Exhibit 10.34


 


HERITAGE OAKS BANK


SALARY CONTINUATION AGREEMENT


 


THIS SALARY CONTINUATION AGREEMENT (the
“Agreement”) is adopted this
               day
of
                   ,
200   , by and between HERITAGE OAKS BANK, a state-chartered
commercial bank located in Paso Robles, California (the “Company”), and KELLEY
STOLZ (the “Executive”).


 


The purpose of this Agreement is to provide
specified benefits to the Executive, a member of a select group of management
or highly compensated employees who contribute materially to the continued
growth, development and future business success of the Company.  This Agreement shall be unfunded for tax
purposes and for purposes of Title I of the Employee Retirement Income Security
Act of 1974 (“ERISA”), as amended from time to time.  The Company will pay the benefits from its general assets.


 


AGREEMENT


 


The Company and the Executive agree as
follows:


 


Article 1


Definitions


 


Whenever used in this
Agreement, the following words and phrases shall have the meanings specified:


 


1.1                                 “Accrual Balance” means the amount
accrued by the Company as a liability for benefits under this Agreement, as
shown on Schedule A.


 


1.2                                 “Beneficiary” means each designated
person, or the estate of the deceased Executive, entitled to benefits, if any, upon
the death of the Executive determined pursuant to Article 4.


 


1.3                                 “Beneficiary Designation Form” means
the form established from time to time by the Company that the Executive
completes, signs and returns to the Company to designate one or more Beneficiaries.


 


1.4                                 “Change of Control” means:


 


(a)                                  A
change in the ownership of the capital stock of the Corporation, whereby
another corporation, person, or group acting in concert (hereinafter this
Agreement shall collectively refer to any combination of these three [another
corporation, person, or group acting in concert] as a “Person”) as described in
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), acquires, directly or indirectly, beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of a number of
shares of capital stock of the Corporation which constitutes fifty percent
(50%) or more of the combined voting power of the Corporation’s then
outstanding capital stock then entitled to vote generally in the election of
directors; or


 


(b)                                 The
persons who were members of the Board of Directors of the Corporation
immediately prior to a tender offer, exchange offer, contested election or any
combination of the foregoing, cease to constitute a majority of the Board of
Directors; or


 


(c)                                  The
adoption by the Board of Directors of the Corporation of a merger,
consolidation or reorganization plan involving the Corporation in which the
Corporation is not the surviving entity, or a sale of all or substantially all
of the assets of the Corporation.  For
purposes of this Agreement, a sale of all or substantially all of the assets of
the Corporation shall be deemed to occur if any Person acquires (or during the
12-month period ending on the date of the most recent acquisition by such
Person, has acquired) gross assets of the Corporation that have an aggregate
fair market value equal


 


1

















 


to fifty percent (50%) or more of the fair market value of all of the
respective gross assets of the Corporation immediately prior to such
acquisition or acquisitions; or


 


(d)                                 A
tender offer or exchange offer is made by any Person which results in such
Person beneficially owning (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) either fifty percent (50%) or more of the Corporation’s
outstanding shares of Common Stock or shares of capital stock having fifty
percent (50%) or more the combined voting power of the Corporation’s then
outstanding capital stock (other than an offer made by the Corporation), and
sufficient shares are acquired under the offer to cause such person to own
fifty percent (50%) or more of the voting power; or


 


(e)                                  Any
other transactions or series of related transactions occurring which have
substantially the same effect as the transactions specified in any of the
preceding clauses of this Section 1.4.


 


Notwithstanding the above, certain transfers are permitted within
Section 318 of the Code and such transfers shall not be deemed a Change of
Control under this Section 1.4.


 


1.5                                 “Code”
means the Internal Revenue Code of 1986, as amended.


 


1.6                                 “Corporation” means Heritage Oaks
Bancorp.


 


1.7                                 “Disability”
means the Executive’s suffering a sickness, accident or injury which has been
determined by the carrier of any individual or group disability insurance
policy covering the Executive, or by the Social Security Administration, to be
a disability rendering the Executive totally and permanently disabled.  The Executive must submit proof to the Plan
Administrator of the carrier’s or Social Security Administration’s
determination upon the request of the Plan Administrator.


 


1.8                                 “Discount Rate”
means the rate used by the Company for determining the Accrual Balance under
Generally Accepted Accounting Principles (“GAAP”).  The initial rate is 7.5%, however, it may be adjusted by the
Company upon written guidance from the Company’s outside auditor that an
adjustment in necessary to maintain the rate within reasonable standards
according to GAAP.


