Exhibit
10.1


 


[Letterhead of
Castle Creek Financial LLC]


 


January 7, 2008


 


First Community Bancorp


401 West “A” Street


San Diego, CA  92101


Attention: Victor R.
Santoro


 


Dear Vic:


 


This letter agreement (the “Agreement”) will confirm that First Community
Bancorp (the “Company”) has engaged Castle Creek Financial LLC (“Castle Creek”)
as the exclusive financial advisor to the Company in connection with the
Company’s efforts to (a) acquire or invest in other financial
institutions, excepting therefrom the opening of individual bank branches in
the ordinary course of business; (b) effect a sale of the Company or a
material amount of its assets; or (c) pursue a financing or
recapitalization transaction (collectively, the “Transaction”).  As the exclusive financial advisor to the
Company, Castle Creek will, in addition to providing services in connection
with a proposed Transaction provide other services pursuant to paragraph
9.  This Agreement amends and restates
the letter agreement between the Company and Castle Creek dated as of December 5,
2006.


 


1.             In connection with a proposed
Transaction, at the request of the Company, Castle Creek will provide such
services as the Company shall reasonably request including: (i) assisting
the Company in the structuring of the financial aspects of a Transaction; (ii) identifying
alternative potential parties and contacting such parties as the Company may
designate; (iii) assist the Company in negotiating the terms of a
Transaction with such parties; (iv) assisting the Company in communicating
the strategic implications of the Transaction to the investment community; and (v) advising
the Company in connection with its efforts to raise any additional capital that
may be required to facilitate the Transaction. 
Further, Castle Creek and the Company expressly acknowledge that the
fees provided for under paragraph 3 for a completed Transaction were determined
in light of the fact that significant financial advisory services are rendered
to the Company in connection with potential Transactions that are not
successfully completed.  Thus, such fees
earned pursuant to paragraph 3 will serve as compensation for services rendered
in connection with a completed Transaction and in connection with potential
Transactions that are not successfully completed.  Further, such fees are in recognition of the
exclusive arrangement between Castle Creek and the Company, and Castle Creek’s
commitment to source and present opportunities in the Company’s geographic
market and niche for the Company’s sole consideration and decision before
presenting such opportunities to any third party.


 


2.             In connection with a proposed
Transaction, you will furnish Castle Creek with such material regarding the
business and financial condition of the Company as we reasonably request, all
of which will be accurate and complete in all material respects at the time
furnished in writing.  The Company will
also use its reasonable best efforts to assure that its personnel, consultants,
experts, attorneys and accountants are made available to Castle Creek upon
Castle Creek’s reasonable request in connection with services provided or to be
provided by Castle Creek.  During the
term of this Agreement, the Company shall


 

















 


promptly notify
Castle Creek of (i) any material changes in the business or financial
condition of the Company from the written information provided to Castle Creek,
and (ii) any material events or developments relating to the financial
condition or business operations or prospects of the Company and promptly make
available for Castle Creek’s review copies of all filings related to the
Transaction made by the Company with any regulatory agency and copies of all
press releases related to the Transaction issued by the Company.  We are relying, without independent verification,
on the accuracy and completeness of all information furnished to us in writing
by the Company or any other party or potential party to any Transaction.  Castle Creek agrees that all requests for
information from the Company will be directed only to the President, Chief
Financial Officer or General Counsel of the Company or such other persons as
the President shall specifically designate and that it will not treat
information obtained from any other person or source as having been provided by
the Company.


 


3.             In consideration of the services to be
provided hereunder, the Company agrees to pay to Castle Creek the following
cash fees:


 


(A)                              In the event that a sale of the Company
is completed, an amount equal to one percent (1.0%) of the Transaction Value
(as defined below) for the Transaction.


 


(B)                                In the event that an acquisition of or
investment in another financial institution is completed by the Company, an
amount based upon the following schedule will be owed to Castle Creek upon the
consummation of the acquisition or investment based upon the Transaction Value
for the Transaction, net of the cost of a “fairness opinion” if such opinion is
deemed necessary:


 


	
   

  	
   

  	
   

  	
   

  	
  Deal
  Value

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ($ in
  millions)

  	
   

  	
   

  	
   

  	
  Fees

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (1)

  	
   

  	
  If

  	
   

  	
  $0 < $20

  	
   

  	
  then

  	
   

  	
  1.0% of the Transaction
  Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  If

  	
   

  	
  Over $20

  	
   

  	
  then

  	
   

  	
  $200,000, plus 0.65% of
  the amount of the Transaction Value in excess of $20 million.

