**Exhibit 10.104**

 

**FIRST AMENDED AND RESTATED**

**SANTA LUCIA BANK**

**DIRECTOR RETIREMENT AGREEMENT**

** **

ThisFirst Amended and Restated Santa Lucia Bank Director Retirement Agreement(hereinafter “Agreement”) is made and entered into, and is effective as of January 1,2008, by and between **Santa Lucia Bank**,a bank organized and existing under the laws of the state of California(hereinafter the “Bank”) and **Douglas C. Filipponi,**a Director of the Bank (hereinafter “Director” or “Participant”);

 

WHEREAS it is the parties’ intent to comply with the final regulationsunder Internal Revenue Code Section 409A, issued on April 10, 2007 bythe Internal Revenue Service (IRS) and the Treasury Department;

 

WHEREFORE, the Bank and Director hereby agree to amend and restate theSanta Lucia Bank Director Retirement Agreement, effective as of February 1,1997 (hereinafter Original Agreement), and thereafter amended by virtue of the January 10,2001 Amendment thereto, in its entirety, and agree that this First Amended andRestated Santa Lucia National Bank Director Retirement Agreement shall amend,supersede and replace the, Original Agreement in its entirety (including anyamendment thereto);

 

WHEREFORE, the parties hereby agree to the following;

 

# **RECITALS**

# ** **

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

 

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

 

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

 

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

 

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

 

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**AGREEMENT**

 

**1.0          Terms and Definitions.**

 

**1.1          AccruedLiability Balance**. For the purposes of thisAgreement, the term “Accrued Liability Balance” means the liability that shouldbe accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”),for the Bank’s obligation to the Director under this Agreement, by applyingAccounting Principles Board Opinion Number 12 (“APB 12”) as amended byStatement of Financial Accounting Standards Number 106 (“FAS 106”) and theDiscount Rate. Any one of a variety of amortization methods may be used todetermine the Accrual Balance; however, once chosen, the method must beconsistently applied.

 

**1.2          Administrator.**The Bank shall be the “Administrator” and, solely forthe purposes of ERISA as discussed herein, the “fiduciary” of this Agreementwhere a fiduciary is required by ERISA.

 

**1.3          Bank.  **For the purpose of this Agreement, the term “Bank” or “Employer” shallbe read so as to include the Santa Lucia Bank holding company, Santa LuciaBancorp, when permissible.

 

**1.4          Boardof Directors.** The Board of Directors shall mean the Board ofDirectors for the Bank, hereinafter, the “Board”.

 

**1.5          Change in Control.** For the purpose of this Plan, a “Changein Control” shall be deemed to have occurred upon any of the followingevents,  as such terms and events aredefined in Internal Revenue Code Section 409A and the related guidance andNotices thereto. IRC 409A currently provides that a Change in Control Eventshall include any of the following events (and for the purposes of thisprovision, the term “corporation” shall mean the Bank or the Bank’s holdingcompany):

 

A.                                   A Change in theOwnership of a Corporation. A change in the ownership ofa corporation occurs on the date that any one person or persons acting as agroup (as defined in IRC 409A), acquires ownership of stock of the corporationthat, together with stock held by such person or group, constitutes more thanfifty percent (50%) of the total fair market value or total voting power of thestock of such corporation.

 

B.                                     Changein the Effective Control of a Corporation. A change in theeffective control of the corporation shall be deemed to occur on either of thefollowing dates:

 

(i) The date anyone person, or persons acting as a group acquires (or has acquired during the12 month period ending on the date of the most recent acquisition by suchperson or group) ownership of stock of the corporation

 

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possessing thirtypercent (30%) or more of the total voting power of the stock of suchcorporation; or

 

(ii) The date amajority of members of the corporation’s board of directors  is replaced during any twelve (12) monthperiod by directors whose appointment or election is not endorsed by a majorityof the members of the corporation’s board of directors before the date of theappointment or election. (In this sub-paragraph, 409A limits “corporation” tothe “relevant” corporation” as defined therein).

 

C.                                     Change in the Ownership of a SubstantialPortion of a Corporation’s Assets. A change in the ownership of a substantialportion of a corporation’s assets shall be deemed to occur on the date that anyone person or group acquires (or has acquired during the twelve (12) monthperiod ending on the date of the most recent acquisition by such person orpersons) assets from the corporation that have a total gross fair market valueequal to or more than forty percent (40%) of the total gross fair market valueof all of the assets of the corporation immediately before such acquisition oracquisitions. No Change in Control shall result if the assets are transferredto certain entities controlled directly or indirectly by the shareholders ofthe transferring corporation.

