**Exhibit10.17**

**EMPLOYMENTAGREEMENT**

This Employment Agreement (the “Agreement”),effective as of January 1, 2006 (the “Effective Date”), is made andentered into by and between Larry Prosi (“Executive”) and 1st Pacific Bank ofCalifornia, a California state-chartered bank (the “Bank”), with regardto the following:

A.    The Bank desires to employ Executive, and Employeedesires to be employed by the Bank, as the Bank’s Chief Banking Officer and afull-time employee of the Bank under the terms of this Agreement, and as suchis expected to make a major contribution to the profitability, growth andfinancial strength of the Bank.

B.    The Bank considers the availability of Executive’sservices, managerial skills and business experience to be in the best interestsof the Bank and the shareholders of the Bank.

C.    Executive is willing to be employed by the Bank uponthe understanding that the Bank will provide him with income security andbenefits if his employment with the Bank is terminated, upon certain terms andconditions.

NOW, THEREFORE, for valuable consideration the receipt and sufficiencyof which are hereby acknowledged, the parties agree as follows:

1.             Definitions.

“Bank” means 1st Pacific Bank of California, aCalifornia state-chartered bank, its successors and permitted assigns.

“Bank Board” means the Board of Directors ofthe Bank.

“Beneficiary” means the person or entity toreceive rights or benefits under this Agreement, as set forth in thisAgreement, in the event of the death of Executive.  Unless otherwise specified in a writtennotice to the Bank, the Beneficiary shall be the spouse of Executive, if any,and if there is none, the estate of Executive (including any trust created bythe terms of Executive’s will) or, if Executive provides the Bank with writtennotice thereof prior to his death, any trust as to which Executive was asettlor with a power of revocation.

“Benefits” means the types and amounts ofbenefits provided under Paragraph 3.6, provided that if at the date ofreference the terms of any Bank insurance plan prohibit the continuance orrecommencement of insurance benefits that Executive formerly held, the Bankshall be obligated to pay to Executive in cash on a monthly basis an amountequal to the Bank’s former premium payments (pro rated on a monthly basis) forthe benefit of Executive under such plan, except that if Executive is entitledto COBRA health insurance benefits the amount shall be increased to the amountpayable by Executive for such benefits if higher than the Bank’s former premiumpayments.

“Change of Control” means the occurrence of anyof the following events:

(i)            any “person” (as used inSection 13(d) of the Securities Exchange Act of 1934 and the rulespromulgated thereunder) becomes the “beneficial owner” (as defined in Rule 13d-3)

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of securitiesrepresenting a majority of the voting power of the then outstanding securitiesof the Bank; or

(ii)           a sale of assets involving all orsubstantially all of the assets of the Bank, or a merger or consolidation ofthe Bank in which the holders of securities of the Bank immediately prior tosuch event hold in the aggregate less than a majority of the securities of theBank or any other surviving or resulting entity immediately after such event.

Notwithstanding the foregoing, a Change in Controlshall not be deemed to have occurred in the event the Bank forms a holdingcompany as a result of which the holders of the Bank’s outstanding votingsecurities immediately prior to the transaction hold, in approximately the samerelative proportions as they held prior to the transaction, substantially allof the outstanding voting securities of a holding company owning all of theBank’s outstanding voting securities after the completion of the transaction.

“Change of Control Severance Benefits” means(i) an amount equal to the sum of (y) one (1) times Executive’s baseannual salary at the rate then in effect in accordance with Paragraph 3.1,plus (z) the amount actually paid by the Bank to Executive under the Planfor the immediately preceding year, if any; and (ii) continuation ofbenefits provided under Paragraph 3.6 or substitute equivalent benefits inthe event that the particular benefits (for instance, insurance coverage) arenot carried by the Bank under its programs following the Change of ControlTermination, for a period of twelve (12) months.

“Change of Control Termination” means thetermination of employment of Executive within twelve (12) months after a Changeof Control (i) by the Bank under Paragraph 4.1.5; or (ii) byExecutive under Paragraph 4.2 for Good Cause.

“Code” means the Internal Revenue Code of 1986,as amended.

“Disability” shall be deemed to occur on thedate the Executive is, by reason of any medically determinable physical ormental impairment that can be expected to result in death or can be expected tolast for a continuous period of not less than 12 months, receiving incomereplacement benefits for a period of not less than three months under anaccident and health plan covering employees of the Bank.

“Executive” means Larry Prosi.

“Expiration Date” means June 30, 2008.

“Good Cause” means:  (i) a reduction in Executive’s basesalary below the rate then in effect in accordance with Paragraph 3.1;(ii) the Bank requiring that Executive be based at a location more thanfifty (50) miles from the Bank’s headquarters as of the Effective Date(excluding travel for Bank business and other temporary relocations of no morethan thirty (30) days individually); (iii) a reduction in his title; or(iv) the continuation after a Change of Control, or imposition within six(6) months after a Change of Control, of a material reduction in theduties or authority of Executive so that he is no longer performingsubstantially all of the duties of a chief credit officer of a community bank.

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“Plan” means the 1st Pacific Bank of CaliforniaIncentive Compensation Plan for Senior Management, in substantially the formattached hereto as Exhibit A, as the same may be amended from timeto time.

“Separation Agreement” means the Separation andGeneral Release of Claims, substantially in the form attached hereto as Exhibit B.

“Trade Secrets and Other Proprietary andConfidential Information” means and consist of, for example, and notintending to be inclusive, information concerning any matters relating to thebusiness of the Bank, any of its customers, governmental relations, customercontacts, underwriting methodology, loan program configuration andqualification strategies, marketing strategies and proposals, or any otherinformation concerning the business of the Bank, its subsidiaries andaffiliates, and the Bank’s good will; provided that “Trade Secrets and OtherProprietary and Confidential Information” shall not be deemed to includeinformation that is or becomes, through no fault of Executive, in the publicdomain.

2.             Rights and Duties of Executive.

2.1           Employment.  The Bankhereby employs Executive as its Executive Vice President and Chief CreditOfficer, and Executive accepts the duties described herein, and agrees todischarge the same faithfully and to the best of his ability.  Executive shall perform such other duties asshall be from time to time prescribed by the Chief Executive Officer of theBank and shall report to and be subject to the direction of the Chief ExecutiveOfficer of the Bank.  Executive shalldevote his full business time and attention to the business and affairs of theBank.

2.2           [Intentionally Omitted.]

2.3           At-Will Employment.  Executive’semployment with the Bank is not for a fixed period of time and can beterminated at the will of either Executive or the Bank at any time, with orwithout notice, and with or without cause. There are no agreements between Executive and the Bank contrary toExecutive’s at-will status.  Neither aBank Board member nor a manager, supervisor, employee or agent of the Bank isauthorized to alter Executive’s at-will status, except for the Chairperson ofthe Bank Board, and then only in a writing signed both by the Chairperson ofthe Bank Board and Executive following adoption of a resolution by the BankBoard authorizing the specific change reflected in such writing and authorizingthe Chairperson of the Bank Board to sign such writing.  Executive should neither assume nor imply anypromise of employment for any specified period of time except through such asigned writing.  This Agreement shallterminate immediately without further liability or obligation to Executive if(i) the Bank is closed by any supervisory authority, or (ii) anysupervisory authority demands, by proposed consent agreement or by a PromptCorrective Action Directive, or pursuant to cease and desist powers, theremoval of Executive from his position as the Executive Vice President or ChiefCredit Officer of the Bank.  ShouldExecutive remain employed under this Agreement through the Expiration Date,Executive’s employment with the Bank shall automatically terminate on that dateand this Agreement shall be of no force or effect on or after that date,subject to Paragraphs 5.4 and 8.6.

