January 16, 2009 United States Department of the Treasury
January 16, 0000
Xxxxxx
Xxxxxx Department of the Treasury
0000
Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx,
X.X. 00000
000 Xxxxx
Xxxxxxxx, Xxxxx 000
Xxx
Xxxxxxxx, Xxxxxxxxxx 00000
Ladies
and Gentlemen:
Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement – Standard Terms dated of even date herewith (the “Securities Purchase
Agreement”) by and among United States Department of Treasury (“Investor”) and Pacific Coast
National Bancorp (“Company”). Investor
and Company desire to set forth herein certain additional agreements regarding
Company’s commitment to the holder of the Preferred Shares after the closing of
the transactions contemplated by the Securities Purchase
Agreement. Terms that are defined in the Securities Purchase
Agreement are used in this letter agreement as so defined.
In order
to comply with California Corporations Code §212(a), the Company has modified
section 7(b) of the Standard Provisions of each of the Certificate of
Designations attached as Annex A and Annex B to the
Securities Purchase Agreement (collectively, the “Certificates of
Designations”) to provide in pertinent part as follows:
“Whenever,
at any time or times, dividends payable on the shares of Designated Preferred
Stock have not been paid for an aggregate of six quarterly Dividend Periods or
more, whether or not consecutive, the holders of the Designated Preferred Stock
shall have the right, with holders of shares of any one or more other classes or
series of Voting Parity Stock outstanding at the time, voting together as a
class, to elect two directors…”
By its
execution hereof, the Company hereby confirms and agrees that as of the date
hereof and at all times while any shares of the Designated Preferred Stock (as
defined in each Certificate of Designations) are outstanding or issuable upon
exercise of the Warrant it shall maintain a range of directors of the Company
that will permit the holder of the Preferred Shares to elect two directors in
accordance with said sections 7(b). Currently Article III, Section 2
(the “Applicable
Provision”) of the Company’s bylaws (the “Bylaws”), in conjunction with
applicable resolutions of the Company’s board of directors, provides for a range
of directors of no less than seven (7) and no more than thirteen
(13). At all times while any shares of the Designated Preferred Stock
are outstanding, the Company shall not fill more than eleven (11) director
positions. In the event the Company desires to increase the number of
directors beyond eleven (11), then the Company shall be required to amend the
Bylaws to increase the maximum directors to always allow for at least two open
director seats for the holders of the Preferred Shares to elect in accordance
with Section 7(b) of the Standard Terms of the Certificate of
UST Seq.
No. 000
Determination
of Preferences of Series A Fixed Rate Cumulative Perpetual Preferred Stock of
Pacific Coast National Bancorp and Section 7(b) of the Standard Terms of the
Certificate of Determination of Preferences of Series B Fixed Rate Cumulative
Perpetual Preferred Stock of Pacific Coast National Bancorp (and to amend the
Bylaws to provide that such provision may not be modified, amended or repealed
by the Company’s board of directors (or any committee thereof) or without the
affirmative vote and approval of (x) the stockholders and (y) the holders of at
least a majority of the shares of Designated Preferred Stock outstanding at the
time of such vote and approval).
In
addition, by its execution hereof, the Company hereby confirms and agrees that,
effective January 15, 2009, it amended the Applicable Provision by adding the
following sentence at the end thereof:
“Notwithstanding
anything in these bylaws to the contrary, for so long as the corporation’s Fixed
Rate Cumulative Perpetual Preferred Stock, Series A and the corporation’s Fixed
Rate Cumulative Perpetual Preferred Stock, Series B (collectively, the “Designated Preferred Stock”)
(or any warrant to purchase any of the Designated Preferred Stock) is
outstanding: (i) whenever, at any time or times, dividends payable on
the shares of Designated Preferred Stock have not been paid for an aggregate of
six quarterly Dividend Periods (as defined in the Certificate of Determination
for the Designated Preferred Stock) or more, whether or not consecutive, the
authorized number of directors shall automatically be increased by two (but
shall in no event be increased to a number of directors that is greater than the
maximum number of directors set forth in this section of these bylaws); and (ii)
this sentence may not be modified, amended or repealed by the corporation’s
Board of Directors (or any committee thereof) or without the affirmative vote
and approval of (x) the shareholders and (y) the holders of at least a majority
of the shares of Designated Preferred Stock outstanding at the time of such vote
and approval.”
The
parties hereto acknowledge that there would be no adequate remedy at law if the
Company fails to perform any of its obligations under this letter agreement and
that the Investor may be irreparably harmed by any such failure, and accordingly
agree that the Investor, in addition to any other remedy to which it may be
entitled at law or in equity, to the fullest extent permitted and enforceable
under applicable law shall be entitled to compel specific performance of the
obligations of the Company under this letter agreement without the necessity of
proving the inadequacy of monetary damages as a remedy or the posting of a
bond.
This
letter agreement and the Certificates of Designations constitute the entire
agreement, and supersedes all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties with
respect to the subject matter hereof.
-2-
UST Seq.
No. 000
This
letter agreement may be executed in counterparts, each of which shall be deemed
an original and all of which shall together constitute one and the same
instrument. This letter agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of California, without giving effect to the conflict of laws rules
thereof.
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-3-
UST Seq.
No. 000
In
witness whereof, this letter agreement has been duly executed by the authorized
representatives of the parties hereto as of the date first above
written.
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By:
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/s/
Xxxxxxx X. Xxxx
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| Name: |
Xxxxxxx
X. Xxxx
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| Title: |
President
and Chief Executive Officer
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By:
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/s/
Xxxxx X. Stalk
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| Name: |
Xxxxx
X. Stalk
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| Title: |
Executive
Vice President and
Chief
Financial Officer
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UNITED
STATES DEPARTMENT OF THE TREASURY
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By:
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Name:
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Title:
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UST Seq. No.
315
