exhibit10-1.htm


    Exhibit
      10.1

    
      

    

     

    
      Form
        of Change of Control Agreement

       

      
         

        Date
          ________________

        


        


         

      

      


      Dear
        _____________:

       

      Vineyard
        Bank (the "Bank") considers it essential to its best interests, the best
        interests of its sole shareholder, Vineyard National Bancorp (the “Company”),
        and the best interests of the Company’s shareholders, to foster the continuous
        employment of key management personnel. In this connection, the Bank recognizes
        that, as is the case with many businesses, the possibility of a change in
        control may exist and that such possibility and the uncertainty and questions
        which it may raise among management, may result in the departure or distraction
        of management personnel to the detriment of the Bank, the Company and their
        respective shareholders.

       

      The
        Board
        of Directors of the Bank has determined that appropriate steps should be
        taken
        to reinforce and encourage the continued attention and dedication of members
        of
        the Bank's executive management, including yourself, to their assigned duties
        without distraction in the face of potentially disturbing circumstances arising
        from the possibility of a change in control.

       

      In
        order
        to induce you to remain in the employ of the Bank, the Bank agrees that subject
        to the terms and conditions set forth in this letter agreement ("Agreement"),
        if
        a Change in Control (within the meaning of Section 2) occurs and you are
        employed by the Bank immediately prior thereto, the Bank will provide you
        with
        the Retention Benefit specified in Section 4.

       

      1.  Term
        of Agreement.
        This
        Agreement will begin on the date hereof and will continue in effect through
        _____________. Beginning on ___________, and each January 1 thereafter, the
        Agreement will automatically be extended for one additional year unless,
        not
        later than September 30 of the preceding year, the Bank gives you notice
        that it
        does not wish to extend this Agreement; provided, however, that any such
        notice
        that is given on or after a Change in Control will not be valid unless you
        consent thereto in writing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.  Change
        in Control.
        For
        purposes of this Agreement, a “Change in Control” shall mean:

       

      (i)
        The
        consummation of a merger or consolidation of the Company with or into another
        entity or any other corporate reorganization if more than 50% of the combined
        voting power (which voting power shall be calculated by assuming the conversion
        of all equity securities convertible (immediately or at some future time)
        into
        shares entitled to vote, but not assuming the exercise of a warrant or right
        to
        subscribe to or purchase those shares) of the continuing or Surviving Entity’s
        securities outstanding immediately after such merger, consolidation or other
        reorganization is owned, directly or indirectly, by persons who were not
        shareholders of the Company immediately prior to such merger, consolidation
        or
        other reorganization; provided,
        however,
        that in
        making the determination of ownership by the shareholders of the Company,
        immediately after the reorganization, equity securities which persons own
        immediately before the reorganization as shareholders of another party to
        the
        transaction shall be disregarded; or 

       

      (ii)
        The
        sale, transfer or other disposition of all or substantially all of the Company’s
        assets. 

       

      (iii)
        A
        transaction will not constitute a Change in Control if its sole purpose is
        to
        change the state of the Company’s incorporation or to create a holding company
        that will be owned in substantially the same proportions by the persons who
        held
        the Company’s securities immediately before such transaction.

       

      3.  Timing
        of, and Conditions to, Retention Payment Following Change in
        Control.

       

      (i)  If
        you
        are employed by the Bank immediately prior to a Change in Control, unless
        you
        have been Unreasonably Uncooperative (as hereinafter defined) you will be
        entitled to receive the Retention Benefit on the earlier of (A) the
        90th
        day
        following the Change in Control; or (B) as soon as practicable (but not more
        than ten days) following the first occurrence on or after the Change in Control
        of any of the following: (1) the termination of your employment by the Bank
        (without regard to the reason of the termination of your employment), (2)
        your
        duties, title, responsibilities or compensation being meaningfully reduced
        by
        the Bank, or (3) your being required to perform your duties at a location
        that
        is more than 25 miles from their original location. In the event that you
        have
        been Unreasonably Uncooperative, you will forfeit your right to receive any
        benefit hereunder. For purposes hereof you will be deemed to have been
“Unreasonably Uncooperative” if and only if the Bank’s Chief Executive Officer
        immediately prior to the Change in Control, in his sole discretion, provides
        you
        and the Bank with written notice that he has made an affirmative determination
        that you have been unreasonably uncooperative with the Bank during the period
        immediately prior to and immediately following the Change in Control. In
        making
        such determination, the Bank’s Chief Executive Officer immediately prior to the
        Change in Control will take into account all factors that he, in his sole
        discretion, deems relevant, including, but not limited to, (i) your position,
        duties and title prior to the Change in Control and (ii) the potential desire
        of
        the new beneficial owners of the Bank to replace some or all of the Bank’s
        management team with other personnel and to have the old management team
        reasonably assist them in the transition. The determination of the Bank’s Chief
        Executive Officer immediately prior to the Change in Control with respect
        thereto shall be binding, even though such determination may be somewhat
        subjective.

