Maximum of Shares
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NATIONAL MERCANTILE BANCORP
(a California corporation)
6.5% Noncumulative Convertible Preferred Stock
($10.00 par value)
AGENCY AGREEMENT
, 1997
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SANDLER ▇'▇▇▇▇▇ & PARTNERS, L.P.
Two World Trade Center, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
National Mercantile Bancorp, a California corporation (the "Company") and
Mercantile National Bank, a national bank (the "Bank"), confirm their agreement
with Sandler ▇'▇▇▇▇▇ & Partners, L.P. ("▇▇▇▇▇▇▇ ▇'▇▇▇▇▇" or the "Agent") with
respect to the offer and sale by the Company of up to $ _________ (_________
shares) of 6.5% Noncumulative Convertible Preferred Stock, $10.00 par value of
the Company ("Preferred Stock").
The Company is offering up to $_________ ( ___________ shares) of Preferred
Stock to the holders of record of Common Stock ("Record Date Holder") at the
close of business on _________ ,1997 (the "Record Date"), at a subscription
price of $______ per share ("Subscription Price") and, subject to the rights of
such holders, to certain other purchasers on a standby basis. Each Record Date
Holder will receive one nontransferable subscription right ("Right") for each
share of Common Stock held of record at the close of business on the Record
Date. Each Right will enable the holder thereof ("Rights Holders") to purchase
from the Company _______ share of Preferred Stock (an "Underlying Share") at the
Subscription Price (the "Basic Subscription Privilege"). Pursuant to a private
offering exemption from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), the Company has entered into purchase
agreements (the "Private Purchaser Agreements") with the ▇▇▇▇▇▇ Company, a bank
holding company and Wildwood Enterprises, Inc. Profit Sharing Plan (the "Private
Purchasers") who have agreed to purchase in the aggregate up to $5.5 million
(_________ shares) of the Preferred Stock at the lower of $1.10 per share or the
Subscription Price (the "Private Purchasers' Price"), available after the
exercise of the Basic Subscription Privilege (the "Private Offering"), subject
to reduction under certain circumstances. Such Private Purchasers have agreed
to purchase and the Company has guaranteed the availability
of, an aggregate minimum of $2.5 million (____shares) of Preferred Stock
("Additional Shares") to such persons at the Private Purchasers' Price if a
sufficient number of shares of Preferred Stock is not available after the
exercise of the Basic Subscription Privilege (the "Private Purchasers' Minimum
Obligation").
Each Rights Holder who fully exercises their Basic Subscription Privilege
will be eligible to subscribe at the Subscription Price for _______ share of
Preferred Stock (the "Excess Underlying Shares") for each Right held, which
remain available after the exercise by the Rights Holders of the Basic
Subscription Privilege and the purchase by the Private Purchasers pursuant to
the terms of the Private Offering, subject to availability, proration and
reduction by the Company under certain circumstances (the "Oversubscription
Privilege"). A Rights ▇▇▇▇▇▇'s election to exercise the Oversubscription
Privilege must be made at the time the Basic Subscription Privilege is
exercised. The Rights are evidenced by nontransferable certificates. Basic
Subscription and Oversubscription Privileges are not transferable. The offer
and sale of the Underlying Shares pursuant to the exercise of the Basic
Subscription Privilege and the Oversubscription Privilege are referred to herein
as the "Rights Offering."
The Company has entered into Standby Purchase Agreements pursuant to which
an aggregate of _____ institutional investors (the "Standby Purchasers") have
severally agreed, subject to certain conditions, to purchase from the Company at
the Subscription Price up to an aggregate of $2.5 million (_____ Shares) of the
Underlying Shares to the extent available after the exercise of the Basic
Subscription Privilege, the Private Offering and the exercise of the
Oversubscription Privilege (the "Standby Purchaser Offering"). The Standby
Purchase Agreements require that the Standby Purchasers agree to purchase and
the Company has guaranteed the availability of, an aggregate minimum of $1.0
million (___ shares of Preferred Stock ("Minimum Standby Shares") at the
Subscription Price if a sufficient number of Underlying Shares are not available
after the exercise of the Basic Subscription Privilege, the Private Offering and
the exercise of the Oversubscription Privilege to satisfy the purchase
commitments of the Standby Purchasers (the "Minimum Standby Obligation"). The
Rights Offering and the offering to Standby Purchasers are together referred to
herein as the "Public Offering". The Private Offering and the Public Offering
may sometimes be referred to herein as the "Offerings". The Underlying Shares
and the Minimum Standby Shares are together referred to herein as the
"Securities."
Rights Holders may exercise subscription rights by delivering to the
subscription agent a properly completed and executed subscription rights
certificate together with payment in full of the subscription price for each
share subscribed for. Payment may be made only (i) by check or bank draft drawn
upon a U.S. bank, or postal, telegraphic or express money order payable to
__________, as subscription agent or (ii) by wire transfer of funds to the
escrow account maintained by the subscription agent for the purpose of accepting
subscriptions pursuant to the terms of an Escrow Agreement to be entered into
between the Company, the subscription agent and Sandler ▇'▇▇▇▇▇. ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
will not receive any funds from subscribers, Private Purchasers or Standby
Purchasers for Securities purchased in the Offerings. Also, ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
will not be responsible for the performance of the subscription agent pursuant
to the Subscription Agent Agreement (as defined in the Prospectus) or for
determining when the conditions of the escrow have been met.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-2 (No. 333-_______) including a
prospectus for the registration of the Rights, the shares of Preferred Stock and
the Common Stock (the "Common Stock") of the Company into which the Preferred
Stock is convertible (together, sometimes referred to herein
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as the "Securities") under the Securities Act, has filed such amendments
thereto, if any, and such amended prospectuses as may have been required to the
date hereof by the Commission in order to declare such registration statement
effective, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended to date, if applicable, and as from time to
time amended or supplemented hereafter) and the prospectus constituting a part
thereof (including in each case all documents incorporated or deemed to be
incorporated by reference therein and the information, if any, deemed to be part
thereof pursuant to the rules and regulations of the Commission under the
Securities Act, as from time to time amended or supplemented pursuant to the
Securities Act or otherwise (the "Securities Act Regulations")), are hereinafter
referred to as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be used by the Company in connection
with the Public Offering which differs from the Prospectus on file with the
Commission at the time the Registration Statement becomes effective (whether or
not such revised prospectus is required to be filed by the Company pursuant to
Rule 424(b) of the Securities Act Regulations), the term "Prospectus" shall
refer to such revised prospectus from and after the time it is first provided to
the Agent for such use.
The Preferred Stock will be issued pursuant to and be entitled to the
benefits of the provisions of an amendment and restatement of the Articles of
Incorporation of the Company to be approved by the Company's shareholders at a
meeting to be held on ____________ ,1997 (the "Annual Meeting"). The Preferred
Stock will be convertible into Common Stock at the rate of one share of Common
Stock for each share of Preferred Stock held. If the requisite shareholder
approval is obtained, the Articles of Incorporation will be amended and restated
(the "Restated Articles of Incorporation") to (i) effect a 9.09 for 1 reverse
stock split of the Common Stock (the "Reverse Stock Split") and (ii) provide for
a limitation on the acquisition by any person of the Preferred Stock (and the
Common Stock into which such Preferred Stock is convertible) if such acquisition
would cause that persons cumulative ownership to be equal to or in excess of
4.5% and a restriction on the acquisition, sale, assignment or transfer by any
current holder of 4.5% or more of the Preferred Stock (and the Common Stock into
which such Preferred Stock is convertible.
