EXHIBIT INDEX

Exhibit A

Form of Agreement with Option Holders

 

SCHEDULE INDEX

Schedule 1.1(h)		List of Options
Schedule 3.2		No Conflicts
Schedule 3.4		Call Reports of PCB Arizona
Schedule 3.8		Undisclosed Liabilities; Adverse Changes
Schedule 3.11		Proceedings and Orders
Schedule 3.12		Absence of Certain Changes and Events
Schedule 3.13		Properties, Contracts, Employee Benefit Plans and Other Agreements
Schedule 3.15		No Defaults
Schedule 3.16		Insurance
Schedule 3.17		Compliance With Environmental Laws
Schedule 4.2		Required Regulatory Consents, Approvals and Notices
Schedule 7.10		List of Option Holders

 

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STOCK PURCHASE AND SALE AGREEMENT

THIS STOCK PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is entered into as of March 1, 2007, by and among PCBA ACQUISITION, LLC , an Arizona limited liability company (“ Buyer ”), PREMIER COMMERCIAL BANK ARIZONA, N.A. , a national banking association (“ PCB Arizona ”), and PREMIER COMMERCIAL BANCORP , a California corporation (“ Bancorp ”).  Buyer, PCB Arizona and Bancorp referred to collectively as the “parties” and individually as a “party.”

RECITALS

A.            PCB Arizona is a national bank organized and existing under the laws of the United States and has its principal office and place of business located in the City of Mesa, County of Maricopa in the State of Arizona.

B.             Buyer is an Arizona limited liability company formed for the purpose of acquiring certain shares of common stock of PCB Arizona.

C.             As of the date of this Agreement, Steven Ellsworth (“ Ellsworth ”) and Kevin Stevenson (“ Stevenson ”) are the managers and sole members of Buyer.

D .            Ellsworth and Stevenson have been executive officers of PCB Arizona, were instrumental in the organization of PCB Arizona, and, while so employed, were intimately knowledgeable about the business affairs and business plans of PCB Arizona.

E.             As of the date hereof, PCB Arizona has 1,102,750 shares of issued and outstanding common stock (the “ Bank Stock ”), of which Bancorp owns, directly or beneficially, 954,000 shares (the “ Acquired Shares ”), Ellsworth owns, directly or beneficially, 93,750 shares, and Stevenson owns, directly or beneficially, 55,000 shares.

F.              The parties to this Agreement desire to effect a transaction whereby Buyer will acquire the Acquired Shares from Bancorp (the “ Acquisition ”) for the purchase price set forth below .

G.             The parties wish to set forth certain other agreements among them .

AGREEMENTS

In consideration of the foregoing premises and the mutual promises, covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1            Definitions .  In addition to those terms defined throughout this Agreement, the following terms, when used herein, shall have the following meanings.

(a)           “ Affiliate ” means with respect to a particular Person, any other Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person.

 

(b)           “ Best Efforts ” means using all due speed that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as promptly and expeditiously as possible, provided, however , that an obligation to use Best Efforts under this Agreement does not require the Person subject to that obligation to take actions that would result in a materially adverse change in the benefits to such Person of this Agreement and the Acquisition.

(c)           “ Business Day ” means any day except Saturday, Sunday and any day on which PCB Arizona is authorized or required by law or other government action to close.

(d)           “ Contract ” means any agreement, contract, obligation, promise or understanding (whether written or oral and whether express or implied) that is legally binding.

(e)           “ Knowledge ” with respect to:

(i)            an individual means that such person will be deemed to have “Knowledge” of a particular fact or other matter if such individual is actually aware of such fact or other matter; and

(ii)            a Person (other than an individual) means that such Person will be deemed to have “Knowledge” of a particular fact or other matter if any individual who is serving as a director or officer or manager of such Person (or in any similar capacity) has Knowledge of such fact or other matter.

(f)            “ Legal Requirement ” means any material federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute or treaty, including without limitation the United States banking laws, rules and regulations and the banking laws, rules and regulations of the State of Arizona.

(g)           “ Material Adverse Effect ” means any change in or effect on the business of PCB Arizona that would be materially adverse to the business, financial condition or results of operations of PCB Arizona, other than any change, effect, event or occurrence to the extent arising from or relating to (i) the United States or the banking industry in general, (ii) actions taken pursuant to the obligations of the parties expressly set forth in this Agreement or (iii) general economic conditions.

