Document:

Exhibit
10.1

 

EXECUTION VERSION

 

STOCK PURCHASE AGREEMENT

 

by and between

 

PACWEST BANCORP

 

and

 

CAPGEN CAPITAL GROUP II LP

 

August 29, 2008

 

 

PACWEST BANCORP

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”)
is made as of August 29, 2008, by and between PacWest Bancorp, a Delaware
corporation (the “Company”), and CapGen Capital Group II LP, a Delaware
limited partnership (“Purchaser”).

 

RECITALS

 

WHEREAS, the Company desires to
issue and sell and Purchaser desires to purchase certain shares of the Company’s
common stock, par value $0.01 per share (the “Company Common Stock”), on
the terms set forth herein;

 

WHEREAS, Purchaser is or will be
on or prior to the Closing Date (as defined below) a registered bank holding
company and, following consummation of the Transaction (as defined below), will
be a registered bank holding company with respect to the Company’s subsidiary
bank; and

 

WHEREAS, the Company has
authorized, and shall prepare and file under the terms set forth herein, a registration
statement on Form S-3 under the Securities Act of 1933, as amended (the “Act”),
with respect to the Shares (as defined below).

 

NOW, THEREFORE, in consideration
of the foregoing recitals and the mutual promises hereinafter set forth, the
parties hereto agree as follows:

 

SECTION 1

 

Agreement to Sell and Purchase

 

Subject to the terms and conditions hereof, Purchaser
agrees to purchase from the Company, on the Closing Date, 3,846,153 (three
million eight hundred forty-six thousand one hundred fifty-four) shares (the “Shares”)
of Company Common Stock, and the Company agrees to issue and sell such Shares
to Purchaser, at a price of $26.00 per share for an aggregate purchase price
(the “Purchase Price”) equal to $99,999,978 (ninety nine million nine hundred
ninety nine thousand nine hundred seventy eight dollars) (such issuance, sale
and purchase of the Shares, along with the other commitments by each party to
the other set forth in this Agreement, the “Transaction”).

 

SECTION 2

 

Closing, Delivery and Payment

 

2.1           Closing.  The closing (the “Closing”) of the
purchase and sale of the Shares shall take place at the offices of the Company,
at 10:00 a.m., local time on (i) the first Business Day (as defined
below) following the last to be waived or fulfilled of the conditions set forth
in Section 8 (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) or (ii) such other date and time as the parties hereto may
mutually agree.  The date on which the
Closing occurs is referred to herein as the “Closing Date.”  For purposes of this Agreement, a “Business
Day” shall mean any day that is not a Saturday, Sunday or other day in
which banks in the State of California or New York are authorized or required
by law to be closed.

 

 

2.2           Delivery.  At the Closing, subject to the terms and
conditions hereof, the Company will deliver to Purchaser the Shares in
certificate form or via uncertificated book-entry form pursuant to instructions
of Purchaser provided to the Company at least five (5) Business Days in
advance of the Closing Date, free and clear of any liens or other encumbrances
(other than those placed thereon by or on behalf of any Purchaser) and subject
to any restrictions on resale in accordance with applicable law prior to the
effectiveness of any registration statement registering such resale, and
Purchaser will make payment to the Company of the Purchase Price, by wire
transfer of immediately available funds to an account designated by the Company
and set forth in Schedule 2.2(a) hereto.  Purchaser and the Company shall execute a
cross receipt acknowledging receipt of the Shares and the Purchase Price,
respectively.

 

2.3           Anti-Dilution.  If, between the date of this Agreement
and the Closing Date, the outstanding shares of Company Common Stock shall have
been changed into or exchanged for a different number or kind of shares or
securities as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
substantially similar transaction, an appropriate and proportionate adjustment
shall be made to the number of Shares and the Purchase Price, as the case may
be, for the Shares.

 

SECTION 3

 

Representations and Warranties of the Company

 

Except as disclosed in reasonable detail in the
Company Reports (as defined below) furnished or filed prior to the date of this
Agreement (excluding any risk factor disclosures contained in such documents
under the heading “Risk Factors” and any disclosures of risks included in any “forward-looking
statements” disclaimer or other statements made that are similarly non-specific
and are predictive or forward-looking in nature), the Company hereby represents
and warrants to Purchaser as follows:

 

3.1           Organization and Standing.  (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  The Company is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or operation of its assets or properties or
conduct of its business requires such qualification, except where the failure
to be so qualified or in good standing is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect (as defined below).
As used in this Agreement, a “Material Adverse Effect” means any effect,
circumstance, occurrence or change that is material and adverse to the
business, assets, results of operations or financial condition of the Company
and Company Subsidiaries (as defined below), taken as a whole; provided, however,
that Material Adverse Effect shall not be deemed to include (A) any
effects, circumstances, occurrences or changes generally affecting the
commercial banking industry, the economy, or the financial, real estate,
securities or credit markets in the United States or 

 

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elsewhere in the world, including effects on such industry, economy or
markets resulting from any regulatory or political conditions or developments,
or any outbreak or escalation of hostilities, declared or undeclared acts of
war or terrorism, (B) changes or proposed changes in generally accepted
accounting principles in the United States (“GAAP”), (C) changes or
proposed changes in laws governing financial institutions and laws of general
applicability or related policies or interpretations of any Governmental
Authority), (in the case of each of clause (A), (B) and (C), other than
effects, circumstances, occurrences or changes that arise after the date of
this Agreement but before the Closing to the extent that such effects,
circumstances, occurrences or changes have a materially disproportionate
adverse affect on the Company and Company Subsidiaries relative to other
companies in the commercial banking industry), or (D) changes in
the market price or trading volume of Company Common Stock (it being
understood and agreed that the exception set forth in this clause (D) does
not apply to the underlying reason or cause giving rise to or contributing to
any such change).

 

(b)           Each Company Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation. 
Each Company Subsidiary is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership or
operation of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.

 

3.2           Company Capital Stock.  As of the date hereof, the authorized capital
stock of the Company consists solely of 50,000,000 shares of Company Common
Stock, of which 27,196,853 shares are issued and outstanding (excluding 969,410
shares of unvested time-based restricted stock and performance-based restricted
stock), and 5,000,000 shares of preferred stock, par value $0.01 per share,
none of which are issued and outstanding. 
As of the date hereof, 1,312 shares of Company Common Stock are issuable
upon the exercise of outstanding options to acquire such shares and there are
969,410 outstanding shares of unvested time-based and performance-based
restricted stock.  The outstanding shares
of Company Common Stock have been duly authorized and are validly issued, fully
paid and nonassessable, and are not subject to preemptive rights (and were not
issued in violation of any preemptive rights). 
The Shares will
be, as of the Closing, duly authorized by all necessary corporate action
on the part of the Company and, when issued and delivered as provided in this
Agreement, will be duly and validly issued, fully paid and nonassessable, and
the issuance thereof will not be subject to any preemptive rights.  As of the date of this Agreement, neither the
Company nor any Company Subsidiary has and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the
Company or any securities representing the right to purchase or otherwise
receive any shares of capital stock of the Company (including any rights plan
or agreement).

 

3.3           Corporate Power.  The Company and each Company Subsidiary has
all requisite power and authority (corporate and other) to carry on its
business as it is now being conducted and to own, lease or operate all its
properties and assets; and the Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
Transaction.

 

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3.4           Corporate Authority.  This Agreement and the Transaction have been
duly authorized by all necessary corporate action of the Company and the board
of directors of the Company (the “Company Board”).  This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Purchaser, this Agreement is a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors’ rights or to general equity principles.

 

3.5           Regulatory Approvals; No Violations.
(a) No consents, approvals, permits, orders, authorizations of,
exemptions, reviews or waivers by, or notices, reports, filings, declarations
or registrations with, any federal, state or local court, governmental, legislative,
judicial, administrative or regulatory authority, agency, commission, body or
other governmental entity or self regulatory organization (each, a “Governmental
Authority”) or with any third party are required to be made or obtained by
the Company or any Company Subsidiary in connection with the execution,
delivery and performance by the Company of this Agreement or the consummation
of the purchase of the Shares or any other aspect of the Transaction except for
(A) the filings contemplated by Section 5.3, (B) those already
obtained or made, (C) any securities or “blue sky” filings of any state
and (D) any notices, filings, declarations or registrations in connection
with the applications of the Purchaser as set forth in Section 5.3.  As used in this Agreement, “Company
Subsidiary” means any person of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by the Company or by
one or more of its Company Subsidiaries; and “person” means an
individual, corporation, limited liability company, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

 

(b)           The execution,
delivery and performance of this Agreement by the Company does not, and the
consummation by the Company of the Transaction will not, (A) constitute or
result in a breach or violation of, or a default under, the acceleration of any
obligations or penalties or the creation of any charge, mortgage, pledge,
security interest, restriction, claim, lien, equity, encumbrance or any other
encumbrance or exception to title of any kind on the assets of the Company or
any Company Subsidiaries (with or without notice, lapse of time, or both)
pursuant to, agreements binding upon the Company or any Company Subsidiary or
to which the Company or any Company Subsidiary or any of their respective
properties is subject or bound or any law, regulation, judgment or governmental
or non-governmental permit or license to which the Company or any Company
Subsidiary or any of their respective properties is subject, (B) constitute
or result in a breach or violation of, or a default under, the certificate of
incorporation of the Company, as amended, or the bylaws of the Company or (C) require
any consent or approval or notice or other filing under any such agreement,
law, regulation, judgment, governmental or non-governmental permit or license,
except, in the case of clauses (A) or (C) above, for any breach,
violation, default, acceleration, creation, change, consent or approval that,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect.

 

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3.6           No Brokers.  Neither the Company nor any Company
Subsidiary nor any of their respective officers, directors, employees, agents
or representatives has employed any broker or finder or incurred any liability
for any brokerage fees, commissions or finders or similar fees in connection
with the Transaction.

