Document:

Exhibit 10.30

 

SUMMARY PLAN

DESCRIPTION

 

HERITAGE OAKS BANCORP

EMPLOYEE STOCK

OWNERSHIP PLAN

 

Table

of Contents

 

	

  ESTABLISHMENT OF PLAN

  
	

  LIMITATIONS OF THIS DESCRIPTION

  
	

  WHY AN EMPLOYEE STOCK OWNERSHIP PLAN?

  
	

  HOW DOES THE PLAN WORK?

  
	

  WHEN MAY I PARTICIPATE IN THE PLAN

  
	

  WHAT IS THE PLAN YEAR?

  
	

  HOW MUCH WILL THE BANK CONTRIBUTE

  
	

  COMPENSATION

  
	

  HOW ARE BANK CONTRIBUTIONS ALLOCATED TO

  INDIVIDUAL PARTICIPANTS’ ACCOUNTS?

  
	

  VESTED OR NONFORFEITABLE PORTION OF

  PARTICIPANT’S BENEFITS

  
	

  VOTING BANK STOCK

  
	

  DISTRIBUTION OF BENEFITS

  
	

  PUT

  OPTION

  
	

  “TOP HEAVY” PLANS

  
	

  DESIGNATION OF BENEFICIARY

  
	

  FILING CLAIMS FOR BENEFITS

  
	

  RIGHTS OF PARTICIPANTS

  
	

  AMENDMENT AND TERMINATION

  
	

  IDENTIFYING

  DATA

  

 

 

SUMMARY PLAN

DESCRIPTION

 

HERITAGE OAKS BANCORP

EMPLOYEE STOCK

OWNERSHIP PLAN

 

ESTABLISHMENT OF PLAN

 

Heritage Oaks Bancorp has established an employee stock ownership plan,

effective January 1, 1997, for the benefit of its employees.  Heritage Oaks Bancorp is proud of this plan

and wants you, as an employee, to know about it.  This description of the plan has been prepared to tell you about

the plan and how it may benefit you. 

You should read all parts of this description carefully so that you will

understand the ways in which the plan may benefit you, and certain exclusions

to coverage and limitations on the receipt of benefits which may apply to

you.  If you wish additional information

concerning this employee stock ownership plan, this description tells you how

to obtain that information.

 

LIMITATIONS OF

THIS DESCRIPTION

 

This description summarizes the main provisions of the plan.  It is not the complete plan.  A complete copy of the plan is available in

the personnel office of the Heritage Oaks Bancorp for your inspection.  In case of any conflict between the

provisions of the complete plan and this description, the provisions of the

complete plan will control.

 

WHY AN EMPLOYEE

STOCK OWNERSHIP PLAN?

 

Heritage Oaks Bancorp believes that giving participants in this plan an

indirect ownership interest in their employer is a way to encourage maximum

efforts on behalf of Heritage Oaks Bancorp. 

The main investment of the plan is expected to be stock of Heritage Oaks

Bancorp or stock of an affiliated employer. 

For purposes of this description, Heritage Oaks Bancorp and any such

affiliated employer will be referred to as the “Bank.”  If the value of the Bank’s stock grows in

the future, participation in this stock ownership plan may prove to be an

important economic benefit.  Naturally,

if the value of the Bank’s stock falls, the value of a participant’s interest

in the plan would be reduced.

 

HOW DOES THE PLAN WORK?

 

In order to understand more fully some of the matters discussed later

on in this plan description, you will need to have a general idea of how the

employee stock ownership plan works. 

Contributions are made, in the discretion of the Bank, annually to the

plan from profits of the Bank.  These

contributions will be credited to the individual accounts of the employees who

are participants in the plan for the year the contribution is made.  (The way in which these amounts will be

distributed to participants will be discussed later in this summary.)  If you are now a participant, or later

become a participant, an account will be set up in your name.

 

The amounts credited to individual accounts are invested by the plan

trustee(s), and any gain or loss from plan investments is credited to, or

charged against, the individual account of each participant.  The main investment is expected to be stock

of the Bank.  Typically any appreciation

or depreciation in the value of plan investments will be determined either by

an annual appraisal made by an independent party or by reference to closing

prices of stock traded in the market. 

