Exhibit 10.1

 

AGREEMENT AND PLAN OF MERGER

 

BY AND BETWEEN

 

FB BANCORP

 

AND

 

FIRST BUSINESS BANK, NATIONAL ASSOCIATION

 

AND

 

1ST PACIFIC BANCORP

 

AND

 

1ST PACIFIC BANK OF CALIFORNIA

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

ARTICLE I

CERTAIN DEFINITIONS

3

 

1.1

Certain Definitions

3

 

 

 

 

ARTICLE II

THE MERGER

11

 

2.1

Merger

11

 

2.2

Effective Time

12

 

2.3

Articles of Incorporation and Bylaws

12

 

2.4

Directors and Officers of Surviving Corporation

12

 

2.5

Effects of the Merger

13

 

2.6

Intentionally omitted

13

 

2.7

Possible Alternative Structures

13

 

2.8

Bank Holding Company Merger and Bank Merger

13

 

2.9

Additional Actions

13

 

 

 

 

ARTICLE III

CONVERSION OF SHARES

14

 

3.1

Conversion of 1st Pacific Bancorp Common Stock; Merger Consideration

14

 

3.2

Dissenting Shares

15

 

3.3

Surrender of Certificates and Payment of Merger Consideration; Earn Out

15

 

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF 1ST PACIFIC BANCORP AND 1ST PACIFIC BANK

19

 

4.1

Standard

19

 

4.2

Organization

19

 

4.3

Capitalization

20

 

4.4

Authority; No Violation

21

 

4.5

Consents

22

 

4.6

Financial Statements

22

 

4.7

Taxes

24

 

4.8

Intentionally omitted

24

 

4.9

Material Contracts; Leases; Defaults

24

 

4.10

Ownership of Property; Insurance Coverage

26

 

4.11

Legal Proceedings

27

 

4.12

Compliance With Applicable Law

28

 

4.13

Employee Benefit Plans

29

 

4.14

Brokers, Finders and Financial Advisors

31

 

4.15

Environmental Matters

31

 

4.16

Loan Portfolio

33

 

4.17

Securities Law Documents

34

 

4.18

Related Party Transactions

34

 

4.19

Deposits

34

 

4.20

Antitakeover Provisions Inapplicable; Required Vote

34

 

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4.21

Registration Obligations

34

 

4.22

Risk Management Instruments

34

 

4.23

Fairness Opinion

35

 

4.24

Intellectual Property

35

 

4.25

Labor Matters

35

 

4.26

1st Pacific Bancorp Information Supplied

35

 

4.27

Regulatory Orders

36

 

4.28

Disclaimer of Other Representations and Warranties

36

 

 

 

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF FB BANCORP AND FIRST BUSINESS BANK

36

 

5.1

Standard

36

 

5.2

Organization

37

 

5.3

Capitalization

37

 

5.4

Authority; No Violation

38

 

5.5

Consents

38

 

5.6

Financing Commitments

39

 

5.7

Licenses and Permits

39

 

5.8

Intentionally Omitted

39

 

5.9

Stock Purchase

39

 

5.10

FB Bancorp and First Business Bank Information Supplied

40

 

5.11

Intentionally Omitted

40

 

5.12

Funds for Stock Purchase on Deposit with First Business Bank

40

 

5.13

Antitakeover Provisions Inapplicable; Required Vote

40

 

5.14

Legal Proceedings

40

 

5.15

Disclaimer of Other Representations and Warranties

40

 

 

 

 

ARTICLE VI

COVENANTS OF 1ST PACIFIC BANCORP

41

 

6.1

Conduct of Business

41

 

6.2

Current Information

45

 

6.3

Access to Properties and Records

46

 

6.4

Financial and Other Statements

47

 

6.5

Maintenance of Insurance

47

 

6.6

Disclosure Supplements

48

 

6.7

Consents and Approvals of Third Parties

48

 

6.8

All Commercially Reasonable Efforts

48

 

6.9

Failure to Fulfill Conditions

48

 

6.10

No Solicitation

49

 

6.11

Reserves and Merger-Related Costs

52

 

6.12

Board of Directors and Committee Meetings

53

 

6.13

Cooperation with Bank Holding Company Merger and Bank Merger

53

 

 

 

 

ARTICLE VII

COVENANTS OF FB BANCORP AND FIRST BUSINESS BANK

53

 

7.1

Conduct of Business

53

 

7.2

Disclosure Supplements

53

 

7.3

Consents and Approvals of Third Parties

54

 

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7.4

All Reasonable Efforts

54

 

7.5

Failure to Fulfill Conditions

54

 

7.6

Directors and Officers Indemnification and Insurance

54

 

7.7

Change of Control Benefits Approval

55

 

7.8

Reasonable Regulatory Restrictions

55

 

7.9

Restrictions on Transfer

55

 

 

 

 

ARTICLE VIII

REGULATORY AND OTHER MATTERS

56

 

8.1

Proxy Statement-Prospectus

56

 

8.2

Shareholders Meeting

57

 

8.3

Regulatory Approvals

57

 

 

 

 

ARTICLE IX

CLOSING CONDITIONS

58

 

9.1

Conditions to Each Party’s Obligations under this Agreement

58

 

9.2

Conditions to the Obligations of FB Bancorp and First Business Bank under this
Agreement

59

 

9.3

Conditions to the Obligations of 1st Pacific Bancorp and 1st Pacific Bank under
this Agreement

60

 

 

 

 

ARTICLE X

THE CLOSING

61

 

10.1

Time and Place

61

 

10.2

Deliveries at the Closing

61

 

 

 

 

ARTICLE XI

TERMINATION, AMENDMENT AND WAIVER

62

 

11.1

Termination

62

 

11.2

Effect of Termination

63

 

11.3

Amendment, Extension and Waiver

64

 

 

 

 

ARTICLE XII

EMPLOYEE BENEFITS

65

 

12.1

Employee Benefits

65

 

 

 

 

ARTICLE XIII

MISCELLANEOUS

66

 

13.1

Confidentiality

66

 

13.2

Expenses

66

 

13.3

Public Announcements

66

 

13.4

Survival

66

 

13.5

Notices

67

 

13.6

Parties in Interest

67

 

13.7

Complete Agreement

68

 

13.8

Counterparts

68

 

13.9

Severability

68

 

13.10

Governing Law; Venue

68

 

13.11

Intentionally omitted

68

 

13.12

Interpretation

68

 

13.13

Specific Performance

69

 

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EXHIBITS

 

Exhibit A:

Agreement and Plan of Merger

 

 

Exhibit B:

Agreement to Merge and Plan of Bank Holding Company Formation

 

 

Exhibit C:

Agreement and Plan of Bank Holding Company Merger

 

 

Exhibit D:

Agreement and Plan of Bank Merger

 

 

Exhibit E:

Voting Agreement

 

 

Exhibit F:

Earn Out Loans

 

 

Exhibit G:

Form of Termination of Employment Agreement

 

 

Exhibit H:

Shareholder Agreement

 

 

Exhibit I:

Directors Agreement

 

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AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of July 16, 2009,
by and among, FB Bancorp, a California corporation (“FB Bancorp”), First
Business Bank, National Association, a national banking association (“First
Business Bank”), 1st Pacific Bancorp, a California corporation (“1st Pacific
Bancorp”), and 1st Pacific Bank of California, a California state-chartered bank
and the wholly-owned subsidiary of 1st Pacific Bancorp (“1st Pacific Bank”), is
made with reference to the following:

 

RECITALS

 

WHEREAS, the Boards of Directors of each of FB Bancorp, First Business Bank, 1st
Pacific Bancorp and 1st Pacific Bank: (i) have determined that this Agreement
and the business combination and related transactions contemplated hereby are in
the best interests of their respective companies and shareholders, (ii) have
determined that this Agreement and the transactions contemplated hereby are
consistent with and in furtherance of their respective business strategies, and
(iii) have adopted resolutions approving this Agreement and declaring its
advisability;

 

WHEREAS, subject to the terms and conditions of this Agreement and an Agreement
and Plan of Merger, the form of which is attached as Exhibit “A” hereto (the
“Merger Agreement”), FB Bancorp desires to acquire all of the issued and
outstanding shares of 1st Pacific Bancorp common stock, no par value (the “1st
Pacific Bancorp Common Stock”), in exchange for cash through the merger of a
wholly-owned subsidiary of FB Bancorp (“FB Merger Sub”) with and into 1st
Pacific Bancorp (the “Merger”), with 1st Pacific Bancorp surviving the Merger
(the “Surviving Corporation”);

 

WHEREAS, subject to the terms and conditions of this Agreement and an Agreement
to Merge and Plan of Bank Holding Company Formation, the form of which is
attached as Exhibit “B” hereto (the “Bank Holding Company Formation Agreement”),
immediately prior to the Merger, FB Bancorp and First Business Bank will
reorganize pursuant to which FB Bancorp will become the bank holding company for
First Business Bank (the “Bank Holding Company Formation”);

 

WHEREAS, immediately after the consummation of the Bank Holding Company
Formation and the Merger and subject to the terms and conditions of this
Agreement and an Agreement and Plan of Bank Holding Company Merger, the form of
which is attached as Exhibit “C” hereto (the “Bank Holding Company Merger
Agreement”), the Surviving Corporation will merge with and into FB Bancorp (the
“Bank Holding Company Merger”) with the Surviving Corporation surviving the Bank
Holding Company Merger (the “Surviving Bank Holding Company”);

 

WHEREAS, immediately after the consummation of the Bank Holding Company
Formation, the Merger and the Bank Holding Company Merger and subject to the
terms and conditions of this Agreement and an Agreement and Plan of Bank Merger,
the form of which is attached as Exhibit “D” hereto (the “Bank Merger
Agreement”), First Business Bank will be merged with and into 1st Pacific Bank
(the “Bank Merger”) with 1st Pacific Bank surviving the Bank Merger and
continuing operations under its California banking charter and as the
wholly-owned bank subsidiary of the Surviving Bank Holding Company (the
“Surviving Bank”);

 

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WHEREAS, as a condition to the willingness of FB Bancorp and First Business Bank
to enter into this Agreement, each of the directors of 1st Pacific Bancorp has
entered into a Voting Agreement, substantially in the form of Exhibit “E”
hereto, dated as of the date hereof, with First Business Bank (the “Voting
Agreement”), pursuant to which each such director has agreed, among other
things, to vote all shares of 1st Pacific Bancorp Common Stock owned by such
person in favor of the approval of this Agreement and the transactions
contemplated hereby, upon the terms and subject to the conditions set forth in
such Voting Agreements;

 

WHEREAS, as a condition to the willingness of 1st Pacific Bancorp and 1st
Pacific Bank to enter into this Agreement, Ernest Auerbach, an adult individual
and the principal shareholder of First Business Bank and FB Bancorp
(“Auerbach”)  has entered into a Shareholder Agreement, substantially in the
form of Exhibit “H” hereto, dated as of the date hereof, with 1st Pacific
Bancorp and 1st Pacific Bank (the “Shareholder Agreement”), pursuant to which
Auerbach has agreed, among other things, to vote all shares of First Business
Bank Common Stock and FB Bancorp Common Stock currently or hereafter 
beneficially owned by him in favor of the approval of this Agreement and the
transactions contemplated hereby, upon the terms and subject to the conditions
set forth in the Shareholder Agreement;

 

WHEREAS, as a condition to the willingness of 1st Pacific Bancorp and 1st
Pacific Bank to enter into this Agreement, each of the directors of First
Business Bank has entered into a Directors Agreement, substantially in the form
of Exhibit “I” hereto, dated as of the date hereof, with 1st Pacific Bancorp and
1st Pacific Bank (the “Directors Agreement”), pursuant to which each such
director has agreed, among other things, to vote all shares of First Business
Bank Common Stock and FB Bancorp Common Stock currently or hereafter owned by
such person in favor of the approval of this Agreement and the transactions
contemplated hereby, upon the terms and subject to the conditions set forth in
such Director Agreements;

 

WHEREAS, as a condition to the willingness of FB Bancorp and First Business Bank
to enter into this Agreement, Richard H. Revier and James H. Burgess have
executed and delivered to FB Bancorp and First Business Bank a termination of
employment agreement in the form attached hereto as Exhibit “G,” terminating the
1st Pacific Bancorp Employment Agreements (as defined below) without liability
to 1st Pacific Bancorp, 1st Pacific Bank or Surviving Corporation, except for
such liabilities and obligations provided therein; and

 

WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto;

 

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

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ARTICLE I

CERTAIN DEFINITIONS

 

1.1          Certain Definitions

 

As used in this Agreement, the following terms have the following meanings
(unless the context otherwise requires, references to Articles and
Sections refer to Articles and Sections of this Agreement).

 

“1st Pacific Bancorp Common Stock” shall have the meaning set forth in the
Recitals to this Agreement.

 

“1st Pacific Bancorp Compensation and Benefit Plans” shall have the meaning set
forth in Section 4.13.1.

 

“1st Pacific Bancorp Disclosure Schedule” shall mean a written disclosure
schedule delivered by 1st Pacific Bancorp to First Business Bank and subject to
the introduction of Article IV, referencing the appropriate section of this
Agreement.

 

“1st Pacific Bancorp Employment Agreements” shall mean those agreements of
employment in effect as of June 1, 2009 by and between 1st Pacific Bancorp or
1st Pacific Bank and Richard H. Revier and James H. Burgess.

 

“1st Pacific Bancorp Equity Plans” shall mean the Second Amended and Restated
2000 Stock Option Plan and the 2007 Omnibus Stock Incentive Plan of 1st Pacific
Bancorp and any amendments thereto.

 

“1st Pacific Bancorp Financial Statements” shall mean (i) the audited
consolidated balance sheets (including related notes and schedules, if any) of
1st Pacific Bancorp and subsidiaries as of December 31, 2008, 2007 and 2006 and
the consolidated statements of operations, stockholders’ equity and cash flows
(including related notes and schedules, if any) of 1st Pacific Bancorp and
subsidiaries for each of the three years ended December 31, 2008, 2007 and 2006,
and (ii) the unaudited interim consolidated financial statements of 1st Pacific
Bancorp and subsidiaries as of the end of each calendar quarter following
December 31, 2008 and for the periods then ended.

 

“1st Pacific Bancorp Option” shall mean an option to purchase shares of 1st
Pacific Bancorp Common Stock granted pursuant to the 1st Pacific Bancorp Equity
Plans and as set forth in the 1st Pacific Bancorp Disclosure Schedule 4.3.1.

 

“1st Pacific Bancorp Recommendation” shall have the meaning set forth in
Section 8.2.1.

 

“1st Pacific Bancorp Regulatory Agreement” shall have the meaning set forth in
Section 4.12.3.

 

“1st Pacific Bancorp Regulatory Reports” means the Reports of Condition and
Income of 1st Pacific Bank and accompanying schedules, as filed with the FDIC,
for each calendar quarter beginning with the quarter ended March 31, 2007,
through the Closing Date, and all Reports from March 31, 2007 through the
Closing Date.

 

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“1st Pacific Bancorp Shareholders Meeting” shall have the meaning set forth in
Section 8.2.1.

 

“1st Pacific Bancorp Subsequent Determination” shall have the meaning set forth
in Section 6.10.

 

“1st Pacific Bancorp Transaction Expenses” shall have the meaning set forth in
Section 6.11.3.

 

“1st Pacific Bancorp Trust Preferred Securities” means the floating rate
preferred securities issued by the FPBN Trust I, a Delaware trust affiliate,
which trust securities mature on September 1, 2037.

 

“1st Pacific Bancorp” shall mean 1st Pacific Bancorp, a California corporation,
with its principal office located at 9333 Genesee Avenue #300, San Diego,
California, 92121.

 

“1st Pacific Bank” shall mean 1st Pacific Bank of California, a
California-chartered commercial bank, with its principal office located at 9333
Genesee Avenue #300, San Diego, California, 92121, which is a wholly-owned
subsidiary of 1st Pacific Bancorp.

 

“1st Pacific Bank Common Stock” shall mean the common stock of 1st Pacific Bank,
no par value.

 

“1st Pacific Bank’s Core Deposits” shall mean total deposits (regardless of
amount) less brokered deposits (as brokered deposits are defined in the Glossary
for the Reports of Condition and Income Instructions for the then current
version of the report forms FFIEC 031 and 041).

 

“1st Pacific Bank Tier 1 Capital” shall mean Tier 1 capital as determined in
accordance with the Reports of Condition and Income Instructions for the then
current version of the report forms FFIEC 031 and 041, but shall not be deemed
to include the impact of any reassessment of the amount of 1st Pacific Bank’s
deferred tax asset as a result of this Agreement, it being understood and
acknowledged that the execution and delivery of this Agreement will cause 1st
Pacific Bank to reassess the amount of its deferred tax asset, which is
disallowed for Tier 1 capital purposes, in accordance with the Report of
Condition and Income instructions and that any adverse changes in its Tier 1
Capital that result from changes in the disallowed deferred tax asset will be
considered a result of this Agreement.

 

“Acquisition Proposal” shall have the meaning set forth in Section 6.10.

 

“Acquisition Transaction” shall have the meaning set forth in Section 6.10.

 

“Affiliate” means any Person who directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person and, without limiting the generality of the foregoing, includes any
executive officer or director of such Person and any Affiliate of such executive
officer or director.

 

“Agreement” means this agreement and any amendment hereto.

 

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“Applications” means the applications for regulatory approval that are required
by the transactions contemplated hereby.

 

“Auerbach” shall have the meaning set forth in the Recitals to this Agreement.

 

“Bank Holding Company Formation” shall have the meaning set forth in the
Recitals to this Agreement.

 

“Bank Holding Company Formation Agreement” shall have the meaning set forth in
the Recitals to this Agreement.

 

“Bank Holding Company Merger Agreement” shall have the meaning set forth in the
Recitals to this Agreement.

 

“Bank Holding Company Merger” shall have the meaning set forth in the Recitals
to this Agreement.

 

“Bank Merger Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Bank Merger” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Bank Regulator” shall mean any Federal or state banking regulator including,
but not limited to, the OCC, the FDIC, the FRB and the Department, which
regulates 1st Pacific Bank or First Business Bank, or any of their respective
holding companies or subsidiaries, as the case may be.

 

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

 

“Certificate” or “Certificates” shall have the meaning set forth in
Section 3.1.5.

 

“CGCL” shall mean the California General Corporation Law.

 

“Claim” shall have the meaning set forth in Section 7.6.1.

 

“Closing Date” shall have the meaning set forth in Section 2.2.

 

“Closing” shall have the meaning set forth in Section 2.2.

 

“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.

 

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

 

“Confidentiality Agreement” shall mean the confidentiality agreement referred to
in Section 13.1 of this Agreement.

 

“CRA” shall mean the Community Reinvestment Act of 1977, as amended

 

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“Department” shall mean the California Department of Financial Institutions.

 

“Director Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Dissenting Shares” shall have the meaning set forth in Section 3.2.1.

 

“Earn Out Amount” shall have the meaning set forth in Section 3.3.4.

 

“Earn Out Lawsuit” shall have the meaning set forth in Section 3.3.4.

 

“Earn Out Loans” shall have the meaning set forth in Section 3.3.4.

 

“Earn Out Period” shall have the meaning set forth in Section 3.3.4.

 

“Earn Out Report” shall have the meaning set forth in Section 3.3.4.

 

“Effective Time” shall mean the date and time specified pursuant to Section 2.2
hereof as the effective time of the Merger.

 

“Environmental Laws” means any applicable Federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
§ 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. § 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. § 7401, et seq;
the Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq;
the Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001, et seq;
the Safe Drinking Water Act, 42 U.S.C. § 300f, et seq; and all comparable state
and local laws, and (b) any common law (including without limitation common law
that may impose strict liability) that may impose liability or obligations for
injuries or damages due to the presence of or exposure to any Materials of
Environmental Concern.

 

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

 

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

 

“Exchange Agent” shall have the meaning set forth in Section 3.3.1.

 

“FDIC” shall mean the Federal Deposit Insurance Corporation or any successor
thereto.

 

“Federal Reserve Bank” shall mean the Federal Reserve Bank of San Francisco.

 

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“FB Bancorp” means FB Bancorp, a California corporation with its principal
office located at 12265 El Camino Real, Suite #100, San Diego, California 92130.

 

“FB Merger Sub” shall have the meaning set forth in the Recitals to this
Agreement.

 

“First Business Bank Common Stock” shall have the meaning set forth in
Section 2.1.1.

 

“First Business Bank Preferred Stock” shall mean the Fixed Rate Non-Cumulative
Perpetual Preferred Stock, Series A, liquidation preference $1,000 per share,
and the Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B,
liquidation preference $1,000 per share.

 

“First Business Bank Fee” shall have the meaning set forth in Section 11.2.2(C).

 

“First Business Bank Shareholders Meeting” shall have the meaning set forth in
Section 8.2.2.

 

“First Business Bank Stock Benefit Plan” means the Ramona National Bank 2001
Stock Option Plan.

 

“First Business Bank” shall mean First Business Bank, National Association, a
national banking association, with its principal office located at 12265 El
Camino Real, Suite #100 San Diego, California 92130.

 

“FRB” shall mean the Board of Governors of the Federal Reserve System or any
successor thereto.

 

“GAAP” shall mean accounting principles generally accepted in the United States
of America, consistently applied with prior practice.

 

“Governmental Entity” shall mean any Federal or state court, administrative
agency or commission or other governmental authority or instrumentality.

 

“HIPAA” shall mean the Health Insurance Portability and Accountability Act.

 

“HOLA” shall mean the Home Owners’ Loan Act, as amended.

 

“Indemnified Liabilities” shall have the meaning set forth in Section 7.6.1.

 

“Indemnified Parties” shall have the meaning set forth in Section 7.6.1.

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Junior Subordinated Debt Securities” means 1st Pacific Bancorp’s unsecured
floating rate junior subordinated debt securities due September 1, 2037.

 

“Knowledge” as used with respect to a Person (including references to such
Person being aware of a particular matter) means those facts that are known or
should have been known after reasonable investigation by the executive officers
and directors of such Person, and includes any facts, matters or circumstances
set forth in any written notice from any Bank Regulator.  For

 

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purposes of this definition, a “reasonable investigation” shall mean a review of
written records in such Person’s possession and interview of the executive
officers and directors of such Person.

 

“Loan Property” shall have the meaning set forth in Section 4.15.2.

 

“Material Adverse Effect” shall mean, with respect to FB Bancorp or First
Business Bank, any effect that (i) is material and adverse to the financial
condition, results of operations or business of such party taken as a whole, or
(ii) does or would materially impair the ability of FB Bancorp or First Business
Bank to perform its obligations under this Agreement or otherwise materially
threaten or materially impede the consummation of the transactions contemplated
by this Agreement.  With respect to 1st Pacific Bancorp or 1st Pacific Bank,
“Material Adverse Effect” shall mean any effect that (i) is material and adverse
to the financial condition, results of operations or business of such party
taken as a whole, or (ii) does or would materially impair the ability of 1st
Pacific Bancorp or 1st Pacific Bank to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the consummation
of the transactions contemplated by this Agreement.  The failure to satisfy any
of the closing conditions set forth in Section 9.2.7 shall not be deemed a
Material Adverse Effect unless otherwise meeting the definition set forth
above.  For purposes of this Agreement, the term “Material Adverse Effect” shall
not be deemed to include the impact of (a) changes in laws and regulations
affecting banks or thrift institutions or their holding companies generally, or
interpretations thereof by courts or governmental agencies, (b) changes in GAAP
or regulatory accounting principles generally applicable to financial
institutions and their holding companies, (c) the impact of compliance with this
Agreement on the business, financial condition or results of operations of the
parties and their respective subsidiaries, including the expenses incurred by
the parties hereto in consummating the transactions contemplated by this
Agreement, (d) any charge or reserve taken by 1st Pacific Bancorp at the request
of FB Bancorp pursuant to Section 6.11 of this Agreement, (e) actions and
omissions of a party hereto taken with the prior written consent of another
non-affiliated party or pursuant to the terms of this Agreement, (f) changes in
national or international political or social conditions including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military or
terrorist attack upon or within the United States, or any of its territories,
possessions or diplomatic or consular offices or upon any military installation,
equipment or personnel of the United States, unless it uniquely affects any of
the parties or any of their subsidiaries, and/or (g) any change in the value of
the securities or loan portfolio, or any change in the value of the deposits or
borrowings, of FB Bancorp or 1st Pacific Bancorp, or any of their Subsidiaries,
respectively, resulting from a change in interest rates generally.

 

“Materials of Environmental Concern” means pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products, and any other materials
regulated under Environmental Laws.

 

“Maximum Amount” shall have the meaning set forth in Section 7.6.3.

