Exhibit 10.98


 


FIRST AMENDED AND RESTATED


 


DEFERRED FEE AGREEMENT


 


RECITAL


 


This First
Amended and Restated Deferred Fee Agreement (hereinafter “Agreement”) is made
and entered into, and is effective as of January 1, 2008  by and between Santa Lucia
Bank, a bank organized and existing under the laws of the state of
California (hereinafter the “Bank” or “Company”) and Douglas C.
Filipponi, a director of the Bank (hereinafter “Director” or “Participant”);


 


WHEREAS it is the parties’ intent to comply with the final regulations
under Internal Revenue Code Section 409A, issued on April 10, 2007 by
the Internal Revenue Service (IRS) and the Treasury Department;


 


WHEREFORE, the Bank and Director hereby agree to amend and restate the
original Deferred Fee Agreement, 
effective as of February 1, 1997 (hereinafter “Original Agreement”),
and further agree that this First Amended and Restated Deferred Fee Agreement
shall amend, supersede and replace the Original Agreement (as amended, if
applicable) in its entirety;


 


WHEREAS, to encourage Director to remain a member of the Company’s
Board of Directors, the Company is willing to provide Director with a deferred
fee opportunity.


 


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


 


NOW, THEREFORE, in consideration of the past service and the services
to be performed by Director in the future, as well as the mutual promises and
covenants contained herein, Director and the Company agree as follows:


 


AGREEMENT


 


1.0                               Terms
and Definitions.


 


                                  For
the purposes of this Agreement, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:


 

















 


1.1                               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.


 


1.2                               Annual
Deferral Amount.  The term
“Annual Deferral Amount” shall mean that portion of Participant’s Director’s
Fees that Participant elects to have (and which is) deferred, in accordance
with the terms of this Plan, for any one Plan Year.  In addition, Participant must defer a minimum
of Three Thousand Six Hundred ($3,600) each Deferral Period. In the event that
Participant elects to defer a specific dollar amount (as opposed to a
percentage of Fees), then such specified amount shall be presumed to be
deferred on a pro-rata basis (i.e. each pay period) as if Director continuously
provided services throughout the year. In the event that Director Separates
From Service, all further Deferrals shall cease.


 


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                               Beneficiary.  The term “Beneficiary(ies)”
shall refer to the person, persons or entity designated in writing by Director
on forms provided by the Administrator (“Beneficiary Designation Form”) to
receive the benefits payable under this Agreement. Director may change his
Beneficiary from time to time, so long as permissible, by filing a new written
Beneficiary Designation Form with the Administrator, and such designation
shall be effective upon receipt by the Administrator. If Director has not
validly designated a beneficiary, or if a designated Beneficiary predeceases
Director, then any benefit owed pursuant to this Agreement shall be made to
Director’s estate.


 


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


 


1.6                               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 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.


 


In addition to the
forgoing, and in accordance with IRC 409A, in order to constitute a Change in
Control event with respect Participant, the Change in Control event must relate
to (i) the corporation for whom the Participant 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 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 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.


 

















 


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


 


1.8                               Deferral
Election Form. The term “Deferral Election Form” shall refer to the
form established from time to time by the Bank that Participant completes,
signs and returns to the Administrator to make a Deferral Election under the
plan.


 


1.9                               Deferral
Period.
“Deferral Period” means the period over which Participant has elected to defer
a portion of his Director’s Fees. Each Plan Year shall be a separate Deferral
Period, however, the prior Deferral Election Form shall remain effective
in the event that Participant fails to file a timely or subsequent Deferral
Election Form.


 


1.10                        Deferred
Compensation Account. The term “Deferred Compensation Account”
shall refer to the amounts Participant has elected to defer over time. The
Deferred Compensation Account shall be a bookkeeping entry only and shall be
utilized solely as a device for the measurement and determination of the
amounts to be paid to, or in respect of, a Participant pursuant to this
Agreement.  The Deferred Compensation
Account shall be equal to the sum of (i) all amounts deferred in each
Deferral Period  under this Agreement,
including all amounts deferred previously under the Original Agreement and (ii) interest
thereon credited in accordance with the applicable interest crediting
provisions, net of all distributions from such account. Amounts deferred
pursuant to the Original Agreement and this Agreement shall be credited to the
Deferred Compensation Account, along with the specified interest thereon.


