**Exhibit 10.96**

 

**FIRST AMENDED AND RESTATED**

** **

**SANTA LUCIA BANK SALARY CONTINUATION AGREEMENT**

** **

ThisFirst Amended and Restated Santa Lucia Bank Salary Continuation Agreement(hereinafter “Agreement”) is made and entered into effective as of December 17,2008 by and between **Santa Lucia Bank**(hereinafter “Bank” or “Employer”), a state-chartered bank with its principaloffices located in the city of Atascadero, California, and **James Cowan**,  an executive of the Bank (the “Executive”).

 

Becauseit is the intent of the parties to comply with the final regulations undersection 409A of the Internal Revenue Code of 1986, issued by the InternalRevenue Service and Treasury Department on April 10, 2007, this Agreementhereby amends, supersedes and replaces the prior Santa Lucia Bank SalaryContinuation Agreement, by and between these same parties effective as of January 18,2001 (hereinafter “Prior Agreement”) in its entirety, as follows:

 

WHEREAS, it is the consensus of the Employer and its Board of Directorsthat Executive’s employment with the Bank in the past has been of exceptionalmerit and has constituted an invaluable contribution to the general welfare ofthe Bank in bringing the Bank to its present status of operating efficiency andpresent position in its field of activity;

 

WHEREAS, the Employer, in concert with its Board of Directors, desiresto establish a compensation benefit program as a fringe benefit for executivesof the Employer in order to attract and retain individuals with extensive andvaluable experience in the banking industry;

 

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

 

WHEREAS, it is deemed to be in the best interests of the Employer toprovide Executive with certain fringe benefits, on the terms and conditions setforth herein, in order to reasonably induce Executive to remain in the Bank’semploy during Executive’s lifetime or until the age of retirement; and

 

WHEREAS, Executive and the Employer wish to specify in writing theterms and conditions upon which this additional compensatory incentive will beprovided to Executive;

 

WHEREAS, it is the intent of the parties hereto that this ExecutivePlan be considered an unfunded arrangement maintained primarily to providesupplemental retirement benefits for Executive, and be considered anon-qualified benefit plan for the purposes of the Employee Retirement IncomeSecurity Act of 1974, as amended (“ERISA”); and

 

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NOW, THEREFORE, in consideration of the past employment performance andthe  services to be performed byExecutive in the future, as well as the mutual promises and covenants containedherein, Executive and the Employer agree as follows:

 

**AGREEMENT**

 

**1.0          Termsand Definitions.**

 

For the purposes of this Agreement, the followingterms shall have the meanings indicated below, unless the context clearlyindicates otherwise. In the event any provision of this Agreement is ambiguous,then it shall be interpreted in a manner that is consistent with InternalRevenue Code Section 409A. Subject to the forgoing, the terms below shallbe defined as follows:

 

**1.1          AccruedLiability Balance.** The term “Accrued LiabilityBalance” shall mean the amount accrued by the Bank to fund the future benefitexpense associated with this Agreement, as of the end of the month precedingExecutive’s Separation From Service. The Bank shall account for this benefitusing Generally Accepted Accounting Principles, regulatory accounting guidanceof the Bank’s primary federal regulator, and other applicable accountingguidance, including but not limited to Accounting Principles Board OpinionNumber 12 (“APB 12”) as amended by Statement of Financial Accounting StandardsNumber 106 (“FAS 106”) and the Discount Rate. Accordingly, the Bank shallestablish a liability retirement account for Executive into which appropriateaccruals shall be made using the applicable Discount Rate.  Any one of a variety of amortization methodsmay be used to determine the Accrual Balance. However, once chosen, the method must be consistently applied.  For illustrative purposes ONLY, a sampletable showing possible prospective Accrued Liability Balance numbers shall beattached hereto as Exhibit “A”; however this Exhibit A is merely asample of the potential Accrued Liability Balance based on a future given dateand using a sample Discount Rate.  Theactual Accrued Liability Balance will be determined based on the actualDiscount Rates in effect over time.

