Document:

ex10_2.htm

    
      

    

     

    
      EMPLOYMENT
        AND CONFIDENTIALITY

      AGREEMENT

      Community
        West Bank

      Executive
        Vice President & Chief Financial Officer

      

      

      This
        Employment and Confidentiality Agreement (the “Agreement”) is made and entered
        into as of July 1, 2007 (the “Effective Date”) by and between Community West
        Bank, a Nationally Chartered Bank and wholly owned subsidiary of Community
        West
        Bancshares (the “Bank“), Community West Bancshares, a California corporation
        (“Parent”) and Charles G. Baltuskonis (“Executive”).

      

      Witnesseth

      

      Whereas
        the Bank is a California national banking association duly organized, validly
        existing, and in good standing under the laws of the United States of America,
        with power to own property and carry on its business as it is now being
        conducted, with its principal place of business located at 445 Pine Street,
        Goleta, California 93117;

      

      Whereas
        the Bank desires to avail itself of the skill, knowledge and experience of
        Executive in order to insure the successful management of its
        business;

      

      Whereas
        the parties desire to enter into this Agreement;

      

      Whereas
        the parties hereto desire to specify the terms of Executive’s employment by the
        Bank and Company as controlling Executive’s employment at the Bank;

      

      Now,
        therefore, in consideration of the representations, warranties, and mutual
        covenants set forth in this Agreement, the following terms and conditions
        shall
        apply to Executive’s employment with the Bank on and after the Effective
        Date:

      

      1.
        ARTICLE 1- EMPLOYMENT AND TERM

      

      1.1.
        Employment. The Bank shall employ Executive as the Bank’s Executive Vice
        President and Chief Financial Officer (the “Position”), and Executive accepts
        such employment, in accordance with the terms and conditions set forth in
        this
        Agreement. The place of Executive’s employment under this Agreement shall be in
        Goleta, California, at a location determined by the Board of Directors of
        the
        Bank (the “Board of Directors”).

      

      1.2.
        Term. The term of employment under this Agreement (“Term”) shall commence
        on the Effective Date and end on June 30, 2010, subject to early termination,
        provided in Article 4, below.

       

       

      
        	 	
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      1.3.
        Renewal. Upon the expiration of the Term, Executive’s employment under
        this Agreement shall automatically renew for a successive period of twelve
        (12)
        months (“Renewal Term”), and upon expiration of any subsequent Renewal Term
        shall automatically renew for a successive period of twelve (12) months;
        unless,
        at least three (3) months before the expiration of any preceding Term or
        Renewal
        Term, either (a) the Board provides written notice of non-renewal to Executive;
        or, (b) Executive provides written notice of non-renewal to Bank. Each party
        shall negotiate in good faith the terms and conditions for any renewal of
        the
        Term or any Renewal Term of this Agreement.

       

      1.4.
        Policies and Regulations. Executive shall observe, comply with and be
        bound by all of the policies, rules and regulations established by the Bank
        with
        respect to its executives and otherwise, all of which policies, rules and
        regulations are subject to change by the Bank from time to time.

      

      2.
        ARTICLE 2- DUTIES OF EXECUTIVE

      

      2.1.
        Powers. At all times Executive shall be empowered by and subject to the
        powers and authority of the Board of Directors and the Bank’s shareholders.
        Executive shall report directly to the Bank’s President and Chief Executive
        Officer (“CEO”).

      

      2.2.
        Duties.

      

      (a)
        Executive Vice President and Chief Financial Officer of
        Bank.  Executive, directly
        or through subordinate supervision, shall be responsible for technical
        and operational activities on a day-to-day basis, as well as formulation
        of
        strategies and business plans to achieve the Bank's long range
        objectives.  Executive agrees to render services and perform
        the duties and acts of Executive Vice President and Chief Financial Officer
        (the
“Duties”) in connection with all aspects of Bank’s business as may be required
        by the Board of Directors and/or the Bank’s CEO. Executive shall perform these
        Duties, and the Specific Duties as defined below, faithfully, diligently,
        to the
        best of Executive’s ability and in the best interests of the Bank, consistent
        with the highest standards of the banking industries and in compliance with
        all
        applicable laws, rules, regulations, and policies applicable to the Bank,
        including, but not limited to, the Federal Deposit Insurance Act, as amended,
        and all regulations thereunder, and the Bank’s Articles of Association and
        Bylaws.

      

      (b)
        Executive Vice President and Chief Financial Officer of Parent. Executive
        also shall have the position of Executive Vice President and Chief Financial
        Officer of Parent. Executive agrees to render services and perform the duties
        and acts of Executive Vice President and Chief Financial Officer of Parent
        as
        may be required by the Board of Directors of Parent and/or the Parent’s
        CEO.

      

      2.3.
        Specific Duties. Without limiting any of Executive’s Duties and
        obligations under Section 2.2, above, Executive agrees to undertake and perform
        all duties required of the Position (“Specific Duties”), including, but are not
        limited to:

       

      (a)
        Serve
        as coordinator for the Asset and Liabilities Management Committee

      (b)
        Manage formation and execution of investment policy.

      (c)
        Implement  and review  risk management
        liabilities.

      (d)
        Oversee  reporting to regulatory authorities, and the
        Board.

      (e)
        Direct  preparation and evaluation of budgets and capital
        plans,

      (f)
        Write, review, and distribute financially related policy and procedure
        statements to ensure regulatory and policy compliance.

      (g)
        Evaluate, develop, and administer accounting systems and practices that comply
        with GAAP, FASB rulings, regulations and laws.

       

       

      
        	 	
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      (i)
        Establish, maintain, and monitor internal accounting control systems in order
        to
        ensure safe and sound operations, accurate accounting records for the statement
        of the institution's financial condition, and timely, accurate report data
        for
        regulators and management.

      (j)
        Supervise the preparation of all regulatory reports and monitors
        compliance.

      (k)
        Manage interest rate risk simulation models to help ensure liquidity and
        control
        interest rate risk; manage pricing of assets and liabilities acquired or
        to be
        acquired to make recommendations that will result  in net interest
        margins consistent with budget objectives.

      (l)  Initiate
        the purchase and sale of security investments in compliance with the Bank’s
        Investment Policy.

      (m)
        Participate in funds acquisition activities through bidding on private and
        public money In compliance with the Bank’s Asset & Liability
        Policy.

      (n)
        Assist the CEO and the Board of Directors in accomplishing the activities
        to
        comply with the Bank’s Capital Plan.

      (o)
        Serve
        as a member of the Executive Management Team.

      (p)
        Be
        responsible, along with the CEO, for the protection of shareholder and creditor
        rights and interests, implementing controls and audits as they deem necessary
        to
        protect such rights.

      

      2.4.
        Conflict of Interests. Executive shall not directly or indirectly render
        any services of a business, commercial or professional nature, to any other
        person, firm or corporation, whether for compensation or otherwise, which
        are in
        conflict with the Bank’s interests. Further, Executive shall not engage in any
        activity that would impair Executive’s ability to act and exercise independent
        judgment in the best interests of Bank.

      

      2.5.
        Exclusive Services. During employment by the Bank, Executive shall not,
        without the express prior written consent of the Board of Directors, engage
        directly or indirectly in any outside employment or consulting of any kind,
        whether or not Executive receives remuneration for such services. Nothing
        in
        this Section 2.5 shall prohibit Executive from providing volunteer consulting
        services (the “Volunteer Services”) through established non-profit or charitable
        organizations in furtherance of such organization’s purposes, so long as such
        Volunteer Services do not materially interfere with Executive’s performance of
        his duties and obligations under this Agreement.

      

      3.
        ARTICLE 3 — COMPENSATION. As the total consideration for
        the services that Executive renders under this Agreement, Executive shall
        be
        entitled to the following:

      

      3.1.
        Base
        Salary. Effective January 1, 2007, the Bank shall pay Executive a base salary
        of
        One Hundred Eighty-One Thousand Four Hundred Forty Dollars ($181,440.00)
        per
        year, less income tax and other applicable withholdings.  On or before
        February 28th of each year during the Term and any Renewal Term, the CEO
        shall
        review the base salary payable to Executive under this Agreement and shall
        determine, in the CEO’s sole discretion, whether or not to adjust such salary.
        Any such adjustment shall be effective as of the first day of March of each
        calendar year. Nothing in this Section 3.1 shall obligate the Bank to increase
        the salary payable to Executive as a result of any such review; provided
        that in
        no event shall the Bank reduce the salary payable to Executive as a result
        of
        such review. Base salary shall be paid in accordance with Bank’s regular payroll
        practices.

       

       

      
        	 	
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      3.2.
        Annual Bonus. Executive shall be eligible to receive an annual bonus, at
        an amount, if any, determined by the Board of Directors in its sole discretion.
        If it is determined that a bonus will be paid Executive for any calendar
        year,
        the bonus will be paid at or near the close of the calendar year, but no
        later
        than thirty (30) days after year-end. Executive acknowledges and agrees that
        nothing in this Agreement or the Bank’s general policies shall require the Bank
        to pay Executive a bonus for any year, to pay Executive a bonus in particular
        amount for any year, or to pay Executive a bonus by reason of the Bank’s payment
        of a bonus to any other executives of the Bank.

      

      3.3.
        Stock Options.

      

      (a)
        Initial Option. At the first meeting of the Board of Directors during
        July,  2007, Executive shall be granted options covering 3,750 shares
        of the Common Stock of Parent (the “Common Stock”) in accordance with the terms
        and conditions of the Parent’s 2006 Stock Option Plan (the “Plan”).

      

      (b)
        Additional Options. So long as Executive is then employed by the Bank
        under the terms of this Agreement, (i) at the first meeting of the Board
        of
        Directors during July, 2008, Executive shall be granted options covering
        an
        additional 3,750 shares of Common Stock in accordance with the terms and
        conditions of the Plan and (ii) at the first meeting of the Board of Directors
        during July, 2009, Executive shall be granted options covering an additional
        3,750 shares of Common Stock in accordance with the terms and conditions
        of the
        Plan.

      

      (c)
        Vesting Schedule. Executive’s interest in each of the foregoing options
        (the “Options”) shall vest pro rata on an annual basis over a period of five (5)
        years from the date of grant of the Option.

      

      (d)
        Acknowledgement. Executive acknowledges that (i) under the Plan the
        exercise price of the Options will be the per share fair market value of
        the
        Common Stock as of the date of grant of the Option and (ii) Executive has
        read,
        reviewed and is familiar with the terms and conditions of the Plan and the
        form
        of the Option Agreement under which the Options will be granted to
        Executive.

      

      (e)
        Adjustment of Option Shares. The foregoing number of shares covered by
        any Option shall be appropriately adjusted in the event of a stock split,
        reverse stock split, stock dividend, combination or reclassification of the
        Common Stock, or similar change in the capital structure of the Bank that
        occurs
        between the Effective Date of this Agreement and the date on which the Option
        is
        granted.

      

      3.4.
        Deferred Compensation.

      

      (a)
        Deferred Compensation. The Bank hereby establishes a balance sheet
        liability account for the benefit of Executive (the “Deferred Account”). The
        provisions of this Section 3.4 shall control all obligations of the Bank
        with
        respect to all amounts credited to the Deferral Account.

