Exhibit 10.3


 



FORM
OF STOCKHOLDERS AGREEMENT BETWEEN FIVE STAR BANCORP AND

 NAMED EXECUTIVE OFFICERS


This
Stockholders Agreement (“Agreement”) is dated as of [_____], by and among Five Star Bancorp, a California corporation (the
“Company”) and [_____] (the “Stockholder”).


W
I T N E S S E T H:


WHEREAS,
the Company and Stockholder wish to set forth their mutual understandings with regard to the ownership of the Stock;


WHEREAS,
it is advantageous to the Company and to the Stockholder for the Company to be taxed as an S corporation under Section 1361(a)
of the Internal Revenue Code of 1986, as amended (the “Code”);


WHEREAS,
the Company can only elect to be an S corporation and taxed as such if it is a small business corporation, as defined in Section
1361(b) of the Code;


WHEREAS,
the Company’s election to be an S corporation and taxed as such is terminated whenever the Company ceases to be a small business
corporation, as defined in Section 1361(b) of the Code; and


WHEREAS,
the parties hereto have reached certain understandings and agreements with respect to (l) operating the Company as a bank holding
company, (2) qualifying the Company as a small business corporation as defined in Section 1361(b) of the Code, and (3) preventing
any action that would cause the Company to cease to be a small business corporation, as defined in Section 1361 (b) of the Code;


NOW,
THEREFORE, in consideration of the foregoing and the mutual promises and undertakings of each of the parties hereto unto the others,
and other good and valuable consideration, the legal sufficiency of which is hereby acknowledged, the parties hereto, intending
to be legally bound by the terms of this Agreement, hereby agree as follows:


ARTICLE
I


CONSENT
TO SUBCHAPTER S ELECTION


Stockholder
hereby consents to the Company’s election to be treated as an S corporation under Section 1361(a) of the Code as such Section
may be amended from time to time and any successor section or sections thereto. If such Stockholder or its successor or assign
is a trust or holds shares of Stock as a trustee of a trust that is a permitted stockholder, as provided in Section 1361 of the
Code or any successor section thereto, Stockholder agrees to have each such beneficiary of such trust, as may be required by law,
execute simultaneously herewith a consent to such election and provide an originally executed copy of such consent to the Company.




    	 



    	 



    



ARTICLE
II


RESTRICTIONS
ON TRANSFER


Section
2.1 Transfer of Shares. Stockholder hereby covenants and agrees that such Stockholder will not sell, offer, transfer, assign,
hypothecate, pledge, give or otherwise dispose of any shares of Stock held by such Stockholder, or any interest therein, whether
legal, equitable or beneficial, whether voluntarily or by operation of the law, except as provided in this Section 2.1 and Sections
2.2 and 2.3 hereof. Stockholder may offer, sell, transfer, assign, hypothecate, pledge, give or otherwise dispose Stockholder’s
shares of Stock to (1) the Company, as permitted by law, (2) a trust defined by Section 1361(d) of the Code (a “Qualified
Subchapter S Trust” or “QSST”) that is for the benefit of the Stockholder who is a party to this Agreement, (3)
a trust that is treated under Sections 671 and 679 of the Code as owned by an individual (a “Grantor Trust”) and is
for the benefit of the Stockholder who is a party to this Agreement, (4) a trust defined by Section 1361(e)(1) of the Code (an
“Electing Small Business Trust”) that is for the benefit of the Stockholder who is a party to this Agreement, or (5)
such other permitted Stockholder, as provided in Section 1361 of the Code or any successor section or sections thereto. A trust
that is a QSST shall be a QSST for the benefit of the Stockholder who is a party to this Agreement. A trust that is a Grantor
Trust shall be a Grantor Trust for the benefit of the Stockholder who is a party to this Agreement where the initial income or
annuity beneficiary of such trust is the Stockholder who is a party to this Agreement. A trust that is an Electing Small Business
Trust shall be an Electing Small Business Trust for the benefit of the Stockholder who is a party to this Agreement where all
potential current beneficiaries are qualified S corporation stockholders.