Concurrently with the execution of this Agreement, the Company is
delivering to the Agent copies of the Prospectus to be used in the Public
Offering. Such Prospectus contains information with respect to the Company, the
Bank and the Preferred Stock.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Bank jointly and severally represent and warrant
to the Agent as of the date hereof as follows:
(i) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto or filed
pursuant to Rule 424(a) under the Securities Act complied in all material
respects when so filed with the provisions of the Securities Act; provided,
however that this representation and warranty shall not apply to statements
in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with the information with respect to the
Agent furnished to the Company in writing by the Agent expressly for use in
the Registration Statement or Prospectus (the "Agent Information" (which
the Company and the Bank acknowledge appears only in the section of the
Prospectus captioned "The Rights Offering -- Financial Advisor."). The
Commission has not issued any order preventing or suspending the use of any
preliminary prospectus.
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(ii) The Registration Statement has been declared effective by the
Commission, no stop order has been issued with respect thereto and no
proceedings therefor have been initiated or, to the knowledge of the
Company and the Bank, threatened by the Commission. At the time the
Registration Statement became effective and at the Closing Time referred to
in Section 2 hereof, the Registration Statement complied and will comply in
all material respects with the requirements of the Securities Act and the
Securities Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
Prospectus, at the date hereof does not and at the Closing Time referred to
in Section 2 hereof will not, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with the Agent Information furnished to the Company in writing
by the Agent expressly for use in the Registration Statement or Prospectus
(which the Company and the Bank acknowledge appears only in the section of
the Prospectus captioned "The Rights Offering -- Financial Advisor"). The
Commission has not issued any order preventing or suspending the use of any
Prospectus.
(iii) The Company will promptly file the Prospectus and any
supplemental sales literature with the Commission. The Prospectus and all
supplemental sales literature, as of the date the Registration Statement
became effective and at the Closing Time referred to in Section 2, complied
and will comply in all material respects with the applicable requirements
of the Securities Act and the Securities Act Regulations and, at or prior
to the time of their first use, will have received all required
authorizations of the Commission for use in final form.
(iv) No order, directive, request or other correspondence has been
received by the Company or the Bank from the Federal Reserve Board ("FRB")
and/or the Office of Comptroller of the Currency ("O.C.") which could have
the effect of delaying or canceling the Offerings.
(v) At the Closing Time referred to in Section 2, the Company and
the Bank will have satisfied any and all terms, conditions, requirements
and provisions imposed upon the Company and the Bank by the FRB, the O.C.
or any other regulatory authority in connection with this transaction
except for any post-closing notices or filings which may be required, or
appropriate waivers shall have been obtained.
(vi) The accountants who audited the financial statements and
supporting schedules of the Company included in the Registration Statement
are independent public accountants within the meaning of the Code of Ethics
of the American Institute of Certified Public Accountants (the "AICPA");
and such accountants are, with respect to the Company and the Bank,
independent certified public accountants as required by the Securities Act
and the Securities Act Regulations.
(vii) The consolidated financial statements and the related notes
thereto included or incorporated by reference in the Registration Statement
and the Prospectus present fairly the financial position of the Company and
the Bank at the dates indicated and the results of
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their operations, retained earnings and cash flows for the periods
specified and comply as to form in all material respects with the
applicable accounting requirements of the Securities Act Regulations;
except as otherwise disclosed therein, said financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules and tables
included or incorporated by reference in the Registration Statement present
fairly the information required to be stated therein.
(viii) The documents incorporated by reference in the Prospectus, at
the time they were filed with the Commission, complied in all material
respects with the requirements of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), and, when read together and with the other
information in the Prospectus, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were or are made, not misleading.
(ix) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein (including the documents incorporated by reference therein), (A)
there has been no material adverse change in the financial condition,
results of operations, or business of the Company and the Bank, taken as a
whole, whether or not arising in the ordinary course of business, and (B)
except for transactions specifically referred to or contemplated in the
Prospectus, there have been no transactions entered into by the Company or
the Bank, other than those in the ordinary course of business and
consistent with past practices, which are material with respect to the
Company and the Bank, taken as a whole.
(x) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of California
with corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have
a material adverse effect on the financial condition, results of
operations, or business of the Company and its subsidiary, taken as a
whole. The Company has no direct or indirect subsidiaries other than the
Bank (which is sometimes referred to herein as the "Subsidiary").
(xi) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, no par value, of which 3,078,146 shares
are presently issued and outstanding and 1,000,000 shares of preferred
stock, with such par or stated value as shall be determined by the Board of
Directors of which no shares are presently issued and outstanding. As of
__________, 1997, there were approximately_______ holders of record of
Common Stock. Except for the Reverse Stock Split, the Preferred Stock and
the Common Stock into which the Preferred Stock is convertible, the Company
has not authorized the issuance of, and has not issued, any other shares of
capital stock. Except for the Rights, the warrants issued in connection
with the Company's Lease Restructuring and the settlement of the
shareholders' class action lawsuit (each as described in the Prospectus),
options to acquire ___________ shares of Common Stock reserved for issuance
pursuant to the Company's 1990 Stock Option Plan and the Company's 1994
Stock Option Plan and the options and stock appreciation rights granted
pursuant to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇'▇ employment agreement (as
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described in the Prospectus), there are no options, warrants, calls,
employee benefit or other plans, preemptive rights or commitments of any
character relating to the authorized but unissued capital stock or any
other equity security of the Company or any securities or obligations
convertible into or exchangeable for or giving any person any right to
subscribe for or acquire from the Company any shares of such capital stock.
(xii) Upon completion of the Offerings, the authorized equity capital
of the Company will be within the range set forth in the Prospectus under
the caption "Capitalization." All of the issued and outstanding shares of
the Common Stock of the Company have been duly and validly issued, fully
paid and non-assessable and are free and clear of any security interest,
pledge, lien, encumbrance, claim or equity. Upon approval of the Restated
Articles of Incorporation, the shares of Preferred Stock to be sold in the
Offerings will be duly and validly authorized for issuance and, when issued
and delivered by the Company against payment of the consideration therefor,
the shares of Preferred Stock will be duly and validly issued, fully paid
and non-assessable and will be free and clear of any security interest,
pledge, lien, encumbrance, claim or equity other than created by the
purchaser thereof; and the issuance of the shares of Preferred Stock will
not be in violation of any preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
shares of Preferred Stock pursuant to the Company's charter, bylaws or
other governing documents or any agreement, plan or other instrument to
which the Company or the Bank is a party or by which it is bound. The terms
and provisions of the shares of Preferred Stock conform and will conform in
all material respects to the description thereof contained in the
Prospectus and the certificates representing the shares of Preferred Stock
will conform with the requirements of applicable laws and regulations.
