FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
This
First Amendment to the Employment Agreement (the “First Amendment”) is made and
is effective as of August 26, 2009, by and between Heritage Oaks Bank, a
California state chartered bank (“Bank”) and Xxxxxx Xxxxxx
(“Executive”).
RECITALS
This
First Amendment is made with regard to the following facts:
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F.
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Executive
is currently employed by the Bank pursuant to that certain Employment
Agreement dated on May 29, 2007 by and between the Bank and the Executive
(the “Agreement”).
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G.
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Heritage
Oaks Bancorp (the “Company”), the Bank’s holding company, closed a
transaction with the United States Department of Treasury (the “Treasury”)
and as a result, became a participant in the Capital Purchase Program
(“CPP”), as authorized under the Troubled Asset Relief Program
(“TARP”).
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H.
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As
a result of the Company’s participation in the CPP, the Company and its
subsidiaries, including the Bank, are subject to executive compensation
and other restrictions as set forth in the CPP, as modified by the
American Recovery and Reinvestment Act of 2009 (“ARRA”) and the Interim
Final Rule on TARP Standards for Compensation and Corporate Governance
published in the Federal Register on June 15, 2009 (the “Interim Final
Rule”).
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I.
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Executive
and Bank desire to amend the terms of the Agreement in the manner set
forth herein for the purpose of complying with
TARP.
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TERMS
In
consideration of the premises and the respective covenants and agreements of the
parties herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
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12.
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Section
1(c) of the Agreement is hereby removed in its entirety and amended to
read as follows:
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(c)
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“Cause”
means:
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(i)
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Executive’s
failing to perform her duties and obligations as an employee of the
Company and failing to cure such breach within 15 days following delivery
to Executive of written notice specifying in reasonable detail the
failures to perform;
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(ii)
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Executive’s
engaging in either grossly negligent conduct or willful misconduct in
connection with the performance of her duties as an employee of the
Company;
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(iii)
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The
conviction of Executive for any crime which constitutes a felony (other
than a vehicular violation not involving theft or fraud) in the
jurisdiction in which committed and which involves an act of theft or
fraud, or the entry by Executive of a plea of guilty or nolo contendre to
such a felony in any jurisdiction;
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(iv)
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Any
violation by Executive of her fiduciary duty to the Company which has the
effect of unlawfully converting for Executive’s own personal benefit, any
material property or prospect of the
Company;
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(v)
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The
repeated consumption of alcohol or drugs in a manner that materially
impairs Executive abilities to perform her duties under this
Agreement;
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(vi)
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Executive’s
personal dishonesty;
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(vii)
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Executive engages, or is
alleged to have engaged, in activity which, in the opinion of the Board or
the Bank’s Chief Executive Officer, could materially adversely affect the
Bank’s reputation in the community or which evidences the lack of
Executive’s fitness or ability to perform Executive’s duties as determined
by the Board or the Bank’s Chief Executive Officer, as the case may be, in
good faith, after Executive has been given written warning specifically
advising her that she has engaged in such activity, and after Executive
has been given a reasonable time period (not to exceed 15 days) after such
warning to provide assurance to the Board or the Bank of her continuing
fitness and ability to perform her duties;
or
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(viii)
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Executive’s
material breach of any provision of the Agreement or the Employment
Agreement.
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13.
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Section
7(e) of the Agreement is hereby removed in its entirety and amended to
read as follows:
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(e)
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Resignation
for Good Reason. Either before or
following a Change in Control during the Term hereof, Executive may, under
the following circumstances, regard Executive’s employment as being
constructively terminated by the Bank (and in such case Executive’s
employment shall terminate) and may, therefore, Resign for Good Reason
within 90 days of Executive’s discovery of the occurrence of one or more
of the following events, any of which shall constitute “Good Reason” for
such Resignation for Good
Reason:
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(i)
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If
the Company, without the prior written consent of Executive, reduces, by
more than ten percent (10%), Executive’s base salary or any bonus
compensation applicable to her as in effect prior to such reduction other
than as part of a Company-wide reduction in compensation expenses that
similarly affects all other senior members of management at and above
Executive’s pay grade or as required by the United States Department of
Treasury for the purpose of compliance with the restrictions on executive
compensation as set forth by the CPP as authorized under the TARP, and
those laws and/or amendments thereto that modify the terms
thereof;
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(ii)
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If
the Company, without the prior written consent of Xxxxxx, deprives Xxxxxx
of the title of Executive Vice President of Heritage Oaks Bank and
President of Business First Bank, a division of Heritage Oaks Bank or
materially diminishes the authority delegated to Xxxxxx in her capacity as
a member of the Executive Committee of Heritage Oaks Bank and as President
of Business First Bank, a division of Heritage Oaks
Bank;
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(iii)
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If
the Company, without the prior written consent of Xxxxxx, requires Xxxxxx
to relocate her principal place of business outside of Santa Xxxxxxx
County;
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(iv)
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A failure
by the Company to maintain any of the benefits and perks to which Xxxxxx
was entitled at a level substantially equal to or greater than the value
of those benefits and perks in effect immediately prior to such change in
benefits or perks; or the taking of any action by the Company which would
materially affect Xxxxxx’x participation in or reduce Xxxxxx’x benefits
under any such benefits or ‘perks’ plans, programs or policies, or deprive
Xxxxxx of any material fringe benefits enjoyed by her immediately prior to
any such action;
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(v)
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Any
purported Termination of Xxxxxx’x employment by the Company other than
those effected in good faith pursuant to Sections 7(a) and 7(b) of the
Agreement;
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(vi)
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The
failure of the Company to obtain the assumption of the Agreement by any
successor; or
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(vii)
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The
receipt by Xxxxxx of a Notice of Non-Renewal per the
Agreement.