 


1.9                                 “Early
Termination” means the
Termination of Employment before Normal Retirement Age for reasons other than
death, Disability, Termination for Cause or following a Change of Control.


 


1.10                           “Early
Termination Date” means the month, day and year in which Early Termination
occurs.


 


1.11                           “Effective
Date” means
                                                   .


 


1.12                           “Normal
Retirement Age” means the Executive’s sixty-fifth (65th)
birthday.


 


1.13                           “Normal
Retirement Date” means the later of the Normal Retirement Age or
Termination of Employment.


 


1.14                           “Plan Administrator” means the plan
administrator described in Article 8.


 


1.15                           “Plan
Year” means each twelve-month period commencing on the Effective
Date.


 


1.16                           “Schedule A” means the schedule, as
it exists from time to time, attached to this Agreement and made a part hereof,
that shows benefits that may be payable under this Agreement.


 


1.17                           “Termination
for Cause” has that meaning
set forth in Article 5.


 


1.18                           “Termination
of Employment” means that the Executive ceases to be employed by the
Company for any reason, voluntary or involuntary, other than by reason of a
leave of absence approved by the Company.


 


2

















 


Article 2


Benefits During Lifetime


 


2.1                                 Normal Retirement
Benefit.  Upon Termination of Employment on or after
the Normal Retirement Age  for reasons other than death, the Company
shall pay to the Executive the benefit described in this Section 2.1 in lieu of
any other benefit under this Article.


 


2.1.1                        Amount of Benefit. 
The annual benefit under this Section 2.1 is EIGHTEEN THOUSAND DOLLARS
($18,000).


 


2.1.2                        Payment of
Benefit.  The Company shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments commencing on the first
day of the month following the Executive’s Normal Retirement Date.  The annual benefit shall be paid to the
Executive for fifteen (15) years.


 


2.2                                 Early Termination
Benefit.  Upon Early Termination, the Company shall
pay to the Executive the benefit described in this Section 2.2 in lieu of any
other benefit under this Article.


 


2.2.1                        Amount of Benefit. 
The benefit under this Section 2.2 is the Early Termination Lump Sum
benefit set forth on Schedule A for the Plan Year ending immediately prior to
the Early Termination Date.  The Early
Termination benefit is determined by vesting the Executive in ten percent (10%)
of the Accrual Balance for the first Plan Year and an additional ten percent
(10%) of said amount for each succeeding year thereafter until the Executive
becomes one hundred percent (100%) vested in the Accrual Balance.


 


2.2.2                        Payment of
Benefit.  The Company shall pay the benefit to the
Executive in a lump sum within ninety (90) days following the Early Termination
Date.


 


2.3                                 Disability
Benefit.  If the Executive terminates employment due
to Disability prior to Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 2.3 in lieu of any other
benefit under this Article.


 


2.3.1                        Amount of Benefit.  The benefit under this Section 2.3 is the
Disability Installment benefit
set forth on Schedule A for the Plan Year ending immediately prior to the
Executive’s Termination of Employment (except during the first Plan Year, the
benefit is the amount set forth for Plan Year 1).  The Disability benefit is determined by vesting the Executive in
one hundred percent (100%) of the Accrual Balance, and continuing to apply the
Discount Rate to the Accrual Balance for the duration of payments.


 


2.3.2                        Payment of
Benefit.  The Company shall pay the benefit to the
Executive in one hundred eighty (180) equal consecutive installments commencing
with the first of the month following Normal Retirement Age.


 


2.4                                 Change of Control
Benefit.  Upon a Change of Control, the Company shall
pay to the Executive the benefit described in this Section 2.4 in lieu of any
other benefit under this Article.


 


2.4.1                        Amount of Benefit.  The benefit under this Section 2.4 is the
Change of Control Installment benefit set forth on Schedule A for the Plan Year
ending immediately prior to the Executive’s Termination of Employment (except
during the first Plan Year, the benefit is the amount set forth for Plan Year
1).  The Change of Control benefit is
determined by vesting the Executive in one hundred percent (100%) of the Normal
Retirement Benefit amount described in Section 2.1.1.


 


2.4.2                        Payment of
Benefit.   The Company shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments commencing with the
first of the  month following Normal 


 


3

















 


Retirement
Age.  The annual benefit shall be paid
to the Executive for a period of fifteen (15) years.


