EMPLOYMENT AGREEMENT
Exhibit
10.1 Employment Agreement
This
Agreement is made and is effective as of January 1, 2005, by and between
Heritage Oaks Bank, a California state chartered bank (“Bank”), Heritage Oaks
Bancorp, a California corporation (“Bancorp”) and Xxxxxxxx X. Xxxx
(“Executive”).
WHEREAS,
the Bank and Bancorp wish to employ Executive as their respective President
and
Chief Executive Officer as specified herein and to benefit from Executive's
services for the period provided in this Agreement, and Executive wishes
to
serve in such positions on a full-time basis solely in accordance with the
terms
hereof for such purposes; and
WHEREAS,
the Board of Directors of the Bank and Bancorp determined that the best
interests of the Bank and Bancorp would be served by Executive's employment
with
the Bank and Bancorp under the terms of this Agreement;
NOW,
THEREFORE, in order to effect the foregoing, the parties hereto wish to enter
into an employment agreement on the terms and conditions set forth below.
Accordingly, 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:
1. Definitions.
(a)
"Agreement"
means
this employment agreement and any amendments hereto complying with Section
20(a)
hereof.
(b)
"Board"
means
the Board of Directors of the Bank and/or the Board of Directors of Bancorp
as
the context requires.
(c)
"Cause"
means:
(i) Executive's
personal dishonesty, incompetence or willful misconduct;
(ii) Executive's
breach of fiduciary duty involving personal profit;
(iii) Executive's
intentional failure to perform Executive's duties for the Bank
or
Bancorp after a written demand for performance is given to Executive by the
Board which demand specifically identifies the manner in which the Board
believes that Executive has not performed his duties;
(iv) Executive's
willful violation of any law, rule, regulation or final cease and desist
order
(other than traffic violations or similar minor offenses) to the extent
detrimental to the Bank's or Bancorp’s business or reputation;
(v) Executive
engages, or is alleged to have engaged, in activity which, in the opinion
of the
Board, could materially adversely affect the Bank’s or Bancorp’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, in good faith;
or
(vi) Executive's
material breach of any provision of this Agreement.
(d)
"Change
in Control"
means a
change of control of the Bank or Bancorp of a nature that would be required
to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or
in
response to any similar item on any similar schedule or form) promulgated
under
the Securities Exchange Act, whether or not Bancorp is then subject to such
reporting requirement; provided, however, that without limitation, a Change
in
Control shall be deemed to have occurred if:
(i) there
is
a transfer, voluntarily or by hostile takeover, by proxy contest (or similar
action), operation of law, or otherwise, of Control of
Bancorp;
(ii) any
Person is or becomes the "beneficial owner" (as defined in Rules 13d-3
and
13d-5 under the Securities Exchange Act or any successor provisions thereof),
directly or indirectly, of securities of the Bank (except for Bancorp)
or
securities of Bancorp representing 25% or more of the respective voting
power of
the Bank's or Bancorp’s then outstanding securities;
(iii) the
individuals who were members of Bancorp’s Board immediately prior to a meeting
of the shareholders of Bancorp, which meeting involves a contest for the
election of directors, do not constitute a majority of the Board following
such
meeting or election;
(iv) a
merger
or consolidation of Bancorp (in which Bancorp is not the surviving entity
and in
which the shareholders of Bancorp immediately prior to such merger or
consolidation do not own a majority of the outstanding voting stock of such
merged or consolidated entity immediately after such merger or consolidation),
or sale of all or substantially all of the assets of the Bank or Bancorp;
or
(v) there
is
a change, during any period of two consecutive years, of a majority of
Bancorp’s
Board as constituted as of the beginning of such period, unless the election
of
each director who is not a director at the beginning of such period was
approved
by a vote of at least two-thirds of the directors then in office who were
directors at the beginning of such period.
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(e)
"Code”
shall
mean the Internal Revenue Code of 1986, as amended.
(f)
"Control”
means
the
possession, direct or indirect, by any Person or "group" (as defined in Section
13(d) of the Securities Exchange Act) of the power to direct or cause the
direction of the management policies of the Bank or Bancorp, whether through
ownership of voting securities, by contract or otherwise, and in any case
means
the ability to determine the election of a majority of the directors of the
Bank
or Bancorp.