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2.4           Outside Activities.  Executiveshall not have other employment, consulting, charitable or independentcontractor work that materially interferes with the fulfillment of Executive’sduties to the Bank.  Executive shall notundertake expanded commitments to business or charitable activities or engagein new such activities before consulting with the President and Chief ExecutiveOfficer of the Bank.  Executive will notprovide services to, hold or make any investment in or loan to, or participatein the management or business of, any bank, savings and loan, credit union,thrift and loan, industrial loan or other entity engaged in the business ofmaking loans or accepting deposits or both; provided that Executive may ownless than 5% of the voting stock of any company that files reports under theSecurities Exchange Act of 1934.

3.             Compensation and Benefits. In consideration for the services to be rendered by Executive to theBank, the Bank agrees to provide Executive with the following compensation andbenefits:

3.1           Salary.  The Bankshall pay Executive a minimum annual salary at the rate of One Hundred FortyThousand Dollars ($140,000) for the period of January 1, 2006 through December31, 2006, increasing to One Hundred Fifty Thousand Dollars ($150,000) for theperiod of January 1, 2007 through December 31, 2007, due and payable biweekly,or otherwise in accordance with the Bank’s policy for the scheduling of salarypayments to employees as in effect from time to time.  Executive’s minimum annual salary for theperiod of January 1, 2008 through June 30, 2008, shall be such amount that isdetermined by the Bank Board; provided, however, that in no event shallExecutive’s minimum annual salary for such period be below One Hundred FiftyThousand Dollars ($150,000).  Othersalary increases, if any, shall only be as approved by the Bank Board in itssole discretion.

3.2           Withholding and Deductions. The Bank shall withhold and/or deduct from any and all salary or otherpayments to Executive, all taxes which may be required to be deducted orwithheld under any provision of law (including, but not limited to, socialsecurity payments and income tax withholding) now in effect or which may becomeeffective any time during Executive’s employment with the Bank.

3.3           Executive Incentive Compensation. In general, the Bank believes that superior performance of Executiveshould be rewarded and encouraged by incentive compensation.  The Bank Board shall adopt the Plan pursuantto which Executive may be entitled to incentive compensation provided that theperformance goals of the Bank as set forth in the Plan are achieved and theterms and conditions of the Plan are satisfied. In addition, Executive shall be entitled to other incentive compensationand bonuses as the Bank Board may determine in its sole discretion.  Notwithstanding the foregoing, Executiveshall not participate in the Bank’s Team Share Plan.

3.4           Automobile Allowance.  The Bankshall pay the Executive an automobile allowance of Six Hundred and FiftyDollars ($650.00) per month, subject to withholding.  This is an allowance for all automobile costsand expenses, including, but not limited to, fuel, license, maintenance,insurance, repairs and purchase or lease payments.

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3.5           Expense Reimbursement.  The Bankagrees to reimburse Executive for all ordinary and necessary expenses incurredby Executive on behalf of the Bank in accordance with the Bank’s policies andprocedures as in effect from time to time, including entertainment, meal andtravel expenses.

3.6           Insurance.  The Bankshall provide life insurance with a life insurance benefit equal to at leastone and one-half times the annual salary of Executive at the rate then ineffect under Paragraph 3.1, which shall be provided through any group lifeinsurance plan of the Bank at the Bank’s option.  The Bank shall provide to Executive the longterm disability insurance provided by the Bank to employees at the EffectiveDate under the Bank’s group plan or shall replace it with similar coverage solong as Executive is employed by the Bank. Executive shall be entitled to participate in such other insurancebenefits as are generally provided to the employees of the Bank from time totime.

3.7           Vacation.  Executiveshall be entitled to five (5) weeks of vacation time and pay per annum, whichshall be scheduled in Executive’s discretion, subject to and taking intoaccount applicable banking laws and regulations.  Unused vacation may be accrued up to amaximum of six (6) weeks of unused vacation in addition to the vacation towhich Executive may be entitled in the current year, and thereafter Executiveshall cease to accrue unused vacation until used.  Vacationmust be accrued before taken, and if not yet accrued, must have the priorapproval of the Chief Executive Officer of the Bank to be taken.  Vacation may be used only at the time ortimes approved by the Chief Executive Officer of the Bank.

4.             Termination.

4.1           Employer Right to Terminate Employment. Nothing in this Agreement shall adversely affect the right of the BankBoard to terminate Executive.  The BankBoard has the right to terminate the employment of Executive with the Bank atwill, with or without cause, upon delivery of written notice to Executive(except in the case of death of Executive, in which event termination shallautomatically occur at the date of death), and including, but not limited to,for any of the following grounds:

4.1.1        Willful breach or habitual neglect or inability(except where such inability is due to Disability or death) to performExecutive’s duties hereunder, including without limitation failure to cooperatewith the Bank Board in the structuring, documentation or negotiation of atransaction that might result in a Change of Control;

4.1.2        Malfeasance or misfeasance in the performance ofExecutive’s duties hereunder, imposition of a regulatory order to removeExecutive, failure to comply with a direction by the Chief Executive Officer of the Bank, material breach of Bankpolicy or procedure, or breach of this Agreement;

4.1.3        Immoral or illegal conduct, conviction of a felony,conviction of a misdemeanor involving moral turpitude;

4.1.4        Disability or death;

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4.1.5        Determination in the complete discretion of the BankBoard that the employment of Executive should be terminated prior to theExpiration Date, without reference to the grounds set forth inParagraphs 4.1.1, 4.1.2, 4.1.3 or 4.1.4, and specification of thetermination date in the notice described in Paragraph 4.1.

4.2           Termination by Executive. Executive may terminate his employment with the Bank at will, for anyreason, and without advance notice. However, as a courtesy, Executive is requested to deliver written noticeto the Bank three (3) months in advance of the date such termination is totake effect, except with respect to a termination for Good Cause.  Executive may terminate his employment withthe Bank prior to the Expiration Date for Good Cause upon thirty (30) daysnotice to the Bank and the Bank’s failure to cure within that time.  To be effective, such notice must be given byExecutive within fifteen (15) days of the occurrence of the event thatconstitutes Good Cause, provided that if Good Cause results from a materialreduction in the duties or authority of Executive so that he is no longerperforming substantially all of the duties of a chief credit officer of acommunity bank and such reduction occurs before a Change of Control occurs andcontinues after the Change of Control occurs, Executive shall be required togive the thirty (30) day notice described above within fifteen (15) days of theChange of Control.

4.3           Termination Upon Expiration. Should Executive remain employed under this Agreement through the datefive (5) months prior to the Expiration Date, Executive shall have theright, while he is still employed, to provide written notice to the Bank of hisdesire to remain employed after the Expiration Date on or before the date four(4) months prior to the Expiration Date. If Executive and the Bank have not entered into an amendment of thisAgreement extending its term or another written agreement replacing this Agreementon or prior to the date three (3) months prior to the Expiration Date, andExecutive’s employment is not otherwise terminated, Executive’s employmentshall automatically terminate on the Expiration Date.  If such an extension or replacement is notentered into on or prior to three (3) months prior to the Expiration Date,Executive shall be deemed to have been given advance notice by the Bank thathis employment with the Bank will terminate as of the Expiration Date.  Nothing in this Paragraph shall prejudicethe at-will status of Executive or require the Bank to negotiate withExecutive.

4.4           Post-Notice Activities of Executive. In the event termination is not effective immediately upon the deliveryof notice of termination by the Bank or Executive, the Bank shall have theright to require that during the period between the giving of notice and theeffective date of termination, Executive’s activities and responsibilities becurtailed as deemed appropriate by the Bank. Such curtailment shall include, without limitation, removing Executivefrom corporate offices, requiring Executive to be physically absent from theBank’s facilities, and eliminating Executive’s access to computer systems,e-mail and telephone systems.

