Document:

exv10w1

 

CONFIDENTIAL

April 3, 2006

Alta California Bank (Proposed)

360 17th Street, Suite 150

Oakland, CA 94612

Attn: Arnold T. Grisham

			
	     Re:	 	Letter of Agreement

Ladies and Gentlemen:

Western Alliance Bancorporation (“WAL”) and the undersigned organizers (“Organizers”) and proposed
executive officers (“Officers”) of Alta California Bank (Proposed) (“ACB”) are entering into this
Letter of Agreement (this “Letter”) to confirm their understanding regarding the organization of
ACB. The Organizers and Officers are referred to herein collectively as the “Organizing Group”.
WAL is a registered bank holding company, the common stock of which is traded on the New York Stock
Exchange (“NYSE”). This Letter expresses the terms and conditions pursuant to which the parties are
prepared to enter into the transactions described herein.

1. Organization of ACB. Following the execution of this Letter, WAL will, except as provided in
Paragraph 9, assume control of, and responsibility for all expenses associated with the
organization of ACB (including, without limitation, consulting and legal fees and fixed asset
expenditures). As soon as practicable after the execution of this Letter, WAL will reimburse the
Organizing Group for expenses incurred in connection with the organization of ACB prior to the
execution of this Letter (the “Reimbursement Amount”) and the Organizing Group will refund all
monies previously advanced by any person to pay such expenses. As soon as practicable after
execution of this Letter, WAL will file an application with the Federal Deposit Insurance
Corporation and either the California Department of Financial Institutions or the Office of the
Comptroller of the Currency to license ACB as a commercial bank with its principal place of
business in the San Francisco Bay Area.

2. Purchase of WAL Common Stock; Warrants. WAL will capitalize ACB with not less than $25 million
in initial capital. Subject to applicable Federal and state securities laws, the

 

 

Alta California Bank (Proposed)

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Organizers and other persons identified by the Organizers and reasonably acceptable to WAL
(collectively, “Investors”) will be offered the opportunity to purchase shares of WAL common stock
(“Shares”) in a private placement transaction exempt from registration the Securities Act of 1933,
as amended, pursuant to a customary written subscription agreement. The identity of the Investors
and the amount of their respective investments is subject to the aforementioned offer; provided,
however, that the aggregate amount of the Investors’ subscriptions shall not be less than $7
million, nor more than $9 million. If the aggregate amount of the Investors’ subscriptions is less
than $7 million, WAL shall have the right to terminate this Letter in accordance with Paragraph 5
below. In addition, for every two Shares purchased by an Investor, WAL shall issue such Investor a
warrant to purchase an additional Share of WAL common stock at the same price paid for such Shares.
These warrants will be exercisable immediately and will have a seven year term.

3. Governance Matters. Subject to applicable regulatory approvals, ACB’s initial board of
directors and executive officers comprises the persons listed on Exhibit “A” attached hereto.
Subject to applicable regulatory approvals, Arnold T. Grisham (“Grisham”) also will serve as WAL’s
Executive Vice President, Northern California Administration and will be a member of WAL’s
executive management group.

4. Officer and Director Compensation. Prior to the organization of ACB, the Officers shall serve
as consultants to WAL and shall be paid monthly consulting fees in the amounts shown in Exhibit
“A”. Following the organization of ACB, the Officers shall be offered at-will employment with ACB
(other than Grisham, who will execute a written employment agreement with ACB) and shall be paid
annual base salaries in the amounts shown on Exhibit “A.” Subject to regulatory approval, ACB’s
outside directors will receive a fee of $1,000 for each Board meeting attended in-person or
telephonically. In addition, on or about the date ACB opens for business, pursuant to WAL’s 2005
Stock Incentive Plan, each executive officer and director will be granted options to purchase
Shares having an aggregate exercise price, as shown for each officer and director in Exhibit “A.”
The exercise price of the options shall be the closing price of WAL common stock reported on the
NYSE composite tape on the date of grant. Options will have a seven (7) year term and will vest
annually in four equal installments beginning on the first anniversary of the date of grant. The
parties acknowledge and agree that this Letter is not a contract for employment for any Officer,
including Grisham, and that this Letter merely provides information regarding some of the terms of
employment with WAL. ACB’s officers and directors shall be eligible to participate in WAL’s annual
and incentive bonus and equity compensation programs on the same basis as similarly situated
employees and directors of WAL and/or its bank subsidiaries, as these programs may be modified or
discontinued from time to time.