 

3.7           Company Reports; Financial Statements.  (a) The Company, and each Company Subsidiary
has filed or furnished, as applicable, on a timely basis all forms, filings,
registrations, submissions, statements, certifications, reports and documents
required to be filed or furnished by it with the U.S. Securities and Exchange
Commission (the “SEC”) under the Exchange Act or the Act since December 31,
2006 (the forms, statements, reports and documents filed or furnished since December 31,
2006 and through the date hereof, including any amendments thereto, the “Company Reports”).  Each of the Company Reports, at the time of
its filing or being furnished complied, or if not yet filed or furnished, will
comply, in all material respects with the applicable requirements of the Act
and the Exchange Act, and any rules and regulations promulgated thereunder
applicable to the Company Reports.   As
of their respective dates (or, if amended prior to the date hereof, as of the
date of such amendment), the Company Reports did not, and any Company Reports
filed or furnished with the SEC subsequent to the date hereof will not, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading.

 

(b)           The Company’s
consolidated financial statements (including, in each case, any notes thereto)
contained in the Company Reports, were or will be prepared (i) in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
interim consolidated financial statements, where information and footnotes
contained in such financial statements are not required under the rules of
the SEC to be in compliance with GAAP) and (ii) to comply as to form, as
of their respective date of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, and in each case such consolidated
financial statements fairly presented, in all material respects, the
consolidated financial position, results of operations, changes in stockholder
equity and cash flows of the Company and the consolidated Company Subsidiaries
as of the respective dates thereof and for the respective periods covered
thereby (subject, in the case of unaudited statements, to normal year-end
adjustments which were not and which are not expected to be, individually or in
the aggregate, material to the Company and its consolidated Company
Subsidiaries taken as a whole).

 

(c)           The Company is in
compliance in all material respects with the applicable listing and corporate
governance rules and regulations of The Nasdaq Stock Market, LLC (the “Nasdaq
Stock Market”).

 

5

 

(d)           The Company
maintains disclosure controls and procedures required by Rule 13a-15 or
15d-15 under the Exchange Act.  Such
disclosure controls and procedures are designed to ensure that information
required to be disclosed by the Company is recorded and reported on a timely
basis to the individuals responsible for the preparation of the Company’s
filings with the SEC and other public disclosure documents.  The Company maintains internal control over
financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable,
under the Exchange Act).  Such internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP and includes
policies and procedures that (i) pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company, (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company, and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on its financial statements.

 

(e)           The Company has
disclosed, based on the most recent evaluation of its chief executive officer
and its chief financial officer prior to the date hereof, to the Company’s
auditors and the audit committee of the Company Board (A) any significant
deficiencies and material weaknesses in the design or operation of its internal
control over financial reporting that are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial
information and has identified for the Company’s auditors and audit committee
of the Company Board any material weaknesses in internal control over financial
reporting and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting. 
Since December 31, 2006, no material complaints, allegation,
assertion or claim, whether written or oral from any source regarding
accounting, internal accounting controls or auditing matters, and no concerns
from the Company employees regarding questionable accounting or auditing
matters, have been received by the Company. 
No attorney representing the Company or any Company Subsidiary, whether
or not employed by the Company or any Company Subsidiary, has reported evidence
of a violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Company’s chief legal officer, audit committee (or other committee
designated for the purpose) of the Company Board or the Company Board pursuant
to the rules adopted pursuant to Section 307 of the Sarbanes-Oxley
Act.

 

(f)            The Company and
Company Subsidiaries have timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that they were
required to file since December 31, 2007 with the Board of Governors of
the Federal Reserve System (the “FRB”), the Federal Deposit Insurance
Corporation (the “FDIC”), the California Department of Financial
Institutions (the “DFI”) or any other Governmental Authority having
jurisdiction over its business or any of its assets or properties (each a “Regulatory
Authority”), and all other material reports and statements required to be
filed by it since December 31, 2007, including, without limitation, the rules and
regulations of the FDIC, the DFI or any other Regulatory Authority, and has
paid all fees and assessments due and payable in connection therewith.  As of their respective dates, such reports
and statements complied in all material respects with all the laws, rules and
regulations of the applicable Regulatory Authority with which they were filed.

 

6

 

3.8           Absence of Certain Changes.  Since December 31, 2007 until the date
hereof, (1) the Company and Company Subsidiaries have conducted their
respective businesses in all material respects in the ordinary course,
consistent with prior practice, and (2) no event or events have occurred
that have had or would be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.

 

3.9           Commitments and Contracts. The
Company has publicly disclosed in the Company Reports filed with the SEC since January 1,
2008 and prior to the date of this Agreement or provided (by hard copy,
electronic data room or otherwise) to Purchaser or its representatives true,
correct and complete copies of, any contract or agreement to which the Company
or any Company Subsidiary is a party or by which the Company or any Company
Subsidiary or any of their respective properties or assets are bound which
limits or purports to limit the freedom of the Company or any Company
Subsidiary or any of their respective Affiliates to compete in any material
line of business or any geographic area to which the Company or any Company
Subsidiary is a party or subject.

 

3.10         Litigation.  (i) No civil, criminal or administrative
litigation, claim, action, suit, hearing, arbitration, investigation or other
proceeding before any Governmental Authority or arbitrator is pending or, to
the actual knowledge of any of the executive officers of the Company,
threatened against the Company or any Company Subsidiary, (ii) neither the
Company or any Company Subsidiary is subject to any order, judgment or decree,
and (iii) there are no facts or circumstances that could result in any
claims against, or obligations or liabilities of, the Company or any Company
Subsidiary, except with respect to (i), (ii) and (iii) for those that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect.

 

SECTION 4

 

Representations and Warranties of Purchaser

 

Purchaser hereby represents and warrants to the
Company as follows:

 

4.1           Institutional Accredited Investor; Experience.  Purchaser is an “accredited investor” (as
defined in Rule 501 under the Act) and is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests.

 

4.2           Investment.  Purchaser is acquiring the Shares for
investment for its own account for investment purposes, and not with the view
to, or for resale in connection with, any distribution thereof that would
require the issuance of the Shares pursuant to this Agreement to be registered
under the Act.  As used in this
Agreement, “Affiliate” means, with respect to any person, any other
person that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such person,
and the term “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through ownership of voting securities, by contract or
otherwise.

 

7

 

4.3           No Reliance.  Purchaser has relied upon the representations
and warranties set forth herein and its own investigations and diligence,
including a review of the Company Reports filed with the SEC and including with
respect to the tax consequences of this investment and the Transaction, and not
upon any other information provided by or on behalf of the Company in making
the decision to purchase the Shares. 
Purchaser understands and acknowledges that neither the Company nor any
of the Company’s representatives, agents or attorneys is making or has made at
any time any warranties or representations of any kind or character, express or
implied, with respect to any matter or the Company Common Stock, except as
expressly set forth herein.

 

4.4           Organization and Standing.  Purchaser is duly organized, validly existing
and in good standing under the laws of the State of Delaware.  Purchaser is duly qualified to do business
and is in good standing as a foreign entity in each jurisdiction where the
ownership or operation of its assets or properties or conduct of its business
requires such qualification, except where the failure to be so qualified or in
good standing is not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the ability of Purchaser to timely
consummate the Transaction.

 

4.5           Bank Holding Company Status.  Prior to Closing, Purchaser will be a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended (the “BHCA”), and has received, or will have received prior to
the Closing Date, all necessary approvals and authority from federal and state
banking regulators to acquire the Shares as contemplated herein.

 

4.6           No Cross Support.  Purchaser is not a bank holding company for
any other entity, and neither it nor the Company nor any Company Subsidiary or
Affiliate of the Company will be looked to as a source of strength for any
other entity partially or wholly owned, controlled by or affiliated with
Purchaser.

 

4.7           Limited Partnership Power.  Purchaser has all requisite limited
partnership power and authority and has taken all limited partnership action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the Transaction.

 

4.8           Limited Partner Authority.  This Agreement and the Transaction have been
duly authorized by all necessary limited partnership action of Purchaser.  This Agreement has been duly executed and
delivered by Purchaser, and, assuming the due authorization, execution and
delivery of this Agreement by the Company, this Agreement is a valid and
legally binding agreement of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors’ rights or to general equity principles.

 

8

 

4.9           Regulatory Approvals; No Violations.  (a) No consents, approvals, permits,
order or authorizations of, exemptions, reviews or waivers by, or notices,
reports, filings or registrations with any Governmental Authority or with any
other third party are required to be made or obtained by Purchaser or any of
its Affiliates or any of their respective officers, directors or employees in
connection with the execution, delivery and performance by Purchaser of this
Agreement or the consummation of the Transaction except for (A) the approval
of the California Commissioner of Financial Institutions under Section 701
of the California Financial Code and filing of the related application, (B) the
approval of the FRB under Section 3 of the BHCA and the filing of the
related application, (C) those already obtained or made and (D) any
securities or “blue sky” filings of any state.

 

(b)           The execution, delivery, and
performance of this Agreement by Purchaser does not, and the consummation by
Purchaser of the Transaction will not, (A) constitute or result in a
breach or violation of, or a default under, or the acceleration or creation of
any obligations, penalties or the creation of any charge, mortgage, pledge,
security interest, restriction, claim, lien or equity, encumbrance or any other
encumbrance or exception to title of any kind on the assets or properties of
Purchaser (with or without notice, lapse of time, or both) pursuant to
agreements binding upon Purchaser or to which Purchaser or any of its
properties is subject or bound or any law, regulation, judgment or governmental
or non-governmental permit or license to which Purchaser or any of its
properties is subject, (B) constitute or result in a breach or violation
of, or a default under, the limited partnership agreement or other organizational
documents of Purchaser or (C) require any consent or approval under any
such agreement, law, regulation, judgment, governmental or non-governmental
permit or license (other than those contemplated by (4.9(a)), except, in the
case of clauses (A) or (C) above, for any breach, violation, default,
acceleration, creation, change, consent or approval that, individually or in
the aggregate, is not reasonably likely to have a material adverse effect on
the ability of Purchaser to timely consummate the Transaction.

 

4.10         Available Funds.   Purchaser has or at Closing will have
available to it all funds necessary for the payment to the Company of the
aggregate Purchase Price.

 

SECTION 5

 

Pre-Closing
Covenants

 

5.1           Reasonable Best Efforts.  Subject to the terms and conditions of this
Agreement, each of the Company and Purchaser agrees to cooperate with the other
and use its reasonable best efforts in good faith to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper,
desirable, or advisable on its part under this Agreement or under applicable
laws to consummate and make effective the Transaction as promptly as
practicable, including the satisfaction of the conditions set forth in Section 8
hereof.

