under the Exchange Act, but excluding any Vice President or Secretary) of the
Company.

 

5.8           Assignment.
Neither this Agreement nor any right, remedy, obligation nor liability arising
hereunder or by reason hereof shall be assignable by any party hereto without
the prior written consent of the other party, and any attempt to assign any
right, remedy, obligation or liability hereunder without such consent shall be
void, except (a) an assignment, in the case of a merger, consolidation,
statutory share exchange or similar transaction that requires the approval of
the Company’s stockholders (a “Business
Combination”) where such party is not the surviving entity, or a
sale of substantially all of its assets, to the entity which is the survivor of
such Business Combination or the purchaser in such sale and (b) as
provided in Sections 3.5 and 4.5.

 

5.9           Severability.
If any provision of this Agreement or the Warrant, 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.

 

5.10         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 benefit, right or remedies, except that the
provisions of Section 4.5 shall inure to the benefit of the persons
referred to in that Section.

 

* * *

 

35

 

ANNEX
A

 

FORM OF
CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

 

[SEE ATTACHED]

 

 

ANNEX
B

 

FORM OF
CERTIFICATE OF DESIGNATIONS

FOR WARRANT PREFERRED STOCK

 

[SEE ATTACHED]

 

 

ANNEX
C

 

FORM OF
WAIVER

 

In consideration for the benefits I will receive as a result of my
employer’s participation in the United States Department of the Treasury’s TARP
Capital Purchase Program, I hereby voluntarily waive any claim against the
United States or my employer for any changes to my compensation or benefits
that are required to comply with the regulation issued by the Department of the
Treasury as published in the Federal Register on October 20, 2008.

 

I acknowledge that this regulation may require modification of the
compensation, bonus, incentive and other benefit plans, arrangements, policies
and agreements (including so-called “golden parachute” agreements) that I have
with my employer or in which I participate as they relate to the period the
United States holds any equity or debt securities of my employer acquired
through the TARP Capital Purchase Program.

 

This waiver includes all claims I may have under the laws of the United
States or any state related to the requirements imposed by the aforementioned
regulation, including without limitation a claim for any compensation or other
payments I would otherwise receive, any challenge to the process by which this
regulation was adopted and any tort or constitutional claim about the effect of
these regulations on my employment relationship.

 

 

ANNEX
D

 

FORM OF
OPINION

 

(a)          The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
state of its incorporation.

 

(b)         The Preferred Shares have been duly and
validly authorized, and, when issued and delivered pursuant to the Agreement,
the Preferred Shares will be duly and validly issued and fully paid and
non-assessable, will not be issued in violation of any preemptive rights, and
will rank pari passu with or
senior to all other series or classes of Preferred Stock issued on the Closing
Date with respect to the payment of dividends and the distribution of assets in
the event of any dissolution, liquidation or winding up of the Company.

 

(c)          The Warrant has been duly authorized
and, when executed and delivered as contemplated by the Agreement, will
constitute a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its 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.

 

(d)         The shares of Warrant Preferred Stock
issuable upon exercise of the Warrant have been duly authorized and reserved
for issuance upon exercise of the Warrant and when so issued in accordance with
the terms of the Warrant will be validly issued, fully paid and non-assessable,
and will rank pari passu with or
senior to all other series or classes of Preferred Stock, whether or not issued
or outstanding, with respect to the payment of dividends and the distribution
of assets in the event of any dissolution, liquidation or winding up of the
Company.

 

(e)          The Company has the corporate power
and authority to execute and deliver the Agreement and the Warrant and to carry
out its obligations thereunder (which includes the issuance of the Preferred
Shares, Warrant and Warrant Shares).

 

(f)          The execution, delivery and
performance by the Company of the Agreement and the Warrant and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of the Company and its
stockholders, and no further approval or authorization is required on the part
of the Company.

 

(g)         The Agreement is a valid and binding
obligation of the Company enforceable against the Company in accordance with
its 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; provided, however, such counsel need express no
opinion with respect to Section 4.5(h) or the severability provisions
of the Agreement insofar as Section 4.5(h) is concerned.

 

 

FORM OF
WARRANT

 

[SEE ATTACHED]

 

 

SCHEDULE A

 

ADDITIONAL TERMS AND CONDITIONS

 

Company
Information:

 

Name of the Company:  Citizens Bancshares
Corporation

 

Corporate or other
organizational form:  C Corporation

 

Jurisdiction of
Organization:  Georgia

 

Appropriate Federal Banking
Agency:  Board of
Governors of the Federal Reserve System

 

	
  Notice Information:

  	
   

  	
  With Copy to:

  
	
  James E. Young

  	
   

  	
  Beth Lanier, Esq.

