Exhibit
10.1




 





 


 


GUARANTEE AGREEMENT


 


by and between


 


FIRST REGIONAL BANCORP


 


and


 


STATE STREET BANK AND TRUST COMPANY


OF CONNECTICUT, NATIONAL ASSOCIATION


 


Dated as of December 18, 2001


 




 





 

















 


GUARANTEE AGREEMENT


 


This GUARANTEE AGREEMENT (this “Guarantee”), dated as
of December 18, 2001, is executed and delivered by First Regional Bancorp, a
California corporation (the “Guarantor”), and State Street Bank and Trust
Company of Connecticut, National Association, a national banking association,
organized under the laws of the United States of America, as trustee (the
“Guarantee Trustee”), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of First Regional
Statutory Trust I, a Connecticut statutory trust (the “Issuer”).


 


WHEREAS, pursuant to an Amended and Restated
Declaration of Trust (the “Declaration”), dated as of the date hereof among
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity but solely as institutional trustee, the
administrators of the Issuer named therein, the Guarantor, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of
the Issuer, the Issuer is issuing on the date hereof those undivided beneficial
interests, having an aggregate liquidation amount of $5,000,000 (the “Capital
Securities”); and


 


WHEREAS, as incentive for the Holders (as defined
herein) to purchase the Capital Securities, the Guarantor desires irrevocably
and unconditionally to agree, to the extent set forth in this Guarantee, to pay
to the Holders of Capital Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth
herein;


 


NOW, THEREFORE, in consideration of the purchase by
each Holder of the Capital Securities, which purchase the Guarantor hereby
agrees shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee for the benefit of the Holders.


 


ARTICLE I


 


DEFINITIONS AND INTERPRETATION


 


Section 1.1.           Definitions
and Interpretation.  In this Guarantee, unless the
context otherwise requires:


 


(a)           capitalized
terms used in this Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;


 


(b)           a
term defined anywhere in this Guarantee has the same meaning throughout;


 


(c)           all
references to “the Guarantee” or “this Guarantee” are to this Guarantee as
modified, supplemented or amended from time to time;


 


(d)           all
references in this Guarantee to “Articles” or “Sections” are to Articles or
Sections of this Guarantee, unless otherwise specified;


 


(e)           terms
defined in the Declaration as at the date of execution of this Guarantee have
the same meanings when used in this Guarantee, unless otherwise defined in this
Guarantee or unless the context otherwise requires; and


 


(f)            a
reference to the singular includes the plural and vice versa.


 


“Affiliate” has the same meaning as given to
that term in Rule 405 of the Securities Act of 1933, as amended, or any
successor rule thereunder.


 

















 


“Beneficiaries” means any Person to whom the
Issuer is or hereafter becomes indebted or liable.


 


“Capital Securities” has the meaning set forth
in the recitals to this Guarantee.


 


“Common Securities” means the common securities
issued by the Issuer to the Guarantor pursuant to the Declaration.


 


“Corporate Trust Office” means the office of
the Guarantee Trustee at which the corporate trust business of the Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Guarantee is located at 225 Asylum
Street, Goodwin Square, Hartford, Connecticut 06103.


 


“Covered Person” means any Holder of Capital
Securities.


 


“Debentures” means the debt securities of the
Guarantor designated the Floating Rate Junior Subordinated Deferrable Interest
Debentures due 2031 held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.


 


“Declaration Event of Default” means an “Event
of Default” as defined in the Declaration.


 


“Event of Default” has the meaning set forth in
Section 2.4(a).


 


“Guarantee Payments” means the following
payments or distributions, without duplication, with respect to the Capital
Securities, to the extent not paid or made by the Issuer:  (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be
paid on such Capital Securities to the extent the Issuer shall have funds
available therefor, (ii) the Redemption Price to the extent the Issuer has
funds available therefor, with respect to any Capital Securities called for
redemption by the Issuer, (iii) the Special Redemption Price to the extent
the Issuer has funds available therefor, with respect to Capital Securities
redeemed upon the occurrence of a Special Event, and (iv) upon a voluntary
or involuntary liquidation, dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the
Holders of the Capital Securities in exchange therefor as provided in the Declaration),
the lesser of (a) the aggregate of the liquidation amount and all accrued
and unpaid Distributions on the Capital Securities to the date of payment, to
the extent the Issuer shall have funds available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer (in either case, the “Liquidation Distribution”).


