Exhibit 10.1EMPLOYMENT AGREEMENT     ThisEmployment Agreement (this “**Agreement**t”) is made this  7th  day ofNovember, 2005 (the “**Effective Date**”), between SOUTHWEST COMMUNITY BANK, a California bankingcorporation (the “**Bank**”), having a principal place of business at 5810 El Camino Road, Carlsbad,California 92024, and FRANK J. MERCARDANTE (“**Executive**”), whose residence address is 1657Independence Way, Vista, California 92084, with reference to the following:**R E C I T A L S**     **WHEREAS,**the Bank is a banking corporation duly organized, validly existing, and in goodstanding under the laws of the State of California, with power to own property and carry on itsbusiness as it is now being conducted;     **WHEREAS,**the Bank desires to continue to avail itself of the skill, knowledge, and experienceof Executive in order to insure the successful management of its business;     **WHEREAS**, the Bank and Executive entered into that certain Employment Agreement dated January29, 1998 (the “Original Agreement”), which Original Agreement has been amended by mutual agreementof the parties through the Effective Date;     **WHEREAS**, the parties hereto desire to specify the terms of Executive’s continued employment bythe Bank as controlling Executive’s continued employment with the Bank; and     **WHEREAS,**the parties wish to enter into this Agreement to reflect the Original Agreement asamended by the parties through the Effective Date and to supersede the Original Agreement;     **NOW, THEREFORE**, in consideration of the mutual covenants hereinafter set forth, and intendingto be legally bound, it is agreed that from and after the Effective Date, the following terms andconditions shall apply to Executive’s said employment:**A G R E E M E N T**     A. TERM OF EMPLOYMENT          1. Term. The Bank hereby employs Executive and Executive hereby accepts employmentwith the Bank for the period commencing on the Effective Date and terminating on January 1, 2009,unless terminated earlier as provided for in this Agreement (the “**Term**”).     B. DUTIES OF EXECUTIVE          1. Duties. Executive shall perform the duties of Chief Executive Officer of the Bank,subject to the powers by law vested in the Board of Directors of the Bank and in the Bank’sshareholder(s). During the Term, Executive shall perform exclusively the services
 

 
herein contemplated to be performed by Executive faithfully, diligently, and to the best ofExecutive’s ability, consistent with the highest and best standards of the banking industry and incompliance with all applicable laws and the Bank’s Articles of Incorporation, Bylaws, and internalwritten policies.          2. Conflicts of Interest. Except as permitted by the prior written consent of theBoard of Directors of the Bank, Executive shall devote Executive’s entire productive time, ability,and attention to the business of the Bank during the Term, and Executive shall not directly orindirectly render any services of a business, commercial, or professional nature, to any otherperson, firm, or corporation, whether for compensation or otherwise, which are in conflict with theBank’s interest. Notwithstanding the foregoing, Executive may make investments of a passive naturein any business or venture, provided, however, that neither such business or venture is incompetition, directly or indirectly, in any manner with the Bank.               (a) Nothing provided in this Section shall prevent the Executive from purchasing or otherwisebeneficially owning, without restriction on amount, any securities issued by the Bank or the Bank’scorporate parent, Southwest Community Bancorp (the “**Company**”).               (b) During the term of this Agreement, Executive shall not directly or indirectly engage incompetition with, or own any interest in any business which competes with, any business of the Bankor the Company or any of their subsidiaries; provided, however, that the provisions of this Section2 shall not prohibit his ownership of not more than 5% of the voting stock of any publicly heldcorporation, or prohibit ownership of not more than 5% of any mutual fund.     C. COMPENSATION          1. Salary. For Executive’s services hereunder, commencing with the Effective Date,the Bank shall pay or cause to be paid as annual base salary to Executive the sum of Three HundredTwenty Thousand Dollars ($320,000) for each year (i.e., 12-month period) of the Term (the “**BaseSalary**”). Said salary shall be payable in equal installments in conformity with Bank’s normalpayroll periods. Annual adjustments commencing January 1, 2006, may be made in the discretion ofthe Board of Directors.          