 

For the purposes of thisdefinition, the term “corporation” shall be read as including the Bank or thebank’s holding company, Santa Lucia Bancorp. In addition to the forgoing, andin accordance with IRC 409A, in order to constitute a Change in Control eventwith respect to a participant, the Change in Control must relate to (i) thecorporation for whom participant is performing services at the time of theChange in Control; (ii) the corporation that is liable for the payment ofthe deferred compensation (or all corporations liable for the payment if morethan one corporation is liable) but only if either the deferred compensation isattributable to the performance of service by the Participant for such corporation(or corporations) or there is a bona fide business purpose for such corporationor corporations to be liable for such payment and, in either case, nosignificant purpose of making such corporation or corporations liable for suchpayment is the avoidance of Federal income tax; or  (iii) a corporation that is a majorityshareholder of a corporation identified above, or any corporation in a chain ofcorporations in which each corporation is a majority shareholder of anothercorporation in the chain, ending in a corporation identified above. Shouldthere be any question of whether a Change in Control has occurred such as totrigger payment of a benefit described herein, any ambiguity shall be resolvedin accordance with the final regulations and any subsequent clarification ofIRC 409A.

 

**1.6          The Code. **The “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

**1.7          Deferral Account and DeferralAmounts.** The term “Deferral Amounts” refers to those amounts Director previouslydeferred under the Original Agreement, and which the Bank maintained asseparate account balance in the Director’s Deferral Account. The deferralelement of this plan was eliminated by Amendment in July of 2003, howeverthe Deferral

 

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Account wasmaintained, accounted for and credited with interest pursuant to the terms ofthe Original Agreement.  In addition, theDeferral Account served as a bookkeeping entry only and was utilized solely asa device for the measurement and determination of the amounts to be paid to, orin respect of, a Participant pursuant to the Original Agreement.

 

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

 

A                                      TheDirector is unable to engage in any substantial gainful activity by reason ofany medically determinable physical or mental impairment that can be expectedto result in death or can be expected to last for a continuous period of notless than twelve (12) months; or

 

B.                                     The Director is, byreason of any medically determinable physical or mental impairment that can beexpected to result in death or can be expected to last for a continuous periodof not less than twelve (12) months, receiving income replacement benefits fora period of not less than three (3) months under an accident and healthplan covering employees of the Employee’s Bank.

 

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

 

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

 

**1.11**        **Early Voluntary Termination.** Theterm “Early Voluntary Termination” means that the Director, prior to attainingthe Early Retirement Age, has voluntarily Separated from Service with theCompany.

 

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

 

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

 

**1.14        Director Benefit. **The term “DirectorBenefit” shall mean the benefit amounts determined pursuant to Paragraphs 1through 6 herein (including sub-paragraphs, as applicable), forfeited, reducedor adjusted to the extent:  (a) requiredunder the other provisions of this Agreement; (b) required by reason ofthe lawful order of any regulatory agency or body having jurisdiction over theBank; or (c) required in order for the Bank to comply with any and all

 

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

 

**1.15**        **IRC 409A.**The term “IRC 409A” shall refer to the final regulations issued by the IRS andthe Treasury Department under Section 409A of the Code.

 

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

 

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

 

**1.18        Removedfor Cause.**The term “Removed (removal) for Cause”shall mean termination of Director’s Service by reason of any of the following:any act of embezzlement, fraud, breach of fiduciary duty, dishonesty,deliberate or reported disregard of the policies and rules of the Companyas adopted by the Board of Directors of the Company, unauthorized use or disclosureof any trade secrets or confidential information of the Company, competitionwith the Company, inducement of any customer of the Company to breach acontract with the Company, inducement of any principal for whom the Companyacts as an agent to terminate such agency relationship, gross negligenceadversely impacting  the Company, willfulbreach of this Agreement, or any other willful misconduct.

 

**1.19        Service/Separation From Service.**  As it applies to Director, the term “Service”shall refer to the services Director provides and performs while serving on theBoard of Directors.  In addition, theterm “Separation from Service” shall be read and interpreted consistent withIRC  409A and any future notices orguidance related thereto. As the term applies herein to individuals who areserving on the Board of Directors, but who are not also acting as employees ofthe Bank, the term “Separation from Service” shall mean the expiration of allcontracts or terms of service under which the Director is performing servicesas a member of the Board of Directors, and where expiration constitutes a goodfaith and complete termination of the service relationship.