 


“Guarantee Trustee” means State Street Bank and
Trust Company of Connecticut, National Association, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee and thereafter means each such Successor Guarantee
Trustee.


 


“Guarantor” means First Regional Bancorp and
each of its successors and assigns.


 


“Holder” means any holder, as registered on the
books and records of the Issuer, of any Capital Securities; provided, however,
that, in determining whether the Holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder,
“Holder” shall not include the Guarantor or any Affiliate of the Guarantor.


 


“Indemnified Person” means the Guarantee
Trustee, any Affiliate of the Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Guarantee Trustee.


 


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“Indenture” means the Indenture dated as of the
date hereof between the Guarantor and State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity but solely as
trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.


 


“Issuer” has the meaning set forth in the
opening paragraph to this Guarantee.


 


“Liquidation Distribution” has the meaning set
forth in the definition of “Guarantee Payments” herein.


 


“Majority in liquidation amount of the Capital
Securities” means Holder(s) of outstanding Capital Securities, voting
together as a class, but separately from the holders of Common Securities, of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all Capital Securities then outstanding.


 


“Obligations” means any costs, expenses or
liabilities (but not including liabilities related to taxes) of the Issuer
other than obligations of the Issuer to pay to holders of any Trust Securities
the amounts due such holders pursuant to the terms of the Trust Securities.


 


“Officer’s Certificate” means, with respect to
any Person, a certificate signed by one Authorized Officer of such Person. Any
Officer’s Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee shall include:


 


(a)           a
statement that each officer signing the Officer’s Certificate has read the
covenant or condition and the definitions relating thereto;


 


(b)           a
brief statement of the nature and scope of the examination or investigation
undertaken by each officer in rendering the Officer’s Certificate;


 


(c)           a
statement that each such officer has made such examination or investigation as,
in such officer’s opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and


 


(d)           a
statement as to whether, in the opinion of each such officer, such condition or
covenant has been complied with.


 


“Person” means a legal person, including any
individual, corporation, estate, partnership, joint venture, association, joint
stock company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.


 


“Redemption Price” has the meaning set forth in
the Indenture.


 


“Responsible Officer” means, with respect to
the Guarantee Trustee, any officer within the Corporate Trust Office of the
Guarantee Trustee including any Vice President, Assistant Vice President,
Secretary, Assistant Secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer’s knowledge of and familiarity with the particular subject.


 


“Special Event” has the meaning set forth in
the Indenture.


 


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“Special Redemption Price” has the meaning set
forth in the Indenture.


 


“Successor Guarantee Trustee” means a successor
Guarantee Trustee possessing the qualifications to act as Guarantee Trustee
under Section 3.1.


 


“Trust Securities” means the Common Securities
and the Capital Securities.


 


ARTICLE II


 


POWERS, DUTIES AND RIGHTS OF


GUARANTEE TRUSTEE


 


Section
2.1.           Powers and Duties of the
Guarantee Trustee.


 


(a)           This
Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders
of the Capital Securities, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder of Capital Securities exercising his or
her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee.  The right,
title and interest of the Guarantee Trustee shall automatically vest in any
Successor Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.


 


(b)           If
an Event of Default actually known to a Responsible Officer of the Guarantee
Trustee has occurred and is continuing, the Guarantee Trustee shall enforce
this Guarantee for the benefit of the Holders of the Capital Securities.


 


(c)           The
Guarantee Trustee, before the occurrence of any Event of Default and after
curing all Events of Default that may have occurred, shall undertake to perform
only such duties as are specifically set forth in this Guarantee, and no
implied covenants shall be read into this Guarantee against the Guarantee
Trustee.  In case an Event of Default
has occurred (that has not been waived pursuant to Section 2.4) and is
actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.