 


In addition to the forgoing, the Deferred Compensation Account shall
include those amounts previously deferred under the Director’s Santa Lucia Bank
Director Retirement Agreement (effective as of February 1, 1997 and
thereafter amended by virtue of the January 10, 2001 Amendment
thereto)  and the  First Amended and Restated Santa Lucia
National Bank Director Retirement Agreement.


 


1.11                        Director
Benefit.  The term “Director
Benefit” shall mean the benefit amounts determined pursuant to Paragraphs 1
through 6 (including sub-paragraphs, as applicable), forfeited, reduced or
adjusted to the extent:  (a) required
under the other provisions of this Agreement; (b) required by reason of
the lawful order of any regulatory agency or body having jurisdiction over the
Bank; or (c) required in order for the Bank 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).


 


1.12                        Director
Fees.  The term “Director Fees”
shall refer to cash compensation paid by the Company to Director for his
services, including annual retainers, chair retainers, meeting fees and cash
paid for services performed as a Director.


 


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


 


1.14                        ERISA.
The term “ERISA” shall mean the Employee Retirement Income 


 

















 


Security Act
of 1974, as amended.


 


1.15                        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.


 


1.16                        Leave
Of Absence.  In accordance
with Code Section 409A and, for the purpose of this Plan, the term “Leave
of Absence” shall include military leave, sick leave, or other bona fide leave
of absence if the period of such leave does not exceed six (6) months, or
if longer, so long as the individual retains a right to reemployment with the
Company under an applicable statute or by contract.  A leave of absence constitutes a bona fide
leave of absence only if there is a reasonable expectation that the Participant
will return to perform services for the Company.  If the period of leave exceeds six (6) months
and the individual does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship is deemed to terminate on
the first date immediately following such six-month period.


 


1.17                        Normal
Retirement Age.  The term “Normal Retirement Age” shall mean  Director’s attainment of age Seventy-Five
(75).


 


1.18                                       Plan.
The “Plan” shall mean the Bank’s Deferred Compensation Plan, which shall be
evidenced by this Agreement and the Deferral Election Form.


 


1.19                        Plan
Year.  The term “Plan Year” shall
mean the calendar year (January 1 through December 31 of any given
year).


 


1.20                        Rate Of
Interest.  The Rate of Interest
shall refer to the percentage used to calculate earnings on the amounts in the
Deferred Compensation Account.  The Rate
of Interest shall be defined as an annual rate equal to the prime rate as
reported in the Wall Street Journal on February 1 of each Plan Year and
shall remain in effect until such annual re-evaluation.


 


1.21                        Removed
for Cause. The term “Removed (Removal) for Cause” shall mean
termination of Director’s Service by reason of any of the following: any act of
embezzlement, fraud, breach of fiduciary duty, dishonesty, deliberate or
reported disregard of the policies and rules of the Company as adopted by
the Board of Directors of the Company, unauthorized use or disclosure of any
trade secrets or confidential information of the Company, competition with the
Company, inducement of any customer of the Company to breach a contract with the
Company, inducement of any principal for whom the Company acts as an agent to
terminate such agency relationship, gross negligence adversely impacting  the Company, willful breach of this
Agreement, or any other willful misconduct.


 


1.22                        Service/
Separation From Service. 
As it applies to Director, the term “Service” shall refer to the
services Director provides and performs while serving on the Board of
Directors.  In addition, the term “Separation
from Service” shall be read and interpreted consistent with IRC  409A and any future notices or guidance
related thereto. 


 

















 


As the term applies herein to individuals who are serving on the Board
of Directors, but who are not also acting as employees of the Bank, the term “Separation
from Service” shall mean the expiration of all contracts or terms of service
under which Director is performing services as a member of the Board of
Directors, and where expiration constitutes a good faith and complete
termination of the service relationship.


