**Exhibit 10.97**

 

FIRST AMENDED AND RESTATED

 

DEFERRED FEE AGREEMENT

 

RECITAL

 

This FirstAmended and Restated Deferred Fee Agreement (hereinafter “Agreement”) is madeand entered into, and is effective as of January 1, 2008  by and between **Santa LuciaBank**, a bank organized and existing under the laws of the state ofCalifornia (hereinafter the “Bank” or “Company”) and**Jerry W.DeCou III**, 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 theoriginal Deferred Fee Agreement,  effectiveas of February 1, 1997 (hereinafter “Original Agreement”), and furtheragree that this First Amended and Restated Deferred Fee Agreement shall amend,supersede and replace the Original Agreement (as amended, if applicable) in itsentirety;

 

WHEREAS, to encourage Director to remain a member of the Company’sBoard of Directors, the Company is willing to provide Director with a deferredfee opportunity.

 

WHEREAS, it is the intent of the parties hereto that this plan(evidenced by this Agreement) be considered an unfunded arrangement maintainedprimarily to provide supplemental retirement benefits for Director, and beconsidered a non-qualified benefit plan for the purposes of the EmployeeRetirement Income Security Act of 1974, as amended (“ERISA”); and

 

NOW, THEREFORE, in consideration of the past service and the servicesto be performed by Director in the future, as well as the mutual promises andcovenants contained herein, Director and the Company agree as follows:

 

**AGREEMENT**

 

**1.0****                               Termsand Definitions.**

 

**                                 **Forthe purposes of this Agreement, the following terms shall have the meaningsindicated, unless the context clearly indicates otherwise:

 

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**1.1****                               Administrator.**The Bank shall be the “Administrator” and, solely for the purposes of ERISA(as defined below), the “fiduciary” of this Agreement where a fiduciary isrequired by ERISA.

 

**1.2****                               AnnualDeferral Amount**.  The term“Annual Deferral Amount” shall mean that portion of Participant’s Director’sFees that Participant elects to have (and which is) deferred, in accordancewith the terms of this Plan, for any one Plan Year.  In addition, Participant must defer a minimumof Three Thousand Six Hundred ($3,600) each Deferral Period. In the event thatParticipant elects to defer a specific dollar amount (as opposed to apercentage of Fees), then such specified amount shall be presumed to bedeferred on a pro-rata basis (i.e. each pay period) as if Director continuouslyprovided services throughout the year. In the event that Director SeparatesFrom Service, all further Deferrals shall cease.

 

**1.3****                               Bank.  **For the purpose of this Agreement, theterm “Bank” or “Employer” shall be read so as to include the Santa Lucia Bankholding company, Santa Lucia Bancorp, when permissible.

 

**1.4****                               Beneficiary. **The term**“**Beneficiary(ies)”shall refer to the person, persons or entity designated in writing by Directoron forms provided by the Administrator (“Beneficiary Designation Form”) toreceive the benefits payable under this Agreement. Director may change hisBeneficiary from time to time, so long as permissible, by filing a new writtenBeneficiary Designation Form with the Administrator, and such designationshall be effective upon receipt by the Administrator. If Director has notvalidly designated a beneficiary, or if a designated Beneficiary predeceasesDirector, then any benefit owed pursuant to this Agreement shall be made toDirector’s estate.

 

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

 

**1.6****                               Changein Control.**  For the purpose ofthis Plan, a “Change in Control” shall be deemed to have occurred upon any ofthe following events, as such terms and events are defined in Internal RevenueCode Section 409A and the related guidance and Notices thereto. IRC 409Acurrently provides that a Change in Control Event shall include any of thefollowing events (and for the purposes of this provision, the term “corporation”shall mean the Bank or the Bank’s holding company):

 

A.                                   AChange in the Ownership of a Corporation. A change in theownership of a corporation occurs on the date that any one person or personsacting as a group (as defined in IRC 409A), acquires ownership of stock of thecorporation that, together with stock held by such person or group, constitutesmore than fifty percent (50%) of the total fair market value or total votingpower of the stock of such corporation.

 

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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 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 duringany twelve (12) month period by directors whose appointment or election is notendorsed by a majority of the members of the corporation’s board of directorsbefore the date of the appointment or election. (In this sub-paragraph, 409Alimits “corporation” to the “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 value ofall 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.

 

In addition to theforgoing, and in accordance with IRC 409A, in order to constitute a Change inControl event with respect Participant, the Change in Control event must relateto (i) the corporation for whom the Participant is performing services atthe time of the Change in Control; (ii) the corporation that is liable forthe payment of the deferred compensation (or all corporations liable for thepayment if more than one corporation is liable) but only if either the deferredcompensation is attributable to the performance of service by Participant forsuch corporation (or corporations) or there is a bona fide business purpose forsuch corporation or corporations to be liable for such payment and, in eithercase, no significant purpose of making such corporation or corporations liablefor such payment 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.

 

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**1.7****                               TheCode. **The “Code” shall mean theInternal Revenue Code of 1986, as amended.

 

**1.8****                               DeferralElection Form.** The term “Deferral Election Form” shall refer to theform established from time to time by the Bank that Participant completes,signs and returns to the Administrator to make a Deferral Election under theplan.

