Document:

Exhibit 10.2

AGREEMENT AND PLAN OF

REORGANIZATION
AND MERGER

This Agreement and Plan of Reorganization and Merger (this “Agreement”)
is entered into as of February 22, 2007, by and among 1st Pacific Bancorp,
a California corporation (“Company”), 1st Pacific Bank of California, a
California state-chartered bank and a wholly-owned subsidiary of Company (“Bank”),
and Landmark National Bank, a national banking association (“Seller”).

RECITALS:

WHEREAS, the respective Boards of Directors of Seller and Company have
each unanimously determined that it is in the best interests of Seller and
Company and their respective shareholders for Seller to be merged with and into
Bank, upon the terms and subject to the conditions set forth in this Agreement
and in accordance with national banking laws and other applicable laws;

WHEREAS, each of the Boards of Directors of Seller, Bank and Company
has unanimously approved this Agreement and the transactions contemplated
hereby;

WHEREAS, Seller’s and Company’s Boards of Directors have resolved to
recommend approval of the transactions to their respective shareholders;

WHEREAS, upon the consummation of the Merger of Seller with and into
Bank, Bank shall be the surviving association and will remain a wholly-owned
subsidiary of Company; and

WHEREAS, it is the intention of the parties to this Agreement that the
business combination contemplated hereby be treated as a “reorganization” under
Section 368 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, in consideration of these premises and the
representations, warranties and agreements herein contained, Seller, Company
and Bank hereby agree as follows:

ARTICLE
1.  DEFINITIONS

As used in this Agreement, the following terms shall have the meanings
set forth below:

“Acquisition Event” shall mean any of the following:

(a)                                  Either Seller or Company, respectively,
shall have authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or shall have entered or
announced an intention to enter into a letter of intent, an
agreement-in-principle or a definitive agreement with any Person (other than
Seller or Company), to effect an Acquisition Transaction or failed to publicly
oppose a Tender Offer or an Exchange Offer (as defined below).  As used herein, the term “Acquisition
Transaction” shall mean (i) a merger, consolidation or

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similar
transaction involving Seller or Company, (ii) the disposition, by sale,
lease, exchange, dissolution or liquidation, or otherwise, of all or substantially
all of the assets of Seller or Company, or any asset or assets of Seller or
Company the disposition or lease of which would result in a material change in
the business or business operations of Seller or Company, or (iii) the
issuance, other than pursuant to outstanding stock options, sale or other
disposition by Seller or Company (including, without limitation, by way of
merger, consolidation, share exchange or any similar transaction) of shares of
Seller Common Stock or Company Common Stock or other Equity Securities, or the
grant of any option, warrant or other right to acquire shares of Seller Common
Stock or Company Common Stock or other Equity Securities, representing
directly, or on an as-exercised, as-exchanged or as-converted basis (in the case
of options, warrants, rights or exchangeable or convertible Equity Securities),
15% or more of the Voting Securities of Seller or Company; or

(b)                                 Prior to termination of this Agreement
(i) any Person (other than a person who is a party to a Seller Director-Shareholder
Agreement or a Company Director-Shareholder Agreement) shall have increased the
number of shares of Seller Common Stock or Company Common Stock over which such
Person has beneficial ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act) by a number that is greater than 5% of the then
outstanding shares of Seller Common Stock or Company Common Stock, as
applicable, if, after giving effect to such increase, such Person owns,
beneficially, more than 10% of the outstanding shares of Seller Common Stock or
Company Common Stock, or (ii) any “group” (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns, or has the
right to acquire beneficial ownership of, more than 10% of the then outstanding
shares of Seller Common Stock or Company Common Stock.

“Acquisition Proposal” shall have the meaning given such term in
Section 6.2.5.

“Affiliate” or “affiliate” shall mean, with respect to any other
Person, any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person.

“Affiliate’s Agreement” shall have the meaning given such term in
Section 5.3.4.

“Aggregate Cash Amount” means the sum of (i) $8,355,780 and
(ii) the product obtained by multiplying (A) the number of shares of
Seller Common Stock obtained upon exercise of Seller Stock Options and Seller
Warrants after the date hereof and prior to the Effective Time by
(B) 0.35, multiplied by (C) the Per Share Cash Consideration.

“Aggregate Company Share Amount” means the sum of (i) the product
obtained by multiplying (A) 1,246,341 by (B) the Exchange Ratio, and
(ii) the product obtained by multiplying (A) the number of shares of
Seller Common Stock obtained upon exercise of Seller Stock Options and Seller
Warrants after the date hereof and prior to the Effective Time by
(B) 0.65, multiplied by (C) the Exchange Ratio.

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“Benefit Arrangement” shall have the meaning given such term in
Section 3.21.4.

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

“Business Day” shall mean any day, other than a Saturday, Sunday or any
other day, such as a legal holiday, on which California state banks in
California are not open for substantially all their banking business.

“California Corporations Code” shall mean the General Corporation Law
of the State of California.

“California Financial Code” shall mean the Financial Code of the State
of California.

“Cash Election” shall have the meaning given to such term in
Section 2.6.1.

“Cash Proration Factor” shall have the meaning given to such term in
Section 2.6.3(b)(iii).

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

“Certificates” shall have the meaning given to such term in
Section 2.5.3.

“Classified Assets” shall have the meaning given to such term in
Section 6.1.14.

“Closing” shall have the meaning given to such term in
Section 2.1.

“Closing Date” shall have the meaning given to such term in
Section 2.1.

“Combination Cash Election” shall have the meaning given such term in
Section 2.6.1.

“Combination Stock Election” shall have the meaning given such term in
Section 2.6.1.

“Company” shall mean 1st Pacific Bancorp.

“Company Common Stock” shall mean the common stock, no par value per
share, of Company.

“Company Director-Shareholder Agreement” shall have the meaning given
such term in Section 7.3.6.

“Company Fairness Opinion” shall have the meaning given to such term in
Section 7.2.7.

“Company Filings” shall have the meanings given such term in
Section 4.6.

“Company Financial Statements” means the audited financial statements
(balance sheets, statements of income, statements of cash flow and statements
of changes in financial position) and notes thereto of Bank and the related
opinions thereon for the years ended December 31, 2005, 2004 and 2003, and
of Company with respect to the period after December 31, 2006.

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“Company Properties” shall have the meaning given to such term in
Section 4.23.1.

“Company Stock Option Plan” shall mean the Second Amended and Restated
2000 Stock Option Plan of 1st Pacific Bank of California assumed by Company,
and any additional equity compensation plan approved by the Board of Directors
of Company prior to the Effective Time.

“Company Superior Proposal” shall have the meaning set forth in
Section 6.4.5.

“Confidential Information” means all information exchanged heretofore
or hereafter between Seller and its affiliates and agents, on the one hand, and
Company and Bank, their affiliates and agents, on the other hand, which is
information related to the business, financial position or operations of the
Person responsible for furnishing the information or an Affiliate of such
Person (such information to include, by way of example only and not of
limitation, client lists, company manuals, internal memoranda, strategic plans,
budgets, forecasts/projections, computer models, marketing plans, files
relating to loans originated by such Person, loans and loan participations
purchased by such Person from others, investments, deposits, leases, contracts,
employment records, minutes of board of directors meetings (and committees
thereof) and stockholder meetings, legal proceedings, reports of examination by
any Governmental Entity, and such other records or documents such Person may
supply to the other party pursuant to the terms of this Agreement or as
contemplated hereby).  Notwithstanding
the foregoing, “Confidential Information” shall not include any information
that (i) at the time of disclosure or thereafter is generally available to
and known by the public (other than as a result of a disclosure directly or
indirectly by the recipients or any of their officers, directors, employees or
other representatives or agents), (ii) was available to the recipients on
a nonconfidential basis from a source other than Persons responsible for
furnishing the information, provided that such source is not and was not bound
by a confidentiality agreement with respect to the information, or
(iii) has been independently acquired or developed by the recipients
without violating any obligations under this Agreement.

“Default” shall mean, as to any party to this Agreement, a failure by
such party to perform, in any material respect, any of the agreements or
covenants of such party contained in Articles 5 or 6.

“Derivatives Contract” shall have the meaning given such term in
Section 3.25.

“Dissenting Shares” shall have the meaning given such term in
Section 2.8.

“Effective Time” shall have the meaning given such term in
Section 2.1.

“Election Deadline” shall have the meaning given such term in Section 2.6.2.

“Election Form” shall have the meaning given such term in
Section 2.6.1.

“Election Form Record Date” shall have the meaning given such term in
Section 2.6.1.

“Employee Plan” shall have the meaning given such term in
Section 3.21.3.

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“Environmental Laws” shall mean and include any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any Governmental
Entity pertaining to health or to the environment, including, without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act Amendments, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of 1976, as
amended (“RCRA”), the Hazardous Materials Transportation Act of 1975, as
amended, the Safe Drinking Water Act, as amended, and the Toxic Substances
Control Act, as amended.

“Equity Securities” shall have the meaning given to such term in the
Exchange Act.

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

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

“Exchange Agent” shall mean U.S. Stock Transfer Corporation or such
other Person as Company shall have appointed to perform the duties set forth in
Section 2.5.3.

“Exchange Offer” shall mean the commencement (as such term is defined
in Rule 14d-2 under the Exchange Act) of an exchange offer or the filing by any
Person of a registration statement under the Securities Act with respect to an
exchange offer to purchase any shares of Seller Common Stock or Company Common
Stock such that, upon consummation of such offer, such Person would own or
control 15% or more of the then outstanding shares of Seller Common Stock or
Company Common Stock, as applicable.

“Exchange Ratio” means 0.778125, subject to adjustment under Section
8.1.8 or 8.1.9.

“Exchange Ratio Testing Period” means the twenty (20) trading days on
which the OTC Bulletin Board (or any other stock exchange or quotation service
in the United States on which shares of Company Common Stock trade if no longer
traded on the OTC Bulletin Board) was open and on which at least four hundred
(400) shares of Company Common Stock actually traded on the OTC Bulletin Board
(or any other stock exchange or quotation service in the United States on which
shares of Company Common Stock trade if no longer traded on the OTC Bulletin
Board), preceding the fifth Business Day prior to the Effective Time.

“Exchange Ratio Company Trading Price” means the average reported
closing sales price for Company Common Stock on the OTC Bulletin Board (or any
other stock exchange or quotation service in the United States on which shares
of Company Common Stock trade if no longer traded on the OTC Bulletin Board)
during the days included in the Exchange Ratio Testing Period.

“Exchange Ratio NASDAQ Bank Index” means the average reported closing
NASDAQ Bank Index during the days included in the Exchange Ratio NASDAQ Testing
Period.

“Exchange Ratio NASDAQ Testing Period” means the twenty trading days
during which the NASDAQ Global Market was open, preceding the fifth Business
Day prior to the Effective Time.

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“Expenses” shall have the meaning given such term in
Section 8.5.6.

“FDIC” shall mean the Federal Deposit Insurance Corporation.

“FDI Act” shall mean the Federal Deposit Insurance Act.

“Federal Reserve” shall mean the Board of Governors of the Federal
Reserve System.

“GAAP” shall mean generally accepted accounting principles accepted in
the United States of America.

“Governmental Entity” shall mean any court, federal, state, local or
foreign government or any administrative agency or commission or other
governmental authority or instrumentality whatsoever.

“Hazardous Substances” shall have the meaning given such term in
Section 3.23.4.

“HMDA” shall mean Home Mortgage Disclosure Act.

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

“Joint Proxy Statement/Prospectus” shall have the meaning given to such
term in Section 5.10.

“Knowledge” shall mean, with respect to any representation or warranty
contained in this Agreement, the actual knowledge, after reasonable inquiry,
including inquiry of direct reports, of any director or executive officer of
Seller, Bank or Company, as the case may be.

“Last Regulatory Approval” shall mean the final Requisite Regulatory
Approval required, from any Governmental Entity under applicable federal laws
of the United States and laws of any state having jurisdiction over the Merger,
to permit the parties to consummate the Merger.

“Loan Loss Reserve” shall have the meaning set forth in
Section 6.1.10(a).

“Mailing Date” shall have the meaning given such term in
Section 2.6.1.

“Material Adverse Effect” shall mean a material adverse effect:
(i) on the business, assets, results of operations, financial condition or
prospects of a Person and its subsidiaries, if any, taken as a whole (unless
specifically indicated otherwise); or (ii) on the ability of a Person that
is a party to this Agreement to perform its obligations under this Agreement or
to consummate the transactions contemplated by this Agreement.

“Merger” shall have the meaning set forth in Section 2.1.

“Merger Agreement” shall have the meaning given to such term in
Section 2.1.

“Merger Consideration” shall mean the Aggregate Cash Amount plus the
Aggregate Share Amount.

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“NBA” means the National Bank Act.

“OCC” shall mean the Office of the Comptroller of the Currency.

“OREO” shall have the meaning given such term in Section 3.13.

“Perfected Dissenting Shares” shall mean Dissenting Shares as to which
the recordholder has made demand on Bank in accordance with
paragraph (b) of Section 214a of the NBA.

“Per Share Cash Consideration” means $12.45.

“Persons” or “persons” shall mean an individual, corporation,
partnership, limited liability company, joint venture, trust or unincorporated
organization, Governmental Entity or any other legal entity whatsoever.

“Registration Statement” shall have the meaning given to such term in
Section 5.10.

“Regulatory Authority” shall mean any Governmental Entity, the approval
of which is legally required for consummation of the Merger.

“Requisite Regulatory Approvals” shall have the meaning set forth in
Section 7.1.2.

“Returns” shall mean all returns, declarations, reports, statements,
and other documents required to be filed with respect to federal, state, local
and foreign Taxes, and the term “Return” means any one of the foregoing
Returns.

“SEC” shall mean the Securities and Exchange Commission.

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

“Seller” shall mean Landmark National Bank, and shall specifically
include each predecessor entity by merger such as Legacy National Bank.

“Seller Collateralizing Real Estate” shall have the meaning given such
term in Section 3.23.1.

“Seller Common Stock” shall mean the common stock, $5.00 par value per
share, of Seller.

“Seller Director-Shareholder Agreement” shall have the meaning given
such term in Section 7.2.6.

“Seller Fairness Opinion” shall have the meaning given to such term in
Section 7.3.3.

“Seller Filings” shall have the meaning given such term in
Section 3.6.

“Seller Financial Statements” means the audited financial statements
(balance sheets, statements of income, statements of cash flow and statements
of changes in financial position)

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and notes thereto of Seller and the related opinions
thereon for the years ended December 31, 2005, 2004 and 2003.

“Seller Properties” shall have the meaning given such term in
Section 3.23.1.

“Seller Stock Options” shall mean the options to purchase shares of
Seller Common Stock pursuant to the Seller Stock Option Plans as described in
Schedule 3.5 hereto.

“Seller Stock Option Plans” shall mean Seller’s written stock option
plans, predecessor stock option plan and predecessor warrants as described in
Schedule 3.5 hereto.

“Seller Superior Proposal” shall have the meaning given to such term in
Section 6.2.5.

“Seller Warrants” shall mean the warrants to purchase shares of Seller
Common Stock pursuant to the warrants described in Schedule 3.5 hereto.

“Stock Election” shall have the meaning given to such term in
Section 2.6.1.

“Stock Proration Factor” shall have the meaning given to such term in
Section 2.6.3(a)(iii).

“Subsidiary” shall mean, with respect to any corporation (the “parent”),
any other corporation, association or other business entity of which more than
50% of the shares of the Voting Stock are owned or controlled, directly or
indirectly, by the parent or by one or more Subsidiaries of the parent, or by
the parent and one or more of its Subsidiaries.

“Surviving Corporation” shall have the meaning given to such term in
Section 2.1.

“Taxes” shall mean all federal, state, local and foreign net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties, or other taxes, together with any interest and any
penalties, additions to tax, or additional amounts with respect thereto, and
the term “Tax” means any one of the foregoing Taxes.

“Tax Filings” shall mean any applications, reports, statements or other
Returns related to any Person’s taxes required to be filed with any local, state
or federal Governmental Entity before the Merger may become effective.

“Tender Offer” shall mean the commencement (as such term is defined in
Rule 14d-2 under the Exchange Act) of a tender offer or the filing by any
person of a registration statement under the Securities Act with respect to a
tender offer to purchase any shares of Seller Common Stock or Company Common
Stock such that, upon consummation of such offer, such person would own or
control 15% or more of the then outstanding Voting Securities of Seller or
Company.

“Understanding” shall have the meaning set forth in Section 6.1.5.

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“Undesignated Shares” shall have the meaning set forth in
Section 2.6.1.

“Updated Schedules” shall mean the schedules provided by Seller to
Company, and the schedules provided by Company to Seller, immediately prior to
the Closing as set forth in Section 5.7.

“Voting Securities” or “Voting Stock” shall mean the stock or other
securities or any other interest entitling the holders thereof to vote in the
election of the directors, trustees or Persons performing similar functions of
the Person in question, including, without limitation, nonvoting securities
that are convertible or exchangeable into voting securities, but shall not
include any stock or other interest so entitling the holders thereof to vote
only upon the happening of a contingency (other than a conversion or exchange
thereof into voting securities), whether or not such contingency has occurred.

ARTICLE
2.  THE MERGER

2.1                                 The
Merger.  Subject to the terms and conditions
of this Agreement, as promptly as practicable following the receipt of the Last
Regulatory Approval and the expiration of all applicable waiting periods,
Seller shall be merged with Bank, with Bank being the surviving corporation of
the merger (the “Surviving Corporation”), all pursuant to the Agreement of
Merger attached to this Agreement as Exhibit 2.1 (the “Merger Agreement”)
and in accordance with the applicable provisions of the California Financial
Code and the California Corporations Code (the “Merger”).  The closing of the Merger (the “Closing”)
shall take place at a location and time and Business Day to be designated by
Company and reasonably concurred to by Seller (the “Closing Date”).  The Merger shall be effective when the Merger
Agreement (together with any other documents required by law to effectuate the
Merger) shall have been filed with the Secretary of State of the State of
California and the CDFI.  When used in
this Agreement, the term “Effective Time” shall mean the time of filing of the
Merger Agreement with the Secretary of State and the CDFI.

2.2                                 Effect
of Merger.  By virtue of the Merger
and at the Effective Time, all of the rights, privileges, powers and franchises
and all property and assets of every kind and description of Seller and Bank
shall be vested in and be held and enjoyed by the Surviving Corporation,
without further act or deed, and all the estates and interests of every kind of
Seller and Bank, including all debts due to either of them, shall be as
effectively the property of the Surviving Corporation as they were of Seller
and Bank immediately prior to the Effective Time, and the title to any real
estate vested by deed or otherwise in either Seller or Bank shall not revert or
be in any way impaired by reason of the Merger; and all rights of creditors and
liens upon any property of Seller and Bank shall be preserved unimpaired and
all debts, liabilities and duties of Seller and Bank shall be debts,
liabilities and duties of the Surviving Corporation and may be enforced against
it to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it, and none of such debts, liabilities or duties
shall be expanded, increased, broadened or enlarged by reason of the Merger.

2.3                                 Articles of
Incorporation and Bylaws.  The
Articles of Incorporation and Bylaws of Bank in effect immediately prior
to the Effective Time shall be the Articles of Incorporation

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and Bylaws of the
Surviving Corporation until amended and the name of the Surviving Corporation
shall be “1st Pacific Bank of California.”

2.4                                 Company
and Bank Common Stock.  The
authorized and issued capital stock of Company immediately prior to the
Effective Time, on and after the Effective Time, pursuant to the Merger
Agreement and without any further action on the part of Company, shall remain
unchanged, except with respect to those shareholders of Company who are “dissenting
shareholders,” as defined in Section 1300(c) of the California
Corporations Code, whose shares are repurchased by Company, in which case those
shares shall no longer be issued and outstanding shares of Company.  The authorized and issued capital stock of
Bank immediately prior to the Effective Time, on and after the Effective Time,
pursuant to the Merger Agreement and without any further action on the part of
Bank, shall remain unchanged.

2.5                                 Conversion
of Seller Common Stock.  At the
Effective Time and pursuant to the Merger Agreement:

2.5.1                        Conversion of Seller Common  Stock.

(a)                                  Subject to the exceptions and limitations
in Section 2.5.1(b) and 2.6, each outstanding share of Seller Common
Stock shall, without any further action on the part of Seller or the holders of
any such shares be converted into (i) shares of Company Common Stock in
accordance with the Exchange Ratio, or (ii) cash in accordance with Per
Share Cash Consideration, at the election of the holder of such share of Seller
Common Stock.

(b)                                 Certain Exceptions and Limitations.  (A) Seller Perfected Dissenting Shares
shall not be converted into shares of Company Common Stock, but shall, after
the Effective Time, be entitled only to such rights as are granted them by
Section 214a of the NBA (each dissenting shareholder who is entitled to
payment for his or her shares of Seller Common Stock shall receive such payment
in an amount as determined pursuant to Section 214a of the NBA);
(B) no fractional shares of Company Common Stock shall be issued in the
Merger and, in lieu thereof, each holder of Seller Common Stock who would
otherwise be entitled to receive a fractional share shall receive an amount in
cash equal to the product (calculated to eight places) obtained by multiplying
such fractional share interest by the Per Share Consideration.

(c)                                  The holders of certificates formerly
representing shares of Seller Common Stock shall cease to have any rights as
shareholders of Seller, except such rights, if any, as they may have pursuant
to national banking laws.  Except as
provided above, until certificates representing shares of Seller Common Stock
are surrendered for exchange or cash, the certificates of each holder shall,
after the Effective Time, represent for all purposes only the right to receive
shares of Company Common Stock or cash in accordance with the Exchange Ratio or
Per Share Cash Consideration, respectively.

2.5.2                        Reservation of Shares. 
Prior to the Effective Time, the Board of Directors of Company shall
reserve for issuance a sufficient number of shares of Company Common Stock for
the purpose of issuing its shares to the shareholders of Seller in accordance
herewith.

2.5.3                        Exchange of Seller Common Stock.

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(a)                                  As soon as reasonably practicable after
the Effective Time, holders of record of certificates formerly representing
shares of Seller Common Stock (“Certificates”) shall be instructed to tender
such Certificates to the Exchange Agent pursuant to a letter of transmittal
that Company shall deliver or cause to be delivered to such holders.  Such letter of transmittal shall specify that
risk of loss and title to Certificates shall pass only upon acceptance of such
Certificates by Company or the Exchange Agent.

(b)                                 After the Effective Time, each holder of
a Certificate that surrenders such Certificate to Company or the Exchange Agent
will, upon acceptance thereof by Company or the Exchange Agent, be entitled to
receive shares of Company Common Stock or cash at the election of the holder of
shares of Seller Common Stock in accordance with Section 2.5.1 hereof.

(c)                                  Company or the Exchange Agent shall
accept Certificates upon compliance with such reasonable terms and conditions
as Company or the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with customary exchange practices.  Certificates shall be appropriately endorsed
or accompanied by such instruments of transfer as Company or the Exchange Agent
may reasonably require.

(d)                                 Each outstanding Certificate, other than
those representing Seller Perfected Dissenting Shares, shall, until duly
surrendered to Company or the Exchange Agent, be deemed to evidence the right
to receive shares of Company Common Stock or cash in accordance with
Section 2.5.1 hereof.

(e)                                  After the Effective Time, holders of
Certificates shall cease to have rights with respect to the Seller Common Stock
previously represented by such Certificates, and their sole rights (other than
the holders of Certificates representing Seller Perfected Dissenting Shares)
shall be to exchange such Certificates for shares of Company Common Stock or
cash at the election of each holder of such Seller Common Stock, respectively,
in accordance with Section 2.5.1 hereof. 
At the Effective Time, Seller shall deliver a certified copy of a list
of its shareholders to Company or the Exchange Agent.  After the Effective Time, there shall be no
further transfer of Certificates on the records of Seller, and if such
Certificates are presented to Seller for transfer, they shall be canceled
against delivery of shares of Company Common Stock or the Per Share
Consideration in accordance with Sections 2.5.1 and 2.6 hereof.  Company shall not be obligated to deliver any
shares of Company Common Stock to any holder of Seller Common Stock until such
holder surrenders the Certificates as provided herein.  No dividends declared will be remitted, nor
any voting rights granted, to any person entitled to receive Company Common
Stock under this Agreement until such person surrenders the Certificates
representing the right to receive such Company Common Stock, at which time such
dividends on whole shares of Company Common Stock with a record date on or
after the Effective Time shall be remitted to such person, without interest and
less any taxes that may have been imposed thereon, and voting rights will be
restored.  Certificates surrendered for
exchange by any person constituting an “affiliate” of Seller for purposes of
Rule 145 under the Securities Act shall not be exchanged for certificates
representing Company Common Stock until Company has received a written
agreement from such person as specified in Section 5.3.4.  Neither the Exchange Agent nor any party to
this Agreement nor any affiliate thereof shall be liable to any holder of
Seller Common Stock represented by any Certificate for any consideration paid
to a public official

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pursuant to applicable abandoned property, escheat or
similar laws.  Company and the Exchange
Agent shall be entitled to rely upon the stock transfer books of Seller to
establish the identity of those persons entitled to receive consideration
specified in this Agreement, which books shall be conclusive with respect
thereto.  In the event of a dispute with
respect to ownership of stock represented by any Certificate, Company or the
Exchange Agent shall be entitled to deposit any consideration in respect
thereof in escrow with an independent third party and thereafter be relieved
with respect to any claims thereto.

(f)                                    If any shares of Company Common Stock are
to be issued and/or Per Share Consideration paid to a person other than a
person in whose name a surrendered Certificate is registered, it shall be a
condition of issuance and/or payment that the surrendered Certificate shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such issuance and/or payment shall pay to Company or the Exchange
Agent any required transfer or other taxes or establish to the satisfaction of
Company or the Exchange Agent that such tax has been paid or is not applicable.

(g)                                 In the event any Certificate shall have
been lost, stolen or destroyed, the owner of such lost, stolen or destroyed
Certificate shall deliver to Company or the Exchange Agent an affidavit stating
such fact, in form satisfactory to Company, and, at Company’s discretion, a
bond in such reasonable sum as Company or the Exchange Agent may direct as
indemnity against any claim that may be made against Company or Seller or its
successor or any other party with respect to the Certificate alleged to have
been lost, stolen or destroyed.  Upon
such delivery, the owner shall have the right to receive the shares of Company
Common Stock and/or Per Share Consideration in accordance with
Sections 2.5.1 and 2.6 hereof with respect to the shares represented by
the lost, stolen or destroyed Certificate.

