Document:

Exhibit 10

Exhibit 10.3

 

CONFIDENTIAL

TREATMENT REQUESTED. CERTAIN PORTIONS HAVE BEEN OMITTED AND HAVE BEEN FILED

SEPARATELY WITH THE COMMISSION.

 

 

FIRST AMENDMENT

FIVE-YEAR CONTRACT AGREEMENT:

U.S. FOODSERVICETM

AND

DAKOTA GROWERS PASTA COMPANY

 

 

                This

First Amendment (the “First Amendment”) to the Five-Year Contract Extension

between U.S. FoodserviceTM and Dakota Growers Pasta Company dated December 28,

2000 (the “Agreement”) is entered into this 20th day of December, 2001.

 

 

                WHEREAS,

U.S. FoodserviceTM and Dakota Growers Pasta Company (collectively referred to

herein as the “Parties”) entered into the Agreement on December 28, 2000,

effective from December 28, 2000 through December 31, 2006; and

 

                WHEREAS,

the Agreement covered dry pasta products for the foodservice and retail markets

packed under the Roseli®, Monarca® and Pasta Sanita® brands and dry pasta

products for the foodservice and retail markets packed exclusively under the

Bellagio S.p.A. brand imported from Italy; and

 

                WHEREAS,

U.S. FoodserviceTM has acquired Alliant Foodservice which provides dry pasta

products for the foodservice markets under the Luzzati and Cosenza brand

labels; and

 

WHEREAS, U.S. FoodserviceTM

also provides dry pasta products for the foodservice markets under the Monarch

Advantage and Monarch Regency brand labels; and

 

                WHEREAS,

the Parties, on the 21st day of December, 2001, entered into an Exclusive

License Agreement, wherein Dakota Growers Pasta Company granted U.S.

FoodserviceTM an exclusive license to use the Trademark “Primo Piatto” in

connection with the distribution and marketing of dry pasta products imported

from Italy; and

 

                NOW

THEREFORE, it is hereby agreed as follows:

 

        1.                                       Section A.

Products of the Agreement is hereby amended as follows:

 

                        Item

1 is amended to add reference to Luzzati, Monarch Advantage and Monarch Regency

brands.

 

                        Item

2 is amended to add reference to the Primo Piatto and Cosenza brands.

 

        2.                                       Item 6 under

Section B. Pricing:  Terms of Sale

of the Agreement is hereby amended by adding the following:

 

                        Synergistic

savings realized through consolidation of the brands will be reviewed upon

completion of such consolidation, and any adjustments to the pricing or

allowances will be agreed upon by U.S. FoodserviceTM and Dakota Growers upon

completion of such review.

 

 

 

        3.                                       Item 2 under

Section E. Contract Incentive Program of the Agreement is hereby amended

as follows:

 

                        (Confidential

treatment requested.)

 

        4.                                       Item 1 under

Section G. Duration of Agreement; Exclusivity of the Agreement is hereby

amended as follows:

 

                        The

Luzzati, Monarch Advantage and Monarch Regency brands are added, and the Primo

Piatto and Cosenza brands are added to the imported dry pasta products.

 

        5.             Item 4 under Section G. Duration

of Agreement; Exclusivity of the Agreement is hereby deleted in its

entirety and replaced with the following:

 

                        This

Agreement may not be transferred or assigned, or any portions thereof, by

either Party, without the written consent of the other Party, such consent not

to be unreasonably withheld.

 

        6.             Schedule A is amended as attached.

 

        7.                                       All other terms

and conditions of the Agreement remain unchanged.

 

IN WITNESS WHEREOF, the

Parties have executed this First Amendment (the “First Amendment”) to the

Five-Year Contract Agreement on the day and year first above written.

 

 

	

  Dakota Growers Pasta

  Company

  	

  US FoodserviceTM

  
	

   

  	

   

  
	

  By: 

  	

  /s/ Tim Dodd

  	

   

  	

  By: 

  	

  /s/ Bill Carter

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Its: 

  	

  President/ G.M.

  	

   

  	

  Its: 

  	

  Vice President Purchasing

  	

   

  

 

Schedule A

 

(Confidential treatment requested.)

 

 

2PART I

 

EXHIBIT 10.3

 

February 28, 2002

 

Employment Agreement between Heritage Oaks

Bank and Lawrence P. Ward

 

1.      Three year

agreement calling for continued employment as President and CEO of Heritage

Oaks Bank and Heritage Oaks Bancorp through 1-31-2005.  This agreement will automatically renew each

year from the anniversary date unless either party gives written notice to the

contrary no less than 60 days from the Anniversary date.

 

 

2.               Annual base

salary for year 2002, $175,000.00. 

Bonus for 2001 to be paid in 2002 is $62,750.00

 

3.               Continued

participation in the performance based bonus plan, approved annually by the

Board of Directors.

 

4.             Continued participation in the bank sponsored 401-K

plan.

 

5.                                       Continued

participation in the executive salary continuation plan, which was established

in 1994 and as increased in year 2001.

 

6.                                       Payment of

life insurance policy premiums of $121.90 per month on $100,000. Policy as is

currently being done.

 

7.                                       Auto to be

provided by the bank with bank covering all associated costs to operate.  In the event of a change of control, see

auto section as outlined in #9 below.