The plan trustee(s) has the power to borrow money on behalf of the plan

so that it can purchase Bank stock. 

After a participant terminates his service with the Bank, the vested (or

 

2

 

nonforfeitable)

percentage of the account credited to the participant will be distributed to

him.  (The time of distribution of

benefits to the employee may occur a number of years after his termination of

employment; see the discussion below under the heading Vested Or Nonforfeitable

Portion Of Participant’s Benefits.)

 

If you are a participant or become a participant, the benefits you will

ultimately receive under the plan will depend primarily upon three things:

 

1.             The amount of Bank contributions

credited to your account in the plan;

 

2.             The return on investments under the

plan; and

 

3.             The vested (or nonforfeitable)

percentage of your account when you terminated.

 

You may have heard or read that the Pension Benefit Guaranty

Corporation (PBGC) guarantees certain benefits under pension plans; however,

because this plan is an employee stock ownership plan, rather than a

pension-type plan, benefits are not permitted to be guaranteed by the PBGC.

 

WHEN MAY I

PARTICIPATE IN THE PLAN

 

First, you must be an employee of the Bank in order to be eligible for

participation.  You must also be at

least 21 years of age, must have completed at least a “year of service for

participation” and be employed on the last day of the plan year.  (The term “year of service for

participation” is explained under the heading which follows.)  You will be admitted to participation in the

plan on the first day of the “plan year” (the annual period from the first day

of January to the last day of December) beginning on or after January 1, 1997

in which you meet these requirements. 

The annual entry date under the plan is the first day of January.  If you have met these requirements, you may

already be a participant in the plan.

 

IF YOU ARE NOT YET A PARTICIPANT IN THE PLAN, MOST OF THE INFORMATION

WHICH FOLLOWS WILL APPLY TO YOU ONLY AFTER YOU BECOME A PARTICIPANT.

 

Year of Service for Participation.  A

year of service for participation is a plan year during which an employee has

at least 1,000 hours of service with the Bank. 

(The way in which hours of service will be measured is discussed in the

heading which follows.)   For example,

suppose you had begun working for the Bank on April 15, 1997 and had completed

1,000 hours of service by December 31, 1997. 

You would be admitted to participation in the plan allocation of Bank

contributions for the 1997 Plan Year (the Plan Year in which you completed the

year of service for participation), as long as you had attained the age of 21

and are an employee on December 31, 1997.

 

If you did not (or do not) meet the 1,000-hour and age 21 requirement

during the plan year which included your employment date, you will be admitted

to participation at a subsequent time if you render 1,000 hours of service and

attain age 21 during any plan year.  In

other words, if you had not completed 1,000 hours of service by December 31, 1997,

in the previous example but did so in the plan year ending on the last day of

December, 1998, you would be admitted to participation in the plan on

January 1, 1998, as long as you were at least 21 years of age and an

employee on December 31, 1998.

 

Hour of Service.  An hour of service means any

hour for which you are paid for working for the Bank.  It also may include certain hours for which you are not directly

paid by the Bank.  An hour of service is

important for measuring 1,000 hours of service for participation (as discussed

above), 1,000 hours of service for accrual of benefits, 1,000 hours of service

for vesting and less than 501 hours of service for a one-year break in service

(all of which are discussed below).

 

3

 

Suspension or Termination of Participation.  If

your employment terminates, after you have become a participant, and you incur

a one-year break in service, your participation in the plan will be suspended

or temporarily terminated until you complete a year of service for participation

following your return to employment. 

For this purpose a year of service for participation will be measured in

a manner similar to that of a year of service for participation, discussed

above; except that the first day of the 12-month period will begin with the day

you return to employment after the one-year break in service.

 

Breaks in Service.  Five (or more) consecutive

one-year breaks in service can be important in determining the number of years

of service for vesting, discussed below under the heading Vested or

Nonforfeitable Portion of Participant’s Benefits.  A one-year break in service occurs when an employee has no more

than 500 hours of service during a plan year. 

In certain cases of absence due to pregnancy, child birth or an

adoption, you may be credited with enough hours of service to avoid a one-year

break in service for one plan year.  You

should check with the Bank about this.