 


In addition to the foregoing, and consistent with IRC 409A, if
Participant provides services both as an employee and a member of the Board of
Directors (or an analogous position with respect to a non-corporate service
recipient), the services provided as a director are not taken into account in
determining whether Participant has a separation from service as an employee
for purposes of a nonqualified deferred compensation plan in which Participant
participates as an employee that is not aggregated with any plan in which Participant
participates as a director (under IRC 409A (c)(2)(ii)). In addition, if
Participant provides services both as an employee and a member of the Board of
Directors (or an analogous position with respect to a non-corporate service
recipient), the services provided as an employee are not taken into account in
determining whether Participant has a separation from service as a director for
purposes of a nonqualified deferred compensation plan in which Participant
participates as a director that is not aggregated with any plan in which the
service provider participates as an employee.


 


1.23                        Unforeseeable Emergency.  In
accordance with IRC 409A, whether Participant is faced with an Unforeseeable
Emergency permitting a distribution is to be determined based on the relevant
facts and circumstances of each case. Consistent with the forgoing, an
unforeseeable emergency is a severe financial hardship to Participant resulting
from an illness or accident of Participant, Participant’s spouse, beneficiary,
or  dependent (as defined in section 152,
without regard to section 152(b)(1), (b)(2), and (d)(1)(B)); loss of
Participant’s property due to casualty (including the need to rebuild a home
following damage to a home not otherwise covered by insurance, for example, not
as a result of a natural disaster); or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
Participant.


 


2.0                               Scope,
Purpose And Effect.


 


2.1                               Contract
Of Employment.  Although this
Agreement is intended to provide Director with an additional incentive to
remain an active member of the Board, this Agreement shall not be deemed to
constitute a contract of employment between Director and the Bank nor shall any
provision of this Agreement restrict or expand the right of the Bank to remove
Director for cause.  This Agreement shall
have no impact or effect upon any separate written Employment Agreement which
Director may have with the Bank, 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 Bank’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 Director.


 


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 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.


 


3.0                               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                               Deferrals,  Election Forms And Modifications Thereto.


 


4.1                               Elections To Defer.   Participant may elect in the Deferral Election Form to
defer a portion of his Director’s Fees earned during a given Deferral Period,
and  payment of fees due immediately
shall be reduced accordingly. As stated previously,  Participant must defer a minimum of
Three Thousand Six Hundred Dollars ($3,600) each Deferral Period.  The specific percentage or amount to be
deferred shall be withheld each scheduled pay period in accordance with Participant’s
most recent and valid Deferral Election Form.


 


4. 2                            Timing Of Elections.


 


A.                                   In General. Compensation
for services performed during a tax
year can be deferred at Participant’s election only if the initial deferral
election is made, in general, not later than the close of the preceding tax year.


 


B.                                     First Year Participation.
An election to defer Director’s Fees 
earned during the first year in which Participant
becomes eligible to participate in the Plan must be made within thirty (30)
days after the date of such eligibility. Furthermore, such
election shall apply only to services performed subsequent to the election.


 


4.3                               Modification
To Election Form/ Subsequent Elections To Defer. Subject to the
minimum deferral requirement per Deferral Period, prior to a new calendar year,
Participant may irrevocably reduce his Director’s Fees not yet earned for the
next calendar year. Participant may provide written notice to the Company (in
the form of a Deferral Election Form) prior to any calendar year of his
decision to increase, decrease or 


 

















 


discontinue compensation
reduction amounts for the next calendar year.


 


4.4                               Evergreen
Election. If Participant does not amend (in writing) his existing Deferral
Election Form in the timeframe stated above (which would be the date upon
which such election becomes irrevocable for the next calendar year), then the
Participant shall be deemed to have waived his right to elect a different
compensation reduction amount and reaffirmed and ratified the compensation
reduction levels and Deferral Election amounts designated in the last prior
period. Furthermore, the existing Deferral Election Form applicable
to the annual Director’s Fees shall become irrevocable with respect to fees
payable in connection with services performed in the immediately following year
as of the last date upon which participant could have modified such election to
defer.