 

“Merger Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Merger Consideration” shall have the meaning set forth in Section 3.1.4.

 

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“Merger Registration Statement” shall mean the registration statement on
Form S-4, together with all amendments, filed with the SEC under the Securities
Act for the purpose of registering shares of FB Bancorp Common Stock to be
offered to holders of First Business Bank Common Stock in connection with the
Bank Holding Company Merger.  The Proxy Statement-Prospectus contained in the
Merger Registration Statement will be utilized to solicit Shareholder Approvals.

 

“Merger” shall mean the merger of 1st Pacific Bancorp with and into FB Merger
Sub pursuant to the terms hereof.

 

“Nasdaq” shall mean the Nasdaq Global Select Market.

 

“Net Lawsuit Collections” shall have the meaning set forth in Section 3.3.4.

 

“Net Loan Collections” shall have the meaning set forth in Section 3.3.4.

 

“Notice of Superior Proposal” shall have the meaning set forth in Section 6.10.

 

“Observer” shall have the meaning set forth in Section 6.12.

 

“OCC” shall mean the Office of the Comptroller of the Currency or any successor
thereto.

 

“Participation Facility” shall have the meaning set forth in Section 4.15.2.

 

“Pension Plan” shall have the meaning set forth in Section 4.13.2.

 

“Per Share Consideration” shall have the meaning set forth in Section 3.1.4.

 

“Person” shall mean any individual, corporation, partnership, joint venture,
association, trust or “group” (as that term is defined under the Exchange Act).

 

“Pre-Closing Earn Out Amount” shall have the meaning set forth in Section 3.3.4.

 

“Pre-Closing Earn Out Period” shall have the meaning set forth in Section 3.3.4.

 

“Pre-Closing Earn Out Report” shall have the meaning set forth in Section 3.3.4.

 

“Pre-Closing Net Lawsuit Collections” shall have the meaning set forth in
Section 3.3.4.

 

“Pre-Closing Net Loan Collections” shall have the meaning set forth in
Section 3.3.4.

 

“Proxy Statement-Prospectus” shall have the meaning set forth in Section 8.1.1.

 

“Regulatory Approvals” means the approval of any Bank Regulator that is
necessary in connection with the consummation of the Bank Holding Company
Formation, the Merger, the Bank Holding Company Merger, the Bank Merger and the
related transactions contemplated by this Agreement.

 

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“Reports” means all forms, statements, certifications, reports and documents
required to be filed or furnished by 1st Pacific Bancorp with the FRB or 1st
Pacific Bank with the FDIC or the Department.

 

“Representatives” shall have the meaning set forth in Section 6.10.

 

“Rights” shall mean warrants, options, rights, convertible securities, stock
appreciation rights and other arrangements or commitments which obligate an
entity to issue or dispose of any of its capital stock or other ownership
interests or which provide for compensation based on the equity appreciation of
its capital stock.

 

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

 

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

 

“Securities Documents” shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.

 

“Securities Laws” shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the SEC promulgated thereunder.

 

“Shareholder” or “Shareholders” shall have the meaning set forth in
Section 3.1.5.

 

“Shareholder Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Shareholder Approvals” shall mean the approval of the shareholders of First
Business Bank at the First Business Bank Shareholders Meeting, the approval of
the Shareholders of 1st Pacific Bancorp at the 1st Pacific Bancorp Shareholders
Meeting, the written consent of 1st Pacific Bancorp, as the sole shareholder of
1st Pacific Bank, and any other approval by the holders of any voting capital
stock of FB Bancorp, FB Merger Sub, First Business Bank, 1st Pacific Bancorp and
1st Pacific Bank as required to approve the transactions contemplated herein,
including the Bank Holding Company Formation, the Merger, the Bank Holding
Company Merger, and the Bank Merger.

 

“Stock Purchase” shall mean the purchase by Auerbach of shares of the no par
value common stock of FB Bancorp having an aggregate purchase price of
approximately fifteen million dollars ($15,000,000).

 

“Subsidiaries” shall have the meaning set forth in Section 4.3.2.

 

“Superior Proposal” shall have the meaning set forth in Section 6.10.

 

“Surviving Bank” shall have the meaning set forth in Recitals to this Agreement.

 

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“Surviving Bank Holding Company” shall have the meaning set forth in Recitals to
this Agreement.

 

“Surviving Corporation” shall have the meaning set forth in Recitals to this
Agreement.

 

“Takeover Laws” means any “moratorium,” “business combination,” “control share,”
“fair price” or other takeover defense laws and regulations.

 

“Tail Coverage” shall have the meaning set forth in Section 7.6.

 

“Tail Policy” shall have the meaning set forth in Section 7.6.

 

“Terminated Employees” shall have the meaning set forth in Section 12.1.2.

 

“Termination Date” shall mean December 31, 2009.

 

“Trust” means FPBN Trust I, a Delaware statutory business trust, the common
securities of which are held by 1st Pacific Bancorp.

 

“Voting Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Warrants” shall mean any warrant to purchase shares of 1st Pacific Bancorp
Common Stock as set forth in the 1st Pacific Bancorp Disclosure Schedule 4.3.1.

 

Other terms used herein are defined in the Preamble and elsewhere in this
Agreement.

 

ARTICLE II

THE MERGER

 

2.1           Merger

 

2.1.1       Bank Holding Company Formation.  Immediately prior to the Closing
and subject to the terms and conditions of this Agreement and the Bank Holding
Company Formation Agreement in the form attached hereto as Exhibit “B,” the
receipt of all necessary Regulatory Approvals and Shareholder Approvals, FB
Bancorp will acquire all of the outstanding voting common stock, $5.00 par
value, of First Business Bank (the “First Business Bank Common Stock”) and
thereby become a bank  holding company for First Business Bank.

 

2.1.2       The Merger.  Subject to the terms and conditions of this Agreement
and the Merger Agreement in the form attached hereto as Exhibit “A,” the receipt
of all necessary Regulatory Approvals and Shareholder Approvals, at the
Effective Time: (a) FB Bancorp will cause FB Merger Sub to merge with and into
1st Pacific Bancorp, with 1st Pacific Bancorp as the Surviving Corporation; and
(b) the separate existence of FB Merger Sub shall cease and all of the rights,
privileges, powers, franchises, properties, assets, liabilities and obligations
of FB Merger Sub shall be vested in and assumed by the Surviving Corporation. 
As part of the Merger, each share of 1st Pacific Bancorp Common Stock will be
converted into the right to receive the Per Share Consideration pursuant to the
terms of Article III hereof.

 

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2.1.3       Bank Holding Company Merger.  Immediately following the Closing for
the Merger, and subject to the terms and conditions of this Agreement and the
Bank Holding Company Merger Agreement to be entered into by and between FB
Bancorp  and the Surviving Corporation, the form of which is attached as
Exhibit “C” hereto, the receipt of all necessary Regulatory Approvals and
Shareholder Approvals: (a) FB Bancorp will merge with the Surviving Corporation
with the Surviving Corporation as the Surviving Bank Holding Company; and
(b) the separate existence of FB Bancorp shall cease and all of the rights,
privileges, powers, franchises, properties, assets, liabilities and obligations
of FB Bancorp shall be vested in and assumed by the Surviving Bank Holding
Company.

 

2.1.4       Bank Merger.  Immediately following the Bank Holding Company Merger
and subject to the terms and conditions of this Agreement the Bank Merger
Agreement, the form of which is attached as Exhibit “D” hereto, the Surviving
Bank Holding Company shall cause the Bank Merger of First Business Bank with and
into 1st Pacific Bank, with 1st Pacific Bank as the Surviving Bank and
continuing banking operations as a California state-chartered bank and as the
wholly-owned subsidiary bank of the Surviving Bank Holding Company.

 

2.2           Effective Time

 

The Closing for the Merger shall occur no later than the close of business on
the tenth (10th) business day following the latest to occur of (i) all
Regulatory Approvals of the Bank Holding Company Formation, the Merger, the Bank
Holding Company Merger and the Bank Merger, (ii) all Shareholder Approvals,
(iii) all closing conditions having been met or waived, or (iv) the passing of
any applicable waiting periods; or at such other date or time upon which the
parties hereto shall mutually agree (the “Closing”). The Merger shall be
effected by the filing of the Merger Agreement with the California Secretary of
State on the day of the Closing (the “Closing Date”), in accordance with the
CGCL. The “Effective Time” means the date and time upon which the Merger
Agreement is filed with the California Secretary of State, or as otherwise
stated in the Merger Agreement, in accordance with the CGCL.

 

2.3           Articles of Incorporation and Bylaws

 

The Articles of Incorporation and bylaws of 1st Pacific Bancorp as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
and bylaws of the Surviving Corporation, until thereafter amended as provided
therein and by applicable law.

 

2.4           Directors and Officers of Surviving Corporation

 

The directors and executive officers of FB Merger Sub immediately prior to the
Effective Time will become the directors and executive officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.  In addition, at the Effective Time, two board members
of 1st Pacific Bancorp immediately prior to the Effective Time will be invited
by the board of directors of FB Merger Sub to join the board of directors of the
Surviving Corporation, which shall become the board of directors of the
Surviving Bank Holding Company until their respective successors are duly
elected or appointed and qualified.

 

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2.5           Effects of the Merger

 

At and after the Effective Time, the Merger shall have the effects as set forth
in the CGCL.

 

2.6           Intentionally omitted.

 

2.7           Possible Alternative Structures

 

Notwithstanding anything to the contrary contained in this Agreement, prior to
the Effective Time, FB Bancorp shall be entitled, upon the consent of 1st
Pacific Bancorp, which shall not be unreasonably withheld, to revise the
structure of the transactions contemplated herein,  provided that (i) there are
no adverse Federal or state income tax consequences to 1st Pacific Bancorp
shareholders as a result of the modification; (ii) the consideration to be paid
to the holders of 1st Pacific Bancorp Common Stock under this Agreement is not
thereby changed in kind, value or reduced in amount; and (iii) such modification
will not delay materially or jeopardize the receipt of Regulatory Approvals or
other consents and approvals relating to the consummation of the transactions
contemplated herein or otherwise cause any condition to Closing set forth in
Article IX not to be capable of being fulfilled. The parties hereto agree to
appropriately amend this Agreement and any related documents in order to reflect
any such revised structure.

 

2.8           Bank Holding Company Merger and Bank Merger

 

FB Bancorp and First Business Bank shall use their reasonable best efforts to
cause the Bank Holding Company Formation to occur as soon as possible and to
cause the consummation of the Bank Holding Company Merger and the Bank Merger to
occur as soon as reasonably practicable after the Effective Time.

 

2.9           Additional Actions

 

If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in law
or any other acts are necessary or desirable to (i) vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of 1st Pacific Bancorp
or FB Merger Sub, or (ii) otherwise carry out the purposes of this Agreement,
1st Pacific Bancorp and 1st Pacific Bank  and their respective officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver, in such official corporate
capacities, all such deeds, assignments or assurances in law or any other acts
as are necessary or desirable to (a) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of 1st Pacific Bancorp or
(b) otherwise carry out the purposes of this Agreement, and the officers and
directors of the Surviving Corporation are authorized in the name of 1st Pacific
Bancorp or otherwise to take any and all such action.

 

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ARTICLE III

CONVERSION OF SHARES

 

3.1           Conversion of 1st Pacific Bancorp Common Stock; Merger
Consideration

 

At the Effective Time, by virtue of the Merger and without any action on the
part of FB Bancorp or First Business Bank, 1st Pacific Bancorp or the holders of
any of the shares of 1st Pacific Bancorp Common Stock, the Merger shall be
effected in accordance with the following terms:

 

3.1.1       Each share of FB Bancorp Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
following the Effective Time and shall be unchanged by the Merger.

 

3.1.2       Each share of common stock, no par value, of FB Merger Sub issued
and outstanding immediately prior to the Effective Time will be converted into
and become one fully paid and nonassessable share of common stock of the
Surviving Corporation.

 

3.1.3       Intentionally omitted.

 

3.1.4       Subject to the provisions of this Article III, each share of 1st
Pacific Bancorp Common Stock issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares) shall become and be converted
into, as provided in and subject to the limitations set forth in this Agreement,
the right to receive $1.40 in cash (the “Per Share Consideration”).  The
aggregate amount of the Per Share Consideration to be paid to all holders of 1st
Pacific Bancorp Common Stock is referred to herein as the “Merger
Consideration.” In the case of 1st Pacific Bancorp Options under the Second
Amended and Restated 2000 Stock Option Plan, such 1st Pacific Bancorp Options
shall be accelerated in full so as to become fully exercisable.  Such 1st
Pacific Bancorp Option holders will be given notice at least thirty (30) days
prior to the Closing of the Merger and of the acceleration of such 1st Pacific
Bancorp Options, which shall be exercisable for a period of thirty (30) days
from the date of such notice.  All unexercised 1st Pacific Bancorp Options under
the Second Amended and Restated 2000 Stock Option Plan shall terminate thirty
(30) days after the date of such notice.  In the case of 1st Pacific Bancorp
Options under the 2007 Omnibus Stock Incentive Plan of 1st Pacific Bancorp, such
1st Pacific Bancorp Options shall be accelerated in full so as to become fully
exercisable.  Such 1st Pacific Bancorp Option holders will be given notice of
the acceleration of such 1st Pacific Bancorp Options, which shall be exercisable
for a period of three (3) months from the date of such notice.  All unexercised
1st Pacific Bancorp Options under the 2007 Omnibus Stock Incentive Plan of 1st
Pacific Bancorp shall terminate three (3) months after the date of such notice. 
In the case of Warrants, such Warrants shall immediately become one hundred
percent (100%) vested upon the approval of this Agreement by the shareholders of
1st Pacific Bancorp and will remain fully exercisable for a period of three
(3) months thereafter, at which time any unexercised Warrants will automatically
terminate.

 

3.1.5       Upon the Effective Time, holders of shares of 1st Pacific Bancorp
Common Stock that were outstanding immediately prior to the Effective Time shall
cease to have any rights as shareholders of 1st Pacific Bancorp (individually, a
“Shareholder,” and collectively the “Shareholders”), and the stock transfer
books of 1st Pacific Bancorp shall be closed with respect to all shares of 1st
Pacific Bancorp Common Stock outstanding immediately prior to the Effective

 

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Time. No further transfer of any such shares of 1st Pacific Bancorp Common Stock
shall be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a valid certificate previously representing any of such
shares of 1st Pacific Bancorp Common Stock, or valid representation of ownership
of certificateless shares of 1st Pacific Bancorp Common Stock (each a
“Certificate” and collectively, the “Certificates”) is presented to the
Surviving Corporation or 1st Pacific Bank, such Certificate shall be canceled
and shall be exchanged as provided in Section 3.3.

 

3.2           Dissenting Shares

 

3.2.1       If demands for payment are filed with respect to 5% or more of the
outstanding shares 1st Pacific Bancorp Common Stock in accordance with
Section 1301 of the CGCL, then notwithstanding any provision of this Agreement
to the contrary, any shares of 1st Pacific Bancorp Common Stock held by a holder
that has demanded and perfected dissenters’ rights for such shares in accordance
with the CGCL and who, as of the Effective Time, has not effectively withdrawn
or lost such dissenters’ rights (“Dissenting Shares”) shall not be converted
into or represent the right to receive the Per Share Consideration set forth in
Section 3.1.4 or any share of the Earn Out Amount pursuant to Section 3.3.4, but
the holder thereof shall only be entitled to such rights as are granted under
the CGCL.

 

3.2.2       Notwithstanding the provisions of Section 3.2.1, if any holder of
1st Pacific Bancorp Common Stock that demands, in accordance with Section 1301
of the CGCL, that 1st Pacific Bancorp purchase such shares under the CGCL, shall
effectively withdraw or lose (through failure to perfect or otherwise) such
holder’s dissenters’ rights, then, as of the later of (i) the Effective Time or
(ii) the occurrence of such event, such holder’s shares shall automatically be
converted into and represent only the right to receive the Per Share
Consideration set forth in Section 3.1.4 (without interest), upon surrender of
the Certificate representing such shares in accordance with Section 3.3.

 

3.2.3       1st Pacific Bancorp shall give FB Bancorp and First Business Bank:
(i) prompt notice of its receipt of any written demands for purchase of any
shares of 1st Pacific Bancorp Common Stock, withdrawals of such demands, and any
other instruments relating to the Merger served pursuant to the CGCL, and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands for purchase under the CGCL. 1st Pacific Bancorp shall not,
except with the prior written consent of FB Bancorp and First Business Bank or
as may be required under applicable law, voluntarily make any payment with
respect to any demands for purchase of 1st Pacific Bancorp Common Stock, or
offer to settle or settle any such demands.

 

3.3           Surrender of Certificates and Payment of Merger Consideration;
Earn Out

 

3.3.1       Exchange Agent. Computershare shall serve as the exchange agent (the
“Exchange Agent”) in the Merger.  No later than the Effective Time, FB Bancorp
shall deposit with the Exchange Agent the Merger Consideration to be held by the
Exchange Agent in escrow for a period not to exceed six (6) months from the
Effective Time.

 

3.3.2       As promptly as practicable after the Effective Time, but in no event
later than ten (10) days after the Effective Time, FB Bancorp shall cause the
Exchange Agent to make available

 

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for exchange in accordance with this Section 3.3 the Merger Consideration
issuable pursuant to Section 3.1 in exchange for outstanding shares of 1st
Pacific Bancorp Common Stock.

 

3.3.3       Exchange Procedures. As soon as reasonably practicable after the
Effective Time, but in no event later than ten (10) days after the Effective
Time, the Surviving Corporation shall cause to be mailed to each holder of
record of a Certificate or Certificates: (i) a letter of transmittal in
customary form, reasonably acceptable to FB Bancorp and 1st Pacific Bancorp
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent); and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for Per Share Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by FB Bancorp together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefore the Per Share Consideration to which such holder
is entitled pursuant to Section 3.1. Until surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of 1st Pacific
Bancorp Common Stock will be deemed from and after the Effective Time, for all
corporate purposes including the payment of dividends, to evidence only the
right to receive the Per Share Consideration pursuant to this Article III.
Holders of outstanding 1st Pacific Bancorp Options under a 1st Pacific Bancorp
Equity Plan shall be paid the applicable consideration in accordance with the
terms of this Agreement and the agreement for the 1st Pacific Bancorp Option
between 1st Pacific Bancorp and each of them.

 

3.3.4       Calculation and Payment of the Earn Out Amount

 

(A)          For purposes of this Agreement, “Earn Out Amount” shall mean an
amount equal to the product of (i) 66-2/3% and (ii) the sum of (A) the “Net Loan
Collections” (as defined below) and (B) the “Net Lawsuit Collections” (as
defined below). Further, “Pre-Closing Earn Out Amount” shall mean an amount
equal to the sum of (Y) the “Pre-Closing Net Loan Collections” (as defined
below) and (Z) the “Pre-Closing Net Lawsuit Collections” (as defined below).
Notwithstanding the foregoing, the sum of the Pre-Closing Earn Out Amount and
the Earn Out Amount shall not exceed Four Million Dollars ($4,000,000).

 

(B)          For purposes of this Agreement, “Net Loan Collections” shall mean
(i) all monies on account of principal, interest, attorneys’ fees and costs
actually collected and received by Surviving Bank on account of the loans
identified on Exhibit “F” hereto (the “Earn Out Loans”) during the Earn Out
Period minus (ii) the sum of the following incurred by Surviving Bank in
connection with collecting the Earn Out Loans for which monies are actually
collected: (A) attorneys’ fees, (B) court costs, (C) arbitration costs,
(D) expert witness fees, (E) consultant fees, (F) collection agency fees,
(G) all interest and principal remitted or to be remitted to a person or entity
on account of the Earn Out Loans other than FB Bancorp, First Business Bank, 1st
Pacific Bancorp, 1st Pacific Bank or their Affiliates, and (H) all other fees,
costs and expenses incurred by Surviving Bank (or their agents) in collecting
the Earn Out Loans.

 

(C)          For purposes of this Agreement, “Pre-Closing Net Loan Collections”
shall mean all monies on account of principal, interest, attorneys’ fees and
costs actually collected and received by 1st Pacific Bank on account of the Earn
Out Loans during the Pre-Closing Earn Out Period (as defined below).

 

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(D)          For purposes of this Agreement, “Net Lawsuit Collections” shall
mean (i) all monies actually received by Surviving Bank as a result of a court
order, arbitrator award, or settlement from any and all defendants, and their
insurers, if any, in the action entitled “1st Pacific Bank, a California
corporation vs. San Diego Private Bank, a California corporation,” Case #
37-2008-00079995-CU-BT-CTL, pending in the Superior Court of California, County
of San Diego, Central Division (the “Earn Out Lawsuit”) during the Earn Out
Period minus (ii) the sum of the following incurred by Surviving Bank in
initiating and prosecuting the Earn Out Lawsuit: (A) attorneys’ fees, (B) court
costs, (C) arbitration costs, (D) expert witness fees, (E) consultant fees,
(F) collection agency fees, and (G) all other fees, costs and expenses incurred
by Surviving Bank in initiating and prosecuting the Earn Out Lawsuit.

 

(E)           For purposes of this Agreement, “Pre-Closing Net Lawsuit
Collections” shall mean all monies actually received by 1st Pacific Bank as a
result of a court order, arbitrator award, or settlement from any and all
defendants, and their insurers, if any, in the Earn Out Lawsuit during the
Pre-Closing Earn Out Period, less any amount  paid to Marty Goldberg as receiver
of Explorer, LLC.

 

(F)           For purposes of this Agreement, “Earn Out Period” shall mean the
three (3) year period from and after the Closing Date.  Further, “Pre-Closing
Earn Out Period” shall mean the period from and after the date of this Agreement
until and including the day immediately prior to the Closing Date.

 

(G)          Upon the Effective Time, Surviving Bank shall pay the Pre-Closing
Earn Out Amount, if any, to the Exchange Agent for distribution on a pro rata
basis to all shareholders of record of 1st Pacific Bancorp immediately before
the Effective Time in accordance with Section 3.3.3 above.  Immediately prior to
the Effective Time, 1st Pacific Bancorp or 1st Pacific Bank shall deliver a
report (the “Pre-Closing Earn Out Report”) to FB Bancorp setting  forth a
detailed calculation of the Pre-Closing Net Loan Collections, the Pre-Closing
Net Lawsuit Collections and the Pre-Closing Earn Out Amount for the Pre-Closing
Earn Out Period and shall be certified by an officer of 1st Pacific Bancorp or
1st Pacific Bank as to completeness and accuracy in all material respects.

 

(H)          Within forty-five (45) days of each anniversary of the Closing Date
during the Earn Out Period, Surviving Bank shall deliver an Earn Out Report (an
“Earn Out Report”) to the Exchange Agent, which Earn Out Report shall set forth
a detailed calculation of the Net Loan Collection, Net Lawsuit Collection and
the Earn Out Amount for the Earn Out Period up to and including such date, net
of any previous Earn Out Amounts reported pursuant to Earn Out Reports for
previous anniversaries, and shall be certified by an officer of Surviving Bank
as to completeness and accuracy in all material respects.  To the extent the
Earn Out Report reflects that the Earn Out Amount is a positive number up to
such date, Surviving Bank shall pay the Earn Out Amount calculated up to such
date, if any, to the Exchange Agent for distribution on a pro rata basis to all
shareholders of record of 1st Pacific Bancorp immediately before the Effective
Time in accordance with Section 3.3.3 above.  The determination of the Earn Out
Amount as set forth on the Earn Out Report shall be conclusive and binding upon
the Parties.

 

(I)            In collecting the Earn Out Loans, the parties agree that
Surviving  Bank shall apply the same level of collection efforts it applies for
loans originated by Surviving Bank in the

 

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normal course of business and that Surviving Bank shall not be obligated to
apply any special efforts or dedicate any special level of personnel or other
resources beyond what Surviving Bank would normally apply when collecting loans
originated by Surviving Bank in the normal course of business.

 

(J)           In prosecuting the Earn Out Lawsuit, the parties agree that
Surviving Bank shall apply the same level of efforts it applies for actions
initiated by Surviving Bank in the normal course of business and will not be
obligated to apply any special efforts or dedicate any special level of
personnel or other resources beyond what Surviving Bank would normally apply
when prosecuting actions initiated by Surviving Bank in the normal course of
business.  Moreover, Surviving Bank shall be entitled to use its sole discretion
in determining whether and at what level to settle the Earn Out Lawsuit as
opposed to prosecute the Earn Out Lawsuit to a final judgment.

 

(K)          On or before the 30th day following each calendar quarter of the
Earn Out Period, Surviving Bank shall provide its Board of Directors with a
report regarding the status of collection and prosecution efforts for the Earn
Out Loans and Earn Out Lawsuit.