 

8.                                       Continued

participation in any other compensation program established by the bank or its

parent holding company that is offered to any other employee of the organization.

 

9.                                       The Board may

terminate this agreement at any time with or without cause, provided that if

terminated without cause, Mr. Ward would be entitled to severance pay equal to

one year annual base salary in effect at the date of termination, plus an

additional amount sufficient to pay for insurance coverage and automobile

expenses for a period of one year.  In

the event of termination during or after a merger or change in control, Mr.

Ward would be entitled to severance pay equal to two years base salary in

effect at the date of termination, plus an additional amount sufficient to pay

for insurance coverage for a period of one year from the date of termination,

and the auto provided by the bank to Mr. Ward be transferred into his name at

the time of termination.  The sales tax

calculation for the transfer of the auto would be based on the depreciated

value of the auto as it then appears on the bank’s books.  In the event of a change of control

where  Mr. Ward is offered subsequent

employment, Mr. Ward would be entitled to severance pay equal to 2 years annual

base salary if he is terminated or quits for good cause.  Events that are considered good cause

include but are not limited to, reduction in title, compensation, demotion,

expanded traveling, etc.

 

	

  Approved by the Board of

  Directors

  	

  Accepted

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

  Dr. B. R. Bryant

  	

   

  	

   

  	

  Lawrence P. Ward

  
	

   

  	

  Chairman

  	

   

  	

   

  	

  President, CEO

  
						

 

63PART I

	

  Date

  	

   

  	

   

  	

   

  	

  Date

  	

   

  	

   

  

 

EXHIBIT

10.17

EXECUTIVE

SALARY CONTINUATION AGREEMENT

 

 

This Agreement is made and entered into this       day of             , 1997, by and between Heritage Oaks Bank, a bank

chartered under the laws of the State of California (the “Employer”), and Paul

A. Tognazzini, an individual residing in the State of California (hereinafter

referred to as the “Executive”).

 

RECITALS

 

WHEREAS, the Executive is an employee of the Employer

and is serving as its Executive Vice President — Senior Loan Officer.

 

WHEREAS, the Executive’s experience and knowledge of

the affairs of the Employer and the banking industry are extensive and

valuable;

 

WHEREAS, it is deemed to be in the best interest of

the Employer to provide the Executive with certain salary continuation

benefits, on the terms and conditions set forth herein, in order to reasonably

induce the Executive to remain in the Employer’s employment;

and

 

WHEREAS, the Executive and the Employer wish to

specify in writing the terms and conditions upon which this additional

compensatory incentive will be provided to the Executive, or to the Executive’s

spouse or the Executive’s designated beneficiaries, as the case may be;

 

NOW, THEREFORE, in consideration of the services to be

performed in the future, as well as the mutual promises and covenants contained

herein, the Executive and the Employer agree as follows:

 

AGREEMENT

 

1.             Terms and Definitions.

 

1.1                               Administrator. 

The Employer shall be the “Administrator” and, solely for the purposes

of ERISA, the “Fiduciary” of this Agreement where a fiduciary is required by

ERISA.

 

1.2.                            Annual Benefit.  The term “Annual Benefit” shall mean the amount determined by

first multiplying the sum of Thirty Thousand Dollars

 

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                                                ($30,000) by the Applicable Percentage

(defined below), and by then subtracting from that amount those additional

amounts as may be: (I) required under the other provisions of this Agreement,

including, but not limited to, Paragraphs 5 and 6 hereof; (ii) required by

reason of the lawful order of any regulatory agency or body having jurisdiction

over the Employer; and (iii) required in order for the Employer to properly

comply with any and all applicable state and federal laws, including, but not

limited to, income, employment and disability income tax laws (e.g., FICA,

FUTA, SDI).

 

1.3                               Applicable Percentage. 

The term “Applicable Percentage” shall mean that percentage listed on

Schedule “A” attached hereto which is adjacent to the number of complete years

(with a “year” being the performance of personal services for or on behalf of

he Employer for a period of 365 days) which have elapsed starting from the

Effective date of this Agreement and ending on the date payments are to first

begin under the terms of this Agreement. 

Notwithstanding the foregoing or the percentages set forth on Schedule

“A”, but subject to all other terms and conditions set forth herein, the

“Applicable Percentage” shall be: (i) subject to clause (ii) of this Paragraph

1.3, one hundred percent (100%) in the event the Executive dies prior to

Retirement as defined in subparagraph 1.11 below; and (ii) notwithstanding the

subclause (i) of this Paragraph 1.3, zero percent (0%) in the event the

Executive takes any action which prevents the Employer from collecting the

proceeds of any life insurance policy which the Employer may happen to own at

the time of the Executive’s death and of which the Employer is the designated

beneficiary.

 

1.4                               Beneficiary. 

Excepting the reference made at the end of Paragraphs 1.3 and 1.10

hereof, the term “beneficiary” or “designated beneficiary “ shall mean the

person or persons whom the Executive shall designate in a valid Beneficiary

Designation, a copy of which is attached hereto as Exhibit “B”, to receive the

benefits provided hereunder.  A

Beneficiary Designate shall be valid only if it is in the form attached hereto

and made a part hereof and is received by the Administrator prior to the

Executive’s death.