 

WHAT IS THE PLAN YEAR?

 

The plan year is the first day of January to the last day of

December.  The plan year is important

for various reasons.  For example, it is

the period for which records are kept for plan administration, and the period

for which allocations of Bank contributions are determined.

 

HOW MUCH WILL

THE BANK CONTRIBUTE

 

Under this plan the Bank has the right to make contributions to the

plan out of its pre-tax profits.  One of

the Bank’s goals in establishing this plan is to encourage you and all other

employees who are participants in the plan to help keep the Bank

profitable.  Generally, once the Bank

contributions are made to the plan, they will be allocated to the accounts of

individual participants in the manner described under the headings “How Does

The Plan Work?” above, and “How Are Bank Contributions Allocated To Individual

Participants’ Accounts?” below.

 

COMPENSATION

 

Generally your compensation for purposes of determining the amount of

your contributions under the plan and the allocation of any Bank contributions

will be all compensation paid during the Plan Year under consideration as W-2

income by the Bank to you, excluding director’s fees.  Amounts deferred pursuant to Internal Revenue Code Section

401(k)(2), or Section 403(b), or contributed to any welfare benefit plans

maintained by the Bank through a reduction in your compensation pursuant to

Internal Revenue Code Section 125, are included in your plan compensation for

the taxable year in which such amounts are contributed.  Compensation excludes amounts in excess of

$170,000 annually (as indexed).

 

HOW ARE BANK

CONTRIBUTIONS ALLOCATED TO INDIVIDUAL PARTICIPANTS’ ACCOUNTS?

 

Once the Bank has made a contribution to the plan for any particular

year, the contribution will be allocated to the accounts of participants who

have completed at least 1,000 hours of service with the Bank during the plan

year for which the contribution is made and who are employees on the last day

of the Plan Year.  If a participant has

terminated employment and a certain percentage of the amount credited to his

account has been forfeited because it was not vested (see the discussion below

under the heading Vested Or Nonforfeitable Portion Of Participant’s Benefits),

that amount will be reallocated to the remaining participants’ accounts in the

same manner as initial Bank contributions.

 

4

 

The Bank contributions and forfeitures (if any) will be allocated, as

of the last day of each plan year, to each eligible participant’s account in

the proportion which that participant’s compensation bears to the total

compensation of all eligible participants for the plan year.  The compensation of a participant for this

purpose is defined under the heading Compensation, above.

 

Suppose, for example, a participant’s compensation is $10,000 for a

plan year and the total compensation paid all participants is $100,000.  If the Bank contributed $10,000 for the plan

year, and there were no forfeitures to be reallocated, the participant earning

$10,000 would be credited with $1,000.

 

VESTED OR

NONFORFEITABLE PORTION OF PARTICIPANT’S BENEFITS

 

Nonforfeitable or Vested Percentage. 

Funds contributed by the Bank, as well as forfeitures, are allocated as

described above and are then invested and accumulated.  The portion or percentage of the Bank

contributions which will eventually be distributed to you after you have

terminated employment is called the nonforfeitable or vested percentage.  If, for example, your vested percentage is

0%, no benefits will be distributed to you. 

If your vested percentage is 50%, one-half the benefits credited to your

account will be distributed to you.  (If

part or all of your benefits are forfeited, and you subsequently return to

employment prior to the time you have 5 consecutive one-year breaks in service,

you may repay the amount previously distributed to you and any forfeited

benefits will be restored to your account. 

However, to have the forfeited amount restored, you must repay in full

any amounts distributed to you before the earlier of (i) 5 years after the

first date on which you are reemployed, or (ii) the date you incur 5

consecutive one-year breaks in service following the date of the previous

distribution to you.)  If you are 100%

vested, all employee contributions credited to your account, adjusted for

investment experience, will be distributed to you.  (The time and manner in which your benefits will be distributed

to you is discussed below under the heading Distribution Of Benefits.)

 

You will be 100% vested under any of the following circumstances:

 

1.             You retire on or after the later of

attaining age 65 or completing 5 years of participation in the plan.

 

2.             You die while still working for the

Bank.

 

3.             You become totally and permanently

disabled while still working for the Bank.

