Exhibit
10.1


 


March 25, 2009


 


PacWest Bancorp


401 West “A” Street


San Diego, CA 92101


Attention: Victor R.
Santoro


 


Dear Vic:


 


This letter agreement (the “Agreement”) will confirm that, subject to the
terms and conditions contained herein, PacWest 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 or acquisition of deposit
bases, loan pools or failed institutions from the FDIC; (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 January 7,
2008.


 


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.  While any proposed Transaction may be pending
that was


 

















 


initiated 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 Chief Executive Officer, Chief Financial Officer
or General Counsel of the Company or such other persons as the Chief Executive
Officer 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 


 


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shares of such
capital stock and for all shares of such classes issuable upon exercise of
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 and 15 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.  To the
extent legally permissible, 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. 
This Agreement may be executed by the exchange of facsimile signatures,
which shall have the same force and effect as if original signatures had been
exchanged.


 


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14.                                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. 
Castle Creek shall not refer to the Company in any written materials
(other than performance overviews and marketing materials related thereto that
may be distributed to both prospective and current investors and clients of
Castle Creek and its affiliates) without the Company’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. 
Notwithstanding the foregoing, nothing herein is intended to prevent the
Company from complying with any disclosure obligations under applicable law,
without seeking Castle Creek’s consent.


 


15.                                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.


 


16.                                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.


 


17.                                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:

  	
   

  
	
   

  	
   

  
	
  PacWest 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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