Exhibit 10.1

FORM OF SUBORDINATED NOTE PURCHASE AGREEMENT

This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of
September 30, 2020, and is made by and between California BanCorp, a California
corporation (“Company”), and the purchaser of the Subordinated Note identified
on the signature page hereto (“Purchaser”).

RECITALS

WHEREAS, Company has requested that Purchaser purchase from Company a
Subordinated Note (as defined herein) in the principal amount set forth on
Purchaser’s signature page (the “Subordinated Note Amount”), which amount is
intended to meet the qualifications for inclusion as Tier 2 Capital (as defined
herein);

WHEREAS, Purchaser is an “accredited investor” as such term is defined by Rule
501 of Regulation D promulgated under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the “Securities Act”), as
well as a “qualified institutional buyer” as such term is defined in Rule 144A
promulgated under the Securities Act (“QIB”);

WHEREAS, the offer and sale of the Subordinated Note by Company is being made
pursuant to one or more available exemptions from the registration requirements
of the Securities Act, including Section 4(a)(2) of the Securities Act; and

WHEREAS, Purchaser is willing to purchase from Company a Subordinated Note in
the Subordinated Note Amount in accordance with the terms, subject to the
conditions and in reliance on, the recitals, representations, warranties,
covenants and agreements set forth herein and in the Subordinated Note.

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

AGREEMENT

 

1.

DEFINITIONS.

1.1 Defined Terms. The following capitalized terms generally used in this
Agreement and in the Subordinated Note have the meanings defined or referenced
below. Certain other capitalized terms used only in specific sections of this
Agreement may be defined in such sections.

“Affiliate(s)” means, with respect to any Person, such Person’s immediate family
members, partners, members or parent and subsidiary corporations, and any other
Person directly or indirectly controlling, controlled by, or under common
control with said Person and their respective Affiliates.

“Agreement” has the meaning set forth in the preamble hereto.

“Articles” has the meaning set forth in Section 3.2.1.2.

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“Bank” means California Bank of Commerce, Walnut Creek, California.

“Business Day” means any day other than a Saturday, Sunday or any other day on
which banking institutions in the State of North Carolina are permitted or
required by any applicable law or executive order to close.

“Bylaws” has the meaning set forth in Section 3.2.1.2.

“Closing” has the meaning set forth in Section 2.5.

“Closing Date” means September 30, 2020.

“Common Stock” means Company’s common stock, no par value per share.

“Company” has the meaning set forth in the preamble hereto and shall include any
successors to Company.

“Company’s SEC Reports” means (i) Company’s Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 2019, as filed with the SEC;
(ii) Company’s Definitive Proxy Statement on Schedule 14A related to its 2020
annual meeting of shareholders, as filed with the SEC; (iii) any Current Report
on Form 8-K, as filed or furnished by Company with the SEC since January 1,
2020; and (iv) Company’s Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 2020 and June 30, 2020, as filed with the SEC pursuant
to the requirements of the Exchange Act.

“Condition or Release” means any presence, use, storage, transportation,
discharge, disposal, release or threatened release of any Hazardous Materials.

“Control” (including the terms “controlling,” “controlled by,” and “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.

“CRA” has the meaning set forth in Section 4.16.

“Disbursement” has the meaning set forth in Section 3.1.

“Equity Interest” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person which is not a corporation, and any
and all warrants, options or other rights to purchase any of the foregoing.

“ERISA” has the meaning set forth in Section 4.11.

“ERISA Affiliate” has the meaning set forth in Section 4.11.

“Event of Default” has the meaning set forth in the Subordinated Note.

 

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

“FDIC” means the Federal Deposit Insurance Corporation.

“FRB” means the Board of Governors of the Federal Reserve System.

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America.

“Governmental Agency(ies)” means, individually or collectively, any federal,
state, county or local governmental department, commission, board, regulatory
authority or agency (including each applicable Regulatory Agency) with
jurisdiction over Company or Bank.

“Governmental Licenses” has the meaning set forth in Section 4.3.

“Hazardous Materials” means oil, flammable explosives, asbestos, urea
formaldehyde insulation, polychlorinated biphenyls, radioactive materials,
hazardous wastes, toxic or contaminated substances or similar materials,
including any substances which are “hazardous substances,” “hazardous wastes,”
“hazardous materials” or “toxic substances” under the Hazardous Materials Laws
and/or other applicable environmental laws, ordinances or regulations.

“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or
requirements pertaining to the protection, preservation, conservation or
regulation of the environment which relates to real property, including: the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq.; the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (including the Superfund Amendments and Reauthorization Act
of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act,
as amended, 29 U.S.C. Section 651, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and
Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local
laws, laws of other jurisdictions or orders and regulations.

“Indebtedness” means: (i) all items arising from the borrowing of money that,
according to GAAP as in effect from time to time, would be included in
determining total liabilities as shown on the consolidated balance sheet of
Company; and (ii) all obligations secured by any lien on property owned by
Company or Bank whether or not such obligations shall have been assumed;
provided, however, Indebtedness shall not include deposits or other indebtedness
created, incurred or maintained in the ordinary course of Company’s or Bank’s
business (including federal funds purchased, advances from any Federal Home Loan
Bank, secured deposits of municipalities, letters of credit issued by Company or
Bank and repurchase arrangements) and consistent with customary banking
practices and applicable laws and regulations.

“Leases” means all leases, licenses or other documents providing for the use or
occupancy of any portion of any Property, including all amendments, extensions,
renewals, supplements, modifications, sublets and assignments thereof and all
separate letters or separate agreements relating thereto.

 

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“Material Adverse Effect” means any change or effect that (i) is or would be
reasonably likely to be material and adverse to the financial condition, results
of operations or business of Company and/or Bank, or (ii) would materially
impair the ability of Company and/or Bank to perform its respective obligations
under any of the Transaction Documents, or otherwise materially impede the
consummation of the transactions contemplated hereby or thereby; provided,
however, that “Material Adverse Effect” shall not be deemed to include the
impact of (1) changes in banking and similar laws, rules or regulations of
general applicability or interpretations thereof by Governmental Agencies,
(2) changes in GAAP or regulatory accounting requirements applicable to
financial institutions and their holding companies generally, (3) changes after
the date of this Agreement in general economic or capital market conditions
affecting financial institutions or their market prices generally and not
specifically related to Company, Bank, or Purchaser, (4) pandemics, epidemics,
disease outbreaks, and other public health emergencies, including the
Coronavirus disease (COVID-19), (5) direct effects of compliance with this
Agreement on the operating performance of Company, Bank, or Purchaser, including
expenses incurred by Company, Bank, or Purchaser in consummating the
transactions contemplated by this Agreement, (6) the effects of any action or
omission taken by Company or Bank with the prior written consent of Purchaser,
and vice versa, or as otherwise contemplated by this Agreement and the
Subordinated Note, and (7) changes in global, national or regional political
conditions, including the outbreak or escalation of war, acts of terrorism or
civil unrest.

“Maturity Date” means September 30, 2030.

“Money Laundering Laws” has the meaning set forth in Section 4.14.

