Document:

Exhibit 4.3

FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE

THIS SECURITY IS
NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR
ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION.

THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.  NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.  THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A,
(D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT
IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.

THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT
IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR
ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED (“ERISA”),  OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)
(EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY
REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN
ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING.  ANY PURCHASER OR HOLDER OF THE SECURITIES OR
ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE

MEANING
OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT
PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE
BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.

THIS SECURITY WILL
BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL
AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS
THEREOF.  ANY ATTEMPTED TRANSFER OF THIS
SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN
$100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

THE HOLDER OF THIS
SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

IN CONNECTION WITH
ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Fixed/Floating Rate Junior Subordinated Deferrable
Interest Debenture

of

National Mercantile Bancorp

January 25, 2007

National
Mercantile Bancorp, a California corporation (the “Company” which term includes
any successor Person under the Indenture hereinafter referred to), for value
received promises to pay to Wilmington Trust Company, not in its individual capacity
but solely as Institutional Trustee for First California Capital Trust I
(the “Holder”) or registered assigns, the principal sum of sixteen million four
hundred ninety-five thousand dollars ($16,495,000.00) on March 15, 2037,
and to pay interest on said principal sum from January 25, 2007, or from
the most recent Interest Payment Date (as defined below) to which interest has
been paid or duly provided for, quarterly (subject to deferral as set forth
herein) in arrears on March 15, June 15, September 15 and
December 15 of each year or if such day is not a Business Day, then the
next succeeding Business Day (each such date, an “Interest Payment Date”) (it
being understood that interest accrues for any such non-Business Day during the
applicable Distribution Period, beginning on or after March 15, 2012),
commencing on the Interest Payment Date in March 2007, at an annual rate equal
to [RATE]% beginning on (and including) the date of original issuance and
ending on (but excluding) the Interest Payment Date in March 2012 and at
an annual rate for each successive period beginning on (and including) the
Interest Payment Date in March 2012, and each succeeding Interest Payment
Date, and ending on (but excluding) the next succeeding Interest Payment Date
(each a “Distribution Period”), equal to 3-Month LIBOR, determined as described
below, plus 1.60% (the “Coupon Rate”), applied to the principal amount hereof,
until the principal hereof is paid or duly provided for or made available for
payment, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest (including Additional Interest) at the
Interest Rate in effect for each applicable period, compounded quarterly, from
the dates such amounts are due until they are paid or made available for
payment.  The amount of interest payable
(i) for any Distribution Period commencing on or after the date

of
original issuance but before the Interest Payment Date in March 2012 will
be computed on the basis of a 360-day year of twelve 30-day months, and
(ii) for the Distribution Period commencing on the Interest Payment Date
in March 2012 and each succeeding Distribution Period will be computed on
the basis of the actual number of days in the Distribution Period concerned
divided by 360.  The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name
this Debenture (or one or more Predecessor Securities) is registered at the
close of business on the regular record date for such interest installment,
which shall be fifteen Business Days prior to the day on which the relevant
Interest Payment Date occurs.  Any such
interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such regular record date and may
be paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on a special record date.

“3-Month LIBOR” as
used herein, means the London interbank offered interest rate for three-month
U.S. dollar deposits determined by the Trustee in the following order of
priority:  (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date (“Telerate Page 3750” means the display designated
as “Page 3750” on the Moneyline Telerate Service or such other page as may
replace Page 3750 on that service or such other service or services as may be
nominated by the British Bankers’ Association as the information vendor for the
purpose of displaying London interbank offered rates for U.S. dollar deposits);
(ii) if such rate cannot be identified on the related Determination Date, the
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks’ offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date.  If at least two
quotations are provided, 3-Month LIBOR will be the arithmetic mean of such
quotations; (iii) if fewer than two such quotations are provided as
requested in clause (ii) above, the Trustee will request four major New York
City banks to provide such banks’ offered quotations (expressed as percentages
per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m.
(London time) on such Determination Date. 
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month LIBOR determined with respect to the Distribution Period
immediately preceding such current Distribution Period.  If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.  As used herein, “Determination Date” means
the date that is two London Banking Days (i.e., a business day in which
dealings in deposits in U.S. dollars are transacted in the London interbank
market) preceding the commencement of the relevant Distribution Period.

The Interest Rate
for any Distribution Period will at no time be higher than the maximum rate
then permitted by New York law as the same may be modified by United States
law.

All percentages
resulting from any calculations on the Debentures will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
..09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used
in or resulting from such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward)).

The principal of
and interest on this Debenture shall be payable at the office or agency of the
Trustee (or other paying agent appointed by the Company) maintained for that
purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made by check mailed to the
registered holder at such address as shall appear in the Debenture Register if
a request for a wire transfer by such holder has not been received by the
Company or by wire transfer to an account appropriately designated by the
holder hereof.  Notwithstanding the
foregoing, so long as the holder of this Debenture is the Institutional
Trustee, the payment of the principal of and interest on this Debenture will be
made in immediately available funds at such place and to such account as may be
designated by the Trustee.

So long as no Acceleration
Event of Default has occurred and is continuing, the Company shall have the right,
from time to time, and without causing an Event of Default, to defer payments
of interest on the Debentures by extending the interest payment period on the
Debentures at any time and from time to time during the term of the Debentures,
for up to 20 consecutive quarterly periods (each such extended interest
payment period, an “Extension Period”), during which Extension Period no
interest (including Additional Interest) shall be due and payable (except any
Additional Sums that may be due and payable). 
No Extension Period may end on a date other than an Interest Payment
Date.  During an Extension Period,
interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Interest Rate in effect
for such Extension Period, compounded quarterly from the date such interest
would have been payable were it not for the Extension Period, to the extent
permitted by law (such interest referred to herein as “Additional Interest”).  At the end of any such Extension Period the
Company shall pay all interest then accrued and unpaid on the Debentures
(together with Additional Interest thereon); provided, however,
that no Extension Period may extend beyond the Maturity Date; provided further,
however, that during any such Extension Period, the Company shall not
and shall not permit any Affiliate to engage in any of the activities or
transactions described on the reverse side hereof and in the Indenture.  Prior to the termination of any Extension
Period, the Company may further extend such period, provided that such period
together with all such previous and further consecutive extensions thereof
shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date.  Upon the termination of
any Extension Period and upon the payment of all accrued and unpaid interest
and Additional Interest, the Company may commence a new Extension Period,
subject to the foregoing requirements. 
No interest or Additional Interest shall be due and payable during an
Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Additional Interest.  The
Company must give the Trustee notice of its election to begin or extend an
Extension Period by the close of business at least 15 Business Days prior to
the Interest Payment Date with respect to which interest on the Debentures
would have been payable except for the election to begin or extend such
Extension Period.

The indebtedness
evidenced by this Debenture is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness, and this Debenture is issued subject to the provisions of
the Indenture with respect thereto.  Each
holder of this Debenture, by accepting the same, (a) agrees to and shall
be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination so provided and (c) appoints the Trustee
his or her attorney-in-fact for any and all such purposes.  Each holder hereof, by his or her acceptance
hereof, hereby waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

This Debenture
shall not be entitled to any benefit under the Indenture hereinafter referred
to, be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by or on behalf of the Trustee.

The provisions of
this Debenture are continued on the reverse side hereof and such provisions
shall for all purposes have the same effect as though fully set forth at this
place.

IN WITNESS
WHEREOF, the Company has duly executed this certificate.

	
   

  	
  NATIONAL MERCANTILE BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

CERTIFICATE OF AUTHENTICATION

This is one of the
Debentures referred to in the within-mentioned Indenture.

	
   

  	
  WILMINGTON TRUST COMPANY, as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  

 

REVERSE OF DEBENTURE

This
Debenture is one of the fixed/floating rate junior subordinated deferrable
interest debentures of the Company, all issued or to be issued under and
pursuant to the Indenture dated as of January 25, 2007 (the “Indenture”),
duly executed and delivered between the Company and the Trustee, to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debentures. 
The Debentures are limited in aggregate principal amount as specified in
the Indenture.

Upon
the occurrence and continuation of a Special Event prior to the Interest
Payment Date in March 2012, the Company shall have the right to redeem the
Debentures in whole, but not in part, at any Interest Payment Date, within 120
days following the occurrence of such Special Event, at the Special Redemption
Price.

In
addition, the Company shall have the right to redeem the Debentures, in whole
or in part, but in all cases in a principal amount with integral multiples of
$1,000.00, on any Interest Payment Date on or after the Interest Payment Date
in March 2012, at the Redemption Price.

Prior
to 10:00 a.m. New York City time on the Redemption Date or Special Redemption
Date, as applicable, the Company will deposit with the Trustee or with one or
more paying agents an amount of money sufficient to redeem on the Redemption
Date or the Special Redemption Date, as applicable, all the Debentures so
called for redemption at the appropriate Redemption Price or Special Redemption
Price.

If
all, or less than all, the Debentures are to be redeemed, the Company will give
the Trustee notice not less than 45 nor more than 60 days, respectively,
prior to the Redemption Date or Special Redemption Date, as applicable, as to
the aggregate principal amount of Debentures to be redeemed and the Trustee
shall select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Debentures or portions thereof (in integral multiples
of $1,000.00) to be redeemed.

Notwithstanding
the foregoing, any redemption of Debentures by the Company shall be subject to
the receipt of any and all required regulatory approvals.

In
case an Acceleration Event of Default shall have occurred and be continuing,
upon demand of the Trustee, the principal of all of the Debentures shall become
due and payable in the manner, with the effect and subject to the conditions
provided in the Indenture.

The
Indenture contains provisions permitting the Company and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal
amount of the Debentures at the time outstanding, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debentures; provided, however, that no such supplemental
indenture shall without the consent of the holders of each Debenture then outstanding
and affected thereby (i) change the fixed maturity of any Debenture, or
reduce the principal amount thereof or any premium thereon, or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Debentures, or impair or affect the right of any Securityholder to institute
suit for payment thereof or impair the right of repayment, if any, at the
option of the holder, or (ii) reduce the aforesaid percentage of
Debentures the holders of which are required to consent to any such
supplemental indenture.

The
Indenture also contains provisions permitting the holders of a majority in
aggregate principal amount of the Debentures at the time outstanding on behalf
of the holders of all of the Debentures to waive (or modify any previously
granted waiver of) any past default or Event of Default, and its consequences,
except a default (a) in the payment of principal of, premium, if any, or
interest on any of the Debentures, (b) in respect of covenants or
provisions hereof or of the Indenture which cannot be modified or amended
without the consent of the holder of each Debenture affected, or (c) in
respect of the covenants contained in Section 3.9 of the Indenture; provided,
however, that if the Debentures are held by the Trust or a trustee of
such trust, such waiver or modification to such waiver shall not be effective
until the holders of a majority in Liquidation Amount of Trust Securities of
the Trust shall have consented to such waiver or modification to such waiver, provided,
further, that if the consent of the holder of each outstanding Debenture
is required, such waiver shall not be effective until each holder of the Trust
Securities of the Trust shall have consented to such waiver.  Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of the Indenture and the
Company, the Trustee and the holders of the Debentures shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.  Whenever
any default or Event of Default hereunder shall have been waived as permitted
by the Indenture, said default or Event of Default shall for all purposes of
the Debentures and the Indenture be deemed to have been cured and to be not
continuing.

No
reference herein to the Indenture and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and
place and at the rate and in the money herein prescribed.

The
Company has agreed that if Debentures are initially issued to the Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
the Trust (regardless of whether Debentures continue to be held by such Trust)
and (i) there shall have occurred and be continuing an Event of Default,
(ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee, or (iii) the Company
shall have given notice of its election to defer payments of interest on the
Debentures by extending the interest payment period as provided herein and such
Extension Period, or any extension thereof, shall be continuing, then the
Company shall not, and shall not allow any Affiliate of the Company to,
(x) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company’s
capital stock or its Affiliates’ capital stock (other than payments of
dividends or distributions to the Company) or make any guarantee payments with
respect to the foregoing or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company or any Affiliate that rank pari passu
in all respects with

or junior in
interest to the Debentures (other than, with respect to clauses (x) and (y)
above,  (1) repurchases, redemptions
or other acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of one or more employees, officers, directors or consultants,
in connection with a dividend reinvestment or stockholder stock purchase plan
or in connection with the issuance of capital stock of the Company (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company’s capital stock (or any
capital stock of a subsidiary of the Company) for any class or series of the
Company’s capital stock or of any class or series of the Company’s indebtedness
for any class or series of the Company’s capital stock, (3) the purchase
of fractional interests in shares of the Company’s capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, (4) any declaration of a dividend in
connection with any stockholders’ rights plan, or the issuance of rights, stock
or other property under any stockholders’ rights plan, or the redemption or
repurchase of rights pursuant thereto, (5) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock and any cash payments in lieu of fractional shares
issued in connection therewith, or (6) payments under the Capital
Securities Guarantee).

The
Debentures are issuable only in registered, certificated form without coupons
and in minimum denominations of $100,000.00 and any multiple of $1,000.00 in
excess thereof.  As provided in the
Indenture and subject to the transfer restrictions and limitations as may be
contained herein and therein from time to time, this Debenture is transferable
by the holder hereof on the Debenture Register of the Company.  Upon due presentment for registration of
transfer of any Debenture at the Principal Office of the Trustee or at any
office or agency of the Company maintained for such purpose as provided in
Section 3.2 of the Indenture, the Company shall execute, the Company or
the Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount.  All Debentures presented for registration of
transfer or for exchange or payment shall (if so required by the Company or the
Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by
a written instrument or instruments of transfer in form satisfactory to, the
Company and the Trustee or the Authenticating Agent duly executed by the holder
or his attorney duly authorized in writing. 
No service charge shall be made for any exchange or registration of
transfer of Debentures, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax, fee or other governmental charge that may be
imposed in connection therewith.