 


4.5                               Deferrals
In The Event Of Unforeseeable Emergency.  In the event a Participant
receives a distribution as a result of an Unforeseeable Emergency pursuant to
the provisions of the Plan, then all future deferrals shall be terminated until
such time as Participant makes a new election, which shall, in turn, comply
with the applicable provisions of this Plan Agreement relating to elections in Section 4
(and shall comply with IRC 409A).


 


4.6                               Elections With Respect To The Time And Form Of
Payment To A Beneficiary. Elections with respect to the
time and form of payment to a Beneficiary are subject to the general rules governing
subsequent deferrals and accelerated payments, including elections by either
Participant or the Beneficiary (with an exception for amounts payable under a
domestic relations order).  However, a
change in a Beneficiary will not be treated as a change in the time and form of
payment, if the change in the time of payment stems solely from the different
life expectancy of the new Beneficiary, such as in the case of a joint and
survivor annuity.


 


4.7                               Leave
Of Absence. If Participant is on a Leave of Absence, then Participant
shall be considered to not have experienced a Separation From Service until the
later of the passage of six (6) months or the expiration of any
contractual or statutory right to return to employment. Separation occurs at
the six-month mark or the expiration of re-employment rights, unless the facts
and circumstances indicate that the expectation of a return to employment ended
earlier. The deferral amount shall continue to be withheld during a paid leave
of absence, unless and until such time as Participant may request a distribution
based on an Unforeseeable Emergency.


 


5.0                               Deferred
Compensation Account.


 


5.1                               Credits
To Deferred Compensation Account. 
As discussed in Section 1.10, the Bank shall establish a
bookkeeping account for Director, known as the Deferred Compensation Account. This
Deferred Compensation Account shall be credited on the dates such Director’s
Fees would otherwise have been paid with the percentage (dollar amount) that
the Participant has notified the Bank (in writing and pursuant to the terms of Section 4),
that he elected to have deferred. The Deferred Compensation Account shall be
equal to the sum of (i) all amounts deferred in each Deferral Period under
this 


 

















 


Agreement,
including all amounts deferred previously under the Original Agreement and (ii) interest
thereon credited in accordance with the applicable interest crediting
provisions, net of all distributions from such account. Amounts deferred
pursuant to the Original Agreement and this Agreement shall be credited to the
Deferred Compensation Account, along with the specified interest thereon.


 


In addition to the forgoing, the Deferred Compensation Account shall
include those amounts previously deferred under the Director’s Santa Lucia Bank
Director Retirement Agreement (effective as of February 1, 1997 and
thereafter amended by virtue of the January 10, 2001 Amendment thereto),
as amended and superseded by the First Amended and Restated Santa Lucia
National Bank Director Retirement Agreement


 


5.2                               Interest
On The Deferred Compensation Account. The Deferred Compensation Account shall be credited annually on February first
with an amount that is in addition to the amount deferred under Section 4,
and shall be calculated by multiplying the balance of the Deferred Compensation
Account by the specified Rate of Interest. Such interest shall be compounded
annually and shall credited each year until such time as the benefits under
this Agreement have been paid in full.


 


5.3                               Nature
Of The Deferred Compensation Account. The Deferred Compensation Account shall be utilized solely as a
device for the measurement and determination of the amount of deferred
compensation to be paid to Participant at the times hereinafter specified and
the Bank shall not segregate any of its assets in order to satisfy any
obligations under this Plan.  The
Deferred Compensation Account shall not constitute or be treated as a trust
fund of any kind. On the contrary, it is understood that all amounts credited
to the Deferred Compensation Account shall be for the sole purpose of
bookkeeping and remain the sole property of the Company, and that Participant
shall have no ownership rights of any nature with respect thereto. Participant’s
rights are limited to the rights to receive payments as hereinafter provided
and Participant’s position with respect thereto is that of a general unsecured
creditor of the Company.