 


Article 3


Death Benefits


 


3.1                                 Death During
Active Service.  If the Executive dies while in the active
service of the Company, the Company shall pay to the Beneficiary the benefit
described in this Section 3.1.  This
benefit shall be paid in lieu of the benefits under Article 2.


 


3.1.1                        Amount of Benefit. 
The annual benefit under this Section 3.1 is the Normal Retirement
Benefit amount described in Section 2.1.1.


 


3.1.2                        Payment of
Benefit.  The Company shall pay the annual benefit to
the Beneficiary in twelve (12) equal monthly installments commencing with the
month following the Executive’s death. 
The annual benefit shall be paid to the Beneficiary for a period of
fifteen (15) years.


 


3.2                                 Death During
Payment of a Benefit.  If the Executive dies after any benefit
payments have commenced under Article 2 of this Agreement but before receiving
all such payments, the Company shall pay the remaining benefits to the
Beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.


 


3.3                                 Death After
Termination of Employment But Before Payment of a Benefit Commences.  If the
Executive is entitled to any benefit payments under Article 2 of this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Beneficiary that the
Executive was entitled to prior to death except that the benefit payments shall
commence on the first day of the month following the date of the Executive’s
death.


 


Article 4


Beneficiaries


 


4.1                                 Beneficiary
Designation.  The Executive shall have the right, at any
time, to designate a Beneficiary(ies) to receive any benefits payable under
this Agreement to a Beneficiary upon the death of the Executive.  The Beneficiary designated under this
Agreement may be the same as or different from the Beneficiary designation
under any other plan of the Company in which the Executive participates.


 


4.2                                 Beneficiary Designation: Change. 
The Executive shall designate a Beneficiary by completing and signing
the Beneficiary Designation Form, and delivering it to the Plan Administrator
or its designated agent.  The
Executive’s Beneficiary designation shall be deemed automatically revoked if
the Beneficiary predeceases the Executive or if the Executive names a spouse as
Beneficiary and the marriage is subsequently dissolved.  The Executive shall have the right to change
a Beneficiary by completing, signing and otherwise complying with the terms of
the Beneficiary Designation Form and the Plan Administrator’s rules and
procedures, as in effect from time to time. 
Upon the acceptance by the Plan Administrator of a new Beneficiary
Designation Form, all Beneficiary designations previously filed shall be
cancelled.  The Plan Administrator shall
be entitled to rely on the last Beneficiary Designation Form filed by the Executive
and accepted by the Plan Administrator prior to the Executive’s death.


 


4.3                                 Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted and acknowledged in writing by the Plan Administrator or its
designated agent.


 


4.4                                 No Beneficiary Designation.  If
the Executive dies without a valid beneficiary designation, or if all
designated Beneficiaries predecease the Executive, then the Executive’s spouse
shall be the designated Beneficiary.  If
the Executive has no surviving spouse, the benefits shall be made to the


 


4

















 


personal
representative of the Executive’s estate.


 


4.5                                 Facility of
Payment.  If the Plan Administrator determines in its
discretion that a benefit is to be paid to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of that
person’s property, the Plan Administrator may direct payment of such benefit to
the guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. 
The Plan Administrator may require proof of incompetence, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.  Any payment of a benefit shall be a payment
for the account of the Executive and the Executive’s Beneficiary, as the case
may be, and shall be a complete discharge of any liability under the Agreement
for such payment amount.


 


Article 5


General Limitations


 


5.1                               Termination for
Cause.  Notwithstanding any provision of this
Agreement to the contrary, the Company shall not pay any benefit under this
Agreement if the Company’s Board of Directors terminates the Executive’s
employment for:


 


(a)                                  Gross negligence or gross neglect of duties
to the Company;


 


(b)                                 Commission of a felony or of a gross
misdemeanor involving moral turpitude; or


 


(c)                                  Fraud, disloyalty, dishonesty or willful
violation of any law or significant Company policy committed in connection with
the Executive’s employment and resulting in a material adverse effect on the
Company.


 


5.2                                 Suicide or
Misstatement.  The Company shall not pay any benefit under
this Agreement if the Executive commits suicide within three years after the
Effective Date.  In addition, the
Company shall not pay any benefit under this Agreement if the Executive has
made any material misstatement of fact on any application for life insurance
owned by the Company on the Executive’s life.


 


5.4                                 Excess Parachute
Payment.  Notwithstanding any provision of this
Agreement to the contrary, to the extent any benefit would create an excise tax
under the excess parachute rules of Section 280G of the Code, the Company shall
reduce the benefit paid under this Agreement to the extent it would not result
in any such excise tax.