Prior
to due presentment for registration of transfer of any Debenture, the Company,
the Trustee, any Authenticating Agent, any paying agent, any transfer agent and
any Debenture registrar may deem the Person in whose name such Debenture shall
be registered upon the Debenture Register to be, and may treat him as, the
absolute owner of such Debenture (whether or not such Debenture shall be
overdue) for the purpose of receiving payment of or on account of the principal
of, premium, if any, and interest on such Debenture and for all other purposes;
and neither the Company nor the Trustee nor any Authenticating Agent nor any
paying agent nor any transfer agent nor any Debenture registrar shall be
affected by any notice to the contrary. 
All such payments so made to any holder for the time being or upon his
order shall be valid, and, to the extent of the sum or sums so paid, effectual
to satisfy and discharge the liability for moneys payable upon any such
Debenture.

No
recourse for the payment of the principal of or premium, if any, or interest on
any Debenture, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or in any supplemental indenture, or in any such
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, officer or
director, as such, past, present or future, of the Company or of any successor
Person of the Company, either directly or through the Company or any successor
Person of the Company, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, it
being expressly understood that all such liability is hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
the Indenture and the issue of the Debentures.

Capitalized terms
used and not defined in this Debenture shall have the meanings assigned in the
Indenture dated as of the date of original issuance of this Debenture between
the Trustee and the Company.

THE
INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES THEREOF.Exhibit 10.1

NATIONAL MERCANTILE BANCORP

16,000 Capital Securities

Fixed/Floating
Rate Capital Securities

(Liquidation Amount $1,000.00 per Capital
Security)

PLACEMENT AGREEMENT

January 24, 2007

FTN Financial Capital
Markets

845 Crossover Lane, Suite
150

Memphis,
Tennessee  38117

Keefe, Bruyette &
Woods, Inc.

787 7th Avenue

4th Floor

New York, New
York  10019

Ladies
and Gentlemen:

National
Mercantile Bancorp, a California corporation (the “Company”), and its financing
subsidiary, First California Capital Trust I, a Delaware statutory trust
(the “Trust,” and hereinafter together with the Company, the “Offerors”),
hereby confirm their agreement (this “Agreement”) with you as placement agents
(the “Placement Agents”), as follows:

Section
1.              Issuance and Sale of
Securities.

1.1.         Introduction.
The Offerors propose to issue and sell at the Closing (as defined in
Section 2.3.1 hereof) 16,000 of the Trust’s Fixed/Floating Rate Capital
Securities, with a liquidation amount of $1,000.00 per capital security (the “Capital
Securities”), to Keefe, Bruyette & Woods, Inc. (the “Purchaser”)
pursuant to the terms of a Subscription Agreement entered into, or to be
entered into on or prior to the Closing Date (as defined in Section 2.3.1
hereof), between the Offerors and the Purchaser (the “Subscription Agreement”),
the form of which is attached hereto as Exhibit A and incorporated
herein by this reference.

1.2.         OperativeAgreements.

The Capital
Securities shall be fully and unconditionally guaranteed on a subordinated
basis by the Company with respect to distributions and amounts payable upon
liquidation, redemption or repayment (the “Guarantee”) pursuant and subject to
the Guarantee Agreement (the “Guarantee Agreement”), to be dated as of the
Closing Date and executed and delivered by the Company and Wilmington Trust
Company (“WTC”), as trustee (the “Guarantee Trustee”), for the benefit from
time to time of the holders of the Capital Securities.  The entire proceeds from the sale by the
Trust to the holders of the Capital Securities shall be combined with the
entire proceeds from the sale by the Trust to the Company of its common
securities (the “Common Securities”), and shall be used by the Trust to
purchase $16,495,000.00 in principal amount of the Fixed/Floating Rate Junior
Subordinated

Deferrable
Interest Debentures (the “Debentures”) of the Company.  The Capital Securities and the Common
Securities for the Trust shall be issued pursuant to an Amended and Restated
Declaration of Trust among WTC, as Delaware trustee (the “Delaware Trustee”),
WTC, as institutional trustee (the “Institutional Trustee”), the Administrators
named therein, and the Company, to be dated as of the Closing Date and in
substantially the form heretofore delivered to the Placement Agents (the “Trust
Agreement”).  The Debentures shall be
issued pursuant to an Indenture (the “Indenture”), to be dated as of the
Closing Date, between the Company and WTC, as indenture trustee (the “Indenture
Trustee”).  The documents identified in
this Section 1.2 and in Section 1.1 are referred to herein as the “Operative
Documents.”

1.3.         Rights of Purchaser. The
Capital Securities shall be offered and sold by the Trust directly to the
Purchaser without registration of any of the Capital Securities, the Debentures
or the Guarantee under the Securities Act of 1933, as amended (the “Securities
Act”), or any other applicable securities laws in reliance upon exemptions from
the registration requirements of the Securities Act and other applicable
securities laws.  The Offerors agree that
this Agreement shall be incorporated by reference into the Subscription
Agreement and the Purchaser shall be entitled to each of the benefits of the
Placement Agents and the Purchaser under this Agreement and shall be entitled
to enforce obligations of the Offerors under this Agreement as fully as if the
Purchaser were a party to this Agreement. 
The Offerors and the Placement Agents have entered into this Agreement
to set forth their understanding as to their relationship and their respective
rights, duties and obligations.

1.4.         Legends.
Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Securities Act, the Capital
Securities and Debentures certificates shall each contain a legend as required
pursuant to any of the Operative Documents.

Section
2.              Purchase of Capital
Securities.

2.1.         Exclusive Rights; Purchase Price.
From the date hereof until the Closing Date (which
date may be extended by mutual agreement of the Offerors and the Placement
Agents), the Offerors hereby grant to the Placement Agents the exclusive right
to arrange for the sale of the Capital Securities to the Purchaser at a
purchase price of $1,000.00 per Capital Security.

2.2.         Subscription Agreement. The
Offerors hereby agree to evidence their acceptance of the subscription by
countersigning a copy of the Subscription Agreement and returning the same to
the Placement Agents.

2.3.         Closing and Delivery of Payment.

2.3.1.      Closing; Closing Date. The
sale and purchase of the Capital Securities by the Offerors to the Purchaser
shall take place at a closing (the “Closing”) at the offices of Lewis,
Rice & Fingersh, L.C., at 10:00 a.m. (St. Louis time) on
January 25, 2007, or such other business day as may be agreed upon by the
Offerors and the Placement Agents (the “Closing Date”); provided, however,
that in no event shall the Closing Date occur later than January 31, 2007
unless consented to by the Purchaser. 
Payment by the Purchaser shall be payable in the manner set forth in the
Subscription Agreement and shall be made prior to or on the Closing Date.

2.3.2.      Delivery. The
certificate for the Capital Securities shall be in definitive form, registered
in the name of the Purchaser, or the Purchaser’s designee, and in the aggregate
amount of the Capital Securities purchased by the Purchaser.

2.3.3.      Transfer Agent. Not
less than two full business days prior to the Closing Date, a global Capital
Securities certificate in definitive form shall be made available by or on
behalf of the

 2
 

Offerors to the Placement
Agents and the Institutional Trustee for inspection and delivery to the
Depository Trust Company (“DTC”) or its custodian.

2.4.         Costs and Expenses. Whether
or not this Agreement is terminated or the sale of the Capital Securities is
consummated, the Company hereby covenants and agrees that it shall pay or cause
to be paid (directly or by reimbursement) all reasonable costs and expenses
incident to the performance of the obligations of the Offerors under this
Agreement, including all fees, expenses and disbursements of counsel and
accountants for the Offerors; all reasonable expenses incurred by the Offerors
incident to the preparation, execution and delivery of the Trust Agreement, the
Indenture, and the Guarantee; and all other reasonable costs and expenses
incident to the performance of the obligations of the Company hereunder and
under the Trust Agreement.

2.5.         Failure to Close. If
any of the conditions to the Closing specified in this Agreement shall not have
been fulfilled to the satisfaction of the Placement Agents or if the Closing
shall not have occurred on or before 10:00 a.m. (St. Louis time) on
January 31, 2007, then each party hereto, notwithstanding anything to the
contrary in this Agreement, shall be relieved of all further obligations under
this Agreement without thereby waiving any rights it may have by reason of such
nonfulfillment or failure; provided, however, that the
obligations of the parties under Sections 2.4, 7.5 and 9 shall not be so
relieved and shall continue in full force and effect.

Section
3.              Closing Conditions.
The obligations of the Purchaser and the Placement Agents on
the Closing Date shall be subject to the accuracy, at and as of the Closing
Date, of the representations and warranties of the Offerors contained in this
Agreement, to the accuracy, at and as of the Closing Date, of the statements of
the Offerors made in any certificates pursuant to this Agreement, to the
performance by the Offerors of their respective obligations under this
Agreement, to compliance, at and as of the Closing Date, by the Offerors with
their respective agreements herein contained, and to the following further
conditions:

3.1.         Opinions of Counsel. On
the Closing Date, the Placement Agents shall have received the following favorable
opinions, each dated as of the Closing Date: 
(a) from Troy & Gould P.C., counsel for the Offerors
and addressed to the Purchaser, the Placement Agents and WTC in substantially
the form set forth on Exhibit B-1 attached hereto and incorporated
herein by this reference, (b) from Richards, Layton & Finger, P.A.,
special Delaware counsel to the Offerors and addressed to the Purchaser, the
Placement Agents and the Offerors, in substantially the form set forth on Exhibit B-2
attached hereto and incorporated herein by this reference and (c) from
Lewis, Rice & Fingersh, L.C., special tax counsel to the Offerors, and
addressed to the Placement Agents and the Offerors, addressing the items set
forth on Exhibit B-3 attached hereto and incorporated herein by this
reference, subject to the receipt by Lewis, Rice & Fingersh, L.C. of a
representation letter from the Company in the form set forth in Exhibit B-3
completed in a manner reasonably satisfactory to Lewis, Rice & Fingersh,
L.C. (collectively, the “Offerors’ Counsel Opinions”).  In rendering the Offerors’ Counsel Opinions,
counsel to the Offerors may rely as to factual matters upon certificates or
other documents furnished by officers, directors and trustees of the Offerors
(copies of which shall be delivered to the Placement Agents and the Purchaser)
and by government officials, and upon such other documents as counsel to the
Offerors may, in their reasonable opinion, deem appropriate as a basis for the
Offerors’ Counsel Opinions.  Counsel to
the Offerors may specify the jurisdictions in which they are admitted to
practice and that they are not admitted to practice in any other jurisdiction
and are not experts in the law of any other jurisdiction.  If the Offerors’ counsel is not admitted to
practice in the State of New York, the opinion of Offerors’ counsel may assume,
for purposes of the opinion, that the laws of the State of New York are
substantively identical, in all respects material to the opinion, to the
internal laws of the state in which such counsel is admitted to practice.  Such Offerors’ Counsel Opinions shall not
state that they are to be governed or qualified by, or that they are otherwise
subject to, any treatise, written policy or other document relating

 3
 

to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).

3.2.         Officer’s Certificate. At
the Closing Date, the Purchaser and the Placement Agents shall have received
certificates from an authorized officer of the Company, dated as of the Closing
Date, stating that (i) the representations and warranties of the Offerors
set forth in Section 5 hereof are true and correct as of the Closing Date
and that the Offerors have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to the
Closing Date, (ii) since the date of this Agreement the Offerors have not
incurred any liability or obligation, direct or contingent, or entered into any
material transactions, other than in the ordinary course of business, which is
material to the Offerors, and (iii) covering such other matters as the
Placement Agents may reasonably request.

3.3.         Administrator’s Certificate. At
the Closing Date, the Purchaser and the Placement Agents shall have received a
certificate of one or more Administrators of the Trust, dated as of the Closing
Date, stating that the representations and warranties of the Trust set forth in
Section 5 are true and correct as of the Closing Date and that the Trust
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date.

3.4.         Purchase Permitted by Applicable
Laws; Legal Investment. The purchase of and
payment for the Capital Securities as described in this Agreement and pursuant
to the Subscription Agreement shall (a) not be prohibited by any
applicable law or governmental regulation, (b) not subject the Purchaser
or the Placement Agents to any penalty or, in the reasonable judgment of the
Purchaser and the Placement Agents, other onerous conditions under or pursuant
to any applicable law or governmental regulation, and (c) be permitted by
the laws and regulations of the jurisdictions to which the Purchaser and the
Placement Agents are subject.

3.5.         Consents and Permits. The
Company and the Trust shall have received all consents, permits and other
authorizations, and made all such filings and declarations, as may be required
from any person or entity pursuant to any law, statute, regulation or rule
(federal, state, local and foreign), or pursuant to any agreement, order or
decree to which the Company or the Trust is a party or to which either is
subject, in connection with the transactions contemplated by this Agreement.

3.6.         Information. Prior
to or on the Closing Date, the Offerors shall have furnished to the Placement
Agents such further information, certificates, opinions and documents addressed
to the Purchaser and the Placement Agents, which the Placement Agents may
reasonably request, including, without limitation, a complete set of the
Operative Documents or any other documents or certificates required by this
Section 3; and all proceedings taken by the Offerors in connection with
the issuance, offer and sale of the Capital Securities as herein contemplated shall
be reasonably satisfactory in form and substance to the Placement Agents.