  



 


(C)                                In the event of a financing or
recapitalization, the fees will be determined in accordance with paragraph 8 below.


 


(D)                               Fees payable pursuant to paragraphs 3
(A), (B) and (C) shall be paid upon and only upon the closing of the
Transaction.


 


For purposes of this Agreement, “Transaction Value” means the sum of
(as applicable for the particular Transaction): (i) with respect to each
class of capital stock of the Company in the event of a sale of the Company or
of the financial institution which is acquired by the Company or in which the
Company invests, the aggregate consideration paid or payable for all shares of
such capital stock and for all shares of such classes issuable upon exercise of



 


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options, warrants or other rights, or conversion or exchange of
securities to the extent that such options are then exercisable; (ii) in
the case of an acquisition or sale, the aggregate liquidation value of any
preferred stock or other preferential interests redeemed or remaining
outstanding; (iii) the fair market value of any assets distributed to the
shareholders of the Company or such financial institution that is purchased, in
connection with the Transaction; and (iv) in the case of an asset purchase
or sale, the aggregate consideration paid or payable for the assets of the
Company or the assets of the financial institution.


 


The determination of the “aggregate consideration paid or payable” for
shares of any classes of capital stock in connection with the Transaction shall
include cash, securities (valued in accordance with the following paragraph),
or other assets or consideration paid or payable by the purchaser or any of its
affiliates, as the case may be, determined without regard to any allocations
between the Company or its affiliates in the event of a sale of the Company or
between the financial institution or its affiliates in the event such financial
institution is acquired by the Company or the Company invests in such financial
institution, including but not limited to (i) assets (net of debt or
payables) of the Company or such financial institution retained by the Company
or such financial institution or their respective stockholders and affiliates,
as the case may be (ii) any deferred installments of the purchase price, (iii) any
portion of the purchase price held in escrow subsequent to closing which is
payable pursuant to the terms of the escrow arrangement, irrespective of
whether such amounts are in fact paid, (iv) any
payments pursuant to earn-outs, royalties or other similar arrangements, (v) any
payments payable after closing upon the occurrence of certain events or
conditions or the satisfaction of certain earnings, sales levels or other
performance objectives which are agreed to on or before the closing,
irrespective of whether such amounts are in fact paid, (vii) the amount of
any extraordinary dividends or other extraordinary payments or distributions to
stockholders of the Company or the financial institution in connection with or
in anticipation of the Transaction, and (viii) consideration paid by the
purchaser or its affiliates as a deposit, reimbursement of expenses, liquidated
damages, walk-away fee or other arrangement.


 


In the event that all or any portion of the
Transaction Value for a Transaction is paid in stock or other securities,
deferred installments or other non-cash consideration, the amount of the fee
payable with respect to such items shall be determined on the basis of the fair
market cash equivalent value of such non-cash consideration as of the day
preceding the closing date of the Transaction as reasonably determined by
Castle Creek and the Company, provided that the value of securities (received
as consideration) which have an existing public trading market shall be
determined by the closing sale (trade) price on the closing date.


 


Any portion of the fee which is payable with
respect to any earn-out, royalty or similar arrangement where the amount
payable is not a certain amount, shall be calculated and paid at the closing
based upon the estimated net present value thereof as reasonably determined by
Castle Creek and the Company.


 


If a Transaction involves the acquisition of less
than all of outstanding securities of the Company, but securities representing
more than 50% of the combined voting power of the then outstanding securities
of the Company, then the fee payable pursuant to Section 3(A) shall
nonetheless be calculated as though all such equity securities had been so
acquired by the purchaser.


 


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4.             Regardless of whether a
Transaction is completed, the Company will reimburse Castle Creek, upon its
demand, for all reasonable out-of-pocket expenses (including travel expenses
and fees and disbursements of counsel retained by Castle Creek in connection
with this engagement).  In seeking such
reimbursement, Castle Creek shall provide an explanation of such charges.


