Exhibit 10.105


 


FIRST AMENDED AND RESTATED


SANTA LUCIA BANK


DIRECTOR RETIREMENT AGREEMENT


 


This
First Amended and Restated Santa Lucia Bank Director Retirement 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”) and Khatchik Achadjian,
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
Santa Lucia Bank Director Retirement Agreement, effective as of February 1,
1997 (hereinafter Original Agreement), and thereafter amended by virtue of the January 10,
2001 Amendment thereto, in its entirety, and agree that this First Amended and
Restated Santa Lucia National Bank Director Retirement Agreement shall amend,
supersede and replace the, Original Agreement in its entirety;


 


WHEREFORE, the parties hereby agree to the following;


 


RECITALS


 


WHEREAS, the Director has been and continues to be a valued Director of
the Bank, and is now serving the Bank;


 


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


 


WHEREAS, it is deemed to be in the best interests of the Bank to
provide the Director with certain fringe benefits, on the terms and conditions
set forth herein, in order to reasonably induce the Director to remain in the
Bank’s employment; and


 


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


 


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


 


1

















 


AGREEMENT


 


1.0          Terms and Definitions.


 


1.1          Accrued
Liability Balance. For the purposes of this
Agreement, the term “Accrued Liability Balance” means the liability that should
be accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”),
for the Bank’s obligation to the Director under this Agreement, by applying
Accounting Principles Board Opinion Number 12 (“APB 12”) as amended by
Statement of Financial Accounting Standards Number 106 (“FAS 106”) and the
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.


 


1.2          Administrator.
The Bank shall be the “Administrator” and, solely for
the purposes of ERISA as discussed herein, 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 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


 


2

















 


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 a participant, the Change in Control must relate to (i) the
corporation for whom 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 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 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          Deferral Account and Deferral
Amounts. 
The term “Deferral Amounts” refers to those amounts Director previously
deferred under the Original Agreement, and which the Bank maintained as
separate account balance in the Director’s Deferral Account. The deferral
element of this plan was eliminated by Amendment in July of 2003, however
the Deferral


 


3

















 


Account was
maintained, accounted for and credited with interest pursuant to the terms of
the Original Agreement.  In addition, the
Deferral Account served as a bookkeeping entry only and was 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 the Original Agreement.


 


1.8          Disability/Disabled.
For the purposes of this Agreement, Director will be
considered Disabled if:


 


A                                      The
Director 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.                                     The Director 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 the Employee’s Bank.


 


1.9          Early Retirement/
Early Retirement Age.  The term “Early Retirement” shall mean the
Director’s Separation From Service on or after attaining the Early Retirement
Age of sixty-five (65) but before attaining the Normal Retirement Age, and for
any reason other than a Removal for Cause.


 


1.10        Early Involuntary Termination. The term “Early Involuntary
Termination” means that the Director, prior to attaining Early Retirement Age,
has been notified in writing that his service as a Director is terminated for
reasons other than an approved leave of absence or a Removal for Cause.


 


1.11        Early Voluntary Termination. The
term “Early Voluntary Termination” means that the Director, prior to attaining
the Early Retirement Age, has voluntarily Separated from Service with the
Company.


 


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


 


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


 


1.14        Director Benefit. 
The term “Director
Benefit” shall mean the benefit amounts determined pursuant to Paragraphs 1
through 6 herein (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


 


4

















 


applicable state and federal laws, including, but not limited to,
income, employment and disability income tax laws (e.g.,
FICA, FUTA, SDI).


 


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        Normal Retirement/
Normal Retirement Age.  The term “Normal Retirement” shall mean the
Director’s Separation From Service on or after attaining the Normal Retirement
Age of seventy-five (75) and for any reason other than a Removal for Cause.


 


1.17        Plan Year.  The “Plan Year” shall mean the calendar year.


 


1.18        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.


 


1.19        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 the 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 the Participant has a separation from service as an employee for
purposes of a nonqualified deferred compensation plan in which the Participant
participates as an employee that is not aggregated with any plan in which the
Participant participates as a director . In addition, if a 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 the Participant has a separation from service as a director for
purposes of a nonqualified deferred compensation plan in which the Participant
participates as a director that is not aggregated with any plan in which the
service provider participates as an employee.


 


5

















 


2.0          Scope, Purpose and Effect.


 


2.1          Contract
of Employment. 
Although this Agreement is intended to provide the Director with an
additional incentive to remain a Director of the Bank, this Agreement shall not
be deemed to constitute a contract of employment between the Director and the
Bank.