If any condition
specified in this Section 3 shall not have been fulfilled when and as
required in this Agreement, or if any of the opinions or certificates mentioned
above or elsewhere in this Agreement shall not be reasonably satisfactory in
form and substance to the Placement Agents, this Agreement may be terminated by
the Placement Agents by notice to the Offerors at any time at or prior to the
Closing Date.  Notice of such termination
shall be given to the Offerors in writing or by telephone or facsimile
confirmed in writing.

Section
4.              Conditions to the
Offerors’ Obligations. The obligations of the Offerors to
sell the Capital Securities to the Purchaser and consummate the transactions
contemplated by this Agreement shall be subject to the accuracy, at and as of
the Closing Date, of the representations and warranties of the Placement Agents
contained in this Agreement and to the following further conditions:

 4
 

4.1.         Executed Agreement. The
Offerors shall have received from the Placement Agents an executed copy of this
Agreement.

4.2.         Fulfillment of Other Obligations.
The Placement Agents shall have fulfilled all of their
other obligations and duties required to be fulfilled under this Agreement
prior to or at the Closing.

Section
5.              Representations and
Warranties of the Offerors. Except as set forth on the
Disclosure Schedule (as defined in Section 11.1) attached hereto, if any,
the Offerors jointly and severally represent and warrant to the Placement
Agents and the Purchaser as of the date hereof and as of the Closing Date as
follows:

5.1.         Securities Law Matters.

(a)           Neither the
Company nor the Trust, nor any of their “Affiliates” (as defined in
Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)),
nor any person acting on any of their behalf has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration under the Securities Act of
any of the Capital Securities, the Guarantee or the Debentures (collectively,
the “Securities”) or any other securities to be issued, or which may be issued,
by the Purchaser.

(b)           Neither the
Company nor the Trust, nor any of their Affiliates, nor any person acting on
its or their behalf  has (i) other
than the Placement Agents, offered for sale or solicited offers to purchase the
Securities, or (ii) engaged in any form of offering, general solicitation
or general advertising (within the meaning of Regulation D) in connection
with any offer or sale of any of the Securities.

(c)           The
Securities satisfy the eligibility requirements of Rule 144A(d)(3) under
the Securities Act.

(d)           Neither the
Company nor the Trust is or, after giving effect to the offering and sale of
the Capital Securities and the consummation of the transactions described in
this Agreement, will be an “investment company” or an entity “controlled” by an
“investment company,” in each case within the meaning of Section 3(a) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”),
without regard to Section 3(c) of the Investment Company Act.

(e)           Neither the
Company nor the Trust has paid or agreed to pay to any person or entity (other
than the Placement Agents) any compensation for soliciting another to purchase
any of the Securities.

5.2.         Organization, Standing and
Qualification of the Trust. The Trust has been
duly created and is validly existing in good standing as a statutory trust
under the Delaware Statutory Trust Act (the “Statutory Trust Act”) with the
power and authority to own property and to conduct the business it transacts
and proposes to transact and to enter into and perform its obligations under
the Operative Documents.  The Trust is
duly qualified to transact business as a foreign entity and is in good standing
in each jurisdiction in which such qualification is necessary, except where the
failure to so qualify or be in good standing would not have a material adverse
effect on the Trust.  The Trust is not a
party to or otherwise bound by any agreement other than the Operative
Documents.  The Trust is and will, under
current law, be classified for federal income tax purposes as a grantor trust
and not as an association taxable as a corporation.

5.3.         Trust Agreement.
The Trust Agreement has been duly authorized by the Company and, on the Closing
Date, will have been duly executed and delivered by the Company and the
Administrators of the Trust, and, assuming due authorization, execution and
delivery by the Delaware Trustee and the

 5
 

Institutional Trustee, will be a valid and
binding obligation of the Company and such Administrators, enforceable against
them in accordance with its terms, subject to (a) applicable bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation and other
laws relating to or affecting creditors’ rights generally, and (b) general
principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law) (“Bankruptcy and Equity”).  Each of the Administrators of the Trust is an
employee or a director of the Company or of a financial institution subsidiary
of the Company and has been duly authorized by the Company to execute and
deliver the Trust Agreement.

5.4.         Guarantee Agreement and the
Indenture. Each of the Guarantee and the Indenture
has been duly authorized by the Company and, on the Closing Date will have been
duly executed and delivered by the Company, and, assuming due authorization,
execution and delivery by the Guarantee Trustee, in the case of the Guarantee,
and by the Indenture Trustee, in the case of the Indenture, will be a valid and
binding obligation of the Company enforceable against it in accordance with its
terms, subject to Bankruptcy and Equity.

5.5.         Capital Securities and Common
Securities. The Capital Securities and the Common
Securities have been duly authorized by the Trust Agreement and, when issued
and delivered against payment therefor on the Closing Date to the Purchaser, in
the case of the Capital Securities, and to the Company, in the case of the
Common Securities, will be validly issued and represent undivided beneficial
interests in the assets of the Trust. None of the Capital Securities or the
Common Securities is subject to preemptive or other similar rights.  On the Closing Date, all of the issued and
outstanding Common Securities will be directly owned by the Company free and
clear of any pledge, security interest, claim, lien or other encumbrance.

5.6.         Debentures. The
Debentures have been duly authorized by the Company and, at the Closing Date,
will have been duly executed and delivered to the Indenture Trustee for
authentication in accordance with the Indenture, and, when authenticated in the
manner provided for in the Indenture and delivered against payment therefor by
the Trust, will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture enforceable against the Company in
accordance with their terms, subject to Bankruptcy and Equity.

5.7.         Power and Authority.
This Agreement has been duly authorized, executed and delivered by the Company
and the Trust and constitutes the valid and binding obligation of the Company
and the Trust, enforceable against the Company and the Trust in accordance with
its terms, subject to Bankruptcy and Equity.

5.8.         No Defaults. The
Trust is not in violation of the Trust Agreement or, to the knowledge of the
Administrators, any provision of the Statutory Trust Act.  The execution, delivery and performance by
the Company or the Trust of this Agreement or the Operative Documents to which
it is a party, and the consummation of the transactions contemplated herein or
therein and the use of the proceeds therefrom, will not conflict with or
constitute a breach of, or a default under, or result in the creation or
imposition of any lien, charge or other encumbrance upon any property or assets
of the Trust, the Company or any of the Company’s Subsidiaries (as defined in
Section 5.11 hereof) pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Trust, the Company or any of its
Subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of any of them is subject, except for a conflict,
breach, default, lien, charge or encumbrance which could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect nor will
such action result in any violation of the Trust Agreement or the Statutory
Trust Act or require the consent, approval, authorization or order of any court
or governmental agency or body.  As used
herein, the term “Material Adverse Effect” means any one or more effects that
individually or in the aggregate are material and adverse to the Offerors’
ability to consummate the transactions contemplated herein or in

 6
 

the Operative Documents or any one or more
effects that individually or in the aggregate are material and adverse to the
condition (financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Company and its Subsidiaries taken as whole,
whether or not occurring in the ordinary course of business.

5.9.         Organization, Standing and
Qualification of the Company. The Company has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of California, with all requisite corporate power and authority
to own its properties and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing as
a foreign corporation in each jurisdiction where the nature of its activities
requires such qualification, except where the failure of the Company to be so
qualified would not, singly or in the aggregate, have a Material Adverse
Effect.

5.10.       Subsidiaries of the Company. Each
of the Company’s significant subsidiaries (as defined in Section 1-02(w)
of Regulation S-X to the Securities Act (the “Significant Subsidiaries”)) is
listed in Exhibit C attached hereto and incorporated herein by this
reference.  Each Significant Subsidiary
has been duly organized and is validly existing and in good standing under the
laws of the jurisdiction in which it is chartered or organized, with all
requisite power and authority to own its properties and conduct the business it
transacts and proposes to transact, and is duly qualified to transact business
and is in good standing as a foreign entity in each jurisdiction where the
nature of its activities requires such qualification, except where the failure
of any such Significant Subsidiary to be so qualified would not, singly or in
the aggregate, have a Material Adverse Effect. 
All of the issued and outstanding shares of capital stock of the
Significant Subsidiaries (a) have been duly authorized and are validly
issued, (b) are fully paid and nonassessable, and (c) are wholly
owned, directly or indirectly, by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, restriction upon voting or
transfer, preemptive rights, claim, equity or other defect.

5.11.       Permits. The
Company and each of its subsidiaries (as defined in Section 1-02(x) of
Regulation S-X to the Securities Act) (the “Subsidiaries”) have all requisite
power and authority, and all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from regulatory or governmental
officials, bodies and tribunals, to own or lease their respective properties
and to conduct their respective businesses as now being conducted, except such
authorizations, approvals, orders, licenses, certificates and permits which, if
not obtained and maintained, would not, singly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such authorizations, approvals, orders, licenses,
certificates or permits which, singly or in the aggregate, if the failure to be
so licensed or approved is the subject of an unfavorable decision, ruling or
finding, would, singly or in the aggregate, have a Material Adverse Effect; and
the Company and its Subsidiaries are in compliance with all applicable laws,
rules, regulations and orders and consents, the violation of which would,
singly or in the aggregate, have a Material Adverse Effect.

5.12.       Conflicts, Authorizations and
Approvals. Neither the Company nor any of its
Subsidiaries is in violation of its respective articles or certificate of
incorporation, charter or by-laws or similar organizational documents or in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which either the Company or any
of its Subsidiaries is a party, or by which it or any of them may be bound or
to which any of the property or assets of the Company or any of its
Subsidiaries is subject, the effect of which violation or default in
performance or observance would have, singly or in the aggregate, a Material
Adverse Effect.

 7
 

5.13.       Holding Company Registration and
Deposit Insurance. The Company is duly registered
(i) as a bank holding company or financial holding company under the Bank
Holding Company Act of 1956, as amended, and the regulations of the Board of
Governors of the Federal Reserve System (the “Federal Reserve”) or (ii) as
a savings and loan holding company under the Home Owners’ Loan Act of 1933, as
amended, and the regulations of the Office of Thrift Supervision (the “OTS”),
and the deposit accounts of the Company’s Subsidiary depository institutions
are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the
fullest extent permitted by law and the rules and regulations of the FDIC, and
no proceedings for the termination of such insurance are pending or threatened.

5.14.       Financial Statements.

(a)   The consolidated
balance sheets of the Company and all of its Subsidiaries as of
December 31, 2005 and December 31, 2004 and related consolidated
income statements and statements of changes in shareholders’ equity for the
three years ended December 31, 2005 together with the notes thereto, and
the consolidated balance sheets of the Company and all of its Subsidiaries as
of September 30, 2006 and the related consolidated income statements and
statements of changes in shareholders’ equity for the nine months then ended,
copies of each of which have been provided to the Placement Agents (together,
the “Financial Statements”), have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
disclosed therein) and fairly present in all material respects the financial
position and the results of operations and changes in shareholders’ equity of
the Company and all of its Subsidiaries as of the dates and for the periods
indicated (subject, in the case of interim financial statements, to normal
recurring year-end adjustments, none of which shall be material).  The books and records of the Company and all
of its Subsidiaries have been, and are being, maintained in all material
respects in accordance with generally accepted accounting principles and any
other applicable legal and accounting requirements and reflect only actual
transactions.

(b)   The information in
the Company’s most recently filed (i) FR Y-9C filed with the Federal
Reserve if the Company is a bank holding company, (ii) FR Y-9SP filed
with the Federal Reserve if the Company is a small bank holding company or
(iii) H-(b)11 filed with the OTS if the Company is a savings and loan
holding company (the “Regulatory Report”), previously provided to the Placement
Agents fairly presents in all material respects the financial position of the
Company and, where applicable, all of its Subsidiaries as of the end of the
period represented by such Regulatory Report.

(c)   Since the respective
dates of the Financial Statements and the Regulatory Report, there has been no
material adverse change or development with respect to the financial condition
or earnings of the Company and all of its Subsidiaries, taken as a whole.

(d)   The accountants of
the Company who certified the Financial Statements are independent public
accountants of the Company and its Subsidiaries within the meaning of the
Securities Act and the rules and regulations thereunder.

5.15.       Exchange Act Reporting. The
reports filed with the Securities and Exchange Commission (the “Commission”) by
the Company under the Securities Exchange Act of 1934, as amended (the “1934
Act”) and the regulations thereunder at the time they were filed with the
Commission complied as to form in all material respects with the requirements
of the 1934 Act and such reports did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.

5.16.       Regulatory Enforcement Matters. Neither
the Company nor any of its Subsidiaries is subject or is party to, or has
received any notice or advice that any of them may become subject or party

 8
 

to, any investigation with respect to, any
cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been since January 1, 2003, a
recipient of any supervisory letter from, or since January 1, 2003, has
adopted any board resolutions at the request of, any Regulatory Agency (as
defined below) that currently restricts in any material respect the conduct of
their business or that in any material manner relates to their capital
adequacy, their credit policies, their ability or authority to pay dividends or
make distributions to their shareholders or make payments of principal or
interest on their debt obligations, their management or their business (each, a
“Regulatory Agreement”), nor has the Company or any of its Subsidiaries been
advised since January 1, 2003, by any Regulatory Agency that it is
considering issuing or requesting any such Regulatory Agreement.  There is no material unresolved violation,
criticism or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of the Company or any of its
Subsidiaries.  As used herein, the term “Regulatory
Agency” means any federal or state agency charged with the supervision or
regulation of depository institutions, bank, financial or savings and loan
holding companies, or engaged in the insurance of depository institution
deposits, or any court, administrative agency or commission or other
governmental agency, authority or instrumentality having supervisory or
regulatory authority with respect to the Company or any of its Subsidiaries.  Neither the Company nor any of the
Subsidiaries is currently unable to pay dividends or make distributions to its
shareholders with respect to any class of its equity securities, or prohibited
from paying principal or interest on its debt obligations, due to a restriction
or limitation, whether by statute, contract or otherwise, and, in the
reasonable judgment of the Company’s management, neither the Company nor any of
the Subsidiaries will be unable in the foreseeable future to pay dividends or
make distributions with respect to any class of equity securities, or be
prohibited from paying principal or interest on its debt obligations, due to a
restriction or limitation, whether by statute, contract or otherwise.