 

However, if you terminate your employment for any reason other than

retirement, death, or total and permanent disability, your nonforfeitable or

vested percentage may be less than 100%. 

This means that part of the amount allocated to your account may be

forfeited after your termination and reallocated to the accounts of participants

remaining in the plan.  The plan

contains this provision in order to encourage plan participants to remain

employees, by rewarding long-time participants in the plan with proportionately

greater benefits than short-time participants. 

The actual percentage of vested benefits is based on the number of years

of service for vesting.  (A year of

service for vesting is explained below.) 

The percentage of your nonforfeitable or vested amount is determined as

follows:

 

	

  Years of Service

  For Vesting

  	

   

  	

  Vested

  Percentage

  	

   

  
	

  Less than 3

  	

   

  	

  0

  	

  %

  
	

  3

  	

   

  	

  20

  	

  %

  
	

  4

  	

   

  	

  40

  	

  %

  
	

  5

  	

   

  	

  60

  	

  %

  
	

  6

  	

   

  	

  80

  	

  %

  
	

  7 or more

  	

   

  	

  100

  	

  %

  

 

5

 

Year of Service for Vesting.  A

year of service for vesting is each plan year beginning on or after

January 1, 1997, in which an employee has attained the age of 18 and has

1,000 hours of service with the Bank. 

The total nonforfeitable percentage is determined by adding each year of

service for vesting together to obtain the total number of years of service for

vesting.  Years of service for vesting

may include plan years for which you were an employee but not a participant.

 

If any of the years of service for vesting are interrupted by one or

more one-year breaks in service, credit for years of service which occurred

prior to the one-year break in service will be lost if you do not return to

employment.  If you return to employment

before you incur 5 consecutive one-year breaks in service, your pre-break

vested amount will be increased if you have post-break years of service for

vesting.  For example, suppose a

participant has 3 years of service for vesting and then terminates employment

for 2 years, when he is 20% vested (if the plan so provides).  If he does not return to employment, his

vesting will not increase.  If he

returns to employment before incurring 5 consecutive one-year breaks in service

and then has new years of service for vesting, his 20% pre-break vested amount

will increase.

 

VOTING BANK STOCK

 

As a participant you will be given the right to instruct the trustee(s)

how to vote Bank stock allocated to your account if the stock is a class of

registered securities.  In most

instances, unregistered stock is voted by the Trustee(s), in the best interest

of the Participants.  Even with

unregistered stock, however, you will be given the right to instruct the

trustee(s) how to vote Bank stock allocated to your account with respect to the

approval or disapproval of any corporate merger or consolidation,

recapitalization, reclassification, liquidation, dissolution, sale of

substantially all assets of a trade or business, or such similar transactions

as may be prescribed in Treasury Regulations. 

Some of the Bank stock in the plan may not be allocated to the account

of any participant at the time a vote is required and some of the participants

to whose account Bank stock is allocated may not choose to instruct the

Trustee(s) as to the voting of that stock. 

The trustee(s) will vote these shares of such Bank stock in the manner

it believes to be in the best interests of the plan and the participants.

 

DISTRIBUTION OF BENEFITS

 

After you have terminated your employment you may elect to receive your

accrued benefits.  However, if the value

of the vested (nonforfeitable) benefits credited to your account does not exceed

$5,000 at the time you terminate, the entire amount will be distributed to you

as soon as administratively feasible after the end of the plan year in which

you complete a one-year break in service. 

You may incur a 10% penalty tax if distributions are made to you before

age 59-1/2, and you do not reinvest them in another qualified plan or an IRA

(i.e., “rollover” the distribution).

 

If you separate from service because of retirement, death, or total and

permanent disability your vested accrued benefit will generally be distributed

to you as soon as administratively feasible after the end of the plan year in

which you separate from service. 

However, in all events, such distributions shall begin not later than 60

days after the end of the plan year in which the latest of the following

occurs: (i) the latest of the date on which you attain the age of 65 or

the date of your fifth anniversary of becoming a participant in the plan; (ii)

the 10th anniversary of the year in which you become a participant in the plan;

or (iii) your termination date.  If the

value of the vested benefits credited to your account exceeds $3,500, at your

election, your

 

6

 

benefits

may be distributed either in a lump sum, or in installments over a period not

exceeding (i) 5 years or (ii) your anticipated life expectancy/the anticipated

life expectancy of you and your spouse.