 

**1.9****                              ****DeferralPeriod**.“Deferral Period” means the period over which Participant has elected to defera portion of his Director’s Fees. Each Plan Year shall be a separate DeferralPeriod, however, the prior Deferral Election Form shall remain effectivein the event that Participant fails to file a timely or subsequent DeferralElection Form.

 

**1.10****                        DeferredCompensation Account**. The term “Deferred Compensation Account”shall refer to the amounts Participant has elected to defer over time. TheDeferred Compensation Account shall be a bookkeeping entry only and shall beutilized solely as a device for the measurement and determination of theamounts to be paid to, or in respect of, a Participant pursuant to thisAgreement.  The Deferred CompensationAccount shall be equal to the sum of (i) all amounts deferred in eachDeferral Period  under this Agreement,including all amounts deferred previously under the Original Agreement and (ii) interestthereon credited in accordance with the applicable interest creditingprovisions, net of all distributions from such account. Amounts deferredpursuant to the Original Agreement and this Agreement shall be credited to theDeferred Compensation Account, along with the specified interest thereon.

 

In addition to the forgoing, the Deferred Compensation Account shallinclude those amounts previously deferred under the Director’s Santa Lucia BankDirector Retirement Agreement (effective as of February 1, 1997 andthereafter amended by virtue of the January 10, 2001 Amendmentthereto)  and the  First Amended and Restated Santa LuciaNational Bank Director Retirement Agreement.

 

**1.11****                        DirectorBenefit. **The term “DirectorBenefit” shall mean the benefit amounts determined pursuant to Paragraphs 1through 6 (including sub-paragraphs, as applicable), forfeited, reduced oradjusted 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 allapplicable state and federal laws, including, but not limited to, income,employment and disability income tax laws (*e.g.*, FICA,FUTA, SDI).

 

**1.12****                        DirectorFees.** The term “Director Fees”shall refer to cash compensation paid by the Company to Director for hisservices, including annual retainers, chair retainers, meeting fees and cashpaid for services performed as a Director.

 

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

 

**1.14****                        ERISA.**The term “ERISA” shall mean the Employee Retirement Income 

 

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Security Actof 1974, as amended.

 

**1.15**                        **IRC 409A.** The term “IRC 409A” shallrefer to the final regulations issued by the IRS and the Treasury Departmentunder Section 409A of the Code.

 

**1.16****                        LeaveOf Absence**.  In accordancewith Code Section 409A and, for the purpose of this Plan, the term “Leaveof Absence” shall include military leave, sick leave, or other bona fide leaveof absence if the period of such leave does not exceed six (6) months, orif longer, so long as the individual retains a right to reemployment with theCompany under an applicable statute or by contract.  A leave of absence constitutes a bona fideleave of absence only if there is a reasonable expectation that the Participantwill return to perform services for the Company.  If the period of leave exceeds six (6) monthsand the individual does not retain a right to reemployment under an applicablestatute or by contract, the employment relationship is deemed to terminate onthe first date immediately following such six-month period.

 

**1.17****                        NormalRetirement Age.**The term “Normal Retirement Age” shall mean  Director’s attainment of age Seventy-Five(75).

 

**1.18****                                       Plan.**The “Plan” shall mean the Bank’s Deferred Compensation Plan, which shall beevidenced by this Agreement and the Deferral Election Form.

 

**1.19****                        PlanYear. **The term “Plan Year” shallmean the calendar year (January 1 through December 31 of any givenyear).

 

**1.20****                        Rate OfInterest.**  The Rate of Interestshall refer to the percentage used to calculate earnings on the amounts in theDeferred Compensation Account.  The Rateof Interest shall be defined as an annual rate equal to the prime rate asreported in the Wall Street Journal on February 1 of each Plan Year andshall remain in effect until such annual re-evaluation.

 

**1.21****                        Removedfor Cause.**The term “Removed (Removal) for Cause” shall meantermination of Director’s Service by reason of any of the following: any act ofembezzlement, fraud, breach of fiduciary duty, dishonesty, deliberate orreported disregard of the policies and rules of the Company as adopted bythe Board of Directors of the Company, unauthorized use or disclosure of anytrade secrets or confidential information of the Company, competition with theCompany, inducement of any customer of the Company to breach a contract with theCompany, inducement of any principal for whom the Company acts as an agent toterminate such agency relationship, gross negligence adversely impacting  the Company, willful breach of thisAgreement, or any other willful misconduct.

 

**1.22**                        **Service/Separation From Service.** As it applies to Director, the term “Service” shall refer to theservices Director provides and performs while serving on the Board ofDirectors.  In addition, the term “Separationfrom Service” shall be read and interpreted consistent with IRC  409A and any future notices or guidancerelated thereto. 

 

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As the term applies herein to individuals who are serving on the Boardof Directors, but who are not also acting as employees of the Bank, the term “Separationfrom Service” shall mean the expiration of all contracts or terms of serviceunder which Director is performing services as a member of the Board ofDirectors, and where expiration constitutes a good faith and completetermination 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 Participant has a separation from service as an employeefor purposes of a nonqualified deferred compensation plan in which Participantparticipates as an employee that is not aggregated with any plan in which Participantparticipates as a director (under IRC 409A (c)(2)(ii)). In addition, 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 an employee are not taken into account indetermining whether Participant has a separation from service as a director forpurposes of a nonqualified deferred compensation plan in which Participantparticipates as a director that is not aggregated with any plan in which theservice provider participates as an employee.