4.5           Automatic Resignations.  Upon noticeof termination of employment Executive shall, automatically and without furtheraction by any party, be deemed to have resigned from all directorships with theBank and any of its subsidiaries and affiliates.  Upon termination of employment, Executive shall,automatically and without further action by any party, be deemed to haveresigned from all offices and other capacities with the Bank and any of itssubsidiaries and affiliates.

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5.             Post-Termination Payments and Benefits. The following are the post-termination payments and benefits to whichExecutive is entitled upon termination of employment with the Bank.

5.1           Termination Resulting from Breach. In the event the employment of Executive is terminated underParagraphs 4.1.1, 4.1.2 or 4.1.3, the Bank shall provide Executive only apayout of all accrued but unused vacation as of the date of termination, thebase salary and Benefits, if any, then-provided, on the terms then-provided,due him through the date of termination and shall not be obligated to provideany other compensation or Benefits.

5.2           Other Terminations.

5.2.1        Payments – Disability.  In the eventthe employment of Executive is terminated under Paragraphs 4.1.4 fordisability, the Bank shall provide Executive only the following:

(a)           the salary due Executive as of the date oftermination;

(b)           payment of certain incentive compensation dueExecutive, if any, in compliance with the Plan;

(c)           a payout of all accrued but unused vacation as of thedate of termination; and

(d)           continuation of the group medical and other insurancebenefits, if any, then-provided under Paragraph 3.6, for a period of three(3) months from the date of termination, subject to the limitations of andto the extent permitted by the policy or policies under which such benefits areprovided.

5.2.2        Payments – Death.  In the eventthe employment of Executive is terminated under Paragraphs 4.1.4 fordeath, the Bank shall provide the Beneficiary only the following:

(a)           the salary due Executive as of the date of death plusa lump sum payment equal to three (3) months of the base salary at the ratethen in effect in accordance with Paragraph 3.1;

(b)           payment of certain incentive compensation dueExecutive, if any, in compliance with the Plan;

(c)           a payout of all accrued but unused vacation as of thedate of termination; and

(d)           continuation of the group medical and other insurancebenefits, if any, then-provided under Paragraph 3.6, for a period of three(3) months from the date of termination, subject to the limitations of andto the extent permitted by the policy or policies under which such benefits areprovided.

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5.2.3        Payments – Termination Under Paragraph 4.1.5. In the event the employment of Executive is terminated underParagraph 4.1.5 or under Paragraph 4.2 for Good Cause, subject toExecutive first entering into the Separation Agreement and such agreement beingfully effective, the Bank shall provide Executive only the following:

(a)           continued salary at the rate then in effect underParagraph 3.1 and the automobile allowance then provided under Paragraph 3.4for a period of nine (9) months from the date notice of termination isdelivered to the Executive, or at the option of the Bank a lump sum payment ofsuch amount, all subject to withholding;

(b)           payment of certain incentive compensation dueExecutive, if any, in compliance with the Plan, with Executive’s terminationunder this Paragraph 5.2.3 being considered for the limited purpose ofinterpreting the Plan in the context of this Agreement as being a termination “withoutcause”;

(c)           a payout of all accrued but unused vacation as of thedate of termination; and

(d)           continuation of the group medical and other insurancebenefits, if any, then-provided under Paragraph 3.6, for a period of nine(9) months from the date of termination, subject to the limitations of andto the extent permitted by the policy or policies under which such benefits areprovided.

5.2.4        Executive’s Right to Waive Payments. Executive shall have the right to waive his rights to receive suchpayments and Benefits otherwise due under this Paragraph 5.2 by givingadvance written notice of such waiver to the Bank.  After receipt of such notice, the Bank shallhave no further obligation to provide any payments or Benefits under thisParagraph 5.2.

5.3           Change of Control.

5.3.1        Payment Following Certain Terminations Related toChange of Control.  Subject to Executive first entering into theSeparation Agreement and such agreement being fully effective, in respect ofany Change of Control Termination the Bank shall pay to Executive the Change ofControl Severance Benefits in a lump sum (except for the benefits underParagraph 3.6, which shall be continued) within five (5) days followingthe date the Separation Agreement is fully effective.

5.3.2        Executive’s Right to Waive Payments. Executive shall have the right to waive his rights to receive paymentsand Benefits otherwise due under this Paragraph 5.3 by giving advancewritten notice of such waiver to the Bank. After receipt of such notice, the Bank shall have no further obligationto provide any payments or Benefits under this Paragraph 5.3.

5.3.3        Adjustments in Payments.  The terms ofthis Paragraph 5.3.3 override and control any and all other terms of thisAgreement to the extent inconsistent with this Paragraph 5.3.3.  This Paragraph 5.3.3 shall apply to theextent that the aggregate present value of any or all payments and benefits inthe nature of compensation to (or for the benefit of) 

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Executive provided under this Agreement or otherwiseprovided to Executive by or on behalf of the Bank or any affiliate, parent orcontrolling entity of the Bank, constitute a “parachute payment” under theprovisions of Section 280G of the Code, and the regulations thereunder(the “Total Payments”).  In theevent that the Total Payments would exceed an amount equal to 299% of Executive’s“base amount” as that term is defined in Section 280G of the Code, asdetermined by the independent public accountants for the Bank, Executive andthe Bank agree that the payments or benefits provided to Executive under thisAgreement shall be reduced (or the parties shall agree to a reduction in otherpayments or benefits included in the Total Payments to the extent legally andcontractually permissible) so that the present value of the total amountreceived by Executive that would constitute a “parachute payment” will be onedollar ($1.00) less than three (3) times Executive’s base amount (as defined inSection 280G of the Code) and so that no portion of the payment or benefitsreceived by Executive would be subject to the excise tax imposed by Section4999 of the Code.

5.4           Termination at Expiration Date.  If Executive’s employment is terminated as aresult of expiration of this Agreement at the Expiration Date, subject toExecutive first entering into the Separation Agreement and such agreement beingfully effective, the Bank shall provide Executive only the following:

5.4.1        continued salary at the rate then in effect underParagraph 3.1 for a period of six (6) months from the date of termination, orat the option of the Bank a lump sum payment of such amount, all subject towithholding;

5.4.2        continuation of the group medical and other insurancebenefits, if any, then-provided under Paragraph 3.6, for a period of six (6)months from the date of termination, subject to the limitations of and to theextent permitted by the policy or policies under which such benefits areprovided;

5.4.3        a payout of all accrued but unused vacation as of thedate of termination; and

5.4.4        payment of certain incentive compensation dueExecutive, if any, in compliance with the Plan, with Executive’s termination asa result of expiration being considered for the limited purpose of interpretingthe Plan in the context of this Agreement as being a termination “withoutcause.”

5.5           Consideration for Payments and Remedies. Without limiting any other remedies available to the Bank, the paymentsto be made under Paragraphs 5.2, 5.3 or 5.4 (subject to the exceptionsstated therein) after the date of termination of Executive’s employment shallbe subject to Executive’s execution of the Separation Agreement, and Executive’scontinued compliance with the Separation Agreement and the terms of thisAgreement that are effective after termination of Executive’s employment,through the making of the last such payment.

5.6           Death Following Termination. In the event that Executive dies while receiving any payments under thisParagraph 5, such payments shall be continued for the benefit of theBeneficiary, as would otherwise be required under this Paragraph 5.