 

In addition to the foregoing, and consistent with IRC 409A, ifParticipant provides services both as an employee and a member of the Board ofDirectors (or an analogous position with respect to a non-corporate servicerecipient), the services provided as a director are not taken into account indetermining whether the Participant has a separation from service as anemployee for purposes of a nonqualified deferred compensation plan in which theParticipant participates as an employee that is not aggregated with any plan inwhich the Participant participates as a director . In addition, if aParticipant provides services both as an employee and a member of the Board ofDirectors (or an analogous position with respect to a non-corporate servicerecipient), the services provided as an employee are not taken into account indetermining whether the Participant has a separation from service as a directorfor purposes of a nonqualified deferred compensation plan in which theParticipant participates as a director that is not aggregated with any plan inwhich the service provider participates as an employee.

 

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**2.0          Scope, Purpose and Effect.**

 

**2.1          Contractof Employment.** Although this Agreement is intended to provide the Director with anadditional incentive to remain a Director of the Bank, this Agreement shall notbe deemed to constitute a contract of employment between the Director and theBank.

 

**2.2          Fringe Benefit. **The benefitsprovided by this Agreement are granted by the Bank as a fringe benefit to theDirector and are not a part of any salary reduction plan or any arrangementdeferring a bonus or a salary increase. The Director has no option to take anycurrent payments or bonus in lieu of the benefits provided by this Agreement.

 

**2.3          Prohibited Payments. **Notwithstandinganything in this Agreement to the contrary, if any payment made under thisAgreement is a “golden parachute payment” as defined in Section 28(k) ofthe Federal Deposit Insurance Act (12 U.S.C. section 1828(k) and Part 359of the Rules and Regulations of the Federal Deposit InsuranceCorporation  (collectively, the “FDICRules”) or is otherwise prohibited, restricted or subject to the prior approvalof a Bank Regulator, no payment shall be made hereunder without complying withsaid FDIC Rules.

 

**3.0        InternalRevenue Code Section 409A Compliance. **It is the intent of the parties to comply withall applicable Internal Revenue Code Sections, including, but not limited to,IRC 409A. Furthermore, for the purposes of this Agreement, IRC Section 409Ashall be read to include any related or relevant IRS Notices or clarifications(including but not limited to Notice 2006-79 and Notice 2007-86). While it isunderstood that a general IRC 409A savings clause will not be effective, theparties intend that any ambiguities regarding any terms or payouts containedherein shall be interpreted in a manner consistent with IRC 409A.

 

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

 

In addition, as statedabove, it is the intent of the parties to comply with IRS Notice 2007-86, andthus, for any new election made in 2008, that new election may not apply toamounts that would otherwise be payable in 2008, and may not cause amounts tobe paid in 2008 that would not otherwise be payable in that year. In the eventany such new election would accelerate a payment into 2008, then such resultingpayment shall not be made until January 3, 2009 (so long as permitted byIRC 409A and any subsequent guidance).

 

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**4.0          Director Benefits Payments.**

 

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

 

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

 

**4.2          PaymentsUpon Early Retirement.** In the event the Director Separates FromService on a date which constitutes an Early Retirement Date, then the Directorshall be entitled to be paid an annual Director Benefit equal to the followingamounts, depending upon Participant’s age on the date of such Separation FromService:

 
| **Age  at Early Retirement**                                        | ** ** | **Annual Benefit Amount** | ** ** |
|---------------------------------------------------------------------|------------|---------------------------|------------|
| 65 through 68 years of age                                          |       | $                         | 3,810      |   |
| 69 through 71 years of age                                          |       | $                         | 4,572      |   |
| 72 through 74 years of age                                          |       | $                         | 5,334      |   |
| Upon attaining age 75, participant  qualifies for Normal Retirement |       | $                         | 6,096      |   |

 

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

 

**4.3          Paymentsin the Event of Separation From Service Prior to the Early Retirement Age.**  In the event the Director Separates FromService before the Early Retirement Age, then this Agreement shall terminateupon the date of such Separation From Service; provided, however, that theDirector shall be entitled to the following benefits as may be applicabledepending upon the circumstances surrounding the Separation:

 

**A.            Disabilityor Separation From Service Following a Change in Control.**In the event the Director becomes Disabled prior to Early Retirement andSeparates From Service as a result therof, or in the event Director SeparatesFrom Service following a Change in Control and prior to the Early RetirementAge, then Director shall be entitled to be paid the Accrued Liability Balanceas of the date of Director’s Separation From Service. This Accrued LiabilityBalance shall be paid in one lump sum within thirty (30) days followingDirector’s Separation From Service; however, Director is not permitted, eitherdirectly or indirectly, to designate the taxable year of the payment).