 


2.2          Fringe Benefit. 
The benefits
provided by this Agreement are granted by the Bank as a fringe benefit to the
Director and are not a part of any salary reduction plan or any arrangement
deferring a bonus or a salary increase. The Director 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 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        Internal
Revenue Code Section 409A Compliance. 
It is the intent of the parties to comply with
all applicable Internal Revenue Code Sections, including, but not limited to,
IRC 409A. Furthermore, for the purposes of this Agreement, IRC Section 409A
shall be read to include any related or relevant IRS Notices or clarifications
(including but not limited to Notice 2006-79 and Notice 2007-86). While it is
understood that a general IRC 409A savings clause will not be effective, the
parties intend that any ambiguities regarding any terms or payouts contained
herein shall be interpreted in a manner consistent with IRC 409A.


 


In addition, for any benefits payable pursuant to this Agreement due to
a Separation From Service, if the individual is a Specified Employee (as
defined herein and by IRC 409A), any such benefit shall be withheld for six (6) months
following such Separation From Service in order to comply with IRC 409A, if
necessary. In addition, for any individual affected by this six (6) month
delay in payment imposed by IRC 409A, and if and/or when applicable, the
aggregate amount of the first seven (7) months of installments shall be
paid at the beginning of the seventh month following the date of Separation
From Service. Monthly installment payments shall continue thereafter if called
for.


 


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).


 


6
















 


4.0          Director Benefits Payments.


 


Subject to the forgoing,
the Director Benefits shall be paid in accordance with the following:


 


4.1          Payments
Upon Normal Retirement.  In the event the Director Separates From
Service on or after attaining the Normal Retirement Age, and for any reason
other than a Removal For Cause, then the Director shall be entitled to be paid
an annual Director Benefit in the amount of Six Thousand, Ninety-Six Dollars
($6,096) per year. This annual Director Benefit shall be paid in twelve (12)
substantially equal monthly installments on the first day of each month,
beginning with the month following the month in which the Director Separates
From Service and continuing until the death of the Director.


 


4.2          Payments
Upon Early Retirement.  In the event the Director Separates From
Service on a date which constitutes an Early Retirement Date, then the Director
shall be entitled to be paid an annual Director Benefit equal to the following
amounts, depending upon Participant’s age on the date of such Separation From
Service:


 


	
  Age
  at Early Retirement

  	
   

  	
  Annual Benefit Amount

  	
   

  
	
  65 through 68 years of age

  	
   

  	
  $

  	
  3,810

  	
   

  
	
  69 through 71 years of age

  	
   

  	
  $

  	
  4,572

  	
   

  
	
  72 through 74 years of age

  	
   

  	
  $

  	
  5,334

  	
   

  
	
  Upon attaining age 75, participant
  qualifies for Normal Retirement

  	
   

  	
  $

  	
  6,096

  	
   

  



 


This annual Director Benefit shall be paid in
twelve (12) substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the Director
Separates From Service and continuing until the death of the Director.


 


4.3          Payments
in the Event of Separation From Service Prior to the Early Retirement Age.  In the event the Director Separates From
Service before the Early Retirement Age, then this Agreement shall terminate
upon the date of such Separation From Service; provided, however, that the
Director shall be entitled to the following benefits as may be applicable
depending upon the circumstances surrounding the Separation:


 


A.            Disability
or Separation From Service Following a Change in Control.
In the event the Director becomes Disabled prior to Early Retirement and
Separates From Service as a result therof, or in the event Director Separates
From Service following a Change in Control and prior to the Early Retirement
Age, then Director shall be entitled to be paid the Accrued Liability Balance
as of the date of Director’s Separation From Service. This Accrued Liability
Balance shall be paid in one lump sum within thirty (30) days following
Director’s Separation From Service; however, Director is not permitted, either
directly or indirectly, to designate the taxable year of the payment).


 


7

















 


B.            Involuntary
Termination. In the event Director is Involuntarily Terminated by the Bank prior to attaining
the Early Retirement Age, then the Director shall receive the Accrued
Liability Balance as of the date of the Separation From Service. This Accrued
Liability Balance shall be paid in one lump sum within thirty (30) days
following Director’s Separation From Service (however Director is not
permitted, either directly or indirectly, to designate the taxable year of the
payment).


 


C.            Voluntary
Termination by the Director.  In the event of an Early Voluntary
Termination by the Director, (other than pursuant to the terms of Paragraph
4.3A), then he shall forfeit any and all rights and benefits he may have under
the terms of this Agreement and shall have no right to be paid any of the
amounts which would otherwise be due or paid to the Director by the Bank
pursuant to the terms of this Agreement.