 

5.2           Press Releases.  The initial press release issued by the
Company and Purchaser concerning the Transaction and this Agreement shall be a
joint press release, and thereafter the Company and Purchaser shall consult
with each other before issuing any press release with respect to the
Transaction or this Agreement and shall not issue any such press release or
make any such public statements without the prior consent of the other party,
which consent shall not be unreasonably withheld or delayed; provided, however, that a 

 

9

 

party may, without the prior consent of the other
party (but after such consultation, to the extent practicable in the
circumstances), issue such press release or make such public statements as may
upon the advice of outside counsel be required by law or the rules or
regulations of the Nasdaq Stock Market or the SEC or any other applicable
regulation.

 

5.3           Bank Regulatory
Applications.  (a) 
Without limiting the generality of Section 5.1, Purchaser shall use
its reasonable best efforts to prepare and file on behalf of it and any of its
subsidiaries or Affiliates, and, to the extent necessary, the Company shall use
its reasonable best efforts to prepare and file on behalf of it or any Company
Subsidiary or Affiliate, all documentation to effect all necessary notices,
reports and other filings and to obtain all permits, consents, approvals and
authorizations necessary or advisable to be obtained from any third parties
and/or Governmental Authorities in order to consummate the Transaction,
including, without limitation, any application or other filing required under Section 701
of the California Financial Code or Section 3 of the BHCA or, in each
case, any applicable regulations thereunder and the Company shall reasonably
cooperate with Purchaser in connection with the foregoing; and any initial
filings with Governmental Authorities shall be made by Purchaser as soon as
reasonably practicable after the date hereof and in any event by September 30,
2008.  Subject to applicable laws
relating to the exchange of information, Purchaser and the Company shall have
the right to review in advance, and to the extent practicable each shall
consult with the other on, all material written information submitted to any
third party and/or any Governmental Authority in connection with the
Transaction.  In exercising the foregoing
right, each of the parties agrees to act reasonably and as promptly as
practicable.  Each party hereto agrees
that it shall to the extent legally permissible and practicable consult with
the other with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and/or Governmental
Authorities necessary or advisable to consummate the Transaction and each party
shall to the extent legally permissible and practicable keep the other party
apprised of the status of material matters relating to completion of the
Transaction (including to the extent legally permissible and practicable (i) promptly
furnishing the other with copies of notices or other communications received by
Purchaser or the Company, as the case may be, from any third party and/or
Governmental Authority with respect to the Transaction and the establishment of
any bank holding company for purposes of the Transaction, and as otherwise
contemplated by this Agreement and, to the extent permitted by law, and (ii) providing
descriptions of any oral communications from such persons).

 

(b)           Each
party agrees, upon request, to furnish the other party with all information
concerning itself, its subsidiaries, directors, officers and stockholders or
shareholders, as applicable, other than any information concerning each party’s
officers, principals, directors and stockholders or shareholders the disclosing
party reasonably determines to be confidential, and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party to any third party and/or
Governmental Authority.

 

5.4           Board Seat.

 

(a)           Prior to the Closing
Date, upon satisfactory completion of a Directors & Officers
questionnaire and provision of other background information as may be
reasonably requested by the Company, the Company shall cause Mr. John Rose
or 

 

10

 

Mr. Robert
Goldstein, at Purchaser’s option, as a representative of Purchaser (the “Board
Representative”), to be appointed to the Company Board and commence serving on
the Company Board immediately following the Closing Date.  Prior to the Closing Date, the Company shall
also cause the Board Representative to be appointed to the Executive Committee
of the Company Board (or any successor committee thereto).

 

(b)           The Company shall
include the Board Representative in the Company’s slate of director nominees
recommended by the Company Board to be voted on by stockholders of the Company
at the 2009 Annual Meeting of Stockholders (the “2009 Meeting”), subject
to satisfaction of all legal and governance requirements applicable to all
board members regarding service as a director of the Company (including the
approval of the Compensation, Nominating and Governance Committee of the
Company Board) and the Company shall also cause the Board Representative to be
re-appointed to the Executive Committee of the Company Board (or any successor
committee thereto), provided that
(i) through the date of the 2009 Meeting, Purchaser shall hold shares of
Company Common Stock representing at least ten percent (10%) of the outstanding
shares of Company Common Stock; and (ii) the Board Representative shall
remain “independent” (as such term is defined in the listing standards of the
Nasdaq Stock Market).

 

(c)           Through the 2009
Meeting and, assuming the conditions in the proviso in Section 5.4(b) are
satisfied and the Board Representative is re-elected at the 2009 Meeting by the
stockholders of the Company, through the 2010 Annual Meeting of Stockholders,
Purchaser shall have the power to designate the Board Representative’s
replacement upon the death, resignation, retirement, disqualification or
removal from office of such director, subject to satisfaction of all legal and
governance requirements applicable to all board members regarding service as a
director of the Company (including the approval of the Compensation, Nominating
and Governance Committee of the Company Board) and provided
that any such replacement shall be “independent” (as such term is defined in
the listing standards of the Nasdaq Stock Market).

 

5.5           Conduct of Business Prior to the Closing.  Except as otherwise expressly contemplated or
permitted by this Agreement or with the prior written consent of Purchaser
(which consent shall not be unreasonably withheld or delayed), during the
period from the date of this Agreement to the Closing Date, the Company shall,
and shall cause each Company Subsidiary to, (i) conduct its business only
in the usual, regular and ordinary course consistent with past practice and (ii) take
no action which would reasonably be expected to adversely affect or delay (x) the
receipt of any approvals of any Governmental Authority required to consummate
the transactions contemplated hereby or (y) the consummation of the
transactions contemplated hereby.

 

5.6           Company Forbearances.  Except as expressly contemplated or permitted
by this Agreement or as set forth in Schedule 5.6, during the period from the
date of this Agreement to the Closing, the Company shall not, and shall not
permit any Company Subsidiary to, without the prior written consent of
Purchaser (which consent shall not be unreasonably withheld or delayed):

 

11

 

(a)           set any
record or payment dates for the payment of any dividends or distributions on
its capital stock or other equity interest or make, declare or pay any dividend
or make any other distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or other equity interest
or any securities or obligations convertible into or exchangeable for any
shares of its capital stock or other equity interest or stock appreciation
rights or grant any person any right to acquire any shares of its capital stock
or other equity interest, other than (A) regular quarterly cash dividends
on Company Common Stock equal to the rate paid during the fiscal quarter
immediately preceding the date hereof with record and payment dates consistent
with past practice; and (B) dividends paid by any of Company Subsidiaries
so long as such dividends are only paid to the Company or any of its other
wholly owned Subsidiaries; provided that
no such dividend shall cause any bank Company Subsidiary to cease to qualify as
a “well capitalized” institution under the prompt corrective action provisions
of the Federal Deposit Insurance Corporation Improvement Act of 1991, as
amended, and the applicable regulations thereunder;

 

(b)           or issue
or commit to issue any additional shares of capital stock or other equity
interest (except (i) options, restricted stock or other equity grants
approved by the Company Board or the Compensation, Nominating and Governance
Committee of the Company Board under the Company’s equity incentive plan) or (ii) pursuant
to the exercise of Company options or vesting of restricted stock or other
equity grants that were or are approved by the Company Board or the
Compensation, Nominating and Governance Committee of the Company Board under
the Company’s equity incentive plan), or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any additional
shares of capital stock or other equity interest (except (i) options,
restricted stock or other equity grants approved by the Company Board or the
Compensation, Nominating and Governance Committee of the Company Board under
the Company’s equity incentive plan or (ii) pursuant to the exercise of
Company options or vesting of restricted stock or other equity grants that were
or are approved by the Company Board or the Compensation, Nominating and
Governance Committee of the Company Board under the Company’s equity incentive
plan); or

 

(c)           agree to,
or make any commitment to, take any of the actions prohibited by this Section 5.6.

 

5.7           Access; Information.

 

(a)           From the
date hereof, until Purchaser no longer owns any Shares, the Company will (i) permit
Purchaser to visit and inspect, at Purchaser’s expense, the properties of the
Company and the Company Subsidiaries, to examine the corporate books and to
discuss the affairs, finances and accounts of the Company and the Company
Subsidiaries with the appropriate officers of the Company, all upon reasonable
notice and at such reasonable times and as often as Purchaser may reasonably
request; (ii) deliver to Purchaser, simultaneously with its delivery to
the Company’s senior management, (A) the monthly financial reporting
package delivered to the Company’s senior management and (B) any other
periodic financial reports prepared by or on behalf of the Company and the
Company Subsidiaries for the senior management of the Company; (iii) make
appropriate officers of the Company, and Company Subsidiaries available upon
reasonable notice and at such reasonable times and as often as Purchaser may
reasonably request for consultation with Purchaser with respect to matters
relating to the business and affairs of the Company 

 

12

 

and Company
Subsidiaries; and (iv) to
the extent consistent with applicable law, inform Purchaser in advance (except
with respect to events which require public disclosure, in which case only
following the Company’s public disclosure thereof through applicable securities
law filings or otherwise) with respect to any material corporate actions and
consult with the Company and Company Subsidiaries with respect to such actions,
and consider, in good faith, the recommendations of Purchaser in connection
with the matters on which it is consulted as described above, recognizing that
the ultimate discretion with respect to all such matters shall be retained by
the Company.  Notwithstanding the
foregoing, at any time during which the Company is subject to the periodic
reporting requirements of the Exchange Act or voluntarily reports thereunder,
the Company may satisfy its obligations pursuant to clause (ii) by filing
with the SEC (via the EDGAR system or otherwise) annual and quarterly reports
satisfying the requirements of the Exchange Act.  Any investigation pursuant to this Section 5.7
shall be conducted during normal business hours and in such manner as not to
interfere unreasonably with the conduct of the business of the Company, and
nothing herein shall require the Company or any Company Subsidiary to disclose
any information to the extent (x) prohibited by applicable law or
regulation, (y) that the Company reasonably believes such information to
be competitively sensitive proprietary information (except to the extent
Purchaser provides assurances reasonably acceptable to the Company that such
information shall not be used by Purchaser or its Affiliates to compete with
the Company and Company Subsidiaries), or (z) that such disclosure would
reasonably be expected to cause a violation of any agreement to which the
Company or any Company Subsidiary is a party or would cause a risk of a loss of
privilege to the Company or any Company Subsidiary (provided that the Company shall use commercially reasonable
efforts to make appropriate substitute disclosure arrangements under
circumstances where the restrictions in this clause (z) apply).  In the event, and to the extent, that it is
reasonably determined that the rights afforded pursuant to this Section 5.7
are not sufficient for purposes of the Department of Labor’s “plan assets”
regulations, to the extent such plan assets regulation applies to the
investment in the Shares, Purchaser and the Company shall cooperate in good
faith to agree upon mutually satisfactory amendments to these management access
and information rights as appropriate so that they thereafter satisfy what is
reasonably required by the then applicable regulations.  The Company agrees to
consider, in good faith, the recommendations of Purchaser in connection with
the matters on which it is consulted as described above, recognizing that the
ultimate discretion with respect to all such matters shall be retained by the
Company.

