binding arbitration in accordance with the Employment Rules of the American ArbitrationAssociation. This means that, except as otherwise stated, both the Company and the Executiveunderstand that arbitration will be their exclusive forum for resolving disputes between them, andthat both parties waive their entitlement, if any, to have controversies between them decided by acourt or a jury. This provision shall not apply to any claim or controversy with respect to orarising out of any employee benefit plan or program of the Company to the extent that such plan orprogram requires participants, beneficiaries and other claimants to follow certain claimsprocedures specified therein.     4. Extent of Service.     Throughout his employment with the Company as President and Chief Executive Officer,Executive shall donate his full time, attention, and energies to the business of Company and shallnot be engaged in any other business activities, except personal investments, without the priorwritten consent of Company.     5. Regular Compensation.     In consideration for the services which Executive is to render under this Agreement, Companyshall pay to Executive a base salary (“Base Salary”) at the annual rate of Five Hundred ThousandDollars ($500,000). The Base Salary shall be payable to Executive in equal semi-monthlyinstallments on the company’s normal payroll schedule.     6. Annual Incentive Compensation.     The maximum target bonus for the first year shall equal 150% times Base Salary, comprised ofthree components: (i) the Guaranteed portion; (ii) the Performance Criteria portion; and (iii) theStrategic Criteria portion. At the end of the first twelve months, Executive shall be paid a bonusof $250,000 (the “Guaranteed” portion) which is guaranteed. The remaining target bonus for thefirst year shall be performance based comprised of $250,000 to be awarded based on mutually agreedupon performance criteria (the “Performance Criteria” portion) and $250,000 to be awarded based onachievement of strategic criteria (the “Strategic Criteria” portion). The Performance Criteria andStrategic Criteria shall be established not more than 30 days following the execution of thisAgreement. The target bonus to which Executive is entitled shall be paid within 30 days of thefirst anniversary of the Effective Date of this Agreement or within 30 days following thetermination of Executive’s employment, whichever is sooner.     If this Agreement is renewed for a second year, the target bonus for the second year shallequal 100% of Base Salary and shall be based entirely on mutually agreed performance criteria. Theaward of the bonus for the second year shall be based on the determination of the CompensationCommittee of the Board of Directors that Executive has met or exceeded the performance criteria.     Executive shall also be entitled to participate in any incentive programs which may be adoptedfrom time to time by Company for Executive, subject to the terms thereof. Amounts
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awarded to Executive under any said incentive program shall be determined at the sole discretionof Company, including the vesting of any incentive awards.     7. Business Expenses.     Executive shall be reimbursed for all ordinary and necessary, documented expenses inconformance with company policy. Request for reimbursement of other expenses should be presentedto the board in advance for approval. In addition, the company will provide suitable housing andrelated housing expenses for the Executive.     8. Automobile.     Company shall purchase or lease an automobile of the Executive’s choice for his use as ChiefExecutive Officer at an “out the door” cost not to exceed $55,000. Company shall pay all fuel,operating, maintenance, and insurance costs. Executive shall be entitled to limited use of theautomobile for personal use, but shall primarily use it for business purposes associated with hisemployment. As the Chief Executive Officer of Company, Executive has been provided an automobilefor the convenience of Company. Company expects the Executive will frequently visit Company’svarious business locations, customers, business partners, vendors, regulatory agencies, ratingsand market making agencies and travel for trade associations in which Company is actively engaged.Upon termination of employment, automobile is to be returned to the company in good condition onthe final date of employment.     9. Vacation.     During his employment Executive shall be entitled to vacation leave at full salary at thediscretion of Executive as time allows, so long as it is reasonable and does not jeopardize hisresponsibilities, of twenty (20) business days per annum; provided that Executive shall take as aportion of his vacation leave at least ten (10) consecutive business days per annum, unlessotherwise waived by the Board.     10. Disability.     If Executive becomes disabled (as defined in section 409A of the Code) during his employmentwith Company pursuant to the terms of this Agreement, Company agrees to continue Executive’s BaseSalary (i) for ninety (90) days from commencement of the disability or (ii) until Executive isable to return to work whichever is less.     11. Insurance.     Company shall provide to Executive, for the benefit of Executive and his eligible spouse,during Executive’s employment with Company pursuant to this Agreement and at Company’s expense thesame medical insurance, dental insurance, and disability insurance coverage, if any, which may beoffered to Company’s other full-time Executives under any benefit plans as may be in effect fromtime to time.
