EXHIBIT 10.24
March ___, 1997
[Addressee]
Attention:
Dear:
This letter confirms our agreement with respect to the intention of
National Mercantile Bancorp (the "Company") to raise additional capital through
a rights offering, with oversubscription privileges, of up to $____ or
___________ shares of the Company's 6.5% Noncumulative Convertible Preferred
Stock, $10.00 stated value (the "Preferred Stock"), to its shareholders of
record of common stock as of _________ ("Rights Offering") and a Private
Offering (as described herein) with the participation of standby purchasers for
any shares which remain available after the Rights Offering and the Private
Offering. Pursuant to a private offering exemption from the registration
requirements of the Securities Act of 1933, as amended, the Company has agreed
to sell up to $5.5 million or _________ shares of Preferred Stock to certain
investors (the "Private Offering"). The Company has guaranteed the availability
of an aggregate minimum of $1.0 million or ___________ shares of Preferred
Stock to the Standby Purchasers if a sufficient number of shares is not
available after the Rights Offing and the Private Offering. (The Rights
Offering and the offering to standby purchasers are hereinafter referred to as
the "Private Offering".) Capitalized terms used herein and not defined herein
shall have the meanings set forth in the Prospectus (as hereinafter defined.)
A REGISTRATION STATEMENT ON FORM S-2, AS AMENDED (THE "REGISTRATION
STATEMENT"), RELATING TO THE COMPANY'S PREFERRED STOCK WAS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") ON FEBRUARY 10, 1997. NO OFFER TO
BUY SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED
UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE, AND ANY SUCH OFFER MAY BE
WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME
PRIOR TO NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE EFFECTIVE DATE.
1. Purchase and Sale of Unsubscribed Shares.
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(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to issue and
sell to you, on behalf of your discretionary clients listed on Exhibit A hereto
(the "Discretionary Clients"), as a standby
[Addressee]
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purchaser (the "Standby Purchaser") and the Standby Purchaser agrees to purchase
from the Company, on behalf of the Discretionary Clients, at the Subscription
Price of $_____ per share up to $____ million or ______ shares of Preferred
Stock ("Standby Shares") which remain available for issuance in accordance with
the Rights Offering after the issuance of all shares of Preferred Stock validly
subscribed for through the exercise of Rights (including the exercise of all
oversubscription privileges) in the Rights Offering and the Private Offering
(such remaining shares being hereinafter referred to as the "Unsubscribed
Shares").
(b) The Standby Purchaser and the Company acknowledge and agree that the
Company has entered into, or contemplates entering into, one or more other
Standby Purchase Agreements with certain other parties (collectively, the
"Standby Purchasers") on terms substantially similar to this Agreement, except
that they may provide for the purchase of a different maximum amount of Standby
Shares in Section 1(a) and a different amount (as defined in Section 1(c)). The
Unsubscribed Shares available for issuance to Standby Purchasers and any
additional shares which the Company shall have elected to issue shall be
allocated (to the extent any allocation thereof is necessary) as nearly as
possible on a pro rata basis among the Standby Purchasers based upon the number
of Standby Shares subscribed for by each such Standby Purchaser, after giving
effect to the limitation set forth in Section 2(a).
(c) Subject to the terms, conditions and limitations herein set forth, in
the event there is not a sufficient number of Unsubscribed Shares remaining upon
completion of the Private Offering and the Rights Offering (including the
exercise of all oversubscription privileges) for sale to the Standby Purchasers
to allow you to purchase at least $____ million shares pursuant to Section 1(a)
(the "Minimum Shares"), the Company agrees to issue and sell to the Standby
Purchaser, and the Standby Purchaser agrees to purchase from the Company, at the
Subscription Price and otherwise in accordance with this Agreement, sufficient
additional shares so that the Standby Purchaser shall have purchased the Minimum
Shares. The shares to be issued and sold to the Standby Purchaser (other than
the Unsubscribed Shares) in order that the Standby Purchaser may purchase the
Minimum Shares are hereinafter referred to as the "Additional Shares."
1. Limitations on Issuance of Standby Shares.
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(a) Section 382 Limitation. The Standby Purchaser acknowledges and agrees
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that the shares allocated to the Standby Purchaser (and/or to any other Standby
Purchaser) may be reduced (the "Section 382 Limitation") to an amount which, in
the sole judgment of the Company after consultation with its tax advisor, would
not likely result in an "ownership change" of the Company under Section 382 of
the Internal Revenue Code of 1986, as amended (the "Code").