 

(b)           Purchaser agrees that the information
provided pursuant to this Section 5.7 shall be governed by the terms of
the Confidentiality Agreement, dated as of July 28, 2008 (the “Confidentiality
Agreement”), and that it shall abide by such terms as if it were CAP (as
defined therein) with respect thereto.

 

SECTION 6

 

Private Placement of the Shares;
Registration Rights

 

6.1           Securities Act Exemption.  It is intended that the Company Common Stock
to be issued pursuant to this Agreement will not be registered under the Act in
reliance on the exemption from the registration requirements of Section 5
of the Act set forth in Section 4(2) and Regulation D under the Act.

 

13

 

6.2           Registration Statement.  The Company shall as promptly as practicable,
but in any event within twenty (20) Business Days after the Closing Date, file
a “shelf registration statement” as defined under Rule 405 of the Act on Form S-3
with the SEC (the “Registration Statement”) for purposes of registering
under the Act the resale of the Shares.

 

6.3           Certain Registration Procedures.  In connection with the Registration Statement
to be filed by the Company pursuant to this Agreement:

 

(a)           Purchaser agrees to
provide in a timely manner information requested by the Company regarding the
proposed distribution by Purchaser of the Shares and all other information
reasonably requested by the Company in connection with the preparation of such
registration statement.

 

(b)           The Company will use
its commercially reasonable efforts to cause the Registration Statement to
become effective and, subject to Section 6.4 hereof, the Company will
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus or prospectus supplement used in
connection therewith as may be necessary (i) to keep such Registration
Statement effective and usable for resale of the Shares for a period from the
date of its initial effectiveness until such time as there are no such Shares
remaining (including by refiling the Registration Statement (or a new
Registration Statement) if the initial Registration Statement expires and (ii) to
comply with the provisions of the Act with respect to the disposition of the
securities covered by such registration statement, in each case for such time
as is contemplated by this Section 6. 
In the event that the Company is a well-known seasoned issuer (as
defined under Rule 405 of the Act) at the time of the filing of the
Registration Statement with the SEC, such Registration Statement shall be
designated by the Company as an automatic Registration Statement.

 

(c)           The Company will furnish
to Purchaser such number of copies of the applicable Registration Statement and
each such amendment and supplement thereto (including in each case all
exhibits) and of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Shares owned
or to be distributed by them.

 

(d)           The Company shall use
its reasonable best efforts to register and qualify the securities covered by
such Registration Statement under such other securities or “blue sky” laws of
such jurisdictions as shall be reasonably requested by Purchaser, to keep such
registration or qualification in effect for so long as such Registration
Statement remains in effect, and to take any other action which may be
reasonably necessary to enable Purchaser to consummate the disposition in such
jurisdictions of the securities owned by Purchaser; provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;

 

14

 

(e)           After the filing of the
Registration Statement, the Company will promptly notify Purchaser of any stop
order issued or threatened by the SEC and shall take all commercially
reasonable actions required to prevent the entry of such stop order or to
remove it if entered.

 

(f)            The Company shall
cause the Shares to be listed on each securities exchange on which Company
Common Stock is then listed.

 

(g)           The Company shall
promptly notify Purchaser:

 

(1)           at
any time when a prospectus relating thereto is required to be delivered under
the Act, of the existence of any fact of which the Company is aware or the
occurrence of an event requiring the preparation of a supplement or amendment
to either the Registration Statement or related prospectus so that, as
thereafter delivered to the purchasers of the Shares, such Registration Statement
or related prospectus, both as then in effect, will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances then existing, not misleading and promptly make available to
Purchaser a reasonable number of copies of any such supplement or amendment;

 

(2)           when
any registration statement filed pursuant to this Section 6 or any
amendment thereto (other than through the incorporation by reference therein of
any report, statement or other document required to be filed pursuant to the
Exchange Act and the rules and regulations thereunder) has been filed with
the SEC and when such registration statement or any post-effective amendment
thereto has become effective; and

 

(3)           of
any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein; and

 

(4)           of
the receipt by the Company or its legal counsel of any notification with respect
to the suspension of the qualification of the Company Common Stock for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose.

 

(h)           The Company shall use
commercially reasonable efforts to procure the cooperation of the Company’s
transfer agent in settling any offering or sale of Shares, including with
respect to the transfer of physical stock certificates into book-entry form in
accordance with any procedures reasonably requested by Purchaser.

 

(i)            All Registration Expenses
incurred in connection with the registration hereunder shall be borne by the
Company.  “Registration Expenses” means
the following expenses incurred by the Company in effecting any registration
pursuant to this Agreement (whether or not any registration or prospectus
becomes effective or final):  all
registration fees, fees and disbursements of counsel for the Company, blue sky
filing fees, and expenses of the Company’s independent accountants in
connection with any regular or special reviews incident to or required by such
registration.  For the avoidance of
doubt, the Company shall not be responsible for and shall not pay any selling
commissions and stock transfer taxes applicable to the sale of Shares and fees
and disbursements of counsel for Purchaser.

 

15

 

(j)            All obligations of the
Company and Purchaser in this Section 6 (other than as set forth in
Sections 6.5, 6.6, 6.7 and 6.8) shall terminate and be of no further force and
effect with respect to any Shares once (i) they are sold pursuant to an
effective registration statement under the Act, (ii) they may be sold
pursuant to Rule 144 without limitation thereunder on volume or manner of
sale, (iii) they shall have ceased to be outstanding or (iv) they
have been sold in a private transaction.

 

6.4           Material Developments; Suspension of Offering.

 

(a)           Notwithstanding the
provisions of Sections 6.2 or 6.3 hereof or any other provisions of this
Agreement to the contrary, the Company shall not be required to file the
Registration Statement or to keep the Registration Statement effective if the
negotiation or consummation of a transaction by the Company or any Company
Subsidiary or Affiliates is pending or an event has occurred, which
negotiation, consummation or event would require additional disclosure by the
Company in the Registration Statement of material information which the Company
in its reasonable judgment has a bona fide business purpose for keeping
confidential and the nondisclosure of which in the Registration Statement would
be expected, in the Company’s reasonable determination, to cause the
Registration Statement or any prospectus filed with respect thereto or included
therein to fail to comply with applicable disclosure requirements; provided, however, that
the Company (i) will promptly notify Purchaser of a delay, suspension or
withdrawal pursuant to this Section 6.4 (without having to provide details
thereof) and (ii) may not delay, suspend or withdraw the Registration
Statement for such reason under this Section 6.4 (A) unless, for so
long as the Board Representative is a member of the Company Board, the members
of the Company Board generally are then ineligible to sell Company securities
pursuant to the Company’s insider trading policies or (B) in the event the
Board Representative is not then a member of the Company Board, more than four (4) times
in any twelve (12) month period and in no event for more than one hundred and
twenty (120) days during the same such twelve (12) month period.  Upon receipt of any notice from the Company
of the happening of any event during the period the Registration Statement is
effective which is of a type specified in the preceding sentence or as a result
of which the Registration Statement or related prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading, Purchaser will immediately
discontinue offers and sales of the Shares under the Registration Statement
(until Purchaser has received copies of a supplemental or amended prospectus or
prospectus supplement that corrects the misstatements or omissions and received
notice that any post-effective amendment has become effective or unless
notified by the Company that Purchaser may resume such offers and sales).  If so directed by the Company, Purchaser will
use its reasonable best efforts to deliver to the Company any copies of the prospectus,
other than permanent file copies then in Purchaser’s possession, covering the
Shares in its possession at the time of receipt of such notice.  Except as required by law, Purchaser agrees
to keep confidential the fact that the Company has exercised its rights under
this Section 6.4 and all facts and circumstances relating to such exercise
until such information is made public by the Company.

 

(b)           If all reports required
to be filed by the Company pursuant to the Exchange Act have not been filed by
the required date without regard to any extension, or if the consummation of
any business combination by the Company has occurred or is probable for 

 

16

 

purposes of Rule 3-05
or Article 11 of Regulation S-X under the Act, upon written notice thereof
by the Company to Purchaser, the rights of Purchaser to offer, sell or
distribute any Shares pursuant to the Registration Statement or to require the
Company to take action with respect to the Registration Statement pursuant to
this Agreement shall be suspended until the date on which the Company has filed
such reports or obtained and filed the financial information required by Rule 3-05
or Article 11 of Regulation S-X to be included or incorporated by
reference, as applicable, in such Registration Statement and the Company shall
notify Purchaser as promptly as practicable when such suspension is no longer
required; provided, that the rights of Purchaser
shall not be suspended pursuant to the preceding clause more than four (4) times
in any twelve (12) month period and in no event for more than one hundred and
twenty (120) days during the same such twelve (12) month period.  The Company’s rights to suspend its
obligations under this Section 6.4(b) shall be in addition to its
rights under Section 6.4(a).