 

**1.2          Administrator. **The Bank shall be the “Administrator” and, solely for the purposes ofERISA (as defined below), the “fiduciary” of this Agreement where a fiduciaryis 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 following events,as such terms and events are defined in Internal Revenue Code Section 409Aand the related guidance and Notices thereto. IRC 409A currently provides thata Change in Control Event shall include any of the following events (and forthe purposes of this provision, the term “corporation” shall mean the Bank orthe Bank’s

 

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holding company):

 

A.            A Change in the Ownership of aCorporation. A change in the ownership of a corporation occurs on the datethat any one person or persons acting as a group (as defined in IRC 409A),acquires ownership of stock of the corporation that, together with stock heldby such person or group, constitutes more than fifty percent (50%) of the totalfair market value or total voting power of the stock of such corporation.

 

B.            Change in the Effective Controlof a Corporation. A change in the effective control of the corporation shallbe deemed to occur on either of the following 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 aSubstantial Portion of a Corporation’s Assets. A change in the ownership ofa substantial portion of a corporation’s assets shall be deemed to occur on thedate that any one person or group acquires (or has acquired during the twelve(12) month period ending on the date of the most recent acquisition by suchperson or persons) assets from the corporation that have a total gross fairmarket value equal to or more than forty percent (40%) of the total gross fairmarket value of all of the assets of the corporation immediately before suchacquisition or acquisitions. No Change in Control shall result if the assetsare transferred to certain entities controlled directly or indirectly by theshareholders of the 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 Executive, the Change in Control event must relate to (i) thecorporation for whom Executive is performing services at the time of the Changein Control; (ii) the corporation that is liable for the payment of thedeferred compensation (or all corporations liable for the payment if more thanone corporation is liable) but only if either the deferred compensation isattributable to the performance of service by the Participant for suchcorporation (or corporations) or there is a bona fide business purpose for suchcorporation or corporations to be liable for such payment

 

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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 corporationthat is a majority shareholder of a corporation identified above, or anycorporation in a chain of corporations in which each corporation is a majorityshareholder of another corporation in the chain, ending in a corporationidentified above. Should there be any question of whether a Change in Controlhas occurred such as to trigger payment of a benefit described herein, anyambiguity shall be resolved in accordance with the final regulations and anysubsequent clarification of IRC 409A.

 

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

 

**1.7       ****Disability/Disabled****. **For the purposes of this Agreement, the term “Disability”shall be interpreted in accordance with IRC 409A. Pursuant to IRC 409A, aParticipant will be considered Disabled if:

 
| A.     | Executive is unable to engage  in any substantial gainful activity by reason of any medically determinable  physical or mental impairment that can be expected to result in death or can  be expected to last for a continuous period of not less than twelve (12)  months; or                                                                                                                        |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
| B.     | Executive is, by reason of any medically  determinable physical or mental impairment that can be expected to result in  death or can be expected to last for a continuous period of not less than  twelve (12) months, receiving income replacement benefits for a period of not  less than three (3) months under an accident and health plan covering  employees of Executive’s employer. |

 

**1.8         DiscountRate.**  The term “Discount Rate” means the rate usedby the Plan Administrator in any specified year to accrue benefits under thisPlan; however, the Plan Administrator, in its sole discretion, may adjust theDiscount Rate to maintain the rate within reasonable standards according toGAAP (Generally Accepted Accounting Principles).

 

**1.9         EarlyRetirement and Early Retirement Age.**  Theterm “Early Retirement” shall refer to Executive’s Separation From Service onor after attaining the Early Retirement Age of sixty-two (62), but beforeattaining the Normal Retirement Age, and for any reason other than “For Cause”(or because of death).