 

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**B.            InvoluntaryTermination**. In the event Director is Involuntarily Terminated by the Bank prior to attainingthe Early Retirement Age, then the Director shall receive the AccruedLiability Balance as of the date of the Separation From Service. This AccruedLiability Balance shall be paid in one lump sum within thirty (30) daysfollowing Director’s Separation From Service (however Director is notpermitted, either directly or indirectly, to designate the taxable year of thepayment).

** **

**C.            VoluntaryTermination by the Director.**  In the event of an Early VoluntaryTermination by the Director, (other than pursuant to the terms of Paragraph4.3A), then he shall forfeit any and all rights and benefits he may have underthe terms of this Agreement and shall have no right to be paid any of theamounts which would otherwise be due or paid to the Director by the Bankpursuant to the terms of this Agreement.

 

**4.4          Removalfor Cause.** In the event that the Director is Removed (at any time) for Cause, asdefined herein, then he shall forfeit any and all rights and benefits he mayhave under the terms of this Agreement and shall have no right to be paid anyof the amounts which would otherwise be due or paid to the Director by the Bankpursuant to the terms of this Agreement.

 

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

 

**4.6          Amounts DeferredUnder Original Agreement.**Because amounts deferred underthe Original Agreement were deferred from the same source (Director Fees) andpaid out in the same manner (upon Separation From Service) as under the “DeferredFee Agreement” between the parties, effective as of February 1, 1997, (andwhich has been Amended and Restated to comply with IRC 409A by virtue of theFirst Amended and Restated Deferred Fee Agreement), the parties hereby agreethat amounts reflected in the Deferral Account under the Original Agreementshall be incorporated into the Deferred Compensation Account under the FirstAmended and Restated Deferred Fee Agreement.

 

**5.0          IRSSection 280G Issues.**

 

If all or any portion of the amounts payableto the Director under this Agreement, either alone or together with otherpayments which the Director has the right to receive from the Bank, constitute “excessparachute payments” within the meaning of Section 280G of the InternalRevenue Code of 1986, as amended (the “Code”), that are subject to the excisetax imposed by Section 4999 of the Code (or similar tax and/orassessment), Director shall be responsible for the payment of such excise taxand Bank (and its successor) shall be responsible for any loss of deductibilityrelated thereto; provided, however, that Bank and Director shall cooperate witheach other and use all reasonable efforts to minimize to the fullest extentpossible (and in accordance

 

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with IRC 409A)  the amount ofexcise tax imposed by Section 4999 of the Code.  If, at a later date, it is determined(pursuant to final regulations or published rulings of the Internal RevenueService, final judgment of a court of competent jurisdiction, or otherwise)that the amount of excise taxes payable by the Director is greater than theamount initially so determined, then the Director shall pay an amount equal tothe sum of such additional excise taxes and any interest, fines and penaltiesresulting from such underpayment. The determination of the amount of any suchexcise taxes shall be made by the independent accounting firm employed by theBank immediately prior to the change in control or such other independentaccounting firm or advisor as may be mutually agreeable to Bank and Director inthe exercise of their reasonable good faith judgment.

 

**6.0****                               Administrativeand Claims Provision.**

 

**6.1          NamedFiduciary and Plan Administrator.  **The“Named Fiduciary and Plan Administrator” of this Director plan shall be theBank until its resignation or removal by the Board of Directors. As NamedFiduciary and Plan Administrator, the Bank shall be responsible for themanagement, control and administration of this Director plan. The NamedFiduciary may delegate to others certain aspects of the management andoperation responsibilities of the plan, including employment of advisors andthe delegation of ministerial duties to qualified individuals.