 

**1.23****                       ****Unforeseeable Emergency**.  Inaccordance with IRC 409A, whether Participant is faced with an UnforeseeableEmergency permitting a distribution is to be determined based on the relevantfacts and circumstances of each case. Consistent with the forgoing, anunforeseeable emergency is a severe financial hardship to Participant resultingfrom an illness or accident of Participant, Participant’s spouse, beneficiary,or  dependent (as defined in section 152,without regard to section 152(b)(1), (b)(2), and (d)(1)(B)); loss ofParticipant’s property due to casualty (including the need to rebuild a homefollowing damage to a home not otherwise covered by insurance, for example, notas a result of a natural disaster); or other similar extraordinary andunforeseeable circumstances arising as a result of events beyond the control ofParticipant.

 

**2.0****                               Scope,Purpose And Effect.**

 

**2.1****                               ContractOf Employment.**  Although thisAgreement is intended to provide Director with an additional incentive toremain an active member of the Board, this Agreement shall not be deemed toconstitute a contract of employment between Director and the Bank nor shall anyprovision of this Agreement restrict or expand the right of the Bank to removeDirector for cause.  This Agreement shallhave no impact or effect upon any separate written Employment Agreement whichDirector may have with the Bank, it being the parties’ intention and agreementthat unless this Agreement is specifically referenced in said EmploymentAgreement (or any modification thereto), this Agreement (and the Bank’sobligations hereunder) shall stand separate and apart and shall 

 

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have no effect on or be affected by, the terms and provisions of saidEmployment Agreement.

 

**2.2****                               FringeBenefit. **The benefits providedby this Agreement are granted by the Bank as a fringe benefit to Director.

 

**2.3****                               ProhibitedPayments. **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 “FDIC Rules”)or is otherwise prohibited, restricted or subject to the prior approval of aBank Regulator, no payment shall be made hereunder without complying with saidFDIC Rules.

 

**3.0****                              ****Compliance With IRC 409A.**   In the event of any ambiguity in terms, orin the event further clarification of any term or provision is necessary, allinterpretations and payouts of benefits based thereon shall be in accordancewith IRC 409A and any related notices or guidance thereon.

 

**4.0****                               Deferrals,  Election Forms And Modifications Thereto.**

 

**4.1****                               Elections To Defer**.   Participant may elect in the Deferral Election Form todefer a portion of his Director’s Fees earned during a given Deferral Period,and  payment of fees due immediatelyshall be reduced accordingly. As stated previously,  Participant must defer a minimum ofThree Thousand Six Hundred Dollars ($3,600) each Deferral Period.  The specific percentage or amount to bedeferred shall be withheld each scheduled pay period in accordance with Participant’smost recent and valid Deferral Election Form.

 

**4. 2****                           ****Timing Of Elections**.

 

A.                                   In General. Compensationfor services performed during a taxyear can be deferred at Participant’s election only if the initial deferralelection is made, in general, ***not later than the close of the preceding******tax year.***

 

B.                                     First Year Participation.An election to defer Director’s Fees earned ***during the first year in which Participantbecomes eligible to participate in the Plan must be made within thirty (30)days after the date of such eligibility***. Furthermore, suchelection shall apply only to services performed subsequent to the election.

 

**4.3****                              ****ModificationTo Election Form/ Subsequent Elections To Defer**. Subject to theminimum deferral requirement per Deferral Period, prior to a new calendar year,Participant may irrevocably reduce his Director’s Fees not yet earned for thenext calendar year. Participant may provide written notice to the Company (inthe form of a Deferral Election Form) prior to any calendar year of hisdecision to increase, decrease or 

 

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discontinue compensationreduction amounts for the next calendar year.

 

**4.4****                              ****EvergreenElection**. If Participant does not amend (in writing) his existing DeferralElection Form in the timeframe stated above (which would be the date uponwhich such election becomes irrevocable for the next calendar year), then theParticipant shall be deemed to have waived his right to elect a differentcompensation reduction amount and reaffirmed and ratified the compensationreduction levels and Deferral Election amounts designated in the last priorperiod. Furthermore, the existing Deferral Election Form applicableto the annual Director’s Fees shall become irrevocable with respect to feespayable in connection with services performed in the immediately following yearas of the last date upon which participant could have modified such election todefer.

 

**4.5****                               DeferralsIn The Event Of Unforeseeable Emergency.**In the event a Participantreceives a distribution as a result of an Unforeseeable Emergency pursuant tothe provisions of the Plan, then all future deferrals shall be terminated untilsuch time as Participant makes a new election, which shall, in turn, complywith the applicable provisions of this Plan Agreement relating to elections in Section 4(and shall comply with IRC 409A).

 

**4.6****                               Elections With Respect To The Time And Form OfPayment To A Beneficiary.** Elections with respect to thetime and form of payment to a Beneficiary are subject to the general rules governingsubsequent deferrals and accelerated payments, including elections by eitherParticipant or the Beneficiary (with an exception for amounts payable under adomestic relations order).  However, achange in a Beneficiary will not be treated as a change in the time and form ofpayment, if the change in the time of payment stems solely from the differentlife expectancy of the new Beneficiary, such as in the case of a joint andsurvivor annuity.