 

6.5           Indemnification by the Company.  The Company agrees to indemnify and hold
harmless Purchaser and, as applicable, its Affiliates, partners, members,
officers, directors, employees, representatives, and agents, and each person,
if any, who controls Purchaser within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, actions, damages, liabilities, costs and expenses (including reasonable
fees, expenses and disbursements of attorneys and other professionals incurred
in connection with investigating, defending, settling, compromising or paying
any such losses, claims, actions, damages, liabilities, costs and expenses)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto), including
any preliminary prospectus or final prospectus contained therein or any
amendment or supplement thereto, or any documents incorporated therein by
reference, or the omission or alleged omission to state therein 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, or arising
out of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary or final prospectus (or any amendment or
supplement thereto) or any documents incorporated therein by reference or
contained in the Registration Statement at the time it became effective (a “Resale
Prospectus”), including any preliminary or final prospectus contained
therein or any amendment or supplement thereto, or any documents incorporated
therein by reference, or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by Purchaser or on Purchaser’s
behalf expressly for inclusion therein; provided, however, that the Company will not be liable in any case to
the extent that any such claim, loss, damage, liability or expense arises out
of or is based upon any untrue statement or omission contained in a Resale
Prospectus which was corrected in a supplement or amendment thereto if such
claim is brought by a purchaser of the Shares from Purchaser and Purchaser
failed to deliver to such purchaser the supplement or amendment to the Resale
Prospectus in a timely manner.

 

6.6           Indemnification by Purchaser.  Purchaser agrees to indemnify and hold
harmless the Company, its officers, directors and agents and each person, if
any, who controls the Company within the meaning of either Section 15 of
the Act or Section 20 of 

 

17

 

the Exchange Act
to the same extent as the indemnity set forth in Section 6.5 from the
Company to Purchaser, but only with respect to information relating to
Purchaser furnished in writing by Purchaser or on Purchaser’s behalf expressly
for use in the Registration Statement or Resale Prospectus or any amendment or
supplement thereto.

 

6.7           Conduct of Indemnification Proceedings.  Each indemnified party shall give prompt
written notice to each indemnifying party of any claim, action, suit or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify the indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in Section 6.5 or 6.6 above, unless and to the extent the
indemnifying party shall have been actually prejudiced by the failure of such
indemnified party to so notify such party and (ii) shall not, in any
event, relieve the indemnifying party from any obligations to the indemnified
party other than the indemnification obligation provided under Section 6.5
or 6.6 above.  Such notice shall describe
in reasonable detail such claim. In case any claim, action, suit or proceeding
is brought against an indemnified party, the indemnified party shall be
entitled to hire, at its own expense, separate counsel and participate in the
defense thereof.  If the indemnifying
party so elects within a reasonable time after receipt of notice, the
indemnifying party may assume the defense of the action or proceeding at the
indemnifying party’s own expense with counsel chosen by the indemnifying party
and approved by the indemnified party, which approval shall not be unreasonably
withheld; provided, however,
that the indemnifying party will not settle or compromise any claim, action,
suit or proceeding, or consent to the entry of any judgment with respect to any
such pending or threatened claim, action, suit or proceeding without the
written consent of the indemnified party unless such settlement, compromise or
consent secures the unconditional release of the indemnified party from all liabilities
arising out of such claim, action, suit or proceeding; provided,
further, that if the defendants in any
such claim, action, suit or proceeding include both the indemnified party and
the indemnifying party and the indemnified party reasonably determines, based
upon advice of legal counsel experienced in such matters, that such claim,
action, suit or proceeding involves a conflict of interest (other than one of a
monetary nature) that would reasonably be expected to make it inappropriate for
the same counsel to represent both the indemnifying party and the indemnified,
then the indemnifying party shall not be entitled to assume the defense of the
indemnified party and the indemnified party shall be entitled to separate
counsel at the indemnifying party’s expense, which counsel shall be chosen by
the indemnified party and approved by the indemnifying party, which approval
shall not be unreasonably withheld; and provided, further, that it is understood that the indemnifying party
shall not be liable for the fees, charges and disbursements of more than one
separate firm for the indemnified party. 
If the indemnifying party assumes the defense of any claim, action, suit
or proceeding, all indemnified parties shall thereafter deliver to the
indemnifying party copies of all notices and documents (including court papers)
received by the indemnified party relating to the claim, action, suit or
proceeding, and each indemnified party shall cooperate in the defense or
prosecution of such claim.  Such
cooperation shall include the retention and (upon the indemnifying party’s
request) the provision to the indemnifying party of records and information
that are reasonably relevant to such claim, action, suit or proceeding, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.  If the indemnifying party is not entitled to
assume the defense of such claim, action, suit or proceeding as a result of the
second proviso to the fourth sentence of this Section 6.7, the 

 

18

 

indemnifying party’s
counsel shall be entitled to conduct the indemnifying party’s defense and
counsel for the indemnified party shall be entitled to conduct the defense of
the indemnified party, it being understood that both such counsel will
cooperate with each other, to the extent feasible in light of the conflict of
interest or different available legal defenses, to conduct the defense of such
action or proceeding as efficiently as possible.  If the indemnifying party is not so entitled
to assume the defense of such action or does not assume the defense, after
having received the notice referred to in the first sentence of this Section 6.7,
the indemnifying party will pay the reasonable fees and expenses of counsel for
the indemnified party; in that event, however, the indemnifying party will not
be liable for any settlement of any claim, action, suit or proceeding effected
without the written consent of the indemnifying party.  If an indemnifying party is entitled to
assume, and assumes, the defense of an action or proceeding in accordance with
this Section 6.7, the indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified party incurred thereafter in
connection with that action or proceeding except as set forth in the proviso in
the fourth sentence of this Section 6.7. 
Unless and until a final judgment is rendered that an indemnified party
is not entitled to the costs of defense under the provisions of this Section 6.7,
the indemnifying party shall reimburse, promptly as they are incurred, the
indemnified party’s costs of defense.

 

6.8           Contribution.

 

(a)           If the indemnification
provided for in Section 6.5 or 6.6 hereof is applicable in accordance with
its terms, but if determined by a court of competent jurisdiction to be legally
unenforceable in respect of any losses, claims, damages, actions, liabilities,
costs or expenses referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by indemnified party as a result of such losses, claims, damages,
actions, liabilities, costs or expenses as between the Company on the one hand
and Purchaser on the other, in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of Purchaser on the other in
connection with such statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations.  The relative fault of
the Company on the one hand and of Purchaser on the other shall be determined
by reference to, among other things, whether the action in question, including
any untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, the Company or Purchaser, and the Company’s and
Purchaser’s relative intent, knowledge, access to information and opportunity
to correct or prevent such action.

 

(b)           The Company and
Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 6.8 were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in Section 6.8(a).  The amount paid or payable by an indemnifying
party as a result of the losses, claims, damages or liabilities referred to in
Sections 6.5 and 6.6 hereof shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the indemnified party in connection with investigating or defending any such
action or claim.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. 
For purposes of this 

 

19

 

Section 6.8, each
person, if any, who controls Purchaser within the meaning of Section 15 of
the Act shall have the same rights to contribution as Purchaser, and each
director of the Company, each officer of the Company who signed a Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Act shall have the same rights to contribution as the
Company.

 

6.9           Rule 144 Reporting.  With a view to making available to Purchaser
the benefits of certain rules and regulations of the SEC which may permit
the sale of the Shares to the public without registration, the Company agrees
to use its commercially reasonable efforts to:

 

(a)           make and
keep public information available, as those terms are understood and defined in
Rule 144(c)(1) under the Act or any similar or analogous rule promulgated
under the Act, at all times after the effective date of this Agreement;

 

(b)           file with
the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act; and

 

(c)           so long as
Purchaser owns any Shares, furnish to Purchaser forthwith upon request: a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 under the Act, and of the Exchange Act; a copy of
the most recent annual or quarterly report of the Company; and such other
reports and documents as Purchaser may reasonably request in availing itself of
any rule or regulation of the SEC allowing it to sell any such securities
without registration.

 

SECTION 7

Additional Covenants

 

7.1           Preemptive Rights.

 

(a)           Company
Sale of Covered Securities.  If the
Company offers to sell Covered Securities (as defined below) in a public or
private offering of Covered Securities solely for cash (a “Qualified
Offering”), Purchaser shall be afforded the opportunity to acquire from the
Company, for the same price and on the same terms as such Covered Securities
are offered, in the aggregate up to the amount of Covered Securities required
to enable it to maintain its then-current Purchaser Percentage Interest (as
defined below), but solely to the extent that any such issuance of shares of
Covered Securities would not result in the issuance of Covered Securities that
would require a vote of the stockholders of the Company pursuant to the listing
standards of the Nasdaq Stock Market and provided, however, that this Section 7.1 shall not apply to any
Qualified Offering the gross proceeds of which, together with the aggregate
gross proceeds of any other Qualified Offering of Covered Securities after the
date hereof, do not exceed $1,000,000. 
As used in this Section 7.1, (i) “Purchaser Percentage
Interest” means, as of any date, the percentage equal to (A) the
aggregate number of shares of Company Common Stock beneficially owned (with the
term “beneficial ownership” having the meaning ascribed in Section 13(d)(3) and
Rule 13d-3 under the Exchange Act) or otherwise held by Purchaser as of
such date divided by (B) the total number of outstanding shares of Company
Common Stock as of such date and 

 

20

 

(ii) “Covered
Securities” means Common Stock and any securities convertible into or
exercisable or exchangeable for Common Stock, other than securities that are (A) issued
by the Company pursuant to any employment contract, employee or benefit plan,
stock purchase plan, stock ownership plan, stock option or equity compensation
plan or other similar plan where stock is being issued or offered to a trust,
other entity to or for the benefit of any employees, potential employees,
consultants, officers or director of the Company, (B) issued by the
Company in connection with a business combination or other merger, acquisition
or disposition transaction, (C) issued with reference to the Common Stock
of a Subsidiary (i.e., a carve-out transaction), (D) issued as a dividend
or in connection with a dividend investment or stockholder purchase plan or (E) issued
in exchange for currently outstanding securities.