 

**6.2          ClaimsProcedure.**   In the event a dispute arises over the benefits under this Agreement andbenefits are not paid to the Employee (or to the Employee’s beneficiary[ies],if applicable) and such claimants feel they are entitled to receive suchbenefits, then a written claim must be made to the Bank (as the planadministrator) in accordance with the following procedures:

 

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

 

B.                                     ClaimDecision.  Upon receipt of such claim, the Administratorshall respond to such claimant within ninety (90) days after receiving theclaim.  If the Administrator determinesthat special circumstances require additional time for processing the claim,the Administrator can extend the response period by an additional ninety (90)days for reasonable cause by notifying the claimant in writing, prior to theend of the initial ninety (90) day period, that an additional period isrequired. The notice of extension must set forth the special circumstances andthe date by which the Administrator expects to render its decision.

 

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

 

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(i)                                     Thespecific reasons for the denial;

(ii)                                  Thespecific reference to pertinent provisions of the Agreement on which the denialis based;

(iii)                               Adescription of any additional information or material necessary for theclaimant to perfect the claim and an explanation of why such material orinformation is necessary;

(iv)                              Appropriateinformation as to the steps to be taken if the claimant wishes to submit theclaim for review and the time limits applicable to such procedures; and

(v)                                 Astatement of the claimant’s right to bring a civil action under ERISA Section 502(a) followingan adverse benefit determination on review.

 

C.                                     Request forReview.  Within sixty (60) days afterreceiving notice from the Administrator that a claim has been denied (in partor all of the claim), then claimant (or their duly authorized representative)may file with the Administrator, a written request for a review of the denialof the claim.

 

 The claimant (or his dulyauthorized representative) shall then have the opportunity to submit writtencomments, documents, records and other information relating to the claim.  The Administrator shall also provide theclaimant, upon request and free of charge, reasonable access to, and copies of,all documents, records and other information relevant (as defined in applicableERISA regulations) to the claimant’s claim for benefits.

 

D.                                    Decision onReview.  The Administrator shallrespond in writing to such claimant within sixty (60) days after receiving therequest for review.  If the Administratordetermines that special circumstances require an extension of time forprocessing the claim, written notice of the extension shall be furnished to theclaimant prior to the termination of the initial sixty (60) day period. In noevent shall such extension exceed a period of sixty (60) days from the end ofthe initial period. The notice of extension must set forth the specialcircumstances requiring an extension of time and the date by which theAdministrator expects to render its decision.

 

In considering the review, the Administrator shall take into accountall materials and information the claimant submits relating to the claim,without regard to whether such information was submitted or considered in theinitial benefit determination.

 

The Administrator shall notify the claimant in writing of its decisionon review.  The Committee shall write thenotification in a manner calculated to be understood by the claimant.  The notification shall set forth:

 

(i)                                     Thespecific reasons for the denial;

(ii)                                  Areference to the specific provisions of the Agreement on which the 

 

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denial isbased;

(iii)                               Astatement that the claimant is entitled to receive, upon request and free ofcharge, reasonable access to, and copies of, all documents, records and otherinformation relevant (as defined in applicable ERISA regulations) to theclaimant’s claim for benefits; and

(iv)                              Astatement of the claimant’s right to bring a civil action under ERISA Section 502(a).

 

**6.3          Arbitrationof Disputes.** All claims, disputes and other matters in question arising out of orrelating to this Agreement or the breach or interpretation thereof, other thanthose matters which are to be determined by the Bank in its sole and absolutediscretion, shall be resolved by binding arbitration before a representativemember, selected by the mutual agreement of the parties, of the JudicialArbitration and Mediation Services, Inc. (“JAMS”), located in SanFrancisco, California.  Notice of thedemand for arbitration shall be filed in writing with the other party to thisAgreement and with JAMS.  In no eventshall the demand for arbitration be made after the date when institution oflegal or equitable proceedings based on such claim, dispute or other matter inquestion would be barred by the applicable statute of limitations.  The arbitration shall be subject to such rules ofprocedure used or established by JAMS. Any award rendered by JAMS shall befinal and binding upon the parties, and as applicable, their respective heirs,beneficiaries, legal representatives, agents, successors and assigns, and maybe entered in any court having jurisdiction thereof.  The obligation of the parties to arbitratepursuant to this clause shall be specifically enforceable in accordance with,and shall be conducted consistently with, the provisions of Title 9 of Part 3of the California Code of Civil Procedure. Any arbitration hereunder shall be conducted in Atascadero, California,unless otherwise agreed to by the parties.