       

       

      
        	 	
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                (i)

              	
                Third
                  Quarter 2007. As of the Effective Date of this Agreement, the Bank
                  shall credit to the Deferral Account Forty Thousand Dollars ($40,000.00)
                  with respect to the calendar quarter ended September 30,
                  2007.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Fourth
                  Quarter 2007. Subject to the provisions of Section 3 .4(b)(iv), below,
                  and provided that Executive is then employed by the Bank under
                  this
                  Agreement, as of December 31, 2007, the Bank shall credit to the
                  Deferral
                  Account an additional Forty Thousand Dollars ($40,000.00) with
                  respect to
                  the calendar quarter ended December 31,
                  2007.

              

      

      

      
        	
                 

              	
                (iii)

              	
                Monthly
                  Credits. Subject to the provisions of Section 3 .4(b)(iv) below,
                  beginning with July 2007 and continuing throughout the Term and
                  any
                  Renewal Term of this Agreement, the Bank shall credit to the Deferral
                  Account on the last day of each calendar month an additional One
                  Thousand
                  Six Hundred Dollars ($1,600.00) per month; provided that in no
                  event shall
                  the Bank be obligated to credit any amount to the Deferral Account
                  with
                  respect to any month unless Executive is employed by the Bank under
                  this
                  Agreement as of the last day of such calendar
                  month.

              

      

      

      
        	
                 

              	
                (iv)

              	
                No
                  Credit During Disability. Notwithstanding anything in this Agreement
                  to the contrary, the Bank shall not be obligated to credit any
                  amount to
                  the Deferral Account under Section 3 .4(a)(ii) above or Section
                  3
                  .4(c)(iii)  with respect to any period during which Executive is
                  disabled (as defined in Section 4.6 below). Notwithstanding the
                  foregoing,
                  interest shall accrue on the balance of the Deferral Account during
                  any
                  period during which Executive is
                  disabled.

              

      

       

      (b)
        Interest Accrual. The Bank shall credit to the Deferral Account at the
        end of each calendar month interest on the balance of the Deferral Account
        at a
        rate equal to the then current rate offered by the Bank on a six (6) month
        certificate of deposit. Interest shall continue to accrue on the balance
        in the
        Deferral Account so long as any amounts remain credited to the Deferral Account
        and unpaid to Executive.

      

      (c)
        Payment of Deferral Amounts.

      

      
        	
              	
                (i)

              	
                No
                  Payment if Termination of Employment Prior to Age 65. Except as
                  provided in Section 3.4(d) below, if Executive’s employment under this
                  Agreement terminates for any reason other than only Executive’s death or
                  disability prior to the date on which he attains age 65, the Bank
                  shall
                  have no obligation to pay any amount to Executive with respect
                  to any
                  amounts credited to the Deferral
                  Account.

              

      

      

      
        	
              	
                (ii)

              	
                Payment
                  After Age 66. Subject to the provisions of Section 3.4(c)(i), above,
                  at such time as Executive attains age 66, whether or not he is
                  then
                  employed with the Bank, the Bank shall make payments to Executive
                  with
                  respect to amounts credited to the Deferral Account as
                  follows.

              

      

       

       

      
        	 	
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      (A)
        Beginning on the first day of the first calendar month after Executive attains
        age 66, the Bank shall pay to Executive an annual amount selected by Executive,
        but in any event not less than Nineteen Thousand Two Hundred Dollars
        ($19,200.00) and not more than Forty Thousand Dollars ($40,000.00). The Bank
        shall pay such amount on a monthly, quarterly or annual basis as selected
        by
        Executive. Executive may change the amount and the time for payment of any
        amounts under this Section 3 .4(c)(ii)(A) so long as such change is made
        in
        compliance with the election and other requirements of Section 409A of the
        Internal Revenue Code of 1986, as amended (the “Code”).

      

      (B)
        The
        parties intend that the provisions of Section 3 .4(c)(ii)(A) provide for
        the
        payment of the Deferred Account balance at a specified time within the meaning
        of Section 409A(a)(2)(A)(iv) of the Code.

      

      
        	
                 

              	
                (iii)

              	
                Payment
                  on Executive’s Disability. If the Bank terminates this Agreement by
                  reason of Executive’s disability (as defined in Section 4.6 below), the
                  Bank shall pay to or on behalf of Executive an amount selected
                  by
                  Executive, but in any event not less than One Thousand Six Hundred
                  Dollars
                  ($1,600.00) and not more than Three Thousand Two Dollars ($3,200.00)
                  per
                  month, until all amounts credited to the Deferral Account have
                  been paid
                  to or for the account of Executive. Notwithstanding the foregoing,
                  once
                  Executive attains age 66, the amounts payable by the Bank to Executive
                  shall be determined under Section 3 .4(c)(ii) above and not this
                  Section 3
                  .4(c)(iii). If Executive dies after the Bank has commenced paying
                  his
                  amounts under this Section 3.4(c)(iii), the Bank shall pay to Executive’s
                  Designated Heirs (as defined below) in accordance with the provisions
                  of
                  Section 3 .4(c)(iv), below, the balance in the Deferred Account
                  on the
                  date of Executive’s death.

              

      

      

      
        	
                 

              	
                (iv)

              	
                Payment
                  on Executive’s Death. If Executive dies prior to the Bank’s payment to
                  Executive of all amounts credited to the Deferral Account, the
                  entire
                  balance of the Deferral Account on the date of Executive’s death shall be
                  paid by the Bank to Executive’s Designated Heirs (as defined below) within
                  thirty (30) days after the later of(A) the date of the delivery
                  to the
                  Bank of written notice of Executive’s death or (B) the date on which the
                  Bank receives a court order or written instructions from legal
                  counsel for
                  Executive or Executive’s estate reasonably acceptable to the Bank
                  authorizing and confirming the payment of the account balance to
                  the
                  Designated Heirs. Set forth in Exhibit A hereto is a schedule of
                  Executive’s heirs (the “Designated Heirs”) for purposes of this Agreement.
                  Executive may change the Designated Heirs at any time and from
                  time to
                  time; provided that the Bank shall not be bound by any change to
                  the
                  Designated Heirs unless and until the Bank has received written
                  notice of
                  the change.

              

      

      

      
        	
                 

              	
                (v)

              	
                Termination
                  of Payment Obligation. The Bank shall have no obligation to pay
                  Executive any amounts under this Section 3.4(c) on or after the
                  date on
                  which the Bank has paid to Executive the entire amount credited
                  to the
                  Deferral Account.

              

      

       

       

      
        	 	
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                (vi)

              	
                Performance
                  of Services. All amounts credited to the Deferral Account under this
                  Section 3.4 are deemed credited with respect to services performed
                  or to
                  be performed by Executive under this Agreement after the Effective
                  Date.

              

      

      

      (d)
        Vesting on Change in Control. On the occurrence of a Change in Control,
        as defined in Section 4.7(a), below, Executive’s interest in fifty percent (the
“Vested Percentage”) of the total amount credited to the Deferral Account as of
        the date of the Change In Control shall become fully vested. The Bank shall
        pay
        the Vested Percentage to Executive in accordance with the provisions of Sections
        3.4(c)(ii), 3.4(c)(d)(iii), and 3.4(c)(iv) above, and the Bank shall be
        obligated to pay such amount to Executive in accordance with such Sections
        even
        though Executive’s employment under this Agreement may have terminated prior to
        the date on which he attains age 65. Subject to the provisions of Section
        3
        .4(c)(i), above, the Bank shall pay to Executive the balance of the amounts
        credited to the Deferral Account in accordance with the provisions of Sections
        3.4(c)(ii), 3.4(c)(iii) and 3.4(c)(iv) above.

      

      The
        vesting under this Section shall occur regardless of whether or not Executive’s
        employment under this Agreement is terminated pursuant to Section 4.7,
        below.

      

      (e)
        Tax Election. To the extent that this Agreement or the provisions of this
        Section 3.4 constitute a nonqualified deferred compensation plan within the
        meaning of Section 409A of the Code, Executive hereby makes an irrevocable
        election as to the payment of any deferred compensation in accordance with
        the
        provisions of this Section 3.4.

      

      (f)
        Status of Deferred Account. Executive agrees that the Bank shall
        establish and maintain the Deferral Account only as a balance sheet liability
        account and that the Bank shall have no obligation to deposit or maintain
        any
        cash or other assets in a separate or segregated account for the benefit
        of
        Executive.

      

      3.5.
        401K Plan. Subject to Executive’s compliance with the eligibility and
        other terms and conditions of the Plan, Executive will be eligible to
        participate In the Bank’s 40 1(k) Plan.

      

      3.6.
        Bank Executive Benefits. Subject to Executive’s satisfaction of any
        eligibility requirements, Executive shall be eligible to participate in the
        Bank’s employee benefit plans, for both Executive and family (including medical,
        dental, vision, prescription plan, life insurance, and short-term disability
        benefits) generally provided by the Bank to its senior executives. In all
        events, the Bank’s liability to Executive shall be limited to the amount of
        premiums payable by the Bank to obtain the coverage(s) contemplated herein.
        Nothing in this Section 3.6 or any other provision of this Agreement shall
        prohibit the Bank from, or limit the right of the Bank to, changing or modifying
        the terms of any of the foregoing employee benefit plans or terminating any
        of
        such plans.

      

      3.7.
        Vacation. Executive shall be entitled to vacation time of not more than
        four (4) weeks per year, provided however that, during each year of the Term
        or
        Renewal Term(s), Executive is required to and shall take at least two (2)
        weeks
        of said vacation (the “mandatory vacation”), which shall be taken consecutively.
        Executive shall be entitled to accumulate up to six (6) weeks of accrued
        vacation, after which additional vacation will not accrue. The Bank shall
        not be
        obligated to pay or reimburse Executive at the end of any calendar year any
        amount for any unused vacation time. The Bank shall pay or reimburse Executive
        at the end of the Term or any Renewal Term after which there is no further
        Renewal Term, for any unused vacation time.

       

       

      
        	 	
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      3.8.
        Reimbursement for Expenses. The Bank shall reimburse Executive for any
        and all reasonable business expenses incurred by Executive on behalf of Bank
        in
        the performance of this Agreement, approved expenditures to be determined
        by the
        Board of Directors (“Business Expenses”). A reimbursable Business Expense shall
        be of a nature qualifying it as a proper business expense deduction on the
        federal and state income tax returns of the Bank. Executive must be able
        to
        furnish adequate records and other documentary evidence as may be required
        by
        Federal and State statues.

      

      4.
        ARTICLE 4- TERMINATION

      

      4.1.
        Termination At Will. Notwithstanding anything to the contrary herein, the
        Bank may terminate this Agreement at any time and for any reason, with or
        without cause, in accordance with the provisions of this Section 4. Except
        as
        otherwise specifically provided in this Agreement, such termination shall
        be
        effective either immediately upon receipt of notice of termination by Executive
        from the Bank or at such later date as the Bank may specify in the notice
        of
        termination. Notwithstanding anything in this Agreement to the contrary,
        the
        Bank shall have no obligation to continue Executive’s employment under this
        Agreement for any period or any particular period.

      

      4.2.
        Termination by the Bank Without Cause or on Non-Renewal. If during the
        Term or Renewal Term, the Bank terminates this Agreement without cause or
        does
        not renew the Term or any Renewal Term, the following provisions shall
        apply.

      

      (a)
        Notice Period. The Bank shall provide Executive at least three (3) months
        written notice of (i) the Bank’s termination of Executive’s employment under
        this Agreement without cause or, (ii) the Bank’s decision not to renew the
        Agreement (“Notice Period”).