“Noteholder” has the meaning set forth in the Subordinated Note.

“OFAC” has the meaning set forth in Section 4.15.

“Person” means an individual, a corporation (whether or not for profit), a
partnership, a limited liability company, a joint venture, an association, a
trust, an unincorporated organization, a government or any department or agency
thereof (including a Governmental Agency) or any other entity or organization.

“Placement Agent” means Wedbush Securities Inc., in its capacity as the
Company’s placement agent in connection with this Agreement.

“Property” means any real property owned or leased by Company or Bank.

“Purchaser” has the meaning set forth in the preamble hereto.

“QIB” has the meaning set forth in the Recitals.

“Regulation D” means Regulation D promulgated under the Securities Act.

 

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“Regulatory Agencies” means any federal or state agency charged with the
supervision or regulation of depository institutions or holding companies of
depository institutions, or engaged in the insurance of depository institution
deposits, or any court, administrative agency or commission or other authority,
body or agency having supervisory or regulatory authority with respect to
Company or Bank.

“Regulatory Approval” has the meaning set forth in Section 3.2.1.6

“SEC” means the Securities and Exchange Commission.

“Securities Act” has the meaning set forth in the Recitals.

“Subordinated Note” means the Subordinated Note in the form attached as Exhibit
A hereto, as amended, restated, supplemented or modified from time to time, and
each Subordinated Note delivered in substitution or exchange for such
Subordinated Note (any one or more Subordinated Notes into which this
Subordinated Note may be subdivided, exchanged, or substituted in the future
referred to, collectively, with this Subordinated Note, as the “Subordinated
Notes”).

“Subordinated Note Amount” has the meaning set forth in the Recitals.

“Subsidiary” means with respect to any Person, any corporation or entity in
which a majority of the outstanding Equity Interest is directly or indirectly
owned by such Person.

“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R.
Part 217, 12 C.F.R. Part 225, and 12 C.F.R. Part 250, as amended, modified and
supplemented and in effect from time to time or any replacement thereof.

“Transaction Documents” has the meaning set forth in Section 3.2.1.1.

1.2 Interpretations. The foregoing definitions are equally applicable to both
the singular and plural forms of the terms defined. The words “hereof”, “herein”
and “hereunder” and words of like import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The word “including” when used in this Agreement without the phrase
“without limitation,” shall mean “including, without limitation.” All references
to time of day herein are references to Eastern Time unless otherwise
specifically provided. All references to this Agreement and the Subordinated
Note shall be deemed to be to such documents as amended, modified or restated
from time to time. With respect to any reference in this Agreement to any
defined term, (i) if such defined term refers to a Person, then it shall also
mean all heirs, legal representatives and permitted successors and assigns of
such Person, and (ii) if such defined term refers to a document, instrument or
agreement, then it shall also include any amendment, replacement, extension or
other modification thereof.

1.3 Exhibits Incorporated. All Exhibits attached are hereby incorporated into
this Agreement.

 

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2.

SUBORDINATED DEBT.

2.1 Certain Terms. Subject to the terms and conditions herein contained, Company
proposes to issue and sell to Purchaser a Subordinated Note in an amount equal
to the Subordinated Note Amount. Purchaser agrees to purchase the Subordinated
Note from Company on the Closing Date in accordance with the terms of, and
subject to the conditions and provisions set forth in, this Agreement and the
Subordinated Note. The Subordinated Note Amount shall be disbursed in accordance
with Section 3.1. The Subordinated Note shall bear interest per annum as set
forth in the Subordinated Note. The unpaid principal balance of the Subordinated
Note plus all accrued but unpaid interest thereon shall be due and payable on
the Maturity Date, or such earlier date on which such amount shall become due
and payable on account of (i) acceleration by Purchaser in accordance with the
terms of the Subordinated Note and this Agreement or (ii) Company’s delivery of
a notice of redemption or repayment in accordance with the terms of the
Subordinated Note.

2.2 Subordination. The Subordinated Note shall be subordinated in accordance
with the subordination provisions set forth therein.

2.3 Maturity Date. On the Maturity Date, all sums due and owing under this
Agreement and the Subordinated Note shall be repaid in full. Company
acknowledges and agrees that Purchaser has not made any commitments, either
express or implied, to extend the terms of the Subordinated Note past its
Maturity Date, and shall not extend such terms beyond the Maturity Date unless
Company and Purchaser hereafter specifically otherwise agree in writing.

2.4 Unsecured Obligations. The obligations of Company to Purchaser under the
Subordinated Note shall be unsecured and not covered by a guarantee of Company
or an Affiliate of Company.

2.5 The Closing. The closing of the sale and purchase of the Subordinated Note
(the “Closing”) shall occur on the Closing Date at such place or time or on such
other date as the parties hereto may agree.

2.6 Payments. Company agrees that matters concerning payments and application of
payments shall be as set forth in this Agreement and in the Subordinated Note.

2.7 Right of Offset. Purchaser hereby expressly waives any right of offset
Purchaser may have against Company or Bank.

2.8 Use of Proceeds. Company shall use the net proceeds from the sale of the
Subordinated Note to repay amounts currently outstanding under an existing
credit facility and for general corporate purposes, including to fund future
growth and for investment in, or capital contributions to, Bank.

 

3.

DISBURSEMENT.

3.1 Disbursement. On the Closing Date, assuming all of the terms and conditions
set forth in Section 3.2 have been satisfied by Company or waived by Purchaser
and Company has executed and delivered to Purchaser this Agreement and
Purchaser’s Subordinated Note and any other related documents in form and
substance reasonably satisfactory to Purchaser, Purchaser

 

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shall disburse the Subordinated Note Amount, which is set forth on Purchaser’s
signature page, in immediately available funds to Company in exchange for a
Subordinated Note with a principal amount equal to such Subordinated Note Amount
(the “Disbursement”). Company will deliver to Purchaser one or more certificates
representing the Subordinated Note in definitive form (or provide evidence of
the same with the original to be delivered by Company by overnight delivery on
the next business day in accordance with the delivery instructions of
Purchaser), registered in such names and denominations as Purchaser may request.

3.2 Conditions Precedent to Disbursement.

3.2.1 Conditions to Purchaser’s Obligation. The obligation of Purchaser to
consummate the purchase of the Subordinated Note to be purchased by it at
Closing and to effect the Disbursement is subject to the fulfillment of or
delivery by or at the direction of Company to Purchaser, on or prior to the
Closing Date, of each of the following (or written waiver by Purchaser prior to
the Closing of such delivery):

3.2.1.1 Transaction Documents. This Agreement and the Subordinated Note
(collectively, the “Transaction Documents”), each duly authorized and executed
by Company.