 


5.             The
Company agrees to indemnify and hold Castle Creek harmless in accordance with
the terms and conditions of Appendix A attached hereto and made a part hereof
as though fully set forth in this Agreement. 
No termination or modification hereof, or completion of Castle Creek’s
engagement hereunder, shall limit or affect such indemnification.


 


6.             Castle Creek’s
services hereunder may be terminated by the Company or Castle Creek at any time
upon 30 days written notice, provided that Castle Creek shall be entitled to
any fees payable pursuant to Section 3 and Section 8 hereof in the
event that the Company completes a Transaction (i) on which Castle Creek
provided advice or participated in discussions with any of the investors in such
Transaction or (ii) with any of the parties as to which Castle Creek
advised the Company or with whom the Company engaged in discussions regarding a
possible Transaction prior to the termination of this Agreement, providing that
such Transaction is completed within eighteen months following the termination
of this Agreement.  In addition, Castle
Creek shall remain entitled to the reimbursement of fees and expenses under the
terms and conditions described in Section 4 hereof, to the extent the same
have been incurred on or prior to the date of such termination.  Furthermore, the provisions of this Section 6,
and Sections 5 (including Appendix A), 10, 11, 12, 13, 14, 15 and 16, as well
as the Confidentiality Agreement, shall survive any termination of this
Agreement.


 


7.             In order to
coordinate our efforts with respect to any Transaction for which the Company
intends to engage a financial advisor, during the period of our engagement
hereunder if the Company or its management receives an inquiry regarding a Transaction,
they will promptly advise Castle Creek of such inquiry in order that we can
evaluate such prospective party and its interest and assist the Company in any
resulting negotiations.


 


8.             Pursuant to
section 3(C) hereinabove, it is understood and agreed that if the Company
decides to pursue a financing or recapitalization Transaction for which Castle
Creek is to provide any of the financial advisory services described above in Section 1
hereof, the Company and Castle Creek shall negotiate in good faith acceptable
compensation for Castle Creek in consideration of such services, which
compensation will take into account, among other things, the results obtained
and the custom and practice among investment bankers acting in similar
situations.  The compensation owed to
Castle Creek in accordance with the fee structure agreed upon by the Company
and Castle Creek in respect of a financing or recapitalization Transaction
shall be paid to Castle Creek in cash upon the completion of any such
Transaction.  It is understood that no
separate fee will be owed to Castle Creek in consideration of services in
connection with a financing or recapitalization Transaction if such Transaction
is undertaken in connection with a Transaction described in Section 3(B) above.


 


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9.             It is
understood and agreed that Castle Creek will provide such other services that
may from time to time be mutually agreed upon by Castle Creek and the
Company.  Castle Creek expressly
acknowledges that it will not be compensated specifically for these services
other than the reimbursement for all reasonable out-of-pocket expenses, but
that such fees earned from acting as a financial advisor to the Company for a
Transaction will serve as compensation to Castle Creek for such non-Transaction
services rendered.  Such services
rendered to the Company not directly related to a specific Transaction may
include, but are not exclusive to (i) the development and preparation of
long term financial and strategic plans, (ii) assistance with investor and
public relations, and (iii) capital management advisory services.


 


10.           Except as
expressly provided herein, no fee paid or payable to Castle Creek or any of its
affiliates shall be used as an offset or credit against any other fee paid or
payable to Castle Creek or any of its affiliates.


 


11.           This Agreement,
along with the indemnity in Appendix A and the Confidentiality Agreement
attached hereto as Annex B, embody the sole terms of the agreement between the
Company and Castle Creek with respect to the subject matter hereof and
supersede all previous agreements, whether oral or written, between the Company
and Castle Creek with respect to the subject matter hereof.  This Agreement may not be altered, varied,
revised or amended, except by an instrument in writing signed by both the
Company and Castle Creek after the date first written above.  The Company and Castle Creek have not made
any other agreements or representations of any kind with respect to such
subject matter.


