Document:

Exhibit
10.1

 

AGREEMENT AND PLAN OF MERGER

 

BY AND BETWEEN

 

FB BANCORP

 

AND

 

FIRST BUSINESS BANK, NATIONAL ASSOCIATION

 

AND

 

1ST PACIFIC BANCORP

 

AND

 

1ST PACIFIC BANK OF CALIFORNIA

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  CERTAIN DEFINITIONS

  	
  3

  
	
   

  	
  1.1

  	
  Certain
  Definitions

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE MERGER

  	
  11

  
	
   

  	
  2.1

  	
  Merger

  	
  11

  
	
   

  	
  2.2

  	
  Effective
  Time

  	
  12

  
	
   

  	
  2.3

  	
  Articles of
  Incorporation and Bylaws

  	
  12

  
	
   

  	
  2.4

  	
  Directors
  and Officers of Surviving Corporation

  	
  12

  
	
   

  	
  2.5

  	
  Effects
  of the Merger

  	
  13

  
	
   

  	
  2.6

  	
  Intentionally
  omitted

  	
  13

  
	
   

  	
  2.7

  	
  Possible
  Alternative Structures

  	
  13

  
	
   

  	
  2.8

  	
  Bank
  Holding Company Merger and Bank Merger

  	
  13

  
	
   

  	
  2.9

  	
  Additional
  Actions

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONVERSION OF SHARES

  	
  14

  
	
   

  	
  3.1

  	
  Conversion
  of 1st Pacific Bancorp Common Stock; Merger Consideration

  	
  14

  
	
   

  	
  3.2

  	
  Dissenting
  Shares

  	
  15

  
	
   

  	
  3.3

  	
  Surrender
  of Certificates and Payment of Merger Consideration; Earn Out

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

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

  	
  19

  
	
   

  	
  4.1

  	
  Standard

  	
  19

  
	
   

  	
  4.2

  	
  Organization

  	
  19

  
	
   

  	
  4.3

  	
  Capitalization

  	
  20

  
	
   

  	
  4.4

  	
  Authority;
  No Violation

  	
  21

  
	
   

  	
  4.5

  	
  Consents

  	
  22

  
	
   

  	
  4.6

  	
  Financial
  Statements

  	
  22

  
	
   

  	
  4.7

  	
  Taxes

  	
  24

  
	
   

  	
  4.8

  	
  Intentionally
  omitted

  	
  24

  
	
   

  	
  4.9

  	
  Material
  Contracts; Leases; Defaults

  	
  24

  
	
   

  	
  4.10

  	
  Ownership
  of Property; Insurance Coverage

  	
  26

  
	
   

  	
  4.11

  	
  Legal
  Proceedings

  	
  27

  
	
   

  	
  4.12

  	
  Compliance
  With Applicable Law

  	
  28

  
	
   

  	
  4.13

  	
  Employee
  Benefit Plans

  	
  29

  
	
   

  	
  4.14

  	
  Brokers,
  Finders and Financial Advisors

  	
  31

  
	
   

  	
  4.15

  	
  Environmental
  Matters

  	
  31

  
	
   

  	
  4.16

  	
  Loan
  Portfolio

  	
  33

  
	
   

  	
  4.17

  	
  Securities
  Law Documents

  	
  34

  
	
   

  	
  4.18

  	
  Related
  Party Transactions

  	
  34

  
	
   

  	
  4.19

  	
  Deposits

  	
  34

  
	
   

  	
  4.20

  	
  Antitakeover
  Provisions Inapplicable; Required Vote

  	
  34

  

 

i

 

	
   

  	
  4.21

  	
  Registration
  Obligations

  	
  34

  
	
   

  	
  4.22

  	
  Risk
  Management Instruments

  	
  34

  
	
   

  	
  4.23

  	
  Fairness
  Opinion

  	
  35

  
	
   

  	
  4.24

  	
  Intellectual
  Property

  	
  35

  
	
   

  	
  4.25

  	
  Labor
  Matters

  	
  35

  
	
   

  	
  4.26

  	
  1st
  Pacific Bancorp Information Supplied

  	
  35

  
	
   

  	
  4.27

  	
  Regulatory
  Orders

  	
  36

  
	
   

  	
  4.28

  	
  Disclaimer
  of Other Representations and Warranties

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  REPRESENTATIONS AND WARRANTIES OF FB BANCORP AND FIRST
  BUSINESS BANK

  	
  36

  
	
   

  	
  5.1

  	
  Standard

  	
  36

  
	
   

  	
  5.2

  	
  Organization

  	
  37

  
	
   

  	
  5.3

  	
  Capitalization

  	
  37

  
	
   

  	
  5.4

  	
  Authority;
  No Violation

  	
  38

  
	
   

  	
  5.5

  	
  Consents

  	
  38

  
	
   

  	
  5.6

  	
  Financing
  Commitments

  	
  39

  
	
   

  	
  5.7

  	
  Licenses
  and Permits

  	
  39

  
	