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     The parties acknowledge that Executive’s Base Salary has been set high enough under thisAgreement so that Executive may pay for additional life insurance that would exceed the maximumcompany benefit. However, Executive shall have the right to determine whether to maintain lifeinsurance and use part of his Base Salary to cover the premiums thereon, or to use the Base Salaryfor other purposes. Company shall have no duty under this Agreement to give Executive anyadditional compensation to cover life insurance premiums or to maintain any life insurance onExecutive’s life.     12. Stock Options.          (a) As part of the consideration for entering this Agreement, the Board hasagreed to grant Executive 100,000 incentive stock options on or about the Effective Date. Thestock option grant will vest as follows: 20% shall vest 12 months after the grant date.Thereafterthe options will vest 20% per year on the anniversary of the grant date. Options will betotallyvested in five years. Stock Options will immediately vest and become exercisable upon thefollowing: 1. Termination by the Company without “cause” as defined in Section 19 below, 2.Termination by the Executive for “good reason” as defined in Section 19 below or 3.Completion of this Agreement (as defined in Section 19(d)).          (b) Such stock options shall be granted pursuant to and subject to the terms ofthe 2002 Stock Option Plan, as amended and shall be subject to such other terms as determinedby the Board as may be set forth in the stock option award agreement.          (c) Additional annual stock option grants may be recommended by theCompensation Committee subject to the approval of the Board of Directors.     13. Retirement Plans. Executive shall be entitled to participate in any retirementplans offered to other Executives of the company, such as Executive’s participation in Company’s 401(k) plan and ESOP.     14. Printed Material.     All written, printed, electronic, visual or audio materials used by Executive in performingduties for Company, other than Executive’s personal notes and diaries, are and shall remain theproperty of Company. Upon termination of employment on any basis, Executive shall return all suchmaterials to Company.     15. Disclosure of Information.     In the course of employment, Executive may have access to confidential information and tradesecrets relating to Company’s business. Except as required in the course of employment by Company,Executive shall not, without Company’s prior written consent, directly or indirectly disclose toanyone any confidential information relating to Company or any financial information, trade secretsor “know-how” that is germane to Company’s business and operations.
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Executive recognizes and acknowledges that any financial information concerning any of Company’scustomers, as it may exist from time to time, is strictly confidential and is a valuable, specialand unique asset of Company’s business. Executive shall not, either before or after termination ofthis Agreement, disclose to anyone said financial information, or any part thereof, for any reasonor purposes whatsoever.     16. Prohibited Activities and Investments.     During Executive’s employment with Company pursuant to this Agreement, Executive shall not,directly or indirectly, either as an Executive, Company, consultant, agent, principal, partner,principal stockholder (*i.e.*, ten percent or more) or corporate officer, directly, or in any otherindividual or representative capacity, engage or participate in any business competitive with thatof Company.     17. Surety Bond.     Executive agrees to furnish all information and take any other steps necessary to enableCompany to obtain and maintain a fidelity bond conditional on the rendering of a true account byExecutive of all moneys, goods, or other property that may come into the custody, charge, orpossession of Executive during Executive’s employment. The surety company issuing such bond andthe amount of the bond must be acceptable to Company. All premiums on the bond are to be paid byCompany. If Executive cannot personally qualify for a surety bond at any time during theExecutive’s employment with Company pursuant to this Agreement, Company shall have the option toterminate this Agreement immediately and said termination shall be deemed to be a termination forcause under section 19(a) herein.     18. Moral Conduct.     Executive agrees to conduct himself at all times with due regard to public conventions andmorals and to abide by and reflect in his personal actions all of the “core values” adopted byCompany and its subsidiaries from time to time. Executive further agrees not to do or commit anyact that will reasonably tend to degrade him or to bring him into public hatred, contempt orridicule, or that will reasonably tend to shock or offend any community in which Company engagesin business, or to prejudice Company or the banking industry in general.     19. Termination ofAgreement.          (a) Termination for Cause.     Company reserves the right to terminate this Agreement “for cause.” Termination for causeshall include termination because of Executive’s (i) personal dishonesty, (ii) incompetence, (iii)willful misconduct, (iv) breach of fiduciary duty involving personal profit, (v) material breach ofany of the terms of this Agreement, (vi) substantial failure to perform assigned duties, (vii)willful violation of any law, rule or regulation (other than traffic violations or similaroffenses) or final cease-and-desist order, or (viii) the willful or permanent breach by Executiveof any obligations owed to Company pursuant to this Agreement. In addition,