Section
2.2 Transfer Conditions. Each Stockholder hereby covenants and agrees that such Stockholder will not sell, transfer, assign,
hypothecate, pledge, gift or otherwise dispose of any shares of Stock or any interest in such shares of Stock, whether legal,
equitable, or beneficial, whether voluntarily or by operation of law, unless all of the following conditions are met:


		a)	The
                                         sale, transfer, assignment, hypothecation, pledge, gift or other disposition will not
                                         adversely affect the treatment of the Company as an S corporation under the provisions
                                         of Subchapter S of the Code or any successor section or sections thereto; 



		b)	The
                                         sale, transfer, assignment, hypothecation, pledge, gift or other disposition will not
                                         cause an increase in the number of persons holding or deemed to be holding Stock for
                                         purposes of Section 1361(b)(1)(A) of the Code, except as permitted under Section 2.2(c)
                                         hereof unless, in the alternative, other stockholders who own more than seventy percent
                                         (70%) of the outstanding shares of Stock of the Company (calculated in the manner specified
                                         in Section 6.1 hereof) consent in writing to such sale, transfer, assignment, hypothecation,
                                         pledge, gift or other disposition; 



		c)	If
                                         the proposed transferee is not an existing stockholder, the sale, transfer, assignment,
                                         hypothecation, pledge, gift or other disposition to such transferee shall be for no less
                                         than 10,000 shares of the transferor’s Stock unless it is a sale, transfer, assignment,
                                         hypothecation, pledge, gift or other disposition of all of the shares of Stock owned
                                         by that stockholder; 



		d)	The
                                         proposed transferee of such shares of Stock has joined in and agreed to be bound by the
                                         terms of this Agreement whereupon all references in this Agreement to Stockholder shall
                                         be deemed to include said transferee; 




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		e)	If
                                         the proposed transferee of such shares of Stock is an existing stockholder, and such
                                         stockholder shall own greater than nine and nine tenths percent (9.9%) of the outstanding
                                         Stock such transferee shall furnish to the Company evidence that such stockholder has
                                         received all regulatory approvals inclusive of but not limited to the California Department
                                         of Financial Institutions (“CDFI”) and the Federal Reserve Bank of San Francisco
                                         (“FRB”) to own greater that ten percent (10%) of the Stock; 



		f)	If
                                         the proposed transferee of such shares of Stock is a trust that is a QSST as defined
                                         in Section 1361(d) of the Code, the beneficiary of such trust has timely filed the election
                                         to treat such trust as a trust described in Section 1361(c)(2)(A)(i) of the Code; 



		g)	If
                                         the proposed transferee of such shares of Stock is a trust that is an Electing Small
                                         Business Trust as defined in Section 1361(e) of the Code, the trustee of such trust has
                                         timely filed the election under Section 1361(e)(3) of the Code; and 



		h)	The
                                         Company is furnished, at the expense of the transferee stockholder, an opinion of counsel
                                         experienced in federal income tax matters selected by the Company to the effect that
                                         such disposition will not adversely affect the status of the Company as an S corporation
                                         under Subchapter S of the Code or any successor section or sections thereto. 



Section
2.3 Right of First Refusal. Notwithstanding anything herein to the contrary, if Stockholder, during his or her lifetime,
shall desire for any reason to sell, transfer, assign or otherwise dispose of any shares of Stock to a bona fide purchaser (including
without limitation any other Stockholder), that Stockholder shall deliver to the Company a written notice of intention (the “Notice
of Intention”) to accept the offer of the bona fide purchaser, together with an exact copy of the offer of the bona fide
purchaser, which shall specify the price and other terms and conditions of the proposed sale, transfer or other disposition, and
the name and address of the proposed purchaser. The Company shall have up to ninety (90) days after the Company receives the Notice
of Intention to either (i) purchase all of the shares of Stock of the Stockholder at the price and terms specified in the Notice
of Intention or (ii) designate a person or group of persons to purchase all of the shares of Stock of the Stockholder at the price
and terms specified in the Notice of Intention, provided that both the designation (if applicable) and the purchase must be completed
within ninety (90) days after the Company receives the Notice of Intention. If either the Company or its designee(s) do not purchase
all of the shares specified in the Notice of Intention, those shares may, for a period of thirty (30) days from the expiration
of the Company’s Right of First Refusal, be transferred only (i) to the person, (ii) at the price, and (iii) on the same terms
and conditions specified in said Notice of Intention and only after the proposed transferee has agreed to hold the shares subject
to the transfer conditions set forth in Section 2.2, above. No transfer of shares may be made after the end of the thirty (30)
day period, nor shall any change in the identity of the proposed transferee, or in the price, or in the terms and conditions of
transfer, be permitted without a new Notice of Intention and compliance with the requirements of this Section 2.3.