2. Bonuses. During the Term, Executive shall be entitled to receive as an incentive,a bonus as determined and payable in accordance with the Bank’s Senior Executive Officer Bonus Planas set forth on Exhibit “A” hereto as it may be amended from time to time by mutual agreement ofthe Board of Directors and Executive, together with such other bonus as the Board of Directorsshall determine from time to time in its sole and absolute discretion (collectively, the “**IncentiveBonus**”).     D. EXECUTIVE BENEFITS          1. Vacation. From and after the Effective Date, Executive shall be entitled to six(6) weeks vacation during each year of the Term; provided, however, that for each year of the Term,Executive is required to and shall take at least two (2) weeks of said vacation (the “**MandatoryVacation**”), which shall be taken consecutively. Executive shall be entitled to carry forward tothe immediately succeeding year of the Term (the “**Carry Forward Period**”) up to two (2) weeks ofunused vacation time for each year of the Term
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(the “**Unused Vacation**”). Should any portion of the Unused Vacation remain unused by Executive atthe end of the Carry Forward Period, Bank shall pay Executive an amount equal to the productresulting from multiplying (i) the number of days of the Unused Vacation that remain unused at theend of the Carry Forward Period, by (ii) the dollar amount resulting from Executive’s Base Salarythen in effect divided by 260. Upon payment of same, Bank shall owe Executive no further benefiton account of the Unused Vacation. Executive shall receive compensation for any vacation in excessof the Unused Vacation not used by Executive in any one year of the Term, calculated in the samemanner as set forth in the previous sentence.          2. Automobile. During the Term hereunder, the Bank shall provide Executive, forExecutive’s sole use, a suitable full sized automobile, the specific make and model of suchautomobile to be determined by Executive, which automobile shall at no time be older than three (3)years. The Bank shall pay all operating expenses of any nature whatsoever with regard to suchautomobile, provided Executive furnishes to the Bank adequate records and other documentaryevidence required by federal and state statutes and regulations issued by the appropriate taxingauthorities for the substantiation of such payments as deductible business expenses of the Bank andnot as deductible compensation to Executive. The Bank shall also procure and maintain in force anautomobile liability insurance policy on such automobile, containing all reasonable and necessarycoverage.          3. Group Medical and Life Insurance Benefits. At such time as Executive shall requestin writing during the Term (the “**Request Date**”), the Bank shall provide for Executive andExecutive’s spouse, at Bank’s expense, participation in the Bank’s existing medical, dental,accident and health insurance benefits in accordance with benefits provided to Bank employeesgenerally, but at a level commensurate for an employee of Executive’s salary level (the “**InsuranceCoverage**”). Said Insurance Coverage shall be in effect as of the Request Date (or as soonthereafter as the Bank’s policies for the Insurance Coverage will permit) and shall continuethroughout the Term. Except in the event of Executive’s termination pursuant to Paragraphs F.1 orF.3, or in the event Executive terminates this Agreement pursuant to Paragraph F.5, Bank shallcontinue to provide or pay the premiums for the Insurance Coverage with substantially similarbenefits, deductibles, co-pays and coverage limits as the Bank is providing for Executive as ofthe end of the Term, at the Bank’s expense, for Executive and Executive’s spouse from and after theend of the Term throughout the remainder of Executive’s and Executive’s spouse’s natural lives.The Bank’s liability to Executive or Executive’s spouse for any breach of this Paragraph D.3 shallbe limited to the amount of premiums required hereunder to be payable by the Bank to obtain ormaintain, as applicable, the coverage’s contemplated herein.          4. Stock Options. All options to purchase shares of the Company’s authorized butunissued Common Stock heretofore granted to Executive shall remain in full force and effect subjectto the terms and conditions of those options as so granted. The Bank and Executive acknowledgeand agree that as of the Effective Date Executive has been granted options which remain unexercisedto purchase those shares of Company Common Stock as listed on Exhibit “B” hereto.          5.SERP. The Bank shall provide for Executive’s participation in the Bank’sSupplemental Executive Retirement Plan as evidenced by that certain Executive SupplementCompensation Agreement by and between Bank and Executive dated October 17, 2001.