(h)           “ Options ” means all of the existing Options to acquire PCB Arizona common stock, as identified on Schedule 1.1(h) .

(i)            “ Order ” means any award, decision, directive, injunction, judgment, memorandum, order, regulatory agreement, ruling, subpoena or verdict entered, issued, made or rendered by any court, administrative or other governmental agency, including any Regulatory Authority, or by any arbitrator.

(j)            “ Person ” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union or other entity or any Regulatory Authority.

(k)           “ Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any judicial or governmental authority, including a Regulatory Authority, or arbitrator.

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(l)            “ Regulatory Authorities ” means any federal, state or local governmental body, agency or authority which under applicable statutes and regulations:  (i) has supervisory, judicial, administrative, police, taxing or other power or authority over PCB Arizona or Buyer; (ii) is required to approve, or give its consent to the Acquisition; or (iii) with which a filing must be made in connection therewith, including in any case, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency (“ OCC ”) and the Federal Deposit Insurance Corporation (“ FDIC ”).

(m)          “ Tax ” means any tax (including any income tax, capital gains tax, value-added tax, sales tax, property tax, gift tax or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency or other fee, and any related charge or amount (including any fine, penalty, interest or addition to tax), imposed, assessed or collected by or under the authority of any Regulatory Authority or payable pursuant to any tax-sharing agreement or any other Contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency or fee.

(n)           “ Tax Return ” means any return (including any information return), report, statement, schedule, notice, form or other document or information filed with or submitted to, or required to be filed with or submitted to, any Regulatory Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.

(o)           “ Threatened ” means a claim, Proceeding, dispute, action or other matter for which any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing).

Section 1.2            Principles of Construction . (a) In this Agreement, unless otherwise stated or the context otherwise requires, the following uses apply:  (i) actions permitted under this Agreement may be taken at any time and from time to time in the actor’s sole discretion; (ii) references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or successor, as in effect at the relevant time; (iii) in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”; (iv) references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality; (v) indications of time of day mean Phoenix, Arizona time; (vi) ”including” means “including, but not limited to”; (vii) all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified; (viii) all words used in this Agreement will be construed to be of such gender or number as the circumstances require; and (ix) the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions.

(b)           The Appendix, Exhibits and Schedules referred to in this Agreement consist of the Appendix, Exhibits and Schedules attached to this Agreement immediately following the signature page of this Agreement, and such Appendix, Exhibits and Schedules are incorporated by reference into this Agreement as if they were set forth in their entirety herein.  Such Schedules only contain information regarding PCB Arizona which was provided to Buyer a reasonable period of time prior to the date of this Agreement.  The parties shall evidence their respective review of the Schedules by initialing each Schedule.

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(c)           All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as consistently applied in the United States (“ GAAP ”).

ARTICLE 2

BASIC TERMS OF TRANSACTION

Section 2.1            The Transaction .  Upon the terms, subject to the conditions and in reliance upon the representations and warranties herein made by the parties to each other, Bancorp shall sell, transfer, convey and deliver to Buyer and Buyer shall purchase from Bancorp, all of the Acquired Shares.

Section  2.2             Effective Time .  The closing of the Acquisition (“ Closing ”) shall occur on August 1, 2007 (the “ Closing Date ”), at such time and place as the parties shall mutually agree .  The Acquisition shall be effective upon the receipt of all required approvals or consents of the Regulatory Authorities for the Acquisition, and the expiration of all statutory waiting periods relating to such approvals (the “Effective Time ”).  The parties agree to use their Best Efforts to cause the Closing to occur as soon as possible after the date of this Agreement.

Section  2.3             Purchase Price; Shareholders’ Equity .  (a) The aggregate purchase price (“ Purchase Price ”) of the Acquired Shares shall be $11,000,000.  The parties agree that in the event Buyer shall have paid either or both of the First Extension Deposit and the Second Extension Deposit, pursuant to Section 8.5 of this Agreement, then such payments shall be credited against the Purchase Price at Closing.  After the Closing, Bancorp will have no further rights in respect of the Acquired Shares except to receive the Purchase Price as provided in this Section 2.3.