      

      (b)
        Compensation.

      

      
        	
                 

              	
                (i)

              	
                During
                  Notice Period. During the Notice Period, Executive shall continue to
                  receive the then applicable salary and benefits specified in this
                  Agreement and shall continue to perform the Duties and Specific
                  Duties of
                  employment as defined under the
                  Agreement.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Deferred
                  Compensation. The Bank shall pay to Executive the balance in the
                  Deferral Account in accordance with the provisions of Section 3.4(d),
                  above.

              

      

       

      (c)
        Benefits.

      

      
        	
                 

              	
                (i)

              	
                After
                  the effective date of the termination of this Agreement, all Executive
                  benefits available under Section 3.6 above (the “Benefits”), shall be
                  continued by Bank, contingent upon and subject to Executive’s COBRA
                  election described under Section 4.2(c)(ii) below, with the Bank
                  to pay
                  the premium cost for the first six (6) months, and Executive to
                  pay the
                  premium cost thereafter. Such Benefits to continue until the earliest
                  of
                  (A) the expiration of the longer of either one (1) year following
                  the
                  effective date of the termination of Executive’s employment under this
                  Agreement or any continuation or coverage period specified by applicable
                  law, or (B) the date Executive becomes covered under any other
                  group
                  health plan not maintained by the Bank or any of its subsidiaries,
                  or (C)
                  Executive provides notice to Bank or the COBRA provider to discontinue
                  the
                  Benefits. Executive shall use his commercially reasonable efforts
                  to
                  promptly notify the Bank of the occurrence of an event described
                  in clause
                  (B) or (C) of the preceding
                  sentence.

              

      

       

       

      
        	 	
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                (ii)

              	
                In
                  the event Executive is required to make an election under Executive
                  Retirement Income Security Act of 1974 Sections 601 et. seq. (“COBRA”) to
                  qualify for the Benefits, Bank’s obligation hereunder shall be conditioned
                  upon Executive’s making a timely
                  election.

              

      

       

      4.3.
        Termination by the Bank for Cause. The Bank may terminate this Agreement
        at any time for “cause” (as defined below) by giving to Executive ten (10) days
        prior written notice of termination.

      

      (a)
        Definition of Cause. For purposes of this Section 4.3, the term “cause”
means and includes only:

      

      
        	
                 

              	
                (i)

              	
                conviction
                  of or confession by Executive to theft, fraud, or embezzlement
                  against the
                  Bank;

              

      

      

      
        	
                 

              	
                (ii)

              	
                Executive’s
                  refusal or failure, after specific written notice and demand by
                  the Bank,
                  to diligently perform services for the Bank as required by Article
                  2
                  hereof;

              

      

      

      
        	
                 

              	
                (iii)

              	
                Executive’s
                  breach or violation of any material written policy or regulation
                  of the
                  Bank, including, but not limited to, any written policy or regulation
                  dealing with sexual harassment, discrimination based on age, sex,
                  race,
                  religion or other protected category, illicit drugs, and environmental
                  protection matters;

              

      

      

      
        	
                 

              	
                (iv)

              	
                Executive’s
                  willful breach or violation of any material law, rule or regulation
                  (other
                  than traffic violations or similar offenses) or final order of
                  a court of
                  competent jurisdiction applicable to the Bank or
                  Executive;

              

      

      

      
        	
                 

              	
                (v)

              	
                Executive’s
                  taking of any material action which requires the prior approval
                  of the
                  Board of Directors without such approval;
                  and

              

      

      

      
        	
                 

              	
                (vi)

              	
                Executive’s
                  breach of or failure to perform any of his fiduciary duties to
                  the Bank or
                  any of shareholders involving personal
                  profit.

              

      

      

      (b)
        Notice of Termination. If the Bank proposes to terminate this Agreement
        under clause (a)(i) above, this Agreement shall terminate automatically at
        the
        end of such 10-day period and the Bank shall have no further obligation to
        give
        Executive any further notice of termination. If the Bank proposes to terminate
        this Agreement under any of clause (a)(ii), (a)(iii), (a)(v) or (a)(vi),
        above,
        this Agreement shall terminate automatically at the end of such 10-day period
        and the Bank shall have no further obligation to give Executive any further
        notice of termination unless Executive has cured, to the reasonable satisfaction
        of the Bank, during such 10-day period the alleged cause of termination and
        the
        Bank provides Executive written notice of its acceptance of such cure.
        Notwithstanding anything in this Agreement to the contrary, if the Bank proposes
        to terminate this Agreement for cause under this Section 4.3, so long as
        the
        Bank provides Executive a reasonable opportunity to cure any alleged cause,
        if
        the Bank is required to do so, the Bank may terminate this Agreement as of
        the
        date of the initial notice of termination and pay Executive an additional
        ten
        (10) days of severance compensation.

       

       

      
        	 	
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      (c)
        Compensation.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Compensation. Executive shall have the right to receive compensation
                  which has already vested or been earned as of the date of termination
                  of
                  this Agreement under this Section
                  4.3.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Deferred
                  Compensation. The Bank shall pay Executive the balance in the Deferral
                  Account in accordance with the provisions of Section 3.4(c),
                  above.

              

      

      

      (d)
        Benefits.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Benefits. Executive shall have the right to receive benefits which
                  have
                  already vested or been earned as of the date of termination of
                  this
                  Agreement under this Section 4.3, unless expressly prohibited by
                  the terms
                  of any plan, program or agreement governing such compensation or
                  benefits.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Additional
                  Benefits. Executive shall be entitled to receive only the right to
                  participate in the Bank’s medical plan in accordance with the provisions
                  of COBRA; provided that Executive shall be responsible for paying
                  all
                  applicable insurance premiums and the Bank shall have no obligation
                  to pay
                  any such premiums.

              

      

      

      4.4.
        Termination by Executive on Other Event.

      

      (a)
        Right to Terminate. Executive may terminate this Agreement at any time
        upon
        the occurrence of an Other Event (as defined below) by giving to the Bank
        sixty
        (60) days prior written notice of termination. Executive must deliver his
        notice
        of termination under this Section 4.4(a) within sixty (60) days after the
        occurrence of any Other Event specified below. Executive shall specify in
        reasonable detail in such notice of termination the basis for the claim that
        the
        Bank has breached or failed to perform any of its material obligations or
        covenants. This notice of termination must set forth in reasonable detail
        the
        facts and circumstances that support Executive’s claim of right to terminate
        this Agreement under this Section 4.4.

      

      (b)
        Definition. For purposes of this Agreement the term “Other Event” shall
        mean and include: (i) the Bank’s breach or failure to perform any of its
        material obligations or covenants under this Agreement, and either the Bank’s
        failure to cure such breach or failure of performance within the 15- day
        period
        specified in Section 4.4(c), below, or the continuation of such breach or
        failure of performance after such 15-day period without Executive’s written
        consent; and (ii) Good Reason (as defined in Section 4.7(d),
        below).

       

       

      
        	 	
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      (c)
        Right to Cure. The Bank shall have an opportunity to cure said breach or
        failure of performance within fifteen (15) days of Bank’s receipt of written
        notice specifying the material breach and the opportunity for Bank to resolve
        said breach.

      

      (d)
        Compensation.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Compensation. Executive shall have the right to receive compensation
                  which has already vested or been earned as of the date of termination
                  of
                  this Agreement under this Section
                  4.3.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Deferred
                  Compensation. The Bank shall pay Executive the balance in the Deferral
                  Account in accordance with the provisions of Section 3.4(d),
                  above.

              

      

      

      (e)
        Benefits.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Benefits. Executive shall have the right to receive benefits which
                  have already vested or been earned as of the date of termination
                  of this
                  Agreement under this Section 4.3, unless expressly prohibited by
                  the terms
                  of any plan, program or agreement governing such compensation or
                  benefits.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Additional
                  Benefits. Executive shall be entitled to receive the Benefits specified
                  in
                  Section 4.2(c), above, in accordance with and subject to the terms
                  of such
                  Section.

              

      

      

      4.5.
        Termination on Death of Executive. This Agreement shall terminate
        automatically upon Executive’s death.

      

      (a)
        Compensation. The Bank shall pay to Executive, his beneficiary or beneficiaries
        or Executive’s estate, as the case may be:

      

      
        	
                 

              	
                (i)

              	
                the
                  compensation which has been earned through the date of termination
                  of this
                  Agreement under this Section 4.5;
                  and

              

      

      

      
        	
                 

              	
                (ii)

              	
                the
                  balance in the Deferral Account in accordance with the provisions
                  of
                  Section 3.4(d)(iv) above.

              

      

      

      (b)
        Benefits. Executive shall have the right to receive benefits which have
        already vested or been earned as of the date of termination of this Agreement
        under this Section 4.6, unless expressly prohibited by the terms of any plan,
        program or agreement governing such compensation or benefits.

      

      4.6.
        Termination on Mental or Physical Disability of Executive.

      

      (a)
        Right to Terminate. If Executive is absent from work or found to be
        physically or mentally incapable of performing Executive’s Duties and Specific
        Duties for a period of thirty (30) consecutive days, or a cumulative period
        of
        one hundred twenty (120) days in any one (1) calendar year, the Bank acting
        in
        good faith, may terminate this Agreement as of the termination date specified
        in
        a written notice of termination delivered to Executive, except that there
        is no
        minimum Notice Period requirement.

       

       

      
        	 	
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      (b)
        Definition of Disability. For purposes of this Agreement only, physical
        or mental disability shall be defined as Executive being unable to fully
        perform
        under this Agreement for a continuous period of ninety (90) days or a cumulative
        period of one hundred twenty (120) days in any one (1) calendar
        year.

      

      (c)
        Compensation.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Compensation. Executive shall have the right to receive compensation
                  which has already vested or been earned as of the date of termination
                  of
                  this Agreement under this Section
                  4.6.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Deferred
                  Compensation. The Bank shall pay Executive the balance in the Deferral
                  Account in accordance with the provisions of Section 3 .4(d)(iii)
                  above.

              

      

      

      (d)
        Benefits.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Benefits. Executive shall have the right to receive benefits which
                  have already vested or been earned as of the date of termination
                  of this
                  Agreement under this Section 4.6, unless expressly prohibited by
                  the terms
                  of any plan, program or agreement governing such compensation or
                  benefits.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Additional
                  Benefits. Executive shall be entitled to receive the Benefits
                  specified in Section 4.2(c), above, in accordance with and subject
                  to the
                  terms of such Section.

              

      

      

      (e)
        Dispute re Disability. If there should be a dispute between the Bank and
        Executive as to Executive’s physical or mental disability for purposes of this
        Agreement, the question shall be settled by the opinion of an impartial
        reputable physician or psychiatrist mutually agreed upon by the parties or
        their
        representatives, or if the parties cannot agree within ten (10) days after
        a
        request for designation of such party, then by a physician or psychiatrist
        designated by the Santa Barbara County Medical Association.