5.17.       No Material Change. Since
December 31, 2005, there has been no material adverse change or
development with respect to the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company or its
Subsidiaries on a consolidated basis, whether or not arising in the ordinary
course of business.

5.18.       No Undisclosed Liabilities. Neither
the Company nor any of its Subsidiaries has any material liability, whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit, proceeding, hearing, charge, complaint,
claim or demand against the Company or its Subsidiaries giving rise to any such
liability), except (i) for liabilities set forth in the Financial
Statements and (ii) normal fluctuation in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of
business of the Company and all of its Subsidiaries since the date of the most
recent balance sheet included in the Financial Statements.

5.19.       Litigation. No
charge, investigation, action, suit or proceeding is pending or, to the
knowledge of the Offerors, threatened against or affecting the Company or its
Subsidiaries or any of their respective properties before or by any courts or
any regulatory, administrative or governmental official, commission, board,
agency or other authority or body, or any arbitrator, wherein an unfavorable
decision, ruling or finding could have, singly or in the aggregate, a Material
Adverse Effect.

5.20.       Deferral of Interest Payments on
Debentures. The Company has no present intention
to exercise its option to defer payments of interest on the Debentures as
provided in the Indenture.  The Company
believes that the likelihood that it would exercise its right to defer payments
of interest on the Debentures as provided in the Indenture at any time during
which the Debentures are outstanding is remote because of the restrictions that
would be imposed on the Company’s ability to declare or pay

 9
 

dividends or distributions on,
or to redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company’s capital stock and on the Company’s ability to make any
payments of principal, interest or premium on, or repay, repurchase or redeem,
any of its debt securities that rank pari
passu in all respects with, or junior in interest to, the
Debentures.

Section
6.              Representations and
Warranties of the Placement Agents. Each Placement
Agent represents and warrants to the Offerors as to itself (but not as to the
other Placement Agent) as follows:

6.1.         Organization, Standing and
Qualification.

(a)   FTN Financial
Capital Markets is a division of First Tennessee Bank National Association, a
national banking association duly organized, validly existing and in good
standing under the laws of the United States, with full power and authority to
own, lease and operate its properties and conduct its business as currently
being conducted.  FTN Financial Capital
Markets is duly qualified to transact business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns or leases property
or conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of FTN Financial Capital Markets.

(b)   Keefe,
Bruyette & Woods, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, with full
power and authority to own, lease and operate its properties and conduct its
business as currently being conducted. Keefe, Bruyette & Woods, Inc.
is duly qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of Keefe, Bruyette & Woods, Inc.

6.2.         Power and Authority. The
Placement Agent has all requisite power and authority to enter into this
Agreement, and this Agreement has been duly and validly authorized, executed
and delivered by the Placement Agent and constitutes the legal, valid and
binding agreement of the Placement Agent, enforceable against the Placement
Agent in accordance with its terms, subject to Bankruptcy and Equity and except
as any indemnification or contribution provisions thereof may be limited under
applicable securities laws.

6.3.         General Solicitation. In
the case of the offer and sale of the Capital Securities, no form of general
solicitation or general advertising was used by the Placement Agent or its
representatives including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.

6.4.         Purchaser. The
Placement Agent has made such reasonable inquiry as is necessary to determine
that the Purchaser is acquiring the Capital Securities for its own account,
except as contemplated in Section 7.8 hereto, and that the Purchaser does not
intend to distribute the Capital Securities in contravention of the Securities
Act or any other applicable securities laws.

6.5.         Qualified Purchasers. The
Placement Agent has not offered or sold and will not arrange for the offer or
sale of the Capital Securities except (i) to those the Placement Agent
reasonably believes are “accredited investors” (as defined in Rule 501 of
Regulation D), or (ii) in any other manner that does not require
registration of the Capital Securities under the Securities Act.  In connection with each such sale, the
Placement Agent has taken or will take reasonable steps to ensure that the
Purchaser is aware

 10

that
(a) such sale is being made in reliance on an exemption under the
Securities Act and (b) future transfers of the Capital Securities will not
be made except in compliance with applicable securities laws.

6.6.         Offering Circulars.
Neither the Placement Agent nor its representatives will include any non-public
information about the Company, the Trust or any of their Affiliates in any
registration statement, prospectus, offering circular or private placement
memorandum used in connection with any purchase of Capital Securities without
the prior written consent of the Trust and the Company.

Section
7.              Covenants of the
Offerors. The Offerors covenant and agree with the
Placement Agents and the Purchaser as follows:

7.1.         Compliance with Representations and
Warranties. During the period from the date of
this Agreement to the Closing Date, the Offerors shall use their best efforts
and take all action necessary or appropriate to cause their representations and
warranties contained in Section 5 hereof to be true as of the Closing
Date, after giving effect to the transactions contemplated by this Agreement,
as if made on and as of the Closing Date.

7.2.         Sale and Registration of Securities.
The Offerors and their Affiliates shall not nor shall
any of them permit any person acting on their behalf (other than the Placement
Agents), to directly or indirectly (i) sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Securities Act) that would or could be integrated with the sale of the
Capital Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) make offers or sales of any such
Security, or solicit offers to buy any such Security, under circumstances that
would require the registration of any of such Securities under the Securities
Act.

7.3.         Use of Proceeds. The
Trust shall use the proceeds from the sale of the Capital Securities and the
Common Securities to purchase the Debentures from the Company.

7.4.         Investment Company. The
Offerors shall not engage, or permit any Subsidiary to engage, in any activity
which would cause it or any Subsidiary to be an “investment company” under the
provisions of the Investment Company Act.

7.5.         Reimbursement of Expenses. If
the sale of the Capital Securities provided for herein is not consummated
(i) because any condition set forth in Section 3 hereof is not
satisfied, or (ii) because of any refusal, inability or failure on the
part of the Company or the Trust to perform any agreement herein or comply with
any provision hereof other than by reason of a breach by the Placement Agents,
the Company shall reimburse the Placement Agents upon demand for all of their
pro rata share of out-of-pocket expenses (including reasonable fees and
disbursements of counsel) in an amount not to exceed $50,000.00 that shall have
been incurred by them in connection with the proposed purchase and sale of the
Capital Securities.  Notwithstanding the
foregoing, the Company shall have no obligation to reimburse the Placement
Agents for their out-of-pocket expenses if the sale of the Capital Securities
fails to occur because the Placement Agents fail to fulfill a condition set
forth in Section 4.

7.6.         Solicitation and Advertising. In
connection with any offer or sale of any of the Securities, the Offerors shall
not, nor shall either of them permit any of their Affiliates or any person
acting on their behalf, other than the Placement Agents, to engage in any form
of general solicitation or general advertising (as defined in
Regulation D).

7.7.         Compliance with Rule 144A(d)(4)
under the Securities Act. So long as any of the
Securities are outstanding and are “restricted securities” within the meaning
of Rule 144(a)(3) under the Securities Act, the Offerors will, during any
period in which they are not subject to and in compliance with Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or

 11
 

the Offerors are not exempt from such
reporting requirements pursuant to and in compliance with Rule 12g3-2(b)
under the Exchange Act, provide to each holder of such restricted securities
and to each prospective purchaser (as designated by such holder) of such
restricted securities, upon the request of such holder or prospective purchaser
in connection with any proposed transfer, any information required to be
provided by Rule 144A(d)(4) under the Securities Act, if applicable.  This covenant is intended to be for the
benefit of the holders, and the prospective purchasers designated by such
holders, from time to time of such restricted securities.  The information provided by the Offerors
pursuant to this Section 7.7 will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

7.8.         Quarterly Reports. Within
50 days of the end of each calendar year quarter and within 100 days
of the end of each calendar year during which the Debentures are issued and
outstanding and Purchaser holds any of the Capital Securities, the Offerors
shall submit to Purchaser a completed quarterly report in the form attached
hereto as Exhibit D as well as a copy of the applicable Regulatory
Report for the Company.

7.9.         Book-Entry Registration. Each
Offeror will cooperate with the Placement Agents and use all commercially
reasonable efforts to make the Capital Securities, and in the event the
Debentures are distributed to holders of the Capital Securities, to make the
Debentures, eligible for clearance and settlement as book-entry securities
through the facilities of DTC, and will execute, deliver and comply with all
representations made to, and agreements with, DTC and Nasdaq’s PORTAL system.

Section
8.              Covenants of the
Placement Agents. The Placement Agents covenant and
agree with the Offerors that, during the period from the date of this Agreement
to the Closing Date, the Placement Agents shall use their best efforts and take
all action necessary or appropriate to cause their representations and
warranties contained in Section 6 to be true as of the Closing Date, after
giving effect to the transactions contemplated by this Agreement, as if made on
and as of the Closing Date.  The
Placement Agents further covenant and agree not to engage in hedging
transactions with respect to the Capital Securities unless such transactions
are conducted in compliance with the Securities Act.

Section
9.              Indemnification.

9.1.         Indemnification Obligation. The
Offerors shall jointly and severally indemnify and hold harmless the Placement
Agents and the Purchaser and each of their respective agents, employees,
officers and directors and each person that controls either of the Placement
Agents or the Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and agents, employees, officers and
directors or any such controlling person of either of the Placement Agents or
the Purchaser (each such person or entity, an “Indemnified Party”) from and
against any and all losses, claims, damages, judgments, liabilities or
expenses, joint or several, to which such Indemnified Party may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of the
Offerors), insofar as such losses, claims, damages, judgments, liabilities or
expenses (or actions in respect thereof) arise out of, or are based upon, or
relate to, in whole or in part, (a) any untrue statement or alleged untrue
statement of a material fact contained in any information (whether written or
oral) or documents executed in favor of, furnished or made available to the
Placement Agents or the Purchaser by the Offerors, or (b) any omission or
alleged omission to state in any information (whether written or oral) or
documents executed in favor of, furnished or made available to the Placement
Agents or the Purchaser by the Offerors a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Indemnified Party for any legal and other expenses as such
expenses are reasonably incurred by such Indemnified Party in

 12
 

connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, judgments,
liability, expense or action described in this Section 9.1.  In addition to their other obligations under
this Section 9, the Offerors hereby agree that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of, or based upon, or related to the matters described
above in this Section 9.1, they shall reimburse each Indemnified Party on
a quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction.  To the
extent that any such interim reimbursement payment is so held to have been
improper, each Indemnified Party shall promptly return such amounts to the
Offerors together with interest, determined on the basis of the prime rate (or
other commercial lending rate for borrowers of the highest credit standing)
announced from time to time by First Tennessee Bank National Association (the “Prime
Rate”).  Any such interim reimbursement
payments which are not made to an Indemnified Party within 30 days of a request
for reimbursement shall bear interest at the Prime Rate from the date of such
request.

9.2.         Conduct of Indemnification
Proceedings. Promptly after receipt by an
Indemnified Party under this Section 9 of notice of the commencement of
any action, such Indemnified Party shall, if a claim in respect thereof is to
be made against the Offerors under this Section 9, notify the Offerors in
writing of the commencement thereof; but, subject to Section 9.4, the
omission to so notify the Offerors shall not relieve them from any liability
pursuant to Section 9.1 which the Offerors may have to any Indemnified Party
unless and to the extent that the Offerors did not otherwise learn of such
action and such failure by the Indemnified Party results in the forfeiture by
the Offerors of substantial rights and defenses.  In case any such action is brought against
any Indemnified Party and such Indemnified Party seeks or intends to seek
indemnity from the Offerors, the Offerors shall be entitled to participate in,
and, to the extent that they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such Indemnified Party; provided, however,
if the defendants in any such action include both the Indemnified Party and the
Offerors and the Indemnified Party shall have reasonably concluded that there
may be a conflict between the positions of the Offerors and the Indemnified
Party in conducting the defense of any such action or that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Offerors, the Indemnified Party shall
have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Party.  Upon receipt of
notice from the Offerors to such Indemnified Party of their election to so
assume the defense of such action and approval by the Indemnified Party of
counsel, the Offerors shall not be liable to such Indemnified Party under this
Section 9 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso in the preceding
sentence (it being understood, however, that the Offerors shall not be liable
for the expenses of more than one separate counsel representing the Indemnified
Parties who are parties to such action), or (ii) the Offerors shall not
have employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel of such
Indemnified Party shall be at the expense of the Offerors.

