Attention: Mr. Dennis Hunter
Exhibit
10 (d)
AMENDED
Engagement Letter Between Sandler X’Xxxxx & Partners, L.P and Northern
Empire Bancshares
January
6, 2006
Board
of
Directors
000
Xxxxxx Xxxxxx
Xxxxx
Xxxx, XX 00000
|
Attention:
|
Xx.
Xxxxxx Xxxxxx
|
Chairman
Ladies
and Gentlemen:
This
letter agreement, executed by the parties on the date(s) set forth below, (1)
is
effective as of January 6, 2006, and (2) amends the letter agreement, executed
by Sandler X’Xxxxx & Partners, L.P. and executed by Northern Empire
Bancshares, on January 6, 2006, to read in full as follows:
Sandler
X‘Xxxxx & Partners, L.P. ("Sandler X’Xxxxx") is pleased to act as an
independent financial advisor to the Board of Directors of Northern Empire
Bancshares and its subsidiaries (together, the "Company") in connection with
the
Company’s consideration of a possible Business Combination involving the Company
and a second party (whether an individual, partnership, company or other entity,
and together with its affiliates, the "Second Party"). This letter is to confirm
the terms and conditions of our engagement.
SPECIFIC
ADVISORY SERVICES
Sandler
X’Xxxxx will assist the Company in analyzing, structuring, negotiating and
effecting a Business Combination or other strategic alternative which may
involve one or more Second Parties. In this regard, we anticipate that our
activities would include, as appropriate, the following:
|
1.
|
Performing
financial analyses of the Company and the Second Party in the context
of a
possible Business Combination or alternative
transaction;
|
|
2.
|
Assisting
the Company in its determination of appropriate and desirable values
to be
exchanged in a Business Combination or alternative
transaction;
|
|
3.
|
Advising
the Company as to the structure and form of any proposed Business
Combination or alternative
transaction;
|
|
4.
|
Advising
and assisting the Company’s management in making presentations to the
Company’s Board of Directors about any proposed Business Combination or
alternative transaction;
|
|
5.
|
Using
its best efforts to assist the Company in identifying suitable Second
Parties and counseling and participating with the Company in any
approaches to, or discussions or negotiations with, such Second
Party;
|
|
6.
|
Assuming
an agreement in principle is reached for a Business Combination or
alternative transaction, assisting the Company in negotiating the
financial terms of a definitive
agreement;
|
|
7.
|
If
requested by the Company and agreed to by Sandler X’Xxxxx, rendering an
Opinion, as defined herein, to the Board (the "Opinion") as to whether
the
consideration to be exchanged in a proposed Business Combination
with the
Second Party is fair, from a financial point of view, to the Company’s
shareholders, it being understood that the Company would not intend
to
proceed with a proposed Business Combination unless Sandler X’Xxxxx
advises the Company that Sandler X’Xxxxx is or will be prepared to issue
an Opinion; and
|
|
8.
|
Rendering
such other financial advisory and investment banking services as
may from
time to time be agreed upon by Sandler X’Xxxxx and the
Company.
|
The
Company hereby acknowledges and agrees that the financial models and
presentations used by Sandler X’Xxxxx in performing its services hereunder have
been developed by and are proprietary to Sandler X’Xxxxx and are protected under
applicable copyright laws. The Company agrees that it will not reproduce or
distribute all or any portion of such models or presentations without the prior
written consent of Sandler X’Xxxxx.
FEES
1. If
during
the period Sandler X’Xxxxx is retained by the Company hereunder or within 12
months following termination of the engagement of Sandler X’Xxxxx, as provided
below under the caption “Termination of Engagement” (a) a Business Combination
is consummated with any Second Party contacted by Sandler X’Xxxxx on behalf of
the Company during the term of this engagement letter and such Second Party
is
included on the agreed upon list of “Contacted Second Parties” to be updated
during the course of the engagement by Sandler X’Xxxxx, with each update to the
list to be agreed to by the Company and such list will be included as Addendum
A
hereto or (b) the Company enters into a definitive agreement with any Second
Party contacted by Sandler X’Xxxxx on behalf of the Company during the term of
this engagement letter and such Second Party is included on the agreed upon
list
of “Contacted Second Parties” to be updated during the course of the engagement
by Sandler X’Xxxxx, with each update to the list to be agreed to by the Company
and such list will be included as Addendum A hereto, to engage in a Business
Combination, and such Business Combination is ultimately consummated, it being
understood that such consummation need not occur during the 12 month period
above, the Company shall pay Sandler X’Xxxxx a fee in an amount equal to 1.00%
of the Aggregate Purchase Price, less the amount of any fee paid to Sandler
X’Xxxxx pursuant to paragraph 2 below, due and payable in cash on the day of
closing of the Business Combination.