(g)
"Disability"
means
physical or mental illness resulting in Executive's absence on a full-time
basis
from Executive's duties with the Bank or Bancorp for 180 calendar days, subject
to the procedure described in Section 7(a).
(h)
"Expiration"
means
the termination of this Agreement (including Executive's employment hereunder)
and of any further obligations of the parties (except as specified in this
Agreement) upon completion of the Term.
(i)
"Person"
means an
individual, a group acting in concert, a corporation, a partnership, an
association, a joint stock company, a trust, any unincorporated organization,
a
government or political subdivision thereof, or any other entity
whatsoever.
(j)
"Resign
for Good Reason" or "Resignation for Good Reason"
has the
meaning found in Section 7(e).
(k)
“Salary
Continuation Agreement”
means
the Executive Salary Continuation Agreement by and between Executive and
the
Bank dated as of March 7, 2001 as the same may be amended from time to
time.
(l)
"Term"
means
the initial term of this Agreement and any extensions hereof, as provided
in
Section 4, whether prior to or following a Change in Control.
(m)
"Termination"
or "Terminate(d)"
means
the termination of Executive's employment hereunder for any of the following
reasons unless the context indicates otherwise:
(i) Retirement
by Executive;
(ii) Death
of
Executive;
(iii) Disability;
(iv) Expiration;
(v) Resignation
for Good
Reason;
(vi) Resignation
other than
Resignation for Good Reason;
(vii) Termination
Without
Cause; and
(viii) Termination
for
Cause.
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(n)
"Termination
Without Cause" or "Terminate(d) Without Cause"
means
the cessation of Executive's employment hereunder for any reason
except:
(i) A
resignation by Executive;
(ii) Termination
for Cause;
(iii) Retirement;
(iv) Disability;
(v) Death;
or
(vi) Expiration.
2. Employment. Notwithstanding
any other
provision to the contrary contained herein, it is agreed by the parties hereto
that the Executive’s employment by the Bank and Bancorp hereunder shall be
at-will, and that the Bank or Bancorp may at any time elect to terminate
this
Agreement and Executive’s employment for any reason by action of its Board the
affirmative vote of at least a majority of the authorized number of its
directors. In this Agreement, notwithstanding the foregoing, in the event
of any
Termination Without Cause pursuant to Section 7 of this Agreement, all severance
and other benefits provided for in Section 8 of this Agreement shall be provided
by the Bank to the Executive and no severance or other benefits shall be
due or
owing Executive by Bancorp.
3. Position
and Responsibilities. The
Executive shall serve
as President and Chief Executive Officer of the Bank and Bancorp as specified
herein, and subject to the provisions of Section 5 below, shall have such
responsibilities, duties and authority set forth in the Articles of
Incorporation and Bylaws of the Bank and Bancorp, respectively, and as are
generally associated with such positions and as may from time to time be
assigned to the Executive by the Board that are consistent with such
responsibilities, duties and authority.
4. Term
of Agreement. Subject
to the terms and
provisions of this Agreement, this Agreement and the period of Executive's
employment shall be deemed to have commenced as of January 1, 2005, and shall
continue for an initial term of three (3) calendar years thereafter, expiring
on
December 31, 2007, unless extended as provided herein. The initial term shall
automatically be extended for an additional one (1) full calendar year without
further action by the parties on January 1, 2006, and on each succeeding
January
1 thereafter, such that as of each such January 1, this Agreement shall have
a
remaining term of three (3) calendar years. Each party, Bank, Bancorp or
Executive, may stop an automatic calendar year extension, however, by serving
written notice ("Notice of Non-Renewal") upon the other within 90 calendar
days
prior to January 1, 2006, or within 90 calendar days prior to January 1 of
any
succeeding year, as the case may be, of such party's intention that this
Agreement shall expire at the end of such Term. In the event the Bank or
Bancorp
retains Executive as an employee following the expiration of the Term, such
employment, absent a written agreement to the contrary, will be on an at-will
basis with such compensation and upon such terms as the parties may then
agree,
subject to termination at any time with or without cause, and without liability.
If the Bank or Bancorp does not retain Executive as an employee after the
Expiration of the Term, Executive's employment shall cease without further
liability of the parties to each other. Executive's employment shall also
terminate, and the Term of this Agreement will expire, upon Executive's
resignation (unless resignation is for Good Reason after a Change in Control),
retirement, death or Disability, or upon Executive's Termination for Cause
or
Termination Without Cause.