 


(d)           No
provision of this Guarantee shall be construed to relieve the Guarantee Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:


 


(i)            prior
to the occurrence of any Event of Default and after the curing or waiving of
all such Events of Default that may have occurred:


 


(A)          the
duties and obligations of the Guarantee Trustee shall be determined solely by
the express provisions of this Guarantee, and the Guarantee Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee, and no implied covenants or
obligations shall be read into this Guarantee against the Guarantee Trustee;
and


 


(B)           in
the absence of bad faith on the part of the Guarantee Trustee, the Guarantee
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished


 


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to the Guarantee
Trustee and conforming to the requirements of this Guarantee; but in the case
of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Guarantee;


 


(ii)           the
Guarantee Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Guarantee Trustee, unless it shall be
proved that such Responsible Officer of the Guarantee Trustee or the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which such
judgment was made;


 


(iii)          the
Guarantee Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the written
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee; and


 


(iv)          no
provision of this Guarantee shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds is not reasonably assured to it under the
terms of this Guarantee or security and indemnity, reasonably satisfactory to
the Guarantee Trustee, against such risk or liability is not reasonably assured
to it.


 


Section
2.2.           Certain Rights of
Guarantee Trustee.


 


(a)           Subject
to the provisions of Section 2.1:


 


(i)            The
Guarantee Trustee may conclusively rely, and shall be fully protected in acting
or refraining from acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.


 


(ii)           Any
direction or act of the Guarantor contemplated by this Guarantee shall be
sufficiently evidenced by an Officer’s Certificate.


 


(iii)          Whenever,
in the administration of this Guarantee, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officer’s Certificate of the Guarantor
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.


 


(iv)          The
Guarantee Trustee shall have no duty to see to any recording, filing or
registration of any instrument (or any re-recording, refiling or
re-registration thereof).


 


(v)           The
Guarantee Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and


 


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in accordance with such advice or opinion. Such counsel may be counsel
to the Guarantor or any of its Affiliates and may include any of its
employees.  The Guarantee Trustee shall
have the right at any time to seek instructions concerning the administration
of this Guarantee from any court of competent jurisdiction.


 


(vi)          The
Guarantee Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against the costs, expenses (including attorneys’ fees and expenses and the
expenses of the Guarantee Trustee’s agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided, however, that nothing contained in
this Section 2.2(a)(vi) shall relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Guarantee.


 


(vii)         The
Guarantee Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.


 


(viii)        The
Guarantee Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.


 


(ix)           Any
action taken by the Guarantee Trustee or its agents hereunder shall bind the
Holders of the Capital Securities, and the signature of the Guarantee Trustee
or its agents alone shall be sufficient and effective to perform any such
action.  No third party shall be
required to inquire as to the authority of the Guarantee Trustee to so act or
as to its compliance with any of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by the Guarantee Trustee’s or its
agent’s taking such action.


 


(x)            Whenever
in the administration of this Guarantee the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount of the
Capital Securities, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.


 


(xi)           The
Guarantee Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Guarantee.


 


(b)           No
provision of this Guarantee shall be deemed to impose any duty or obligation on
the Guarantee Trustee to perform any act or acts or exercise any right, power,
duty or obligation conferred or imposed on it, in any jurisdiction in which it
shall be illegal or in which the Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law to perform any such act or acts
or to exercise any such right, power, duty or obligation.  No permissive power or authority available
to the Guarantee Trustee shall be construed to be a duty.


 


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Section
2.3.           Not Responsible for Recitals or Issuance of Guarantee.  The
recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Guarantee Trustee does not assume any responsibility for their
correctness.  The Guarantee Trustee
makes no representation as to the validity or sufficiency of this Guarantee.


 


Section
2.4.           Events of Default;
Waiver.