(xiii) A number of shares of Common Stock equal to the number of
shares of Preferred Stock have been duly authorized by all necessary
corporate action and reserved in the corporate records of the Company, and
upon conversion of the Preferred Stock into the Common Stock, when issued
and delivered will have been duly and validly issued, fully paid and non-
assessable and will be free and clear of any security interest, pledge,
lien, encumbrance, claim or equity; and the issuance of the shares of
Common Stock will not be in violation of any preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting
or transfer of, any shares of Common Stock pursuant to the Company's
charter, bylaws or other governing documents or any agreement, plan or
other instrument to which the Company or the Bank is a party or by which it
is bound.
(xiv) All of the issued and outstanding capital stock of the Bank has
been duly and validly issued and is fully paid and nonassessable, and all
such capital stock is owned beneficially and of record by the Company free
and clear of any mortgage, pledge, lien, encumbrance, claim or equity; all
of the issued and outstanding capital stock of the Bank has been duly
authorized and validly issued, is fully paid and nonassessable and is owned
by the Company, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(xv) Except as disclosed in the Prospectus, neither the filing of
the Registration Statement nor the offering or sale of the Preferred Stock
gives rise to any rights for or relating to the registration of any shares
of Preferred or Common Stock or other securities of the Company or rights
relating to antidilution which could result in any change in the number of
shares of capital stock to be issued by the Company.
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(xvi) Each of the Company and the Bank have full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus; the Company and the Bank have
obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses; all such
licenses, permits and other governmental authorizations are in full force
and effect and the Company and the Bank are in all material respects in
compliance therewith; neither the Company nor the Bank have received notice
of any proceeding or action relating to the revocation or modification of
any such license, permit or other governmental authorization which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might materially and adversely affect the conduct of the business
or financial condition, results of operations, or business of the Company
and the Bank, taken as a whole; and the Bank is in good standing under the
laws of the United States and is not required to qualify as a foreign
corporation in any jurisdiction.
(xvii) The deposit accounts of the Bank are insured by the FDIC up to
the applicable limits.
(xviii) The Bank has been duly incorporated and is validly existing as
a national bank in good standing under the laws of the United States with
the full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus, and the Bank is duly qualified to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the financial condition,
results of operations, or business of the Company and the Bank, taken as a
whole; the activities of the Bank are permitted to a national bank by the
rules, regulations, resolutions and practices of the O.C.C.
(xix) The Bank has no direct or indirect subsidiary that is a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X of the
rules and regulations of the Commission.
(xx) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action of the Company and the Bank,
and this Agreement has been duly executed and delivered by and is the valid
and binding agreement of the Company and the Bank enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency or other
laws affecting the enforceability of the rights of creditors generally and
judicial limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xxi) The execution, delivery and performance of the Private
Purchasers' Agreements and the consummation of the transactions
contemplated therein have been duly authorized by all necessary corporate
action of the Company and the Bank, and the Private Purchasers' Agreements
have been duly executed and delivered by and are the valid and binding
agreements of the Company and the Bank enforceable in accordance with their
terms, except as may be limited by bankruptcy, insolvency or other laws
affecting the enforceability of the rights of creditors generally and
judicial limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
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(xxii) The execution, delivery and performance of the Registration
Rights Agreements and the consummation of the transactions contemplated
therein have been duly authorized by all necessary corporate action of the
Company and the Bank, and the Registration Rights Agreements have been duly
executed and delivered by and are the valid and binding agreements of the
Company and the Bank enforceable in accordance with their terms, except as
may be limited by bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification and contribution provisions may be
limited by applicable securities laws.
(xxiii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
Closing Date, except as otherwise may be indicated or contemplated therein,
none of the Company or the Bank will have (A) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed
money, except borrowings in the ordinary course of business from the same
or similar sources indicated in the Prospectus, or (B) entered into any
transaction or series of transactions which is material in light of the
business of the Company and the Bank, taken as a whole, excluding the
origination, purchase and sale of loans or the purchase or sale of
investment securities or mortgaged-backed securities in the ordinary course
of business or otherwise as indicated in the Prospectus.
(xxiv) No approval of any regulatory or supervisory or other public
authority including but not limited to the O.C. and the FRB is required in
connection with the execution and delivery of this Agreement or the
issuance of the Securities, except for the declaration of effectiveness of
any required post-effective amendment to the Registration Statement by the
Commission and as may be required under the securities laws of various
jurisdictions.
(xxv) Neither the Company nor the Bank is in violation of its
charter or bylaws or in default (nor has any event occurred which, with
notice or lapse of time or both, would constitute a default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or the Bank
is a party or by which it or either of them may be bound, or to which any
of the property or assets of the Company or the Bank is subject.
(xxvi) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein do not and will
not conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Bank pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or the Bank is a party or by which it or either of them
may be bound, or to which any of the property or assets of the Company or
the Bank is subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or the Bank, or any
applicable law, administrative regulation or administrative or court
decree.
(xxvii) No labor dispute with the employees of the Company or the Bank
exists or, to the knowledge of the Company or the Bank, is imminent; and
the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its principal
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suppliers or contractors which might be expected to result in any material
adverse change in the financial condition, results of operations, or
business of the Company and the Bank, taken as a whole.
(xxviii) The Company and the Bank have good and marketable title to
all properties and assets for which ownership is material to the business
of the Company or the Bank and to those properties and assets described in
the Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Prospectus or are not material in relation to the business of the Company
or the Bank taken as a whole; and all of the leases and subleases material
to the business of the Company or the Bank under which the Company or the
Bank hold properties, including those described in the Prospectus, are
valid and binding.
(xxix) Other than as disclosed in the Registration Statement, there
is no action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company or the Bank, threatened, against or affecting the Company or
the Bank, which is required to be disclosed therein (other than as
disclosed therein), or which is likely to result in any material adverse
change in the financial condition, results of operations, or business of
the Company and the Bank, taken as a whole, or which is likely to
materially and adversely affect the properties or assets thereof or which
is likely to materially and adversely affect the performance of this
Agreement or the consummation of the transactions herein contemplated or
described in the Prospectus; all pending legal or governmental proceedings
to which the Company or the Bank is a party or of which any of their
respective property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not material; and there are
no contracts or documents of the Company or its subsidiary which are
required to be filed as exhibits to the Registration Statement which have
not been so filed.
(xxx) The Company has obtained an opinion of its counsel, ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, with respect to the legality of the Securities issued, a
copy of which is filed as an exhibit to the Registration Statement; all
material aspects of the aforesaid opinion are accurately summarized in the
Prospectus; the facts and representations upon which such opinion is based
are truthful, accurate and complete in all material respects, and neither
the Company nor the Bank has taken or will take any action inconsistent
therewith.
(xxxi) The Company has obtained an opinion of its accountants,
Deloitte & Touche, LLP, with respect to the federal and state income tax
consequences of the Offerings, a copy of which is filed as an exhibit to
the Registration Statement; all material aspects of the aforesaid opinion
are accurately summarized in the Prospectus; the facts and representations
upon which such opinion is based are truthful, accurate and complete in all
material respects, and neither the Company nor the Bank has taken or will
take any action inconsistent therewith.