[Addressee]
, 1997
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Page 3
(b) Maximum Holding. The Standby Purchaser acknowledges and agrees that,
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not withstanding anything to the contrary herein contained or implied, the
Company will not issue to the Standby Purchaser shares of Preferred Stock in an
amount which, when aggregated with other shares of Preferred Stock owned or
controlled by the Standby Purchaser, would exceed 4.5% of the total issued and
outstanding shares of Preferred Stock upon completion of the Offering, including
shares issued pursuant to any Standby Purchase Agreements.
(c) Failure to Obtain Regulatory Approval. The Standby Purchaser hereby
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acknowledges and agrees that the Company may decline to issue shares of
Preferred Stock to the Standby Purchaser hereunder if, in the opinion of the
Company, the Standby Purchaser is required to obtain prior clearance or approval
of such purchase from any state or federal bank regulatory authority and if such
approval or clearance has not been obtained or if satisfactory evidence thereof
has not been presented to the Company prior to the expiration of the Offering.
3. The Closing. As soon as practicable following its determination of the
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number of Unsubscribed Shares, the Company shall notify the Standby Purchaser of
the number of Standby Shares, if any, to be purchased by the Standby Purchaser
pursuant to Section 1(a) and the number of Additional Shares, if any, to be
purchased by the Standby Purchaser pursuant to Section 1(c). The delivery of
and payment for the Standby Shares and the Additional Shares shall take place
at the Offices of Manatt, Xxxxxx & Xxxxxxxx at 9:00 a.m., Pacific Time,
immediately after the closing of the sale of shares of Preferred Stock pursuant
to the Rights Offering and the Private Offering, such time and date to be not
more than five (5) business days after the foregoing notification and to be
specified therein (such time and date being referred to as the "Closing Time,"
the date of the Closing Time being referred to as the "Closing Date" and the
consummation of the transaction being referred to as the "Closing").
4. Delivery of Standby Shares and Additional Shares. At the Closing, the
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Standby Shares and Additional Shares to be purchased by the Standby Purchaser
hereunder, registered in the name of the Standby Purchaser, the Discretionary
Clients or their nominee(s), as the Standby Purchaser may specify in writing at
least three (3) days prior to the Closing Date, shall be delivered by or on
behalf of the Company to the Standby Purchaser, for the Standby Purchaser's
account, against delivery by the Standby Purchaser of the Subscription Price
therefore in immediately available funds in the form of one or more federal
funds checks or a wire transfer to an account designated by the Company.
5. Representations and Warranties. The Company and the Standby Purchaser
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hereby confirm their agreement as follows:
(a) The Company represents and warrants to, and covenants with, the Standby
Purchaser as follows:
[Addressee]
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(i) The Company has filed a Registration Statement on Form S-2 with the
SEC and all amendments thereto. Such Registration Statement as
amended at the time it becomes effective (the "Effective Date"),
including all exhibits and all documents incorporated therein by
reference, is herein called the "Registration Statement." The
prospectus filed with the SEC pursuant to the Securities Act of 1933,
as amended (the "Securities Act") and the regulations promulgated
thereunder ("Regulations") and which constitutes a part of the
Registration Statement is herein called the "Prospectus."
(ii) The Underlying Shares, the Standby Shares and the Additional Shares
have been duly authorized by the Company, and when issued and
delivered by the Company against payment therefore, will be duly and
validly issued, fully paid and non-assessable. The rights have been
duly authorized by the Company, and when issued and delivered by the
Company, will constitute valid and legally binding obligations of the
company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to the safety and soundness of insured depository
institutions as set forth in 12 U.S.C. (S) 1818(b).
(iii) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action of the Company and this Agreement, when duly executed
and delivered by the Standby Purchaser, will constitute a valid and
legally binding agreement of the Company enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights, to
general equity principles and to laws relating to the safety and
soundness of insured depository institutions as set forth in 12 U.S.C.
(S) 1818(b).
(iv) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of California, with
corporate power and authority to perform its obligations under this
Agreement.