 

1.5                               Change in Control. The term “ Change in Control” shall

mean, with respect to the Employer or any corporation formed to act as a parent

or holding company of the Employer or its stock: (I) a change in control of a

nature that would be required to be reported in response to Item 6(e) of

Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of

1934, as amended (the “Exchange Act”), or in response to any other form or

report to the regulatory agencies or governmental authorities having

jurisdiction over the Employer or any stock exchange on 

 

65

 

                                                which the Employer’s shares are listed

which requires the reporting of a change in control; (ii) any merger,

consolidation or reorganization of the Employer in which the Employer does not

survive; (iii) any sale, lease, exchange, mortgage, pledge, transfer or other

disposition (in fair market value of fifty percent (50%) of the total value of

the assets of the Employer, reflected in the most recent balance sheet of the

Employer; (iv) a transaction whereby any “person” (as such term is used in the

Exchange Act or any individual, corporation, partnership, trust or any other

entity becomes the beneficial owner, directly or indirectly, or securities of

the Employer representing twenty-five (25%) or more of the combined voting

power of the Employer’s then outstanding securities; or (v) a situation where,

in any one-year period, individuals who at the beginning of such period

constitute the Board of Directors of the Employer cease for any reason to constitute

at least a majority thereof, unless the election, or the nomination for

election by the Employer’s shareholders, of each new director is approved by a

vote of at least three-quarters (3/4) of the directors then still in office who

were directors at the beginning of the period.

 

1.6                               The Code. 

The “Code” shall mean the Internal Revenue Code of 1986, as amended (the

“Code”).

 

1.7                               Disability/Disabled. 

The term “Disability” or “Disabled” shall have the same meaning given

such term in the principal disability insurance policy covering the Executive,

which is incorporated herein by reference to the limited extent thereof.  In the event the Executive is not covered by

a disability policy containing a definition of “Disability” or “Disabled,”

these terms shall mean an illness or incapacity which, having continued for a

period of one hundred and eighty (180) consecutive days, thereafter prevents

the Executive from adequately performing the Executive’s regular employment

duties.  The determination of whether the

Executive is Disabled shall be made by an independent physician selected by

mutual agreement of the parties.

 

1.8                               Effective Date. 

The term “Effective Date” shall mean the date upon which this Agreement

was entered into by the parties, as first written above.

 

1.9                               ERISA.  

The term “ERISA” shall mean the Employee Retirement Income Security Act

of 1974, as amended

 

1.10.                     Lump Sum Payout Amount. 

The term “Lump Sum Payout Amount” (also referred to herein as the

“LSPA”) shall mean that dollar amount 

 

66

 

                                                determined by: (a) multiplying (i) the

“Designated Dollar Amount” listed on Schedule “C” corresponding to the year in

which an event occurs requiring payment of the LSPA to the Executive occurs

under this Agreement, by (ii) the “LSPA Percentage” listed on Schedule “D”

corresponding to the year in which the event occurs requiring payment of the

LSPA to the Executive under this Agreement; and (b) reducing this resulting

amount as may be: (i) required under the other provisions of this Agreement,

including, but not limited to Paragraph 4.2 (i.e., to take into account any

previous Disability payment which may have been paid under the terms of this

Agreement), Paragraph 5 and Paragraph 6 hereof; (ii) required by reason of the

lawful order of any regulatory agency or body having jurisdiction over the

Employer; and (iii) required in order for the Employer to properly comply with

any and all applicable state and federal laws, including, but not limited to,

income, employment and disability income tax laws (e.g., FICA, FUTA, SDI),

partnership, trust or any other entity) becomes the beneficial owner, directly

or indirectly, of securities of the Employer representing twenty–five

percent (25%) or more of the combined voting power of the Employer’s then

outstanding securities; or (v) a situation where, in any one–year period,

individuals who at the beginning of such period constitute the Board of

Directors of the Employer cease for any reason to constitute at least a majority

thereof, unless the election, or the nomination for election by the Employer’s

shareholders, of each new director is approved by a vote of at least three

quarters (3/4) of the directors then still in office who were directors at the

beginning of the period.

 

Notwithstanding the

foregoing or the percentages set forth on Schedule “D,” but subject to all

other terms and conditions set forth herein, the “LSPA Percentage” shall be

zero percent (04b) in the event the Executive takes any action which prevents

the Employer from collecting the proceeds of any life insurance policy which

the Employer may happen to own at the time of the Executive’s death and of

which the Employer is the designated beneficiary.

 

1.11.                     Retirement. The term “Retirement” or “Retires” shall refer to the

date on which, after the Executive attains sixty two (62) years of age, the

Executive acknowledges in writing to Employer to be the last day he will

provide any significant .personal services, whether as an employee or

independent consultant or contractor, to Employer or to, for, or on behalf of,

any other business entity conducting, performing or making available to any

person or entity banking or other financial services of any kind. For purposes

of this Agreement, the phrase “significant personal services” shall mean more

than ten (10) hours of personal services rendered to one or more individuals or

entitles in any thirty (30) day period.

 

67

 

1.12                        Surviving Spouse. The term “Surviving Spouse” shall mean

the person, if any, who shall be legally married to the Executive on the date

of the Executive’s death.