 

If you separate from service for any other reason and the value of the

vested benefits credited to your account exceeds $5,000, the distribution will

generally be in installments or in a lump sum, at your election, beginning as

soon as administratively feasible after the end of the plan year in which you

complete a one-year break in service. 

You may, however, elect a later distribution in accordance with the

plan.

 

If any nonvested accrued benefit is forfeited, you may have the right

to return such amounts to the plan if you return to employment, and have the

nonvested amount restored to your account.

 

Whether benefits are distributed in a lump sum or installments, you

will have the option of taking the distributions in cash or in whole shares of

qualifying employer securities, except to the extent your account consists of

cash or fractions of such shares.  The

fair market value of such assets, if any, will be distributed in cash.

 

After you have been a participant in the plan for at least 10 years,

you will be offered, beginning at age 55, the option to diversify as to the

Bank stock allocated to your account. 

The election procedure will be more fully explained to you at the time

you are eligible for it.  Generally, it

will permit you to elect to have diversified up to 25% of the value in your

account.  This election will be offered

for 5 years.  After the end of the 5th

year, you will be offered the option of diversifying up to 50% of the Bank

stock reduced by the Bank stock already distributed.

 

PUT OPTION

 

If you or your beneficiary receive Bank stock in a distribution from

the plan which are not readily tradable on an established market and if the

Plan has not offered you a cash distribution option, you shall also be granted

an option to “put” all or a portion of the shares to the Bank (unless

prohibited under state or federal law). 

A put allows you or your Beneficiary to have the Bank purchase the

shares at fair market value.  This put

option must be exercised either within 60 days after the shares are distributed

or within a second period of 60 days in the next following fiscal year,

beginning at least 6 months from the first date of the original put option

period.  The payment for the purchase of

the shares may be either in a lump sum or in up to 6 substantially equal annual

installments.  The plan has the option,

but not the duty, to assume the rights and obligations of the Bank with respect

to this put option.

 

“TOP HEAVY” PLANS

 

If this plan is a “top heavy” plan special rules concerning vesting,

minimum contributions and benefits, and amounts deemed to be compensation, will

be applicable.

 

Generally, a “top heavy” plan is a plan in which the value of the

employer and participant accounts of all “key-employees” exceeds 60% of the

value of the participant and employer accounts of all employees.  A “key-employee” is a participant who for

any of the 4 preceding plan years is (i) an officer who earns at least $45,000

per year (adjusted for cost of living in 2001), (ii) one of the 10 employees

owning the largest interest in the employer and who earns at least $35,000 per

year, (iii) an owner of more than 5% of the employer, or (iv) an owner of at

least 1% of the employer having an annual compensation from the employer of

more than $150,000.

 

Some of the special provisions which are applicable during plan years

in which a plan is top heavy are as follows:

 

7

 

Rapid Vesting.  For plan years during which

the plan is a top heavy plan the vesting schedule set forth under the

sub-heading “Non-forfeitable or Vested Percentage” will be revised (to the

extent the vesting schedule shown below is more favorable to you) as follows:

 

	

  Years  of Service

  For Vesting

  	

   

  	

  Vested

  Percentage

  	

   

  
	

  Less than 2

  	

   

  	

  0

  	

  %

  
	

  2

  	

   

  	

  20

  	

  %

  
	

  3

  	

   

  	

  40

  	

  %

  
	

  4

  	

   

  	

  60

  	

  %

  
	

  5

  	

   

  	

  80

  	

  %

  
	

  6 or more

  	

   

  	

  100

  	

  %

  

 

If following a year in which the plan is a top heavy plan, the plan no

longer qualifies as a top heavy plan, then the rapid vesting schedule set forth

above will no longer be applicable and the schedule set forth under the heading

“Non-forfeitable or Vested Percentage” will apply instead.  However, your vested accrued benefit may not

be reduced by this change and if you have 3 or more years of service for

vesting you will have the right to choose between the 2 vesting schedules.

 

Minimum Contributions and Benefits. 