 


(a)           An
Event of Default under this Guarantee will occur upon the failure of the
Guarantor to perform any of its payment or other obligations hereunder.


 


(b)           The
Holders of a Majority in liquidation amount of the Capital Securities may,
voting or consenting as a class, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences.  Upon such waiver, any such Event of Default
shall cease to exist, and shall be deemed to have been cured, for every purpose
of this Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.


 


Section
2.5.           Events of Default;
Notice.


 


(a)           The
Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders of the
Capital Securities and the Guarantor, notices of all Events of Default actually
known to a Responsible Officer of the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, however,
that the Guarantee Trustee shall be protected in withholding such notice if and
so long as a Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.


 


(b)           The
Guarantee Trustee shall not be deemed to have knowledge of any Event of Default
unless the Guarantee Trustee shall have received written notice from the
Guarantor or a Holder of the Capital Securities (except in the case of a
payment default), or a Responsible Officer of the Guarantee Trustee charged
with the administration of this Guarantee shall have obtained actual knowledge
thereof.


 


ARTICLE III


 


GUARANTEE TRUSTEE


 


Section
3.1.           Guarantee Trustee; Eligibility.


 


(a)           There
shall at all times be a Guarantee Trustee which shall:


 


(i)            not
be an Affiliate of the Guarantor, and


 


(ii)           be
a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or
Person authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State, Territorial
or District of Columbia authority.  If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 3.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.


 


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(b)           If
at any time the Guarantee Trustee shall cease to be eligible to so act under
Section 3.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 3.2(c).


 


(c)           If
the Guarantee Trustee has or shall acquire any “conflicting interest” within
the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee
shall either eliminate such interest or resign to the extent and in the manner
provided by, and subject to this Guarantee.


 


Section
3.2.           Appointment, Removal and
Resignation of Guarantee Trustee.


 


(a)           Subject
to Section 3.2(b), the Guarantee Trustee may be appointed or removed without
cause at any time by the Guarantor except during an Event of Default.


 


(b)           The
Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until
a Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.


 


(c)           The
Guarantee Trustee appointed to office shall hold office until a Successor
Guarantee Trustee shall have been appointed or until its removal or
resignation.  The Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by an instrument
in writing executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.


 


(d)           If
no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. 
Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Guarantee Trustee.


 


(e)           No
Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Guarantee Trustee.


 


(f)            Upon
termination of this Guarantee or removal or resignation of the Guarantee
Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee
Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and
7.3 accrued to the date of such termination, removal or resignation.


 


ARTICLE IV


 


GUARANTEE


 


Section
4.1.           Guarantee.


 


(a)           The
Guarantor irrevocably and unconditionally agrees to pay in full to the Holders
the Guarantee Payments (without duplication of amounts theretofore paid by the
Issuer), as and when due, regardless of any defense (except the defense of
payment by the Issuer), right of set-off or counterclaim that the Issuer may
have or assert.  The Guarantor’s
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.


 


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(b)           The
Guarantor hereby also agrees to assume any and all Obligations of the Issuer
and in the event any such Obligation is not so assumed, subject to the terms
and conditions hereof, the Guarantor hereby irrevocably and unconditionally
guarantees to each Beneficiary the full payment, when and as due, of any and
all Obligations to such Beneficiaries. 
This Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.


 


Section 4.2.           Waiver
of Notice and Demand.  The Guarantor hereby waives
notice of acceptance of this Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.


 


Section 4.3.           Obligations
Not Affected. 
  The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:


 


(a)           the
release or waiver, by operation of law or otherwise, of the performance or
observance by the Issuer of any express or implied agreement, covenant, term or
condition relating to the Capital Securities to be performed or observed by the
Issuer;


 


(b)           the
extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Special Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital
Securities or the extension of time for the performance of any other obligation
under, arising out of or in connection with, the Capital Securities (other than
an extension of time for payment of Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or other sum payable that results from
the extension of any interest payment period on the Debentures or any extension
of the maturity date of the Debentures permitted by the Indenture);


 