 

1.3                               Termination for Cause. The term “Termination for Cause”shall

mean termination of the employment of the Executive by reason of any of the

following:

 

(a) A termination “for cause” as this term

may be defined in any written employment agreement entered into by and between

the Employer and the Executive;

 

(b) The willful breach of duty by the

Executive in the course of his employment;

 

(c) The habitual neglect by the Executive of

his employment responsibilities and duties;

 

 

(d) The Executive’s deliberate violation of

any state or federal banking or securities laws, or of the Bylaws, rules,

policies or resolutions of the Employer, or of the rules or regulations of the:

(i) The California Institute of Banking 

(ii) Federal Deposit Insurance Corporation; (iii) Securities and

Exchange Commission; or (iv) any other regulatory agency or governmental authority

having jurisdiction over the Employer;

 

(e) The determination by a state or federal

banking agency or other governmental authority having jurisdiction over the

Employer that the Executive is not suitable to act in the capacity for which

she is employed by the Employer;

 

(f) The Executive is convicted of any felony

or a crime involving moral turpitude or a fraudulent or dishonest act; or

 

(g) The Executive discloses without

authority any secret or confidential information not otherwise publicly

available concerning the Employer or takes any action which the Employer’s

Board of Directors determines, in its sole discretion and subject to good

faith, fair dealing and reasonableness, constitutes unfair competition with or

induces any customer to breach any contract with the Employer.

 

2.

                                   Scope, Purpose and

Effect.

 

68

 

2.1.

Contract of Employment. Although this Agreement is intended to provide the Executive with an

additional incentive to remain in the employ of the Employer, this Agreement

shall not be deemed to constitute a contract of employment between the

Executive and the Employer nor shall any provision of this Agreement restrict

or expand the right of the Employer to terminate the Executive’s employment.

This Agreement shall have no impact or effect upon any separate written

Employment Agreement which the Executive may have with the Employer, it being

the parties’ intention and agreement that unless this Agreement is specifically

referenced in said Employment Agreement (or any modification thereto), this

Agreement (and the Employer’s obligations hereunder) shall stand separate and

apart and shall have no effect upon, nor be affected by, the terms and

provisions of said Employment Agreement.

 

2.2.

Fringe Benefit.

The benefits provided by this Agreement are granted by the Employer as a fringe

benefit to the Executive and are not a part of any salary reduction plan or any

arrangement deferring a bonus or a salary increase. The Executive has no option

to take any current payments or bonus in lieu of the benefits provided by this

Agreement.

 

 

3.                                        Payments

Upon or After Retirement.

 

3.1.

                         Payments Upon Retirement. If the Executive shall remain in the continuous

employment of the Employer until attaining sixty-two (62) of age, the Executive

shall be entitled to be paid the Annual Benefit, as defined above, for a period

of fifteen (15) years, with each Annual Benefit amount to be paid in twelve

(12) equal monthly installments (paid on the first day of each month),

beginning with the month following the month in which the Executive Retires or

upon such later date as may be mutually agreed upon by the Executive and the

Employer in advance of said Retirement date. At the Employer’s sole and

absolute discretion. the Employer may increase the Annual Benefit as and when

the Employer determines the same to be appropriate in order to reflect

substantial change in the cost of living. Notwithstanding anything contained

herein to the contrary, the Employer shall have no obligation hereunder to make

any such cost–of–living adjustment.

 

3.2.

                         Payments in the Event of

Death After Retirement. The Employer agrees that if the Executive Retires, but shall die

before receiving all of the monthly payments to which he is entitled hereunder,

the Employer will continue to make such monthly payments to the Executive’s

designated beneficiary for the remaining period.  If a valid Beneficiary Designation is 

 

69

 

                                                not in effect, then the remaining amounts

due to the Executive under the term of this Agreement shall be paid to the

Executive’s Surviving spouse. If the Executive leaves no Surviving Spouse, the

remaining amounts due to the Executive under the terms of this Agreement shall

be paid to the duly qualified personal representative, executor or

administrator of the Executive’s estate.

 

4. Payments

in the Event Death or Disability Occurs Prior to Retirement.

 

4.1.

Payments in the Event of Death Prior to Retirement. In the event the Executive should die

while actively employed by the Employer at any time after the Effective Date of

this Agreement, but prior to attaining sixty two (62) years of age or if the

Executive chooses to work after attaining sixty two (62) years of age, but dies

before Retirement, the Employer agrees to pay the Annual Benefit to the

Executive’s designated beneficiary for a period of fifteen (15) years, with

each Annual Benefit amount to be paid in twelve (12) equal monthly installments

(paid on the first day of each month), beginning with the month following the month

in which the Executive’s death occurs. If a valid Beneficiary designation is

not in effect, then the remaining amounts due to the Executive under the terms

of this Agreement shall be paid to the Executive’s Surviving Spouse in the same

manner. If the Executive leaves no Surviving Spouse, the remaining amounts due

to the Executive under the terms of this Agreement shall be paid to the duly

qualified personal representative, executor or administrator of the Executive’s

estate.