 

**4.7****                               LeaveOf Absence.** If Participant is on a Leave of Absence, then Participantshall be considered to not have experienced a Separation From Service until thelater of the passage of six (6) months or the expiration of anycontractual or statutory right to return to employment. Separation occurs atthe six-month mark or the expiration of re-employment rights, unless the factsand circumstances indicate that the expectation of a return to employment endedearlier. The deferral amount shall continue to be withheld during a paid leaveof absence, unless and until such time as Participant may request adistribution based on an Unforeseeable Emergency.

 

**5.0****                               DeferredCompensation Account.**

 

**5.1****                               CreditsTo Deferred Compensation Account**. As discussed in Section 1.10, the Bank shall establish abookkeeping account for Director, known as the Deferred Compensation Account.This Deferred Compensation Account shall be credited on the dates such Director’sFees would otherwise have been paid with the percentage (dollar amount) thatthe Participant has notified the Bank (in writing and pursuant to the terms of Section 4),that he elected to have deferred. The Deferred Compensation Account shall beequal to the sum of (i) all amounts deferred in each Deferral Period underthis 

 

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Agreement,including all amounts deferred previously under the Original Agreement and (ii) interestthereon credited in accordance with the applicable interest creditingprovisions, net of all distributions from such account. Amounts deferredpursuant to the Original Agreement and this Agreement shall be credited to theDeferred Compensation Account, along with the specified interest thereon.

 

### In addition to the forgoing, the Deferred Compensation Account shallinclude those amounts previously deferred under the Director’s Santa Lucia BankDirector Retirement Agreement (effective as of February 1, 1997 and thereafteramended by virtue of the January 10, 2001 Amendment thereto), as amendedand superseded by the First Amended and Restated Santa Lucia National BankDirector Retirement Agreement

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**5.2****                               InterestOn The Deferred Compensation Account.** The Deferred Compensation Account shall be credited annually on February firstwith an amount that is in addition to the amount deferred under Section 4,and shall be calculated by multiplying the balance of the Deferred CompensationAccount by the specified Rate of Interest. Such interest shall be compoundedannually and shall credited each year until such time as the benefits underthis Agreement have been paid in full.

 

**5.3****                               NatureOf The Deferred Compensation Account**. The Deferred Compensation Account shall be utilized solely as adevice for the measurement and determination of the amount of deferredcompensation to be paid to Participant at the times hereinafter specified andthe Bank shall not segregate any of its assets in order to satisfy anyobligations under this Plan.  TheDeferred Compensation Account shall not constitute or be treated as a trustfund of any kind. On the contrary, it is understood that all amounts creditedto the Deferred Compensation Account shall be for the sole purpose ofbookkeeping and remain the sole property of the Company, and that Participantshall have no ownership rights of any nature with respect thereto. Participant’srights are limited to the rights to receive payments as hereinafter providedand Participant’s position with respect thereto is that of a general unsecuredcreditor of the Company.

 

**6.0****                               PaymentOf Deferred Compensation Account.**

 

Payment of the Deferred Compensation Accountshall be in accordance with the following:

 

**6.1****                               Paymentof Benefit In The Event Participant Separates From Service.** In theevent of Participant’s Separation From Service for any reason other thanfollowing a Change in Control, then he shall receive the balance in hisDeferred Compensation Account as of the date of his Separation From Service.The Deferred Compensation Account Balance shall be paid out as follows:payments shall be made monthly for a period of ten (10) years (120months). Participant’s remaining Deferred Compensation Account Balance shallcontinue to be credited with interest at the Rate of Interest until all suchone hundred and twenty (120) payments have been made. In addition, monthlypayments shall be calculated to provide Participant with substantially equalmonthly installments based on the Rate of Interest in effect when the initial  payment is made, and 

 

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readjusted annually to take into account any fluctuation in the Rate ofInterest (as defined herein). Absent any delay imposed by Code Section 409A,(i.e. the 5 year delay for subsequent deferral elections, the 6 month delay forspecified employees, etc.), payments shall commence or be made on the first dayof the first month following the month in which Participant Separates FromService and shall continue thereafter for a period of one hundred and twenty(120) months.

 

**6.2****                               Upona Change in Control.** Upon a Change in Control, all future Deferralsshall cease and Participant shall be entitled to receive the balance in hisDeferred Compensation Account as of the date of such Change in Control(with  the exception that the Deferred CompensationAccount Balance shall continue to be credited with interest at the Rate ofInterest until all payments have been made). The Deferred Compensation Account Balance shall be paid out as follows:payments shall be made monthly for a period of ten (10) years (120months). In addition, monthly payments shall be calculated to provideParticipant with substantially equal monthly installments based on the Rate ofInterest in effect when the initial payment is made, and readjusted annually totake into account any fluctuation in the Rate of Interest (as defined herein).Absent any delay imposed by Code Section 409A, (i.e. the 5 year delay forsubsequent deferral elections, the 6 month delay for specified employees,etc.), payments shall commence or be made on the first day of the first monthfollowing the month in which Participant Separates From Service and shallcontinue thereafter for a period of one hundred and twenty (120) months.