2. If
Sandler X’Xxxxx is asked by the Company to render an Opinion in connection with
a Business Combination, the Company agrees to pay Sandler X’Xxxxx a fee of
$200,000, payable in cash at the time such Opinion is rendered, which shall
be
credited against any fee that may become due and payable pursuant to paragraph
(1) above.
EXPENSE
REIMBURSEMENT
In
addition to any fees that may be payable to Sandler X’Xxxxx under this letter,
the Company agrees to reimburse Sandler X’Xxxxx, upon request made from time to
time, for its reasonable out-of-pocket expenses incurred in connection with
Sandler X’Xxxxx’x activities under this letter, including the reasonable fees
and disbursements of its legal counsel; provided,
however,
that the
Company shall not be required to reimburse any expenses exceeding $20,000 in
the
aggregate unless Sandler X’Xxxxx has obtained the Company’s prior approval of
such expenses (such approval not to be unreasonably withheld); and provided
further
that
such expense limitation and approval is not intended to apply to or in any
way
impair or limit the indemnification or contribution provisions
hereof.
FAIRNESS
OPINION
The
Fairness Opinion referred to above is a written opinion of Sandler X’Xxxxx
provided to the Company stating in effect that, in the sole opinion of Sandler
X’Xxxxx and subject to the terms and conditions contained therein, the
consideration to be received in the proposed Business Combination with a Second
Party is fair to the Company’s shareholders from a financial point of
view.
It
is
understood that any Opinion will be dated as of a date reasonably proximate
to
the date of any definitive agreement entered into by the Company and the Second
Party and, at the request of the Company, shall be updated as of a date
reasonably proximate to the date of any proxy statement or any offer to purchase
to be mailed to the shareholders of the Company in connection with the Business
Combination. It is further understood that if the Opinion is included in any
such proxy statement or offer to purchase, the Opinion will be reproduced in
such proxy statement or offer to purchase in full, and any description of or
reference to Sandler X’Xxxxx or the analyses performed by Sandler X’Xxxxx or any
summary of the Opinion in such proxy statement or offer to purchase will be
in a
form acceptable to Sandler X’Xxxxx and its counsel in the exercise of their
reasonable judgment. Except as provided in this letter or as required by law,
neither the Opinion nor any other advice delivered to the Board of Directors
or
senior management of the Company by Sandler X’Xxxxx may be reproduced,
summarized, described or referred to without Sandler X’Xxxxx’x prior written
consent; provided, however, the Company may reproduce, and Sandler X’Xxxxx will
assist the Company in summarizing, the Opinion in the proxy statement to be
furnished to shareholders and/or the registration statement to be filed with
the
SEC in connection with the Business Combination, and Sandler X’Xxxxx will assist
the Company in providing to its shareholders and the SEC all information
required by the SEC, including SEC Schedule 14A and Regulation
M-A.
CONFIDENTIAL
INFORMATION
The
Company will furnish Sandler X’Xxxxx (and will request that any of the Company’s
representatives furnish Sandler X’Xxxxx) with such information as Sandler
X’Xxxxx reasonably believes appropriate to its assignment (all such information
so furnished being the "Information") and hereby
represents and warrants to Sandler X’Xxxxx that the Information will be true and
correct in all material respects and not misleading.
The
Company recognizes and confirms that Sandler X’Xxxxx (a) will use and rely
primarily on the Information and on information available from generally
recognized public sources in performing the services contemplated by this letter
and in rendering the Opinion without having independently verified the same,
(b)
does not assume responsibility for the accuracy or completeness of the
Information and such other information, (c) will not make an appraisal of any
assets, collateral securing assets or liabilities of the Company or any Second
Party and (d) will not perform any analysis on the effect of AICPA Statement
of
Position 03-3 on the value of any loan portfolio to be sold as part of any
Business Combination (an “SOP 03-3 Review”). Sandler X’Xxxxx agrees to use all
reasonable efforts to keep confidential Information confidential.