      

      4.7.
        Termination on Change in Control.

      

      (a)
        Right
        to Terminate. If within twelve (12) months following (a) a merger, consolidation
        or reorganization of the Bank or Parent with or into another corporation
        or
        business entity immediately after which the shareholders of Parent or the
        Bank
        immediately before the merger, consolidation or reorganization own, directly
        or
        indirectly, 50% or less of the outstanding voting securities of the surviving
        or
        resulting corporation or entity, or (b) upon a sale or other disposition
        of all
        or substantially all of the assets of Parent or the Bank other than to a
        wholly
        owned subsidiary of Parent or the Bank, or (c) the acquisition of more than
        fifty percent (50%) of the combined outstanding voting securities of Parent
        or
        the Banlc by any person or group of affiliated persons (other than as a result
        of the organization of a holding company for Parent or the Bank) (collectively
        a
“Change in Control”), (i) the Bank terminates this Agreement, with or without
        cause, or does not renew the Term or any Renewal Term of this Agreement,
        or (ii)
        Executive terminates this Agreement under Section 4.4 above, the following
        provisions shall apply.

       

       

      
        	 	
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      (b)
        Compensation.

      

      
        	
                 

              	
                (i)

              	
                Earned
                  Compensation. Executive shall have the right to receive compensation
                  which has already vested or been earned as of the date of termination
                  of
                  this Agreement under this Section
                  4.6.

              

      

      

      
        	
                 

              	
                (ii)

              	
                Severance
                  Compensation. If, within one (1) year after the occurrence of the
                  Change in Control, Executive terminates his employment under this
                  Agreement for Good Reason (as defined below) or the Bank terminates
                  Executive’s employment under this Agreement other than for cause (as
                  defined in Section 4.3(a) above), the Bank shall pay to or on behalf
                  of
                  Executive one (1) year’s base salary and the costs of Executive’s Benefits
                  (as defined above) for a period of one( 1) year after such the
                  date of
                  termination. The foregoing salary and benefits shall be paid in
                  monthly
                  installments over such one-year period in accordance with the Bank’s
                  normal practices. This provision shall apply only if Executive
                  terminates
                  his employment for Good Reason or if the Bank terminates Executive’s
                  employment, and shall not apply if Executive terminates his employment
                  on
                  any other basis under Section 4.4,
                  above.

              

      

      

      
        	
                 

              	
                (iii)

              	
                Deferred
                  Compensation. The Bank shall pay Executive the balance in the Deferral
                  Account in accordance with the provisions of Section 3.4(e)
                  above.

              

      

      

      (c)
        Benefits.

      

      (i)
        Earned Benefits. Executive shall have the right to receive benefits which
        have already vested or been earned as of the date of termination of this
        Agreement under this Section 4.7, unless expressly prohibited by the terms
        of
        any plan, program or agreement governing such compensation or
        benefits.

      

      (ii)
        Additional Benefits. Executive shall be entitled to receive the Benefits
        specified in Section 4.2(c), above, in accordance with and subject to the
        terms
        of such Section.

      

      (d)
        For
        Good Reason. For purposes of this Section 4.7, the term “Good Reason” shall mean
        and include only the occurrence of any of the following events:

      

      (i)
        A
        material change occurs in the functions, duties, responsibilities, reporting
        relationship, location of work, and/or title of Executive which is not agreed
        to
        by Executive, provided that none of (A) a change in Executive’s title following
        the merger or consolidation of the Bank with or into any other corporation
        or
        entity or (B) a temporary change any of the matters described in this clause
        (i)
        for a period of no more than sixty (60) consecutive days as a result of
        Executive’s incapacity or disability shall by itself constitute an event
        described in this clause (i); or

       

       

      
        	 	
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      (ii)
        The
        Bank requires Executive to perform any function or duty, the performance
        of
        which would violate any material statute or public policy the violation of
        which
        could expose Executive to personal liability or which would have a material
        adverse effect on Executive’s business reputation.

      

      5.
        ARTICLE 5- CONFIDENTIALITY AND
        NON-SOLICITATION

      

      5.1.
        Confidentiality and Trade Secrets. Executive acknowledges that, in the
        course of his employment with the Bank, Executive will acquire information
        about
        the Bank’s borrowers and clients, terms and conditions of Bank transactions,
        pricing information for the purchase or sale of assets, financing and
        securitization arrangements, research materials, manuals, computer programs,
        formulas analyzing assets portfolios, techniques, data, marketing plans and
        tactics, technical information, lists of asset sources, the processes and
        practices of the Bank and related companies, information contained in electronic
        or computer files, financial information, salary and wage information, and
        other
        information that is designated by the Bank or its affiliates as confidential
        or
        that Executive knows or should know is confidential information provided
        by
        third parties and that the Bank or its affiliates are obligated to keep
        confidential as well as other proprietary information of the Bank or its
        affiliates (“Confidential Information”). Executive acknowledges that all
        Confidential Information is and shall continue to be the exclusive property
        of
        the Bank. Executive agrees not to disclose any Confidential Information,
        either
        during the Term or thereafter, directly or indirectly, under any circumstances
        or by any means, to any third person or party without the prior written consent
        of the Bank.

      

      5.2.
        Non-Solicitation of Executives. Except as permitted by the prior written
        consent of either the President/CEO of the Bank or the Chairman of the Board
        of
        Directors, during the one (1) year period following the termination date,
        Executive shall not directly or indirectly solicit for employment or for
        independent contractor work from any executive of the Bank, and shall not
        encourage any such executive to leave the employment of Bank.

      

      5.3.
        Non-Solicitation of Customers. During the one (1) year period following
        the termination date, Executive shall not directly: (a) solicit business
        from
        any customers of the Bank; (b) encourage any customers to stop using the
        facilities or services of the Bank; or (c) encourage any customers to use
        the
        facilities or services of any competitor of the Bank.

      

      5.4.
        Bank to Benefit from Provisions. To the extent any provisions of this
        Article 5 relate in any way to Confidential Information and trade secrets
        of the
        Bank, then the obligations of Executive set forth herein shall also extend
        to
        the Bank and inure to its benefit.

       

      6.
        ARTICLE 6- BANK’S OWNERSHIP IN EXECUTIVE’S
        WORK

      

      6.1.
        Bank’s Ownership. Executive agrees that all inventions, discoveries,
        improvements, trade secrets, formulas, techniques, processes, and know-how,
        whether or not patentable, and whether or not reduced to practice, that are
        conceived or developed during Executive’s employment with the Bank, either alone
        or jointly with others, or relating to the Bank or to the banking industry
        (“Bank’s Work”), and any written record that Executive may maintain of Bank’s
        Work, shall be owned exclusively by the Bank. Executive hereby assigns to
        Bank,
        all of Executive’s right, title, and interest, if any, in such intellectual
        property defined as Bank’s Work. Executive shall furnish to Bank any and all
        such records pertaining to Bank’s Work, immediately upon request.
        Notwithstanding anything in this Section 6.1 to the contrary, any inventions,
        discoveries, improvements, trade secrets, formulas, techniques, processes
        and
        know-how conceived or developed by Executive solely while providing Volunteer
        Services (as defined in Section 2.5, above) shall not be considered Bank
        Work.

       

       

      
        	 	
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      6.2.
        Return of Bank’s Property and Materials. Upon termination of his
        employment with the Bank, Executive shall deliver to the Bank all Bank property
        and materials that are in Executive’s possession or control, including Bank’s
        Work, within five (5) calendar days.

      

      6.3.
        Bank to Benefit from Provisions. To the extent any provisions of this
        Article 6 relate in any way to information, property, rights, projects,
        ventures, or inventions of the Bank, then the obligations of Executive set
        forth
        in this Article 6 shall also extend to the Bank and inure to its
        benefit.

      

      7.
        ARTICLE 7- ARBITRATION

      

      7.1.
        Obligation to Arbitrate. If any dispute, controversy or claim arises out
        of or relates to this Agreement, such dispute, controversy, or claim shall
        be
        settled by binding arbitration only, in accordance with the Rules of Judicial
        Arbitration and Mediation Services, using legal principles and damages according
        to California Law, and shall be selected by and agreed upon by both parties.
        Judgment upon the arbitrator’s award shall be entered in the jurisdiction
        thereof. The arbitrator shall determine which party is the prevailing party
        and
        shall include in the award, the prevailing party’s actual attorney’s fees and
        costs. The arbitrator shall have no authority to grant either punitive or
        consequential damages to any party. Nothing in the Article 7 shall prohibit
        or
        limit the right of the Bank to commence suit or other judicial proceedings
        seeking injunction or other equitable relief in the event of Executive’s breach
        or threatened breach of any of his obligations under any of Sections 5 or
        6 of
        this Agreement or Sections 5 or 6 of the Original Agreement.

      

      7.2.
        Arbitrator. If the parties cannot agree upon the selection of an
        arbitrator within ten (10) days of written demand upon the other, the parties
        shall choose from a list to be provided by the main Los Angeles office of
        the
        American Arbitration Association (ZAAA”) or of the Federal Mediation and
        Conciliation Service, using the strike method, with the first to strike being
        determined by the flip of a coin.

      

      7.3.
        Fee Deposit. As soon as practicable after selection of the arbitrator,
        the arbitrator or their designated representative shall determine a reasonable
        estimate of anticipated fees and costs setting forth that parry’s pro rata share
        of said fees and costs. Thereafter, each party shall, within ten (10) days
        of
        receipt of said statement, deposit said sum with the arbitrator. Failure
        of any
        party to make such a deposit shall result in a forfeiture by the non-depositing
        party of the right to prosecute or defend the claim which is the subject
        of the
        arbitration, but shall not otherwise serve to abate, stay, or suspend the
        arbitration.

       

       

      
        	 	
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      7.4.
        Hearing Schedule. Unless the parties agree otherwise, within one hundred
        and twenty (120) days of the selection of the arbitrator, a hearing shall
        be
        conducted at a time and a place in Santa Barbara County agreed upon by the
        parties. Arbitration shall be conducted in accordance with AAA employment
        rules
        and procedures (“AAA Rules”), then in effect. In the event of any inconsistency
        between AAA Rules and this Agreement, the terms of this Agreement shall
        prevail.

      

      7.5.
        Award. Within thirty (30) days of conclusion of the arbitration hearing,
        the arbitrator shall issue an award, accompanied by a written decision
        explaining the basis for the arbitrator’s award. The decision of the arbitrator
        shall be final, binding, and non-appealable, except as otherwise permitted
        by
        Law, and may be enforced as a final judgment in any court of competent
        jurisdiction.

      

      8.
        ARTICLE 8- MISCELLANEOUS

      

      8.1.
        Parent as a Party. Parent is a party to this Agreement solely for
        purposes of effecting the grant of the Options contemplated in Section 3,
        above.
        Parent shall have no liability or obligation to Executive with respect to
        the
        Bank’s performance or non-performance of any of its obligations under this
        Agreement.

      

      8.2.
        Injunctive Relief. Executive hereby acknowledges and agrees that it would
        be difficult to fully compensate the Bank for damages for a breach or threatened
        breach of any of the provisions of Sections 5 or 6 hereof or Sections 5 or
        6 of
        the Original Agreement. Accordingly, Executive specifically agrees that the
        Bank
        shall be entitled to temporary and permanent injunctive relief to enforce
        the
        provisions of Sections 5 or 6 hereof or Sections 5 or 6 of the Original
        Agreement, and that such relief may be granted without the necessity of proving
        actual damages. The foregoing provision with respect to injunctive relief
        shall
        not, however, prohibit the Bank from pursuing any other rights or remedies
        available to the Bank for such breach or threatened breach, including, but
        not
        limited to, the recovery of damages from Executive or any third
        parties.