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           6. 401(k) Program. During the Term, the Bank shall provide for Executive’sparticipation in the Bank’s 401(k) retirement plan in accordance with the benefits provided to Bankemployees generally.          7. Other Benefits. Except as provided herein, during the term of his employment underthis Agreement, Executive shall be entitled to participate in employee benefit programs and fringebenefits in accordance with the plans, practices, programs, and policies of the Bank in effect forwhich executives of the Bank are eligible pursuant to the terms of such plans, practices, programs,and policies, including sick leave; provided, however, Executive shall not participate in suchplans that are applicable only for Bank’s employees, such as Bank’s employee bonus program.     E. REIMBURSEMENT FOR BUSINESS EXPENSES          Executive shall be entitled to reimbursement by the Bank for any ordinary and necessarybusiness expenses incurred by Executive in the performance of Executive’s duties and in acting forthe Bank during the Term, which types of expenditures shall be determined by the Board ofDirectors, provided that:          1. Each such expenditure is of a nature qualifying it as a proper deduction on the federal andstate income tax returns of the Bank as a business expense (without regard to limitations such asmeals) and not as a deductible compensation to Executive; and          2. Executive furnishes to the Bank adequate records and other documentary evidence required byfederal and state statutes and regulations issued by the appropriate taxing authorities for thesubstantiation of such expenditures as business expenses of the Bank and not as deductiblecompensation to Executive.     F. TERMINATION          1. Termination for Cause. The Bank may terminate this Agreement at any time by actionof the Board of Directors for “cause” only if: (a) Executive fails to perform or habituallyneglects the duties which he is required to perform hereunder; (b) if Executive engages in illegalactivity which materially adversely affects the Bank’s reputation in the community or whichevidences the lack of Executive’s fitness or ability to perform Executive’s duties as reasonablydetermined by the Board of Directors, in good faith; (c) Executive commits any act which wouldcause termination of coverage under the Bank’s Banker’s Blanket Bond as to Executive (asdistinguished from termination of coverage as to the Bank as a whole); and (d) any regulatoryauthority having supervisory authority over Bank exercises its cease and desist powers to removeExecutive from office or advises Bank that Executive should be removed from office. Suchtermination shall not prejudice any remedy which the Bank may have at law, in equity, or under thisAgreement.          2. Death or Disability. In the event of Executive’s death, or if Executive is foundto be physically or mentally disabled (as hereinafter defined) by the Board of Directors in goodfaith, this Agreement shall terminate.     For purposes of this Agreement only, physical or mental disability shall be defined asExecutive being unable to fully perform under this Agreement for a continuous period of ninety (90)days or a cumulative period of one hundred twenty (120) days in any calendar year. If there shouldbe a dispute between the Bank and Executive as to Executive’s physical
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or mental disability for purposes of this Agreement, the question shall be settled by the opinionof an impartial reputable physician or psychiatrist agreed upon by the parties or theirrepresentatives, or if the parties cannot agree within ten (10) days after a request fordesignation of such party, then by a physician or psychiatrist designated by the San Diego CountyMedical Association. The certification of such physician or psychiatrist as to the question indispute shall be final and binding upon the parties hereto.          3. Action by Supervisory Authority. If the Bank is closed by or taken over by theCalifornia Department of Financial Institutions or other supervisory authority, including theFederal Deposit Insurance Corporation, such bank supervisory authority may immediately terminatethis Agreement.          4. Change in Control Event. In the event of a “Change of Control” Executive’semployment with the Bank may be terminated by Executive or by the surviving entity. A Change ofControl shall be deemed to have occurred if:               (a) there shall be consummated (1) any consolidation or merger of the Company in which theCompany is not the continuing or surviving corporation, or pursuant to which shares of theCompany’s Common Stock would be converted in whole or in part into cash, securities, or otherproperty, other than a merger of the Company in which the holders of the Company’s Common Stockimmediately prior to the merger have substantially the same proportionate ownership of common stockof the surviving corporation immediately after the merger, or (2) any sale, lease, exchange ortransfer (in one transaction or a series of related transactions) of all or substantially all theassets of the Company, or               (b) the shareholders of the Company shall approve any plan or proposal for the liquidation ordissolution of the Company, or               (c) any “person” [as such term is used in Sections 13(d)(3) and 14(d)(2) of the SecuritiesExchange Act of 1934 (the “Exchange Act”)], other than the Company or a subsidiary thereof or acorporation owned, directly or indirectly, by the shareholder of the Company, shall become thebeneficial owner [within the meaning of Rule 13(d)(3) under the Exchange Act] of securities of theCompany representing 25% or more of the combined voting power of the Company’s or theBank’s then outstanding securities ordinarily (and apart from rights accruing in specialcircumstances) having the right to vote in the election of directors, as a result of a tender orexchange offer, open market purchases, privately negotiated purchases or otherwise, or               (d) at any time during a period of two (2) consecutive years, individuals who, at thebeginning of such period, constituted the Board of Directors of the Company shall cease for anyreason to constitute at least a majority thereof, unless the election or the nomination forelection by the Company’s shareholders of each new director during such two-year period wasapproved by a vote of at least two-thirds of the directors then still in office who were directorsat the beginning of such two-year period, or               (e) any other event shall occur that would be required to be reported in response to Item 6(e)(or any successor provision) of Schedule 14A of Regulation 14A promulgated under the Exchange Act,whether or not such filing is required because the Company is not registered under the ExchangeAct.