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5. Duties.
(a) The
Bank or Bancorp and
Executive hereby agree that, subject to the provisions of this Agreement,
the
Bank or Bancorp shall employ Executive, and Executive shall serve the Bank
and
Bancorp (from date of appointment) as President and Chief Executive Officer
for
the Term of this Agreement.
(b) During
the Term hereof,
Executive shall devote substantially all of his or her business time, attention,
skill and efforts to the faithful performance of the business of the Bank
and
Bancorp to the fullest extent necessary to properly discharge his or her
duties
and responsibilities hereunder. Executive's position and duties with the
Bank
and Bancorp shall be as identified from time to time by the Boards of Directors
of the Bank and Bancorp. Further, with the prior approval of the Board, from
time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in charitable, political
or civic organizations, which, in such Board’s judgment, will not present any
material conflict of interest with the Bank and Bancorp and will not unfavorably
affect the performance of Executive’s duties pursuant to this Agreement. Subject
to the provisions of the Bank’s and Bancorp’s code of conduct,
nothing
contained herein will be deemed to limit the ability of Executive to make
passive investments.
(c) In
addition, to the
extent permitted by law and consistent with the oversight responsibilities
of
the Board of Directors , Executive shall have the full authority and support
of
the Board of Directors to hire and fire all officers and employees of the
Bank
and Bancorp from time to time.
(d) Further,
Executive shall
have the full authority of the Bank and Bancorp and the Board to execute
contracts, leases and other related documents for the purchase of capital
equipment and improvements, provided such expenditures and obligations are
contained in and within the respective annual budgets for the Bank and Bancorp,
which has been adopted or approved by the Boards of Directors.
6. Salary,
Bonus Payments and Related Matters.
(a) Salary. During
the period of the
Executive's employment as President and Chief Executive Officer hereunder,
the
Bank shall pay to the Executive a base salary of Two Hundred and Forty-Nine
Thousand Six Hundred Dollars ($249,600). All base salary of Executive shall
be
payable at regular intervals in accordance with the Bank's normal payroll
practices now or hereafter in effect. Executive's salary shall be reviewed
at
least annually by the Board or a committee designated by the Board and shall
be
adjusted based upon Executive's job performance and the Bank's financial
condition and performance. The first such salary review shall be undertaken
no
later than January 1, 2006 and completed no later than March 31, 2006. If
there
is a Change in Control, Executive's salary shall not be less than Executive’s
annual salary for the year immediately preceding the Change in Control. It
is
agreed to by Bank, Bancorp and Executive that all compensation earned and
payable to Executive under this Agreement be paid by Bank and not by
Bancorp.
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(b) Bonuses. Executive
may receive
certain annual bonus compensation during the Term of this Agreement as
follows:
(i) 1997
Bonus Plan.
During
each year of the Term, Executive shall be
eligible to participate in the 1997 Bonus Plan and to receive a bonus from
such
bonus plan in an amount to be determined by the Board’s compensation committee.
(ii) Discretionary
Bonus.
Executive may also, in the discretion of the Board,
receive an additional bonus based on individual merit and performance. The
amount of this bonus, if any, in any such year shall be determined by the
Board,
in its sole discretion.
(c) Expenses. During
the period of the
Executive's employment hereunder, the Executive shall be entitled to receive
prompt reimbursement for all reasonable and customary expenses incurred by
the
Executive in performing services hereunder in accordance with the general
policies and procedures established by the Bank.
(d) Employee
Benefits and Perks. During
the period of the
Executive's employment hereunder, the Executive shall be entitled to participate
in all employee benefits plans or arrangements of the Bank or Bancorp on
the
same basis as other employees of the Bank including, without limitation,
plans
or arrangements providing medical insurance, dental insurance, life insurance,
disability insurance, sick leave, or retirement. Executive shall also be
entitled to (i) the use of a Bank owned automobile to be replaced at the
discretion of the Board, (ii) the use of the Bank provided credit card(s),
car
telephone(s), pager(s) and such other perks (if such is (are) being so provided)
upon the terms and conditions previously in effect, and (iii) the reimbursement
for the premiums paid by Executive on the life insurance policy and the
disability insurance policy identified on Exhibit A hereto. Executive shall
also
be entitled to 20 days paid vacation for each year of the Term. Executive
shall
comply with Bank’s standard employee policies and practices in scheduling and
taking vacations.