      

      8.3.
        Authorized Representative of the Bank. Although Executive is an officer
        of the Bank, any and all actions and decisions to be taken or made by the
        Bank
        under this Agreement or with respect to the employment relationship described
        in
        this Agreement, and any and all consents, approvals and agreements permitted
        or
        required to be given or made on the part of the Bank under this Agreement,
        shall
        be made and accomplished by the Bank only through the actions taken, in writing,
        of its Chief Financial Officer or such other person or persons as the Board
        of
        Directors may from time to time designate.

      

      8.4.
        Tax Advice. Executive represents and warrants to the Bank that he has
        sought and received independent professional advice concerning the treatment
        of
        the transactions contemplated by this Agreement under the Code, the rules
        and
        regulations promulgated thereunder by the Internal Revenue Service (the “j$’),
        and the income tax laws of any other applicable taxing jurisdictions, and
        that
        he is not relying upon any representation, warranty or other statement made
        by
        the Bank, its counsel or anyone acting on behalf of the Bank with respect
        to
        such treatment or the structuring of the compensation payable under this
        Agreement as assuring any particular income tax treatment. Executive understands
        and agrees that neither the Bank, its counsel nor anyone acting on behalf
        of the
        Bank has made or is making any representation, warranty or other statement
        with
        respect to such income tax treatment.

       

       

      
        	 	
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      8.5.
        Notice. Any notice or other communication required or permitted under
        this Agreement shall be in writing and shall be deemed received (i) when
        personally delivered, or, (ii) if mailed, one (1) week after having been
        placed
        in the United States mail, registered, or certified, postage prepaid, addressed
        to the party to whom it is directed at the address listed below or (iii)
        if sent
        by facsimile, email or other form of electronic transmission, one (1) business
        day after the notice is transmitted to the facsimile number, email address
        or
        other address specified on the signature page of this Agreement, and the
        transmitting party either receives confirmation of transmission or does not
        receive notice of non- delivery.

      

      8.6.
        Entire Agreement. This Agreement, including any documents expressly
        incorporated into it by the terms of this Agreement, constitutes the entire
        agreement between the parties. This Agreement supersedes and rescinds any
        and
        all prior oral and written agreements, understandings, negotiations, and
        discussions relating to the employment of Executive by Bank. This Agreement
        may
        not be modified, supplemented or amended by oral agreement, but only by an
        agreement in writing signed by Bank and Executive.

      

      8.7.
        Amendment. This Agreement may be amended only in writing duly executed by
        all of the parties hereto. Notwithstanding anything in this Agreement to
        the
        contrary, any amendment to Section 3.4 of this Agreement shall be made in
        compliance with the requirements of Section 409A of the Coder and the Treasury
        Regulations thereunder.

      

      8.8.
        Survival of Certain Provisions. Notwithstanding anything to the contrary
        contained herein, in the event of any termination of this Agreement, the
        rights
        and obligations of the parties under Sections 3.4, 4.2(b), 4.2(c), 4.3(c),
        4.3(d), 4.4(d), 4.4(e), 4.5(a), 4.5(b), 4.6(c), 4.6(d), 4.6(e), 4.7(b) and
        4.7(c) and Articles 5, 6, 7 and 8 hereof shall survive such termination and
        shall continue in full for and effect until fully performed.

      

      8.9.
        Waivers. All rights and remedies of the parties hereto are separate and
        cumulative, and no one of them, whether exercised or not, shall be deemed
        to
        limit or exclude any other rights or remedies which the parties hereto may
        have.
        Neither party hereto shall be deemed to waive any rights or remedies under
        this
        Agreement unless such waiver be in writing and signed by such party. No delay
        or
        omission on the part of either party hereto in exercising any right or remedy
        shall operate as a waiver of such right or remedy or any other right or remedy.
        A waiver of any right or remedy on any one occasion shall not be construed
        as a
        bar to or waiver of any such right or remedy on any future
        occasion.

      

      8.10.
        Successors and Assigns. The Bank shall require any successor or assignee,
        whether direct or indirect, by purchase, merger, consolidation, or otherwise
        to
        all or substantially all of the business or assets of the Bank to expressly
        assume and agree to perform in writing this Agreement in the same manner
        and to
        the same extent that the Bank would be required to perform it if no such
        succession or assignment had taken place. This Agreement shall inure to the
        benefit of and be binding upon the Bank, its successors and assigns, and
        upon
        Executive and Executive’s heirs, executors, administrators and legal
        representatives. No party to this Agreement may delegate its or their duties
        hereunder without the prior written consent of the other party to this
        Agreement.

       

       

      
        	 	
                Initials:

              	 	 	
                Initials:

              	 

      

      
        
          
          

        

        
          Page
            17 of
            19

          
            

          

        

        
          
          

        

      

       

      8.11.
        Governing Law. This Agreement is entered into in the State of California,
        and California law shall in all respects govern the validity, construction,
        and
        interpretation of this Agreement.

      

      8.12.
        Attorney’s Fees. In any arbitration, suit or other action between the
        parties seeking enforcement of any of the terms and provisions of this
        Agreement, the prevailing party in such arbitration, suit or other action
        shall
        be awarded, in addition to damages, injunctive or other relief, its reasonable
        costs and expenses, not limited to taxable costs, and a reasonable attorney’s
        fees. In order for a party to change its address or other information for
        the
        purpose of this section, the party must first provide notice of that change
        in
        the manner required by this section.

      

      9.
        ARTICLE 9- RECEIPT OF AGREEMENT

      

      9.1.
        Receipt of Agreement. Each of the parties hereto acknowledges that they
        have read this Agreement in its entirety and does hereby acknowledge receipt
        of
        a fully executed copy thereof. A fully executed copy shall be an original
        for
        all purposes, and Is a duplicate original.

      

      IN
        WITNESS WHEREOF, the parties hereto have caused this Employment and
        Confidentiality Agreement to be executed as of the Effective Date set forth
        above.

      

      ACCEPTED
        AND AGREED:

      

      EXECUTIVE

      

      

      
        	
                By:

              	 	 

      

      Name:
        Charles G. Baltuskonis

      

      Address
        for Notice:

      5739
        Encina Road, #103

      Goleta,
        CA  93117

      Telephone:  (805)
        451-4844

      

      

      COMMUNITY
        WEST BANK

          A
        National Banking Association

      

      
        	
                By:

              	 	 

      

          Lynda
        Nahra, President & CEO

       

       

      
        	 	
                Initials:

              	 	 	
                Initials:

              	 

      

      
        
          
          

        

        
          Page
            18 of
            19

          
            

          

        

        
          
          

        

      

       

      Address
        for Notice:

      445
        Pine
        Street

      Goleta,
        California 93317

      Attention:
        Robert H. Bartlein, Chairman of the Board

      Telephone:
        (805) 683-4944

      Facsimile:
        (805) 692-2897

      

      

      COMMUNITY
        WEST BANCSHARES,

      

      

      
        	
                By:

              	 	 

      

           Lynda
        Nahra, President & CEO

      

      Address
        for Notice:

      445
        Pine
        Street

      Goleta,
        California 93317

      Attention:
        Lynda Nahra,  President & CEO

      Telephone:
        (805) 683-4944

      Facsimile:
        (805) 692-2897

      

      

      

      

      

      DESIGNATED
        HEIRS

      

      Set
        forth
        below is a list of the names and addresses of Executive’s heirs to whom the Bank
        shall pay the balance of the Deferred Account in the event of Executive’s
        death.

      

      
        	
                NAME

              	
                ADDRESS

              	
                PERCENTAGE
                  INTEREST

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

      

       

    

    
      	 	
              Initials:

            	 	 	
              Initials:

            	 

    

     

     

     Page
      19 of
      19ex10_1.htm

    
      
        

      

    

    AGREEMENT

     

     

    This
      Agreement (this "Agreement") is entered into as of June 29,
      2007, by and among Satellite Security Corporation, a Nevada corporation
      ("SSCY"), Satellite Security Systems, Inc., a California
      corporation ("S3"), Zirk Engelbrecht, an individual
      ("Engelbrecht"), the holders of Secured Convertible Notes
      identified on the signature pages hereto (collectively, the
      "Noteholders"), with respect to the following
      facts:

     

    A.           SSCY
      is a Nevada corporation whose common stock is registered under Section 12(b)
      of
      the Securities Exchange Act of 1934, as amended (the "Exchange
      Act").

     

    B.           SSCY
      owns (i) 1,000 shares of common stock (the "S3 Shares") of S3,
      representing 100% of the issued and outstanding capital stock of S3, and (ii)
      65,041,831 shares of common stock (the "Orbtech Shares") of
      Orbtech Holdings, Ltd., a South African company ("Orbtech"),
      representing approximately 35% of the issued and outstanding capital stock
      of
      Orbtech.

     

    C.           SSCY
      has entered into an Agreement dated as of February 23, 2007 (the
      "Orbtech Agreement") with Mr. Allen Harington
      ("Harrington"), pursuant to which SSCY has agreed to sell to
      Harington and Harington has agreed to purchase from SSCY all of the Orbtech
      Shares in exchange for a cash payment of 10 million South African Rand in
      accordance with the terms of such agreement.

     

    D.           The
      Noteholders loaned an aggregate of $3.3 million (collectively, the
      "Loan") to SSCY on July 13, 2006 pursuant to and as evidenced
      by the terms of: (i) Subscription Agreements, (the “Subscription
      Agreements”), (ii) Secured Convertible Notes (each a
      "Note" and collectively, the "Notes"), (iii) a
      Security Agreement (the "Security Agreement"), including a
      description of the collateral (collectively, the "Collateral"),
      (iv) a Guaranty executed by S3 (the "Guaranty"), (v) a
      collateral agent agreement (the "Collateral Agent Agreement"),
      (vi) a Funds Escrow Agreement, (vii) Class A Common Stock Purchase Warrants,
      and
      (viii) Class B Common Stock Purchase Warrants (collectively, the "Loan
      Documents"), and in connection with the Loan were granted a security
      interest in substantial all of the assets of SSCY, including without limitation
      the S3 Shares, the Orbtech Shares and the Orbtech Agreement.

     

    E.           Engelbrecht
      is a board member of SSCY and has served as its Chief Executive Officer since
      December 2006 and remains in such capacity as of the date hereof.

     

    F.           SSCY
      and S3 are each in default under the Loan Documents.  As of June 1,
      2007, there is at least $3.5 million due and owing under the Loan
      Documents.

     

    G.           Noteholders
      have indicated their intent to exercise their remedies under, among other
      sources of authority, the California Uniform Commercial Code (the
      "UCC") and Section  9620 thereof, pursuant to which
      they may accept collateral in satisfaction of the obligation(s) secured by
      such
      collateral.  More particularly, Noteholders and/or the Agent (as
      defined below) on their behalf, as collateral agent, desire to accept some
      of
      the Collateral, as described in this Agreement, in partial satisfaction of
      the
      obligations under the Notes pursuant to UCC § 9620(a), subject to obtaining the
      consent of SSCY and S3 as required by, among other sections of the UCC, UCC
§
9620(c)(i).  SSCY and S3 are willing to consent to such partial
      satisfaction of the obligations under the Notes, subject to the terms of this
      Agreement.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    H.           The
      parties now desire to enter into this Agreement to settle existing claims
      between them, to evidence the consent of SSCY and S3 to the UCC § 9620 remedy of
      Noteholders and to set forth the terms and conditions relating
      thereto.