 

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

 

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

 

**1.12       Executive Benefit. **The term “Executive Benefit” shall mean the annual benefit amountsdetermined pursuant to Paragraphs 1 through 4 herein (including sub-paragraphs,as applicable), forfeited, reduced or adjusted to the extent:  (a) required under the other provisions

 

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ofthis Agreement; (b) required by reason of the lawful order of any regulatoryagency or body having jurisdiction over the Employer; or (c) required inorder for the Employer to comply with any and all applicable state and federallaws, including, but not limited to, income, employment and disability incometax laws (*e.g.*, FICA, FUTA, SDI).

 

**1.13        InvoluntarySeparation From Service**.   In accordance with IRC 409A, the term “InvoluntarySeparation From Service” shall mean a Separation From Service due to theindependent exercise of the unilateral authority of the Bank to terminateExecutive’s services, other than due to Executive’s implicit or explicitrequest, where Executive was willing and able to continue performing services.

 

**1.14**        **IRC 409A.**   The term “IRC 409A” shall refer to the finalregulations issued by the IRS and the Treasury Department under Section 409Aof the Code.

 

**1.15        Normal Retirement /Normal Retirement Age. **The term “Normal Retirement” shall meanExecutive’s Separation From Service on or after the attaining the NormalRetirement Age of Sixty-Five (65) for any reason other than “For Cause” (orbecause of death).

 

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

 

**1.17        SeparationFrom Service/ Termination of Employment.**  The terms Separation From Service (SeparatesFrom Service) and Termination of Employment shall be used interchangeably forthe purposes of this Agreement and shall be interpreted in accordance with theprovisions of IRC 409A. Whether a termination of employment has occurred isdetermined based on whether the facts and circumstances indicate that the Bankand Executive reasonably anticipate that no further services will be performedafter a certain date or that the level of bona fide services the employee willperform after such date (whether as an employee or as an independent contractor)will permanently decrease to no more than twenty (20%) percent of the averagelevel of bona fide services performed (as an employee or an independentcontractor) over the immediately preceding 36-month period (or the full periodof services to the employer  if theemployee has been providing services to the employer less than 36 months).There shall be no Separation From Service while Executive is on military leave,sick leave or other bona fide leave of absence, as long as such leave does notexceed six (6) months, or if longer, so long as the individual retains aright to re-employment with the service recipient under an applicable statuteor by contract.

 

**1.18        SpecifiedEmployee.** The term “Specified Employee” shall bedefined in accordance with IRC 409A. At present, and in accordance with IRC409A, the term “Specified Employee” means an employee who, as of the date ofthe employee’s Separation From Service, is a key employee of an employer ofwhich any stock is publicly traded on an established securities market orotherwise. An employee is a key employee if the employee meets the requirementsof section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with theregulations thereunder and disregarding section 416(i)(5)) at any time duringthe twelve (12) month period ending on a specified employee identificationdate. If Executive is a key employee as of a specified employee

 

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identification date, then Executive shall be treated as a key employeefor the entire twelve (12) month period beginning on the specified employeeeffective date.

 

**1.19        TerminationFor Cause.**The term “Termination For Cause” shallmean termination of Executive’s employment by reason of any of the following:

 
| A.     | Executive’s personal dishonesty, incompetence or willful misconduct;                                                                                                                                                                                                                  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                       |
| B.     | Executive’s breach of fiduciary duty involving personal profit;                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                       |
| C.     | Executive’s intentional failure to perform Executive’s duties for the  Bank after a written demand for performance is given to Executive by the  Board which demand specifically identifies the manner in which the Board  believes that Executive has not performed his duties; |
|   |                                                                                                                                                                                                                                                                                       |
| D.     | Executive’s willful violation of any law, rule, regulation or final  cease and desist order (other than traffic violations or similar minor  offenses) to the extent detrimental to the Bank’s business or reputation; or                                                        |
|   |                                                                                                                                                                                                                                                                                       |
| E.     | Executive’s material breach of any provision of this Agreement.                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                       |

**1.20        VoluntaryTermination.** The term “VoluntaryTermination” shall mean an Executive’s Separation From Service, which is not asa result of an Involuntary Termination, a Termination For Cause or because of aDisability.