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          5. Termination Without Cause. Notwithstanding anything to the contrary containedherein, it is agreed by the parties hereto that either the Bank or Executive may at any time electto terminate this Agreement and Executive’s employment by the Bank for any reason. Suchtermination shall be effective thirty (30) days following proper delivery of notice of terminationto the non-terminating party in accordance with the notice provisions set forth herein.          6. Constructive Discharge. The Bank shall be considered under this Agreement toterminate employment of Executive without “cause” as defined in this Agreement if Executiveterminates employment as a result of a constructive discharge or for a material breach of thisAgreement by Bank. For purposes of this Agreement, “constructive discharge” is the resignation ortermination of employment by Executive as a result of Bank either intentionally creating orknowingly permitting working conditions that are so intolerable or aggravated that a reasonableemployer would realize that a reasonable person in Executive’s position would be compelled toresign.          7. Expiration of Term Without Renewal. If the Bank is unwilling, for any reasonwhatsoever, to enter into a new employment agreement with Executive at the expiration of the fullTerm, or the Executive and Bank are unable to reach a mutually agreeable contract prior to theexpiration of the full Term, or Executive decides to retire or to take employment elsewhere at theexpiration of the full Term, then Executive’s employment with Bank shall terminate at the end ofthe full Term.          8. Effect of Termination.               (a) In the event Executive’s employment with Bank is terminated for any of the reasonsspecified in Paragraphs F.1, F.3, or F.5 (solely as a result of Executive’s election toterminate) of this Agreement, Executive shall be entitled to (i) the Base Salary and IncentiveBonus earned by Executive prior to the date of termination, computed pro rata up to and includingthat date, and (ii) accrued but unused vacation time, but Executive shall be entitled to no furthercompensation or benefits otherwise provided for or contemplated under this Agreement.               (b) In the event Executive’s employment with Bank is terminated by either Executive or Bankpursuant to Paragraph F.2 hereof, Executive shall be entitled to (i) the Base Salary and IncentiveBonus earned by Executive prior to the date of termination, computed pro rata up to and includingthat date, (ii) accrued but unused vacation time, plus (iii) the continuation of Insurance Coverageas provided in Paragraph D.3 hereof, as applicable.               (c) In the event Executive’s employment with Bank is terminated pursuant to Paragraph F.4hereof, Executive shall be entitled to the following benefits: (i) the Base Salary and IncentiveBonus earned by Executive prior to the date of termination, computed up to and including that date,(ii) accrued but unused vacation time, (iii) the continuation of Insurance Coverage as provided inParagraph D.3 hereof, as applicable, and (iv) an amount equal to three (3) years of Executive’sBase Salary in effect immediately prior to the date of termination which shall become due andpayable only upon the passage of six (6) months following the date of termination.               (d) In the event Executive’s employment with Bank is terminated pursuant to Paragraphs F.5(solely as a result of Bank’s election to terminate) or F.6 of this
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Agreement, Executive shall be entitled to (i) the Base Salary and Incentive Bonus earned byExecutive prior to the termination, computed pro rata up to and including that date, (ii) accruedbut unused vacation time, (iii) the continuation of the Insurance Coverage as provided in ParagraphD.3 hereof, as applicable, and (iv) an amount equal to six (6) months of Executive’s Base Salary ineffect immediately prior to the date of termination.               (e) Payment of the benefits required by this Paragraph 8 shall be made by the Bank in equalinstallments in accordance with the Bank’s normal payroll periods. The payment of such benefitsshall discharge Bank from any further liability to Executive under this Agreement, but shall notdischarge Bank from any liability pursuant to any indemnification obligation or tort cause ofaction.               (f) If the Term of this Agreement is not renewed under Paragraph F.7 for any reason,Executive shall be entitled to (i) accrued but unused vacation time, plus (ii) the continuation ofInsurance Coverage as provided in Paragraph D.3 hereof, as applicable.               (g) If any portion of the amounts payable to Executive under this Agreement, either alone, ortogether with other payments which the Executive has the right to receive from the Bank, constitute“excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code of1986, as amended (the “Code”), that are subject to the excise tax imposed by Section 4999 of theCode (or similar tax and/or assessment), the Bank and Executive shall cooperate with each other anduse all reasonable efforts to minimize to the fullest extent possible the amount of excise taximposed by Section 4999 of the Code (or similar tax and/or assessment). In the event that there isany amount of excise tax imposed by Section 4999 of the Code (or similar tax and/or assessment),the Executive shall bear the responsibility for its payment and the Bank shall bear theresponsibility of any loss of deductibility related thereto. If, at a later date, it is determined(pursuant to final regulations or published rulings of the Internal Revenue Service, final judgmentof a court of competent jurisdiction, or otherwise) that the amount of excise taxes payable by theExecutive is greater than the amount initially so determined, then Executive shall pay an amountequal to the sum of such additional excise taxes and any interest, fines and penalties resultingfrom such underpayment, and Bank shall bear the responsibility of any loss of deductibility and anyinterest, fines and penalties resulting therefrom. The determination of the amount of any suchexcise taxes shall be made by the independent accounting firm employed by the Bank immediatelyprior to the Change of Control.               (h) In the event Executive’s employment with Bank is terminated pursuant to Paragraph F ofthis Agreement, the provisions of Paragraph G hereof, except as otherwise provided in ParagraphG.2, shall survive said termination and shall inure to the benefit of and be binding upon theparties hereto and their respective executors, administrators, successors and assigns.               (i) In the event Executive’s employment with Bank is terminated in accordance with thisAgreement (whether by Executive or Bank) and at such time Executive is a member of the Board ofDirectors of Company, Bank or any subsidiary thereof, or holds any other office thereof, Executiveshall, and hereby agrees to, tender Executive’s resignation from the Board ofDirectors of the Company, Bank and all subsidiaries thereof and any committees thereof and allother offices of the Company, Bank and all subsidiaries thereof then held by Executive effective onthe date of termination. If such resignation is not received by the Bank within three (3) daysafter the date of
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termination, Executive hereby authorizes and directs the Board of Directors of all such entities toconsider the failure to so act as Executive’s resignation from all said positions effective as ofthe date of termination.     G. GENERAL PROVISIONS          1. Trade Secrets. During the Term, Executive will have access to and becomeacquainted with what Executive and Bank acknowledge are trade secrets; to wit, knowledge or dataconcerning the Bank, including its operations and methods of doing business, and the identity ofcustomers of the Bank, including knowledge of their financial condition and their financial needs.Executive shall not disclose any of the aforesaid trade secrets, directly or indirectly, or usethem in any way, either during the Term or for a period of 3 years after the termination of thisAgreement (or such longer period as may be required by law or regulation), except as required inthe course of Executive’s employment with the Bank. The unauthorized use or disclosure of any suchconfidential information and/or trade secrets shall constitute unfair competition.          2. Covenant Not to Interfere. The Executive hereby covenants and agrees thatExecutive will not now, nor for the period during which Executive receives any compensation fromBank, plus an additional period of 2 years, in violation of California law disrupt, damage, impairor interfere with the business of the Bank, whether by way of interfering with or raiding itsemployees, disrupting its relationships with customers and their agents, representatives orvendors, or otherwise.          