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Company reserves the right to terminate this Agreement “for cause” in the event that actions areeffected by any regulatory agency having jurisdiction to remove or suspend Executive from office,or upon the directive of any such regulatory agency that Company must remove Executive as itsChief Executive Officer, regardless of whether such directive is given orally or in writing.          (b) Statutory Grounds for Termination.     Executive’s employment under this Agreement shall terminate immediately upon the occurrenceof any of the following events, which events are described in sections 2920 and 2921 of theCalifornia Labor Code: (1) The occurrence of circumstances that make itimpossible orimpractical for the business of Company to be continued.  (2) The death of Executive.  (3) The loss of Executive’s legal capacity. Thisdoes not affectExecutive’s rights under section 10 of this Agreement.  (4) The loss by Company of legal capacity to contract.  (5) Subject to section 10 of this Agreement, thecontinued incapacityon the part of Executive under this Agreement, unless waived byCompany.          (c) Definition of Good Reason.As used in this Agreement, the term Good Reason means the occurrence of any of the followingprovided, however, that any such event or condition shall cease to constitute a Good Reason twoyears following its initial existence:(1) A material diminution in Executive’s Base Salary;(2) A material diminution in Executive’s authority, duties, or responsibilities;(3) A requirement that Executive report to a corporate officer or employee instead ofreporting directly to the Board of Directors of the Company.(4) A change in the Executive’s principal work location to any location that is morethan 50 miles from Executive’s current work location on the date of this Agreement; or(5) Any other action or inaction that constitutes a material breach of this Agreement bythe Company.Notwithstanding the foregoing, the Executive shall not be considered to have terminated employmentfor Good Reason (i) unless he provides written notice to the Company of the
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existence of the event or condition constituting Good Reason within 90 days of its initialexistence, or (ii) if the Company remedies such event or condition within 30 days of receipt ofsuch notice.          (d) Completion of Agreement     The Executive’s employment under this Agreement will terminate on the one year anniversary ofthe effective date of this Agreement unless extended or renewed by the written agreement ofparties. “Completion of the Agreement” means Executive’s performance of his duties under thisAgreement through the later of (i) the end of the first one year term or (ii) if the Companyrequests that the parties renew or extend this Agreement on substantially the same terms, throughthe end of the second one year term (or such shorter renewal term as the parties mutually agree).     20. Bonus Calculation and Severance Pay          (a) (Bonus Calculation) If the Company terminates this Agreement withoutcause, or if the Executive terminates the agreement for good reason, the Executive willreceivehis base salary through the date of termination and the annual target bonus; provided,          (i) during the first one year term, the Executive will receive theGuaranteed portion of $250,000 plus, if the Strategic Criteria are met, theStrategic Criteria portion ($250,000), plus, any amount related to the Performance Criteria portion (up to $250,000) which shall be determined by the Board’sCompensation Committee; and          (ii) after the first one year term, the Executive is eligible to receive thetarget bonus of up to $500,000 which shall be determined by the Board’sCompensation Committee based upon mutually agreed performance criteria.Payment of incentive bonus under this Section 20(a) is in lieu of the annual incentive bonus towhich Executive would have been entitled under Section 6 if this Agreement had continued to theend of its then current term. In no case will Executive receive both an annual incentive bonusunder Section 6 and any payment under this Section 20(a) with respect to the same period ofemployment.          (b) (Severance Pay) If the Company terminates this Agreement without cause,or if Executive terminates the Agreement for Good Reason, or upon Executive’s completion ofthe Agreement, the Executive also will receive a lump sum severance payment of $500,000 plus,a performance based severance payment of $250,000. The performance based severance awardshall be conditioned on a finding by the Compensation Committee of the Company’s Board ofDirectors that Executive during the first year has achieved both the Performance Criteria andtheStrategic Criteria or after the first year that Executive has achieved applicable performancecriteria.