(c)           any
failure, omission, delay or lack of diligence on the part of the Holders to
enforce, assert or exercise any right, privilege, power or remedy conferred on
the Holders pursuant to the terms of the Capital Securities, or any action on
the part of the Issuer granting indulgence or extension of any kind;


 


(d)           the
voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or other
similar proceedings affecting, the Issuer or any of the assets of the Issuer;


 


(e)           any
invalidity of, or defect or deficiency in, the Capital Securities;


 


(f)            the
settlement or compromise of any obligation guaranteed hereby or hereby
incurred; or


 


(g)           any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a guarantor, it being the intent of this
Section 4.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.


 


There shall be no obligation of the Holders to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.


 


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Section
4.4.           Rights of Holders.


 


(a)           The
Holders of a Majority in liquidation amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of this Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee; provided, however, that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to
follow any such direction if the Guarantee Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if the Guarantee Trustee in good faith by its board of directors or
trustees, executive committees or a trust committee of directors or trustees
and/or Responsible Officers shall determine that the action or proceedings so
directed would involve the Guarantee Trustee in personal liability.


 


(b)           Any
Holder of Capital Securities may institute a legal proceeding directly against
the Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee,
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other Person.  The
Guarantor waives any right or remedy to require that any such action be brought
first against the Issuer, the Guarantee Trustee or any other Person before so proceeding
directly against the Guarantor.


 


Section 4.5.           Guarantee of Payment.  This
Guarantee creates a guarantee of payment and not of collection.


 


Section 4.6.           Subrogation.  The
Guarantor shall be subrogated to all (if any) rights of the Holders of Capital
Securities against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee.  If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.


 


Section 4.7.           Independent Obligations.  The
Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Capital Securities and that the
Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 4.3 hereof.


 


Section 4.8.           Enforcement
by a Beneficiary.  A Beneficiary may enforce the
obligations of the Guarantor contained in Section 4.1(b) directly against the
Guarantor and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity before
proceeding against the Guarantor.  The
Guarantor shall be subrogated to all rights (if any) of any Beneficiary against
the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor
under this Agreement; provided, however, that the Guarantor shall
not (except to the extent required by mandatory provisions of law) be entitled
to enforce or exercise any rights that it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Agreement, if at the time of any such payment, and after
giving effect to such payment, any amounts are due and unpaid under this
Agreement.


 


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ARTICLE V


 


LIMITATION OF TRANSACTIONS; SUBORDINATION


 


Section 5.1.           Limitation
of Transactions.  So long as any Capital Securities
remain outstanding, if (a) there shall have occurred and be continuing an
Event of Default or a Declaration Event of Default or (b) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor shall not and shall not permit any Affiliate to (x) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Guarantor’s or such
Affiliate’s capital stock (other than payments of dividends or distributions to
the Guarantor) or make any guarantee payments with respect to the foregoing or
(y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Guarantor or any
Affiliate that rank pari passu in all respects with or junior
in interest to the Debentures (other than, with respect to clauses (x) and (y)
above, (i) repurchases, redemptions or other acquisitions of shares of
capital stock of the Guarantor in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Guarantor (or securities convertible into
or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default,
Declaration Event of Default or Extension Period, as applicable, (ii) as a
result of any exchange or conversion of any class or series of the Guarantor’s
capital stock (or any capital stock of a subsidiary of the Guarantor) for any
class or series of the Guarantor’s capital stock or of any class or series of
the Guarantor’s indebtedness for any class or series of the Guarantor’s capital
stock, (iii) the purchase of fractional interests in shares of the
Guarantor’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) any
declaration of a dividend in connection with any stockholders’ rights plan, or
the issuance of rights, stock or other property under any stockholders’ rights
plan, or the redemption or repurchase of rights pursuant thereto, (v) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari
passu with or junior to such stock and any cash payments in lieu of
fractional shares issued in connection therewith, or (vi) payments under
this Guarantee).