2.6                                 Election
and Proration Procedures.

2.6.1                        An election form and other appropriate
and customary transmittal materials in such form as Company and Seller shall
mutually agree (“Election Form”) shall be mailed no more than twenty (20) days
after the Effective Time or on such other date as Seller and Company shall
mutually agree (“Mailing Date”) to each holder of record of Seller Common Stock
as of the Effective Time (“Election Form Record Date”).  Company shall provide to the Exchange Agent
all information reasonably necessary for it to perform its obligations as
specified herein.  Each Election Form
shall permit the holder (or the beneficial owner through appropriate and
customary documentation and instructions) to elect (an “Election”) to receive
either (i) Company Common Stock (a “Stock Election”) with respect to all
of such holder’s Seller Common Stock, (ii) cash (a “Cash Election”) with
respect to all of such holder’s Seller Common Stock, or (iii) a specified
number of shares of Seller Common Stock to receive Company Common Stock (a “Combination
Stock Election”) and a specified number of shares of Seller Common Stock to receive
cash (a “Combination Cash Election”), subject to the provisions contained in
this Agreement.  Any Seller Common Stock
(other than Seller Dissenting Shares) with respect to which the holder (or the
beneficial owner, as the case may be) shall not have submitted to the Exchange
Agent an effective, properly completed Election Form received prior to the
Election Deadline shall be deemed to be “Undesignated Shares” hereunder.

 12
 

2.6.2                        Any Election shall have been properly made and
effective only if the Exchange Agent shall have actually received a properly
completed Election Form by 5:00 P.M. California time on or before the 30th day
following the Mailing Date, or such other time and date as Company and Seller
may mutually agree (the “Election Deadline”). 
An Election Form shall be deemed properly completed only if an Election
is indicated for each share of Seller Common Stock covered by such Election
Form and if accompanied by one or more Certificates (or customary affidavits
and indemnification regarding the loss or destruction of such Certificates or
the guaranteed delivery of such Certificates) representing all shares of Seller
Common Stock covered by such Election Form, together with the duly executed
transmittal materials included in or required by the Election Form.  Any Election Form may be revoked or changed
by the person submitting such Election Form at or prior to the Election
Deadline.  In the event an Election Form
is revoked prior to the Election Deadline, the shares of Seller Common Stock
represented by such Election Form shall automatically become Undesignated
Shares unless and until a new Election Form is properly completed with respect
to such shares on or before the Election Deadline, and Company shall cause the
Certificates representing such Undesignated Shares to be promptly returned
without charge to the person submitting the revoked Election Form upon written
request to that effect from the holder who submitted such Election Form.  Subject to the terms of this Agreement and of
the Election Form, the Exchange Agent shall have reasonable discretion to
determine whether any election, revocation or change has been properly or
timely made and to disregard immaterial defects in the Election Forms, and any
decisions of Company and Seller required by the Exchange Agent and made in good
faith in determining such matters shall be binding and conclusive.  The Exchange Agent shall notify as soon as
reasonably possible any person of any material defect in his or her Election
Form.

2.6.3                        Company shall use its best efforts to cause the
Exchange Agent to effect the allocation among the holders of Seller Common
Stock of rights to receive Company Common Stock or cash in the Merger as
follows:

(a)                                  If the conversion of shares of Seller
Common Stock for which Cash Election and Combination Cash Elections shall have
effectively been made would result in a number of shares of Company Common
Stock being issued that is greater than the Aggregate Company Share Amount
(which shall be determined for this purpose on the assumption that all shares
of Seller Common Stock [other than those for which Cash Elections or
Combination Cash Elections have been made] would be entitled to receive Company
Common Stock), then, to the extent necessary so that the number of shares of
Company Common Stock to be issued in the Merger shall be equal to the Aggregate
Company Share Amount, the Exchange Agent shall make the following allocations
and adjustments in the following order:

(i)                                     shares of Seller Common Stock for which
effective Cash Elections or Combination Cash Elections have been made shall be
converted into the right to receive cash in an amount equal to the Per Share
Cash Consideration;

(ii)                                  the Exchange Agent shall select by lot
such number of holders of Undesignated Shares to receive the Per Share Cash
Consideration as shall be necessary so that the shares of Company Common Stock
to be received by other holders of Undesignated Shares, when combined with the
number of shares of Company Common Stock for which Stock Elections or Combination
Stock Elections have been

 13
 

made shall be equal to the Aggregate Company Share
Amount. If all Undesignated Shares are converted into the right to receive the
Per Share Cash Consideration and the shares for which Stock Election and
Combination Stock Elections are still greater than the Aggregate Company Share
Amount, then;

(iii)                               a stock proration factor (the “Stock
Proration Factor”) shall be determined by dividing (x) the Aggregate
Company Share Amount by (y) the product of (i) the total number of
shares of Seller Common Stock with respect to which effective Stock Elections
and Combination Stock Elections were made multiplied by (ii) the Exchange
Ratio.  Each holder of Seller Common
Stock who made an effective Stock Election or Combination Stock Election shall
be entitled to:

(1)                                  the number of shares of Company Common
Stock equal to the product of (x) the Exchange Ratio, multiplied by
(y) the number of shares of Seller Common Stock covered by such Stock
Election or Combination Stock Election, multiplied by (z) the Stock
Proration Factor; and

(2)                                  cash in an amount equal to the product of
(x) the Per Share Cash Consideration, multiplied by (y) the number of
shares Seller Common Stock covered by such Stock Election or Combination Stock
Election, multiplied by (z) one minus the Stock Proration Factor.

(b)                                 If the conversion of the shares of Seller
Common Stock for which Stock Elections and Combination Stock Elections shall
have effectively been made (based upon the Exchange Ratio) would result in a
number of shares of Company Common Stock being issued that is less than the
Aggregate Company Share Amount (which shall be determined for this purpose on
the assumption that all shares of Seller Common Stock [other than those for
which Stock Elections or Combination Stock Elections have been made] would be
entitled to receive the Per Share Cash Consideration), then, to the extent
necessary so that the number of shares of Company Common Stock to be issued in
the Merger shall be equal to the Aggregate Company Share Amount, the Exchange
Agent shall make the following allocations and adjustments in the following
order:

(i)                                     each holder of Seller Common Stock who
made an effective Stock Election or Combination Stock Election shall receive
the number of shares of Company Common Stock equal to the product of the
Exchange Ratio multiplied by the number of shares of Seller Common Stock
covered by such Stock Election or Combination Stock Election;

(ii)                                  the Exchange Agent shall select by lot
such number of holders of Undesignated Shares to receive Company Common Stock
as shall be necessary so that the shares of Company Common Stock to be received
by those holders, when combined with the number of shares of Company Common
Stock for which a Stock Election or Combination Stock Election has been made
shall be equal to at least the Aggregate Company Share Amount.  If all Undesignated Shares plus all shares as
to which Stock Elections and Combination Stock Elections have been made
together are still less than the Aggregate Company Share Amount, then;

 14
 

(iii)                               a cash proration factor (the “Cash
Proration Factor”) shall be determined by dividing (x) the Aggregate
Company Share Amount (less the product of (i) the sum of the shares for
which an effective Stock Election and Combination Stock Election has been made
plus all the Undesignated Shares multiplied by (ii) the Exchange Ratio) by
(y) the product of (i) the sum of the total number of shares of
Seller Common Stock with respect to which effective Cash Elections and
Combination Cash Elections were made multiplied by (ii) the Exchange
Ratio.  Each holder of Seller Common
Stock who made an effective Cash Election or Combination Cash Election shall be
entitled to:

(1)                                  cash equal to the product of (x) the
Per Share Cash Consideration, multiplied by (y) the number of shares of
Seller Common Stock covered by such Cash Election or Combination Cash Election,
multiplied by (z) one minus the Cash Proration Factor; and

(2)                                  the number of shares of Company Common
Stock equal to the product of (x) the Exchange Ratio, multiplied by
(y) the number of shares of Seller Common Stock covered by such Cash
Election or Combination Cash Election, multiplied by (z) the Cash
Proration Factor.

(c)                                  If the aggregate number of shares of
Seller Common Stock for which Stock Elections and Combination Stock Elections
shall have effectively been made would result in a number of shares of Company
Common Stock being issued that is equal to the Aggregate Company Share Amount,

(i)                                     the shares of Seller Common Stock for
which effective Stock Elections and Combination Stock Elections have been made
shall be converted into the right to receive Company Common Stock equal to the
product of the Exchange Ratio multiplied by the number of shares of Seller
Common Stock covered by such Stock Elections and Combination of Stock
Elections;

(ii)                                  the shares of Seller Common Stock for
which effective Cash Elections and Combination Cash Elections have been made
shall be converted into the right to receive the Per Share Cash Consideration;
and

(iii)                               the Undesignated Shares shall be
converted into the right to receive the Per Share Cash Consideration.

(d)                                 Notwithstanding any other provision of
this Agreement, if, after applying the allocation rules set forth in the
preceding subsections of this Section 2.6(c), the number of shares of
Company Common Stock that would be issued pursuant to the Merger is less than
the Aggregate Company Share Amount or more than the Aggregate Company Share
Amount, Company shall be authorized to reallocate shares of Company Common Stock
and cash among the holders of the Seller Common Stock in good faith and in such
a manner as Company reasonably determines to be fair and equitable, or to vary
the number of shares of Company Common Stock to be issued in the Merger, in a
manner such that the number of shares of Company Common Stock to be issued in
the Merger shall be equal to the Aggregate Company Share Amount.

 15
 

(e)                                  Notwithstanding any other provision of
this Agreement (other than Section 2.6(c)(iv) hereof), if any
Dissenting Shares fail to become Perfected Dissenting Shares, such Dissenting
Shares shall automatically be converted into and represent the right to receive
the consideration for such shares provided in this Agreement, without interest
thereon.  The consideration payable for
any such Dissenting Shares shall be payable in cash, in shares of Company
Common Stock, or in such combination of cash and Company Common Stock as shall
be determined by Company as being necessary or appropriate to preserve the
status of the Merger as a “reorganization” within the meaning of section
368(a) of the Code.

2.6.4                        The calculations required by
Section 2.6(c) shall be prepared by Company prior to the Effective
Time and shall be set forth in a certificate executed by the Chief Financial
Officer of Company and furnished to Seller at least two Business Days prior to
the Effective Time showing the manner of calculation in reasonable detail.  Any calculation of a portion of a share of
Company Common Stock shall be rounded to the nearest ten-thousandth of a share,
and any cash payment shall be rounded to the nearest cent.

2.7                                 Seller
Stock Options and Warrants.

2.7.1                        As of the Effective Time, to the extent
Seller Stock Options have not been cancelled in exchange for cash in accordance
with Section 6.3.13 and remain outstanding according to their terms, the
outstanding rights with respect to the Seller Stock Options for shares of
Seller Common Stock pursuant to stock options under the Seller Stock Option
Plans shall be converted into and become rights to purchase Company Common
Stock adjusted as to exercise price and number according to the Exchange Ratio
and otherwise in accordance with the Seller Stock Option Plans.  Nothing in this Agreement shall be deemed to
preclude holders of Seller Stock Options from exercising those Seller Stock
Options at any time in accordance with their terms, including prior to the
Effective Time.  Any cash paid for
cancellation of Seller Stock Options shall not offset or otherwise affect the
amount of the Merger Consideration.

2.7.2                        As of the Effective Time, to the extent
Seller Warrants have not been cancelled in exchange for cash in accordance with
Section 6.3.13 and remain outstanding, the outstanding rights with respect
to the Seller Warrants for shares of Seller Common Stock shall be converted
into and become rights to purchase Company Common Stock adjusted as to exercise
price and number according to the Exchange Ratio and otherwise in accordance
with the terms of the Seller Warrants, provided that Seller Warrants that are
amended on the terms offered by Company in accordance with Section 6.3.13 shall
not expire as a result of the Merger. 
Nothing in this Agreement shall be deemed to preclude holders of Seller
Warrants from exercising those Seller Warrants at any time in accordance with
their terms, including prior to the Effective Time.  Any cash paid for cancellation of Seller
Warrants shall not offset or otherwise affect the amount of the Merger
Consideration.

2.8                                 Dissenters’
Rights.  Shares of Seller Common
Stock, the holders of which have lawfully dissented from the Merger in
accordance with Section 214a of the NBA and have timely filed with Bank a
written demand for purchase of his or her shares and have surrendered his or
her stock certificates pursuant to paragraph (b) of Section 214a
of the NBA, are herein called “Dissenting Shares.”  Dissenting Shares, the holders of which have
not effectively withdrawn or lost their dissenters’ rights under
paragraph (b) of Section 214a of the NBA (“Perfected

 16
 

Dissenting Shares”),
shall not remain outstanding pursuant to Section 2.4 or converted pursuant
to Section 2.5, but the holders thereof shall be entitled only to such
rights as are granted by paragraph (b) of Section 214a of the
NBA.  Each holder of Perfected Dissenting
Shares who is entitled to payment for his or her Seller Common Stock, as
applicable, pursuant to the provisions of paragraph (b) of
Section 214a of the NBA shall receive payment therefor from Bank (but only
after the amount thereof shall have been agreed upon or finally determined
pursuant to such provisions).

2.9                                 Board
of Directors of Company following the Effective Time.  At the Effective Time, two board members of
Seller will be invited to join the board of directors of Company.

2.10                           Executive
Officers of Company and Bank following the Effective Time.  At the Effective Time, the then existing
executive officers of Company and Bank shall remain the executive officers of
Company and Bank.

2.11                           Change
of Structure.  Company and Seller
agree that Company may change the structure of the Merger so long as the
consideration received by Seller shareholders under Section 2.5 hereof is
not modified and the Closing of the Merger is not materially delayed.

ARTICLE
3.  REPRESENTATIONS AND WARRANTIES OF
SELLER

Seller represents and warrants to Company and Bank as follows:

3.1                                 Organization;
Corporate Power; Etc.  Seller is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States and has all requisite corporate
power and corporate authority to own, lease and operate its properties and
assets and to carry on its business substantially as it is being conducted on
the date of this Agreement.  Seller has
all requisite corporate power and corporate authority to own, lease and operate
its properties and to carry on its business substantially as it is being
conducted on the date of this Agreement, except where the failure to have such
power or authority would not have a Material Adverse Effect on Seller or the
ability of Seller to consummate the transactions contemplated by this
Agreement.  Seller has all requisite
corporate power and corporate authority to enter into this Agreement and,
subject to obtaining all requisite Regulatory Approvals, Seller will have the
requisite corporate power and corporate authority to perform its respective
obligations hereunder with respect to the consummation of the transactions
contemplated hereby.

3.2                                 Licenses
and Permits.  Except as disclosed on
Schedule 3.2, Seller has all material licenses, certificates, franchises,
rights and permits that are necessary for the conduct of its business as
presently conducted, and such licenses are in full force and effect, except for
any failure to be in full force and effect that would not, individually or in
the aggregate, have a Material Adverse Effect on Seller or on the ability of
Seller to consummate the transactions contemplated by this Agreement.  The properties, assets, operations and
businesses of Seller are and have been maintained and conducted, in all material
respects, in compliance with all applicable licenses, certificates, franchises,
rights and permits.

3.3                                 Subsidiaries.  There is no corporation, partnership, joint
venture or other entity in which Seller owns, directly or indirectly (except as
pledgee pursuant to loans or stock or other

 17
 

interest held as the
result of or in lieu of foreclosure pursuant to pledge or other security
arrangement), any equity or other voting interest or position.

3.4                                 Authorization
of Agreement; No Conflicts.

3.4.1                        The execution and delivery of this
Agreement and the Merger Agreement by Seller, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of Seller, subject only to the approval
of this Agreement, the Merger Agreement and the Merger by Seller’s
shareholders.  This Agreement has been
duly executed and delivered by Seller and constitutes a legal, valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, liquidation,
receivership, conservatorship, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and by general equitable principles
and by Section 8(b)(6)(D) of the FDI Act, 12 U.S.C.
1818(b)(6)(D).  The Merger Agreement,
upon the receipt of all Requisite Regulatory Approvals and the due execution
and filing of such Merger Agreement in accordance with the applicable
provisions of the California Corporations Code and the California Financial
Code, will constitute a legal, valid and binding obligation of Seller,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, liquidation, receivership, conservatorship,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally and by general equitable principles and by
Section 8(b)(6)(D) of the Federal Deposit Insurance Act,
12 U.S.C. 1818(b)(6)(D).

3.4.2                        Except as disclosed on Schedule 3.4
the execution and delivery of this Agreement and the Merger Agreement, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with, or result in any violation of or default or loss of a
material benefit under, any provision of the Articles of Association or
Bylaws of Seller, any material mortgage, indenture, lease, agreement or other
material instrument or any permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Seller or any of its assets or properties, other than any such conflict,
violation, default or loss which (i) will not have a Material Adverse
Effect on Seller, or on Company or Bank following consummation of the Merger;
or (ii) will be cured or waived prior to the Effective Time.

3.5                                 Capital
Structure.  The authorized capital
stock of Seller consists of 10,000,000 shares of Seller Common Stock, $5.00 par
value per share.  On the date of this
Agreement, 1,917,448 shares of Seller Common Stock were outstanding and 475,286
shares of Seller Common Stock were reserved for issuance pursuant to Seller
Stock Options granted under the Seller Stock Option Plans and Seller
Warrants.  All outstanding shares of
Seller Common Stock are validly issued, fully paid and nonassessable (except as
set forth in 12 U.S.C. 55) and do not possess any preemptive rights and were
not issued in violation of any preemptive rights or any similar rights of any
Person.  Except for the Seller Warrants
and the Seller Stock Options described on Schedule 3.5 to this Agreement,
Seller does not have outstanding any options, warrants, calls, rights,
commitments, securities or agreements of any character to which Seller is a
party or by which it is bound obligating Seller to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of
Seller or obligating Seller to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.

 18
 

3.6                                 Seller
Filings.  Except as disclosed on
Schedule 3.6, since January 1, 2003, Seller has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with (a) the OCC; or
(b) any other applicable federal, state or local governmental or
regulatory authority.  All such reports,
registrations and filings, and all reports sent to Seller’s shareholders during
the three-year period ended December 31, 2005 and the nine months ended
September 30, 2006 (whether or not filed with any Regulatory Authority),
are collectively referred to as the “Seller Filings.”  Except to the extent prohibited by law,
copies of the Seller Filings have been made available to Company.  As of their respective filing or mailing
dates, each of the past Seller Filings (a) was true and complete in all
material respects (or was amended so as to be so promptly following discovery
of any discrepancy); and (b) complied in all material respects with all of
the statutes, rules and regulations enforced or promulgated by the Regulatory
Authority with which it was filed (or was amended so as to be so promptly
following discovery of any such noncompliance) and none contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

3.7                                 Accuracy
of Information Supplied.  Seller has
delivered or will deliver to Company copies of the Seller Financial Statements,
and Seller will hereafter until the Closing Date deliver to Company copies of
additional financial statements of Seller as provided in
Sections 5.1.1(iii).  The Seller
Financial Statements have been prepared (and all of said additional financial
statements will be prepared) in accordance with GAAP, or applicable regulatory
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) consistently followed
throughout the periods covered by such statements, and present (and, when
prepared, will present) fairly the financial position of Seller as of the
respective dates indicated and the results of operations, cash flows and
changes in shareholders’ equity at the respective dates and for the respective
periods covered by such financial statements (subject, in the case of the
unaudited statements, to recurring adjustments normal in nature and
amount).  In addition, Seller has
delivered or made available to Company copies of all management or other
letters delivered to Seller by its independent accountants in connection with
any of the Seller Financial Statements or by such accountants or any consultant
regarding the internal controls or internal compliance procedures and systems
of Seller issued at any time since January 1, 2005, and will make
available for inspection by Company or its representatives, at such times and
places as Company may reasonably request, reports and working papers produced
or developed by such accountants or consultants.

3.8                                 Compliance
with Applicable Laws.  Except as
disclosed on Schedule 3.8, the business of Seller is not being conducted
in violation of any law, ordinance or regulation, except for violations which
individually or in the aggregate would not have a Material Adverse Effect on
Seller.  Except as set forth on
Schedule 3.8, no investigation or review by any Governmental Entity with
respect to Seller, other than regular bank examinations, is pending or
threatened, nor has any Governmental Entity indicated to Seller an intention to
conduct the same.

3.9                                 Litigation.  Except as set forth on Schedule 3.9,
there is no suit, action or proceeding or investigation pending or threatened
against or affecting Seller which, if adversely determined, would have a
Material Adverse Effect on Seller; nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Seller that

 19
 

has, or which, insofar as
reasonably can be foreseen, in the future would have, any such Material Adverse
Effect.  Schedule 3.9 contains a
true, correct and complete list, including identification of the applicable
insurance policy covering such litigation, if any, subject to reservation of
rights, if any, the applicable deductible and the amount of any reserve
therefor, of all pending litigation in which Seller is a named party, and
except as disclosed on Schedule 3.9, all of the litigation shown on such
Schedule is adequately covered by insurance in force, except for
applicable deductibles, or has been adequately reserved for in accordance with
Seller’s prior business practices.

3.10                           Agreements
with Banking Authorities.  Seller is
not a party to any written agreement or memorandum of understanding with, or
order or directive from, any Governmental Entity.

3.11                           Insurance.  Seller has in full force and effect policies
of insurance with respect to its assets and business against such casualties
and contingencies and in such amounts, types and forms as are customarily appropriate
for its business, operations, properties and assets.  Schedule 3.11 contains a list of all
policies of insurance and bonds carried and owned by Seller.  Seller is not in default under any such
policy of insurance or bond such that it can be canceled and all material
current claims outstanding thereunder have been filed in timely fashion.  Seller has filed claims with, or given notice
of claim to, its insurers or bonding companies in timely fashion with respect
to all material matters and occurrences for which it believes it has coverage.

3.12                           Title
to Assets other than Real Property. 
Except as disclosed on Schedule 3.12, Seller has marketable title
to or a valid leasehold interest in all material properties and assets (other
than real property which is the subject of Section 3.13) used in its
business, free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims, assessments and
encumbrances, except for: 
(a) rights of lessors, lessees or sublessees in such matters as are
reflected in a written lease; (b) encumbrances as set forth in the Seller
Financial Statements; (c) current Taxes (including assessments collected
with Taxes) not yet due which have been fully reserved for; (d) encumbrances,
if any, that are not substantial in character, amount or extent and do not
detract materially from the value, or interfere with present use, or the
ability of Seller or its Subsidiary to sell or otherwise dispose of the
property subject thereto or affected thereby; and (e) other matters as
described in Schedule 3.12.  All
such properties and assets are, and require only routine maintenance to keep
them, in good working condition, normal wear and tear excepted.

3.13                           Real
Property.  Schedule 3.13 is an
accurate list and general description of all real property owned or leased by
Seller, including Other Real Estate Owned (“OREO”).  Seller has marketable title to the real
properties that it owns, as described in such Schedule, free and clear of all
mortgages, covenants, conditions, restrictions, easements, liens, security
interests, charges, claims, assessments and encumbrances, except for
(a) rights of lessors, lessees or sublessees in such matters as are
reflected in a written lease; (b) liens for current Taxes (including
assessments collected with Taxes) not yet due and payable;
(c) encumbrances, if any, that are not substantial in character, amount or
extent and do not materially detract from the value, or interfere with present
use, or the ability of Seller to dispose, of Seller’s interest in the property
subject thereto or affected thereby; and (d) other matters as described in
Schedule 3.13.  Seller has valid
leasehold interests in the leaseholds it holds, free and clear of all mortgages,
liens, security

 20
 

interests, charges,
claims, assessments and encumbrances, except for (a) claims of lessors,
co-lessees or sublessees in such matters as are reflected in a written lease;
(b) title exceptions affecting the fee estate of the lessor under such leases;
and (c) other matters as described in Schedule 3.13.  The activities of Seller with respect to all
real property owned or leased by it for use in connection with its operations
are in all material respects permitted and authorized by applicable zoning
laws, ordinances and regulations and all laws and regulations of any
Governmental Entity.  Except as set forth
on Schedule 3.13, Seller enjoys quiet possession under all material leases
to which it is the lessee and all of such leases are valid and in full force and
effect, except as the enforceability thereof may be limited by bankruptcy,
liquidation, receivership, conservatorship, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and by general
equitable principles.  Materially all
buildings and improvements on real properties owned or leased by Seller are in
good condition and repair, and do not require more than normal and routine
maintenance to keep them in such condition, normal wear and tear excepted.

3.14                           Taxes.

3.14.1                  Filing of Returns.  Except as set
forth on Schedule 3.14.1, Seller has duly prepared and filed or caused to
be duly prepared and filed all federal, state, and local Returns (for Tax or
informational purposes) which were required to be filed by or in respect of
Seller or any of its properties, income and/or operations on or prior to the
Closing Date.  As of the time they were
filed, the foregoing Returns accurately reflected the material facts regarding
the income, business, asset, operations, activities, status, and any other
information required to be shown thereon. 
Except as set forth on Schedule 3.14.1, no extension of time within
which Seller may file any Return is currently in force.

3.14.2                  Payment of Taxes.  Except as
disclosed on Schedule 3.14.2 with respect to all amounts in respect of
Taxes imposed on Seller or for which Seller is or could be liable, whether to
taxing authorities (as, for example, under law) or to other Persons (as, for
example, under Tax allocation agreements), with respect to all taxable periods
or portions of periods ending on or before the Closing Date, all applicable tax
laws and agreements have been or will be fully complied with in all material
respects, and all such amounts required to be paid by or on behalf of Seller to
taxing authorities or such other Persons on or before the date hereof have been
paid.

3.14.3                  Audit History.  There is no
review or audit by any taxing authority of any Tax liability of Seller
currently in progress of which Seller has Knowledge.  Except as disclosed on Schedule 3.14.3,
Seller has not received any written notices since its inception of any pending
or threatened audit, by the Internal Revenue Service or any state, local or
foreign agency, for any Returns or Tax liability of Seller for any period.  Seller currently has no unpaid deficiencies
assessed by the Internal Revenue Service or any state, local or foreign taxing
authority arising out of any examination of any of the Returns of Seller or any
Subsidiaries filed for fiscal years ended on or after December 31, 2003
through the Closing Date, nor is there reason to believe that any material
deficiency will be assessed.

3.14.4                  Statute of Limitations.  Except as
disclosed on Schedule 3.14.4, no agreements are in force or are currently
being negotiated by or on behalf of Seller for any waiver

 21
 

or for the extension of any statute of limitations
governing the time of assessments or collection of any Tax.  No closing agreements or compromises exist
concerning Taxes of Seller.

3.14.5                  Withholding Obligations.  Except as set
forth on Schedule 3.14.5, Seller has withheld from each payment made to
any of its officers, directors and employees, the amount of all applicable
Taxes, including, but not limited to, income tax, social security
contributions, unemployment contributions, backup withholding and other
deductions required to be withheld therefrom by any Tax law and have paid the
same to the proper taxing authorities within the time required under any
applicable Tax law.

3.14.6                  Tax Liens.  There are no
Tax liens, whether imposed by any federal, state, local or foreign taxing
authority, outstanding against any assets owned by Seller except for liens for
Taxes that are not yet due and payable.

3.14.7                  Tax Reserves.  Seller has
made full and adequate provision and reserve for all federal, state, local or
foreign Taxes for the current period for which Tax and information returns are
not yet required to be filed.  The Seller
Financial Statements contain fair and sufficient accruals for the payment of
all Taxes for the periods covered by the Seller Financial Statements and all
periods prior thereto.