 

3.3.5       No Further Ownership Rights in 1st Pacific Bancorp Common Stock. 
Any and all Merger Consideration paid in exchange for shares of 1st Pacific
Bancorp Common Stock in accordance with the terms hereof shall be deemed to have
been paid in full satisfaction of all rights pertaining to such shares of 1st
Pacific Bancorp Common Stock, and there shall be no further registration of
transfers on the record book of 1st Pacific Bancorp of shares of 1st Pacific
Bancorp Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section 3.3.

 

3.3.6       Lost, Stolen or Destroyed Certificates.  In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration to which the holder of such shares of 1st Pacific Bancorp Common
Stock would be entitled under this Article III; provided, however, that the
Surviving Corporation may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to provide an indemnity against any claim that may be made against
the Surviving Corporation, FB Bancorp or First Business Bank with respect to
the  Certificates alleged to have been lost, stolen or destroyed.

 

3.3.7       FB Bancorp and the Surviving Corporation shall be entitled to deduct
and withhold from any consideration payable or otherwise deliverable to any
holder or former holder of capital stock of 1st Pacific Bancorp Common Stock
pursuant to this Agreement such amounts as FB Bancorp or the Surviving
Corporation may be required to deduct or withhold therefrom under the Code or
under any provision of state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.

 

3.3.8       Neither FB Bancorp nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of 1st Pacific Bancorp for any cash
amounts, delivered to any public official pursuant to any applicable abandoned
property, escheat or similar law.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF 1ST PACIFIC BANCORP AND 1ST PACIFIC BANK

 

1st Pacific Bancorp and 1st Pacific Bank represent and warrant to FB Bancorp and
First Business Bank that the statements contained in this Article IV are correct
and complete as of the date of this Agreement, subject to the standard set forth
in Section 4.1 and except as set forth in the 1st Pacific Bancorp Disclosure
Schedule delivered by 1st Pacific Bancorp and 1st Pacific Bank to FB Bancorp and
First Business Bank on the date hereof, as amended pursuant to Section 6.6, and
except as to any representation or warranty which specifically relates to an
earlier date, which only need be so correct as of such earlier date. 1st Pacific
Bancorp  and 1st Pacific Bank have made a good faith effort to ensure that the
disclosure on each schedule of the 1st Pacific Bancorp Disclosure
Schedule corresponds to the section referenced herein. However, for purposes of
the 1st Pacific Bancorp Disclosure Schedule, any item disclosed on any schedule
therein is deemed to be fully disclosed with respect to all schedules under
which such item may be relevant as and to the extent that it is reasonably clear
on the face of such schedule that such item applies to such other schedule.
References to the Knowledge of 1st Pacific Bancorp shall include the Knowledge
of 1st Pacific Bank.

 

4.1           Standard

 

No representation or warranty of 1st Pacific Bancorp contained in this
Article IV shall be deemed untrue or incorrect, and 1st Pacific Bancorp shall
not be deemed to have breached a representation or warranty, as a consequence of
the existence of any fact, circumstance or event unless such fact, circumstance
or event, individually or taken together with all other facts, circumstances or
events inconsistent with any provision of Article IV, has had or is reasonably
expected to have a Material Adverse Effect, disregarding for these purposes
(x) any qualification or exception for, or reference to, materiality in any such
representation or warranty and (y) any use of the terms “material,”
“materially,” “in all material respects,” “Material Adverse Effect” or similar
terms or phrases in any such representation or warranty. The foregoing standard
shall not apply to representations and warranties contained in Sections 4.2
(other than the last sentence of Section 4.2.1, 4.2.2, 4.2.3 and 4.2.4), 4.3,
4.4, 4.9.5, 4.13.5, 4.13.8, 4.13.10 and 4.13.11, which shall be deemed untrue,
incorrect and breached if they are not true and correct in all material respects
based on the qualifications and standards therein contained. Provided further,
that as to the representations contained in Sections 4.13.5, 4.13.8, 4.13.10,
and 4.13.11, if there is a breach that relates to an undisclosed payment,
expense accrual or cost in excess of $150,000 (either individually or in the
aggregate), such breach shall be considered material.

 

4.2           Organization

 

4.2.1       1st Pacific Bancorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and is
duly registered as a bank holding company under the BHCA.  1st Pacific Bancorp
has full corporate power and corporate authority to carry on its business as now
conducted and is duly licensed or qualified to do business in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification.

 

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4.2.2        1st Pacific Bank is a California state-chartered commercial bank
duly organized and validly existing under the laws of State of California.  The
deposits of 1st Pacific Bank are insured by the FDIC to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid by 1st Pacific Bank when due. 1st Pacific
Bank is a member of the Federal Reserve System and owns the requisite amount of
stock therein.

 

4.2.3        The respective minute books of 1st Pacific Bancorp and 1st Pacific
Bank accurately records, in all material respects, all material corporate
actions of their respective shareholders and boards of directors (including
committees).

 

4.2.4        Prior to the date of this Agreement, 1st Pacific Bancorp has made
available to FB Bancorp true and correct copies of the Articles of Incorporation
and bylaws of 1st Pacific Bancorp and 1st Pacific Bank.

 

4.3           Capitalization

 

4.3.1        The authorized capital stock of 1st Pacific Bancorp consists of
10,000,000 shares of common stock, no par value per share, of which, as of the
date of this Agreement, 4,980,481 shares are outstanding, validly issued, fully
paid and nonassessable and free of preemptive rights, and 10,000,000 shares of
Preferred Stock, no par value per share, of which there are no shares issued and
outstanding. There are no shares of 1st Pacific Bancorp Common Stock held by 1st
Pacific Bancorp in its treasury. Neither 1st Pacific Bancorp nor 1st Pacific
Bank has or is bound by any Rights of any character relating to the purchase,
sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of 1st Pacific Bancorp Common Stock, or any other
security of 1st Pacific Bancorp or any securities representing the right to
vote, purchase or otherwise receive any shares of 1st Pacific Bancorp Common
Stock or any other security of 1st Pacific Bancorp other than shares issuable
under the 1st Pacific Bancorp Equity Plans and the Warrants. 1st Pacific Bancorp
Disclosure Schedule 4.3.1 sets forth (i) the name of each holder of options to
purchase 1st Pacific Bancorp Common Stock, the number of shares each such
individual may acquire pursuant to the exercise of such options, the grant and
vesting dates, and the exercise price relating to the options held, and (ii) the
name of each holder of Warrants, the number of shares each such individual may
acquire pursuant to the exercise of such Warrants, the expiration date, and the
exercise price relating to the Warrants.

 

4.3.2        1st Pacific Bancorp Disclosure Schedule 4.3.2 sets forth a true and
correct list of all of the subsidiaries of 1st Pacific Bancorp (the
“Subsidiaries”). Except for (i) the Subsidiaries, (ii) equity interests held in
the investment portfolios of 1st Pacific Bank, (iii) equity interests held by
1st Pacific Bank in a fiduciary capacity, and (iv) equity interests held in
connection with the lending activities of 1st Pacific Bank, including stock in
the Federal Reserve Bank, 1st Pacific Bancorp does not possess, directly or
indirectly, any material equity interest in any corporate entity.  Except for
the 1st Pacific Bancorp Trust Preferred Securities, 1st Pacific Bancorp owns,
directly or indirectly, all of the issued and outstanding shares of the capital
stock or other equity interests of each of the Subsidiaries, free and clear of
all liens, charges, encumbrances and security interests whatsoever, and all of
such shares or equity interests are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights.  No Subsidiary of 1st
Pacific Bancorp, other than the Trust, is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any

 

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other equity interest of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity interest of such Subsidiary.

 

4.3.3        To 1st Pacific Bancorp’s Knowledge, no Person or “group” (as that
term is used in Section 13(d)(3) of the Exchange Act), is the beneficial owner
(as defined in Section 13(d) of the Exchange Act) of 5% or more of the
outstanding shares of 1st Pacific Bancorp Common Stock, except as listed on 1st
Pacific Bancorp’s Disclosure Schedule 4.3.3.

 

4.4           Authority; No Violation

 

4.4.1        Each of 1st Pacific Bancorp and 1st Pacific Bank has full corporate
power and corporate authority to execute and deliver this Agreement and, subject
to the receipt of the Regulatory Approvals and the Shareholder Approvals, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by 1st Pacific Bancorp and 1st Pacific Bank and the completion of
the transactions contemplated hereby, including the Merger, have been duly and
validly approved by the Boards of Directors of 1st Pacific Bancorp and 1st
Pacific Bank, and no other corporate proceedings on the part of 1st Pacific
Bancorp, except for the approval of the shareholders of 1st Pacific Bancorp and
1st Pacific Bank, is necessary to complete the transactions contemplated hereby,
including the Merger. This Agreement has been duly and validly executed and
delivered by 1st Pacific Bancorp and 1st Pacific Bank, and subject to approval
by the shareholders of 1st Pacific Bancorp and 1st Pacific Bank and receipt of
the Regulatory Approvals and due and valid execution and delivery of this
Agreement by FB Bancorp and First Business Bank, constitutes the valid and
binding obligation of 1st Pacific Bancorp and 1st Pacific Bank, enforceable
against them in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally, and subject,
as to enforceability, to general principles of equity and Section 8(b)(6)(D) of
the Federal Deposit Insurance Act, 12 U.S.C. Section 1818(b)(6)(D) (as
applicable).

 

4.4.2        Except as listed on 1st Pacific Bancorp Disclosure Schedule 4.4.2,
subject to receipt of Regulatory Approvals and compliance by the parties hereto
with any conditions contained therein, and to the receipt of Shareholder
Approvals; (A) the execution and delivery of this Agreement by 1st Pacific
Bancorp and 1st Pacific Bank, (B) the consummation of the transactions
contemplated hereby, and (C) compliance by 1st Pacific Bancorp and 1st Pacific
Bank with all of the terms and provisions hereof will not (i) conflict with or
result in a breach of any provision of the Articles of Incorporation or bylaws
of 1st Pacific Bancorp or the Articles of Incorporation or bylaws of 1st Pacific
Bank; (ii) to the Knowledge of 1st Pacific Bancorp, violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to 1st Pacific Bancorp or 1st Pacific Bank or any of their respective
properties or assets; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default), under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of 1st Pacific Bancorp or 1st
Pacific Bank under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which 1st Pacific Bancorp or 1st Pacific Bank is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches or

 

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defaults under clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on 1st Pacific Bancorp and
1st Pacific Bank taken as a whole.

 

4.5           Consents

 

Except as listed on 1st Pacific Bancorp Disclosure Schedule 4.5 and except for
(a) filings with Bank Regulators, the receipt of the Regulatory Approvals, and
compliance with any conditions contained therein, (b) the filing of the
certificate of merger with the Secretary of State of the State of California,
(c) the filing with the SEC of (i) the Merger Registration Statement and
(ii) such reports under Sections 13(a), 13(d), 13(g), 14(f) and 16(a) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby and the obtaining from the SEC of such orders
as may be required in connection therewith, (d) such filings and approvals as
are required to be made or obtained under the securities or “Blue Sky” laws of
various states in connection with the issuance of the shares of FB Bancorp
Common Stock pursuant to this Agreement and the Bank Holding Company Merger
Agreement, and (e) Shareholder Approvals, no consents, waivers or approvals of,
or filings or registrations with, any Governmental Entity are necessary, and, to
1st Pacific Bancorp’s Knowledge, no consents, waivers or approvals of, or
filings or registrations with, any other third parties are necessary, in
connection with (x) the execution and delivery of this Agreement by 1st Pacific
Bancorp and 1st Pacific Bank, and (y) the completion of the Merger and the
transactions contemplated thereby. 1st Pacific Bancorp and 1st Pacific Bank have
no reason to believe that (i) any Regulatory Approvals or other required
consents or approvals will not be received, or that (ii) any public body or
authority, the consent or approval of which is not required or to which a filing
is not required, will object to the completion of the transactions contemplated
by this Agreement.

 

4.6           Financial Statements

 

4.6.1        1st Pacific Bancorp has previously made available to FB Bancorp and
First Business Bank the 1st Pacific Bancorp Regulatory Reports. The 1st Pacific
Bancorp Regulatory Reports have been prepared in all material respects in
accordance with applicable regulatory accounting principles and practices
throughout the periods covered by such statements.

 

4.6.2        1st Pacific Bancorp has previously made available to FB Bancorp and
First Business Bank the 1st Pacific Bancorp Financial Statements. The 1st
Pacific Bancorp Financial Statements have been prepared in accordance with GAAP
(including the related notes where applicable), and fairly present in each case
in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments), the consolidated financial position,
results of operations and cash flows of 1st Pacific Bancorp and 1st Pacific Bank
on a consolidated basis as of and for the respective periods ending on the dates
thereof, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.

 

4.6.3        At the date of each balance sheet included in the 1st Pacific
Bancorp Financial Statements or the 1st Pacific Bancorp Regulatory Reports,
neither 1st Pacific Bancorp nor 1st Pacific Bank, as applicable, had any
liabilities, obligations or loss contingencies of any nature (whether absolute,
accrued, contingent or otherwise) of a type required to be reflected in such 1st
Pacific Bancorp Financial Statements or 1st Pacific Bancorp Regulatory Reports
or in the footnotes thereto which are not fully reflected or reserved against
therein or fully disclosed in a footnote thereto,

 

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except for liabilities, obligations and loss contingencies which are not
material individually or in the aggregate or which are incurred in the ordinary
course of business, consistent with past practice, and except for liabilities,
obligations and loss contingencies which are within the subject matter of a
specific representation and warranty herein and subject, in the case of any
unaudited statements, to normal, recurring audit adjustments and the absence of
footnotes.

 

4.6.4        Except as listed on 1st Pacific Bancorp Disclosure Schedule  4.6.4,
the records, systems, controls, data and information of 1st Pacific Bancorp and
1st Pacific Bank 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 1st Pacific Bancorp or 1st Pacific Bank or 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 4.6.4. 1st Pacific Bancorp: (x) has implemented and maintains a
system of internal control over financial reporting (as required by
Rule 13a-15(a) of the Exchange Act) that is designed to provide reasonable
assurances regarding the reliability of financial reporting and the preparation
of its financial statements for external purposes in accordance with GAAP,
(y) 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 1st Pacific Bancorp and 1st Pacific Bank, is made known to the chief
executive officer and the chief financial officer of 1st Pacific Bancorp by
others within those entities, and (z) has disclosed, based on its most recent
evaluation prior to the date hereof, to 1st Pacific Bancorp’s outside auditors
and the audit committee of 1st Pacific Bancorp’s Board of Directors (i) any
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) which are reasonably likely to materially adversely affect 1st
Pacific Bancorp’s ability to record, process, summarize and report financial
information and (ii) any fraud of which 1st Pacific Bancorp has Knowledge of,
whether or not material, that involves management or other employees who have a
significant role in 1st Pacific Bancorp’s internal control over financial
reporting. These disclosures (if any) were made in writing by management to 1st
Pacific Bancorp’s auditors and audit committee and a copy has previously been
made available to FB Bancorp and First Business Bank. As of the date hereof, to
the Knowledge of 1st Pacific Bancorp, its chief executive officer and chief
financial officer would be able to give the certifications required pursuant to
the rules and regulations adopted pursuant to Section 302 of the Sarbanes-Oxley
Act, without qualification.

 

4.6.5        Since January 1, 2007: (i)  to the Knowledge of 1st Pacific
Bancorp, no director, officer, employee, auditor, accountant or representative
of 1st Pacific Bancorp or 1st Pacific Bank had or obtained Knowledge of any
material complaint, allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures, methodologies or
methods of 1st Pacific Bancorp or 1st Pacific Bank or their respective internal
accounting controls, including any material complaint, allegation, assertion or
claim that 1st Pacific Bancorp or 1st Pacific Bank has engaged in questionable
accounting or auditing practices; and (ii) no attorney representing 1st Pacific
Bancorp or 1st Pacific Bank, whether or not employed by 1st Pacific Bancorp or
1st Pacific Bank, has reported evidence of a material violation of securities
laws, breach of fiduciary duty or similar violation by 1st Pacific Bancorp or
1st Pacific Bank or any of their respective officers, directors, employees or
agents to the Board of Directors of 1st Pacific Bancorp or 1st Pacific Bank or
any committee thereof or to any director or officer of 1st Pacific Bancorp or
1st Pacific Bank.

 

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4.7           Taxes

 

1st Pacific Bancorp and 1st Pacific Bank have duly filed all federal, state and
material local tax returns required to be filed by or with respect to 1st
Pacific Bancorp and 1st Pacific Bank on or prior to the date of this Agreement,
taking into account any extensions (all such returns, to 1st Pacific Bancorp’s
Knowledge, being accurate and correct in all material respects) and has duly
paid or made provisions for the payment of all material federal, state and local
taxes which have been incurred by or are due, or claimed to be, due from 1st
Pacific Bancorp or 1st Pacific Bank by any taxing authority or pursuant to any
written tax sharing agreement on or prior to the date of this Agreement other
than taxes or other charges which (i) are not delinquent, (ii) are being
contested in good faith, or (iii) have not yet been fully determined. As of the
date of this Agreement, 1st Pacific Bancorp has received no written notice of,
and to 1st Pacific Bancorp’s Knowledge there is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any taxes of
1st Pacific Bancorp or 1st Pacific Bank, and no claim has been made by any
authority in a jurisdiction where 1st Pacific Bancorp or 1st Pacific Bank does
not file tax returns that 1st Pacific Bancorp or any such Subsidiary is subject
to taxation in that jurisdiction.  1st Pacific Bancorp and 1st Pacific Bank have
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in effect.
1st Pacific Bancorp and each of its Subsidiaries has withheld and paid, if due,
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, shareholder or
other third party, and 1st Pacific Bancorp and each of its Subsidiaries, to 1st
Pacific Bancorp’s Knowledge, has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the Code
and similar applicable state and local information reporting requirements.

 

4.8           Intentionally omitted

 

4.9           Material Contracts; Leases; Defaults

 

4.9.1        Except as set forth in 1st Pacific Bancorp Disclosure
Schedule 4.9.1, neither 1st Pacific Bancorp nor 1st Pacific Bank is a party to
or subject to: (i) any employment, consulting or severance contract or material
arrangement with any past or present officer, director or employee of 1st
Pacific Bancorp or 1st Pacific Bank, except for “at will” arrangements; (ii) any
plan, material arrangement or contract providing for bonuses, pensions, options,
deferred compensation, retirement payments, profit sharing or similar material
arrangements for or with any past or present officers, directors or employees of
1st Pacific Bancorp or 1st Pacific Bank; (iii) any collective bargaining
agreement with any labor union relating to employees of 1st Pacific Bancorp or
1st Pacific Bank; (iv) any agreement which by its terms limits the payment of
dividends by 1st Pacific Bancorp or 1st Pacific Bank; (v) any instrument
evidencing or related to material indebtedness for borrowed money whether
directly or indirectly, by way of purchase money obligation, conditional sale,
lease purchase, guaranty or otherwise, in respect of which 1st Pacific Bancorp
or 1st Pacific Bank is an obligor to any person, which instrument evidences or
relates to indebtedness other than deposits, repurchase agreements, the Federal
Reserve Bank advances, bankers’ acceptances, and “treasury tax and loan”
accounts and transactions in “federal funds” in each case established in the
ordinary course of business consistent with past practice, or which contains
financial covenants or other restrictions (other than those relating to the
payment of principal and interest when due) which would be applicable on or
after the Closing Date to FB Bancorp or First Business Bank; (vi) except for
items

 

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listed on 1st Pacific Bancorp Disclosure Schedule 4.16 and loans and other
extensions of credit made by 1st Pacific Bank in the ordinary course of its
business, any other agreement, written or oral, that obligates 1st Pacific
Bancorp or 1st Pacific Bank for the payment of more than $100,000 annually or
for the payment of more than $50,000 over its remaining term, which is not
terminable without cause on 60 days’ or less notice without penalty or payment,
or (vii) any agreement (other than this Agreement), contract, arrangement,
commitment or understanding (whether written or oral) that restricts or limits
in any material way the conduct of business by 1st Pacific Bancorp or 1st
Pacific Bank (it being understood that any non-compete or similar provision
shall be deemed material).

 

4.9.2        Each real estate lease that requires the consent of the lessor or
its agent resulting from the Merger or the Bank Merger by virtue of the terms of
any such lease, is listed in 1st Pacific Bancorp Disclosure Schedule 4.9.2
identifying the section of the lease that contains such prohibition or
restriction. Subject to any consents that may be required as a result of the
transactions contemplated by this Agreement, to its Knowledge, neither 1st
Pacific Bancorp nor 1st Pacific Bank is in default in any material respect under
any material contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its assets,
business, or operations may be bound or affected, or under which it or its
assets, business, or operations receive benefits, and there has not occurred any
event that, with the lapse of time or the giving of notice or both, would
constitute such a default.

 

4.9.3        True and correct copies of agreements, contracts, arrangements and
instruments referred to in Section 4.9.1 and 4.9.2 have been made available to
FB Bancorp and First Business Bank on or before the date hereof, are listed on
1st Pacific Bancorp Disclosure Schedule 4.9.1 or on 1st Pacific Bancorp
Disclosure Schedule 4.9.2  and are in full force and effect on the date hereof
and neither 1st Pacific Bancorp nor 1st Pacific Bank (nor, to the Knowledge of
1st Pacific Bancorp, any other party to any such contract, arrangement or
instrument) has materially breached any provision of, or is in default in any
respect under any term of, any such contract, arrangement or instrument. Except
as listed on 1st Pacific Bancorp Disclosure Schedule 4.9.3(a), no party to any
material contract, arrangement or instrument will have the right to terminate
any or all of the provisions of any such contract, arrangement or instrument as
a result of the execution of, and the consummation of the transactions
contemplated by, this Agreement. Except as set forth in 1st Pacific Bancorp
Disclosure Schedule 4.9.3(b), no plan, contract, employment agreement,
termination agreement, or similar agreement or arrangement to which 1st Pacific
Bancorp or 1st Pacific Bank is a party or under which 1st Pacific Bancorp or 1st
Pacific Bank may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue to accrue
future benefits thereunder. Except as set forth in 1st Pacific Bancorp
Disclosure Schedule 4.9.3(c), no such agreement, plan, contract, or arrangement
(x) provides for acceleration in the vesting of benefits or payments due
thereunder upon the occurrence of a change in ownership or control of 1st
Pacific Bancorp or 1st Pacific Bank or upon the occurrence of a subsequent
event; or (y) requires 1st Pacific Bancorp or 1st Pacific Bank to provide a
benefit in the form of 1st Pacific Bancorp Common Stock or determined by
reference to the value of 1st Pacific Bancorp Common Stock.

 

4.9.4        Since December 31, 2008, through and including the date of this
Agreement, except as listed on 1st Pacific Bancorp Disclosure Schedule 4.9.4 or
except as publicly disclosed by 1st Pacific Bancorp in the Securities Documents
filed or furnished by 1st Pacific Bancorp prior to the date hereof or consistent
with the 1st Pacific Bank Layoff Procedure, a copy which has been made available
to First Business Bank, neither 1st Pacific Bancorp nor 1st Pacific Bank has

 

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(i) except for (A) normal increases for employees (other than officers and
directors subject to the reporting requirements of Section 16(a) of the Exchange
Act) made in the ordinary course of business consistent with past practice, or
(B) as required by applicable law, increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect as of
December 31, 2008 (which amounts have been previously made available to FB
Bancorp), granted any severance or termination pay, entered into any contract to
make or grant any severance or termination pay (except as required under the
terms of agreements or severance plans listed on 1st Pacific Bancorp Disclosure
Schedule 4.13.1, as in effect as of the date hereof), or paid any bonus other
than the customary year-end bonuses in amounts consistent with past practice,
(ii) granted any options to purchase shares of 1st Pacific Bancorp Common Stock,
or any right to acquire any shares of its capital stock to any executive
officer, director or employee other than grants to employees (other than
officers subject to the reporting requirements of Section 16(a) of the Exchange
Act) made in the ordinary course of business consistent with past practice under
1st Pacific Bancorp Equity Plans, (iii) increased or established any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, (iv) made any material
election for federal or state income tax purposes, (v) made any material change
in the credit policies or procedures of 1st Pacific Bancorp or 1st Pacific Bank,
the effect of which was or is to make any such policy or procedure less
restrictive in any material respect, (vi) made any material acquisition or
disposition of any assets or properties, or any contract for any such
acquisition or disposition entered into other than loans and loan commitments,
(vii) entered into any lease of real or personal property requiring annual
payments in excess of $100,000, other than in connection with foreclosed
property or in the ordinary course of business consistent with past practice,
(viii) changed any accounting methods, principles or practices of 1st Pacific
Bancorp or its Subsidiaries affecting its assets, liabilities or businesses,
including any reserving, renewal or residual method, practice or policy or
(ix) suffered any strike, work stoppage, labor slow-down, or other labor
disturbance.