3. Indemnification. To the extent permitted by law, applicable statutes and theBylaws or resolutions of the Bank in effect from time to time, the Bank shall indemnify Executiveagainst liability or loss arising out of Executive’s duties or out of any actual or assertedmisfeasance or nonfeasance in the performance of Executive’s duties or out of any actual orasserted wrongful act against, or by, the Bank, including but not limited to judgments, fines,settlements, and expenses incurred in the defense of actions, proceedings, and appeals therefrom.However, the Bank shall have no duty to indemnify Executive with respect to any claim, issue, ormatter as to which Executive has been adjudged to be liable to the Bank in the performance of hisduties, unless and only to the extent that the court in which such action was brought shalldetermine upon application that, in view of all of the circumstances of the case, Executive isfairly and reasonably entitled to indemnification for the expenses which such court shalldetermine. The Bank shall endeavor to apply for and obtain Directors and Officers LiabilityInsurance to indemnify and insure the Bank and Executive from and against the aforesaidliabilities. The provisions of this Paragraph G.3 shall apply to the estate, executor,administrator, heirs, legatees, or devisees of Executive.          4. Return of Documents. Executive expressly agrees that all manuals, documents,files, reports, studies, instruments, or other materials used and/or developed by Executive duringthe Term are solely the property of the Bank, and that Executive has no right, title, or interesttherein. Upon termination of this Agreement, Executive or Executive’s representative shallpromptly deliver possession of all of said property to the Bank in good condition.          5. Notices. All notices, demands, or other communications hereunder shall be inwriting and shall be delivered in person (professional courier acceptable); or by United Statesmail, certified or registered, postage prepaid, with return receipt requested; or by facsimiletransmission; or otherwise actually delivered, to the addresses for the parties
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appearing at the inception of this Agreement. The person or addresses to which mailings ordeliveries shall be made may change from time to time by notice given pursuant to the provisions ofthis Paragraph G.5. Any notice, demand, or other communication given pursuant to this Agreementshall be deemed to have been given on the date actually delivered, if delivered in person, three(3) days following the date mailed, if delivered by U.S. mail, or upon written confirmation oftransmission, if delivered by facsimile.          6. Review by Counsel. Executive represents and warrants to the Bank that he has hadthis Agreement reviewed by independent legal counsel of his choice, or if he has not, that he hashad the opportunity to do so, and hereby waives any claim, objection, or defense on the groundsthat this Agreement has not been reviewed by legal counsel of his choice.          7. California Law. This Agreement is to be governed by and construed in accordancewith the laws of the State of California.          8. Captions and Paragraph Headings. Captions and paragraph headings used herein arefor convenience only and are not a part of this Agreement and shall not be used in construing thisAgreement.          9. Invalid Provisions. Should any provision of this Agreement for any reason, bedeclared invalid, void, or unenforceable by a court of competent jurisdiction, the validity andbinding effect of any remaining portion shall not be affected, and the remaining portions of thisAgreement shall remain in full force and effect as if this Agreement had been executed with saidprovisions eliminated.          10. Entire Agreement. This Agreement and the other agreements, plans or documentsspecifically referred to herein contain the entire agreement of the parties. It supersedes any andall other agreements, either oral or in writing, between the parties here with respect to theemployment of Executive by the Bank. Each party to this Agreement acknowledges that norepresentation, inducements, promises, or agreements, oral or otherwise, have been made by anyparty, or anyone acting on behalf of any party, which are not embodied herein, and that no otheragreement, statement, or premise not contained in this Agreement shall be valid or binding. ThisAgreement may not be modified or amended by oral agreement but only by an agreement in writingsigned by both the Bank and Executive.          