3.14.8                  IRC Section 382 Applicability. 
Seller, including any party joining in any consolidated return to which
Seller is a member, has not undergone an “ownership change” as defined in IRC
Section 382(g) within the “testing period” (as defined in IRC
Section 382) ending immediately before the Effective Time, and not taking
into account any transactions contemplated by this Agreement.

3.14.9                  Disclosure Information.  Within 45 days
of the date of this Agreement, Seller will deliver to Company a schedule
setting forth the following information with respect to Seller and as of the
most recent practicable date (as well as on an estimated pro forma basis as of
the Closing giving effect to the consummation of the transactions contemplated
hereby):  (a) Seller’s basis in its
assets; (b) the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess charitable
contribution allocable to Seller; and (c) the amount of any deferred gain
or loss allocable to Seller and arising out of any deferred intercompany
transactions.

3.15                           Performance
of Obligations.  Except as disclosed
on Schedule 3.15, Seller has performed all material obligations required
to be performed by it to date and Seller is not in material default under or in
breach of any term or provision of any covenant, contract, lease, indenture or
any other agreement, written or oral, to which it is a party, is subject or is
otherwise bound, and no event has occurred that, with the giving of notice or
the passage of time or both, would constitute such a default or breach, where
such default or breach or failure to perform would have a Material Adverse
Effect on Seller.  Except as disclosed on
Schedule 3.15 or in the portion of Schedule 3.16 that identifies
90-day past due or classified or nonaccrual loans, no party with whom Seller
has an agreement that is of material importance to the businesses of Seller is
in default thereunder.

 22

3.16                           Loans
and Investments.  Except as set forth
on Schedule 3.16, all loans, leases and other extensions of credit,
guaranties, security agreements or other agreements supporting any loans or
extensions of credit, and investments of Seller are, and constitute, in all
material respects, the legal, valid and binding obligations of the parties
thereto and are enforceable against such parties in accordance with their
terms, except as the enforceability thereof may be limited by applicable law
and otherwise by bankruptcy, liquidation, receivership, conservatorship,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally and by general equitable principles. 
Except as described on Schedule 3.16, as of December 31, 2006,
no loans or investments held by Seller are: 
(i) more than ninety (90) days past due with respect to any
scheduled payment of principal or interest, other than loans on a nonaccrual
status; (ii) classified as “loss,” “doubtful,” “substandard” or “specially
mentioned” by Seller or any banking regulators; or (iii) on a nonaccrual
status in accordance with Seller’s loan review procedures.  Except as set forth on Schedule 3.16,
none of such assets (other than loans) are subject to any restrictions,
contractual, statutory or other, that would materially impair the ability of
the entity holding such investment to dispose freely of any such assets at any
time, except restrictions on the public distribution or transfer of any such
investments under the Securities Act and the regulations thereunder or state
securities laws and pledges or security interests given in connection with
government deposits.  All loans, leases
or other extensions of credit outstanding, or commitments to make any loans,
leases or other extensions of credit made by Seller to any Affiliates of Seller
are disclosed on Schedule 3.16.  For
outstanding loans or extensions of credit where the original principal amounts
are individually in excess of $100,000 and which by their terms are either
secured by collateral or supported by a guaranty or similar obligation, the
security interests have been duly perfected in all material respects and have
the priority they purport to have in all material respects, other than by
operation of law, and, in the case of each guaranty or similar obligation, each
has been duly executed and delivered to Seller and is still in full force and
effect.

3.17                           Brokers
and Finders.  Except as disclosed on
Schedule 3.17, Seller is not a party to or obligated under any agreement
with any broker or finder relating to the transactions contemplated hereby, and
neither the execution of this Agreement, nor the Merger Agreement, nor the
consummation of the transactions provided for herein or therein, will result in
any liability to any broker or finder. 
Seller agrees to indemnify and hold harmless Company and its affiliates,
and to defend with counsel selected by Company and reasonably satisfactory to
Seller, from and against any liability, cost or expense, including attorneys’
fees, incurred in connection with a breach of this Section 3.17.

3.18                           Material
Contracts.  Schedule 3.18 to
this Agreement contains a complete and accurate written list of all agreements,
obligations or understandings involving payment or receipt of consideration
exceeding $10,000 per year, written and oral, to which Seller is a party as of
the date of this Agreement, except for loans and other extensions of credit
made by Seller in the ordinary course of its business and those items
specifically disclosed in the Seller Financial Statements.

3.19                           Absence
of Material Adverse Effect.  Since
January 1, 2005, the business of Seller has been conducted only in the
ordinary course, in the same manner as theretofore conducted, and no event or
circumstance has occurred or is expected to occur which has had or

 23
 

which, with the passage
of time or otherwise, could reasonably be expected to have a Material Adverse
Effect on Seller.

3.20                           Undisclosed
Liabilities.  Except as disclosed on
Schedule 3.20, Seller has no liabilities or obligations, either accrued,
contingent or otherwise, that are material to Seller and that have not
been:  (a) reflected or disclosed in
the Seller Financial Statements; or (b) incurred subsequent to
December 31, 2004 in the ordinary course of business.  There is no basis for the assertion against
Seller of any liability, obligation or claim (including without limitation that
of any Governmental Entity) that will have or cause, or could reasonably be
expected to have or cause, a Material Adverse Effect on Seller that is not
fully and fairly reflected and disclosed in the Seller Financial Statements or
on Schedule 3.20.

3.21                           Employees;
Employee Benefit Plans; ERISA.

3.21.1                  All material
obligations of Seller for payment to trusts or other funds or to any
Governmental Entity or to any individual, director, officer, employee or agent
(or his or her heirs, legatees or legal representatives) with respect to
unemployment compensation benefits, profit-sharing, pension or retirement
benefits or social security benefits, whether arising by operation of law, by
contract or by past custom, have been properly accrued on the Seller Financial
Statements for the periods covered thereby and paid when due.  Except as disclosed on Schedule 3.21.1,
all material obligations of Seller, whether arising by operation of law, by
contract or by past custom for vacation or holiday pay, bonuses and other forms
of compensation which are payable to its directors, officers, employees or
agents have been properly accrued on the Seller Financial Statements for the
periods covered thereby and paid when due. 
There are no unfair labor practice complaints, strikes, slowdowns,
stoppages or other controversies pending or attempts to unionize or
controversies threatened between Seller or any of its Affiliates and/or
relating to any of its employees that are likely to have a Material Adverse
Effect on Seller.  Seller is not a party
to any collective bargaining agreement with respect to any of its employees
and, except as set forth on Schedule 3.21.1, Seller is not a party to a
written employment contract with any of its employees and there are no
understandings with respect to the employment of any officer or employee of
Seller which are not terminable by Seller without liability on not more than
thirty (30) days’ notice.  Except as
disclosed in the Seller Financial Statements for the periods covered thereby,
all material sums due for employee compensation have been paid and all employer
contributions for employee benefits, including deferred compensation
obligations, and all material benefit obligations under any Employee Plan (as
defined in Section 3.21.3 hereof) or any Benefit Arrangement (as defined
in Section 3.21.4 hereof) have been duly and adequately paid or provided
for in accordance with plan documents. 
Except as set forth on Schedule 3.21.1, no director, officer or
employee of Seller is entitled to receive any payment of any amount under any
existing agreement, severance plan or other benefit plan as a result of the
consummation of any transaction contemplated by this Agreement or the Merger
Agreement.  Seller has materially
complied with all applicable federal and state statutes and regulations which
govern workers’ compensation, equal employment opportunity and equal pay,
including, but not limited to, all civil rights laws, Presidential Executive
Order 1124, the Fair Labor Standards Act of 1938, as amended, and the Americans
with Disabilities Act.

 24
 

3.21.2                  Seller has delivered as
Schedule 3.21.2 a complete list of:

(a)                                  All
current employees of Seller together with each employee’s tenure with Seller,
title or job classification, and the current annual rate of compensation
anticipated to be paid to each such employee; and

(b)                                 All
Employee Plans and Benefit Arrangements (as defined in Sections 3.21.3 and
3.21.4 hereof), including all plans or practices providing for current
compensation or accruals for active employees, including, but not limited to,
all employee benefit plans, all pension, profit-sharing, retirement, bonus,
stock option, incentive, deferred compensation, severance, long-term
disability, medical, dental, health, hospitalization, life insurance or other
insurance plans or related benefits.

3.21.3                  Except as
disclosed on Schedule 3.21.3, Seller does not maintain, administer or
otherwise contribute to any “employee benefit plan,” as defined in
Section 3(3) of ERISA, which is subject to any provisions of ERISA
and covers any employee, whether active or retired, of Seller or any of its
Subsidiaries (any such plan being herein referred to as an “Employee Plan”).  True and complete copies of each such
Employee Plan, including amendments thereto, have been previously delivered or
made available to Company, together with (i) all agreements regarding plan
assets with respect to such Employee Plans, (ii) a true and complete copy
of the annual reports for the most recent three years (Form 5500 Series
including, if applicable, Schedules A and B thereto) prepared in
connection with any such Employee Plan, (iii) a true and complete copy of
the actuarial valuation reports for the most recent three years, if any,
prepared in connection with any such Employee Plan covering any active employee
of Seller or its Subsidiaries, (iv) a copy of the most recent summary plan
description of each such Employee Plan, together with any modifications
thereto, and (v) a copy of the most recent favorable determination letter
(if applicable) from the Internal Revenue Service for each Employee Plan.  None of the Employee Plans is a “multiemployer
plan” as defined in Section 3(37) of ERISA or a “multiple employer plan”
as covered in Section 412(c) of the IRC, and Seller has not been
obligated to make a contribution to any such multiemployer or multiple employer
plan within the past five years.  None of
the Employee Plans of Seller is, or for the last five years has been, subject
to Title IV of ERISA.  Each Employee Plan
that is intended to be qualified under Section 401(a) of the IRC is
so qualified and each trust maintained pursuant thereto is exempt from income
tax under Section 501(a) of the IRC, and Seller is not aware of any
fact which has occurred that would cause the loss of such qualification or
exemption.

3.21.4                  Except as
disclosed on Schedule 3.21.4, Seller does not maintain (other than base
salary and base wages) any form of current or deferred compensation, bonus,
stock option, stock appreciation right, severance pay, salary continuation,
retirement or incentive plan or arrangement for the benefit of any director,
officer or employee, whether active or retired, of Seller or for any class or
classes of such directors, officers or employees.  Except as disclosed on Schedule 3.21.4,
Seller does not maintain any group or individual health insurance, welfare or
similar plan or arrangement for the benefit of any director, officer or employee
of Seller, whether active or retired, or for any class or classes of such
directors, officers or employees.  Any
such plan or arrangement described in this Section 3.21.4, copies of which
have been delivered or made available to Company, shall be herein referred to
as a “Benefit Arrangement.”

 25
 

3.21.5                  To Seller’s
Knowledge, all Employee Plans and Benefit Arrangements are operated in material
compliance with the requirements prescribed by any and all statutes,
governmental or court orders, or governmental rules or regulations currently in
effect, including but not limited to ERISA and the IRC, applicable to such
plans or arrangements, and plan documents relating to any such plans or
arrangement materially comply with or will be amended to materially comply with
applicable legal requirements.  Neither
Seller, nor any Employee Plan nor any trusts created thereunder, nor any
trustee, administrator nor any other fiduciary thereof has engaged in a “prohibited
transaction,” as defined in Section 406 of ERISA and Section 4975 of
the IRC, that could subject Seller, Company, or Bank to liability under
Section 409 or 502(i) of ERISA or Section 4975 of the IRC or
that would adversely affect the qualified status of such plans; each “plan
official” within the meaning of Section 412 of ERISA of each Employee Plan
is bonded to the extent required by such Section 412; with respect to each
Employee Plan, to Seller’s Knowledge, no employee of Seller, nor any fiduciary
of any Employee Plan, has engaged in any breach of fiduciary duty as defined in
Part 4 of Subtitle B of Title I of ERISA which could subject
Seller or any of its Subsidiaries to liability if Seller or any such Subsidiary
is obligated to indemnify such Person against liability.  Except as disclosed on Schedule 3.21.5,
Seller has not failed to make any material contribution or pay any amount due
and owing as required by law or the terms of any Employee Plan or Benefit
Arrangement.

3.21.6                  Except as set
forth on Schedule 3.21.6, no Employee Plan or Benefit Arrangement has any
material liability of any nature, accrued or contingent, including, without
limitation, liabilities for federal, state, local or foreign taxes, interest or
penalty other than liability for claims arising in the course of the
administration of each such Employee Plan. 
Except as set forth on Schedule 3.21.6, to Seller’s Knowledge there
is no pending or threatened legal action, proceeding or investigation against
any Employee Plan that could result in material liability to such Employee
Plan, other than routine claims for benefits, and there is no basis for any
such legal action, proceeding or investigation.

3.21.7                  To Seller’s
Knowledge, each Benefit Arrangement which is a group health plan (within the
meaning of such term under IRC Section 4980B(g)(2)) materially complies
and has materially complied with the requirements of Section 601 through
608 of ERISA or Section 4980B of the IRC governing continuation coverage
requirements for employee-provided group health plans.

3.21.8                  Except as
disclosed on Schedule 3.21.8, Seller does not maintain any Employee Plan
or Benefit Arrangement pursuant to which any benefit or other payment will be
required to be made by Seller or its Affiliates or pursuant to which any other
benefit will accrue or vest in any director, officer or employee of Seller or
its Affiliates, in either case as a result of the consummation of the
transactions contemplated by this Agreement or the Merger Agreement.

3.22                           Powers
of Attorney.  No power of attorney or
similar authorization given by Seller is presently in effect or outstanding
other than powers of attorney given in the ordinary course of business with
respect to routine matters.

 26
 

3.23                           Hazardous
Materials.  Except as set forth on
Schedule 3.23:

3.23.1                  Except for ordinary and necessary quantities
of cleaning, pest control and office supplies, and other small quantities of
Hazardous Substances that are used in the ordinary course of business and in
compliance with applicable Environmental Laws, or ordinary rubbish, debris and
nonhazardous solid waste stored in garbage cans or bins for regular disposal
off-site, or petroleum contained in, and de minimus quantities discharged from,
motor vehicles in their ordinary operation on any of the Seller Properties (as
defined below), Seller has not engaged in the generation, use, manufacture,
treatment, transportation, storage (in tanks or otherwise), or disposal of
Hazardous Substances other than as permitted by and only in compliance with
applicable law.  Since the date Seller
was formed as a legal entity, no material amount of Hazardous Substances has
been released, emitted or disposed of, or otherwise deposited, on, in or from
any real property which is now or has been previously owned since the date
Seller opened for banking, or which is currently or during the past three years
was leased, by Seller, including OREO (collectively, the “Seller Properties”),
and Seller has not received written notice that any of the same has occurred
with respect to any real property in which Seller now holds any security
interest, mortgage or other lien or interest (“Seller Collateralizing Real
Estate”), except for (i) matters disclosed on Schedule 3.23; and
(ii) no activity has been undertaken on any of the Seller Properties since
the date Seller opened for banking, and Seller has not received any written
notice that activities have been or are being undertaken on any of the Seller
Collateralizing Real Estate, that would cause or contribute to:

(a)                                  any
of the Seller Properties or Seller Collateralizing Real Estate becoming a
treatment, storage or disposal facility within the meaning of RCRA or any
similar state law or local ordinance;

(b)                                 a
release or threatened release of any Hazardous Substances under circumstances
which would violate any Environmental Laws; or

(c)                                  the
discharge of Hazardous Substances into any soil, subsurface water or ground
water or into the air, or the dredging or filling of any waters, that would
require a permit or any other approval under the Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, as amended, 42
U.S.C. § 7401 et seq., or any similar federal or state law or local
ordinance; the cumulative effect of which would have a Material Adverse Effect
on the Seller Property or Seller Collateralizing Real Estate involved.

3.23.2                  Except as disclosed on
Schedule 3.23, there are not, and never have been, any underground storage
tanks located in or under any of the Seller Properties or the Seller
Collateralizing Real Estate.

3.23.3                  Seller has not received any written
notice of, and to the Knowledge of Seller has not received any verbal notice
of, any pending or threatened claims, investigations, administrative
proceedings, litigation, regulatory hearings or requests or demands for
remedial or responsive actions or for compensation, with respect to any of the
Seller Properties or Seller Collateralizing Real Estate, alleging noncompliance
with or violation of any Environmental Law or seeking relief under any
Environmental Law, and none of the Seller Properties or Seller Collateralizing
Real Estate is listed on the United States Environmental Protection Agency’s

 27
 

National
Priorities List of Hazardous Waste Sites, or, to the Knowledge of Seller, any
other list, schedule, log, inventory or record of hazardous waste sites maintained
by any federal, state or local agency.

3.23.4                  “Hazardous Substances” shall mean any
hazardous, toxic or infectious substance, material, gas or waste which is
regulated by any local, state or federal Governmental Entity, or any of their
agencies.

3.24                           Parachute
Payments.  The consummation of the
Merger will not entitle any director, officer or employee of Seller to any
payment that would constitute a parachute payment under IRC Section 280G.

3.25                           Risk
Management Instruments.  Neither
Seller nor any Subsidiary of Seller is a party or has agreed to enter into an
exchange traded or over-the-counter equity, interest rate, foreign exchange or
other swap, forward, future, option, cap, floor or collar or any other contract
that is not included on the balance sheet and is a derivatives contract
(including various combinations thereof) (each, a “Derivatives Contract”) or
owns securities that (i) are referred to generally as “structured notes,” “high
risk mortgage derivatives,” “capped floating rate notes” or “capped floating
rate mortgage derivatives” or (ii) are likely to have changes in value as
a result of interest or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange rate changes, except for
those Derivatives Contracts and other instruments legally purchased or entered
into in the ordinary course of business consistent with safe and sound banking
practices and regulatory guidance and previously disclosed to Company and Bank.

3.26                           Liability
Under Regulation C, Truth in Lending Law and HMDA.  To Seller’s Knowledge, and except as
disclosed on Schedule 3.26, Seller has no liabilities or obligations
either accrued, contingent or otherwise, that have a Material Adverse Effect on
Seller with respect to Regulation C, Truth in Lending Law and HMDA
disclosures.

3.27                           Bank
Secrecy Act.  Seller is in compliance
with the Bank Secrecy Act (31 U.S.C. § 5322, et seq.) and related state
and federal anti-money laundering laws, regulations and guidelines, including
without limitation those provisions of federal regulations requiring
(a) the filing of reports, such as Currency Transaction Reports and
Suspicious Activity Reports, (b) the maintenance of records and
(c) the exercise of due diligence in identifying customers.

3.28                           Accounting
Records.  Seller maintains accounting
records which fairly and validly reflect, in all material respects, its
transactions and accounting controls sufficient to provide reasonable
assurances that such transactions are (i) executed in accordance with its
management’s general or specific authorization, and (ii) recorded as
necessary to permit the preparation of financial statements in conformity with
GAAP.  Such records, to the extent they
contain material information pertaining to Seller which is not easily and
readily available elsewhere, have been duplicated, and such duplicates are
stored safely and securely.

3.29                           Corporate
Records.  The minute books of Seller
accurately reflect all material actions taken by its shareholders, board of
directors and committees of its board of directors.

 28
 

3.30                           Accounting
and Tax Matters.  Seller has not
through the date hereof taken or agreed to take any action that would prevent
Seller from qualifying the Merger as a reorganization within the meaning of
Section 368 of the IRC.

3.31                           Community
Reinvestment Act.  Seller received a
rating of “satisfactory” or better in its most recent examination or interim
review with respect to the Community Reinvestment Act.  Seller has not been advised in writing of any
concerns regarding compliance with the Community Reinvestment Act by any
Governmental Entity or by any other Person.

3.32                           Foreign
Corrupt Practices Act.  Seller
(including any of its officers, directors and, to the Knowledge of Seller, its
representatives) has not taken any action which would cause it to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
rules or regulations thereunder.

ARTICLE
4.  REPRESENTATIONS AND WARRANTIES OF
COMPANY AND BANK

Company and Bank,
jointly and severally, represent and warrant to Seller as follows:

4.1                                 Organization;
Corporate Power; Etc.  Each of
Company and Bank is a California corporation duly organized, validly existing
and in good standing under the laws of the State of California and has all
requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business substantially as it is being
conducted on the date of this Agreement. 
Company is a bank holding company registered under the BHCA.  Each of Company’s Subsidiaries has all
requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business substantially as it is being
conducted on the date of this Agreement, except where the failure to have such
power or authority would not have a Material Adverse Effect on Company taken as
a whole or the ability of Company to consummate the transactions contemplated
by this Agreement.  Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to obtaining all Requisite Regulatory Approvals, Company will have the
requisite corporate power and authority to perform its respective obligations
hereunder with respect to the consummation of the transactions contemplated
hereby.  Company is the sole shareholder
of Bank.  Bank is a state chartered
banking corporation licensed to conduct banking business in California.  Bank is a member of the Federal Reserve System.  Bank’s deposits are insured by the FDIC in
the manner and to the full extent provided by law.

4.2                                 Licenses
and Permits.  Company and Bank have
all material licenses, certificates, franchises, rights and permits that are
necessary for the conduct of their business as presently conducted, and such
licenses are in full force and effect, except for any failure to be in full
force and effect that would not, individually or in the aggregate, have a
Material Adverse Effect on Company and Bank taken as a whole or on the ability
of Company and Bank to consummate the transactions contemplated by this
Agreement.  The properties, assets,
operations and businesses of Company and Bank are and have been maintained and
conducted, in all material respects, in compliance with all applicable
licenses, certificates, franchises, rights and permits.

4.3                                 Subsidiaries.  There is no corporation, partnership, joint
venture or other entity in which Company or Bank own, directly or indirectly
(except as pledgee pursuant to loans or stock

 29
 

or other interest
held as the result of or in lieu of foreclosure pursuant to pledge or other
security arrangement) any equity or other voting interest or position, other
than Company’s ownership of Bank or any entity facilitating the issuance of
trust preferred securities.

4.4                                 Authorization
of Agreement; No Conflicts.

4.4.1                        The execution and delivery of
this Agreement and the Merger Agreement by Company and Bank, and the
consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action on the part of Company and
Bank, subject only to the approval of this Agreement, the Merger Agreement and
the Merger by Company’s shareholders. 
This Agreement has been duly executed and delivered by Company and Bank
and constitutes a legal, valid and binding obligation of Company and Bank,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, liquidation, receivership, conservatorship,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally and by general equitable principles and by
Section 8(b)(6)(D) of the FDI Act, 12 U.S.C. 1818(b)(6)(D).  The Merger Agreement, upon the receipt of all
Requisite Regulatory Approvals and the due execution and filing of such Merger
Agreement in accordance with the applicable provisions of the California
Corporations Code and the California Financial Code, will constitute a legal,
valid and binding obligation of Company and Bank, enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, liquidation, receivership, conservatorship, insolvency, moratorium
or other similar laws affecting the rights of creditors generally and by
general equitable principles and by Section 8(b)(6)(D) of the FDI
Act, 12 U.S.C. 1818(b)(6)(D).

4.4.2                        Except as disclosed on
Schedule 4.4, the execution and delivery of this Agreement and the Merger
Agreement, and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with, or result in any violation of or
default or loss of a material benefit under, any provision of the
Articles of Incorporation or Bylaws of Company or Bank, any material
mortgage, indenture, lease, agreement or other material instrument or any
permit, concession, grant, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Company or Bank or
any of their respective assets or properties, other than any such conflict,
violation, default or loss which (i) will not have a Material Adverse
Effect on Company and Bank taken as a whole; or (ii) will be cured or
waived prior to the Effective Time.

4.5                                 Capital
Structure.  The authorized capital
stock of Company consists of 10,000,000 shares of Company Common Stock, no par
value per share and 10,000,000 shares of Company Preferred Stock.  On the date of this Agreement, 3,889,692
shares of Company Common Stock were outstanding and 1,037,142 shares of Company
Common Stock were reserved for issuance pursuant to outstanding Company Stock
Options under the Company Stock Option Plan. 
All outstanding shares of Company Common Stock are validly issued, fully
paid and nonassessable and do not possess any preemptive rights and were not
issued in violation of any preemptive rights or any similar rights of any Person.  Except for the Company Stock Options
described on Schedule 4.5 to this Agreement, Company does not have
outstanding any options, warrants, calls, rights, commitments, securities or
agreements of any character to which Company is a party or by which it is bound
obligating Company to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of Company or obligating

 30
 

Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.

4.6                                 Company
Filings.  Except as disclosed on
Schedule 4.6, since January 1, 2005, Company and Bank have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that were required to be filed with (a) the
Federal Reserve or any Federal Reserve Bank; (b) the CDFI; (c) the
SEC; and (d) any other applicable federal, state or local governmental or
regulatory authority.  All such reports,
registrations and filings are collectively referred to as the “Company Filings.”  Except to the extent prohibited by law,
copies of the Company Filings have been made available to Seller.  As of their respective filing or mailing
dates, each of the past Company Filings (a) was true and complete in all
material respects (or was amended so as to be so promptly following discovery
of any discrepancy); and (b) complied in all material respects with all of
the statutes, rules and regulations enforced or promulgated by the Regulatory
Authority with which it was filed (or was amended so as to be so promptly
following discovery of any such noncompliance) and none contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

4.7                                 Accuracy
of Information Supplied.  Company has
delivered or will deliver to Seller copies of the Company Financial Statements,
and Company will hereafter until the Closing Date deliver to Seller copies of
additional financial statements of Company as provided in
Sections 5.1.1(iii).  The Company
Financial Statements have been prepared (and all of said additional financial
statements will be prepared) in accordance with GAAP, or applicable regulatory
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) consistently followed
throughout the periods covered by such statements, and present (and, when
prepared, will present) fairly the financial position of Company or Bank, as
appropriate, as of the respective dates indicated and the results of
operations, cash flows and changes in shareholders’ equity at the respective
dates and for the respective periods covered by such financial statements
(subject, in the case of the unaudited statements, to recurring adjustments
normal in nature and amount).  In
addition, Company has delivered or made available to Seller copies of all management
or other letters delivered to Company or Bank by their independent accountants
in connection with any of the Company Financial Statements or by such
accountants or any consultant regarding the internal controls or internal
compliance procedures and systems of Company or Bank issued at any time since
January 1, 2005, and will make available for inspection by Seller or its
representatives, at such times and places as Seller may reasonably request,
reports and working papers produced or developed by such accountants or
consultants.

4.8                                 Compliance
with Applicable Laws.  The respective
businesses of Company and Bank are not being conducted in violation of any law,
ordinance or regulation, except for violations which individually or in the
aggregate would not have a Material Adverse Effect on Company and Bank, taken
as a whole.  Except as set forth on
Schedule 4.8, to the Knowledge of Company no investigation or review by
any Governmental Entity with respect to Company or Bank, other than regular bank
examinations, is pending or threatened, nor has any Governmental Entity
indicated to Company or Bank an intention to conduct the same.