9.3.         Contribution. If
the indemnification provided for in this Section 9 is required by its
terms, but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an Indemnified Party under Section 9.1 in
respect of any losses, claims, damages, liabilities or expenses referred to
herein or therein, then the Offerors shall contribute to the amount paid or
payable by such Indemnified Party as a result of any losses, claims, damages,
judgments, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Offerors, on the one hand, and the Indemnified Party, on the other hand, from
the offering of such Capital Securities,

 13
 

or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Offerors, on the one
hand, and the Placement Agents, on the other hand, in connection with the statements
or omissions or inaccuracies in the representations and warranties herein or
other breaches which resulted in such losses, claims, damages, judgments,
liabilities or expenses, as well as any other relevant equitable
considerations.  The respective relative
benefits received by the Offerors, on the one hand, and the Placement Agents,
on the other hand, shall be deemed to be in the same proportion, in the case of
the Offerors, as the total price paid to the Offerors for the Capital
Securities sold by the Offerors to the Purchaser (net of the compensation paid
to the Placement Agents hereunder, but before deducting expenses), and in the
case of the Placement Agents, as the compensation received by them, bears to
the total of such amounts paid to the Offerors and received by the Placement
Agents as compensation.  The relative
fault of the Offerors and the Placement Agents shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission of a material
fact or the inaccurate or the alleged inaccurate representation and/or warranty
relates to information supplied by the Offerors or the Placement Agents and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. 
The provisions set forth in Section 9.2 with respect to notice of
commencement of any action shall apply if a claim for contribution is made
under this Section 9.3; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 9.2 for purposes of indemnification.  The Offerors and the Placement Agents agree
that it would not be just and equitable if contribution pursuant to this
Section 9.3 were determined by pro rata allocation or by any other method
of allocation that does not take account of the equitable considerations
referred to in this Section 9.3. 
The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages, judgments, liabilities or expenses referred to in this
Section 9.3 shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. In no event shall the liability of the Placement Agents hereunder be
greater in amount than the dollar amount of the compensation (net of payment of
all expenses) received by the Placement Agents upon the sale of the Capital
Securities giving rise to such obligation. 
No person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.

9.4.         Additional Remedies. The
indemnity and contribution agreements contained in this Section 9 are in
addition to any liability that the Offerors may otherwise have to any
Indemnified Party.

9.5.         Additional Indemnification. The
Company shall indemnify and hold harmless the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Sections 9.1 through 9.4 hereof.

Section
10.            Rights and
Responsibilities of Placement Agents.

10.1.       Reliance. In
performing their duties under this Agreement, the Placement Agents shall be
entitled to rely upon any notice, signature or writing which they shall in good
faith believe to be genuine and to be signed or presented by a proper party or
parties.  The Placement Agents may rely
upon any opinions or certificates or other documents delivered by the Offerors
or their counsel or designees to either the Placement Agents or the Purchaser.

10.2.       Rights of Placement Agents. In
connection with the performance of their duties under this Agreement, the
Placement Agents shall not be liable for any error of judgment or any action
taken or omitted to be taken unless the Placement Agents were grossly negligent
or engaged in willful misconduct in connection with such performance or
non-performance.  No provision of this
Agreement shall require 

 14
 

the Placement Agents to expend or risk their
own funds or otherwise incur any financial liability on behalf of the Purchaser
in connection with the performance of any of their duties hereunder.  The Placement Agents shall be under no
obligation to exercise any of the rights or powers vested in them by this
Agreement.

Section
11.            Miscellaneous.

11.1.       Disclosure Schedule. The
term “Disclosure Schedule,” as used herein, means the schedule, if any,
attached to this Agreement that sets forth items the disclosure of which is
necessary or appropriate as an exception to one or more representations or
warranties contained in Section 5 hereof; provided, that any item
set forth in the Disclosure Schedule as an exception to a representation or
warranty shall be deemed an admission by the Offerors that such item represents
an exception, fact, event or circumstance that is reasonably likely to result
in a Material Adverse Effect.  The
Disclosure Schedule shall be arranged in paragraphs corresponding to the
section numbers contained in Section 5. 
Nothing in the Disclosure Schedule shall be deemed adequate to disclose
an exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. 
Without limiting the generality of the immediately preceding sentence,
the mere listing (or inclusion of a copy) of a document or other item in the
Disclosure Schedule shall not be deemed adequate to disclose an exception to a
representation or warranty made herein unless the representation or warranty
has to do with the existence of the document or other item itself.  Information provided by the Company in
response to any due diligence questionnaire shall not be deemed part of the
Disclosure Schedule and shall not be deemed to be an exception to one or more
representations or warranties contained in Section 5 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 11.1.

11.2.       Legal Expenses. At
Closing, the Placement Agents shall provide a credit for the Offerors’
transaction-related legal expenses in the amount of $10,000.00.

11.3.       Non-Disclosure. Except
as required by applicable law, including without limitation securities laws and
regulations promulgated thereunder, (i) the Offerors shall not, and will
cause their advisors and representatives not to, issue any press release or
other public statement regarding the transactions contemplated by this
Agreement or the Operative Documents prior to or on the Closing Date and
(ii) following the Closing Date, the Offerors shall not include in any press
release, other public statement or other communication regarding the
transactions contemplated by this Agreement or the Operative Documents, any
reference to the Placement Agents, WTC, the Purchaser, the term “PreTS” or any
derivations thereof, or the terms and conditions of this Agreement or the
Operative Documents.  Notwithstanding
anything to the contrary, the Offerors may (1) consult any tax advisor
regarding U.S. federal income tax treatment or tax structure of the transaction
contemplated under this Agreement and the Operative Documents and
(2) disclose to any and all persons, without limitation of any kind, the
U.S. Federal income tax structure (in each case, within the meaning of Treasury
Regulation § 1.6011-4) of the transaction contemplated under this Agreement and
the Operative Documents and all materials of any kind (including opinions or
other tax analyses) that are provided to you relating to such tax treatment and
tax structure.  For this purpose, “tax
structure” is limited to any facts relevant to the U.S. federal income tax
treatment of the transaction and does not include information relating to
identity of the parties.

11.4.       Notices. Prior
to the Closing, and thereafter with respect to matters pertaining to this
Agreement only, all notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier or overnight air courier guaranteeing next day delivery:

 15
 

if to the
Placement Agents, to:

FTN Financial
Capital Markets

845 Crossover
Lane, Suite 150

Memphis,
Tennessee  38117

Telecopier:  901-435-4706

Telephone:  800-456-5460

Attention: 
James D. Wingett

and

Keefe, Bruyette &
Woods, Inc.

787 7th Avenue

4th Floor

New York, New
York  10019

Telecopier:  212-403-2000

Telephone:  212-403-1004

Attention: 
Mitchell Kleinman, General Counsel

with a copy to:

Lewis, Rice &
Fingersh, L.C.

500 North Broadway, Suite
2000

St. Louis,
Missouri  63102

Telecopier:  314-241-6056

Telephone:  314-444-7600

Attention: 
Thomas C. Erb, Esq.

and

Sidley Austin LLP

787 7th Avenue

New York, New York  10019

Telecopier:  212-839-5599

Telephone:  212-839-5300

Attention: 
Renwick Martin, Esq.

if to the
Offerors, to:

National Mercantile
Bancorp

1880 Century Park East,
Suite 800

Los Angeles, California  90067

Telecopier:  310-201-0629

Telephone:  310-282-6703

Attention: 
David R. Brown

 16
 

with a copy to:

Troy &
Gould P.C.

1801 Century Park East

Los Angeles,
California  90067

Telecopier:  310-789-1431

Telephone:  310-789-1231

Attention:  Alan
Spatz, Esq.

All such notices
and communications shall be deemed to have been duly given (i) at the time
delivered by hand, if personally delivered, (ii) five business days after
being deposited in the mail, postage prepaid, if mailed, (iii) when
answered back, if telexed, (iv) the next business day after being
telecopied, or (v) the next business day after timely delivery to a
courier, if sent by overnight air courier guaranteeing next day delivery.  From and after the Closing, the foregoing
notice provisions shall be superseded by any notice provisions of the Operative
Documents under which notice is given. 
The Placement Agents, the Offerors, and their respective counsel, may
change their respective notice addresses from time to time by written notice to
all of the foregoing persons.

11.5.       Parties in Interest, Successors and
Assigns. Except as expressly set forth
herein, this Agreement is made solely for the benefit of the Placement Agents,
the Purchaser and the Offerors and any person controlling the Placement Agents,
the Purchaser or the Offerors and their respective successors and assigns; and
no other person shall acquire or have any right under or by virtue of this
Agreement.  This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties.

11.6.       Counterparts. This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

11.7.       Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

11.8.       Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF LAWS) OF THE STATE OF NEW
YORK.

11.9.       Entire Agreement.
This Agreement, together with the Operative Documents and the other documents
delivered in connection with the transactions contemplated by this Agreement,
is intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.  There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein.  This
Agreement, together with the Operative Documents and the other documents
delivered in connection with the transaction contemplated by this Agreement,
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

11.10.     Severability. In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Placement Agents’ and the Purchaser’s rights and
privileges shall be enforceable to the fullest extent permitted by law.

 17
 

11.11.     Survival. The
Placement Agents and the Offerors, respectively, agree that the representations,
warranties and agreements made by each of them in this Agreement and in any
certificate or other instrument delivered pursuant hereto shall remain in full
force and effect and shall survive the delivery of, and payment for, the
Capital Securities.

Signatures appear on the following page

 18
 

If this Agreement
is satisfactory to you, please so indicate by signing the acceptance of this
Agreement and deliver such counterpart to the Offerors whereupon this Agreement
will become binding between us in accordance with its terms.

	
  

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
  

  	
  NATIONAL MERCANTILE BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST CALIFORNIA CAPITAL TRUST I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: Administrator

  
					

 

CONFIRMED AND
ACCEPTED,

as
of the date first set forth above

FTN FINANCIAL CAPITAL MARKETS,

a division of First Tennessee
Bank National Association,

as a
Placement Agent

 

	
  By:

  	
   

  	
   

  	 

	
  Name:

  	
   

  	
   

  	 

	
  Title:

  	
   

  	
   

  
						

 

 

KEEFE,
BRUYETTE & WOODS, INC.,

a
New York corporation, as a Placement Agent

 

	
  By:

  	
   

  	
   

  	 

	
  Name:

  	
   

  	
   

  	 

	
  Title:

  	
   

  	
   

  
						

 

 19

EXHIBIT A

FORM OF
SUBSCRIPTION AGREEMENT

FIRST CALIFORNIA CAPITAL
TRUST I

NATIONAL
MERCANTILE BANCORP

SUBSCRIPTION
AGREEMENT

January 25,
2007

THIS
SUBSCRIPTION AGREEMENT (this
“Agreement”) made among First California Capital Trust I (the “Trust”), a
statutory trust created under the Delaware Statutory Trust Act (Chapter 38
of Title 12 of the Delaware Code, 12 Del. C. §§ 3801, et seq.),
National Mercantile Bancorp, a California corporation, with its principal
offices located at 1880 Century Park East, Suite 800, Los Angeles,
California  90067 (the “Company” and,
collectively with the Trust, the “Offerors”), and Keefe, Bruyette &
Woods, Inc. (the “Purchaser”).

RECITALS:

A.                                    The
Trust desires to issue 16,000 of its Fixed/Floating Rate Capital Securities
(the “Capital Securities”), liquidation amount $1,000.00 per Capital Security,
representing an undivided beneficial interest in the assets of the Trust (the “Offering”),
to be issued pursuant to an Amended and Restated Declaration of Trust (the “Declaration”)
by and among the Company, Wilmington Trust Company (“WTC”), the administrators
named therein, and the holders (as defined therein), which Capital Securities
are to be guaranteed by the Company with respect to distributions and payments
upon liquidation, redemption and otherwise pursuant to the terms of a Guarantee
Agreement between the Company and WTC, as trustee (the “Guarantee”); and

B.                                    The
proceeds from the sale of the Capital Securities will be combined with the
proceeds from the sale by the Trust to the Company of its common securities,
and will be used by the Trust to purchase an equivalent amount of
Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures of the
Company (the “Debentures”) to be issued by the Company pursuant to an indenture
to be executed by the Company and WTC, as trustee (the “Indenture”); and

C.                                    In
consideration of the premises and the mutual representations and covenants
hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

PURCHASE
AND SALE OF CAPITAL SECURITIES

1.1.                              Upon
the execution of this Agreement, the Purchaser hereby agrees to purchase from
the Trust 16,000 Capital Securities at a price equal to $1,000.00 per Capital
Security (the “Purchase Price”) and the Trust agrees to sell such Capital
Securities to the Purchaser for said Purchase Price.  The rights and preferences of the Capital
Securities are set forth in the Declaration. 
The Purchase Price is payable in immediately available funds on
January 25, 2007, or such other business day as may be designated by the
Purchaser, but in no event later than January 31, 2007 (the “Closing Date”).  The Offerors shall provide the Purchaser wire
transfer instructions no later than 1 day following the date hereof.

1.2.                              The
Placement Agreement, dated January 24, 2007 (the “Placement Agreement”),
among the Offerors and the placement agents identified therein (the “Placement
Agents”) includes certain

 A-1
 

representations and
warranties, covenants and conditions to closing and certain other matters
governing the Offering.  The Placement
Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agents and
the Purchaser under the Placement Agreement and shall be entitled to enforce
the obligations of the Offerors under such Placement Agreement as fully as if
the Purchaser were a party to such Placement Agreement.

1.3.                              Anything
herein or in the Placement Agreement notwithstanding, the Offerors acknowledge
and agree that, so long as Purchaser holds some or all of the Capital
Securities, the Purchaser may in its discretion from time to time transfer or
sell, or sell or grant participation interests in, some or all of such Capital
Securities to one or more parties, provided that any such transaction complies,
as applicable, with the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”) and any other applicable securities
laws, is pursuant to an exemption therefrom, or is otherwise not subject
thereto.