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5.7           Nonassignability.  NeitherExecutive nor any other person or entity shall have any power or right totransfer, assign, anticipate, hypothecate, mortgage, commute, modify, orotherwise encumber in advance any of the rights or benefits of Executive underthis Paragraph 5, nor shall any of said rights or benefits be subject toseizure for the payment of any debts, judgments, alimony or separatemaintenance, owed by Executive or any other person or entity, or betransferable by operation of law in the event of bankruptcy, insolvency orotherwise.  The terms of thisParagraph 5.7 shall not affect the interpretation of any provision of thisAgreement.

5.8           Claims Procedure.  The BankBoard shall make all determinations as to rights to benefits under thisParagraph 5.

5.9           Regulatory Restrictions.  The partiesunderstand and agree that at the time any payment would otherwise be made orbenefit provided under this Paragraph 5, depending on the facts andcircumstances existing at such time, the satisfaction of such obligations bythe Bank may be deemed by a regulatory authority to be illegal, an unsafe andunsound practice, or for some other reason not properly due or payable by theBank.  Among other things, theregulations at 12 C.F.R. Part 30, Appendix A promulgated pursuant toSection 39(a) of the Federal Deposit Insurance Act, and at 12 C.F.R.Part 359, or similar regulations or regulatory action following similarprinciples may apply at such time.  TheBank agrees that to the extent reasonably feasible, it will in good faith seekto determine the position of the appropriate regulatory authority in advance ofeach payment or benefit otherwise due under this Paragraph 5, includingseeking the approval or acquiescence of the appropriate regulatory authorities,if required.  The parties understand,acknowledge and agree that, notwithstanding any other provision of thisAgreement, the Bank shall not be obligated to make any payment or provide anybenefit under this Paragraph 5 where (i) an appropriate regulatoryauthority does not approve or acquiesce as required or (ii) the Bank hasbeen informed either orally or in writing by a representative of theappropriate regulatory authority that it is the position of such regulatoryauthority that making such payment or providing such benefit would constitutean unsafe and unsound practice, violate a written agreement with the regulatoryauthority, violate an applicable rule, law or regulation, or would cause therepresentative of the regulatory authority to recommend enforcement actionagainst the Bank.

5.10         Right of Offset. Any and all of the compensation and benefits thatwould otherwise be provided under this Paragraph 5 are subject to the Bank’soffset for any liability of Executive to the Bank to the extent the Bank Boarddetermines that such liability exists. In addition, without limiting the remedies of the Bank otherwiseavailable under this Agreement or otherwise, all compensation and benefits thatwould otherwise be payable under this Paragraph 5 shall cease as of thedate Executive first violates any of the provisions included inParagraphs 6.4, 6.5 or 6.6.

5.11         Overlapping Benefits and Payments. In the event that Executive receives payments and/or benefits under oneof Paragraphs 5.1 through 5.4, inclusive, Executive may not receivepayments and/or benefits under one of the other of such Paragraphs, and thefirst such applicable of those Paragraphs shall apply.

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5.12         Delayed Payments.  In the eventthat Code Section 409A (“**409A**”)applies to any compensation with respect to a separation from service, paymentof that compensation shall be delayed if Executive is a “specified employee,”as defined in 409A(a)(2)(B)(i), and such delayed payment is required by409A.  Such delay shall last six monthsfrom the date of separation from service. On the day following the end of such six-month period, the Bank shallmake a catch-up payment to Executive equal to the total amount of such paymentsthat would have been made during the six-month period but for this Section5.12, plus interest calculated at the prime rate as reported in The Wall StreetJournal.

6.             Additional Covenants.

6.1           Insurance.  The Bankshall have the right to obtain and hold a “keyman” life insurance policy on thelife of Executive and disability insurance covering Executive, in each case,with the Bank as beneficiary of such policy. Executive agrees to provide any information required for the issuance ofany such policy and submit himself to any physical examination required for anysuch policy.

6.2           Unsecured General Creditor. Neither Executive nor any other person or entity shall have any legalright or equitable rights interests or claims in or to any property or assetsof the Bank under the provisions of this Agreement.  No assets of the Bank shall be held under anytrust for the benefit of Executive or any other person or entity or held in anyway as security for the fulfilling of the obligations of the Bank under thisAgreement.  All of the Bank’s assetsshall be and remain the general, unpledged, unrestricted assets of theBank.  The Bank’s obligations under thisAgreement are unfunded and unsecured promises, and to the extent such promisesinvolve the payment of money, they are promises to pay money in thefuture.  Executive and any person orentity claiming through him shall be unsecured general creditors with respectto any rights or benefits hereunder.

6.3           Dispute Resolution. Simultaneously with the execution of this Agreement, the parties haveentered into the Arbitration Agreement attached as Exhibit C, which theparties agree shall govern the resolution of any and all disputes referencedtherein.

6.4           Return of Documents.  Executiveexpressly agrees that upon termination of employment he will return to the Bankall Bank manuals, document, files, reports, studies, customer lists, businessplans, loan and deposit program plans and outlines, customer solicitation andfollow-up techniques and plans, marketing plans, employee policies, incentivecompensation arrangements, instruments, software, and other materials usedand/or developed by Executive during his employment, whether in paper, computerreadable, computer coded, magnetic, compact disk or other tangible orelectronic form.

6.5           Confidentiality.

6.5.1        No Disclosure.  During theterm of employment with the Bank, Executive will have access to and becomeacquainted with various Trade Secrets and Other Proprietary and ConfidentialInformation which are owned by the Bank and which are used in the operation ofthe Bank’s business, the wrongful use or disclosure of which to the public orcompetitors of the Bank would materially adversely affect the business andprospects of the 

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Bank.  Executiveshall not disclose or use in any manner, directly or indirectly, any TradeSecrets and Other Proprietary and Confidential Information either during hisemployment with the Bank or at any time thereafter, except as required in thecourse of employment with the Bank.

6.5.2        Nonsolicitation of Business. Without limiting Paragraph 6.5.1, Executive agrees that for a period oftwelve (12) months following the termination of his employment with the Bank,Executive will not, directly or indirectly, solicit, attempt to solicit,divert, or attempt to divert any customers of the Bank or any business the Bankor a subsidiary or affiliate had enjoyed or solicited from its customers,borrowers, depositors or investors by using any Trade Secrets and OtherProprietary and Confidential Information.

6.6           Business Protection Covenants.

6.6.1        Covenant Not to Compete.  Executiveagrees that he will not, during the course of employment, voluntarily orinvoluntarily, directly or indirectly, (i) engage in any banking orfinancial products or service business, loan origination or deposit-takingbusiness or any other business competitive with that of the Bank, itssubsidiaries or affiliates (“Competitive Business”) within the County ofSan Diego (the “Market Area”), (ii) own, manage, operate,control, be employed by, or provide management or consulting services in anycapacity to any firm, corporation, or other entity (other than the Bank or itssubsidiaries or affiliates) engaged in any Competitive Business in the MarketArea, or (iii) solicit or otherwise intentionally cause any member of theBank Board or any employee or officer of the Bank or any of its subsidiaries oraffiliates to engage in any action prohibited under (i) or (ii) ofthis Paragraph 6.6.1.

6.6.2        Inducing Employees To Leave The Bank; Employment ofEmployees.  Any attempt on the part of Executive toinduce others to leave the Bank’s employ, or the employ of any of itssubsidiaries or affiliates, or any effort by Executive to interfere with theBank’s relationship with its other employees would be harmful and damaging tothe Bank.  Executive agrees that duringthe term of employment and during any period following the termination of hisemployment during which he is receiving compensation or benefits underParagraphs 5.2, 5.3 or 5.4, Executive will not in any way, directly orindirectly (i) induce or attempt to induce any employee of the Bank or anyof its subsidiaries of affiliates to quit employment with the Bank or therelevant subsidiary or affiliate; (ii) otherwise interfere with or disruptthe relationships between the Bank and its subsidiaries and affiliates and theirrespective employees; (iii) solicit, entice, or hire away any employee ofthe Bank or any of its subsidiaries or affiliates; or (iv) hire or engageany employee of the Bank or any subsidiary or affiliate or any former employeeof the Bank or any subsidiary or affiliate whose employment with the Bank orthe relevant subsidiary or affiliate ceased after the date of termination ofExecutive’s employment with the Bank.