(b)           The parties agree that as of the Closing Date, the book value of the Bank Stock (the “ Shareholder Equity ”) shall be not less than $9,000,000, independent of any stock options or warrants outstanding immediately prior to the Closing Date.  The Shareholder Equity shall be calculated pursuant to generally accepted accounting principles, and shall be verified by an independent third party mutually agreeable to all parties, which could include the certified public accountants for PCB Arizona.  In the event the Shareholder Equity is below $9,000,000 as of the Closing Date, the Purchase Price for the Acquired Shares shall be reduced on a dollar for dollar basis by the amount by which the Shareholder Equity of PCB Arizona is below $9,000,000.

Section  2.4             Options and Warrants .  Subject to Section 7.10, u pon the Closing, all stock options of PCB Arizona, other than those held by Ellsworth and Stevenson, shall be cancelled with no liability to PCB Arizona.  All stock options of Ellsworth and Stevenson will remain in place and shall be the responsibility of PCB Arizona from and after the Closing .  In the event the Acquisition is terminated, all options and warrants to Ellsworth and Stevenson shall terminate immediately with no further liability to PCB Arizona or Bancorp.

Section  2.5             Buyer’s Deliveries at Closing .  At the Closing, Buyer shall deliver the following items to Bancorp:

(a)           evidence of the deposit by Buyer with a federal deposit insured banking institution with shareholder equity in excess of $20 million of the Purchase Price;

(b)           a certificate executed by the President or any Vice President and the Secretary or any Assistant Secretary of Buyer dated the Closing Date stating that:  (i) all of the representations and warranties of Buyer set forth in this Agreement are true and correct with the same force and effect as if

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all of such representations and warranties were made at the Closing Date, provided, however, that to the extent such representations and warranties expressly relate to an earlier date, such representations shall be true and correct in all material respects on and as of such earlier date, and provided further , that to the extent that such representations and warranties are made in this Agreement subject to a standard of materiality or Knowledge, such representations and warranties shall be true and correct in all respects; and (ii) Buyer has performed or complied with all of the covenants and obligations to be performed or complied with by it under the terms of this Agreement on or prior to the Closing Date, provided, however, that to the extent performance and compliance with such covenants and obligations are subject in this Agreement to a standard of materiality, and also with respect to the performance by Buyer of the covenant to pay the Purchase Price, Buyer shall have performed and complied in all respects with such covenants and obligations;

(c)           copies of resolutions of the members and managers of Buyer authorizing and approving this Agreement and the consummation of the transactions contemplated hereby; and

(d)           such other documents as PCB Arizona may reasonably request.

All of such items shall be reasonably satisfactory in form and substance to Bancorp and its counsel.

Section  2.6             Bancorp’s Deliveries at Closing .  At the Closing, Bancorp shall deliver the following items to Buyer:

(a)           certificates representing the Acquired Stock, duly endorsed in blank by the holder thereof;

(b)           a certificate executed by the Chairman or President of Bancorp stating that:  (i) all of the representations and warranties of Bancorp and PCB Arizona set forth in this Agreement are true and correct with the same force and effect as if all of such representations and warranties were made at the Closing Date, provided, however, that to the extent such representations and warranties expressly relate to an earlier date, such representations shall be true and correct in all material respects on and as of such earlier date, and provided further , that to the extent that such representations and warranties are made in this Agreement subject to a standard of materiality or Knowledge, such representations and warranties shall be true and correct in all respects; and (ii) each of Bancorp and PCB Arizona have performed and complied with all of the covenants and obligations to be performed or complied with by it under the terms of this Agreement on or prior to the Closing Date, provided, however, that to the extent performance and compliance with such covenants and obligations are subject in this Agreement to a standard of materiality, each of Bancorp and PCB Arizona shall have performed and complied in all respects with such covenants and obligations;

(c)           copies of resolutions of the board of directors of Bancorp and PCB Arizona, as applicable, authorizing and approving this Agreement and the consummation of the transactions contemplated hereby, certified as of the Closing Date by the Secretary or any Assistant Secretary of Bancorp and PCB Arizona, as applicable;

(d)           a legal opinion of Bancorp’s counsel dated the Closing Date opining as to due authorization, enforceability and other matters of a similar nature; and

(e)           such other documents as Buyer may reasonably request.

All of such items shall be reasonably satisfactory in form and substance to Buyer and its counsel.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF BANCORP AND PCB ARIZONA

Bancorp and PCB Arizona hereby represents and warrants to Buyer as follows:

Section 3.1             Authorization; Enforceability .  Each of Bancorp and PCB Arizona has the requisite power and authority to enter into and perform its obligations under this Agreement and the execution, delivery and performance of this Agreement by each of Bancorp and PCB Arizona, and the consummation by it of its respective obligations under this Agreement, have been authorized by all necessary actions of any kind whatsoever (except for approval of the Acquisition and this Agreement by its stockholders) and this Agreement constitutes a legal, valid and binding obligation of each of Bancorp and PCB Arizona enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other laws and subject to general principles of equity.

Section 3.2            No Conflict .   Except as set forth in Schedule 3.2 , neither the execution nor the delivery of this Agreement nor the consummation or performance of the Acquisition will, directly or indirectly (with or without notice or lapse of time):  (a) contravene, conflict with, or result in a violation of any provision of the charter or bylaws of either Bancorp or PCB Arizona; (b) contravene, conflict with or result in a violation of, or give any Regulatory Authority the bona fide right to challenge the Acquisition or to exercise any remedy or obtain any relief under, any Legal Requirement or Order to which either Bancorp, PCB Arizona, or any of the assets owned or used by Bancorp or PCB Arizona, respectively, may be subject; (c) contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the valid right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract where the same would have a Material Adverse Effect; or (d) result in the creation of any lien, charge or encumbrance upon or with respect to any of the assets owned or used by Bancorp or PCB Arizona.  Neither Bancorp nor PCB Arizona will be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation of the Acquisition.

Section 3.3            Bank Capitalization .  The authorized capital stock of PCB Arizona consists, and immediately prior to the Closing will consist, exclusively of 1,102,750 shares of common stock , all of which shares are, and immediately prior to the Closing will be, duly authorized, validly issued and outstanding, fully paid and nonassessable.  There are no unexpired or pending preemptive rights with respect to any shares of capital stock of PCB Arizona.  Other than the stock options and warrants that are to be cancelled pursuant to Section 2.4 of this Agreement, there are no outstanding securities of PCB Arizona which are convertible into or exchangeable for any shares of PCB Arizona’s capital stock, and PCB Arizona is not a party to any Contract relating to the issuance, sale or transfer of any equity securities or other securities of PCB Arizona.  None of the issued and outstanding shares of PCB Arizona’s capital stock was issued in violation of any federal or state securities laws or any other Legal Requirement.  PCB Arizona does not own or have any Contract to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business.

Section 3.4            Call Reports .   True, correct and complete copies of the following are set forth in Schedule 3.4 :  (a) PCB Arizona’s Report of Condition and Reports of Income as filed with Regulatory Authorities, for the following periods: December 31, 2006 (collectively, the “ Call Reports ”); and (b) any other reports filed by PCB Arizona, and all written agreements and understandings in effect or entered into by PCB Arizona, with any Regulatory Authority since its inception.  The Call Reports have been prepared in accordance with all Legal Requirements and generally accepted accounting practices applicable to financial institutions consistently applied, and each of the Call Reports accurately, fairly

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and correctly presents the financial position, assets, liabilities and the results of operations of PCB Arizona at the respective dates and for the respective periods covered by such Call Reports.

Section 3.5            Books and Records .  The books of account, minute books, stock record books and other records of PCB Arizona are complete and correct in all material respects and have been maintained in accordance with all applicable Legal Requirements.  At the Closing, all of those books and records will be in the possession of PCB Arizona.

Section 3.6            Title to and Condition of Assets .   PCB Arizona has good and marketable title to all of its properties and assets, real and personal, tangible and intangible, as reflected on PCB Arizona’s most recent Call Report, free and clear of all mortgages, liens, security interests, pledges, charges, claims, encumbrances  and other restrictions of any nature whatsoever other than:  (a) pledges or liens required to be granted in connection with the acceptance of government deposits, granted in connection with repurchase or reverse repurchase agreements or otherwise incurred in the ordinary course of business; (b) statutory liens for Taxes not yet delinquent or being contested in good faith by appropriate Proceedings and for which appropriate reserves have been established and reflected on the Call Reports; and (c) minor defects and irregularities in title and encumbrances that would not have a Material Adverse Effect,.  All real property and fixed assets (whether owned or leased) utilized in and material to the conduct of the business of PCB Arizona are in good condition and repair, free from structural defects, subject to ordinary wear and tear and such minor defects as will not impair their continued normal use.

Section 3.7            Loan Loss Reserve .   To Bancorp’s and PCB Arizona’s Knowledge:  (a) PCB Arizona’s reserve for possible loan and lease losses is adequate in all material respects under the standards applied by applicable Regulatory Authorities and based upon generally accepted accounting practices applicable to financial institutions to provide for possible or specific losses, net of recoveries relating to loans previously charged off; (b) none of PCB Arizona’s loans is subject to any material offset or claim of offset; and (c) the aggregate loan balances in excess of PCB Arizona’s reserve for loan and lease losses are, based on past loan loss experience, collectible in accordance with their terms and all uncollectible loans have been charged off.

Section 3.8            Undisclosed Liabilities; Adverse Changes .   PCB Arizona has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except:  (a) as set forth in Schedule 3.8 ; (b) for liabilities or obligations reflected or reserved against in the Call Reports; and (c) for current liabilities incurred in the ordinary course of business since the respective dates of the Call Reports.  Since the date of the latest Call Report, there has been no occurrence that would have a Material Adverse Effect.

Section 3.9            Taxes .   PCB Arizona has duly filed or will duly file all Tax Returns required to be filed by it for all periods prior to the Closing Date, and each such Tax Return is complete and accurate in all material respects.  PCB Arizona has paid, or made adequate provision for the payment of, all Taxes (whether or not reflected in Tax Returns as filed or to be filed) due and payable by PCB Arizona, or claimed to be due and payable by any Regulatory Authority, and is not delinquent in the payment of any Tax, except such Taxes as are being contested in good faith and as to which adequate reserves have been provided.  There is no claim or assessment pending or Threatened against PCB Arizona for Taxes owed by PCB Arizona.  No audit, examination or investigation related to PCB Arizona is presently being conducted or Threatened by any Regulatory Authority.

Section 3.10         Compliance with Law .   PCB Arizona is, and at all times since its inception has been, in material compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets.  No event has occurred or circumstance exists that (with or without notice or lapse of time):  (a) may constitute or result in a

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violation by PCB Arizona of, or a failure on the part of PCB Arizona to comply with, any Legal Requirement; or (b) may give rise to any obligation on the part of PCB Arizona to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, and in the case of either clause (a) or (b) would have a Material Adverse Effect.  PCB Arizona has not received, at any time since its inception, any notice or other communication (whether oral or written) from any Regulatory Authority or any other Person regarding:  (x) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement; or (y) any actual, alleged, possible or potential obligation on the part of PCB Arizona to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, where either the occurrence described in clause (x) or (y) would have a Material Adverse Effect.

Section 3.11         Proceedings and Orders .   Attached as Schedule 3.11 is a true and correct list of all material Proceedings and Orders pending, entered into or, to the Knowledge of PCB Arizona, Threatened against or affecting PCB Arizona or any of its assets or business, since its inception, involving any Regulatory Authority or other Person.  Except to the extent indicated in Schedule 3.11 , no such pending or Threatened Proceeding or Order would, alone or in the aggregate, have a Material Adverse Effect and there is no fact which would provide a basis for any Proceeding or Order which would have such an effect.  No officer, director, agent or employee of PCB Arizona is subject to any Order that prohibits such officer, director, agent or employee from engaging in or continuing any conduct, activity or practice relating to the business of PCB Arizona.  PCB Arizona has not received, at any time since its inception, any notice or other communication (whether oral or written) from any Regulatory Authority or any other Person regarding any actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement to which PCB Arizona, or any of the assets owned or used by PCB Arizona, is or has been subject where the same would have a Material Adverse Effect.

Section 3.12         Absence of Certain Changes and Events .   Except as set forth in Schedule 3.12 or as permitted by this Agreement, since its inception, PCB Arizona has conducted its business only in the ordinary course of business and there has not been with respect to PCB Arizona any:

(a)           change in PCB Arizona’s authorized or issued capital stock; grant of any stock option or right to purchase shares of capital stock of PCB Arizona; issuance of any security convertible into such capital stock or evidences of indebtedness (except in connection with customer deposits); grant of any registration rights; purchase, redemption, retirement or other acquisition by PCB Arizona of any shares of any such capital stock, declaration or payment of any dividend or other distribution or payment in respect of shares of PCB Arizona’s capital stock;

(b)           amendment to the charter or bylaws or any resolutions adopted by the board of directors or the stockholders of PCB Arizona relating thereto;

(c)           payment or increase by PCB Arizona of any bonuses, salaries or other compensation to any stockholder, director, officer or employee (except in the ordinary course of business) or entry into any employment, severance or similar Contract with any director, officer or employee;

(d)           adoption, amendment (except for any amendment necessary to comply with any Legal Requirement) or termination of, or increase in the payments to or benefits under, any Employee Benefit Plan;

(e)           damage to or destruction or loss of any asset or property of PCB Arizona, whether or not covered by insurance, where the same would have a Material Adverse Effect;

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(f)            entry into, termination or extension of, or receipt of notice of termination of any joint venture or similar agreement, or any Contract or transaction involving a total remaining commitment by or to PCB Arizona of at least $5,000;

(g)           material change in any existing lease of real or personal property;

(h)           sale (other than any sale in the ordinary course of business), lease or other disposition of any material asset or property of PCB Arizona or mortgage, pledge or imposition of any lien or other encumbrance on any material asset or property of PCB Arizona except for tax and other liens which arise by operation of law and with respect to which payment is not past due and except for pledges or liens:  (i) required to be granted in connection with the acceptance by PCB Arizona of government deposits; (ii) granted in connection with repurchase or reverse repurchase agreements; or (iii) otherwise incurred in the ordinary course of business;

(i)            incurrence of any obligation or liability (fixed or contingent) other than in the ordinary course of business;

(j)            cancellation or waiver of any claims or rights with a value to PCB Arizona in excess of $1,000;

(k)           any investment of a capital nature exceeding $2,500 or aggregate investments of a capital nature exceeding $10,000;

(l)            merger or consolidation with or into any other Person, or acquisition of any stock, equity interest or business of any other Person;

(m)          transaction for the borrowing or loaning of monies, other than in the ordinary course of business;

(n)           material change in the accounting methods used by PCB Arizona; or

(o)           agreement, whether oral or written, by PCB Arizona to do any of the foregoing.

Section 3.13         Properties, Contracts, Employee Benefit Plans and Other Agreements .   Schedule 3.13 lists or describes the following:

(a)           All real property owned by PCB Arizona and the principal buildings and structures located thereon, and each lease of real property to which PCB Arizona is a party;

(b)           each Contract to which PCB Arizona is a party that involves performance of services or delivery of goods or materials by PCB Arizona of an amount or value in excess of $2,500;

(c)           except for financing leases made by PCB Arizona in the ordinary course of business, each lease, rental, license, installment and conditional sale agreement and other Contract to which PCB Arizona is a party affecting the ownership of, leasing of, title to, use of, any personal property with aggregate annual payments of greater than $2,500;

(d)           except for “shrink wrap” licenses generally applicable in the case of retail sales of software in the consumer market, each licensing agreement or other Contract to which PCB Arizona is a party with respect to patents, trademarks, copyrights, or other intellectual property (collectively, “ Intellectual Property Assets ”), including agreements with current or former employees, consultants, or

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contractors regarding the appropriation or the non-disclosure of any of PCB Arizona’s Intellectual Property Assets;

(e)           each collective bargaining agreement and other Contract to which PCB Arizona is a party with any labor union or other employee representative of a group of employees;

(f)            each joint venture, partnership and other Contract (however named) to which PCB Arizona is a party involving a sharing of profits, losses, costs or liabilities by PCB Arizona with any other Person;

(g)           each Contract to which PCB Arizona is a party containing covenants that in any way purport to restrict the business activity of PCB Arizona or any director, officer, employee or stockholder of PCB Arizona or limit PCB Arizona to engage in any line of business or to compete with any Person;

(h)           each Contract to which PCB Arizona is a party providing for payments to or by any Person based on sales, purchases or profits, other than direct payments for goods;

(i)            any written employment agreement or similar arrangement with any director, officer, employee or consultant of PCB Arizona;