     

    
      
        I.           The
          Noteholders appointed a collateral agent (the "Agent") under
          the terms of the Collateral Agent Agreement to provide for the orderly
          administration of the Collateral and to allocate the enforcement of certain
          rights of the Noteholders under the Notes and Security Agreement for the
          orderly
          administration thereof.  The Noteholders desire to enter into this
          Agreement on their own behalf and as beneficiaries of the Security Agreement
          and
          parties to the Collateral Agent Agreement.

      

       

    

    NOW
      THEREFORE, in consideration for the mutual promises, covenants and conditions
      contained in this Agreement, and intending to be legally bound, the parties
      represent, warrant, covenant and agree as follows:

     

    ARTICLE
      1

     

    STRICT
      FORECLOSURE

     

    1.1           Acceptance
      of Assets in Partial Satisfaction of Obligations / UCC §
9620(a).  The Noteholders assert a security interest
      pursuant to the Loan Documents in substantially all of the assets of SSCY and
      S3.  SSCY and S3 acknowledge that each of them is in default under the
      Loan Documents.  In consideration of the covenants of the Noteholders
      and Engelbrecht under this Agreement (including without limitation the reduction
      and credit towards the obligations under the Loan Documents set forth below),
      effective upon the Acceptance (as defined below) SSCY and S3 each hereby consent
      to the acceptance by Noteholders, or their designee, of SSCY's right, title
      and
      interest in the following assets (collectively, the "Assets"),
      in partial satisfaction of the obligations of SSCY and S3 under the Loan
      Documents:

     

    (a)           The
      S3 Shares

     

    (b)           The
      Orbtech Shares and any payments, proceeds or other consideration resulting
      from
      the sale of such Orbtech Shares pursuant to the Orbtech Agreement;
      and

     

    (c)           The
      Orbtech Agreement.

     

    EXCEPT
      AS
      SET FORTH IN THIS AGREEMENT, NEITHER SSCY NOR S3 IS MAKING ANY REPRESENTATION
      OR
      WARRANTY OF ANY KIND REGARDING THE ASSETS, EXPRESS OR IMPLIED, INCLUDING BUT
      NOT
      LIMITED TO ANY REPRESENTATION OR WARRANTY REGARDING CONDITION OF THE ASSETS,
      OR
      THE FITNESS, DESIRABILITY, OR MERCHANTABILITY THEREOF OR SUITABILITY THEREOF
      FOR
      ANY PARTICULAR PURPOSE, OR THE EXISTENCE OR AMOUNT OF ACCOUNTS, LIABILITIES,
      LIENS, CLAIMS OR ENCUMBRANCES.

     

    1.2           UCC
      § 9620 Proposal.  This Agreement constitutes a "proposal"
      within the meaning set forth and pursuant to UCC §§ 9102(a)(66), 9620, 9621 and
      9622, setting forth the terms on which SSCY and S3 are each willing to consent
      to the acceptance of the Assets in partial satisfaction of obligations under
      the
      Loan Documents.  This Agreement, subject to the terms hereof,
      constitutes the consent of SSCY and S3 to such proposal pursuant to the UCC,
      and
      Noteholders' acceptance thereof.  Noteholders and/or Agent shall be
      responsible for compliance with UCC § 9620 and/or related
      provisions.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    1.3          Conversion
      of Notes.  Effective upon the Acceptance (and without the
      need for further documentation), and in exchange for the consent of SSCY and
      S3
      under the UCC, each of the Noteholders agree:

     

    (a)           To
      convert all outstanding amounts due and all obligations under the Notes and
      Loan
      Documents into a pro rata portion of 2,000,000 shares of the SSCY’s common stock
      (calculated on a post split basis after taking into account the reverse split
      described in Section 2.1 below) (the “SSCY
      Shares”).

     

    (b)           That
      all breaches, defaults and/or events of default under the Loan Documents, and
      all penalties, accrued and unpaid interest, charges, fees and costs, through
      the
      Acceptance Date shall be waived.

     

    (c)           Section
      3.11 of each Note and Section 11 of each Subscription Agreement relating to
      registration rights shall be deleted in their entirety.

     

    (d)           Section
      9(n) (Further Registration Statements), Section 9(o) (Blackout), and Section
      9(q) (Limited Standstill Agreements) under each Subscription Agreement shall
      be
      deleted in their entirety.  The Limited Standstill Agreements executed
      under Section 9(q) of each Subscription Agreement shall be terminated and of
      no
      force or effect

     

    1.4          Termination
      of Warrants.  Effective upon the Acceptance, and in
      exchange for SSCY's consent under UCC §§ 9620 (a)(1) and (c)(1), each of the
      Noteholders agrees that each of the outstanding Class A Common Stock Purchase
      Warrants and Class B Common Stock Purchase Warrants issued to such Noteholder
      under the Loan Documents shall be cancelled and be of no further force or
      effect.  All such warrants shall be returned to SSCY upon the
      Acceptance together with any necessary endorsements.

     

    1.5          Assignment
      of Orbtech Agreement Obligations.  As of
      the Acceptance, and as a condition of the consent of SSCY and S3 under the
      UCC,
      the Noteholders shall assume all obligations of SSCY under the Orbtech
      Agreement.  Such assumption shall be evidenced by an assumption
      agreement delivered at the Acceptance Closing (the "Orbtech Agreement
      Assumption") in form as reasonably approved by SSCY.

     

    1.6          Transfer
      of Portion of SSCY Shares.  In exchange for the
      assumption of liabilities and the covenants of Engelbrecht under this Agreement,
      promptly following the Acceptance, the Noteholders each agree to transfer to
      Engelbrecht or his designee 50% of the SSCY shares issuable to such Noteholder
      on a pro rata basis (i.e., 1,000,000 SSCY Shares).

     

    ARTICLE
      2

     

    CORPORATE
      AND SEC MATTERS

     

    2.1          Authorization
      of Reverse Stock Split.  Effective upon execution of this
      Agreement, Engelbrecht, as the sole director of SSCY, shall approve an amendment
      to SSCY's Articles of Incorporation to affect a 500 for 1 reverse stock split
      of
      SSCY's outstanding common stock.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    2.2          Withdrawal
      of Registration Statement.  Promptly after the execution
      of this Agreement, SSCY will file a request to withdraw its Registration
      Statement (file no. 333-136948).

     

    2.3          Current
      Report on Form 8-K.  Within four (4) business days after
      execution of this Agreement, SSCY will file a Current Report on Form 8-K
      announcing its entry into this Agreement as the entry of a material definitive
      agreement, and will file a copy of this Agreement as an exhibit to that
      report.

     

    2.4          Proxy
      Statement.  Promptly after execution of this Agreement,
      SSCY will prepare a Proxy Statement or Written Consent Solicitation under
      Section 14 of the Exchange Act, seeking approval of an amendment to SSCY's
      Articles of Incorporation to affect a 500 for 1 reverse stock
      split.  Engelbrecht, as director of SSCY, will recommend that the
      shareholders approve the reverse stock split.

     

    2.5          Public
      Filings.  Until the earlier of the consummation of a
      Merger (as defined in Section 2.8 below) or March 31, 2009,
      SSCY agrees to file with the SEC in a timely manner all reports and other
      documents required under the Exchange Act as may be necessary to permit the
      Noteholders to sell shares under Rule 144 of the Securities Act of 1933, as
      amended (the "Securities Act").

     

    2.6          Merger
      Candidates.  After the Acceptance, Engelbrecht will use
      reasonable efforts, in his capacity as Chief Executive Officer of SSCY, to
      solicit and negotiate with potential merger candidates to merge an operating
      entity into SSCY or similar transaction (the
“Merger”).  Any payments, share issuances, cash or
      non-cash compensation or other benefits, paid to or received by Engelbrecht
      or
      any of his affiliates or designees in connection with the Merger shall be
      allocated 60% to Engelbrecht or his affiliates or designees, on the one hand,
      and 40% to the holders of the Notes, on the other hand, other than (i)
      reasonable and customary compensation received by Engelbrecht in exchange for
      services,  or (ii) consideration received by Engelbrecht in connection
      with the Merger that is distributed to all SSCY stockholders based on their
      pro
      rata share of stock ownership of SSCY.

     

    ARTICLE
      3

     

    ADDITIONAL
      COVENANTS

     

    3.1          Assumption
      of Certain Liabilities by Engelbrecht.  Effective upon
      the Acceptance, and except for the contribution obligation set forth in Section
      3.2 below, Engelbrecht personally, in his own capacity, shall assume the
      following claims, liabilities or obligations of SSCY:

     

    (a)           all
      claims, liabilities or obligations for accrued and unpaid wages of employees
      of
      SSCY and/or S3 existing on or as of the Acceptance Date;

     

    (b)           all
      fees and expenses of SSCY's independent auditors in connection with the
      completion of its audit for the year ended December 31, 2006 existing on or
      as
      of the Acceptance Date, and all such fees and expenses incurred after the
      Acceptance Date in connection with the completion of such audit;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (c)           all
      fees and expenses of SSCY's legal counsel, Duane Morris LLP, existing on or
      as
      of the Acceptance Date, and all attorneys' fees and expenses incurred by SSCY
      after the Acceptance Date through the effectuation of the Merger, if any,
      including without limitation, all fees and expenses relating to this Agreement
      and the corporate and SEC related actions to be taken as provided in
Article 2;

     

    (d)           all
      legal, accounting, printing or other fees and expenses to be incurred by SSCY
      after the Acceptance Date though the consummation of the Merger necessary or
      advisable to maintain SSCY’s status as a current reporting company under the
      Exchange Act, including without limitation, timely filing of reports and other
      documents;

     

    (e)           all
      claims settlement costs, legal, or other fees and expenses from and after the
      date hereof arising out of that certain litigation in the United States District
      Court for the District of New Jersey styled Jay B. Ross and Protocol
      Electronics, Inc. v. Celtron International, Inc., Case No. 05-1300;
      and

     

    (f)           all
      claims, settlement costs, legal, or other fees and expenses from and after
      the
      date hereof arising out of that certain arbitration proceeding by John Phillips
      relating to the termination of his employment agreement with SSCY.

     

    The
      foregoing assumptions shall be evidenced by an assumption agreement (the
      "Engelbrecht Assumption") delivered at Acceptance Closing in
      form as reasonably approved by SSCY.

     

    3.2          Contribution
      by Noteholders.  Upon execution of this Agreement, the
      Noteholders shall pay $30,000 to Duane Morris LLP, to be applied to outstanding
      amounts due on the SSCY account.  Effective upon the Acceptance, the
      Noteholders shall tender to Zirk Engelbrecht the proceeds from the sale of
      the
      Orbtech Shares received through the Acceptance Date under the Orbtech Agreement,
      and thereafter as and when received, up to a maximum amount of an additional
      $120,000; provided, however, that if the purchase price for the Orbtech Shares
      is received in payments of $400,000 or less, then only $50,000 need be
      transferred to Engelbrecht per payment, until such amount is paid in
      full.

     

    ARTICLE
      4

     

    AGENT

     

    
      4.1           Compliance
        by the Agent.  Noteholders represent and warrant that
        they have caused and/or will cause the Agent to comply with the terms of
        this
        Agreement and to not permit the Agent to take actions against SSCY, S3 or
        Engelbrecht or the Collateral inconsistent with the terms hereof, and will
        cause
        the Agent to execute any and all documents and take such actions as the parties
        may reasonably request to effectuate the terms hereof.