 31
 

4.9                                 Litigation.  Except as set forth on Schedule 4.9,
there is no suit, action or proceeding or investigation pending or threatened
against or affecting Company which, if adversely determined, would have a
Material Adverse Effect on Company and Bank taken as a whole; nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Company or Bank that has, or which, insofar as
reasonably can be foreseen, in the future would have, any such Material Adverse
Effect.  Schedule 4.9 contains a
true, correct and complete list, including identification of the applicable
insurance policy covering such litigation, if any, subject to reservation of
rights, if any, the applicable deductible and the amount of any reserve
therefor, of all pending litigation in which Company or Bank is a named party
of which Company has Knowledge, and except as disclosed on Schedule 4.9,
all of the litigation shown on such Schedule is adequately covered by
insurance in force, except for applicable deductibles, or has been adequately
reserved for in accordance with Company’s prior business practices.

4.10                           Agreements
with Banking Authorities.  Neither
Company nor Bank is a party to any written agreement or memorandum of
understanding with, or order or directive from, any Governmental Entity.

4.11                           Insurance.  Company and Bank each has in full force and
effect policies of insurance with respect to its assets and business against
such casualties and contingencies and in such amounts, types and forms as are
customarily appropriate for its business, operations, properties and assets.

4.12                           Taxes.

4.12.1                  Filing of Returns.  Except as set forth on Schedule 4.12.1,
Company and Bank have duly prepared and filed or caused to be duly prepared and
filed all federal, state, and local Returns (for Tax or informational purposes)
which were required to be filed by or in respect of Company and Bank or any of
their properties, income and/or operations on or prior to the Closing
Date.  As of the time they were filed,
the foregoing Returns accurately reflected the material facts regarding the
income, business, asset, operations, activities, status, and any other information
required to be shown thereon.  Except as
set forth on Schedule 4.12.1, no extension of time within which Company or
Bank may file any Return is currently in force.

4.12.2                  Payment of Taxes.  Except as disclosed on Schedule 4.12.2
with respect to all amounts in respect of Taxes imposed on Company or Bank or
for which Company or Bank is or could be liable, whether to taxing authorities
(as, for example, under law) or to other Persons (as, for example, under Tax
allocation agreements), with respect to all taxable periods or portions of
periods ending on or before the Closing Date, all applicable tax laws and
agreements have been or will be fully complied with in all material respects,
and all such amounts required to be paid by or on behalf of Company or Bank to
taxing authorities or such other Persons on or before the date hereof have been
paid.

4.12.3                  Audit History.  Except as disclosed on Schedule 4.12.3,
there is no review or audit by any taxing authority of any Tax liability of
Company or Bank currently in progress of which Company or Bank has
Knowledge.  Except as disclosed on
Schedule 4.12.3, neither Company nor Bank has received any written notices
since its inception of any pending or

 32
 

threatened audit,
by the Internal Revenue Service or any state, local or foreign agency, for any
Returns or Tax liability of Company and Bank for any period.  Company and Bank currently have no unpaid
deficiencies assessed by the Internal Revenue Service or any state, local or
foreign taxing authority arising out of any examination of any of the Returns
of Company or Bank filed for fiscal years ended on or after December 31,
2004 through the Closing Date, nor to the Knowledge of Company is there reason
to believe that any material deficiency will be assessed.

4.12.4                  Statute of Limitations.  Except as disclosed on Schedule 4.12.4,
no agreements are in force or are currently being negotiated by or on behalf of
Company or Bank for any waiver or for the extension of any statute of
limitations governing the time of assessments or collection of any Tax.  No closing agreements or compromises exist
concerning Taxes of Company or Bank.

4.12.5                  IRC Section 382 Applicability.  Company and Bank, including any party joining
in any consolidated return to which Company or Bank is a member, have not
undergone an “ownership change” as defined in IRC
Section 382(g) within the “testing period” (as defined in IRC
Section 382) ending immediately before the Effective Time, and not taking
into account any transactions contemplated by this Agreement.

4.13                           Brokers
and Finders.  Except as set forth on
Schedule 4.13, neither Company nor Bank is a party to or obligated under
any agreement with any broker or finder relating to the transactions
contemplated hereby, and neither the execution of this Agreement, nor the
Merger Agreement, nor the consummation of the transactions provided for herein
or therein, will result in any liability to any broker or finder.  Company agrees to indemnify and hold harmless
Seller, and to defend with counsel selected by Seller and reasonably
satisfactory to Company, from and against any liability, cost or expense,
including attorneys’ fees, incurred in connection with a breach of this
Section 4.13.

4.14                           Absence
of Material Adverse Effect.  Since
January 1, 2005, the business of Company (or Bank, prior to formation of
Company) has been conducted only in the ordinary course, in the same manner as
theretofore conducted, and no event or circumstance has occurred or is expected
to occur which to Company’s Knowledge has had or which, with the passage of
time or otherwise, could reasonably be expected to have a Material Adverse
Effect on Company and Bank taken as a whole.

4.15                           Performance
of Obligations.  Except as disclosed
on Schedule 4.15, Company and Bank have performed all material obligations
required to be performed by them to date and neither is in material default
under or in breach of any term or provision of any covenant, contract, lease,
indenture or any other agreement, written or oral, to which it is a party, is
subject or is otherwise bound, and no event has occurred that, with the giving
of notice or the passage of time or both, would constitute such a default or
breach, where such default or breach or failure to perform would have a
Material Adverse Effect on Company and Bank taken as a whole.  Except as disclosed on Schedule 4.15 and
except with respect to loans by Bank, no party with whom Company or Bank has an
agreement that is of material importance to the businesses of Company or Bank
is in default thereunder.

 33
 

4.16                           Undisclosed
Liabilities.  Except as disclosed on
Schedule 4.16, neither Company nor Bank has any liabilities or
obligations, either accrued, contingent or otherwise, that are material to
Company and Bank taken as a whole and that have not been:  (a) reflected or disclosed in the
Company Financial Statements; (b) incurred subsequent to December 31,
2004 in the ordinary course of business; or (c) incurred in connection with the
issuance of trust preferred securities or debt after the date of this Agreement.  There is no basis for the assertion against
Company or Bank of any liability, obligation or claim (including without
limitation that of any Governmental Entity) that will have or cause, or could
reasonably be expected to have or cause, a Material Adverse Effect on Company
and Bank taken as a whole that is not fully and fairly reflected and disclosed
in the Seller Financial Statements or on Schedule 4.16.

4.17                           Bank
Secrecy Act.  Bank is in compliance
with the Bank Secrecy Act (31 U.S.C. § 5322, et seq.) and related state
and federal anti-money laundering laws, regulations and guidelines, including
without limitation those provisions of federal regulations requiring
(a) the filing of reports, such as Currency Transaction Reports and
Suspicious Activity Reports, (b) the maintenance of records and
(c) the exercise of due diligence in identifying customers.

4.18                           Community
Reinvestment Act.  Bank received a
rating of “satisfactory” or better in its most recent examination or interim
review with respect to the Community Reinvestment Act.  Bank has not been advised in writing of any
concerns regarding compliance with the Community Reinvestment Act by any
Governmental Entity or by any other Person.

ARTICLE
5.  ADDITIONAL AGREEMENTS

5.1                                 Access
to Information.

5.1.1                        Upon reasonable notice, Seller
shall permit Company and its accountants, counsel and other representatives
reasonable access to its officers, employees, properties, books, contracts,
commitments and records from the date hereof through the Effective Time, and shall
furnish or provide access to Company as soon as practicable, (i) a copy of
each of the Seller Filings filed subsequent to the date of this Agreement
promptly after such document has been filed with the appropriate Governmental
Entity; (ii) unless otherwise prohibited by law, a copy of each report,
schedule and other document filed or received by Seller during such period with
or from any Regulatory Authority or the Internal Revenue Service, as to
documents other than related to employees or customers and other than those
distributed to banks generally; (iii) as promptly as practicable following
the end of each calendar month after the date hereof, a balance sheet of Seller
as of the end of such month; and (iv) all other information concerning
Seller’s business, properties, assets, financial condition, results of
operations, liabilities, personnel and otherwise as Company may reasonably
request.

5.1.2                        Until the Effective Time,
Company’s Chief Executive Officer shall be entitled to receive a copy of board
packages prepared for meetings of the Board of Directors of Seller and of the
Loan Committee of Seller, and a copy of the minutes of, and resolutions adopted
at, such meetings.  Seller shall provide
Company’s Chief Executive Officer with notice of the dates, times and places of
such meetings at the same time notice is given to the members of the Board of
Directors of Seller.  Notwithstanding the
foregoing, Seller shall not be obligated

 34
 

to disclose any
information to Company that is entitled to be protected from disclosure under
an attorney-client privilege which would be lost due to such disclosure.

5.2                                 Shareholder
Approval.  Company and Seller shall
promptly call their respective meetings of shareholders to be held at the
earliest practicable date after the date on which the initial Registration
Statement is declared effective by the SEC, but in no event later than July 31,
2007, for the purpose of approving this Agreement and authorizing the Merger
Agreement and the Merger.  Subject to its
respective fiduciary duties, each of Company’s and Seller’s Board of Directors
will recommend to its respective shareholders approval of this Agreement, the
Merger Agreement and the Merger.

5.3                                 Taking
of Necessary Action.

5.3.1                        Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees, subject to
applicable laws and the fiduciary duties of Seller’s or Company’s Board of
Directors, as advised in writing by its respective counsel, to use all
reasonable efforts promptly to take or cause to be taken all action and
promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Merger Agreement,
including, without limitation, the delivery of any certificate or other
document reasonably requested by counsel to a party to this Agreement.  Without limiting the foregoing, Company and
Seller will use their reasonable efforts to obtain all consents of third
parties and Government Entities necessary or, in the reasonable opinion of
Company or Seller advisable for the consummation of the transactions
contemplated by this Agreement.  In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the Merger Agreement, or
to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of Seller, the proper officers or
directors of Company, Bank or Seller, as the case may be, shall take all such
necessary action.

5.3.2                        The obligations of Seller
contained in Section 6.2.5 of this Agreement shall continue to be in full
force and effect despite any Default under Section 6.2.5 or Seller’s
receipt of a Seller Superior Proposal (defined below) and any Default under
Section 6.2.5 by Seller shall entitle Company to such legal or equitable
remedies as may be provided in this Agreement or by law notwithstanding that
any action or inaction of the Board of Directors or officers of the defaulting
party which is required to enable such party to fulfill such obligations may be
excused based on the continuing fiduciary obligations of such party’s Board of
Directors and officers to its shareholders.

5.3.3                        Seller shall use its best
efforts to cause each director, executive officer and other person who is an “Affiliate”
of Seller (for purposes of Rule 145 under the Securities Act) to deliver to
Company, on the date of this Agreement, a written agreement in the form attached
hereto as Exhibit 5.3 (the “Affiliate’s Agreement”).

5.4                                 Registration
Statement and Applications.

5.4.1                        Company and Seller will
cooperate and jointly prepare and file as promptly as practicable the
Registration Statement, the statements, applications, correspondence

 35
 

or forms to be
filed with appropriate state securities law regulatory authorities, and the
statements, correspondence or applications to be filed to obtain the Requisite
Regulatory Approvals to consummate the transactions contemplated by this
Agreement.  Each of Company and Seller
shall use all reasonable efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such
filing, and Company and Seller shall thereafter mail the Joint Proxy
Statement/Prospectus to their respective shareholders.  Each party will furnish all financial or
other information, certificates, consents and opinions of counsel concerning it
and its Subsidiaries received by such party.

5.4.2                        Each party shall provide to the
other at the request of the other party: (i) immediately prior to the
filing thereof, copies of all material statements, applications, correspondence
or forms to be filed with state securities law regulatory authorities, the SEC
and other appropriate regulatory authorities to obtain the Requisite Regulatory
Approvals; (ii) promptly after delivery to, or receipt from, such
regulatory authorities all written communications, letters, reports or other
documents relating to the transactions contemplated by this Agreement; and
(iii) written summaries of all oral communications with any state
securities law regulatory authorities, the SEC or other appropriate bank
regulatory authorities regarding the Requisite Regulatory Approvals.

5.5                                 Expenses.

5.5.1                        Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
the same except as otherwise provided in Article 8.

5.5.2                        Seller shall use its best
efforts to ensure that its attorneys, accountants, financial advisors,
investment bankers and other consultants engaged by them in connection with the
transaction contemplated by this Agreement submit full and final bills on or
before the Closing Date and that such expenses are properly reflected on the
books of Seller.

5.6                                 Notification
of Certain Events.

5.6.1                        Seller shall provide to
Company, as soon as practicable, written notice (sent via facsimile and
overnight mail or courier) of the occurrence or failure to occur of any of the
events, circumstances or conditions that are the subject of Sections 6.1
and 6.2, which notice shall provide reasonable detail as to the subject matter
thereof.

5.6.2                        Company shall provide to
Seller, as soon as practicable, written notice (sent via facsimile and
overnight mail or courier) of the occurrence or failure to occur of any of the
events, circumstances or conditions that are the subject of Section 6.3
and 6.4, which notice shall provide reasonable detail as to the subject matter
thereof.

5.6.3                        Each party shall promptly
advise the others in writing of any change or event which could reasonably be
expected to have a Material Adverse Effect on such party or on its ability to
consummate the transactions contemplated by this Agreement or the Merger
Agreement.

 36
 

5.6.4                        Seller and Company shall
immediately notify the other in writing in the event that such party becomes
aware that the Registration Statement or Joint Proxy Statement/Prospectus at
any time contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statement therein, in light of the circumstances under which they were made,
not misleading or that the Registration Statement or the Joint Proxy
Statement/Prospectus otherwise is required to be amended and supplemented,
which notice shall specify, in reasonable detail, the circumstances
thereof.  Company shall promptly amend
and supplement such materials and disseminate the new or modified information
so as to fully comply with the Securities Act. 
If the amendment or supplement so required relates to information
concerning or provided by Seller, the out-of-pocket costs and expenses of preparing,
filing and disseminating such amendment or supplement shall be borne by Seller.

5.7                                 Updated
Schedules.  Seller has delivered to
Company on or before the date of this Agreement all of the Schedules to
this Agreement which Seller is required to deliver to Company hereunder (the “Seller
Schedules”).  Company has delivered to
Seller on or before the date of this Agreement all of the Schedules to
this Agreement which Company is required to deliver to Seller hereunder ( the “Company
Schedules”).  Immediately prior to the
Closing Date, Seller shall have prepared updates of the Seller
Schedules provided for in this Agreement and shall deliver to Company
revised schedules containing the updated information (or a certificate signed
by Seller’s Chief Executive Officer stating that there have been no changes on
the applicable schedules); and Company shall have prepared updates of the
Company Schedules provided for in this Agreement and shall deliver to
Seller revised Schedules containing updated information (or a certificate
signed by Company’s Chief Executive Officer stating that there has been no
change on the applicable schedules).

5.8                                 Additional
Accruals/Appraisals.  Immediately
prior to the Closing Date, at Company’s request, Seller shall, consistent with
GAAP and applicable SEC and banking regulations, modify or change its loan,
accrual, reserve, tax, litigation and real estate valuation policies and
practices (including loan classifications and levels of reserves) as may be
necessary to conform Seller’s practices and methods to those of Company and
Bank, provided, however, that no accrual or reserve made by Seller pursuant to
this Section 5.8, or any litigation or regulatory proceeding arising out
of any such accrual or reserve, or any other effect on Seller resulting from
Seller’s compliance with this Section 5.8, shall constitute or be deemed
to be a breach, violation of or failure to satisfy any representation,
warranty, covenant, condition or other provision of this Agreement or otherwise
be considered in determining whether any such breach, violation or failure to
satisfy shall have occurred.

5.9                                 Employee
Plans.  Immediately prior to the
Closing Date, at Company’s request, Seller shall terminate any Employment Plan
or Benefit Arrangement, provided, however, that no accrual or reserve made by
Seller as a result of a termination requested by Company pursuant to this
Section 5.9, or any litigation or regulatory proceeding arising out of any
such accrual or reserve, or any other effect on Seller resulting from Seller’s
compliance with this Section 5.9, shall constitute or be deemed to be a
breach, violation of or failure to satisfy any representation, warranty,
covenant, condition or other provision of this Agreement or otherwise be
considered in determining whether any such breach, violation or failure to
satisfy shall have occurred.

 37
 

5.10                           Registration
Statement.  None of the information
supplied or to be supplied by Seller or relating to Seller and approved by
Seller which is included or incorporated by reference in (i) the
Registration Statement on Form S-4 to be filed with the SEC by Company in
connection with the issuance of shares of Company Common Stock in the Merger
(including the Joint Proxy Statement of Company and Seller and the Prospectus
of Company and Bank (“Joint Proxy Statement/Prospectus”) constituting a part
thereof, the “Registration Statement”) will, at the time the Registration
Statement becomes effective under the Securities Act, 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 therein, in light of the
circumstances under which they were made, not misleading; (ii) the Joint
Proxy Statement/Prospectus and any amendment or supplement thereto will, at all
times from the date of mailing to shareholders of Seller through the date of
the meeting of shareholders of Seller to be held in connection with the Merger,
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 therein,
in light of the circumstances under which they were made, not misleading; and
(iii) the applications and forms to be filed with securities or “blue sky”
authorities, self regulatory authorities, or any Governmental Entity in
connection with the Merger, the issuance of any shares of Company Common Stock
in connection with the Merger, or any Requisite Regulatory Approvals will, at
the time filed or at the time they become effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The Joint Proxy Statement/Prospectus will
comply in all material respects with the provisions of the Securities Act and
the rules and regulations thereunder.

ARTICLE
6.  CONDUCT OF BUSINESS

6.1                                 Affirmative
Conduct of Seller.  During the period
from the date of execution of this Agreement through the Effective Time, Seller
shall carry on its business in the ordinary course in substantially the manner
in which heretofore conducted, subject to changes in law applicable to all
national banking associations and directives from regulators, and use all
commercially reasonable efforts to preserve intact its business organization
and preserve its relationships with customers, depositors, suppliers and others
having business dealings with it; and, to these ends, shall fulfill each of the
following:

6.1.1                        Use its commercially reasonable
efforts, or cooperate with others, to expeditiously bring about the
satisfaction of the conditions specified in Article 7 hereof;

6.1.2                        Advise Company promptly in
writing of any change that would have a Material Adverse Effect on Seller, or
of any matter which would make the representations and warranties set forth in
Article 3 hereof not true and correct in any material respect as of the
effective date of the Registration Statement and at the Effective Time;

6.1.3                        Keep in full force and effect
all of its existing material permits and licenses;

6.1.4                        Use its commercially reasonable
efforts to maintain insurance or bonding coverage on all material properties
for which it is responsible and on its business operations, and

 38
 

carry not less
than the same coverage for fidelity, public liability, personal injury,
property damage and other risks equal to that which is in effect as of the date
of this Agreement; and notify Company in writing promptly of any facts or
circumstances which could affect its ability to maintain such insurance or
bonding coverage;

6.1.5                        Perform its material
contractual obligations and not breach or come into default on any of such
obligations, and not amend, modify, or, except as they may be terminated in
accordance with their terms, terminate any material contract, agreement,
understanding, commitment, or offer, whether written or oral (collectively
referred to as an “Understanding”), or materially default in the performance of
any of its obligations under any Understanding where such default would have a
Material Adverse Effect on Seller;

6.1.6                        Duly observe and conform to all
legal requirements applicable to its business, except for any failure to so
observe and conform that would not, individually or in the aggregate, and, in
the future will not, have a Material Adverse Effect on Seller;

6.1.7                        Duly and timely file as and
when due all reports and Returns required to be filed with any Governmental
Entity;

6.1.8                        Maintain its tangible assets
and properties in good condition and repair, normal wear and tear excepted in
accordance with prior practices;

6.1.9                        Promptly advise Company in
writing of any event or any other transaction within the Knowledge of Seller,
whereby any Person or related group of Persons acquires, or proposes to
acquire, after the date of this Agreement, directly or indirectly, record or
beneficial ownership (as defined in Rule 13d-3 promulgated by the SEC
pursuant to the Exchange Act) or control of 5% or more of the outstanding
shares of Seller Common Stock either prior to or after the record date fixed
for the Seller shareholders’ meeting or any adjourned meeting thereof to
approve the transactions contemplated herein;

6.1.10                  (a)                                  Maintain a reserve
for loan and lease losses (“Loan Loss Reserve”) at a level that is consistent
with Seller’s past practices and methodology as in effect on the date of the
execution of this Agreement and in accordance with GAAP and applicable
regulatory accounting principles and banking laws and regulations;

(b)                                 Charge
off all loans, receivables and other assets, or portions thereof, deemed by
Seller, its outside loan portfolio reviewer, the OCC, or its independent
auditors, to be uncollectible in accordance with GAAP, regulatory accounting
principles, and applicable law or regulation, or which have been classified as “loss”
or as directed by any regulatory authority, unless such classification or
direction has been disregarded in good faith by Seller, Seller has submitted in
writing to such regulatory authority the basis upon which it has so disregarded
such classification or direction, and such regulatory authority retracts its
direction requiring such charge-off;

6.1.11                  Furnish to Company, as soon as
practicable, and in any event within fifteen (15) days after it is prepared:
(i) a copy of any report submitted to the Board of Directors of Seller and
access to the working papers related thereto, provided, however, that Seller
need not furnish Company any materials relating to deliberations of Seller’s
Board of Directors with

 39
 

respect to its
approval of this Agreement, communications of Seller’s legal counsel with the
Board of Directors or officers of Seller regarding Seller’s rights against or
obligations to Company or Bank under this Agreement, or books, records and
documents covered by the attorney-client privilege or which are attorneys’ work
product; (ii) copies of all material reports, renewals, filings,
certificates, statements, correspondence and other documents specific to Seller
or filed with or received from the OCC or any Governmental Entity to the extent
not prohibited by applicable law, regulation or order; (iii) monthly
unaudited balance sheets, statements of income and changes in shareholders’
equity for Seller and quarterly unaudited balance sheets, statements of income
and changes in shareholders’ equity for Seller, in each case prepared on a
basis consistent with past practice; and (iv) such other reports as
Company may reasonably request (which are otherwise deliverable under this
Section 6.1.11) relating to Seller;

6.1.12                  Seller agrees that through the
Effective Time, as of their respective dates, (i) each Seller Filing will
be true and complete in all material respects; and (ii) each Seller Filing
will comply in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Governmental Entity with which it
will be filed and none will 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 therein, in light of the circumstances under which they
will be made, not misleading.  Any
financial statement contained in any of such Seller Filings that is intended to
present the financial position of Seller during the periods involved to which it
relates will fairly present in all material respects the financial position of
Seller and will be prepared in accordance with GAAP or consistent with
applicable regulatory accounting principles and banking law and banking
regulations, except as stated therein;

6.1.13                  Maintain reserves for contingent
liabilities in accordance with GAAP or applicable regulatory accounting
principles and consistent with past practices;

6.1.14                  Inform Company of the amounts and
categories of any loans, leases or other extensions of credit, or other assets,
that have been classified by any bank regulatory authority as “specially
mentioned,” “renegotiated,” “substandard,” “doubtful,” “loss” or any comparable
classification (“Classified Assets”). 
Seller will furnish to Company, as soon as practicable, and in any event
within fifteen (15) days after the end of each calendar month, schedules
including the following: (i) Classified Assets by type and its
classification category; (ii) nonaccrual credits by type;
(iii) renegotiated loans by type (loans on which interest has been
renegotiated to lower than market rates because of the financial condition of
the borrowers); (iv) delinquent credits by type, including an aging into
30-89 and 90+ day categories; (v) loans or leases or other assets charged
off, in whole or in part, during the previous month by type; and (vi) OREO
or assets owned stating with respect to each its type;

6.1.15                  Furnish to Company, upon Company’s
request, schedules with respect to the following: (i) participating loans
and leases, stating, with respect to each, whether it is purchased or sold and
the loan or lease type; (ii) loans or leases (including any commitments)
by Seller to any director or officer (at or above the Vice President level) of
Seller or to any Person holding 5% or more of the capital stock of Seller,
including, with respect to each such loan or lease, the identity and, to the
Knowledge of Seller, the relation of the borrower to Seller, the loan or lease
type and the outstanding and undrawn amounts; and (iii) standby letters of
credit, by type;

 40
 

6.1.16                  Make available to Company copies of
each credit authorization package, consisting of all applications for and
financial information regarding loans, renewals of loans or other extensions of
credit secured by a first trust deed on real property, or liquid collateral
consisting of cash, TCD’s, stock, bonds or the cash value of life insurance or
extensions of credit secured by the foregoing, unsecured loans or unsecured
extensions of credit, and renewals of any classified or criticized loans which
are considered by Seller after the date of this Agreement, concurrently with
submission to Seller’s loan committee; and

6.1.17                  Seller shall comply with the
requirements of all applicable rules and regulations, the noncompliance with
which would materially and adversely affect the assets, liabilities, business,
financial condition or results of operations or prospects of Seller.

6.2                                 Negative
Covenants of Seller.  Between the
date hereof and the Effective Time, except as contemplated by this Agreement,
and subject to requirements of law and regulation generally applicable to
banks, Seller shall not, without prior written consent of Company (which
consent shall not be unreasonably withheld and which consent shall be deemed
granted if within three (3) Business Days of Company’s receipt of written
notice of a request for prior written consent, written notice of objection is
not received by Seller):

6.2.1                        (a) Declare or pay any
dividend or make any other distribution in respect of any of its capital stock;
(b) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (c) repurchase or
otherwise acquire any shares of its capital stock;

6.2.2                        Take any action that would or
might result in any of the representations and warranties of Seller set forth
in this Agreement becoming untrue in any material respect or any of the
conditions to the Merger set forth in Article 7 not being satisfied,
except to the extent such actions are required to be undertaken by applicable
law, regulation or at the direction of any Regulatory Authority;

6.2.3                        Issue, deliver, sell, or grant,
or authorize the issuance, delivery, sale or grant of, or purchase, any shares
of the capital stock of Seller or any securities convertible or exercisable
into or exchangeable for such capital stock, or any rights, warrants or
options, including options under any stock option plans or enter into any
agreements to do any of the foregoing, except in connection with the issuance
of Seller Common Stock pursuant to the exercise of Seller Warrants or Seller
Stock Options or modifications thereof pursuant to this Agreement;

6.2.4                        Amend its Articles of
Association or Bylaws, except as required by applicable law or by the terms of
this Agreement;

6.2.5                        Authorize or knowingly permit
any of its representatives, directly or indirectly, to solicit or encourage any
Acquisition Proposal (as hereinafter defined) or participate in any discussions
or negotiations with, or provide any nonpublic information to, any Person or
group of persons (other than Company and Bank, and their representatives)
concerning any such solicited or encouraged Acquisition Proposal.  Seller shall notify Company within 24 hours
if any inquiry regarding an Acquisition Proposal is received by Seller,
including the terms thereof.