 

4.2. Payments

in the Event of Permanent Disability Prior to Retirement. In the event the Executive becomes Disabled while

actively employed by The Employer at any time after the date of this Agreement

but prior to Retirement, the Executive shall be entitled to be paid the Annual

Benefit, as defined above, for a period of fifteen (15)years, with each Annual

Benefit amount to be paid in twelve (12) equal monthly installments paid on the

first day of each month), beginning with the month following the earlier of (1)

the month in which the Executive formally retires after reaching sixty two (62)

years of age, or (2) the date upon which the Executive is no longer entitled to

receive Disability benefits under the Executive’s principal Disability

Insurance policy (or the date of the Disability if no Disability policy

exists), provided that the Executive remains unable to return to and thereafter

fulfill the responsibilities associated with the employment position held with

The Employer prior to becoming Disabled by reason of such Disability continuing.

However, in the event the Executive’s Disability should cease and Executive is

able to return to and thereafter fulfill the responsibilities associated with

the employment position held with the Employer prior to becoming Disabled, the

Employer’s obligation to make additional payments under this Paragraph shall be

suspended until such time as Executive next becomes eligible to receive

payments under the terms of this Agreement. In the event the 

 

70

 

Employer’s obligation to

make additional payments under this Paragraph is suspended as aforesaid, and

the Executive then becomes entitled to receive payments under the terms of this

Agreement, the aggregate amount paid prior to suspension shall be treated,

notwithstanding anything contained in this Agreement to the contrary, as having

satisfied the Employer’s payment obligations with respect to that number of

initial monthly payments as is equal to the aggregate amount previously paid

out under the terms of this Paragraph; provided, however, that the Employer

promptly begin making the remaining monthly payments required under this

Agreement to the Executive for as long as such payments would otherwise be

required after proper adjustment has been made for the amounts previously paid

to the Executive under this Paragraph. For example, if the Executive receives

$10,000 during a period of Disability, and the Executive returns to work (such

that future payments are suspended) and 

then becomes eligible for the Retirement payout option described above

(and is entitled to receive $10,000 over the first twelve payments under such

option), the Employer shall be entitled to credit the prior payments as having

satisfied its obligation to make the first twelve payments due to the Executive

provided the Employer pays to the Executive, on the first day of each

successive month following the month in which the Retirement occurs (as

provided for above), the next monthly payment amount required with respect to

the payout option selected, i.e., in this example, the amount to be paid as the

first monthly payment under the Retirement option would equal the amount

payable under the Retirement option for the thirteenth month (with the second

payment equaling the amount payable with respect to the fourteenth month and so

on), until such time as the Executive, etc., has received the 168 remaining

payments due after making the adjustment for payments made prior to suspension.

In the event a Lump Sum Payment Amount is to be paid under Paragraph 5, the SPA

shall be reduced as provided for in Paragraph 1.10 above by the aggregate

amounts previously distributed to the Executive under the terms of this

Paragraph.

 

5. Payments

in the Event Employment Is Terminated Prior to Retirement. As indicated in Paragraph 2 above, the Employer

reserves the right to terminate the Executive’s employment, with or without

cause but subject to any written employment agreement which may then exist, at

any time prior to the Executive’s Retirement. In the event that the employment

of the Executive shall be terminated, other than by reason of Disability, Death

or Retirement, prior to the Executive’s attaining sixty-two (62) years of age,

then this Agreement shall terminate upon the date of such termination of employment;

provided, however, that the Executive shall be entitled to the following

benefits, which shall  be paid in lieu

of any other payout options contained herein, depending upon the circumstances

surrounding the Executive’s termination:

 

5.1. Termination

Without Cause. If the Executive’s employment is

terminated by the Employer without cause, the Executive shall be entitled to be

paid the 

 

71

 

Lump Sum Payment Amount,

as defined above, within ninety (90) days after the effective date of the

Executive’s termination, or upon such later date as may be mutually agreed upon

by the Executive and the Employer in advance of the effective date of the

Executive’s termination .

 

5.2.

Voluntary Termination by the Executive. If the Executive’s employment is voluntarily

terminated by the Executive, the Executive shall be entitled to be paid the

Lump Sum Payment Amount, as defined above, within ninety (90) days after the

effective date of the Executive’s termination, or upon such later date as may

be mutually agreed upon by the Executive and the Employer in advance of the

effective date of the Executive’s termination.

 

5.3. Termination

for Cause.

The Executive agrees that his employment with the Employer is terminated “for

cause,” as defined in subparagraph 1.13 of this Agreement, he forfeit any and

all rights and benefits he may have under the toughens of this Agreement and

shall have no right to be paid any of the amounts which would otherwise be due

or paid to the Executive by the Employer pursuant to the terms of this

Agreement.

 

5.4. Termination

by the Employer on Account of or After a Change in Control. In the event: (i) the executive’s

employment with the Employer is terminated by the Employer in conjunction with,

or by reason of, a “change in control” (as defined in subparagraph 1.5 above);

or (ii) by reason of the Employer’s actions any adverse and material change

occurs in the scope of the Executive’s position, responsibilities, duties,

salary, benefits, or location of employment after a “change in control” (as

defined in subparagraph 1.5) occurs or (iii) the Employer causes an event to

occur which reasonably constitutes or results in a demotion, a significant

diminution of responsibilities or authority, or a constructive termination by

forcing a resignation or otherwise) of the Executive’s employment after a

“change in control” (as defined in subparagraph 1.5) occurs, then the Executive

shall be entitled to be paid the Annual Benefit, as defined above, for a period

of fifteen (15) years, with each Annual Benefit amount to be paid in twelve

(12) equal monthly installments paid on the first day of each month), beginning

with the month following the month in which the Executive is terminated or the

action referred to above occurs.