 

**6.3****                              ****Unforeseeable Emergency.** In the event of an Unforeseeable Emergency, Participant may petition tothe Administrator in writing for a distribution. A distribution on account ofUnforeseeable Emergency may not be made to the extent that such emergency is ormay be relieved through reimbursement or compensation from insurance orotherwise, by liquidation of Participant’s assets, to the extent theliquidation of such assets would not cause severe financial hardship, or bycessation of deferrals under the plan. Distributions because of anUnforeseeable Emergency must be limited to the amount reasonably necessary tosatisfy the emergency need (which may include amounts necessary to pay anyFederal, state, local, or foreign income taxes or penalties reasonablyanticipated to result from the distribution). Determinations of amounts reasonably necessary to satisfy the emergencyneed must take into account any additional compensation that is available ifthe plan provides for cancellation of a deferral election upon a payment due toan Unforeseeable Emergency. If the petition for payout is approved by theAdministrator, then payout shall occur within sixty (60) days of such approval.In the event Participant’s petition for payout based on an UnforeseeableEmergency is granted, all future deferrals shall be terminated until such timeas Participant makes a new election, which shall in turn be treated as aninitial deferral election.

 

Any amount distributeddue to an Unforeseeable Emergency shall be subtracted from benefit amounts thatwould otherwise have been payable under this Agreement. Remaining benefitpayments shall be made in accordance with the provisions of Paragraphs 6.1-6.2.

 

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**6.4****                               Death.**

 

**A.****                                    DeathAfter Separating From Service.**In the event the Participant dies afterSeparating From Service but before all one hundred and twenty (120) monthlypayments due under the terms of this Plan have been paid in full, then anyunpaid payments shall be made to Participant’s Beneficiary in the same amountand on the same schedule as would have been paid to Director had he survived.

 

**B.****                                    DeathPrior to Separating From Service.** In the event Participant Dies beforeSeparating From Service, then Participant’s Beneficiary shall receive thegreater of the following: (i)  the lifetime benefit that would have beenpaid to the Director under Paragraph 6.1, calculated as if the Director’s deathwere at age Seventy-Five (75), or (ii) whatever the lifetime benefit wouldhave been paid to the Director deferring Three Thousand, Six Hundred ($3,600)annually until age Seventy-Five (75). Payments shall be made monthly for aperiod of ten (10) years (120 months), commencing on the first day of thefirst month following the month in which Participant dies.

 

**7.0****                              ****Compliance With IRC 409A.**

 

**7.1****                              ****Compliance With Notice 2006-79and 2007-86.**As this is a Director Plan, the six month delay in payment to a key employee ofa publicly traded company is unnecessary. In the event, however, that suchdelay in payment is warranted under IRC 409A

 

Notwithstanding the forgoing and/or anyprovision existing in this Agreement or any amendment thereto, it is the intentof the Bank and the Director that any payment or benefit provided pursuant tothis Agreement shall be made and paid in a manner, at a time and in a formwhich complies with the applicable requirements of IRC Section 409A, inorder to avoid any unfavorable tax consequences resulting from any such failureto comply. Furthermore, for the purposes of this Agreement, IRC Section 409Ashall be read to include any related or relevant IRS Notices (including but notlimited to Notice 2006-79).

 

In accordance with the current restrictions on payouts of deferredcompensation, and with respect to any plan amendment or election in 2008, suchamendment or election may not act as to accelerate any payments or cause anypayment to be made in 2008 that would not otherwise be payable in 2008.Furthermore, this restriction also applies to payments following a separationfrom service, and similarly applies to elections/amendments and payments madeand to be made in 2008. Therefore, an election or amendment to change a timeand form of payment made on or after January 1, 2008 

 

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and on or beforeDecember 31, 2008, may apply only to amounts that would not otherwise bepayable in 2008 and may not cause an amount to be paid in 2008 that would nototherwise be payable in 2008. (For example, where an amount would otherwise bepayable upon an event, such as a separation from service, an election in 2008cannot change the amount that would be payable in 2008 if the service providerseparated from service in 2008).

 

**8.0****                               Witholdings**.

 

**8.1****                               WithholdingOf Payroll Taxes**.  The Companyshall withhold from payments made hereunder any taxes required to be withheldfrom Participant’s wage under federal, state or local law. However, aBeneficiary may elect not to have withholding for federal income tax purposespursuant to Section 3405(a) (2) of the Internal Revenue Code, orany successor provision thereto.

 

**8.2****                               Effectof Payment.** Payment of the forgoing benefits shall fully and completelydischarge the Bank from all further obligations under this Plan with respect toa Participant and Participant’s Beneficiary(ies).

 

**9.0****                               BeneficiaryDesignations.**

 

**9.1****                               BeneficiaryDesignation**. Each Participant shall have the right, at any time, todesignate any person or persons as his Beneficiary(ies) to whom benefits underthis Agreement shall be paid in the event of his death prior to completedistribution to the Director of the benefits due under the Agreement. EachBeneficiary designation shall be in a written form prescribed by theAdministrator, and will be effective only when filed with the Administratorduring the Participant’s lifetime and when accepted and acknowledged in writingby the Administrator or its designated agent.

 

**9.2****                               Amendmentsto Beneficiary Designation**. Any Beneficiary designation may be changedby Director without the consent of any designated Beneficiary by the filing ofa new Beneficiary designation with the Administrator. The filing of a newBeneficiary designation form will cancel all Beneficiary designationspreviously filed. If an Director’s compensation is community property, anyBeneficiary designation shall be valid or effective only as permitted underapplicable law.

 

**9.3****                               NoParticipant Designation**. In the absence of an effective Beneficiarydesignation, or if all designated Beneficiaries predecease the Director or dieprior to complete distribution of the Director’s benefits, then the Director’sdesignated Beneficiary shall be deemed to be the Director’s estate.