(v) At the time when the Registration Statement was declared effective by
the SEC pursuant to the Securities Act and the Regulations and at the
Closing Time, the Registration Statement and the Prospectus complied
and will comply in all material respects with the requirements of the
Securities Act, the Prospectus at the date hereof does not and at the
Closing Time will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated
[Addressee]
, 1997
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therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; except
that the foregoing does not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished by the Standby Purchaser to the
Company expressly for use therein.
(vi) Neither the Company nor any of its direct subsidiaries that is
considered to be a "significant the subsidiary" within the meaning of
the Regulations ("Subsidiary") is in violation of its charter or by-
laws or in default under any agreement, indenture or instrument to
which the Company or its Subsidiary is a party, the effect of which
violation or default would be material to the business, properties,
financial condition or results of operations of the Company and its
Subsidiary, taken as a whole, and the execution, delivery and
performance of this Agreement by the Company and the consummation of
the transactions contemplated hereby will not conflict with, or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets
of the Company or its Subsidiary pursuant to the terms of any
agreement, indenture or instrument to which the Company or its
Subsidiary is a party, or result in a violation of the charter or by-
laws of the Company or its Subsidiary or any order, rule or regulation
of any court or governmental agency having jurisdiction over the
Company, its Subsidiary or any of their property; and, except as
required by the Regulations, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and applicable state securities law, no
consent, authorization or order of, or filing or registration with,
any court or governmental agency is required for the execution,
delivery and performance of this Agreement, except as has been
obtained or applied for as of the date hereof, and with respect to any
approvals applied for, the Company has no reason to believe such
approvals will not be granted or obtained.
(vii) The Company has applied to have the shares of Preferred Stock
approved for quotation on the Smallcap tier of the Nasdaq Stock Market
and will use its best efforts to obtain such approval.
(b) The Standby Purchaser represents and warrants to, and covenants with,
the Company as follows:
(i) If the Standby Purchaser is an individual, he or she has full power
and authority to perform his or her obligations under this Agreement.
[Addressee]
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(ii) If the Standby Purchaser is a corporation, the Standby Purchaser is a
corporation duly incorporated, validly existing and in good standing
under the laws of _____________, with corporate power and authority to
perform its obligation under this Agreement.
(iii) If the Standby Purchaser is a trust, the Trustee has been duly
appointed as Trustee to the Standby Purchaser with full power and
authority to act on behalf of the Standby Purchaser and to perform the
obligations of the Standby Purchaser under this Agreement.
(iv) If the Standby Purchaser is a partnership or limited liability
company, the Standby Purchaser is a ______________, duly organized,
validly existing and in good standing under the laws of
________________, with full power and authority to perform its
obligations under this Agreement.
(v) The Standby Purchaser has received from the Company and has reviewed
carefully a copy of the Prospectus as amended to date as well as the
documents incorporated therein by reference and the public documents
filed in connection therewith, and except as set forth in this
Agreement and in the Prospectus, the Standby Purchaser is not relying
on any information other than information contained in this Agreement
or the Prospectus.
(vi) The Standby Purchaser is acquiring the shares of Preferred Stock
pursuant to this Agreement for the account of the Discretionary
Clients for investment only and not with a view to any resale,
distribution or other disposition thereof.
(vii) The execution, delivery and performance of this Agreement by the
Standby Purchaser and the consummation by the Standby Purchaser of the
transactions contemplated hereby been duly authorized by all necessary
action of the Standby Purchaser; and this Agreement, when duly
executed and delivered by the Standby Purchaser, will constitute a
valid and legally binding instrument, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(viii) The Standby Purchaser is not insolvent and has access to sufficient
cash funds of the Discretionary Clients to purchase the Standby Shares
and Additional Shares on the terms and conditions contained in this
Agreement and will have such funds on the Closing Date. The Standby
Purchaser has simultaneously with the execution and delivery of this
Agreement or prior thereto provided the
[Addressee]
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Company with evidence or substantiated that such Standby Purchaser has
the financial means to satisfy the financial obligations under this
Agreement and the foregoing evidence and substantiation is a true and
accurate representation of such means.
(ix) No state, federal or foreign regulatory approvals, permits, licenses
or consents or other contractual or legal obligations are required in
order for the Standby Purchaser to enter into this Agreement or
purchase the Standby Shares and the Additional Shares.