 

6.

Additional Limitations on the Amount of the Annual Benefit. The Executive acknowledges and agrees that the parties

have entered into this Agreement based 

Upon the certain financial and tax accounting assumptions. Accordingly,

with full knowledge of the potential consequences the Executive agrees that,

notwithstanding anything contained herein to the contrary: (i) the amount of

the Annual Benefit or the SPA, as the case may be, shall be Limited to that

amount of the Annual Benefit or the SPA (determined without regard to this

Paragraph 6) which will be deductible by the Employer under the Code in 

 

72

 

the year in which payment

is to be made to the Executive; (ii) the Annual Benefit or the SPA amount shall

be deemed to be the last payment made to the Executive and the first for which

an income tax deduction, if any, has been disallowed; and (iii) any

compensatory amounts for which a deduction is denied to the Employer shall, at

the Employers’s election, serve to first reduce the Employer’s obligation to

pay the monthly Annual Benefit payments or the SPA to the Executive under the

terms of this Agreement. The Executive recognizes that, in this regard,

limitations on deductibility may be imposed under, but not limited to, Code

Section 280G. Consistent with the foregoing, and in the event that any payment

or benefit received or to be received by the Executive, whether payable

pursuant to the terms of this Agreement or any other plan, arrangement or agreement

with the Employer (together with the Annual Benefit or the SPA, the “Total

Payments”), will not be deductible (in whole or in part) as a result of Code

Section 280G, the Annual Benefit or the SPA, as the case may be, shall be

reduced until no portion of the Total Payments is nondeductible as a result of

Section 280G of the Code (or the Annual Benefit or SPA is reduced to zero (O)).

For purposes of this limitation:

 

(a) No portion of the

Total Payments, the receipt or enjoyment of which the Executive shall have

effectively waived in writing prior to the date of payment of a SPA or any

future Annual Benefit payments, shall be taken into account;

 

(b) No portion of the

Total Payments which, in the opinion of the tax counsel selected by the

Employer and acceptable to the Executive, does not constitute a “parachute

payment” within the meaning of Section 280G of the Code shall be taken

into  account;

 

(c) Future Annual Benefit

payments, or the SPA as the case may be, shall be reduced only to the extent

necessary so that the Total Payments (other than those referred to in clauses

(a) or  above in their entirety)

constitute reasonable compensation for services actually rendered within the

meaning of Section 280G of the Code, in the opinion of tax counsel refined to

in clause (b) above; and

 

(d) The value of any

noncash benefit or any deferred payment or benefit included in the Total

Payments shall be determined by the Employers’s independent auditors in

accordance with the principles of Section 280G of the Code.

 

7. Right

To Determine Funding Methods. The Employer reserves the right to determine, in its

sole and absolute discretion, whether, to what extent and by what method, if

any, to provide for the payment of the amounts which may be payable to the

Executive, the Executive’s spouse or the Executive’s beneficiaries under the

terms of this Agreement. In the event that the Employer elects to fund this

Agreement, in whole or in part, through the use of life insurance or annuities,

or both, the Employer shall determine the ownership and beneficial interests of

any such policy of life insurance or annuity. The Employer further reserves the

right, in its sole and absolute discretion, to terminate any such policy, and

any other device used to fund its obligations under this Agreement, at 

 

73

 

any lime, in whole or, in

part. Consistent with Paragraph 9 below, neither the Executive, the Executive’s

spouse nor the Executive’s beneficiaries shall have any right, title or interest

in or to any funding source or amount utilized by the Employer pursuant to this

Agreement, and any such funding source or amount shall not constitute security

for the performance of the Employer’s obligations pursuant to this Agreement.

In connection with the foregoing, the Executive agrees to execute such

documents and undergo such medical examinations or tests which the Employer may

request and which may be reasonably necessary to facilitate any funding for

this Agreement including, without limitation, the Employer’s acquisition of any

policy of insurance or annuity. Furthermore, a refusal by the Executive to

consent to, participate in and undergo any such medical examinations or tests

shall result in the immediate termination of this Agreement and the immediate

forfeiture by the Executive, the Executive’s spouse and the Executive’s

beneficiaries of any and all rights to payment hereunder. Notwithstanding

anything contained herein to the contrary, no interest shall accrue or be

payable with respect to any of the amounts payable under the terms of this

Agreement.

 

8. Claims

Procedure. The Employer shall, but only to the

extent necessary to comply with ERISA, be designated as the named fiduciary

under this Agreement and shall have authority to control and manage the

operation and administration of this Agreement. Consistent therewith, the

Employer shall make ail determinations as to the rights to benefits under this

Agreement. Any decision by the Employer denying a claim by the Executive, the

Executive’s spouse, or the Executive’s beneficiary for benefits under this

Agreement shall be stated in writing and delivered or mailed, via registered or

certified mail, to the Executive, the Executive’s spouse or the Executive’s

beneficiary, as the case may be. Such decision shall set forth the specific

reasons for the denial of a claim. In addition, the Employer shall provide the

Executive, the Executive’s spouse or the Executive’s beneficiary with a

reasonable opportunity for a full and fair review of the decision denying such

claim.