 

**9.4****                               Doubtas to Beneficiary.** If the Administrator has any doubt as to the properBeneficiary to receive payments pursuant to this Agreement, the Administratorshall have the right to withhold such payments until this matter is resolved(so long as such payments are made in a timely fashion and in compliance withIRC 409A).

 

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**9.5****                               Paymentto Guardian**.  If a benefit ispayable to a minor or a person declared incompetent or to a person incapable ofhandling the disposition of his property, the Administrator may direct paymentof such benefit to the guardian, legal representative or such person having thecare and custody of such minor or incompetent person.  The Administrator may require proof ofincompetency, minority, incapacity or guardianship as it may deem appropriateprior to distribution of the benefit. Such distribution shall completely discharge the Administrator and theBank from all liability with respect to such benefit.

 

**9.6****                               Effectof Payment to the Beneficiary.** Payment to the deemed Beneficiary shallfully and completely discharge the Bank and the Administrator from all furtherobligations under this Agreement.

 

**10.0****                        AdministrationAnd Claims Procedure.**

 

**10.1****                        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 to qualified individuals, includingemployment of advisors and the delegation of ministerial duties.

 

**10.2****                        ClaimsProcedure.**

 

In the event a dispute arises over the benefits under this Directorplan and benefits are not paid to Director (or to Director’s beneficiary[ies],if applicable) and such claimants feel they are entitled to receive suchbenefits, then a written claim must be made to the Named Fiduciary and PlanAdministrator named above  in accordancewith the following procedures:

 

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

 

B.                                     ClaimDecision.  Upon receipt of such claim, the PlanAdministrator shall respond to such claimant within ninety (90) days afterreceiving the claim.  If the PlanAdministrator determines that special circumstances require additional time forprocessing the claim, the Plan Administrator can extend the response period byan additional ninety (90) days for reasonable cause by notifying the claimantin writing, prior to the end of the initial ninety (90) day period,  that an additional period is required. Thenotice of extension must set forth the special circumstances and the date bywhich the Plan Administrator expects to render its decision.

 

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If the claim is denied in whole or in part, the Plan Administratorshall notify the claimant in writing of such denial. The Plan Administratorshall write the notification in a manner calculated to be understood by theclaimant.  The notification shall setforth:

 
| (i)   | The specific reasons for the denial;                                                                                                                                           |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | The specific reference to pertinent provisions of the Agreement on  which the denial is based;                                                                                 |
| (iii) | A description of any additional information or material necessary for  the claimant to perfect the claim and an explanation of why such material or  information is necessary; |
| (iv)  | Appropriate information as to the steps to be taken if the claimant  wishes to submit the claim for review and the time limits applicable to such  procedures; and             |
| (v)   | A statement of the claimant’s right to bring a civil action under  ERISA Section 502(a) following an adverse benefit determination on  review.                  |

 

C.                                     Request forReview.  Within sixty (60) days afterreceiving notice from the Plan Administrator that a claim has been denied (inpart or all of the claim), then  claimant(or their duly authorized representative) may file with the Plan Administrator,a written request for a review of the denial of 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 Plan 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 Plan Administrator shallrespond in writing to such claimant within sixty (60) days after receiving therequest for review.  If the PlanAdministrator determines that special circumstances require an extension oftime for processing the claim, written notice of the extension shall befurnished to the claimant prior to the termination of the initial sixty (60)day period. In no event shall such extension exceed a period of sixty (60) daysfrom the end of the initial period. The notice of extension must set forth thespecial circumstances requiring an extension of time and the date by which thePlan Administrator expects to render its decision.

 

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In considering the review, the Plan Administrator shall take intoaccount all materials and information the claimant submits relating to theclaim, without regard to whether such information was submitted or consideredin the initial benefit determination.

 

The Plan Administrator shall notify the claimant in writing of itsdecision on review.  The PlanAdministrator shall write the notification in a manner calculated to beunderstood by the claimant.  Thenotification shall set forth:

 
| (i)   | The specific reasons for the denial;                                                                                                                                                                                                                                             |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | A reference to the specific provisions of the Agreement on which the  denial is based;                                                                                                                                                                                           |
| (iii) | A statement that the claimant is entitled to receive, upon request  and free of charge, reasonable access to, and copies of, all documents,  records and other information relevant (as defined in applicable ERISA  regulations) to the claimant’s claim for benefits; and |
| (iv)  | A statement of the claimant’s right to bring a civil action under  ERISA Section 502(a).                                                                                                                                                                               |

 

**11.0****                        DisputeResolution.**

 