(x) The execution and delivery of this Agreement, the consummation by the
Standby Purchaser of the transactions herein contemplated and the
compliance by the Standby Purchaser with the terms hereof do not and
will not conflict with, or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Standby Purchaser is a party or by which
any of the Standby Purchaser's properties or assets are bound, or any
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Standby Purchaser or any of the
Standby Purchaser's properties or assets; and no consent, approval,
authorization, order, registration or qualification of or with any
such government, governmental instrumentality or court, domestic or
foreign, is required for the valid authorization, execution, delivery
and performance by the Standby Purchaser of this Agreement or the
consummation by the Standby Purchaser of the transactions contemplated
by this Agreement.
(xi) The Standby Purchaser, and, to the best of its knowledge, the
Discretionary Clients have not entered into any contracts,
arrangements, understandings or relationships (legal or otherwise)
with any other person or persons with respect to the transactions
contemplated by this Agreement or any securities of the Company,
including but not limited to transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies; and the
Standby Purchaser and, to the best of its knowledge, the Discretionary
Clients, do not own any securities of the Company which are pledged or
otherwise subject to a contingency the occurrence of which would give
another person voting power or investment power of such securities.
[Addressee]
, 1997
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6. Conditions. The respective obligations of the Company and the Standby
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Purchaser to purchase shares of Preferred Stock as set forth in this Agreement
are subject to the following conditions:
(a) No order suspending the effectiveness of the Registration Statement or
any amendment or supplement thereto shall have been issued and no proceedings
for such purpose shall be pending before or threatened by the SEC and any
requests for additional information by the SEC (to be included in the
Registration Statement, in the Prospectus or otherwise) shall have been complied
with in all material respects.
(b) The representatives and warrants of the Company and the Standby
Purchaser contained herein shall be true and correct in all material respects as
of the Closing Date and the Company and the Standby Purchaser shall have
performed all covenants and agreements herein required to be performed on its
part at or prior to the Closing Date.
(c) The Company shall have conducted the Rights Offering and the Private
Offering substantially in the manner described in the Prospectus.
7. Termination.
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(a) The Standby Purchaser may terminate this Agreement (i) upon the
occurrence of a suspension of trading in the common stock, no par value of the
Company (the "Common Stock"), the establishment of limited or minimum process
for the Common Stock or a general suspension of trading in or the establishment
of limited or minimum prices on any national securities exchange or the Nasdaq
Stock Market, any banking moratorium, any suspension of payments with respect to
banks in the United States or a declaration of war or national emergency in the
United States, (ii) under any circumstances which would result in the Standby
Purchaser, individually or together with any other person or entity, being
required to register as a depository institution holding company under federal
or state laws or regulations, or to submit an application, or notice, to acquire
or retain control of a depository institution or depository institution holding
company, to a federal bank regulatory authority, or (iii) prior to the
expiration of the Offering, if the Company experiences a material adverse change
in its financial condition from its financial condition on December 31, 1996,
except as specifically disclosed in the Prospectus.
(b) In the event (x) the Company, in its reasonable judgment, determines
that it is not in the best interests of the Company and its shareholders to go
forward with the Rights Offering or (y) consummation of the Rights Offering is
prohibited by law, rule or regulation and the company terminates the Rights
Offering, in each case, the Company may terminate this Agreement without
liability.
[Addressee]
, 1997
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(c) Either of the parties hereto may terminate this Agreement (i) if the
transactions contemplated hereby are not consummated by _________, 1997 through
no fault of the Standby Purchaser or (ii) in the event that the Company is
unable to obtain any required federal or state approvals for the transactions
contemplated hereby on conditions reasonably satisfactory to it despite its
reasonable efforts to obtain such approvals. In addition, this Agreement shall
terminate upon mutual consent of the parties hereto.
(d) The Company and the Standby Purchaser hereby agree that any termination
of this Agreement pursuant to Section 7(a) (b) or (c), (other than termination
by one party in the event of a breach of this Agreement by the other party or
misrepresentation of any of the statements made hereby by the other party) shall
be without liability of the Company or the Standby Purchaser.