 


Section 5.2.           Ranking.  This
Guarantee will constitute an unsecured obligation of the Guarantor and will
rank subordinate and junior in right of payment to all present and future
Senior Indebtedness (as defined in the Indenture) of the Guarantor.  By their acceptance thereof, each Holder of
Capital Securities agrees to the foregoing provisions of this Guarantee and the
other terms set forth herein.


 


The right of the Guarantor to participate in any
distribution of assets of any of its subsidiaries upon any such subsidiary’s
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent the Guarantor may itself be
recognized as a creditor of that subsidiary. 
Accordingly, the Guarantor’s obligations under this Guarantee will be
effectively subordinated to all existing and future liabilities of the
Guarantor’s subsidiaries, and claimants should look only to the assets of the
Guarantor for payments hereunder.  This
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Guarantor, including Senior Indebtedness of the
Guarantor, under any indenture that the Guarantor may enter into in the future
or otherwise.


 


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ARTICLE VI


 


TERMINATION


 


Section
6.1.           Termination.  This
Guarantee shall terminate as to the Capital Securities (i) upon full
payment of the Redemption Price or Special Redemption Price of all Capital
Securities then outstanding, (ii) upon the distribution of all of the
Debentures to the Holders of all of the Capital Securities or (iii) upon
full payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer.  This
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Capital Securities must restore payment of any
sums paid under the Capital Securities or under this Guarantee.


 


ARTICLE VII


 


INDEMNIFICATION


 


Section
7.1.           Exculpation.


 


(a)           No
Indemnified Person shall be liable, responsible or accountable in damages or
otherwise to the Guarantor or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person’s negligence or
willful misconduct with respect to such acts or omissions.


 


(b)           An
Indemnified Person shall be fully protected in relying in good faith upon the
records of the Issuer or the Guarantor and upon such information, opinions,
reports or statements presented to the Issuer or the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person’s professional or expert competence and who, if selected by such
Indemnified Person, has been selected with reasonable care by such Indemnified
Person, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Capital Securities might properly be paid.


 


Section
7.2.           Indemnification.


 


(a)           The
Guarantor agrees to indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any and all loss, liability, damage, claim
or expense incurred without negligence or willful misconduct on the part of the
Indemnified Person, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including, but not limited to,
the costs and expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of the
Indemnified Person’s powers or duties hereunder.  The obligation to indemnify as set forth in this Section 7.2
shall survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.


 


(b)           Promptly
after receipt by an Indemnified Person under this Section 7.2 of notice of
the commencement of any action, such Indemnified Person will, if a claim in
respect thereof is to be made against the Guarantor under this
Section 7.2, notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not relieve the
Guarantor from liability under


 


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paragraph (a)
above unless and to the extent that the Guarantor did not otherwise learn of
such action and such failure results in the forfeiture by the Guarantor of
substantial rights and defenses and (ii) will not, in any event, relieve
the Guarantor from any obligations to any Indemnified Person other than the
indemnification obligation provided in paragraph (a) above.  The Guarantor shall be entitled to appoint
counsel of the Guarantor’s choice at the Guarantor’s expense to represent the
Indemnified Person in any action for which indemnification is sought (in which
case the Guarantor shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the Indemnified Person or Persons
except as set forth below); provided, however, that such counsel
shall be reasonably satisfactory to the Indemnified Person.  Notwithstanding the Guarantor’s election to
appoint counsel to represent the Guarantor in an action, the Indemnified Person
shall have the right to employ separate counsel (including local counsel), and
the Guarantor shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the Guarantor to
represent the Indemnified Person would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any
such action include both the Indemnified Person and the Guarantor and the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Person(s) which are different
from or additional to those available to the Guarantor, (iii) the
Guarantor shall not have employed counsel satisfactory to the Indemnified
Person to represent the Indemnified Person within a reasonable time after
notice of the institution of such action or (iv) the Guarantor shall authorize
the Indemnified Person to employ separate counsel at the expense of the
Guarantor.  The Guarantor will not,
without the prior written consent of the Indemnified Persons, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Persons are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Person from all liability arising out of such claim,
action, suit or proceeding.


