[FORM OF UNDERWRITING AGREEMENT]
UNDERWRITING AGREEMENT
(the "Agreement")
__________ Shares
(Subject to increase of up to _______ (15%) additional
shares in the event of an oversubscription)
PACIFIC COMMUNITY BANKING GROUP
(A CALIFORNIA CORPORATION)
Common Stock
(no par value per share)
UNDERWRITING AGREEMENT
July 27, 1999
Sutro & Co. Incorporated
Friedman, Billings, Ramsey & Co., Inc.
Wedbush Morgan Securities, Inc.
Ragen MacKenzie Incorporated
As Representatives of the several Underwriters
c/o Sutro & Co. Incorporated
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025
Ladies and Gentlemen:
Pacific Community Banking Group, a California corporation (the
"Company") proposes, subject to the terms and conditions stated herein, to issue
and sell to the several Underwriters named in Schedule A hereto (the
"Underwriters"), for which you are acting as representatives (the
"Representatives"), an aggregate of up to __________ shares of common stock, no
par value per share (the "Common Stock"), of the Company. The shareholders
listed in Schedule B hereto as either "Hemet Major Selling Shareholders,"
"Valley Major Selling Shareholders" or "Other Selling Shareholders" (together,
the "Selling Shareholders") agree severally but not jointly to sell to the
Underwriters an aggregate of up to ________ outstanding shares of Common Stock.
The "Hemet Major Selling Shareholders" and "Valley Major Selling
Shareholders," together, are sometimes referred to herein as the "Major
Selling Shareholders." The _____ shares of Common Stock to be sold by the
Company and the _____ shares of Common Stock to be sold by the Selling
Shareholders are collectively referred to herein as the "Shares" or the "Firm
Common Shares." In addition, the Company grants to the Underwriters an
option to purchase up to 525,000 additional shares of Common Stock ((15% OF
OFFERING FIRM COMMON SHARES) the "Optional Common Shares"), as provided in
Section 4(c) hereof, for the purpose of covering over-allotments in
connection with the sale of the Firm Common Shares. The Firm Common Shares
and, to the extent such option is exercised, the Optional Common Shares are
hereinafter collectively referred to as the "Common Shares."
The Company and the Selling Shareholders understand that the
Underwriters propose to make a public offering of the Common Shares on the
effective date of the registration statement hereinafter referred to or as
soon thereafter as in your judgment is advisable. The Company and the
Selling Shareholders hereby confirm that the Underwriters and any dealers
have been authorized to distribute or cause to be distributed each
Preliminary Prospectus (as defined below) and are authorized to distribute
the Prospectus (as defined below), as from time to time amended or
supplemented, on the effective date of the registration statement hereinafter
referred to or as soon thereafter as in your judgment is advisable.
The Company and the Selling Shareholders confirm their agreement
with respect to the purchase of the Common Shares by the Underwriters as
follows:
SECTION 1. Representations and Warranties.
(A) The Company hereby represents and warrants to, and agrees
with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-76403)
(the "Registration Statement") with respect to the Common Shares has been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with
the Commission. The Registration Statement contains information regarding
The Bank of Hemet ("Hemet") and Valley Bank ("Valley") and the Hemet
subsidiaries (Hemet and Valley are collectively referred to herein as the
"Banks"), each of which the Company proposes to acquire after the
Registration Statement becomes effective. The Company has prepared and has
filed or proposes to file prior to the effective date of such Registration
Statement an amendment or amendments to such Registration Statement, which
amendment or amendments have been or will be similarly prepared. There have
been delivered to you
two signed copies of such Registration Statement and amendments, together
with two copies of each exhibit filed therewith. Conformed copies of such
registration statement and amendments thereto and related preliminary
prospectuses have been delivered to you in such reasonable quantities as you
have requested. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of Final Prospectus, (ii) a
Final Prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations or (iii) a term sheet (the "Term Sheet") as described in and in
accordance with Rules 434 and 424(b) of the Rules and Regulations. As filed,
the Final Prospectus, if one is used, or the Term Sheet and the latest
Preliminary Prospectus sent or given to purchasers of the Common Shares by
the Underwriters prior to or at the same time as the confirmation of such
sale, if a final prospectus is not used, shall include all Rule 430A
Information (as defined beow) and, except to the extent that you shall agree
in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not completed
at such date and time, shall contain only such specific additional
information and other changes (beyond that contained in the latest
Preliminary Prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used herein shall mean such
registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as defined below), also shall mean
such registration statement as so amended; provided, however, that such term
shall also include (i) all Rule 430A Information deemed to be included in
such registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations and (ii) any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations relating to the Common Shares. The term "Preliminary Prospectus"
shall mean any preliminary prospectus relating to the Common Shares and
delivered to you as well as any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" shall mean: (i) the prospectus relating
to the Common Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations; (ii) if a
Term Sheet is not used and no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, the form of final prospectus included in the
Registration Statement at the time it becomes effective; or (iii) if a Term
Sheet is used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together
with the latest Preliminary Prospectus sent or given to purchasers of the
Common Shares by the Underwriters prior to or at the same time as the
confirmation of such sale. The term "Rule 430A Information" shall mean
information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective
pursuant to Rule 430A of the Rules and Regulations.
The Company has filed a Registration Statement on Form S-4 (File
No.: 333-76401) with respect to the Company's offer to exchange its
securities for securities of the Banks prior to the sale of the Firm Common
Shares. As used herein, the "Bank S-4" shall mean such registration
statement at the time such registration statement becomes effective and, in
the event any post-effective amendment thereto becomes effective prior to the
First Closing Date (as defined below), also shall mean such registration
statement as so amended; provided, however, that such term shall also include
(i) all Rule 430A information deemed to be included in such registration
statement at the time such registration statement becomes effective as
provided by Rule 430A of the Rules and Regulations and (ii) any registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations relating
to the Common Shares. The term "S-4 Prospectus" shall mean: (i) as the
context dictates, the proxy statement/prospectus relating to the Company's
offer to exchange its securities for those of the Hemet and/or Valley, as the
case may be, in the form in which it is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations; or (ii) if no filing
pursuant to Rule 424(b) of the Rules and Regulations is required, the form of
final joint proxy statement/prospectus included in the Bank S-4 at the time
it becomes effective.
A Registration Statement on Form 8-A (the "Form 8-A") with respect
to the common stock of the Company has been prepared in conformity with the
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission thereunder. Such Form 8-A has been filed
with the Commission or will be filed not later than the time when the
Registration Statement becomes effective.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects to the requirements of the
Act and the Rules and Regulations and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration Statement
and the Prospectus, and any amendments or supplements thereto, will contain
all material statements and information required to be included therein by
the Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations, and the
Registration Statement will not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary, in light of the circumstances under which they were made, to make
the statements therein not misleading, and neither the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary, in light of the circumstances under which they were made, to
make the statements therein not misleading; provided, however, no
representation or warranty contained in this subsection 1(A)(b) shall be
applicable to information contained in or omitted from any Preliminary
Prospectus, the Registration Statement, the Prospectus or any such amendment
or supplement that is described in clauses (i) and (ii) of Section 3 hereof.
(c) The Company has two subsidiaries, Interim Valley Bank and
PCBG Merger Corporation (the "Company Subsidiaries"). With the exception of
the Company Subsidiaries, the Company does not own or control, directly or
indirectly, any corporation, association or other entity. Valley Bank has no
subsidiaries, and does not own or control, directly or indirectly, any
corporation, association or other entity. Hemet has five wholly owned
subsidiaries, Banklink Corporation, Hemet Service Corporation, Florida Avenue
Investment Company, Inland Diversified, Inc. and B.O.H. Escrow Company
(collectively, the "Hemet Subsidiaries"). With the exception of the Hemet
Subsidiaries, Hemet does not own or control, directly or indirectly, any
corporation, association or other entity. The Company, the Company
Subsidiaries, each of the Banks and [Banklink Corporation] have been duly
incorporated and are validly existing as corporations in good standing under
the laws of California with full power and authority (corporate and other) to
own and lease their respective assets and properties and to conduct their
respective businesses as now being conducted and as described in the
Registration Statement. The Company, the Company Subsidiaries, each of the
Banks and [Banklink Corporation] are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in which the
ownership or leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except for jurisdictions
in which the failure to so qualify would not have a material adverse effect
upon the Company or either of the Banks taken as a whole and to the Company's
knowledge, no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail,
such power and authority or qualification.
(d) The Company, the Company Subsidiaries, each of the Banks and
[Banklink Corporation] holds and is operating in compliance with all
licenses, approvals, certificates, permits, authorizations, consents and
orders from governmental and regulatory authorities, foreign and domestic,
which are necessary or required in the conduct of its business. The Hemet
Subsidiaries other than Banklink Corporation are inactive and conduct no
business.
(e) The Company has the authorized capitalization as set forth
under the heading "Capitalization" in the Prospectus. The issued and
outstanding shares of capital stock and all securities of the Company, are
duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
applicable federal and state securities laws, have not been issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and conform in all material respects to the
description thereof contained in the Prospectus. To the knowledge of the
Company, after reasonable investigation, the issued and outstanding shares of
capital stock and all securities of each of the Banks and the Hemet
subsidiaries, are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws, except for shares issued to Ken Ray, have not been
issued in violation of or, except for certain rights of Valley, subject to
any preemptive rights or other rights to subscribe for or purchase
securities, and confirm in all material respects to the description thereof
contained in the S-4 Prospectus. Except as disclosed in or contemplated by
the Prospectus and the financial statements of the Company, and the related
notes thereto, included in the Prospectus, the Company has no outstanding
options to purchase, or any preemptive rights or other rights to subscribe
for or to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of capital stock of the
Company or any such options, rights, convertible securities or obligations.
To the knowledge of the Company, after reasonable investigation, except as
disclosed in or contemplated by the S-4 Prospectus and the financial
statements of the Banks, and the related notes thereto, included in the S-4
Prospectus, neither of the Banks has outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, shares of capital stock of the Banks or any such options,
rights, convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted or intended to be granted thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(f) The Common Shares have been duly authorized and, when
issued, delivered and paid for in the manner set forth in this Agreement,
will be validly issued, fully paid and nonassessable, and will conform to the
description thereof contained in the Prospectus. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance
and sale of the Common Shares, except for options described in (e) above,
such rights as may be held by holders of the Company's Preferred Stock issued
and outstanding as of the date of this Agreement, and the Company's Warrants
to be issued as described in the S-4 Prospectus. No shareholder of the
Company has any right which has not been waived to require the Company to
register the sale of any shares owned by such shareholder under the Act in
the public offering contemplated by this Agreement. No further approval or
authorization of the shareholders or the Board of Directors of the Company is
required for the issuance and sale of the Common Shares as contemplated
herein.
(g) The Company has full right, power and authority to enter
into this Agreement and perform the transactions contemplated in this
Agreement. This Agreement has and, prior to the First Closing Date (as
defined below) will have been, duly authorized, executed and delivered by the
Company, and constitutes the valid and binding agreement of the Company
enforceable against it in accordance with its terms, except (A) as limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding may
be brought and (C) to the extent that rights to indemnity or contribution
under this Agreement or may be limited by federal or state securities laws or
the public policy underlying such laws. The execution and delivery of this
Agreement by the Company and the consummation of the transactions
contemplated thereby by the Company do not violate any provisions of the
articles of incorporation or bylaws of the Company and will not conflict
with, result in the breach or violation of, or constitute, either by
themselves or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of the Banks is a
party or by which the Company or either of the Banks or any of their
respective properties may be bound or affected, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body
applicable to the Company or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by such agreements, except for compliance with the
Act, the Blue Sky laws applicable to the public offering of the Common Shares
by the several Underwriters and the clearance of such offering with the
National Association of Securities Dealers, Inc. (the "NASD").
(h) The Company and Hemet each has full right, power and
authority to enter into the First Restated Agreement and Plan of
Reorganization with the Bank of Hemet, dated January 5, 1999, and the
exhibits thereto, as amended on March 4, 1999 and on April 2, 1999 (the
"Hemet Reorganization Agreement"), and the Company and Valley Bank each has
full right, power and authority to enter into the First Restated Agreement
and Plan of Reorganization with Valley Bank, dated January 5, 1999, and the
exhibits thereto, as amended on March 24, 1999 and on April 12, 1999 (the
"Valley Reorganization Agreement," and collectively with the Hemet
Reorganization Agreement, the "Reorganization Agreements"), and perform the
transactions contemplated in such agreements. The Reorganization Agreements
have each been duly authorized, executed and delivered by the Company and the
Banks, and they constitute the valid and binding agreements of the Company
and the Banks enforceable against each of them in accordance with their
respective terms, except (A) as limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding may
be brought. The execution and delivery of the Reorganization Agreements and
the consummation of the transactions contemplated in such agreements by the
Company and the Company Subsidiaries, as appropriate, does not violate any
provisions of the articles of incorporation or bylaws of the Company or the
Company subsidiaries or the Banks, as appropriate, and will not conflict
with, result in the breach or violation of, or constitute, either by itself
or upon notice or the passage of time or both, a default under any agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or
other instrument to which the Company, the Company Subsidiaries or either of
the Banks is party or by which the Company, the Company Subsidiaries or
either of the Banks or any of their respective properties may be bound or
affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company, the Company Subsidiaries
or the Banks or any of their respective properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery
of the Reorganization Agreements except for compliance with the Federal
Deposit Insurance Act, the Federal Reserve Act and the California Financial
Code.