 

4.9.5        Neither 1st Pacific Bancorp nor 1st Pacific Bank has accepted funds
or sold stock as part of the Capital Purchase Program established by the United
States Treasury Department under the Troubled Assets Relief Program, pursuant to
the Emergency Economic Stabilization Act of 2008.

 

4.9.6        Except as of otherwise disclosed on 1st Pacific Bancorp Disclosure
Schedule 4.9.6, all payments due on the 1st Pacific Bancorp Trust Preferred
Securities and the Junior Subordinated Debt Securities have been paid in
accordance with their respective terms.

 

4.10        Ownership of Property; Insurance Coverage

 

4.10.1     1st Pacific Bancorp and 1st Pacific Bank have good and, as to real
property, marketable title to all material assets and properties owned by 1st
Pacific Bancorp or each 1st Pacific Bancorp Subsidiary in the conduct of its
businesses, whether such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the balance sheets
contained in the 1st Pacific Bancorp Regulatory Reports and in the 1st Pacific
Bancorp Financial Statements or acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of in the ordinary
course of business, since the date of such balance sheets), subject to no
material encumbrances, liens, mortgages, security interests or pledges, except
(i) those items

 

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which secure liabilities for public or statutory obligations or any discount
with, borrowing from or other obligations to the Federal Home Loan Bank of
San Francisco or Federal Reserve Bank, inter-bank credit facilities, or any
transaction by an 1st Pacific Bancorp Subsidiary acting in a fiduciary capacity,
(ii) statutory liens for amounts not yet delinquent or which are being contested
in good faith, (iii) non-monetary liens affecting real property which do not
adversely affect the value or use of such real property, and (iv) those
described and reflected in the 1st Pacific Bancorp Financial Statements. 1st
Pacific Bancorp and the 1st Pacific Bancorp Subsidiaries, as lessee, have the
right under valid and existing leases of real and personal properties used by
1st Pacific Bancorp and 1st Pacific Bank in the conduct of their businesses to
occupy or use all such properties as presently occupied and used by each of
them. Such existing leases and commitments to lease constitute or will
constitute operating leases for both tax and financial accounting purposes and
the lease expense and minimum rental commitments with respect to such leases and
lease commitments are as disclosed in all material respects in the notes to the
1st Pacific Bancorp Financial Statements.

 

4.10.2     With respect to all material agreements pursuant to which 1st Pacific
Bancorp or 1st Pacific Bank has purchased securities subject to an agreement to
resell, if any, 1st Pacific Bancorp or such 1st Pacific Bancorp Subsidiary, as
the case may be, has a lien or security interest (which to 1st Pacific Bancorp’s
Knowledge is a valid, perfected first lien) in the securities or other
collateral securing the repurchase agreement, and the value of such collateral
equals or exceeds the amount of the debt secured thereby.

 

4.10.3     1st Pacific Bancorp and 1st Pacific Bank currently maintain insurance
considered by each of them to be reasonable for their respective operations.
Neither 1st Pacific Bancorp nor 1st Pacific Bank, except as disclosed in 1st
Pacific Bancorp Disclosure Schedule 4.10.3(a), has received notice from any
insurance carrier during the past five years that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs (other than with respect to health insurance) with respect to
such policies of insurance will be substantially increased. There are presently
no material claims pending under such policies of insurance and no notices have
been given by 1st Pacific Bancorp or 1st Pacific Bank under such policies. All
such insurance is valid and enforceable and in full force and effect, and within
the last three years 1st Pacific Bancorp and 1st Pacific Bank has received each
type of insurance coverage for which it has applied and during such periods has
not been denied indemnification for any material claims submitted under any of
its insurance policies. 1st Pacific Bancorp Disclosure
Schedule 4.10.3(b) identifies all material policies of insurance maintained by
1st Pacific Bancorp and 1st Pacific Bank as well as the other matters required
to be disclosed under this Section.

 

4.11        Legal Proceedings

 

Except as set forth in 1st Pacific Bancorp Disclosure Schedule 4.11, neither 1st
Pacific Bancorp nor 1st Pacific Bank is a party to any, and there are no pending
or, to 1st Pacific Bancorp’s Knowledge, threatened legal, administrative,
arbitration or other proceedings, claims (whether asserted or unasserted),
actions or governmental investigations or inquiries of any nature (i) against
1st Pacific Bancorp or 1st Pacific Bank, (ii) to which 1st Pacific Bancorp or
1st Pacific Bank’s assets are or may be subject, (iii) challenging the validity
or propriety of any of the transactions contemplated by this Agreement, or
(iv) which could adversely affect the ability of 1st Pacific Bancorp or 1st
Pacific Bank to perform under this Agreement, except for any proceeding, claim,

 

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action, investigation or inquiry which, if adversely determined, individually or
in the aggregate, would not be reasonably expected to have a Material Adverse
Effect on 1st Pacific Bancorp.

 

4.12        Compliance With Applicable Law

 

4.12.1     To 1st Pacific Bancorp’s Knowledge, each of 1st Pacific Bancorp and
1st Pacific Bank is in compliance in all material respects with all applicable
federal, state and local statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable to it, its properties, assets and
deposits, its business, including, without limitation, the USA Patriot Act, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act of 1977, the Home Mortgage Disclosure Act, and all other applicable fair
lending laws and other laws relating to discriminatory business practices and
neither 1st Pacific Bancorp nor 1st Pacific Bank has received any written notice
to the contrary. The Board of Directors of 1st Pacific Bank has adopted and 1st
Pacific Bank has implemented an anti-money laundering program that contains
adequate and appropriate customer identification verification procedures that
has not been deemed ineffective by any Governmental Authority and that meets the
requirements of Sections 352 and 326 of the USA Patriot Act and the regulations
thereunder.  The representations and warranties set forth in this Section 4.12.1
do not apply to tax matters, employee benefit matters, environmental matters,
and labor matters, which are addressed in Sections 4.7, 4.13, 4.15 and 4.25,
respectively.

 

4.12.2     Each of 1st Pacific Bancorp and 1st Pacific Bank has all material
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Entities and Bank
Regulators that are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the Knowledge of 1st Pacific Bancorp, no suspension or
cancellation of any such permit, license, certificate, order or approval is
threatened or will result from the consummation of the transactions contemplated
by this Agreement, subject to obtaining Regulatory Approvals.

 

4.12.3     For the period beginning January 1, 2009, except as listed on 1st
Pacific Bancorp Disclosure Schedule 4.12.3 or except for confidential
supervisory information described in 12 C.F.R. 261.2(c)(1), neither 1st Pacific
Bancorp nor 1st Pacific Bank has received any written notification or, to 1st
Pacific Bancorp’s Knowledge, any other communication from any Bank Regulator
(i) asserting that 1st Pacific Bancorp or 1st Pacific Bank is not in material
compliance with any of the statutes, regulations or ordinances which such Bank
Regulator enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to 1st Pacific Bancorp or 1st
Pacific Bank; (iii) requiring, or threatening to require, 1st Pacific Bancorp or
1st Pacific Bank, or indicating that 1st Pacific Bancorp or 1st Pacific Bank may
be required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any federal or state governmental
agency or authority which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit, in any material respect the operations of 1st
Pacific Bancorp or 1st Pacific Bank, including without limitation any
restriction on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any manner the
operations of 1st Pacific Bancorp or 1st Pacific Bank, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a “1st Pacific Bancorp Regulatory Agreement”). Except
as

 

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listed on 1st Pacific Bancorp Disclosure Schedule 4.12.3, neither 1st Pacific
Bancorp nor 1st Pacific Bank has consented to or entered into any 1st Pacific
Bancorp Regulatory Agreement that is currently in effect or that was in effect
since January 1, 2009. The most recent regulatory rating given to 1st Pacific
Bank as to compliance with the Community Reinvestment Act (“CRA”) is
“Satisfactory” or better.

 

4.12.4     Since the enactment of the Sarbanes-Oxley Act, 1st Pacific Bancorp
has been and is in compliance in all material respects with (i) the applicable
provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and
corporate governance rules and regulations of the Nasdaq. 1st Pacific Bancorp
Disclosure Schedule 4.12.4 sets forth, as of December 31, 2008, a schedule of
all officers and directors of 1st Pacific Bancorp who have outstanding loans
from 1st Pacific Bancorp or 1st Pacific Bank, and there has been no default on,
or forgiveness or waiver of, in whole or in part, any such loan during the two
years immediately preceding the date hereof.

 

4.13        Employee Benefit Plans

 

4.13.1     1st Pacific Bancorp Disclosure Schedule 4.13.1 includes a descriptive
list of all existing bonus, incentive, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, stock appreciation,
phantom stock, severance, welfare benefit plans (including paid time off
policies and other benefit policies and procedures), fringe benefit plans,
employment, severance and change in control agreements, split dollar life
insurance and any supplemental life insurance agreements and/or policies, and
all other material benefit practices, policies and arrangements maintained by
1st Pacific Bancorp or 1st Pacific Bank in which any employee or former
employee, consultant or former consultant or director or former director of 1st
Pacific Bancorp or 1st Pacific Bank participates or to which any such employee,
consultant or director is a party or is otherwise entitled to receive benefits
(the “1st Pacific Bancorp Compensation and Benefit Plans”). Except as set forth
in 1st Pacific Bancorp Disclosure Schedule 4.13.1, neither 1st Pacific Bancorp
nor 1st Pacific Bank has any commitment to create any additional 1st Pacific
Bancorp Compensation and Benefit Plan or to materially modify, change or renew
any existing 1st Pacific Bancorp Compensation and Benefit Plan (any modification
or change that increases the cost of such plans would be deemed material),
except as required to maintain the qualified status thereof.

 

4.13.2     To the Knowledge of 1st Pacific Bancorp, each 1st Pacific Bancorp
Compensation and Benefit Plan has been operated and administered in all material
respects in accordance with its terms and with applicable law, including, but
not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age
Discrimination in Employment Act, COBRA, the Health Insurance Portability and
Accountability Act (“HIPAA”) and any regulations or rules promulgated
thereunder, and all material filings, disclosures and notices required by ERISA,
the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act, COBRA and HIPAA and any other applicable law have been timely
made or any interest, fines, penalties or other impositions for late filings
have been paid in full and each 1st Pacific Bancorp Compensation and Benefit
Plan that is subject to Code Section 409A is in compliance with Code
Section 409A. There is no material pending or, to the Knowledge of 1st Pacific
Bancorp, threatened action, suit or claim relating to any of the 1st Pacific
Bancorp Compensation and Benefit Plans (other than routine claims for benefits).
To the Knowledge of 1st Pacific Bancorp and 1st Pacific Bank, neither 1st
Pacific Bancorp nor 1st Pacific Bank has engaged in a transaction, or omitted to
take any action, with respect to any 1st

 

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Pacific Bancorp Compensation and Benefit Plan that would reasonably be expected
to subject 1st Pacific Bancorp or 1st Pacific Bank to an unpaid tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA.

 

4.13.3     Neither 1st Pacific Bancorp nor 1st Pacific Bank maintains any
defined benefit pension plan. To the Knowledge of 1st Pacific Bancorp, there is
no pending investigation or enforcement action by any Governmental Entity or
Bank Regulator with respect to any 1st Pacific Bancorp Compensation and Benefit
Plan, or any plan maintained by any entity which is considered one employer with
1st Pacific Bancorp under Section 4001(b)(1) of ERISA or Code Section 414
(“ERISA Affiliate”)(such plan being referred to as an “ERISA Affiliate Plan”).
Neither 1st Pacific Bancorp, 1st Pacific Bank, nor any ERISA Affiliate has
contributed to any “multiemployer plan,” as defined in Section 3(37) of ERISA.

 

4.13.4     All material contributions required to be made under the terms of any
1st Pacific Bancorp Compensation and Benefit Plan or ERISA Affiliate Plan or any
employee benefit arrangements to which 1st Pacific Bancorp or 1st Pacific Bank
is a party or a sponsor have been timely made, and all anticipated contributions
and funding obligations are accrued on 1st Pacific Bancorp’s consolidated
financial statements to the extent required by GAAP. 1st Pacific Bancorp and 1st
Pacific Bank have expensed and accrued as a liability the present value of
future benefits under each applicable 1st Pacific Bancorp Compensation and
Benefit Plan for financial reporting purposes as required by GAAP.

 

4.13.5     Neither 1st Pacific Bancorp nor 1st Pacific Bank has any obligations
to provide retiree health, life insurance, disability insurance, or other
retiree death benefits under any 1st Pacific Bancorp Compensation and Benefit
Plan, other than benefits mandated by COBRA or other applicable law to any
employee or director. There has been no communication to employees by 1st
Pacific Bancorp or 1st Pacific Bank that would reasonably be expected to promise
or guarantee such employees or directors retiree health, life insurance,
disability insurance, or other retiree death benefits.

 

4.13.6     1st Pacific Bancorp and 1st Pacific Bank do not maintain any 1st
Pacific Bancorp Compensation and Benefit Plans covering employees who are not
United States residents.

 

4.13.7     With respect to each 1st Pacific Bancorp Compensation and Benefit
Plan, if applicable, 1st Pacific Bancorp has provided or made available to FB
Bancorp copies of the: (A) plan documents, administrative forms, any loan
documents under an 1st Pacific Bancorp employee stock ownership plan, trust
instruments and insurance contracts; (B) three most recent Forms 5500 as filed;
(C) three most recent actuarial reports and financial statements; (D) most
recent summary plan description; (E) most recent determination letter issued by
the IRS; (F) any Form 5310 or Form 5330 filed with the IRS within the last three
years; (G) most recent nondiscrimination tests performed under ERISA and the
Code (including 401(k) and 401(m) tests); (H) ESOP allocation and suspense
account records for the past three years; and (I) copies of all equity grant
agreements.

 

4.13.8     Except as listed on 1st Pacific Bancorp Disclosure Schedule 4.13.8,
the consummation of the Merger will not, directly or indirectly (including,
without limitation, as a result of any termination of employment or service at
any time prior to or following the Effective Time)

 

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(A) entitle any employee, consultant or director to any payment or benefit
(including severance pay, change in control benefit, or similar compensation) or
any increase in compensation, (B) result in the vesting or acceleration of any
benefits under any 1st Pacific Bancorp Compensation and Benefit Plan or
(C) result in any material increase in benefits payable under any 1st Pacific
Bancorp Compensation and Benefit Plan.

 

4.13.9     Neither 1st Pacific Bancorp nor 1st Pacific Bank maintains any
compensation plans, programs or arrangements under which any payment is
reasonably likely to become non-deductible, in whole or in part, for tax
reporting purposes as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder.

 

4.13.10   To the Knowledge of 1st Pacific Bancorp, the consummation of the
Merger and the Bank Merger will not, directly or indirectly (including without
limitation, as a result of any termination of employment or service at any time
prior to or following the Effective Time), entitle any current or former
employee, director or independent contractor of 1st Pacific Bancorp or 1st
Pacific Bank to any actual or deemed payment (or benefit) which could constitute
a “parachute payment” (as such term is defined in Section 280G of the Code).

 

4.13.11   Except as disclosed in 1st Pacific Bancorp Disclosure
Schedule 4.13.11, there are no stock options, stock appreciation or similar
rights, earned dividends or dividend equivalents, or shares of restricted stock
or restricted stock units, outstanding under any of the 1st Pacific Bancorp
Compensation and Benefit Plans or otherwise as of the date hereof and none will
be granted, awarded, or credited after the date hereof.

 

4.13.12   1st Pacific Bancorp Disclosure Schedule 4.13.12(a) sets forth, as of
the payroll date immediately preceding the date of this Agreement, a list of the
full names of all officers, and employees (full or part-time) of 1st Pacific
Bank or 1st Pacific Bancorp, their title and rate of salary, and their date of
hire. 1st Pacific Bancorp Disclosure Schedule 4.13.12(b) also sets forth any
changes to any 1st Pacific Bancorp Compensation and Benefit Plan since
December 31, 2008.

 

4.14        Brokers, Finders and Financial Advisors

 

Neither 1st Pacific Bancorp nor 1st Pacific Bank, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder or
financial advisor in connection with the transactions contemplated by this
Agreement, or incurred any liability or commitment for any fees or commissions
to any such person in connection with the transactions contemplated by this
Agreement except for the retention of Sandler O’Neill and Partners, L.P. by 1st
Pacific Bancorp and the fee payable pursuant thereto. A true and correct copy of
the engagement agreement with  Sandler O’Neill and Partners, L.P., setting forth
the fee payable to  Sandler O’Neill and Partners, L.P. for its services rendered
to 1st Pacific Bancorp in connection with the Merger and transactions
contemplated by this Agreement, is attached to 1st Pacific Bancorp Disclosure
Schedule 4.14.

 

4.15        Environmental Matters

 

4.15.1     Except as may be set forth in 1st Pacific Bancorp Disclosure
Schedule 4.15, with respect to 1st Pacific Bancorp and 1st Pacific Bank:

 

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(A)                               To 1st Pacific Bancorp’s Knowledge, the 1st
Pacific Bancorp Participation Facilities and the 1st Pacific Bank Participation
Facilities and the Loan Properties are in substantial compliance with, and have
not been adjudged liable under, any Environmental Laws;

 

(B)                               1st Pacific Bancorp has received no written
notice of any suit, claim, action, administrative order, proceeding, or demand
for investigation and, to 1st Pacific Bancorp’s Knowledge, no such action is
threatened or has been filed with any court, governmental agency or other forum
against it or 1st Pacific Bank or any Participation Facility for: (x) alleged
noncompliance with, or liability under, any Environmental Law or (y) alleging
the unlawful presence or release (as defined herein) into the environment of any
Materials of Environmental Concern (as defined herein), in connection with any
site owned, leased or operated by it or 1st Pacific Bank or any Participation
Facility;

 

(C)                               1st Pacific Bancorp has received no written
notice of any suit, claim, action, administrative order, proceeding, or demand
for investigation, and, to 1st Pacific Bancorp’s Knowledge, no such action is
threatened or has been filed with any court, governmental agency or other forum
against any Loan Property (or 1st Pacific Bancorp or 1st Pacific Bank with
respect to such Loan Property) for: (x) alleged noncompliance with, or liability
under, any Environmental Law or (y) alleging the unlawful presence or release
into the environment of any Materials of Environmental Concern in connection
with any site owned, leased or operated by it or 1st Pacific Bank or any
Participation Facility;

 

(D)                               To 1st Pacific Bancorp’s Knowledge, with
respect to the properties currently owned or operated by 1st Pacific Bancorp or
1st Pacific Bank (including, without limitation, soil, groundwater or surface
water on, or under the properties, and buildings thereon), there is no reported
presence or release of Materials of Environmental Concern other than as
permitted under applicable Environmental Law;

 

(E)                                 Neither 1st Pacific Bancorp nor 1st Pacific
Bank during the past five years has received any written notice, demand letter,
executive or administrative order, directive or request for information from any
federal, state, local or foreign governmental entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law;

 

(F)                                 To 1st Pacific Bancorp’s Knowledge, there
are no underground storage tanks on, in or under any properties owned or
operated by 1st Pacific Bancorp or 1st Pacific Bank or any Participation
Facility, and to 1st Pacific Bancorp’s Knowledge, no underground storage tanks
have been closed or removed from any properties owned or operated by 1st Pacific
Bancorp or 1st Pacific Bank or any Participation Facility; and

 

(G)                               To 1st Pacific Bancorp’s Knowledge, during the
period of (s) 1st Pacific Bancorp’s or 1st Pacific Bank’ ownership or operation
of any of their respective current properties or (t) 1st Pacific Bancorp’s or
1st Pacific Bank’ participation in the management of any Participation Facility,
there have been no unlawful releases of Materials of Environmental Concerns in,
on, under or affecting such properties that could reasonably be expected to
result in material liability under the Environmental Laws. To 1st Pacific
Bancorp’s Knowledge, prior to the period of (x) 1st Pacific Bancorp’s or 1st
Pacific Bank’ ownership or operation of any of their respective current
properties or (y) 1st Pacific Bancorp’s or 1st Pacific Bank’ participation in
the management of any Participation

 

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Facility, there were no unlawful releases of Materials of Environmental Concern
in, on, under or affecting such properties that could reasonably be expected to
result in material liability under the Environmental Laws.

 

4.15.2              “Loan Property” means any property in which the applicable
party (or a Subsidiary of it) holds a security interest.   “Participation
Facility” means any facility in which the applicable party (or a Subsidiary of
it) participates in active management with the authority to make decisions and
take actions without the need for approval by third parties.

 

4.16                        Loan Portfolio

 

4.16.1              The allowance for loan losses reflected in 1st Pacific
Bancorp’s audited consolidated balance sheet at December 31, 2008 was, and the
allowance for loan losses shown on the balance sheets in 1st Pacific Bancorp’s
Securities Documents for periods ending after December 31, 2008 was or will be,
as the case may be, adequate, as of the dates thereof, under GAAP.

 

4.16.2              Except as set forth on 1st Pacific Bancorp Disclosure
Schedule 4.16.2(a), 1st Pacific Bancorp has received no written notice that
there is any suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to 1st Pacific Bancorp’s
Knowledge, no such action is threatened, before any court, governmental agency
or other forum against it or 1st Pacific Bank relating to any withdrawn loan
commitment, termination of a loan or potential borrower.  1st Pacific Bancorp
Disclosure Schedule 4.16.2(b) sets forth a listing, as of the most recently
available date, by account, of  (x) all loans, (1) that are contractually past
due 90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
“Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,”
“Loss,” “Classified,” “Criticized,” “Watch list” or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the obligor thereunder, or (4) where a specific
reserve allocation exists in connection therewith, and (y) all assets classified
by 1st Pacific Bank as real estate acquired through foreclosure or in lieu of
foreclosure, including in-substance foreclosures, and all other assets currently
held that were acquired through foreclosure or in lieu of foreclosure.

 

4.16.3              All loans receivable (including discounts) and accrued
interest entered on the books of 1st Pacific Bancorp and 1st Pacific Bank arose
out of bona fide arm’s-length transactions, were made for good and valuable
consideration in the ordinary course of 1st Pacific Bancorp’s or 1st Pacific
Bank’s respective business, and the notes or other evidences of indebtedness
with respect to such loans (including discounts) are true and genuine and are
what they purport to be.  To the Knowledge of 1st Pacific Bancorp, the loans,
discounts and the accrued interest reflected on the books of 1st Pacific Bancorp
and 1st Pacific Bank are subject to no defenses, set-offs or counterclaims
(including, without limitation, those afforded by usury or truth-in-lending
laws), except as may be provided by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally or by general principles of equity.  All
such loans are owned by 1st Pacific Bancorp or 1st Pacific Bank free and clear
of any liens.

 

4.16.4              The notes and other evidences of indebtedness evidencing the
loans described above, and all pledges, mortgages, deeds of trust and other
collateral documents or security

 

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instruments relating thereto are, in all material respects, valid, true and
genuine, and what they purport to be.

 

4.17                        Securities Law Documents

 

1st Pacific Bancorp has timely filed with the SEC (i) annual reports on
Form 10-K for the years ended December 31, 2008, 2007 and 2006 and (ii) proxy
materials used or for use in connection with its meetings of shareholders held
in 2008, 2007 and 2006. Such reports and proxy materials complied, at the time
filed with the SEC, in all material respects, with the Securities Laws.

 

4.18                        Related Party Transactions

 

1st Pacific Bancorp Disclosure Schedule 4.18 sets forth all transactions,
including any loan or other credit accommodation, with any Affiliate of 1st
Pacific Bancorp or 1st Pacific Bank.  All such transactions (a) were made in the
ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more than
the normal risk of collectability or present other unfavorable features. No loan
or credit accommodation to any Affiliate of 1st Pacific Bancorp or 1st Pacific
Bank is presently in default or, during the three year period prior to the date
of this Agreement, has been in default or has been restructured, modified or
extended. Neither 1st Pacific Bancorp nor 1st Pacific Bank has been notified
that principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by 1st Pacific Bancorp is
inappropriate.

 

4.19                        Deposits

 

Except as set forth in 1st Pacific Bancorp Disclosure Schedule 4.19, none of the
deposits of 1st Pacific Bank is a “brokered deposit” as defined in 12 CFR
Section 337.6(a)(2).

 

4.20                        Antitakeover Provisions Inapplicable; Required Vote

 

The affirmative vote of a majority of the outstanding shares of 1st Pacific
Bancorp Common Stock is required to approve this Agreement and the Merger under
the CGCL and there are no provisions in the Articles of Incorporation of 1st
Pacific Bancorp to the contrary.