3.2.1.2 Authority Documents.

 

  (a)

A copy, certified by the Secretary or Assistant Secretary of Company, of the
articles of incorporation of Company and all amendments thereto as in effect as
of the Closing Date (the “Articles”);

 

  (b)

A certificate of good standing of Company issued by the Secretary of State of
the State of California;

 

  (c)

A copy, certified by the Secretary or Assistant Secretary, of the bylaws of
Company and all amendments thereto as in effect as of the Closing Date (the
“Bylaws”);

 

  (d)

A copy, certified by the Secretary or Assistant Secretary of Company, of the
resolutions of the board of directors of Company, and any committee thereof,
authorizing the execution, delivery and performance of the Transaction
Documents;

 

  (e)

An incumbency certificate of the Secretary or Assistant Secretary of Company
certifying the names of the officer or officers of Company authorized to sign
the Transaction Documents and the other documents provided for in this
Agreement; and

 

  (f)

The opinion of Sheppard, Mullin, Richter & Hampton LLP, counsel to Company,
dated as of the Closing Date, substantially in the form set forth at Exhibit B
attached hereto addressed to Purchaser.

 

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3.2.1.3 Representations and Warranties. The representations and warranties of
Company set forth in Section 4 of this Agreement that do not contain a “Material
Adverse Effect” qualification or other express materiality or similar
qualification shall have been true and correct as of the date hereof and shall
be true and correct as of the Closing Date, except where the failure of such
representations and warranties to be so true and correct does not have a
Material Adverse Effect; provided, however, that representations and warranties
made as of a specified date need only be true and correct as of such date. The
representations and warranties of Company set forth in Section 4 of this
Agreement that contain a “Material Adverse Effect” qualification or any other
express materiality or similar qualification shall have been true and correct as
of the date hereof and shall be true and correct as of the Closing Date;
provided, however, that representations and warranties made as of a specified
date need only be true and correct as of such date.

3.2.1.4 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by Company on or prior to the Closing Date shall have
been performed or complied with in all material respects.

3.2.1.5 Other Requirements. Such other additional information regarding Company
and Bank and their respective assets, liabilities (including any liabilities
arising from, or relating to, legal proceedings) and contracts as Purchaser may
reasonably require.

3.2.1.6 Consents and Approvals. The Company shall file any required
applications, filings and notices required in connection with this Agreement, as
applicable, with (i) the FRB (under the Bank Holding Company Act of 1956, as
amended (the “Bank Holding Company Act”)), and (ii) the California Department of
Business Oversight (the “State Regulator”), and receive approval of, or consent
or nonobjection to, the foregoing applications, filings and notices (“Regulatory
Approval”).

3.2.2 Conditions to Company’s Obligation. The obligation of Company to
consummate the sale of the Subordinated Note and to effect the Closing is
subject to delivery by Purchaser to Company of this Agreement, duly authorized
and executed by Purchaser, and the purchase price in an amount equal to the
Subordinated Note Amount.

 

4.

REPRESENTATIONS AND WARRANTIES OF COMPANY.

Company hereby represents and warrants to Purchaser as follows:

4.1 Organization and Authority.

4.1.1 Organization Matters of Company and Bank.

4.1.1.1 Company is a bank holding company registered with the FRB under the Bank
Holding Company Act of 1956, as amended. Company is a business corporation
validly existing and in good standing under the laws of the State of California
and has all requisite corporate power and authority to conduct its business and
activities as presently conducted, to own

 

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its properties, and to perform its obligations under the Transaction Documents.
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.

4.1.1.2 Bank is the only direct or indirect Subsidiary of Company. Bank has been
duly chartered and is validly existing as a California chartered bank, in good
standing under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct its
business and is duly qualified as a foreign entity to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect. All of the issued and outstanding
shares of capital stock or other equity interests in Bank have been duly
authorized and validly issued, are fully paid and nonassessable and are owned by
Company, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim, except for the pledge by Company of all such shares
pursuant to that certain Pledge Agreement dated as of April 27, 2020, by and
between Company and TIB-The Independent BankersBank, N.A.; none of the
outstanding shares of capital stock of, or other equity interests in, Bank were
issued in violation of the preemptive or similar rights of any security holder
of Bank or any other Person.

4.1.1.3 The deposit accounts of Bank are insured by the FDIC up to applicable
limits. Neither Company nor Bank has received any notice or other information
indicating that Bank is not an “insured depository institution” as defined in 12
U.S.C. Section 1813, nor has any event occurred which could reasonably be
expected to adversely affect the status of Bank as an FDIC-insured institution.
Company and Bank have made payment of all franchise and similar taxes in all of
the respective jurisdictions in which they are incorporated, chartered or
qualified, except for any such taxes (i) where the failure to pay such taxes
will not have a Material Adverse Effect, (ii) the validity of which is being
contested in good faith or (iii) for which proper reserves have been set aside
on the books of Company or Bank, as the case may be.

4.1.2 Capital Stock and Related Matters. The Articles of Company authorize
Company to issue 40,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock. As of the date of this Agreement, there are 8,149,127 shares of
Common Stock issued and outstanding and no shares of Company’s preferred stock
issued and outstanding. All of the outstanding capital stock of Bank is owned
beneficially and of record by Company and has been duly authorized and validly
issued and is fully paid and nonassessable. All of the outstanding capital stock
of Company has been duly authorized and validly issued and is fully paid and
nonassessable. There are, as of the date hereof, no outstanding options, rights,
warrants or other agreements or instruments obligating Company to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of the
capital stock of Company or obligating Company to grant, extend or enter into
any such agreement or commitment to any Person other than Company except
pursuant to Company’s equity incentive plans duly adopted by Company’s Board of
Directors.

 

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4.2 No Impediment to Transactions.

4.2.1 Transaction is Legal and Authorized. The issuance of the Subordinated
Note, the borrowing of the Subordinated Note Amount, the execution of the
Transaction Documents and compliance by Company with all of the provisions of
the Transaction Documents are within the corporate and other powers of Company.

4.2.2 Agreement. This Agreement has been duly authorized, executed and
delivered, and, assuming due authorization, execution and delivery by Purchaser,
constitutes the legal, valid and binding obligation of Company, enforceable in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors’ rights generally or by general equitable
principles.

4.2.3 Subordinated Note. The Subordinated Note has been duly authorized by
Company and when executed by Company and issued, delivered to and paid for by
Purchaser in accordance with the terms of the Agreement, will have been duly
executed, issued and delivered, and will constitute legal, valid and binding
obligations of Company, enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles.

4.2.4 Exemption from Registration. Neither Company, the Bank, nor any of their
respective Affiliates, nor any Person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Subordinated Note.
Assuming the accuracy of the representations and warranties of Purchaser set
forth in this Agreement, the Subordinated Note will be issued in a transaction
exempt from the registration requirements of the Securities Act.