Section
2.4 Other Actions. Stockholder hereby covenants and agrees that such Stockholder will not take any action that causes a
termination of the election by the Company to be an S corporation under Subchapter S of the Code or any successor section or sections
thereto except for the execution of an amendment to this Agreement pursuant to Section 6.1, which is supported by at least seventy
percent (70%) of the outstanding shares of Stock.




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Section
2.5 Legending of Stock Certificates. Stockholder does hereby consent to the placement on the certificates representing
ownership of shares of Stock held by such Stockholder of the following restrictive legend:


“The
shares of stock represented by this certificate are subject to a Stockholders Agreement,, dated as of December 18, 2009, a copy
of which is available for examination at the principal offices of Five Star Bancorp, and may not be offered, sold transferred,
hypothecated, pledged, given or otherwise disposed of except in strict and full accordance with the terms of such Agreement.


Five
Star Bancorp will not effectuate transfers of Stock except in accordance with the provisions of such Agreement. Copies of the
aforesaid Stockholders Agreement may be obtained from Five Star Bancorp.”


ARTICLE
III


BUYBACK
PROVISIONS


Section
3.1 Buyback Provisions in the Event of Termination of Employment with or without Cause, Resignation, Hardship, Death or
Disability. In the event Stockholder’s employment with the Company is terminated with or without cause, Stockholder
resigns from Company’s employment, Stockholder incurs financial hardship, Stockholder dies or is disabled, the Company
or an individual or entity designated by the Company shall within a ninety day period from the date of such termination,
death or disability, or within ninety days of written notice from Stockholder of a financial hardship, purchase all of the
shares owned by the Stockholder at a price equal to the purchase price for all of the shares paid by the Stockholder for the
stock, adjusted for stock splits and stock dividends. This paragraph will terminate and no longer be applicable upon the
tenth year after the execution of this Agreement or in the event of a Change in Control involving the Company. A Change in
Control shall mean the merger, sale or combination of the Company where Company stockholders do not own in excess of fifty
percent of the shares of the resulting entity after the consummation.


ARTICLE
IV


REPRESENTATIONS
AND WARRANTS


Section
4.1 General Representations and Warranties. Stockholder represents and warrants to the Company as follows:


		a)	Such
                                         Stockholder has full right, power and authority to enter into this Agreement and the
                                         entry into this Agreement will not violate any contracts or agreements by which such
                                         Stockholder is bound nor constitute a default under any loan or other agreement nor violate
                                         any applicable law; 



		b)	Such
                                         Stockholder has no actual knowledge of any governmental or nongovernmental actions, suits
                                         or proceedings (or claims of which such Stockholder has been notified) which are pending
                                         or threatened against or materially affecting such Stockholder, which would prevent or
                                         hinder the execution of this Agreement or the consummation of the transactions contemplated
                                         hereby; 




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		c)	This
                                         Agreement, when executed and delivered, will constitute a valid and binding obligation
                                         of such Stockholder, fully enforceable against such Stockholder in accordance with its
                                         terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization,
                                         or other laws of general application relating to or affecting enforcement of creditors’
                                         rights, or except to the extent that such enforcement may be limited by general principles
                                         of equity; 



		d)	None
                                         of the Stock that such Stockholder holds is subject to any contract of sale or auction;
                                         



		e)	No
                                         person, other than persons who are parties to this Agreement, has a community property,
                                         spousal property or other interest in the shares of Stock registered in such Stockholder’s
                                         name; 