 


Article 6


Claims And Review Procedures


 


6.1                                 Claims Procedure.  An
Executive or Beneficiary (“claimant”) who has not received benefits under the
Agreement that he or she believes should be paid shall make a claim for such
benefits as follows:


 


6.1.1                        Initiation – Written Claim. 
The claimant initiates a claim by submitting to the Plan Administrator a
written claim for the benefits.


 


6.1.2                        Timing of Plan Administrator Response.  The
Plan Administrator shall respond to such claimant within 90 days after
receiving the claim.  If the Plan Administrator
determines that special circumstances require additional time for processing
the claim, the Plan Administrator can extend the response period by an
additional 90 days by notifying the claimant in writing, prior to the end of
the initial 90-day period, that an additional period is required.  The notice of extension must set forth the
special circumstances and the date by which the Plan Administrator expects to
render its decision.


 


6.1.3                        Notice of Decision.  If
the Plan Administrator denies part or all of the claim, the Plan Administrator
shall notify the claimant in writing of such denial.  The Plan Administrator shall 


 


5

















 


write the
notification in a manner calculated to be understood by the claimant.  The notification shall set forth:


 


(a)                                  The specific reasons for the denial;


(b)                                 A reference to the specific provisions of
the Agreement on which the denial is based;


(c)                                  A description of any additional information
or material necessary for the claimant to perfect the claim and an explanation
of why it is needed;


(d)                                 An explanation of the Agreement’s review
procedures and the time limits applicable to such procedures; and


(e)                                  A statement of the claimant’s right to bring
a civil action under ERISA Section 502(a) following an adverse benefit
determination on review.


 


6.2                                 Review Procedure.  If
the Plan Administrator denies part or all of the claim, the claimant shall have
the opportunity for a full and fair review by the Plan Administrator of the
denial, as follows:


 


6.2.1                        Initiation – Written Request.  To
initiate the review, the claimant, within 60 days after receiving the Plan
Administrator’s notice of denial, must file with the Plan Administrator a
written request for review.


 


6.2.2                        Additional Submissions – Information Access. 
The claimant shall then have the opportunity to submit written comments,
documents, records and other information relating to the claim.  The Plan Administrator shall also provide
the claimant, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claimant’s claim for benefits.


 


6.2.3                        Considerations on Review.  In
considering the review, the Plan Administrator shall take into account all
materials and information the claimant submits relating to the claim, without
regard to whether such information was submitted or considered in the initial
benefit determination.


 


6.2.4                        Timing of Plan Administrator Response. 
The Plan Administrator shall respond in writing to such claimant within
60 days after receiving the request for review.  If the Plan Administrator determines that special circumstances
require additional time for processing the claim, the Plan Administrator can
extend the response period by an additional 60 days by notifying the claimant
in writing, prior to the end of the initial 60-day period, that an additional
period is required.  The notice of
extension must set forth the special circumstances and the date by which the
Plan Administrator expects to render its decision.


 


6.2.5                        Notice of Decision. 
The Plan Administrator shall notify the claimant in writing of its
decision on review.  The Plan
Administrator shall write the notification in a manner calculated to be
understood by the claimant.  The
notification shall set forth:


 


(a)                                  The specific reasons for the denial;


(b)                                 A reference to the specific provisions of
the Agreement on which the denial is based;


(c)                                  A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits; and


(d)                                 A statement of the claimant’s right to bring
a civil action under ERISA Section 502(a).


 


Article 7


Amendments and Termination


 


This Agreement may be amended or terminated
only by a written agreement signed by the Company and the Executive.  Provided, however, if the Company’s Board of
Directors determines that the Executive is no longer a member of a select group
of management or highly compensated employees for reasons other 


 


6

















 


than death, Disability or
retirement, the Company may amend or terminate this Agreement.  Upon such amendment or termination the
Company shall pay benefits to the Executive as if Early Termination occurred on
the date of such amendment or termination, regardless of whether Early Termination
actually occurs.


 


Article 8


Administration
of Agreement


 


8.1                                 Plan Administrator
Duties.  This Agreement shall be
administered by a Plan Administrator which shall consist of the Board, or such
committee or person(s) as the Board shall appoint.  The Executive may be a member of the Plan Administrator.  The Plan Administrator shall also have the
discretion and authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administra­tion of this Agreement and
(ii) decide or resolve any and all ques­tions including interpretations of this
Agreement, as may arise in connection with the Agreement.