(xxxii) Each lease of real property (together with any improvements
thereon) and all material personal property to which the Company or the
Bank is a party has been duly authorized, executed and delivered, and is
the legal, valid and binding agreement of the Company or the Bank
enforceable in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability
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relating to or affecting creditors' rights, to general principles of
equity, and to laws relating to the safety and soundness of insured
depository institutions and their institution affiliated parties as set
forth in 12 U.S.C. (S) 1818(b).
(xxxiii) Except as disclosed in the Prospectus, as of the date of the
Prospectus and the Closing Date, neither the Company nor the Bank is in
violation of any directive or order (including any memorandum of
understanding) specific to the Company or the Bank from the O.C., the FRB,
or any other agency to make any material change in the method of conducting
its business as described in the Prospectus or as otherwise presently
contemplated; there are no directives or orders specific to the Company or
the Bank from the FRB or the O.C. or any other regulatory agency other than
those disclosed in the Prospectus; and each of the Company and the Bank is
conducting its business so as to comply in all material respects with all
applicable statutes and regulations.
(xxxiv) The Company has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock.
(xxxv) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxxvi) The Company and the Bank are in compliance in all material
respects with the applicable financial record keeping and reporting
requirements of the Currency and Foreign Transaction Reporting Act of 1970,
as amended, and the rules and regulations thereunder, and the lending
practices of the Bank are and have been, in all material respects, in
conformity with the Real Estate Settlement Procedures Act, as amended, and
the rules and regulations thereunder.
(xxxvii) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Company and
its subsidiary included in the Prospectus meet or are exempt from all
requirements of federal, state or local law pertaining to lending,
including without limitation truth in lending (including the requirements
of Regulations Z and 12 C.F.R. Part 226 and Section 563.99), consumer
credit protection, equal credit opportunity and all disclosure laws
applicable to such loans, except for violations which, if asserted, would
not have a material adverse effect on the Bank.
(xxxviii) To the knowledge of the Company and the Bank, neither the
Company nor the Bank or employees of the Bank has made any payment of funds
of the Company or the Bank as a loan for the purchase of the Securities or
made any other payment of funds prohibited by law, and no funds have been
set aside to be used for any payment prohibited by law.
(xxxix) Neither the Company nor the Bank nor any properties owned or
operated by the Company or the Bank is in violation of or liable under any
Environmental Law (as defined below), except for such violations or
liabilities that, individually or in the aggregate, would not have a
material adverse effect on the financial condition, results of operations,
or business of the Company and the Bank, taken as a whole. There are no
actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any governmental agency) instituted
-10-
or pending, or to the knowledge of the Company or the Bank threatened,
relating to the liability of any property owned or operated by the Company
or the Bank, under any Environmental Law. For purposes of this subsection,
the term "Environmental Law" means any federal, state, local or foreign
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any regulatory authority relating to (i) the protection,
preservation or restoration of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of any substance presently listed, defined, designated
or classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material
containing any such substance as a component.
(xxxx) The Company and its subsidiary have filed all federal income
and state and local franchise tax returns required to be filed, or have
received extensions thereof, and have made timely payments of all taxes
shown as due and payable in respect of such returns, and no deficiency has
been asserted with respect thereto by any taxing authority.
(xxxxi) The Company has received approval, subject to issuance, to
have the Preferred Stock quoted on the Small Caps Market of the National
Association of Securities Dealers' Automated Quotation System ("Nasdaq")
Stock Market effective on the Closing Date.
(b) Any certificate signed by any officer of the Company or the Bank and
delivered to either of the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Company or the Bank to each as to the matters
covered thereby.
SECTION 2. APPOINTMENT OF ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇; SALE AND DELIVERY OF THE
SECURITIES; CLOSING.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler ▇'▇▇▇▇▇ as its Agent to consult with and advise the Company
regarding the structure of the Offerings, as well as to identify Standby
Purchasers and assist the Bank in negotiating Standby Purchase Agreements with
the Standby Purchasers. On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ accepts such appointment and agrees to provide services to the
Company as to the matters described below; provided, however, that the Agent
shall not be obligated to sell any minimum number of shares of Common Stock to
any particular category of purchaser or in the aggregate or take any action
which is inconsistent with any applicable laws, regulations, decisions or
orders. The services to be rendered by ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ pursuant to this
appointment include the following: (i) identifying prospective Standby
Purchasers and assisting in the negotiation of Standby Purchase Agreements with
such Standby Purchasers; (ii) assisting the Company's management in preparing
for meetings with existing shareholders and other potential investors in the
Public Offering; (iii) reviewing the Private Purchase Agreements; and (iv)
providing such other general advice and assistance as may be requested to
promote the successful completion of the Offerings.
-11-
If at least the total minimum of Securities, as disclosed on the cover of
the Prospectus, are sold, the Company agrees to issue or have issued the shares
of Preferred Stock sold and to release for delivery certificates for such shares
of Preferred Stock at the Closing Time against payment therefor by release of
funds from the special interest-bearing accounts referred to below. The closing
shall be held at the offices of Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, at 10:00 a.m., local
time, or at such other place and time as shall be agreed upon by the parties
hereto, on a business day to be agreed upon by the parties hereto. The Company
shall notify the Agent by telephone, confirmed in writing, when funds shall have
been received for all the shares of Preferred Stock sold. Certificates for the
shares of Preferred Stock sold shall be delivered directly to the purchasers
thereof in accordance with their directions. The date upon which the Company
shall release for delivery all of the shares of Preferred Stock sold, in
accordance with the terms hereof, is herein called the "Closing Date." The hour
on the Closing Date at which the Company shall release for delivery all of the
shares of Preferred Stock sold in accordance with the terms hereof is called the
"Closing Time."
Appropriate arrangements for placing the funds received from subscriptions
for the Preferred Stock or other offers to purchase Preferred Stock were made
prior to the commencement of the Public Offering, with provision for refund to
the purchasers as set forth in Section 9 hereof, or for delivery to the Company
if all shares of Preferred Stock are sold. The Company shall not be deemed to
have received any subscription offer or exercise of a Right accompanied by a
check or comparable instrument until final payment has been made on such check
or instrument. The Company will pay any stock issue and transfer taxes which
may be payable with respect to the sale of the shares of Preferred Stock.
In addition to reimbursement of the expenses specified in Section 4 hereof,
the Agent will receive the following compensation for its services hereunder:
(a) a non-refundable advisory fee of $25,000, previously paid by the
Company;
(b) one and one-half percent (1.50%) of the aggregate value of funds
committed in the Private Offering;
(c) three percent (3.0%) of the aggregate purchase price of the shares of
Preferred Stock sold in the Public Offering pursuant to the exercise
of subscription rights; and
(d) five percent (5.0%) of the aggregate value of funds committed by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ who execute standby purchase agreements.