8. Future Acquisitions.
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(a) For a period of five (5) years from the Closing Date, the Standby
Purchaser agrees to give the Company sufficient prior written notice of any
proposed acquisition of additional shares of "stock" of the Company (as defined
under Section 382 of the Code and the regulations promulgated thereunder) so
that the Company may determine in its reasonable judgment whether such purchase
of additional shares could reasonably be expected to result in an " ownership
change" under Section 382 of the Code and the regulations promulgated thereunder
and, in the event the Company makes such a determination, the Standby Purchaser
agrees to limit its purchases of additional shares of Common Stock or interests
therein as the Company may request to avoid such an ownership change.
(b) The Standby Purchaser agrees that (i) during the period beginning on
the date hereof and continuing until the Closing Date, it will not offer, sell,
contract to sell or otherwise dispose of, or bid for, purchase, contract to
purchase or otherwise acquire, any shares of Common Stock or interest therein,
or cause the Discretionary Clients to take any such actions, without the prior
written consent of the Company and (ii) during the period commencing the day
after the Closing Date and continuing until the fifth anniversary of the Closing
Date, it will not, nor will it cause the Discretionary Client to, bid for,
purchase, contract to purchase or otherwise acquire, directly or indirectly, any
shares of Preferred Stock or the Common Stock into which it is convertible or
interests therein if, after consummation of such acquisition, its percentage
ownership, together with that of its affiliates, of the total number of shares
of the Common Stock of the Company would exceed 4.5%.
9. Continuing Provisions. The representations and warranties of the
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Company and the Standby Purchaser set forth in this Agreement shall be true and
correct in all material respects only as of the date of this Agreement and as of
the Closing Date. All of the covenants, agreements and obligations of each of
the Company and the Standby Purchaser
[Addressee]
, 1997
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required to be performed by the Closing Date shall have been duly performed and
complied with by the Closing Date unless such performance shall have been waived
in writing by the Company or the Standby Purchaser, as the case may be. The
respective representatives, warranties, covenants, agreements and obligations of
the parties to this Agreement shall survive the Closing Date.
10. Recapitalization, etc. Other than as disclosed in the Prospectus,
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prior to Closing, the Company shall not split, combine, reclassify or repurchase
any of its capital stock or declare or pay any extraordinary dividends on any of
its capital stock.
11. Miscellaneous. This Agreement is made solely for the benefit of the
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Standby Purchaser and the Company, and their respective personal representatives
and successors, and no other person, partnership, association or corporation
shall acquire or have any right under or by virtue of this Agreement.
12. Assignment. Neither the Company nor the Standby Purchaser may assign
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any of its rights under this Agreement without the prior written consent of the
other party hereto; provided that it is acknowledged and agreed that the
Standby Purchaser is acquiring the Standby Shares and the Additional Shares for
the Discretionary Clients.
13. Entire Agreement. This Agreement constitutes the entire agreement and
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understanding between the Standby Purchaser and the Company, and supersedes all
prior agreements and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this Agreement, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect under the laws of any jurisdiction, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way affected or
impaired thereby or under the laws of any other jurisdiction.
14. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which when so executed and delivered shall be an original,
and all such counterparts together constitute but one and the same instrument.
15. Amendments. This Agreement may not be amended, modified or changed,
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in whole or in part, except by an instrument in writing signed by the Company
and the Standby Purchaser.
16. Notices. Except as otherwise provided in this Agreement, and unless
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otherwise notified by the respective addressee, all notices and communications
hereunder shall be in writing and mailed or delivered or by facsimile or
telephone if subsequently confirmed in writing to:
[Addressee]
, 1997
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If to the Company: National Mercantile Bancorp
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxx
Executive Vice President and
Chief Administrative Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Xxxxxx, Xxxxxx & Xxxxxxxx
00000 X. Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 310-312-4224
If to the Standby Purchaser: [Addressee]
17. Applicable Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California, without regard to the
conflict of laws rules thereof.
18. Business Day. The term "business day" shall mean a day on which
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banking institutions are open generally in New York.
[Addressee]
, 1997
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IN WITNESS WHEREOF, and intending to be legally bound hereby, each of the
Standby Purchaser and the Company has signed or caused to be signed its name as
of the day and year first above written.
NATIONAL MERCANTILE BANCORP
By: ___________________________
Xxxxx X. Xxxxxxxxxx
Executive Vice President and
Chief Administrative Officer
Agreed and Accepted as of the
_________ day of _________, 1997:
[Company]
By: ______________________________
Title: ______________________________
[Addressee]
, 1997
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EXHIBIT A
Discretionary Clients
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