       

      
        
          
          

        

        
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      4.  Retention
        Benefit.
        The
“Retention Benefit” payable hereunder is a lump sum payment, payable by check,
        in an amount equal to the sum of: (i) your base salary for a ____-month period;
        (ii) the average of the two most recent annual incentive bonuses paid to
        you
        prior to the Change in Control; and (iii) the amount you would have to pay
        for
        COBRA continuation coverage under the Bank’s group health plans for a ___-month
        period had your employment terminated immediately prior to the Change in
        Control
        and you elected COBRA continuation coverage at such time. For purposes of
        clause
        (i) of the preceding sentence, “base salary” means your base salary immediately
        prior to the Change in Control, but disregarding any reduction of your base
        salary that is made in anticipation of the Change in Control.

       

      5.  Accelerated
        Vesting of Restricted Shares and Stock Options.
        Upon a
        Change in Control, to the extent that it has not yet vested, any award to
        you
        under any of the Company’s Restricted Share Plans that has not previously
        terminated and any stock option granted to you under the Company’s 1997
        Incentive Stock Option Plan (or any other stock option plan adopted by the
        Company) that has not previously terminated, shall fully and immediately
        vest.

       

      6.  Parachute
        Tax.
        Notwithstanding anything in this Agreement to the contrary, the amount of
        any
        payment to be received by you pursuant to this Agreement (including the
        accelerated vesting provided for in Section 5) will be reduced (but not below
        zero) by the amount, if any, necessary to prevent any part of any payment
        or
        benefit received or to be received by the you in connection with a Change
        in
        Control, (whether payable or provided pursuant to this Agreement (but without
        regard to this Section 6) or any other agreement, contract, plan or arrangement
        with the Bank, any person whose action results in such Change in Control
        or any
        member of an “affiliated group” (as defined in Section 280G(d)(5) of the
        Internal Revenue Code of 1986, as amended (the “Code”)) which includes the Bank)
        (such foregoing payments or benefits referred to collectively as the “Total
        Payments”), from being treated as an “excess parachute payment” within the
        meaning of Section 280G(b)(I) of the Code, but only if and to the extent
        such
        reduction will also result in, after taking into account all applicable state
        and Federal taxes (computed at the highest applicable marginal rate) including
        any taxes payable pursuant to Section 4999 of the Code, a greater after-tax
        benefit to you than the after-tax benefit to you of the Total Payments computed
        without regard to any such reduction. For purposes of the foregoing, (i)
        no
        portion of the Total Payments will be taken into account which in the opinion
        of
        nationally-recognized tax counsel selected by you (“Tax Counsel”) does not
        constitute a “parachute payment” within the meaning of Section 280G(b)(2)
        of the Code; (ii) any reduction in payments pursuant to this Agreement will
        be
        computed by taking into account, in accordance with Section 280G(b)(4) of
        the
        Code, that portion of the Total Payments which is reasonable compensation,
        within the meaning of Section 280G(b)(4) of the Code, in the opinion of Tax
        Counsel; (iii) the value of any non-cash benefits or of any deferred or
        accelerated payments or benefits included in the Total Payments will be
        determined by Tax Counsel in accordance with the principles of Section
        280G(d)(3) and (4) of the Code and the Treasury Regulations thereunder; and
        (iv)
        in the event of any uncertainty as to whether a reduction in Total Payments
        to
        the Executive is required pursuant hereto, the Bank will initially make all
        payments otherwise required to be paid to you hereunder, and any amounts
        so paid
        which are ultimately determined not to have been payable hereunder either
        (x)
        upon our mutual agreement, or (y) upon Tax Counsel furnishing you with its
        written opinion setting forth the amount of such payments not to have been
        so
        payable under this Section 6, or (z) in the event a portion of the Total
        Payments shall be determined by a court or an Internal Revenue Service
        proceeding to have otherwise been an “excess parachute payment,” the amount so
        determined in (x), (y) or (z) shall be repaid by you to the Bank within ten
        (10)
        business days after the time of such mutual agreement, such opinion is so
        furnished to you, or of such determination, as applicable. All fees and expenses
        of any Tax Counsel or accounting firm selected under this Section 6 shall
        be
        borne solely by the Bank.

       

      
        
          
          

        

        
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      7.  Withholding
        Taxes.
        The
        Bank may withhold from all payments due you hereunder all taxes that the
        Bank is
        required to withhold.