 


Section 7.3.           Compensation; Reimbursement of Expenses.  The
Guarantor agrees:


 


(a)           to
pay to the Guarantee Trustee from time to time such compensation for all
services rendered by it hereunder as the parties shall agree to from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and


 


(b)           except
as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon
request for all reasonable expenses, disbursements and advances incurred or
made by it in accordance with any provision of this Guarantee (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or willful misconduct.


 


The provisions of this Section 7.3 shall survive
the resignation or removal of the Guarantee Trustee and the termination of this
Guarantee.


 


ARTICLE VIII


 


MISCELLANEOUS


 


Section 8.1.           Successors and Assigns.  All
guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Capital Securities then
outstanding.  Except in connection with
any merger or consolidation of the Guarantor with or into another entity or any
sale, transfer or lease of the Guarantor’s assets to another entity, in each
case, to the extent permitted under the Indenture, the


 


13

















 


Guarantor may not assign its rights or delegate its
obligations under this Guarantee without the prior approval of the Holders of
at least a Majority in liquidation amount of the Capital Securities.


 


Section 8.2.           Amendments.  Except
with respect to any changes that do not adversely affect the rights of Holders
of the Capital Securities in any material respect (in which case no consent of
Holders will be required), this Guarantee may be amended only with the prior
approval of the Holders of not less than a Majority in liquidation amount of
the Capital Securities.  The provisions of
the Declaration with respect to amendments thereof apply to the giving of such
approval.


 


Section 8.3.           Notices.  All notices
provided for in this Guarantee shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by first class
mail, as follows:


 


(a)           If
given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set
forth below (or such other address as the Guarantee Trustee may give notice of
to the Holders of the Capital Securities and the Guarantor):


 


State Street Bank and Trust Company of Connecticut,
National Association


225 Asylum Street, Goodwin Square


Hartford, Connecticut 
06103


Attention: 
Corporate Trust Department


Telecopy: 
860-244-1889


 


With a copy to:


 


State Street Bank and Trust Company


P.O. Box 778


Boston, Massachusetts 
02102-0778


Attention: 
Paul D. Allen, Corporate Trust Department


Telecopy: 
617-662-1462


 


(b)           If
given to the Guarantor, at the Guarantor’s mailing address set forth below (or
such other address as the Guarantor may give notice of to the Holders of the
Capital Securities and to the Guarantee Trustee):


 


First Regional Bancorp


1801 Century Park East


Los Angeles, California  90067-2302


Attention:  Tom
McCullough


Telecopy: 
310-552-1772


 


(c)           If
given to any Holder of the Capital Securities, at the address set forth on the
books and records of the Issuer.


 


All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid, except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.


 


Section 8.4.           Benefit.  This
Guarantee is solely for the benefit of the Beneficiaries and, subject to
Section 2.1(a), is not separately transferable from the Capital Securities.


 


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Section 8.5.           Governing Law.  THIS
GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).


 


Section 8.6.           Counterparts.  This
Guarantee may be executed in one or more counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
instrument.


 


Section
8.7            Separability.  In
case one or more of the provisions contained in this Guarantee shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Guarantee, but this Guarantee shall be construed as if such
invalid or illegal or unenforceable provision had never been contained herein.


 


Signatures
appear on the following page


 


15

















 


THIS GUARANTEE is executed as of the day and year first
above written.


 


 


	
   

  	
  FIRST REGIONAL BANCORP,
  as Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   Thomas McCullough

  	
   

  
	
   

  	
   

  	
   Name:  Thomas McCullough

  
	
   

  	
   

  	
   Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STATE STREET BANK AND
  TRUST COMPANY

  OF CONNECTICUT, NATIONAL

  ASSOCIATION, as Guarantee Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   Paul D. Allen

  	
   

  
	
   

  	
   

  	
   Name:  Paul D. Allen

  
	
   

  	
   

  	
   Title:  Vice President

  
							



 


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