4.2.5 No Defaults or Restrictions. Neither the execution and delivery of the
Transaction Documents nor compliance with their respective terms and conditions
will (whether with or without the giving of notice or lapse of time or both) (i)
violate, conflict with or result in a breach of, or constitute a default under:
(1) the Articles or Bylaws of Company; (2) any of the terms, obligations,
covenants, conditions or provisions of any corporate restriction or of any
contract, agreement, indenture, mortgage, deed of trust, pledge, bank loan or
credit agreement, or any other agreement or instrument to which Company or Bank,
as applicable, is now a party or by which it or any of its properties may be
bound or affected; (3) any judgment, order, writ, injunction, decree or demand
of any court, arbitrator, grand jury, or Governmental Agency applicable to
Company or Bank; or (4) any statute, rule or regulation applicable to Company,
except, in the case of items (2), (3) or (4), for such violations and conflicts
that would not reasonably be expected to have, singularly or in the aggregate, a
Material Adverse Effect, or (ii) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any property or asset
of Company or Bank. Neither Company nor Bank is in default in the performance,
observance or fulfillment of any of the terms, obligations, covenants,
conditions or provisions contained in any indenture or other agreement creating,
evidencing or securing Indebtedness of any kind or pursuant to which any such
Indebtedness is issued, or any other agreement or instrument to which Company or
Bank, as applicable, is a party or by which Company or Bank, as applicable, or
any of their properties may be bound or affected, except, in each case, only
such defaults that would not reasonably be expected to have, singularly or in
the aggregate, a Material Adverse Effect.

 

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4.2.6 Governmental Consent. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained by Company that have not
been obtained, and no registrations or declarations are required to be filed by
Company that have not been filed in connection with, or, in contemplation of,
the execution and delivery of, and performance under, the Transaction Documents,
except for applicable requirements, if any, of the Securities Act, the Exchange
Act or state securities laws or “blue sky” laws of the various states and any
applicable federal or state banking laws and regulations. The Company and Bank
have received from the Regulatory Agencies any required approval of, or consent
or nonobjection to, the issuance and sale of the Subordinated Note contemplated
by this Agreement.

4.3 Possession of Licenses and Permits. Each of Company and Bank possesses such
permits, licenses, approvals, consents and other authorizations (collectively,
“Governmental Licenses”) issued by the appropriate Governmental Agencies
necessary to conduct the business now operated by them except where the failure
to possess such Governmental Licenses would not, singularly or in the aggregate,
have a Material Adverse Effect; Company and Bank are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, individually or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither Company nor Bank has received any notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses.

4.4 Financial Condition.

4.4.1 Company Financial Statements. The financial statements of Company included
in the Company’s SEC Reports (including the related notes, where applicable),
which have been provided to Purchaser (i) have been prepared from, and are in
accordance with, the books and records of Company; (ii) fairly present in all
material respects the results of operations, cash flows, changes in
stockholders’ equity and financial position of Company and its consolidated
Subsidiaries, for the respective fiscal periods or as of the respective dates
therein set forth (subject in the case of unaudited statements to recurring
year-end audit adjustments normal in nature and amount), as applicable;
(iii) complied as to form, as of their respective dates of filing in all
material respects with applicable accounting and banking requirements as
applicable, with respect thereto; and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
Company and Bank have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal and accounting
requirements. Neither Company nor Bank has any material liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due), except for those liabilities that are reflected or reserved
against on the consolidated balance sheet (or notes thereto) of Company
contained in the Company’s SEC Reports for Company’s most recently completed
quarterly or annual fiscal period, as applicable, and for liabilities incurred
in the ordinary course of business consistent with past practice or in
connection with this Agreement and the transactions contemplated hereby.

 

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4.4.2 Absence of Default. Since December 31, 2019, no event has occurred which
either of itself or with the lapse of time or the giving of notice or both,
would give any creditor of Company or Bank the right to accelerate the maturity
of any material Indebtedness of Company or Bank. Neither Company nor Bank is in
default under any Lease, agreement or instrument, or any law, rule, regulation,
order, writ, injunction, decree, determination or award, non-compliance with
which could reasonably be expected to result in a Material Adverse Effect.

4.4.3 Solvency. After giving effect to the consummation of the transactions
contemplated by this Agreement, Company has capital sufficient to carry on its
business and transactions and is solvent and able to pay its debts as they
mature. No transfer of property is being made and no Indebtedness is being
incurred in connection with the transactions contemplated by this Agreement with
the intent to hinder, delay or defraud either present or future creditors of
Company or Bank.

4.4.4 Ownership of Property. Each of Company and Bank has good and marketable
title as to all real property owned by it and good title to all assets and
properties owned by Company and Bank 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 most recent consolidated balance
sheet contained in the Company’s SEC Reports 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 consolidated balance
sheet), subject to no encumbrances, liens, mortgages, security interests or
pledges, except (i) those items which secure liabilities for public deposits or
statutory obligations or any discount with, borrowing from or other obligations
to the Federal Home Loan Bank or FRB, inter-bank credit facilities, reverse
repurchase agreements or any transaction by Bank acting in a fiduciary capacity,
(ii) statutory liens for amounts not yet due or delinquent or that are being
contested in good faith and (iii) such liens that do not, individually or in the
aggregate, materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by Company
or Bank. Each of Company and Bank, as lessee, has the right under valid and
existing Leases of real and personal properties that are material to Company or
Bank, as applicable, in the conduct of its business to occupy or use all such
properties as presently occupied and used by it. Such existing Leases and
commitments to Lease constitute or will constitute operating Leases for both tax
and financial accounting purposes except as otherwise disclosed in the Company’s
SEC Reports 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 Company’s SEC Reports.

4.5 No Material Adverse Change. Since June 30, 2020, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.

4.6 Legal Matters.

4.6.1 Compliance with Law. Each of Company and Bank (i) has complied with and
(ii) is not under investigation with respect to, and, to Company’s knowledge,
has not been threatened to be charged with or given any notice of any material
violation of any applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government, or any instrumentality or
agency thereof, having jurisdiction over the conduct of its business or the

 

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ownership of its properties, except where any such failure to comply or
violation would not reasonably be expected to have a Material Adverse Effect.
Each of Company and Bank is in compliance with, and at all times prior to the
date hereof has been in compliance with, (x) all statutes, rules, regulations,
orders and restrictions of any domestic or foreign government, or any
Governmental Agency, applicable to it, and (y) its own privacy policies and
written commitments to its respective customers, consumers and employees,
concerning data protection, the privacy and security of personal data, and the
nonpublic personal information of their respective customers, consumers and
employees, in each case except where any such failure to comply, would not
result, individually or in the aggregate, in a Material Adverse Effect. At no
time during the two years prior to the date hereof has Company or Bank received
any notice asserting any violations of any of the foregoing, except for any
violations that (A) have been resolved or (B) that have not had, and are not
reasonably expected to have, a Material Adverse Effect.

4.6.2 Regulatory Enforcement Actions. Each of Company and Bank is in compliance
in all material respects with all laws administered by and regulations of any
Governmental Agency applicable to it or to them, the failure to comply with
which would have a Material Adverse Effect. None of Company or Bank, nor any of
their respective officers or directors is now operating under any restrictions,
agreements, memoranda, commitment letter, supervisory letter or similar
regulatory correspondence, or other commitments (other than restrictions of
general application) imposed by any Governmental Agency, nor are, to Company’s
knowledge, (i) any such restrictions threatened, (ii) any agreements, memoranda,
commitment letters, supervisory letters or similar regulatory correspondence, or
other commitments being sought by any Governmental Agency, or (iii) any legal or
regulatory violations previously identified by, or penalties or other remedial
action previously imposed by, any Governmental Agency that remain unresolved.