 


6.0                               Payment
Of Deferred Compensation Account.


 


Payment of the Deferred Compensation Account
shall be in accordance with the following:


 


6.1                               Payment
of Benefit In The Event Participant Separates From Service. In the
event of Participant’s Separation From Service for any reason other than
following a Change in Control, then he shall receive the balance in his
Deferred Compensation Account as of the date of his Separation From Service.
The Deferred Compensation Account Balance shall be paid out as follows:
payments shall be made monthly for a period of ten (10) years (120
months). Participant’s remaining Deferred Compensation Account Balance shall
continue to be credited with interest at the Rate of Interest until all such
one hundred and twenty (120) payments have been made. In addition, monthly
payments shall be calculated to provide Participant with substantially equal
monthly installments based on the Rate of Interest in effect when the initial  payment is made, and 


 

















 


readjusted annually to take into account any fluctuation in the Rate of
Interest (as defined herein). Absent any delay imposed by Code Section 409A,
(i.e. the 5 year delay for subsequent deferral elections, the 6 month delay for
specified employees, etc.), payments shall commence or be made on the first day
of the first month following the month in which Participant Separates From
Service and shall continue thereafter for a period of one hundred and twenty
(120) months.


 


6.2                               Upon
a Change in Control. Upon a Change in Control, all future Deferrals
shall cease and Participant shall be entitled to receive the balance in his
Deferred Compensation Account as of the date of such Change in Control
(with  the exception that the Deferred Compensation
Account Balance shall continue to be credited with interest at the Rate of
Interest until all payments have been made). 
The Deferred Compensation Account Balance shall be paid out as follows:
payments shall be made monthly for a period of ten (10) years (120
months). In addition, monthly payments shall be calculated to provide
Participant with substantially equal monthly installments based on the Rate of
Interest in effect when the initial payment is made, and readjusted annually to
take into account any fluctuation in the Rate of Interest (as defined herein).
Absent any delay imposed by Code Section 409A, (i.e. the 5 year delay for
subsequent deferral elections, the 6 month delay for specified employees,
etc.), payments shall commence or be made on the first day of the first month
following the month in which Participant Separates From Service and shall
continue thereafter for a period of one hundred and twenty (120) months.


 


6.3                               Unforeseeable Emergency. 
In the event of an Unforeseeable Emergency, Participant may petition to
the Administrator in writing for a distribution. A distribution on account of
Unforeseeable Emergency may not be made to the extent that such emergency is or
may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of Participant’s assets, to the extent the
liquidation of such assets would not cause severe financial hardship, or by
cessation of deferrals under the plan. Distributions because of an
Unforeseeable Emergency must be limited to the amount reasonably necessary to
satisfy the emergency need (which may include amounts necessary to pay any
Federal, state, local, or foreign income taxes or penalties reasonably
anticipated to result from the distribution). 
Determinations of amounts reasonably necessary to satisfy the emergency
need must take into account any additional compensation that is available if
the plan provides for cancellation of a deferral election upon a payment due to
an Unforeseeable Emergency. If the petition for payout is approved by the
Administrator, then payout shall occur within sixty (60) days of such approval.
In the event Participant’s petition for payout based on an Unforeseeable
Emergency is granted, all future deferrals shall be terminated until such time
as Participant makes a new election, which shall in turn be treated as an
initial deferral election.


 


Any amount distributed
due to an Unforeseeable Emergency shall be subtracted from benefit amounts that
would otherwise have been payable under this Agreement. Remaining benefit
payments shall be made in accordance with the provisions of Paragraphs 6.1-6.2.


 
















 


6.4                               Death.


 


C.                                    Death
After Separating From Service.  In the event the Participant dies after
Separating From Service but before all one hundred and twenty (120) monthly
payments due under the terms of this Plan have been paid in full, then any
unpaid payments shall be made to Participant’s Beneficiary in the same amount
and on the same schedule as would have been paid to Director had he survived.