 

**2.0          Scope, Purpose and Effect.**

 

**2.1          Contractof Employment.** Although this Agreement is intended to provide Executive with anadditional incentive to remain in the employ of the Employer, this Agreementshall not be deemed to constitute a contract of employment between Executiveand the Employer nor shall any provision of this Agreement restrict or expandthe right of the Employer to terminate Executive’s employment.  This Agreement shall have no impact or effectupon any separate written Employment Agreement which Executive may have withthe Employer, it being the parties’ intention and agreement that unless thisAgreement is specifically referenced in said Employment Agreement (or anymodification thereto), this Agreement (and the Employer’s obligationshereunder) shall stand separate and apart and shall have no effect on or beaffected by, the terms and provisions of said Employment Agreement.

 

**2.2          Fringe Benefit. **The benefits provided by this Agreement are granted by the Bank as afringe benefit to Executive and are not a part of any salary reduction plan orany arrangement deferring a bonus or a salary increase.  Executive has no option to take any currentpayments or bonus in lieu of the benefits provided by this Agreement

 

**2.3          ProhibitedPayments. **Notwithstanding anything in this Agreement tothe contrary, if any payment made under this Agreement is a “golden parachutepayment” as defined

 

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inSection 28(k) of the Federal Deposit Insurance Act (12 U.S.C. section1828(k) and Part 359 of the Rules and Regulations of the FederalDeposit Insurance Corporation (collectively, the “FDIC Rules”) or is otherwise prohibited, restrictedor subject to the prior approval of a Bank Regulator, no payment shall be madehereunder without complying with said FDIC Rules.

 

**2.4          AdditionalProhibited Payments.**If the Bank is subject to theexecutive compensation limitations under the United States Treasury Department’sTroubled Asset Relief Progra**m** (“TARP”) atthe time Executive becomes entitled to any payment under this Agreement, and ifsuch payment, together with any other payments which Executive has the right toreceive from the Bank, exceed the limits allowed for Executive establishedunder TARP, then the aggregate payments to Executive pursuant to this Agreementand any other agreement with Executive shall be reduced to the largest amountas will result in no portion of such payments violating the executivecompensation limitations under TARP.

 

**3.0          Delay in Payments for Specified Employee in the Event ofa  Separation From Service, Notice2007-86  and Compliance With IRC 409A.**

 

**3.1          Delay in Payments for Specified Employee in the Event ofa Separation From Service and Compliance with Notice 2007-86.** In the case of any Employee who is a Specified Employee as of the dateof a Separation From Service, then a payment conditioned upon a Separation FromService may not be made before the date that is six (6) months after thedate of Separation From Service (or, if earlier than the end of the six-monthperiod, the date of death of the Specified Employee).

 

In the event payments to which Executivewould otherwise be entitled during the first six (6) months are subject tothis six (6) month delay in payment, then such payments shall beaccumulated and paid on the first day of the seventh month following the dateof Separation From Service. Payments will then continue thereafter as calledfor pursuant to the terms of this Agreement.

 

**Notwithstandingany provision existing in this Agreement or any amendment thereto, it is theintent of the Bank and Executive that any payment or benefit provided pursuantto this 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 2007-86).**

** **

In addition, as stated above, it is the intent of the parties to complywith IRS Notice 2007-86, and thus, for any new election made in 2008, that newelection may not apply to amounts that would otherwise be payable in 2008, andmay not cause amounts to be paid in 2008 that would not otherwise be payable inthat year. In the event any such new election would accelerate a payment into2008, then such resulting payment shall not be made until January 3, 2009(so long as permitted by IRC 409A and any subsequent guidance).