4.6.3 Pending Litigation. There are no actions, suits, proceedings or written
agreements pending, or, to Company’s knowledge, threatened or proposed, against
Company or Bank at law or in equity or before or by any federal, state,
municipal, or other governmental department, commission, board, or other
administrative agency, domestic or foreign, that, either separately or in the
aggregate, would reasonably be expected to have a Material Adverse Effect or
affect issuance or payment of the Subordinated Note; and neither Company nor
Bank is a party to or named as subject to the provisions of any order, writ,
injunction, or decree of, or any written agreement with, any court, commission,
board or agency, domestic or foreign, that either separately or in the
aggregate, will have a Material Adverse Effect.

4.6.4 Environmental. No Property is or, to Company’s knowledge, has been a site
for the use, generation, manufacture, storage, treatment, release, threatened
release, discharge, disposal, transportation or presence of any Hazardous
Materials, and neither Company nor Bank has engaged in such activities. There
are no claims or actions pending or, to Company’s knowledge, threatened against
Company or Bank by any Governmental Agency or by any other Person relating to
any Hazardous Materials or pursuant to any Hazardous Materials Law.

4.6.5 Brokerage Commissions. Except for fees payable to the Placement Agent,
neither Company nor any Affiliate of Company is obligated to pay any brokerage
commission or finder’s fee to any Person in connection with the transactions
contemplated by this Agreement.

 

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4.6.6 Investment Company Act. Neither Company nor Bank is an “investment
company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended.

4.7 No Material Misstatement or Omission. None of the representations,
warranties, covenants and agreements contained in this Agreement or in any
certificate or other document delivered to Purchaser by or on behalf of Company
or Bank pursuant to or in connection with this Agreement contains any untrue
statement of a material fact or omits to state a material fact or any fact
necessary to make the statements contained therein not misleading in light of
the circumstances when made or furnished to Purchaser.

4.8 Reporting Compliance. Company is subject to, and is in compliance in all
material respects with, the reporting requirements of Section 13 and
Section 15(d), as applicable, of the Exchange Act. The Company’s SEC Reports at
the time they were or hereafter are filed with the SEC, complied in all material
respects with the requirements of the Exchange Act and did not and do not
include 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 under
which they were made, not misleading.

4.9 Internal Control Over Financial Reporting. Company maintains systems of
“internal control over financial reporting” (as defined in Rule 13a-15(f) of the
Exchange Act) that comply with the requirements of the Exchange Act and have
been designed by, or under the supervision of, its principal executive and
principal financial officers, or persons performing similar functions, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP, including, but not limited to, a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Since the conclusion of Company’s most
recently completed fiscal year, (y) Company has no knowledge of (A) any material
weakness in Company’s internal control over financial reporting (whether or not
remediated) except as otherwise disclosed in the Company’s SEC Reports, or
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in Company’s internal controls or Bank’s
internal controls, and (z) except as otherwise disclosed in the Company’s SEC
Reports, there has been no change in Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect, Company’s internal control over financial reporting.

4.10 Tax Matters. Company and Bank have (i) filed all material foreign, U.S.
federal, state and local tax returns, information returns and similar reports
that they are required to file (taking into account extensions) with
governmental tax agencies, and all such tax returns are true, correct and
complete in all material respects, and (ii) paid all material taxes required to
be paid by them (taking into account extensions) and any other material tax
assessment, fine or penalty levied against them other than taxes (x) currently
payable without penalty or interest, or (y) being contested in good faith by
appropriate proceedings.

 

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4.11 Exempt Offering. Assuming the accuracy of Purchaser’s representations and
warranties set forth in this Agreement, no registration under the Securities Act
is required for the offer and sale of the Subordinated Note by Company to
Purchaser.

4.12 Representations and Warranties Generally. The representations and
warranties of Company set forth in this Agreement and in any certificate or
other document delivered to Purchaser by or on behalf of Company, Bank or any of
their Subsidiaries pursuant to or in connection with this Agreement that do not
contain a “Material Adverse Effect” qualification or other express materiality
or similar qualification are true and correct as of the date hereof and as of
the Closing Date, except where the failure of such representations and
warranties to be so true and correct does not have a Material Adverse Effect;
provided, however, that any such representations and warranties made as of a
specified date need only be true and correct as of such date. The
representations and warranties of Company set forth in this Agreement and in any
certificate or other document delivered to Purchaser by or on behalf of Company,
Bank or any of their Subsidiaries pursuant to or in connection with this
Agreement that contain a “Material Adverse Effect” qualification or any other
express materiality or similar qualification are true and correct as of the date
hereof and as of the Closing Date; provided, however, that any such
representations and warranties made as of a specified date need only be true and
correct as of such date.

 

5.

GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.

Company hereby further covenants and agrees with Purchaser as follows:

5.1 Compliance with Transaction Documents. Company shall comply with, observe
and timely perform each and every one of the covenants, agreements and
obligations under the Transaction Documents.

5.2 Affiliate Transactions. Company shall not itself, nor shall it cause, permit
or allow Bank to enter into any transaction, including the purchase, sale or
exchange of property or the rendering of any service, with any Affiliate of
Company except in the ordinary course of business and pursuant to the reasonable
requirements of Company’s or such Affiliate’s business and upon terms consistent
with applicable laws and regulations and reasonably found by the appropriate
board(s) of directors to be fair and reasonable and no less favorable to Company
or such Affiliate than would be obtained in a comparable arm’s length
transaction with a Person not an Affiliate.

5.3 Compliance with Laws.

5.3.1 Generally. Company shall comply and cause Bank to comply in all material
respects with all applicable statutes, rules, regulations, orders and
restrictions in respect of the conduct of its business and the ownership of its
properties, except, in each case, where such noncompliance would not reasonably
be expected to have a Material Adverse Effect.

 

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5.3.2 Regulated Activities. Company shall not itself, nor shall it cause, permit
or allow Bank to (i) engage in any business or activity not permitted by all
applicable laws and regulations, except where such business or activity would
not reasonably be expected to have a Material Adverse Effect or (ii) make any
loan or advance secured by the capital stock of another bank or depository
institution, or acquire the capital stock, assets or obligations of or any
interest in another bank or depository institution, in each case other than in
accordance with applicable laws and regulations and safe and sound banking
practices.

5.3.3 Taxes. Company shall, and shall cause Bank to, promptly pay and discharge
(i) all taxes, assessments and other governmental charges imposed upon Company
or Bank or upon the income, profits, or property of Company or Bank and (ii) all
claims for labor, material or supplies that, if unpaid, might by law become a
lien or charge upon the property of Company or Bank. Notwithstanding the
foregoing, none of Company or Bank shall be required to pay any such tax,
assessment, charge or claim, so long as the validity thereof is being contested
in good faith by appropriate proceedings, and appropriate reserves therefor
shall be maintained on the books of Company and Bank.

5.3.4 Corporate Existence. Company shall do or cause to be done all things
reasonably necessary to maintain, preserve and renew its corporate existence and
that of Bank and their respective rights, licenses and franchises, and comply in
all material respects with all related laws applicable to Company and Bank;
provided, however, that Company may consummate a merger in accordance with
Section 8(b) of the Subordinated Note.