 

4.21                        Registration Obligations

 

Neither 1st Pacific Bancorp nor 1st Pacific Bank is under any obligation,
contingent or otherwise, which will survive the Effective Time by reason of any
agreement to register any transaction involving any of its securities under the
Securities Act.

 

4.22                        Risk Management Instruments

 

Neither 1st Pacific Bancorp nor 1st Pacific Bank has any material interest rate
swaps, caps, floors, option agreements, futures or forward contracts or other
similar risk management arrangements, whether entered into for 1st Pacific
Bancorp’s own account, or for the account of 1st Pacific Bank or their
customers.

 

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4.23                        Fairness Opinion

 

1st Pacific Bancorp has received a written opinion from Sandler O’Neill and
Partners, L.P. to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date hereof, the Merger
Consideration to be received by the shareholders of 1st Pacific Bancorp pursuant
to this Agreement is fair to such shareholders from a financial point of view.
Such opinion has not been amended or rescinded as of the date of this Agreement.

 

4.24                        Intellectual Property

 

1st Pacific Bancorp Disclosure Schedule 4.24 sets forth a true and complete list
of all material (a) trademark registrations and applications, (b) service mark
registrations and applications, (c) unregistered trademarks and service marks,
and (d) Internet domain names owned, used or held for use in connection with the
business of the 1st Pacific Bancorp or 1st Pacific Bank.  1st Pacific Bancorp
and 1st Pacific Bank own or, to 1st Pacific Bancorp or 1st Pacific Bank’s
Knowledge, possess valid and binding licenses and other rights (subject to
expirations in accordance with their terms) to use all patents, copyrights,
trade secrets, trade names, service marks and trademarks used in their business,
each without payment (except as set forth in 1st Pacific Bancorp Disclosure
Schedule 4.24), and neither 1st Pacific Bancorp nor 1st Pacific Bank has
received any notice of conflict with respect thereto that asserts the rights of
others. 1st Pacific Bancorp and 1st Pacific Bank have performed all the
obligations required to be performed, and are not in default in any respect,
under any contract, agreement, arrangement or commitment to which 1st Pacific
Bancorp and 1st Pacific Bank are a party relating to any of the foregoing. To
the Knowledge of 1st Pacific Bancorp and 1st Pacific Bank, the conduct of the
business of 1st Pacific Bancorp and 1st Pacific Bank as currently conducted does
not, in any respect, infringe upon, dilute, misappropriate or otherwise violate
any intellectual property owned or controlled by any third party.

 

4.25                        Labor Matters

 

There are no labor or collective bargaining agreements to which 1st Pacific
Bancorp 1st Pacific Bank is a party. To the Knowledge of 1st Pacific Bancorp and
1st Pacific Bank, there is no union organizing effort pending or threatened
against 1st Pacific Bancorp or 1st Pacific Bank. There is no labor strike, labor
dispute (other than routine employee grievances that are not related to union
employees), labor slowdown, labor stoppage or labor lockout pending or, to the
Knowledge of 1st Pacific Bancorp or 1st Pacific Bank, threatened against 1st
Pacific Bancorp or 1st Pacific Bank. There is no unfair labor practice or labor
arbitration proceeding pending or, to the Knowledge of 1st Pacific Bancorp or
1st Pacific Bank, threatened against 1st Pacific Bancorp or 1st Pacific Bank
(other than routine employee grievances that are not related to union
employees). 1st Pacific Bancorp and 1st Pacific Bank are in compliance in all
material respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice.

 

4.26                        1st Pacific Bancorp Information Supplied

 

The information relating to 1st Pacific Bancorp and 1st Pacific Bank supplied by
1st Pacific Bancorp or 1st Pacific Bank to be contained in the Merger
Registration Statement, or in any other document filed with any Bank Regulator
or other Governmental Entity in connection herewith, will

 

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not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading.

 

4.27                        Regulatory Orders

 

Except as listed on 1st Pacific Bancorp Disclosure Schedule 4.27, neither 1st
Pacific Bancorp nor 1st Pacific Bank is subject to any formal or informal order,
agreement or understanding issued by a Bank Regulator or other Governmental
Entity.

 

4.28                        Disclaimer of Other Representations and Warranties.

 

Except for the express representations and warranties stated above, neither 1st
Pacific Bancorp nor 1st Pacific Bank make any other representations or
warranties whatsoever, express or implied, with regard to the matters discussed
herein.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF FB BANCORP AND FIRST BUSINESS BANK

 

Each of FB Bancorp and First Business Bank represents and warrants to 1st
Pacific Bancorp and 1st Pacific Bank, jointly and severally, that the statements
contained in this Article V are correct and complete as of the date of this
Agreement, subject to the standard set forth in Section 5.1, and except as set
forth in the FB Bancorp Disclosure Schedule delivered by FB Bancorp or First
Business Bank to 1st Pacific Bancorp and 1st Pacific Bank on the date hereof,
and except as to any representation or warranty which specifically relates to an
earlier date, which only need be so correct as of such earlier date.  FB Bancorp
and First Business Bank have made a good faith effort to ensure that the
disclosure on their respective disclosure schedules corresponds to the section
referenced herein. However, for purposes of the FB Bancorp Disclosure Schedule,
any item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant as and to the
extent that it is reasonably clear on the face of such schedule that such item
applies to such other schedule.  References to the Knowledge of FB Bancorp,
First Business Bank or Auerbach shall include the Knowledge of the other two.

 

5.1                               Standard

 

No representation or warranty of FB Bancorp or First Business Bank contained in
this Article V shall be deemed untrue or incorrect, and FB Bancorp and First
Business Bank shall not be deemed to have breached a representation or warranty,
as a consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with all other
facts, circumstances or events inconsistent with any paragraph of Article V, has
had or is reasonably expected to have a Material Adverse Effect, disregarding
for these purposes (x) any qualification or exception for, or reference to,
materiality in any such representation or warranty and (y) any use of the terms
“material,” “materially,” “in all material respects,” “Material Adverse Effect”
or similar terms or phrases in any such representation or warranty. The
foregoing standard shall not apply to representations and warranties contained
in Sections 5.2 (other than the last sentences of Sections 5.2.1, 5.2.2, 5.2.3
and 5.2.4), 5.3, 5.4, 5.5, 5.6, 5.9, 5.11 and 5.12, which shall be deemed
untrue, incorrect and breached if they are not true and correct in all material
respects based on the qualifications and standards therein contained.

 

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5.2                              Organization

 

5.2.1                     FB Bancorp is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.  FB
Bancorp has full corporate power and authority to carry on its business as now
conducted and is duly licensed or qualified to do business in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification.

 

5.2.2                     First Business Bank is a national banking association
duly organized, validly existing and in good standing (to the extent required)
under the laws of the United States of America. First Business Bank has full
corporate power and authority to carry on its business as now conducted and is
duly licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification. The deposits of First Business Bank
are insured by the FDIC to the fullest extent permitted by law, and all premiums
and assessments required to be paid in connection therewith have been paid when
due.

 

5.2.3                     The minute books of FB Bancorp and First Business Bank
accurately record, in all material respects, all material corporate actions of
their respective shareholders and boards of directors (including committees).

 

5.2.4                     Prior to the date of this Agreement, FB Bancorp has
made available to 1st Pacific Bancorp and 1st Pacific Bank true and correct
copies of its Articles of Incorporation and bylaws and First Business Bank has
made available to 1st Pacific Bancorp and 1st Pacific Bank true and correct
copies of its Articles of Association and bylaws.

 

5.3                              Capitalization

 

5.3.1                     The authorized capital stock of FB Bancorp consists of
10,000,000 shares of common stock, no par value, of which 15,924 shares are
outstanding, validly issued, fully paid and nonassessable and free of preemptive
rights, and 10,000,000 shares of preferred stock, no par value, of which no
shares of preferred stock are outstanding.  Auerbach is the beneficial owner,
with the power to vote and dispose of, 15,924 shares of the FB Bancorp common
stock.

 

5.3.2                     The authorized capital stock of First Business Bank
consists of 10,000,000 shares of First Business Bank Common Stock, of which
2,643,534 shares are outstanding, validly issued, fully paid and free of
preemptive rights, and 10,000,000 shares of First Business Bank Preferred Stock,
of which 2,322 shares are outstanding.  Except with respect to the First
Business Bank Preferred Stock, First Business Bank is not bound by any Rights of
any character relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of First Business Bank
Common Stock, or any other security of First Business Bank or any securities
representing the right to vote, purchase or otherwise receive any shares of
First Business Bank Common Stock or any other security of First Business Bank,
other than shares issuable under the First Business Bank Stock Benefit Plan. 
Auerbach is the beneficial owner, with the power to vote and dispose of,
2,404,262 shares of the First Business Bank Common Stock and no shares of the
First Business Bank Preferred Stock.  All outstanding shares of First Business
Bank Preferred Stock are held and owned by the United States Treasury and were
purchased under the Capital

 

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Purchase Program established under the Troubled Asset Relief Program pursuant to
the Emergency Economic Stabilization Act of 2008.

 

5.4                               Authority; No Violation

 

5.4.1                     Each of FB Bancorp and First Business Bank has full
corporate power and authority to execute and deliver this Agreement, subject to
receipt of the Regulatory Approvals and the Shareholder Approvals, to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by FB Bancorp and First Business Bank and the completion by each of
them of the transactions contemplated hereby, including the Bank Holding Company
Formation and the Merger, have been duly and validly approved by their
respective Boards of Directors, and, except for the Shareholder Approvals, no
other corporate proceedings on the part of FB Bancorp and First Business Bank
are necessary to complete the transactions contemplated hereby, including the
Bank Holding Company Formation and the Merger. This Agreement has been duly and
validly executed and delivered by FB Bancorp and First Business Bank, and
subject to the Shareholder Approvals and the receipt of the Regulatory Approvals
and due and valid execution and delivery of this Agreement by 1st Pacific
Bancorp and 1st Pacific Bank, constitutes the valid and binding obligations of
each of FB Bancorp and First Business Bank, enforceable against them in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally, and subject, as to
enforceability, to general principles of equity and Section 8(b)(6)(D) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1818(b)(6)(D) (as applicable).

 

5.4.2                     Subject to receipt of Regulatory Approvals and
compliance by the parties hereto with any conditions contained therein, (A) the
execution and delivery of this Agreement by FB Bancorp and First Business Bank ,
(B) the consummation of the transactions contemplated hereby, and (C) compliance
by FB Bancorp and First Business Bank with any of the terms or provisions hereof
will not (i) conflict with or result in a breach of any provision of the
Articles of Incorporation or bylaws of FB Bancorp or the Articles of Association
or bylaws of First Business Bank; (ii) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to FB
Bancorp, First Business Bank or any of their respective  properties or assets;
or (iii) violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default), under, result in the termination of, accelerate the
performance required by, or result in a right of termination or acceleration or
the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of FB Bancorp or First Business Bank under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other investment or obligation to
which any of them is a party, or by which they or any of their respective
properties or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults under clause (ii) or (iii) hereof which, either
individually or in the aggregate, will not have a Material Adverse Effect on FB
Bancorp or First Business Bank.

 

5.5                               Consents

 

Except for (a) filings with Bank Regulators, the receipt of the Regulatory
Approvals, compliance with any conditions contained therein, (b) the filing of
the certificate of merger with the Secretary of State of the State of
California, (c) the filing with the SEC of (i) the Merger Registration Statement
and (ii) such reports under Sections 13(a), 13(d), 13(g), 14(f) and 16(a) of the
Exchange

 

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Act as may be required in connection with this Agreement and the transactions
contemplated hereby and the obtaining from the SEC of such orders as may be
required in connection therewith, (d) such filings and approvals as are required
to be made or obtained under the securities or “Blue Sky” laws of various states
in connection with the issuance of the shares of FB Bancorp Common Stock
pursuant to this Agreement and the Bank Holding Company Merger Agreement, and
(e) Shareholder Approvals, no consents, waivers or approvals of, or filings or
registrations with, any Governmental Entity are necessary, and, to FB Bancorp’s
Knowledge, no consents, waivers or approvals of, or filings or registrations
with, any other third parties are necessary, in connection with (x) the
execution and delivery of this Agreement by FB Bancorp and First Business Bank,
and (y) the completion of the transactions contemplated herein.  FB Bancorp and
First Business Bank have no reason to believe that (i) any Regulatory Approvals
or other required consents or approvals will not be received, or that (ii) any
public body or authority, the consent or approval of which is not required or to
which a filing is not required, will object to the completion of the
transactions contemplated by this Agreement.

 

5.6                               Financing Commitments.

 

FB Bancorp and First Business Bank presently have or will have at Closing all
funds necessary for payment of the Merger Consideration and, assuming that each
of 1st Pacific Bancorp and 1st Pacific Bank is in full compliance with the
covenants contained in Article VI and 1st Pacific Bank  has achieved the closing
conditions contained in Article IX, to First Business Bank’s and FB Bancorp’s
Knowledge, such funds will be sufficient after payment of the Merger
Consideration for the Surviving Corporation to achieve a Tier 1 Capital Ratio
(as defined in 12 CFR 325.2) of 8% as of the consummation of the transactions
contemplated herein.

 

5.7                               Licenses and Permits.

 

Except for any licenses, certificates, franchises, rights and permits required
to consummate the Bank Holding Company Formation, including but not limited to
licenses, certificates, franchises, rights and permits for FB Bancorp to operate
as a bank holding company for First Business Bank, FB Bancorp and First Business
Bank have all material licenses, certificates, franchises, rights and permits
that are necessary for the conduct of their business as presently conducted, and
such licenses are in full force and effect, except for any failure to be in full
force and effect that would not, individually or in the aggregate, have a
Material Adverse Effect on FB Bancorp and First Business Bank taken as a whole
or on the ability of FB Bancorp and First Business Bank to consummate the
transactions contemplated by this Agreement.  The properties, assets, operations
and businesses of FB Bancorp and First Business Bank are and have been
maintained and conducted, in all material respects, in compliance with all
applicable licenses, certificates, franchises, rights and permits.

 

5.8                               Intentionally Omitted.

 

5.9                               Stock Purchase

 

Each of FB Bancorp and First Business Bank have met with its respective Bank
Regulator and have not been informed of, and have no Knowledge of, any
conditions or restrictions imposed by any Governmental Entity on the Stock
Purchase.  FB Bancorp and First Business Bank have no reason to believe that
(i) any approvals by a Bank Regulator or other required consents or approvals

 

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will not be received, or that (ii) any public body or authority, the consent or
approval of which is required or to which a filing is required, will object to
the completion and consummation of the Stock Purchase.

 

5.10                        FB Bancorp and First Business Bank Information
Supplied

 

The information relating to FB Bancorp and First Business Bank supplied by FB
Bancorp or First Business Bank to be contained in the Merger Registration
Statement, or in any other document filed with any Bank Regulator or other
Governmental Entity in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.

 

5.11                        Intentionally Omitted.

 

5.12                        Funds for Stock Purchase on Deposit with First
Business Bank

 

Auerbach has deposited approximately fifteen million dollars ($15,000,000) with
First Business Bank, which funds are intended to be used to consummate the Stock
Purchase.

 

5.13                        Antitakeover Provisions Inapplicable; Required Vote

 

The affirmative vote of a majority of the outstanding shares of FB Bancorp
Common Stock is required to approve this Agreement and the Merger under the CGCL
and there are no provisions in the Articles of Incorporation of FB Bancorp to
the contrary.  The affirmative vote of not less than two-thirds of the
outstanding shares of First Business Bank Common Stock is required to approve
this Agreement and the Merger under applicable law and there are no provisions
in the Articles of Association of First Business Bank to the contrary.  The
approval of the outstanding shares of First Business Bank Preferred Stock is not
required to approve this Agreement and the Merger.

 

5.14                        Legal Proceedings

 

Except as set forth in FB Bancorp Disclosure Schedule 5.14, neither FB Bancorp
nor First Business Bank is a party to any, and there are no pending or, to FB
Bancorp’s Knowledge, threatened legal, administrative, arbitration or other
proceedings, claims, formal or informal orders, agreements or understandings
issued by a Bank Regulator or other Governmental Entity,  actions or
governmental investigations or inquiries of any nature (i) against FB Bancorp or
First Business Bank, (ii) to which FB Bancorp or First Business Bank’s assets
are or may be subject, (iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which could adversely
affect the ability of FB Bancorp or First Business Bank to perform under this
Agreement, except for any proceeding, claim, action, investigation or inquiry
which, if adversely determined, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect on FB Bancorp or First
Business Bank.

 

5.15                        Disclaimer of Other Representations and Warranties.

 

Except for the express representations and warranties stated above, neither FB
Bancorp  nor First Business  Bank make any other representations or warranties
whatsoever, express or implied, with regard to the matters discussed herein.

 

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ARTICLE VI
COVENANTS OF 1ST PACIFIC BANCORP

 

6.1                               Conduct of Business

 

6.1.1                     Affirmative Covenants.  During the period from the
date of this Agreement to the Effective Time, except with the written consent of
First Business Bank, 1st Pacific Bancorp and 1st Pacific Bank will:

 

(A)                               operate their respective businesses, in the
usual, regular and ordinary course of business; use commercially reasonable
efforts to preserve intact their business organization and assets and maintain
their respective rights and franchises; and voluntarily take no action which
would (i) result in 1st Pacific Bancorp or 1st Pacific Bank incurring material
losses; (ii) adversely affect the ability of the parties to obtain any
Regulatory Approval or other approvals of Governmental Entities required for the
transactions contemplated hereby or materially increase the period of time
necessary to obtain such approvals, or (iii) adversely affect their ability to
perform their covenants and agreements under this Agreement;

 

(B)                               use commercially reasonable efforts to reduce
Federal Home Loan Advances to a maximum of $40,000,000;

 

(C)                               use commercially reasonable efforts to
maintain the allowance for loan loss in accordance with GAAP; and

 

(D)                               use commercially reasonable efforts to
maintain loan classification policies and procedures in accordance with industry
best practices consistent with past practice and, from and after the date of
this Agreement to the Closing Date, provide FB Bancorp and First Business Bank
by no later than the 15th day of each month, a written report setting forth all
loans classified as “Substandard,” “Doubtful,” “Loss and “Other Loans Especially
Mentioned.”

 

6.1.2                                     Negative Covenants.  1st Pacific
Bancorp agrees that from the date of this Agreement to the Effective Time,
except as otherwise specifically permitted or required by this Agreement, set
forth in 1st Pacific Bancorp Disclosure Schedule 6.1.2, or consented to by First
Business Bank in writing (which consent shall not be unreasonably withheld or
delayed), it will not, and it will cause 1st Pacific Bank not to:

 

(A)                               change or waive any provision of its
Articles of Incorporation or bylaws, except as required by law, or appoint any
new director to the board directors;

 

(B)                               change the number of authorized or issued
shares of its capital stock, issue any shares of 1st Pacific Bancorp Common
Stock, or 1st Pacific Bank Common Stock, or issue or grant any Right or
agreement of any character relating to its authorized or issued capital stock or
any securities convertible into shares of such stock, make any grant or award
under the 1st Pacific Bancorp Equity Plans, or split, combine or reclassify any
shares of capital stock, or declare, set aside or pay any dividend or other
distribution in respect of capital stock, or redeem or otherwise acquire any
shares of capital stock, except that 1st Pacific Bancorp may (i) issue shares of
1st Pacific Bancorp Common Stock upon the valid exercise, in accordance with the
information set forth in 1st Pacific Bancorp Disclosure Schedule 4.3.1, of
presently outstanding 1st Pacific Bancorp Options

 

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issued under the 1st Pacific Bancorp Equity Plans and of presently outstanding
Warrants and (ii) pay dividends in respect of the capital stock of 1st Pacific
Bank to 1st Pacific Bancorp;

 

(C)                               enter into, amend in any material respect or
terminate any contract or agreement (including without limitation any settlement
agreement with respect to litigation) except in the ordinary course of business
and except pursuant to the termination of employment agreements in the form
attached hereto as Exhibit “G” with Richard H. Revier and James H. Burgess;

 

(D)                               make application for the opening or closing of
any, or open or close any, branch or automated banking facility;

 

(E)                                 grant or agree to pay any bonus, severance
or termination to, or enter into, renew or amend any employment agreement,
severance agreement and/or supplemental executive agreement with, or increase in
any manner the compensation or fringe benefits of, any of its directors,
officers or employees, except (i) as may be required pursuant to commitments
existing on the date hereof and set forth on 1st Pacific Bancorp Disclosure
Schedules 4.9.1 and 4.13.1, (ii) termination of employment agreements in the
form attached hereto as Exhibit “G” with Richard H. Revier and James H. Burgess,
and (iii) pay increases in the ordinary course of business consistent with past
practice to non-officer employees. Neither 1st Pacific Bancorp nor 1st Pacific
Bank shall hire or promote any employee to a rank having a title of vice
president or other more senior rank or hire any new employee at an annual rate
of compensation in excess of $50,000, provided that 1st Pacific Bancorp or 1st
Pacific Bank may hire at-will, non-officer employees to fill vacancies that may
from time to time arise in the ordinary course of business;

 

(F)                                 enter into or, except as may be required by
law, materially modify any pension, retirement, stock option, stock purchase,
stock appreciation right, stock grant, savings, profit sharing, deferred
compensation, supplemental retirement, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to any defined contribution
plan not in the ordinary course of business consistent with past practice,
except termination of employment agreements in the form attached hereto as
Exhibit “G” with Richard H. Revier and James H. Burgess;

 

(G)                               merge or consolidate 1st Pacific Bancorp or
1st Pacific Bank with any other corporation; sell or lease all or any
substantial portion of the assets or business of 1st Pacific Bancorp or 1st
Pacific Bank; make any acquisition of all or any substantial portion of the
business or assets of any other person, firm, association, corporation or
business organization other than in connection with foreclosures, settlements in
lieu of foreclosure, troubled loan or debt restructuring, or the collection of
any loan or credit arrangement between 1st Pacific Bancorp or 1st Pacific Bank
and any other person; enter into a purchase and assumption transaction with
respect to deposits and liabilities; permit the revocation or surrender by any
1st Pacific Bancorp Subsidiary of its certificate of authority to maintain, or
file an application for the relocation of, any existing branch office, or file
an application for a certificate of authority to establish a new branch office;
provided, however, that notwithstanding anything contained in this
Section 6.1.2(G) to the contrary, 1st Pacific Bancorp and 1st Pacific Bank shall
be permitted to take such actions to reduce the asset size of 1st Pacific Bank
consistent with their obligations under Section 6.1.1;

 

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(H)                               sell or otherwise dispose of the capital stock
of 1st Pacific Bancorp or 1st Pacific Bank or sell or otherwise dispose of any
asset of 1st Pacific Bancorp or 1st Pacific Bank other than in the ordinary
course of business consistent with past practice and other than in accordance
with their respective obligations under Section 6.1.1; except for transactions
with the Federal Reserve System and Federal Home Loan Bank of San Francisco,
subject any asset of 1st Pacific Bancorp or 1st Pacific Bank to a lien, pledge,
security interest or other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, “treasury tax and loan” accounts
established in the ordinary course of business and transactions in “federal
funds” and the satisfaction of legal requirements in the exercise of trust
powers) other than in the ordinary course of business consistent with past
practice; incur any indebtedness for borrowed money (or guarantee any
indebtedness for borrowed money), except in the ordinary course of business
consistent with past practice;

 

(I)                                    intentionally take any action which would
result in any of the representations and warranties of 1st Pacific Bancorp or
1st Pacific Bank set forth in this Agreement becoming untrue as of any date
after the date hereof or in any of the conditions set forth in Article IX hereof
not being satisfied, except in each case as may be required by applicable law;

 

(J)                                 change any method, practice or principle of
accounting, except as may be required from time to time by GAAP (without regard
to any optional early adoption date) or any Bank Regulator responsible for
regulating 1st Pacific Bancorp or 1st Pacific Bank;

 

(K)                               waive, release, grant or transfer any material
rights of value or modify or change in any material respect any existing
material agreement or indebtedness to which 1st Pacific Bancorp or 1st Pacific
Bank is a party, other than in the ordinary course of business, consistent with
past practice;

 

(L)                                purchase any securities (other than Federal
Reserve Bank stock as required by the Federal Reserve Bank); or purchase any
securities other than securities (i) issued by a federal government agency and
(ii) with a weighted average life of not more than one year;

 