 

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**3.2          Compliance WithIRC 409A.**   In the event of anyambiguity in terms, or in the event further clarification of any term orprovision is necessary, all interpretations and payouts of benefits basedthereon shall be in accordance with IRC 409A and any related notices orguidance thereon.

 

**4.0          Executive Benefit Payments UponRetirement.**

 

**4.1          ExecutiveBenefit Payments Upon Normal Retirement.**In theevent Executive Separates From Service for any reason other than For Cause (orbecause of death) on a date which constitutes a Normal Retirement date asdefined herein, then Executive shall be entitled to be paid the following:

 

**4.1.1****                     Amount ofBenefit.** Executive shall receive an annual Executive Benefit ofTwenty-Five Thousand Dollars ($25,000).

 

**4.1.2****                     PaymentMethod and Duration.** This annual Executive Benefit shall be paid intwelve (12) substantially equal monthly installments, with payments commencingon the first day of the first month following Executive’s Separation FromService and continuing until the death of Executive.

 

**4.2          ExecutiveBenefit Payments Upon Early Retirement. **In the event Executive Separates From Servicefor any reason other than For Cause (or because of death) on a date whichconstitutes an Early Retirement date as defined herein, then Executive shall beentitled to be paid the following:

 

**4.2.1****                     Amount ofBenefit.**Executive shall receive an annual Executive Benefit based onthe Early Retirement payment date and calculated as follows: an annual lifetimeannuity based on the Accrued Liability Balance as of the date of EarlyRetirement, taking into consideration the Discount Rate and mortalityassumptions in use by the Bank as of the Early Retirement Date. This annualamount shall remain consistent for the duration of the benefit.  For illustrative purposes ONLY, a sampletable showing possible prospective Accrued Liability Balances and acorresponding potential benefit  isattached hereto as “Exhibit A”; however this Exhibit A is merely asample table and not intended to bind the parties. The actual benefit amountwill be determined by the Bank’s actuaries at the time the benefit becomes due.

 

**4.2.2****                     PaymentMethod and Duration.** This annual Executive Benefit shall be paid intwelve (12) substantially equal monthly installments, with payments commencingon the first day of the first month following Executive’s Separation FromService and continuing until the death of Executive.

 

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**5.0          Paymentsin the Event of Disability or Death During Employment.**

 

**5.1          Disability.**  In the event Executive becomes Disabled whileemployed by the Bank (i.e. prior to Separating From Service with the Bank) andprior to qualifying for Early or Normal Retirement, then Executive shall beentitled to be paid the following benefit in lieu of any other benefits herein(i.e., this provision shall control even in the event such Disability occurswithin 2 years of a Change in Control, etc). If, however, Executive becomesDisabled after qualifying for Early or Normal Retirement, then Executive shallbe deemed to have elected Early or Normal Retirement and shall receive thebenefit specified under the applicable provisions of this Agreement.

 

**5.1.1****                     Amount ofBenefit.**  Executive shall receivean annual Executive Benefit  based on theDisability date and calculated as follows: an annual lifetime annuity based onthe Accrued Liability Balance as of the date of Disability, taking intoconsideration the Discount Rate and mortality assumptions in use by the Bank asof the Disability date. This annual amount shall remain consistent for theduration of the benefit. For illustrative purposes ONLY, a sample table showingpossible prospective Accrued Liability Balances and a corresponding potentialbenefit hereunder is attached hereto as “Exhibit A”; however this Exhibit Ais merely a sample table and not intended to bind the parties. The actualbenefit amount will be determined by the Bank’s actuaries at the time thebenefit becomes due

 

**5.1.2****                     PaymentMethod and Duration.** This annual Executive Benefit shall be paid intwelve (12) substantially equal monthly installments, with payments commencingon the first day of the first month following Executive’s Disability andcontinuing until the death of Executive.