6.7           Equitable Relief.  Executiveacknowledges and agrees that irreparable injury will result to the Bank in theevent of a breach of any of the provisions of this Paragraph 6 (the “DesignatedProvisions”) and that the Bank will have no adequate remedy at law withrespect thereto.  Accordingly, in theevent of a material breach of any Designated Provision, and in addition to anyother legal or equitable remedy the Bank or its subsidiaries or affiliates may 

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have, the Bank and any relevant subsidiary oraffiliate shall be entitled to the entry of a preliminary and permanentinjunction (including, without limitation, specific performance) to restrainthe violation or breach thereof by Executive or any affiliates, agents, or anyother persons acting for or with Executive in any capacity whatsoever, andExecutive submits to the jurisdiction of such court in any such action.  Any such remedy shall be granted pursuant tothe dispute resolution procedures applicable under Paragraph 6.3.

6.8           Severability.  It is thedesire and intent of the parties that the provisions of this Paragraph 6shall be enforced to the fullest extent permissible under the laws and publicpolicies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any particular provision ofthis Paragraph 6 shall be adjudicated or found to be invalid orunenforceable, such provisions shall be deemed amended to delete therefrom theportion thus adjudicated or found to be invalid or unenforceable, such deletionto apply only with respect to the operation of such provision in the particularjurisdiction in which such adjudication or finding is made.  In addition, should any court or arbitratordetermine that the provisions of this Paragraph 6 shall be unenforceablewith respect to scope, duration, or geographic area, such court or arbitratorshall be empowered to substitute, to the extent enforceable, provisions similarhereto or other provisions so as to provide to the Bank, to the fullest extentpermitted by applicable law, the benefits intended by this Paragraph 6.

6.9           Indemnification.  To thefullest extent permitted by law and in accordance with the procedures andsubstantive requirements imposed by law and applicable regulation (including 12C.F.R. Part 359, or similar regulations or regulatory action following similarprinciples), the Bank shall indemnify Executive in the event he was or is aparty or is threatened to be made a party in any action brought by a thirdparty against Executive (whether or not the Bank is joined as a partydefendant) against expenses, judgments, fines, settlement, and other amountsactually and reasonably incurred in connection with said action, providedExecutive acted in good faith and in a manner Executive reasonably believed tobe in the best interests of the Bank, and provided the alleged conduct ofExecutive arose out of and was within the course and scope of his employment asan officer or employee of the Bank.  ThisParagraph 6.7 shall not limit any other rights to indemnification thatExecutive may now or hereafter have by law or under the articles, bylaws orresolutions of the Bank or otherwise.

7.             Other Agreements.

7.1           Bank Policies and Manuals. The parties further agree that to the extent of any inconsistencybetween this Agreement and any employee manual or policy of the Bank, that theterms of this Agreement shall supersede the terms of such employee manual orpolicy.

8.             General Provisions.

8.1           Notices.  Unlessotherwise specifically permitted by this Agreement, all notices or othercommunications required or permitted under this Agreement shall be in writing,and shall be personally delivered or sent by registered or certified mail,postage prepaid return receipt requested, or sent by facsimile, provided thatthe facsimile cover sheet contain a notation of the date and time oftransmission, and shall be deemed received: (i) if personally delivered,upon the date of delivery to the address of the person to receive such notice,(ii) if mailed in 

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accordance with the provisions of this paragraph, two(2) business days after the date placed in the United States mail,(iii) if mailed other than in accordance with the provisions of thisparagraph or mailed from outside the United States, upon the date ofdelivery to the address of the person to receive such notice, or (iv) ifgiven by facsimile, when sent.  Noticesshall be given at the following addresses:

If to Executive:

Larry Prosi

Fax:  

If to the Bank:

James G. Knight, M.D.Chairman1st Pacific Bank of Californiac/o 6907 Camino DegraziaSan Diego, CA  92111Fax:  619-222-8216

With a copy to:

Kurt L. Kicklighter, Esq.Luce, Forward, Hamilton & Scripps LLP601 West Broadway, Suite 2600San Diego, CA  92101Fax:  619-645-5339

The relevant party may change the address for delivery of notices bygiving notice of such change in accordance with this paragraph.

8.2           Complete Agreement; Modifications. This Agreement and written agreements, if any, entered into concurrentlyherewith (i) constitute the parties’ entire agreement, including allterms, conditions, definitions, warranties, representations, and covenants,with respect to the subject matter hereof, (ii) merge all priordiscussions and negotiations between or among any or all of them as to thesubject matter hereof, and (iii) supersede and replace all terms,conditions, definitions, warranties, representations, covenants, agreements,promises and understandings, whether oral or written, with respect to thesubject matter hereof.  This Agreementmay not be amended, altered or modified except by a writing signed by the partyto be bound.  With respect to the Bank,such amendment, alteration or modification may only be made on behalf of theBank by the Chairperson of the Personnel Committee of the Bank Board, theChairperson of the Bank Board or another person specifically designated by theBank Board.  With regard to suchamendments, alterations, or modifications, facsimile signatures shall be 

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effective as original signatures.  Any amendment, alteration, or modificationrequiring the signature of more than one party may be signed in counterparts.

8.3           Further Actions.  Each partyagrees to perform any further acts and execute and deliver any furtherdocuments reasonably necessary to carry out the provisions of this Agreement.

8.4           Assignment.  No party mayassign its rights under this Agreement without the prior written consent of theother parties hereto.

8.5           Successors and Assigns.  Except asexplicitly provided herein to the contrary, this Agreement shall be bindingupon and inure to the benefit of the parties, their respective successors andpermitted assigns.

8.6           Termination and Survival. Upon the termination of the employment of Executive, the Bank mayterminate this Agreement upon notice to Executive, which may be provided at thetime notice of termination of employment is provided by either party.

8.6.1        The obligations of Executive and the rights of theBank under Paragraphs 4.5, 5.9, 5.10, 5.11 and 6.3 through and including6.6 shall survive the termination of this Agreement, provided that if Executiveand the Bank have entered into the Separation Agreement, the dispute resolutionprovisions of the Separation Agreement shall apply to and govern any and alldisputes related to this Agreement.

8.6.2        The obligations of the Bank to Executive which bytheir terms are to continue after termination of employment underParagraph 5 shall survive such termination of employment and terminationof the Agreement.  The notice provisionsof Paragraph 8.1 and this Paragraph 8.6 shall survive termination ofemployment and termination of the Agreement.

8.6.3        Notwithstanding any provision of this Agreement to thecontrary, this Agreement shall terminate and, therefore, among other things,none of the provisions providing for compensation or benefits to Executiveshall be of any effect, in the event that the Bank is placed into aconservatorship or receivership, it loses its Federal deposit insurance, or itsbanking charter is revoked.

8.7           Severability.  If anyportion of this Agreement shall be held by a court of competent jurisdiction tobe invalid, void, or otherwise unenforceable, the remaining provisions shallremain enforceable to the fullest extent permitted by law if enforcement wouldnot frustrate the overall intent of the parties (as such intent is manifestedby all provisions of the Agreement including such invalid, void, or otherwiseunenforceable portion).