 41
 

For purposes of
this Section 6.2.5, “Acquisition Proposal” shall mean any
(a) proposal pursuant to which any Person other than Company or Bank would
acquire or participate in a merger or other business combination or
reorganization involving Seller; (b) proposal by which any Person or
group, other than Company, would acquire the right to vote ten percent (10%) or
more of the capital stock of Seller entitled to vote for the election of
directors; (c) acquisition of the assets of Seller other than in the
ordinary course of business; or (d) acquisition in excess of ten percent
(10%) of the outstanding capital stock of Seller, other than as contemplated by
this Agreement.  Notwithstanding the
foregoing, nothing contained in this Agreement shall prevent Seller or Seller’s
Board of Directors from (i) furnishing nonpublic information to, or
entering into discussions or negotiations with, any person in connection with
an unsolicited bona fide written Acquisition Proposal by such person, or
recommending an unsolicited bona fide written Acquisition Proposal to the
shareholders of Seller, if and only to the extent that (A) the Board of
Directors of Seller has determined and believes in good faith (after
consultation with and the concurrence of its financial advisor) that such
Acquisition Proposal would, if consummated, result in a transaction materially
more favorable, from a financial point of view, to Seller’s shareholders than
the transaction contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a “Seller Superior
Proposal”) and Seller’s Board of Directors has determined in good faith, after
consultation with and based on written advice from its outside legal counsel,
that such action is necessary for Seller to comply with its fiduciary duties to
shareholders under applicable law, and (B) prior to furnishing such
nonpublic information to, or entering into discussions or negotiations with,
such person, Seller’s Board of Directors has received from such person an
executed confidentiality agreement, with terms no more favorable to such party
than those contained in the Confidentiality Agreement between Seller and
Company, or (ii) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal, if such Rule is applicable thereto;

6.2.6                        Acquire or agree to acquire by
merging, consolidating with, or by purchasing all or a substantial portion of
the assets of, or in any other manner, any business or any Person or otherwise
acquire or agree to acquire any assets which are material to Seller, other than
in the ordinary course of business consistent with prior practice;

6.2.7                        Sell, lease or otherwise
dispose of any of its assets which are material, individually or in the
aggregate, to Seller, except in the ordinary course of business consistent with
prior practice and after notice to and consultation with Company.  Company shall respond to Seller within five
(5) business days of notice by Seller which contains all appropriate
documents;

6.2.8                        Incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities of Seller or guarantee any debt securities of others other than in
the ordinary course of business consistent with prior practice;

6.2.9                        Enter into any Understanding,
except:  (a) deposits incurred, and
short-term debt securities (obligations maturing within one year) issued, in the
ordinary course of business consistent with prior practice, and liabilities
arising out of, incurred in connection with, or related to the consummation of
this Agreement; (b) commitments to make loans or other extensions of
credit in the ordinary course of business consistent with prior practice; and
(c) loan

 42
 

sales in the
ordinary course of business, without any recourse provided that no commitment
to sell loans shall extend beyond the Effective Time;

6.2.10                  Make or enter into a commitment to
make any unsecured loan with a principal balance or maximum principal balance
in excess of $200,000, or, except in the ordinary course of business pursuant
to Seller’s Loan Policy, make or enter into a commitment to make any other loan
or other extension of credit or renew any criticized or classified loan;

6.2.11                  Except in the ordinary course of
business consistent with prior practice or as required by an existing contract,
and provided prior disclosure thereof has been made in Schedule 6.2.11,
grant any general or uniform increase in the rates of pay of employees or
employee benefits or any increase in salary or employee benefits of any
officer, employee or agent or pay any bonus to any Person, retain any person
(including a former employee or manager) as a consultant to provide services at
any time prior to the Effective Time or make any promise or commitment to make
any payment to any such person, provided that bonuses may be paid and
arrangements entered into with respect to current Seller employees to encourage
their cooperation and assistance in completing the transactions contemplated by
this Agreement that are agreed to by Company;

6.2.12                  Sell, transfer, mortgage, encumber or
otherwise dispose of any assets or other liabilities except in the ordinary
course of business consistent with prior practice or as required by any
existing contract;

6.2.13                  Make the credit underwriting
policies, standards or practices relating to the making of loans and other
extensions of credit, or commitments to make loans and other extensions of
credit, or the Loan Loss Reserve policies, less stringent than those in effect
on December 31, 2006 or reduce the amount of the Loan Loss Reserves or any
other reserves for potential losses or contingencies;

6.2.14                  Make any capital expenditures, or
commitments with respect thereto, except those in the ordinary course of
business which do not exceed $5,000 individually or $25,000 in the aggregate;

6.2.15                  Renew, extend or amend any existing
employment contract or agreement, enter into any new employment contract or
agreement or make any bonus or any special or extraordinary payments to any
Person, other than changes with respect to Seller Stock Options contemplated by
this Agreement;

6.2.16                  Acquire any investment security
except for federal funds or obligations of the United States Treasury or agency
obligations with maturities of one year or less;

6.2.17                  Except as otherwise required to
correct a prior filing, compromise or otherwise settle or adjust any assertion
or claim of a deficiency in Taxes (or interest thereon or penalties in
connection therewith) or file any appeal from an asserted deficiency except in
a form previously approved by Company in writing, which approval will not be
unreasonably withheld, or file or amend any federal, foreign, state or local
Tax Return or report or make any tax election or change any method or period of
accounting unless required by GAAP or applicable law and, then, only after
submitting such Tax return or report or proposed Tax election or change in any

 43
 

method or period
of accounting, to Company for its approval, which it shall not unreasonably
withhold or delay;

6.2.18                  Except as contemplated in this
Agreement, terminate any Employee Plan or Benefit Arrangement;

6.2.19                  Change its fiscal year or methods of
accounting in effect at December 31, 2006, except as required by changes
in GAAP or regulatory accounting principles as concurred to by Seller’s
independent public accountants or by Section 5.8 of this Agreement;

6.2.20                  Take or cause to be taken any action
which would disqualify the Merger as a “reorganization” within the meaning of
Section 368(a) of the IRC as a tax-free reorganization;

6.2.21                  Take or cause to be taken into OREO
any commercial property without an environmental report reporting no adverse
environmental condition on such property, with a copy of such report delivered
to Company prior to taking such property into OREO;

6.2.22                  Make any new elections with respect
to Taxes or any changes in current elections with respect to Taxes affecting
the assets owned by Seller; or

6.2.23                  Materially change its pricing
practices on loans or deposit products.

6.3                                 Affirmative
Conduct of Company.  During the
period from the date of execution of this Agreement through the Effective Time,
each of Company and Bank shall carry on its business in the ordinary course in
substantially the manner in which heretofore conducted, subject to changes in
law applicable to all bank holding companies or California state-chartered
banks, respectively, and directives from regulators, and use all commercially
reasonable efforts to preserve intact its business organization and preserve
its relationships with customers, and, to these ends, shall fulfill each of the
following:

6.3.1                        Use its commercially reasonable
efforts, or cooperate with others, to expeditiously bring about the
satisfaction of the conditions specified in Article 7 hereof;

6.3.2                        Advise Seller promptly in
writing of any change that would have a Material Adverse Effect on Company and
Bank taken as a whole, or of any matter which would make the representations
and warranties set forth in Article 4 hereof not true and correct in any
material respect as of the effective date of the Registration Statement and at
the Effective Time;

6.3.3                        Keep in full force and effect
all of its existing material permits and licenses;

6.3.4                        Duly observe and conform to all
legal requirements applicable to its business, except for any failure to so
observe and conform that would not, individually or in the aggregate, and, in
the future will not, have a Material Adverse Effect on Company and Bank taken
as a whole;

 44

6.3.5        Duly and timely file as and when due all
reports and Returns required to be filed with any Governmental Entity;

6.3.6        Company agrees that through the
Effective Time, as of their respective dates, (i) each Company Filing will
be true and complete in all material respects; and (ii) each Company
Filing will comply in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Governmental Entity with which it
will be filed and none will 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 therein, in light of the circumstances under which they
will be made, not misleading.  Any financial
statement contained in any of such Company Filings that is intended to present
the financial position of Company during the periods involved to which it
relates will fairly present in all material respects the financial position of
Company and will be prepared in accordance with GAAP or consistent with
applicable regulatory accounting principles and banking law and banking
regulations, except as stated therein;

6.3.7        File all necessary applications with the
OCC, Federal Reserve and CDFI for the transactions contemplated by this
Agreement as soon as possible, but no later than April 10, 2007 and furnish to
Seller, as soon as practicable, and in any event within fifteen days after it
has prepared all applications to be submitted to the OCC, Federal Reserve and
CDFI for approval of the Merger;

6.3.8        Insurance.

(a)           Company and Bank shall permit Seller
to use commercially reasonable efforts to (i) extend the discovery period
of its directors’ and officers’ liability insurance for a period of up to 48
months with respect to all matters arising from facts or events which occurred
before the Effective Time for which Seller would have had an obligation to
indemnify its directors and officers or (ii) buy “peace of mind” coverage;
provided, however, that the total costs to Seller, Company and Bank of the premiums
for either of such alternatives shall not exceed $70,000.  If Seller is unable to maintain or obtain the
insurance called for by this Section 6.3.18 as a result of the preceding
provision, Seller shall use commercially reasonable efforts to obtain as much
comparable insurance as is available for $70,000 with respect to acts or
omissions occurring prior to the Effective Time of the Merger by such directors
and officers in their capacities as such. 
If Company shall consolidate with or merge into any other entity and
shall not be the continuing or surviving entity of such consolidation or merger
or shall transfer all or substantially all of its assets to any other entity,
then and in each case, proper provision shall be made so that the successors and
assigns of Company shall assume the obligations set forth in this
Section 6.3.18;

(b)           For a period of four years after the
Effective Time, Company shall, and shall cause its subsidiaries to, maintain
and preserve the rights to indemnification of officers and directors provided
for in the Articles of Association and Bylaws of Seller, or any
indemnification agreement, as in effect on the date hereof with respect to
indemnification for liabilities and claims arising out of acts, omissions,
events, matters or circumstances occurring or existing prior to the Effective
Time, including, without limitation, the Merger and the other

 45
 

transactions contemplated by this Agreement, to the
extent such rights to indemnification are not in excess of that permitted by
applicable state or federal laws or regulatory authorities;

(c)           The provisions of this
Section are intended to be for the benefit of, and shall be enforceable
by, each director or officer of Seller and his or her heirs and
representatives;

6.3.9        From and after the Effective Time,
Company shall file timely all reports with the SEC necessary to permit the
shareholders of Seller who may be deemed “underwriters” (within the meaning of
Rule 145 under the Securities Act) of Seller Common Stock to sell Company
Common Stock received by them in connection with the Merger pursuant to
Rules 144 and 145(d) under the Securities Act if they would otherwise
be so entitled; provided, however, that Company is otherwise obligated to file
such reports with the SEC;

6.3.10      Blue Sky. 
Company agrees to use commercially reasonable efforts to have the shares
of Company Common Stock to be issued in connection with the Merger qualified or
registered for offer and sale, to the extent required, under the securities
laws of each jurisdiction in which shareholders of Seller reside;

6.3.11      Reservation, Issuance and Registration of
Company Common Stock.  Company shall
reserve and make available for issuance in connection with the Merger and in
accordance with the terms and conditions of this Agreement such number of
shares of Company Common Stock to be issued to the shareholders of Seller in
the Merger pursuant to Article 2 hereof;

6.3.12      Compliance with Rules.  Company and Bank shall comply with the
requirements of all applicable rules and regulations, the noncompliance with
which would have a Material Adverse Effect on Company and Bank taken as a
whole;

6.3.13      Seller Stock Options and Warrants.  Company and/or Seller, as Company shall
determine, shall offer the holders of Seller Stock Options and Seller Warrants
cash in the amount of the Per Share Consideration net of the exercise or strike
prices in exchange for cancellation of such Seller Stock Options and Seller
Warrants with the consideration for the same to be payable within fifteen (15)
days after the Effective Time.  With
respect to Seller Stock Options and Seller Warrants that are not cancelled
prior to the Effective Time, Company shall take any and all such actions that
may be necessary for Company to assume the obligations and rights related to
the Seller Stock Options and Seller Warrants in accordance with their terms as
of the Effective Time.  However, with
respect to Seller Warrants that are not cancelled prior to the Effective Time,
Company shall offer to enter into amendments of such Seller Warrants to the
effect that such Seller Warrants shall not expire as a result of the Merger;
and

6.3.14      Perform its material contractual
obligations and not breach or come into default on any of such obligations, and
not amend, modify, or, except as they may be terminated in accordance with
their terms, terminate any material Understanding, or materially default in the
performance of any of its obligations under any Understanding where such
default would have a Material Adverse Effect on Company and Bank taken as a
whole.

 46
 

6.4           Negative Covenants of Company.  Between the date hereof and the Effective
Time, Company agrees that without Seller’s prior written consent (which consent
shall not be unreasonably withheld and which consent shall be deemed granted if
within three (3) Business Days of Seller’s receipt of written notice of a
request for prior written consent, written notice of objection is not received
by Company), it shall not:

6.4.1        (a) Declare or pay any dividend or
make any other distribution in respect of any of its capital stock;
(b) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (c) repurchase or
otherwise acquire any shares of its capital stock;

6.4.2        Take any action that would or might
result in any of the representations and warranties of Company or Bank set
forth in this Agreement becoming untrue in any material respect or any of the
conditions to the Merger set forth in Article 7 not being satisfied,
except to the extent such actions are required to be undertaken by applicable
law, regulation or at the direction of any Regulatory Authority;

6.4.3        Issue, deliver, sell, or grant, or
authorize the issuance, delivery, sale or grant of, or purchase, any shares of
the capital stock of Company or any securities convertible or exercisable into
or exchangeable for such capital stock, or any rights, warrants or options,
including options under any stock option plans or enter into any agreements to
do any of the foregoing, except in connection with the issuance of Company
Stock Options or other equity compensation instruments or rights under the
Company Stock Option Plan or Company Common Stock pursuant to the exercise of
Company Stock Options, none of which shall be deemed to cause the
representation in Section 4.5 to be untrue in any material respect under
Section 6.4.2;

6.4.4        Take or cause to be taken any action
which would disqualify the Merger as a “reorganization” within the meaning of
Section 368(a) of the IRC as a tax-free reorganization;

6.5           Access to Operations.  Within fifteen (15) Business Days of the
Closing Date, Seller shall afford to Bank and its authorized agents and
representatives, access, during normal business hours, to the operations,
books, and other information relating to Seller for the sole purpose of
assuring an orderly transition of operations, including the data processing
conversion, in the Merger.  Bank shall
give reasonable notice for access to Seller, and the date and time of such
access will then be mutually agreed to by Bank and Seller.  Bank’s access shall be conducted in a manner
which does not unreasonably interfere with Seller’s normal operations,
customers and employee relations and which does not interfere with the ability
of Seller to consummate the transactions contemplated by this Agreement.

ARTICLE 7.  
CONDITIONS PRECEDENT TO CLOSING

7.1           Conditions to the Parties’
Obligations.  The obligations of all
the parties to this Agreement to effect the Merger shall be subject to the
fulfillment of the following conditions:

7.1.1        This Agreement, the Merger Agreement and
the Merger shall have been validly approved by the holders of two-thirds of the
outstanding shares of Seller Common Stock

 47
 

and by the holders of a majority of the outstanding
shares of Company Common Stock entitled to vote;

7.1.2        All permits, approvals and consents
required to be obtained, and all waiting periods required to expire, prior to
the consummation of the Merger under applicable federal laws of the United
States or applicable laws of any state having jurisdiction over the
transactions contemplated by this Agreement and the Merger Agreement shall have
been obtained or expired, as the case may be (all such permits, approvals and
consents and the lapse of all such waiting periods being referred to as the “Requisite
Regulatory Approvals”), without the imposition of any condition which in the
reasonable good faith judgment of any party to be affected by such condition is
materially burdensome upon such party or its respective Affiliates or the
Surviving Corporation;

7.1.3        There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Government Entity which: (i) makes the
consummation of the Merger illegal; (ii) requires the divestiture by
Company of any material asset or of a material portion of the business of
Company; or (iii) imposes any condition upon Company or Bank (other than
general provisions of law applicable to all banks and bank holding companies)
which in the judgment of Company and Seller would be materially burdensome;

7.1.4        The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and shall
remain in effect.  No legal,
administrative, arbitration, investigatory or other proceeding by any
Governmental Entity or any other Person shall have been instituted and, at what
otherwise would have been the Effective Time, remain pending by or before any
Governmental Entity to restrain or prohibit the transactions contemplated
hereby;

7.1.5        Company and Seller shall have received
an opinion from Vavrinek, Trine, Day & Co., dated the Effective Time,
subject to assumptions and exceptions normally included, and in form and
substance reasonably satisfactory to Company, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the IRC and that Company, Bank and
Seller will each be a party to that reorganization within the meaning of
Section 368(b) of the IRC;

7.1.6        No action, suit or proceeding shall have
been instituted or threatened by any Governmental Entity before any court or
governmental body seeking to challenge or restrain the transactions
contemplated by this Agreement or the Merger Agreement which presents a
substantial risk that such transactions will be restrained or that any party
hereto may suffer material damages or other relief as a result of consummating
such transactions; and

7.1.7        The sale of Company Common Stock
resulting from the Merger shall have been qualified or registered with the
appropriate state securities law or “blue sky” regulatory authorities of all
states in which qualification or registration is required under the State
securities laws, and such qualifications or registration shall not have been
suspended or revoked.

 48
 

7.1.8        The number of shares of Company Common
Stock which are “dissenting shares” within the meaning of California
Corporations Code Section 1300(b) shall not exceed an amount which,
when combined with other cash amounts payable in connection with the Merger,
would result in the Merger being disqualified from a tax free reorganization
pursuant to Section 368 of the IRC; and

7.1.9        The number of shares of Seller Common
Stock which are eligible to be Seller Perfected Dissenting Shares pursuant to
Section 214a of the NBA shall not exceed an amount which, when combined
with other cash amounts payable in connection with the Merger, would result in
the Merger being disqualified from a tax free reorganization pursuant to
Section 368 of the IRC.

7.1.10      Seller shall have obtained all consents of
third parties required to permit the Merger to proceed in accordance with
material contracts, including without limitation the leased premises of Seller,
and excluding Seller’s data processing contract.

7.2           Conditions to Company’s and Bank’s
Obligations.  The obligations of
Company and Bank to effect the Merger shall be subject to the fulfillment (or
waiver, in writing, by Company) of each of the following conditions:

7.2.1        Except as otherwise provided in this
Section 7.2, (a) the representations and warranties of Seller
contained in Article 3 shall be true in all material respects as of the
Effective Time as though made at the Effective Time, except to the extent they
expressly refer to an earlier time and except where the failure to be true,
individually or in the aggregate, would not have or would not be reasonably
likely to have, a Material Adverse Effect on the Surviving Corporation or
Company or upon the consummation of the transactions contemplated hereby;
(b) Seller shall have duly performed and complied in all material respects
with all agreements and covenants required by this Agreement to be performed or
complied with by it prior to or at the Effective Time, except where the failure
to so perform and comply, individually or in the aggregate, would not have or
would not be reasonably likely to have a Material Adverse Effect on Seller, or
upon the consummation of the transactions contemplated hereby; (c) none of
the events or conditions entitling Company to terminate this Agreement under
Article 8 shall have occurred and be continuing; and (d) Seller shall
have delivered to Company certificates dated the date of the Effective Time and
signed by the Chief Executive Officer and Corporate Secretary to the effect set
forth in Subsections 7.2.1(a), (b) and (c);

7.2.2        There shall have been obtained, without
the imposition of any material burden or restriction on any of the parties
hereto not in existence on the date hereof, each consent to the consummation of
the Merger required to be obtained from any Person under any agreement,
contract or license to which Seller is a party or by or under which it is bound
or licensed, the withholding of which might have a Material Adverse Effect on
Seller, the Surviving Corporation or Company at or following the Effective
Time, or on the transactions contemplated by this Agreement;

7.2.3        Seller shall have delivered its Updated
Schedules to Company on the day immediately preceding the Closing Date and
none of such Updated Schedules shall reflect any item that was not on the
Seller Schedules (or in the Seller Financial Statements) delivered on the

 49
 

date of execution of this Agreement that has had,
would have, or could be reasonably likely to have, a Material Adverse Effect on
the business, conditions, properties or capitalization of Seller, the Surviving
Corporation or Company at or after the Effective Time, or on the consummation
of the transactions contemplated hereby;

7.2.4        Between the date of this Agreement and
the Effective Time, no event or circumstance shall have occurred which has had
or could reasonably be expected to have a Material Adverse Effect on Seller,
and Company shall have received a certificate signed on behalf of Seller by the
Chief Executive Officer of Seller to such effect;

7.2.5        Seller shall have delivered to Company
not later than the date of this Agreement all of the executed Affiliate’s
Agreements in the form attached hereto as Exhibit 5.3, and such Affiliates’
Agreements shall remain in full effect and not modified, rescinded or breached
as of the Effective Time;

7.2.6        All of Seller’s director-shareholders
shall have delivered to Company on the date of this Agreement the Seller
Director-Shareholder Agreements in the form attached hereto as
Exhibit 7.2.6, which shall provide, among other things, that the director
will (i) vote his or her shares in favor of the transactions contemplated
by this Agreement and (ii) recommend that Seller shareholders approve this
Agreement and the transactions contemplated hereby, and such Seller
Director-Shareholder Agreements shall remain in full effect and not modified,
rescinded or breached as of the Effective Time;

7.2.7        The fairness opinion (the “Company
Fairness Opinion”) commissioned by Company’s Board of Directors shall provide
as of the date of mailing the Joint Proxy Statement/Prospectus to Company’s
shareholders that the terms of the Merger, from a financial standpoint, are
fair to the shareholders of Company, and shall not have been revoked, at any
time prior to the meeting of Company’s shareholders at which the Merger is to
be voted on.  Seller shall be provided
immediate notification by Company of the revocation of the Company Fairness
Opinion;

7.3           Conditions to Seller’s Obligations.  The obligations of Seller to effect the
Merger shall be subject to the fulfillment (or waiver, in writing, by Seller)
of each of the following conditions:

7.3.1        Except as otherwise provided in this
Section 7.3, (a) the representations and warranties of Company and
Bank contained in Article 4 shall be true in all material respects as of
the Effective Time as though made at the Effective Time, except to the extent
they expressly refer to an earlier time or a covenant of Company or Bank
specifically permits a change in the facts represented in a representation or
warranty, and except where the failure to be true, individually or in the
aggregate, would not have or would not be reasonably likely to have, a Material
Adverse Effect on the business, conditions, capitalization or properties of
Company and Bank taken as a whole or upon consummation of the transactions
contemplated hereby; (b) each of Company and Bank shall have duly
performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with it prior
to or at the Effective Time, except where the failure to so perform and comply,
individually or in the aggregate, would not have or would not be reasonably
likely to have a

 50
 

Material Adverse Effect on the business, conditions,
capitalization or properties of Company and Bank, taken as a whole, or upon the
consummation of the transactions contemplated hereby; (c) none of the
events or conditions entitling Seller to terminate this Agreement under
Article 8 shall have occurred and be continuing; and (d) Company shall
have delivered to Seller certificates dated the date of the Effective Time and
signed by the President and Chief Executive Officer and Chief Financial Officer
of Company to the effect set forth in Subsections 7.3.1(a), (b) and
(c);

7.3.2        There shall have been obtained, without
the imposition of any material burden or restriction on any of the parties
hereto not in existence on the date hereof, each consent to the consummation of
the Merger required to be obtained from any Person under any agreement,
contract or license to which Company or Bank is a party or by or under which
either is bound or licensed, the withholding of which might have a Material
Adverse Effect on Seller, the Surviving Corporation or Company at or following
the Effective Time, or on the transactions contemplated by this Agreement;

7.3.3        Company shall have delivered its Updated
Schedules to Seller on the day immediately preceding the Closing Date and
none of such Updated Schedules shall reflect any item that was not on the
Company Schedules (or in the Company Financial Statements) delivered on
the date of execution of this Agreement that has had, or would have, or could
be reasonably likely to have, a Material Adverse Effect on the business,
conditions, properties or capitalization of Company and its Subsidiaries, taken
as a whole, at or after the Effective Time, or on the consummation of the
transactions contemplated hereby;

7.3.4        Between the date of this Agreement and
the Effective Time, no event or circumstance shall have occurred which has had
or could reasonably be expected to have a Material Adverse Effect on Company,
and Seller shall have received a certificate signed on behalf of Company by the
Chief Executive Officer of Company to such effect;

7.3.5        All of Company’s director-shareholders
shall have delivered to Seller on the date of this Agreement the Company
Director-Shareholder Agreements in the form attached hereto as
Exhibit 7.3.6 which shall provide, among other things, that the director
will (i) vote his or her shares in favor of the transactions contemplated
by this Agreement, and (ii) recommend that Company shareholders approve
this Agreement and the transactions contemplated hereby;

7.3.6        The fairness opinion (the “Seller
Fairness Opinion”) commissioned by Seller’s Board of Directors shall provide as
of the date of mailing the Joint Proxy Statement/Prospectus to Seller’s
shareholders that the terms of the Merger, from a financial standpoint, are
fair to the shareholders of Seller, and shall not have been revoked, at any
time prior to the meeting of Seller’s shareholders at which the Merger is to be
voted on.  Company shall be provided
immediate notification by Seller of the revocation of the Seller Fairness
Opinion;

ARTICLE 8.  
TERMINATION, AMENDMENTS AND WAIVERS

8.1           Termination of Agreement.  Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated hereby
including the Merger may be terminated at

 51
 

any time before the Effective Time, whether before or after approval by
the shareholders of Company and Seller as follows, and in no other manner:

8.1.1        By mutual consent of Company and Bank,
on the one hand, and Seller on the other;

8.1.2        By Company or Seller, (i) if any
conditions set forth in Section 7.1 shall not have been met by September
30, 2007, or (ii) upon the expiration of 20 Business Days after any
Governmental Entity denies or refuses to grant any approval, consent or
authorization required to be obtained in order to consummate the transaction
contemplated by this Agreement unless, within said 20 Business Day period after
such denial or refusal, all parties hereto agree to resubmit the application to
the Governmental Entity that has denied, or refused to grant the approval,
consent or authorization requested;

8.1.3        By Company, if any conditions set forth
in Section 7.2 shall not have been met, or by Seller, if any conditions
set forth in Section 7.3 shall not have been met, by September 30, 2007,
or such earlier time as it becomes apparent that such condition cannot be met;

8.1.4        By Company if there shall have been
(i) a breach of any of the representations or warranties of Seller set
forth in this Agreement, (ii) a default in the observance or in the due
and timely performance of any of Seller’s covenants and agreements herein
contained, which breach or default, in the reasonable opinion of Company, by
its nature cannot be cured or is not cured prior to September 30, 2007 or
thirty (30) days from the date of breach or default, whichever is later, and
which breach or default would, in the reasonable opinion of Company,
individually or in the aggregate, have, or be reasonably likely to have, a
Material Adverse Effect on Seller or upon the consummation of the transactions
contemplated hereby;

8.1.5        By Seller if there shall have been
(i) a breach of any of the representations or warranties of Company or
Bank set forth in this Agreement, (ii) a default in the observance or in
the due and timely performance of any of covenants and agreements of Company or
Bank herein contained, which breach or default, in the reasonable opinion of
Seller, by its nature cannot be cured or is not cured prior to September 30,
2007 or thirty (30) days from the date of breach or default, whichever is
later, and which breach or default would, in the reasonable opinion of Seller,
individually or in the aggregate, have, or be reasonably likely to have, a
Material Adverse Effect on Company or Bank or upon the consummation of the
transactions contemplated hereby; or

8.1.6        By Company, if an Acquisition Event
involving Company or Seller shall have occurred.

8.1.7        By Seller, if an Acquisition Event
involving Seller shall have occurred.

8.1.8        By Seller, upon 48 hours written notice,
if (i) the Exchange Ratio Company Trading Price has decreased to less than
$13.25, and (ii) such decrease is not proportionate relative to the average
change in the NASDAQ Bank Index during the Exchange Ratio NASDAQ Testing
Period.  For purposes of this provision
the term “decrease is not proportionate relative to the average change in the
NASDAQ Bank Index during the Exchange Ratio NASDAQ Testing Period” shall mean
that (I) the quotient obtained by dividing the

 52
 

Exchange Ratio Company Trading Price by $16.00 is less
than (II) the quotient obtained by dividing the Exchange Ratio NASDAQ Bank
Index by 3421.91 and subtracting .15 from the quotient.