7. Termination.
(a) Resignation,
Retirement, Death or Disability. Executive's
employment
hereunder shall cease at any time by Executive's resignation (other than
a
resignation for Good Reason as provided in Section 7(e)), or by Executive's
retirement, death or Disability. Disability shall be deemed to have occurred
only after the following procedure has been satisfied: If within 30 days
after a
written notice of proposed Termination for Disability is given to Executive
by
the Bank and Bancorp, Executive has not returned to the full-time performance
of
his duties, the Bank and Bancorp may end Executive's employment by giving
written notice of Termination for Disability. Such notice may be given by
the
Bank and Bancorp following Executive's absence from Executive's duties by
reason
of physical or mental disability for one hundred and fifty (150) consecutive
calendar days.
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(b) Termination
for Cause. Executive's
employment
shall cease upon a good faith finding of Cause by the Board; provided, however,
that Executive shall be given written notice of the Board's finding of conduct
by Executive amounting to Cause for such termination. Said notice shall be
accompanied by a copy of a resolution duly adopted by the affirmative vote
of
not less than a majority of a quorum of the Board at a duly-noticed meeting
of
the Board, finding that in the good faith opinion of the Board, Executive
was
guilty of conduct amounting to Cause and specifying the particulars thereof;
provided, however, that after a Change in Control, such resolution may be
adopted only by the affirmative vote of not less than a majority of a committee
composed of at least three (3) disinterested outside directors of the Bank
and
Bancorp. In the absence of at least three (3) disinterested outside directors,
a
determination of Cause shall be submitted to and made by an arbitrator(s)
pursuant to Section 19 hereof.
(c) Termination
Without Cause. Executive's
employment
may be terminated Without Cause pursuant to this Section 7(c) upon 30 days'
notice for any reason, subject to the payment of all amounts required by
Section
8 hereof.
(d) Expiration. Executive's
employment
shall cease, or shall continue on an at-will basis as provided in Section
4
hereof, upon the expiration of the Term of this Agreement as provided in
Section
4 hereof.
(e) 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 Bank or Bancorp (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:
(i) 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 Bank immediately prior to the Change in Control, or any
subsequent removal of Executive from or any failure to re-elect him to any
such
position;
(ii) Without
Executive's express written consent, the termination and/or material reduction
in Executive's facilities (including office space and general location) and
staff reporting and available to Executive immediately prior to the Change
in
Control;
(iii) A
material reduction (ten percent or greater) by the Bank of Executive's base
salary or of any bonus compensation applicable to him as in effect immediately
prior to the Change in Control;
(iv) A
failure
by the Bank to maintain any of the employee benefits and perks to which
Executive was entitled immediately prior to the Change in Control at a level
substantially equal to or greater than the value of those employee benefits
and
perks in effect immediately prior to the Change in Control; or the taking
of any
action by the Bank 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 him
immediately prior to the Change in Control;
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(v) The
Bank
or Bancorp requiring Executive to be based anywhere other than San Xxxx Obispo
county, except for required travel on the Bank's or Bancorp’s behalf to an
extent substantially consistent with Executive's present business travel
obligations;
(vi) Any
purported Termination of Executive's employment by the Bank or Bancorp other
than those effected in good faith pursuant to Sections 7(a) and
7(b);
(vii) The
failure of the Bank or Bancorp to obtain the assumption of this Agreement
by any
successor; or
(viii) Receipt
by Executive of a
Notice of Non-Renewal.
(f) Supervisory
Suspension. If
the Executive is
suspended and/or temporarily prohibited from participating in the conduct
of the
Bank's or Bancorp’s affairs by a notice served under Sections 8(e) or (g) of the
Federal Deposit Insurance Act or similar statute, rule or regulation, the
Bank's
or Bancorp’s obligations under this Agreement shall be suspended as of the date
of service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Bank shall, (i) pay the Executive all or part of
the
compensation withheld while its obligations under this Agreement were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(g) Regulatory
Removal. If
the Executive is
removed and/or permanently prohibited from participating in the conduct of
the
Bank's or Bancorp’s affairs by an order issued under Sections 8(e) or (g) of the
Federal Deposit Insurance Act or similar statute, rule or regulation, all
obligations of the Bank and Bancorp under this Agreement shall terminate
as of
the effective date of the order.