**11.1****                        Arbitrationof Disputes.**  All claims,disputes and other matters in question arising out of or relating to thisAgreement or the breach or interpretation thereof, other than those matterswhich are to be determined by the Bank in its sole and absolute discretion,shall be resolved by binding arbitration before a representative member,selected by the mutual agreement of the parties, of the Judicial Arbitrationand Mediation Services, Inc. (“JAMS”), located in California.  In the event JAMS is unable or unwilling toconduct the arbitration provided for under the terms of this paragraph, or hasdiscontinued its business, the parties agree that a representative member,selected by the agreement of the parties, of the American ArbitrationAssociation (“AAA”) in California shall conduct the binding arbitrationreferred to in this paragraph. Notice of the demand for arbitration shall befiled in writing with the other party to this Agreement and with JAMS (orAAA).  In no event shall the demand forarbitration be made after the date when institution of legal or equitableproceedings based on such claim, dispute or other matter in question would bebarred by the applicable statute of limitations.  The arbitration shall be subject to such rules ofprocedure used or established by JAMS (or AAA). Any award rendered by JAMS orAAA shall be final and binding upon the parties, and as applicable, theirrespective heirs, beneficiaries, legal representatives, agents, successors andassigns, and may be entered in any court having jurisdiction thereof. Theobligation of the parties to arbitrate pursuant to this clause shall bespecifically enforceable in accordance with, and shall be conductedconsistently with, the provisions of California law and the California code ofCivil Procedure. Any arbitration hereunder shall be conducted in Atascadero,California, unless otherwise agreed to by the parties.

 

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**11.2****                        Attorneys’Fees.**  In the event of anyarbitration or litigation concerning any controversy, claim or dispute betweenthe parties hereto, arising out of or relating to this Agreement or the breachhereof, or the interpretation hereof, (a) each party shall pay his ownattorneys’ arbitration fees incurred (pursuant to the terms of this Agreement);(b) the prevailing party shall be entitled to recover from the other partyreasonable expenses, attorneys’ fees and costs incurred in the enforcement orcollection of any judgment or award rendered. The “prevailing party” means anyparty (one party or 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.

 

**12.0****                        Statusas an Unsecured General Creditor and Rabbi Trust.**

 

**12.1****                        UnsecuredCreditor.** Notwithstanding anything contained herein to thecontrary:  (i) Director shall haveno legal or equitable rights, interests or claims in or to any specificproperty or assets of the Bank as a result of this Agreement; (ii) none ofthe Bank’s assets shall be held in or under any trust for the benefit ofDirector or held in any way as security for the fulfillment of the obligationsof the Bank under this Agreement; (iii) all of the Bank’s assets shall beand remain the general unpledged and unrestricted assets of the Bank; (iv) theBank’s obligation under this Agreement shall be that of an unfunded andunsecured promise by the Bank to pay money in the future; and (v) Directorshall be an unsecured general creditor with respect to any benefits which maybe payable under the terms of this Agreement.

 

Notwithstanding subparagraphs (i) through (v) above, the Bankand the Director acknowledge and agree that, in the event of a Change inControl, upon request of  Director, or inthe Bank’s discretion if the Director does not so request and the Bank nonethelessdeems it appropriate, the Bank shall establish, not later than the effectivedate of the Change in Control, a Rabbi Trust or multiple Rabbi Trusts (the “Trust”or “Trusts”) upon such terms and conditions as the Bank, in its solediscretion, deems appropriate and in compliance with applicable provisions ofthe Code, in order to permit the Bank to make contributions and/or transferassets to the Trust or Trusts to discharge its obligations pursuant to thisAgreement.  The principal of the Trust orTrusts and any earnings thereon shall be held separate and apart from otherfunds of the Bank to be used exclusively for discharge of the Bank’sobligations pursuant to this Agreement and shall continue to be subject to theclaims of the Bank’s general creditors until paid to Director in such mannerand at such times as specified in this Agreement.

 

Assets set aside in trust by Bank to meet itsobligations under this Agreement shall not be placed in a foreign trust locatedoutside the United States.

 

**12.2****                        CorporateAssets**.  As stated above,payments to Director or his Beneficiary(ies) shall be made from assets whichshall continue, for all purposes, to be a part of the general, unrestrictedassets of the Bank. No person shall have nor acquire any interest in any suchassets by virtue of the provisions of this Agreement. .

 

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The Bank may, in its sole discretion,purchase assets to secure all or any part of its obligations undertaken throughthis Agreement. If the Bank elects to secure its promise under this Agreement,in whole or in part, through the purchase of life insurance, mutual funds,disability policies, annuities or other assets, then Bank may, at any timedispose of such assets in whole or in part. In no event shall Director orBeneficiary(ies) be deemed to have a lien, right, title, or interest in anyspecific investment or asset of Bank.

 

If Bank decided to purchase a life insurance,disability or annuity policy upon the life or health of Director, then Directorwill cooperate by furnishing any and all information requested by the Bank andby taking such physical examinations or other action as may be requested by theBank in order to obtain such insurance or annuity.

 

**13.0****                        Miscellaneous.**

 

**13.1****                        OpportunityTo Consult With Independent Advisors.** Director acknowledges that he has been afforded the opportunity toconsult with independent advisors of his choosing including, withoutlimitation, accountants or tax advisors and counsel regarding both the benefitsgranted to him under the terms of this Agreement and the (i) terms andconditions which may affect Director’s right to these benefits and (ii) personaltax effects of such benefits including, without limitation, the effects of anyfederal or state taxes, Section 280G of the Code, and any other taxes,costs, expenses or liabilities whatsoever related to such benefits, which inany of the foregoing instances Director acknowledges and agrees shall be thesole responsibility of Director notwithstanding any other term or provision ofthis Agreement. Director further acknowledges and agrees that the Bank shallhave no liability whatsoever related to any such personal tax effects or otherpersonal costs, expenses, or liabilities applicable to Director and furtherspecifically waives any right for himself or herself, and his or her heirs,beneficiaries, legal representatives, agents, successor and assign to claim orassert liability on the part of the Bank related to the matters described abovein this paragraph.   Director furtheracknowledges that he has read, understands and consents to all of the terms andconditions of this Agreement, and that he enters into this Agreement with afull understanding of its terms and conditions.