8.8           Extension Not a Waiver.  No delay oromission in the exercise of any power, remedy, or right herein provided orotherwise available to any party shall impair or affect the right of such partythereafter to exercise the same.  Anyextension of time or other indulgence granted to a party hereunder shall nototherwise alter or affect any power, remedy or right of any other party, or theobligations of the party to whom such extension or indulgence is granted exceptas specifically waived.

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8.9           Time of Essence.  Time is ofthe essence of each and every term, condition, obligation and provision hereof.

8.10         No Third Party Beneficiaries. This Agreement and each and every provision hereof is for the exclusivebenefit of the parties hereto and not for the benefit of any third party.

8.11         Headings.  The headingsin this Agreement are inserted only as a matter of convenience, and in no waydefine, limit, or extend or interpret the scope of this Agreement or of anyparticular provision hereof.

8.12         References.  A referenceto a particular paragraph of this Agreement shall be deemed to includereferences to all subordinate paragraphs, if any.

8.13         Counterparts.  ThisAgreement may be signed in multiple counterparts with the same force and effectas if all original signatures appeared on one copy; and in the event thisAgreement is signed in counterparts, each counterpart shall be deemed anoriginal and all of the counterparts shall be deemed to be one agreement.

8.14         Applicable Law.  ThisAgreement shall be construed in accordance with, and governed by, the laws ofthe State of California.

8.15         Representation by Counsel. This Agreement has been negotiated by the parties with the assistance oftheir respective counsel and at their own cost and expense.  For this reason the principal that anagreement shall be interpreted against the party that drafted it shall notapply to this Agreement.

IN WITNESS WHEREOF, the undersigned have executed thisAgreement as of the dates set forth below.
| Date:  |                               |                                                |   |
|--------|------------------------------------|-----------------------------------------------------|--------|
|   | Larry Prosi                        |
|   |                               |
|   |                               |
|   | 1st PACIFIC BANK  OF CALIFORNIA, a |
|   | California  state-chartered bank   |
|   |                               |
|   |                               |
| Date:  |                               |                                                | By:    |   |
|   |                               |   A. Vincent Siciliano, President and CEO |

 

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**EXHIBIT A**

**1****st**** PACIFIC BANK OF CALIFORNIA INCENTIVECOMPENSATION PLAN FORSENIOR MANAGEMENT**

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**EXHIBIT B**

**SEPARATIONAGREEMENTANDGENERAL RELEASE OF CLAIMS**

This Separation Agreement and General Release of Claims (this “Agreement”)is entered into by and between Larry Prosi (“Employee”) and 1st Pacific Bank ofCalifornia, a California state bank (the “Bank”).

**RECITALS**

A.    Employee commenced employment with Bank on or about                           .  Employee’s employment with the Bankterminated on                     ,        .

B.    Employee and the Bank desire to settle and compromise any and allpossible claims against the Bank by Employee arising out of their relationshipto date, including Employee’s employment with the Bank and the termination ofEmployee’s employment, and to provide for a general release of any and all suchclaims.

**AGREEMENT**

1.     Separation Pay/Consideration.  In consideration of the covenants andreleases set forth herein, the Bank agrees to pay Employee the amount payableto him and the non-monetary consideration (if any) due him, pursuant to and inaccordance with, Paragraphs 5.2, 5.3 or 5.4, as the case may be, of theEmployment Agreement dated January 1, 2006, by and between the Bank andEmployee (the “Employment Agreement”), less all applicable state andfederal deductions (in each case, the “Payment”), $2,000 of which shallbe consideration for Employee’s release of ADEA claims as set forth inSection 3, below; provided that no such Payment shall be made until atleast eight (8) days have past since Employee’s execution of thisAgreement.  The check representing thePayment shall be mailed to Employee at his/her home address at                                 .

2.     Release of All Claims Except Age Discrimination in EmploymentAct of 1967 (“ADEA”) Claims.

a.     In consideration of the payment and other benefits described inSection 1, which Employee would otherwise not be entitled to except forsigning this Agreement, Employee does hereby unconditionally, irrevocably andabsolutely release and discharge the Bank and any related holding, parent,sister or subsidiary entities and all of their respective boards of directors,officers, employees, agents, volunteers, attorneys, insurers, divisions,successors and assigns from any and all loss, liability, claims, demands,causes of action or suits of any type, whether in law and/or in equity, relateddirectly or indirectly, or in any way connected with any transaction, affairsor occurrences between them to date, including, but not limited to, Employee’semployment with the Bank and the termination of said employment.  This Agreement specifically applies, withoutlimitation, to any and all contract or tort claims, claims for wrongfultermination, wage claims, and claims arising under Title VII of the CivilRights Act 

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of 1991, the Americanswith Disabilities Act, the Equal Pay Act, the California Fair Employment andHousing Act, the Fair Labor Standards Act, the Family and Medical Leave Act,the California Family Rights Act, the California Labor Code, and any and allfederal or state statutes or provisions governing the employment relationshipor discrimination in employment except the federal statute specificallyexcluded hereafter.  This releasespecifically excludes any and all loss, liability, claims, demands, causes ofaction or suits of any type arising under the ADEA.  Employee’s release of ADEA claims will beaddressed separately in Section 3 of this Agreement.

b.     Employee irrevocably and absolutely agrees that he/she will notprosecute nor allow to be prosecuted on his/her behalf, in any administrativeagency, whether federal or state, or in any court, whether federal or state,any claim or demand of any type related to the matters released above, it beingthe intention of the parties that with the execution by Employee of thisrelease, the Bank and any related holding, parent, sister or subsidiarycorporations or entities and all of their respective boards of directors,officers, employees, agents, volunteers, attorneys, insurers, divisions, successorsand assigns will be absolutely, unconditionally and forever discharged of andfrom all obligations to or on behalf of Employee related in any way to thematters discharged herein.

3.     Release of All ADEA Claims.

a.     This section of the Agreement exclusively addresses Employee’srelease of claims arising under federal law involving discrimination on thebasis of age in employment (age 40 and above). This section is provided separately, in compliance with federal law,including but not limited to the Older Workers’ Benefit Protection Act of 1990,to ensure that Employee clearly understands his/her rights so that any releaseof age discrimination claims under federal law (the ADEA) is knowing andvoluntary on the part of Employee.

b.     Employee represents, acknowledges and agrees that the Bank hasadvised him/her, in writing, to discuss this Agreement with an attorney, and tothe extent, if any, that Employee has desired, Employee has done so; that theBank has given Employee twenty-one (21) days from receipt of this Agreement toreview and consider this Agreement before signing it, and Employee understandsthat he/she may use as much of this twenty-one (21) day period as he/she wishesprior to signing; that no promise, representation, warranty or agreements notcontained herein have been made by or with anyone to cause him/her to sign thisAgreement; that he/she has read this Agreement in its entirety, and fullyunderstands and is aware of its meaning, intent, content and legal effect; andthat he/she is executing this release voluntarily and free of any duress orcoercion.

c.     The parties acknowledge that for a period of seven (7) daysfollowing the execution of this Agreement, Employee may revoke the Agreement,and the Agreement shall not become effective or enforceable until therevocation period has expired.  ThisAgreement shall become effective eight (8) days after it has been signedby Employee and the Bank, and in the event the parties do not sign on the same date,then this Agreement shall become effective eight (8) days after the dateit is signed by Employee.

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d.     In consideration of the separation payment and other benefitsmade to Employee described in Section 1 of this Agreement, which Employeewould otherwise not be entitled to except for signing this Agreement, Employeedoes hereby unconditionally, irrevocably and absolutely release and dischargethe Bank and any related holding, parent, sister or subsidiary entities and allof their respective boards of directors, officers, employees, agents, volunteers,attorneys, insurers, divisions, successors and assigns from any and all loss,liability, claims, demands, causes of action or suits of any type arising underthe ADEA and related directly or indirectly to Employee’s employment with theBank and the termination of said employment.