 

(b)           Notice.  Prior to making any Qualified Offering of
Covered Securities, the Company shall give Purchaser written notice of its
intention (including, in the case of a registered public offering and to the
extent possible, a copy of the prospectus included in the registration
statement filed in respect of such), describing, to the extent then known, the
anticipated amount of securities, price (or, in the case of a registered public
offering, an estimated range of prices) and other material terms upon which the
Company proposes to offer the same. 
Purchaser shall have ten (10) days from the provision of such
notice to notify the Company in writing that it intends to exercise such
preemptive purchase rights and as to the amount of Covered Securities Purchaser
desires to purchase, up to the maximum amount calculated pursuant to Section 7.1(a) (the
“Designated Securities”).  Such
notice shall constitute a non-binding indication of interest of Purchaser to
purchase the amount of Designated Securities so specified (or a proportionately
lesser amount if the amount of Covered Securities to be offered in such
Qualified Offering is subsequently reduced) at the price (or range of prices)
and other terms set forth in the Company’s notice to it.  The failure to respond during such ten (10) day
period shall constitute a waiver of preemptive rights in respect of such
offering.  The obligation of the Company
to provide such notice shall be subject to Purchaser’s written agreement to
confidentiality and restrictions on trading terms reasonably acceptable to the
Company, which in any case shall be no more restrictive than those contained in
the Confidentiality Agreement.  The
failure of the Purchaser to agree to such terms within ten (10) days after
the date of receipt of the Company’s notice as described in this clause shall
constitute a waiver of the Purchaser’s preemptive rights in respect of such
offering.

 

(c)           Purchase
Mechanism.

 

(1)           If Purchaser
exercises its preemptive purchase rights provided in this Section 7.1 with
respect to a Qualified Offering that is an underwritten public offering or a
private offering made to qualified institutional buyers (as such term is
defined in Rule 144A under the Act) for resale pursuant to Rule 144A
under the Act, the Company shall offer Purchaser, if such underwritten public
offering or Rule l44A offering is consummated, the Designated Securities
(as adjusted downward or, at Purchaser’s option, upward to reflect the actual
size of such offering when priced) at the same price as the Covered Securities
are offered to the initial purchasers in such offering and shall provide
written notice of such price to Purchaser as soon as practicable prior to such
consummation.  Contemporaneously with the
execution of any underwriting agreement or purchase agreement entered into
between the Company and the underwriters or initial purchasers of such
underwritten public 

 

21

 

offering or Rule 144A offering,
Purchaser shall, if it continues to wish to exercise its preemptive rights with
respect to such offering, enter into an instrument in form and substance
reasonably satisfactory to the Company acknowledging Purchaser’s binding
obligation to purchase the Designated Securities to be acquired by it and
containing representations, warranties and agreements of Purchaser that are
customary in private placement transactions and, in any event, no less
favorable to Purchaser than any underwriting or purchase agreement entered into
by the Company in connection with such offering, and the failure to enter into
such an instrument at or prior to such time shall constitute a waiver of
preemptive rights in respect of such offering. 
Any offers and sales pursuant to this Section 7.1(c) in the
context of a registered public offering shall also be conditioned on reasonably
acceptable representations and warranties of Purchaser regarding its status as
the type of offeree to whom a private sale can be made concurrently with a
registered offering in compliance with applicable securities laws.

 

(2)           If
Purchaser exercises its preemptive rights provided in this Section 7.1
with respect to a Qualified Offering that is not an underwritten public
offering or Rule 144A offering (a “Private Placement”), the closing
of the purchase of the Covered Securities with respect to which such right has
been exercised shall be conditioned on the consummation of the Private
Placement giving rise to such preemptive purchase rights and shall take place
simultaneously with the closing of the Private Placement or on such other date
as the Company and Purchaser shall agree in writing; provided that
the actual amount of Covered Securities to be sold to Purchaser pursuant to its
exercise of preemptive rights hereunder shall be reduced if the aggregate
amount of Covered Securities sold in the Private Placement is reduced and, at
the option of Purchaser (to be exercised by delivery of written notice to the
Company within five (5) Business Days of receipt of notice of such
increase), shall be increased if such aggregate amount of Covered Securities
sold in the Private Placement is increased. 
In connection with its purchase of Designated Securities, Purchaser
shall, if it continues to wish to exercise its preemptive rights with respect
to such offering, execute an agreement containing representations, warranties
and agreements of Purchaser that are substantially similar in all material
respects to the agreements executed by other purchasers in such Private
Placement.

 

(3)           If,
prior to consummation of Qualified Offering, the terms of the proposed issuance
change with the result that the price is less than the minimum price or more
than the maximum price set forth in the notice contemplated by Section 7.1(b) or
the other principal terms are more favorable in any material respect to the
prospective purchaser than those set forth in such notice, it shall be
necessary for a separate notice to be furnished, and the terms and provisions
of this Section 7.1 separately complied with.

 

(d)           Termination
of Preemptive Rights.  Anything to
the contrary in this Section 7.1 notwithstanding, the preemptive right to
purchase Covered Securities granted by this Section 7.1 shall terminate as
of and not be available for any offering that commences at any time after the
date on which Purchaser offers, sells, pledges, or otherwise transfers any
Shares purchased hereunder, including by way of entry into any swap or other
agreement or transaction that hedges or transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of such Company
Common Stock (a “Hedging Transaction”).

 

22

 

7.2           Restrictions
on Transfer.  Purchaser shall not,
directly or indirectly, transfer, sell, assign, pledge, convey, hypothecate or
otherwise encumber or dispose of, or engage in a Hedging Transaction with
respect to (collectively, “Transfer”)
any of the Shares, other than any such Transfer that, to the knowledge of
Purchaser after reasonable inquiry, taken together with any other Transfers of
shares of Company Common Stock by Purchaser to the same person or any of its
Affiliates at any time, would cause all such Transfers to represent more than
4.9% of the outstanding shares of Company Common Stock as of immediately prior
to such Transfer.  Notwithstanding Section 7.2,
nothing shall prevent Purchaser from making a Transfer in violation of Section 7.2
under the following circumstances:

 

(a)           Transfers
with the consent of the Company Board (such consent not to be unreasonably
withheld) to any Affiliate of Purchaser if the transferee agrees in writing for
the benefit of the Company (with a copy thereof to be furnished to the Company
and to be in form and substance reasonable satisfactory to the Company) to be
bound by the terms of this Agreement and provided that,
in conjunction therewith, the assignee makes to the Company the representations
and warranties contained in Sections 4.5 and 4.6 as if such assignee were “Purchaser”
therein and the Closing and Closing Date referred to in Sections 4.5 and 4.6
were the closing and closing date of such assignment; and

 

(b)           Transfers
pursuant to a merger, tender offer or exchange offer or other business
combination, acquisition of assets or similar transaction or change of control
involving the Company or any Company Subsidiary so long as such transaction has
been approved by the Company Board.

 

7.3           Indemnity
for Purchaser.  The Company agrees to indemnify and hold
harmless Purchaser and its Affiliates and each of their respective officers,
directors, partners, members and employees, and each person who controls
Purchaser within the meaning of the Exchange Act and the rules and
regulations promulgated thereunder (each an “Indemnified Person”), to
the fullest extent lawful, from and against any and all judgments, fines,
amounts paid in settlement and expenses (including reasonable attorneys’ fees
and disbursements) (collectively, “Losses”) arising out of or resulting
from any action, suit, claim, proceeding or investigation by any Governmental
Authority, stockholder of the Company or any other person (other than the
Company) relating to this Agreement or the Transaction (other than any Losses
determined by a court of competent jurisdiction to be attributable to the acts,
errors or omissions on the part of Purchaser, but not including the
Transaction).  With respect to any Losses
in respect of which indemnity may be sought under this Section 7.3, the
respective rights and obligations and procedures contained in Section 6.7
shall apply as if restated in this Section 7.3.  In no event shall the Company be liable or
otherwise responsible to any Indemnified Person for any consequential or
punitive damages except to the same extent that a director of the Company would
be entitled to indemnification for such damages under the Company’s certificate
of incorporation, bylaws or the Delaware General Corporation Law.

 

23

 

7.4           Bank
Holding Company Matters.

 

(a)           Each
of Purchaser and the Company agrees to comply in all material respects with all
laws and regulations applicable to it as a registered bank holding company.

 

(b)           Purchaser
agrees that it shall not, and shall not permit any of its Affiliates to, make
any investments or acquisitions or take any other actions that would reasonably
be expected to cause Purchaser to become a bank holding company with respect to
any other entity or otherwise be looked to as a source of strength for any
other entity partially or wholly owned, controlled by or affiliated with
Purchaser, to cause any bank subsidiary of the Company to become liable
(contingently or otherwise) for any liabilities of any other insured depository
institution or to result in any restrictions or limitations on the activity of
the Company or any Company Subsidiary.

 

(c)           In
connection with any proposed activity, acquisition or other event or
transaction on the part of Purchaser, the Company or any Company Subsidiary
that requires any consent or approval from, or filing or notice to, any
Regulatory Authority (a “Regulatory Action”), each party hereto agrees
to, and to cause its Affiliates to, upon the other party’s written request,
take such actions or refrain from taking such actions, provide such information
and otherwise reasonably cooperate with the other party in each case as the
requesting party or the applicable Regulatory Authority shall reasonably
request in connection with such Regulatory Action, in each case, to the extent
necessary to obtain any required consent or approval or make any required
filing or notice.  Notwithstanding the
foregoing, neither party shall be required to take such actions or refrain from
taking such actions, provide such information and otherwise reasonably
cooperate to the extent doing so would reasonably be likely to result in the
imposition of any conditions, restrictions or requirements that would be
materially and unreasonably burdensome on such party.

 

7.5           Legend.  Purchaser agrees that all certificates or
other instruments representing Shares will bear a legend substantially to the
following effect:

 

“THE SECURITIES
REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.  THIS INSTRUMENT IS ISSUED
PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF
A STOCK PURCHASE AGREEMENT, DATED AUGUST 29, 2008, BETWEEN THE ISSUER OF THESE
SECURITIES AND PURCHASER REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH
THE ISSUER.  THE SECURITIES REPRESENTED
BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT.  ANY SALE
OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.”

 

In the event that
any Shares (i) are no longer subject to the transfer restrictions set
forth in this Agreement, (ii) are Transferred in a transaction registered
under the Act, (iii) are Transferred in a transaction exempt from the registration
requirements of the Act, and upon delivery to the Company of such documents as
it may reasonably request with respect to 

 

24

 

such exemption, or
(iv) upon Purchaser’s request and receipt by the Company and its transfer
agent of an opinion of Purchaser’s counsel, reasonably satisfactory to the
Company and its transfer agent, to the effect that a “private placement” legend
is no longer required under the Act and applicable state laws, the Company shall
issue new certificates representing such Shares, which shall not contain such
portion of the above legend that is no longer applicable.