5.3.5 Dividends, Payments, and Guarantees During Event of Default. Upon the
occurrence of an Event of Default (as defined under the Subordinated Note),
until such Event of Default is cured by Company or waived by the Purchaser in
accordance with Section 17 of the Subordinated Notes, Company shall not, except
as may be required by any federal or state Governmental Agency, (a) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock; (b) make any
payment of principal of, or interest or premium, if any, on, or repay,
repurchase or redeem any of Company’s Indebtedness that ranks equal with or
junior to the Subordinated Notes; or (c) make any payments under any guarantee
that ranks equal with or junior to the Subordinated Note, other than: (i) any
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, any class of Company’s Common Stock;
(ii) any declaration of a non-cash dividend in connection with the
implementation of a shareholders’ rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto; (iii) as a result of a reclassification of Company’s capital
stock or the exchange or conversion of one class or series of Company’s capital
stock for another class or series of Company’s capital stock; (iv) the purchase
of fractional interests in shares of Company’s capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged; or (v) purchases of any class of Company’s Common Stock
related to the issuance of Common Stock or rights under any benefit plans for
Company’s directors, officers or employees or any of Company’s dividend
reinvestment plans (including any repurchases or acquisitions in connection with
the forfeiture of any stock award, cashless or net exercise of any option, or
acceptance of Common Stock in lieu of an award recipient’s tax obligations under
any equity award).

 

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5.3.6 Tier 2 Capital. If all or any portion of the Subordinated Note ceases to
qualify for inclusion as Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years
immediately preceding the Maturity Date of the Subordinated Note, Company will
immediately notify Purchaser, and thereafter, Company and Purchaser will work
together in good faith to execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Note to qualify as Tier 2 Capital; provided that
nothing contained in this Agreement shall limit Company’s right to redeem the
Subordinated Note upon the occurrence of a Tier 2 Capital Event as described in
the Subordinated Note.

5.3.7 Environmental Matters. Except as would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, Company shall:
(a) exercise, and cause Bank and each of their Subsidiaries to exercise,
commercially reasonably efforts in order to comply in all material respects with
all Hazardous Materials Laws; and (b) promptly take any and all necessary
remedial action in connection with any Condition or Release or threatened
Condition or Release on, under or about any Property in order to comply in all
material respects with all applicable Hazardous Materials Laws; provided,
however, that Company shall not be deemed to be in breach of the foregoing
covenant if and to the extent it has not taken such remedial actions due to
(x) its diligent pursuit of an available statutory or administrative exemption
from compliance with the relevant Hazardous Materials Law from the appropriate
Governmental Agency (and no penalties for noncompliance with the relevant
Hazardous Materials Law(s) shall accrue as a result of such non-compliance,
without rebate or waiver if such exemption or waiver is granted), or (y) is
actively and diligently contesting in good faith any Governmental Agency’s
order, determination or decree with respect to the applicability or
interpretation of any such relevant Hazardous Materials Law and/or the actions
required under such laws or regulations in respect of such Condition or Release.
In the event Company, Bank or any other Subsidiary of Company or Bank undertakes
any remedial action with respect to such Hazardous Material on, under or about
any Property, Company, Bank or such other Subsidiary shall conduct and complete
such remedial action in compliance with all applicable Hazardous Materials Laws
and in accordance with the policies, orders and directives of all Governmental
Agencies.

5.4 Absence of Control. It is the intent of the parties to this Agreement that
in no event shall Purchaser, by reason of any of the Transaction Documents, be
deemed to control, directly or indirectly, Company, and Purchaser shall not
exercise, or be deemed to exercise, directly or indirectly, a controlling
influence over the management or policies of Company.

5.5 Information Available to Facilitate Resales.

5.5.1 Current Public Information. With a view to making available to Purchaser
or Noteholder the benefits of certain SEC rules and regulations permitting the
sale of the Subordinated Notes without registration as soon as allowed, Company
shall, at all times from the date of this Agreement through the date that the
restrictive legend on the Subordinated Notes may be removed, make and keep
available adequate current public information with respect to Company, as those
terms are understood and defined in Rule 144(c) or any similar or analogous
rules promulgated under the Securities Act, and, upon written request by
Purchaser or Noteholder, Company shall provide a written statement that Company
has complied with such requirements.

5.5.2 Rule 144A Information. While the Subordinated Note remains a “restricted
security” within the meaning of the Securities Act, Company will make available,
upon request, to any seller of such Subordinated Note the information specified
in Rule 144A(d)(4) under the Securities Act, unless Company is then subject to
Section 13 or 15(d) of the Exchange Act.

 

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6.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.

Purchaser hereby represents and warrants to Company, and covenants with Company,
as follows:

6.1 Legal Power and Authority. Purchaser has all necessary power and authority
to execute, deliver and perform Purchaser’s obligations under this Agreement and
to consummate the transactions contemplated hereby. Purchaser is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation.

6.2 Authorization and Execution. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of
Purchaser, and this Agreement has been duly authorized, executed and delivered,
and, assuming due authorization, execution and delivery by the other parties
hereto, is a legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors’ rights generally or by general
equitable principles.

6.3 No Conflicts. Neither the execution, delivery or performance of the
Transaction Documents nor the consummation of any of the transactions
contemplated thereby will conflict with, violate, constitute a breach of or a
default (whether with or without the giving of notice or lapse of time or both)
under (i) Purchaser’s organizational documents, (ii) any agreement to which
Purchaser is party, (iii) any law applicable to Purchaser or (iv) any order,
writ, judgment, injunction, decree, determination or award binding upon or
affecting Purchaser.

6.4 Purchase for Investment. Purchaser is purchasing the Subordinated Note for
Purchaser’s own account and not with a view to distribution and with no present
intention of reselling, distributing or otherwise disposing of the same.
Purchaser has no present or contemplated agreement, undertaking, arrangement,
obligation, Indebtedness or commitment providing for, or which is likely to
compel, a disposition of the Subordinated Note in any manner.

6.5 Institutional Accredited Investor. Purchaser is and will be on the Closing
Date (i) an institutional “accredited investor” as such term is defined in Rule
501(a) of Regulation D and as contemplated by subsections (1), (2), (3) and
(7) of Rule 501(a) of Regulation D, and has no less than $5,000,000 in total
assets and (ii) a QIB.

6.6 Financial and Business Sophistication. Purchaser has such knowledge and
experience in financial and business matters that Purchaser is capable of
evaluating the merits and risks of Purchaser’s prospective investment in the
Subordinated Note. Purchaser has relied solely upon Purchaser’s own knowledge
of, and/or the advice of Purchaser’s own legal, financial or other advisors with
regard to, the legal, financial, tax and other considerations involved in
deciding to invest in the Subordinated Note.

 

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6.7 Ability to Bear Economic Risk of Investment. Purchaser recognizes that an
investment in the Subordinated Note involves substantial risk. Purchaser has the
ability to bear the economic risk of Purchaser’s prospective investment in the
Subordinated Note, including the ability to hold the Subordinated Note
indefinitely, and further including the ability to bear a complete loss of all
of Purchaser’s investment in Company.