 

**6.4          Attorneys’Fees.**  Inthe event of any arbitration or litigation concerning any controversy, claim ordispute between the parties hereto, arising out of or relating to this Agreementor the breach hereof, or the interpretation hereof, (a) each party shallpay his own attorneys’ arbitration fees incurred; (b) the prevailing partyshall be entitled to recover from the other party reasonable expenses,attorneys’ fees and costs incurred in the enforcement or collection of anyjudgment or award rendered. The “prevailing party” means any party (one partyor both parties, as the case may be) determined by the arbitrator(s) orcourt to be entitled to money payments from the other, not necessarily theparty in whose favor a judgment is rendered.

 

**7.0          Status as anUnsecured General Creditor and Rabbi Trust.**

 

Notwithstanding anything contained herein to the contrary:  (i) the Director shall have no legal orequitable rights, interests or claims in or to any specific property or assetsof the Bank as a result of this Agreement; (ii) none of the Bank’s assetsshall be held in or under any trust for the benefit of the Director or held inany way as security for the fulfillment of the obligations of the Bank underthis Agreement; (iii) all of the Bank’s assets shall be and remain thegeneral unpledged and unrestricted assets of the Bank; (iv) the Bank’sobligation under this Agreement shall be that of an unfunded and unsecuredpromise by the Bank to pay money in the future; and (v) the Director shallbe an unsecured general creditor with respect to any benefits which may bepayable under the terms of this Agreement.

 

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Notwithstanding subparagraphs (i) through (v) above, the Bankand the Director acknowledge and agree that, in the event of a Change inControl, upon request of the Director, or in the Bank’s discretion if theDirector does not so request and the Bank nonetheless deems it appropriate, theBank shall establish, not later than the effective date of the Change inControl, a Rabbi Trust or multiple Rabbi Trusts (the “Trust” or “Trusts”) uponsuch terms and conditions as the Bank, in its sole discretion, deemsappropriate and in compliance with applicable provisions of the Code, in orderto permit the Bank to make contributions and/or transfer assets to the Trust orTrusts to discharge its obligations pursuant to this Agreement.  The principal of the Trust or Trusts and anyearnings thereon shall be held separate and apart from other funds of the Bankto be used exclusively for discharge of the Bank’s obligations pursuant to thisAgreement and shall continue to be subject to the claims of the Bank’s generalcreditors until paid to the Director in such manner and at such times asspecified in this Agreement.

 

**8.0          Miscellaneous.**

 

**8.1          OpportunityTo Consult With Independent Advisors.**  The Director acknowledges that he has beenafforded the opportunity to consult with independent advisors of his choosingincluding, without limitation, accountants or tax advisors and counselregarding both the benefits granted to him under the terms of this Agreementand the (i) terms and conditions which may affect the Director’s right tothese benefits and (ii) personal tax effects of such benefits including,without limitation, the effects of any federal or state taxes, Section 280Gof the Code, and any other taxes, costs, expenses or liabilities whatsoeverrelated to such benefits, which in any of the foregoing instances the Directoracknowledges and agrees shall be the sole responsibility of the Directornotwithstanding any other term or provision of this Agreement.  The Director further acknowledges and agreesthat the Bank shall have no liability whatsoever related to any such personaltax effects or other personal costs, expenses, or liabilities applicable to theDirector and further specifically waives any right for himself or herself, andhis or her heirs, beneficiaries, legal representatives, agents, successor andassign to claim or assert liability on the part of the Bank related to thematters described above in this paragraph. The Director further acknowledgesthat he has read, understands and consents to all of the terms and conditionsof this Agreement, and that he enters into this Agreement with a fullunderstanding of its terms and conditions.

 

**8.2          Notice.**  Any notice required or permitted of eitherthe Director or the Bank under this Agreement shall be deemed to have been dulygiven, if by personal delivery, upon the date received by the party or itsauthorized representative; if by facsimile, upon transmission to a telephonenumber previously provided by the party to whom the facsimile is transmitted asreflected in the records of the party transmitting the facsimile and uponreasonable confirmation of such transmission; and if by mail, on the third dayafter mailing via U.S. first class mail, registered or certified, postageprepaid and return receipt requested, and addressed to the party at the addressgiven below for the receipt of notices, or such changed address as may berequested in writing by a party.