Notwithstanding any decrease in the price of Company Common Stock, as
set forth in this Section 8.1.8, Seller shall not be entitled to terminate this
Agreement pursuant to this Section 8.1.8 if Company elects, no later than the
close of the business on the first succeeding Business Day after the receipt of
written notice from Seller of termination under this Section 8.1.8, to adjust
the Exchange Ratio such that the Exchange Ratio shall equal the lesser of (i)
the number derived by multiplying the unadjusted Exchange Ratio times the
quotient obtained by dividing 13.25 by the Exchange Ratio Company Trading
Price, or (ii) the number derived by multiplying (A) the quotient obtained by
dividing the Exchange Ratio NASDAQ Bank Index by 3421.91 and subtracting .15
from the quotient, times (B) 16.00, times (C) the unadjusted Exchange Ratio,
divided by (D) the Exchange Ratio Company Trading Price.

8.1.9        By Company, if (i) the Exchange Ratio
Company Trading Price has increased to more than $18.75, and (ii) such increase
is not proportionate relative to the average change in the NASDAQ Bank Index
during the Exchange Ratio NASDAQ Testing Period.  For purposes of this provision the term “increase
is not proportionate relative to the average change in the NASDAQ Bank Index
during the Exchange Ratio NASDAQ Testing Period” shall mean that (I) the
quotient obtained by dividing the Exchange Ratio Company Trading Price by
$16.00 is greater than (II) the quotient obtained by dividing the Exchange
Ratio NASDAQ Bank Index by 3421.91 and adding .15 to the quotient.

Notwithstanding any increase in the price of Company Common Stock, as
set forth in this Section 8.1.9, Company shall not be entitled to terminate
this Agreement pursuant to this Section 8.1.9 if Seller elects, no later than
the close of the business on the first succeeding Business Day after the
receipt of written notice from Company of termination under this Section 8.1.9,
to adjust the Exchange Ratio such that the Exchange Ratio shall equal the
greater of (i) the number derived by multiplying the unadjusted Exchange Ratio
times the quotient obtained by dividing 18.75 by the Exchange Ratio Company
Trading Price, or (ii) the number derived by multiplying (A) the quotient
obtained by dividing the Exchange Ratio NASDAQ Bank Index by 3421.91 and adding
..15 to the quotient, times (B) 16.00, times (C) the unadjusted Exchange Ratio,
divided by (D) the Exchange Ratio Company Trading Price.

8.2           Effect of Termination.  In the event that this Agreement shall be
terminated pursuant to Section 8.1 hereof, all further obligations of the
parties hereto under this Agreement shall terminate without further liability
of any party to another; provided, however, that no termination of this
Agreement under Section 8.1 for any reason or in any manner shall release,
or be construed as so releasing, any party from its obligations under
Sections 8.5, 10.5 or 10.6, hereof and notwithstanding the foregoing if
such termination shall result from the willful failure of a party to fulfill a
condition to the performance of the obligations of any other party or to
perform a covenant of such party in this Agreement, such party shall, subject
to the provision of Section 8.5, be fully liable for any and all damages,
costs and expenses (including, but not limited to, reasonable attorneys’ fees
sustained or incurred by the other party or parties in connection with
negotiating and implementing the transactions contemplated in this Agreement).

 53
 

8.3           Waiver of Conditions.  If any of the conditions specified in
Section 7.2 have not been satisfied, Company and Bank may nevertheless, at
their election, proceed with the transactions contemplated in this
Agreement.  If any of the conditions
specified in Section 7.3 have not been satisfied, Seller may nevertheless,
at its election, proceed with the transactions contemplated in this
Agreement.  If any party elects to
proceed pursuant to the provisions hereof, the conditions that are unsatisfied
immediately prior to the Effective Time shall be deemed to be satisfied, as
evidenced by a certificate delivered by the electing party.

8.4           Force Majeure.  Company and Seller agree that,
notwithstanding anything to the contrary in this Agreement, in the event this
Agreement is terminated as a result of a failure of a condition, which failure
is due to a natural disaster or other act of God, or an act of war or of
terror, and provided neither party has materially failed to observe the
obligations of such party under this Agreement, neither party shall be obligated
to the other party to this Agreement for any expenses or otherwise be liable
hereunder.

8.5           Monetary Consequences of
Termination.

8.5.1        Seller hereby agrees that if this
Agreement is terminated (i) by Company pursuant to Section 8.1.2,
because of the failure of Seller shareholders to approve this Agreement and the
transactions contemplated hereby following the withdrawal or modification in
any manner adverse to Company of the Board of Directors of Seller’s
recommendation of this Agreement and the transactions contemplated hereby,
(ii) by Company pursuant to Section 8.1.3 because of the failure
of any of the conditions set forth in Section 7.2, (iii) by
Company pursuant to Section 8.1.4, (iv) by Company pursuant
to Section 8.1.6 because Seller is involved in an Acquisition Event, or
(v) by Seller pursuant to Section 8.1.7, Seller shall promptly, and
in any event within seven Business Days after such termination, pay Company
$250,000 as liquidated damages for the direct expenses incurred by Company and
Bank related to the transactions contemplated hereby, which the parties agree
is a reasonable estimate of such expenses.

8.5.2        Company and Bank hereby agree that if
this Agreement is terminated (i) by Seller pursuant to
Section 8.1.2, because of the failure of Company shareholders to approve
this Agreement and the transactions contemplated hereby following the
withdrawal or modification in any manner adverse to Seller of the Board of
Directors of Company’s recommendation of this Agreement and the transactions
contemplated hereby, (ii) by Seller pursuant to Section 8.1.3
because of the failure of any of the conditions set forth in Section 7.3,
(iii) by Seller pursuant to Section 8.1.5, or (iv) by
Company pursuant to Section 8.1.6 because Company is involved in an
Acquisition Event, Company and Bank shall promptly, and in any event within
seven (7) Business Days after such termination, pay Seller $250,000
as liquidated damages for the direct expenses incurred by Company and Bank
related to the transactions contemplated hereby, which the parties agree is a
reasonable estimate of such expenses. 
The payment obligations of Company and Bank set forth in the preceding
sentence shall be deemed joint and several.

8.5.3        Seller hereby agrees that if this
Agreement is terminated (a) by Company pursuant to Section 8.1.6 due
to an Acquisition Event involving Seller or by Seller under Section 8.1.7
due to an Acquisition Event involving Seller, or (b) is otherwise
terminated under Section 8.5.1 and during the twelve (12) month period
immediately following termination of this

 54
 

Agreement an Acquisition Event with Seller is
consummated, then, within seven (7) Business Days after termination under
(a) or the date the Acquisition Event is consummated under (b), whichever
is earlier, Seller shall, in addition to any payment due under
Section 8.5.1, pay Company in immediately available funds $850,000, which
amount the parties acknowledge as representing (i) Company and Bank’s
indirect costs and expenses incurred in connection with the transactions
contemplated by this Agreement and (ii) Company and Bank’s loss as a
result of the transactions contemplated by this Agreement not being
consummated.

8.5.4        Company hereby agrees that if this Agreement is
terminated (a) by Company pursuant to Section 8.1.6 due to an
Acquisition Event involving Company, Company shall, in addition to any payment
due under Section 8.5.2, pay Seller in immediately available funds
$850,000, which amount the parties acknowledge as representing (i) Seller’s
indirect costs and expenses incurred in connection with the transactions
contemplated by this Agreement and (iii) Seller’s loss as a result of the
transactions contemplated by this Agreement not being consummated.

8.5.5        Except as otherwise provided herein and
in Section 5.5.1, all Expenses incurred by Company and Bank or Seller in
connection with or related to the authorization, preparation and execution of
this Agreement, the solicitation of shareholder approvals and all other matters
related to the closing of the transactions contemplated hereby, including,
without limitation of the generality of the foregoing, all fees and expenses of
agents, representatives, counsel, and accountants employed by either of the
parties or its affiliates, shall be borne solely and entirely by the party
which has incurred the same.

8.5.6        “Expenses” as used in this Agreement
shall include all reasonable out-of-pocket expenses (including all fees and
expenses of attorneys, accountants, investment bankers, experts and consultants
to the party and its Affiliates) incurred by the party or on its behalf in
connection with or related to the authorization, preparation and execution of
this Agreement, the solicitation of shareholder approvals and all other matters
related to the closing of the transactions contemplated hereby.

8.6           Effect of Termination; Survival.  Except as provided in Section 8.5, no
termination under Section 8.1 for any reason or in any manner shall
release, or be construed as so releasing, any party hereto from its obligations
pursuant to Sections 5.5, 8.5, 10.5 or 10.6 hereof or from any liability
or damage to any other party hereto arising out of, in connection with, or
otherwise relating to, directly or indirectly, said party’s material breach,
Default or failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, or any breaches of any representation or
warranty contained herein arising prior to the date of termination of this
Agreement.

ARTICLE 9.  
EMPLOYEE BENEFITS

9.1           Employee Benefits.  To the extent permissible under ERISA and
similarly applicable laws and regulations, all employees of Seller at the
Effective Time who continue as employees of Bank, shall be entitled to
participate in all Company and Bank [Benefit Arrangements] on substantially the
same basis as other similarly situated employees of Company and Bank.  Each of these employees will be credited for
eligibility, participation and vesting

 55
 

purposes with such employee’s respective years of past service with
Seller (or other prior service so credited by Seller) as though they had been
employees of Company and Bank, except with respect to Company’s Second Amended
and Restated 2000 Stock Option Plan of 1st Pacific Bank of California, any
additional equity compensation plan Company may adopt and 401(k) Plan.

ARTICLE 10.  
GENERAL PROVISIONS

10.1         Nonsurvival of Representations and
Warranties.  None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time or to a
termination of this Agreement.

10.2         Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given (i) on the date
such notice is delivered if delivered personally, (ii) four Business Days
after such notice is mailed if mailed by registered or certified mail (return
receipt requested), (iii) one Business Day after such notice is sent if
sent by confirmed overnight courier or facsimile (with electronic confirmation
and verbal confirmation from the person to whom such facsimile is addressed),
as the case may be, to the parties at the following addresses (or any such
other address for a party as shall be specified by like notice):

	
  If to Seller at:

  	
  Landmark National Bank

  
	
   

  	
  937 Lomas Santa
  Fe Drive

  
	
   

  	
  P.O. Box 1429

  
	
   

  	
  Solana Beach, CA
  92075

  
	
   

  	
  Fax
  No. (858) 509-0898

  
	
   

  	
  Attention: F.
  Richard Mandelbaum

  
	
   

  	
   

  
	
  with a copy to:

  	
  Gary Steven Findley & Associates

  
	
   

  	
  1470 North
  Hundley Street

  
	
   

  	
  Anaheim, CA
  92806

  
	
   

  	
  Fax
  No. (714) 630-7910

  
	
   

  	
  Attention: Gary
  Steven Findley, Esq.

  
	
   

  	
   

  
	
  If to Company
  and Bank at:

  	
  1st Pacific Bancorp and 1st Pacific Bank of
  California

  
	
   

  	
  4275 Executive
  Square, Suite 650

  
	
   

  	
  La Jolla, CA
  92037

  
	
   

  	
  Fax
  No. (858) 875-2015

  
	
   

  	
  Attention:
  Dr. James G. Knight, Chairman

  
	
   

  	
   

  
	
  with a copy to:

  	
  Luce, Forward, Hamilton & Scripps, LLP

  
	
   

  	
  600 West
  Broadway, Suite 2600

  
	
   

  	
  San Diego,
  CA 92101

  
	
   

  	
  Fax
  No. (619) 232-8311

  
	
   

  	
  Attention: Kurt
  L. Kicklighter, Esq.

  

 

 56
 

 

10.3         Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

10.4         Entire Agreement/No Third Party
Rights/Assignment.  This Agreement
(including the documents and instruments referred to herein):  (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; (b) except as
expressly set forth herein, is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder; (c) shall not be
assigned by a party, by operation of law or otherwise, without the consent of
the other parties; and (d) subject to the foregoing, shall be binding upon
and shall inure to the benefit of the parties hereto and their permitted
successors and assigns.

10.5         Nondisclosure of Agreement.  Company and Bank and Seller agree, except as
required by law, so long as this Agreement is in effect, not to issue any
public notice, disclosure or press release with respect to the transactions
contemplated by this Agreement without seeking the consent of the other party,
which consent shall not be unreasonably withheld.

10.6         Confidentiality.  All Confidential Information disclosed
heretofore or hereafter by any party to this Agreement to any other party to
this Agreement shall be kept confidential by such other party and shall not be
used by such other party otherwise than as herein contemplated, except to the
extent that (a) it is necessary or appropriate to disclose to the Federal
Reserve, OCC, CDFI or any other Governmental Entity having jurisdiction over
any of the parties or as may be otherwise required by Rule (any disclosure of Confidential
Information to a Governmental Entity shall be accompanied by a request that
such Governmental Entity preserve the confidentiality of such Confidential
Information); or (b) such duty as to confidentiality is waived by the
other party.  Such obligation as to
confidentiality and nonuse shall survive the termination of this Agreement
pursuant to Article 8.  In the event
of such termination and on request of another party, each party shall use all
reasonable efforts to (1) return to the other parties all documents (and
reproductions thereof) received from such other parties that contain
Confidential Information (and, in the case of reproductions, all such
reproductions made by the receiving party); and (2) destroy the originals
and all copies of any analyses, computations, studies or other documents
prepared for the internal use of such party that included Confidential
Information.

10.7         Governing Law.  This Agreement shall be governed and
construed in accordance with the laws of the State of California, without
regard to any applicable conflicts of law, except where national banking law
applies.  This Agreement shall be
enforced only in a state or federal court in the County of San Diego,
California.

10.8         Headings/Table of Contents.  The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.

10.9         Enforcement of Agreement.  The parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Agreement or
the Merger Agreement is not

 57
 

performed in accordance with its specific terms or is otherwise
breached.  It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof
in any federal or state court in the County of San Diego, California, this
being in addition to any remedy to which they are entitled at law or in equity
or under this Agreement.

10.10       Severability.  Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.

10.11       Attorneys’ Fees.  If any legal action or any arbitration upon
mutual agreement is brought for the enforcement of this Agreement or because of
an alleged dispute, breach or default in connection with this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys’ fees and
other costs and expenses incurred in that action or proceeding, in addition to
any other relief to which it may be entitled.

 58
 

10.12       Amendment.  This Agreement may be amended by the parties
hereto, at any time before or after approval hereof by the shareholders of
Company and Seller; provided, however, that after any such approval by such
shareholders, no amendments shall be made which by law require further approval
by such shareholders without such further approval.

IN WITNESS WHEREOF, Company and Bank and Seller have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.

	
  LANDMARK NATIONAL BANK

  	
  1ST PACIFIC BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
       /s/ James J. Schmid

  	
   

  	
  By:

  	
   /s/ Dr. James G. Knight

  	
   

  
	
   

  	
       James
  J. Schmid, Chairman

  	
   

  	
     Dr. James G. Knight, Chairman

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
       /s/ F.J. “Rick” Mandelbaum

  	
   

  	
  By:

  	
    /s/ Robert P. Cange

  	
   

  
	
   

  	
       F.J. “Rick”
  Mandelbaum,

  	
   

  	
   

  	
     Robert P. Cange, Secretary

  	
   

  
	
   

  	
       President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1ST PACIFIC BANK
  OF CALIFORNIA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Dr.
  James G. Knight

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
       Dr.
  James G. Knight, Chairman

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
     /s/
  Robert P. Cange

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
       Robert
  P. Cange, Secretary

  	
   

  	
   

  	
   

  

 

 59

TABLE OF
CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1.
  DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE 2. THE
  MERGER

  	
  9

  
	
  2.1

  	
  The Merger

  	
  9

  
	
  2.2

  	
  Effect of Merger

  	
  9

  
	
  2.3

  	
  Articles of
  Incorporation and Bylaws

  	
  9

  
	
  2.4

  	
  Company and Bank
  Common Stock

  	
  10

  
	
  2.5

  	
  Conversion of
  Seller Common Stock

  	
  10

  
	
  2.6

  	
  Election and
  Proration Procedures

  	
  12

  
	
  2.7

  	
  Seller Stock
  Options and Warrants

  	
  16

  
	
  2.8

  	
  Dissenters’
  Rights

  	
  16

  
	
  2.9

  	
  Board of
  Directors of Company following the Effective Time

  	
  17

  
	
  2.10

  	
  Executive
  Officers of Company and Bank following the Effective Time

  	
  17

  
	
  2.11

  	
  Change of
  Structure

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3.
  REPRESENTATIONS AND WARRANTIES OF SELLER

  	
  17

  
	
  3.1

  	
  Organization;
  Corporate Power; Etc

  	
  17

  
	
  3.2

  	
  Licenses and
  Permits

  	
  17

  
	
  3.3

  	
  Subsidiaries

  	
  17

  
	
  3.4

  	
  Authorization of
  Agreement; No Conflicts

  	
  18

  
	
  3.5

  	
  Capital
  Structure

  	
  18

  
	
  3.6

  	
  Seller Filings

  	
  19

  
	
  3.7

  	
  Accuracy of
  Information Supplied

  	
  19

  
	
  3.8

  	
  Compliance with
  Applicable Laws

  	
  19

  
	
  3.9

  	
  Litigation

  	
  19

  
	
  3.10

  	
  Agreements with
  Banking Authorities

  	
  20

  
	
  3.11

  	
  Insurance

  	
  20

  
	
  3.12

  	
  Title to Assets
  other than Real Property

  	
  20

  
	
  3.13

  	
  Real Property

  	
  20

  
	
  3.14

  	
  Taxes

  	
  21

  
	
  3.15

  	
  Performance of
  Obligations

  	
  22

  
	
  3.16

  	
  Loans and
  Investments

  	
  23

  
	
  3.17

  	
  Brokers and
  Finders

  	
  23

  
	
  3.18

  	
  Material
  Contracts

  	
  23

  
	
  3.19

  	
  Absence of
  Material Adverse Effect

  	
  23

  
	
  3.20

  	
  Undisclosed
  Liabilities

  	
  24

  
	
  3.21

  	
  Employees; Employee
  Benefit Plans; ERISA

  	
  24

  
	
  3.22

  	
  Powers of
  Attorney

  	
  26

  
	
  3.23

  	
  Hazardous
  Materials

  	
  27

  
	
  3.24

  	
  Parachute
  Payments

  	
  28

  
	
  3.25

  	
  Risk Management
  Instruments

  	
  28

  
	
  3.26

  	
  Liability Under
  Regulation C, Truth in Lending Law and HMDA

  	
  28

  
	
  3.27

  	
  Bank Secrecy Act

  	
  28

  
	
  3.28

  	
  Accounting
  Records

  	
  28

  
	
  3.29

  	
  Corporate
  Records

  	
  28

  

 

 i
 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  3.31

  	
  Community
  Reinvestment Act

  	
  29

  
	
  3.32

  	
  Foreign Corrupt
  Practices Act

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4.
  REPRESENTATIONS AND WARRANTIES OF COMPANY AND BANK

  	
  29

  
	
  4.1

  	
  Organization;
  Corporate Power; Etc

  	
  29

  
	
  4.2

  	
  Licenses and
  Permits

  	
  29

  
	
  4.3

  	
  Subsidiaries

  	
  29

  
	
  4.4

  	
  Authorization of
  Agreement; No Conflicts

  	
  30

  
	
  4.5

  	
  Capital
  Structure

  	
  30

  
	
  4.6

  	
  Company Filings

  	
  31

  
	
  4.7

  	
  Accuracy of
  Information Supplied

  	
  31

  
	
  4.8

  	
  Compliance with
  Applicable Laws

  	
  31

  
	
  4.9

  	
  Litigation

  	
  32

  
	
  4.10

  	
  Agreements with
  Banking Authorities

  	
  32

  
	
  4.11

  	
  Insurance

  	
  32

  
	
  4.12

  	
  Taxes

  	
  32

  
	
  4.13

  	
  Brokers and
  Finders

  	
  33

  
	
  4.14

  	
  Absence of
  Material Adverse Effect

  	
  33

  
	
  4.15

  	
  Performance of
  Obligations

  	
  33

  
	
  4.16

  	
  Undisclosed
  Liabilities

  	
  34

  
	
  4.17

  	
  Bank Secrecy Act

  	
  34

  
	
  4.18

  	
  Community
  Reinvestment Act

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.
  ADDITIONAL AGREEMENTS

  	
  34

  
	
  5.1

  	
  Access to
  Information

  	
  34

  
	
  5.2

  	
  Shareholder
  Approval

  	
  35

  
	
  5.3

  	
  Taking of
  Necessary Action

  	
  35

  
	
  5.4

  	
  Registration
  Statement and Applications

  	
  35

  
	
  5.5

  	
  Expenses

  	
  36

  
	
  5.6

  	
  Notification of
  Certain Events

  	
  36

  
	
  5.7

  	
  Updated
  Schedules

  	
  37

  
	
  5.8

  	
  Additional
  Accruals/Appraisals

  	
  37

  
	
  5.9

  	
  Employee Plans

  	
  37

  
	
  5.10

  	
  Registration
  Statement

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6.
  CONDUCT OF BUSINESS

  	
  38

  
	
  6.1

  	
  Affirmative
  Conduct of Seller

  	
  38

  
	
  6.2

  	
  Negative
  Covenants of Seller

  	
  41

  
	
  6.3

  	
  Affirmative
  Conduct of Company

  	
  44

  
	
  6.4

  	
  Negative
  Covenants of Company

  	
  47

  
	
  6.5

  	
  Access to
  Operations

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7.
  CONDITIONS PRECEDENT TO CLOSING

  	
  47

  
	
  7.1

  	
  Conditions to
  the Parties’ Obligations

  	
  47

  
	
  7.2

  	
  Conditions to
  Company’s and Bank’s Obligations

  	
  49

  
	
  7.3

  	
  Conditions to
  Seller’s Obligations

  	
  50

  

 

 ii
 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 8.
  TERMINATION, AMENDMENTS AND WAIVERS

  	
  51

  
	
  8.1

  	
  Termination of
  Agreement

  	
  51

  
	
  8.2

  	
  Effect of
  Termination

  	
  53

  
	
  8.3

  	
  Waiver of
  Conditions

  	
  54

  
	
  8.4

  	
  Force Majeure

  	
  54

  
	
  8.5

  	
  Monetary
  Consequences of Termination

  	
  54

  
	
  8.6

  	
  Effect of
  Termination; Survival

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9.
  EMPLOYEE BENEFITS

  	
  55

  
	
  9.1

  	
  Employee
  Benefits

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10.
  GENERAL PROVISIONS

  	
  56

  
	
  10.1

  	
  Nonsurvival of
  Representations and Warranties

  	
  56

  
	
  10.2

  	
  Notices

  	
  56

  
	
  10.3

  	
  Counterparts

  	
  57

  
	
  10.4

  	
  Entire
  Agreement/No Third Party Rights/Assignment

  	
  57

  
	
  10.5

  	
  Nondisclosure of
  Agreement

  	
  57

  
	
  10.6

  	
  Confidentiality

  	
  57

  
	
  10.7

  	
  Governing Law

  	
  57

  
	
  10.8

  	
  Headings/Table
  of Contents

  	
  57

  
	
  10.9

  	
  Enforcement of
  Agreement

  	
  57

  
	
  10.10

  	
  Severability

  	
  58

  
	
  10.11

  	
  Attorneys’ Fees

  	
  58

  
	
  10.12

  	
  Amendment

  	
  59

  

 

 iii

Exhibit 2.1

Agreement
of Merger

This Agreement of
Merger (the “Merger Agreement”), dated          ,
2007, is entered into by and between 1st Pacific Bank of California, a
California state chartered bank (“Bank”) and Landmark National Bank, a national
banking association (“Landmark”), to which 1st Pacific Bancorp, a California
corporation and sole shareholder of Bank (“Bancorp”) is a party, with reference
to the following facts:

1.                                       Bank
is a banking corporation duly organized, validly existing and in good standing
under the laws of the State of California. 
Bank’s authorized capital consists of           
shares of common stock, no par value (“Bank Stock”) of which, on the date
hereof, there are           shares
issued and outstanding, all of which are owned by Bancorp.

2.                                       Landmark
is a national banking association duly organized, validly existing and in good
standing under the laws of the United States, with authorized capital of         
shares of common stock, $5.00 par value (“Landmark Stock”), of which, on the
date hereof, there are         shares issued
and outstanding.

3.                                       Bancorp
is a California corporation duly organized, validly existing and in good
standing under the laws of the State of California.  Bancorp’s authorized capital consists of           
shares of common stock, no par value (“Bancorp Stock”) of which, on the date
hereof, there are          shares
issued and outstanding.

4.                                       Bancorp,
Bank and Landmark have entered into an Agreement and Plan of Reorganization and
Merger dated as of          , 2007
(the “Reorganization Agreement”) which provides for the merger of Landmark with
and into Bank (the “Merger”) in accordance with this Merger Agreement.

5.                                       The
respective Boards of Directors of Bank and Landmark deem it desirable and in
the best interests of their respective corporations and shareholders that
Landmark be merged with and into Bank as provided in the Reorganization
Agreement pursuant to the laws of the State of California and that Bank be the
surviving corporation (the “Surviving Bank”).

NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and agreements set
forth herein and for the purposes of prescribing the terms and conditions of
the Merger, the parties hereto agree as follows:

Article
I

The Merger

Upon consummation
of the Merger at the Effective Time (as hereinafter defined), Landmark shall be
merged with and into Bank with Bank as the Surviving Bank and the separate
corporate existence of Landmark shall cease.

Article
II

Name

The name of the
Surviving Bank shall be “1st Pacific Bank of California.”

Article
III

Articles of Incorporation

The Articles of
Incorporation of Bank as in effect immediately prior to the Effective Time
shall, at and after the Effective Time, continue to be the Articles of
Incorporation of the Surviving Bank.

