Securities Purchase Agreement

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 its common 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 Except to the extent supplemented or superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in the Securities Purchase Agreement – Standard Terms attached hereto as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) and the Securities Purchase Agreement (including the Annexes thereto) 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.

* * *

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

Name:

Title:

THE FIRST BANCORP, INC.

Name:

Title:

EXHIBIT A

SECURITIES PURCHASE AGREEMENT

TABLE OF CONTENTS

Page

Article I

Purchase; Closing

1.1 Purchase...................................................................................................................1

1.2 Closing.....................................................................................................................2

1.3 Interpretation............................................................................................................4

Article II

Representations and Warranties

2.1 Disclosure ................................................................................................................4

2.2 Representations and Warranties of the Company....................................................5

Article III

Covenants

3.1 Commercially Reasonable Efforts .........................................................................13

3.2 Expenses ................................................................................................................14

3.3 Sufficiency of Authorized Common Stock; Exchange Listing..............................14

3.4 Certain Notifications Until Closing .......................................................................15

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 Voting of Warrant Shares ......................................................................................30

4.7 Depositary Shares ..................................................................................................31

4.8 Restriction on Dividends and Repurchases............................................................31

4.9 Repurchase of Investor Securities..........................................................................32

4.10 Executive Compensation .......................................................................................33

4.11 Bank and Thrift Holding Company Status.............................................................33

4.12 Predominantly Financial ........................................................................................34

Article V

Miscellaneous

5.1 Termination............................................................................................................34

5.2 Survival of Representations and Warranties..........................................................35

5.3 Amendment............................................................................................................35

5.4 Waiver of Conditions.............................................................................................35

5.5 Governing Law: Submission to Jurisdiction, Etc . ............................................35

5.6 Notices ...................................................................................................................35

5.7 Definitions..............................................................................................................36

5.8 Assignment ............................................................................................................36

5.9 Severability ............................................................................................................36

5.10 No Third Party Beneficiaries .................................................................................37

LIST OF ANNEXES

ANNEX A: FORM OF CERTIFICATE OF DESIGNATIONS FOR PREFERRED STOCK

ANNEX B: FORM OF WAIVER

ANNEX C: FORM OF OPINION

ANNEX D: FORM OF WARRANT

INDEX OF DEFINED TERMS

Term

Location of

Definition

Affiliate 5.7(b)

Agreement Recitals

Appraisal Procedure 4.9(c)(i)

Appropriate Federal Banking Agency 2.2(s)

Bank Holding Company 4.11

Bankruptcy Exceptions 2.2(d)

Benefit Plans 1.2(d)(iv)

Board of Directors 2.2(f)

Business Combination 4.4

business day 1.3

Capitalization Date 2.2(b)

Certificate 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 Recitals

Company Recitals

Company Financial Statements 2.2(h)

Company Material Adverse Effect 2.1(a)

Company Reports 2.2(i)(i)

Company Subsidiary; Company Subsidiaries 2.2(i)(i)

control; controlled by; under common control with 5.7(b)

Controlled Group 2.2(n)

CPP Recitals

EESA 1.2(d)(iv)

ERISA 2.2(n)

Exchange Act 2.1(b)

Fair Market Value 4.9(c)(ii)

Federal Reserve 4.11

GAAP 2.1(a)

Governmental Entities 1.2(c)

Holder 4.5(k)(i)

Holders’ Counsel 4.5(k)(ii)

Indemnitee 4.5(g)(i)

Information 3.5(b)

Initial Warrant Shares Recitals

Investor Recitals

Junior Stock 4.8(c)

knowledge of the Company; Company’s knowledge 5.7(c)

Last Fiscal Year 2.1(b)

Term

Location of

Definition

Letter Agreement Recitals

officers 5.7(c)

Parity Stock 4.8(c)

Pending Underwritten Offering 4.5(l)

Permitted Repurchases 4.8(a)(ii)

Piggyback Registration 4.5(a)(iv)

Plan 2.2(n)

Preferred Shares Recitals

Preferred Stock Recitals

Previously Disclosed 2.1(b)