 


D.                                    Death
Prior to Separating From Service. In the event Participant Dies before
Separating From Service, then Participant’s Beneficiary shall receive the
greater of the following: (i)  the lifetime benefit that would have been
paid to the Director under Paragraph 6.1, calculated as if the Director’s death
were at age Seventy-Five (75), or (ii) whatever the lifetime benefit would
have been paid to the Director deferring Three Thousand, Six Hundred ($3,600)
annually until age Seventy-Five (75). Payments shall be made monthly for a
period of ten (10) years (120 months), commencing on the first day of the
first month following the month in which Participant dies.


 


7.0                               Compliance With IRC 409A.


 


7.1                               Compliance With Notice 2006-79
and 2007-86.
As this is a Director Plan, the six month delay in payment to a key employee of
a publicly traded company is unnecessary. In the event, however, that such
delay in payment is warranted under IRC 409A


 


Notwithstanding the forgoing and/or any
provision existing in this Agreement or any amendment thereto, it is the intent
of the Bank and the Director 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 2006-79).


 


In accordance with the current restrictions on payouts of deferred
compensation, and with respect to any plan amendment or election in 2008, such
amendment or election may not act as to accelerate any payments or cause any
payment to be made in 2008 that would not otherwise be payable in 2008.
Furthermore, this restriction also applies to payments following a separation
from service, and similarly applies to elections/amendments and payments made
and to be made in 2008. Therefore, an election or amendment to change a time
and form of payment made on or after January 1, 2008 


 

















 


and on or before
December 31, 2008, may apply only to amounts that would not otherwise be
payable in 2008 and may not cause an amount to be paid in 2008 that would not
otherwise be payable in 2008. (For example, where an amount would otherwise be
payable upon an event, such as a separation from service, an election in 2008
cannot change the amount that would be payable in 2008 if the service provider
separated from service in 2008).


 


8.0                               Witholdings.


 


8.1                               Withholding
Of Payroll Taxes.  The Company
shall withhold from payments made hereunder any taxes required to be withheld
from Participant’s wage under federal, state or local law. However, a
Beneficiary may elect not to have withholding for federal income tax purposes
pursuant to Section 3405(a) (2) of the Internal Revenue Code, or
any successor provision thereto.


 


8.2                               Effect
of Payment. Payment of the forgoing benefits shall fully and completely
discharge the Bank from all further obligations under this Plan with respect to
a Participant and Participant’s Beneficiary(ies).


 


9.0                               Beneficiary
Designations.


 


9.1                               Beneficiary
Designation. Each Participant shall have the right, at any time, to
designate any person or persons as his Beneficiary(ies) to whom benefits under
this Agreement shall be paid in the event of his death prior to complete
distribution to the Director of the benefits due under the Agreement. Each
Beneficiary designation shall be in a written form prescribed by the
Administrator, and will be effective only when filed with the Administrator
during the Participant’s lifetime and when accepted and acknowledged in writing
by the Administrator or its designated agent.


 


9.2                               Amendments
to Beneficiary Designation. Any Beneficiary designation may be changed
by Director without the consent of any designated Beneficiary by the filing of
a new Beneficiary designation with the Administrator. The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed. If an Director’s compensation is community property, any
Beneficiary designation shall be valid or effective only as permitted under
applicable law.


 


9.3                               No
Participant Designation. In the absence of an effective Beneficiary
designation, or if all designated Beneficiaries predecease the Director or die
prior to complete distribution of the Director’s benefits, then the Director’s
designated Beneficiary shall be deemed to be the Director’s estate.


 


9.4                               Doubt
as to Beneficiary. If the Administrator has any doubt as to the proper
Beneficiary to receive payments pursuant to this Agreement, the Administrator
shall have the right to withhold such payments until this matter is resolved
(so long as such payments are made in a timely fashion and in compliance with
IRC 409A).