6.8 Information. Purchaser acknowledges that: (i) Purchaser is not being
provided with the disclosures that would be required if the offer and sale of
the Subordinated Note were registered under the Securities Act, nor is Purchaser
being provided with any offering circular or prospectus prepared in connection
with the offer and sale of the Subordinated Note; (ii) Purchaser has conducted
Purchaser’s own examination of Company and the terms of the Subordinated Note to
the extent Purchaser deems necessary to make Purchaser’s decision to invest in
the Subordinated Note; (iii) Purchaser has availed itself of publicly available
financial and other information concerning Company to the extent Purchaser deems
necessary to make Purchaser’s decision to purchase the Subordinated Note;
(iv) Purchaser has not received or relied on any form of general solicitation or
general advertising (within the meaning of Regulation D) from Company or any
party acting on Company’s behalf in connection with the offer and purchase of
the Subordinated Note; and (v) Purchaser has reviewed the information set forth
in the Company’s SEC Reports.

6.9 Access to Information. Purchaser acknowledges that Purchaser and Purchaser’s
advisors have been furnished with all materials relating to the business,
finances and operations of Company that have been requested by Purchaser and
Purchaser’s advisors and have been given the opportunity to ask questions of,
and to receive answers from, Persons acting on behalf of Company concerning
terms and conditions of the transactions contemplated by this Agreement in order
to make an informed and voluntary decision to enter into this Agreement.

6.10 Investment Decision. Purchaser has made Purchaser’s own investment decision
based upon Purchaser’s own judgment, due diligence, and advice from such
advisors as Purchaser has deemed necessary and not upon any view expressed by
any other Person, including the Placement Agent. Neither such inquiries nor any
other due diligence investigations conducted by it or its advisors or
representatives, if any, shall modify, amend or affect its right to rely on
Company’s representations and warranties contained herein. Purchaser is not
relying upon, and has not relied upon, any advice, statement, representation or
warranty made by any Person by or on behalf of Company, including the Placement
Agent, except for the express statements, representations and warranties of
Company made or contained in this Agreement. Furthermore, Purchaser acknowledges
that (i) the Placement Agent has not performed any due diligence review on
behalf of Purchaser and (ii) nothing in this Agreement or any other materials
presented by or on behalf of Company to Purchaser in connection with the
purchase of the Subordinated Note constitutes legal, tax or investment advice.

6.11 Private Placement; No Registration; Restricted Legends. Purchaser
understands and acknowledges that the Subordinated Note comes within the
definition of “restricted securities” under Rule 144 of the Securities Act and
is being sold by Company without registration under the Securities Act in
reliance on the exemption from federal registration set forth in Section 4(a)(2)
of the Securities Act or any state securities laws, and accordingly, may be
resold, pledged or otherwise transferred only in compliance with the
registration requirements of federal and state securities laws or if exemptions
from the Securities Act and applicable state securities

 

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laws are available to Purchaser. Purchaser is not subscribing for the
Subordinated Note as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any seminar or
meeting. Purchaser further acknowledges and agrees that all certificates or
other instruments representing the Subordinated Note will bear the restrictive
legend set forth in the form of Subordinated Note. Purchaser further
acknowledges Purchaser’s primary responsibilities under the Securities Act and,
accordingly, will not sell or otherwise transfer the Subordinated Note or any
interest therein without complying with the requirements of the Securities Act
and the rules and regulations promulgated thereunder and the requirements set
forth in this Agreement. Neither Company nor the Placement Agent have or has
made or are or is making any representation, warranty or covenant, express or
implied, as to the availability of any exemption from registration under the
Securities Act or any applicable state securities laws for the resale, pledge or
other transfer of the Subordinated Note, or that the Subordinated Note purchased
by Purchaser will ever be able to be lawfully resold, pledged or otherwise
transferred.

6.12 Role of Placement Agent. Purchaser will purchase the Subordinated Note
directly from Company and not from the Placement Agent, and Purchaser
understands that neither the Placement Agent nor any other broker or dealer has
any obligation to make a market in the Subordinated Notes.

6.13 Tier 2 Capital. If all or any portion of the Subordinated Note ceases to
qualify for inclusion as Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years
immediately preceding the Maturity Date of the Subordinated Note, Company will
immediately notify Purchaser, and thereafter, Company and Purchaser will work
together in good faith to execute and deliver all agreements as reasonably
necessary in order to restructure the applicable portions of the obligations
evidenced by the Subordinated Note to qualify as Tier 2 Capital; provided that
nothing contained in this Agreement shall limit Company’s right to redeem the
Subordinated Note upon the occurrence of a Tier 2 Capital Event as described in
the Subordinated Note.

6.14 Accuracy of Representations. Purchaser understands that Company is relying
and will rely upon the truth and accuracy of the foregoing representations,
acknowledgements and agreements in connection with the transactions contemplated
by this Agreement, and agrees that if any of the representations or
acknowledgements made by it are no longer accurate as of the Closing Date, or if
any of the agreements made by it are breached on or prior to the Closing Date,
it shall promptly notify Company.

 

7.

MISCELLANEOUS.

7.1 Prohibition on Assignment by Company. Except as described in Section 8(b)
(Merger or Sale of Assets) of the Subordinated Note, Company may not assign,
transfer or delegate any of its rights or obligations under this Agreement or
the Subordinated Note without the prior written consent of Purchaser. In
addition, in accordance with the terms of the Subordinated Note, any transfer of
such Subordinated Note must be made in accordance with the Assignment Form
attached thereto and the requirements and restrictions thereof.

7.2 Time of the Essence. Time is of the essence with respect to this Agreement.

 

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7.3 Waiver or Amendment. No waiver or amendment of any term, provision,
condition, covenant or agreement herein shall be effective except with the prior
written consent of Purchaser. Notwithstanding the foregoing, Company may amend
or supplement the Subordinated Notes without the consent of Purchaser to cure
any ambiguity, defect or inconsistency or to provide for uncertificated
Subordinated Notes in addition to or in place of certificated Subordinated
Notes, or to make any change that does not adversely affect the rights of
Purchaser. No failure to exercise or delay in exercising, by Purchaser, of any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege preclude any
other or further exercise thereof, or the exercise of any other right or remedy
provided by law. The rights and remedies provided in this Agreement are
cumulative and not exclusive of any right or remedy provided at law or in
equity. No notice or demand on Company in any case shall, in and of itself,
entitle Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Purchaser to any other or
further action in any circumstances without notice or demand. No consent or
waiver, express or implied, by Purchaser to or of any breach or default by
Company in the performance of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance of the same or any other obligations of Company hereunder. Failure
on the part of Purchaser to complain of any acts or failure to act or to declare
an Event of Default, irrespective of how long such failure continues, shall not
constitute a waiver by Purchaser of its rights hereunder or impair any rights,
powers or remedies on account of any breach or default by Company.

