FORM OF CHANGE IN CONTROL AGREEMENTS AGREEMENT
EXHIBIT
10.1
FORM
OF
CHANGE IN CONTROL AGREEMENTS
AGREEMENT
This
Agreement is made and is effective as of {date}
by and
between Heritage Oaks Bank (“Company”) and {name}
(“Executive”).
WHEREAS,
Executive is currently employed by the Company and its parent company Heritage
Oaks Bancorp, a California corporation (“Bancorp”) in the capacities of
Executive Vice-President and {insert
functional title}
of each
of Company and Bancorp, and Executive’s background, expertise and efforts have
contributed to the success and financial strength of the Company;
and
WHEREAS,
the Company wishes to assure itself of the continued opportunity to benefit
from
Executive’s services and Executive wishes to serve in the employ of the Company
for such purposes;
WHEREAS,
the Board of Directors of the Company (“Board”) has determined that the best
interests of the Company would be served by setting forth the benefits which
the
Company will provide to Executive if the Executive remains employed by the
Company up to and including the consummation of a Change in Control of the
Company; and
WHEREAS,
the Company wishes to provide a specific incentive to Executive to remain in
the
employ of the Company through and including the consummation of any Change
in
Control of the Company, as defined herein.
NOW,
THEREFORE, in order to effect the foregoing, the parties hereto wish to enter
into an agreement on the terms and conditions set forth below. This agreement
(“Agreement”) therefore sets forth those benefits which the Company will provide
to Executive in the event of a “Change in Control of the Company” (as defined in
paragraph 2) under the circumstances described below or in contemplation of
a
Change in Control as discussed in Paragraph 1 below. Accordingly, in
consideration of the premises and the respective covenants and agreements of
or
in contemplation of a Change in Control as discussed in Paragraph 1 below herein
contained, and intending to be legally bound hereby, the parties hereto agree
as
follows:
1.
TERM.
If a
Change in Control of the Company should occur while Executive is still an
employee of the Company, then this Agreement shall continue in effect from
the
date of such Change in Control of the Company for so long as Executive remains
an employee of the Company, but in no event for more than two years following
the consummation of a Change in Control of the Company; provided, however,
that
the expiration of the term of this Agreement shall not adversely affect
Executive’s rights under this Agreement which have accrued prior to such
expiration. If no Change in Control of the Company occurs before Executive’s
status as an employee of the Company is terminated, this Agreement shall expire
on such date. Prior to a Change in Control of the Company, Executive’s
employment may be terminated by the Company with or without Cause (as defined
in
paragraph 3(iii)), and/or this Agreement may be terminated by the Company at
any
time upon written notice to Executive and, in either or both such events,
Executive shall not be entitled to any of the benefits provided hereunder;
provided, however, a termination of Executive, or this Agreement, in
contemplation of but prior to a Change in Control shall be presumed to be a
termination following a Change in Control if such termination is reasonably
proximate in time to the public announcement of said Change in
Control.
2.
CHANGE
IN CONTROL.
For
purposes of this Agreement, a “Change in Control of the Company” shall be deemed
to have occurred if (A) there shall be consummated (1) any consolidation or
merger of the Company or Bancorp in which the Company or Bancorp, as the case
may be, is not the continuing or surviving corporation (unless the shareholders
of Company or Bancorp, as the case may be, immediately before such merger own
immediately after such merger more than a majority of the voting securities
of
the surviving entity), or pursuant to which shares of the Company’s or Bancorp’s
common stock would be converted in whole or in part into cash, securities or
other property, or (2) any sale, lease, exchange or transfer (in one transaction
or a series of related transactions) of all or substantially all the assets
of
the Company or Bancorp, or (B) the shareholders of the Company or Bancorp shall
approve any plan or proposal for the liquidation or dissolution of the Company
or Bancorp, or (C) any “person” (as such term is used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), other than the Company or Bancorp, or a subsidiary thereof, or any
employee benefit plan sponsored by the Company or Bancorp, or a subsidiary
thereof, or a corporation owned, directly or indirectly, by the shareholders
of
the Company or Bancorp in substantially the same proportions as their ownership
of stock of the Company or Bancorp, shall become the beneficial owner (within
the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
or Bancorp representing 20% or more of the combined voting power of the
Company’s or Bancorp’s then outstanding securities ordinarily (and apart from
rights accruing in special circumstances) having the right to vote in the
election of directors as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise.
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3.
TERMINATION
FOLLOWING CHANGE IN CONTROL.
If a
Change in Control of the Company shall have occurred while Executive is still
an
employee of the Company, Executive shall be entitled to the payments and
benefits provided in paragraph 4 hereof upon the subsequent termination of
Executive’s employment, within two years following the consummation of a Change
in Control of the Company, by Executive or by the Company unless such
termination is (a) because of death, “Disability” or “Retirement” (as defined
below), (b) by the Company for “Cause” (as defined below), or (c) by Executive
other than for “Good Reason” (as defined below), in any of which events
Executive shall not be entitled to receive benefits under this
Agreement.
(i)
Disability.