(i) The Company, the Company Subsidiaries and the Banks have
obtained all necessary governmental approvals to consummate the Company's
acquisition of each of the Banks in accordance with the terms of the
Reorganization Agreements, and to the best of the Company's knowledge, no
action is pending or threatened to prevent the consummation the transactions
contemplated by the Reorganization Agreements;
(j) Arthur Andersen, LLP and McGladrey & Pullen, LLP, who have
expressed their opinions with respect to the financial statements filed with
the Commission as a part of the Registration Statement and included in the
Prospectus, are independent accountants as required by the Act and the Rules
and Regulations.
(k) The historical financial statements of the Company and, to
the knowledge of the Company after reasonable investigation, the Banks
included in the Registration Statement and the Prospectus present fairly the
financial position of the Company and the Banks, as of the respective dates
of such financial statements and schedules, and the results of operations,
cash flows and shareholders' equity and the other information purported to be
shown therein of the Company and the Banks for the respective periods covered
thereby. Such statements and related notes of the Company, and, to the
knowledge of the Company after reasonable investigation, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as noted therein) as certified by the
independent accountants named in subsection 1(A)(j). The Registration
Statement includes all of the financial statements and schedules required
under the Act to be included therein. The pro forma financial statements,
together with related schedules and notes, set forth in the Prospectus and
the Registration Statement, comply as to form in all material respects with
the requirements of the Act. Such pro forma financial statements have been
prepared on the basis consistent with such historical statements, except for
the pro forma adjustments specified therein, and give effect to assumptions
made on a reasonable basis and present fairly the historical and proposed
transactions contemplated by the Prospectus and this Agreement. The selected
financial data set forth in the Prospectus under the captions "Unaudited Pro
Forma Combined Financial Information," "Pacific Community Banking Group
Selected Financial Data" "The Bank of Hemet Selected Financial Data" and
"Valley Bank Selected Financial Data" present fairly the information set
forth therein on the basis stated in the Registration Statement.
(l) Except as disclosed in the Prospectus, and except as to
defaults which individually or in the aggregate would not have a material
adverse effect on the Company or either of the Banks, (i) none of the
Company, the Company Subsidiaries or any of the Banks or any of the Hemet
Subsidiaries is in violation or default of any provision of their respective
articles of incorporation or bylaws, or is in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of its properties is
bound; and (ii) there does not exist any state of facts which constitutes an
event of default (as defined in such documents) on the part of the Company,
the Company Subsidiaries or any of the Banks or any of the Hemet Subsidiaries
which, with notice or lapse of time or both, would constitute such an event
of default.
(m) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which have
not been described or filed as required. The contracts so described in the
Prospectus are in full force and effect on the date hereof and have been duly
authorized and validly entered into by the Company, the Company Subsidiaries,
the Banks or the Hemet Subsidiaries, as appropriate; and, except as disclosed
in the Prospectus and except as to defaults which individually or in the
aggregate would not be material to the Company and the Banks, taken as a
whole, neither the Company, the Company Subsidiaries, nor any of the Banks or
the Hemet Subsidiaries, nor to the best of the Company's knowledge, any other
party, is in breach of or in default under any of such contracts.
(n) There are no legal or governmental actions, suits or
proceedings
pending or, to the Company's knowledge after reasonable investigation,
threatened to which the Company, the Company Subsidiaries, the Banks or the
Hemet Subsidiaries is a party or of which property owned or leased by any of
them is the subject, including actions related to environmental or
discrimination matters, which actions, suits or proceedings (i) might
reasonably be expected to, individually or in the aggregate, prevent or
materially and adversely affect the transactions contemplated by this
Agreement or result in a material adverse change in the condition (financial
or otherwise), properties, business, results of operations or prospects of
the Company, taken as a whole, or (ii) questions the validity of any of the
securities of the Company, this Agreement, or of any action taken or to be
taken by the Company pursuant to or in connection with this Agreement; and no
labor disturbance by the employees of the Company or any of the Banks or any
of the Hemet Subsidiaries exists or is imminent which might reasonably be
expected to have a material adverse effect on the Company or either of the
Banks. Neither the Company, either of the Banks or the Hemet Subsidiaries is
not a party or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body, administrative
agency or other governmental body.
(o) The Company, the Company Subsidiaries, each of the Banks and
each of the Hemet Subsidiaries has good and valid title to all the properties
and assets reflected as owned in the financial statements hereinabove
described or as described elsewhere in the Prospectus, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements or as described elsewhere in the
Prospectus and (ii) those which are not material in amount and do not
materially and adversely affect the use made and proposed to be made of such
property and assets by the Company, either of the Banks or the Hemet
Subsidiaries. The Company, the Company Subsidiaries, each of the Banks and
each of the Hemet Subsidiaries hold their respective leased properties under
valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company, the Banks and the
Hemet Subsidiaries. Except as disclosed in the Prospectus, each of the
Company, the Company Subsidiaries, each of the Banks and each of the Hemet
Subsidiaries owns or leases all such properties as are necessary to their
respective operations as now conducted.
(p) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as described in
or specifically contemplated by the Prospectus: (i) neither the Company or
the Company Subsidiaries, nor any of the Banks nor any of the Hemet
Subsidiaries has incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of
business or which could reasonably be expected to result in a material
reduction in the future earnings of the Company or either of the Banks; (ii)
the Company and each of the Banks and the Hemet Subsidiaries have not
sustained any material loss or interference
with their respective businesses or properties from fire, flood, earthquake,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) the Company has not paid or declared any dividends or other distributions
with respect to its capital stock and the Company and each of the Banks and each
of the Hemet Subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any change
in the capital stock (other than upon the sale of the Common Shares hereunder
and the exchange of preferred shares for common shares) or indebtedness of the
Company or any of the Banks or any of the Hemet Subsidiaries that is material to
the Company or the Banks, taken individually (other than in the ordinary course
of business); and (v) there has not been any material change in the condition
(financial or otherwise), business, properties, results of operations or
prospects of the Company, the Banks or the Hemet Subsidiaries.
(q) The Company and, to the knowledge of the Company, after
reasonable investigation, each of the Banks and each of the Hemet Subsidiaries
have sufficient trademarks, trade names, service marks, patent rights,
copyrights, licenses, know-how and other similar rights and proprietary
knowledge (collectively, "Intangibles") to conduct their respective businesses
as now conducted, and the Company has no knowledge of any material infringement
by any of the Company or the Banks or the Hemet Subsidiaries of any Intangible
of others, and there is no claim being made against the Company or the Banks or
the Hemet Subsidiaries regarding any Intangible which could have a material
adverse effect on the Company or either of the Banks.
(r) The Company has not been advised, and has no reason to
believe, that any of the Company or either of the Banks or any of the Hemet
Subsidiaries is not conducting its business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is conducting
business, including, without limitation, all applicable local, state and federal
environmental laws and regulations, except where failure to be in compliance
therewith would not have a material adverse effect on the Company or either of
the Banks.
Notwithstanding the foregoing, to the Company's knowledge, the
Company, the Banks and each of the Hemet Subsidiaries are in compliance with all
Environmental Regulations; (ii) except as disclosed in Schedule 1(r) hereto,
there are no Tanks on or above Company and Bank Property; (iii) there are no
Hazardous Materials on, below or above the surface of, or migrating from Company
and Bank Property that would reasonably have a material adverse effect on the
Company or the Banks; (iv) the Company, the Banks and each of the Hemet
subsidiaries have no loans outstanding secured by real property that is not in
compliance with Environmental Regulations or which has a Tank that is not in
compliance with Environmental Regulations or upon which there are Hazardous
Materials on or migrating from; and (v) without limiting the foregoing
representations and warranties contained in clauses (i)
through (iv), as of the date of this Agreement, there is no claim, action,
suit, or proceeding or notice thereof before any governmental entity pending
against Company, the Banks or any of the Hemet Subsidiaries or concerning
property securing Company, the Banks or Hemet Subsidiaries loans and there is
no outstanding judgment, order, writ, injunction, decree, or award against or
affecting Company and Bank Property or property securing Company or Bank
loans, relating to the foregoing representations (i) - (iv). For purposes of
this section, the term "Environmental Regulations" shall mean all applicable
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar items,
of all governmental entities and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of human
health or the environment, including, without limitation: all requirements,
including, but not limited to those pertaining to reporting, licensing,
permitting, investigation, and remediation of emissions, discharges,
releases, or threatened releases of Hazardous Materials, chemical substances,
pollutants, contaminants, or hazardous or toxic substances, materials or
wastes whether solid, liquid, or gaseous in nature, into the air, surface
water, groundwater, or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
chemical substances, pollutants, contaminants, or hazardous or toxic
substances, materials, or wastes, whether solid, liquid, or gaseous in nature
and all requirements pertaining to the protection of the health and safety of
employees or the public. "Company and Bank Property" shall mean real estate
owned, leased, or otherwise operated by Company, the Banks or the Hemet
Subsidiaries or in which the Company, the Banks or the Hemet subsidiaries has
an investment (by sale and lease-back or otherwise) in each case, which real
estate is owned, leased, or otherwise used on the date of this Agreement,
including, without limitation, properties under foreclosure and properties
held by the Company, the Banks or the Hemet subsidiaries in its capacity as a
trustee. "Tank" shall mean treatment or storage tanks, sumps, gas or oil
wells and associated piping transportation devices. "Hazardous Materials"
shall mean any substance the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order action, policy or common law; or which is or becomes defined as a
hazardous waste, hazardous substance, hazardous material, used oil, pollutant
or contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601, ET SEQ.); the Resource Conservation and Recovery Act (42
U.S.C. Section 6901, ET SEQ.); the Clean Air Act, as amended (42 U.S.C.
Section 7401, ET SEQ.); the Federal Water Pollution Control Act, as amended
(33 U.S.C. Section 1251, ET SEQ.); the Toxic Substances Control Act, as
amended (15 U.S.C. Section 9601, ET SEQ.); the Occupational Safety and Health
Act, as amended (29 U.S.C. Section 651 ET SEQ.); the Emergency Planning and
Community Right-to-Know Act of 1986 (42 U.S.C. Section 11001, ET SEQ.); the
Mine Safety and Health Act of 1977, as amended (30 U.S.C. Section 801, ET
SEQ.); the Safe Drinking Water Act (42 U.S.C. Section 300f, ET SEQ.);
and all comparable state and local laws, including without limitation, the
Carpenter-Presley-Tanner Hazardous Substance Account Act (State Superfund),
the Porter-Cologne Water Quality Control Act, Section 25140, 25501(j) and
(k), 25501.1,25281 and 25250.1 of the California Health and Safety Code
and/or Article I of Title 22 of the California Code of Regulations, Division
4, Chapter 30; laws of other jurisdictions or orders and regulations; or the
presence of which causes or threatens to cause a nuisance, trespass or other
common law tort upon real property or adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons, which contains
gasoline, diesel fuel or other petroleum hydrocarbons; polychlorinated
biphenyls (PCBs), asbestos or urea formaldehyde foam insulation.
(s) The Company and, to the knowledge of the Company after
reasonable investigation, each of the Banks have filed, or applied in good faith
for extensions of, all necessary federal, state and foreign tax returns and have
paid all taxes shown as due thereon; and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
or the Banks which could have a material adverse effect on the Company or either
of the Banks.
(t) To the best of the Company's knowledge, the Company, each of
the Banks and each of the Hemet Subsidiaries have not violated any provisions of
any federal, state or local law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable wage or hour laws, nor any
provisions of the Employee Retirement Income Security Act of 1974 or the rules
and regulations promulgated thereunder. There is no significant pending labor
practice complaint pending against the Company or the Banks. To the best of the
Company's knowledge, there is no union representation question existing with
respect to the employees of the Company or the Banks or the Hemet subsidiaries.
To the best of the Company's knowledge, there are no pending or threatened union
organizing activities with respect to the Company, the Banks or the Hemet
Subsidiaries.
(u) Neither the Company nor any of the Banks is, nor upon
completion of the sale of Common Shares contemplated hereby will be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(v) The Company has not distributed and will not distribute prior
to the First Closing Date any offering materials in connection with the offering
and sale of the Common Shares other than any Preliminary Prospectus, the
Prospectus, the Registration Statement, the Bank S-4, the S-4 Prospectus and the
other materials permitted by the Act.