8. Payments
to Executive Upon Termination.
(a) Death,
Disability or Retirement. In
the event of
Termination of this Agreement due to Executive's death, Disability or
retirement, Executive or Executive's spouse and/or estate shall be entitled
to
(i) all benefits generally available to Bank and Bancorp employees, or their
spouses and/or estates, as of the date of such death, Disability or retirement
and (ii) the benefits provided in Executive’s Salary Continuation
Agreement.
(b) Resignation
Without Good Reason or Expiration. In
the event of
Executive's resignation (other than a Resignation for Good Reason), or upon
Expiration, the Bank and Bancorp shall have no further obligations to Executive
under this Agreement or otherwise, except as may be expressly required by
law.
(c) Termination
for Cause. In
the event Executive is
Terminated for Cause, the Bank or Bancorp shall have no further obligations
to
Executive under this Agreement or otherwise, except as may be expressly required
by law.
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(d) Termination
Without Cause Prior to a Change in Control. Upon
the occurrence of a
Termination Without Cause prior to a Change in Control, as severance pay
and in
lieu of damages for breach of this Agreement, the Bank on its behalf and
on
behalf of Bancorp shall pay to Executive commencing on the first day of the
seventh month following Executive’s termination and on the first day of the next
11 successive months a payment equal to Executive’s monthly base salary then in
effect, less applicable state and federal withholdings. During the 12 month
period during which Executive would receive payments pursuant to this provision,
Executive shall also be entitled to the continuation of insurance and other
benefits as set forth herein; provided, however, (i) such benefits shall
not
include participation in the 1997 Bonus Plan and (ii) such insurance benefits
shall be provided only to the extent permissible under applicable policies.
(e) Termination
Without Cause or Resignation for Good Reason, After a Change in
Control. If
in the 24 month period
following a Change in Control, Executive (i) Resigns for Good Reason or (ii)
is
otherwise Terminated Without Cause, the Bank and Bancorp shall pay to Executive,
in the aggregate, a lump sum payment equal to (A) 24 months base salary then
in
effect and (B) two times the amount of Executive’s bonus for the year preceding
the Change in Control. Such lump sum shall be paid not later than the tenth
(10th) day of the seventh month following the date of Termination Without
Cause
or a Resignation for Good Reason. 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.
(f) Source
of Payments. All
payments provided in
Section 8 shall be paid in cash from the general funds of the Bank, and no
special or separate fund need be established and no other segregation of
assets
need be made to assure payment.
(g) Consistent
Returns. The
Bank, Bancorp and
Executive agree that the payments being made under this Agreement represent
reasonable compensation for services and that neither the Bank nor Executive
will file any returns or reports which take a contrary position.
(h) Reduction
or Limitation on Payments.
(i) 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 or Bancorp 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 and Bancorp’s independent auditors or if
such firm is no longer providing tax services to Bank or Bancorp to such
other
tax advisor as shall be mutually acceptable to Bank, Bancorp and Executive,
and
such determination shall be conclusive and binding on the Bank, Bancorp and
Executive with respect to the treatment of the payment for tax reporting
purposes.
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(ii) 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. §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 the 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.
(i) Sole
Remedy. The
receipt of the
amounts described in this Section 8 shall constitute Executive’s sole remedy for
breach of this Agreement against the Bank or Bancorp and its respective
officers, directors, employees and agents.
9. Nondisclosure
of Confidential Information. Executive
acknowledges
that, in the course of employment with the Bank and Bancorp, Executive will
have
access to confidential information. “Confidential Information” includes, but is
not limited to, information about the Bank and Bancorp, its affiliates and
its
customer, pricing information, financing arrangements, research materials,
manuals, computer programs, formulas, techniques, data, marketing plans and
tactics, technical information, lists of asset sources and customers, the
processes and practices of the Bank and Bancorp, and their affiliates, all
information contained in electronic or computer files, all financial
information, salary and wage information, and any other information that
is
designated by the Bank and Bancorp, or their affiliates as confidential or
that
Executive knows or should know is confidential. Confidential Information
also
includes information provided by third parties that the Bank and Bancorp,
or
their affiliates are obligated to keep confidential; and all other proprietary
information of the Bank and Bancorp, or their affiliates. Executive acknowledges
that all Confidential Information is and shall continue to be the exclusive
property of the Bank and Bancorp or their affiliates, as applicable, whether
or
not prepared in whole or in part by Executive and whether or not disclosed
to or
entrusted to Executive in connection with employment by the Bank and Bancorp.