Article
IV

Bylaws

The Bylaws of Bank
as in effect immediately prior to the Effective Time shall, at and after the
Effective Time, continue to be the Bylaws of the Surviving Bank.

Article
V

Directors

The members of the
Board of Directors of Bank immediately prior to the Effective Time shall, at
and after the Effective Time, continue to be the members of the Board of
Directors of the Surviving Bank.

Article
VI

Rights and Duties of Surviving Bank

Upon the merger
becoming effective, all rights, privileges, franchises and property of
Landmark, and all debts and liabilities due or to become due to Landmark,
including things in action and every interest or asset of conceivable value or
benefit, shall be deemed fully and finally and without any right of reversion
transferred to and vested in the Surviving Bank without further act or deed,
and the Surviving Bank shall have and hold the same in its own right as fully
as the same was possessed and held by Landmark.

Upon the merger
becoming effective, all debts, liabilities, and obligations due or to become
due, and all claims or demands for any cause existing against Landmark shall be
and become the debts, liabilities, obligations of, and the claims and demands
against, the Surviving Bank in the same manner as if the Surviving Bank had
itself incurred or become liable for them.

Upon the merger
becoming effective, all rights of creditors of Landmark, and all liens upon the
property of Landmark, shall be preserved unimpaired as in effect immediately prior
to the time of the merger.

 2
 

Upon the merger
becoming effective, any action or proceeding pending by or against Landmark
shall not be deemed to have abated or been discontinued, but may be prosecuted
to judgment, with the right to appeal or review as in other cases, as if the
merger had not taken place or the Surviving Bank may be substituted for
Landmark.

Article
VII

Conversion of Shares

In and by virtue
of the Merger and at the Effective Time, pursuant to this Merger Agreement, the
shares of Bank Stock and Landmark Stock outstanding at the Effective Time shall
be converted as follows:

(a)                                  Effect
on Bank Stock.  Each share of Bank
Stock issued and outstanding immediately prior to the Effective Time shall, on
and after the Effective Time, pursuant to the Agreement of Merger and without
any further action on the part of the Surviving Bank or the holders of Bank
Stock, remain outstanding and is not affected by the Merger.

(b)                                 Effect
on Landmark Stock.  Each share of
Landmark Stock issued and outstanding immediately prior to the Effective Time
shall, on and after the Effective Time, pursuant to the Agreement of Merger and
without any further action on the part of the Surviving Bank or the holders of
Landmark Stock, be automatically cancelled and cease to be an issued and
outstanding share of Landmark Stock and be converted into the right to elect to
receive, subject to certain limitation set forth in the Reorganization
Agreement, either .778125 shares of Bancorp no par value common stock or $12.45
in cash.

No fractional shares of Bancorp Stock shall be issued
in the Merger.  In lieu thereof, each
holder of Landmark Stock who would otherwise be entitle to receive fractional
shares shall receive an amount in cash equal to the product (calculated to
eight places) obtained by multiplying such fractional share interest by $12.45.

The shareholders of Landmark who dissent from the
Merger pursuant to Section 214a of the National Bank Act shall have the rights
set forth in Section 214a of the National Bank Act provided that they comply
with the provisions of Section 214a of the National Bank Act.

(c)                                  Effect
on Landmark Stock Options and Landmark Warrants.  Immediately prior to the Effective Time, the
outstanding rights pursuant to Landmark Stock Option Plans and Landmark Warrants,
other than any of those as to which Bancorp and the respective holders have
agreed to cancel in exchange for cash consideration to be paid to the holders
by Bancorp, shall be converted into and become rights with respect to shares of
Bancorp determined in accordance with the Landmark Stock Option Plans and
Landmark Warrants.

 3
 

Article
VIII

Further Action

The parties hereto
shall execute and deliver, or cause to be executed and delivered, all such
deeds and other instruments, and will take or cause to be taken all further or
other action as they may deem necessary or desirable in order to vest in and
confirm to the Surviving Bank title to and possession of all of Bank’s and
Landmark’s property, rights, privileges, powers and franchises hereunder, and otherwise
to carry out the intent and purposes of this Merger Agreement.

Article
IX

Effective Time

The Merger will
become effective upon the filing in accordance with Section 4887 of the
California Financial Code of a copy of this Merger Agreement (bearing the
certification of the Secretary of State of the State of California) and all
other requisite accompanying certificates in the office of the Commissioner of
the California Department of Financial Institutions (the “Commissioner”).  (The date and time of such filing with the
Commissioner is referred to herein as the “Effective Time”).

Article
X

Conditions to Merger

The filing of this
Merger Agreement with the Commissioner as provided in Article IX above is
conditioned upon the fulfillment or waiver, prior to such filing, of all the
conditions to the Merger set forth in Article 7 of the Reorganization
Agreement.

Article
XI

Successors and Assigns

This Merger
Agreement shall be binding upon and enforceable by the parties hereto and their
respective successors, assigns and transferees, but this Merger Agreement may
not be assigned by either party without the written consent of the other.

Article
XII

Governing Law

This Merger
Agreement has been executed in the State of California, and the laws of the
State of California shall govern the validity and interpretation hereof and the
performance by the parties hereto.

 4
 

Article
XIII

Termination

This Merger
Agreement may, by the mutual consent and action of the Boards of Directors of
Bank and Landmark, be abandoned at any time before or after approval thereof by
the shareholders of Bank and Landmark, but not later than the filing of this
Merger Agreement with the Commissioner pursuant to Section 4887 of the
California Financial Code.  This Merger
Agreement shall automatically be terminated and of no further force and effect
if, prior to the filing of an executed copy hereof with the Commissioner as
provided in Article IX hereof, the Reorganization Agreement is terminated in
accordance with the terms thereof.

IN WITNESS WHEREOF,
Bank, Landmark and Bancorp, pursuant to the approval and authority duly given
by resolution of their respective Boards of Directors, have caused this Merger
Agreement to be signed by their respective Chairman of the Board or Chief
Executive Officer and Secretary on the day and year first above written.

	
  

  	
  1ST PACIFIC BANK OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dr. James G. Knight, Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LANDMARK NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer or President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1ST PACIFIC BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dr. James G. Knight, Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Secretary

  
								

 

 5
 

 

Certificate of Approval

of

Agreement
of Merger

                          
and                           
certify that:

1.                                       They
are the President and Chief Executive Officer and Secretary, respectively, of
Landmark National Bank, a national banking association (“Landmark”).

2.                                       This
certificate is attached to the Agreement of Merger dated           ,
2007 by and between 1st Pacific Bank of California, a California state
chartered bank (“Bank”) and Landmark, to which 1st Pacific Bancorp, a
California corporation and sole shareholder of Bank (“Bancorp”) is a party,
which provides for the merger of Landmark with and into Bank (“Merger”).

3.                                       The
Agreement of Merger in the form attached was duly approved by the Board of
Directors and shareholders of Landmark.

4.                                       Landmark
has one class of shares outstanding consisting of common shares which was
entitled to vote on the Merger.  Landmark
has         common shares outstanding which
were entitled to vote on the Merger.

5.                                       The
principal terms of the Agreement of Merger in the form attached were approved
by Landmark by the vote of a number of shares of its capital stock which
equaled or exceeded the vote required.

6.                                       The
percentage vote required is at least 66 2/3% of the outstanding shares which
were entitled to vote on the Merger.

We certify under
penalty of perjury under the laws of the State of California that the foregoing
is true and correct of our own knowledge. 
We declare we are the persons who executed this instrument, which
execution is our act and deed.

Executed at          ,
California on          , 2007.

	
  

  	
   

  	
   

  
	
   

  	
  President and
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  	
   

  

 

 6
 

Certificate of Approval

of

Agreement
of Merger

                          
and                           
certify that:

1.                                       They
are the President and Chief Executive Officer and Secretary, respectively, of
1st Pacific Bank of California, a California state chartered bank (“Bank”).

2.                                       This
certificate is attached to the Agreement of Merger dated           ,
2007 by and between Bank and Landmark National Bank, a national banking
association (“Landmark”), to which 1st Pacific Bancorp, a California
corporation and sole shareholder of Bank (“Bancorp”) is a party, which provides
for the merger of Landmark with and into Bank (“Merger”).

3.                                       The
Agreement of Merger in the form attached was duly approved by the Board of
Directors of Bank.

4.                                       Bank
has one class of shares authorized consisting of common shares and has        
common shares outstanding, all of which are owned by Bancorp.

5.                                     The
principal terms of the Agreement of Merger in the form attached were
unanimously approved by Bank’s sole shareholder, Bancorp.

We certify under
penalty of perjury under the laws of the State of California that the foregoing
is true and correct of our own knowledge. 
We declare we are the persons who executed this instrument, which
execution is our act and deed.

Executed at          ,
California on          , 2007.

	
  

  	
   

  	
   

  
	
   

  	
  President and
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  	
   

  

 

 7
 

 

Certificate of Approval

of

Agreement
of Merger

                          
and                           
certify that:

1.                                       They
are the President and Chief Executive Officer and Secretary, respectively, of
1st Pacific Bancorp, a California corporation (“Bancorp”).

2.                                       This
certificate is attached to the Agreement of Merger dated           ,
2007 by and between 1st Pacific Bank of California, a California state
chartered bank (“Bank”) and Landmark National Bank, a national banking
association (“Landmark”), to which Bancorp is a party, which provides for the
merger of Landmark with and into Bank (“Merger”).

3.                                       The
Agreement of Merger in the form attached was duly approved by the Board of
Directors of Bancorp.

4.                                       Bancorp
has one class of shares outstanding consisting of common shares which was
entitled to vote on the Merger.  Bancorp
has         common shares outstanding which
were entitled to vote on the Merger.

5.                                       The
principal terms of the Agreement of Merger in the form attached were approved
by Bancorp by the vote of a number of shares of its capital stock which equaled
or exceeded the vote required.

6.                                       The
percentage vote required is more than 50% of the outstanding shares of Bancorp
which were entitled to vote on the Merger.

We certify under
penalty of perjury under the laws of the State of California that the foregoing
is true and correct of our own knowledge. 
We declare we are the persons who executed this instrument, which
execution is our act and deed.

Executed at          ,
California on          , 2007.

	
  

  	
   

  	
   

  
	
   

  	
  President and
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Secretary

  	
   

  

 

 8

Exhibit 5.3

Affiliate’s Agreement

February 22, 2007

1st
Pacific Bancorp and 1st Pacific Bank of California

4275
Executive Square, Suite 650

La
Jolla, California  92037

Attention:  Dr. James G. Knight,
Chairman

Ladies and Gentlemen:

Reference is made to the Agreement and Plan of Reorganization and
Merger, dated as of February 22, 2007 (the “Reorganization Agreement”), by and
among 1st Pacific Bancorp (“Company”), 1st Pacific Bank of California (“Bank”)
and Landmark National Bank (“Seller”), which Reorganization Agreement provides
for the merger of Seller with and into Bank (the “Merger”), in a transaction in
which, among other things, shares of the common stock, $5.00 par value, of
Seller (“Seller Common Stock”) will be converted into the right to receive shares
of common stock, no par value, of Company (“Company Common Stock”) and/or cash,
as more fully provided therein.

The undersigned has been informed that the Merger constitutes a
transaction covered by Rule 145 under the Securities Act of 1933, as amended
(the “Securities Act”); that the undersigned may be deemed to be an “affiliate”
of Seller within the meaning of Rule 145; and that, accordingly, the shares of
Company Common Stock which the undersigned may acquire in connection with the
Merger may be disposed of only in conformity with the provisions hereof.

The capitalized terms used and not defined herein shall have the
meaning set forth in the Reorganization Agreement.

1.                                       The undersigned, after inquiry of any agent
with discretionary power to transfer the undersigned’s shares of Seller Common
Stock, represents, warrants and agrees as follows:

(a)                                  The undersigned has full power to execute
this Affiliate’s Agreement and to make the representations, warranties and
agreements herein, and to perform his, her or its obligations hereunder.

(b)                                 The undersigned is currently the owner of
that number of shares of Seller Common Stock set forth in Schedule 1 hereto
(the “Seller Shares”) and has held the Seller Shares at all times since January
1, 2005, unless otherwise set forth in Schedule 1.

(c)                                  The undersigned currently owns no shares of
Company Common Stock and has not owned any shares of Company Common Stock since
January 1, 2005, except as otherwise disclosed on Schedule 1 to this
Agreement.  The undersigned shall not
sell, margin, sell short, purchase, contract to purchase or sell or otherwise

have
any financial interest, directly or indirectly in any transaction involving
shares of Company Common Stock from the date hereof until after the Merger.

(d)                                 The undersigned shall not purchase, sell,
transfer or otherwise dispose of, or reduce the undersigned’s risk of ownership
or investment in any of the Seller Shares prior to the Merger.

(e)                                  Other than in exchange for Company Common
Stock and/or cash pursuant to the Merger, the undersigned has no present plan
or intent to engage in a sale, exchange, transfer, redemption or reduction in
any way of the undersigned’s risk of ownership by short sale or otherwise, or
other disposition, directly or indirectly (such actions being collectively
referred to as a “Sale”) of the Seller Shares or any of the shares of Company
Common Stock to be received by the undersigned pursuant to the Merger.

(f)                                    The undersigned has not engaged in a Sale of
any shares of Seller Common Stock at any time since January 1, 2005 unless
otherwise set forth in Schedule 1.

(g)                                 The undersigned is not aware of or
participating in any plan or intention on the part of the Seller’s shareholders
(a “Plan”) to engage in a Sale of Company Common Stock to be received by such
Seller shareholders pursuant to the Merger that will reduce such Seller
shareholders’ ownership of Company Common Stock to a number of shares having,
in the aggregate, a value at the Effective Time of less than 50% of the total
fair market value of the Seller Shares or Seller Common Stock outstanding
immediately prior to the Merger.  For
purposes of this representation, shares of the Seller Stock disposed of in a
Sale (including through the exercise of dissenters’ rights) will be considered
to be outstanding stock of Seller immediately prior to the Merger that was
exchanged for Company Common Stock in the Merger, and then disposed of pursuant
to a Plan.

(h)                                 The undersigned has no present plan or intent
to (i) engage in a Sale of the Seller Shares (other than in exchange for
Company Common Stock and/or cash pursuant to the Merger), or (ii) exercise
dissenters’ rights in connection with the Merger.

(i)                                     The representations contained herein shall be
true and correct at all times from the date hereof through the Effective Time.

(j)                                     The undersigned has consulted such legal and
financial counsel as the undersigned deems appropriate in connection with the
execution of this Affiliate’s Agreement.

2.                                       Company agrees to use its best efforts to
file all reports and data with the Securities and Exchange Commission (“SEC”)
necessary to permit the undersigned to sell Restricted Securities pursuant to
and otherwise in conformity with Rule 145(d) under the Securities Act.

3.                                       Company acknowledges that the provisions of
Section 1(e) of this Affiliate’s Agreement will be satisfied as to any sale by
the undersigned of Restricted Securities pursuant to Rule 145(d) under the
Securities Act, as evidenced by a broker’s letter or opinion of

 2
 

counsel
stating that the requirements of Rule 145 have been met; provided, however,
that if counsel for Company reasonably believes that the provisions of Rule 145
have not been complied with, or if requested by Company in connection with a
proposed disposition, the undersigned shall furnish to Company a copy of a “no
action” letter or other communication from the staff of the SEC or an opinion
of counsel in form and substance reasonably satisfactory to Company and its
counsel, to the effect that the applicable provisions of Paragraphs (c), (e),
(f) and (g) of Rule 144 under the Securities Act have been complied with or
that the disposition may be otherwise effected in the manner requested in
compliance with the Securities Act.

4.                                       The undersigned also understands that stop
transfer instructions will be given to Company’s transfer agent with respect to
the Restricted Securities and that there will be placed on the certificates
evidencing the Restricted Securities, or any substitutions therefor, a legend
stating in substance:

“THE SHARES REPRESENTED BY
THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), APPLIES AND MAY BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IN ACCORDANCE WITH THE TERMS OF
AN AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND 1ST PACIFIC BANCORP, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF 1ST PACIFIC
BANCORP.”

Company agrees that such
stop transfer instructions and legend will be promptly removed if there has
been compliance with the provisions of Section 3.

 3
 

5.                                       This Affiliate’s Agreement shall be binding
upon and enforceable against administrators, executors, representatives, heirs,
legatees and devisees of the undersigned and any pledgee holding the Restricted
Securities of the undersigned as collateral.

IN WITNESS WHEREOF, the undersigned has executed the foregoing
Affiliate’s Agreement as of the date first above written.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to and
  Accepted:

  	
   

  
	
   

  	
   

  
	
  1ST PACIFIC
  BANCORP

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
									

 

 4

EXHIBIT 7.2.6

LANDMARK
DIRECTOR-SHAREHOLDER’S AGREEMENT

This Landmark Director-Shareholder’s Agreement (“Agreement”), dated as
of February 22, 2007 is entered into by and between 1st Pacific Bancorp, a
California corporation (“Bancorp”), and 1st Pacific Bank, a California state
chartered bank (“Bank”), on one hand and                                     
(“Shareholder”), on the other hand.

RECITALS

A.                                   Bancorp, Bank and Landmark National Bank,
a national banking association (“Landmark”) entered into that certain Agreement
and Plan of Reorganization and Merger of even date herewith (the “Reorganization
Agreement”).

B.                                     Shareholder is a member of the Board of
Directors of Landmark and owns shares of the common stock, $5.00 par value, of
Landmark (“Landmark Stock”).

C.                                     Shareholder is willing to agree to vote
or cause to be voted all shares of Landmark Stock with respect to which
Shareholder has voting power on the date hereof or hereafter acquired to
approve the Reorganization Agreement and the transactions contemplated thereby
and all requisite matters related thereto.

D.                                    Shareholder is willing to agree to not
compete with, use trade secrets or solicit customers or employees of Bancorp,
Bank or Landmark as set forth in this Agreement.

E.                                      Unless otherwise provided in this
Agreement, capitalized terms shall have the meanings given to them in the
Reorganization Agreement.

NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, Bancorp and Bank and Shareholder agree as follows:

Article I

Director-Shareholder’s
Agreement

 1.1         Agreement to Vote.  Shareholder shall vote or cause to be voted
at any meeting of shareholders of Landmark to approve the Reorganization
Agreement and the transactions contemplated thereby (the “Shareholders’ Meeting”),
all of the shares of Landmark Stock as to which Shareholder has sole or shared
voting power (the “Shares”), as of the record date established to determine
shareholders who have the right to vote at any such Shareholders’ Meeting or to
give consent to action in writing (the “Record Date”), to approve the
Reorganization Agreement, the Agreement of Merger and the transactions
contemplated thereby, including the principal terms of the Reorganization and
Merger.

 1.2         Restrictions on Dispositions.  Shareholder agrees that, from and after the
date of this Agreement and through the Effective Time, he or she will not take
any action that will alter or affect in any way the right to vote the Shares,
except (i) with the prior written consent of Bancorp or (ii) to
change such right from that of a shared right of Shareholder to vote the Shares
to a sole right of Shareholder to vote the Shares.

 1.3         Shareholder Approval.  Shareholder shall (i) recommend
shareholder approval of the Reorganization Agreement, the Agreement of Merger
and the transactions contemplated thereby by the Landmark shareholders at the
Shareholders’ Meeting and (ii) advise the Landmark shareholders to reject
any subsequent proposal or offer received by Landmark relating to any purchase,
sale, acquisition, merger or other form of business combination involving
Landmark or any of its assets, equity securities or debt securities and to
proceed with the transactions contemplated by the Reorganization Agreement;
provided, however, that Shareholder shall not be obligated to take any action
specified above if the Board of Directors of Landmark is advised in writing by
outside

legal counsel, Gary Steven Findley & Associates, that, in the
exercise of his or her fiduciary duties, a director of Landmark should not take
such action.

 1.4         Noncompetition.  Other than serving as a
director, executive officer or shareholder of Bancorp or Bank, for a period of
two years after the Effective Time (the “Term”), Shareholder agrees not to,
directly or indirectly, without the prior written consent of Bancorp, own more
than 1% of, organize, or be connected as an officer, director, or employee
with, any financial institution, other than Bancorp or Bank, whose deposits are
insured by the federal government that has its head office within 50 miles of
the head office of Landmark or has a branch office in San Diego County (a “Competitive
Enterprise”).  In addition, during the
Term, Shareholder agrees not to, directly or indirectly: (i) solicit, entice,
influence, divert or otherwise contact any customer of Bancorp, Bank or
Landmark or assist anyone in the solicitation, enticement, influencing,
diversion or contacting of any customer of Bancorp, Bank or Landmark for the
purpose of causing, encouraging, or attempting to cause or encourage such
customer to divert its current, ongoing or future business from Bancorp, Bank
or Landmark; (ii) employ or assist in employing any present employee of
Landmark to perform services for any Competitive Enterprise; (iii) solicit
(including the disclosure to any third party of the names, backgrounds or
qualifications of any Bancorp, Bank or Landmark employees or the identification
of such employees as potential candidates for employment, except for acting as
a reference upon the request of any such employee) any employee to leave his or
her employment with Bancorp, Bank or Landmark; (iv) make any oral or written
statement, comments or other communications that impugns or is intended to
impugn, disparage or otherwise malign the reputation, ethics, competency,
morality or qualifications of Bancorp or Bank or any of their affiliates,
subsidiaries, current or former directors, officers, employees or customers; or
(v) commit, plan or agree to undertake any activity set forth in (i) through
(iv).  In the event that during the Term
Bancorp or Bank is acquired by another financial institution and is not the
surviving entity of the acquisition, then this Section 1.4 shall terminate upon
the date of Bancorp’s or Bank’s acquisition.

 1.5         Confidentiality.  For purposes of this Agreement, “Proprietary
Information” shall mean any information relating to the business of Landmark
that has not previously been publicly released by Landmark or its
representatives, and shall include, but shall not be limited to, information
encompassed in all marketing and business plans, financial information, fees,
pricing information, customer and client lists and relationships between
Landmark and its customers and clients and others who have business dealings
with Landmark.  Shareholder agrees to
maintain the confidentiality of all Proprietary Information that has been
disclosed to Shareholder in the course of his or her service as a director of
Landmark.  Shareholder shall not, without
written authorization from Bancorp, use for Shareholder’s benefit or purposes,
nor disclose to others any Proprietary Information.  The prohibitions in this Section  1.5 shall not apply to any Proprietary
Information after such Proprietary Information has been voluntarily disclosed
to the public, independently developed and disclosed by others, or otherwise
enters the public domain other than through a breach by Shareholder of the
terms hereof and shall not restrict any disclosure required by law or in
connection with any administrative or judicial proceedings.

Article II

Representations and Warranties of Shareholder

Shareholder
represents and warrants to Bancorp and Bank that the statements set forth below
are true and correct as of the date of this Agreement, except those that are
specifically as of a different date:

 2.1         Ownership and Related
Matters.

 

(a)           Schedule 2.1(a) hereto
correctly sets forth the number of Shares and the nature of Shareholder’s
voting power with respect thereto as of the date hereof.  Within five business days after the Record
Date, Shareholder shall amend said Schedule 2.1(a) to correctly
reflect the number of Shares and the nature of Shareholder’s voting power with
respect thereto as of the Record Date.

(b)           There
are no proxies, voting trusts or other agreements or understandings to or by
which Shareholder or his or her spouse is a party or bound or that expressly
requires that any of the Shares be voted in any specific manner other than as
provided in this Agreement.

 2.2         Authorization;
Binding Agreement.  Shareholder has the legal right,
power, capacity and authority to execute, deliver and perform this Agreement,
and this Agreement is the valid and binding obligation of

 2
 

Shareholder enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity.

 2.3         Noncontravention.  The execution, delivery and performance of
this Agreement by Shareholder will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which Shareholder or
his or her spouse is a party or by which any of Shareholder’s properties or his
or her spouse’s properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require any third party consents; (c) result in the
creation or imposition of any encumbrance on any of the Shares or any other
assets of Shareholder or his or her spouse; or (d) violate any applicable
laws or rules to which Shareholder or his or her spouse is subject.

 

Article III

General

 3.1         Amendments.  To
the fullest extent permitted by law, this Agreement and any schedule or exhibit
attached hereto may be amended by agreement in writing of the parties hereto at
any time.

 3.2         Integration.  This
Agreement constitutes the entire agreement between the parties pertaining to
the subject matter hereof and (except for the Reorganization Agreement if
executed by Shareholder) supersedes all prior agreements and understandings of
the parties in connection therewith.

 3.3         Specific Performance.  Shareholder, Bancorp and Bank each expressly
acknowledge that, in view of the uniqueness of the obligations of Shareholder
contemplated hereby, neither Bancorp nor Bank would not have an adequate remedy
at law for money damages in the event that this Agreement has not been
performed by Shareholder in accordance with its terms, and therefore
Shareholder, Bancorp and Bank agree that Bancorp and Bank shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which either may be entitled at law or in equity.  

 3.4         Termination.  This
Agreement shall terminate automatically without further action at the earlier
of four years following the Effective Time of the Reorganization or the
termination of the Reorganization Agreement in accordance with its terms.  Upon termination of this Agreement as
provided herein, the respective obligations of the parties hereto shall
immediately become void and have no further force and effect.  

 3.5         No
Assignment.  Neither this Agreement nor any rights,
duties or obligations hereunder shall be assignable by Bancorp, Bank or
Shareholder, in whole or in part.  Any
attempted assignment in violation of this prohibition shall be null and
void.  Subject to the foregoing, all of
the terms and provisions hereof shall be binding upon, and inure to the benefit
of, the successors of the parties hereto. 
Notwithstanding the foregoing, nothing herein shall bind any transferee
of Shareholder’s shares of common stock of Bancorp after the Effective Time or
convey any rights to such transferee under this Agreement.

 3.6         Headings.  The
descriptive headings of the several Articles and Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.

 3.7         Counterparts.  This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each party hereto and delivered to each
party hereto.

 3.8         Gender,
Number, and Tense.  Throughout
this Agreement, unless the context otherwise requires,

(i)                                     the masculine, feminine and neuter
genders each includes the other;

(ii)                                  the singular includes the plural, and the
plural includes the singular; and

(iii)                               the past tense includes the present, and
the present tense includes the past.

 3
 

 3.9         Notices.  Any
notice or communication required or permitted hereunder, shall be deemed to
have been given if in writing and (a) delivered in person,
(b) delivered by confirmed facsimile transmission, or (c) mailed by
certified or registered mail, postage prepaid with return receipt requested,
addressed as follows:

 

If to Bancorp:

1st Pacific
Bancorp

4275 Executive
Square, Suite 650

La Jolla, CA  92037

Fax No. (858)
509-0898

Attention:  Dr.
James G. Knight, Chairman

With a copy to:

Luce, Forward,
Hamilton & Scripps, LLP

600 West Broadway,
Suite 2600

San Diego,
California  92101

Fax:  (619) 232-8311

Attention:  Kurt
L. Kicklighter, Esq.