For plan years during which this plan is a top heavy plan the employer

must provide minimum benefits or contributions to all non-key employees with a

year of service for accrual of benefits. 

Generally this means that you will receive a contribution to your

employer account which is at least equal to 3% of your compensation, as long as

similar contributions are made for the plan year to key employees.

 

In addition to the limitations set forth above other consequences may

result during plan years in which this plan is a top heavy plan.  For details as to these provisions see the Plan

itself.

 

DESIGNATION OF

BENEFICIARY

 

You should designate a beneficiary to receive any benefits which would

become payable upon or after your death. 

This designation should be made in writing on a form to be provided to

you.  If you do not make such a

designation, your spouse, your lineal descendants, your parents, and your

estate, in that order, would receive any benefits payable upon your death.

 

Under most circumstances your spouse is required to be your

beneficiary.  The plan provides for a

procedure for your spouse consenting not to being named as a beneficiary.  If the procedure in the plan is not

followed, your spouse may well be your beneficiary, in case of your death, even

though you have named a different beneficiary.

 

FILING CLAIMS FOR BENEFITS

 

You, as a participant, or your beneficiary (in the event of your

death), at the time discussed above in this plan description, may file a

written election with the administrative committee, requesting a distribution

of benefits.  If your claim, or that of

your beneficiary, is denied, the reasons for the denial will be given to you or

your beneficiary in writing.  You or

your beneficiary will then have 60 days from the date of notice of denial of

your claim to appeal the decision in writing to the administrative

committee.  You or your beneficiary will

then be given an opportunity for a full and fair review by the administrative

committee.

 

8

 

RIGHTS OF PARTICIPANTS

 

Participants and beneficiaries in this employee stock ownership plan

are entitled to certain rights and protections under the Employee Retirement

Income Security Act of 1974 (ERISA). 

Title I of ERISA provides that all plan participants shall be entitled to:

 

1.             Examine, without charge, at the plan

administrator’s office and at other locations such as worksites and union

halls, all plan documents, including insurance contracts, collective bargaining

agreements and copies of all documents filed by the plan administrator with the

U.S. Department of Labor, such as annual reports and plan descriptions.

 

2.             Obtain copies of all plan documents

and other plan information upon written request to the plan administrator.  The administrator may make a reasonable

charge for the copies.

 

3.             Receive a summary of the plan’s

annual financial report.  The plan

administrator is required by law to furnish each participant with a copy of

this summary annual report.

 

4.             Obtain, once a year, a statement of

the total plan benefits accrued and the nonforfeitable (vested) plan benefits,

if any, or the earliest date on which benefits will become nonforfeitable

(vested).  The plan may require a

written request for this statement, but it must provide the statement free of

charge.

 

In addition to creating rights for plan participants, Title I of ERISA

imposes duties upon the people who are responsible for the operation of the

plan.  The people who operate your plan,

called “fiduciaries” of the plan, have a duty to do so prudently and in the

interest of you and other plan participants and beneficiaries.

 

No one, including your employer, your union or any other person, may

fire you or otherwise discriminate against you in any way to prevent you from

obtaining a plan benefit or exercising your rights under ERISA.

 

If your claim for a plan benefit is denied in whole or in part, you

must receive a written explanation of the reason for the denial.  You have the right to have the plan review

and reconsider your claim.

 

Under Title I of ERISA there are steps you can take to enforce the above

rights.  For instance, if you request

materials from the plan administrator and do not receive them within 30 days,

you may file suit in a federal court. 

In such a case, the court may require the plan administrator to provide

the materials and pay you up to $100 a day until you receive the materials,

unless the materials were not sent because of reasons beyond the control of the

administrator.  If you have a claim for

benefits which is denied or ignored, in whole or in part, you may file suit in

a state or federal court.  The court

will decide who should pay court costs and legal fees.  If you are successful the court may order

the person you have sued to pay these costs and fees.  If you lose the court may order you to pay these costs and fees,

for example, if it finds your claim is frivolous.

 

If you have any questions about this plan, you should contact the plan

administrator.

 

If you have any questions about this statement or your rights under

ERISA, you should contact the plan administrator or the nearest Area Office of

the U. S. Labor-Management Service Administration, Department of Labor.