ARTICLE II

REPRESENTATIONS
AND WARRANTIES OF PURCHASER

2.1.                              The
Purchaser understands and acknowledges that none of the Capital Securities, the
Debentures or the Guarantee have been registered under the Securities Act or
any other applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not
be offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any
other applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.

2.2.                              The
Purchaser represents and warrants that, except as contemplated under
Section 1.3 hereof, it is purchasing the Capital Securities for its own
account, for investment, and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act or
other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to
its ability to resell such Capital Securities pursuant to an effective
registration statement under the Securities Act or under Rule 144A or any
other exemption from registration available under the Securities Act or any
other applicable securities law.

2.3.                              The
Purchaser represents and warrants that neither the Offerors nor the Placement
Agents are acting as a fiduciary or financial or investment adviser for the
Purchaser.

2.4.                              The
Purchaser represents and warrants that it is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Offerors or of the Placement
Agents.

2.5.                              The
Purchaser represents and warrants that (a) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisers
in connection herewith to the extent it has deemed necessary, (b) it has
had a reasonable opportunity to ask questions of and receive answers from
officers and representatives of the Offerors concerning their respective
financial condition and results of operations and the purchase of the Capital
Securities, and any such questions have been answered to its satisfaction, (c) it
has had the opportunity to review all publicly available records and filings
concerning the Offerors and it has carefully reviewed such records and filings
that it considers relevant to making an investment decision, and (d) it
has made its own investment decisions based upon its own judgment, due
diligence and advice from such advisers as it has deemed necessary and not upon
any view expressed by the Offerors or the Placement Agents.

 A-2
 

2.6.                              The
Purchaser represents and warrants that it is a “qualified institutional buyer”
as defined under Rule 144A under the Securities Act.  If
the Purchaser is a dealer of the type described in paragraph (a)(1)(ii) of
Rule 144A under the Securities Act, it owns and invests on a discretionary
basis not less than U.S. $25,000,000.00 in securities of issuers that are not
affiliated with it.  The Purchaser is not
a participant-directed employee plan, such as a 401(k) plan, or any other type
of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of
Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of
Rule 144A that holds the assets of such a plan, unless investment
decisions with respect to the plan are made solely by the fiduciary, trustee or
sponsor of such plan.

2.7.                              The Purchaser represents and warrants that on
each day from the date on which it acquires the Capital Securities through and
including the date on which it disposes of its interests in the Capital
Securities, either (i) it is not (a) an “employee benefit plan” (as
defined in Section 3(3) of the United States Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)) which is subject to the
provisions of Part 4 of Subtitle B of Title I of ERISA, or any
entity whose underlying assets include the assets of any such plan (an “ERISA
Plan”), (b) any other “plan” (as defined in Section 4975(e)(1) of
the United States Internal Revenue Code of 1986, as amended (the “Code”))
which is subject to the provisions of Section 4975 of the Code or any
entity whose underlying assets include the assets of any such plan (a “Plan”),
(c) an entity whose underlying assets include the assets of any such ERISA
Plan or other Plan by reason of Department of Labor regulation
section 2510.3-101 or otherwise, or (d) a governmental or church plan
that is subject to any federal, state or local law which is substantially
similar to the provisions of Section 406 of ERISA or Section 4975 of
the Code (a “Similar Law”); or (ii) the purchase, holding and
disposition of the Capital Securities by it will satisfy the requirements for
exemptive relief under Prohibited Transaction Class Exemption (“PTCE”)
84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or a similar exemption,
or, in the case of a plan subject to a Similar Law, will not result in a
non-exempt violation of such Similar Law.

2.8.                              The Purchaser represents and warrants that it
is acquiring the Capital Securities as principal for its own account for
investment and, except as contemplated under Section 1.3 hereof, not for
sale in connection with any distribution thereof.  It was not formed solely for the purpose of
investing in the Capital Securities, and additional capital or similar
contributions were not specifically solicited from any person owning a
beneficial interest in it for the purpose of enabling it to purchase any
Capital Securities.  The Purchaser is not
a (i) partnership, (ii) common trust fund or (iii) special
trust, pension, profit sharing or other retirement trust fund or plan in which
the partners, beneficiaries or participants, as applicable, may designate the
particular investments to be made or the allocation of any investment among
such partners, beneficiaries or participants, and except as contemplated under
Section 1.3 hereof, it agrees that it shall not hold the Capital
Securities for the benefit of any other person and shall be the sole beneficial
owner thereof for all purposes and that it shall not sell participation
interests in the Capital Securities or enter into any other arrangement
pursuant to which any other person shall be entitled to a beneficial interest
in the distribution on the Capital Securities. 
The Capital Securities purchased directly or indirectly by the Purchaser
constitute an investment of no more than 40% of its assets.  The Purchaser understands and agrees that any
purported transfer of the Capital Securities to a purchaser which would cause
the representations and warranties of Section 2.6 and this
Section 2.8 to be inaccurate shall be null and void ab initio and the Offerors retain the
right to resell any Capital Securities sold to non-permitted transferees.

2.9.                              The
Purchaser represents and warrants that it has full power and authority to
execute and deliver this Agreement, to make the representations and warranties
specified herein, and to consummate the transactions contemplated herein and it
has full right and power to subscribe for Capital Securities and perform its
obligations pursuant to this Agreement.

 A-3
 

2.10.                        The
Purchaser represents and warrants that no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of,
any governmental body, agency or court having jurisdiction over the Purchaser,
other than those that have been made or obtained, is necessary or required for
the performance by the Purchaser of its obligations under this Agreement or to
consummate the transactions contemplated herein.

2.11.                        The
Purchaser represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Purchaser.

2.12.                        The
Purchaser understands and acknowledges that the Company will rely upon the
truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agrees that, if any of the acknowledgments,
representations, warranties or agreements deemed to have been made by it by its
purchase of the Capital Securities are no longer accurate, it shall promptly
notify the Company.

2.13.                        The
Purchaser understands that no public market exists for any of the Capital
Securities, and that it is unlikely that a public market will ever exist for
the Capital Securities.

ARTICLE III

MISCELLANEOUS

3.1.                              Any
notice or other communication given hereunder shall be deemed sufficient if in
writing and sent by registered or certified mail, return receipt requested,
international courier or delivered by hand against written receipt therefor, or
by facsimile transmission and confirmed by telephone, to the following
addresses, or such other address as may be furnished to the other parties as
herein provided:

To the Offerors:                                                           National
Mercantile Bancorp

1880 Century Park East,
Suite 800

Los Angeles,
California  90067

Attention:  David R. Brown

Fax: 
310-201-0629

To the Purchaser:                                                  Keefe,
Bruyette & Woods, Inc.

787 7th Avenue,
4th Floor

New York, New
York  10019

Attention:  Mitchell Kleinman, General Counsel

Fax: 
212-403-2000

Unless otherwise
expressly provided herein, notices shall be deemed to have been given on the
date of mailing, except notice of change of address, which shall be deemed to
have been given when received.

3.2.                              This
Agreement shall not be changed, modified or amended except by a writing signed
by the parties to be charged, and this Agreement may not be discharged except
by performance in accordance with its terms or by a writing signed by the party
tobe charged.

3.3.                              Upon
the execution and delivery of this Agreement by the Purchaser, this Agreement
shall become a binding obligation of the Purchaser with respect to the purchase
of Capital Securities as herein provided.

 A-4
 

3.4.                              NOTWITHSTANDING
THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO,
THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

3.5.                              The
parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.

3.6.                              This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the same
instrument.

3.7.                              In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors’ and the Purchaser’s rights and
privileges shall be enforceable to the fullest extent permitted by law.

Signatures
appear on the following page

 A-5
 

IN
WITNESS WHEREOF, this
Agreement is agreed to and accepted as of the day and year first written above.

 

	
  KEEFE, BRUYETTE & WOODS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NATIONAL
  MERCANTILE BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  FIRST
  CALIFORNIA CAPITAL TRUST I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:
  Administrator

  
								

 

 A-6

EXHIBIT
B-1

FORM OF
COMPANY COUNSEL OPINION

January 25,
2007

	
  Wilmington Trust Company

  Rodney Square North

  1100 North Market Street

  Wilmington, Delaware 
  19890-1600

  	
  FTN Financial Capital Markets

  845 Crossover Lane, Suite 150

  Memphis, Tennessee 
  38117

   

  
	
   

  	
  Keefe, Bruyette & Woods, Inc.

  787 7th Avenue, 4th Floor

  New York, New York 
  10019

  

 

Ladies and Gentlemen:

We have acted as
counsel to National Mercantile Bancorp (the “Company”), a California
corporation in connection with a certain Placement Agreement, dated
January 24, 2007, (the “Placement Agreement”), between the Company and
First California Capital Trust I (the “Trust”), on one hand, and FTN
Financial Capital Markets and Keefe, Bruyette & Woods, Inc. (the “Placement
Agents”), on the other hand.  Pursuant to
the Placement Agreement, and subject to the terms and conditions stated
therein, the Trust will issue and sell to Keefe, Bruyette & Woods,
Inc. (the “Purchaser”), $16,000,000.00 aggregate principal amount of
Fixed/Floating Rate Capital Securities (liquidation amount $1,000.00 per
capital security) (the “Capital Securities”).

Capitalized terms
used herein and not otherwise defined shall have the same meanings ascribed to
them in the Placement Agreement.

The law covered by
the opinions expressed herein is limited to the law of the United States of
America and of the State of California.

We have made such
investigations of law as, in our judgment, were necessary to render the
following opinions.  We have also
reviewed (a) the Company’s Articles of Incorporation, as amended, and its
By-Laws, as amended; and (b) such corporate documents, records,
information and certificates of the Company and the Subsidiaries, certificates
of public officials or government authorities and other documents as we have
deemed necessary or appropriate as a basis for the opinions hereinafter
expressed.  As to certain facts material
to our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in
connection with the above-referenced transaction, of officers and other
representatives of the Company and the Subsidiaries and the Trust.

As used herein,
the phrases “to the best of our knowledge” or “known to us” or other similar
phrases mean the actual knowledge of the attorneys who have had active
involvement in the transactions described above or who have prepared or signed
this opinion letter, or who otherwise have devoted substantial attention to
legal matters for the Company.

Based upon and
subject to the foregoing and the further qualifications set forth below, we are
of the opinion as of the date hereof that:

1.                                       The
Company is 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 Bank
Holding Company Act of

 B-1-1
 

1956, as amended.  Each of the Significant Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
organization.  Each of the Company and
the Significant Subsidiaries has full corporate power and authority to own or
lease its properties and to conduct its business as such business is currently
conducted in all material respects.  To
the best of our knowledge, all outstanding shares of capital stock of the
Significant Subsidiaries have been duly authorized and validly issued, and are
fully paid and nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 1831o or 12 U.S.C. Section 55, and
are owned of record and beneficially, directly or indirectly, by the Company.

2.                                       The
issuance, sale and delivery of the Debentures in accordance with the terms and
conditions of the Placement Agreement and the Operative Documents have been
duly authorized by all necessary actions of the Company.  The issuance, sale and delivery of the
Debentures by the Company and the issuance, sale and delivery of the Capital
Securities and the Common Securities by the Trust do not give rise to any
preemptive or other rights to subscribe for or to purchase any shares of
capital stock or equity securities of the Company or the Significant
Subsidiaries pursuant to the corporate Articles of Incorporation or Charter,
By-Laws or other governing documents of the Company or the Significant
Subsidiaries, or, to the best of our knowledge, any agreement or other
instrument to which either the Company or the Subsidiaries is a party or by
which the Company or the Significant Subsidiaries may be bound.

3.                                       The
Company has all requisite corporate power to enter into and perform its
obligations under the Placement Agreement and the Subscription Agreement, and
the Placement Agreement and the Subscription Agreement have been duly and
validly authorized, executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, except as the enforcement thereof may be limited by general
principles of equity and by bankruptcy or other laws affecting creditors’
rights generally, and except as the indemnification and contribution provisions
thereof may be limited under applicable laws and certain remedies may not be
available in the case of a non-material breach.

4.                                       Each
of the Indenture, the Trust Agreement and the Guarantee Agreement has been duly
authorized, executed and delivered by the Company, and is a valid and legally
binding obligation of the Company enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of creditors
generally and of general principles of equity.

5.                                       The
Debentures have been duly authorized, executed and delivered by the Company,
are entitled to the benefits of the Indenture and are legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and remedies of
creditors generally and of general principles of equity.

6.                                       To
the best of our knowledge, neither the Company, the Trust, nor any of the
Subsidiaries is in breach or violation of, or default under, with or without
notice or lapse of time or both, its Articles of Incorporation or Charter,
By-Laws or other governing documents (including without limitation, the Trust
Agreement).  The execution, delivery and
performance of the Placement Agreement and the Operative Documents and the
consummation of the transactions contemplated by the Placement Agreement and
the Operative Documents do not and will not (i) result in the creation or
imposition of any material lien, claim, charge, encumbrance or restriction upon
any property or assets of the Company or the Subsidiaries, or (ii) conflict
with, constitute a material breach or violation of, or constitute a material
default under, with or without notice or lapse of time or both, any of the
terms, provisions or conditions of (A) the Articles of Incorporation or
Charter, By-Laws or other governing documents of the Company or the

 B-1-2
 

Subsidiaries, or
(B) to the best of our knowledge, any material contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease, franchise,
license or any other agreement or instrument to which the Company or the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound or (C) any order, decree, judgment, franchise,
license, permit, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, known to us having
jurisdiction over the Company or the Subsidiaries or any of their respective
properties which, in the case of each of (i) or (ii) above, is material to the
Company and the Subsidiaries on a consolidated basis.