Executive agrees not to disclose Confidential Information, directly or
indirectly, under any circumstances or by any means, to any third persons
without the prior written consent of the Bank and Bancorp or their affiliates,
as applicable, both during his employment with the Bank and Bancorp and after
his employment has ended. Executive agrees that he will not copy, transmit,
reproduce, summarize, quote, or make any commercial or other use whatsoever
of
Confidential Information, except as may be necessary to perform work done
by
Executive for the Bank and Bancorp. Executive agrees to exercise the highest
degree of care in safeguarding Confidential Information against loss, theft
or
other inadvertent disclosure and agrees generally to take all steps necessary
or
requested by the Bank and Bancorp or their affiliates to ensure maintenance
of
the confidentiality of the Confidential Information. Executive agrees that,
unless compelled by law, Executive shall not, during or after employment
with
the Bank and Bancorp, make any comments or other communications contrary
to the
interests of, or disparaging the goodwill or reputation of, the Bank and
Bancorp, their business or any of their products, services, controlling persons,
affiliates, officers, directors, or executives. Executive agrees, in addition
to
the specific covenants contained herein, to comply with all of Bank’s and
Bancorp’s policies and procedures for the protection of Confidential
Information.
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10. Exclusions. Paragraph
9 shall not
apply to the following information: (a) information now and hereafter
voluntarily disseminated by the Bank or Bancorp to the public or which otherwise
becomes part of the public domain through lawful means; (b) information already
known to Executive as documented by written records which predate Executive’s
employment with the Bank but that was not subject to any obligation of
confidentiality; (c) information subsequently and rightfully received from
third
parties and not subject to any obligation of confidentiality; and (d)
information independently developed by Executive after termination of his
employment.
11. Confidential,
Proprietary and Trade Secret Information of Others. Executive
represents and
warrants that he is not under any pre-existing obligation that conflicts
or is
in any way inconsistent with the provisions of this Agreement. Executive
represents and warrants that he has not granted any rights or licenses to
any
intellectual property or technology that would conflict with Executive’s
obligations under this Agreement. Executive further represents and warrants
that
he has disclosed to the Bank and Bancorp any agreement to which Executive
is or
has been a party regarding the confidential information of others and Executive
understands that Executive’s employment by the Bank and Bancorp will not require
Executive to breach any such agreement. Executive will not disclose protected
confidential information of third parties to the Bank or Bancorp nor induce
the
Bank and Bancorp to use any such protected confidential information received
from another under an agreement or understanding prohibiting such use or
disclosure.
12. No
Unfair Competition. Executive
hereby
acknowledges that the sale or unauthorized use or disclosure of any of the
Bank’s or Bancorp’s Confidential Information obtained by Executive by any means
whatsoever, at any time before, during, or after the Term shall constitute
unfair competition. Executive shall not engage in any unfair competition
with
the Bank or Bancorp either during the Term or at any time
thereafter.
13. Ownership
of Copyrights. Executive
agrees that all
original works of authorship not otherwise within the scope of Paragraph
14 that
are conceived or developed during Executive’s employment with the Bank, either
alone or jointly with others, if on the Bank’s or Bancorp’s time, using Bank or
Bancorp facilities, or relating to the Bank and Bancorp are “works for hire” to
the greatest extent permitted by law and shall be owned exclusively by the
Bank
and Bancorp, and Executive hereby assigns to the Bank or Bancorp all of
Executive’s right, title, and interest in all such original works of authorship
and mask works. Executive agrees that the Bank and Bancorp shall be the sole
owner of all rights pertaining thereto, and further agrees to execute all
documents that the Bank and Bancorp reasonably determines to be necessary
or
convenient for establishing in the Bank’s or Bancorp’s name the copyright to any
such original works of authorship. Executive shall claim no interest in any
inventions, copyrighted material, patents, or patent applications unless
Executive demonstrates that any such invention, copyrighted material, patent,
or
patent application was developed before he began any employment with the
Bank or
Bancorp. This provision is intended to apply only to the extent permitted
by
applicable law.