 


12.           This Agreement
shall be governed by and construed in accordance with the laws of the State of
California without regard to principles of conflict of laws.  Any right to trial by jury with respect to
any claim or proceeding related to or arising out of this engagement or any
transaction or conduct in connection herewith, is waived.  Any claim or dispute arising out of this
Agreement or the alleged breach thereof shall be submitted by the parties to
binding and nonappealable arbitration by the American Arbitration Association (“AAA”)
in San Diego, California, under the commercial rules then in effect for
the AAA, except as provided herein.  The
AAA shall recommend three arbitrators who are knowledgeable in the field of
investment banking.  The parties shall
agree upon one of the three arbitrators or, if no arbitrator is mutually agreed
upon, the AAA shall appoint one of the three arbitrators within 30 days of such
failure.  The award rendered by the
arbitrator shall include costs of arbitration, reasonable attorneys’ fees and
fees of experts and other witnesses, but shall not include punitive damages
against either party.  Each party shall
have the right to request the arbitrator to order reasonable and limited
discovery.  Notwithstanding this
provision, either party may seek appropriate injunctive relief.


 


13.           This Agreement
may be executed in counterparts, each of which shall be deemed an original and
all of which shall continue one and the same instrument.


 


14.           The obligations
of the Company hereunder shall be the joint and several obligations of the
entities comprising the term Company.


 


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15.           The Company
expressly acknowledges that Castle Creek has been retained solely as an advisor
to the Company, and not as an advisor to or agent of any other person, and that
the Company’s engagement of Castle Creek is not intended to confer rights upon
any persons not a party hereto (including shareholders, employees or creditors
of the Company) as against Castle Creek, Castle Creek’s affiliates or their
respective directors, officers, agents and employees. Any advice provided to the Company by Castle Creek pursuant to this
Agreement is solely for the information and assistance of the executive
management and Board of Directors of the Company.  Such advice shall be treated as confidential
information and shall not be disclosed to any third party except in accordance
with the terms of the Confidentiality Agreement.  Any reference to Castle Creek or to any
affiliate of Castle Creek in any release or communication to any party outside
the Company is subject to Castle Creek’s prior written approval, which approval
shall not be unreasonably withheld or delayed. 
If this Agreement is terminated prior to any release or communication,
no reference shall be made to Castle Creek without Castle Creek’s prior written
approval.


 


16.           Neither the
Company nor Castle Creek may assign, transfer, license, or sublicense its
rights under this Agreement without the other party’s prior written consent,
which may be granted or withheld in the other party’s sole and absolute
discretion.  Subject to the limitation in
this paragraph, this Agreement will inure to the benefit of and be binding upon
both the Company and Castle Creek and their respective successors and assigns.


 


17.           Castle Creek
represents that it has the necessary expertise to provide the services
contemplated by this Agreement and that the compensation provided for herein is
fair and reasonable and comparable to the compensation that would be charged by
an independent provider of such services with the same type, level and quality
of expertise.  The Company acknowledges
that the services contemplated herein will meet legitimate needs of the Company
and that it is in the best interests of the Company to obtain such services.


 


18.           After closing a
Transaction, Castle Creek shall have the right to place advertisements in
financial and other newspapers and other newspapers and journals at its own
expense describing its services to the Company under this Agreement, provided
that Castle Creek shall have submitted a copy of any such proposed
advertisements to the Company for its prior approval, which approval shall not
be unreasonably withheld or delayed.


 


[Signature Page Follows]


 


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Please confirm that the foregoing is in accordance
with your understanding by signing and returning to us the duplicates of this
Agreement and the related indemnification agreement which shall thereupon
constitute binding agreements.


 


Very
truly yours,


 


Castle Creek Financial
LLC


 


 


	
  By:

  	
  /s/
  William J. Ruh

  	
   

  
	
  Name:

  	
  William J. Ruh

  
	
  Title:

  	
  Executive Vice
  President

  



 


 


Accepted and agreed:


 


First Community Bancorp


 


on its behalf and on
behalf of the Company,


as defined above.


 


 


	
  By:

  	
  /s/
  Victor R. Santoro

  	
   

  
	
  Name:

  	
  Victor R. Santoro

  
	
  Title:

  	
  Executive Vice
  President and CFO

  



 


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