If, as a
result of Executive’s incapacity due to physical or mental illness, Executive
shall have been absent from her duties with the Company on a full-time basis
for
90 days, the Company may terminate this Agreement for “Disability.”
(ii)
Retirement.
Retirement shall mean the voluntary termination by Executive of her employment
for other than “Good Reason” (as defined below) which termination qualifies as
retirement in accordance with any pension plan adopted by the Company, pursuant
to the Company’s normal retirement policies, or in accordance with any
retirement arrangement established with Executive’s consent with respect to
Executive; provided, however, that no mandatory retirement, whether under any
pension plan or in accordance with any such other retirement arrangement, shall
constitute Retirement for purposes of this Agreement, unless Executive has
previously consented thereto in writing.
(iii)
Cause.
Executive’s employment shall cease following a Change in Control upon a good
faith finding of Cause by the Board. “Cause” hereunder means the
following:
(A)
Executive’s personal dishonesty, incompetence or willful misconduct, including
but not limited to a breach of the Company’s or Bancorp’s code of ethics or code
of conduct;
(B)
Executive’s
breach of fiduciary duty involving personal profit;
(C)
Executive’s
intentional failure to perform Executive’s duties for the Company after a
written demand for performance is given to Executive by the Board which demand
specifically identifies the manner in which the Board believes that Executive
has not performed her duties;
(D)
Executive’s
willful violation of any law, rule, regulation or final cease and desist order
(other than traffic violations or similar minor offenses) to the extent
detrimental to the Company’s business or reputation; or
(E)
the
willful engaging by Executive in gross misconduct materially and demonstrably
injurious to the Company.
Notwithstanding
any of the foregoing, Executive remains an “at will” employee of the Company and
the Company can without cause terminate Executive’s employment prior to any
Change in Control in the discretion of the Board of Directors of the
Company.
(iv)
Resignation
for Good Reason.
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 Company (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:
(A) Without
Executive's express written consent, the assignment to Executive of any duties
materially inconsistent with Executive's position, duties, responsibilities
and
status with the Company immediately prior to the Change in Control, or any
subsequent removal of Executive from or any failure to re-elect her to any
such
position;
(C) A
material reduction (ten percent or greater) by the Company of Executive's total
compensation (base salary and any bonus compensation applicable to her) as
in
effect immediately prior to the Change in Control;
(D) A
material reduction (ten percent or greater) by the Company to the Executive’s
total benefits and perks as in effect immediately prior to the Change in
Control; or the taking of any action by the Company which would materially
affect Executive's participation in or reduce Executive's benefits under any
such benefits or ‘perks' plans, programs or policies, or deprive Executive of
any material fringe benefits enjoyed by her immediately prior to the Change
in
Control;
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(E) The
Company requiring Executive to be based anywhere other than San Xxxx Obispo
County where the Company’s headquarters is currently situated, except for
required travel on the Company’s behalf to an extent substantially consistent
with Executive's present business travel obligations; or
(F) The
failure of the Company to obtain the assumption of this Agreement by any
successor.
(v)
Notice
of Termination.
Any
termination by the Company pursuant to subparagraphs (i), (ii) or (iii) above
or
by Executive pursuant to subparagraph (iv) above shall be communicated by
written Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall
set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive’s employment under the provision so
indicated.
(vi)
Date
of Termination.
“Date
of Termination” shall mean
(A)
if
this Agreement is terminated for Disability, thirty days after Notice of
Termination is given,
(B)
if
Executive’s employment is terminated pursuant to subparagraph (iv) above, the
date specified in the Notice of Termination,
(C)
if
Executive’s employment is terminated for any other reason, the date on which a
Notice of Termination is given (or, if a Notice of Termination is not given,
the
date of such termination), and
(D)
if
Executive is entitled to compensation pursuant to paragraph 4, the date
determined pursuant to such paragraph.
4.
COMPENSATION
DURING DISABILITY OR UPON TERMINATION.
(i)
If,
after a Change in Control of the Company, Executive shall fail to perform her
duties because of a Disability, Executive shall continue to receive his/her
full
base salary monthly at the rate then in effect until her employment is
terminated pursuant to paragraph 3(i) hereof.
(ii)
If,
after a Change in Control of the Company, Executive’s employment shall be
terminated for Cause, the Company shall pay Executive his/her full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to
Executive under this Agreement.
(iii)
If,
after a Change in Control of the Company, the Company shall terminate
Executive’s employment (other than pursuant to paragraph 3(i) or 3(iii) hereof
or by reason of death or Retirement as provided in Paragraph 3(ii)) or Executive
shall terminate her employment for Good Reason, Executive shall be entitled
to
payments pursuant to this paragraph 4:
The
Company shall pay to Executive as severance pay (and without regard to the
provisions of any benefit plan) in a lump sum on the fifth day following the
Date of Termination, the following amounts:
(x)
Executive’s full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the terms
of
any Plans have been earned or become payable, but which have not yet been paid
to Executive (including amounts which previously had been deferred at
Executive’s request); and
(y)
an
amount equal to Executive’s total accrued compensation from the Company
(including bonus) during the previous twelve (12) months.
(iv)
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this paragraph 4 be reduced by any
compensation earned by Executive as the result of employment by another employer
after the Date of Termination, or otherwise.