(w) The Company, each of the Banks and the Hemet Subsidiaries
maintain insurance of the types and in the amounts generally deemed adequate for
their respective businesses, including, but not limited to, insurance covering
computers and computer and data-processing related equipment and real and
personal property owned or leased by the Company or any of the Banks or the
Hemet Subsidiaries, against loss, theft, damage, destruction, natural disaster
including earthquake, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
(x) By December 31, 1999, any software or hardware designed, used,
purchased or licensed by the Company, and, to the knowledge of the Company after
reasonable investigation, by either of the Banks or the Hemet Subsidiaries, in
the course of operation or management of the respective business of each will
not contain any deficiency (a) in the ability of such software or hardware to
identify correctly or perform calculations or other processing with respect to
dates after December 31, 1999 or (b) that would cause such software or hardware
to be fit no longer for the purpose for which it was intended by reason of the
changing of the date from 1999 to 2000, except in either case as such deficiency
would not have a material adverse effect on the Company or either of the Banks.
(y) Neither the Company nor, to the knowledge of the Company after
reasonable investigation, either of the Banks or the Hemet Subsidiaries has at
any time during the past five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(z) All material transactions between the Company and its officers
and directors and their respective affiliates have been accurately disclosed in
the Prospectus, and the terms of such transactions are fair to the Company; to
the knowledge of the Company after reasonable investigation, all material
transactions between the Banks and their respective officers and directors and
their respective affiliates have been accurately disclosed in the S-4
prospectus;
(aa) The transactions contemplated by the Reorganization Agreements
have been consummated in accordance with the terms of the Reorganization
Agreements and in compliance with all applicable laws and regulations.
In matters relating to the Banks and Banklink Corporation, the Company
makes the representations and warranties contained in this Section 1 of the
Agreement to the knowledge of the Company after reasonable investigation. In
matters relating to the Hemet Subsidiaries, other than Banklink Corporation, the
Company makes the representations and warranties contained in this Section 1 of
the Agreement to the
actual knowledge of the Company.
Any certificate signed by any officer of the Company and delivered to
you or to your counsel shall be deemed a representation and warranty by the
Company to you as to the matters covered thereby. Any certificate delivered by
the Company to its counsel for purposes of enabling such counsel to render the
opinions referred to in Section 7(e) will also be furnished to the Underwriter
and its counsel and shall be deemed to be additional representations and
warranties by the Company to the Underwriter as to the matters covered thereby
and the Underwriter and its counsel are entitled to rely thereon.
(B) Each Selling Shareholder severally but not jointly represents
and warrants to, and agrees with, the Underwriters, that:
(a) Such Selling Shareholder has full legal right, power and
authority to enter into and perform this Agreement, the Power of Attorney in the
form heretofore furnished to you (the "Power of Attorney") and the Custody
Agreement, Letter of Transmittal, Power of Attorney and Offer of Sale in the
form heretofore furnished to you (collectively, the "Custody Agreement"). Each
of the Agreement, the Power of Attorney and the Custody Agreement has been duly
executed and delivered by such Selling Shareholder, and (assuming this Agreement
is a binding agreement of yours) constitutes the valid and binding agreement of
such Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its respective terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies, and except as rights to indemnity or contribution may
be limited by federal or state securities law and the public policy underlying
such laws).
(b) None of the execution, delivery or performance of this
Agreement, the Power of Attorney and the Custody Agreement and the consummation
of the transactions herein or therein contemplated will conflict with or result
in a breach of, or default under, any indenture, mortgage, deed of trust, voting
trust agreement, shareholders' agreement, note agreement or other agreement or
instrument to which such Selling Shareholder is a party or by which such Selling
Shareholder is bound or to which any of his or its property is or may be
subject, or any statute, judgment, decree, order, rule or regulation applicable
to such Selling Shareholder of any government, arbitrator, court, regulatory
body or administrative agency or other governmental agency or body, domestic or
foreign, having jurisdiction over such Selling Shareholder or any of his
activities or properties.
(c) At the date hereof, such Selling Shareholder has full right,
power and
authority to sell, assign, transfer and deliver the shares of the common
stock of the Banks (and options to purchase shares of the common stock of the
Banks) to be surrendered in exchange for the Shares, and at the time of
delivery of the Shares to be sold by such Selling Shareholder to the several
Underwriters, such Selling Shareholder will have full right, power and
authority to sell, assign, transfer and deliver the Shares to be sold by such
Selling Shareholder hereunder. At the date hereof such Selling Shareholder
is the lawful owner of and has good and marketable title to the shares of the
common stock of the Banks (and options to purchase shares of the common stock
of the Banks) to be surrendered in exchange for the Shares, free and clear of
any and all encumbrances, and at the time of delivery of the Shares to be
sold by such Selling Shareholder, such Selling Shareholder will be the lawful
owner of and will have good and marketable title to the Shares free and clear
of any and all encumbrances.
(d) To such Selling Shareholder's knowledge, such Selling
Shareholder has not taken any action designed to stabilize or manipulate the
price of any security of the Company, or which has constituted or which might in
the future reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of the Shares or otherwise.
(C) Each Valley Major Selling Shareholder severally but not
jointly represents and warrants to, and agrees with, the Underwriters, that:
(a) neither the Registration Statement nor any amendment thereto, and
neither the Prospectus nor any supplement thereto, contains or will contain, as
the case may be, any untrue statement of a material fact with regard to Valley
or omits or will omit to state any material fact required to be stated therein
with regard to Valley or necessary to make the statements therein with regard to
Valley, in light of the circumstances under which they were made, not
misleading.
(b) There is not pending, or, to the Valley Major Selling
Shareholder's best knowledge, threatened against such Valley Major Selling
Shareholder, any action, suit or proceeding which (A) questions the validity of
this Agreement or of any action taken or to be taken by such Valley Major
Selling Shareholder pursuant to or in connection with this Agreement or (B) is
required to be disclosed in the Preliminary Prospectus, the Prospectus or the
Registration Statement which is not so disclosed, and such actions, suits or
proceedings as are summarized in the Preliminary Prospectus, the Prospectus, the
Prospectus, or the Registration Statement, if any, are accurately summarized.
(D) Each Hemet Major Selling Shareholder severally but not jointly
represents and warrants to, and agrees with, the Underwriters, that:
(a) neither the Registration Statement nor any amendment thereto, and
neither the Prospectus nor any supplement thereto, contains or will contain, as
the case may be, any untrue
statement of a material fact with regard to Hemet or omits or will omit to
state any material fact required to be stated therein with regard to Hemet or
necessary to make the statements therein with regard to Hemet, in light of
the circumstances under which they were made, not misleading.
(b) There is not pending, or, to the Hemet Major Selling
Shareholder's best knowledge, threatened against such Hemet Major Selling
Shareholder, any action, suit or proceeding which (A) questions the validity of
this Agreement or of any action taken or to be taken by such Hemet Major Selling
Shareholder pursuant to or in connection with this Agreement or (B) is required
to be disclosed in the Preliminary Prospectus, the Prospectus or the
Registration Statement which is not so disclosed, and such actions, suits or
proceedings as are summarized in the Preliminary Prospectus, the Prospectus, the
Prospectus, or the Registration Statement, if any, are accurately summarized.
(E) Valley hereby represents and warrants to, and agrees with,
each of the Underwriters that:
The representations and warranties made in the Valley Reorganization
Agreement are true and correct as of the date of this Agreement.
(F) Hemet hereby represents and warrants to, and agrees with, each
of the Underwriters that:
The representations and warranties made in the Hemet Reorganization
Agreement are true and correct as of the date of this Agreement.
SECTION 2. Reserved.
SECTION 3. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under the caption "Underwriting" in the Prospectus,
was furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and the
Prospectus, and such information is correct in all material respects. The
Representatives represent and warrant they have been authorized by each of the
other Underwriters as the Representatives to enter into this Agreement on behalf
of each such Underwriter and to act on behalf of each such Underwriter in the
manner herein provided.
SECTION 4. Purchase, Sale and Delivery of Common Shares; Commission
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and each Selling Shareholder agrees, severally and not
jointly, to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company and the Selling Shareholders, the
number of Firm Common Shares determined by (1) adding the aggregate number of
Firm Common Shares to be sold by the Company and by each of the Selling
Shareholders, as set forth opposite their respective names in Schedule B hereto,
and then (2) multiplying that sum by a fraction, the numerator of which is the
aggregate number of Firm Common Shares to be purchased by such Underwriter as
set forth opposite the name of such Underwriter in Schedule A hereto and the
denominator of which is the aggregate number of Firm Common Shares to be
purchased by all the Underwriters from the Company and the Selling Shareholders
hereunder. The purchase price per share to be paid by the several Underwriters
shall be $_____ per share. In consideration of the Underwriters' services in
making the public offering of the Firm Common Shares, the Company shall pay a
fee (the "Underwriting Fee") to the Underwriters of ____% of the aggregate
purchase price for all of the Firm Common Shares. The fee shall be paid on the
First Closing Date and shall be offset against the portion of the purchase price
payable to the Company by the Underwriters. The Selling Shareholders shall have
no obligation for any portion of the Underwriting Fee and the Underwriters may
not offset any portion of the Underwriting Fee against any portion of the
aggregate purchase price payable to the Selling Shareholders.
(b) Delivery of certificates for the Firm Common Shares to be
purchased by the Underwriters and payment therefor shall be made at the offices
of Sutro & Co. Incorporated, 11150 Santa Monica Boulevard, Suite 1500, Los
Angeles, California (or such other place as may be agreed upon by the Company
and the Representatives) at 6:00 a.m., local time, on the fourth full business
day (assuming pricing after 4:30 p.m. New York Time) (unless such time and date
are postponed in accordance with the terms of this Agreement) following the date
the Registration Statement becomes effective (or, if the Company has elected to
rely upon Rule 430A of the Act, the third business day after determination of
the initial offering price), or at such other time as shall be agreed upon by
you and the Company.
Delivery of certificates for the Firm Common Shares shall be made by
or on behalf of the Company to you, for the respective accounts of the several
Underwriters, against payment by you, for the accounts of the several
Underwriters, of the purchase price therefor by wire transfers payable in same
day funds to such account as the Company shall have designated to the
Representatives in writing at least two business days prior to the First Closing
Date. The certificates for the Firm Common Shares shall be registered in such
names and denominations as you shall have requested at least two business days
prior to the First Closing Date, and shall be made available for checking and
packaging on the business day preceding the First
Closing Date at such location in [New York, New York] as may be designated by
you. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters. The time and date of such delivery shall be referred to herein
as the "First Closing Date."
(c) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 525,000 (15% OF FIRM COMMON
SHARES) Optional Common Shares at the purchase price per share to be paid by the
Underwriters for the Firm Common Shares, for use solely in covering any
over-allotments made by the Underwriters for the account of the Underwriters in
the sale and distribution of the Firm Common Shares. The option granted
hereunder may be exercised at any time (but not more than once) within 30 days
after the first date that any of the Common Shares are released by you for sale
to the public, upon notice by you to the Company setting forth the aggregate
number of Optional Common Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for such Optional
Common Shares are to be registered and the time and place at which such
certificates are to be delivered. Such time of delivery (which may not be
earlier than the First Closing Date and being herein referred to as the "Second
Closing Date") shall be determined by you, but if at any time other than the
First Closing Date shall not be earlier than two nor later than three full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Company
pursuant to such notice of exercise by a fraction, the numerator of which is the
number of Firm Common Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is _______ (subject
to such adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares being
purchased will be made available for checking and packaging on the business day
preceding the Second Closing Date at such location in [New York, New York] as
may be designated by you. The manner of payment for and delivery of such
Optional Common Shares shall be the same as for the Firm Common Shares purchased
from the Company as specified in the to preceding paragraphs. At any time
before lapse of the option, you may cancel such option by giving written notice
of such cancellation to the Company. If the Underwriters purchase any Optional
Common Shares, the Company shall pay an additional fee of ____% of the aggregate
purchase price of the Optional Common Shares purchased. The fee shall be paid
on the Second Closing Date and shall be offset against the portion of the
aggregate purchase price for the Optional Common Shares payable to the Company
by the Underwriters. Except to the extent modified by the paragraph (c), all
provisions of this Agreement relating to the transactions contemplated to occur
on the Closing Date for the sale of the Firm Shares shall apply.
(d) You have advised the Company that each Underwriter has
authorized you to accept delivery of its Common Shares, to make payments and
receipt therefore. You, individually and not as the Representatives of the
Underwriters, may (but shall not be obligated to) make payments for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by you by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this Agreement.
(e) Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the Common
Shares as soon after the effective date of the Registration Statement as in your
judgment is advisable and at the public offering price per share (the "Offering
Price") set forth on the cover page of and on the terms set forth in the final
prospectus, if one is used, or on the first page of the Term Sheet, if one is
used.
SECTION 5. Covenants of the Company and the Selling Shareholders.
The Company hereby covenants and agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to you of such timely
filing. The Company will promptly advise you in writing (i) of the receipt of
any comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or after
it becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have become
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for that purpose. If the Commission shall enter any such
stop order at any time, the Company will use all commercially reasonable efforts
to obtain the lifting of such order at the earliest possible time. The Company
will not file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or the
Prospectus if you have not been furnished with a copy a reasonable
time prior to such filing, if you reasonably object to the Company filing
such document or if the document to be filed is not in compliance with the
Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable the Underwriters to continue the distribution of the
Common Shares and will use its best efforts to cause the same to become
effective as promptly as possible. The Company will fully and completely
comply with the provisions of Rule 430A of the Rules and Regulations with
respect to information omitted from the Registration Statement in reliance
upon such Rule.