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          (c) For the avoidance of uncertainty: if the Executive refuses to renew or extend thisAgreement on substantially similar terms for a period not to exceed one year at the request of theCompany after the initial one year term, Executive will be entitled to the annual incentive bonusunder Section 6 for the first one year term but will not be entitled to any additional paymentunder Section 20(a) or to any severance under Section 20(b); and if this Agreement terminates (i)pursuant to Section 19(b) of this Agreement, (ii) by Company “for cause” (pursuant to Section19(a) of this Agreement), or (iii) because of the death, incapacity or disability of Executive,Executive shall not receive any annual incentive bonus under Section 6 or Section 20(a) or anyseverance under Section 20(b).          (d) Payments under the terms of this Section 20 are subject to regulatory approval pursuantto Part 359 of the FDIC Rules and Regulations.     21. Cooperation with Company After Termination of the Executive’s Employment.     Following termination of the Executive’s employment, Executive shall fully cooperate withCompany in all matters relating to the winding up of his pending work on behalf of Company and theorderly transfer of any such pending work to other employees of Company as may be designated byCompany, including but not limited to the successor President and Chief Executive Officer ofCompany.     22. Notices.     Any notice to Company required or permitted under this Agreement shall be given in writing toCompany, either by personal service or by certified mail, postage prepaid, addressed to thechairman of the Board at its then principal place of business. Any such notice to Executive shallbe given in like manner and, if mailed, shall be addressed to Executive at Executive’s homeaddress then shown on Company’s files. For the purpose of determining compliance with any timelimit in this Agreement, a notice shall be deemed to have been duly given (a) on the date ofservice, if personally served on the party to whom notice is to be given, or (b) the fifthbusiness day after mailing, if mailed to the party to whom notice is to be given in the mannerprovided in this Section.     23. Nonassignability.     Neither this Agreement nor any right or interest hereunder shall be assignable by Executive,his beneficiaries or legal representatives without Company’s prior written consent; provided,however, that nothing in this Section 23 shall preclude (i) Executive from designating abeneficiary to receive any benefit payable hereunder upon his death, or (ii) the executors,administrators, or other legal representatives of Executive or his estate from assigning anyrights hereunder to the person or persons entitled thereto.     24. No Attachment.     Except as required by law, no right to receive payments under this Agreement shall be subjectto anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge
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or hypothecation or to execution, attachment, levy or similar process or assignment by operationof law, and any attempt, voluntary or involuntary, to effect any such action shall be null, voidand of no effect.     25. Binding Effect.     This Agreement shall be binding upon and inure to the benefit of Executive and Company andtheir respective permitted successors and assigns. This Agreement shall not become effective andExecutive shall have no rights hereunder prior to receipt of all regulatory approvals from theCompany’s banking regulators.     26. Modification and Waiver.          (a) Amendment of Agreement.     This Agreement may not be modified or amended except by an instrument in writing signed bythe parties hereto.          (b) Waiver.     No term or condition of this Agreement shall be deemed to have been waived nor shall there beany estoppel against the enforcement of any provision of this Agreement, except by writteninstrument of the party charged with such waiver or estoppel. No such written waiver shall bedeemed a continuing waiver unless specifically stated therein, and each such waiver shall operateonly as to the specific term or condition for the future or as to any act other than thatspecifically waived. No delay in exercising any rights shall be construed as a waiver, nor shall awaiver on one occasion operate as a waiver of such right on any future occasion.     27. Entire Agreement.     The parties hereto acknowledge that each has read this Agreement, understand it, and agree tobe bound by its terms. The parties further agree that this Agreement contains all of the covenantsand agreements between the parties with respect to the employment of Executive by Company. Eachparty to this Agreement acknowledges that no representations, inducements, promises or agreements,orally or otherwise, have been made by any party, or anyone acting on behalf of any party, whichis not embodied herein, and that no other agreement, statement or promise not contained in thisAgreement shall be valid and binding.     28. Partial Invalidity.     If any provision in this Agreement is held by a court of competent jurisdiction to be invalid,void or unenforceable, the provision shall be deemed amended as necessary to conform to applicablelaws or regulations, or if it cannot be so amended without materially altering the intention of theparties, the remaining provisions shall nevertheless continue in full force without being impairedor invalidated in any way.