 

9. Status

as an Unsecured General Creditor. Notwithstanding anything contained herein to the

contrary: (i) neither the Executive, the Executive’s spouse or the Executive’s

beneficiary shall have any legal or equitable rights, interests or claims in or

to any specific property or assets of the Employer; (ii) none of the Employer’s

assets shall be held in or under any trust for the benefit of the Executive,

the Executive’s spouse or the Executive’s beneficiaries or held in any way as security

for the fulfillment of the obligations 

of the Employer under this Agreement; (iii) all of the Employer’s assets

shall be and remain the general unpledged and unrestricted assets of the

Employer; (iv) the Employer’s obligation under this Agreement shall be that of

an unfunded and unsecured promise by the Employers to pay money in the future;

and (v) the Executive, the Executive’s spouse and the Executive’s beneficiaries

shall be unsecured general creditors with respect to any benefits which may be

payable under the terms of this Agreement.

 

10.

Miscellaneous.

 

74

 

10.1

Opportunity To Consult With Independent Counsel. The Executive acknowledges that he has been afforded

the opportunity to consult with independent counsel of his choosing regarding

both the benefits granted to him under the terms of this Agreement and the

terms and conditions which may affect the Executive’s right to these benefits.

The Executive further acknowledges that he has read, understands and  consents to all of the terms and conditions

of this Agreement, and that he enters into this Agreement with a full

understanding of its terms and conditions.

 

10.2. Arbitration

of Disputes. All claims, disputes and other matters

in question arising out of or relating to this Agreement or the breach or

interpretation thereof, other than those matters which are to be determined by

the Employer in its sole and absolute discretion, shall be resolved by binding

arbitration before a representative member, selected by the mutual agreement of

the parties, of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”),

presently located at 111 Pine Suite, Suite 710, in San Francisco, California.

In the event JAMS is unable or unwilling to conduct the arbitration provided

for under the terms of this Paragraph, or has discontinued its business, the

parties agree that a representative member, selected by the mutual agreement of

the parties, of the American Arbitration Association (“AAA”), presently located

at 417 Montgomery Street, in San Francisco, California, shall conduct the

binding Arbitration referred to in this Paragraph. Notice of the demand for

arbitration shall be filed in writing with the other party to this Agreement

and with JAMS (or AAA, if necessary). In no event shall the demand for

arbitration be made after the date when institution of legal or equitable

proceedings based on such claim, dispute or other matter in question would be

barred by the applicable statute of limitations. The arbitration shall be

subject to such rules of procedure used or established by JAMS, or if there are

none, the rules of procedure used or established by AAA. Any award rendered by

JAMS or AAA shall be final and binding upon the parties, and as applicable,

their respective heirs, beneficiaries, legal representatives, agents,

successors and assigns, and may be entered in any court having jurisdiction

thereof. The obligation of the parties to arbitrate pursuant to this clause

shall be specifically enforceable in accordance with, and shall be conducted

consistently with, the provisions of Title 9 of Part 3 of the California Code

of Civil Procedure. Any arbitration hereunder shall be conducted in San

Francisco, California, unless otherwise agreed to by the parties.

 

10.3. Attorneys’

Fees. In the

event of any arbitration or litigation concerning any controversy, claim or

dispute between the parties hereto, arising out of or relating to this

Agreement or the breach hereof, or the interpretation hereof, the prevailing

party shall be entitled to recover from the losing party reasonable expenses,

Attorneys’ fees and costs incurred in connection therewith or in the

enforcement 

 

75

 

or collection of any

judgment or award rendered therein. The “prevailing party” means the party

determined by the arbitrator(s) or court, as the case may be, to have most

nearly prevailed, even if such party did not prevail in all matters, not

necessarily the one in whose favor a judgment is rendered.

 

10.4. Notice. Any notice required or permitted of

either the Executive or the Employer under this Agreement shall be deemed to

have been duly given, if by personal delivery, upon the date received by the

party or its authorized representation; if by facsimile, upon transmission to a

telephone number previously provided by the party to whom the facsimile is

transmitted as reflected in the records of the party transmitting the facsimile

and upon reasonable confirmation of such transmission; and if by mail, on the

third day after mailing via U.S. first class mail, registered or certified,

postage prepaid and return receipt requested, and addressed to the party at the

address given below for the receipt of notices, or such changed address as may

be requested in writing by a party.

 

If to the Employer:               Heritage Oaks Bank

545 Twelfth Street

Paso Robles, CA 93446

 

Attn: Corporate Secretary

 

If to the

Executive:                                             Mr. Paul A. Tognazzini

250 Frontier Way .

Templeton, CA 93465

 

 

10.5. Assignment. Neither the Executive, the Executive’s

spouse, nor any other beneficiary under this Agreement shall have any power or

right to transfer, assign, anticipate, hypothecate, modify or otherwise

encumber any part or all of the amounts payable hereunder, nor, prior to

payment in accordance with the terms of this Agreement, shall any portion of

such amounts be: (i) subject to seizure by any creditor of any such

beneficiary, by a proceeding at law or in equity, for the payment of any debts,

judgments, alimony or separate maintenance obligations which may be owed by the

Executive, the Executive’s spouse, or any designated beneficiary; or (ii)

transferable by operation of law in the event of bankruptcy, insolvency or

otherwise. Any such attempted assignment or transfer shall be void and shall terminate

this Agreement, and the Employer shall thereupon have no further liability

hereunder.