 

SECTION 8

 

Conditions

 

8.1           Conditions to Each Party’s Obligations to Close
the Transaction.  The
obligation of Purchaser to purchase the Shares, and of the Company to issue and
sell the Shares, at Closing is subject to the fulfillment of the following
conditions as of the Closing Date:

 

(a)           No
Injunction.  No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
restrain, enjoins or otherwise prohibits consummation of any transaction
contemplated by this Agreement (collectively, an “Order”).

 

8.2           Conditions to the Obligations of Purchaser.  The obligation of Purchaser to purchase the
Shares is, at the option of Purchaser, subject to the fulfillment of the following
conditions as of the Closing Date:

 

(a)           Representations and
Warranties; Covenants.  (i) The
representations and warranties in Section 3.8(2) shall be true and
correct in all respects as of the Closing Date, and (ii) the other
representations and warranties of the Company set forth in this Agreement
(without regard to any “material,” “Material Adverse Effect” or other
materiality qualifier) shall be true and correct at and as of the Closing Date
(except to the extent such representations and warranties relate to an earlier
date, in which case such representations and warranties shall be true and
correct on and as of such earlier date); provided  however, that in the event of a breach of a representation
or warranty of the type described in Section 8.2(a)(ii), the condition set
forth in this Section 8.2(a) shall be deemed satisfied unless the
effect of all such breaches of representations and warranties taken together
would reasonably be likely to have a Material Adverse Effect.  The Company shall have performed or complied
in all material respects with all covenants of the Company in this Agreement.

 

(b)           Bringdown
Certificate.  The Company shall have
delivered to Purchaser a certificate of the Company, executed by an executive
officer of the Company, dated the Closing Date, and certifying to the
fulfillment of the conditions specified in clause (a) of this Section 8.2.

 

(c)           Regulatory Approvals. 
All approvals of the FRB and the DFI in connection with the execution,
delivery and performance of this Agreement and the consummation of the
Transaction by Purchaser shall have been made or obtained (as the case may be)
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall 

 

25

 

have expired, and none of
the approvals shall contain any conditions, restrictions or requirements which
would reasonably be likely (i) following the Closing Date, to,
individually or in the aggregate, have a material adverse effect on Purchaser
or any of its Subsidiaries or Affiliates or (ii)  to be materially and
unreasonably burdensome on Purchaser or any of its Subsidiaries or Affiliates.

 

8.3           Conditions to Closing of Company.  The Company’s obligation to sell and issue
the Shares is, at the option of the Company, subject to the fulfillment of the
following conditions as of the Closing Date:

 

(a)           Representations and
Warranties; Covenants.  The
representations and warranties of Purchaser in this Agreement (without regard
to any “material” or “material adverse effect” qualifiers) shall be true and
correct at and as of the Closing (except to the extent such representations and
warranties relate to an earlier date, in which case such representations and
warranties shall be true and correct on and as of such earlier date); provided, however, that in the event of a breach of a
representation or warranty of Purchaser, the condition set forth in this Section 8.3(a) shall
be deemed satisfied unless the effect of all such breaches of representations
and warranties taken together would reasonably be likely to prevent or
materially impede or delay the consummation of the transactions contemplated by
this Agreement.  Purchaser shall have
performed or complied in all material respects with all covenants of Purchaser
in this Agreement.

 

(b)           Bringdown
Certificate.  Purchaser shall have
delivered to the Company a certificate of Purchaser, executed by an executive
officer of Purchaser, dated the Closing Date, and certifying to the fulfillment
of the conditions specified in clause (a) of this Section 8.3.

 

(c)           Regulatory Approvals. 
All approvals of the FRB and the DFI in connection with the execution,
delivery and performance of this Agreement and the consummation of the
Transaction by Purchaser shall have been made or obtained (as the case may be)
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired, and none of the approvals shall contain any
conditions, restrictions or requirements which would reasonably be likely (i) following
the Closing Date, to, individually or in the aggregate, have a Material Adverse
Effect on the Company, (ii) be materially and unreasonably burdensome on
the Company or any of its Subsidiaries or Affiliates or (iii) to require
the sale by the Company or any Company Subsidiary or Affiliates of any assets.

 

SECTION 9

Miscellaneous

 

9.1           Governing Law; Venue.  This Agreement shall be deemed to be made in
and in all respects shall be interpreted, construed and governed by and in
accordance with the laws of the State of Delaware.  The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the federal courts of
the United States of America located in the State of Delaware solely for the
purposes of any suit, action or other proceeding between any of the parties
hereto arising out of this Agreement or any transaction contemplated hereby,
and hereby waive, and agree to assert, as a defense in any 

 

26

 

action, suit or
proceeding for the interpretation or enforcement hereof, that it is not subject
thereto or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such Delaware state or federal
court.  The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 9.7or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.    EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

9.2           Attorney’s Fees.  In the event of any action of any kind
between the parties hereto with respect to this Agreement, the prevailing party
shall be entitled to recover from the other party its attorney’s fees and
related costs and expenses incurred in connection with such action.

 

9.3           Termination.  This Agreement may be terminated at any
time prior to the Closing:

 

(a)           by either
Purchaser or the Company if the Closing shall not have occurred by February 28,
2009 (the “Termination Date”), provided, however
that the right to terminate this Agreement under this Section 9.3(a) shall
not be available to any party whose breach of any representation or warranty or
failure to perform any obligation under this Agreement shall have caused or
resulted in the failure of the Closing to occur on or prior to such date; or

 

(b)           by either
Purchaser or the Company in the event that any Governmental Authority shall
have issued an Order and such Order shall have become final and nonappealable;
or

 

(c)           by the
Company if there has been a breach of any representation, warranty, covenant or
agreement made by Purchaser in this Agreement, or any such representation and
warranty shall have become untrue after the date of this Agreement, such that Section 8.3(a) would
not be satisfied and such breach or condition is not curable or, if curable, is
not cured within the earlier of (x) thirty (30) days after written notice
thereof is given by the Company to Purchaser and (y) the Termination Date;
or

 

(d)           by
Purchaser if there has been a breach of any representation, warranty, covenant
or agreement made by the Company in this Agreement, or any such representation
and warranty shall have become untrue after the date of this Agreement, such
that Section 8.2(a) would not be satisfied and such breach or
condition is not curable or, if curable, is not cured within the earlier of (x) thirty
(30) days after written notice thereof is given by Purchaser to the Company and
(y) the Termination Date; or

 

27

 

(e)           by the
mutual written consent of Purchaser and the Company. In the event of
termination of this Agreement as provided in this Section 9.3, this
Agreement shall forthwith become void, except that nothing herein shall relieve
any party from liability for any breach of this Agreement, material
misrepresentation or fraud.

 

9.4           Survival.  The representations and warranties made
herein shall survive the Closing Date and shall expire on the date that is six (6) months
following the Closing Date; provided, however that the representation and warranty in Section 3.8(2) shall
expire as of the Closing Date.  The
covenants contained herein shall survive in accordance with their respective
terms.

 

9.5           Successors and Assigns.  Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

 

9.6           Entire Agreement; Amendment.  This Agreement and the Confidentiality
Agreement constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof and thereof, and no party shall
be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein.  Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or
termination is sought.

 

9.7           Notices, Etc.  Any notice, request, instruction or other
document to be given hereunder by any party to the other will be in writing and
will be deemed to have been duly given (a) on the date of delivery if
delivered personally or by telecopy or facsimile, upon confirmation of receipt,
(b) on the first Business Day following the date of dispatch if delivered
by a recognized next-day courier service, or (c) on the third Business Day
following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. 
All notices hereunder shall be delivered as set forth below, or pursuant
to such other instructions as may be designated in writing by the party to
receive such notice.

 

	
  If to Purchaser to it
  at:

  
	
   

  	
   

  
	
   

  	
  CapGen
  Capital Group II LP

  
	
   

  	
  c/o
  CapGen Capital Advisers LLC

  
	
   

  	
  280
  Park Avenue

  
	
   

  	
  40th
  Floor West, Suite 401

  
	
   

  	
  New
  York, New York 10017

  
	
   

  	
  Attn:
  John Sullivan, Managing Director

  
	
   

  	
  Telephone:
  (212) 542-6868

  
	
   

  	
  Fax:
  (212) 542-6879

  
	
   

  	
   

  
	
   

  	
  with
  a copy to (which copy alone shall not constitute notice):

  
	
   

  	
   

  
	
   

  	
  Simpson
  Thacher & Bartlett LLP

  
	
   

  	
  425
  Lexington Avenue

  
	
   

  	
  New
  York, New York 10017

  
	
   

  	
  Attn:   Gary I. Horowitz, Esq.

  
	
   

  	
  Telephone:
  (212) 455-2000

  
	
   

  	
  Fax:
  (212) 455-2502

  

 

28

 

	
  If to the Company:

  
	
   

  	
   

  
	
   

  	
  PacWest
  Bancorp

  
	
   

  	
  10250
  Constellation Blvd., Suite 1640

  
	
   

  	
  Los
  Angeles, CA 90067

  
	
   

  	
  Attn:
  Jared M. Wolff, Esq., General Counsel

  
	
   

  	
  Telephone:
  (310) 728-1023

  
	
   

  	
  Fax:
  (310) 201-0498

  
	
   

  	
   

  
	
   

  	
  with
  a copy to (which copy alone shall not constitute notice):

  
	
   

  	
   

  
	
   

  	
  Sullivan &
  Cromwell LLP

  
	
   

  	
  1888
  Century Park East, Suite 2100

  
	
   

  	
  Los
  Angeles, CA 90067

  
	
   

  	
  Attn:
  Patrick S. Brown, Esq.

  
	
   

  	
  Telephone:
  (310) 712-6600

  
	
   

  	
  Fax:
  (310) 712-8800

  

 

9.8           Specific Performance.  The Company and Purchaser acknowledge and
agree that irreparable damage to the other party would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached.  It is accordingly agreed that each party
shall be entitled to an injunction, injunctions or other equitable relief,
without the necessity of posting a bond, to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which the
parties may be entitled by law or equity.