 


4.4          Removal
for Cause. 
In the event that the Director is Removed (at any time) for Cause, as
defined herein, then he shall forfeit any and all rights and benefits he may
have under the terms of this Agreement and shall have no right to be paid any
of the amounts which would otherwise be due or paid to the Director by the Bank
pursuant to the terms of this Agreement.


 


4.5          Death.
There are no death benefits payable under this Agreement (such benefits are
described by a Life Insurance Endorsement Method Split Dollar Plan Agreement,
if any), nor will Director Benefit Payments be made after the Director dies,
regardless of whether such death occurs before or after termination, and
regardless of whether payments have already begun pursuant to this Agreement.


 


4.6          Amounts Deferred
Under Original Agreement.  Because amounts deferred under
the Original Agreement were deferred from the same source (Director Fees) and
paid out in the same manner (upon Separation From Service) as under the “Deferred
Fee Agreement” between the parties, effective as of February 1, 1997, (and
which has been Amended and Restated to comply with IRC 409A by virtue of the
First Amended and Restated Deferred Fee Agreement), the parties hereby agree
that amounts reflected in the Deferral Account under the Original Agreement
shall be incorporated into the Deferred Compensation Account under the First
Amended and Restated Deferred Fee Agreement.


 


5.0          IRS
Section 280G Issues.


 


If all or any portion of the amounts payable
to the Director under this Agreement, either alone or together with other
payments which the 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 (and in accordance


 


8

















 


with IRC 409A)  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 the Director is greater than the
amount initially so determined, then the 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.


 


6.0                               Administrative
and Claims Provision.


 


6.1          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, including employment of advisors and
the delegation of ministerial duties to qualified individuals.


 


6.2          Claims
Procedure.   
In the event a dispute arises over the benefits under this Agreement and
benefits are not paid to the Employee (or to the Employee’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 Bank (as the plan
administrator) in accordance with the following procedures:


 


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


 


B.                                     Claim
Decision.  Upon receipt of such claim, the Administrator
shall respond to such claimant within ninety (90) days after receiving the
claim.  If the Administrator determines
that special circumstances require additional time for processing the claim,
the 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 Administrator expects to render its decision.


 


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


 


9

















 


(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 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 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 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 Administrator shall
respond in writing to such claimant within sixty (60) days after receiving the
request for review.  If the 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
Administrator expects to render its decision.


 


In considering the review, the 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 Administrator shall notify the claimant in writing of its decision
on review.  The Committee 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 


 


10

















 


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).


 


6.3          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 San
Francisco, California.  Notice of the
demand for arbitration shall be filed in writing with the other party to this
Agreement and with JAMS.  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. Any award rendered by JAMS 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 Title 9 of Part 3
of the California Code of Civil Procedure. 
Any arbitration hereunder shall be conducted in Atascadero, California,
unless otherwise agreed to by the parties.


 


6.4          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; (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.


 


7.0          Status as an
Unsecured General Creditor and Rabbi Trust.


 


Notwithstanding anything contained herein to the contrary:  (i) the 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 the 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) the Director shall
be an unsecured general creditor with respect to any benefits which may be
payable under the terms of this Agreement.


 


11

















 


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 the 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 the Director in such manner and at such times as
specified in this Agreement.


 


8.0          Miscellaneous.


 


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


 


8.2          Notice.  Any notice required or permitted of either
the 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.


 


12

















 


	
  If to the Bank:

  	
  7480 El Camino Real

  
	
   

  	
  Atascadero, CA 93422

  
	
   

  	
  FAX (805) 466-1058

  
	
   

  	
   

  
	
  If to the Director:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


8.3          Assignment.  The 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.


 


8.4          Binding
Effect/Merger or Reorganization.  This Agreement shall be binding upon and inure
to the benefit of the Director 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. 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 holding
company, as the case may be.


 


8.5          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.


 


8.6          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.


 


8.7          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.


 


8.8          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


 


13

















 


extent that it is compliant with all applicable codes and statutes,
including but not limited to IRS Code Section 409A.


 


8.9          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.


 


8.10        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.


 


8.11        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.


 


8.12        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.


 


IN WITNESS WHEREOF, the Bank and the 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/ Khatchik Achadjian

  	
   

  	
  Date:

  	
  December 17, 2008

  
	
   

  	
  Signature

  	
   

  	
   

  	
   

  



 


 


	
  /s/ John C. Hansen

  	
   

  	
  /s/ Cindy Dilbeck

  
	
   

  	
  Witness

  	
   

  	
   Witness

  
				



 


14