(c) If at any time during which a prospectus relating to the
Common Shares is required to be delivered under the Act, any event occurs, as
a result of which the Prospectus, including any amendments or supplements,
would include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or if it is necessary at any time to amend
the Prospectus, including any amendments or supplements, to comply with the
Act or the Rules and Regulations, the Company will promptly advise you
thereof and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement, which will correct such statement or
omission or an amendment or supplement which will effect such compliance and
will use its best efforts to cause the same to become effective as soon as
possible.
(d) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company,
at its expense, will furnish to you or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the
purposes contemplated in the Act.
(e) As soon as practicable, but not later than 50 days after the
end of the first quarter ending after the first anniversary of the effective
date of the Registration Statement (as defined in Rule 158(c) of the Rules
and Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(f) The Company shall cooperate with you and your counsel to
qualify or register the Common Shares for sale under (or obtain exemptions
from the
application of) the Blue Sky laws of such jurisdictions as you designate,
will comply with such laws and will continue such qualifications,
registrations and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not presently qualified or where
it would be subject to taxation as a foreign corporation. The Company will
advise you promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending
such qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(g) For a period of five years from the First Closing Date, the
Company will furnish to the Representatives: (i) as soon as practicable
after the end of each fiscal year, copies of the Annual Report of the Company
containing the consolidated balance sheet of the Company as of the close of
such fiscal year and consolidated statements of income, shareholders' equity
and cash flows for the year then ended and the opinion thereon of the
Company's independent public accountants; (ii) as soon as practicable after
the filing thereof, copies of each proxy statement and annual and other
report filed by the Company with the Commission, the NASD or any securities
exchange; and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its Common Stock.
(h) During the period of 180 days after the effective date of
the Registration Statement, without the prior written consent of Sutro & Co.
Incorporated (which consent may be withheld at the sole discretion of Sutro &
Co. Incorporated), the Company will not issue, offer, sell or otherwise
dispose of any shares of Common Stock of the Company or any securities
convertible into or exchangeable for shares of Common Stock of the Company,
other than (i) the sale of the Common Shares hereunder; (ii) the issuance of
Common Stock of the Company pursuant to the exercise of options under the
Company's stock plans disclosed in the Prospectus; (iii) the granting of
stock options after the date of the Prospectus under the Company's stock
plans disclosed in the Prospectus; (iv) the issuance of warrants and Common
Shares to the holders of common stock of Hemet and common stock of Valley, as
described in the Prospectus. For purposes of this subsection (h), an offer
by the Company to exchange its securities for those of a bank or other
financial institution, or a corporation providing services related to the
banking industry, or an offer to exchange its securities for the assets of
such an entity, shall not constitute an offer to sell the Company's
securities and shall not require your consent. The execution of an agreement
to acquire such an entity or its assets in exchange for securities of the
Company, and the issuance of securities on the completion of the agreement,
shall not constitute an offer,
issuance, sale or disposition of the Company's securities for purposes of
this subsection (h), provided the shares issues in such transaction are
subject to a lock-up agreement or other restriction, in a form reasonably
acceptable to you, until the end of the period of the 180 days after the
effective date of the Registration Statement.
(i) The Company will apply the net proceeds of the sale of the
Common Shares substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to designate and
maintain the Common Stock for quotation on the Nasdaq National Market.
(k) The Company shall comply with all registration, filing and
reporting obligations of the Exchange Act which may from time to time be
applicable to the Company.
(l) The Company shall make reasonable efforts to acquire and
maintain Directors' and Officers' Liability Insurance in reasonable amounts,
at reasonable costs and on reasonable terms (which shall include payment of
such officers' and directors' costs of defense as and when incurred) from a
responsible insurer(s).
(m) The Company will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
You, on behalf of the Underwriters, may, in your sole discretion,
waive in writing the performance by the Company of any one or more of the
foregoing covenants or extend the time for their performance.
The Selling Shareholders hereby covenant and agree, severally but
not jointly,
(a) Each Selling Shareholder will not, directly or indirectly,
without the prior written consent of the Representatives, take directly or
indirectly and action designed to, or which might in the foreseeable future
reasonably be expected, to cause or result in, stabilization or manipulation
of the price of any securities of the Company.
(b) Each Selling Shareholder consents to the use of the
Prospectus and any amendment or supplement thereto by the Underwriters and
all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the
Shares and for such period of time thereafter as the Prospectus is required
to be delivered in connection therewith.
(c) Each Major Selling Shareholder will not, directly or
indirectly, without the prior written consent of the Representatives, offer,
sell, grant any option to purchase or otherwise dispose (or announce any
offer, sale, grant of any option to purchase or other disposition) of any
shares of Common Stock or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock, for a period of 90 days after the
date hereof.
SECTION 6. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or
is terminated, the Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and
in connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing: (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and
engraving costs), (ii) all fees and expenses of the registrar and transfer
agent of the Common Stock, (iii) all necessary issue, transfer and other
taxes in connection with the issuance and sale of the Common Shares to the
Underwriters, (iv) all fees and expenses of counsel and independent
accountants of the Company, (v) all fees and expenses of counsel to the
Underwriters for legal fees incurred in connection with qualifying or
registering (or obtaining exemptions from the qualification or registration
of) all or any part of the Common Shares for offer and sale under the United
States state "Blue-Sky" laws; (vi) all fees and reasonable out-of-pocket
expenses of counsel to the Underwriters for legal fees incurred other than as
described in (v) above; (vii) all costs and expenses incurred in connection
with the printing, filing, shipping and distribution of the Registration
Statement, each Preliminary Prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements
provided for herein, this Agreement, the Agreement Among Underwriters, the
Selected Dealers Agreement, the Underwriters' Questionnaire, the
Underwriters' Power of Attorney, the Preliminary and the Final Blue Sky
Memoranda, (viii) all filing fees incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from
the qualification or registration of) all or any part of the Common Shares
for offer and sale under the U.S. state Blue Sky laws, (ix) the NASD and any
fees and expenses relating to the inclusion of the Common Shares on the
Nasdaq National Market, (x) all other fees, costs and expenses referred to in
Item 13 of the Registration Statement, and (xi) all of your out-of-pocket
expenses up to an aggregate of $15,000, unless we consent to a higher amount.
Except as provided in this Section 6, Section 8 and Section 10 hereof, the
Underwriters shall pay all of their own expenses, including the fees and
disbursements of their counsel (excluding those relating to (i) fees and
expenses of counsel and (ii) qualification, registration or exemption under
the securities and Blue
Sky laws and the Blue Sky Memoranda referred to above).
SECTION 7. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Shareholders herein
set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be, to the accuracy of the statements of
the Company and the Selling Shareholders made pursuant to the provisions
hereof, to the performance by the Company and the Selling Shareholders of
their obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. (or in the case of a registration statement filed
pursuant to Rule 462(b) of the Rules and Regulations relating to the Common
Shares, not later than 10:00 P.M.), Washington, D.C. time, on the date of
this Agreement, or at such later time as shall have been consented to by you;
if the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and Regulations; the Form 8-A shall have become effective
pursuant to the Exchange Act and the Rules and Regulations; and prior to such
Closing Date, no stop order suspending the effectiveness of the Registration
Statement or the Form 8-A shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge
of the Company or you, shall be contemplated by the Commission; and any
request of the Commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to your
satisfaction.
(b) Since the respective dates as of which information is given
in the Registration Statement and Prospectus, (i) except as set forth in or
contemplated by the Registration Statement or the Prospectus, there shall not
have been any change in the capital stock of the Company or any material
change in the indebtedness (other than in the ordinary course of business) of
the Company, the Company Subsidiaries, either of the Banks or the Hemet
Subsidiaries, (ii) except as set forth in or contemplated by the Registration
Statement or the Prospectus, no material verbal or written agreement or other
transaction shall have been entered into by the Company, the Company
Subsidiaries, either of the Banks or the Hemet Subsidiaries, which is not in
the ordinary course of business or which could reasonably be expected to
result in a material reduction in the future earnings of the Company or
either of the Banks, (iii) no loss or damage (whether or not insured) to the
property of the Company, either of the Banks or the Hemet Subsidiaries shall
have been sustained which materially and adversely
affects the condition (financial or otherwise), business, properties, results
of operations or prospects of the Company or either of the Banks, (iv) no
legal or governmental action, suit or proceeding affecting the Company, the
Company Subsidiaries, either of the Banks or the Hemet Subsidiaries which is
material to the Company or either of the Banks, or which affects or may
affect the transactions contemplated by this Agreement shall have been
instituted or threatened and (v) there shall not have been any material
adverse change in the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company, the Banks or
the Hemet Subsidiaries, which makes it impractical or inadvisable in your
reasonable judgment to proceed with the public offering or purchase the
Common Shares as contemplated hereby.
(c) There shall have been delivered to you the Firm Common
Shares and, if any Optional Common Shares are then being purchased, such
Optional Common Shares.
(d) The NASD, upon review of the terms of the public offering of
the Common Shares, shall not have objected to the fairness and reasonableness
of the underwriting terms and arrangements as proposed in this Agreement.
(e) There shall have been furnished to you, as Representatives
of the Underwriters on each Closing Date, in form and substance reasonably
satisfactory to you, except as otherwise expressly provided below:
(i) An opinion of Morrison & Foerster, LLP counsel for the
Company, addressed to the Underwriters and dated the First Closing Date or
the Second Closing Date, as the case may be, to the effect that:
(1) The Company, the Company Subsidiaries and, to such
counsel's knowledge, each of the Banks and the Hemet Subsidiaries, has been
duly organized and is validly existing in good standing under the laws of
its jurisdiction of incorporation, with corporate power to own its
properties and assets, to carry on its business as described in the
Prospectus, and, as to the Company, to enter into this Agreement and to
perform its obligations under this Agreement. The Company and, to such
counsel's knowledge, the Banks and the Hemet Subsidiaries are not required
to be qualified to do business as a foreign corporation in any
jurisdiction, except for Valley, which is qualified to do business in
Oregon.
(2) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus; the Common Stock and the preferred stock of the Company conform
in all material respects to the description thereof contained in the
Prospectus; all of the
outstanding securities of the Company have been duly authorized by all
necessary corporate action on the part of the Company and are validly
issued, fully paid and non-assessable.
(3) The statements in the Prospectus under the caption
"Description of Capital Stock," insofar as they summarize provisions of the
Articles of Incorporation and Bylaws of the Company, and the statements in
the Prospectus under the caption "Supervision and Regulation," insofar as
they summarize matters of law, fairly present the information required by
Form S-1.
(4) To the best of their knowledge, the outstanding shares
of the capital stock of each of the Banks and the Hemet Subsidiaries, have
been duly authorized by all necessary corporate action on the part of each
such corporation, are validly issued, fully paid and non-assessable;
(5) Holders of the capital stock of the Company are not
entitled to any preemptive right, subscription right or similar right to
subscribe to any additional shares of the Company's capital stock under the
Company's Articles of Incorporation or Bylaws or any other agreement.
(6) The Registration Statement has become effective
under the Act and the Form 8-A has become effective under the Exchange
Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or the Form 8-A has been
issued or threatened by the Commission. Such counsel has reviewed the
statements set forth in the Registration Statement and Prospectus under
the headings "Risk Factors--Government regulation may impair our
operations or restrict our growth;" "Risk Factors--We face potential
exposure to legal expenses and damages in a lawsuit," "Risk Factors--Our
ability to pay dividends is limited;" "Risk Factors--Bank regulatory
laws could discourage changes in our ownership" "Risk
Factors--Provisions in our charter
documents and agreements we have made will delay or prevent changes in
control of our corporation or our management;" "The Acquisitions;"
"Business of Pacific Community Banking Group--Supervision and
Regulation;" "Business of Pacific Community Banking Group--Litigation;"
"Business of the Bank of Hemet--Supervision and Regulation;" "Business
of the Bank of Hemet--Litigation;" "Business of Valley Bank--Supervision
and Regulation;" "Business of Valley Bank--Litigation;" "Supervision and
Regulation;" "Description of Capital Stock;" "Shares Eligible for
Future Sale;" and "Additional Information" and, to the extent they
constitute a summary of legal matters, documents or proceedings, such
statements accurately summarize in all material respects, the
information called for with respect to such legal matters, documents and
proceedings under the 1933 Act and 1933 Act Regulations.
(7) The Registration Statement and each amendment thereto,
on the date it was filed, complied in all material respects with the
requirements for registration statements on Form S-1 under the Act and the
Rules and Regulations in effect at the date of filing, except such counsel
need express no opinion concerning the financial statements and other
financial information contained therein; any required filing of a
Registration Statement or Prospectus has been made in the manner and within
the time period required by the Rules and Regulations and no stop order
suspending the use of the Prospectus or any Registration Statement has been
issued, and, to the knowledge of such counsel, no proceedings for the
purpose has been instituted or contemplated under the Rules and
Regulations; the descriptions contained and summarized in the Registration
Statement and in the Prospectus of contracts and other documents, are
accurate and fairly describe in all material respects such contracts or
documents; to the knowledge of such counsel, there are no contracts or
documents which are required by the Rules and Regulations to be described
in the Registration Statement or Prospectus or to be filed as exhibits to
the Registration Statement which are not described or filed as required by
the Rules and Regulations; there is not pending or threatened against the
Company or, to the knowledge of such counsel after reasonable
investigation, either of the Banks any action, suit,
proceeding or investigation before or by any court, regulatory body, or
administrative agency or any other governmental agency or body, domestic
or foreign, of a character required to be disclosed in the Registration
Statement or Prospectus which is not so disclosed therein.