The above fees are subject to a minimum aggregate compensation to the Agent
of $250,000.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Offering is terminated by the Company,
Sandler ▇'▇▇▇▇▇ shall be entitled to retain the financial advisory fee set forth
in Section 2(a) hereof and the Company shall reimburse Sandler ▇'▇▇▇▇▇ for all
of its reasonable out-of-pocket expenses incurred prior to termination including
the reasonable fees and disbursements of counsel for the Agent, up to an
aggregate of $125,000, upon receipt by the Company or the Bank of a written
accounting therefor setting forth in reasonable detail the expenses incurred by
the Agent.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at the Closing Time, or upon the termination of this Agreement,
as the case may be.
-12-
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with the Agent
as follows:
(a) The Company will prepare and file such amendments or supplements to
the Registration Statement and the Prospectus as may hereafter be required by
the Securities Act Regulations or as may hereafter be requested by the Agent.
The Company will notify the Agent immediately, and confirm the notice in
writing, (i) of the effectiveness of any post-effective amendment of the
Registration Statement or the filing of any supplement to the Prospectus, (ii)
of the receipt of any comments from the Commission with respect to the
transactions contemplated by this Agreement, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the receipt
of any order, directive, request or other correspondence from the FRB or the OCC
relating to the Offering, (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (vi) of the receipt of any
notice with respect to the suspension of any qualification of the Rights or the
Preferred Stock for offering or sale in any jurisdiction. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the withdrawal thereof at the earliest possible
moment.
(b) The Company will give the Agent notice of its intention to file or
prepare any amendment to the Registration Statement (including any post-
effective amendment) or any amendment or supplement to the Prospectus (including
any revised prospectus which the Company proposes for use in connection with the
Public Offering of the Rights or the Preferred Stock which differs from the
prospectus on file at the Commission at the time the Registration Statement
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) of the Securities Act Regulations), will furnish
the Agent with copies of any such amendment or supplement a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will not file
any such amendment or supplement or use any such prospectus to which the Agent
or counsel for the Agent shall object.
(c) The Company will deliver to the Agent as many signed copies and as
many conformed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) as the Agent may reasonably request, and from time to time
such number of copies of the Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be delivered, the
Company will comply, at its own expense, with all requirements imposed upon it
by the Commission, as from time to time in force, and by the Securities Act, the
Securities Act Regulations, the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, including, without limitation, Rule 10b-6
under the 1934 Act, so far as necessary to permit the continuance of sales or
dealing in shares of Common Stock during such period in accordance with the
provisions hereof and the Prospectus.
(e) If any event or circumstance shall occur as a result of which it is
necessary, in the opinion of counsel for the Agent, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Company
will forthwith amend or supplement the Prospectus (in form and substance
satisfactory to the Agent and counsel for the Agent) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact
-13-
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Company will furnish to the Agent a reasonable number of
copies of such amendment or supplement. For the purpose of this subsection, the
Company will furnish such information with respect to itself as the Agent may
from time to time reasonably request.
(f) The Company will take all necessary action, in cooperation with the
Agent, to qualify the Securities for offering and sale under the applicable
securities laws of such states of the United States and other jurisdictions as
the Agent and the Company have agreed; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation in any jurisdiction in which it is not so qualified.
In each jurisdiction in which the Securities have been so qualified, the Company
will file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than six months from the effective date of the Registration Statement.
(g) The Company authorizes ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ to act as agent of the Company
in distributing the Prospectus to persons having record addresses in the states
or jurisdictions set forth in a survey of the securities or "blue sky" laws of
the various jurisdictions in which the Public Offering will be made (the "Blue
Sky Survey").
(h) The Company will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering a twelve month period beginning
not later than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration Statement.
(i) During the period of five years hereafter, the Company will furnish to
its stockholders as soon as practicable after the end of each fiscal year an
annual report (including statements of financial condition and statements of
income, stockholders' equity and cash flows of the Company, the Bank and their
subsidiaries, certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement) consolidated summary financial information of the
Company, the Bank and its subsidiaries for such quarter in reasonable detail.
In addition, such annual report and quarterly consolidated summary financial
information shall be made public through the issuance of appropriate press
releases at the same time or prior to the time of the furnishing thereof to
stockholders of the Company.
(j) During the period of five years hereafter, the Company will furnish to
the Agent (i) as soon as available, a copy of each report or other document of
the Company furnished generally to stockholders of the Company or furnished to
or filed with the Commission under the Exchange Act or any national securities
exchange or system on which any class of securities of the Company is listed,
and (ii) from time to time, such other information concerning the Company as the
Agent may reasonably request.
(k) The Company will use the net proceeds received by it from the sale of
the Securities in the manner specified in the Prospectus under "Use of
Proceeds."
(l) The Company will file all documents and notices required by the Small
Caps Market of the Nasdaq Stock Market and will use its best efforts to maintain
the listing of the Common Stock
-14-
on the Small Caps Market of the Nasdaq Stock Market and to cause the Preferred
Stock to be listed on the Small Caps Market of the Nasdaq Stock Market upon the
completion of the Offering.
(m) The Company will take such actions and furnish such information as are
reasonably requested by the Agent in order for the Agent to ensure compliance
with the National Association of Securities Dealers, Inc.'s "Interpretation
Relating to Free-Riding and Withholding" in connection with the sale of the
Preferred Stock.
(n) Other than the Prospectus or as permitted by applicable law, the
Company will not distribute any prospectus or other offering material in
connection with the offer and sale of the Securities and will not publish any
writing which constitutes an offer or prospectus.
(o) The Company will use all reasonable efforts to comply with such
requirements as may be necessary for the Agent or other brokerage firms to make
an active market for the shares of Preferred Stock and the Common Stock.
(p) The Company will cause to be maintained records of all funds submitted
to the Company's subscription agent in connection with the Rights Offering and
deposited by it in an escrow account to enable the Company to make appropriate
refunds of such funds in the event that such refunds are required to be made in
accordance with the Offering as described in the Prospectus.
(q) The Company will furnish to you as early as practicable prior to the
Closing Date, but no later than two (2) full business days prior thereto, a copy
of the latest available unaudited interim consolidated financial statements of
the Bank which have been read by Deloitte & Touche LLP as stated in their
letters to be furnished pursuant to subsections (d) and (e) of Section 5 hereof.
(r) The Company shall not deliver the Preferred Stock until the Company
has satisfied or caused to be satisfied each condition set forth in Section 5
hereof, unless such condition is waived by the Agent.
(s) Subsequent to the respective dates as to which information in given in
the Prospectus and prior to the Closing Date, except as otherwise may be
indicated or contemplated therein, the Company will not (i) issue any
securities, other than pursuant to the Company's existing stock option plans, or
incur any liability or obligation, direct or contingent, for borrowed money,
except borrowings from the same or similar sources indicated in the Prospectus
in the ordinary course of business, or (ii) enter into any transaction, other
than in the ordinary course of business which might result in any material
adverse change in the financial condition, results of operations, or business of
the Company and the Bank, taken as a whole.