11. Arbitration. Any controversy or claim arising out of, or related to, thisAgreement shall be submitted to binding arbitration to J.A.M.S., Inc. (“JAMS”), of San Diego,California, in accordance with this Agreement and the rules and procedures of the CaliforniaArbitrations Act. Any party may request arbitration of a dispute by means of written demand on allother parties. If JAMS is no longer in existence, and if the parties cannot agree on a singlearbitrator, then one shall be appointed by the California Superior Court having jurisdiction overthis Agreement and the parties, upon application by any party. The only arbitrator permitted toserve under this Section 11 shall be a former superior court judge of a California Superior Court.A final judgment confirming the award rendered by the arbitrator may be entered in any court havingjurisdiction, and shall be binding, final and non-appealable. Each party to the arbitration shallshare equally the arbitrator’s initial fees in connection with any such arbitration proceeding;however, the arbitrator shall award to the prevailing party reimbursement of attorney fees, costs,and expenses incurred in connection with the arbitration. The arbitrator shall have the power toaward any and all remedies and relief whatsoever that is deemed appropriate under thecircumstances, including, but not
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limited to, money damages and injunctive relief. This arbitration provision shall be deemed to beself-executing and shall remain in full force and effect after the expiration or termination ofthis Agreement. In the event any party fails to appear at any arbitration proceeding, an award maybe entered against such party by default or otherwise notwithstanding said failure to appear. Thearbitrator shall award attorney fees and costs to the prevailing party.          12. Attorneys’ Fees: If any party to this Agreement shall bring any action for arbitration orany action for any relief against any other party, declaratory or otherwise, arising out of thisAgreement, the losing party shall pay to the prevailing party all costs plus a reasonable sum forattorney fees incurred in bringing such suit, enforcing any judgment granted therein, or both, allof which shall be deemed to have accrued upon the commencement of such action and shall be paidwhether or not such action is prosecuted to judgment. Any judgment or order entered in such actionshall contain a specific provision providing for the recovery of attorney fees and costs incurredin enforcing such judgment. For purposes of this Agreement, attorney fees shall include, withoutlimitation, fees incurred in the following: (i) post-judgment motions; (ii) contempt proceedings;(iii) garnishment, levy, and debtor and third-party examinations; (vi) discovery; (v) bankruptcylitigation; and (vi) appeals.          13. Receipt of Agreement. Each of the parties hereto acknowledge that he has readthis Agreement in its entirety and does hereby acknowledge receipt of a fully executed copythereof. A fully executed copy shall be an original for all purposes, and a duplicate original.          **IN WITNESS WHEREOF**, the parties hereto have executed this Agreement as of the day and yearfirst above written.         **SOUTHWEST COMMUNITY BANK**           By: /s/ Howard B. Levenson     Its: Chairman           **EXECUTIVE**           /s/ Frank J. Mercardante         FRANK J. MERCARDANTE  