It
is
agreed that prior to distributing any materials related to the Company,
including, but not limited to the Information, to a Second Party, Sandler
X’Xxxxx will provide a copy of such materials to the Company and its counsel
for
its review and written approval, such approval not to be unreasonably withheld.
The parties agree that the foregoing provision for the Company’s prior approval,
among other provisions herein, is a material inducement for the Company to
enter
into this engagement letter, and agree that a breach of this provision,
resulting in loss or damage to the Company, would constitute a material breach
of this engagement letter.
CERTAIN
ACKNOWLEDGMENTS
The
Company acknowledges that Sandler X’Xxxxx has been retained hereunder solely as
an adviser to the Board of Directors of the Company, and not as an adviser
to or
agent of any other person, and that the Company’s engagement of Sandler X’Xxxxx
is as an independent contractor and not in any other capacity. Sandler X’Xxxxx
may, to the extent it deems appropriate, render the services hereunder through
one or more of its affiliates. Neither this engagement, nor the delivery of
any
advice in connection with this engagement, is intended to confer rights upon
any
persons not a party hereto (including security holders, employees or creditors
of the Company) as against Sandler X’Xxxxx or its affiliates or its or their
respective partners, directors, officers, agents or employees. Following
consummation of a Business Combination, Sandler X’Xxxxx may, at its own expense,
place announcements or advertisements in financial newspapers, journals and
marketing materials describing our services hereunder.
The
Company acknowledges that it is not relying on the advice of Sandler X’Xxxxx for
tax, legal or accounting matters, it is seeking and will rely on the advice
of
its own professionals and advisors for such matters and it will make an
independent analysis and decision regarding any Business Combination or
alternative transaction based upon such advice.
INDEMNIFICATION;
CONTRIBUTION
The
Company agrees to indemnify and hold Sandler X’Xxxxx and its affiliates and
their respective partners, directors, officers, employees, agents and
controlling persons (Sandler X’Xxxxx and each such person being an "Indemnified
Party") harmless from and against any and all losses, claims, damages and
liabilities, joint or several, to which such Indemnified Party may become
subject under applicable federal or state law, or otherwise, related to or
arising out of any actual or proposed Business Combination or alternative
transaction or the engagement of Sandler X’Xxxxx pursuant to, or the performance
by Sandler X’Xxxxx of the services contemplated by, this letter (collectively,
the “Losses”), and will reimburse any Indemnified Party for all expenses
(including reasonable counsel fees and expenses) as they are incurred, including
expenses incurred in connection with the investigation of, preparation for
or
defense of any pending or threatened claim or any action or proceeding arising
therefrom, whether or not such Indemnified Party is a party (collectively,
the
“Expenses”). The Company will not be liable under the foregoing indemnification
provision to the extent that any Loss is found in a final judgment by a court
of
competent jurisdiction to have resulted proximately from (1)
the
bad
faith of or (2) a material breach of this Agreement or (3) gross negligence
or
(4) or reckless or willful misconduct or (5) violation of law or regulation
by
the
Indemnified Party. The
Company further agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
or
any of its affiliates, creditors or security holders for or in connection with
the engagement of Sandler X’Xxxxx pursuant to, or the performance by Sandler
X’Xxxxx of the services contemplated by, this letter or any actual or proposed
Business Combination, alternative transaction or other conduct in connection
therewith except with respect to those losses, claims, damages and liabilities,
joint and several, incurred by the Company that are found in a final judgment
by
a court of competent jurisdiction to have resulted proximately from the
(1)
bad
faith of or (2) a breach of this Agreement or (3) gross negligence or (4) or
reckless or willful misconduct or (5) violation of law or regulation
by
the
Indemnified Party. In the event a court finds that any losses, claims damages
and liabilities of the Company resulted from any of the acts of Sandler O’Neil
enumerated in the preceding sentence, the
Company, in addition to any other rights it may have under this agreement,
expressly reserves its rights to pursue any remedy in law or equity against
Sandler X’Xxxxx for breach of contract, for indemnification and otherwise to the
fullest extent provided by California law.