SECTION 4. PAYMENT OF EXPENSES. The Company shall pay all expenses incident
to the performance of their obligations under this Agreement, including but not
limited to (i) the cost of obtaining all securities and bank regulatory
approvals, (ii) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the purchasers in the
Offerings, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the fees and disbursements of counsel in connection therewith and in
connection with the preparation of the Blue Sky Survey in an amount not to
exceed $15,000, (vi) the printing and delivery to the Agent of copies of the
Registration Statement as originally filed and of each
-15-
amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Public Offering and
the Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey, and (viii) the fees and expenses incurred in connection with the listing
of the Securities on the Small Caps Market of the Nasdaq Stock Market. In the
event the Agent incurs any such fees and expenses on behalf of the Company, the
Company will reimburse the Agent for such fees and expenses whether or not the
Offering is consummated; provided, however, that the Agent shall not incur any
substantial expenses on behalf of the Company pursuant to this Section without
the prior approval of the Company.
The Company shall pay certain expenses incident to the performance of the
Agent's obligations under this Agreement, including (i) the filing fees paid or
incurred by the Agent in connection with all filings with the National
Association of Securities Dealers, Inc., and (ii) all reasonable out of pocket
expenses incurred by the Agent relating to the Offerings, including, without
limitation, advertising, promotional, and travel expenses and fees and expenses
of the Agent's counsel, up to an aggregate of $125,000. All fees and expenses
to which the Agent is entitled to reimbursement under this paragraph of this
Section 4 shall be due and payable upon receipt by the Company of a written
accounting therefor setting forth in reasonable detail the expenses incurred by
the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS. The Company and the Agent
agree that the issuance and the sale of Preferred Stock and all obligations of
the Agent hereunder are subject to the accuracy of the representations and
warranties of the Company and the Bank herein contained as of the date hereof
and as of the Closing Date, to the accuracy of the written statements of
officers and directors of the Company made pursuant to the provisions hereof, to
the performance by the Company of their obligations hereunder, and to the
following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission, no order suspending the sale
of the Securities in any jurisdiction shall have been issued, and no order,
directive, request or other correspondence has been received by the Company or
the Bank from the FRB or the OCC which could have the effect of delaying or
canceling the Offerings.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company and the Bank, in form and
substance satisfactory to counsel for the Agent, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
California.
(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required except where the failure to be so qualified
would not have a material adverse effect upon the financial condition,
results of operations, or business of the Company or the Bank, taken as a
whole.
-16-
(iv) The authorized capital stock of the Company is correctly set
forth in the Registration Statement and Prospectus under the caption
"Capitalization" and, upon consummation of the Offerings, the issued and
outstanding capital stock of the Company will be no less than the Minimum
and no more than the Maximum set forth in the Registration Statement and
Prospectus under the caption "Capitalization."
(v) The Rights have been duly and validly authorized for issuance,
and when issued and delivered by the Company pursuant to the terms of the
Rights Offering, in accordance with the description set forth in the
Prospectus, will be duly and validly issued.
(vi) The Preferred Stock has been duly and validly authorized for
issuance and sale and, when issued and delivered by the Company pursuant to
the terms of the Offerings against payment of the consideration therefor in
accordance with the description set forth in the Prospectus, will be duly
and validly issued and fully paid and non-assessable and will be owned free
and clear of any mortgage, pledge, loan, security interest, encumbrance, or
claim (legal or equitable) other than that created by the purchaser thereof
or by a third party other than the Company with respect to a purchaser
thereof.
(vii) A number of shares of Common Stock equal to the number of
shares of Preferred Stock have been duly and validly authorized and
reserved in the corporate records of the Company, and upon conversion of
the Preferred Stock pursuant to the terms of the Offerings, in accordance
with the description set forth in the Prospectus, will be duly and validly
issued and fully paid and non-assessable and will be owned free and clear
of any mortgage, pledge, loan, security interest, encumbrance, or claim
(legal or equitable).
(viii) The issuance of the Preferred Stock and the Common Stock into
which the Preferred Stock is convertible is not subject to preemptive or
other similar rights arising by operation of law or, to the best of such
counsel's knowledge and information, otherwise.
(ix) The Bank has been duly organized, and is validly existing and
in good standing under the laws of the United States of America as a
national bank, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus; and the Bank is duly qualified
as a foreign corporation in each jurisdiction in which such qualification
is required.
(x) The deposit accounts of the Bank are insured by the FDIC up to
the maximum amount allowed by law.
(xi) The only direct or indirect subsidiary of the Company is the
Bank; and the Bank has no direct or indirect subsidiary. For purposes of
the opinions set forth in this section 5(b)(1) the term "subsidiaries"
refers only to those subsidiaries of the Company or the Bank which would be
considered a "significant subsidiary" within the meaning of Regulation S-X,
Rule 1-02 promulgated by the Commission.
(xii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action on the part of the Company and
the Bank and this Agreement constitutes the legal, valid and binding
agreement of the Company and the Bank, enforceable in accordance with its
terms, except as rights to indemnity, contribution and limitations of
liability hereunder
-17-
may be limited under applicable law (it being understood that such counsel
may avail itself of customary exceptions concerning the effect of
bankruptcy, insolvency or similar laws and the availability of equitable
remedies); and to the best of such counsel's knowledge will not conflict
with or constitute a breach of, or default under, and no event has occurred
which, with notice or lapse of time or both, would constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or the Bank pursuant
to any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or the Bank is a party or by which either
of them may be bound, or to which any of the property or assets of the
Company or the Bank is subject, nor will such execution or delivery result
in any violation of the provisions of the charter or by-laws of the Company
or the Bank.
(xiii) The execution and delivery of the Private Purchaser Agreements
and the consummation of the transactions contemplated thereby have been
duly and validly authorized by all necessary action on the part of the
Company and the Bank and the Private Purchasers' Agreements constitutes the
legal, valid and binding agreement of the Company and the Bank, enforceable
in accordance with its terms, except as rights to indemnity, contribution
and limitations of liability hereunder may be limited under applicable law
(it being understood that such counsel may avail itself of customary
exceptions concerning the effect of bankruptcy, insolvency or similar laws
and the availability of equitable remedies); and to the best of such
counsel's knowledge will not conflict with or constitute a breach of, or
default under, and no event has occurred which, with notice or lapse of
time or both, would constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or the Bank pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or the Bank is a party or by which either of them may be bound, or
to which any of the property or assets of the Company or the Bank is
subject, nor will such execution or delivery result in any violation of the
provisions of the charter or by-laws of the Company or the Bank.
(xiv) The offer, sale and delivery of the Preferred Stock in the
manner contemplated by the Private Purchaser Agreements is exempt from the
registration requirements under the Securities Act.
(xv) The Registration Statement is effective under the Securities
Act and, to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued under the
Securities Act or proceedings therefor initiated or threatened by the
Commission.
(xvi) No further approval, authorization, consent or other order of
any public board or body is required in connection with the execution and
delivery of this Agreement or the issuance of the Securities, except as may
be required under the securities or Blue Sky laws of various jurisdictions
as to which no opinion need be rendered.
(xvii) At the time the Registration Statement became effective and at
the Closing Time, the Registration Statement (other than the financial
statements and statistical data included therein, as to which no opinion
need be rendered) complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act Regulations.