11
14. Ownership
of Records. Any
written record that
Executive may maintain of inventions, discoveries, improvements, trade secrets,
formulae, processes, or know-how, whether or not patentable and whether or
not
reduced to practice, and any such records relating to original works of
authorship or mask works made by Executive, alone or jointly with others,
in the
course of Executive’s employment with the Bank and Bancorp shall remain the
property of the Bank and Bancorp. Executive shall furnish the Bank and Bancorp
any and all such records immediately upon request.
15. Return
of Bank’s Property and Materials. Upon
termination of
employment with the Bank and Bancorp, Executive shall deliver to the Bank
and
Bancorp all Bank and Bancorp property and materials that are in Executive’s
possession or control, including all of the information described as
Confidential Information in Paragraph 9 of this Agreement and including all
other information relating to any inventions, discoveries, improvements,
trade
secrets, formulae, processes, know-how, original works of authorship, or
mask
works of the Bank or Bancorp.
16. Waivers
not to be Continued. Any
waiver by a party of
any breach of this Agreement
by the other party shall not be construed as a continuing waiver or as consent
to any subsequent breach by the other party.
17. Notices. All
notices, requests,
demands and other communications hereunder shall be in writing and shall
be
deemed to have been duly given if delivered by hand or mailed, certified
or
registered mail, return receipt requested, with postage prepaid, to the
following addresses or to such other address as either party may designate
by
like notice.
|
A.
|
If
to the Bank, to:
|
Heritage
Oaks Bank
000
00xx
Xxxxxx
Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn:
Chairman of the Board
B. If
to
Bancorp, to:
000
00xx
Xxxxxx
Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn:
Chairman of the Board
C. If
to
Executive, to:
Xxxxxxxx
X. Xxxx
c/o
Heritage Oaks Bank
000
00xx
Xxxxxx
Xxxx
Xxxxxx, Xxxxxxxxxx 00000
and
to
such other or additional person or persons as either party shall have designated
to the other party in writing by like notice.
12
18. Indemnification. To
the maximum extent and
when permitted by applicable law, the Articles of Incorporation and Bylaws
of
Bank and Bancorp, respectively, and resolutions of the Boards of Directors
of
the Bank and Bancorp in effect from time to time (except as limited below),
the
Bank and Bancorp shall indemnify Executive against liability or loss arising
out
of Executive’s actual or asserted misfeasance or non-feasance in the performance
of Executive’s duties or out of any actual or asserted wrongful act against, or
by, the Bank or Bancorp including but not limited to judgments, fines,
settlements and expenses incurred in the defense of actions, proceedings
and
appeals therefrom. In the event there is any conflict between the provisions
governing indemnification for the Bank or Bancorp, it is intended by the
parties
that the broadest protections of each be afforded to Executive. However,
the
Bank and Bancorp shall have not duty to indemnify Executive with respect
to any
claim, issue or matter as to which Executive has been finally adjudged to
be
liable to the Bank or Bancorp in the performance of his duties, unless and
only
to the extent that the court in which such action was brought shall determine
upon application that, in view of all of the circumstances of the case,
Executive is fairly and reasonably entitled to indemnification for the expenses
which such court shall determine. The Bank and Bancorp shall endeavor to
maintain Directors and Officers Liability Insurance to indemnify and insure
the
Bank, Bancorp and Executive from and against the aforesaid liabilities. The
provisions of this Section 18 shall apply and inure to the benefit of the
estate, executor, administrator, heirs, legatees or devisees of
Executive.
19. Arbitration. The
parties agree that any and all disputes, controversies or claims of any kind
or
nature, including but not limited to any arising out of or in any way related
to
Employee’s employment with or separation from the Bank or Bancorp, shall be
submitted to binding arbitration under the auspices and rules of the American
Arbitration Association (“AAA”) in Fresno, California. Included within this
provision are any claims alleging fraud in the inducement of this Agreement,
or
relating to the general validity or enforceability of this Agreement, or
claims
based on a violation of any local, state or federal law, such as claims for
discrimination or civil rights violations under Title VII of the Civil Rights
Act of 1964, the California Fair Employment and Housing Act, the Age
Discrimination in Employment Act and the Americans with Disabilities Act.
