Document:

Exhibit 10.1

 

OAK
VALLEY COMMUNITY BANK

SALARY CONTINUATION AGREEMENT

 

THIS
AGREEMENT is adopted this                                                   ,
by and between OAK VALLEY COMMUNITY BANK, a state-chartered commercial bank
located in Oakdale, California (the “Company”), and                                                  (the
“Executive”).

 

INTRODUCTION

 

To
encourage the Executive to remain an employee of the Company, the Company is
willing to provide salary continuation benefits to the Executive.  The Company will pay the benefits from its
general assets.

 

AGREEMENT

 

The
Company and the Executive agree as follows:

 

ARTICLE I

 

Definitions

 

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

 

1.             “Change of Control”
means:

 

(a)           A change in the ownership of the capital stock of the
Company or the Holding Company, whereby a corporation, person, or group acting
in concert (hereinafter this Agreement shall collectively refer to any
combination of these three [a 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 Company or Holding Company which constitutes fifty percent (50%) or more of
the combined voting power of the Company’s or Holding Company’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 Company or Holding Company immediately prior to a tender offer, exchange
offer, contested election or any combination of the foregoing, cease to
constitute a majority of he Board of Directors; or

 

(c)           The adoption by the Board of Directors of the Company
or of the Holding Company of a merger, consolidation or reorganization plan
involving the Company or Holding Company in which the Company or the Holding
Company is not the surviving entity, or a sale of all or substantially all of
the assets of the Company or Holding Company. 
For purposes of this Agreement, a sale of all or substantially all of
the assets of the Company or Holding Company 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 Company or
Holding Company that have an aggregate fair market value equal to fifty percent
(50%) or more of the fair market value of all of the respective gross assets of
the Company or Holding Company 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
Company’s or Holding Company’s outstanding shares of Common Stock or shares of
capital stock having fifty percent (50%) or more the combined voting power of
the Company’s or Holding Company’s then outstanding capital stock (other than
an offer made by the Company or the Holding Company), 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 subsection (1).

 

(i)            “Permitted Transfers”
means that a Shareholder, defined as the existing owners of all issued and
outstanding stock of the Company as of the date of this Agreement, may make the
following transfers and such transfers shall be deemed not to be a Change of
Control under Section 1.1:

 

 

(a)           To any trust created solely for the benefit of any
Shareholder or any spouse of or any lineal descendant of any Shareholder;

 

(b)           To any individual or entity by bona fide gift;

 

(c)           To any spouse or former spouse pursuant to the terms
of a decree of divorce;

 

(d)           To any officer or employee of the Company pursuant to
any incentive stock option plan established by the Shareholders;

 

(e)           To any family member; or

 

(f)            After receipt of any necessary regulatory approvals,
to any Company or partnership a majority of the stock or interests of which
Company or partnership are owned by any of the Shareholders.

 

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

 

3.             “Constructive Termination
of Employment” means, following a Change of Control:

 

(a)           Without the Executive’s express written consent, the
assignment to the Executive of any duties inconsistent with the Executive’s
positions, duties, responsibilities and status with the Company, or a change in
the Executive’s reporting responsibilities, titles or offices, or any removal
of the Executive from or any failure to re-elect the Executive to any of such
positions, except in connection with the termination of the Executive’s
employment for Cause, Disability or retirement or as a result of the Executive’s
death;

 

(b)           A reduction by the Company in the Executive’s base
salary as in effect on the date hereof of as the same may be increased from
time to time;

 

(c)           Without the Executive’s express written consent the
failure by the Company to continue any action which would adversely affect the
Executive’s participation in or materially reduce the Executive’s benefits
under any of such plans, or the failure by the Company to provide the Executive
with the number of paid vacation days to which the Executive is then entitled
on the basis of Years of Service with the Company in accordance with the
Company’s normal vacation policy in effect on the date hereof, or

 

(d)           The Company requiring the Executive to be based anywhere
other than in the community where the Executive is currently based at the time
of a Change of Control, except for required travel on Company business to an
extent substantially consistent with the Executive’s present- business travel
obligations, or in the event the Executive consents to a proposed relocation,
the failure by the Company to pay (or reimburse the Executive) for all
reasonable moving expenses incurred by the Executive relating to a change of
principal resident in connection with such relocation, and to indemnify the
Executive against any loss of the fair market value of such residence as
determined by a real estate appraiser designated by the Executive and
reasonably satisfactory to the Company realized on the sale of the Executive’s
principal residence in connection with any such change of residence.