 

9.9           No Third Party Beneficiaries.  Other than as set forth in Sections 6.5 and
6.6 and 7.3, nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.

 

9.10                         No Assignment.  This Agreement shall not be assignable by
operation of law or otherwise; provided,
however, that Purchaser may
assign its rights and obligations under this Agreement without the Company’s
consent to any Affiliate, but only if the assignee agrees in writing with the
Company in form and substance reasonably satisfactory to the Company to be
bound by the terms of this Agreement and in conjunction therewith, makes to the
Company representations and warranties substantially equivalent (with necessary
conforming changes) to those contained in Section 4 as if such assignee
were “Purchaser” therein (any such transferee shall be included in the term “Purchaser”);
provided, further, that no such assignment shall be
permitted without the Company’s consent if it (x) would reasonably be
expected to adversely affect or delay the receipt of the approvals of any
Governmental Authority described in Section 5.3, (y) would require
any consents or approvals from or filings or notices with any Governmental
Authority or other person not identified in Section 5.3 or (z) would
reasonably be expected to adversely affect or delay the consummation of the
transactions contemplated hereby.

 

29

 

9.11         Expenses.  The Company and Purchasers shall bear their
own respective expenses incurred on its behalf with respect to this Agreement
and the Transaction.

 

9.12         Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.

 

9.13         Severability.  In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that
no such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.

 

9.14         Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

30

 

This
STOCK PURCHASE AGREEMENT is hereby executed as of the date first above written.

 

	
  “COMPANY”

  	
  PACWEST BANCORP,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Matthew P. Wagner

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Matthew
  P. Wagner

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  “PURCHASER”

  	
  CAPGEN CAPITAL GROUP II LP,

  
	
   

  	
  a Delaware limited
  partnership.

  
	
   

  	
   

  
	
   

  	
  By:
  CapGen Capital Group II LLC, its general

  partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Eugene A. Ludwig

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Eugene
  A. Ludwig

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Member

  
						

 

31CC - Filed by Filing Services Canada Inc. 403-717-3898

CONTROLLER AGREEMENT

THIS AGREEMENT is made effective this 31st day of August, 2008.

BETWEEN:

Lexaria Corp., a body corporate duly incorporated under the laws of the State of Nevada, and having its Registered Office at 604 – 700 West Pender, in the City of Vancouver, in the Province/State of British Columbia, V6C 1G8

(hereinafter called the "Lexaria")

AND:

CAB Financial Services Ltd., a company duly incorporated under the laws of the Province of British Columbia and having an office at 483 Holbrook Road East, in the City of Kelowna, in the Province of British Columbia, V1X 7H9

(hereinafter called the "CAB")

WHEREAS:

A.

CAB is a consulting company controlled by Chris Bunka, who has been appointed President and Chief Executive Officer of Lexaria by the board of Directors;

B.

Lexaria is desirous of retaining the accounting and controller services of CAB on a continuing basis and CAB has agreed to serve Lexaria as an independent contractor upon the terms and conditions hereinafter set forth;

FOR VALUABLE CONSIDERATION it is hereby agreed as follows:

.

CAB shall provide corporate accounting and controller services to Lexaria, such duties and responsibilities to include those services set out in Schedule A and CAB shall serve Lexaria (and/or such subsidiary or subsidiaries of Lexaria as Lexaria may from time to time require) in such accounting and controller capacity or capacities as may from time to time be determined by 

 

- 2 -

resolution of the Board of Directors of Lexaria and shall perform such duties and exercise such powers as may from time be determined by resolution of the Board of Directors, as an independent contractor.

2.

The basic remuneration of CAB for its services hereunder shall be at the rate of four thousand five hundred Canadian dollars per month ($4,500.00) exclusive of GST, together with any such increments thereto as the Board of Directors of Lexaria may from time to time determine, payable on the 15th business day of each calendar month. The basic compensation covers that time required by CAB, in its estimation, to fulfill the Services.

3.

CAB shall be responsible for the payment of its income taxes and GST remittances as shall be required by any governmental entity with respect to compensation paid by Lexaria to CAB.

4.

The terms "subsidiary" and "subsidiaries" as used herein mean any corporation or company of which more than 50% of the outstanding shares carrying voting rights at all times (provided that the ownership of such shares confers the right at all times to elect at least a majority of the Board of Directors of such corporation or company) are for the time being owned by or held for Lexaria and/or any other corporation or company in like relation to Lexaria and include any corporation or company in like relation to a subsidiary.

5.

During the term of this Agreement, CAB shall provide its services to Lexaria through Bal Bhullar (“Bhullar”), and CAB shall ensure that Bhullar will be available to provide such services to Lexaria in a timely manner subject to Bhullar's availability at the time of the request.

6.

CAB shall be reimbursed for all travelling and other expenses actually and properly incurred by it in connection with its duties hereunder.  For all such expenses CAB shall furnish to Lexaria statements, receipts and vouchers for such out-of-pocket expenses on a monthly basis.

7.

Neither CAB nor Bhullar shall, either during the continuance of its contract hereunder or at any time thereafter, disclose the private affairs of Lexaria and/or its subsidiary or 

 

- 3 -

subsidiaries, or any secrets of Lexaria and/or its subsidiary or subsidiaries, to any person other than the Directors of Lexaria and/or its subsidiary or subsidiaries or for Lexaria's purposes and shall not (either during the continuance of its contract hereunder or at any time thereafter) use for its own purposes or for any purpose other than those of Lexaria any information it may acquire in relation to the business and affairs of Lexaria and/or its subsidiary or subsidiaries.

8.

CAB and Bhullar shall well and faithfully serve Lexaria or any subsidiary as aforesaid during the continuance of its contract hereunder and use its best efforts to promote the interests of Lexaria.

9.

This Agreement may be terminated forthwith by Lexaria without prior notice if at any time:

(a)

CAB shall commit any material breach of any of the provisions herein contained; or

(b)

CAB shall be guilty of any misconduct or neglect in the discharge of its duties hereunder; or

(c)

CAB shall become bankrupt or make any arrangements or composition with its creditors; or

(d)

Bunka shall become of unsound mind or be declared incompetent to handle his own personal affairs; or

(e)

CAB or Bunka shall be convicted of any criminal offence other than an offence which, in the reasonable opinion of the Board of Directors of Lexaria, does not affect their position as a Consultant or a director of Lexaria.

This Agreement may also be terminated by either party upon thirty (30) days written notice to the other.

11.

In the event this Agreement is terminated by reason of default on the part of CAB or 

 

- 4 -

the written notice of Lexaria, then at the request of the Board of Directors of Lexaria, CAB shall cause Bhullar to forthwith resign any position or office which she then holds with Lexaria or any subsidiary of Lexaria.  The provisions of paragraph 9 shall survive the termination of this Agreement.

12.

Lexaria is aware that CAB has now and will continue to have financial interests in other companies and properties and Lexaria recognizes that these companies and properties will require a certain portion of CAB's time.  Lexaria agrees that CAB may continue to devote time to such outside interests, PROVIDED THAT such interests do not conflict with, in any way, the time required for CAB to perform its duties under this Agreement.

13.

The services to be performed by CAB pursuant hereto are personal in character, and neither this Agreement nor any rights or benefits arising thereunder are assignable by CAB without the previous written consent of Lexaria.

15.

Any notice in writing or permitted to be given to CAB hereunder shall be sufficiently given if delivered to CAB personally or mailed by registered mail, postage prepaid, addressed to CAB as its address above.  Any such notice mailed as aforesaid shall be deemed to have been received by CAB on the first business day following the date of mailing.  Any notice in writing required or permitted to be given to Lexaria hereunder shall be given by registered mail, postage prepaid, addressed to Lexaria at the address shown above.  Any such notice mailed as aforesaid shall be deemed to have been received by Lexaria on the first business day following the date of mailing.  Any such address for the giving of notices hereunder may be changed by notice in writing given hereunder.

16.

The provisions of this Agreement shall enure to the benefit of and be binding upon CAB and the successors and assigns of Lexaria.  For this purpose, the terms "successors" and "assigns" shall include any person, firm or corporation or other entity which at any time, whether by merger, purchase or otherwise, shall acquire all or substantially all of the assets or business of Lexaria.

17.

Every provision of this Agreement is intended to be severable.  If any term or 

 

- 5 -

provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of the provisions of this Agreement.

18.

This Agreement is being delivered and is intended to be performed in the Province of British Columbia and shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of such Province.  This Agreement may not be changed orally, but only by an instrument in writing signed by the party against whom or which enforcement of any waiver, change, modification or discharge is sought.

19.

This Agreement and the obligations of Lexaria herein are subject to all applicable laws and regulations in force at the local, provincial, and federal levels. 

IN WITNESS WHEREOF this Agreement has been executed as of the day, month and year first above written.

		
	THE COMMON SEAL of Lexaria Corp. was hereto affixed in the presence of:

____________________________

____________________________

	)

)

)

)

)                       c/s

)

)

)

)

)

		
	SIGNED by:

____________________________

____________________________

	)

)

)

)

)                       

)

)

)

)

)

 

- 6 -

SCHEDULE A 

The Services

Bookkeeping and Accounting:

Set up general ledger and internal systems;

Do weekly bookkeeping, cheque writing, accounts receivable and payable;

Prepare and complete full quarterly financial statements, notes, and MD&A;

Liaise with external auditors;

Set up oil and gas well ledgers, reserves, NPV, etc;

General banking.

Regulatory filings:

Prepare, review, revise and file:

SEC:

AGM

Sarbanes Oxley internal controls and compliance 

Prepare, complete and file:

10KSB

10Q

8K

SB2 

Forms 3, 4, 5

BCSC:

As needed.

Other:

Insurance requirements

Canadian/US Taxation forms

State of Nevada 

GST Remit

Payroll Source Deduction Remit

Finance Related:

Insert financial reporting into presentation materials;

Construct powerpoint presentations;

Construct and update monthly, spreadsheet financial models and forecasts;

Oil & Gas Project evaluation, NPV calculations;

Executive Services:

CFO or controller level Road-Show presentations;

Strategic financing;

Office management;

Personnel manager;

Strategic planning;

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]