Proprietary Rights 2.2(u)

Purchase Recitals

Purchase Price 1.1

Purchased Securities Recitals

Qualified Equity Offering 4.4

register; registered; registration 4.5(k)(iii)

Registrable Securities 4.5(k)(iv)

Registration Expenses 4.5(k)(v)

Regulatory Agreement 2.2(s)

Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415 4.5(k)(vi)

Savings and Loan Holding Company 4.11

Schedules Recitals

SEC 2.1(b)

Securities Act 2.2(a)

Selling Expenses 4.5(k)(vii)

Senior Executive Officers 4.10

Share Dilution Amount 4.8(a)(ii)

Shelf Registration Statement 4.5(a)(ii)

Signing Date 2.1(a)

Special Registration 4.5(i)

Stockholder Proposals 3.1(b)

subsidiary 5.8(a)

Tax; Taxes 2.2(o)

Transfer 4.4

Warrant Recitals

Warrant Shares 2.2(d)

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 its

Common Stock (" Common Stock ") set forth on Schedule A to the Letter Agreement (the " Initial

Warrant Shares ") (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 ").

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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

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performed in all material respects all obligations required to be performed by it under this

Agreement at or prior to the Closing;

(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 amendment

to its certificate or articles of incorporation, articles of association, or similar

organizational document (" Charter ") in substantially the form attached hereto as Annex

A (the " Certificate 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 B 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 C;

(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

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(viii) the Company shall have duly executed the Warrant in substantially the

form attached hereto as Annex D 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) " 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 accepted accounting

principles in the United States (" GAAP ") or regulatory accounting requirements, or authoritative

interpretations thereof, (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

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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 (D) changes in the market price or trading volume of the Common

Stock or any other equity, equity-related or debt securities of the Company or its consolidated

subsidiaries (it being understood and agreed that the exception set forth in this clause (D) does

not apply to the underlying reason giving rise to or contributing to any such change); or (ii) the

ability of the Company to consummate the Purchase and the other transactions contemplated by

this Agreement and the Warrant and perform its obligations hereunder or thereunder on a timely

basis.

(b) " Previously Disclosed " means information set forth or incorporated in the

Company’s Annual Report on Form 10-K for the most recently completed fiscal year of the

Company filed with the Securities and Exchange Commission (the " SEC ") prior to the Signing

Date (the " Last Fiscal Year ") or in its other reports and forms filed with or furnished to the SEC

under Sections 13(a), 14(a) or 15(d) of the Securities Exchange Act of 1934 (the " Exchange

Act ") on or after the last day of the Last Fiscal Year and prior to the Signing Date.

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 is

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). Except as provided in the Warrant, as of

the Signing Date, the Company does not have outstanding any securities or other obligations

providing the holder the right to acquire Common Stock that is not reserved for issuance as

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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.

(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 Common 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, subject, if applicable, to the approvals of its

stockholders set forth on Schedule C.

(e) Authorization, Enforceability.

(i) The Company has the corporate power and authority to execute and

deliver this Agreement and the Warrant and, subject, if applicable, to the approvals of its

stockholders set forth on Schedule C, 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, subject, in each case, if applicable, to the approvals of its stockholders set

forth on Schedule C. 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.

(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

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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 Company Subsidiary under any of the terms, conditions or

provisions of (i) subject, if applicable, to the approvals of the Company’s stockholders set

forth on Schedule C, 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 Certificate of Designations with the Secretary

of State of its jurisdiction of organization or other applicable Governmental Entity, any

current report on Form 8-K required to be filed with the SEC, such filings and approvals

as are required to be made or obtained under any state "blue sky" laws, the filing of any

proxy statement contemplated by Section 3.1 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. The

Company has taken all actions necessary to render any stockholders’ rights plan of the Company

inapplicable to this Agreement and the Warrant and the consummation of the transactions

contemplated hereby and thereby, including the exercise of the Warrant by the Investor in

accordance with its terms.