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EXHIBIT “A”**SENIOR EXECUTIVE OFFICER BONUS PLAN**Executive will receive a Bonus for 2005 based upon the percentage of improvement in earnings, asadjusted for nonrecurring events and Bonus accrual, in excess of 16% over 2004 net earnings.Executive shall receive 50% of a Bonus Pool which will be determined based upon a minimum of 30% ofthe combined annual salaries of all executive officers included in the Executive Bonus Plan asdetermined by the Board of Directors. Bonus Payment in subsequent years will be negotiated betweenBank and Executive prior to the beginning of the new calendar year. For 2005, the followingschedule:                       **Projected Earnings**             **Earnings Increase** **(Net of Bonus**  **% Of Combined Base**  **Executive Officer**  **Bonus Pool as a %**  **Executive Bonus @** **over 2004** **Accrual)**  **Salaries**  **Bonus Pool**  **of Net**  **50.00%** **116%** **$****5,504,200**   **30.00****%** **$****238,250**   **4.33****%** **$****119,125** **118%**  **5,599,100**   **32.00****%**  **254,133**   **4.54****%**  **127,067** **120%**  **5,694,000**   **34.00****%**  **270,017**   **4.74****%**  **135,008** **122%**  **5,788,900**   **36.00****%**  **285,900**   **4.94****%**  **142,950** **124%**  **5,883,800**   **38.00****%**  **301,783**   **5.13****%**  **150,892** **126%**  **5,978,700**   **40.00****%**  **317,667**   **5.31****%**  **158,833** **128%**  **6,073,600**   **42.00****%**  **333,550**   **5.49****%**  **166,775** **130%**  **6,168,500**   **44.00****%**  **349,433**   **5.66****%**  **174,717** **132%**  **6,263,400**   **46.25****%**  **367,302**   **5.86****%**  **183,651** **134%**  **6,358,300**   **48.50****%**  **385,171**   **6.06****%**  **192,585** **136%**  **6,453,200**   **50.75****%**  **403,040**   **6.25****%**  **201,520** **138%**  **6,548,100**   **53.00****%**  **420,908**   **6.43****%**  **210,454** **140%**  **6,643,000**   **56.00****%**  **444,733**   **6.69****%**  **222,367** **142%**  **6,737,900**   **59.25****%**  **470,544**   **6.98****%**  **235,272** **144%**  **6,832,800**   **62.50****%**  **496,354**   **7.26****%**  **248,177** **146%**  **6,927,700**   **65.75****%**  **522,165**   **7.54****%**  **261,082** **148%**  **7,022,600**   **69.00****%**  **547,975**   **7.80****%**  **273,988** **150%**  **7,117,500**   **72.50****%**  **575,771**   **8.09****%**  **287,885** **152%**  **7,212,400**   **76.00****%**  **603,567**   **8.37****%**  **301,783** **154%**  **7,307,300**   **79.50****%**  **631,363**   **8.64****%**  **315,681** **156%**  **7,402,200**   **83.00****%**  **659,158**   **8.90****%**  **329,579** **158%**  **7,497,100**   **86.50****%**  **686,954**   **9.16****%**  **343,477** **160%**  **7,592,000**   **90.50****%**  **718,721**   **9.47****%**  **359,360** **162%**  **7,686,900**   **94.50****%**  **750,488**   **9.76****%**  **375,244** **164%**  **7,781,800**   **98.50****%**  **782,254**   **10.05****%**  **391,127** **166%**  **7,876,700**   **102.50****%**  **814,021**   **10.33****%**  **407,010** **168%**  **7,971,600**   **106.50****%**  **845,788**   **10.61****%**  **422,894** **170%**  **8,066,500**   **111.50****%**  **885,496**   **10.98****%**  **442,748** **172%**  **8,161,400**   **116.50****%**  **925,204**   **11.34****%**  **462,602** **174%**  **8,256,300**   **121.50****%**  **964,913**   **11.69****%**  **482,456** **176%**  **8,351,200**   **126.50****%**  **1,004,621**   **12.03****%**  **502,310** **178%**  **8,446,100**   **131.50****%**  **1,044,329**   **12.36****%**  **522,165** **180%**  **8,541,000**   **136.50****%**  **1,084,038**   **12.69****%**  **542,019** **182%**  **8,635,900**   **141.50****%**  **1,123,746**   **13.01****%**  **561,873** **184%**  **8,730,800**   **146.50****%**  **1,163,454**   **13.33****%**  **581,727** 
 

 
EXHIBIT “A”                       **Projected Earnings**             **Earnings Increase** **(Net of Bonus**  **% Of Combined Base**  **Executive Officer**  **Bonus Pool as a %**  **Executive Bonus @** **over 2004** **Accrual)**  **Salaries**  **Bonus Pool**  **of Net**  **50.00%** **186%**  **8,825,700**   **151.50****%**  **1,203,163**   **13.63****%**  **601,581** **188%**  **8,920,600**   **156.50****%**  **1,242,871**   **13.93****%**  **621,435** **190%**  **9,015,500**   **161.50****%**  **1,282,579**   **14.23****%**  **641,290** 
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EXHIBIT “B”**STOCK OPTIONS****As of September 1, 2005**                    Date *Option  *Option  *Price     of Grant Shares Granted  Shares Unexercised  Per Share 3/18/1998  79,734.38   55,125.00   3.7249 1/17/2001  7,875.00   7,875.00   6.6032 8/15/2001  53,998.88   53,998.88   7.2381 6/19/2002  31,500.00   31,500.00   8.2540 11/19/2003  15,750.00   15,750.00   18.4127 10/23/2004  13,125.00   13,125.00   27.8571 8/17/2005  20,000.00   20,000.00   33.2500             **Totals**  **221,983.26**   **197,373.88**                 * as adjusted for stock splits and stock dividends