 

**5.2          Death.**  There are no death benefits payable underthis Agreement (such benefits are described by a Joint Beneficiary DesignationAgreement, if any), nor will Executive Benefit Payments be made after Executivedies, regardless of whether such death occurs before or after termination andregardless of whether payments have already begun pursuant to this Agreement.

 

**6.0          Payments in theEvent Executive Voluntarily or Involuntarily Separates From Service Prior toEarly Retirement.**

 

As indicated above, the Bank reserves the right to terminate Executive’sEmployment, with or without Cause but subject to any written employmentagreement which may then exist.  In theevent that Executive Separates From Service prior to qualifying for EarlyRetirement, other than by reason of a termination For Cause or following a Changein Control, then, for the following events of termination, and as applicable,Executive shall be entitled to the benefits described below which correspond tothe circumstances surrounding Executive’s Termination of Employment.

 

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**6.1          InvoluntaryTermination. **In the event Executive is InvoluntarilyTerminated prior to qualifying for Early Retirement (for reasons other than aTermination For Cause, following a Change in Control, as addressed in alternateprovisions herein), then he shall be entitled to receive the following:

 

**6.1.1****                     Amount ofBenefit.** Executive shall receive an Executive Benefit equal to theAccrued Liability Balance based on the date such Termination occurs.

 

**6.1.2****                     PaymentMethod and Duration.**  ThisExecutive Benefit amount shall be paid in one lump sum on the first day of thefirst month immediately following Executive’s Separation From Service.

 

**6.2          VoluntaryTermination by Executive.** Executive agrees that ifhe Voluntarily Terminates his Employment with the Employer prior to qualifyingfor Early Retirement (for reasons otherthan following a Change in Control), then Executive shall forfeit allrights and benefits he may have had under the terms of this Agreement and shallhave no right to be paid any of the amounts which would be due or paid toExecutive by the Bank pursuant to the terms of this Agreement.

 

**7.0          Change in Control.**

 

**7.1**          In the event of a Change in Control,followed by a Separation From Service (for any reason other than for Cause)prior to Executive qualifying for Early Retirement, then Executive shall beentitled to receive the following Executive Benefit in lieu of all othersidentified herein:

 

**7.1.1****                     BenefitAmount.**  Executive shall receivean Executive Benefit equal to the Accrued Liability Balance based on the datesuch Separation From Service occurs.

 

**7.1.2****                     PaymentMethod and Duration.**  ThisExecutive Benefit amount shall be paid in one lump sum on the first day of thefirst month immediately following Executive’s Separation From Service.

 

In the event Executive Separates From Serviceafter a Change in Control, and after qualifying for Early or Normal Retirement,then Executive shall be deemed to have elected Early or Normal Retirement andshall receive the benefit specified under the applicable provisions of thisAgreement.

 

**8.0          Terminationfor Cause.**

 

Executive agrees that if Executive’semployment with the Bank is terminated at any time For Cause as defined in thisAgreement (including an Executive who has attained Early or Normal RetirementAge but has not yet Separated From Service, and including following a Change inControl), then he shall forfeit any and all rights and benefits he may haveunder the terms of this

 

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Agreement and shall have no right to be paid any of the amounts whichwould otherwise be due or paid to Executive by the Bank pursuant to the termsof this Agreement.

 

**9.0****                               RightTo Determine Funding Methods.**

 

The Bank reserves the right to determine, inits sole and absolute discretion, whether, to what extent and by what method,if any, to provide for the payment of the amounts which may be payable toExecutive, under the terms of this Agreement. In the event that the Bank electsto fund this Agreement, in whole or in part, through the use of life insuranceor annuities, or both, the Bank shall determine the ownership and beneficialinterests of any such policy of life insurance or annuity.  The Bank further reserves the right, in itssole and absolute discretion, to terminate any such policy, and any otherdevise used to fund its obligations under this Agreement, at any time, in wholeor in part.  Executive shall have noright, title or interest in or to any funding source or amount utilized by theBank pursuant to this Agreement, and any such funding source or amount shallnot constitute security for the performance of the Bank’s obligations pursuantto this Agreement. In connection with the foregoing, Executive agrees toexecute such documents and undergo such medical examinations or tests which theBank may request and which may be reasonably necessary to facilitate anyfunding for this Agreement including, without limitation, the Bank’sacquisition of any policy of insurance or annuity.