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14.
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The
following will be added as Section 6(b)(iv) to the
Agreement:
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(c)
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(iv)
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If
the Company is subject to the executive compensation limitations under the
TARP at the time Executive receives a bonus under this section, any and
all such bonuses and/or portions thereof shall be subject to forfeiture
and/or repayment by the Executive to the Company if the payment of such
bonus was based on materially inaccurate financial statements or any other
materially inaccurate performance metric
criteria.
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15.
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Section
8(h) of the Agreement is hereby removed in its entirety and amended to
read as follows:
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(h) Reduction of Payment; IRC
Section 409A Compliance.
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(i)
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Notwithstanding
anything in the foregoing to the contrary, if the payments made to
Executive following a Termination Without Cause or Resignation For Good
Reason or any of the other payments provided for in this Agreement,
together with any other payments which Executive has the right to receive
from the Bank would constitute a “parachute payment” (as defined in
Section 280G of the Code), the payments pursuant to this Agreement shall
be reduced to the largest amount as will result in no portion of such
payments being subject to the excise tax imposed by Section 4999 of the
Code; provided, however, that (A) the parties acknowledge that the
foregoing payment is for services to be rendered in the event of a Change
in Control over and above those normally and reasonably expected of the
Executive, and (B) the determination as to whether any reduction in the
payments under this Agreement pursuant to this proviso is necessary shall
be made in good faith by the Bank’s independent auditors or if such firm
is no longer providing tax services to Bank to such other tax advisor as
shall be mutually acceptable to Bank and Executive, and such determination
shall be conclusive and binding on the Bank and Executive with respect to
the treatment of the payment for tax reporting
purposes.
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(ii)
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This
Agreement, and any payments or benefits hereunder, are made expressly
subject to and conditioned upon compliance with all federal and state law,
regulations and policies relating to the subject matter of this Agreement,
including but not limited to the provisions of law codified at 12 U.S.C.
Section 1828(k), the regulations of the FDIC codified as 12 C.F.R. Part
359, and any successor or similar federal or state law or regulation
applicable to the Bank or Bancorp. Employee acknowledges that
he understands the sections of law and regulations cited above and that
Bank’s and Bancorp’s obligations to make payments hereunder are expressly
relieved if such payments violate any federal or state law or regulation
applicable to the Bank or Bancorp.
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(iii)
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If
the Company is subject to the executive compensation limitations under
TARP at the time the Executive receives payment(s) under sections 8(d)
and/or 8(e) and any such payment(s), together with any other payments
which Executive has the right to receive from the Company, exceed the
limits allowed for Executive established under TARP, then the aggregate
payments pursuant to this Agreement, and any other agreement with
Executive, shall be reduced to the largest amount as will result in no
portion of such payments violating the executive compensation limitations
under TARP.
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(iv)
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Notwithstanding
any provision existing in this Agreement or any amendment thereto, it is
the intent of the Bank and Executive that any payment or benefit provided
pursuant to this Agreement shall be made and paid in a manner, at a time
and in a form which complies with the applicable requirements of IRC
Section 409A, in order to avoid any unfavorable tax consequences resulting
from any such failure to comply. Furthermore, for the purposes of this
Agreement, IRC Section 409A shall be read to include any related or
relevant IRS Notices (including but not limited to Notice
2007-86). In the event of any ambiguity in terms, or in the
event further clarification of any term or provision is necessary, all
interpretations and payouts of benefits based thereon shall be in
accordance with IRC 409A and any related notices or guidance
thereon.
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16.
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Capitalized
terms used herein and not otherwise defined shall have the same meaning as
set forth in the Agreement.
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17.
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This
First Amendment may be entered into in one or more counterparts, all of
which shall be considered one and the same instrument, and it shall become
effective when one or more counterparts have been signed by each of the
Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same
counterpart.
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18.
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Except
as herein amended, the Agreement shall remain in full force and
effect.
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19.
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This
First Amendment shall be governed by and construed in accordance with the
laws of the State of California.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
| ATTEST: | HERITAGE OAKS BANK | ||||
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/s/
Xxxx Xxxxxx
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/s/ Xxx Xxxxxxxx | ||||
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Its: |
EVP
and COO
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Print name: |
Xxx
Xxxxxxxx
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| THE EXECUTIVE | |||||
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxx Xxxxxx | ||||
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Witness
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Xxxxxx Xxxxxx | ||||