4.     Section 1542 Waiver. Employee does expressly waive all of the benefits and rights granted tohim/her pursuant to California Civil Code section 1542, which reads:

A GENERAL RELEASE DOESNOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OF OR SUSPECT TO EXIST INHIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Employee does certifythat he/she has read all of this Agreement, including the release provisionscontained herein and the quoted Civil Code section, above, and that he/shefully understands all of the same. Employee hereby expressly agrees that this Agreement shall extend andapply to all unknown, unsuspected and unanticipated injuries and damages(including, without limitation, those arising under the ADEA), as well as thoseinjuries and damages that are now disclosed.

5.     Confidentiality. Employee agrees that all matters relative to this Agreement, includingthe negotiations leading up to this Agreement and its terms, shall remainconfidential.  Accordingly, Employeehereby agrees that, with the exception of his/her spouse, regulatory agenciesof the Bank and tax and legal advisors, he/she will not discuss, disclose orreveal to any other persons, entities or organizations, whether within oroutside of the Bank, the terms and conditions of this Agreement.

6.     Non-Disparagement. Employee agrees that he/she will not disparage the Bank or any of itsdirectors, employees, agents or volunteers or otherwise interfere with the Bank’sbusiness, vendor or other relationships. Employee agrees not to make any derogatory or adverse statements,written or verbal, to anyone regarding the Bank or any of its present or formerdirectors, employees, agents or volunteers. The Bank agrees that it will neither disparage Employee nor make anyderogatory or adverse statements, written or verbal, to anyone regardingEmployee.  If an arbitrator determinesthat the Bank has breached its obligations under this Section 6, to theextent the Payment has not been paid in full, the Bank shall be required tomake the Payment in full to Employee within five (5) days following sucharbitrator’s determination.  Nothing inthis Section 6 shall prohibit or relate to any statement by any person to anybank regulatory agency.

7.     Entire Agreement. The parties further declare and represent that no promise, inducement oragreement not herein expressed has been made to them and that this Agreement 

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contains the full andentire agreement between and among the parties, and that the terms of thisAgreement are contractual and not a mere recital.

8.     Future Employment. Employee agrees that the Bank will not be obligated to offer employmentto him/her or to hire him/her for any reason, regardless of the circumstances,at any time on or after the date of this Agreement.  Employee agrees that he/she will not applyfor nor accept any such employment.

9.     Trade Secret/Proprietary Information.  Employee hereby reaffirms his/her obligationsunder his/her Employment Agreement with the Bank to which this Agreementrelates, which shall remain in effect to the extent provided in the EmploymentAgreement.  Employee further agrees thathe/she shall not disclose to any person(s) or entity(ies) at any time orin any manner, directly or indirectly, any information relating to theoperations of the Bank which has not already been disclosed to the generalpublic.  Employee agrees that thisprovision includes, but is not limited to, the following information:proprietary information and/or trade secrets; secret formulae; customer listsand/or names; product and service prices; customer charges; contracts; contractnegotiations and employee relations matters. Employee understands and agrees that this list is not all-inclusive.

10.   Return of Company Property.  Employee agrees to promptly return allproperty or information belonging to the Bank, including all keys, computers,cellular telephones, and any document or property Employee generated duringhis/her employment at the Bank, and agrees that no such property will be inhis/her possession or control at the time he/she receives the considerationspecified in Section 1.  Thisincludes all property or information that may have come into his/her possessionas a result of his/her employment with the Bank.  Employee further acknowledges that he/she hasnot retained any copies of any such information.

11.   Applicable Law.  The validity, interpretation, and performanceof this Agreement shall be construed and interpreted according to the laws ofthe State of California.

12.   Dispute Resolution.  Any dispute arising out of or related to thisAgreement shall be resolved through binding arbitration through JAMS/Endisputein San Diego, California, under the then current applicable rules ofJAMS/Endispute.  Each party shall beresponsible for its or his/her own costs and attorneys’ fees in connection withthe arbitration.

13.   Complete Defense.  This Agreement may be pleaded as a full andcomplete defense against any action, suit or proceeding which may beprosecuted, instituted or attempted by either party in breach thereof.

14.   Severability.  If any provision of this Agreement, or partthereof, is held invalid, void or voidable as against public policy orotherwise, the invalidity shall not affect other provisions, or parts thereof,which may be given effect without the invalid provision or part.  To this extent, the provisions, and partsthereof, of this Agreement are declared to be severable.

15.   No Admission of Liability.  It is understood that this Agreement is notan admission of any liability by the Bank

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16.   Successors and Assigns.  This Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective heirs, legalrepresentatives, successors and assigns.

17.   Counterparts.  This Agreement may be signed incounterparts.  A facsimile signatureshall have the same force and effect as an original signature.

Employee and the Bank have read the foregoingAgreement and know its contents and fully understand it.  Employee and the Bank acknowledge that theyhave fully discussed this Agreement with their respective attorneys to theextent desired, or have had the opportunity to do so, and fully understand theconsequences of this Agreement.  No partyis being influenced by any statement made by or on behalf of any of the otherparty to this Agreement.  Employee andthe Bank have relied and are relying solely upon his/her or its own judgment,belief and knowledge of the nature, extent, effect and consequences relating tothis Agreement and/or upon the advice of their own legal counsel concerning theconsequences of this Agreement.

**IN WITNESS WHEREOF**, the undersigned have executed thisAgreement on the dates shown below.

 
| Dated:     |                                         |   |   |
|------------|----------------------------------------------|--------|--------|
|       | Larry Prosi                                  |
|       |                                         |   |
|       |                                         |   |
| ** ** | **1****st Pacific Bank of California:** |
| ** ** | ** **                                   |
| ** ** | ** **                                   |
| Dated:     |                                         |   | By:    |   |
|       | Name:                                        |   |
|       | Its:                                         |   |
|            |                                              |        |        |  |  |  |  |

 

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**EXHIBIT C**

**EXECUTIVEARBITRATION AGREEMENT**

THIS EXECUTIVE ARBITRATION AGREEMENT (“ArbitrationAgreement”) is made by and between 1st Pacific Bank of California, aCalifornia state-chartered bank (the “Bank”), and Larry Prosi (the “Executive”),effective as of the date that the Employment Agreement between the Bank andExecutive executed contemporaneously herewith (the “Employment Agreement”),becomes effective.

The purpose of this Arbitration Agreement is toestablish final and binding arbitration for disputes arising out of Executive’semployment, the Employment Agreement or the termination of Executive’semployment.  Executive and the Bankdesire to arbitrate their disputes on the terms and conditions set forth below,in order to gain the benefits of a speedy, impartial dispute-resolutionprocedure.  Executive and the Bank agreeto the following:

1.             Claims Covered By The Arbitration Agreement.  Executive and the Bank mutually consent tothe resolution by final and binding arbitration of all claims or controversies(“claims”) that the Bank may have against Executive or that Executivemay have against the Bank or against its officers, directors, partners,employees, agents, pension or benefit plans, administrators, or fiduciaries, orany subsidiary or affiliated company or corporation (collectively referred toas the “Bank”), relating to, resulting from, or in any way arising outof Executive’s employment relationship with the Bank, the Employment Agreementand/or the termination of Executive’s employment relationship with the Bank, tothe extent permitted by law.  The claimscovered by this Arbitration Agreement include, but are not limited to, claimsfor wages or other compensation due; claims for breach of any contract orcovenant (express or implied); tort claims; claims for discrimination andharassment (including, but not limited to, race, sex, religion, nationalorigin, age, marital status or medical condition, disability, sexualorientation, or any other characteristic protected by federal, state or local law);claims for benefits (except where an employee benefit or pension plan specifiesthat its claims procedure shall culminate in an arbitration procedure differentfrom this one); and claims for violation of any public policy, federal, stateor other governmental law, statute, regulation or ordinance.