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     29. Governing Law.     This Agreement shall be governed by and construed in accordance with the laws of the State ofCalifornia.     30. Injunctive Relief.     Company and Executive acknowledge and agree that the services to be performed under thisAgreement are of a special, unique, unusual, extraordinary and intellectual character which givethem a peculiar value, the loss of which cannot be reasonably or adequately compensated in damagesin an action at law. Company and Executive therefore expressly agree that Company and Executive,in addition to any other rights or remedies which Company and Executive may possess, shall beentitled to injunctive and other equitable relief to prevent a breach of this Agreement byExecutive and Company.     31. Company Regulatory Agencies.     The obligations and rights of the Parties hereunder are expressly conditioned upon theapproval or non-disapproval of (i) this Agreement and/or (ii) Executive, in the event suchapprovals are required, by those banking regulatory agencies which have jurisdiction over Companyor any of its subsidiaries.     32. Duplicate Originals.     This Agreement may be executed simultaneously in one or more counterparts, each of whichshall be deemed an original, but all of which together constitute one and the same instrument.     33. Compliance with Internal Revenue Code Section 409A.          (a) Company and Executive agree that, notwithstanding anything herein to the contrary, thisAgreement is intended to be interpreted and operated so that the payment of the benefits set forthherein either shall either be exempt from the requirements of section 409A of the Code or shallcomply with the requirements of such provision. References in this Agreement to section 409A of theCode include rules, regulations, and guidance of general application issued by the Department ofthe Treasury under section 409A of the Code. Executive hereby acknowledges that he has been advisedto seek and has sought the advice of a tax advisor with respect to the tax consequences toExecutive of all payments pursuant to this Agreement, including any adverse tax consequences orpenalty taxes under Code section 409A and applicable State tax law. Executive hereby agrees to bearthe entire risk of any such adverse federal and State tax consequences and penalty taxes in theevent any payment pursuant to this Agreement is deemed to be subject to Code Section 409A, that norepresentations have been made to Executive relating to the tax treatment of any payment pursuantto this Agreement under Code Section 409A and the corresponding provisions of any applicable Stateincome tax laws, and that in no event shall the Company be liable to Executive for or with respectto any taxes, penalties or interest which may be imposed upon Executive pursuant to Section 409A.
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          (b) If, on the date of Executive’s Separation from Service, Executive is a“specified employee”, as defined in section 409A of the Code, of the Company, and if anypayments or benefits under this Agreement payable upon Executive’s Separation from Servicewill result in additional tax or interest to the Executive because of section 409A of theCode, thendespite any provision of this Agreement to the contrary the Executive will not be entitled tothepayments or benefits until the earlier of (x) the date that is six months and one day afterExecutive’s Separation from Service for reasons other than the Executive’s death, and (y) thedate of the Executive’s death. After the end of the period during which payments or benefitsaredelayed under this provision, the entire amount of the delayed payments and benefits shall bepaid to the Executive in a single lump sum, without interest.          (c) With respect to reimbursements and in-kind benefits made to Executivepursuant to Sections 8 and 9, if any, which are not otherwise excludible from Executive’sgrossincome, to the extent required to comply with the provisions of section 409A of the Code, noreimbursement of such expenses incurred by Executive during any taxable year of Executiveshall be made after the last day of the following taxable year, the amount of expenseseligible forreimbursement, or in-kind benefits provided, during a taxable year may not affect the expenseseligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, andtheright to reimbursement of such expenses or such in-kind benefits shall not be subject toliquidation or exchange for another benefit.
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     IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the 27 day ofOCT, 2008.          COMPANY: CAPITAL CORP OF THE WEST