7.                                       Except
for filings, registrations or qualifications that may be required by applicable
securities laws, no authorization, approval, consent or order of, or filing,
registration or qualification with, any person (including, without limitation,
any court, governmental body or authority) is required under the laws of the
State of California in connection with the transactions contemplated by the
Placement Agreement and the Operative Documents in connection with the offer
and sale of the Capital Securities as contemplated by the Placement Agreement
and the Operative Documents.

8.                                       To
the best of our knowledge (i) no action, suit or proceeding at law or in
equity is pending or threatened to which the Company, the Trust or the
Subsidiaries are or may be a party, and (ii) no action, suit or proceeding
is pending or threatened against or affecting the Company, the Trust or the
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the transactions contemplated by the Placement Agreement and the Operative
Documents or the issuance and sale of the Capital Securities as contemplated
therein or the condition (financial or otherwise), earnings, affairs, business,
or results of operations of the Company, the Trust and the Subsidiaries on a
consolidated basis.

9.                                       Assuming
the truth and accuracy of the representations and warranties of the Placement
Agents in the Placement Agreement and the Purchaser in the Subscription
Agreement, it is not necessary in connection with the offering, sale and
delivery of the Capital Securities, the Debentures and the Guarantee Agreement
(or the Guarantee) to register the same under the Securities Act of 1933, as
amended, under the circumstances contemplated in the Placement Agreement and
the Subscription Agreement.

10.                                 Neither
the Company nor the Trust is or after giving effect to the offering and sale of
the Capital Securities and the consummation of the transactions described in
the Placement Agreement will be, an “investment company” or an entity “controlled”
by an “investment company,” in each case within the meaning of the Investment
Company Act of 1940, as amended, without regard to Section 3(c) of such Act.

The opinion
expressed in the first two sentences of numbered paragraph 1 of this opinion is
based solely upon certain certificates and confirmations issued by the
applicable governmental officer or authority with respect to each of the
Company and the Significant Subsidiaries.

With respect to
the foregoing opinions, since no member of this firm is actively engaged in the
practice of law in the States of Delaware or New York, we do not express any
opinions as to the laws of such states and have (i) relied, with your
approval, upon the opinion of Richards, Layton & Finger, P.A. with respect
to matters of Delaware law and (ii) assumed, with your approval and
without rendering any opinion to such effect, that the laws of the State of New
York, in all respects material to this opinion, are substantively identical to
the laws of the State of California, without regard to conflict of law
provisions.

 B-1-3
 

The opinions
expressed herein are rendered to you solely pursuant to Section 3.1(a) of
the Placement Agreement.  As such, they
may be relied upon by you only and may not be used or relied upon by any other
person for any purpose whatsoever without our prior written consent.

Very truly yours,

 B-1-4

EXHIBIT
B-2

FORM OF
DELAWARE COUNSEL OPINION

To Each of the Persons

Listed on Schedule A Hereto

Re:                               First California Capital Trust I

Ladies and Gentlemen:

We have acted as
special Delaware counsel for First California Capital Trust I, a Delaware
statutory trust (the “Trust”), in connection with the matters set forth
herein.  At your request, this opinion is
being furnished to you.

For purposes of giving
the opinions hereinafter set forth, our examination of documents has been
limited to the examination of originals or copies of the following:

(a)                                  The
Certificate of Trust of the Trust (the “Certificate of Trust”), as filed in the
office of the Secretary of State of the State of Delaware (the “Secretary of
State”) on [FILE DATE], 2007;

(b)                                 The
Declaration of Trust, dated as of [FILE DATE], 2007, among National Mercantile
Bancorp, a California corporation (the “Company”), Wilmington Trust Company, a
Delaware banking corporation (“WTC”), as trustee and the administrators named
therein (the “Administrators”);

(c)                                  The
Amended and Restated Declaration of Trust of the Trust, dated as of
January 25, 2007 (including the form of Capital Securities Certificate
attached thereto as Exhibit A-1 and the terms of the Capital Securities
attached as Annex I) (the “Declaration of Trust”), among the Company, as
sponsor, WTC, as Delaware trustee (the “Delaware Trustee”) and institutional
trustee (the “Institutional Trustee”), the Administrators and the holders, from
time to time, of undivided beneficial interests in the assets of the Trust;

(d)                                 The
Placement Agreement, dated January 24, 2007 (the “Placement Agreement”),
among the Company, the Trust, and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, Inc., as placement agents;

(e)                                  The
Subscription Agreement, dated January 25, 2007 (the “Subscription
Agreement”), among the Trust, the Company and Keefe, Bruyette & Woods,
Inc. (the documents identified in items (c) through (e) being collectively
referred to as the “Operative Documents”);

(f)                                    The
Capital Securities being issued on the date hereof (the “Capital Securities”);

(g)                                 The
Common Securities being issued on the date hereof (the “Common Securities”)
(the documents identified in items (f) and (g) being collectively referred to
as the “Trust Securities”); and

(h)                                 A
Certificate of Good Standing for the Trust, dated January 24, 2007,
obtained from the Secretary of State.

 B-2-1
 

Capitalized terms used
herein and not otherwise defined are used as defined in the Declaration of
Trust, except that reference herein to any document shall mean such document as
in effect on the date hereof.  This
opinion is being delivered pursuant to Section 3.1 of the Placement Agreement.

For purposes of this
opinion, we have not reviewed any documents other than the documents listed in
paragraphs (a) through (h) above.  In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (h) above) that is referred to in or incorporated by
reference into the documents reviewed by us. 
We have assumed that there exists no provision in any document that we
have not reviewed that is inconsistent with the opinions stated herein.  We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.

With respect to all
documents examined by us, we have assumed (i) the authenticity of all documents
submitted to us as authentic originals, (ii) the conformity with the originals
of all documents submitted to us as copies or forms, and (iii) the genuineness
of all signatures.

For purposes of this
opinion, we have assumed (i) that the Declaration of Trust constitutes the
entire agreement among the parties thereto with respect to the subject matter
thereof, including with respect to the creation, operation, and termination of
the Trust, and that the Declaration of Trust and the Certificate of Trust are
in full force and effect and have not been amended further, (ii) that there are
no proceedings pending or contemplated, for the merger, consolidation,
liquidation, dissolution or termination of the Trust, (iii) except to the
extent provided in paragraph 1 below, the due creation, due formation or due
organization, as the case may be, and valid existence in good standing of each
party to the documents examined by us under the laws of the jurisdiction
governing its creation, formation or organization, (iv) that each party to the
documents examined by us is qualified to do business in each jurisdiction where
such qualification is required generally or necessary in order for such party
to enforce its rights under the documents examined by us, (v) the legal
capacity of each natural person who is a party to the documents examined by us,
(vi) except to the extent set forth in paragraph 2 below, that each of the
parties to the documents examined by us has the power and authority to execute
and deliver, and to perform its obligations under, such documents, (vii) except
to the extent provided in paragraph 3 below, that each of the parties to the
documents examined by us has duly authorized, executed and delivered such
documents, (viii) the receipt by each Person to whom a Capital Security is to
be issued by the Trust (the “Capital Security Holders”) of a Capital Security
Certificate for the Capital Security and the payment for the Capital Securities
acquired by it, in accordance with the Declaration of Trust and the
Subscription Agreement, (ix) that the Capital Securities are issued and sold to
the Holders of the Capital Securities in accordance with the Declaration of
Trust and the Subscription Agreement, (x) the receipt by the Person (the “Common
Securityholder”) to whom the common securities of the Trust representing common
undivided beneficial interests in the assets of the Trust (the “Common
Securities” and, together with the Capital Securities, the “Trust Securities”)
are to be issued by the Trust of a Common Security Certificate for the Common
Securities and the payment for the Common Securities acquired by it, in
accordance with the Declaration of Trust, (xi) that the Common Securities are
issued and sold to the Common Securityholder in accordance with the Declaration
of Trust, (xii) that each of the parties to the documents reviewed by us has
agreed to and received the stated consideration for the incurrence of its
obligations under such documents, (xiii) that each of the documents reviewed by
us (other than the Declaration of Trust) is a legal, valid, binding and
enforceable obligation of the parties thereto in accordance with the terms
thereof and (xiv) that the Trust derives no income from or connected with
sources within the State of Delaware and has no assets, activities (other than
having a trustee and the filing of documents with the Secretary of State) or
employees in the State of Delaware.  We
have not participated in the preparation of any offering materials with respect
to the Trust Securities and assume no responsibility for its contents.

 B-2-2
 

This opinion is limited to the laws of the State
of Delaware (excluding the securities laws of the State of Delaware), and we
have not considered and express no opinion on the laws of any other
jurisdiction, including federal laws and rules and regulations relating
thereto.  Our opinions are rendered only
with respect to Delaware laws and rules, regulations and orders thereunder that
are currently in effect.

 

We
express no opinion as to (i) the effect of suretyship defenses, or defenses in
the nature thereof, with respect to the obligations of any applicable
guarantor, joint obligor, surety, accommodation party, or other secondary
obligor or any provisions of the Declaration of Trust with respect to
indemnification or contribution and (ii) the accuracy or completeness of any
exhibits or schedules to the Operative Documents.  No opinion is given herein as to the choice
of law or internal substantive rules of law that any court or other tribunal
may apply to the transactions contemplated by the Operative Documents.

 

We
express no opinion as to the enforceability of any particular provision of the
Declaration of Trust or the other Operative Documents relating to remedies
after default.

 

We
express no opinion as to the enforceability of any particular provision of any
of the Operative Documents relating to (i) waivers of rights to object to
jurisdiction or venue, or consents to jurisdiction or venue, (ii) waivers of
rights to (or methods of) service of process, or rights to trial by jury, or
other rights or benefits bestowed by operation of law, (iii) waivers of any
applicable defenses, setoffs, recoupments, or counterclaims, (iv) waivers or
variations of provisions which are not capable of waiver or variation under the
Uniform Commercial Code (“UCC”) of the State, (v) the grant of powers of
attorney to any person or entity, or (vi) exculpation or exoneration clauses,
indemnity clauses, and clauses relating to releases or waivers of unmatured
claims or rights.

 

We
have made no examination of, and no opinion is given herein as to the Trustee’s
or the Trust’s title to or other ownership rights in, or the existence of any
liens, charges or encumbrances on, or adverse claims against, any asset or
property held by the Institutional Trustee or the Trust.  We express no opinion as to the creation,
validity, attachment, perfection or priority of any mortgage, security interest
or lien in any asset or property held by the Institutional Trustee or the
Trust.

 

We
express no opinion as to the effect of events occurring, circumstances arising,
or changes of law becoming effective or occurring, after the date hereof on the
matters addressed in this opinion letter, and we assume no responsibility to
inform you of additional or changed facts, or changes in law, of which we may
become aware.

 

We
express no opinion as to any requirement that any party to the Operative
Documents (or any other persons or entities purportedly entitled to the
benefits thereof) qualify or register to do business in any jurisdiction in
order to be able to enforce its rights thereunder or obtain the benefits
thereof.

 

Based upon the foregoing, and upon our
examination of such questions of law and statutes of the State of Delaware as
we have considered necessary or appropriate, and subject to the assumptions,
qualifications, limitations and exceptions set forth herein, we are of the
opinion that:

 

1.                                       The
Trust has been duly created and is validly existing in good standing as a
statutory trust under the Delaware Statutory Trust Act (12 Del. C. §
3801, et seq.) (the “Act”). 
All filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Trust as a statutory trust
have been made.

 B-2-3
 

2.                                       Under
the Declaration of Trust and the Act, the Trust has the trust power and
authority to (A) execute and deliver the Operative Documents, (B) perform its
obligations under such Operative Documents and (C) issue the Trust Securities.

3.                                       The
execution and delivery by the Trust of the Operative Documents, and the
performance by the Trust of its obligations thereunder, have been duly
authorized by all necessary trust action on the part of the Trust.

4.                                       The
Declaration of Trust constitutes a legal, valid and binding obligation of the
Company, the Trustees and the Administrators, and is enforceable against the
Company, the Trustees and the Administrators, in accordance with its terms.

5.                                       Each
of the Operative Documents constitutes a legal, valid and binding obligation of
the Trust, enforceable against the Trust, in accordance with its terms.

6.                                       The
Capital Securities have been duly authorized for issuance by the Declaration of
Trust, and, when duly executed and delivered to and paid for by the purchasers
thereof in accordance with the Declaration of Trust, the Subscription Agreement
and the Placement Agreement, the Capital Securities will be validly issued,
fully paid and, subject to the qualifications set forth in paragraph 8 below,
nonassessable undivided beneficial interests in the assets of the Trust and
will entitle the Capital Securities Holders to the benefits of the Declaration
of Trust.  The issuance of the Capital
Securities is not subject to preemptive or other similar rights under the Act
or the Declaration of Trust.

7.                                       The
Common Securities have been duly authorized for issuance by the Declaration of
Trust and, when duly executed and delivered to the Company as Common Security
Holder in accordance with the Declaration of Trust, will be validly issued,
fully paid and, subject to paragraph 8 below and Section 9.1(b) of the
Declaration of Trust (which provides that the Holder of the Common Securities
are liable for debts and obligations of Trust), nonassessable undivided
beneficial interests in the assets of the Trust and will entitle the Common
Security Holder to the benefits of the Declaration of Trust.  The issuance of the Common Securities is not
subject to preemptive or other similar rights under the Act or the Declaration
of Trust.