 

AMENDMENT AND TERMINATION

 

The Bank expects to continue the plan indefinitely, but reserves the

right to terminate the plan or to amend it. 

The Bank also reserves the right to suspend contributions if it is

determined that continuation of contributions is impossible or

inadvisable.  If the plan is terminated,

or if the

 

9

 

employer

contributions to the plan are permanently discontinued, each participant will

be entitled to receive the entire amount of his account.

 

10

 

IDENTIFYING DATA

 

Under this heading the names and addresses of certain individuals who

have various responsibilities with respect to this plan are shown. Also,

certain identification information with respect to the plan itself is set out

in case that information would be of use to you.

 

	

  Employer:

  	

   

  	

  Heritage Oaks Bancorp

  545 - 12th Street

  Paso Robles, CA 93446

  

  (805) 239-5200

  
	

   

  	

   

  	

   

  
	

  Identification

  Numbers

  	

   

  	

  The employer’s IRS identification number is:

  95-3763629

  Plan Number:     002

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  The plan is administered by an  Administrative Committee.

  
	

   

  	

   

  	

   

  
	

  Plan

  Administrator:

  	

   

  	

  Administrative Committee

  c/o Heritage Oaks Bancorp

  545 - 12th Street

  Paso Robles, CA 93446

  
	

   

  	

   

  	

   

  
	

  Agent for

  Service of Process:

  	

   

  	

  Administrative Committee

  c/o Heritage Oaks Bancorp

  545 - 12th Street

  Paso Robles, CA 93446

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  In addition, service of legal process may be made upon any plan trustee(s)

  or the plan administrator, whose names and addresses are listed under this

  heading.

  
	

   

  	

   

  	

   

  
	

  Trustees:

  	

   

  	

  Lawrence P. Ward

  B. R. Bryant

  

  c/o Heritage Oaks Bancorp

  545 - 12th Street

  Paso Robles, CA 93446

  

 

11Exhibit 10.31

 

SUMMARY OF MATERIAL

MODIFICATIONS

TO THE SUMMARY PLAN

DESCRIPTION FOR THE

HERITAGE OAKS BANCORP

EMPLOYEE STOCK

OWNERSHIP PLAN

 

The Heritage Oaks Bancorp

Employee Stock Ownership Plan has been amended.  Most of these amendments are to have the plan comply with the

changes in the law made by the Economic Growth and Tax Relief Reconciliation

Act of 2001.  The purpose of this

Summary Of Material Modifications (SMM) is to provide you with required notice

of the changes in the Plan.  It is

important to remember that the Summary Plan Description (SPD) describing the

plan, and this SMM, are summaries of the provisions contained in the official

Plan document and that any conflicts between either the SPD or the SMM and the

Plan document will be governed by the Plan document, including any Plan

amendments.  Recent changes made to the

Plan are as follows and are made effective January 1, 2002 unless stated

otherwise:

 

1.                                       Internal

Revenue Code section 415 Annual Addition Limit.  The limit on the total of employee and

employer contributions made on behalf of an employee under all plans sponsored

by an employer was changed from the lesser of $35,000 or 25% of compensation to

the lesser of $40,000 or 100% of compensation.

 

2.                                       Compensation

That May Be Taken Into Account Under the Plan.  The amount of annual compensation that can

be taken into account for purposes of calculating all contributions under the

plan and for performing all plan testing has been increased from $170,000 to

$200,000.

 

3.                                       Top

Heavy Changes.  The “top heavy” provisions of the plan

provide that if the accrued benefits of key employees under all plans sponsored

by the employer exceed 60% of all plan assets under the plans that minimum

contributions must be made on behalf of all non-key employees.  The Heritage Oaks Bancorp plans are not top

heavy.  The EGTRRA amendments:  (i) change the definition of key employee by

raising the amount of compensation required to be considered a key employee,

(ii) reduce the number of years one is required to look back in determining

whether an employee is a key employee from 4 years to one year, (iii) require

only distributions from the prior year (rather than the past five years) need

to be taken into account in determining accrued benefits, and (iv) allow matching

contributions to be taken into account to satisfy the minimum contribution

requirements.

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