5. Termination; Reimbursement of Expenses.

     (a) WAL may terminate this Letter if it determines in good faith that: (A) the Organizing
Group, or any Organizer or Officer individually, has violated any of the covenants contained in
Paragraph 6 below and WAL determines in good faith that such violation will impair the prospects of
completing the organization of ACB or the business prospects of ACB after opening for business, in
each case in a material respect, or (B) Arnold T. Grisham or

 

 

Alta California Bank (Proposed)

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Sedrick A. Tydus has violated any of the covenants contained in Paragraph 7 below during the
Organizational Period (as defined in Paragraph 7). In the event WAL elects to terminate this
Letter pursuant to this Paragraph 5, the Organizers and Officers responsible for such violation(s)
will be jointly and severally liable for reimbursement of all expenses incurred by WAL in
connection with the organization of ACB, not to exceed the sum of (i) the Reimbursement Amount and
(ii) $300,000.

     (b) The Organizing Group and ACB on the one hand, and WAL on the other hand, may terminate
this Letter of Intent if the other party: (i) breaches any of its material obligations under this
Letter of Intent and does not proceed diligently to cure such breach after receipt of written
notice from the party claiming such breach, or (ii) formally abandons, indicates in writing its
intention not to complete or otherwise does not use commercially reasonable efforts to complete the
transactions contemplated by this Letter of Intent. Except as provided in subparagraph (a) above,
subparagraph (b) of Paragraph 7 below and Paragraph 8, upon such termination, the parties shall
have no liability to each other and shall be released from all obligations under this Letter (other
than as provided in Paragraph 8), including all covenants under Paragraphs 6 and 7.

6. Exclusivity. In consideration of and as a condition to WAL’s substantial financial support and
commitments hereunder, from the date hereof until the Termination Date (as defined in Paragraph 11
below): (a) the Organizing Group, and each Organizer and Officer individually, will negotiate and
cooperate exclusively and in good faith with WAL with respect to ACB’s organization and the
consummation of the transactions contemplated by this Letter; and (b) except for the transactions
contemplated hereby, no Organizer or Officer shall (or permit any investment banker, financial
advisor, attorney, accountant or other agent or representative to) initiate, solicit, negotiate,
encourage (including by way of furnishing information), entertain, consider or accept or take any
other action to facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any competing proposal or offer to establish a business
affiliation between ACB and another party or for any other party to acquire all or substantially
all of the capital stock of ACB, or enter into any agreement or understanding, whether written or
oral, that would prevent the consummation of the transactions contemplated hereby, or to organize a
de novo depository institution in Alameda, Contra Costa, San Francisco or Santa Clara Counties,
California.

7. Additional Commitments of Officers.

     (a) From the date hereof through the date that ACB opens for business (the “Organizational
Period”) and, thereafter, for so long as such individual serves as a consultant to or is employed
by ACB, WAL or any of its affiliates, each Officer shall in good faith devote their full business
time and attention to ACB’s organization and the successful completion of the transactions
contemplated by this Letter, and shall not, directly or indirectly: (i) own, manage, operate,
control, advise, assist, participate in, or be connected with as an officer, employee, partner,
shareholder, director, organizer or otherwise, or have any financial interest in, any entity or
organization (formal or informal) engaged in organizing a de novo depository institution in
Alameda, Contra Costa, San Francisco and Santa Clara Counties, California, or (ii) solicit, entice,
persuade or induce any Officer or other individual who is employed by ACB, WAL or its

 

 

Alta California Bank (Proposed)

April 3, 2006

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affiliates to terminate or refrain from continuing such employment or become employed by or
engaged as a consultant for any individual or entity other than ACB, WAL or its affiliates; or hire
as an employee, consultant or otherwise, any Officer or other individual who is employed by ACB,
WAL or its affiliates.