(M)                             except for commitments issued or proposals
pending prior to the date of this Agreement and which have been disclosed on the
1st Pacific Bancorp Disclosure Schedule 6.1.2(M), and the renewal of existing
lines of credit, make any new loan or other credit facility commitment
(including without limitation, lines of credit and letters of credit) in an
amount in excess of $500,000 for a new customer or $1,000,000 for any existing
customer. In addition, the prior approval of First Business Bank is required
with respect to the following: (i) any new loan or credit facility commitment to
any borrower or group of affiliated borrowers whose credit exposure with First
Business Bank, 1st Pacific Bancorp and 1st Pacific Bank, in the aggregate,
exceeds $2,000,000 prior thereto or as a result thereof; (ii) any new loan or
credit facility commitment in any property located outside of California; and
(iii) any construction loan or residential real estate loan;

 

(N)                               except as set forth on the 1st Pacific Bancorp
Disclosure Schedule 6.1.2(N), enter into, renew, extend or modify any other
transaction (other than a deposit transaction) with any Affiliate;

 

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(O)                              enter into (or renew) any futures contract,
option, interest rate caps, interest rate floors, interest rate exchange
agreement or other agreement or take any other action for purposes of hedging
the exposure of its interest-earning assets and interest-bearing liabilities to
changes in market rates of interest; enter into (or renew) any structured
financing transaction;

 

(P)                                except for the execution of this Agreement,
and actions taken or which will be taken in accordance with this Agreement and
performance thereunder, take any action that would give rise to a right of
payment to any individual under any employment agreement outside of the ordinary
course of business;

 

(Q)                              make any material change in policies in
existence on the date of this Agreement with regard to: the extension of credit,
or the establishment of reserves with respect to the possible loss thereon or
the charge off of losses incurred thereon; investments; asset/liability
management; or other material banking policies except as may be required by
changes in applicable law or regulations or by a Bank Regulator;

 

(R)                               except for the execution of this Agreement,
and the transactions contemplated herein, take any action that would give rise
to an acceleration of the right to payment to any individual under any 1st
Pacific Bancorp Equity Plan;

 

(S)                                except as set forth in 1st Pacific Bancorp
Disclosure Schedule 6.1.2(S), make any capital expenditures in excess of $25,000
individually or $50,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair;

 

(T)                                except as set forth in 1st Pacific Bancorp
Disclosure Schedule 6.1.2(T), purchase or otherwise acquire, or sell or
otherwise dispose of, any assets or incur any liabilities other than in the
ordinary course of business consistent with past practices and policies;

 

(U)                                acquire a participation interest in any new
loan or sell any participation interest in any loan, except for the sale of a
participation interest in the maximum amount of $3,000,000 or the sale of
participation interests in the aggregate maximum amount of $30,000,000 (provided
that First Business Bank will be given the first opportunity to purchase any
loan participation being sold) or OREO properties (other than sales of OREO
which generate a net book loss of not more than $50,000 per property);

 

(V)                               undertake or enter into any lease, contract or
other commitment for its account, other than in the normal course of providing
credit to customers as part of its banking business, involving a payment by 1st
Pacific Bancorp or 1st Pacific Bank of more than $25,000 annually, or containing
any financial commitment extending beyond 12 months from the date hereof;

 

(W)                           pay, discharge, settle or compromise any claim,
action, litigation, arbitration or proceeding, other than the Earn Out Lawsuit
or any such payment, discharge, settlement or compromise in the ordinary course
of business consistent with past practice that involves solely money damages in
the amount not in excess of $25,000 individually or $75,000 in the aggregate,
and that does not create negative precedent for other pending or potential
claims, actions, litigation, arbitration or proceedings;

 

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(X)                               go to sale on notice of default or take a deed
or title to any commercial real estate without first conducting a Phase I
environmental assessment of the property if such environmental assessment
indicates the presence of a Materials of Environmental Concern;

 

(Y)                                purchase or sell any mortgage loan servicing
rights other than in the ordinary course of business consistent with past
practice;

 

(Z)                                borrow or otherwise enter into any agreement
(including but not limited to structured borrowings or any indebtedness the
maturity date of which is in excess of 12 months) to increase the indebtedness
of 1st Pacific Bancorp or any of its subsidiaries except for liquidity and
operational purposes;

 

(AA)                      issue any broadly distributed communication of a
general nature to employees (including general communications relating to
benefits and compensation) without prior consultation with First Business Bank
and, to the extent relating to post-Closing employment, benefit or compensation
information without the prior consent of First Business Bank (which shall not be
unreasonably withheld) or issue any broadly distributed communication of a
general nature to customers without the prior approval of First Business Bank
(which shall not be unreasonably withheld), except as required by law or for
communications in the ordinary course of business consistent with past practice
that do not relate to the Merger or other transactions contemplated hereby;

 

(BB)                      withdraw its application to participate in the Capital
Purchase Program established by the United States Treasury Department under the
Troubled Assets Relief Program, pursuant to the Emergency Economic Stabilization
Act of 2008; or

 

(CC)                      agree to do any of the foregoing.

 

6.2                               Current Information

 

6.2.1                                     During the period from the date of
this Agreement to the Effective Time, 1st Pacific Bancorp will cause one or more
of its representatives to confer with representatives of First Business Bank and
report the general status of its ongoing operations at such times as First
Business Bank may reasonably request. 1st Pacific Bancorp will promptly notify
First Business Bank of any material change in the normal course of its business
or in the operation of its properties and, to the extent permitted by applicable
law, of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or, if known by 1st Pacific Bancorp, the threat of material litigation involving
1st Pacific Bancorp or 1st Pacific Bank. Without limiting the foregoing, senior
officers of First Business Bank, 1st Pacific Bancorp and 1st Pacific Bank shall
meet on a reasonably regular basis (expected to be at least monthly) to review
the financial and operational affairs of 1st Pacific Bancorp and 1st Pacific
Bank, in accordance with applicable law, and 1st Pacific Bancorp and 1st Pacific
Bank shall give due consideration to First Business Bank’s input on such
matters, with the understanding that, notwithstanding any other provision
contained in this Agreement, First Business Bank shall under no circumstances be
permitted to exercise control of 1st Pacific Bancorp or 1st Pacific Bank prior
to the Effective Time.

 

6.2.2                                     1st Pacific Bank shall provide First
Business Bank, within fifteen (15) business days of the end of each calendar
month, a written list of nonperforming assets (the term

 

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“nonperforming assets,” for purposes of this subsection, means (i) loans that
are “troubled debt restructuring” as defined in Statement of Financial
Accounting Standards No. 15, “Accounting by Debtors and Creditors for Troubled
Debt Restructuring,” (ii) loans on nonaccrual, (iii) real estate owned, (iv) all
loans ninety (90) days or more past due) as of the end of such month and
(iv) and impaired loans. On a monthly basis, 1st Pacific Bancorp shall provide
FB Bancorp and First Business Bank with a schedule of all loan approvals, which
schedule shall indicate the loan amount, loan type and other material features
of the loan.

 

6.2.3                                     1st Pacific Bancorp shall promptly
inform First Business Bank upon receiving written notice of any legal,
administrative, arbitration or other proceedings, demands, notices, audits or
investigations (by any federal, state or local commission, agency or board)
relating to the alleged liability of 1st Pacific Bancorp or 1st Pacific Bank
under any labor or employment law.

 

6.3                               Access to Properties and Records

 

6.3.1                                     Subject to Section 13.1 hereof, 1st
Pacific Bancorp shall permit First Business Bank reasonable access upon
reasonable notice and during normal business hours to its properties and those
of 1st Pacific Bank, and shall disclose and make available to First Business
Bank during normal business hours all of its books, papers and records relating
to the assets, properties, operations, obligations and liabilities, including,
but not limited to, all books of account (including the general ledger), tax
records, minute books of directors’ (other than minutes that discuss any of the
transactions contemplated by this Agreement or any other subject matter 1st
Pacific Bancorp reasonably determines should be treated as confidential) and
shareholders’ meetings, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, litigation files, plans
affecting employees, and any other business activities or prospects in which
First Business Bank may have a reasonable interest; provided, however, that 1st
Pacific Bancorp shall not be required to take any action that would provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights or business interests or confidences of any
customer or other person or would result in the waiver by it of the privilege
protecting communications between it and any of its counsel. 1st Pacific Bancorp
shall provide and shall request its auditors to provide First Business Bank with
such historical financial information regarding it (and related audit reports
and consents) as First Business Bank may reasonably request. First Business Bank
shall use commercially reasonable efforts to minimize any interference with 1st
Pacific Bancorp’s and 1st Pacific Bank’s regular business operations during any
such access to 1st Pacific Bancorp’s or 1st Pacific Bank’s property, books and
records.  First Business Bank’s examination of the records of 1st Pacific
Bancorp and 1st Pacific Bank pursuant hereto, shall not constitute a waiver or
relinquishment on the part of First Business Bank to rely upon the
representations and warranties made by 1st Pacific Bancorp and 1st Pacific Bank
herein or pursuant hereto; provided, that First Business Bank shall disclose any
fact or circumstance it may discover which it believes renders any
representation or warranty made by 1st Pacific Bancorp and 1st Pacific Bank
hereunder incorrect in any respect.

 

6.3.2                                     Access to Operations. Within sixty
(60) days prior to the Effective Time, 1st Pacific Bancorp and 1st Pacific Bank
shall afford to FB Bancorp and First Business Bank and their authorized agents
and representatives, access, during normal business hours, to the operations,
books, and other information relating to 1st Pacific Bancorp and 1st Pacific
Bank for the sole purpose of assuring an orderly transition of operations,
including the data processing conversion, in

 

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the Merger.  FB Bancorp and First Business Bank shall give reasonable notice for
access to 1st Pacific Bancorp and 1st Pacific Bank, and the date and time of
such access will then be mutually agreed to by FB Bancorp, First Business Bank,
1st Pacific Bancorp and 1st Pacific Bank. FB Bancorp and First Business Bank’s
access shall be conducted in a manner which does not unreasonably interfere with
1st Pacific Bancorp’s and 1st Pacific Bank’s normal operations, customers and
employee relations and which does not interfere with the ability of 1st Pacific
Bancorp and 1st Pacific Bank to consummate the transactions contemplated by this
Agreement.

 

6.3.3                                     Access to Employees.  Between the date
hereof and the Effective Time, 1st Pacific Bancorp and 1st Pacific Bank shall
give FB Bancorp and First Business Bank and their authorized representatives
upon reasonable notice, reasonable access to all employees and all personnel
files of current employees of 1st Pacific Bancorp and/or 1st Pacific Bank, as
permitted by law, as FB Bancorp or First Business Bank may reasonably require
for purposes of determining 1st Pacific Bancorp or 1st Pacific Bank employees
whose employee will continue after the Effective Time and to make the other
determinations regarding employee benefits pursuant to Article XII; provided,
however, that in exercising the privileges provided herein, FB Bancorp and First
Business Bank shall not disrupt the business of 1st Pacific Bank in its sole
discretion. Nothing in this Section 6.3.3 is intended, nor shall it be
construed, to confer any rights or benefits upon any persons other than FB
Bancorp, First Business Bank, 1st Pacific Bancorp or 1st Pacific Bank.

 

6.4                               Financial and Other Statements

 

6.4.1                                     Promptly upon receipt thereof, 1st
Pacific Bancorp will furnish to First Business Bank copies of each annual,
interim or special audit of the books of 1st Pacific Bancorp and 1st Pacific
Bank made by its independent auditors and copies of all internal control reports
submitted to 1st Pacific Bancorp or 1st Pacific Bank by such auditors in
connection with each annual, interim or special audit of the books of 1st
Pacific Bancorp and 1st Pacific Bank made by such auditors.

 

6.4.2                                     1st Pacific Bancorp and 1st Pacific
Bank will furnish to First Business Bank copies of all documents, statements and
reports as it shall send to its shareholders, the FDIC, the FRB, the Department
or any other regulatory authority, except as legally prohibited thereby. Within
25 days after the end of each month, 1st Pacific Bancorp and 1st Pacific Bank
will deliver to First Business Bank a consolidated balance sheet and a
consolidated statement of income, without related notes, for such month prepared
in accordance with current financial reporting practices.

 

6.4.3                                     1st Pacific Bancorp and 1st Pacific
Bank will advise First Business Bank promptly of the receipt of any examination
report of any Bank Regulator with respect to the condition or activities of 1st
Pacific Bancorp or 1st Pacific Bank.

 

6.4.4                                     With reasonable promptness, 1st
Pacific Bancorp and 1st Pacific Bank will furnish to First Business Bank such
additional financial data that 1st Pacific Bancorp or 1st Pacific Bank possess
and as First Business Bank may reasonably request, including without limitation,
detailed monthly financial statements and loan reports.

 

6.5                               Maintenance of Insurance

 

1st Pacific Bancorp shall maintain, and cause 1st Pacific Bank to maintain,
insurance in such amounts as are reasonable to cover such risks as are customary
in relation to the character and

 

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location of their properties and the nature of their business.  Subject to the
prior written consent of FB Bancorp, 1st Pacific Bancorp and 1st Pacific Bank
shall purchase the Tail Policy which provides for the Tail Coverage (as these
terms are defined in Section 7.6).

 

6.6                               Disclosure Supplements

 

From time to time prior to the Effective Time, 1st Pacific Bancorp will promptly
supplement or amend the 1st Pacific Bancorp Disclosure Schedule delivered in
connection herewith with respect to any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such 1st Pacific Bancorp Disclosure
Schedule or which is necessary to correct any information in such 1st Pacific
Bancorp Disclosure Schedule which has been rendered inaccurate thereby. No
supplement or amendment to such 1st Pacific Bancorp Disclosure Schedule shall
have any effect for the purpose of determining satisfaction of the conditions
set forth in Article IX; provided, however, that the contents of any supplement
or amendment shall not otherwise be deemed a breach of a representation or
warranty, including for purposes of Section 11.2.2(A), unless such supplement or
amendment contains a fact, circumstance or event that individually, or taken
together with all other facts, circumstances and events has resulted in or has
had, or is reasonably expected to have or result in a Material Adverse Effect.

 

6.7                               Consents and Approvals of Third Parties

 

1st Pacific Bancorp shall use all commercially reasonable efforts to obtain, as
soon as practicable, all consents and approvals necessary or desirable for the
consummation of the transactions contemplated by this Agreement.  Without
limiting the foregoing, in connection with the outstanding 1st Pacific Bancorp
Trust Preferred Securities and related underlying Junior Subordinated Debt
Securities, 1st Pacific Bancorp shall, prior to the Closing, use all
commercially reasonable efforts to obtain all necessary consents and approvals
of each trustee and any other person whose consent or approval shall be required
in order to permit the consummation of the transactions contemplated herein,
including the succession by the Surviving Corporation to the rights and
obligations of 1st Pacific Bancorp under the related indentures, guarantees or
other agreements or instruments.

 

6.8                               All Commercially Reasonable Efforts

 

Subject to the terms and conditions herein provided, 1st Pacific Bancorp agrees
to use all commercially reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.

 

6.9                               Failure to Fulfill Conditions

 

In the event that 1st Pacific Bancorp determines that a condition to its
obligation to complete the Merger cannot be fulfilled and that it will not waive
that condition, it will promptly notify First Business Bank.

 

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6.10                        No Solicitation

 

6.10.1                              1st Pacific Bancorp and 1st Pacific Bank
shall not, and shall cause their respective officers, directors, employees,
investment bankers, financial advisors, attorneys, accountants, consultants,
affiliates and other agents (collectively, the “Representatives”) not to,
directly or indirectly, (i) initiate, solicit, induce or knowingly encourage, or
take any action to facilitate the making of, any inquiry, offer or proposal
which constitutes, or could reasonably be expected to lead to, an Acquisition
Proposal; (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal or furnish, or otherwise afford access, to any Person
(other than First Business Bank) any information or data with respect to 1st
Pacific Bancorp or 1st Pacific Bank or otherwise relating to an Acquisition
Proposal; (iii) release any Person from, waive any provisions of, or fail to
enforce any confidentiality agreement or standstill agreement to which 1st
Pacific Bancorp or 1st Pacific Bank is a party; or (iv) enter into any
agreement, agreement in principle or letter of intent with respect to any
Acquisition Proposal or approve or resolve to approve any Acquisition Proposal
or any agreement, agreement in principle or letter of intent relating to an
Acquisition Proposal. Any violation of the foregoing restrictions by 1st Pacific
Bancorp or 1st Pacific Bank or any Representative, whether or not such
Representative is so authorized and whether or not such Representative is
purporting to act on behalf of 1st Pacific Bancorp or 1st Pacific Bank or
otherwise, shall be deemed to be a breach of this Agreement by 1st Pacific
Bancorp and 1st Pacific Bank. 1st Pacific Bancorp and 1st Pacific Bank shall,
and shall cause each of their respective Representatives to, immediately cease
and cause to be terminated any and all existing discussions, negotiations, and
communications with any Persons with respect to any existing or potential
Acquisition Proposal.

 

For purposes of this Agreement, “Acquisition Proposal” shall mean any inquiry,
offer or proposal (other than an inquiry, offer or proposal from First Business
Bank), whether or not in writing, contemplating, relating to, or that could
reasonably be expected to lead to, an Acquisition Transaction. For purposes of
this Agreement, “Acquisition Transaction” shall mean (A) any transaction or
series of transactions involving any merger, consolidation, recapitalization,
share exchange, liquidation, dissolution or similar transaction involving 1st
Pacific Bancorp or 1st Pacific Bank; (B) any transaction pursuant to which any
third party or group acquires or would acquire (whether through sale, lease or
other disposition), directly or indirectly, any assets of 1st Pacific Bancorp or
1st Pacific Bank representing, in the aggregate, fifteen percent (15%) or more
of the assets of 1st Pacific Bancorp and 1st Pacific Bank on a consolidated
basis, except for a sale (or sales) intended to reduce the assets size of 1st
Pacific Bank to approximately $400,000,000 pursuant to Section 6.1.1(B); (C) any
issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase or securities convertible into, such
securities) representing ten percent (10%) or more of the votes attached to the
outstanding securities of 1st Pacific Bancorp or 1st Pacific Bank; (D) any
tender offer or exchange offer that, if consummated, would result in any third
party or group beneficially owning ten percent (10%) or more of any class of
equity securities of 1st Pacific Bancorp or 1st Pacific Bank; or (E) any
transaction which is similar in form, substance or purpose to any of the
foregoing transactions, or any combination of the foregoing.

 

6.10.2                              Notwithstanding Section 6.10.1, 1st Pacific
Bancorp may take any of the actions described in clause (ii) of Section 6.10.1
if, but only if: (i) 1st Pacific Bancorp has received a bona fide unsolicited
written Acquisition Proposal that did not result from a breach of this
Section 6.10; (ii) 1st Pacific Bancorp Board determines in good faith, after
consultation with, and having

 

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considered the advice of, its outside legal counsel and its independent
financial advisor, that (A) such Acquisition Proposal constitutes, or is
reasonably likely to lead to, a Superior Proposal and (B) the failure to take
such actions would be inconsistent with its fiduciary duties to 1st Pacific
Bancorp’s shareholders under applicable law; (iii) 1st Pacific Bancorp has
provided First Business Bank with at least five (5) Business Days’ prior notice
of such determination; and (iv) prior to furnishing or affording access to any
information or data with respect to 1st Pacific Bancorp or 1st Pacific Bank or
otherwise relating to an Acquisition Proposal, 1st Pacific Bancorp or 1st
Pacific Bank receives from such Person a confidentiality agreement with terms no
less favorable to 1st Pacific Bancorp or 1st Pacific Bank than those contained
in the Confidentiality Agreement.  1st Pacific Bancorp and 1st Pacific Bank
shall promptly provide to First Business Bank any non-public information
regarding 1st Pacific Bancorp or 1st Pacific Bank provided to any other Person
that was not previously provided to First Business Bank, such additional
information to be provided no later than the date of provision of such
information to such other party.

 

For purposes of this Agreement, “Superior Proposal” shall mean any bona fide
written proposal (on its most recently amended or modified terms, if amended or
modified) made by a third party to enter into an Acquisition Transaction on
terms that 1st Pacific Bancorp Board determines in its good faith judgment,
after consultation with and having considered the advice of outside legal
counsel and a financial advisor: (i) would result in a transaction that
(A) involves consideration to the holders of the shares of 1st Pacific Bancorp
Common Stock that is more favorable, from a financial point of view, than the
consideration to be paid to 1st Pacific Bancorp’s shareholders pursuant to this
Agreement, considering, among other things, the nature of the consideration
being offered and any material regulatory approvals or other risks associated
with the timing of the proposed transaction beyond or in addition to those
specifically contemplated hereby, and which proposal is not conditioned upon
obtaining additional financing and (B) is, in light of the other terms of such
proposal, more favorable to 1st Pacific Bancorp’s shareholders than the Merger
and the transactions contemplated by this Agreement; and (ii) is reasonably
likely to be completed on the terms proposed, in each case taking into account
all legal, financial, regulatory and other aspects of the proposal.

 

6.10.3                              1st Pacific Bancorp shall promptly (and in
any event within twenty-four (24) hours) notify First Business Bank in writing
if any proposals or offers are received by, any information is requested from,
or any negotiations or discussions are sought to be initiated or continued with,
1st Pacific Bancorp or any 1st Pacific Bancorp Representatives, in each case in
connection with any Acquisition Proposal, and such notice shall indicate the
name of the Person initiating such discussions or negotiations or making such
proposal, offer or information request and the material terms and conditions of
any proposals or offers (and, in the case of written materials relating to such
proposal, offer, information request, negotiations or discussion, providing
copies of such materials (including e-mails or other electronic communications)
unless: (i) such materials constitute confidential information of the party
making such offer or proposal under an effective confidentiality agreement;
(ii) disclosure of such materials jeopardizes the attorney-client privilege; or
(iii) disclosure of such materials contravenes any law, rule, regulation, order,
judgment or decree. 1st Pacific Bancorp and 1st Pacific Bank agree that they
shall keep First Business Bank informed, on a current basis, of the status and
terms of any such proposal, offer, information request, negotiations or
discussions (including any amendments or modifications to such proposal, offer
or request).

 

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6.10.4                              Subject to Section 6.10.5, neither the 1st
Pacific Bancorp Board nor any committee thereof shall: (i) withdraw, qualify or
modify, or propose to withdraw, qualify or modify, in a manner adverse to First
Business Bank in connection with the transactions contemplated by this Agreement
(including the Merger), the 1st Pacific Bancorp Recommendation (as defined in
Section 8.2), or make any statement, filing or release, in connection with 1st
Pacific Bancorp Shareholders Meeting or otherwise, inconsistent with the 1st
Pacific Bancorp Recommendation (it being understood that taking a neutral
position or no position with respect to an Acquisition Proposal shall be
considered an adverse modification of the 1st Pacific Bancorp Recommendation);
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal; or (iii) enter into (or cause 1st Pacific Bancorp or 1st Pacific Bank
to enter into) any letter of intent, agreement in principle, acquisition
agreement or other agreement (A) related to any Acquisition Transaction (other
than a confidentiality agreement entered into in accordance with the provisions
of Section 6.10.2 or (B) requiring 1st Pacific Bancorp or 1st Pacific Bank to
abandon, terminate or fail to consummate the Merger or any other transaction
contemplated by this Agreement.

 

6.10.5                              Notwithstanding Section 6.10.4, prior to the
date of the 1st Pacific Bancorp Shareholders Meeting, the 1st Pacific Bancorp
Board may approve or recommend to the shareholders of 1st Pacific Bancorp a
Superior Proposal and withdraw, qualify or modify the 1st Pacific Bancorp
Recommendation in connection therewith (a “1st Pacific Bancorp Subsequent
Determination”) after the fourth (4th) Business Day following First Business
Bank’s receipt of a notice (the “Notice of Superior Proposal”) from 1st Pacific
Bancorp advising First Business Bank that the 1st Pacific Bancorp Board has
decided that a bona fide unsolicited written Acquisition Proposal that it
received (that did not result from a breach of this Section 6.10) constitutes a
Superior Proposal (it being understood that 1st Pacific Bancorp shall be
required to deliver a new Notice of Superior Proposal in respect of any revised
Superior Proposal from such third party or its affiliates that 1st Pacific
Bancorp proposes to accept) if, but only if, (i) the 1st Pacific Bancorp Board
has reasonably determined in good faith, after consultation with and having
considered the advice of outside legal counsel and a financial advisor, that the
failure to take such actions would be inconsistent with its fiduciary duties to
1st Pacific Bancorp’s shareholders under applicable law, (ii) during the four
(4) Business Day Period after receipt of the Notice of Superior Proposal by
First Business Bank, 1st Pacific Bancorp and the 1st Pacific Bancorp Board shall
have cooperated and negotiated in good faith with First Business Bank to make
such adjustments, modifications or amendments to the terms and conditions of
this Agreement as would enable 1st Pacific Bancorp to proceed with the 1st
Pacific Bancorp Recommendation without a 1st Pacific Bancorp Subsequent
Determination;  provided, however, that First Business Bank shall not have any
obligation to propose any adjustments, modifications or amendments to the terms
and conditions of this Agreement, and (iii) at the end of such four (4) Business
Day period, after taking into account any such adjusted, modified or amended
terms as may have been proposed by First Business Bank since its receipt of such
Notice of Superior Proposal, 1st Pacific Bancorp Board has again in good faith
made the determination (A) in clause (i) of this Section 6.10.5 and (B) that
such Acquisition Proposal constitutes a Superior Proposal. Notwithstanding the
foregoing, the changing, qualifying or modifying of the 1st Pacific Bancorp
Recommendation or the making of a 1st Pacific Bancorp Subsequent Determination
by the 1st Pacific Bancorp Board shall not change the approval of the 1st
Pacific Bancorp Board for purposes of causing any Takeover Laws to be
inapplicable to this Agreement and the Voting Agreements and the transactions
contemplated hereby and thereby, including the Merger.