(8) Such counsel does not know of any contract or other
document of a character required to be filed as an exhibit to the
Registration Statement which is not filed as required.
(9) The execution, delivery and performance of this
Agreement, the Hemet Reorganization Agreement and the Valley Reorganization
Agreement have been duly authorized by all necessary corporate action on
the part of the Company, and this Agreement, the Hemet Reorganization
Agreement and the Valley Reorganization Agreement have been duly executed
and delivered by the Company; and this Agreement, the Hemet Reorganization
Agreement and the Valley Reorganization Agreement are valid and binding
agreements of the Company enforceable in accordance with their respective
terms, and the transactions contemplated by the Reorganization Agreements
have been consummated.
(10) No order, consent, permit or approval by any California
or federal governmental authority is required on the part of the Company
for the execution and delivery of this Agreement, or for the issuance and
sale of the Common Shares being sold by the Company under this Agreement,
except as have been obtained under the Act and as may be required under
applicable bank regulatory laws, Blue Sky laws or state securities laws or
by the NASD.
(11) The execution and delivery by the Company of this
Agreement the Hemet Reorganization Agreement and the Valley Reorganization
Agreement, and the performance of the Company's obligations on or prior to
the date of this opinion under this Agreement do not (i) violate or
conflict with any state or federal statute, rule or regulation of any
regulatory body, administrative agency or other governmental agency or body
that such counsel has, in the exercise of customary professional diligence,
recognized as applicable to the Company or to transactions of the type
contemplated by this Agreement, except that such counsel need express no
opinion regarding any federal securities laws, the Blue Sky or state
securities laws or with respect to Section 10 of this Agreement, except as
otherwise expressly stated in such counsel's opinion and no consent,
approval, authorization or order of any court, regulatory body or
administrative agency or
other governmental agency or body, domestic or foreign, has been or is
required for the Company's performance of this Agreement or the
consummation of the transactions contemplated hereby, except such as
have been obtained under the Rules and Regulations or may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution by the underwriter of the Shares; or (ii) violate,
breach or result in a default under the articles or certificates of
incorporation or bylaws of the Company or under any of the agreements,
instruments, contracts, orders, injunctions or judgments binding on the
Company or which may be affected by the issuance of capital stock of the
Company; or will result in the creation or imposition of any lien,
charge or encumbrance upon, any property or assets of the Company or the
Banks;
(12) To such counsel's knowledge, the conduct of the
business of the Company and the Banks, respectively, as described in the
Preliminary Prospectus, the Prospectus and Registration Statement is not in
violation of any federal or state statute, administrative regulation or
other law, and the Company and the Banks have each obtained all licenses,
permits, franchises, certificates and other authorizations from state,
federal and other regulatory authorities as are necessary or required for
the ownership, leasing and operation of their respective properties and the
conduct of their respective businesses as presently conducted and as
contemplated in the Prospectus and the Registration Statement; the Company
is duly licensed by the Federal Reserve Board as a bank holding company;
each of the Banks is duly licensed by the California Department of
Financial Institutions to engage in the business of banking and to conduct
its business as described in the Prospectus
and the Registration Statement, and the deposits of each of the Banks
are insured by the Federal Deposit Insurance Corporation up to the
maximum amounts allowable under applicable law;
(13) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(14) The Company has obtained all requisite California and
federal governmental and regulatory approvals, orders, consents or permits
necessary to consummate the transactions contemplated by the Reorganization
Agreements.
Such counsel shall state that in connection with such counsel's
participation in the preparation of the Registration Statement, the Preliminary
Prospectus and the Prospectus, participation in conferences with officers and
representatives of the Company and the Banks, and the independent public
accountants of the Company and the Banks, in connection with the preparation of
the Registration Statement, the Preliminary Prospectus and the Prospectus, it
does not believe that the Registration Statement as of its effective date
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein, in light of the circumstances under which
they were made, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and counsel shall
state that it does not believe that the Prospectus as of its date and as of the
date of such opinion, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. However, such counsel need express no opinion or belief as to
the financial statements contained in the Registration Statement, the
Preliminary Prospectus or the Prospectus.
In rendering such opinions, such counsel may rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
the Company and public officials and the opinion of even date herewith
[addressed to you] from Knecht & Hansen. References to the Registration
Statement shall include any amendment or supplement thereto at the date of such
opinion.
(ii) An opinion of Gary Steven Findley & Associates, as counsel to
Bank of Hemet addressed to the Underwriters and dated the First Closing Date to
the effect that:
(1) Hemet has been duly organized and is validly existing
in good standing under the laws of its jurisdiction of incorporation, with
corporate power to own its properties and assets, to carry on its business
as described in the Prospectus. The only subsidiaries of Hemet are the
Hemet Subsidiaries, all of which are duly organized and validly existing
under the laws of their respective jurisdictions of incorporation, with
corporate power to own their properties and assets, to carry on their
respective businesses as described in the Prospectus. Neither Hemet nor any
of the Hemet Subsidiaries is required to be qualified to do business as a
foreign corporation in any jurisdiction.
(2) The authorized and outstanding capital stock of Hemet
is as set forth in the Bank S-4, including any amendments thereto (the
"Bank S-4"); the Common Stock and the preferred stock of Hemet conform in
all material respects to the description thereof contained in the Bank S-4;
the outstanding shares of the capital stock of Hemet have been duly
authorized by all necessary corporate action on the part of Hemet and are
validly issued, fully paid and non-assessable.
(3) The statements in the Bank S-4 under the caption
"Description of Capital Stock", insofar as they summarize provisions of the
Articles of Incorporation and Bylaws of Hemet, and the statements in the
Bank S-4 under the caption "Supervision and Regulation" and "Dissenters'
Rights of Appraisal", insofar as they summarize matters of law, fairly
present the information required by Bank S-4.
(4) The outstanding shares of the capital stock of the
Hemet Subsidiaries have been duly authorized by all necessary corporate
action on the part of each such corporation, are validly issued, fully paid
and non-assessable.
(5) Holders of the capital stock of Hemet are not entitled
to any preemptive right, subscription right or similar right to subscribe
to any additional shares of Hemet's capital stock under the Hemet Articles
of Incorporation or Bylaws or any other agreement.
(6) The execution, delivery and performance of the Hemet
Reorganization Agreement has been duly authorized by all necessary
corporate action on the part of Hemet, and the Hemet Reorganization
Agreement has been duly executed and delivered by Hemet; and the Hemet
Reorganization Agreement is a valid and binding agreement of Hemet
enforceable in accordance with its terms.
(7) Hemet has obtained all required orders, consents,
permits or approvals of all California or federal governmental authorities
required on the part of Hemet for the execution, delivery and consummation
of the transactions contemplated by the Hemet Reorganization Agreement.
(8) The performance of Hemet's obligations under the Hemet
Reorganization Agreement or prior to the date of this opinion under this
Agreement do not (i) violate or conflict with any state or federal statute,
rule or regulation of any regulatory body, administrative agency or other
governmental agency or body that such counsel has, in the exercise of
customary professional diligence, recognized as applicable to Hemet or to
transactions of the type contemplated by the Hemet Reorganization Agreement
and no consent, approval, authorization or order of any court, regulatory
body or administrative agency or other governmental agency or body,
domestic or foreign, has been or is required for Hemet's performance under
the Reorganization Agreement or the consummation of the transactions
contemplated thereby, except such as have been obtained; or (ii) violate,
breach or result in a default under the articles of incorporation or bylaws
of Hemet or under any of the agreements, instruments, contracts, orders,
injunctions or judgments binding on Hemet; or will result in the creation
or imposition of any lien, charge or
encumbrance upon, any property or assets of Hemet;
(9) To such counsel's knowledge, the conduct of the
business of Hemet and the Hemet Subsidiaries as described in the Prospectus
and Registration Statement and the Bank S-4 is not in violation of any
federal or state statute, administrative regulation or other law, and Hemet
and the Hemet Subsidiaries have obtained all licenses, permits, franchises,
certificates and other authorizations from state, federal and other
regulatory authorities as are necessary or required for the ownership,
leasing and operation of their respective properties and the conduct of
their respective businesses as presently conducted and as contemplated in
the Prospectus, the Registration Statement and the Bank S-4; Hemet is duly
licensed by the Department of Financial Institutions to engage in the
business of banking and to conduct its business as described in the
Preliminary Prospectus, the Prospectus and the Registration Statement, and
the deposits of Hemet are insured by the Federal Deposit Insurance
Corporation up to the maximum amounts allowable under applicable law;
Such counsel shall state that in connection with such counsel's
participation in the preparation of the Bank S-4, participation in conferences
with officers and representatives of Hemet, and the independent public
accountants of Hemet, in connection with the preparation of the Registration
Statement, the Prospectus and the Bank S-4, it does not believe that the
Registration Statement or the Bank S-4 as of their respective effective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading as relating to Hemet and the Hemet Subsidiaries, and counsel
shall state that it does not believe that the Prospectus or the Bank S-4 as of
its date and as of the date of such opinion, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading as relates to Hemet and the Hemet
Subsidiaries. However, such counsel need express no opinion or belief as to the
financial statements and other financial information contained in
the Registration Statement or the Prospectus.
In rendering such opinions, such counsel may rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
Hemet and public officials. References to the Registration Statement shall
include any amendment or supplement thereto at the date of such opinion.
(iii) An opinion of Aldrich & Bonnefin, as counsel to Valley,
addressed to the Underwriters and dated the First Closing Date to the effect
that:
(1) Valley has been duly organized and is validly existing
in good standing under the laws of its jurisdiction of incorporation, with
corporate power to own its properties and assets, to carry on its business
as described in the Prospectus. Valley has no subsidiaries. Valley is not
required to be qualified to do business as a foreign corporation in any
jurisdiction, except for Oregon.
(2) The authorized and outstanding capital stock of Valley
is as set forth in the Registration Statement on the Bank S-4; the Common
Stock of Valley conforms in all material respects to the description
thereof contained in the Bank S-4.
(3) The statements in the Bank S-4 under the caption
"Description of Capital Stock", insofar as they summarize provisions of the
Articles of Incorporation and Bylaws of Valley, and the statements in the
Bank S-4 under the caption "Supervision and Regulation" and "Dissenters'
Rights", insofar as they summarize matters of law, fairly present the
information required by Form S-4.
(4) The outstanding shares of the capital stock of Valley
have been duly authorized by all necessary corporate action on the part of
Valley, are validly issued, fully paid and non-assessable, except for 7,872
shares issued to Kenneth Ray.
(5) Holders of the capital stock of Valley are not entitled
to any subscription right or similar right to subscribe to any additional
shares of Valley's capital stock under the Valley Articles of
Incorporation or Bylaws or any
other agreement, except for certain preemptive rights.
(6) The execution, delivery and performance of the Valley
Reorganization Agreement has been duly authorized by all necessary
corporate action on the part of Valley, and the Valley Reorganization
Agreement has been duly executed and delivered by Valley; and the Valley
Reorganization Agreement is a valid and binding agreement of Valley
enforceable in accordance with its terms.
(7) Valley has obtained all required orders, consents,
permits or approvals of all California or federal governmental authorities
required on the part of Valley for the execution, delivery and consummation
of the transactions contemplated by the Valley Reorganization Agreement.
(8) The performance of Valley's obligations under the
Valley Reorganization Agreement or prior to the date of this opinion under
this Agreement do not (i) violate or conflict with any state or federal
statute, rule or regulation of any regulatory body, administrative agency
or other governmental agency or body that such counsel has, in the exercise
of customary professional diligence, recognized as applicable to Valley or
to transactions of the type contemplated by the Valley Reorganization
Agreement and no consent, approval, authorization or order of any court,
regulatory body or administrative agency or other governmental agency or
body, domestic or foreign, has been or is required for Valley's performance
under the Reorganization Agreement or the consummation of the transactions
contemplated thereby, except such as have been obtained; or (ii) violate,
breach or result in a default under the articles of incorporation or bylaws
of Valley, except for certain insurance policies that will terminate as a
result of the Valley merger, or under any of the agreements, instruments,
contracts, orders, injunctions or judgments binding on Valley; or will
result in the creation or imposition of any lien, charge or encumbrance
upon, any property or assets of Valley;
(9) To such counsel's knowledge, the conduct of the
business of Valley as described in the Prospectus, Registration Statement
and the Bank S-4 is not in violation of any federal or state statute,
administrative regulation or other law, and Valley has obtained all
licenses, permits, franchises, certificates and other authorizations from
state, federal and other regulatory authorities as are necessary or
required for the ownership, leasing and operation of their respective
properties and the conduct of their respective businesses as presently
conducted and as contemplated in the Prospectus, the Registration Statement
and the Bank S-4; Valley is duly licensed by the California Department of
Financial Institutions to engage in the business of banking and to conduct
its business as described in the Preliminary Prospectus, the Prospectus and
the Registration Statement, and the deposits of Valley are insured by the
Federal Deposit Insurance Corporation up to the maximum amounts allowable
under applicable law;
Such counsel shall state that in connection with such counsel's
participation in the preparation of the Registration Statement and the
Prospectus, participation in conferences with officers and representatives of
Valley, and the independent public accountants of Valley, in connection with the
preparation of the Registration Statement and the Prospectus, it does not
believe that the Registration Statement or the Bank S-4 as of their respective
effective dates contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading as relating to Valley, and counsel shall state
that it does not believe that the Prospectus or the Bank S-4 as of its date and
as of the date of such opinion, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading as relates to Valley. However, such counsel need express no
opinion or belief as to the financial statements and other financial information
contained in the Registration Statement, the Prospectus or the Bank S-4.