       

    

    ARTICLE
      5

     

    RELEASE
      AND INDEMNITY PROVISIONS

     

    5.1          Mutual
      General Release.

     

    (a)           Effective
      upon the Acceptance, SSCY, S3 and Engelbrecht, each for itself and its
      respective shareholders, directors, officers, employees, affiliates,
      subsidiaries, assigns and successors, fully and forever releases and discharges
      each of the Noteholders and each of their respective shareholders, directors,
      officers, employees, affiliates, subsidiaries, heirs, executors, administrators,
      predecessors, successors, agents, attorneys and assigns, with respect to any
      and
      all claims, liabilities and causes of action, of every nature, kind and
      description, in law, equity or otherwise, which have arisen, occurred or existed
      at any time prior to or on the Acceptance Date.  This release shall
      not act to release any future claims, including any claims that may arise under
      this Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (b)           Effective
      upon the Acceptance, each of the Noteholders for itself and its respective
      heirs, executors, administrators, shareholders, directors, officers, employees,
      affiliates, subsidiaries, assigns and successors, fully and forever releases
      and
      discharges SSCY and Engelbrecht, and each of their respective shareholders,
      directors, officers, employees, affiliates, subsidiaries, heirs, executors,
      administrators, assigns and successors, with respect to any and all claims,
      liabilities and causes of action, of every nature, kind and description, whether
      known or unknown, suspected or unsuspected, anticipated or unanticipated, in
      law, equity or otherwise, which have arisen, occurred or existed at any time
      prior to or on the Acceptance Date.  This release shall not act to
      release any future claims, including any claims that may arise under this
      Agreement.

     

    5.2          Severability
      of Release Provisions.  If any provision of the releases
      given under this Agreement is found to be unenforceable, it will not affect
      the
      enforceability of the remaining provisions and a court or administrative body
      reviewing this Agreement may enforce all remaining provisions to the extent
      permitted by law.

     

    5.3          Promise
      to Refrain from Suit or Administrative Action.  Except as
      set forth in this Agreement, each party promises and agrees that it will never
      sue the other or any of the other releasees, or otherwise institute or
      participate in any legal or administrative proceedings against the other or
      any
      of the other releasees, or advocate or incite the institution of, or assist
      or
      participate in, any claim covered by the release provisions of this Agreement,
      unless compelled by legal process to do so.

     

    ARTICLE
      6

     

    REPRESENTATIONS
      AND WARRANTIES

     

    6.1          Representations
      and Warranties of SSCY and Engelbrecht.  SSCY, for itself
      and not jointly, and Engelbrecht, jointly and severally with SSCY, hereby
      represent and warrant to the Noteholders, as follows:

     

    (a)           Ownership
      of Assets.  SSCY, beneficially and of record, owns, the
      S3 Shares, the Orbtech Shares and the Orbtech Agreement.  SSCY has not
      previously transferred or conveyed, the S3 Shares, the Orbtech Shares or the
      Orbtech Agreement to any third party.  SSCY has not at any time
      executed any agreement or other document pursuant to which it purported to
      transfer any right, title, claim, equity or interest in, the S3 Shares, the
      Orbtech Shares and the Orbtech Agreement other than the Loan
      Documents.

     

    (b)           Ownership
      of Claims.  SSCY, S3 and Engelbrecht own all rights to
      any claims that each is releasing under this Agreement.  Neither SSCY
      nor Engelbrecht have transferred any of such claims to any third party, or
      entered into any agreement or other document pursuant to which he or it,
      respectively, purported to transfer any right, or interest in any such
      claim.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (c)           Power
      and Authority.  SSCY, S3 and Engelbrecht have the
      requisite corporate power and authority, as applicable, to enter into this
      Agreement and to release the claims that it is releasing under this
      Agreement.  Except for the approvals and filings described in this
      Agreement, no consent, approval, or authorization of or designation, declaration
      or filing with any governmental authority on the part of SSCY, S3 and/or
      Engelbrecht is required in connection with the valid execution and delivery
      of
      this Agreement.  The performance of all the obligations of SSCY, S3
      and Engelbrecht constitute valid and legally binding obligations of SSCY, S3
      and
      Engelbrecht, enforceable against them in accordance with their terms except
      as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium,
      fraudulent conveyance, and other laws of general application affecting
      enforcement of creditors' rights generally.

     

    (d)           No
      Conflicts.  Subject to making the filings with the SEC
      described herein, the execution, delivery and performance of this Agreement
      by
      SSCY, S3 and Engelbrecht and the consummation by SSCY, S3 and Engelbrecht of
      the
      transactions contemplated hereby do not and will not: (i) conflict with or
      violate any provision of the articles of incorporation or bylaws of SSCY and/or
      S3; or (ii) conflict with, or constitute a default (or an event that with notice
      or lapse of time or both would become a default) under, result in the creation
      of any lien upon any of the properties or assets of SSCY, S3 and/or Engelbrecht
      or give to others any rights of termination, amendment, acceleration or
      cancellation (with or without notice, lapse of time or both) of, any material
      agreement, credit facility, debt or other material instrument or other material
      understanding to which SSCY, S3 or Engelbrecht is a party or by which any
      property or asset of SSCY, S3 or Engelbrecht is bound or affected (except the
      Loan Documents); or (iii) conflict with or result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which SSCY, S3 or Engelbrecht is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of SSCY or Engelbrecht is bound or affected.

     

    (e)           Litigation.  To
      the knowledge of SSCY, S3 and Engelbrecht, except as described in SSCY's filings
      with the SEC, there is no suit, claim, action, proceeding or investigation
      threatened against SSCY, S3 or any of their affiliates, at law or in equity
      or
      before any governmental authority or before any arbitrator.

     

    (f)           Investment
      Risks.  Engelbrecht has been informed and understands and
      agrees as follows: (i) the SSCY Shares have been registered under the Securities
      Act or qualified under any state securities laws
      in reliance on exemptions from registration provided thereunder; (ii) an
      investment in SSCY Shares is a speculative investment; (iii) Engelbrecht must
      be
      able to hold the SSCY Shares indefinitely due to substantial restrictions on
      the
      transferability of the SSCY Shares; and (iv) Engelbrecht must, therefore, have
      adequate means of providing for his current and future needs and personal
      contingencies and have no need for liquidity in this
      investment.  Engelbrecht has a pre-existing business relationship with
      SSCY and has the capacity to protect his own interests in connection with the
      acquisition of the SSCY Shares.  Engelbrecht is able to bear the
      economic risk of this investment.  Engelbrecht is acquiring the SSCY
      Shares for his own account, for long-term investment, and not with a view to,
      or
      for sale in connection with, the distribution thereof.  Engelbrecht
      has no present intention of selling, granting any participation in, or otherwise
      distributing the SSCY Shares within the meaning of Section 2(11) of the
      Securities Act.  The SSCY Shares will not be resold without
      registration under the Securities Act and qualification under the securities
      laws of all applicable states, unless such sale would be exempt
      therefrom.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (g)           Orbtech
      Agreement. The Orbtech Agreement is in full force and effect and is
      the legal, valid and binding obligation of SSCY and, to the knowledge of the
      SSCY and Engelbrecht, of Harrington, enforceable against SSCY and, to the
      knowledge of the SSCY and Engelbrecht, Harrington in accordance with its terms
      and, upon the Acceptance, shall continue in full force and effect without
      penalty or other adverse consequence. To its knowledge, SSCY is not in default
      under the Orbtech Agreement, nor, to the knowledge of SSCY and Engelbrecht,
      is
      Harrington in default thereunder, and to SSCY's knowledge no event has occurred
      that with the lapse of time or the giving of notice or both would constitute
      a
      material default by SSCY, or to the knowledge of the SSCY and Engelbrecht,
      Harrington thereunder. Harrington has neither exercised any termination rights
      nor given notice of any dispute with respect to the Orbtech
      Agreement.

     

    6.2          Representations
      and Warranties of the Noteholders.  Each of the
      Noteholders, severally and not jointly, hereby represents and warrants to SSCY
      and Engelbrecht, as follows:

     

    (a)           Ownership
      of Notes.  Each Noteholder owns its Note that it is
      converting hereunder, and is transferring the SSCY Shares to Engelbrecht free
      and clear of any liens, claims, obligations or encumbrances.  No
      Noteholder has previously transferred or conveyed the Notes to any third
      party.  No Noteholder has at any time executed any agreement or other
      document pursuant to which it has purported to transfer any right, title, claim,
      equity or interest in the Notes.  The execution, delivery and
      performance of this Agreement by each Noteholder and the consummation of the
      transactions contemplated hereby do not and will not conflict with or result
      in
      a violation of any agreement or other understanding, law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which a Noteholder is subject (including federal
      and
      state securities laws and regulations).

     

    (b)           Ownership
      of Claims.  Each Noteholder owns all rights to any claims
      that they are releasing under this Agreement, free and clear of any liens,
      claims or encumbrances.  No Noteholder has transferred any of the
      claims to any third party, or entered into any agreement or other document
      pursuant to which it has purported to transfer any right, or interest in any
      claim.

     

    (c)           Power
      and Authority.  Each Noteholder has the requisite power
      and authority, including corporate power and authority, to enter into this
      Agreement, to transfer the SSCY Shares to Engelbrecht and to release the claims
      that it is releasing under this Agreement.  Except for the filings
      described in this Agreement, no consent, approval, or authorization of or
      designation, declaration or filing with any governmental authority on the part
      of the Noteholder is required in connection with the valid execution and
      delivery of this Agreement.  The performance of all the obligations of
      each Noteholder constitute valid and legally binding obligations of such
      Noteholder, enforceable against it in accordance with their terms except as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium,
      fraudulent conveyance, and other laws of general application affecting
      enforcement of creditors' rights generally.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (d)           Agent.  Noteholders
      have the full power and authority to direct the Agent to act on their behalf
      in
      accordance with this Agreement's terms, including, without limitation, to accept
      the Assets on behalf of the Noteholders and release the security
      interest.

     

    ARTICLE
      7

     

    CONDITIONS
      TO ACCEPTANCE

     

    7.1          Conditions
      to SSCY, S3 and Engelbrecht's Obligations.  The consent
      of SSCY and S3 to the exercise by Noteholders and/or the Agent of the
      foreclosure remedy under UCC § 9620 and the consent of SSCY, S3 and Engelbrecht
      to the other the transactions contemplated by this Agreement is subject to
      the
      fulfillment on or prior to the Acceptance Date of the following
      conditions:

     

    (a)           The
      representations and warranties made by the Noteholders in this Agreement shall
      be true and correct when made, and shall be true and correct on the Acceptance
      Date with the same force and effect as if they had been made on and as of such
      date, subject to changes contemplated by this Agreement;

     

    (b)           each
      Noteholder shall have performed all obligations and conditions herein required
      to be performed or observed by it on or prior to the Acceptance Date;
      and

     

    (c)           SSCY
      and Engelbrecht shall have received the deliveries set forth in Section
      8.1.