   

  	
  5.8

  	
  Intentionally
  Omitted

  	
  39

  
	
   

  	
  5.9

  	
  Stock
  Purchase

  	
  39

  
	
   

  	
  5.10

  	
  FB
  Bancorp and First Business Bank Information Supplied

  	
  40

  
	
   

  	
  5.11

  	
  Intentionally
  Omitted

  	
  40

  
	
   

  	
  5.12

  	
  Funds
  for Stock Purchase on Deposit with First Business Bank

  	
  40

  
	
   

  	
  5.13

  	
  Antitakeover
  Provisions Inapplicable; Required Vote

  	
  40

  
	
   

  	
  5.14

  	
  Legal
  Proceedings

  	
  40

  
	
   

  	
  5.15

  	
  Disclaimer
  of Other Representations and Warranties

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  COVENANTS OF 1ST PACIFIC BANCORP

  	
  41

  
	
   

  	
  6.1

  	
  Conduct
  of Business

  	
  41

  
	
   

  	
  6.2

  	
  Current
  Information

  	
  45

  
	
   

  	
  6.3

  	
  Access
  to Properties and Records

  	
  46

  
	
   

  	
  6.4

  	
  Financial
  and Other Statements

  	
  47

  
	
   

  	
  6.5

  	
  Maintenance
  of Insurance

  	
  47

  
	
   

  	
  6.6

  	
  Disclosure
  Supplements

  	
  48

  
	
   

  	
  6.7

  	
  Consents
  and Approvals of Third Parties

  	
  48

  
	
   

  	
  6.8

  	
  All
  Commercially Reasonable Efforts

  	
  48

  
	
   

  	
  6.9

  	
  Failure
  to Fulfill Conditions

  	
  48

  
	
   

  	
  6.10

  	
  No
  Solicitation

  	
  49

  
	
   

  	
  6.11

  	
  Reserves
  and Merger-Related Costs

  	
  52

  
	
   

  	
  6.12

  	
  Board
  of Directors and Committee Meetings

  	
  53

  
	
   

  	
  6.13

  	
  Cooperation
  with Bank Holding Company Merger and Bank Merger

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  COVENANTS OF FB BANCORP AND FIRST BUSINESS BANK

  	
  53

  
	
   

  	
  7.1

  	
  Conduct
  of Business

  	
  53

  
	
   

  	
  7.2

  	
  Disclosure
  Supplements

  	
  53

  
	
   

  	
  7.3

  	
  Consents
  and Approvals of Third Parties

  	
  54

  

 

ii

 

	
   

  	
  7.4

  	
  All
  Reasonable Efforts

  	
  54

  
	
   

  	
  7.5

  	
  Failure
  to Fulfill Conditions

  	
  54

  
	
   

  	
  7.6

  	
  Directors
  and Officers Indemnification and Insurance

  	
  54

  
	
   

  	
  7.7

  	
  Change
  of Control Benefits Approval

  	
  55

  
	
   

  	
  7.8

  	
  Reasonable
  Regulatory Restrictions

  	
  55

  
	
   

  	
  7.9

  	
  Restrictions
  on Transfer

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  REGULATORY AND OTHER MATTERS

  	
  56

  
	
   

  	
  8.1

  	
  Proxy
  Statement-Prospectus

  	
  56

  
	
   

  	
  8.2

  	
  Shareholders
  Meeting

  	
  57

  
	
   

  	
  8.3

  	
  Regulatory
  Approvals

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  CLOSING CONDITIONS

  	
  58

  
	
   

  	
  9.1

  	
  Conditions
  to Each Party’s Obligations under this Agreement

  	
  58

  
	
   

  	
  9.2

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

  	
  59

  
	
   

  	
  9.3

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

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  THE CLOSING

  	
  61

  
	
   

  	
  10.1

  	
  Time
  and Place

  	
  61

  
	
   

  	
  10.2

  	
  Deliveries
  at the Closing

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  TERMINATION, AMENDMENT AND WAIVER

  	
  62

  
	
   

  	
  11.1

  	
  Termination

  	
  62

  
	
   

  	
  11.2

  	
  Effect
  of Termination

  	
  63

  
	
   

  	
  11.3

  	
  Amendment,
  Extension and Waiver

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  EMPLOYEE BENEFITS

  	
  65

  
	
   

  	
  12.1

  	
  Employee
  Benefits

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  MISCELLANEOUS

  	
  66

  
	
   

  	
  13.1

  	
  Confidentiality

  	
  66

  
	
   

  	
  13.2

  	
  Expenses

  	
  66

  
	
   

  	
  13.3

  	
  Public
  Announcements

  	
  66

  
	
   

  	
  13.4

  	
  Survival

  	
  66

  
	
   

  	
  13.5

  	
  Notices

  	
  67

  
	
   

  	
  13.6

  	
  Parties
  in Interest

  	
  67

  
	
   