In rendering such opinions, such counsel may rely as to matters of
fact, to the extent deemed proper, on certificates of responsible officers of
Valley and public officials. References to the Registration Statement shall
include any amendment or supplement thereto at the date of such opinion.
(iv) Such opinion or opinions of Morrison & Foerster, LLP,
addressed to the Underwriters, dated the First Closing Date to the effect that:
(1) Assuming the genuineness of signature and capacity of
each Selling Shareholder or the Attorney in Fact, as the case may be, (a)
each Selling Shareholder has full legal right, power and authority to enter
into this Agreement and to sell, assign, transfer and deliver in the manner
provided herein the shares sold by such Selling Shareholder, (b) this
Agreement has been duly executed and delivered by such Selling Shareholder,
and (c) this Agreement, assuming the due authorization, execution and
delivery by each other party hereto and further assuming it is a valid and
binding agreement of each of the Underwriters, is a valid and binding
agreement of such Selling Shareholder, enforceable against such Selling
Shareholder in accordance with its terms (except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or affecting creditors' rights
generally and by general principals of equity relating to the availability
of remedies and except as rights to indemnity and contribution may be
limited by federal or state securities laws and the public policy
underlying such laws);
(2) None of the execution, delivery or performance of this
Agreement, the Power of Attorney and the Custody Agreement by such Selling
Shareholder and the consummation by such Selling Shareholder of the
transactions herein and therein contemplated, conflict with or result in a
breach of, or default under, any indenture, mortgage, deed of trust, voting
trust agreement, shareholders' agreement, note agreement or other agreement
or other instrument to which such Selling Shareholder is a party or by
which such Selling Shareholder is bound or to which any of the property or
any of the Selling Shareholders is subject, or the charter or bylaws of any
of the Selling Shareholders that are corporations, and nothing has come to
counsel's attention which causes such counsel to believe that such actions
will result in any violation of any federal or California law, rule,
administrative regulation or
court decree applicable to such Selling Shareholder (other than state
securities or blue sky laws or regulations, as to which such counsel need
not express any opinion);
(3) A Custody Agreement has been duly executed and
delivered by each Selling Shareholder and, assuming the due authorization,
execution and delivery of the Power of Attorney and Custody Agreement by
the other parties thereto, each constitutes the valid and binding agreement
of each Selling Shareholder enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally or by general principles of equity
relating to the availability of remedies and except as rights to indemnity
or contribution may be limited by federal or state securities laws and the
public policy underlying such laws;
(4) Upon the delivery of the Common Shares to be sold
hereunder by each Selling Shareholder and payment therefor in accordance
with the terms of this Agreement and assuming that each of the Underwriters
which has severally purchased such Shares obtains control of such Common
Shares without notice of any adverse claim (within the meaning of Section
8303(a) of the Uniform Commercial Code), such Underwriter will have
acquired all of the rights of such Selling Shareholder to the Common Shares
sold by such Selling Shareholder hereunder, and in addition will have
acquired title to such Common Shares free and clear of any adverse claim.
(v) Such opinion or opinions of Manatt, Phelps & Phillips, LLP,
counsel for the Underwriters, dated the First Closing Date or the Second Closing
Date, as the case may be, with respect to such other matters as you may
reasonably require, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such matters.
In connection with such opinions, such counsel may rely on representations or
certificates of officers of the Company, the Banks and governmental officials.
(vi) A certificate of the Company executed by the Chief Executive
Officer and the Chief Financial Officer of the Company (who may be the same
person), dated the First Closing Date or the Second Closing Date, as the case
may be, to the effect that:
(1) The representations and warranties of the
Company set forth in Section 1 of this Agreement and Article V of both
of the Reorganization Agreements were true and correct as of the date
of this
Agreement and are true and correct in all material respects (provided,
however, that where a representation or warranty is already qualified
as to materiality, such materiality qualifier shall be disregarded for
purposes of this condition) as of the First Closing Date or the Second
Closing Date, as the case may be, and the Company has complied in all
material respects with all the agreements and covenants and satisfied
in all material respects all the conditions on its part to be
performed or satisfied on or prior to such Closing Date, as contained
herein and as in the Hemet Reorganization Agreement and the Valley
Reorganization Agreement.
(2) The Commission has not issued any order
preventing or suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to
the best of the knowledge of the respective signers, no proceedings
for that purpose have been instituted or are pending or contemplated
under the Act.
(3) Each of the respective signers of the
certificate has carefully examined the Registration Statement, the
Preliminary Prospectus and the Prospectus; in his opinion and to the
best of his knowledge, the Registration Statement, the Preliminary
Prospectus and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein regarding
the Company; and neither the Registration Statement nor the Prospectus
nor any amendments or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be
stated therein, in light of the circumstances under which it was made,
or necessary to make the statements therein not misleading.
(4) Since the initial date on which the Registration
Statement was filed, no agreement, whether written or oral,
transaction or event has occurred which should have been set forth in
an amendment to the Registration Statement or in a supplement to or
amendment of any prospectus which has not been disclosed in such a
supplement or amendment.
(5) Since the respective dates as of which
information is given in the Registration Statement, the Preliminary
Prospectus and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been any material
adverse change or a development involving a material adverse change in
the condition
(financial or otherwise), business, properties, results of
operations, management or prospects of the Company, either of the
Banks or the Hemet Subsidiaries; and no legal or governmental action,
suit or proceeding is pending or threatened against the Company,
either of the Banks or the Hemet Subsidiaries which is material to the
Company or either of the Banks, whether or not arising from
transactions in the ordinary course of business, or which may
adversely affect the transactions contemplated by this Agreement;
since such dates and except as so disclosed, neither the Company, or
either of the Banks or the Hemet Subsidiaries have entered into any
verbal or written agreement or other transaction which could result in
a material reduction in the future earnings of the Company or either
of the Banks or incurred any material liability or obligation, direct,
contingent or indirect, made any change in its capital stock, made any
material change in its short-term debt or funded debt or repurchased
or otherwise acquired any of the Company's capital stock; and the
Company has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
shareholders of record on a date prior to the First Closing Date or
Second Closing Date; and
(6) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus
and except as disclosed in or contemplated by the Prospectus, none of
the Company, the Banks or the Hemet Subsidiaries has sustained a
material loss or damage by strike, fire, flood, windstorm, accident or
other calamity (whether or not insured). References to the
Registration Statement and the Prospectus in this paragraph are to
such documents as amended and supplemented at the date of the
certificate.
(vii) A certificate of Hemet executed by the Chief Executive Officer
and the Chief Financial Officer of Hemet, dated the First Closing Date to the
effect that:
(1) The representations and warranties of Hemet set
forth in Article IV of the Hemet Reorganization Agreement were true
and correct as of the date of this Agreement and are true and correct
in all material respects (provided, however, that where a
representation or warranty is already qualified as to materiality,
such materiality qualifier shall be disregarded for purposes of this
condition) as of the First Closing Date and Hemet has complied in all
material respects with all the agreements and covenants and satisfied
in all material respects all the conditions on its part to be
performed or satisfied on or prior to such First Closing Date, as
contained in the Hemet Reorganization Agreement.
(2) Each of the respective signers of the
certificate has carefully examined the Registration Statement and the
Prospectus and the Hemet S-4; in his opinion and to the best of his
knowledge, the Registration Statement, the Prospectus and the Hemet
S-4 and any amendments or supplements thereto contain all statements
required to be stated therein regarding Hemet; and neither the
Registration Statement, the Prospectus or the Hemet S-4 nor any
amendments or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to be
stated therein, or necessary to make the statements therein, in light
of the circumstances under which it was made, not misleading, as
regards Hemet.
(3) Since the initial dates on which the
Registration Statement and the Bank S-4 was filed, no agreement to
which Hemet is a party, whether written or oral, transaction or event
has occurred which should have been set forth in an amendment to the
Registration Statement or the Bank S-4 or in a supplement to or
amendment of any prospectus which has not been disclosed in such a
supplement or amendment.
(4) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
and the Bank S-4 and except as disclosed in or contemplated by the
Prospectus, there has not been any material adverse change or a
development involving a material adverse change in the condition
(financial or otherwise), business, properties, results of operations,
management or prospects of Hemet; and no legal or governmental action,
suit or proceeding is pending or threatened against Hemet which is
material to Hemet, whether or not arising from transactions in the
ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; since such dates and
except as so disclosed, Hemet has not entered into any verbal or
written agreement or other transaction which could result in a
material reduction in the future earnings of Hemet or incurred any
material liability or obligation, direct, contingent or indirect, made
any change in its capital stock, made any material change in its
short-term debt or funded debt or repurchased or otherwise acquired
any of Hemet's capital stock; and, except as described in the Bank
S-4, Hemet has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
shareholders of record on a date prior to the First Closing Date; and
(5) Since the respective dates as of which
information is
given in the Registration Statement and the Prospectus and except as
disclosed in or contemplated by the Prospectus, Hemet has not
sustained a material loss or damage by strike, fire, flood, windstorm,
accident or other calamity (whether or not insured). References to the
Registration Statement, the Prospectus and the Bank S-4 in this
paragraph are to such documents as amended and supplemented at the
date of the certificate.
(viii) A certificate of Valley executed by the Chief Executive
Officer and the Chief Financial Officer of Valley, dated the First Closing Date
to the effect that:
(1) The representations and warranties of Valley set
forth in Article IV of the Valley Reorganization Agreement were true
and correct as of the date of this Agreement and are true and correct
in all material respects (provided, however, that where a
representation or warranty is already qualified as to materiality,
such materiality qualifier shall be disregarded for purposes of this
condition) as of the First Closing Date and Valley has complied in all
material respects with all the agreements and covenants and satisfied
in all material respects (provided, however, that where a
representation or warranty is already qualified as to materiality,
such materiality qualifier shall be disregarded for purposes of this
condition) all the conditions on its part to be performed or satisfied
on or prior to such Closing Date.
(2) Each of the respective signers of the
certificate has carefully examined the Registration Statement, the
Prospectus and the Bank S-4; in his opinion and to the best of his
knowledge, the Registration Statement, the Prospectus and the Bank S-4
and any amendments or supplements thereto contain all statements
required to be stated therein regarding Valley; and neither the
Registration Statement nor the Prospectus nor any amendments or
supplement thereto includes any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(3) Since the initial dates on which the
Registration Statement and the Bank S-4 was filed, no agreement to
which Valley is a party, whether written or oral, transaction or event
has occurred which should have been set forth in an amendment to the
Registration Statement or the Bank S-4 or in a supplement to or
amendment of any prospectus which has not been disclosed in such a
supplement or amendment.
(4) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
and the Bank S-4 and except as disclosed in or contemplated by the
Prospectus, there has not been any material adverse change or a
development involving a material adverse change in the condition
(financial or otherwise), business, properties, results of operations,
management or prospects of Valley; and no legal or governmental
action, suit or proceeding is pending or threatened against Valley
which is material to Valley, whether or not arising from transactions
in the ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; since such dates and
except as so disclosed, Valley has not entered into any verbal or
written agreement or other transaction which could result in a
material reduction in the future earnings of Valley or incurred any
material liability or obligation, direct, contingent or indirect, made
any change in its capital stock, made any material change in its
short-term debt or funded debt or repurchased or otherwise acquired
any of Valley's capital stock; and, except as described in the Bank
S-4, Valley has not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
shareholders of record on a date prior to the First Closing Date; and
(5) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus
and except as disclosed in or contemplated by the Prospectus, Valley
has not sustained a material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not insured).
References to the Registration Statement, the Prospectus and the
Valley S-4 in this paragraph are to such documents as amended and
supplemented at the date of the certificate.