     (b) Each Officer acknowledges that a violation of any of the covenants contained in this
Paragraph 7 would cause immeasurable and irreparable damage to WAL and to the successful completion
of the transactions contemplated by this Letter. Accordingly, each Officer agrees that WAL shall
be entitled to injunctive relief in any court of competent jurisdiction (including, but not limited
to, temporary restraining orders, preliminary injunctions and/or permanent injunctions), without
having to post any bond or other security, to restrain or prohibit any actual or threatened
violation of any such covenant. In addition, whether or not WAL seeks or obtains such injunctive
relief, if it determines that an Officer has violated any of the covenants contained in this
Paragraph 7, the Officer shall promptly repay to WAL all consulting fees and any other amounts
received by such Officer in connection with ACB’s organization.

8. Due Diligence; Confidentiality. WAL and the Organizing Group shall provide each other such
documents, records and other information as may be reasonably necessary for the parties to conduct
appropriate due diligence in connection with the transactions contemplated by this Letter. WAL and
the Organizing Group each acknowledge that certain documents, records and other information
provided to the other and its representatives pursuant to this Letter may consist of confidential
and proprietary information and each party acknowledges and agrees that it is aware of, will comply
with (and that any person or entity to whom any such information may be disclosed as permitted by
this Paragraph 8 has been, or upon receiving such information will be, advised of and will agree to
comply with) the restrictions imposed by federal and state securities laws on a person or entity
possessing material nonpublic information regarding an issuer of securities. Except as otherwise
required in this Letter, the existence of this Letter and its contents, and any information or
materials received by a party in connection with the parties’ negotiations and/or the due diligence
investigations contemplated herein, are intended to be confidential and held in the strictest
confidence and are not to be discussed with or disclosed to any third party, except (a) with the
express written consent of the disclosing party, (b) to the legal and financial advisors and
lenders to the parties hereto to the extent reasonably required, or (c) as may be required in
response to any summons, subpoena or discovery order or to comply with any applicable law, order,
regulation or ruling, or the rules of any stock exchange, including disclosures necessary or
appropriate in regulatory applications filed in connection with the transactions contemplated by
this Letter, provided that, where permitted and appropriate, such information will be designated as
confidential. All obligations of confidentiality and all restrictions on the use of confidential
and proprietary information under this Letter shall remain in effect for a period of two (2) years
following the Termination Date.

9. Expenses and Fees. Except as set forth herein, no party hereto shall be responsible for any
other party’s expenses in connection with the transactions contemplated hereby. The Organizers and
Officers represent and warrant that it or they have not contracted or incurred any liability for
finder’s or brokers’ fees or similar fees or commissions in connection with the transactions
contemplated hereby and agree to hold WAL harmless from any brokerage or

 

 

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finder’s fee or commission claimed on account of this Letter or the transactions contemplated
hereby.

10. Counterparts. This Letter may be executed in several counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same instrument.

11. Binding Effect; Expiration; Governing Law. This is Letter shall be binding upon, the parties
hereto when this Letter has been countersigned by each of member of the Organizing Group; provided,
however, that a party’s sole remedy for breach of any term or provision of this Letter shall be a
right to termination in accordance with Paragraph 5 and, if applicable, for reimbursement of WAL’s
expenses pursuant Subparagraph 5(a) or injunctive relief under Subparagraph 7(b). This Letter
shall terminate on the “Termination Date,” which shall be the earlier of: (a) the date ACB opens
for business; (b) the date on which this Letter is terminated pursuant Paragraph 5 above; or (c)
December 29, 2006. This Letter shall be governed by and construed in accordance with internal
substantive laws of the State of California, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law or choice of law.

     If the terms and conditions of this Letter are in accord with your understanding, please sign
and return the enclosed counterpart of this Letter no later than April 5, 2006, after which date,
if not signed and returned by all of the Organizers and Officers, this Letter shall be null and
void.

	 	 	 	 	 
	 	 	 	Very truly yours,

WESTERN ALLIANCE BANCORPORATION

 
	 	 	 	By	:          /s/ Robert Sarver
 
	 	 	 	 	Its: President  and CEO 	 
	 	 	 	 
	 

ACKNOWLEDGED AND AGREED TO:

ALTA CALIFORNIA BANK (PROPOSED)

By:           /s/Arnold Grisham

Arnold Grisham

 

 

Alta California Bank (Proposed)

April 3, 2006

Page 6 of 7

ORGANIZERS AND OFFICERS:

/s/ Michael Beasley

 

Michael Beasley

/s/ Steve Callaway

 

Steve Callaway

/s/ David Cannon

 

David Cannon

/s/ Jack Chu

 

Jack Chu

/s/ Arnold Grisham

 

Arnold Grisham

/s/ Robert Harris

 

Robert Harris

/s/ Mike Major

 

Mike Major

/s/ Regina Muehlhauser

 

Regina Muehlhauser

/s/ Sedrick Tydus

 

Sedrick Tydus

 

 

Alta California Bank (Proposed)

April 3, 2006

Page 7 of 7

/s/ Richard Weinstein

 

Richard Weinstein

/s/ Marshall
Griffin

 

Marshall Griffin

/s/ Margaret
Incandela

 

Margaret Incandelaexv10w1

 

Exhibit 10.1

Modification #3 to the

Thiokol Long Term Pricing Agreement

Whereas, the parties entered into a “Thiokol Long Term Pricing Agreement” dated December 12. 1997
and modified on two subsequent occasions (Sept 30, 2000. and Jan 30, 2001); (hereinafter “Thiokol
LTA”);

Whereas, the parties desire to modify/add certain provisions to the Thiokol LTA;

Now therefore, the parties agree as follows:

	 	1.	 	Exhibit B to this Modification establishes pricing for lower
quantities and adds pricing for years 2009 through 2013. For years 2006 and
beyond, the prices in Exhibit B replace the prices in Exhibit A of the original
agreement. References to Exhibit A for years 2006 and on will now be references
to Exhibit B. Also, for years 2006 and beyond, the prices in Exhibit A for
volumes exceeding 20,000,000 pounds shall no longer be applicable. Effective
beginning in 2009, upon expiration of the Alliant Agreement, all ATK purchases
shall be placed under this Agreement. In the event volumes exceed 20,000,000
pounds per year, the parties shall negotiate mutually acceptable pricing that
shall not exceed the prices per pound established in Exhibit B for 19,000,001 —
20,000,000 pounds.
	 
	 	2.	 	D5 program AP prices for 2006 and on are now established in the
Note shown on Exhibit B.
	 
	 	3.	 	[THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY]
	 
	 	4.	 	AMPAC agrees to maintain ready and qualified capacity to the
current level of safety and performance; maintain qualified status and
programmatic support on all DoD and NASA Programs; and maintain the current
capability to produce the entire range of AP products using the current qualified
manufacturing process. Both production lines (trains) at AMPAC shall be
maintained in this ready and qualified condition and production shall utilize
both lines in order to prevent cross contamination with other products.
	 
	 	5.	 	The parties agree to extend the period of performance of the
Reclaimed Ammonium Perchlorate Sales/Purchase Agreement dated January 30, 2001
(as amended) through September 30, 2013. In the event the AMPAC’s market for the
resale of Reclaimed AP substantially degrades compared to the current market, the
parties agree to enter into good faith negotiations to restructure AMPAC’s
obligations for purchase of Reclaimed AP such that AMPAC will
not be put in a position where AMPAC is required to: (1) sell Reclaimed AP at
a lower value than it pays Thiokol for the material, or (2) dispose of Reclaimed
AP due to the inability to sell the material. Pending any restructure of the

 

 

	 	 	 	agreement for Reclaimed AP, the obligations of both parties under the agreement,
as extended above, will continue.

	 	6.	 	In the event industry volumes fan below [THIS AMOUNT HAS BEEN
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED
SEPARATELY] pounds and ATK’s customers require ATK to purchase from another
source or if ATK becomes non-competitive in the market due to high AP pricing
compared to another source of AP, then ATK shall not be required to purchase all
of its volume from AMPAC. Prior to ATK purchasing from another source, ATK and
AMPAC shall work together in good faith in an attempt to establish pricing that
is acceptable to ATK’s customers or pricing that enables ATK to be competitive.
	 
	 	7.	 	In Paragraph 9 (Term and Termination of Agreement), the following
provisions are added to address termination of the Thiokol agreement:

	 	a.	 	Unless extended by mutual consent, this Agreement
shall remain in effect through GFY2013, unless earlier terminated by one
of the following circumstances:

	 	i.	 	One of the parties petitions for
bankruptcy or reorganization under bankruptcy laws, or makes an
assignment for the benefit of creditors. Termination is at the
election of the other party.
	 
	 	ii.	 	One of the parties becomes physically
incapable of performing or is ineligible to perform its
obligations under the contract due to circumstances such as
debarment, suspension, or other legal action. Termination is at
the ejection of the other party.

	 	8.	 	ATK shall pay [THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY] for the right to have
AP stored at the AMPAC facility at no additional cost. This applies to all ATK
purchases under the Thiokol Agreement and the Alliant Agreement.
	 
	 	9.	 	Effective with the date of this agreement the Provision 8. Disputes
shall be replaced with the following:
	 
	 	 	 	DISPUTES 
	 
	 	 	 	With the exception of the AMPAC Historical Environmental Remediation Claim which
is addressed in paragraph 10 below, any c1aim, controversy or dispute arising out
of or relating to this Agreement which is not disposed of by mutual agreement
shall be submitted to mediation by a mutually agreeable mediator. Senior level
executives for both parties must participate in the mediation and exert good faith
effort to settle the dispute. If good faith efforts to mediate do not result in a
settlement, the dispute shall be decided by binding arbitration conducted under
the rules of the American Arbitration Association.
Pending final resolution of any claim, controversy or dispute, the parties will
diligently proceed with performance of this Agreement.

 

 

	 	10.	 	Both parties agree to waive any and all existing claims or REAs
related to the Thiokol LTA agreement except for Items a. and b. as identified
below.

	 	a.	 	This does not include: a waiver of amounts owed to
the other party resulting from differences in interim versus final
billings.
	 
	 	b.	 	AMPAC Historical Environmental Remediation Costs:

(1) To the extent a claim for Historical Environmental Remediation cost is
deemed reasonable by ATK and authorized under its prime contract, ATK
agrees to provide AMPAC’s claim to its customer under the prime contract
disputes process, provided:

(a) AMPAC’s claim has a reasonable basis both as to entitlement and
amount in accordance with the terms of ATK’ s contract with AMPAC and
does not exceed ATK’s properly allocable share of [THIS AMOUNT HAS
BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS
BEEN FILED SEPARATELY] for the historical remediation cost applicable
to all customers. This not-to-exceed value may be increased by [THIS
AMOUNT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND HAS BEEN FILED SEPARATELY] if AMPAC determines after a
review of its data that certain historical environmental costs have
been omitted from the original calculation;

( b ) AMPAC reimburses ATK monthly for all expenses
associated with ATK’s involvement with the claim;

( c ) AMPAC waives all rights and actions against ATK in connection
with the claim and agrees to be bound by whatever outcome is
obtained through the prime contract disputes process;

( d ) ATK controls all customer interfaces in connection with the
claim;

( e ) AMPAC agrees to keep ATK apprized of all litigation strategy
and tactics including settlement, appeal or alternative dispute
resolution.

(2). ATK agrees to provide whatever amount of recovery is received
from its prime contractor for AMPAC’s cost provided ATK has been fully
reimbursed for its expenses involved in asserting and
supporting AMPAC’s claim.

(3). Should ATK deem AMPAC’s claim to be unreasonable, AMPAC shall have the
right to submit the claim to a mutually agreeable 3rd party expert for a
formal written evaluation. ATK shall give full and fair

consideration to the 3rd party expert report in its re-consideration of
reasonableness.

	 	 	 	 	 
	 	 	 	 	 
	ATK THIOKOL

	 	 
	 	AMPAC
	 
	 	 	 	 
	Date: 4/5/06

	 	 	 	Date: 4/5/06

 

 

EXHIBIT B

THIS MATERIAL HAS BEEN OMITTED PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY

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