8.                                       Under
the Declaration of Trust and the Act, the Holders of the Capital Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.  We note that the Holders of the Capital
Securities and the Holder of the Common Securities may be obligated, pursuant
to the Declaration of Trust, (A) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers or
exchanges of Capital Security Certificates and the issuance of replacement
Capital Security Certificates, and (B) to provide security or indemnity in
connection with requests of or directions to the Institutional Trustee to
exercise its rights and powers under the Declaration of Trust.

9.                                       Neither
the execution, delivery and performance by the Trust of the Operative
Documents, nor the consummation by the Trust of any of the transactions
contemplated thereby, requires the consent or approval of, the authorization
of, the withholding of objection on the part of, the giving of notice to, the
filing, registration or qualification with, or the taking of any other action
in respect of, any governmental authority or agency of the State of Delaware, other
than the filing of the Certificate of Trust with the Secretary of State (which
Certificate of Trust has been duly filed).

10.                                 Neither
the execution, delivery and performance by the Trust of the Trust Documents,
nor the consummation by the Trust of the transactions contemplated thereby, (i)
is in

 B-2-4
 

violation of the
Declaration of Trust or of any law, rule or regulation of the State of Delaware
applicable to the Trust or (ii) to the best of our knowledge, without
independent investigation, violates, contravenes or constitutes a default
under, or results in a breach of or in the creation of any lien (other than as
permitted by the Operative Documents) upon any property of the Trust under any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement, license or other agreement or
instrument to which the Trust is a party or by which it is bound.

11.                                 Assuming
that the Trust will not be taxable as a corporation for federal income tax
purposes, but rather will be classified for such purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986,
as amended, the Trust will not be subject to any tax, fee or governmental
charge under the laws of the State of Delaware.

The opinions expressed
in paragraph 4, 5, 6, 7 and 8 above are subject, as to enforcement, to the
effect upon the Declaration of Trust of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and transfer, and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.

Circular
230 Notice.  Any advice contained in this communication
with respect to any federal tax matter was not intended or written to be used,
and it cannot be used by any taxpayer, for the purpose of avoiding penalties
that the Internal Revenue Service may impose on the taxpayer.  If any such advice is made to any person
other than to our client for whom the advice was prepared, the advice expressed
above is being delivered to support the promotion or marketing (by a person
other than Richards, Layton & Finger) of the transaction or matter
discussed or referenced, and such taxpayer should seek advice based on the
taxpayer’s particular circumstances from an independent tax advisor.

In basing the opinions
set forth herein on “our knowledge,” the words “our knowledge” signify that no
information has come to the attention of the attorneys in the firm who are
directly involved in the representation of the Trust in this transaction that
would give us actual knowledge that any such opinions are not accurate. Except
as otherwise stated herein, we have undertaken no independent investigation or
verification of such matters.

We consent to your
relying as to matters of Delaware law upon this opinion in connection with the
Placement Agreement.  We also consent to
Lewis, Rice & Fingersh, L.C.’s and Troy & Gould P.C.’s
relying as to matters of Delaware law upon this opinion in connection with
opinions to be rendered by them on the date hereof pursuant to the Placement
Agreement.  Except as stated above,
without our prior written consent, this opinion may not be furnished or quoted
to, or relied upon by, any other Person for any purpose.

Very truly yours,

 B-2-5
 

SCHEDULE A

Wilmington
Trust Company

FTN Financial
Capital Markets

Keefe, Bruyette
& Woods, Inc.

National Mercantile
Bancorp

 B-2-6

EXHIBIT B-3

TAX COUNSEL OPINION ITEMS

1.                                       The
Debentures will be classified as indebtedness of the Company for U.S. federal
income tax purposes.

2.                                       The
Trust will be characterized as a grantor trust and not as an association
taxable as a corporation for U.S. federal income tax purposes.

 B-3-1
 

Lewis, Rice & Fingersh, L.C.

500 N. Broadway, Suite 2000

St. Louis, Missouri  63102

Re:                             Representations
Concerning the Issuance of Junior Subordinated Deferrable Interest Debentures
(the “Debentures”) to First California Capital Trust I (the “Trust”) and
Sale of Trust Securities (the “Trust Securities”) of the Trust

Ladies and Gentlemen:

In accordance with
your request, National Mercantile Bancorp (the “Company”) hereby makes the
following representations in connection with the preparation of your opinion
letter as to the United States federal income tax consequences of the issuance
by the Company of the Debentures to the Trust and the sale of the Trust
Securities.

Company hereby
represents that:

1.                                       The
sole assets of the Trust will be the Debentures, any interest paid on the
Debentures to the extent not distributed, proceeds of the Debentures, or any of
the foregoing.

2.                                       The
Company intends to use the net proceeds from the sale of the Debentures for
general corporate purposes.

3.                                       The
Trust was not formed to conduct any trade or business and is not authorized to
conduct any trade or business. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds
from the sale of Trust Securities to acquire the Debentures, and
(iii) engaging only in activities necessary or incidental thereto.

4.                                       The
Company has not entered into an agency agreement with the Trust or authorized
the trustee to act as its agent in dealing with third parties. To Company’s
knowledge, after due inquiry, the Trust has not acted as the agent of the
Company or of anyone else in dealing with third parties.

5.                                       The
Trust was formed to facilitate direct investment in the assets of the Trust,
and the existence of multiple classes of ownership is incidental to that
purpose. There is no intent to provide holders of such interests in the Trust
with diverse interests in the assets of the Trust.

6.                                       The
Company intends to create a debtor-creditor relationship between the Company,
as debtor, and the Trust, as a creditor, upon the issuance and sale of the
Debentures to the Trust by the Company. The Company will (i) record and at all
times continue to reflect the Debentures as indebtedness on its separate books
and records for financial accounting purposes, and (ii) treat the Debentures as
indebtedness for all United States tax purposes.

7.                                       During
each year, the Trust’s income will consist solely of payments made by the
Company with respect to the Debentures. Such payments will not be derived from
the active conduct of a financial business by the Trust. Both the Company’s
obligation to make such payments and the measurement of the amounts payable by
the Company are defined by the terms of the Debentures. Neither the Company’s
obligation to make such payments nor the measurement of the amounts payable by
the Company is dependent on income or profits of Company or any affiliate of
the Company.

 B-3-2
 

8.                                       The
Company expects that it will be able to make, and will make, timely payment of
amounts identified by the Debentures as principal and interest in accordance
with the terms of the Debentures with available capital or accumulated
earnings.

9.                                       The
Company presently has no intention to defer interest payments on the
Debentures, and it considers the likelihood of such a deferral to be remote
because, if it were to exercise its right to defer payments of interest with
respect to the Debentures, it would not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company or any
affiliate of the Company (other than payments of dividends or distributions to
the Company or payments of dividends from direct or indirect subsidiaries of
the Company to their parent corporations, which also shall be direct or
indirect subsidiaries of the Company) or make any payment of principal of or
interest or premium, if any, on or repay, repurchase, or redeem any debt
securities of the Company or any affiliate of the Company that rank pari passu in all respects with or junior in interest to the
Debentures, in each case subject to limited exceptions stated in
Section 2.11 of the Indenture to be entered into in connection with the
issuance of the Debentures.

10.                                 The
Company has no present intention (a) to take the position that a deferral of
interest payments on the Debentures is not a remote contingency, or (b) to make
an explicit disclosure on the Company’s tax return, under Reg. § 1.1275-2(h)(5)
that its determination as holder with respect to remote contingency status is
different from its determination as issuer.

11.                                 Immediately
after the issuance of the Debentures, the debt-to-equity ratio of the Company
(as determined for financial accounting purposes, but excluding deposit
liabilities from the Company’s debt) will be within standard depository
institution industry norms and, in any event, will be no higher than four to
one (4 : 1).

12.                                 To
the best of our knowledge, the Company is currently in compliance with all
federal, state, and local capital requirements, except to the extent that
failure to comply with any such requirements would not have a material adverse
effect on the Company and its affiliates.

13.                                 The
Company will not issue any class of common stock or preferred stock senior to
the Debentures during their term.

14.                                 The
Internal Revenue Service has not challenged the interest deduction on any class
of the Company’s subordinated debt in the last ten (10) years on the basis that
such debt constitutes equity for federal income tax purposes.

The above
representations are accurate as of the date below and will continue to be
accurate through the issuance of the Trust Securities, unless you are otherwise
notified by us in writing. The undersigned understands that you will rely on
the foregoing in connection with rendering certain legal opinions, and
possesses the authority to make the representations set forth in this letter on
behalf of the Company.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  NATIONAL MERCANTILE BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: January 24, 2007

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 B-3-3

EXHIBIT C

SIGNIFICANT
SUBSIDIARIES

Mercantile National Bank

South Bay Bank, N.A.

National Mercantile
Capital Trust I

 C-1

EXHIBIT D

FORM OF QUARTERLY REPORT

Keefe, Bruyette & Woods, Inc.

787 7th Avenue, 4th Floor

New York, New York  10019

Attention:  Mitchell Kleinman, General Counsel

BANK HOLDING COMPANY

As of [March 31, June 30, September 30 or December 31], 20  

 

	
  Tier 1 to Risk
  Weighted Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Double
  Leverage

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of
  Reserves to Non-Performing Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Net
  Charge-Offs to Loans

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Return on
  Average Assets (annualized)**

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Net Interest
  Margin (annualized)**

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Efficiency Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Assets

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Assets

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Year to Date
  Income

  	
   

  	
  $

  	
   

  

 

*A table describing the
quarterly report calculation procedures is provided on page D-2

** To annualize Return on Average Assets and Net Interest Margin do the
following:

1st Quarter-multiply income statement item by 4,
then divide by balance sheet item(s)

2nd Quarter-multiply income statement item by
2,then divide by balance sheet item(s)

3rd Quarter-divide income statement item by 3,
then multiply by 4, then divide by balance sheet item(s)

4th Quarter-should already be an annual number

NO ADJUSTMENT SHOULD BE
MADE TO BALANCE SHEET ITEMS

 D-1
 

Financial Definitions

 

	
  Report Item

  	
   

  	
  Corresponding FRY-9C or LP Line Items

  with Line Item corresponding Schedules

  	
   

  	
  Description of Calculation

  
	
  “Tier 1 Capital”
  to Risk Weighted Assets

  	
   

  	
  BHCK7206

  Schedule HC-R

  	
   

  	
  Tier 1 Risk Ratio: Core Capital (Tier 1)/ Risk-Adjusted
  Assets

  
	
  Ratio of Double
  Leverage

  	
   

  	
  (BHCP0365)/(BHCP3210)

  Schedule PC in the LP

  	
   

  	
  Total equity investments in subsidiaries divided by
  the total equity capital. This field is calculated at the parent company
  level. “Subsidiaries” include bank, bank holding company, and nonbank
  subsidiaries.

  
	
  Non-Performing
  Assets to Loans and OREO

  	
   

  	
  (BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/(BHCK2122+BHCK2744)

  Schedules HC-C, HC-M & HC-N

  	
   

  	
  Total Nonperforming Assets (NPLs+Foreclosed Real
  Estate+Other Nonaccrual & Repossessed Assets)/ Total Loans + Foreclosed
  Real Estate

  
	
  Ratio of
  Reserves to Non-Performing Loans

  	
   

  	
  (BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507)

  Schedules HC & HC-N

  	
   

  	
  Total Loan Loss and Allocated Transfer Risk
  Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured)

  
	
  Ratio of Net
  Charge-Offs to Loans

  	
   

  	
  (BHCK4635-BHCK4605)/(BHCK3516)

  Schedules HI-B & HC-K

  	
   

  	
  Net charge offs for the period as a percentage of
  average loans.

  
	
  Return on Assets

  	
   

  	
  (BHCK4340/BHCK3368)

  Schedules HI & HC-K

  	
   

  	
  Net Income as a percentage of Assets.

  
	
  Net Interest
  Margin

  	
   

  	
  (BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHCKB985)

  Schedules HI Memorandum and HC-K

  	
   

  	
  (Net Interest Income Fully Taxable Equivalent, if
  available / Average Earning Assets)

  
	
  Efficiency Ratio

  	
   

  	
  (BHCK4093)/(BHCK4519+BHCK4079)

  Schedule HI

  	
   

  	
  (Noninterest Expense)/ (Net Interest Income Fully
  Taxable Equivalent, if available, plus Noninterest Income)

  
	
  Ratio of Loans
  to Assets

  	
   

  	
  (BHCKB528+BHCK5369)/BHCK2170)

  Schedule HC

  	
   

  	
  Total Loans & Leases (Net of Unearned Income
  & Gross of Reserve)/ Total Assets

  
	
  Ratio of Loans
  to Deposits

  	
   

  	
  (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636)

  Schedule HC

  	
   

  	
  Total Loans & Leases (Net of Unearned Income
  & Gross of Reserve)/ Total Deposits (Includes Domestic and Foreign Deposits)

  
	
  Total Assets

  	
   

  	
  (BHCK2170)

  Schedule HC

  	
   

  	
  The sum of total assets. Includes cash and balances
  due from depository institutions; securities; federal funds sold and
  securities purchased under agreements to resell; loans and lease financing
  receivables; trading assets; premises and fixed assets; other real estate
  owned; investments in unconsolidated subsidiaries and associated companies;
  customer’s liability on acceptances outstanding; intangible assets; and other
  assets.

  
	
  Net Income

  	
   

  	
  (BHCK4300)

  Schedule HI

  	
   

  	
  The sum of income (loss) before extraordinary items
  and other adjustments and extraordinary items; and other adjustments, net of
  income taxes.

  

 

 D-2

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