(ix) A certificate of the [Major] Selling Shareholders (which may
be signed by the Attorney-in-Fact for the Selling Shareholders), dated the First
Closing Date, to the effect that:
(1) The representations and warranties of such Selling
Shareholder in this Agreement are true and correct, as if made at and
as of the First Closing Date or the Second Closing Date, as the case
may be, and such Selling Shareholder has complied in all material
respects with all the agreements and satisfied all the conditions to
be performed or satisfied by such Selling Shareholder at or prior to
the First Closing Date; and
(2) The Registration Statement and the Prospectus and, if
any,
each amendment and supplement thereto, contain all material statements
required to be included therein regarding such [Major] Selling Shareholder,
and none of the Registration Statement nor any amendment thereto includes
any untrue statement of a material fact regarding such [Major] Selling
Shareholder or omits to state any material fact regarding such [Major]
Selling Shareholder required to be stated therein or necessary to make the
statements therein regarding such [Major] Selling Shareholder in light of
the circumstances under which they were made, not misleading.
(x) On the date before this Agreement is executed and also on each
Closing Date, a letter addressed to you, as Representatives of the
Underwriters, from Arthur Andersen, LP and McGladrey & Pullen, LLP,
independent accountants, the first one to be dated the date of this
Agreement, the second one to be dated the First Closing Date and the third
one (in the event of a second closing hereunder) to be dated the Second
Closing Date, in form and substance reasonably satisfactory to you, to the
effect that they are independent public accountants with respect to the
Company and each of the Banks, respectively, within the meaning of the Act
and the related Rules and Regulations, and containing statements and
information with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(xi) On or before the First Closing Date, letters from each
director and executive officer of the Company and each of the Banks, in
form and substance reasonably satisfactory to you, (i) confirming that for
a period of 90 days from the date of the Prospectus (or 180 days in the
case of those persons who are directors of the Company), such person will
not, directly or indirectly, offer to sell, contract to sell or otherwise
sell, dispose of, loan, pledge or grant any rights or options with respect
to (each, a "Disposition") any shares of the Common Stock, any options or
warrants to purchase any shares of the Common Stock or any securities
convertible into or exercisable or exchangeable for shares of the Common
Stock, whether then owned or thereafter acquired by such person or with
respect to which such person has or thereafter acquires the power of
disposition, or transfer, in any manner, all or a portion of the economic
consequences associated with the ownership of such Common Stock, any
options or warrants to purchase any shares of the Common Stock or any
securities convertible into or exercisable or exchangeable for shares of
the Common Stock, otherwise than (i) as a bona fide gift or gifts, provided
the donee or donees thereof agree in writing to be bound by the terms of
such letter, (ii) as distribution to partners or shareholders of such
person, provided that the distributees thereof agree in writing to be bound
by the terms of such letter, or (iii) with the prior written consent of the
Representatives.
(f) On or before the date any of the Common Shares are released by
the Representatives for sale to the public and on the First Closing Date, the
Common Shares shall be authorized for quotation on the Nasdaq National Market.
(g) The Common Shares shall be qualified for sale in such States
and jurisdictions as the Representatives may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the First Closing Date and the Second Closing Date;
(h) Reserved
(i) On the First Closing Date or the Second Closing Date, as the
case may be, the Underwriters shall have received a certificate, executed by the
Secretary of the Company, dated as of the Closing Date or the Option Closing
Date, as the case may be, certifying the authenticity of attached copies of the
Company's Articles of Incorporation, as amended, Bylaws, as amended, and
resolutions of the Board of Directors approving the transactions contemplated
hereby.
(j) The transactions contemplated by the Reorganization Agreements
shall have been consummated.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Manatt, Phelps & Phillips, LLP, counsel for the Underwriters. The
Company shall furnish you with such manually signed or conformed copies of such
opinions, certificates, letters and documents as you request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company without liability on the part of you or any Underwriter or the Company
except for the expenses to be paid or reimbursed by the Company pursuant to
Sections 6 and 8 hereof and except to the extent provided in Section 10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses. Notwithstanding
any other provisions hereof, if this Agreement shall be terminated by you
pursuant to Section 7 or Section 13(a) or (b) or if the sale to the Underwriters
of the Firm Common Shares at the First Closing Date is not consummated because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses that shall have been
reasonably incurred by them in connection with the proposed purchase
and the sale of the Firm Common Shares, including but not limited to
reasonable fees and disbursements of counsel, printing expenses,
travel expenses, postage and telephone charges relating directly to
the offering contemplated by the Prospectus up to a maximum of
$175,000. Any such termination shall be without liability of any
party to any other party except that the provisions of this Section
and Section 6 and Section 10 hereof shall at all times be effective
and shall apply.
SECTION 9. Effectiveness of Registration Statement. You and the
Company will use your and its respective best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.
SECTION 10. Indemnification and Contribution.
(a) The Company and the Major Selling Shareholders jointly and
severally agree to (i) indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses, joint or
several (and actions in respect thereof), to which such Underwriter or such
controlling person may become subject, under the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the Rules and Regulations or
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company and the Major Selling
Shareholders), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or any
Blue Sky application or other document executed by the Company or the Major
Selling Shareholders filed in any state or other jurisdiction in order to
qualify any or all of the shares of Common Stock offered hereby or arise out
of or are based upon the omission or alleged omission to state in any of them
a material fact required to be stated therein or necessary to make the
statements in any of them not misleading, or arise out of or are based in
whole or in part on any inaccuracy in the representations and warranties of
the Company or the Major Selling Shareholders contained herein or any failure
of the Company or the Major Selling Shareholders to perform their obligations
hereunder or under law; and (ii) reimburse each Underwriter and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling,compromising, appearing as
a third-party witness or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the
Company and the Major Selling Shareholders will not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made (i) in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 3 hereof; or (ii) in any
Preliminary Prospectus if a copy of the Prospectus (or the Prospectus as then
amended or supplemented) was not sent or given by or on behalf of the
Underwriters to such person at or prior to the written confirmation of the
sale of such Common Shares to such person in any case where such delivery is
required by the Act, such untrue statement contained in or omission from such
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
so amended or supplemented) and the Company had previously furnished copies
of such corrected Prospectus to the Underwriters.
In addition to its other obligations under this Section 10(a), the
Company and the Major Selling Shareholders jointly and severally agree that,
as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
untrue statement or omission, or any alleged untrue statement or omission, or
any inaccuracy in the representations and warranties of the Company or the
Major Selling Shareholder or any failure to perform their respective
obligations hereunder, all as described in this Section 10(a), the Company
and the Major Selling Shareholders will reimburse each Underwriter (and to
the extent applicable each controlling person) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's and the Major Selling
Shareholders' obligation to reimburse each Underwriter (and to the extent
applicable each controlling person) for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, each Underwriter (and to the extent
applicable each controlling person) shall promptly return it to the Company
and the Major Selling Shareholders together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial lending rate
for borrowers of the highest credit standing) announced from time to time by
Bank of America, (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
the Company or the Major Selling Shareholder may otherwise have.
(b) Each Other Selling Shareholder severally, but not jointly,
agrees to (i) indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of the Act, against
any losses, claims, damages,
liabilities or expenses, joint or several (and actions in respect thereof),
to which such Underwriter or such controlling person may become subject,
under the Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Rules and Regulations or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company and the Other Selling Shareholders), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or any Blue Sky application or other document executed by
the Company or the Other Selling Shareholders filed in any state or other
jurisdiction in order to qualify any or all of the shares of Common Stock
offered hereby or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated
therein or necessary to make the statements in any of them not misleading, or
arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Other Selling Shareholders contained
herein or any failure of the Other Selling Shareholders to perform their
obligations hereunder or under law; and (ii) reimburse each Underwriter and
each such controlling person for any legal and other expenses as such
expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising,
appearing as a third-party witness or paying any such loss, claim, damage,
liability, expense or action; provided, however, that in any Preliminary
Prospectus if a copy of the Prospectus (or the Prospectus as then amended or
supplemented) was not sent or given by or on behalf of the Underwriters to
such person at or prior to the written confirmation of the sale of such
Common Shares to such person in any case where such delivery is required by
the Act, such untrue statement contained in or omission from such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as so amended
or supplemented) and the Company had previously furnished copies of such
corrected Prospectus to the Underwriters; provided, further, that the
obligations of each of the Other Selling Shareholders pursuant to this
Section 10(b) shall apply only with respect to information provided by the
Other Selling Shareholders. No Other Selling Shareholder shall be required
to pay amounts for indemnification, including expenses, under this Section
10(b) which exceed the aggregate net proceeds received by such Other Selling
Shareholder from the sale of Shares to the Underwriters.
In addition to its other obligations under this Section 10(b), the
Other Selling Shareholders agree that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any untrue statement or omission, or any alleged
untrue statement or omission, or any inaccuracy in the representations and
warranties of the Other Selling Shareholder or any failure to perform their
respective obligations hereunder, all as described in this
Section 10(b), the Other Selling Shareholders will reimburse each Underwriter
(and to the extent applicable each controlling person) on a quarterly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Other Selling Shareholders'
obligation to reimburse each Underwriter (and to the extent applicable each
controlling person) for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, each Underwriter (and to the extent applicable
each controlling person) shall promptly return it to the Other Selling
Shareholders together with interest, compounded daily, determined on the
basis of the prime rate (or other commercial lending rate for borrowers of
the highest credit standing) announced from time to time by Bank of America,
(the "Prime Rate"). Any such interim reimbursement payments which are not
made to an Underwriter within 30 days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which the Other
Selling Shareholders may otherwise have.
(c) Each Underwriter agrees to severally but not jointly
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, each Selling Shareholder, and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages, liabilities or expenses to which the
Company or any such director, officer or controlling person, or Selling
Shareholder, may become subject, under the Act, the Exchange Act or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected
with the written consent of such Underwriter), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in any of them not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company as described in Section 3 hereof; and will reimburse
the Company and each such director, officer or controlling person for any
legal and other expenses, as such expenses are reasonably incurred by the
Company or any such director, officer or controlling person, or any Selling
Shareholder, in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its
other obligations unde this Section 10(c), each Underwriter severally agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
untrue statement or omission, or any alleged untrue statement or omission,
described in this Section 10(c) which relates to information furnished to the
Company as described in Section 3 hereof; it will reimburse the Company and
each such officer, director or controlling person, and Selling Shareholder,
on a quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company and each such officer,
director or controlling person and Selling Shareholder for such expenses and
the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company and each
such officer, director or controlling person and Selling Shareholder shall
promptly return it to the Underwriters, together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the appropriate person within 30
days of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request. This indemnity agreement will be in addition
to any liability which the Underwriters may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under the indemnity agreement contained in this Section or to the extent it is
not prejudiced as a proximate result of such failure. In case any such action
is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnfied party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the provisions of this
paragraph (it being understood, however, that the indemnifying party shall
not be liable for the expenses of more than one separate counsel, approved by
the Underwriters in the case of paragraphs (a) and (b) of this Section 10,
representing the indemnified parties who are parties to such action); (ii)
the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party; or (iii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. An indemnifying party shall not be
liable for any settlement of any action, suit, proceeding or claim effected
without its written consent, which will not be unreasonably withheld.
(e) If the indemnification provided for in this Section 10 is
required by its terms but is for any reason held to be unavailable to hold
harmless an indemnified party under subsections (a), (b), (c) or (d) of this
Section 10 in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to herein in such proportion as is appropriate to reflect the
relative benefits received by the Company and/or the Selling eShareholders
and the Underwriters from the offering of the Common Shares and the relative
fault of the Company and/or the Selling Shareholders and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and/or the Selling Shareholders and the Underwriters shall be deemed
to be in the same proportion, in the case of the Company, as the total price
paid to the Company for the Common Shares sold by it to the Underwriters (net
of underwriting commissions but before deducting expenses), and in the case
of the Selling Shareholders, as the total price paid to the Selling
Shareholders for the Common Shares sold by it to the Underwriters (net of
underwriting commissions but before deducting expenses) and, in the case of
the Underwriters, as the underwriting commissions received by them, bears to
the total of such amounts paid to the Company and the amounts received by the
Underwriters as underwriting commissions. The relative fault of the Company
and/or the Selling Shareholders and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Shareholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent sch untrue
statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in subsection (d)
of this Section 10, any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or
claim.
The provisions set forth in subsection (d) of this Section 10 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this subsection (e); provided, however, that
no additional notice shall be required with respect to any action for which
notice has been given under subsection (d) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 10 were determined solely
by pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 10, no
Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter in
connection with the Common Shares underwritten by it. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 10 are several in proportion to their respective
underwriting commitments and not joint.
(f) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 10(a), 10(b) and
10(c) hereof, including the amounts of any requested reimbursement payments and
the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Code of Arbitration Procedure of the NASD.
as applicable. Any such arbitration must be commenced by service of a written
demand for arbitration or written notice of intention to arbitrate, therein
selecting the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 10(a), 10(b) and
10(c) hereof and would not resolve the ultimate propriety or enforceability of
the obligation to reimburse expenses which is created by the provisions of such
Sections 10(a), 10(b) and 10(c) hereof.