 

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6.10.6                              Nothing contained in this Section 6.10 shall
prohibit 1st Pacific Bancorp or the 1st Pacific Bancorp Board from complying
with 1st Pacific Bancorp’s obligations required under Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act; provided, however, that any such
disclosure relating to an Acquisition Proposal shall be deemed a change in the
1st Pacific Bancorp Recommendation unless 1st Pacific Bancorp Board reaffirms
the 1st Pacific Bancorp Recommendation in such disclosure.

 

6.11                        Reserves and Merger-Related Costs

 

6.11.1                              1st Pacific Bancorp and 1st Pacific Bank
agree to consult with First Business Bank with respect to its loan, litigation
and real estate valuation policies and practices (including loan classifications
and levels of reserves).  1st Pacific Bank and 1st Pacific Bancorp shall also
consult with First Business Bank with respect to the character, amount and
timing of restructuring charges to be taken by each of them in connection with
the transactions contemplated hereby and shall take such charges as First
Business Bank shall reasonably request and which are not inconsistent with GAAP,
provided that no such actions need be effected until First Business Bank shall
have irrevocably certified to 1st Pacific Bancorp that all conditions set forth
in Article IX to the obligation of First Business Bank to consummate the
transactions contemplated hereby (other than the delivery of certificates or
opinions) have been satisfied or, where legally permissible, waived.

 

6.11.2                              Establishment of Accruals.  1st Pacific
Bancorp and 1st Pacific Bank shall establish accruals for all severance benefits
for Terminated Employees.  If requested by FB Bancorp or First Business Bank, on
the business day immediately prior to the Effective Time, 1st Pacific Bancorp or
1st Pacific Bank shall, consistent with GAAP, establish such additional accruals
and reserves as may be necessary to conform its accounting and credit loss
reserve practices and methods to those of First Business Bank (as such practices
and methods are to be applied to 1st Pacific Bancorp or 1st Pacific Bank from
and after the Effective Time) and reflect First Business Bank’s plans with
respect to the conduct of 1st Pacific Bancorp’s and 1st Pacific Bank’s business
following the Merger and to provide for the costs and expenses relating to the
consummation by 1st Pacific Bancorp and 1st Pacific Bank of the transactions
contemplated by this Agreement.  The establishment of such accruals and reserves
shall not, in and of itself, constitute a breach of any representation or
warranty of 1st Pacific Bancorp or 1st Pacific Bank contained in the Agreement
or constitute a Material Adverse Effect on the business (present or future),
operations, or financial condition of 1st Pacific Bancorp or 1st Pacific Bank.

 

6.11.3                              Transaction Expenses.  Based upon the final
bills or estimates of such final bills, 1st Pacific Bancorp and 1st Pacific Bank
shall have paid all severance benefits under any 1st Pacific Bancorp Employment
Agreements that will terminate as a result of the transactions contemplated
herein, other than severance benefits required to be deferred for a period not
to exceed 6 months from termination in order to comply with Section 409A of the
Code, and all fees and expenses of all attorneys, accountants and investment
bankers of 1st Pacific Bancorp and 1st Pacific Bank (“Advisors”) for services
rendered solely in connection with the transactions contemplated by this
Agreement, including the fee to Sandler O’Neil and Partners, L.P., which fee
shall in no event exceed $490,000  (collectively, the “1st Pacific Bancorp
Transaction Expenses”) in full prior to the Effective Time, and FB Bancorp and
First Business Bank shall have received written evidence from 1st Pacific
Bancorp and 1st Pacific Bank to such effect prior to the Effective Time;
provided, however, that the aggregate amount of such 1st Pacific Bancorp
Transaction Expenses shall not

 

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exceed $1,800,000 (inclusive of reasonable costs incurred or advanced by its
Advisors) without the prior written consent of FB Bancorp after an opportunity
to review all invoices, bills and estimates relating to such 1st Pacific Bancorp
Transaction Expenses to determine their reasonableness.

 

6.12                        Board of Directors and Committee Meetings

 

1st Pacific Bancorp and 1st Pacific Bank shall permit a reasonable number of
representatives of First Business Bank who are subject to the Confidentiality
Agreement to attend any meeting of the Board of Directors of 1st Pacific Bancorp
and/or 1st Pacific Bank or the Executive and Loan Committees thereof as an
observer (the “Observer”), provided that neither 1st Pacific Bancorp nor 1st
Pacific Bank shall be required to permit the Observer to remain present during
any confidential discussion of this Agreement, and the transactions contemplated
hereby, any discussion necessary to maintain attorney/client privilege, or any
third party proposal to acquire control of 1st Pacific Bancorp or 1st Pacific
Bank or during any other matter that the respective Board of Directors has
reasonably determined to be confidential with respect to First Business Bank’s
participation.

 

6.13                        Cooperation with Bank Holding Company Merger and
Bank Merger

 

Subject to the terms and conditions herein provided, 1st Pacific Bancorp and 1st
Pacific Bank agree to cooperate fully with FB Bancorp and First Business Bank to
consummate and make effective the Bank Holding Company Merger and the Bank
Merger, as contemplated herein and in the Bank Holding Company Merger Agreement
and the Bank Merger Agreement, attached hereto as Exhibit “C” and Exhibit “D,”
respectively.

 

ARTICLE VII
COVENANTS OF FB BANCORP AND FIRST BUSINESS BANK

 

7.1                               Conduct of Business

 

7.1.1                                     During the period from the date of
this Agreement to the Effective Time, except with the written consent of 1st
Pacific Bancorp and 1st Pacific Bank, which consent will not be unreasonably
withheld, First Business Bank and FB Bancorp will use commercially reasonable
efforts to preserve intact its respective business organization and assets and
maintain its rights and franchises; and voluntarily take no action that would:
(i) adversely affect the ability of First Business Bank or FB Bancorp to obtain
the Regulatory Approvals or materially increase the period of time necessary to
obtain such approvals; (ii) adversely affect its ability to perform its
covenants and agreements under this Agreement; or (iii) result in the
representations and warranties contained in Article V of this Agreement not
being true and correct on the date of this Agreement or at any future date on or
prior to the Closing Date or in any of the conditions set forth in Article IX
hereof not being satisfied.

 

7.2                               Disclosure Supplements

 

From time to time prior to the Effective Time, First Business Bank will promptly
supplement or amend the First Business Bank Disclosure Schedule delivered in
connection herewith with respect to any material matter hereafter arising which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such First Business Bank Disclosure
Schedule or which is necessary to correct any information in such First Business
Bank

 

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Disclosure Schedule which has been rendered inaccurate thereby. No supplement or
amendment to such First Business Bank Disclosure Schedule shall have any effect
for the purpose of determining satisfaction of the conditions set forth in
Article IX.

 

7.3                               Consents and Approvals of Third Parties

 

First Business Bank and FB Bancorp shall use all commercially reasonable efforts
to obtain as soon as practicable all consents and approvals necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.

 

7.4                               All Reasonable Efforts

 

Subject to the terms and conditions herein provided, FB Bancorp and First
Business Bank agree to use all commercially reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including but not
limited to the formation of FB Merger Sub and the consummation of the Bank
Holding Company Formation and the Stock Purchase.

 

7.5                               Failure to Fulfill Conditions

 

In the event that First Business Bank or FB Bancorp determines that a condition
to its obligation to complete the Merger cannot be fulfilled and that it will
not waive that condition, it will promptly notify 1st Pacific Bancorp and 1st
Pacific Bank.

 

7.6                               Directors and Officers Indemnification and
Insurance

 

7.6.1                                     FB Bancorp and First Business Bank
shall permit 1st Pacific Bancorp and 1st Pacific Bank purchase a policy of
officers’ and directors’ liability insurance with terms comparable to the policy
currently in effect which provides coverage (the “Tail Coverage”) for thirty-six
(36) months from the Effective Time for claims arising from facts or events that
occurred prior to the Effective Time (the “Tail Policy”); provided, however,
that the total cost of the premiums for such Tail Policy shall not exceed
$100,000.

 

7.6.2                                     For a period of three years after the
Effective Time, FB Bancorp shall, and shall cause Surviving Corporation,
Surviving Bank Holding Company, First Business Bank, Surviving Bank or any other
entity resulting from the transactions contemplated by this Agreement and the
several agreements referenced herein and appended hereto to maintain and
preserve the rights to indemnification of officers and directors provided for in
the Articles of Incorporation and bylaws of 1st Pacific Bancorp and 1st Pacific
Bank as in effect on the date hereof with respect to indemnification for
liabilities and claims arising out of acts, omissions, events, matters or
circumstances occurring or existing prior to the Effective Time, including,
without limitation, the Merger and the other transactions contemplated by this
Agreement, to the extent such rights to indemnification are not in excess of
that permitted by applicable state or federal laws or Regulatory Authorities.

 

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7.6.3                                     The provisions of this Section 7.6 are
intended to be for the benefit of, and shall be enforceable by, each director or
officer of 1st Pacific Bancorp and 1st Pacific Bank and his or her heirs and
representatives.

 

7.6.4                                     In the event that either FB Bancorp,
Surviving Corporation, First Business Bank or any of their respective successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving bank or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of First Business Bank shall assume the obligations set
forth in this Section 7.6.

 

7.7                               Change of Control Benefits Approval

 

FB Bancorp, First Business Bank, 1st Pacific Bank and 1st Pacific Bancorp shall
use commercially reasonable efforts to the extent not inconsistent with their
fiduciary duties to obtain the approval of all required Bank Regulators for the
payment of the “Change of Control Severance Benefits” (as defined in the
applicable 1st Pacific Bancorp Employment Agreement) to Richard H. Revier and
James H. Burgess pursuant to a termination of employment agreement in the form
attached hereto as Exhibit “G” based on applications prepared and submitted by
1st Pacific Bank and/or 1st Pacific Bancorp to the applicable Bank Regulators
for approval to pay such Change of Control Benefits, which applications shall
have been reviewed and approved by FB Bancorp or First Business Bank prior to
submission.  The provisions of this Section 7.7 are intended to be for the
benefit of, and shall be enforceable by, each of Richard H. Revier and James H.
Burgess and his heirs and representatives, and Messrs. Revier and Burgess shall
be consulted whenever any such applications are prepared and submitted;
provided, however, FB Bancorp, First Business Bank, 1st Pacific Bank and
1st Pacific Bancorp make no representation or warranty regarding Bank
Regulators’ approval of any of the Change of Control Severance Benefits.

 

7.8                               Reasonable Regulatory Restrictions

 

FB Bancorp and First Business Bank shall accept all regulatory restrictions
imposed on them, Surviving Corporation, Surviving Bank Holding Company and/or
Surviving Bank in connection with the Stock Purchase, the Merger and the
transactions contemplated by this Agreement; provided, however, FB Bancorp
and/or First Business Bank shall not be obligated to consummate the Stock
Purchase, the Merger and/or the transactions contemplated by this Agreement to
the extent that it or they reasonably determine, in good faith, that any one or
more restrictions, individually or when aggregated, as in effect or to be in
effect as of the Closing, with respect to Surviving Corporation, Surviving Bank
Holding Company and/or Surviving Bank would be material and adverse to the
financial condition, results of operations or business of such party taken as a
whole.

 

7.9                               Restrictions on Transfer

 

FB Bancorp shall not permit the transfer of any shares of FB Bancorp common
stock owned by Auerbach on its books, and First Business Bank shall not permit
the transfer of any shares of First Business Bank Common Stock owned by Auerbach
on its books (other than to FB Bancorp), and neither FB Bancorp nor First
Business Bank shall issue a new certificate representing any such shares (other
than pursuant to the Bank Holding Company Formation), unless and until: (i) such

 

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transferee shall have agreed in writing to be subject to each of the terms of
the Shareholder Agreement, (ii) such transferee shall be deemed to be a party
thereto as if such transferee were Auerbach and such transferee’s signature
appeared on the signature pages of the Shareholder Agreement, and (iii) 1st
Pacific Bancorp shall have given FB Bancorp or First Business Bank, as
applicable, a copy of its written consent to Auerbach permitting such transfer
under Section 1.2 of the Shareholder Agreement.

 

ARTICLE VIII
REGULATORY AND OTHER MATTERS

 

8.1                               Proxy Statement-Prospectus

 

8.1.1                                     For the purposes of (x) registering FB
Bancorp Common Stock to be offered to holders of First Business Bank Common
Stock in connection with the Bank Holding Company Formation with the SEC under
the Securities Act and (y) holding the 1st Pacific Bancorp Shareholders Meeting
and the First Business Bank Shareholders Meeting, First Business Bank shall
draft and prepare, and 1st Pacific Bancorp shall cooperate in the preparation
of, the Merger Registration Statement, including a proxy statement and
prospectus satisfying all applicable requirements of applicable state securities
laws, the Securities Act and the Exchange Act, and the rules and regulations
thereunder (such proxy statement/prospectus in the form mailed to the
shareholders of First Business Bank and 1st Pacific Bancorp, together with any
and all amendments or supplements thereto, being herein referred to as the
“Proxy Statement-Prospectus”). FB Bancorp shall file the Merger Registration
Statement, including the Proxy Statement-Prospectus, with the SEC. FB Bancorp
shall use its best efforts to have the Merger Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing,
and First Business Bank and 1st Pacific Bancorp shall thereafter promptly mail
the Proxy Statement-Prospectus to their respective shareholders. FB Bancorp
shall also use its best efforts to obtain all necessary state securities law or
“Blue Sky” permits and approvals required to carry out the transactions
contemplated by this Agreement, and 1st Pacific Bancorp shall furnish all
information concerning 1st Pacific Bancorp, 1st Pacific Bank and the holders of
1st Pacific Bancorp Common Stock as may be reasonably requested in connection
with any such action.

 

8.1.2                                     1st Pacific Bancorp shall provide
First Business Bank with any information concerning itself and 1st Pacific Bank
that First Business Bank may reasonably request in connection with the drafting
and preparation of the Proxy Statement-Prospectus, and First Business Bank shall
notify 1st Pacific Bancorp promptly of the receipt of any comments of the SEC
with respect to the Proxy Statement-Prospectus and of any requests by the SEC
for any amendment or supplement thereto or for additional information and shall
provide to 1st Pacific Bancorp promptly copies of all correspondence between
First Business Bank or any of their representatives and the SEC. First Business
Bank shall give 1st Pacific Bancorp and its counsel the opportunity to review
and comment on the Proxy Statement-Prospectus prior to its being filed with the
SEC and shall give 1st Pacific Bancorp and its counsel the opportunity to review
and comment on all amendments and supplements to the Proxy Statement-Prospectus
and all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of First Business
Bank and 1st Pacific Bancorp agrees to use all reasonable efforts, after
consultation with the other party hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement-Prospectus
and all required amendments and supplements thereto to be

 

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mailed to the holders of First Business Bank Common Stock entitled to vote at
the First Business Bank Shareholders Meeting and to the holders of 1st Pacific
Bancorp Common Stock entitled to vote at the 1st Pacific Bancorp Shareholders
Meeting at the earliest practicable time.

 

8.1.3                                     1st Pacific Bancorp and First Business
Bank shall promptly notify the other party if at any time it becomes aware that
the Proxy Statement-Prospectus or the Merger Registration Statement contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. In such
event, 1st Pacific Bancorp shall cooperate with First Business Bank in the
preparation of a supplement or amendment to such Proxy Statement-Prospectus that
corrects such misstatement or omission, and First Business Bank shall file an
amended Merger Registration Statement with the SEC, which amended Merger
Registration Statement shall be mailed to the holders of First Business Bank
Common Stock entitled to vote at the First Business Bank Shareholders Meeting
and to the holders of 1st Pacific Bancorp Common Stock entitled to vote at the
1st Pacific Bancorp Shareholders Meeting at the earliest practicable time.

 

8.2                               Shareholders Meeting

 

8.2.1                                     1st Pacific Bancorp will (i) as
promptly as practicable after the Merger Registration Statement is declared
effective by the SEC, take all steps necessary to give notice of, convene and
hold a meeting of its shareholders (the “1st Pacific Bancorp Shareholders
Meeting”), for the purpose of considering this Agreement and the Merger, and for
such other purposes as may be, in 1st Pacific Bancorp’s reasonable judgment,
necessary or desirable, and (ii) subject to Section 6.10, have its Board of
Directors recommend approval of this Agreement to the 1st Pacific Bancorp
Shareholders (the “1st Pacific Bancorp Recommendation”).

 

8.2.2                                     First Business Bank and FB Bancorp
will (i) as promptly as practicable after the Merger Registration Statement is
declared effective by the SEC, take all steps necessary to give notice of,
convene and hold a meeting of its shareholders (the “First Business Bank
Shareholders Meeting”), for the purpose of considering this Agreement, the Bank
Holding Company Formation and the Merger, and for such other purposes as may be,
in First Business Bank’s reasonable judgment, necessary or desirable, and
(ii) have its Board of Directors recommend approval of this Agreement to the
First Business Bank Shareholders.

 

8.3                               Regulatory Approvals

 

Each of First Business Bank, FB Bancorp, 1st Pacific Bancorp and 1st Pacific
Bank will cooperate with the other and use all commercially reasonable efforts
to promptly prepare all necessary documentation, to effect all necessary filings
and to obtain all necessary permits, consents, waivers, approvals and
authorizations of the SEC, the Bank Regulators and any other third parties and
governmental bodies necessary to consummate Bank Holding Company Formation, the
Merger, the Bank Holding Company Merger, and the Bank Merger as contemplated by
this Agreement. FB Bancorp, First Business Bank, 1st Pacific Bancorp and 1st
Pacific Bank will furnish each other and each other’s counsel with all
information concerning themselves, their subsidiaries, directors, officers and
shareholders and such other matters as may be necessary or advisable in
connection with the Proxy Statement-Prospectus and any application, petition or
any other statement or application

 

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made by or on behalf of 1st Pacific Bancorp or FB Bancorp to any Bank Regulatory
or governmental body in connection with the Merger, and the other transactions
contemplated by this Agreement. 1st Pacific Bancorp or 1st Pacific Bank shall
have the right to review and approve in advance all characterizations of the
information relating to 1st Pacific Bancorp or 1st Pacific Bank, which appear in
any filing made in connection with the transactions contemplated by this
Agreement with any governmental body. FB Bancorp shall give 1st Pacific Bancorp
or 1st Pacific Bank and their counsel the opportunity to review and comment on
each filing prior to its being filed with a Bank Regulator and shall give 1st
Pacific Bancorp and 1st Pacific Bank and their counsel the opportunity to review
and comment on all amendments and supplements to such filings and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, a Bank Regulator.

 

ARTICLE IX
CLOSING CONDITIONS

 

9.1                               Conditions to Each Party’s Obligations under
this Agreement

 

The respective obligations of each party under this Agreement shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions,
none of which may be waived:

 

9.1.1                                     Intentionally omitted.

 

9.1.2                                     Closing of the Bank Holding Company
Formation.  The Bank Holding Company Formation as contemplated herein and in the
Bank Holding Company Formation Agreement shall have been consummated.

 

9.1.3                                     No Injunctions. None of the parties
hereto shall be subject to any order, decree or injunction of a court or agency
of competent jurisdiction that enjoins or prohibits the consummation of the
transactions contemplated by this Agreement and no statute, rule or regulation
shall have been enacted, entered, promulgated, interpreted, applied or enforced
by any Governmental Entity or Bank Regulator, that enjoins or prohibits the
consummation of the transactions contemplated by this Agreement.

 

9.1.4                                     Regulatory Approvals.  All Regulatory
Approvals and other necessary approvals, authorizations and consents of any
Governmental Entities required to consummate the transactions contemplated by
this Agreement shall have been obtained and shall remain in full force and
effect and all waiting periods relating to such approvals, authorizations or
consents shall have expired; and no such approval, authorization or consent
shall include any condition or requirement, excluding standard conditions that
are normally imposed by the Bank Regulators in bank merger transactions and
other reasonable conditions as determined by FB Bancorp and/or First Business
Bank in accordance with Section 7.8 , that would, in the good faith reasonable
judgment of the Board of Directors of First Business Bank and 1st Pacific
Bancorp, materially and adversely affect the business, operations, financial
condition, property or assets of the combined enterprise of First Business Bank,
FB Bancorp, 1st Pacific Bancorp or 1st Pacific Bank or materially impair the
value of First Business Bank, FB Bancorp, 1st Pacific Bancorp or 1st Pacific
Bank.

 

9.1.5                                     Effectiveness of Merger Registration
Statement. The Merger Registration Statement shall have become effective under
the Securities Act and no stop order suspending the

 

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effectiveness of the Merger Registration Statement shall have been issued, and
no proceedings for that purpose shall have been initiated or threatened by the
SEC and, if the offer and sale of FB Bancorp Common Stock in the Bank Holding
Company Formation is subject to the blue sky laws of any state, such offer and
sale shall not be subject to a stop order of any state securities commissioner.

 

9.2                               Conditions to the Obligations of FB Bancorp
and First Business Bank under this Agreement

 

The obligations of FB Bancorp and First Business Bank under this Agreement shall
be further subject to the satisfaction of the conditions set forth in
Sections 9.2.1 through 9.2.7 at or prior to the Closing Date:

 

9.2.1                                     Representations and Warranties. Each
of the representations and warranties of 1st Pacific Bancorp and 1st Pacific
Bank set forth in this Agreement shall be true and correct as of the date of
this Agreement and upon the Closing Date with the same effect as though all such
representations and warranties had been made on the Closing Date (except to the
extent such representations and warranties speak as of an earlier date), in any
case subject to the standard set forth in Section 4.1; and 1st Pacific Bancorp
shall have delivered to First Business Bank a certificate to such effect signed
by the Chief Executive Officer and the Chief Financial Officer of 1st Pacific
Bancorp dated as of the Closing Date.

 

9.2.2                                     Agreements and Covenants. 1st Pacific
Bancorp and 1st Pacific Bank shall have performed in all material respects all
obligations and complied in all material respects with all agreements or
covenants to be performed or complied with by them at or prior to the Closing
Date, and First Business Bank shall have received a certificate signed on behalf
of 1st Pacific Bancorp by the Chief Executive Officer and Chief Financial
Officer of 1st Pacific Bancorp to such effect dated as of the Closing Date.  For
purposes of clarifying this Section 9.2.2, the failure of 1st Pacific Bancorp
and/or 1st Pacific Bank to reach the goals set forth in Section 6.1.1 (B), (C),
and/or (D) shall not be deemed a failure to perform or comply with the covenants
therein so long as 1st Pacific Bancorp has used commercially reasonable efforts
to do so.

 

9.2.3                                     Permits, Authorizations, Etc. FB
Bancorp and First Business Bank shall have obtained any and all material
permits, authorizations, consents, waivers, clearances or approvals required for
the lawful consummation of the Bank Holding Company Formation, the Merger, the
Bank Holding Company Merger and the Bank Merger.

 

9.2.4                                     No Material Adverse Effect. Since
May 31, 2009, no event has occurred or circumstance arisen that, individually or
in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on 1st Pacific Bancorp or 1st Pacific Bank.

 

9.2.5                                     Resignations. FB Bancorp and First
Business Bank shall have received a written resignation from each of the
directors of 1st Pacific Bancorp and 1st Pacific Bank, effective as of the
Closing Date.

 

9.2.6                                     Officers’ Certificates. 1st Pacific
Bancorp and 1st Pacific Bank shall have furnished FB Bancorp and First Business
Bank with such certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Section 9.2 as FB
Bancorp or First Business Bank may reasonably request.