 

**13.2****                        Notice.**  Any notice required or permitted of eitherDirector 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, postage prepaidand return receipt requested, and addressed to the party at the address givenbelow for the receipt of notices, or such changed address as may be requestedin writing by a party.

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

 

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| If to the Director: |   |   |
|---------------------|--------|--------|
|                |   |   |
|                |   |   |

 

**13.3****                        Assignment.**  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 ortransfer shall be void. In the event the Director or any beneficiary attemptsassignment, communication, hypothecation, transfer or disposal of the benefitshereunder, any such attempted transfer or assignment shall be void.

 

**13.4****                        IRS Section 280GIssues.** If all or any portion ofthe amounts payable under this Agreement, either alone or together with otherpayments which 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 the amount of excise tax imposed by Section 4999 of the Code, aslong as such efforts are in accordance with IRC 409A.  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 Director is greater than the amount initiallyso determined, then Director shall pay an amount equal to the sum of suchadditional excise taxes and any interest, fines and penalties resulting fromsuch underpayment.  The determination ofthe amount of any such excise taxes shall be made by the independent accountingfirm employed by the Bank immediately prior to the change in control or suchother independent accounting firm or advisor as may be mutually agreeable toBank and Director in the exercise of their reasonable good faith judgment.

 

**13.5****                        BindingEffect/Merger or Reorganization.** This Agreement shall be binding upon and inure to the benefit ofDirector and the Bank. Accordingly, the Bank shall not merge or consolidateinto or with another corporation or entity, or reorganize or sell substantiallyall of its assets to another corporation, firm or person, unless and until suchsucceeding or continuing corporation, entity, firm or person agrees to assumeand discharge the obligations of the Bank under this Agreement. The term “Bank”as used in this Agreement shall be deemed to refer to such surviving orsuccessor firm, person, entity or corporation, or holding company, as the casemay be.

 

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**13.6****                        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.

 

**13.7****                        PartialInvalidity.** If any terms, provision, covenant, or condition of thisAgreement is determined by an arbitrator or a court, as the case may be, to beinvalid, void, or unenforceable, such determination shall not render any otherterm, provision, covenant or condition invalid, void or unenforceable, and theAgreement shall remain in full force and effect notwithstanding such partialinvalidity.

 

**13.8****                        EntireAgreement.**  This Agreementsupersedes any and all other agreements, either oral or in writing, between theparties with respect to the subject matter of this Agreement and contains allof the covenants and agreements between the parties with respect thereto.  Each party to this Agreement acknowledgesthat no other representations, inducements, promises, or agreements, oral orotherwise, have been made by any party, or anyone acting on behalf of anyparty, which are not set forth herein, and that no other agreement, statement,or promise not contained in this Agreement shall be valid or binding on eitherparty.

 

**13.9****                        ParagraphHeadings.**  The paragraph headingsused in this Agreement are included solely for the convenience of the partiesand shall not affect or be used in connection with the interpretation of thisAgreement.

 

**13.10****                 No StrictConstruction.**  The language usedin this Agreement shall be deemed to be the language chosen by the partieshereto to express their mutual intent, and no rule of strict constructionwill be applied against any person.

 

**13.11****                 Governing Law.**  The laws of the State of California, otherthan those laws denominated choice of law rules, and where applicable, the rules andregulations of the Board of Governors of the Federal Reserve System, FederalDeposit Insurance Corporation, Office of the Comptroller of the Currency, orany other regulatory agency or governmental authority having jurisdiction overthe Bank or the Holding Company, shall govern the validity, interpretation,construction and effect of this Agreement.

 

**13.12****                 Gender. **Whenever in this Agreement words are usedin the masculine, feminine or neuter gender, they shall be read and construedas in the masculine, feminine or neuter gender, whenever they should so apply.

 

**13.13**                 **Amendment.**  Any amendment to this Agreement shall beeffective only if it is in writing and signed by each party or such party’sauthorized representative, and only to the extent that it is compliant with allapplicable codes and statutes, including but not limited to IRC 409A. Inaddition, no amendment shall be effective to decrease a Participant’s DeferralAccount Balance calculated as though Participant had experienced a separationfrom service as of the effective date of such amendment or modification, or 

 

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if the amendment or modification occurs after the date upon whichParticipant was eligible to retire, calculated as though Participant hadRetired as of the effective date of the amendment or modification.

 

**14.0****                        Terminationor Modification of Agreement by Reason of Changes in the Law, Rules orRegulations.**

 

The Bank is entering into this Agreement upon the assumption thatcertain existing tax laws, the Code, rules and regulations will continuein effect in their current form. If any said assumptions should change and saidchange has a detrimental effect on this Director plan, then the Bank reservesthe right to terminate or modify this Agreement accordingly. In the event of atermination of this Agreement, then all previously deferred amounts shall beheld in the Deferred Compensation Account, accruing interest, until theearliest of Director’s Separation From Service or Death.

 

IN WITNESS WHEREOF, the Bank and Director have executed this Agreementon 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/ Jerry W. DeCou III |   | Date: December 17, 2008 |
|-----------|------------------------|--------|-------------------------|
| Signature |                   |   |

 

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

 

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