(g) No Company Material Adverse Effect. Since the last day of the last completed

fiscal period for which the Company has filed a Quarterly Report on Form 10-Q or an Annual

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Report on Form 10-K with the SEC prior to the Signing Date, no fact, circumstance, event,

change, occurrence, condition or development has occurred that, individually or in the aggregate,

has had or would reasonably be expected to have a Company Material Adverse Effect.

(h) Company Financial Statements. Each of the consolidated financial statements of

the Company and its consolidated subsidiaries (collectively the " Company Financial

Statements ") included or incorporated by reference in the Company Reports filed with the SEC

since December 31, 2006, present fairly in all material respects the consolidated financial

position of the Company and its consolidated subsidiaries as of the dates indicated therein (or if

amended prior to the Signing Date, as of the date of such amendment) 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), (B) have been prepared from, and are in accordance with, the

books and records of the Company and the Company Subsidiaries and (C) complied as to form,

as of their respective dates of filing with the SEC, in all material respects with the applicable

accounting requirements and with the published rules and regulations of the SEC with respect

thereto.

(i) Reports.

(i) Since December 31, 2006, the Company and each subsidiary of the

Company (each a " Company Subsidiary " and, collectively, the " Company Subsidiaries ")

has timely 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. In the case of each such Company Report filed with or

furnished to the SEC, such Company Report (A) did not, as of its date or if amended

prior to the Signing Date, as of the date of such amendment, contain an untrue statement

of a material fact or omit to state a material fact necessary in order to make the statements

made therein, in light of the circumstances under which they were made, not misleading,

and (B) complied as to form in all material respects with the applicable requirements of

the Securities Act and the Exchange Act. With respect to all other Company Reports, the

Company Reports were complete and accurate in all material respects as of their

respective dates. No executive officer of the Company or any Company Subsidiary has

failed in any respect to make the certifications required of him or her under Section 302

or 906 of the Sarbanes-Oxley Act of 2002.

(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

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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 disclosure controls and procedures (as defined in

Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to the

Company, including the 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 over financial reporting (as defined in Rule 13a-15(f) of the

Exchange Act) that are reasonably likely to adversely affect the Company’s ability to

record, process, summarize and report financial information and (y) any fraud, whether or

not material, that involves management or other employees who have a significant role in

the Company’s internal controls over financial reporting.

(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 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 D 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

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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 E, 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 E, no Governmental Entity has placed any restriction on the business or properties of

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

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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.

(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.

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(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.

(s) Agreements with Regulatory Agencies. Except as set forth on Schedule F, 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.

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(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

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.

(a) 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.

(b) If the Company is required to obtain any stockholder approvals set forth on

Schedule C, then the Company shall comply with this Section 3.1(b) and Section 3.1(c). The

Company shall call a special meeting of its stockholders, as promptly as practicable following

the Closing, to vote on proposals (collectively, the " Stockholder Proposals ") to (i) approve the

exercise of the Warrant for Common Stock for purposes of the rules of the national security

exchange on which the Common Stock is listed and/or (ii) amend the Company’s Charter to

increase the number of authorized shares of Common Stock to at least such number as shall be

sufficient to permit the full exercise of the Warrant for Common Stock and comply with the

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other provisions of this Section 3.1(b) and Section 3.1(c). The Board of Directors shall

recommend to the Company’s stockholders that such stockholders vote in favor of the

Stockholder Proposals. In connection with such meeting, the Company shall prepare (and the

Investor will reasonably cooperate with the Company to prepare) and file with the SEC as

promptly as practicable (but in no event more than ten business days after the Closing) a

preliminary proxy statement, shall use its reasonable best efforts to respond to any comments of

the SEC or its staff thereon and to cause a definitive proxy statement related to such

stockholders’ meeting to be mailed to the Company’s stockholders not more than five business

days after clearance thereof by the SEC, and shall use its reasonable best efforts to solicit proxies

for such stockholder approval of the Stockholder Proposals. The Company shall notify the

Investor promptly of the receipt of any comments from the SEC or its staff with respect to the

proxy statement and of any request by the SEC or its staff for amendments or supplements to

such proxy statement or for additional information and will supply the Investor with copies of all

correspondence between