If to Shareholder:

 

 

With a copy to:

Gary Steven
Findley & Associates

1470 North Hundley
Street

Anaheim,
California 92806

Fax:  (714) 630-7910

Attention: Gary Steven Findley

or at such other address and to the attention of such other person as a
party may notice to the other in accordance with this Section 3.9.  Any such notice or communication shall be
deemed received on the date delivered personally or delivered by confirmed
facsimile transmission or on the third Business Day after it was sent by
certified or registered mail, postage prepaid with return receipt requested.

 3.10       Governing
Law.  This Agreement shall
be construed in accordance with, and governed by, the laws of the State of
California, except to the extent preempted by the laws of the United States.

 3.11       Not
in Director Capacity. 
Except to the extent set forth in Sections 1.4 and 1.5, no person
executing this Agreement who is, during the term hereof, a director of
Landmark, makes any agreement or understanding herein in his or her capacity as
such director.  The parties sign solely
in their capacities as owners of or holders of the power to vote shares of
Landmark Stock.

 3.12       Attorneys’
Fees.  If any legal action
or any arbitration upon mutual agreement is brought for the enforcement of this
Agreement or because of an alleged dispute, breach or default in connection with
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys’ fees and other costs and expenses incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.

 3.13       Regulatory
Compliance.  Each of the
provisions of this Agreement is subject to compliance with all applicable
regulatory requirements and conditions.

 3.14       Severability
and the Like.  If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be unreasonable as to duration, activity or subject, it shall be deemed to
extend only over

 4
 

the maximum duration, range of activities or subjects as to which such
provision shall be valid and enforceable under applicable law.  If any provisions shall, for any reason, be
held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.

 

 3.15       Waiver
of Breach.  Any failure or
delay by Bancorp and/or Bank in enforcing any provision of this Agreement shall
not operate as a waiver thereof.  The
waiver by Bancorp and/or Bank of a breach of any provision of this Agreement by
the Shareholder shall not operate or be construed as a waiver of any subsequent
breach or violation thereof.  All waivers
shall be in writing and signed by the party to be bound.

 

 

[Remainder of
Page Intentionally Left Blank. Signature Page to Follow]

 5
 

IN WITNESS WHEREOF, the parties to this Agreement have caused and duly
executed this Agreement as of the day and year first above written.

 

	
  1ST PACIFIC BANCORP

  	
   

  	
  1ST PACIFIC BANK OF CALIFORNIA

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SHAREHOLDER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
      By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  	
   

  	
   

  
								

 

 6
 

SPOUSAL CONSENT

 

 

I am the spouse of                                                   ,
Shareholder in the above Agreement.  I
understand that I may consult independent legal counsel as to the effect of
this Agreement and the consequences of my execution of this Agreement and, to
the extent I felt it necessary, I have discussed it with legal counsel.  I hereby confirm this Agreement and agree
that it shall bind my interest in the Shares, if any.

 

	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (Shareholder’s
  Spouse’s Name)

  

 

 7
 

SCHEDULE 2.1(a)

	
  Number of Shares Owned

  	
   

  	
  Nature of Voting Power

  
	
   

  	
   

  	
   

  

 

 8

EXHIBIT
7.3.6

BANCORP
DIRECTOR-SHAREHOLDER’S AGREEMENT

This Bancorp
Director-Shareholder’s Agreement (“Agreement”), dated as of February 22, 2007
is entered into by and between Landmark National Bank, a national banking
association (“Landmark”), and                                     
(“Shareholder”).

RECITALS

A.                                   1st Pacific Bancorp, a California
corporation (“Bancorp”), 1st Pacific Bank of California, a California state
chartered bank, and Landmark entered into that certain Agreement and Plan of
Reorganization and Merger of even date herewith (the “Reorganization Agreement”).

B.                                     Shareholder is a member of the Board of
Directors of Bancorp and owns shares of the common stock, no par value, of
Bancorp (“Bancorp Stock”).

C.                                     Shareholder is willing to agree to vote
or cause to be voted all shares of Bancorp Stock with respect to which
Shareholder has voting power on the date hereof or hereafter acquired to
approve the Reorganization Agreement and the transactions contemplated thereby
and all requisite matters related thereto.

D.                                    Unless otherwise provided in this
Agreement, capitalized terms shall have the meanings given to them in the
Reorganization Agreement.

NOW THEREFORE, in
consideration of the premises and of the respective representations, warranties
and covenants, agreements and conditions contained herein and in the
Reorganization Agreement, and intending to be legally bound hereby, Landmark
and Shareholder agree as follows:

Article
I

Director-Shareholder’s
Agreement

1.1          Agreement
to Vote. 
Shareholder shall vote or cause to be voted at any meeting of
shareholders of Bancorp to approve the Reorganization Agreement and the
transactions contemplated thereby (the “Shareholders’ Meeting”), all of the
shares of Bancorp Stock as to which Shareholder has sole or shared voting power
(the “Shares”), as of the record date established to determine shareholders who
have the right to vote at any such Shareholders’ Meeting or to give consent to
action in writing (the “Record Date”), to approve the Reorganization Agreement,
the Agreement of Merger and the transactions contemplated thereby, including
the principal terms of the Reorganization and Merger.

1.2          Restrictions
on Dispositions. 
Shareholder agrees that, from and after the date of this Agreement and
through the Effective Time, he or she will not take any action that will alter
or affect in any way the right to vote the Shares, except (i) with the
prior written consent of Landmark or (ii) to change such right from that
of a shared right of Shareholder to vote the Shares to a sole right of
Shareholder to vote the Shares.

1.3          Shareholder
Approval. 
Shareholder shall (i) recommend shareholder approval of the
Reorganization Agreement, the Agreement of Merger and the transactions
contemplated thereby by the Bancorp shareholders at the Shareholders’ Meeting
and (ii) advise the Bancorp shareholders to reject any subsequent proposal
or offer received by Bancorp relating to any purchase, sale, acquisition,
merger or other form of business combination involving Bancorp or any of its
assets, equity securities or debt securities and to proceed with the
transactions contemplated by the Reorganization Agreement; provided, however,
that Shareholder shall not be obligated to take any action specified above if
the Board of Directors of Bancorp is advised in writing by outside legal
counsel, Luce, Forward, Hamilton & Scripps, LLP, that, in the exercise of
his or her fiduciary duties, a director of Bancorp should not take such action.

Article
II

Representations
and Warranties of Shareholder

Shareholder
represents and warrants to Landmark that the statements set forth below are
true and correct as of the date of this Agreement, except those that are
specifically as of a different date:

2.1          Ownership
and Related Matters.

(a)           Schedule 2.1(a) hereto
correctly sets forth the number of Shares and the nature of Shareholder’s
voting power with respect thereto as of the date hereof.  Within five business days after the Record
Date, Shareholder shall amend said Schedule 2.1(a) to correctly
reflect the number of Shares and the nature of Shareholder’s voting power with
respect thereto as of the Record Date.

(b)           There are no proxies, voting trusts
or other agreements or understandings to or by which Shareholder or his or her
spouse is a party or bound or that expressly requires that any of the Shares be
voted in any specific manner other than as provided in this Agreement.

2.2          Authorization;
Binding Agreement. 
Shareholder has the legal right, power, capacity and authority to
execute, deliver and perform this Agreement, and this Agreement is the valid
and binding obligation of Shareholder enforceable in accordance with its terms,
except as the enforcement thereof may be limited by general principles of
equity.

2.3          Noncontravention.  The execution, delivery and performance of
this Agreement by Shareholder will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which Shareholder or
his or her spouse is a party or by which any of Shareholder’s properties or his
or her spouse’s properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require any third party consents; (c) result in the
creation or imposition of any encumbrance on any of the Shares or any other
assets of Shareholder or his or her spouse; or (d) violate any applicable
laws or rules to which Shareholder or his or her spouse is subject.

Article
III

General

3.1          Amendments.  To the fullest extent permitted by law, this
Agreement and any schedule or exhibit attached hereto may be amended by
agreement in writing of the parties hereto at any time.

3.2          Integration.  This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and (except for the
Reorganization Agreement if executed by Shareholder) supersedes all prior
agreements and understandings of the parties in connection therewith.

3.3          Specific
Performance. 
Shareholder and Landmark each expressly acknowledges that, in view of
the uniqueness of the obligations of Shareholder contemplated hereby, Landmark
would not have an adequate remedy at law for money damages in the event that
this Agreement has not been performed by Shareholder in accordance with its
terms, and therefore Shareholder and Landmark agree that Landmark shall be
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled at law or in equity.

3.4          Termination.  This Agreement shall terminate automatically
without further action at the earlier of four years following the Effective
Time of the Reorganization or the termination of the Reorganization Agreement
in accordance with its terms.  Upon
termination of this Agreement as provided herein, the respective obligations of
the parties hereto shall immediately become void and have no further force and
effect.

3.5          No
Assignment. 
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Landmark or Shareholder, in whole or in part.  Any attempted assignment in violation of this
prohibition shall be null and void. 
Subject to the foregoing, all of the terms and provisions hereof shall
be binding

upon, and inure to
the benefit of, the successors of the parties hereto.  Notwithstanding the foregoing, nothing herein
shall bind any transferee of Shareholder’s Shares after the Effective Time or
convey any rights to such transferee under this Agreement.

3.6          Headings.  The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.

3.7          Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to each party hereto.

3.8          Gender,
Number, and Tense. 
Throughout this Agreement, unless the context otherwise requires,

(i)                                     the
masculine, feminine and neuter genders each includes the other;

(ii)           the singular includes the plural, and
the plural includes the singular; and

(iii)          the past tense includes the present,
and the present tense includes the past.

3.9          Notices.  Any notice or communication required or
permitted hereunder, shall be deemed to have been given if in writing and
(a) delivered in person, (b) delivered by confirmed facsimile
transmission, or (c) mailed by certified or registered mail, postage
prepaid with return receipt requested, addressed as follows:

If
to Landmark:

Landmark National Bank

937 Lomas Santa Fe Drive

Solana Beach, California
92075

Fax No. (858)
332-1018

Attention:  F.J. “Rick” Mandelbaum, President

With
a copy to:

Gary Steven Findley &
Associates

1470 North Hundley Street

Anaheim, California 92806

Fax:  (714) 630-7910

Attention:  Gary Steven Findley

If
to Shareholder:

 

c/o 1st Pacific Bank of California

4275 Executive Square,
Suite 650

La
Jolla, California 92037

With
a copy to:

Luce, Forward,
Hamilton & Scripps, LLP

600 West Broadway,
Suite 2600

San Diego,
California 92101

Fax No. (619)
232-8311

Attention:  Kurt L. Kicklighter, Esq.

or at such other
address and to the attention of such other person as a party may notice to the
other in accordance with this Section 3.9. 
Any such notice or communication shall be deemed received on the date
delivered personally or delivered by confirmed facsimile transmission or on the
third Business Day after it was sent by certified or registered mail, postage
prepaid with return receipt requested.

3.10        Governing
Law.  This
Agreement shall be construed in accordance with, and governed by, the laws of
the State of California, except to the extent preempted by the laws of the
United States.

3.11        Not in
Director Capacity. 
No person executing this Agreement who is, during the term hereof, a
director of Bancorp, makes any agreement or understanding herein in his or her
capacity as such director.  The parties
sign solely in their capacities as owners of or holders of the power to vote
shares of Bancorp Stock.

3.12        Attorneys’
Fees.  If any legal
action or any arbitration upon mutual agreement is brought for the enforcement
of this Agreement or because of an alleged dispute, breach or default in
connection with this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys’ fees and other costs and expenses incurred in
that action or proceeding, in addition to any other relief to which it may be
entitled.

3.13        Regulatory
Compliance.  Each
of the provisions of this Agreement is subject to compliance with all
applicable regulatory requirements and conditions.

3.14        Severability
and the Like.  If
any provision of this Agreement shall be held by a court of competent
jurisdiction to be unreasonable as to duration, activity or subject, it shall
be deemed to extend only over the maximum duration, range of activities or
subjects as to which such provision shall be valid and enforceable under
applicable law.  If any provisions shall,
for any reason, be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.

3.15        Waiver of
Breach.  Any
failure or delay by Landmark in enforcing any provision of this Agreement shall
not operate as a waiver thereof.  The
waiver by Landmark of a breach of any provision of this Agreement by the
Shareholder shall not operate or be construed as a waiver of any subsequent
breach or violation thereof.  All waivers
shall be in writing and signed by the party to be bound.

 

[Remainder of Page Intentionally Left
Blank. Signature Page to Follow]

IN WITNESS
WHEREOF, the parties to this Agreement have caused and duly executed this
Agreement as of the day and year first above written.

 

	
  LANDMARK NATIONAL BANK

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  
	
   

  
	
  SHAREHOLDER

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
						

 

SPOUSAL
CONSENT

I am the spouse of
                                           ,
Shareholder in the above Agreement.  I
understand that I may consult independent legal counsel as to the effect of
this Agreement and the consequences of my execution of this Agreement and, to
the extent I felt it necessary, I have discussed it with legal counsel.  I hereby confirm this Agreement and agree
that it shall bind my interest in the Shares, if any.

	
  

  	
   

  
	
   

  	
  (Shareholder’s
  Spouse’s Name)

  

 

SCHEDULE 2.1(a)

 

	
  Number of Shares Owned

  	
   

  	
  Nature of Voting PowerExhibit
10.3

LANDMARK
DIRECTOR-SHAREHOLDER’S AGREEMENT

This Landmark Director-Shareholder’s Agreement
(“Agreement”), dated as of February 22, 2007 is entered into by and between 1st
Pacific Bancorp, a California corporation (“Bancorp”), and 1st Pacific Bank, a
California state chartered bank (“Bank”), on one hand and
                        
(“Shareholder”), on the other hand.

RECITALS

A.                                   Bancorp,
Bank and Landmark National Bank, a national banking association (“Landmark”)
entered into that certain Agreement and Plan of Reorganization and Merger of
even date herewith (the “Reorganization Agreement”).

B.                                     Shareholder
is a member of the Board of Directors of Landmark and owns shares of the common
stock, $5.00 par value, of Landmark (“Landmark Stock”).

C.                                     Shareholder
is willing to agree to vote or cause to be voted all shares of Landmark Stock
with respect to which Shareholder has voting power on the date hereof or
hereafter acquired to approve the Reorganization Agreement and the transactions
contemplated thereby and all requisite matters related thereto.

D.                                    Shareholder
is willing to agree to not compete with, use trade secrets or solicit customers
or employees of Bancorp, Bank or Landmark as set forth in this Agreement.

E.                                      Unless
otherwise provided in this Agreement, capitalized terms shall have the meanings
given to them in the Reorganization Agreement.

NOW THEREFORE, in consideration of the premises and of
the respective representations, warranties and covenants, agreements and
conditions contained herein and in the Reorganization Agreement, and intending
to be legally bound hereby, Bancorp and Bank and Shareholder agree as follows:

Article I

Director-Shareholder’s Agreement

 1.1          Agreement
to Vote.  Shareholder
shall vote or cause to be voted at any meeting of shareholders of Landmark to
approve the Reorganization Agreement and the transactions contemplated thereby
(the “Shareholders’ Meeting”), all of the shares of Landmark Stock as to which
Shareholder has sole or shared voting power (the “Shares”), as of the record
date established to determine shareholders who have the right to vote at any
such Shareholders’ Meeting or to give consent to action in writing (the “Record
Date”), to approve the Reorganization Agreement, the Agreement of Merger and
the transactions contemplated thereby, including the principal terms of the
Reorganization and Merger.

 1.2          Restrictions
on Dispositions. 
Shareholder agrees that, from and after the date of this Agreement and
through the Effective Time, he or she will not take any action that will alter
or affect in any way the right to vote the Shares, except (i) with the prior
written consent of Bancorp or (ii) to change such right from that of a shared
right of Shareholder to vote the Shares to a sole right of Shareholder to vote
the Shares.

 1.3          Shareholder
Approval.  Shareholder
shall (i) recommend shareholder approval of the Reorganization Agreement, the
Agreement of Merger and the transactions contemplated thereby by the Landmark
shareholders at the Shareholders’ Meeting and (ii) advise the Landmark
shareholders to reject any subsequent proposal or offer received by Landmark
relating to any purchase, sale, acquisition, merger or other form of business
combination involving Landmark or any of its assets, equity securities or debt
securities and to proceed with the transactions contemplated by the
Reorganization Agreement; provided, however, that Shareholder shall not be
obligated to take any action specified above if the Board of Directors of
Landmark is advised in writing by outside legal counsel, Gary Steven Findley
& Associates, that, in the exercise of his or her fiduciary duties, a
director of Landmark should not take such action.

 1.4         Noncompetition.  Other than serving as a
director, executive officer or shareholder of Bancorp or Bank, for a period of
two years after the Effective Time (the “Term”), Shareholder agrees not to,
directly or indirectly, without the prior written consent of Bancorp, own more
than 1% of, organize, or be connected as an officer, director, or employee with,
any financial institution, other than Bancorp or Bank, whose deposits are
insured by the federal government that has its head office within 50 miles of
the head office of Landmark or has a branch office in San Diego County (a
“Competitive Enterprise”).  In addition,
during the Term, Shareholder agrees not to, directly or indirectly: (i)
solicit, entice, influence, divert or otherwise contact any customer of
Bancorp, Bank or Landmark or assist anyone in the solicitation, enticement,
influencing, diversion or contacting of any customer of Bancorp, Bank or
Landmark for the purpose of causing, encouraging, or attempting to cause or
encourage such customer to divert its current, ongoing or future business from
Bancorp, Bank or Landmark; (ii) employ or assist in employing any present
employee of Landmark to perform services for any Competitive Enterprise; (iii)
solicit (including the disclosure to any third party of the names, backgrounds
or qualifications of any Bancorp, Bank or Landmark employees or the identification
of such employees as potential candidates for employment, except for acting as
a reference upon the request of any such employee) any employee to leave his or
her employment with Bancorp, Bank or Landmark; (iv) make any oral or written
statement, comments or other communications that impugns or is intended to
impugn, disparage or otherwise malign the reputation, ethics, competency,
morality or qualifications of Bancorp or Bank or any of their affiliates,
subsidiaries, current or former directors, officers, employees or customers; or
(v) commit, plan or agree to undertake any activity set forth in (i) through
(iv).  In the event that during the Term
Bancorp or Bank is acquired by another financial institution and is not the
surviving entity of the acquisition, then this Section 1.4 shall terminate upon
the date of Bancorp’s or Bank’s acquisition.

 1.5         Confidentiality.  For purposes of this Agreement, “Proprietary
Information” shall mean any information relating to the business of Landmark
that has not previously been publicly released by Landmark or its
representatives, and shall include, but shall not be limited to, information
encompassed in all marketing and business plans, financial information, fees,
pricing information, customer and client lists and relationships between
Landmark and its customers and clients and others who have business dealings
with Landmark.  Shareholder agrees to
maintain the confidentiality of all Proprietary Information that has been disclosed
to Shareholder in the course of his or her service as a director of
Landmark.  Shareholder shall not, without
written authorization from Bancorp, use for Shareholder’s benefit or purposes,
nor disclose to others any Proprietary Information.  The prohibitions in this Section 1.5 shall not
apply to any Proprietary Information after such Proprietary Information has
been voluntarily disclosed to the public, independently developed and disclosed
by others, or otherwise enters the public domain other than through a breach by
Shareholder of the terms hereof and shall not restrict any disclosure required
by law or in connection with any administrative or judicial proceedings.

Article II

Representations and Warranties of Shareholder

Shareholder represents and warrants to Bancorp and
Bank that the statements set forth below are true and correct as of the date of
this Agreement, except those that are specifically as of a different date:

 2.1         Ownership
and Related Matters.

(a)           Schedule 2.1(a) hereto
correctly sets forth the number of Shares and the nature of Shareholder’s
voting power with respect thereto as of the date hereof.  Within five business days after the Record
Date, Shareholder shall amend said Schedule 2.1(a) to correctly
reflect the number of Shares and the nature of Shareholder’s voting power with
respect thereto as of the Record Date.

(b)           There are no proxies, voting trusts
or other agreements or understandings to or by which Shareholder or his or her
spouse is a party or bound or that expressly requires that any of the Shares be
voted in any specific manner other than as provided in this Agreement.

 2.2         Authorization;
Binding Agreement.  Shareholder
has the legal right, power, capacity and authority to execute, deliver and
perform this Agreement, and this Agreement is the valid and binding obligation
of Shareholder enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity.

 2
 

 2.3         Noncontravention.
 The execution,
delivery and performance of this Agreement by Shareholder will not
(a) conflict with or result in the breach of, or default or actual or
potential loss of any benefit under, any provision of any agreement, instrument
or obligation to which Shareholder or his or her spouse is a party or by which
any of Shareholder’s properties or his or her spouse’s properties are bound, or
give any other party to any such agreement, instrument or obligation a right to
terminate or modify any term thereof; (b) require any third party
consents; (c) result in the creation or imposition of any encumbrance on
any of the Shares or any other assets of Shareholder or his or her spouse; or
(d) violate any applicable laws or rules to which Shareholder or his or
her spouse is subject.

Article III

General

 3.1         Amendments.  To the fullest extent permitted
by law, this Agreement and any schedule or exhibit attached hereto may be
amended by agreement in writing of the parties hereto at any time.

 3.2         Integration.  This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
hereof and (except for the Reorganization Agreement if executed by Shareholder)
supersedes all prior agreements and understandings of the parties in connection
therewith.

 3.3         Specific
Performance.  Shareholder,
Bancorp and Bank each expressly acknowledge that, in view of the uniqueness of
the obligations of Shareholder contemplated hereby, neither Bancorp nor Bank
would not have an adequate remedy at law for money damages in the event that
this Agreement has not been performed by Shareholder in accordance with its
terms, and therefore Shareholder, Bancorp and Bank agree that Bancorp and Bank
shall be entitled to specific enforcement of the terms hereof in addition to
any other remedy to which either may be entitled at law or in equity.

 3.4         Termination.  This Agreement shall
terminate automatically without further action at the earlier of four years
following the Effective Time of the Reorganization or the termination of the
Reorganization Agreement in accordance with its terms.  Upon termination of this Agreement as
provided herein, the respective obligations of the parties hereto shall
immediately become void and have no further force and effect.

 3.5         No
Assignment.  Neither
this Agreement nor any rights, duties or obligations hereunder shall be
assignable by Bancorp, Bank or Shareholder, in whole or in part.  Any attempted assignment in violation of this
prohibition shall be null and void. 
Subject to the foregoing, all of the terms and provisions hereof shall
be binding upon, and inure to the benefit of, the successors of the parties
hereto.  Notwithstanding the foregoing,
nothing herein shall bind any transferee of Shareholder’s shares of common
stock of Bancorp after the Effective Time or convey any rights to such
transferee under this Agreement.

 3.6         Headings.  The descriptive headings of
the several Articles and Sections of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.

 3.7         Counterparts.  This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to each party hereto.

 3.8         Gender,
Number, and Tense. 
Throughout this Agreement, unless the context otherwise requires,

(i)                                     the
masculine, feminine and neuter genders each includes the other;

(ii)                                  the
singular includes the plural, and the plural includes the singular; and

(iii)                               the
past tense includes the present, and the present tense includes the past.

 3
 

 3.9         Notices.  Any notice or communication
required or permitted hereunder, shall be deemed to have been given if in
writing and (a) delivered in person, (b) delivered by confirmed
facsimile transmission, or (c) mailed by certified or registered mail,
postage prepaid with return receipt requested, addressed as follows:

If to Bancorp:

1st Pacific Bancorp

4275 Executive Square, Suite 650

La Jolla, CA 
92037

Fax No. (858) 509-0898

Attention:  Dr. James G. Knight, Chairman

With a copy to:

Luce, Forward, Hamilton & Scripps, LLP

600 West Broadway, Suite 2600

San Diego, California 
92101

Fax:  (619)
232-8311

Attention:  Kurt L. Kicklighter, Esq.

If to Shareholder:

 

 

 

With a copy to:

Gary Steven Findley & Associates

1470 North Hundley Street

Anaheim, California 92806

Fax:  (714)
630-7910

Attention: Gary Steven
Findley

or at such other address and to the attention of such
other person as a party may notice to the other in accordance with this
Section 3.9.  Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission or on the third Business Day
after it was sent by certified or registered mail, postage prepaid with return
receipt requested.

 3.10       Governing
Law.  This Agreement
shall be construed in accordance with, and governed by, the laws of the State
of California, except to the extent preempted by the laws of the United States.

 3.11       Not
in Director Capacity. 
Except to the extent set forth in Sections 1.4 and 1.5, no person
executing this Agreement who is, during the term hereof, a director of
Landmark, makes any agreement or understanding herein in his or her capacity as
such director.  The parties sign solely
in their capacities as owners of or holders of the power to vote shares of
Landmark Stock.

 3.12       Attorneys’
Fees.  If any legal
action or any arbitration upon mutual agreement is brought for the enforcement
of this Agreement or because of an alleged dispute, breach or default in
connection with this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys’ fees and other costs and expenses incurred in
that action or proceeding, in addition to any other relief to which it may be
entitled.

 3.13       Regulatory
Compliance.  Each
of the provisions of this Agreement is subject to compliance with all
applicable regulatory requirements and conditions.

 3.14       Severability
and the Like.  If
any provision of this Agreement shall be held by a court of competent
jurisdiction to be unreasonable as to duration, activity or subject, it shall
be deemed to extend only over 

 4
 

the maximum duration, range of activities or subjects
as to which such provision shall be valid and enforceable under applicable
law.  If any provisions shall, for any
reason, be held by a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.

 3.15       Waiver
of Breach.  Any
failure or delay by Bancorp and/or Bank in enforcing any provision of this
Agreement shall not operate as a waiver thereof.  The waiver by Bancorp and/or Bank of a breach
of any provision of this Agreement by the Shareholder shall not operate or be
construed as a waiver of any subsequent breach or violation thereof.  All waivers shall be in writing and signed by
the party to be bound.

[Remainder
of Page Intentionally Left Blank. Signature Page to Follow]

 5
 

IN WITNESS WHEREOF, the parties to this Agreement have
caused and duly executed this Agreement as of the day and year first above
written.

	
  1ST PACIFIC BANCORP

  	
  1ST PACIFIC BANK OF CALIFORNIA

  	 

	 
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  Its:

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  	 

	
   

  	
   

  	 

	 
	
   

  	
   

  
	 
	
  SHAREHOLDER

  	
   

  
	 
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Name

  	
   

  	
   

  	
   

  	 

										

 

 6
 

SPOUSAL
CONSENT

I am the spouse of
                             ,
Shareholder in the above Agreement.  I
understand that I may consult independent legal counsel as to the effect of
this Agreement and the consequences of my execution of this Agreement and, to
the extent I felt it necessary, I have discussed it with legal counsel.  I hereby confirm this Agreement and agree
that it shall bind my interest in the Shares, if any.

	
   

  	
   

  	
   

  
	
   

  	
  (Shareholder’s Spouse’s
  Name)    

  	
   

  

 

 7
 

SCHEDULE 2.1(a)

	
  Number of Shares Owned

  	
   

  	
  Nature of Voting Power

  
	
   

  	
   

  	
   

  

 

 8

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