       

      8.  No
        Mitigation.
        You
        will not be required to mitigate the amount of any payment provided for herein
        by seeking other employment or otherwise, nor will the amount of any payment
        or
        benefit provided for herein be reduced by any compensation earned by you
        as the
        result of employment by another employer.

       

      9.  No
        Employment Contract.
        This
        Agreement does not constitute a contract of employment, it does not impose
        on
        the Bank any obligation to retain you as an employee, and it does not prevent
        you from terminating your employment. You understand and acknowledge that
        you
        are an employee at will and that either you or the Bank may terminate our
        employment relationship at any time, for any reason, or for no
        reason.

       

      10.  Assignment.
        Your
        obligations may not be delegated and, except with respect to the designation
        of
        beneficiaries in connection with benefits payable to you hereunder, you may
        not,
        without the Bank’s written consent thereto, assign, transfer, convey, pledge,
        encumber, hypothecate or otherwise dispose of this Agreement or any interest
        herein. Any such attempted delegation or disposition shall be null and void
        and
        without effect. This Agreement and all of the Bank’s rights and obligations
        hereunder may be assigned or transferred by the Bank to and shall be assumed
        by
        and be binding upon any successor to the Bank. The term “successor” means, with
        respect to the Bank or any of its subsidiaries, any corporation or other
        business entity which, by merger, consolidation, purchase of the assets or
        otherwise acquires all or a material part of the assets of the
        Bank.

       

      11.  Death.
        This
        Agreement will inure to the benefit of and be enforceable by your personal
        or
        legal representatives, executors, administrators, successors, heirs,
        distributees, devisees and legatees. Unless otherwise provided herein, if
        you
        should die while any amount would still be payable to you hereunder, all
        such
        amounts will be paid in accordance with the terms of this Agreement to your
        devisee, legatee or other designee or, if there is no such designee, to your
        estate.

       

      
        
          
          

        

        
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      12.  Notice.
        For the
        purpose of this Agreement, notices and all other communications provided
        for in
        the Agreement will be in writing and will 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 first
        page of this Agreement, provided that all notice to the Bank must be directed
        to
        the attention of the President, or to such other address as either party
        may
        have furnished to the other in writing in accordance herewith, except that
        notice of change of address will be effective only upon receipt.

       

      13.  Final
        Expression.
        This
        Agreement is intended to be a final expression of our agreement with respect
        to
        the subject matter hereof and is intended as a complete and exclusive statement
        of the terms and conditions thereof and supersedes and replaces all prior
        negotiations and agreements between us, whether written or oral, with respect
        to
        the subject matter hereof.

       

      14.  Validity.
        The
        invalidity or unenforceability of any provision of this Agreement will not
        affect the validity or enforceability of any other provision of this Agreement,
        which will remain in full force and effect.

       

      15.  Amendment
        and Waiver.
        No
        provision of this Agreement may be modified, waived or discharged unless
        such
        waiver, modification or discharge is agreed to in writing and signed by you
        and
        the President of the Bank. 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 will be deemed
        a
        waiver of similar or dissimilar provisions or conditions at the same or at
        any
        prior or subsequent time.

       

      16.  Governing
        Law.
        This
        Agreement will be governed by and construed under the laws of the State of
        California, applicable to contracts to be wholly performed in such State,
        without regard to the conflict of laws principles thereof.

       

      17.  Arbitration.
        Any
        dispute or controversy arising under or in connection with this Agreement
        will
        be settled exclusively by arbitration in California, in accordance with the
        rules of the American Arbitration Association then in effect. Judgment may
        be
        entered on the arbitrator's award in any court having jurisdiction; provided,
        however, that you will be entitled to seek specific performance of your right
        to
        be paid during the pendency of any dispute or controversy arising under or
        in
        connection with this Agreement.

       

      18.  Counterparts.
        This
        Agreement may be executed in several counterparts, each of which will be
        deemed
        to be an original but all of which together will constitute one and the same
        instrument.

       

      If
        this
        letter sets forth our agreement on the subject matter hereof, kindly sign
        and
        return to the Bank the enclosed copy of this letter which will then constitute
        our agreement on this subject.

       

      
        
          
          

        

        
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      Sincerely,

       

      


       

      By: ____________________________

       

      Name:
        Norman Morales

       

      Title: President
        and Chief Executive Officer

       

      Section
        5
        Consented and Agreed to by 

       

      Vineyard
        National Bancorp

       

       

       

      By:_______________________

       

      Name:
        Norman Morales

       

      Title: President
        and Chief Executive Officer

       

      Agreed
        to
        this ____ day
        ______, 20__.

       

      


       

      


       

      ______________________    _____________________________

      EMPLOYEE
        NAME    Signature
        Date

       

       

      
        
          
          

        

        
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