  
	
  President and Chief Executive Officer

  	
   

  	
  Bryan Cave Powell Goldstein LLP

  
	
  Citizens Bancshares Corporation

  	
   

  	
  One Atlantic Center

  
	
  75 Piedmont Avenue, N.E.

  	
   

  	
  1201 West Peachtree Street, 14th Floor

  
	
  Atlanta, Georgia 30303

  	
   

  	
  Atlanta, Georgia 30309

  
	
  Fax: 
  (404) 575-8201

  	
   

  	
  Fax: (404) 572-6999

  

 

Terms of the Purchase:

 

Series of Preferred
Stock Purchased:  Fixed Rate
Cumulative Perpetual Preferred Stock, Series A

 

Per Share Liquidation
Preference of Preferred Stock:  $1,000

 

Number of Shares of
Preferred Stock Purchased:  7,462

 

Dividend Payment Dates on
the Preferred Stock:  Feb. 15, May 15, Aug. 15, Nov. 15

 

Series of Warrant
Preferred Stock:  Not
Applicable - CDFI

 

Number of Warrant
Shares:  Not
Applicable - CDFI

 

Number of Net Warrant Shares
(after net settlement):  Not Applicable - CDFI

 

Exercise Price of the
Warrant:  Not
Applicable – CDFI

 

Purchase Price:  $7,462,000

 

Closing:

 

	
  Location of Closing: 

  	
  Hughes Hubbard & Reed
  LLP

  
	
   

  	
  One Battery Park Plaza

  
	
   

  	
  New York, NY 10004

  

 

Time of Closing:  9:00 a.m., Eastern
Standard Time

 

Date of Closing:  March 6, 2009

 

UST Sequence Number: 318

 

 

Wire
Information for Closing:                                         [REDACTED]

 

Contact
for Confirmation of Wire Information:

 

Mr. Samuel
J. Cox

Executive Vice President & Chief Financial Officer

Phone: (404) 575-8400

Email: SJCox@ctbatl.com

 

 

SCHEDULE B

 

CAPITALIZATION

 

Capitalization Date:  February 28, 2009

 

Common Stock

 

Par
value:  $1.00

 

Total
Authorized:  20,000,000

 

Outstanding:  2,013,812(1)

 

Subject to warrants, options, convertible securities,
etc.:  127,003(2)

 

Reserved for benefit plans and other issuances:  215,107(3)

 

Remaining
authorized but unissued:          17,644,078

 

Shares issued after Capitalization Date (other than
pursuant to warrants, options, convertible securities, etc. as set forth
above):    None

 

Preferred Stock  None outstanding or authorized at
Capitalization Date(4)

 

Par
value: None

 

Total
Authorized:  None

 

Outstanding
(by series):  None

 

Reserved
for issuance:  None

 

Remaining
authorized but unissued:  None

 

	
  Holders of
  5% or more of any class of capital stock

  	
   

  	
  Primary Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Herman J.
  Russell

  	
   

  	
  30%

  	
   

  	
  504 Fair
  Street, S.W.

  
	
   

  	
   

  	
   

  	
   

  	
  Atlanta, GA
  30313

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hot Creek
  Capital, LLC

  	
   

  	
  9%

  	
   

  	
  690 South
  McCarran Blvd

  
	
   

  	
   

  	
   

  	
   

  	
  Reno, NV
  89509

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  National Mortgage Association(5)

  	
   

  	
  5%

  	
   

  	
  3900
  Wisconsin Ave, N.W.

  
	
   

  	
   

  	
   

  	
   

  	
  Washington,
  DC  20016

  

 

	
  (1)

  	
  Does not include 90,000
  shares of non-voting common stock, $1.00 par value, held by one shareholder.

  
	
  (2)

  	
  Includes options
  granted (exercisable and non-exercisable pursuant to vesting schedule).

  
	
  (3)

  	
  Includes options
  authorized and reserved, but not granted.

  
	
  (4)

  	
  As of March 4,
  2009, the articles of incorporation will authorize 10,000,000 shares of
  preferred stock, no par value, of which no shares will be outstanding or
  reserved for issuance other than pursuant to the CPP.

  
	
  (5)

  	
  Federal National Mortgage
  Association also owns 90,000 shares of non-voting common stock.

  

 

UST Sequence Number: 318

 

 

SCHEDULE C

 

LITIGATION

 

List any
exceptions to the representation and warranty in Section 2.2(l) of
the Securities Purchase Agreement — Standard Terms.