SECTION 11. Default of Underwriters. It shall be a condition to this
Agreement and the obligations of the Company to sell and deliver the Common
Shares hereunder, and of each Underwriter to purchase the Common Shares in the
manner as described herein, that, except as hereinafter in this paragraph
provided, each of the Underwriters shall purchase and pay for all the Common
Shares agreed to be purchased by such Underwriter hereunder upon tender to the
Underwriters of such shares in accordance with the terms hereof. If applicable,
if any Underwriter or Underwriters default in their obligations to purchase
Common Shares hereunder on either the First or Second Closing Date, and the
aggregate number of Common Shares which such defaulting entity agreed but failed
to purchase on such Closing Date does not exceed 10% of the total number of
Common Shares which the Underwriters are obligated to purchase on such Closing
Date, the nondefaulting entities shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Common Shares which such
defaulting entities agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of Common Shares
with respect to which such default occurs is more than the above percentage, and
arrangements satisfactory to you and the Company for the purchase of such Common
Shares by other persons are not made within two full business days after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter or the Company, except for the expenses to be paid by
the Company pursuant to Section 6 hereof and except to the extent provided in
Section 10 hereof.
If applicable, in the event that Common Shares to which a default
relates are to be purchased by a nondefaulting Underwriter or by another person
or persons, the Representatives shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus, this
Agreement and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
SECTION 12. Effective Date. This Agreement shall become effective
immediately as to Sections 6, 8, 10, 13 and 14 hereof and, as to all other
provisions, (i) if at the time of execution of this Agreement the Registration
Statement has not become effective, at 6:00 a.m., California time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii) if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 6:00 a.m., California time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by notice
to the Company or by release of any of the Common Shares for sale to the public.
For the purposes of this Section 12, the Common Shares shall be deemed to
have been so released upon the release for publication of any newspaper
advertisement relating to the Common Shares or upon the release by you of
notices (i) advising Underwriters that the Common Shares are released for
public offering, or (ii) offering the Common Shares for sale to securities
dealers, whichever may occur first.
SECTION 13. Termination. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof:
(a) This Agreement (except for the expenses to be paid by the
Company pursuant to Section 6 hereof and except to the extent provided in
Section 10 hereof) may be terminated by the Representative by notice to the
Company and the Attorney-in-Fact in the event that the Company or any of the
Selling Shareholders has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the First Closing Date or the Second Closing Date, as the case may be, or if any
of the representations or warranties of the Company or any of the Selling
Shareholders is not accurate in any respect or if the covenants, agreements or
conditions of, or applicable to, the Company or any of the Selling Shareholders
herein contained have not been complied with in any respect or satisfied within
the time specified on the First Closing Date or the Second Closing Date,
respectively.
(b) This Agreement also may be terminated by the Representatives
prior to the First Closing Date by notice to the Company and the
Attorney-in-Fact (i) if material governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally established
on the New York Stock Exchange or on the American Stock Exchange or in the
over the counter market by the NASD, or trading in securities generally shall
have been suspended on either such Exchange or in the over the counter market
by the NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred or
shall have accelerated or escalated to such an extent, as, in the reasonable
judgment of the Representatives, to affect materially and adversely the
marketability of the Common Shares, (iii) if any adverse event shall have
occurred or shall exist which makes untrue or incorrect in any material
respect any statement or information contained in the Registration Statement
or the Prospectus or any amendment thereof or which is not reflected in the
Registration Statement or the Prospectus but should be reflected therein in
order to make the statements or information contained therein not misleading
in any material respect, (iv) if, on or after the date hereof, there shall be
any action, suit or proceeding pending or threatened, or there shall have
been any development or prospective development involving particularly the
business or properties or securities of the
Company or any of the Banks or the transactions contemplated by this
Agreement, which, in the reasonable judgment of the Representatives, may
materially and adversely affect the Company's or either of the Bank's
business or earnings and makes it impracticable or inadvisable to offer or
sell the Common Shares; or (v) the Company or either of the Banks shall have
sustained a loss by strike, fire, flood, earthquake, accidet or other
calamity of such a character as to interfere materially with the conduct of
the business and operations of the Company or either of the Banks regardless
of whether or not such loss was insured. Any termination pursuant to this
Section 13(b) shall be without liability on the part of any Underwriter to
the Company or on the part of the Company to you or any Underwriter (except
for expenses to be paid or reimbursed by the Company pursuant to Sections 6
and 8 hereof and except to the extent provided in Section 10 hereof).
SECTION 14. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, the Selling Shareholders, its officers and the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Selling Shareholders or the Company, or any of its or
their partners, officers or directors or any controlling persons, as the case
may be, and will survive delivery of and payment for the Common Shares sold
hereunder. Any successors to the Underwriters shall be entitled to the
indemnity, contribution and reimbursement agreements contained in this
Agreement.
SECTION 15. Substitution of Underwriters. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 7
or 13 hereof) to purchase and pay for (a) in the case of the First Closing
Date, the number of Firm Common Shares agreed to be purchased by such
Underwriter or Underwriters upon tender to you of such Firm Common Shares in
accordance with the terms hereof or (b) in the case of the Second Closing
Date, the number of Optional Common Shares agreed to be purchased by such
Underwriter or Underwriters upon tender to you of such Optional Common Shares
in accordance with the terms hereof, and the number of such shall not exceed
10% of the Firm Common Shares or Optional Common Shares required to be
purchased on the First Closing Date or the Second Closing Date, as the case
may be, then, each of the non-defaulting Underwriters shall purchase and pay
for (in addition to the number of such Shares which it has severally agreed
to purchase hereunder) that proportion of the number of Shares which the
defaulting Underwriter or Underwriters shall have so failed or refused to
purchase on such First Closing Date or Second Closing Date, as the case may
be, which the number of Firm Common Shares agreed to be purchased by such
non-defaulting Underwriter bears to the aggregate number of Common Shares so
agreed to be purchased by all such non-defaulting Underwriters on such First
Closing Date or Second Closing Date, as the case may be.
In such case, you shall have the right to postpone the First Closing Date or
the Second Closing Date, as the case may be, to a date not exceeding seven
full business days after the date originally fixed as such First Closing Date
or Second Closing Date, as the case may be, pursuant to the terms hereof in
order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made.
If one or more of the Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 7 or 13 hereof) to purchase and pay for (a) in the
case of the First Closing Date, the number of Firm Common Shares agreed to be
purchased by such Underwriter or Underwriters upon tender to you of such Firm
Common Shares in accordance with the terms hereof or (b) in the case of the
Second Closing Date, the number of Optional Common Shares agreed to be purchased
by such Underwriter or Underwriters upon tender to you of such Optional Common
Shares in accordance with the terms hereof, and the number of such Shares shall
exceed 10% of the Firm Common Shares or Optional Common Shares required to be
purchased by all the Underwriters on the First Closing Date or the Second
Closing Date, as the case may be, then (unless within 48 hours after such
default arrangements to your satisfaction shall have been made for the purchase
of the defaulted Shares by an Underwriter or Underwriters) and subject to the
provisions of Section 13 hereof, this Agreement will terminate without liability
on the part of any non-defaulting Underwriter or on the part of the Company
except as otherwise provided hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
paragraph. Nothing in this Section 12, and no action taken hereunder, shall
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
SECTION 16. Notices. All communications hereunder shall be in
writing and, if sent to the Underwriters, shall be mailed, delivered or
telecopied and confirmed to you at 1150 Santa Monica Boulevard, Suite 1500, Los
Angeles, California 90025, with a copy to Manatt, Phelps & Phillips, LLP, 11355
W. Olympic Blvd., Los Angeles, California 90064, Attention: Paul H. Irving,
Esq., FAX: (310) 312-4224; if sent to the Company or the Selling Shareholders,
shall be mailed, delivered or telecopied and confirmed to the Company at 23332
Mill Creek Drive, Suite 2309, Laguna Hills, California 92653, with a copy to
Morrison & Foerster, 19990 MacArthur Boulevard, Suite 1200, Irvine, California
92612-2445, Attention: Ellen Marshall, The Company or you may change the
address for receipt of communications hereunder by giving notice to the others.
SECTION 17. Successors. This Agreement will inure to the benefit of
and be binding upon the Company, the Selling Shareholders and each Underwriter,
including any substitute Underwriters pursuant to Section 15 hereof, and to the
benefit
of the officers and directors and controlling persons referred to in Section
10 hereof, and in each case their respective successors, personal
representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser
of the Common Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 18. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you, as
Representatives, will be binding upon all the Underwriters.
SECTION 19. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 21. General. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The Section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement between the Company and you, all in accordance
with its terms.
Very truly yours,
PACIFIC COMMUNITY BANKING GROUP
By:______________________________
Chief Executive Officer
SELLING SHAREHOLDERS FROM BANK OF
HEMET AS LISTED ON SCHEDULE B
By:______________________________
As Attorney-in-Fact for the Selling
Shareholders identified in Schedule B
Shareholders from Bank of Hemet
SELLING SHAREHOLDERS FROM VALLEY BANK AS
LISTED ON SCHEDULE B
By:______________________________
As Attorney-in-Fact for the Selling
Shareholders identified in Schedule B
Shareholders from Valley Bank
John Brudin
By:______________________________
John Brudin
Jack E. Gosch
By:______________________________
Jack E. Gosch
E. Kenneth Hyatt
By:______________________________
E. Kenneth Hyatt
James B. Jaqua
By:______________________________
James B. Jaqua
John J. McDonough
By:______________________________
John J. McDonough
Joseph D. Pehl
By:______________________________
Joseph D. Pehl
Clayton A. Record, Jr.
By:______________________________
Clayton A. Record, Jr.
Harold R. Williams, Jr.
By:______________________________
Harold R. Williams, Jr.
Robert I. Robie
By:______________________________
Robert I. Robie
Marion V. Ashley
By:______________________________
Marion V. Ashley
Willow I. Decker
By:______________________________
Willow I. Decker
Juan P. Renteria
By:______________________________
Juan P. Renteria
Jesse Washington
By:______________________________
Jesse Washington
George E. Wilson
By:______________________________
George E. Wilson
Helga Wolf
By:______________________________
Helga Wolf
Eugene H. Wood
By:______________________________
Eugene H. Wood
N. Douglas Mills
By:______________________________
N. Douglas Mills
Valley Bank Employee Stock Ownership Plan
By:______________________________
Eri Hook - Joint Trustee
By:______________________________
N. Douglas Mills- Joint Trustee
By:______________________________
Mark Nugent - Joint Trustee
By:______________________________
Dianna Williams - Joint Trustee
By:______________________________
George E. Wilson - Joint Trustee
Mark Nugent
By:______________________________
Mark Nugent
Kenneth Ray
By:______________________________
_________________,
as Conservator for Kenneth Ray
Dianna Williams
By:______________________________
Dianna Williams
Charles L. Motte and Ottie Mae Motte Trust of
4/29/75
By:______________________________
Charles L. Motte and Ottie Mae Motte as
Trustees
THE BANK OF HEMET
By:______________________________
James B. Jaqua
President and Chief Executive Officer
VALLEY BANK
By:______________________________
N. Douglas Mills
President and Chief Executive Officer
By:______________________________
Marion V. Ashley
Chairman of the Board
The foregoing Underwriting Agreement is hereby confirmed and accepted by Sutro &
Co. Incorporated, Friedman, Billings, Ramsey & Co., Inc., Wedbush Morgan
Securities, Inc. and Ragen MacKenzie Incorporated in Los Angeles, California as
of the date first above written.
SUTRO & CO. INCORPORATED
As Representative of the several Underwriters
By Sutro & Co. Incorporated
By: _____________________________
Its:_____________________________
SCHEDULE A
SCHEDULE OF UNDERWRITERS
NAME OF UNDERWRITER NUMBER OF FIRM
COMMON
SHARES
TO BE
PURCHASED
- -------------------------------------------------- ----------------
Sutro & Co. Incorporated
Friedman, Billings, Ramsey & Co., Inc.
Wedbush Morgan Securities, Inc.
Ragen MacKenzie Incorporated
[NAMES OF OTHER UNDERWRITERS]
----------------
Total
================
SCHEDULE B
SCHEDULE OF SELLING SHAREHOLDERS
NAME AND ADDRESS OF SELLING SHAREHOLDER FIRM SHARES TO BE SOLD
- --------------------------------------- ----------------------
HEMET MAJOR SELLING SHAREHOLDERS
1. John Brudin
[Address]
2. Jack E. Gosch
[Address]
3. E. Kenneth Hyatt
[Address]
4. James B. Jaqua
[Address]
5. John J. McDonough
[Address]
6. Joseph D. Pehl
[Address]
7. Clayton A. Record, Jr.
[Address]
8. Harold R. Williams, Jr.
[Address]
9. Robert I. Robie
[Address]
VALLEY MAJOR SELLING SHAREHOLDERS
1. Marion V. Ashley
[Address]
2. Willow I. Decker
[Address]
3. Juan P. Renteria
[Address]
4. Jesse Washington
[Address]
5. George E. Wilson
[Address]
6. Helga Wolf
[Address]
7. Eugene H. Wood
[Address]
8. N. Douglas Mills
[Address]
9. Valley Bank Employee Stock Ownership Plan
[Address]
10. Mark Nugent
[Address]
11. Kenneth Ray
[Address]
12. Dianna Williams
[Address]
13. Charles L. Motte and Ottie Mae Motte Trust
of 4/29/75
[Address]
[OTHER SELLING SHAREHOLDERS
[List of all other Hemet Selling Shareholders]
[List of all other Valley Selling Shareholders]]