(v)
The
provisions of this Agreement, and any payment provided for hereunder, shall
not
reduce any amounts otherwise payable, or in any way diminish Executive’s
existing rights, or rights which would accrue solely as a result of the passage
of time, under any employee benefit plan of the Company, any employment
agreement or other contract, plan or arrangement of the Company, except to
the
extent necessary to prevent double payment under any severance plan or program
of the Company in effect at the Date of Termination.
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5.
SUCCESSOR’S
BINDING AGREEMENT
(i)
The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance satisfactory
to
Executive expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
if
no such succession had taken place.
(ii)
This
Agreement shall inure to the benefit of, and be enforceable by, Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributes, devises and legatees. If Executive should die while any amounts
would still be payable to Executive hereunder if Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee or
other designee or, if there be no such designee, to Executive’s
estate.
6.
NO
EMPLOYMENT AGREEMENT.
In
consideration of the foregoing obligations of the Company, Executive agrees
to
be bound by the terms and conditions of this Agreement and to remain in the
employ of the Company during any period following any public announcement by
any
person of any proposed transaction or transactions which, if effected, would
result in a Change in Control of the Company until a Change in Control of the
Company has taken place or, in the opinion of the Board, such person has
abandoned or terminated its efforts to effect a Change in Control of the
Company. Subject to the foregoing including but not limited to the provisions
contained in Paragraph 1 that a termination in contemplation of a Change in
Control entitles Executive to the amounts provided in Section 4, nothing
contained in this Agreement shall impair or interfere in any way with
Executive’s right to terminate her employment or the right of the Company to
terminate Executive’s employment with or without cause prior to a Change in
Control of the Company. Nothing contained in this Agreement shall be construed
as a contract of employment between the Company and Executive or as a right
for
Executive to continue in the employ of the Company, or as a limitation of the
right of the Company to discharge Executive with or without cause prior to
a
Change in Control of the Company.
7.
NOTICE.
For the
purpose of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
on
the last page of this Agreement, provided that all notices to the Company should
be directed to the attention of the Chairman of the Company’s Compensation
Committee, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
8.
FURTHER
ASSURANCES.
Each
party hereto agrees to furnish and execute such additional forms and documents,
and to take such further action, as shall be reasonable and customarily required
in connection with the performance of this Agreement or the payment of benefits
hereunder.
9.
MISCELLANEOUS.
No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Executive
and such officer as may be specifically designated by the Board of Directors
of
the Company. No waiver by either party hereto at any time of any breach by
the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or
subsequent time. No agreements or representations, oral or otherwise, express
or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement
contains the entire agreement among the parties and supersedes and replaces
any
prior agreement between the parties concerning the subject matter hereof. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California.
10.
VALIDITY.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
11.
COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together will constitute one and
the
same instrument.
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12.
ARBITRATION.
Any
dispute or controversy arising or in connection with this Agreement shall,
upon
written request of one party to the other, be submitted to and settled
exclusively by arbitration pursuant to the rules of the American Arbitration
Association. Judgment may be entered on the arbitrator's award in any court
of
competent jurisdiction. The cost of such arbitration, including reasonable
attorney’s fees, shall be borne by the losing party or in such proportions as
the arbitrator(s) shall decide. Arbitration shall be the exclusive remedy of
Executive and the Company and the award of the arbitrator(s) shall be final
and
binding upon the parties. All reasonable costs, including reasonable attorney’s
fees, incurred in enforcing an arbitration award in court, or of seeking a
court
order to compel arbitration, shall be borne by the losing party in such
proceedings.
13.
ADVICE
OF COUNSEL.
Executive acknowledges that she has been encouraged to consult with legal
counsel of her choosing concerning the terms of this Agreement prior to
executing this Agreement. Any failure by Executive to consult with competent
counsel prior to executing this Agreement shall not be a basis for rescinding
or
otherwise avoiding the binding effect of this Agreement. The parties acknowledge
that they are entering into this Agreement freely and voluntarily, with full
understanding of the terms of this Agreement. Interpretation of the terms and
provisions of this Agreement shall not be construed for or against either party
on the basis of the identity of the party who drafted the terms or provisions
in
question.
14.
REDUCTION
OF PAYMENT.
Notwithstanding anything in the foregoing to the contrary, if the severance
payment 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
Company would constitute a "parachute payment" (as defined in Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended, or such similar set of laws
(the “Code”)), the payments pursuant to this Agreement shall be reduced
(reducing first the payments under Section 3 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 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 Company’s then current
tax services provider / advisor, and such determination shall be conclusive
and
binding on the Company and Executive with respect to the treatment of the
payment for tax reporting purposes.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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HERITAGE
OAKS BANK
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000
00XX
Xxxxxx
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Xxxx
Xxxxxx, Xxxxxxxxxx 00000
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By:
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Its:
President
& CEO
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Print
name: Xxxxxxxx
X.Xxxx
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THE
EXECUTIVE
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000
00XX
Xxxxxx
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Xxxx
Xxxxxx, Xxxxxxxxxx 00000
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{Executive’s
name}
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