 

**10.0****                        Administrator.**

 

**10.1****                        NamedFiduciary and Plan Administrator.  **The“Named Fiduciary” and “Plan Administrator” of this Executive 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 Executive 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.

 

**11.0****                        Claims Procedure.**

 

In the event a dispute arises over the benefits under this ExecutivePlan and benefits are not paid to Executive (or to Executive’sbeneficiary[ies], if applicable) and such claimants feel they are entitled toreceive such benefits, then a written claim must be made to the Named Fiduciaryand Plan Administrator named above in accordance with the following procedures:

 

A.                                   Written Claim.  The claimant may file a written request for suchbenefit 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

 

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(90) day period, that an additional period isrequired. The notice of extension must set forth the special circumstances andthe date by which the Plan Administrator expects to render its decision.

 

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 specificreasons 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 Plan Administrator that a claim has been denied (inpart or all of the claim), then claimant (or their duly authorizedrepresentative) may file with the Plan Administrator, a written request for areview of the denial of the claim.

 

The claimant (or his duly authorized representative) shall then havethe opportunity to submit written comments, documents, records and otherinformation relating to the claim.  ThePlan Administrator shall also provide the claimant, 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.

 

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)                                   Thespecific reasons for the denial;

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

 

**12.0****                        Attorney’sFees.**  If any legal action orother proceeding is brought for the enforcement of this Agreement, or becauseof an alleged dispute, breach, default or misrepresentation in connection withany of the provisions of this Agreement, the successful or prevailing party orparties shall be entitled to recover reasonable attorneys’ fees and other costsincurred in that action or proceeding in addition to any other relief to whichit or they may be entitled.  The “prevailingparty” means any party determined by the arbitrator(s) or court to beentitled to money payments from the other, not necessarily the party in whosefavor a judgment is rendered.

 

**13.0****                        Statusas an Unsecured General Creditor and Rabbi Trust. **Notwithstanding anything contained hereinto the contrary:  (i) Executiveshall have no legal or equitable rights, interests or claims in or to anyspecific property or assets of the Employer as a result of this Agreement; (ii) noneof the Bank’s assets shall be held in or under any trust for the benefit ofExecutive 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) Executiveshall 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 Executive acknowledge and agree that, in the event of a Change in Control,upon request of Executive, or in the Bank’s discretion if Executive does not sorequest and the Bank nonetheless deems it appropriate, the Bank shallestablish, not later than the effective date of the Change in Control, a RabbiTrust or multiple Rabbi Trusts (the “Trust” or “Trusts”) upon such terms andconditions as the Bank, in its sole discretion, deems appropriate and incompliance with applicable provisions of

 

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the Code, in order to permit the Bank to make contributions and/ortransfer assets to the Trust or Trusts to discharge its obligations pursuant tothis Agreement.  The principal of theTrust or Trusts and any earnings thereon shall be held separate and apart fromother funds 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 Executive in such mannerand at such times as specified in this Agreement.

 

**14.0****                        Miscellaneous.**

 

**14.1****                        OpportunityTo Consult With Independent Advisors.** Executive 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 Executive’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 in any ofthe foregoing instances Executive acknowledges and agrees shall be the soleresponsibility of Executive, provided, however, that Employer and Executiveshall cooperate with each other and use all reasonable efforts to minimize tothe fullest extent possible the amount of excise tax imposed by Section 280Gand 4999 of the Code. In the event the parties are unable to eliminate suchexcise taxes, Executive 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 Executive 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. Executive further acknowledges that he has read, understandsand consents to all of the terms and conditions of this Agreement, and that heenters into this Agreement with a full understanding of its terms andconditions.