		f)	Such
                                         Stockholder holds the shares of Stock registered either (i) in such Stockholder’s individual
                                         capacity for such Stockholder’s own benefit, (ii) in such Stockholder’s capacity as a
                                         trustee of a trust that is a permitted stockholder as provided in Section 1361 (c)(2)
                                         of the Code or any successor section thereto, or (iii) in such Stockholder’s capacity
                                         as the executor of an estate; 



		g)	If
                                         such Stockholder holds shares of Stock in his or her capacity as a trustee of a trust
                                         that is a permitted stockholder as provided in Section 1361(c)(2) of the Code, such Stockholder
                                         has heretofore furnished to the Company a true, complete, and correct copy of the trust
                                         instrument under which such Stockholder holds the shares of Stock held by him or her
                                         in trust, and if the trust is a QSST as described in Section 1361(d) of the Code, a true,
                                         complete and correct copy of the election by the beneficiary of such trust to treat such
                                         trust as a trust described in Section 1361(c)(2)(A)(i) of the Code, or if the trust is
                                         an Electing Small Business Trust as described in Section 1361(e) of the Code, a true,
                                         complete and correct copy of the election by the trustee of such trust under Section
                                         1361(e)(3) of the Code; and 



		h)	Such
                                         Stockholder is a citizen or resident of the United States or otherwise qualifies as a
                                         United States person as defined in Section 7701(a)(3) of the Code. 



Section
4.2 Representations of the Company. The Company hereby represents and warrants that it is a corporation in good standing
under the laws of the State of California, that it has all necessary corporate authorization to enter into and carry out the terms
of this Agreement and that, upon execution of this Agreement by the proper officers of the Company, this Agreement will constitute
a valid and binding obligation of the Company enforceable against the Company in accordance with its terms.


ARTICLE
V


COVENANTS
OF THE COMPANY


Section
5.1 Subchapter S Election. The Company covenants to elect to be taxed as an S corporation under the provisions of Subchapter
S of the Code, and any successor section or sections thereto, such election to take effect as soon as permitted under the Code
after the date of this Agreement.


Section
5.2 Stock Transfers. The Company covenants not to effectuate transfers of Stock except in accordance with the provisions
of this Agreement.



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Section
5.3 Distributions. Subject to the approval of the FRB and/or the CDFI if necessary, the Company covenants to make annual
cash distributions such that each Stockholder receives from the Company, either directly or indirectly, a percentage of his or
her annual pro rata share of taxable income of the Company that is not less than the percentage that is the maximum federal tax
rate for individuals under Section I of the Code, or any successor section or sections thereto (without regard to the effect of
Section 1(g) of the Code or any successor section or sections thereto); unless the Board of Directors of the Company makes an
affirmative determination that such distributions are prohibited by statute, regulation, regulatory enforcement action or will
materially jeopardize the continuing viability of the Company.


ARTICLE
VI


CONSTRUCTION
OF AGREEMENT


This
Agreement shall be liberally construed to give effect to the intent of the parties that Stockholder shall not have the right,
power, or authority to act or refrain from acting in any manner that would jeopardize the Company’s election to be taxed as an
S corporation under Subchapter S of the Code or any successor section or sections thereto, except upon the written consent of
stockholders who own more than seventy percent of the outstanding shares of Stock, to the revocation of the Company’s election
to be taxed as an S corporation. In furtherance of this intent, this Agreement is to be liberally construed to preclude any act
or actions which would jeopardize such election whether or not specifically contemplated hereby. In furtherance of this intent,
any attempted transfer of any shares of Stock by Stockholder shall be null and void unless such transfers are in compliance with
this Agreement. Any attempted transfers not in compliance with this Agreement by operation of law or otherwise will be
ineffective and the Company will be entitled to treat the transferor as the continuing Stockholder, notwithstanding such purported
transfer, and all rights relating to such shares of Stock shall remain rights of the purported transferor, all distributions of
dividends and liquidating distributions in respect of such shares of Stock shall continue to be made to the purported transferor,
and all voting and other rights with respect to such Stock shall be exercisable only by the purported transferor. In the event
that it is impossible to treat the transferor as the continuing Stockholder, and the transferor has attempted to make a transfer
of shares of Stock not in compliance with this Agreement, then the transferor hereby agrees that, on the day immediately prior
to the effective date of such attempted transfer, he or she shall be deemed to have offered to sell to the Company or to the Company’s
designee all of his or her shares of Stock at the price equal to the book value of the Stock. The Company or the Company’s designee
shall have a ninety day period to accept such offer and to purchase such shares of Stock. The Company, in its sole discretion,
shall have the right to determine its designee(s) for the acquisition of such shares of Stock. Furthermore, any act or actions
by Stockholder that jeopardize the Company’s election to be taxed as an S corporation shall be treated as an attempted transfer
of shares of Stock not in compliance with this Agreement (e.g. changes in Stockholder’s citizenship or residency, as the case
may be), and all of the shares of Stock of that Stockholder shall be offered to the Company or the Company’s designee(s) at the
price equal to the book value of the Stock. The Company or the Company’s designee(s) shall have a ninety day period to accept
such offer and to purchase such shares of Stock. The Company, in its sole discretion, shall have the right to determine its designee(s)
for the acquisition of such shares of Stock.