In
the
event Sandler X’Xxxxx appears as a witness in any action brought against the
Company in which an Indemnified Party is not named as a defendant, the Company
agrees to reimburse Sandler X’Xxxxx for all reasonable expenses incurred and
time expended by it in connection with its appearing as a witness.
The
Company agrees to notify Sandler X’Xxxxx promptly of the assertion against it or
any other person of any claim or the commencement of any action or proceeding
relating to any transaction contemplated by this agreement.
CERTAIN
DEFINITIONS
As
used
in this letter, the term:
|
1.
|
"Business
Combination" means (a) any merger, consolidation, reorganization
or other
business combination pursuant to which the business of the Company
is
combined with or comes under common control with that of a Second
Party,
or (b) the acquisition, directly or indirectly, by a Second Party
of more
than 24.9% of the capital stock, or all or a substantial portion
of the
assets, of the Company, by way of tender or exchange offer, negotiated
purchase or otherwise, whether effected, in any such case, in one
transaction or a series of
transactions.
|
|
2.
|
"Aggregate
Purchase Price" means an amount equal to the sum of (a) the product
of (1)
the consideration agreed to be paid or exchanged for each share
of each
class of stock of the Company, and (2) the number of such shares
outstanding immediately preceding the effective time of the Business
Combination, plus (b) the product of (1) the number of such shares
issuable upon the exercise of any options, warrants or other rights
to
purchase shares of any class of the Company’s securities, all as
outstanding on or after the date of an agreement to effect a Business
Combination, and, without duplication, that are cashed out, as
the case
may be, as part of the Business Combination and (2) the consideration
to
be paid with respect to such underlying shares minus any applicable
exercise or strike price plus (c) the amount of any debt assumed
(directly
or indirectly) or repaid in connection with the Business Combination,
(d)
the
net present value of any contingent payments (whether or not related
to
future earnings or operations and including payments to executive
personnel in respect of retention agreements) calculated based
upon the
assumption
that the maximum aggregate amount of any consideration pursuant
to the
contingent payment provisions is received,
plus (e) any extraordinary dividends or distributions paid on or
prior to
the closing in connection with the Business Combination.
|
|
For
purposes of this agreement, if all or any portion of the consideration
to
be paid consists of securities, (i) the fair market value of any
such
securities will be the value as the parties hereto shall mutually
agree on
the day prior to the consummation of such transaction; provided,
however,
that if such securities consist of securities with an existing
public
trading market, the value thereof shall be determined by the average
of
the last sales prices for such securities on the five trading days
ending
five calendar days prior to such date and (ii) the amount of the
fee
payable pursuant to paragraph 1 under the caption “Fees” above shall be
calculated as if the date on which the payment is due were the
date of
consummation of the Business Combination. In the event a particular
transaction structure makes the calculation of the Aggregate Purchase
Price as set forth above impractical, the parties hereto shall
use their
best efforts to determine an Aggregate Purchase Price that would
approximate the Aggregate Purchase Price had the relevant Business
Combination been structured as a purchase of the Company’s
shares.
|
GOVERNING
LAW
This
Agreement, and the rights of the parties’ hereunder, shall be governed,
interpreted and enforced pursuant to the laws of the State of
California.
TERMINATION
OF ENGAGEMENT
Sandler
X’Xxxxx’x engagement hereunder may be terminated by the Company or by Sandler
X’Xxxxx at any time upon 30 days written notice to that effect, it being
understood that the provisions relating to the payment of fees and expenses
and
indemnification and contribution and those contained under the caption “Certain
Acknowledgements” will survive any such termination for a period of 12 months
following such 30 days written notice.
Please
confirm that the foregoing correctly sets forth our agreement by signing and
returning to Sandler X’Xxxxx the duplicate copy of this letter enclosed
herewith.
Very
truly yours,
|
Sandler
X’Xxxxx & Partners, L.P.
|
||
|
By:
|
Sandler
X’Xxxxx & Partners Corp.,
|
|
|
|
the
sole general partner
|
|
|
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|
|
Xxxxxx
X. Xxxxxx
|
||
|
An
Officer of the Corporation
|
||
|
Dated:
|
January
6, 2006
|
|
Accepted
and agreed to:
|
By:
|
/s/
Xxxxxx X. Xxxxxx
|
|
Name:
|
Xxxxxx
X. Xxxxxx
|
|
Its:
|
Chairman
of the Board
|
Dated:
