Exhibit 10.96


 


FIRST AMENDED AND RESTATED


 


SANTA LUCIA BANK SALARY CONTINUATION AGREEMENT


 


This
First Amended and Restated Santa Lucia Bank Salary Continuation Agreement
(hereinafter “Agreement”) is made and entered into effective as of December 17,
2008 by and between Santa Lucia Bank
(hereinafter “Bank” or “Employer”), a state-chartered bank with its principal
offices located in the city of Atascadero, California, and James Cowan,  an executive of the Bank (the “Executive”).


 


Because
it is the intent of the parties to comply with the final regulations under
section 409A of the Internal Revenue Code of 1986, issued by the Internal
Revenue Service and Treasury Department on April 10, 2007, this Agreement
hereby amends, supersedes and replaces the prior Santa Lucia Bank Salary
Continuation Agreement, by and between these same parties effective as of January 18,
2001 (hereinafter “Prior Agreement”) in its entirety, as follows:


 


WHEREAS, it is the consensus of the Employer and its Board of Directors
that Executive’s employment with the Bank in the past has been of exceptional
merit and has constituted an invaluable contribution to the general welfare of
the Bank in bringing the Bank to its present status of operating efficiency and
present position in its field of activity;


 


WHEREAS, the Employer, in concert with its Board of Directors, desires
to establish a compensation benefit program as a fringe benefit for executives
of the Employer in order to attract and retain individuals with extensive and
valuable experience in the banking industry;


 


WHEREAS, Executive’s experience and knowledge of the affairs of the
Employer and the banking industry are extensive and valuable;


 


WHEREAS, it is deemed to be in the best interests of the Employer to
provide Executive with certain fringe benefits, on the terms and conditions set
forth herein, in order to reasonably induce Executive to remain in the Bank’s
employ during Executive’s lifetime or until the age of retirement; and


 


WHEREAS, Executive and the Employer wish to specify in writing the
terms and conditions upon which this additional compensatory incentive will be
provided to Executive;


 


WHEREAS, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for Executive, and be considered a
non-qualified benefit plan for the purposes of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”); and


 


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NOW, THEREFORE, in consideration of the past employment performance and
the  services to be performed by
Executive in the future, as well as the mutual promises and covenants contained
herein, Executive and the Employer agree as follows:


 


AGREEMENT


 


1.0          Terms
and Definitions.


 


For the purposes of this Agreement, the following
terms shall have the meanings indicated below, unless the context clearly
indicates otherwise. In the event any provision of this Agreement is ambiguous,
then it shall be interpreted in a manner that is consistent with Internal
Revenue Code Section 409A. Subject to the forgoing, the terms below shall
be defined as follows:


 


1.1          Accrued
Liability Balance. The term “Accrued Liability
Balance” shall mean the amount accrued by the Bank to fund the future benefit
expense associated with this Agreement, as of the end of the month preceding
Executive’s Separation From Service. The Bank shall account for this benefit
using Generally Accepted Accounting Principles, regulatory accounting guidance
of the Bank’s primary federal regulator, and other applicable accounting
guidance, including but not limited to Accounting Principles Board Opinion
Number 12 (“APB 12”) as amended by Statement of Financial Accounting Standards
Number 106 (“FAS 106”) and the Discount Rate. Accordingly, the Bank shall
establish a liability retirement account for Executive into which appropriate
accruals shall be made using the applicable Discount Rate.  Any one of a variety of amortization methods
may be used to determine the Accrual Balance. 
However, once chosen, the method must be consistently applied.  For illustrative purposes ONLY, a sample
table showing possible prospective Accrued Liability Balance numbers shall be
attached hereto as Exhibit “A”; however this Exhibit A is merely a
sample of the potential Accrued Liability Balance based on a future given date
and using a sample Discount Rate.  The
actual Accrued Liability Balance will be determined based on the actual
Discount Rates in effect over time.


 


1.2          Administrator.  The Bank shall be the “Administrator” and, solely for the purposes of
ERISA (as defined below), the “fiduciary” of this Agreement where a fiduciary
is required by ERISA.


 


1.3          Bank.   For the purpose of this Agreement, the term “Bank” or “Employer” shall
be read so as to include the Santa Lucia Bank holding company, Santa Lucia
Bancorp, when permissible.


 


1.4          Board
of Directors.  The Board of Directors shall mean the Board of
Directors for the Bank, hereinafter, the “Board”.


 


1.5          Change in Control. For the purpose of this Plan, a “Change
in Control” shall be deemed to have occurred upon any of the following events,
as such terms and events are defined in Internal Revenue Code Section 409A
and the related guidance and Notices thereto. IRC 409A currently provides that
a Change in Control Event shall include any of the following events (and for
the purposes of this provision, the term “corporation” shall mean the Bank or
the Bank’s


 


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holding company):


 


A.            A Change in the Ownership of a
Corporation. A change in the ownership of a corporation occurs on the date
that any one person or persons acting as a group (as defined in IRC 409A),
acquires ownership of stock of the corporation that, together with stock held
by such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of such corporation.


 


B.            Change in the Effective Control
of a Corporation. A change in the effective control of the corporation shall
be deemed to occur on either of the following dates:


(i) The date any
one person, or persons acting as a group acquires (or has acquired during the
12 month period ending on the date of the most recent acquisition by such
person or group) ownership of stock of the corporation possessing thirty
percent (30%) or more of the total voting power of the stock of such
corporation; or


(ii) The date a
majority of members of the corporation’s board of directors is replaced during
any twelve (12) month period by directors whose appointment or election is not
endorsed by a majority of the members of the corporation’s board of directors
before the date of the appointment or election. (In this sub-paragraph, 409A
limits “corporation” to the “relevant” corporation” as defined therein).


 


C.            Change in the Ownership of a
Substantial Portion of a Corporation’s Assets. A change in the ownership of
a substantial portion of a corporation’s assets shall be deemed to occur on the
date that any one person or group acquires (or has acquired during the twelve
(12) month period ending on the date of the most recent acquisition by such
person or persons) assets from the corporation that have a total gross fair
market value equal to or more than forty percent (40%) of the total gross fair
market value of all of the assets of the corporation immediately before such
acquisition or acquisitions. No Change in Control shall result if the assets
are transferred to certain entities controlled directly or indirectly by the
shareholders of the transferring corporation.


 


For the purposes of this
definition, the term “corporation” shall be read as including the Bank or the
bank’s holding company, Santa Lucia Bancorp. In addition to the forgoing, and
in accordance with IRC 409A, in order to constitute a Change in Control event
with respect to Executive, the Change in Control event must relate to (i) the
corporation for whom Executive is performing services at the time of the Change
in Control; (ii) the corporation that is liable for the payment of the
deferred compensation (or all corporations liable for the payment if more than
one corporation is liable) but only if either the deferred compensation is
attributable to the performance of service by the Participant for such
corporation (or corporations) or there is a bona fide business purpose for such
corporation or corporations to be liable for such payment


 


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and, in either case, no
significant purpose of making such corporation or corporations liable for such
payment is the avoidance of Federal income tax; or (iii) a corporation
that is a majority shareholder of a corporation identified above, or any
corporation in a chain of corporations in which each corporation is a majority
shareholder of another corporation in the chain, ending in a corporation
identified above. Should there be any question of whether a Change in Control
has occurred such as to trigger payment of a benefit described herein, any
ambiguity shall be resolved in accordance with the final regulations and any
subsequent clarification of IRC 409A.


 


1.6         The Code.  The “Code” shall mean the Internal Revenue Code of 1986, as amended.


 


1.7       Disability/Disabled. 
For the purposes of this Agreement, the term “Disability”
shall be interpreted in accordance with IRC 409A. Pursuant to IRC 409A, a
Participant will be considered Disabled if:


 


	
  A.

  	
  Executive is unable to engage
  in any substantial gainful activity by reason of any medically determinable
  physical or mental impairment that can be expected to result in death or can
  be expected to last for a continuous period of not less than twelve (12)
  months; or

  
	
   

  	
   

  
	
  B.

  	
  Executive is, by reason of any medically
  determinable physical or mental impairment that can be expected to result in
  death or can be expected to last for a continuous period of not less than
  twelve (12) months, receiving income replacement benefits for a period of not
  less than three (3) months under an accident and health plan covering
  employees of Executive’s employer.

  



 


1.8         Discount
Rate.  The term “Discount Rate” means the rate used
by the Plan Administrator in any specified year to accrue benefits under this
Plan; however, the Plan Administrator, in its sole discretion, may adjust the
Discount Rate to maintain the rate within reasonable standards according to
GAAP (Generally Accepted Accounting Principles).


 


1.9         Early
Retirement and Early Retirement Age.  The
term “Early Retirement” shall refer to Executive’s Separation From Service on
or after attaining the Early Retirement Age of sixty-two (62), but before
attaining the Normal Retirement Age, and for any reason other than “For Cause”
(or because of death).


 


1.10       Effective Date.  The term “Effective Date” shall mean the date first written above.


 


1.11       ERISA.  The term “ERISA” shall mean the Employee Retirement Income Security Act
of 1974, as amended.


 


1.12       Executive Benefit.  The term “Executive Benefit” shall mean the annual benefit amounts
determined pursuant to Paragraphs 1 through 4 herein (including sub-paragraphs,
as applicable), forfeited, reduced or adjusted to the extent:  (a) required under the other provisions


 


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of
this Agreement; (b) required by reason of the lawful order of any regulatory
agency or body having jurisdiction over the Employer; or (c) required in
order for the Employer to comply with any and all applicable state and federal
laws, including, but not limited to, income, employment and disability income
tax laws (e.g., FICA, FUTA, SDI).


 


1.13        Involuntary
Separation From Service.   In accordance with IRC 409A, the term “Involuntary
Separation From Service” shall mean a Separation From Service due to the
independent exercise of the unilateral authority of the Bank to terminate
Executive’s services, other than due to Executive’s implicit or explicit
request, where Executive was willing and able to continue performing services.


 


1.14        IRC 409A.   The term “IRC 409A” shall refer to the final
regulations issued by the IRS and the Treasury Department under Section 409A
of the Code.


 


1.15        Normal Retirement /
Normal Retirement Age.  The term “Normal Retirement” shall mean
Executive’s Separation From Service on or after the attaining the Normal
Retirement Age of Sixty-Five (65) for any reason other than “For Cause” (or
because of death).


 


1.16        Plan Year.  The term “Plan Year” shall mean the calendar year.


 


1.17        Separation
From Service/ Termination of Employment.  The terms Separation From Service (Separates
From Service) and Termination of Employment shall be used interchangeably for
the purposes of this Agreement and shall be interpreted in accordance with the
provisions of IRC 409A. Whether a termination of employment has occurred is
determined based on whether the facts and circumstances indicate that the Bank
and Executive reasonably anticipate that no further services will be performed
after a certain date or that the level of bona fide services the employee will
perform after such date (whether as an employee or as an independent contractor)
will permanently decrease to no more than twenty (20%) percent of the average
level of bona fide services performed (as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the employer  if the
employee has been providing services to the employer less than 36 months).
There shall be no Separation From Service while Executive is on military leave,
sick leave or other bona fide leave of absence, as long as such leave does not
exceed six (6) months, or if longer, so long as the individual retains a
right to re-employment with the service recipient under an applicable statute
or by contract.


 


1.18        Specified
Employee. The term “Specified Employee” shall be
defined in accordance with IRC 409A. At present, and in accordance with IRC
409A, the term “Specified Employee” means an employee who, as of the date of
the employee’s Separation From Service, is a key employee of an employer of
which any stock is publicly traded on an established securities market or
otherwise. An employee is a key employee if the employee meets the requirements
of section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the
regulations thereunder and disregarding section 416(i)(5)) at any time during
the twelve (12) month period ending on a specified employee identification
date. If Executive is a key employee as of a specified employee


 


5

















 


identification date, then Executive shall be treated as a key employee
for the entire twelve (12) month period beginning on the specified employee
effective date.


 


1.19        Termination
For Cause. The term “Termination For Cause” shall
mean termination of Executive’s employment by reason of any of the following:


 


	
  A.

  	
  Executive’s personal dishonesty, incompetence or willful misconduct;

  
	
   

  	
   

  
	
  B.

  	
  Executive’s breach of fiduciary duty involving personal profit;

  
	
   

  	
   

  
	
  C.

  	
  Executive’s intentional failure to perform Executive’s duties for the
  Bank after a written demand for performance is given to Executive by the
  Board which demand specifically identifies the manner in which the Board
  believes that Executive has not performed his duties;

  
	
   

  	
   

  
	
  D.

  	
  Executive’s willful violation of any law, rule, regulation or final
  cease and desist order (other than traffic violations or similar minor
  offenses) to the extent detrimental to the Bank’s business or reputation; or

  
	
   

  	
   

  
	
  E.

  	
  Executive’s material breach of any provision of this Agreement.

  
	
   

  	
   

  



1.20        Voluntary
Termination. The term “Voluntary
Termination” shall mean an Executive’s Separation From Service, which is not as
a result of an Involuntary Termination, a Termination For Cause or because of a
Disability.


 


2.0          Scope, Purpose and Effect.


 


2.1          Contract
of Employment. 
Although this Agreement is intended to provide Executive with an
additional incentive to remain in the employ of the Employer, this Agreement
shall not be deemed to constitute a contract of employment between Executive
and the Employer nor shall any provision of this Agreement restrict or expand
the right of the Employer to terminate Executive’s employment.  This Agreement shall have no impact or effect
upon any separate written Employment Agreement which Executive may have with
the Employer, it being the parties’ intention and agreement that unless this
Agreement is specifically referenced in said Employment Agreement (or any
modification thereto), this Agreement (and the Employer’s obligations
hereunder) shall stand separate and apart and shall have no effect on or be
affected by, the terms and provisions of said Employment Agreement.


 


2.2          Fringe Benefit.  The benefits provided by this Agreement are granted by the Bank as a
fringe benefit to Executive and are not a part of any salary reduction plan or
any arrangement deferring a bonus or a salary increase.  Executive has no option to take any current
payments or bonus in lieu of the benefits provided by this Agreement


 


2.3          Prohibited
Payments.  Notwithstanding anything in this Agreement to
the contrary, if any payment made under this Agreement is a “golden parachute
payment” as defined


 


6

















 


in
Section 28(k) of the Federal Deposit Insurance Act (12 U.S.C. section
1828(k) and Part 359 of the Rules and Regulations of the Federal
Deposit Insurance Corporation 
(collectively, the “FDIC Rules”) or is otherwise prohibited, restricted
or subject to the prior approval of a Bank Regulator, no payment shall be made
hereunder without complying with said FDIC Rules.


 


2.4          Additional
Prohibited Payments. If the Bank is subject to the
executive compensation limitations under the United States Treasury Department’s
Troubled Asset Relief Program (“TARP”) at
the time Executive becomes entitled to any payment under this Agreement, and if
such payment, together with any other payments which Executive has the right to
receive from the Bank, exceed the limits allowed for Executive established
under TARP, then the aggregate payments to Executive pursuant to this Agreement
and any other agreement with Executive shall be reduced to the largest amount
as will result in no portion of such payments violating the executive
compensation limitations under TARP.


 


3.0          Delay in Payments for Specified Employee in the Event of
a  Separation From Service, Notice
2007-86  and Compliance With IRC 409A.


 


3.1          Delay in Payments for Specified Employee in the Event of
a Separation From Service and Compliance with Notice 2007-86. 
In the case of any Employee who is a Specified Employee as of the date
of a Separation From Service, then a payment conditioned upon a Separation From
Service may not be made before the date that is six (6) months after the
date of Separation From Service (or, if earlier than the end of the six-month
period, the date of death of the Specified Employee).


 


In the event payments to which Executive
would otherwise be entitled during the first six (6) months are subject to
this six (6) month delay in payment, then such payments shall be
accumulated and paid on the first day of the seventh month following the date
of Separation From Service. Payments will then continue thereafter as called
for pursuant to the terms of this Agreement.


 


Notwithstanding
any provision existing in this Agreement or any amendment thereto, it is the
intent of the Bank and Executive that any payment or benefit provided pursuant
to this Agreement shall be made and paid in a manner, at a time and in a form
which complies with the applicable requirements of IRC Section 409A, in
order to avoid any unfavorable tax consequences resulting from any such failure
to comply. Furthermore, for the purposes of this Agreement, IRC Section 409A
shall be read to include any related or relevant IRS Notices (including but not
limited to Notice 2007-86).


 


In addition, as stated above, it is the intent of the parties to comply
with IRS Notice 2007-86, and thus, for any new election made in 2008, that new
election may not apply to amounts that would otherwise be payable in 2008, and
may not cause amounts to be paid in 2008 that would not otherwise be payable in
that year. In the event any such new election would accelerate a payment into
2008, then such resulting payment shall not be made until January 3, 2009
(so long as permitted by IRC 409A and any subsequent guidance).


 


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3.2          Compliance With
IRC 409A.   In the event of any
ambiguity in terms, or in the event further clarification of any term or
provision is necessary, all interpretations and payouts of benefits based
thereon shall be in accordance with IRC 409A and any related notices or
guidance thereon.


 


4.0          Executive Benefit Payments Upon
Retirement.


 


4.1          Executive
Benefit Payments Upon Normal Retirement. In the
event Executive Separates From Service for any reason other than For Cause (or
because of death) on a date which constitutes a Normal Retirement date as
defined herein, then Executive shall be entitled to be paid the following:


 


4.1.1                     Amount of
Benefit. Executive shall receive an annual Executive Benefit of
Twenty-Five Thousand Dollars ($25,000).


 


4.1.2                     Payment
Method and Duration. This annual Executive Benefit shall be paid in
twelve (12) substantially equal monthly installments, with payments commencing
on the first day of the first month following Executive’s Separation From
Service and continuing until the death of Executive.


 


4.2          Executive
Benefit Payments Upon Early Retirement. 
In the event Executive Separates From Service
for any reason other than For Cause (or because of death) on a date which
constitutes an Early Retirement date as defined herein, then Executive shall be
entitled to be paid the following:


 


4.2.1                     Amount of
Benefit.  Executive shall receive an annual Executive Benefit based on
the Early Retirement payment date and calculated as follows: an annual lifetime
annuity based on the Accrued Liability Balance as of the date of Early
Retirement, taking into consideration the Discount Rate and mortality
assumptions in use by the Bank as of the Early Retirement Date. This annual
amount shall remain consistent for the duration of the benefit.  For illustrative purposes ONLY, a sample
table showing possible prospective Accrued Liability Balances and a
corresponding potential benefit  is
attached hereto as “Exhibit A”; however this Exhibit A is merely a
sample table and not intended to bind the parties. The actual benefit amount
will be determined by the Bank’s actuaries at the time the benefit becomes due.


 


4.2.2                     Payment
Method and Duration. This annual Executive Benefit shall be paid in
twelve (12) substantially equal monthly installments, with payments commencing
on the first day of the first month following Executive’s Separation From
Service and continuing until the death of Executive.


 


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5.0          Payments
in the Event of Disability or Death During Employment.


 


5.1          Disability.  In the event Executive becomes Disabled while
employed by the Bank (i.e. prior to Separating From Service with the Bank) and
prior to qualifying for Early or Normal Retirement, then Executive shall be
entitled to be paid the following benefit in lieu of any other benefits herein
(i.e., this provision shall control even in the event such Disability occurs
within 2 years of a Change in Control, etc). If, however, Executive becomes
Disabled after qualifying for Early or Normal Retirement, then Executive shall
be deemed to have elected Early or Normal Retirement and shall receive the
benefit specified under the applicable provisions of this Agreement.


 


5.1.1                     Amount of
Benefit.  Executive shall receive
an annual Executive Benefit  based on the
Disability date and calculated as follows: an annual lifetime annuity based on
the Accrued Liability Balance as of the date of Disability, taking into
consideration the Discount Rate and mortality assumptions in use by the Bank as
of the Disability date. This annual amount shall remain consistent for the
duration of the benefit. For illustrative purposes ONLY, a sample table showing
possible prospective Accrued Liability Balances and a corresponding potential
benefit hereunder is attached hereto as “Exhibit A”; however this Exhibit A
is merely a sample table and not intended to bind the parties. The actual
benefit amount will be determined by the Bank’s actuaries at the time the
benefit becomes due


 


5.1.2                     Payment
Method and Duration. This annual Executive Benefit shall be paid in
twelve (12) substantially equal monthly installments, with payments commencing
on the first day of the first month following Executive’s Disability and
continuing until the death of Executive.


 


5.2          Death.  There are no death benefits payable under
this Agreement (such benefits are described by a Joint Beneficiary Designation
Agreement, if any), nor will Executive Benefit Payments be made after Executive
dies, regardless of whether such death occurs before or after termination and
regardless of whether payments have already begun pursuant to this Agreement.


 


6.0          Payments in the
Event Executive Voluntarily or Involuntarily Separates From Service Prior to
Early Retirement.


 


As indicated above, the Bank reserves the right to terminate Executive’s
Employment, with or without Cause but subject to any written employment
agreement which may then exist.  In the
event that Executive Separates From Service prior to qualifying for Early
Retirement, other than by reason of a termination For Cause or following a Change
in Control, then, for the following events of termination, and as applicable,
Executive shall be entitled to the benefits described below which correspond to
the circumstances surrounding Executive’s Termination of Employment.


 


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6.1          Involuntary
Termination.  In the event Executive is Involuntarily
Terminated prior to qualifying for Early Retirement (for reasons other than a
Termination For Cause, following a Change in Control, as addressed in alternate
provisions herein), then he shall be entitled to receive the following:


 


6.1.1                     Amount of
Benefit. Executive shall receive an Executive Benefit equal to the
Accrued Liability Balance based on the date such Termination occurs.


 


6.1.2                     Payment
Method and Duration.  This
Executive Benefit amount shall be paid in one lump sum on the first day of the
first month immediately following Executive’s Separation From Service.


 


6.2          Voluntary
Termination by Executive. Executive agrees that if
he Voluntarily Terminates his Employment with the Employer prior to qualifying
for Early Retirement (for reasons other
than following a Change in Control), then Executive shall forfeit all
rights and benefits he may have had under the terms of this Agreement and shall
have no right to be paid any of the amounts which would be due or paid to
Executive by the Bank pursuant to the terms of this Agreement.


 


7.0          Change in Control.


 


7.1          In the event of a Change in Control,
followed by a Separation From Service (for any reason other than for Cause)
prior to Executive qualifying for Early Retirement, then Executive shall be
entitled to receive the following Executive Benefit in lieu of all others
identified herein:


 


7.1.1                     Benefit
Amount.  Executive shall receive
an Executive Benefit equal to the Accrued Liability Balance based on the date
such Separation From Service occurs.


 


7.1.2                     Payment
Method and Duration.  This
Executive Benefit amount shall be paid in one lump sum on the first day of the
first month immediately following Executive’s Separation From Service.


 


In the event Executive Separates From Service
after a Change in Control, and after qualifying for Early or Normal Retirement,
then Executive shall be deemed to have elected Early or Normal Retirement and
shall receive the benefit specified under the applicable provisions of this
Agreement.


 


8.0          Termination
for Cause.


 


Executive agrees that if Executive’s
employment with the Bank is terminated at any time For Cause as defined in this
Agreement (including an Executive who has attained Early or Normal Retirement
Age but has not yet Separated From Service, and including following a Change in
Control), then he shall forfeit any and all rights and benefits he may have
under the terms of this


 


10
















 


Agreement and shall have no right to be paid any of the amounts which
would otherwise be due or paid to Executive by the Bank pursuant to the terms
of this Agreement.


 


9.0                               Right
To Determine Funding Methods.


 


The Bank reserves the right to determine, in
its sole and absolute discretion, whether, to what extent and by what method,
if any, to provide for the payment of the amounts which may be payable to
Executive, under the terms of this Agreement. In the event that the Bank elects
to fund this Agreement, in whole or in part, through the use of life insurance
or annuities, or both, the Bank shall determine the ownership and beneficial
interests of any such policy of life insurance or annuity.  The Bank further reserves the right, in its
sole and absolute discretion, to terminate any such policy, and any other
devise used to fund its obligations under this Agreement, at any time, in whole
or in part.  Executive shall have no
right, title or interest in or to any funding source or amount utilized by the
Bank pursuant to this Agreement, and any such funding source or amount shall
not constitute security for the performance of the Bank’s obligations pursuant
to this Agreement. In connection with the foregoing, Executive agrees to
execute such documents and undergo such medical examinations or tests which the
Bank may request and which may be reasonably necessary to facilitate any
funding for this Agreement including, without limitation, the Bank’s
acquisition of any policy of insurance or annuity.


 


10.0                        Administrator.


 


10.1                        Named
Fiduciary and Plan Administrator.   The
“Named Fiduciary” and “Plan Administrator” of this Executive Plan shall be the
Bank until its resignation or removal by the Board of Directors. As Named
Fiduciary and Plan Administrator, the Bank shall be responsible for the
management, control and administration of this Executive Plan. The Named
Fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the plan, including employment of advisors and
the delegation of ministerial duties to qualified individuals.


 


11.0                        Claims Procedure.


 


In the event a dispute arises over the benefits under this Executive
Plan and benefits are not paid to Executive (or to Executive’s
beneficiary[ies], if applicable) and such claimants feel they are entitled to
receive such benefits, then a written claim must be made to the Named Fiduciary
and Plan Administrator named above in accordance with the following procedures:


 


A.                                   Written Claim.  The claimant may file a written request for such
benefit to the Plan Administrator.


 


B.                                     Claim
Decision.  Upon receipt of such claim, the Plan
Administrator shall respond to such claimant within ninety (90) days after
receiving the claim.  If the Plan
Administrator determines that special circumstances require additional time for
processing the claim, the Plan Administrator can extend the response period by
an additional ninety (90) days for reasonable cause by notifying the claimant
in writing, prior to the end of the initial ninety


 


11

















 


(90) day period, that an additional period is
required. The notice of extension must set forth the special circumstances and
the date by which the Plan Administrator expects to render its decision.


 


If the claim is denied in whole or in part, the Plan Administrator
shall notify the claimant in writing of such denial. The Plan Administrator
shall write the notification in a manner calculated to be understood by the
claimant.  The notification shall set
forth:


 


(i)                                     The specific
reasons for the denial;


(ii)                                  The
specific reference to pertinent provisions of the Agreement on which the denial
is based;


(iii)                               A
description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary;


(iv)                              Appropriate
information as to the steps to be taken if the claimant wishes to submit the
claim for review and the time limits applicable to such procedures; and


(v)                                 A
statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.


 


C.                                     Request for
Review.  Within sixty (60) days after
receiving notice from the Plan Administrator that a claim has been denied (in
part or all of the claim), then claimant (or their duly authorized
representative) may file with the Plan Administrator, a written request for a
review of the denial of the claim.


 


The claimant (or his duly authorized representative) shall then have
the opportunity to submit written comments, documents, records and other
information relating to the claim.  The
Plan Administrator shall also provide the claimant, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits.


 


D.                                    Decision on
Review.  The Plan Administrator shall
respond in writing to such claimant within sixty (60) days after receiving the
request for review.  If the Plan
Administrator determines that special circumstances require an extension of
time for processing the claim, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial sixty (60)
day period. In no event shall such extension exceed a period of sixty (60) days
from the end of the initial period. The notice of extension must set forth the
special circumstances requiring an extension of time and the date by which the
Plan Administrator expects to render its decision.


 


12

















 


In considering the review, the Plan Administrator shall take into
account all materials and information the claimant submits relating to the
claim, without regard to whether such information was submitted or considered
in the initial benefit determination.


 


The Plan Administrator shall notify the claimant in writing of its
decision on review.  The Plan
Administrator shall write the notification in a manner calculated to be
understood by the claimant.  The
notification shall set forth:


 


(i)                                   The
specific reasons for the denial;


(ii)                                A
reference to the specific provisions of the Agreement on which the denial is
based;


(iii)                             A
statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits; and


(iv)                            A
statement of the claimant’s right to bring a civil action under ERISA Section 502(a).


 


12.0                        Attorney’s
Fees.  If any legal action or
other proceeding is brought for the enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding in addition to any other relief to which
it or they may be entitled.  The “prevailing
party” means any party determined by the arbitrator(s) or court to be
entitled to money payments from the other, not necessarily the party in whose
favor a judgment is rendered.


 


13.0                        Status
as an Unsecured General Creditor and Rabbi Trust.  Notwithstanding anything contained herein
to the contrary:  (i) Executive
shall have no legal or equitable rights, interests or claims in or to any
specific property or assets of the Employer as a result of this Agreement; (ii) none
of the Bank’s assets shall be held in or under any trust for the benefit of
Executive or held in any way as security for the fulfillment of the obligations
of the Bank under this Agreement; (iii) all of the Bank’s assets shall be
and remain the general unpledged and unrestricted assets of the Bank; (iv) the
Bank’s obligation under this Agreement shall be that of an unfunded and
unsecured promise by the Bank to pay money in the future; and (v) Executive
shall be an unsecured general creditor with respect to any benefits which may
be payable under the terms of this Agreement.


 


Notwithstanding subparagraphs (i) through (v) above, the Bank
and Executive acknowledge and agree that, in the event of a Change in Control,
upon request of Executive, or in the Bank’s discretion if Executive does not so
request and the Bank nonetheless deems it appropriate, the Bank shall
establish, not later than the effective date of the Change in Control, a Rabbi
Trust or multiple Rabbi Trusts (the “Trust” or “Trusts”) upon such terms and
conditions as the Bank, in its sole discretion, deems appropriate and in
compliance with applicable provisions of


 


13

















 


the Code, in order to permit the Bank to make contributions and/or
transfer assets to the Trust or Trusts to discharge its obligations pursuant to
this Agreement.  The principal of the
Trust or Trusts and any earnings thereon shall be held separate and apart from
other funds of the Bank to be used exclusively for discharge of the Bank’s
obligations pursuant to this Agreement and shall continue to be subject to the
claims of the Bank’s general creditors until paid to Executive in such manner
and at such times as specified in this Agreement.


 


14.0                        Miscellaneous.


 


14.1                        Opportunity
To Consult With Independent Advisors. 
Executive acknowledges that he has been afforded the opportunity to
consult with independent advisors of his choosing including, without
limitation, accountants or tax advisors and counsel regarding both the benefits
granted to him under the terms of this Agreement and the (i) terms and
conditions which may affect Executive’s right to these benefits and (ii) personal
tax effects of such benefits including, without limitation, the effects of any
federal or state taxes, Section 280G of the Code, and any other taxes, costs,
expenses or liabilities whatsoever related to such benefits, which in any of
the foregoing instances Executive acknowledges and agrees shall be the sole
responsibility of Executive, provided, however, that Employer and Executive
shall cooperate with each other and use all reasonable efforts to minimize to
the fullest extent possible the amount of excise tax imposed by Section 280G
and 4999 of the Code. In the event the parties are unable to eliminate such
excise taxes, Executive further acknowledges and agrees that the Bank shall
have no liability whatsoever related to any such personal tax effects or other
personal costs, expenses, or liabilities applicable to Executive and further
specifically waives any right for himself or herself, and his or her heirs,
beneficiaries, legal representatives, agents, successor and assign to claim or
assert liability on the part of the Bank related to the matters described above
in this paragraph. Executive further acknowledges that he has read, understands
and consents to all of the terms and conditions of this Agreement, and that he
enters into this Agreement with a full understanding of its terms and
conditions.


 


14.2                        Notice.  Any notice required or permitted of either
Executive or the Bank under this Agreement shall be deemed to have been duly
given, if by personal delivery, upon the date received by the party or its
authorized representative; if by facsimile, upon transmission to a telephone
number previously provided by the party to whom the facsimile is transmitted as
reflected in the records of the party transmitting the facsimile and upon
reasonable confirmation of such transmission; and if by mail, on the third day
after mailing via U.S. first class mail, registered or certified, postage
prepaid and return receipt requested, and addressed to the party at the address
given below for the receipt of notices, or such changed address as may be
requested in writing by a party.


 


	
  If to the Bank:

  	
   

  	
  7480 El Camino Real

  
	
   

  	
   

  	
  Atascadero, CA 93422

  
	
   

  	
   

  	
  FAX (805) 466-1058

  
	
   

  	
   

  	
   

  
	
  If to the Executive:

  	
   

  	
                                      

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                                      

  



 


14

















 


14.3                        Assignment.  Executive shall have no power or right to
transfer, assign, anticipate, hypothecate, modify or otherwise encumber any
part or all of the amounts payable hereunder, nor, prior to payment in
accordance with the terms of this Agreement, shall any portion of such amounts
be:  (i) subject to seizure by any
creditor of Executive, by a proceeding at law or in equity, for the payment of
any debts, judgments, alimony or separate maintenance obligations which may be
owed by Executive; or (ii) transferable by operation of law in the event
of bankruptcy, insolvency or otherwise. Any such attempted assignment or
transfer shall be void. In the event Executive or any beneficiary attempts
assignment, communication, hypothecation, transfer or disposal of the benefits
hereunder, any such attempted transfer or assignment shall be void.


 


14.4                        IRS Section 280G
Issues.  If all or any portion of
the amounts payable to Executive under this Agreement, either alone or together
with other payments which Executive has the right to receive from the Employer,
constitute “excess parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), that are subject
to the excise tax imposed by Section 4999 of the Code (or similar tax
and/or assessment), Executive shall be responsible for the payment of such
excise tax and Employer (and its successor) shall be responsible for any loss
of deductibility related thereto; provided, however, that Employer and
Executive shall cooperate with each other and use all reasonable efforts to
minimize to the fullest extent possible the amount of excise tax imposed by Section 4999
of the Code.  If, at a later date, it is
determined (pursuant to final regulations or published rulings of the Internal
Revenue Service, final judgment of a court of competent jurisdiction, or
otherwise) that the amount of excise taxes payable by Executive is greater than
the amount initially so determined, then Executive shall pay an amount equal to
the sum of such additional excise taxes and any interest, fines and penalties
resulting from such underpayment.  The
determination of the amount of any such excise taxes shall be made by the
independent accounting firm employed by the Employer immediately prior to the
change in control or such other independent accounting firm or advisor as may
be mutually agreeable to Employer and Executive in the exercise of their
reasonable good faith judgment.


 


14.5                        Binding
Effect/Merger or Reorganization. 
This Agreement shall be binding upon and inure to the benefit of
Executive and the Bank.  Accordingly, the
Bank shall not merge or consolidate into or with another corporation, or
reorganize or sell substantially all of its assets to another corporation, firm
or person, unless and until such succeeding or continuing corporation, firm or
person agrees to assume and discharge the obligations of the Bank under this
Agreement.  In the alternative, the
Holding Company may agree to assume and discharge the obligation of the Bank
under this Agreement. Upon the occurrence of such event, the term “Bank” as
used in this Agreement shall be deemed to refer to such surviving or successor
firm, person, entity or corporation, or the Holding Company, as the case may
be.


 


14.6                        Nonwaiver.  The failure of either party to enforce at any
time or for any period of time any one or more of the terms or conditions of
this Agreement shall not be a waiver of such term(s) or condition(s) or
of that party’s right thereafter to enforce each and every term and condition
of this Agreement.


 


15

















 


14.7                        Partial
Invalidity. If any terms, provision, covenant, or condition of this
Agreement is determined by an arbitrator or a court, as the case may be, to be
invalid, void, or unenforceable, such determination shall not render any other
term, provision, covenant or condition invalid, void or unenforceable, and the
Agreement shall remain in full force and effect notwithstanding such partial
invalidity.


 


14.8                        Entire
Agreement.  This Agreement
supersedes any and all other agreements, either oral or in writing, between the
parties with respect to the subject matter of this Agreement and contains all
of the covenants and agreements between the parties with respect thereto.  Each party to this Agreement acknowledges
that no other representations, inducements, promises, or agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf of any
party, which are not set forth herein, and that no other agreement, statement,
or promise not contained in this Agreement shall be valid or binding on either
party.


 


14.9                        Modifications.  Any modification of this Agreement shall be
effective only if it is in writing and signed by each party or such party’s
authorized representative, and only to the extent that it is compliant with all
applicable codes and statutes, including but not limited to IRS Code Section 409A.


 


14.10                 Paragraph
Headings.  The paragraph headings
used in this Agreement are included solely for the convenience of the parties
and shall not affect or be used in connection with the interpretation of this
Agreement.


 


14.11                 No Strict
Construction.  The language used
in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction
will be applied against any person.


 


14.12                 Governing Law.  The laws of the State of California, other
than those laws denominated choice of law rules, and where applicable, the rules and
regulations of the Board of Governors of the Federal Reserve System, Federal
Deposit Insurance Corporation, Office of the Comptroller of the Currency, or
any other regulatory agency or governmental authority having jurisdiction over
the Bank or the Holding Company, shall govern the validity, interpretation,
construction and effect of this Agreement.


 


14.13                 Gender.  Whenever in this Agreement words are used
in the masculine, feminine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever they should so apply.


 


15.0                        Termination
or Modification of Agreement by Reason of Changes in the Law, Rules or
Regulations.


 


The Bank is entering into this Agreement upon the assumption that
certain existing tax


 


16

















 


laws, the Code, rules and regulations will continue in effect in
their current form. If any said assumptions should change and said change has a
detrimental effect on this Executive plan, then the Bank reserves the right to
terminate or modify this Agreement accordingly.


 


IN WITNESS WHEREOF, the Bank and Executive have executed this Agreement
on the date first above-written in the City of Atascadero, California.


 


	
  SANTA LUCIA BANK

  	
  EXECUTIVE

  
	
   

  	
   

  
	
  By:

  	
  /s/ Larry H. Putnam

  	
   

  	
  /s/ James M. Cowan

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  December
  17, 2008

  	
   

  	
  Date:

  	
  12-16-08

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John C. Hansen

  	
   

  	
  /s/ Cindy Dilbeck

  
	
  Witness

  	
   

  	
  Witness

  
							



 


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