-18-
(xviii) The Securities conform to the description thereof contained in
the Prospectus, and the forms of certificates used to evidence the
Securities are in due and proper form and comply with all applicable
statutory requirements.
(xix) To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against or affecting the
Company or the Bank which are required to be disclosed in the Registration
Statement and Prospectus, other than those disclosed therein, which would
have a material adverse effect upon the financial condition or results of
operations of the Company and the Bank taken as a whole.
(xx) The information in the Prospectus under " Market Price of
Common Stock and Dividends," "Certain Federal Income Tax Consequences",
"The Company-Regulatory Agreements", "The Company-Legal Proceedings", "The
Private Offering", "Regulation," and "Description of Capital Stock," to the
extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by them
and is correct in all material respects.
(xxi) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto and the descriptions
thereof or references thereto are correct.
(xxii) To the best of such counsel's knowledge, the Company and the
Bank have obtained all licenses, permits and other governmental
authorizations currently required for the conduct of their respective
businesses as described in the Registration Statement and Prospectus, and
all such licenses, permits and other governmental authorizations are in
full force and effect, and the Company and the Bank are in all material
respects complying therewith.
(xxiii) Neither the Company nor the Bank is in violation of its
charter or bylaws or, to the best of such counsel's knowledge, in default
(nor has any event occurred which, with notice or lapse of time or both,
would constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or the Bank is a party or by which the Company or the
Bank or any of their property may be bound.
(xxiv) The Company is not required to be registered as an investment
company under the Investment Company Act of 1940.
(2) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Agent, with respect to the matters set forth in
Section 5(b)(1)(i), (iv), (v), (vi) (solely as to preemptive rights arising by
operation of law), (x), (xii), (xv) and (xvi) and such other matters as the
Agent may reasonably require.
(3) In giving their opinions required by subsections (b)(l) and (b)(2),
respectively, of this Section, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ shall each additionally state that nothing has come to their attention
that would lead them to believe that the Registration Statement (except for
financial statements and schedules and other financial or statistical data
-19-
included therein, as to which counsel need make no statement), at the time it
became effective, contained an 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 not misleading, or that the Prospectus (except for financial
statements and schedules and other financial or statistical data included
therein, as to which counsel need make no statement), at the time the
Registration Statement became effective or at Closing Time, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. In giving their opinions, ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely as to matters of fact on
certificates of officers and directors of the Company and the Bank and
certificates of public officials, and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may also rely
on the opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.
(c) At the Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
financial condition, results of operations, or business of the Company and the
Bank, taken as a whole, whether or not arising in the ordinary course of
business, and the Agent shall have received a certificate of the President and
Chief Executive Officer of the Company, and the chief financial or chief
accounting officer of the Company, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) there shall have been
no material transaction entered into by the Company or the Bank from the date of
the latest statement of financial condition of the Company or the Bank as set
forth in the Registration Statement and the Prospectus other than transactions
referred to or contemplated therein and transactions in the ordinary course of
business, (iii) except as previously disclosed in the Prospectus, neither the
Company nor the Bank shall have received from the OCC any direction (oral or
written) to make any material change in the method of conducting its business
with which it has not complied (which direction, if any, shall have been
disclosed to the Agent) or which materially and adversely would affect the
business, financial condition or results of operations of the Company or the
Bank, (iv) the representations and warranties in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and as of the
Closing Time, except as to any such representation or warranty which
specifically relates to an earlier date, (v) the Company and the Bank have
complied with all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to Closing Time, (vi) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission, (vii) no order, directive, request or other correspondence has been
received by the Company or the Bank from the FRB or the OCC which could have the
effect of delaying or canceling the Offering, and (viii) neither the Company nor
the Bank has a "significant subsidiary" within the meaning of Regulation S-X,
Rule 1-02 promulgated by the Commission.
(d) At the time of the execution of this Agreement, the Agent shall have
received from Deloitte & Touche LLP a letter dated such date, in form and
substance satisfactory to the Agent, to the effect that (i) they are independent
certified public accountants with respect to the Company and the Bank within the
meaning of the Code of Ethics of the American Institute of Certified Public
Accountants, the Securities Act and the Securities Act Regulations; (ii) it is
their opinion that the consolidated financial statements and supporting
schedules included in the Registration Statement and incorporated by reference
therein and covered by their opinions therein comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations; (iii) based upon limited procedures as agreed upon by the
Agent and Deloitte & Touche LLP and set forth in detail in such letter, nothing
has come to their attention which causes them to believe that (A) the unaudited
financial statements and supporting schedules of the Bank and their
-20-
subsidiaries included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations or are not presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Registration Statement and the Prospectus, (B) the unaudited amounts set
forth under "Summary Selected Consolidated Financial and Other Data" in the
Prospectus were not determined on a basis substantially consistent with that
used in determining the corresponding amounts in the audited financial
statements included in the Registration Statement and the Prospectus or
incorporated therein by reference, (C)at a specified date not more than five
days prior to the date of this Agreement, there has been any increase in the
consolidated long term or short term debt of the Company and its subsidiaries or
any decrease in consolidated total assets, allowance for loan losses, total
deposits or shareholders equity of the Company and its subsidiaries, in each
case as compared with the amounts shown in the December 31, 1996 balance sheet
included in the Registration Statement or, (D) during the period from December
31, 1996 to a specified date not more than five days prior to the date of this
Agreement, there were any decreases, as compared with the corresponding period
in the preceding year, in total interest income, net interest income, net
interest income after provision for loan losses, income before income tax
expense or net income of the Bank, except in all instances for increases or
decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur; and (iv) in addition to the examination referred to in
their opinions and the limited procedures referred to in clause (iii) above,
they have carried out certain specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are specified by
the Agent, and have found such amounts, percentages and financial information to
be in agreement with the relevant accounting, financial and other records of the
Company and its subsidiaries identified in such letter.
(e) At Closing Time, the Agent shall have received from Deloitte & Touche
LLP a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (d) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to Closing Time.
(f) At Closing Time, counsel for the Agent shall have been furnished with
such documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Agent and counsel for the Agent.
(g) At any time prior to Closing Time, (i) there shall not have occurred
any material adverse change in the financial markets in the United States or
elsewhere or any outbreak of hostilities or escalation thereof or other calamity
or crisis the effects of which, in the judgment of the Agent, are so material
and adverse as to make it impracticable to market the Securities or to enforce
contracts, including subscriptions or orders, for the sale of the Securities,
and (ii) trading generally on either the American Stock Exchange or the New York
Stock Exchange shall not have been suspended, and minimum or maximum prices for
trading shall not have been fixed, or maximum ranges for prices for securities
have been required, by either of said Exchanges or by order of the Commission or
any other governmental authority, and a banking moratorium shall not have been
declared by Federal, New York or California authorities.
-21-
SECTION 6. INDEMNIFICATION.