 


8.2                                 Agents.  In the administration of this Agreement, the
Plan Administrator may employ agents and delegate to them such administrative
duties as it sees fit, (including acting through a duly appointed
representative), and may from time to time consult with counsel who may be
counsel to the Company.


 


8.3                                 Binding Effect of
Decisions.  The decision or action
of the Plan Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application of the
Agreement and the rules and regulations promulgated hereunder shall be final
and conclusive and binding upon all persons having any interest in the
Agreement.


 


8.4                                 Indemnity of Plan
Administrator.  The Company shall
indemnify and hold harmless the members of the Plan Administrator against any
and all claims, losses, damages, expenses or liabilities arising from any
action or failure to act with respect to this Agreement, except in the case of
willful misconduct by the Plan Administrator or any of its members.


 


8.5                                 Company Information.  To enable the Plan Administrator to perform
its functions, the Company shall supply full and timely information to the Plan
Administrator on all matters relating to the Compensation of its Participants,
the date and circum­stances of the retirement, Disability, death or Termina­tion
of Employment of its Participants, and such other pertinent information as the
Plan Administrator may reasonably require.


 


Article 9


Miscellaneous


 


9.1                                 Binding Effect. 
This Agreement shall bind the Executive and the Company, and their
beneficiaries, survivors, executors, successors, administrators and
transferees.


 


9.2                                 No Guarantee of
Employment.  This Agreement is not an employment policy
or contract.  It does not give the
Executive the right to remain an employee of the Company, nor does it interfere
with the Company’s right to discharge the Executive.  It also does not require the Executive to remain an employee nor
interfere with the Executive’s right to terminate employment at any time.


 


9.3                                 Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.


 


9.4                                 Tax Withholding. 
The Company shall withhold any taxes that are required to be withheld
from the benefits provided under this Agreement.


 


9.5                                 Applicable Law. 
The Agreement and all rights hereunder shall be governed by the laws of
the State of California, except to the extent preempted by the laws of the
United States of America.


 


9.6                                 Unfunded
Arrangement.  The Executive and Beneficiary are general
unsecured creditors of the 


 


7

















 


Company for the payment of benefits under
this Agreement.  The benefits represent
the mere promise by the Company to pay such benefits.  The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. 
Any insurance on the Executive’s life is a general asset of the Company
to which the Executive and Beneficiary have no preferred or secured claim.


 


9.7                                 Reorganization.  The
Company shall not merge or consolidate into or with another company, or
reorganize, or sell substantially all of its assets to another company, firm,
or person unless such succeeding or continuing company, firm, or person agrees
to assume and discharge the obligations of the Company under this
Agreement.  Upon the occurrence of such
event, the term “Company” as used in this Agreement shall be deemed to refer to
the successor or survivor company.


 


9.8                                 Entire Agreement.  This Agreement constitutes the entire
agreement between the Company and the Executive as to the subject matter
hereof.  No rights are granted to the
Executive by virtue of this Agreement other than those specifically set forth
herein.


 


9.9                                 Interpretation.  Wherever the fulfillment of the intent and purpose of this Agreement
requires, and the context will permit, the use of the masculine gender includes
the feminine and use of the singular includes the plural.


 


9.10                           Alternative
Action.  In the event it shall become impossible for
the Company or the Plan Administrator to perform any act required by this
Agreement, the Company or Plan Administrator may in its discretion perform such
alternative act as most nearly carries out the intent and purpose of this
Agreement and is in the best interests of the Company.


 


9.11                           Headings.  Article and section headings are for convenient reference only and shall
not control or affect the meaning or construction of any of its provisions.


 


9.12                           Validity.  In case any provision of this
Agreement shall be illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining parts hereof, but this Agreement
shall be construed and enforced as if such illegal and invalid provision has
never been inserted herein.


 


9.13                        Notice.  Any notice or filing required or permitted
to be given to the Company under this Agreement shall be sufficient if in
writing and hand-delivered, or sent by registered or certified mail, to the
address below: 


 


	
   

  
	
   

  
	
   

  



 


Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or
certification.


 


Any notice or filing required or permitted to
be given to the Executive under this Agreement shall be sufficient if in
writing and hand-delivered, or sent by mail, to the last known address of the
Executive.


 


IN WITNESS WHEREOF, the Executive and a duly
authorized representative of the Company have signed this Agreement.


 


	
  EXECUTIVE:

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  HERITAGE OAKS
  BANK

  
	
   

  	
   

  
	
   

  	
   

  	
  By  

  	
   

  	
   

  
	
  Kelley Stolz

  	
   

  
					



 


8