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ARTICLE
VII


MISCELLANEOUS


Section
7.1 Amendments. This Agreement may be amended only by an instrument in writing duly executed by stockholders who, at the
time of such amendment, own, in the aggregate, at least seventy percent (70%) of the Stock issued and outstanding at such time.
For the purposes of this Section 7.1, if any party hereto holds any options, warrants, restricted stock, or other rights of any
party hereto to acquire any number of shares of Stock from the Company, such options, warrants, restricted stock or other rights
shall be deemed to be such number of shares of issued and outstanding Stock. In the event that this Agreement is amended in the
manner described herein, Stockholder, whether or not such Stockholder has consented to such amendment, shall be bound thereby,
provided that no amendment shall be binding upon any Stockholder without his or her consent to the extent that such amendment
would adversely affect such Stockholder’s rights or obligations as a Stockholder of the Company relative to the rights and obligation
of the other stockholders.


Section
7.2 Termination. This Agreement shall terminate on the earlier of the election to terminate S corporation status or the
twentieth anniversary of the date hereof, unless renewed or extended with the consent of at least seventy percent (70%) of the
Stock issued and outstanding at such time.


Section
7.3 Notices. Any notices, letters or other communications contemplated by this Agreement shall be in writing and shall
be deemed to be given when delivered in person or when sent by an overnight delivery service maintaining records of receipt, to
such person at the office of the company where such person maintains his or her office, or, at such other address as the Company
or Stockholder shall have furnished in writing to the other.


Section
7.4 Governing Law. This Agreement shall be governed under the laws of the State of California, excluding the conflict of
laws or provisions thereof.


Section
7.5 Enforcement. Each of the parties hereto agrees that monetary damages in the event of breach of this Agreement would
be inadequate and that, in the event of a breach, the remedy shall be specific performance. Each of the parties hereto hereby
warrants, covenants and agrees not to object, challenge, dispute or contest the propriety of specific performance as a remedy
in the event a court of competent jurisdiction determines that a breach of this Agreement has occurred.


Section
7.6 Miscellaneous. This Agreement represents the entire agreement and understanding of the parties hereto regarding the
subject matter hereof. This Agreement and any amendments hereto may be executed in one or more counterparts, each of which shall
be an original, but all of which together shall constitute one instrument. The headings of this Agreement are inserted for convenience
only and shall not constitute a part hereof. As used herein, except as the context otherwise indicates, the singular shall include
the plural and vice versa, words of any gender shall include any other gender, and “or” is used in the inclusive sense.
If any provision of this Agreement, or the application thereof, shall, for any reason and to any extent, be found invalid or unenforceable,
the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected
thereby but rather shall be enforced to the maximum extent, permissible under applicable law, so long as and to the extent that
such enforceability does not materially adversely affect the mutual rights and obligations of the parties hereunder.


IN WITNESS
WHEREOF, the parties hereto have set their hands as of the day and year first above written.


 





	FIVE STAR BANCORP	 	STOCKHOLDERS
	 	 	 
	 	 	[_____]
















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