  	
  13.7

  	
  Complete
  Agreement

  	
  68

  
	
   

  	
  13.8

  	
  Counterparts

  	
  68

  
	
   

  	
  13.9

  	
  Severability

  	
  68

  
	
   

  	
  13.10

  	
  Governing
  Law; Venue

  	
  68

  
	
   

  	
  13.11

  	
  Intentionally
  omitted

  	
  68

  
	
   

  	
  13.12

  	
  Interpretation

  	
  68

  
	
   

  	
  13.13

  	
  Specific Performance

  	
  69

  

 

iii

 

EXHIBITS

 

	
  Exhibit A:

  	
  Agreement
  and Plan of Merger

  
	
   

  	
   

  
	
  Exhibit B:

  	
  Agreement
  to Merge and Plan of Bank Holding Company Formation

  
	
   

  	
   

  
	
  Exhibit C:

  	
  Agreement
  and Plan of Bank Holding Company Merger

  
	
   

  	
   

  
	
  Exhibit D:

  	
  Agreement
  and Plan of Bank Merger

  
	
   

  	
   

  
	
  Exhibit E:

  	
  Voting
  Agreement

  
	
   

  	
   

  
	
  Exhibit F:

  	
  Earn
  Out Loans

  
	
   

  	
   

  
	
  Exhibit G:

  	
  Form of
  Termination of Employment Agreement

  
	
   

  	
   

  
	
  Exhibit H:

  	
  Shareholder
  Agreement

  
	
   

  	
   

  
	
  Exhibit I:

  	
  Directors Agreement

  

 

iv

 

AGREEMENT AND PLAN OF MERGER

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

ARTICLE I

CERTAIN DEFINITIONS

 

1.1          Certain Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Agreement”
means this agreement and any amendment hereto.

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“CGCL” shall
mean the California General Corporation Law.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

“Nasdaq”
shall mean the Nasdaq Global Select Market.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

“Termination
Date” shall mean December 31, 2009.

 

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

 

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

 

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

 

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

 

ARTICLE II

THE MERGER

 

2.1           Merger

 

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

 

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

 

11

 

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

 

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

 

2.2           Effective
Time

 

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

 

2.3           Articles of
Incorporation and Bylaws

 

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

 

2.4           Directors
and Officers of Surviving Corporation

 

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

 

12

 

2.5           Effects
of the Merger

 

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

 

2.6           Intentionally
omitted.

 

2.7           Possible
Alternative Structures

 

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

 

2.8           Bank
Holding Company Merger and Bank Merger

 

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

 

2.9           Additional
Actions

 

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

 

13

 

ARTICLE III

CONVERSION OF SHARES

 

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

 

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

 

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

 

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

 

3.1.3       Intentionally omitted.

 

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

 

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

 

14

 

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

 

3.2           Dissenting
Shares

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

3.3.4       Calculation and Payment of the Earn Out Amount

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

ARTICLE IV

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

 

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

 

4.1           Standard

 

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

 

4.2           Organization

 

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

 

19

 

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

 

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

 

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

 

4.3           Capitalization

 

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

 

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

 

20

 

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

 

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

 

4.4           Authority;
No Violation

 

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

 

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

 

21

 

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

 

4.5           Consents

 

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

 

4.6           Financial
Statements

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

23

 

4.7           Taxes

 

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

 

4.8           Intentionally
omitted

 

4.9           Material
Contracts; Leases; Defaults

 

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

 

24

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

4.10        Ownership of Property; Insurance
Coverage

 

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

 

26

 

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

 

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

 

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

 

4.11        Legal Proceedings

 

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

 

27

 

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

 

4.12        Compliance With Applicable Law

 

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

 

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

 

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

 

28

 

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

 

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

 

4.13        Employee Benefit Plans

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

4.14        Brokers, Finders and Financial
Advisors

 

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

 

4.15        Environmental Matters

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

4.16                        Loan
Portfolio

 

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

 

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

 

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

 

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

 

33

 

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

 

4.17                        Securities
Law Documents

 

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

 

4.18                        Related
Party Transactions

 

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

 

4.19                        Deposits

 

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

 

4.20                        Antitakeover
Provisions Inapplicable; Required Vote

 

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

 

4.21                        Registration
Obligations

 

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

 

4.22                        Risk
Management Instruments

 

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

 

34

 

4.23                        Fairness
Opinion

 

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

 

4.24                        Intellectual
Property

 

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

 

4.25                        Labor
Matters

 

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

 

4.26                        1st
Pacific Bancorp Information Supplied

 

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

 

35

 

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

 

4.27                        Regulatory
Orders

 

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

 

4.28                        Disclaimer
of Other Representations and Warranties.

 

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

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF FB BANCORP AND FIRST
BUSINESS BANK

 

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

 

5.1                               Standard

 

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

 

36

 

5.2                              Organization

 

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

 

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

 

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

 

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

 

5.3                              Capitalization

 

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

 

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

 

37

 

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

 