2.             Required Notice Of Claims And Statute Of Limitations.  Executive may initiate arbitration by servingor mailing a written notice to the Board of Directors of the Bank at the Bank’sadministrative headquarters, care of the Corporate Secretary.  The Bank may initiate arbitration by servingor mailing a written notice to Executive at his last known address.  The written notice must specify the claimsasserted against the other party.  Noticeof any claim sought to be arbitrated must be served within the limitationsperiod established by applicable federal or state law.

3.             Arbitration Procedures.  After demand for arbitration has been made byserving written notice under the terms of Section 3 of this ArbitrationAgreement, the party demanding arbitration shall file a demand for arbitrationwith the American Arbitration Association (“AAA”).  Except as otherwise provided in thisArbitration Agreement, the arbitration will be 

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conducted according to the then applicable arbitrationrules of AAA for the arbitration of employment disputes.

4.             Discovery. Discovery shall be allowed and conducted pursuant to the then applicablearbitration rules of AAA for the arbitration of employment disputes.

5.             Choice of Law. The arbitrator shall apply the substantive law (and the law of remedies,if applicable) of the State of California, or federal law, or both, asapplicable to the claim(s) asserted. The arbitrator shall have authority to resolve any dispute relating tothe interpretation, applicability, enforceability or formation of thisArbitration Agreement, including but not limited to any claim that all or anypart of this Arbitration Agreement is void or voidable.

6.             Summary Judgment. Either party may file a motion for summary judgment with thearbitrator.  The arbitrator is entitledto resolve some or all of the asserted claims through such a motion.  The standards to be applied by the arbitratorin ruling on a motion for summary judgment shall be the applicable laws as specifiedin Section 5 of this Arbitration Agreement.

7.             Application For Emergency Injunctive And/Or OtherEquitable Relief.  Claims by the Bankor Executive for emergency injunctive and/or other equitable relief relating tounfair competition and/or the use and/or unauthorized disclosure of tradesecrets or confidential information shall be subject to the then currentversion of the AAA’s Optional Rules for Emergency Measures of Protection setforth within the AAA’s Commercial Dispute Resolution Procedures.  The AAA shall appoint a single emergencyarbitrator to handle the claim(s) for emergency relief.  The emergency arbitrator selected by the AAAshall be either a retired judge or an individual experienced in handlingmatters involving claims for emergency injunctive and/or other equitable reliefrelating to unfair competition and the use or unauthorized disclosure of tradesecrets and/or confidential information.

8.             Arbitration Decision.  The arbitrator’s decision will be final andbinding.  The arbitrator shall issue awritten arbitration decision revealing the essential findings and conclusionsupon which the decision and/or award is based. A party’s right to appeal the decision is limited to grounds providedunder applicable federal or state law.

9.             Place Of Arbitration.  The arbitration will be at a mutuallyconvenient location, which must be within 50 miles of Executive’s lastemployment location with the Bank.  Ifthe parties cannot agree upon a location, then the arbitration will be held atAAA’s office nearest to Executive’s last employment location with the Bank.

10.           Severability.  Should any portion of this ArbitrationAgreement be found to be unenforceable, such portion will be severed from thisArbitration Agreement, and the remaining portions shall continue to beenforceable.

11.           Section Headings.  The section headings of this ArbitrationAgreement are intended solely for the convenience of reference and shall not inany manner amplify, limit, modify or otherwise be used in interpretation of anyprovisions hereof.

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12.           Construction.  This Arbitration Agreement shall not beinterpreted for or against any party on the basis that such party or its legalrepresentative caused part or all of this Arbitration Agreement to be drafted.

13.           Consideration.  The Bank’s offer to employ Executive, and thepromises by the Bank and Executive to arbitrate differences, rather thanlitigate them before courts or other bodies, provide consideration for eachother.

14.           Fees and Costs.  Each party may be represented by an attorneyor other representative selected by the party. Each party shall be responsible for its own attorneys’ or representative’sfees.  However, if any party prevails ona statutory claim which affords the prevailing party’s attorneys’ fees, or if thereis a written agreement providing for fees, the arbitrator may award reasonablefees to the prevailing party.  In noevent shall Executive be required to pay administrative fees, includingarbitrator’s fees, beyond the fees which would have been incurred by Executive,if any, had the dispute(s) arbitrated under this Arbitration Agreementbeen litigated in state or federal court; the Bank shall be responsible for alladministrative fees exceeding such amount.

15.           Enforcement of ArbitrationAgreement.  Should either party filea court action concerning or refuse to arbitrate a claim which is subject toarbitration under this Arbitration Agreement, the other party shall be entitledto recover its costs and reasonable attorneys’ fees incurred in enforcing thisArbitration Agreement in court.

16.           Sole And Entire Agreement.  This Arbitration Agreement expresses theentire agreement of the parties and there are no other agreements, oral orwritten, concerning arbitration, except as provided herein, and except for theEmployment Agreement which incorporates this Arbitration Agreement byreference.  By itself, this ArbitrationAgreement is not, and shall not be construed to create, any contract ofemployment, express or implied.

17.           Requirements for Modification orRevocation.  This ArbitrationAgreement shall survive the termination of Executive’s employment.  It can only be revoked or modified by awriting signed by the Chairperson of the Personnel Committee of the Bank’sBoard of Directors, the Chairperson of the Bank’s Board of Directors or anotherperson specifically designated by the Board of Directors of the Bank andExecutive, that specifically states an intent to revoke or modify thisArbitration Agreement.

18.           Waiver of Jury Trial/ExclusiveRemedy.  **EXECUTIVE AND THE BANK WAIVE ANY CONSTITUTIONAL OR STATUTORY RIGHT TOHAVE ANY DISPUTE BETWEEN THEM COVERED BY THE TERMS OF THIS ARBITRATIONAGREEMENT DECIDED BY A COURT OF LAW AND/OR BY A JURY IN A COURT**.

19.           Voluntary Agreement.  EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HASCAREFULLY READ THIS ARBITRATION AGREEMENT, UNDERSTANDS ITS TERMS, AND AGREESTHAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE BANK AND EXECUTIVE RELATINGTO THE SUBJECTS COVERED IN THE ARBITRATION AGREEMENT ARE CONTAINED IN IT.  EXECUTIVE HAS VOLUNTARILY ENTERED INTO THEARBITRATION AGREEMENT WITHOUT 

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RELIANCE ON ANY PROVISIONS OR REPRESENTATIONS BY THEBANK, OTHER THAN THOSE CONTAINED IN THIS ARBITRATION AGREEMENT OR EMPLOYMENTAGREEMENT INTO WHICH IT IS INCORPORATED BY REFERENCE.

EXECUTIVE FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THEOPPORTUNITY TO DISCUSS THIS ARBITRATION AGREEMENT AND THE EMPLOYMENT AGREEMENTWITH EXECUTIVE’S PRIVATE LEGAL COUNSEL AND EXECUTIVE HAS UTILIZED THATOPPORTUNITY TO THE EXTENT DESIRED.

 
| Dated: |                                 |                                           |   |
|--------|--------------------------------------|------------------------------------------------|--------|
|   | Larry Prosi,  Executive              |
|   |                                 |
|   |                                 |
|   | 1st PACIFIC BANK OF CALIFORNIA, |
|   | a California  state-chartered bank   |
|   |                                 |
|   |                                 |
| Dated: |                                 |                                           | By:    |   |
|   |                                 |  A. Vincent  Siciliano, President and CEO |

 

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