 

10.6. Binding

Effect/Merger or Reorganization. This Agreement shall be binding upon and inure to the

benefit of the Executive and the Employers and, as applicable, their respective

heirs, beneficiaries, legal representatives, agents, 

 

76

 

successors and assigns.

Accordingly, the Employer shall not merge or consolidate into or with another

corporation, or reorganize or sell substantially all of its assets to another

corporation, firm or person, unless and until such succeeding or continuing

corporation, firm or person agrees to assume and discharge the obligations of

the Employer under this Agreement. Upon the occurrence of such event, the term

“Employer” as used in this Agreement shall be deemed to  refer to such surviving or successor firm,

person, entity of corporation.

 

10.7. Nonwaiver. The failure of either party to enforce at any time or

for any period of time any one or more of the terms or conditions of this

Agreement shall not be a waiver of such term(s) or condition(s) or of that

party’s right thereafter to enforce each and every term and condition of this

Agreement.

 

10.8. Partial

Invalidity.

If any term, provision, covenant, or condition of this Agreement is determined

by an arbitrator or a court, as the case may be, to  be invalid, void, or unenforceable, such determination shall not

render any other term, provision, covenant or condition invalid, void or

unenforceable, and the Agreement shall 

remain in full force and effect notwithstanding such partial invalidity.

 

10.9. Entire

Agreement. This

Agreement supersedes any and all other agreements, either oral or in writing,

between the parties with respect to the subject matter of this Agreement and

contains all of the covenants and agreements between the parties with respect

thereto. Each party to this Agreement acknowledges that no other

representations, inducements, promises, or agreements, oral or otherwise, have

been made by any party, or anyone acting on behalf of any party, which are not

set forth herein, and that no other agreement, statement, or promise not

contained in this Agreement shall be valid or binding on either party.

 

10.10. Modifications. Any modification of this Agreement shall be effective

only if it is in writing and signed by each party or such party’s authorized

representative.

 

 

10.11 Paragraph

Headings. The paragraph headings used in this

Agreement are included solely for the convenience of the parties and shall not

affect or be used in connection with the interpretation of this Agreement.

 

10.12. No

Strict Construction. The language used in this Agreement shall be deemed to be the language

chosen by the parties hereto to express their mutual intent, and no rule of

strict construction will be applied against any person.

 

10.13.Governing

Law.  The laws of the State of California, other

than those laws 

 

77

 

denominated choice of law

rules, and, where applicable, the rules and regulations of the: (i) Office of

the California Superintendent of Banks; (ii) Federal Deposit Insurance

Corporation; and (iii) Securities and Exchange Commission shall govern the

validity, interpretation, construction and effect of this Agreement.

 

IN WITNESS WHEREOF, the

Employer and the Executive have executed this Agreement on the date first

above-written in the City of Paso Robles, San Luis Obispo County, California.

 

	

  THE EMPLOYER:

  	

   

  	

  THE EXECUTIVE:

  
	

   

  	

   

  	

   

  
	

  HERITAGE OAKS BANK

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

   

  	 

	

   

  	

  Dr. B.R. Bryant, Chairman

  	

   

  	

  Paul A. Tognazzini

  	 

						

 

78

 

SCHEDULE

“A”

	

  NUMBER OF COMPLETE YEARS

  	

   

  	

   

  	

   

  
	

  WHICH HAVE ELAPSED

  	

   

  	

  APPLICABLE PERCENTAGE

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  1

  	

   

  	

   

  	

   

  	

  6.6

  	

  %

  
	

  2

  	

   

  	

   

  	

   

  	

  13.3

  	

  %

  
	

  3

  	

   

  	

   

  	

   

  	

  20.0

  	

  %

  
	

  4

  	

   

  	

   

  	

   

  	

  26.6

  	

  %

  
	

  5

  	

   

  	

   

  	

   

  	

  33.3

  	

  %

  
	

  6

  	

   

  	

   

  	

   

  	

  40.0

  	

  %

  
	

  7

  	

   

  	

   

  	

   

  	

  46.6

  	

  %

  
	

  8

  	

   

  	

   

  	

   

  	

  53.3

  	

  %

  
	

  9

  	

   

  	

   

  	

   

  	

  60.0

  	

  %

  
	

  10

  	

   

  	

   

  	

   

  	

  66.6

  	

  %

  
	

  11

  	

   

  	

   

  	

   

  	

  73.3

  	

  %

  
	

  12

  	

   

  	

   

  	

   

  	

  80.0

  	

  %

  
	

  13

  	

   

  	

   

  	

   

  	

  86.6

  	

  %

  
	

  14

  	

   

  	

   

  	

   

  	

  93.3

  	

  %

  
	

  15

  	

   

  	

   

  	

   

  	

  100.0

  	

  %

  

 

79

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