(j)            each profit-sharing, deferred compensation, bonus, stock ownership, stock purchase, pension, incentive plan or agreement, retainer, employment, consulting, retirement, employee welfare or benefit agreements, plans or arrangements (including vacation, sick leave, salary continuation, service awards, severance pay, medical, hospitalization, disability and life insurance) established, maintained, sponsored or undertaken by PCB Arizona for the benefit of PCB Arizona’s officers, directors or employees, including each trust or other agreement with any custodian or any trustee for funds held under any such agreement, plan or arrangement, and all other Contracts or arrangements under which pensions, deferred compensation or other retirement benefits are being paid or may become payable by PCB Arizona for the benefit of PCB Arizona’s employees (collectively, the “ Employee Benefit Plans ”), and, in respect to any of them, the latest reports or forms, if any, filed with the Department of Labor and Pension Benefit Guaranty Corporation under the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), any current financial or actuarial reports and any currently effective private rulings or determination letters from the Internal Revenue Service obtained by or for the benefit of PCB Arizona;

(k)           each executory Contract entered into other than in the ordinary course of business that contains or provides for an express undertaking by PCB Arizona to be responsible for consequential damages;

(l)            each executory Contract for capital expenditures in excess of $2,500;

(m)          each written warranty, guaranty or other similar undertaking with respect to contractual performance extended by PCB Arizona other than in the ordinary course of business; and

(n)           each amendment, supplement and modification (whether oral or written) in respect of any of the foregoing.

Copies of each document, plan or Contract listed and described on Schedule 3.13 will be made available during due diligence.  PCB Arizona agrees to promptly provide Buyer with copies of any such document, plan or Contract described this Section 3.13 entered into by PCB Arizona on or after the date of this Agreement.

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Section 3.14         Employee Benefit Plans .   Except as otherwise set forth on Schedule 3.13 , PCB Arizona is not a party to, or obligated under, any Employee Benefit Plans.  PCB Arizona has complied with the applicable administrative, reporting and substantive requirements of ERISA and any other applicable Legal Requirement with respect to each Employee Benefit Plan where the failure to so comply would have a Material Adverse Effect.

Section 3.15         No Defaults .   Except as set forth in Schedule 3.15 , each Contract identified or required to be identified in Schedule 3.13 is in full force and effect and is valid and enforceable in accordance with its terms.  PCB Arizona is, and at all times since its inception, has been, in compliance in all material respects with all applicable terms and requirements of each Contract under which PCB Arizona has or had any obligation or liability or by which PCB Arizona or any of the assets owned or used by PCB Arizona is or was bound.  To Bancorp’s and PCB Arizona’s Knowledge, each other Person that has or had any obligation or liability under any material Contract under which PCB Arizona has or had any rights is, and at all times since its inception, has been in compliance in all material respects with all applicable terms and requirements of such Contract.  To the Knowledge of Bancorp or PCB Arizona, no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a violation or breach of, or give PCB Arizona or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract, and where any of the foregoing would have a Material Adverse Effect.  PCB Arizona has not given to or received from any other Person, at any time since its inception, any notice or other communication (whether oral or written) regarding any actual, alleged, possible or potential violation or breach of, or default under, any material Contract.  Other than in the ordinary course of business in connection with workouts and restructured loans, there are no renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate any material amounts paid or payable to PCB Arizona under current or completed Contracts with any Person and no such Person has made written demand for such renegotiation.

Section 3.16         Insurance .   Schedule 3.16 lists and briefly describes the policies of insurance (including bankers blanket bond and insurance providing benefits for employees) owned or held by PCB Arizona.  Each such policy is, and PCB Arizona will use its Best Efforts to keep each such policy, in full force and effect (except for any expiring policy which is replaced by coverage at least as extensive) until the Closing.  All premiums due on such policies have been paid.

Section 3.17         Compliance with Environmental Laws .  (a) There are no actions, suits, investigations, liabilities, inquiries, Proceedings or Orders involving PCB Arizona or any of its assets that are pending or, to the Knowledge of PCB Arizona, Threatened, nor to the Knowledge of Bancorp or PCB Arizona is there any factual basis for any of the foregoing, as a result of any failure of PCB Arizona to comply (or the assertion of liability even if in compliance) with any Legal Requirements designed to minimize, prevent, punish or remedy the consequences of actions that damage or threaten the soil, land surface or subsurface strata, surface waters (including navigable wa