5.4                               Authority;
No Violation

 

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

 

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

 

5.5                               Consents

 

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

 

38

 

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

 

5.6                               Financing
Commitments.

 

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

 

5.7                               Licenses
and Permits.

 

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

 

5.8                               Intentionally
Omitted.

 

5.9                               Stock
Purchase

 

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

 

39

 

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

 

5.10                        FB
Bancorp and First Business Bank Information Supplied

 

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

 

5.11                        Intentionally
Omitted.

 

5.12                        Funds
for Stock Purchase on Deposit with First Business Bank

 

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

 

5.13                        Antitakeover
Provisions Inapplicable; Required Vote

 

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

 

5.14                        Legal
Proceedings

 

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

 

5.15                        Disclaimer
of Other Representations and Warranties.

 

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

 

40

 

ARTICLE VI

COVENANTS OF 1ST PACIFIC BANCORP

 

6.1                               Conduct of Business

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

(CC)                      agree to do any of the foregoing.

 

6.2                               Current Information

 

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

 

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

 

45

 

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

 

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

 

6.3                               Access to Properties and Records

 

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

 

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

 

46

 

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

 

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

 

6.4                               Financial and Other Statements

 

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

 

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

 

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

 

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

 

6.5                               Maintenance of Insurance

 

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

 

47

 

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

 

6.6                               Disclosure Supplements

 

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

 

6.7                               Consents and Approvals of Third
Parties

 

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

 

6.8                               All Commercially Reasonable Efforts

 

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

 

6.9                               Failure to Fulfill Conditions

 

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

 

48

 

6.10                        No Solicitation

 

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

 

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

 

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

 

49

 

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

 

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

 

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

 

50

 

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

 

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

 

51

 

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

 

6.11                        Reserves and
Merger-Related Costs

 

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

 

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

 

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

 

52

 

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

 

6.12                        Board of Directors and
Committee Meetings

 

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

 

6.13                        Cooperation with Bank
Holding Company Merger and Bank Merger

 

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

 

ARTICLE VII

COVENANTS OF FB BANCORP AND FIRST BUSINESS BANK

 

7.1                               Conduct of Business

 

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

 

7.2                               Disclosure Supplements

 

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

 

53

 

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

 

7.3                               Consents and Approvals
of Third Parties

 

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

 

7.4                               All Reasonable Efforts

 

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

 

7.5                               Failure to Fulfill
Conditions

 

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

 

7.6                               Directors and Officers
Indemnification and Insurance

 

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

 

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

 

54

 

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

 

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

 

7.7                               Change of Control
Benefits Approval

 

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

 

7.8                               Reasonable Regulatory
Restrictions

 

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

 

7.9                               Restrictions on Transfer

 

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

 

55

 

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

 

ARTICLE VIII

REGULATORY AND OTHER MATTERS

 

8.1                               Proxy
Statement-Prospectus

 

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

 

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

 

56

 

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

 

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

 

8.2                               Shareholders Meeting

 

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

 

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

 

8.3                               Regulatory Approvals

 

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

 

57

 

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

 

ARTICLE IX

CLOSING CONDITIONS

 

9.1                               Conditions to Each Party’s
Obligations under this Agreement

 

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

 

9.1.1                                     Intentionally omitted.

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

59

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

60

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE X

THE CLOSING

 

10.1                        Time and Place

 

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

 

10.2                        Deliveries at the
Closing

 

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

 

61

 

ARTICLE XI

TERMINATION, AMENDMENT AND WAIVER

 

11.1                        Termination

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

62

 

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

 

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

 

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

 

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

 

11.2                        Effect of Termination

 

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

 

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

 

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

 

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

 

63

 

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

 

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

 

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

 

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

 

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

 

11.3                        Amendment, Extension and Waiver

 

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

 

64

 

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

 

ARTICLE XII

EMPLOYEE BENEFITS

 

12.1                        Employee Benefits.

 

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

 

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

 

65

 

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

 

ARTICLE XIII

MISCELLANEOUS

 

13.1                        Confidentiality

 

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

 

13.2                        Expenses

 

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

 

13.3                        Public Announcements

 

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

 

13.4                        Survival

 

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

 

66

 

13.5                        Notices

 

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

 

	
  If to First Business Bank,
  to:

  	
   

  	
  Mr. Nathan L. Rogge

  President and Chief
  Executive Officer

  12265
  El Camino Real, Suite #100

  San Diego,
  California 92130

  Phone   (858)
  847-4784

  Fax       (858)
  847-4781

  
	
   

  	
   

  	
   

  
	
  With required copies to:

  	
   

  	
  S. Alan Rosen, Esq.

  Horgan, Rosen,
  Beckham & Coren, LLP

  23975 Park Sorrento,
  Suite 200

  Calabasas, California
  91302

  Phone:  (818)
  591-2121

  Fax:      (818)
  591- 3838

  
	
   

  	
   

  	
   

  
	
  If to 1st Pacific Bancorp
  or

  	
   

  	
  1st Pacific Bank, to: Ronald
  J. Carlson

  President and Chief
  Executive Officer

  9333 Genesee Avenue #300

  San Diego, California

  Phone:  (858)
  875-2005

  Fax:      (858)
  875-2016

  
	
   

  	
   

  	
   

  
	
  With required copies to:

  	
   

  	
  Kurt L.
  Kicklighter, Esq.

  Luce, Forward,
  Hamilton & Scripps, LLP

  600 West Broadway,
  Suite 2600

  San Diego, CA
  92101-3372

  Phone:  (619)
  699-2526

  Fax:      (858)
  532-4312

  

 

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

 

13.6                        Parties in Interest

 

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

 

67

 

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

 

13.7                        Complete Agreement

 

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

 

13.8                        Counterparts

 

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

 

13.9                        Severability

 

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

 

13.10                 Governing Law; Venue

 

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

 

13.11                 Intentionally omitted.

 

13.12                 Interpretation

 

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

 

68

 

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

 

13.13                 Specific Performance

 

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

 

69

 

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

 

	
   

  	
  FB
  BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Nathan L. Rogge

  
	
   

  	
  Name:

  	
  Nathan L. Rogge

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lester Machado

  
	
   

  	
  Name:

  	
  Lester Machado

  
	
   

  	
  Title:

  	
  Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  FIRST
  BUSINESS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Nathan L. Rogge

  
	
   

  	
  Name:

  	
  Nathan L. Rogge

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lester Machado

  
	
   

  	
  Name:

  	
  Lester Machado

  
	
   

  	
  Title:

  	
  Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  1ST
  PACIFIC BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald J. Carlson

  
	
   

  	
  Name:

  	
  Ronald J. Carlson

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Robert Cange

  
	
   

  	
  Name:

  	
  Robert Cange

  
	
   

  	
  Title:

  	
  Corporate Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  1ST
  PACIFIC BANK OF CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald J. Carlson

  
	
   

  	
  Name:

  	
  Ronald J. Carlson

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Robert Cange

  
	
   

  	
  Name:

  	
  Robert Cange

  
	
   

  	
  Title:

  	
  Corporate Secretary 

  

 

70Exhibit 10.2

 

SHAREHOLDER AGREEMENT

 

This Shareholder Agreement (this “Agreement”)
is made and entered into this         
day of                             ,
2009, by and between 1st Pacific Bancorp, a California corporation (“1st Pacific Bancorp”) and 1st
Pacific Bank of California, a California state-chartered bank and the
wholly-owned subsidiary of 1st Pacific Bancorp (“1st
Pacific Bank,” and together with 1st Pacific Bancorp, “1st Pacific”) on the one hand, and
Ernest Auerbach, an individual (“Shareholder”)
on the other hand, with reference to the following facts:

 

RECITALS

 

A.                                   Shareholder has agreed to and intends to
purchase approximately fifteen million dollars ($15,000,000) of shares of the
no par value common stock of FB Bancorp (the “Stock
Purchase”) and has deposited the funds required for the Stock
Purchase into First Business Bank, National Association, a national banking
association (“First Business Bank”).

 

B.                                     First Business Bank, FB Bancorp, a
California corporation (“FB Bancorp”),
1st Pacific Bancorp and 1st Pacific Bank have entered into that certain
Agreement and Plan of Merger dated as of this date (the “Reorganization
Agreement”), pursuant to which: (i) FB Bancorp and First
Business Bank will reorganize and FB Bancorp will become the bank holding
company for First Business Bank (the “Bank Holding Company
Formation”); (ii) immediately thereafter, FB Bancorp will
cause the merger of a wholly-owned merger subsidiary with and into 1st Pacific
Bancorp (the “Merger”), with 1st Pacific
Bancorp as the resultant or surviving corporation in the Merger (the “Surviving Corporation”); (iii) immediately
thereafter, the Surviving Corporation will merge with FB Bancorp (the “Bank Holding Company Merger”) with
the Surviving Corporation as the resultant or surviving bank holding company
(the “Surviving Bank Holding Company”)
for First Business Bank and 1st Pacific Bank; and (iv) immediately
thereafter, the Surviving Bank Holding Company will cause the merger of First
Business Bank with 1st Pacific Bank (the “Bank Merger”)
with 1st Pacific Bank as the resultant or surviving bank in the Bank Merger
(the “Surviving Bank”).

 

C.                                     Shareholder is the largest shareholder in
each of First Business Bank and FB Bancorp and will benefit significantly from
the Reorganization Agreement and the transactions contemplated thereby.

 

D.                                    As a condition to its willingness to
enter into the Reorganization Agreement, and in reliance on Shareholder’s
representations, warranties, covenants and agreements hereunder, 1st Pacific
has requested that Shareholder agree, and Shareholder has agreed, to enter into
this Agreement and to perform Shareholder’s duties and obligations hereunder.

 

NOW, THEREFORE, in consideration of the promises and
of the representations, warranties and covenants, agreements and conditions
contained herein and in the Reorganization Agreement, the parties hereto agree
as follows:

 

1

 

AGREEMENT

 

1.                                      AGREEMENTS OF SHAREHOLDER

 

1.1.                            Agreement to Vote. 
At any meeting of shareholders of First Business Bank and/or FB Bancorp
to approve the Stock Purchase, the Merger, the Reorganization Agreement and the
transactions contemplated thereby, Shareholder shall vote or cause to be voted
all shares of: (i) common stock of FB Bancorp, no par value per share (“FB Bancorp Stock”) and (ii) common
stock of First Business Bank, $5.00 par value per share (“First
Business Bank Common Stock” and together with FB Bancorp Stock, “FBB Stock”), owned by Shareholder
and any other shares of FBB Stock hereafter acquired by Shareholder in favor
of, and to approve, the principal terms of the Stock Purchase, Bank Holding
Company Formation, Merger and any other matter contemplated by the
Reorganization Agreement which requires the approval of the shareholders of
First Business Bank and/or FB Bancorp.

 

1.2.                            Restrictions on Dispositions. 
Shareholder agrees that, except with the prior written consent of 1st
Pacific Bancorp, which may be withheld in its sole and absolute discretion,
Shareholder will not pledge nor otherwise encumber, sell, assign or otherwise
dispose of any shares of FBB Stock currently owned or acquired by Shareholder
after the date of this Agreement.

 

1.3.                            Cooperation. 
Shareholder agrees to cooperate fully with 1st Pacific in connection
with the Bank Holding Company Formation and the Stock Purchase, including
providing all information reasonably requested by the regulatory authorities on
a timely basis in connection with Shareholder’s applications for approval as
the controlling shareholder of the Surviving Bank Holding Company.

 

1.4.                            Covenant to Elect Former 1st Pacific
Directors.  Pursuant to Section 2.4 of the
Reorganization Agreement, two board members of 1st Pacific Bancorp immediately
prior to the effective time of the Merger (“1st
Pacific Directors”) will be invited to join the board of
directors of Surviving Corporation, which shall become the directors of
Surviving Bank Holding Company. 
Shareholder agrees to vote, or cause to be voted, all shares of FBB Stock
owned by Shareholder and any other shares of FBB Stock hereafter acquired by
Shareholder, from time to time and at all times, in whatever manner as shall be
necessary to ensure that at each annual or special meeting of shareholders at
which an election of directors is held or pursuant to any written consent of
the shareholders, the 1st Pacific Directors shall be elected to the board of
directors of Surviving Corporation and Surviving Bank Holding Company; provided
however, that such obligation shall only apply if the 1st Pacific Directors are
nominated for re-election by the Surviving Corporation’s board of directors and
they consent to serve; and provided further, that such obligation shall
terminate upon the expiration of the Earn Out Period (as defined in the
Reorganization Agreement).

 

1.5.                            Reasonable Restrictions. 
Shareholder agrees to accept all reasonable regulatory restrictions
imposed by any Federal or state banking regulator including, but not limited
to, the Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and the
California Department of Financial Institutions, which regulates 1st Pacific
Bank or First Business Bank, or any of their respective holding companies or
subsidiaries, as the case may be, in connection with the Stock Purchase and the
Holding Company Formation; provided, however, Shareholder shall not be
obligated to 

 

2

 

consummate the Stock
Purchase or the Bank Holding Company Formation to the extent that Shareholder
reasonably determines, in good faith, that any one or more restrictions,
individually or when aggregated, as in effect or to be in effect as of the
closing of the Bank Holding Company Merger, with respect to Shareholder would
be material and adverse to Shareholder’s financial condition or business plans,
it being understood and agreed that any regulatory requirement to increase
Shareholder’s financial commitment to the consummation of the Bank Holding
Company Formation and Stock Purchase beyond fifteen million dollars
($15,000,000) shall be deemed material and adverse to Shareholder.

 

1.6.                            General Conduct. 
During the period from the date of this Agreement to the Effective Time
(as defined in the Reorganization Agreement), except with the written consent
of 1st Pacific Bancorp and 1st Pacific Bank, which may be withheld in their
sole and absolute discretion, Shareholder will not voluntarily take any action
that would: (i) adversely affect the ability of Shareholder, First
Business Bank or FB Bancorp to obtain the Regulatory Approvals (as defined in
the Reorganization Agreement) or materially increase the period of time
necessary to obtain such approvals; (ii) adversely affect his ability to
perform his covenants and agreements under this Agreement; (iii) result in
the representations and warranties contained in Article V of the
Reorganization Agreement not being true and correct on the date of this
Agreement or at any future date on or prior to the Closing Date (as defined in
the Reorganization Agreement) or in any of the conditions set forth in Article IX
of the Reorganization Agreement not being satisfied; or (iv) cause or
allow (to the extent of Shareholder’s power and authority as a shareholder)
First Business Bank or FB Bancorp to take any action that would result in the
representations and warranties contained in Article V of the
Reorganization Agreement not being true and correct on the date of this
Agreement or at any future date on or prior to the Closing Date (as defined in
the Reorganization Agreement) or in any of the conditions set forth in Article IX
of the Reorganization Agreement not being satisfied.

 

2.                                      REPRESENTATIONS AND
WARRANTIES OF SHAREHOLDER

 

Shareholder represents and warrants to and agrees with
1st Pacific as follows:

 

2.1.                            Capacity.  Shareholder
has all the requisite capacity and authority to enter into and perform
Shareholder’s obligations under this Agreement.

 

2.2.                            Binding Agreement.  This
Agreement constitutes the valid and binding obligation of Shareholder, except
as the enforcement hereof may be limited by general principles of equity.

 

2.3.                            Non-Contravention.  The
execution and delivery of this Agreement by Shareholder does not, and the
performance by Shareholder of Shareholder’s obligations hereunder and the
consummation by Shareholder of the transactions contemplated hereby will not,
violate or conflict with or constitute a default under any agreement,
instrument, contract or other obligation or any order; arbitration award,
judgment or decree to which Shareholder is a party or by which Shareholder is
bound, or any statute, rule or regulation to which Shareholder or any of
Shareholder’s property is subject.

 

2.4.                            Ownership of Shares.  Schedule 1 hereto correctly
sets forth the number of shares of FB Bancorp Stock and First Business Bank
Common Stock owned by Shareholder, or with 

 

3

 

respect to which
Shareholder has voting power or beneficial ownership, as of the date hereof,
divided by the type of stock.  Shareholder
has good title to all of the shares of FBB Stock indicated as owned by
Shareholder in the capacity set forth on Schedule 1
as of the date hereof and such shares of FBB Stock are so owned free and clear
of any liens, security interests, charges or other encumbrances, except as set
forth in Schedule 1.  Shareholder neither owns nor has voting power
over any equity or voting securities of First Business Bank or FB Bancorp other
than as set forth on Schedule 1.

 

2.5.                            Deposit.  Shareholder has
deposited approximately fifteen million dollars ($15,000,000) (the “Funds”) into an account at First
Business Bank, which Funds are designated for use in the Stock Purchase.  Neither such account nor such Funds therein
is currently restricted or pledged in any manner and such Funds will not be
withdrawn, pledged or transferred without the written consent of 1st Pacific
Bancorp, except to consummate the Stock Purchase.  Shareholder has provided to 1st Pacific
Bancorp a full, complete and accurate copy of the bank statement evidencing the
deposit and status of the account as of the date of this Agreement.

 

3.                                      TERMINATION

 

3.1.                            Termination Date. 
This Agreement shall terminate and be of no further force and effect
upon the earlier of: (i) the termination of the Reorganization Agreement,
or (ii) the expiration of the Earn Out Period (as defined in the
Reorganization Agreement).  Consummation
of the Merger and the other matters contemplated by the Reorganization
Agreement shall not terminate this Agreement.

 

3.2.                            Effect of Termination. 
Upon the valid termination of this Agreement in accordance with Section 3.1 hereof, the
respective obligations of the parties hereto shall immediately become void and
have no further force or effect.

 

4.                                      EQUITABLE RELIEF. 
Shareholder acknowledges and agrees that 1st Pacific’s remedies at law
for breach of any of the provisions of this Agreement may be inadequate and, in
recognition of this fact, Shareholder agrees that, in the event of such breach,
in addition to any remedies at law it may have, 1st Pacific, without posting
any bond, shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy that may be available. Shareholder further
acknowledges that should Shareholder violate any of the provisions of this
Agreement, it will be difficult to determine the amount of damages resulting to
1st Pacific and that in addition to any other remedies it may have, 1st Pacific
shall be entitled to temporary and permanent injunctive relief without the
necessity of proving damages.

 

5.                                      ACKNOWLEDGEMENT. 
Each of Shareholder and 1st Pacific acknowledges and agrees that the
covenants and agreements contained in this Agreement have been negotiated in
good faith by the parties, are reasonable and are not more restrictive or
broader than necessary to protect the interests of the parties thereto, and
would not achieve their intended purpose if they were on different terms or for
periods of time shorter than the periods of time provided herein or applied in
more restrictive geographical areas than are provided herein. Shareholder
further acknowledges that 1st Pacific would not enter into the Reorganization
Agreement and the transactions contemplated thereby in the absence of the
covenants and agreements contained in this Agreement and that such covenants
and agreements are essential to protect the value of the Reorganization
Agreement to 1st Pacific.

 

4

 

6.                                      MISCELLANEOUS

 

6.1.                            Expenses.  Each party
hereto shall pay its own costs and expenses, including, without limitation,
those of its attorneys and accountants, in connection with this Agreement and
transactions covered and contemplated hereby.

 

6.2.                            Notices.  All notices,
demands or other communications hereunder shall be in writing and be made by (a)
hand delivery; (b) overnight mail; (c) United States mail, first
class, certified or postage prepaid; or (d) facsimile transmission, and
shall be deemed to have been duly given (i) on the date of service if
delivered by hand or facsimile transmission (provided that telecopied notices
are also mailed by United States mail, first class, certified or registered,
postage prepaid); (ii) on the next day if delivered by overnight mail; or
first class, certified or registered, postage prepaid, and properly addressed
as follows:

 

(a)                                  If to 1st Pacific:

Ronald
J. Carlson

President
and Chief Executive Officer

1st
Pacific Bank of California

9333
Genesee Avenue #300

San Diego,
California

Phone:           (858) 875-2005

Fax:                         (858) 875-2016

 

(b)                                 If to Shareholder:

to the address noted on the final page hereof.

 

The persons or addresses to which mailings or
deliveries shall be made may change from time to time by notice given pursuant
to the provisions of this Section 6.2.

 

6.3.                            Successors and Assigns. 
All terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective transferees,
successors and assigns; provided, however, that, except as otherwise
contemplated herein, this Agreement and all rights, privileges, duties and
obligations of the parties hereto may not be assigned or delegated by
Shareholder without the prior written consent of 1st Pacific and any purported
assignment in violation of this Section 6.3
shall be null and void.

 

6.4.                            Third Party Beneficiaries. 
Each party hereto intends that this Agreement shall not benefit, or
create any right or cause of action in or on behalf of, any person other than the
parties hereto, except that Ronald J. Carlson and Christopher Scripps McKellar
shall be third party beneficiaries of Sections 1.4, 4 and 6
and shall have the right to enforce the obligations of such provisions. As used
in this Agreement, the term “party” or “parties” shall refer only to 1st
Pacific Bancorp, 1st Pacific Bank and Shareholder.

 

5

 

6.5.                            Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one instrument.

 

6.6.                            Governing Law/Venue. 
This Agreement is made and entered in the State of California and the
laws of the State of California shall govern the validity and interpretation
hereof and the performance of the parties hereto of their respective duties and
obligations hereunder.  In an action or
suit brought by Shareholder or 1st Pacific to enforce any provision hereof, or
for damages for the breach hereof, such action or suit shall be commenced and
maintained exclusively in the state superior courts located in San Diego
County, California or Federal district courts located in San Diego County,
California, and the parties hereto agree not to challenge the selection of that
venue in any such proceeding for any reason, including, without limitation, on
the grounds that such venue is an inconvenient forum.

 

6.7.                            Captions.  The captions
contained in this Agreement are for convenience of reference only and do not
form a part of this Agreement.

 

6.8.                            Waiver and Modification. 
No waiver of any term, provision or condition of this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be
construed as a further or continuing waiver of any such term, provision or
condition of this Agreement. This Agreement may be modified or amended only by
an instrument of equal formality signed by the parties or their duly authorized
agents, and if such modification or amendment would effect Sections 1.4,
4 or 6, by Ronald J. Carlson and Christopher Scripps McKellar as
well.

 

6.9.                            Entire Agreement. 
The making, execution and delivery of this Agreement by the parties
hereto have not been induced by any representation, statements, warranties or
agreements other than those expressed herein. This Agreement, in addition to
the applicable provisions of the Reorganization Agreement, embodies the entire
understanding of the parties and there are no further or other agreements or
understandings, written or oral, in effect between the parties relating to the
subject matter hereof, unless expressly referred to by reference herein.

 

6.10.                     Severability. 
Whenever possible, each provision of this Agreement and every related
document shall be interpreted in such manner as to be valid under applicable
law.  However, if any provision of any of
the foregoing shall be invalid or prohibited under said applicable law, it
shall be construed, interpreted and limited to effectuate its purpose to the
maximum legally permissible extent.  If
it cannot be so construed and interpreted so as to be valid under such law,
such provision shall be ineffective to the extent of such invalidity or
prohibition without invalidating the remainder of such provision or the
remaining provisions of this Agreement, and this Agreement shall be construed
to the minimum extent possible to carry out its terms without such invalid or
unenforceable provision or portion thereof.

 

[The remainder of this page intentionally
left blank.]

 

6

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first above written.

 

	
   

  	
   

  	
  1ST
  PACIFIC BANCORP  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  J. Carlson

  
	
   

  	
   

  	
  Title:

  	
  President
  and Chief Executive Officer 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1ST
  PACIFIC BANK OF CALIFORNIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  J. Carlson

  
	
   

  	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SHAREHOLDER  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Ernest
  Auerbach 

  	
   

  	
   

  
	
  (Name)
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Street
  Address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (City,
  State and Zip Code)

  	
   

  	
   

  

 

7

 

SCHEDULE 1

 

	
   

  	
   

  	
  Number

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Shares

  	
   

  	
  Type

  	
   

  	
  Nature of Ownership

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