 

















 


9.5                               Payment
to Guardian.  If a benefit is
payable to a minor or a person declared incompetent or to a person incapable of
handling the disposition of his property, the Administrator may direct payment
of such benefit to the guardian, legal representative or such person having the
care and custody of such minor or incompetent person.  The Administrator may require proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate
prior to distribution of the benefit. 
Such distribution shall completely discharge the Administrator and the
Bank from all liability with respect to such benefit.


 


9.6                               Effect
of Payment to the Beneficiary. Payment to the deemed Beneficiary shall
fully and completely discharge the Bank and the Administrator from all further
obligations under this Agreement.


 


10.0                        Administration
And Claims Procedure.


 


10.1                        Named
Fiduciary and Plan Administrator.   The
“Named Fiduciary” and “Plan Administrator” of this Director 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 Director plan. The Named
Fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the plan to qualified individuals, including
employment of advisors and the delegation of ministerial duties.


 


10.2                        Claims
Procedure.


 


In the event a dispute arises over the benefits under this Director
plan and benefits are not paid to Director (or to Director’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 (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.


 

















 


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).

  



 


11.0                        Dispute
Resolution.


 


11.1                        Arbitration
of Disputes.  All claims,
disputes and other matters in question arising out of or relating to this
Agreement or the breach or interpretation thereof, other than those matters
which are to be determined by the Bank in its sole and absolute discretion,
shall be resolved by binding arbitration before a representative member,
selected by the mutual agreement of the parties, of the Judicial Arbitration
and Mediation Services, Inc. (“JAMS”), located in California.  In the event JAMS is unable or unwilling to
conduct the arbitration provided for under the terms of this paragraph, or has
discontinued its business, the parties agree that a representative member,
selected by the agreement of the parties, of the American Arbitration
Association (“AAA”) in California shall conduct the binding arbitration
referred to in this paragraph. Notice of the demand for arbitration shall be
filed in writing with the other party to this Agreement and with JAMS (or
AAA).  In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations.  The arbitration shall be subject to such rules of
procedure used or established by JAMS (or AAA). Any award rendered by JAMS or
AAA shall be final and binding upon the parties, and as applicable, their
respective heirs, beneficiaries, legal representatives, agents, successors and
assigns, and may be entered in any court having jurisdiction thereof. The
obligation of the parties to arbitrate pursuant to this clause shall be
specifically enforceable in accordance with, and shall be conducted
consistently with, the provisions of California law and the California code of
Civil Procedure. Any arbitration hereunder shall be conducted in Atascadero,
California, unless otherwise agreed to by the parties.


 

















 


11.2                        Attorneys’
Fees.  In the event of any
arbitration or litigation concerning any controversy, claim or dispute between
the parties hereto, arising out of or relating to this Agreement or the breach
hereof, or the interpretation hereof, (a) each party shall pay his own
attorneys’ arbitration fees incurred (pursuant to the terms of this Agreement);
(b) the prevailing party shall be entitled to recover from the other party
reasonable expenses, attorneys’ fees and costs incurred in the enforcement or
collection of any judgment or award rendered. The “prevailing party” means any
party (one party or both parties, as the case may be) 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.


 


12.0                        Status
as an Unsecured General Creditor and Rabbi Trust.


 


12.1                        Unsecured
Creditor. Notwithstanding anything contained herein to the
contrary:  (i) Director shall have
no legal or equitable rights, interests or claims in or to any specific
property or assets of the Bank 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
Director 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) Director
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 the Director acknowledge and agree that, in the event of a Change in
Control, upon request of  Director, or in
the Bank’s discretion if the Director 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
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 Director in such manner
and at such times as specified in this Agreement.


 


Assets set aside in trust by Bank to meet its
obligations under this Agreement shall not be placed in a foreign trust located
outside the United States.


 


12.2                        Corporate
Assets.  As stated above,
payments to Director or his Beneficiary(ies) shall be made from assets which
shall continue, for all purposes, to be a part of the general, unrestricted
assets of the Bank. No person shall have nor acquire any interest in any such
assets by virtue of the provisions of this Agreement. .