 

 

If none, please so
indicate by checking the box:  x

 

UST Sequence Number:

 

 

SCHEDULE D

 

COMPLIANCE WITH LAWS

 

List any
exceptions to the representation and warranty in the second sentence of Section 2.2(m) of
the Securities Purchase Agreement — Standard Terms.

 

 

If none, please so
indicate by checking the box: . x

 

 

List any
exceptions to the representation and warranty in the last sentence of Section 2.2(m) of
the Securities Purchase Agreement — Standard Terms.

 

 

If none, please so
indicate by checking the box: . x

 

 

UST Sequence Number: 318

 

 

SCHEDULE E

 

REGULATORY AGREEMENTS

 

List any exceptions to the representation and warranty in Section 2.2(s) of
the Securities Purchase Agreement — Standard Terms.

 

 

If none, please so
indicate by checking the box: . xExhibit No. 10.2

 

UNITED STATES DEPARTMENT OF THE TREASURY

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

 

March 6,
2009

 

Ladies
and Gentlemen:

 

Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement — Standard Terms dated of as of the date of this letter agreement
(the “Securities Purchase Agreement”) between
United States Department of Treasury (“Investor”) and
the company named on the signature page hereto (the “Company”).  Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Securities Purchase Agreement.

 

The
American Recovery and Reinvestment Act of 2009, as it may be amended from time
to time (the “Act”), includes
provisions relating to executive compensation and other matters that may be
inconsistent with the Securities Purchase Agreement, the Warrant and the
Certificate of Designation (the “Transaction
Documents”).  Accordingly,
Investor and the Company desire to confirm their understanding as follows:

 

1.             Notwithstanding anything in the
Transaction Documents to the contrary, in the event that the Act or any rules or
regulations promulgated thereunder are inconsistent with any of the terms of
the Transaction Documents, the Act and such rules and regulations shall
control.

 

2.             For the avoidance of doubt (and
without limiting the generality of Paragraph 1):

 

(a)           the provisions of Section 111
of the Emergency Economic Stabilization Act of 2008, as amended by the Act or
otherwise from time to time (“EESA”),
shall apply to the Company;

 

(b)           the waiver to be
delivered by each of the Company’s Senior Executive Officers pursuant to Section 1.2(d)(v) of
the Securities Purchase Agreement shall, in addition, be delivered by any
additional highly compensated employees required by applicable rules or
regulations under EESA;

 

(c)           the Company’s chief
executive officer and chief financial officer shall provide the written
certification of compliance by the Company with the requirements of Section 111
of EESA in the manner specified by Section 111(b)(4) thereunder or in
any rules or regulations under EESA; and

 

(d)           the Company shall be permitted to repay preferred shares,
and when such preferred shares are repaid, the Investor shall liquidate
warrants associated with such preferred shares, all in accordance with the Act
and any rules and regulations thereunder.

 

UST Sequence Number: 318

 

 

From
and after the date hereof, each reference in the Securities Purchase Agreement
to “this Agreement” or “this Securities Purchase Agreement” or words of like
import shall mean and be a reference to the Agreement (as defined in the
Securities Purchase Agreement) as amended by this letter agreement.

 

This letter agreement will
be governed by and construed in accordance with the federal law of the United
States if and to the extent such law is applicable, and otherwise in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.

 

This letter agreement, the
Securities Purchase Agreement, the Warrant, the Certificate of Designation and
any other documents executed by the parties at the Closing constitute the
entire agreement of the parties with respect to the subject matter hereof.

 

Nothing in this letter
agreement shall be deemed an admission by Investor as to the necessity of
obtaining the consent of the Company in order to effect the changes to the
Transaction Documents contemplated by this letter agreement, nor shall anything
in this letter agreement be deemed to require Investor to obtain the consent of
any other TARP recipient (as defined in the Act) participating in the Capital
Purchase Program (the “CPP”) in
order to effect changes to their documentation under the CPP.

 

This
letter 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 letter
agreement may be delivered by facsimile and such facsimiles will be deemed
sufficient as if actual signature pages had been delivered.

 

[Remainder of this page intentionally left blank]

 

 

In
witness whereof, the parties have duly executed this letter agreement as of the
date first written above.

 

	
   

  	
  UNITED STATES DEPARTMENT OF

  
	
   

  	
  THE TREASURY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Neel
  Kashkari

  
	
   

  	
   

  	
  Name:
  Neel Kashkari

  
	
   

  	
   

  	
  Title: Interim
  Assistant Secretary for 

  Financial Stability

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CITIZENS
  BANCSHARES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James E. Young

  
	
   

  	
   

  	
  Name:
  James E. Young

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

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