 

**14.2****                        Notice.**  Any notice required or permitted of eitherExecutive 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.

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

 

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**14.3****                        Assignment.**  Executive 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 Executive, by a proceeding at law or in equity, for the payment ofany debts, judgments, alimony or separate maintenance obligations which may beowed by Executive; or (ii) transferable by operation of law in the eventof bankruptcy, insolvency or otherwise. Any such attempted assignment ortransfer shall be void. In the event Executive or any beneficiary attemptsassignment, communication, hypothecation, transfer or disposal of the benefitshereunder, any such attempted transfer or assignment shall be void.

 

**14.4****                        IRS Section 280GIssues.** If all or any portion ofthe amounts payable to Executive under this Agreement, either alone or togetherwith other payments which Executive has the right to receive from the Employer,constitute “excess parachute payments” within the meaning of Section 280Gof the Internal Revenue Code of 1986, as amended (the “Code”), that are subjectto the excise tax imposed by Section 4999 of the Code (or similar taxand/or assessment), Executive shall be responsible for the payment of suchexcise tax and Employer (and its successor) shall be responsible for any lossof deductibility related thereto; provided, however, that Employer andExecutive shall cooperate with each other and use all reasonable efforts tominimize to the fullest extent possible the amount of excise tax imposed by Section 4999of the Code.  If, at a later date, it isdetermined (pursuant to final regulations or published rulings of the InternalRevenue Service, final judgment of a court of competent jurisdiction, orotherwise) that the amount of excise taxes payable by Executive is greater thanthe amount initially so determined, then Executive shall pay an amount equal tothe sum of such additional excise taxes and any interest, fines and penaltiesresulting from such underpayment.  Thedetermination of the amount of any such excise taxes shall be made by theindependent accounting firm employed by the Employer immediately prior to thechange in control or such other independent accounting firm or advisor as maybe mutually agreeable to Employer and Executive in the exercise of theirreasonable good faith judgment.

 

**14.5****                        BindingEffect/Merger or Reorganization.** This Agreement shall be binding upon and inure to the benefit ofExecutive and the Bank.  Accordingly, theBank shall not merge or consolidate into or with another corporation, orreorganize or sell substantially all of its assets to another corporation, firmor person, unless and until such succeeding or continuing corporation, firm orperson agrees to assume and discharge the obligations of the Bank under thisAgreement.  In the alternative, theHolding Company may agree to assume and discharge the obligation of the Bankunder this Agreement. Upon the occurrence of such event, the term “Bank” asused in this Agreement shall be deemed to refer to such surviving or successorfirm, person, entity or corporation, or the Holding Company, as the case maybe.

 

**14.6****                        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.

 

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**14.7****                        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.

 

**14.8****                        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.

 

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

 

**14.10****                 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.

 

**14.11****                 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.

 

**14.12****                 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.

 

**14.13****                 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.

 

**15.0****                        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

 

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laws, the Code, rules and regulations will continue in effect intheir current form. If any said assumptions should change and said change has adetrimental effect on this Executive plan, then the Bank reserves the right toterminate or modify this Agreement accordingly.

 

IN WITNESS WHEREOF, the Bank and Executive have executed this Agreementon the date first above-written in the City of Atascadero, California.

 
| **SANTA LUCIA BANK** | **EXECUTIVE**       |
|----------------------|---------------------|
| ** **           | ** **          |
| By:                  | /s/ Larry H. Putnam |   | /s/ James M. Cowan |
|                 |                |
|                 |                |
| Date:                | December  17, 2008  |   | Date: | 12-16-08 |
|                 |                |   |
|                 |                |   |
| /s/ John C. Hansen   |                | **/s/ Cindy Dilbeck** |
| **Witness**          | ** **          | **Witness** |
|                      |                     |  |  |  |  |  |

 

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