 

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9.2.7                                     Thresholds.  1st Pacific Bancorp and
1st Pacific Bank shall have achieved the following thresholds as of the last day
of the month immediately preceding the Effective Time:

 

(A)                                               The amount of 1st Pacific
Bank’s Core Deposits exceed $224,999,999.99;

 

(B)                                               1st Pacific Bank’s Tier 1
Capital, net of any Pre-Closing Net Lawsuit Collections, exceeds $21,499,999.99;

 

(C)                                               The aggregate of loans
classified by 1st Pacific Bank as “Substandard,” “Doubtful,” “Loss,” “Other
Loans Specially Mentioned,” “Special Mention,” and “Criticized,” or words of
similar import do not exceed 220% of the sum of 1st Pacific Bank’s Tier 1
Capital and the allowance for loan and lease losses;

 

(D)                                               Other real estate owned, as
required to be reported in the Reports of Condition and Income of 1st Pacific
Bank filed with a Bank Regulator, does not exceed 1.5% of total assets of 1st
Pacific Bank;

 

(E)                                                 The total assets of 1st
Pacific Bank do not exceed $400,000,000;

 

(F)                                                 The aggregate of loans
classified by 1st Pacific Bank as “Substandard,” “Doubtful,” and “Loss,” or
words of similar import, and other real estate owned does not exceed 60% of the
sum of 1st Pacific Bank’s Tier 1 Capital and the allowance for loan and lease
losses; and

 

(G)                                               The aggregate of loans past
due thirty (30) through eighty-nine (89) days and still accruing, as required to
be reported in the Reports of Condition and Income of 1st Pacific Bank filed
with a Bank Regulator, does not exceed 5.0% of gross loans then outstanding of
1st Pacific Bank.

 

In determining whether 1st Pacific Bank has achieved any of the thresholds as of
the last day of the month immediately preceding the Effective Time as required
by this Section 9.2.7: (i) loans shall be classified in accordance with
(A) industry best practices consistent with 1st Pacific Bank’s written
classification policy as in effect as of the date of this Agreement and (B) any
classification downgrades mandated by any Bank Regulator or recommended by an
independent third party loan review; (ii) the impact of compliance with this
Agreement on the business, financial condition or results of operations of 1st
Pacific Bancorp and 1st Pacific Bank, including the expenses incurred by 1st
Pacific Bancorp and 1st Pacific Bank in consummating the transactions
contemplated by this Agreement, shall be disregarded; and (iii) the impact of
any charge or reserve taken by 1st Pacific Bancorp or 1st Pacific Bank at the
request of FB Bancorp pursuant to Section 6.11 shall be disregarded.

 

9.3                               Conditions to the Obligations of 1st Pacific
Bancorp and 1st Pacific Bank under this Agreement

 

The obligations of 1st Pacific Bancorp under this Agreement shall be further
subject to the satisfaction of the conditions set forth in Sections 9.3.1
through 9.3.7 at or prior to the Closing Date:

 

9.3.1                                     Representations and Warranties. Each
of the representations and warranties of First Business Bank set forth in this
Agreement shall be true and correct as of the date of this Agreement

 

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and upon the Closing Date with the same effect as though all such
representations and warranties had been made on the Closing Date (except to the
extent such representations and warranties speak as of an earlier date), in any
case subject to the standard set forth in Section 5.1; and First Business Bank
shall have delivered to 1st Pacific Bancorp and 1st Pacific Bank a certificate
to such effect signed by the Chief Executive Officer and the Chief Financial
Officer of First Business Bank dated as of the Closing Date.

 

9.3.2                                     Agreements and Covenants. First
Business Bank shall have performed in all material respects all obligations and
complied in all material respects with all agreements or covenants to be
performed or complied with by it at or prior to the Closing Date, and 1st
Pacific Bancorp shall have received a certificate signed on behalf of First
Business Bank by the Chief Executive Officer and Chief Financial Officer to such
effect dated as of the Closing Date.

 

9.3.3                                     Permits, Authorizations, Etc. 1st
Pacific Bancorp shall have obtained any and all material permits,
authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Merger.

 

9.3.4                                     Payment of Merger Consideration. First
Business Bank shall have delivered the Merger Consideration to the Exchange
Agent and the Exchange Agent shall have provided 1st Pacific Bancorp with a
certificate evidencing such delivery.

 

9.3.5                                     Officers’ Certificate. FB Bancorp and
First Business Bank shall have furnished 1st Pacific Bancorp and 1st Pacific
Bank with such certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Section 9.3 as 1st
Pacific Bancorp or 1st Pacific Bank may reasonably request.

 

9.3.6                                     Shareholder Approval. This Agreement
and the transactions contemplated hereby shall have been approved by the
requisite vote of the shareholders of 1st Pacific Bancorp.

 

9.3.7                                     Stock Purchase Consummation.  The
Stock Purchase shall have been consummated.

 

ARTICLE X
THE CLOSING

 

10.1                        Time and Place

 

Subject to the provisions of Articles IX and XI hereof, the Closing of the
Merger shall take place at the offices of Horgan, Rosen, Beckham & Coren,
L.L.P., 23975 Park Sorrento, Suite 200, Calabasas, CA 91302, at 10:00 a.m., or
at such other place or time as the parties hereto shall mutually agree.

 

10.2                        Deliveries at the Closing

 

At the Closing there shall be delivered to FB Bancorp, First Business Bank, 1st
Pacific Bancorp and 1st Pacific Bank the opinions, certificates, and other
documents and instruments required to be delivered at the Closing under
Article IX hereof. At or prior to the Closing, FB Bancorp shall have delivered
the Merger Consideration as set forth under Section 9.3.4 hereof.

 

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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER

 

11.1                        Termination

 

For purposes of this Article XI, FB Bancorp and First Business Bank shall be
considered one and the same “party” and 1st Pacific Bancorp and 1st Pacific Bank
shall be considered one and the same “party.”  Accordingly, any reference to a
“party” in this Article XI shall mean either FB Bancorp and First business Bank
as one party or 1st Pacific Bancorp and 1st Pacific Bank as one party.

 

This Agreement may be terminated at any time prior to the Closing Date, whether
before or after Shareholder Approvals:

 

11.1.1                              At any time by the mutual written agreement
of FB Bancorp, First Business Bank, 1st Pacific Bancorp and 1st Pacific Bank;

 

11.1.2                              By the Boards of Directors of either party
(provided, that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) if there
shall have been a material breach of any of the representations or warranties
set forth in this Agreement on the part of the other party, which breach by its
nature cannot be cured prior to the Termination Date or shall not have been
cured within 30 days after written notice of such breach by the terminating
party to the other party; provided, however, that neither party shall have the
right to terminate this Agreement pursuant to this Section 11.1.2 unless the
breach of representation or warranty, together with all other such breaches,
would entitle the terminating party not to consummate the transactions
contemplated hereby under Section 9.2.1 (in the case of a breach of a
representation or warranty by 1st Pacific Bancorp or 1st Pacific Bank) or
Section 9.3.1 (in the case of a breach of a representation or warranty by First
Business Bank);

 

11.1.3                              By the Boards of Directors of either party
(provided, that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) if there
shall have been a material failure to perform or comply with any of the
covenants or agreements set forth in this Agreement on the part of the other
party, which failure by its nature cannot be cured prior to the Termination Date
or shall not have been cured within 30 days after written notice of such failure
by the terminating party to the other party; provided, however, that neither
party shall have the right to terminate this Agreement pursuant to this
Section 11.1.3 unless the breach of covenant or agreement, together with all
other such breaches, would entitle the terminating party not to consummate the
transactions contemplated hereby under Section 9.2.2 (in the case of a breach of
covenant by 1st Pacific Bancorp) or Section 9.3.2 (in the case of a breach of
covenant by First Business Bank);

 

11.1.4                              At the election of the Boards of Directors
of either party if the Closing shall not have occurred by the Termination Date,
or such later date as shall have been agreed to in writing by First Business
Bank, 1st Pacific Bancorp and 1st Pacific Bank;

 

11.1.5                              Automatically and without any action on the
part of any party if the shareholders 1st Pacific Bancorp shall have voted at
its shareholders’ meeting on the transactions contemplated by this Agreement and
such vote shall not have been sufficient to approve such transactions;

 

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11.1.6                              By the Boards of Directors of either party
if: (i) final action has been taken by a Bank Regulator whose approval is
required in connection with this Agreement and the transactions contemplated
hereby, which final action (x) has become unappealable and (y) does not approve
this Agreement or the transactions contemplated hereby, or (ii) any court of
competent jurisdiction or other governmental authority shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;

 

11.1.7                              By the Boards of Directors of either party
(provided, that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) in the
event that any of the conditions precedent to the obligations of such party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 11.1.4 of this Agreement;

 

11.1.8                              By the Board of Directors of First Business
Bank if 1st Pacific Bancorp has received a Superior Proposal, and in accordance
with Section 6.10 of this Agreement, the Board of Directors of 1st Pacific
Bancorp has entered into an acquisition agreement with respect to the Superior
Proposal, terminated this Agreement, or withdraws its recommendation of this
Agreement, fails to make such recommendation or modifies or qualifies its
recommendation in a manner adverse to First Business Bank; or

 

11.1.9                              By the Board of Directors of 1st Pacific
Bancorp if 1st Pacific Bancorp has received a Superior Proposal, and in
accordance with Section 6.10 of this Agreement, the Board of Directors of 1st
Pacific Bancorp has made a determination to accept such Superior Proposal.

 

11.2                        Effect of Termination

 

11.2.1                              In the event of termination of this
Agreement pursuant to any provision of Section 11.1, this Agreement shall
forthwith become void and have no further force, except that (i) the provisions
of Sections 11.2, 13.1, 13.2, 13.6, 13.9, 13.10, and any other Section which, by
its terms, relates to post-termination rights or obligations, shall survive such
termination of this Agreement and remain in full force and effect.

 

11.2.2                              If this Agreement is terminated, expenses
and damages of the parties hereto shall be determined as follows:

 

(A)                               In the event of a termination of this
Agreement because of a breach of any representation, warranty, covenant or
agreement contained in this Agreement by 1st Pacific Bancorp or 1st Pacific
Bank, First Business Bank shall be entitled to claim from 1st Pacific Bancorp or
1st Pacific Bank liquidated damages equal to $250,000.

 

(B)                               Each of First Business Bank and FB Bancorp
acknowledges and agrees that 1st Pacific Bancorp’s and 1st Pacific Bank’s
remedies at law for a breach of any representation, warranty, covenant or
agreement contained in this Agreement by First Business Bank or FB Bancorp would
be inadequate and that irreparable damage would occur to 1st Pacific Bancorp and
1st Pacific Bank in the event that the provisions contained in this Agreement
are not performed by First Business Bank and FB Bancorp in accordance with this
Agreement’s specific terms or if they are otherwise breached.  In recognition of
this fact, each of First Business Bank and FB Bancorp agrees

 

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that, in the event of such breach, in lieu of any remedies at law it may have,
1st Pacific Bancorp and 1st Pacific Bank, without posting any bond, shall be
entitled exclusively to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy that may be available. Each of First Business Bank
and FB Bancorp further acknowledges that should First Business Bank or FB
Bancorp violate any of the provisions of this Agreement, it will be difficult to
determine the amount of damages resulting to 1st Pacific Bancorp and 1st Pacific
Bank and that in lieu of any other remedies it may have, 1st Pacific Bancorp and
1st Pacific Bank shall be entitled exclusively to temporary and permanent
injunctive relief without the necessity of proving damages.

 

(C)                               As a condition of First Business Bank’s
willingness, and in order to induce First Business Bank, to enter into this
Agreement, and to reimburse First Business Bank for incurring the costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, 1st Pacific Bancorp hereby agrees
to pay First Business Bank, and First Business Bank shall be entitled to payment
of a fee of $1,000,000, less any amount received or owed under
Section 11.2.2(A) above (the “First Business Bank Fee”), within five
(5) business days after written demand for payment is made by First Business
Bank, following the occurrence of any of the events set forth below:

 

(i)                                     1st Pacific Bancorp terminates this
Agreement pursuant to Section 11.1.9 or First Business Bank terminates this
Agreement pursuant to Section 11.1.8; or

 

(ii)                                  The entering into of a definitive
agreement by 1st Pacific Bancorp relating to an Acquisition Proposal or the
consummation of an Acquisition Proposal involving 1st Pacific Bancorp within six
months after the occurrence of any of the following: (a) the termination of the
Agreement by First Business Bank pursuant to Section 11.1.2 or 11.1.3 because of
a breach by 1st Pacific Bancorp; or (b) the failure of the shareholders of 1st
Pacific Bancorp to approve this Agreement after the occurrence of an Acquisition
Proposal.

 

(D)                               If demand for payment of the First Business
Bank Fee is made pursuant to Section 11.2.2(C) or if First Business Bank makes a
demand for payment of  liquidated damages as set forth in Section 11.2.2(A) and
payment is timely made, then First Business Bank will not have any other rights
or claims against 1st Pacific Bancorp or 1st Pacific Bank, and their respective
officers and directors, under this Agreement, it being agreed that the
acceptance of the First Business Bank Fee under Section 11.2.2(C) or the
acceptance of the payment of liquidated damages under Section 11.2.2(A) will
constitute the sole and exclusive remedy of First Business Bank against 1st
Pacific Bancorp and 1st Pacific Bank and their respective officers and
directors.

 

11.3                        Amendment, Extension and Waiver

 

Subject to applicable law, at any time prior to the Effective Time (whether
before or after approval thereof by the shareholders of First Business Bank and
by the shareholders of 1st Pacific Bancorp), the parties hereto by action of
each of their respective Boards of Directors, may (a) amend this Agreement,
(b) extend the time for the performance of any of the obligations or other acts
of any other party hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or
(d) waive compliance with any of the agreements or conditions contained herein;
provided, however, that after any approval of this Agreement and the

 

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transactions contemplated hereby by the shareholders of First Business Bank and
by the Shareholders of 1st Pacific Bancorp, there may not be, without further
approval of such shareholders, any amendment of this Agreement which reduces the
amount, value or changes the form of consideration to be delivered to 1st
Pacific Bancorp’s shareholders pursuant to this Agreement. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto. Any agreement on the part of a party hereto to any extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or failure to insist on strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.

 

ARTICLE XII
EMPLOYEE BENEFITS

 

12.1                        Employee Benefits.

 

12.1.1                              Following the Effective Time, most employees
of 1st Pacific Bancorp and 1st Pacific Bank will have the opportunity to
continue their at-will employment with the Surviving Bank Holding Company and
Surviving Bank if and to the extent that mutually suitable job opportunities are
available with Surviving Bank Holding Company or Surviving Bank at the former
offices of 1st Pacific Bancorp and 1st Pacific Bank or another office of either
Surviving Bank Holding Company or Surviving Bank.  FB Bancorp will cause to be
made offers of employment to such employees as soon as practicable after the
execution of this Agreement; provided, however, that nothing herein contained
shall be deemed to change any employee’s at-will status nor to create a contract
of employment with any such employee.

 

12.1.2                              Notwithstanding anything to the contrary in
Section 12.1.1, FB Bancorp or First Business Bank shall provide 1st Pacific
Bancorp or 1st Pacific Bank with a list or lists of all 1st Pacific Bancorp or
1st Pacific Bank employees whose employment will not continue after the
Effective Time (the “Terminated Employees”).  FB Bancorp or First Business Bank
shall provide severance payments to each of the Terminated Employees in an
amount equal to two weeks’ salary plus one week’s salary for each full year of
service with 1st Pacific Bancorp or 1st Pacific Bank or partial year of service
with 1st Pacific Bancorp or 1st Pacific Bank rounded to the nearest whole year
of service, with 6 months or more rounded up, unless such Terminated Employee
signs a release of any and all claims he or she might have against 1st Pacific
Bancorp or 1st Pacific Bank arising out of his or her employment and
termination, in which case FB Bancorp or First Business Bank shall provide
severance payments to each such Terminated Employee in an amount equal to:
(i) for non-exempt/non-officer employees, three weeks’ salary plus one week’s
salary for each full year of service with 1st Pacific Bancorp or 1st Pacific
Bank or partial year of service with 1st Pacific Bancorp or 1st Pacific Bank
rounded to the nearest whole year of service, with 6 months or more rounded up,
and two months COBRA, if desired; (ii)  for AVP/supervisory employees, four
weeks’ salary plus one week’s salary for each full year of service with 1st
Pacific Bancorp or 1st Pacific Bank or partial year of service with 1st Pacific
Bancorp or 1st Pacific Bank rounded to the nearest whole year of service, with 6
months or more rounded up, and two months COBRA, if desired; (iii) for VP
employees, five weeks’ salary plus one week’s salary for each full year of
service with 1st Pacific Bancorp or 1st Pacific Bank or partial year of service
with 1st Pacific Bancorp or 1st Pacific Bank rounded to the nearest whole year
of service, with 6 months or more rounded up, and

 

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two months COBRA, if desired; (iv) for SVP employees, six weeks’ salary plus one
week’s salary for each full year of service with 1st Pacific Bancorp or 1st
Pacific Bank or partial year of service with 1st Pacific Bancorp or 1st Pacific
Bank rounded to the nearest whole year of service, with 6 months or more rounded
up, and two months COBRA, if desired.  Notwithstanding anything to the contrary
in this Agreement, the covenants set forth in this Section 12.1.2 shall survive
the Effective Time.

 

ARTICLE XIII
MISCELLANEOUS

 

13.1                        Confidentiality

 

Except as specifically set forth in Section 11.2.2, First Business Bank, 1st
Pacific Bancorp and 1st Pacific Bank mutually agree to be bound by the terms of
the confidentiality agreement dated February 12, 2009 (the “Confidentiality
Agreement”) previously executed by the parties hereto, which Confidentiality
Agreement is hereby incorporated herein by reference. The parties hereto agree
that such Confidentiality Agreement shall continue in accordance with its
respective terms, notwithstanding the termination of this Agreement.

 

13.2                        Expenses

 

Except as specifically set forth herein, all expenses incurred by FB Bancorp,
First Business Bank, 1st Pacific Bancorp and 1st Pacific Bank in connection with
or related to the authorization, preparation and execution of this Agreement,
the solicitation of shareholder approvals and all other matters related to the
Closing of the transactions contemplated hereby, including, without limitation
of the generality of the foregoing, all fees and expenses of agents,
representatives, counsel, and accountants employed by either of the parties or
their respective Affiliates, shall be borne solely and entirely by the party
which has incurred the same.

 

13.3                        Public Announcements

 

First Business Bank, 1st Pacific Bancorp and 1st Pacific Bank shall cooperate
with each other in the development and distribution of all news releases and
other public disclosures with respect to this Agreement, and except as set forth
immediately below, neither FB Bancorp, First Business Bank, 1st Pacific Bancorp
nor 1st Pacific Bank shall issue any news release, or other public announcement
or communication with respect to this Agreement unless such news release, public
announcement or communication has been mutually agreed upon by the parties
hereto.  Notwithstanding the foregoing, 1st Pacific Bancorp may make any
securities filings with respect to this Agreement to the extent 1st Pacific
Bancorp reasonably believes is required by law or any securities exchange upon
which its securities may be listed.

 

13.4                        Survival

 

All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto or thereto shall expire on and be
terminated and extinguished at the Effective Time, except for those covenants
and agreements contained herein which by their terms apply in whole or in part
after the Effective Time.

 

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13.5                        Notices

 

All notices or other communications hereunder shall be in writing and shall be
deemed given if delivered by receipted hand delivery or mailed by prepaid
registered or certified mail (return receipt requested) or by recognized
overnight courier addressed as follows:

 

If to First Business Bank, to:

 

Mr. Nathan L. Rogge

President and Chief Executive Officer

12265 El Camino Real, Suite #100

San Diego, California 92130

Phone   (858) 847-4784

Fax       (858) 847-4781

 

 

 

With required copies to:

 

S. Alan Rosen, Esq.

Horgan, Rosen, Beckham & Coren, LLP

23975 Park Sorrento, Suite 200

Calabasas, California 91302

Phone:  (818) 591-2121

Fax:      (818) 591- 3838

 

 

 

If to 1st Pacific Bancorp or

 

1st Pacific Bank, to: Ronald J. Carlson

President and Chief Executive Officer

9333 Genesee Avenue #300

San Diego, California

Phone:  (858) 875-2005

Fax:      (858) 875-2016

 

 

 

With required copies to:

 

Kurt L. Kicklighter, Esq.

Luce, Forward, Hamilton & Scripps, LLP

600 West Broadway, Suite 2600

San Diego, CA 92101-3372

Phone:  (619) 699-2526

Fax:      (858) 532-4312

 

or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given: (a) as of the
date delivered by hand; (b) three (3) business days after being delivered to the
U.S. mail, postage prepaid; or (c) one (1) business day after being delivered to
the overnight courier.

 

13.6                        Parties in Interest

 

This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party. Except as provided in Article III and Sections 7.6
and 7.7, nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the

 

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parties hereto and their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

 

13.7                        Complete Agreement

 

This Agreement, including the Exhibits and Disclosure Schedules hereto and the
documents and other writings referred to herein or therein or delivered pursuant
hereto, and the Confidentiality Agreement, referred to in Section 13.1, contains
the entire agreement and understanding of the parties with respect to its
subject matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties other than those expressly set
forth herein or therein. This Agreement supersedes all prior agreements and
understandings (other than the Confidentiality Agreements referred to in
Section 13.1 hereof) between the parties, both written and oral, with respect to
its subject matter.

 

13.8                        Counterparts

 

This Agreement may be executed in one or more counterparts all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties. A facsimile or other electronic copy of a signature page shall be
deemed to be an original signature page.

 

13.9                        Severability

 

In the event that any one or more provisions of this Agreement shall for any
reason be held invalid, illegal or unenforceable in any respect, by any court of
competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement and the parties shall use
their reasonable efforts to substitute a valid, legal and enforceable provision
which, insofar as practical, implements the purposes and intents of this
Agreement.

 

13.10                 Governing Law; Venue

 

This Agreement shall be governed by the laws of California, without giving
effect to its principles of conflicts of laws. The parties hereto agree that any
disputes, claims, disagreements, lawsuits, actions or controversies of any type
or nature whatsoever that, directly or indirectly, arise from or relate to this
Agreement, including, without limitation, claims relating to the inducement,
construction, performance or termination of this Agreement, shall be brought in
the state superior courts located in San Diego County, California or Federal
district courts located in San Diego County, California, and the parties hereto
agree not to challenge the selection of that venue in any such proceeding for
any reason, including, without limitation, on the grounds that such venue is an
inconvenient forum.

 

13.11                 Intentionally omitted.

 

13.12                 Interpretation

 

When a reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. The recitals hereto constitute an integral part of this Agreement.
References to Sections include subsections, which are part of the

 

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related Section (e.g., a section numbered “Section 5.5.1” would be part of
“Section 5.5” and references to “Section 5.5” would also refer to material
contained in the subsection described as “Section 5.5.1”). The table of
contents, index and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without
limitation.” The phrases “the date of this Agreement,” “the date hereof” and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the Recitals to this Agreement. The parties
have participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

 

13.13                 Specific Performance

 

The parties hereto agree that irreparable damage would occur in the event that
the provisions contained in this Agreement were not performed in accordance with
its specific terms or was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions thereof in
any court of the United States or California, this being in addition to any
other remedy to which they are entitled at law or in equity.

 

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IN WITNESS WHEREOF, FB Bancorp, First Business Bank, 1st Pacific Bancorp and 1st
Pacific Bank have caused this Agreement to be executed by their duly authorized
officers as of the date first set forth above.

 

 

FB BANCORP

 

 

 

 

By:

 

/s/ Nathan L. Rogge

 

Name:

Nathan L. Rogge

 

Title:

President and Chief Executive Officer

 

 

 

 

By:

 

/s/ Lester Machado

 

Name:

Lester Machado

 

Title:

Corporate Secretary

 

 

 

 

FIRST BUSINESS BANK

 

 

 

 

By:

 

/s/ Nathan L. Rogge

 

Name:

Nathan L. Rogge

 

Title:

President and Chief Executive Officer

 

 

 

 

By:

 

/s/ Lester Machado

 

Name:

Lester Machado

 

Title:

Corporate Secretary

 

 

 

 

1ST PACIFIC BANCORP

 

 

 

 

By:

 

/s/ Ronald J. Carlson

 

Name:

Ronald J. Carlson

 

Title:

President and Chief Executive Officer

 

 

 

 

By:

 

/s/ Robert Cange

 

Name:

Robert Cange

 

Title:

Corporate Secretary

 

 

 

 

1ST PACIFIC BANK OF CALIFORNIA

 

 

 

 

By:

 

/s/ Ronald J. Carlson

 

Name:

Ronald J. Carlson

 

Title:

President and Chief Executive Officer

 

 

 

 

By:

 

/s/ Robert Cange

 

Name:

Robert Cange

 

Title:

Corporate Secretary

 

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