     

    7.2          Conditions
      to Noteholders' Obligations.  The obligation of the
      Noteholders to accept the Assets in full satisfaction of obligations as
      contemplated by UCC § 9620 and to effectuate the transactions contemplated by
      this Agreement is subject to the fulfillment on or prior to the Acceptance
      Date
      of the following conditions:

     

    (a)           The
      representations and warranties made by SSCY, S3 and Engelbrecht in this
      Agreement shall be true and correct when made, and shall be true and correct
      on
      the Acceptance Date with the same force and effect as if they had been made
      on
      and as of such date, subject to changes contemplated by this
      Agreement;

     

    (b)           SSCY,
      S3 and Engelbrecht shall have performed all obligations and conditions herein
      required to be performed or observed by it on or prior to the Acceptance Date;
      and

     

    (c)           The
      Noteholders (or the Agent on their behalf), shall have received the deliveries
      set forth in Section 8.1.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    ARTICLE
      8

     

    ACCEPTANCE

     

    8.1          Acceptance.  The
      acceptance of the Assets in partial satisfaction of obligations pursuant to
      the
      UCC and, in particular UCC § 9620 (the "Acceptance") shall be
      deemed to have occurred on the business day following the satisfaction or waiver
      of the conditions to Acceptance identified in this Agreement (the
      "Acceptance Date").  The parties shall meet at the
      offices of Duane Morris LLP, 101 W. Broadway Street, San Diego, California
      92101
      on the second business day following the satisfaction or waiver of the
      conditions to Acceptance identified in Section 7 (the "Acceptance
      Closing") for the purpose of making the deliveries required
      hereunder.  At the Acceptance Closing, (i) SSCY shall deliver to the
      Agent, for the benefit of the Noteholders or their designee, the certificates
      representing the S3 Shares, duly endorsed to the Agent, for the benefit of
      the
      Noteholders or their designee; (ii) SSCY shall deliver to the Agent, for the
      benefit of the Noteholders or their designee, the certificates representing
      the
      Orbtech Shares, duly endorsed to the Agent, for the benefit of the Noteholders
      or their designee, and any payments, proceed or other consideration resulting
      from the sale of such Orbtech Shares pursuant to the Orbtech Agreement; (iii)
      the Noteholders shall deliver to SSCY, (A) from each Noteholder the Note, the
      Class A Common Stock Purchase Warrants and Class B Common Stock Purchase
      Warrants for cancellation, together with any required endorsements and (B)
      the
      Orbtech Agreement Assumption; (iv) Engelbrecht shall deliver to SSCY the
      Engelbrecht Assumption; and SSCY shall deliver to the Noteholders the SSCY
      Shares, duly endorsed, and validly issued and registered in the name and amounts
      set forth on Schedule A.  The parties acknowledge that the deliveries
      by SSCY hereunder are given for cooperation purposes only, but that the transfer
      of the Assets is deemed effectuated pursuant to UCC § 9622(2) and the exercise
      by Noteholders and the Agent of the foreclosure remedy under UCC §
9620.

     

    ARTICLE
      9

     

    MISCELLANEOUS
      PROVISIONS

     

    9.1          Further
      Assurances.  Each party agrees to take such actions and
      to execute such further documents or instruments as may be reasonably necessary
      or appropriate to carry out the transactions contemplated by this
      Agreement.

     

    9.2           Entire
      Agreement.  This Agreement constitutes the entire
      agreement of the parties with respect to its subject matter and supersedes
      all
      previous arrangements and agreements of the parties, whether written or oral,
      with respect to its subject matter.  No promises or representations
      are being relied on by any party which do not appear in this
      Agreement.  The parties further acknowledge and agree that parole
      evidence shall not be required to interpret the intent of the
      parties.

     

    9.3           Waiver,
      Amendment and Modification of Agreement.  The parties
      agree that no waiver, amendment or modification of any of the terms of this
      Agreement shall be effective unless in writing and signed by all parties
      affected by the waiver, amendment or modification.  No waiver of any
      term, condition or default of any term of this Agreement shall be construed
      as a
      waiver of any other term, condition or default.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    9.4           Notice.  Any
      and all notices required or permitted to be given under this Agreement will
      be
      sufficient if hand delivered or delivered by overnight courier service to the
      address listed below or any other address of which the sender of the notice
      has
      been notified of in writing by the intended recipient.  Any notice
      required or permitted to be given hereunder shall be deemed effective upon
      hand
      delivery or one business day following delivery to the overnight
      courier.

     

    If
      to SSCY or S3:

    

    Satellite
      Security Corporation

    Post
      Office Box 880263

    San
      Diego, CA  92168

    

    With
      a
      copy to:

    

    James
      A.
      Mercer, III, Esquire

    Duane
      Morris LLP

    101
      West
      Broadway Suite 900

    San
      Diego, CA  92101

    

    If
      to Engelbrecht:

    

    Mr.
      Zirk
      Engelbrecht

    Post
      Office Box 880263

    San
      Diego, CA  92168

    

    If
      to the Noteholders:

    

    To
      the
      addresses set forth on books of SSCY

    

    With
      a
      copy to:

    

    Eliezer
      Helfgott, Esquire

    Sills
      Cummis Epstein & Gross

    One
      Riverfront Plaza

    Newark,
      New Jersey 07102

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    9.5          Governing
      Law.  All questions concerning the construction,
      validity, enforcement and interpretation of this Agreement shall be governed
      by
      and construed and enforced in accordance with the internal laws of the State
      of
      New York, without regard to the principles of conflicts of law thereof, except
      that enforcement of the remedy under the Loan Documents under the UCC as
      referred to herein shall be governed by the internal laws of the State of
      California.  Each party agrees that all legal proceedings concerning
      the interpretations, enforcement and defense of the transactions contemplated
      by
      this Agreement (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in the City of
      New
      York.  Each party hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in the City of New York,
      borough of Manhattan for the adjudication of any dispute hereunder or in
      connection herewith or with any transaction contemplated hereby or discussed
      herein (including with respect to the enforcement of this Agreement), and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is improper or is an inconvenient
      venue for such proceeding.  Each party hereby irrevocably waives
      personal service of process and consents to process being served in any such
      suit, action or proceeding by mailing a copy thereof via registered or certified
      mail or overnight delivery (with evidence of delivery) to such party at the
      address in effect for notices to it under this Agreement and agrees that such
      service shall constitute good and sufficient service of process and notice
      thereof.  Nothing contained herein shall be deemed to limit in any way
      any right to serve process in any other manner permitted by law.  The
      parties hereby waive all rights to a trial by jury.  If either party
      shall commence an action or proceeding to enforce any provisions of the
      Agreement, then the prevailing party in such action or proceeding shall be
      reimbursed by the other party for its reasonable attorneys' fees and other
      costs
      and expenses incurred with the investigation, preparation and prosecution of
      such action or proceeding 

     

    9.6          Expenses.  Each
      party shall bear their respective expenses and legal fees incurred by it with
      respect to this Agreement and the transactions contemplated hereby.

     

    9.7          Counterparts
      and Facsimiles.  This Agreement may be executed in
      counterparts, each of which shall be an original, but all of which together
      shall constitute one instrument.  Facsimile and electronic copies of
      signatures shall have the same effect as, and shall be considered, original
      signatures.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have entered into this Agreement as of the day
      and
      year first written above.

     

    
      	
              SATELLITE
                SECURITY CORP. 

            	 	
              ZIRK
                ENGELBRECHT

            	 
	 	 	 	 	 
	
              By:

            	
              /s/
                Zirk Engelbrecht

            	 	
              /s/
                Zirk
                Engelbrecht                                                             

            	 
	 	
              Zirk
                Engelbrecht, CEO

            	 	
              Zirk
                Engelbrecht

            	 
	 	 	 	 	 
	 	 	 	 	 
	
              SATELLITE
                SECURITY SYSTEMS, INC.

            	 	 	 
	 	 	 	 	 
	
              By:

            	
              SATELLITE
                SECURITY CORP

            	 	
              NOTEHOLDERS:

            	 
	 	
              its
                sole stockholder

            	 	
              [See
                attached Schedule]

            	 
	 	 	 	 	 
	 	 	 	
               

            	 
	
              By:

            	
              /s/
                Zirk Engelbrecht

            	 	
               

            	 
	 	
              Zirk
                Engelbrecht, CEO

            	 	
               

            	 

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    SCHEDULE
      "A"

    

    

    
      	
              
                Name

              

            	 	
              
                Signature

              

            	 	
              
                Amount
                  of SSCY Shares after giving effect to transactions

                under
                  Agreement

              

            
	 	 	 	 	 
	
              Alpha
                Capital Aktiengesellschaft

            	 	
              
                /s/
                  Alpha Capital Aktiengesellschaft

              

            	 	
              303,030

            
	
              Double
                U Master Fund, LP

            	 	
              
                /s/
                  Double U Master Fund, LP

              

            	 	
              303,030

            
	
              Puritan
                LLC

            	 	
              
                /s/
                  Puritan LLC

              

            	 	
              151,515

            
	
              Brio
                Capital, LP

            	 	
              
                /s/
                  Brio Capital, LP

              

            	 	
              75,758

            
	
              Notzer
                Chesed Corp.

            	 	
              
                /s/
                  Notzer Chesed Corp.

              

            	 	
              121,212

            
	
              Qesef
                Holdings LLC

            	 	
              
                /s/
                  Qesef Holdings LLC

              

            	 	
              166,666

            
	
              Anthony
                Heller

            	 	
              
                /s/
                  Anthony Heller

              

            	 	
              60,606

            
	
              Abraham
                Kimelman

            	 	
              
                /s/
                  Abraham Kimelman

              

            	 	
              45,455

            
	
              Tower
                Paper Co. Inc. Ret. Plan

            	 	
              
                /s/
                  Tower Paper Co. Inc. Ret. Plan

              

            	 	
              15,152

            
	
              Bessie
                Weiss Family Partnership

            	 	
              
                /s/
                  Bessie Weiss Family Partnership

              

            	 	
              121,212

            
	
              Ellis
                International Ltd.

            	 	
              
                /s/
                  Ellis International Ltd.

              

            	 	
              121,212

            
	
              Bursteine
                and Lindsay SEC. Corp.

            	 	
              
                /s/
                  Bursteine and Lindsay SEC. Corp.

              

            	 	
              45,455

            
	
              Centurion
                Microcap, L.P.

            	 	
              
                /s/
                  Centurion Microcap, L.P.

              

            	 	
              60,606

            
	
              Professional
                Offshore Opportunity

            	 	
              
                /s/
                  Professional Offshore Opportunity

              

            	 	
              90,909

            
	
              Professional
                Traders Fund LLC

            	 	
              
                /s/
                  Professional Traders Fund LLC

              

            	 	
              60,606

            
	
              Mordechai
                Vogel

            	 	
              
                /s/
                  Mordechai Vogel

              

            	 	
              15,152

            
	
              First
                Mirage, Inc.

            	 	
              
                /s/
                  First Mirage, Inc.

              

            	 	
              60,606

            
	
              Generation
                Capital Associate

            	 	
              
                /s/
                  Generation Capital Associate

              

            	 	
              30,303

            
	
              Harborview
                Master Fund LP

            	 	
              
                /s/
                  Harborview Master Fund LP

              

            	 	
              90,909

            
	
              Truk
                Opportunity Fund, LLC

            	 	
              
                /s/
                  Truk Opportunity Fund, LLC

              

            	 	
              60,606

            
	 	 	 	 	
              2,000,000

            

    

     

     
      14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]