 

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| If to the Bank:     | 7480 El Camino Real  |
|---------------------|----------------------|
|                | Atascadero, CA 93422 |
|                | FAX (805) 466-1058   |
|                |                 |
| If to the Director: |                 |   |
|                |                 |   |
|                |                 |   |

 

**8.3          Assignment.**  The Director shall have no power or right totransfer, assign, anticipate, hypothecate, modify or otherwise encumber anypart or all of the amounts payable hereunder, nor, prior to payment inaccordance with the terms of this Agreement, shall any portion of such amountsbe:  (i) subject to seizure by anycreditor of the Director, by a proceeding at law or in equity, for the paymentof any debts, judgments, alimony or separate maintenance obligations which maybe owed by the Director; or (ii) transferable by operation of law in theevent of bankruptcy, insolvency or otherwise. Any such attempted assignment or transfer shall be void.

 

**8.4          BindingEffect/Merger or Reorganization.**  This Agreement shall be binding upon and inureto the benefit of the Director and the Bank. Accordingly, the Bank shall not merge or consolidate into or withanother corporation, or reorganize or sell substantially all of its assets toanother corporation, firm or person, unless and until such succeeding orcontinuing corporation, firm or person agrees to assume and discharge theobligations of the Bank under this Agreement. Upon the occurrence of suchevent, the term “Bank” as used in this Agreement shall be deemed to refer tosuch surviving or successor firm, person, entity or corporation, or holdingcompany, as the case may be.

 

**8.5          Nonwaiver.**  The failure of either party to enforce at anytime or for any period of time any one or more of the terms or conditions ofthis Agreement shall not be a waiver of such term(s) or condition(s) orof that party’s right thereafter to enforce each and every term and conditionof this Agreement.

 

**8.6          PartialInvalidity.** If any terms, provision, covenant, or condition of this Agreement isdetermined by an arbitrator or a court, as the case may be, to be invalid,void, or unenforceable, such determination shall not render any other term,provision, covenant or condition invalid, void or unenforceable, and theAgreement shall remain in full force and effect notwithstanding such partialinvalidity.

 

**8.7          EntireAgreement.** This Agreement supersedes any and all other agreements, either oral orin writing, between the parties with respect to the subject matter of thisAgreement and contains all of the covenants and agreements between the partieswith respect thereto.  Each party to thisAgreement acknowledges that no other representations, inducements, promises, oragreements, oral or otherwise, have been made by any party, or anyone acting onbehalf of any party, which are not set forth herein, and that no otheragreement, statement, or promise not contained in this Agreement shall be validor binding on either party.

 

**8.8          Modifications.**  Any modification of this Agreement shall beeffective only if it is in writing and signed by each party or such party’sauthorized representative, and only to the

 

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

 

**8.9          ParagraphHeadings.** The paragraph headings used in this Agreement are included solely forthe convenience of the parties and shall not affect or be used in connectionwith the interpretation of this Agreement.

 

**8.10        NoStrict Construction.**  The language used in this Agreement shall bedeemed to be the language chosen by the parties hereto to express their mutualintent, and no rule of strict construction will be applied against anyperson.

 

**8.11        Gender.**Whenever in this Agreement words are used in the masculine,feminine or neuter gender, they shall be read and construed as in themasculine, feminine or neuter gender, whenever they should so apply.

 

**8.12        GoverningLaw.**  Thelaws of the State of California, other than those laws denominated choice oflaw rules, and where applicable, the rules and regulations of the Board ofGovernors of the Federal Reserve System, Federal Deposit Insurance Corporation,Office of the Comptroller of the Currency, or any other regulatory agency orgovernmental authority having jurisdiction over the Bank or the holdingcompany, shall govern the validity, interpretation, construction and effect ofthis Agreement.

 

IN WITNESS WHEREOF, the Bank and the Director have executed thisAgreement on the date first above-written in the City of Atascadero,California.

 

**Santa Lucia Bank**

 

 
| By:    | /s/ Larry H. Putnam        |   | Date:  | December 17, 2008 |
|--------|----------------------------|--------|--------|-------------------|
|   | Chief Executive Officer    |   |   |              |
|   | Signature & Title |   |   |              |

 

 

**Director**

 

 
| By:    | /s/ Douglas C. Filipponi |   | Date:  | December 17, 2008 |
|--------|--------------------------|--------|--------|-------------------|
|   | Signature                |   |   |              |

 

 
| /s/ John C. Hansen |    | /s/ Cindy Dilbeck |
|--------------------|---------|-------------------|
|               | Witness |              |  Witness |
|                    |         |                   |  |

 

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