 

















 


The Bank may, in its sole discretion,
purchase assets to secure all or any part of its obligations undertaken through
this Agreement. If the Bank elects to secure its promise under this Agreement,
in whole or in part, through the purchase of life insurance, mutual funds,
disability policies, annuities or other assets, then Bank may, at any time
dispose of such assets in whole or in part. In no event shall Director or
Beneficiary(ies) be deemed to have a lien, right, title, or interest in any
specific investment or asset of Bank.


 


If Bank decided to purchase a life insurance,
disability or annuity policy upon the life or health of Director, then Director
will cooperate by furnishing any and all information requested by the Bank and
by taking such physical examinations or other action as may be requested by the
Bank in order to obtain such insurance or annuity.


 


13.0                        Miscellaneous.


 


13.1                        Opportunity
To Consult With Independent Advisors. 
Director 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 Director’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 Director acknowledges and agrees shall be the
sole responsibility of Director notwithstanding any other term or provision of
this Agreement. Director 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 Director 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.   Director 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.


 


13.2                        Notice.  Any notice required or permitted of either
Director 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 Director:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


13.3                        Assignment.  Director 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 the Director, 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 the Director; 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 the Director or any beneficiary attempts
assignment, communication, hypothecation, transfer or disposal of the benefits
hereunder, any such attempted transfer or assignment shall be void.


 


13.4                        IRS Section 280G
Issues.   If all or any portion of
the amounts payable under this Agreement, either alone or together with other
payments which Director has the right to receive from the Bank, 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), Director shall be responsible for the payment of such excise tax
and Bank (and its successor) shall be responsible for any loss of deductibility
related thereto; provided, however, that Bank and Director 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, as
long as such efforts are in accordance with IRC 409A.  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 Director is greater than the amount initially
so determined, then Director 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 Bank immediately prior to the change in control or such
other independent accounting firm or advisor as may be mutually agreeable to
Bank and Director in the exercise of their reasonable good faith judgment.


 


13.5                        Binding
Effect/Merger or Reorganization. 
This Agreement shall be binding upon and inure to the benefit of
Director and the Bank. Accordingly, the Bank shall not merge or consolidate
into or with another corporation or entity, or reorganize or sell substantially
all of its assets to another corporation, firm or person, unless and until such
succeeding or continuing corporation, entity, firm or person agrees to assume
and discharge the obligations of the Bank under this Agreement. The term “Bank”
as used in this Agreement shall be deemed to refer to such surviving or
successor firm, person, entity or corporation, or holding company, as the case
may be.


 

















 


13.6                        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.


 


13.7                        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.


 


13.8                        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.


 


13.9                        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.


 


13.10                 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.


 


13.11                 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.


 


13.12                 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.


 


13.13                 Amendment.  Any amendment to 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 IRC 409A. In
addition, no amendment shall be effective to decrease a Participant’s Deferral
Account Balance calculated as though Participant had experienced a separation
from service as of the effective date of such amendment or modification, or 


 

















 


if the amendment or modification occurs after the date upon which
Participant was eligible to retire, calculated as though Participant had
Retired as of the effective date of the amendment or modification.


 


14.0                        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 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 Director plan, then the Bank reserves
the right to terminate or modify this Agreement accordingly. In the event of a
termination of this Agreement, then all previously deferred amounts shall be
held in the Deferred Compensation Account, accruing interest, until the
earliest of Director’s Separation From Service or Death.


 


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


 


Santa Lucia Bank


 


 


	
  By:

  	
  /s/ Larry H. Putnam

  	
   

  	
  Date: December 17, 2008

  
	
  Chief Executive Officer

  	
   

  	
   

  	
   

  
	
  Signature & Title

  	
   

  	
   

  	
   

  



 


 


Director


 


 


	
  By:

  	
  /s/ Douglas C. Filipponi

  	
   

  	
  Date: December 17, 2008

  
	
  Signature

  	
   

  	
   

  



 


 


	
  /s/ John C. Hansen

  	
   

  	
  /s/ Cindy Dilbeck

  
	
  Witness

  	
   

  	
  Witness