The
parties shall each bear their own costs and attorneys’ fees incurred in
conducting the arbitration and, except for such disputes where Employee asserts
a claim under a state or federal statute prohibiting discrimination in
employment (“a Statutory Claim”), or unless required otherwise by applicable
law, shall split equally the fees and administrative costs charged by the
arbitrator and AAA. In disputes where Employee asserts a Statutory Claim
against
the Bank, Employee shall be required to pay only the AAA filing fee to the
extent such filing fee does not exceed the fee to file a complaint in state
or
federal court. The Bank shall pay the balance of the arbitrator’s fees and
administrative costs. The prevailing party in the arbitration, as determined
by
the arbitrator, shall be entitled to recover his or its reasonable attorneys’
fees and costs, including the costs or fees charged by the arbitrator and
AAA.
In disputes where the Employee asserts a Statutory Claim, reasonable attorneys’
fees shall be awarded by the arbitrator based on the same standard as such
fees
would be awarded if the Statutory Claim had been asserted in state or federal
court. Judgment upon an award rendered by the arbitrator may be entered in
any
competent court having jurisdiction over the dispute. Employee understands
that
arbitration is in lieu of any and all other civil legal proceedings and that
he
is waiving any right he may have to resolve disputes through court or trial
by
jury.
13
20. General
Provisions.
(a) Entire
Agreement. This
Agreement
constitutes the entire agreement by the parties with respect to the subject
matter hereof, and supersedes and replaces all prior agreements among or
between
the parties, including but not limited to Executive’s Employment Agreement dated
as of February 1, 2004. No amendment, waiver or termination of any of the
provisions hereof shall be effective unless in writing and signed by the
party
against whom it is sought to be enforced. Any written amendment, waiver,
or
termination hereof executed by the Bank, Bancorp and Executive shall be binding
upon them and upon all other Persons, without the necessity of securing the
consent of any other Person, and no Person shall be deemed to be a third-party
beneficiary under this Agreement.
(b) Counterparts. This
Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one and the same
Agreement.
(c) Headings. The
headings of the
Sections of this Agreement have been inserted for convenience of reference
only
and shall in no way restrict or modify any of the terms or provisions
hereof.
(d) Severability. If
for any reason any
provision of this Agreement is held invalid or unenforceable, such invalidity
or
unenforceability shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be
held
invalid or unenforceable in part, such invalidity or unenforceability shall
in
no way affect the rest of such provision not held so invalid, and the rest
of
such provision, together with all other provisions of this Agreement, shall
to
the full extent consistent with law continue in full force and
effect.
(e) Governing
Law. This
Agreement shall be
governed and construed and the legal relationships of the parties determined
in
accordance with the laws of the State of California applicable to contracts
executed and to be performed solely in the State of California.
(f) Assumption.
The
Bank and Bancorp shall require any successor in interest (whether
direct or indirect or as a result of purchase, merger, consolidation, Change
in
Control or otherwise) to all or substantially all of the business and/or
assets
of the Bank or Bancorp to expressly assume and agree to perform the obligations
under this Agreement in the same manner and to the same extent that the Bank
or
Bancorp would be required to perform it if no such succession had taken
place.
(g) Advice
of Counsel. Executive
acknowledges
that he has been encouraged to consult with legal counsel of his choosing
concerning the terms of this Agreement prior to executing this Agreement.
Executive acknowledges that this Agreement has been prepared by Reitner &
Stuart, which has served as counsel to the Bank and Bancorp in this matter
and
not as counsel to Executive. 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
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
| ATTEST: | HERITAGE OAKS BANK |
| /s/ Xxxxxxxx Xxxxxx | By:/s/ Xxxx Xxxxxxx |
| Witness | Its: Chief Administrative Officer |
| Print Name: Xxxx Xxxxxxx | |
| HERITAGE OAKS BANCORP | |
| /s/ Xxx Xxxxx | By:/s/ B.R. Xxxxxx |
| Witness | Its: Chairman |
| Print Name: B.R. Xxxxxx | |
| THE EXECUTIVE | |
| /s/ Xxxxx Xxxxxx | /s/ Xxxxxxxx X. Xxxx |
| Witness | Xxxxxxxx X. Xxxx |
| President/Chief Executive Officer |
15