(a) The Company and the Bank jointly and severally agree to indemnify and
hold harmless the Agent, each person, if any, who controls the Agent, within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and its respective partners, directors, officers, employees and agents (the
Agent and each such person being an "Agent Indemnified Party") as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, related to or arising out of the Offerings
or any action taken by the Agent where acting as agent of the Company or
otherwise as described in Section 2 hereof or in the Engagement Letter
dated December 1, 1996 between the Company and the Agent; provided,
however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense found in a final judgment by a court to
have resulted primarily from the bad faith or gross negligence of the
Agent.
(ii) from and against any and all loss, liability, claim, damage and
expense, as incurred, related to or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(iii) from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever described in clauses (i) or (ii) above, if such settlement is
effected with the written consent of the Company or the Bank, which consent
shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c)hereof, the fees and disbursements of
counsel chosen by the Agent), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation,
proceeding or inquiry by any governmental agency or body, commenced or
threatened, or any pending or threatened claim whatsoever described in
clauses (i) or (ii) above, to the extent that any such expense is not paid
under (i), (ii) or (iii) above;
provided, that this indemnity agreement shall not apply to any loss, liability,
--------
claim, damage or expense to the extent arising out of any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact required to be stated therein or necessary to make not misleading
any statements contained in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement thereto), made in
reliance upon and in conformity with written information relating to the Agent
furnished to the Company by the Agent expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto), which information is included solely in the section of the
Prospectus captioned "The Rights Offering -- Financial Advisor."
-22-
(b) The Agent agrees to indemnify and hold harmless the Company its
directors and its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with the
Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder. No indemnification provided
for in Section 6(a) or 6(b) shall be available to any party who shall fail to
give notice as provided in this Section 6(c)if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice but the omission so
to notify such indemnifying party of any such action, suit or proceeding shall
not relieve it from any liability that it may have to any indemnified party for
contribution or otherwise than under this Section 6. An indemnifying party may,
at its own expense, participate in, and to the extent that it shall wish, assume
the defense of, any such action, provided, however, that if the defense of such
action is assumed by the Company, counsel shall be satisfactory to the Agent.
Notwithstanding the Company's election to assume the defense of such action, if,
in the sole judgment of the Agent or any other Agent Indemnified Party, it is
advisable for the Agent or any other Agent Indemnified Party to be represented
by separate counsel, the Agent or any other Agent Indemnified Party shall have
the right to employ counsel to represent the Agent or any other Agent
Indemnified Party for liability arising from any action in which indemnity may
be sought by the Agent or any other Agent Indemnified Party, in which event the
reasonable fees and expenses of such separate counsel shall be borne by the
Company and reimbursed to the Agent or any other Agent Indemnified Party as
incurred. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) The Company also agrees that the Agent shall not have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company,
its security holders or the Company's creditors relating to or arising out of
the engagement of the Agent pursuant to, or the performance by the Agent of the
services contemplated by, this Agreement, except to the extent that any loss,
claim, damage or liability is found in a final judgment by a court of competent
jurisdiction to have resulted primarily from the Agent's bad faith or gross
negligence.
(e) In addition to, and without limiting, the provisions of Section
(6)(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act or any of their respective partners, directors, officers,
employees or agents is requested or required to appear as a witness or otherwise
gives testimony in any action, proceeding, investigation or inquiry brought by
or on behalf of or against the Company, the Agent or any of its respective
affiliates or any participant in the transactions contemplated hereby in which
the Agent is not named as a defendant, the Company agrees to reimburse the Agent
for all reasonable and necessary out-of-pocket expenses incurred by it in
connection with preparing or appearing as a witness or otherwise giving
testimony.
-23-
SECTION 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Agent, as incurred, in such proportions (i) that the Agent is
responsible for that portion represented by the percentage that the maximum
aggregate marketing fees appearing on the cover page of the Prospectus bears to
the maximum aggregate gross proceeds appearing thereon and the Company is
responsible for the balance or (ii) if, but only if, the allocation provided for
in clause (i) is for any reason held unenforceable, in such proportion as is
appropriate to reflect not only the relative benefits to the Company on the one
hand and the Agent on the other, as reflected in clause (i), but also the
relative fault of the Company on the one hand and the Agent on the other, as
well as any other relevant equitable considerations; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls the Agent within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Agent, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company. Notwithstanding anything to the contrary set forth
herein, to the extent permitted by applicable law, in no event shall the Agent
be required to contribute an aggregate amount in excess of the aggregate
marketing fees to which the Agent is entitled and actually paid pursuant to this
Agreement. Neither party shall be liable for contribution for claims settled
without such party's consent provided such consent is not unreasonably withheld.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company or the Bank submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Agent or controlling person, or
by or on behalf of the Company, and shall survive delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company, at
any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations, or business of the Company and the Bank, taken
as a whole, whether or not arising in the ordinary course of business; (ii) if
there has occurred any material adverse change in the financial markets in the
United States or elsewhere or any outbreak of hostilities or escalation thereof
or other calamity or crisis the effects of which, in the judgment of the Agent,
are so material and adverse as to make it impracticable to market the Securities
or to enforce contracts, including subscriptions or orders, for the sale of the
Securities; (iii) if trading generally on either the American Stock Exchange or
the New York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said Exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
Federal, New York or California authorities; (iv) if any condition specified in
Section 5 shall not have been fulfilled when and as required to be fulfilled;
(v) if there shall have been such material
-24-
adverse change in the condition or prospects of the Company or the Bank or the
prospective market for the Company's securities as in the Agent's good faith
opinion would make it inadvisable to proceed with the offering, sale or delivery
of the Securities; or (vi) if the Company is unable to sell at least the total
minimum of Securities, as disclosed on the cover of the Prospectus, or if the
Offering is not consummated for any other reason, prior to __________, 1997.
(b) If this Agreement is terminated pursuant to this Section, the Company
shall refund to any persons who have subscribed for any of the shares of
Preferred Stock the full amount which it may have received from them, without
interest, as provided in the Prospectus, such termination shall be without
liability of any party to any other party except that the provisions of Section
4 hereof relating to reimbursement of expenses and the provisions of Sections 6
and 7 hereof shall survive any termination of this Agreement.
SECTION 10. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agent
shall be directed to the Agent at Two World Trade Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Principal, with a copy to
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.; notices to the Company shall be directed
to the Company at 1840 Century Park East, Los Angeles, California 90067,
attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Executive Vice President and Chief
Administrative Officer, with a copy to Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Agent and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Agent and the Company and
their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Agent and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made other than those specifically mentioned herein. No waiver,
amendment or other modification of this Agreement shall be effective unless in
writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State without regard to the
conflicts of laws provisions thereof. Specified times of day refer to Pacific
time unless otherwise noted herein.
SECTION 14. 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
-25-
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.
SECTION 15. HEADINGS. Sections headings are not to be considered part of
this Agreement, are for convenience and reference only, and are not to be deemed
to be full or accurate descriptions of the contents of any paragraph or
subparagraph.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Agent, the Company and the Bank in accordance with its terms.
Very truly yours,
National Mercantile Bancorp
By:
Name:
Title:
National Mercantile Bancorp
By:
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
By: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ & Partners Corp.,
the sole general partner
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
-26-