7.4 Severability. Any provision of this Agreement which is unenforceable or
invalid or contrary to law, or the inclusion of which would adversely affect the
validity, legality or enforcement of this Agreement, shall be of no effect and,
in such case, all the remaining terms and provisions of this Agreement shall
subsist and be fully effective according to the tenor of this Agreement the same
as though any such invalid portion had never been included herein.
Notwithstanding any of the foregoing to the contrary, if any provisions of this
Agreement or the application thereof are held invalid or unenforceable only as
to particular persons or situations, the remainder of this Agreement, and the
application of such provision to persons or situations other than those to which
it shall have been held invalid or unenforceable, shall not be affected thereby,
but shall continue valid and enforceable to the fullest extent permitted by law.

7.5 Notices. Any notice which any party hereto may be required or may desire to
give hereunder shall be deemed to have been given if in writing and if delivered
personally, or if mailed, postage prepaid, by United States registered or
certified mail, return receipt requested, or if delivered by a responsible
overnight commercial courier promising next business day delivery, addressed:

 

if to Company:   

California BanCorp

1300 Clay Street, Fifth Floor

Oakland, CA 94612

Attention:     Thomas A. Sa

                     Senior Executive Vice President

                     and Chief Financial Officer

 

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with a copy to:   

Sheppard, Mullin, Richter & Hampton LLP

650 Town Center Drive, Tenth Floor

Costa Mesa, CA 92626

Attention: Joshua A. Dean

if to Purchaser:    To the address indicated on Purchaser’s signature page.

or to such other address or addresses as the party to be given notice may have
furnished in writing to the party seeking or desiring to give notice, as a place
for the giving of notice; provided that no change in address shall be effective
until five (5) Business Days after being given to the other party in the manner
provided for above. Any notice given in accordance with the foregoing shall be
deemed given when delivered personally or, if mailed, three (3) Business Days
after it shall have been deposited in the United States mails as aforesaid or,
if sent by overnight courier, the Business Day following the date of delivery to
such courier (provided next business day delivery was requested).

7.6 Successors and Assigns. This Agreement shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors and
assigns; except that, unless Purchaser consents in writing, no assignment made
by Company in violation of this Agreement shall be effective or confer any
rights on any purported assignee of Company. The term “successors and assigns”
will not include a purchaser of all or any portion of the Subordinated Note from
Purchaser merely because of such purchase.

7.7 No Joint Venture. Nothing contained herein or in any document executed
pursuant hereto and no action or inaction whatsoever on the part of Purchaser,
shall be deemed to make Purchaser a partner or joint venturer with Company.

7.8 Documentation. All documents and other matters required by any of the
provisions of this Agreement to be submitted or furnished to Purchaser shall be
in form and substance satisfactory to Purchaser.

7.9 Entire Agreement. This Agreement and the Subordinated Note along with the
Exhibits thereto constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and may not be modified or amended in any
manner other than by supplemental written agreement executed by the parties
hereto. No party, in entering into this Agreement, has relied upon any
representation, warranty, covenant, condition or other term that is not set
forth in this Agreement or in the Subordinated Note.

7.10 Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
laws or principles of conflict of laws. Nothing herein shall be deemed to limit
any rights, powers or privileges which Purchaser may have pursuant to any law of
the United States of America or any rule, regulation or order of any department
or agency thereof and nothing herein shall be deemed to make unlawful any
transaction or conduct by Purchaser which is lawful pursuant to, or which is
permitted by, any of the foregoing.

 

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7.11 No Third Party Beneficiary. This Agreement is made for the sole benefit of
Company and Purchaser, and no other Person shall be deemed to have any privity
of contract hereunder nor any right to rely hereon to any extent or for any
purpose whatsoever, nor shall any other Person have any right of action of any
kind hereon or be deemed to be a third party beneficiary hereunder.

7.12 Legal Tender of United States. All payments hereunder shall be made in coin
or currency which at the time of payment is legal tender in the United States of
America for public and private debts.

7.13 Reinstatement of Obligations. To the extent that Purchaser receives any
payment on account of Company’s obligations under the Subordinated Note and any
such payment and/or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
federal law, common law or equitable cause, then to the extent of such payment
received, Company’s obligations under the Subordinated Note or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment(s) had not been received by Purchaser and applied on account
of Company’s obligations; provided, however, if Purchaser successfully contests
any such invalidation, declaration, set aside, subordination or other order to
pay any such payment to any third party, Company’s obligations to Purchaser that
otherwise would have been revived pursuant to this subsection shall be deemed
satisfied.

7.14 Captions; Counterparts. Captions contained in this Agreement in no way
define, limit or extend the scope or intent of their respective provisions. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. In the event that any signature is
delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.

7.15 Knowledge; Discretion. All references herein to Purchaser’s or Company’s
knowledge shall be deemed to mean the knowledge of such party based on the
actual knowledge of such party’s Chief Executive Officer and Chief Financial
Officer or such other persons holding equivalent offices, and such knowledge as
would reasonably be expected to come to the attention of such officers in the
performance of their respective duties. Unless specified to the contrary herein,
all references herein to an exercise of discretion or judgment by Purchaser, to
the making of a determination or designation by Purchaser, to the application of
Purchaser’s discretion or opinion, to the granting or withholding of Purchaser’s
consent or approval, to the consideration of whether a matter or thing is
satisfactory or acceptable to Purchaser, or otherwise involving the decision
making of Purchaser, shall be deemed to mean that Purchaser shall decide using
the reasonable discretion or judgment of a prudent lender.

 

23

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7.16 Waiver Of Right To Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR
ACTIONS OF COMPANY OR PURCHASER. THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE WILL. THE PARTIES FURTHER
ACKNOWLEDGE THAT (I) THEY HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS
OF THIS WAIVER, (II) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES AND THEIR
COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS AGREEMENT AND
(III) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS
IF FULLY INCORPORATED THEREIN.

7.17 Expenses. Except as otherwise provided in this Agreement, each of the
parties will bear and pay all other costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated pursuant to this
Agreement.

7.18 Survival. Each of the representations and warranties set forth in this
Agreement shall survive the consummation of the transactions contemplated hereby
for a period of one year after the date hereof. Except as otherwise provided
herein, all covenants and agreements contained herein shall survive until, by
their respective terms, they are no longer operative.

[Signature Pages Follow]

 

24

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IN WITNESS WHEREOF, Company has caused this Subordinated Note Purchase Agreement
to be executed by its duly authorized representative as of the date first above
written.

 

COMPANY: CALIFORNIA BANCORP By:  

/s/ Thomas A. Sa

  Name:   Thomas A. Sa   Title:   Senior Executive Vice President and     Chief
Financial Officer

[Company Signature Page to Subordinated Note Purchase Agreement]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Purchaser has caused this Subordinated Note Purchase
Agreement to be executed by its duly authorized representative as of the date
first above written.

 

PURCHASER: [                                                         ]

By:  

/s/

       Name:  

 

       Title:  

 

Address of Purchaser: [                                    
                    ] Principal Amount of Subordinated Note Purchased:
$[                            ]

[Purchaser Signature Page to Subordinated Note Purchase Agreement]