 

4.             “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
Company of the carrier’s or Social Security Administration’s determination upon
the request of the Company.

 

5.             “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.

 

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

 

7.             “Effective Date”
means                      ,       .

 

8.             “Involuntary Termination of
Employment” means, following a Change of Control, the Executive has
been notified in writing by the Company that employment with the Company is
terminated.

 

9.             “Normal Retirement Age”
means the Executive’s sixty-second (62nd)
birthday.

 

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

 

 

11.           “Plan Year”
means each calendar year ending December 31.  The initial Plan Year shall commence on the
effective date of this Agreement.

 

12.           “Termination for Cause”
See Article 5.

 

13.           “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.

 

14.           “Years of Service”
means the total number of calendar years during which the Executive is employed
on a full-time basis by the Company, with a minimum of 1,000 hours, inclusive
of any leaves of absence approved by the Company.

 

ARTICLE II

 

Lifetime Benefits

 

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.

 

(a)           Amount of Benefit.  The annual
benefit under this Section 2.1 is $           
(                              
Dollars).  The Company’s Board of
Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1;
however, any increase shall require the recalculation of Schedule A.

 

(b)           Payment of Benefit.  The Company
shall pay the annual benefit to the Executive in 12 equal monthly installments
payable on the first day of each month commencing with the month following the
Executive’s Normal Retirement Date.  The
annual benefit shall be paid to the Executive for a period of twenty (20)
years.

 

(c)           Benefit Increases.  Commencing on
the first anniversary of the first benefit payment, and continuing on each
subsequent anniversary, the Company’s Board of Directors, at its sole
discretion, may increase the benefit.

 

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 Agreement.

 

(a)           Amount of Benefit.  The benefit
under this Section 2.2 is the Early Termination Benefit set forth in
Schedule A for the Plan Year ending immediately prior to the Early Termination
Date, determined by vesting the Executive in zero percent (0%) of the Accrual
Balance set forth in Schedule A for the first five (5) Years of Service,
twenty percent (20%) of the Accrual Balance in the sixth (6th) Year of Service, and an additional twenty percent
(20%) of said amount for each succeeding Year of Service thereafter until the
Executive becomes on hundred percent (100%) vested in the Accrual Balance.  Any increase in the annual benefit under Section 2.1.1
shall require the recalculation of this benefit on Schedule A.

 

(b)           Payment of Benefit.  The Company
shall pay the benefit to the Executive in a lump sum within sixty (60) days
following the Early Termination Date.

 

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 Agreement.

 

(a)           Amount of Benefit.  The benefit
under this Section 2.3 is the Disability Lump Sum Benefit set forth in
Schedule A for the Plan Year ending immediately prior to the date in which the
Termination of Employment occurs (except during the first Plan Year, the
benefit is the amount set forth for Plan Year 1), determined by vesting the
Executive in one hundred percent (100%) of the Accrual Balance.  Any increase in the annual benefit under Section 2.1.1
would require the recalculation of the Disability benefit on Schedule A.

 

(b)           Payment of Benefit.  The Company
shall pay the annual benefit to the Executive in a lump sum within sixty (60)
days following Termination of Employment.

 

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

 

(a)           Amount of Benefit.  The benefit,
under this Section 2.4 is the Change of Control Annual Benefit set forth
in Schedule A for the Plan Year ending immediately prior to the date in which
Termination of Employment occurs (except during the first Plan Year, the
benefit is the amount set forth for Plan Year 1), determined by vesting the
Executive in one hundred percent 

 

 

(100%) of the Normal
Retirement Benefit described in Section 2.1.1.  Any increase in the annual benefit under Section 2.1.1
would require the recalculation of the Change of Control benefit on Schedule A.

 

(b)           Payment of Benefit.  The Company
shall pay the annual benefit to the Executive in 12 equal monthly installments
payable on the first day of each month commencing with the month following
Termination of Employment.  The annual
benefit shall be paid to the Executive for a period of twenty (20) years.

 

(c)           Benefit Increases.  Benefit
payments may be increased as provided in Section 2.1.3.

 

(d)           Excess Parachute Payment. 
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement to the extent the
benefit would create an excise tax under the excess parachute rules of Section 280G
of the Code.  To the extent possible,
such benefit payment shall be reduced to allow payment within the fullest
extent permissible under applicable law.

 

ARTICLE III

 

Death Benefits

 

Upon
the Executive’s death prior to the termination of this Agreement or prior to
the commencement of any payments to the Executive, if any, under Section 2.4,
the Company shall pay to the Executive’s beneficiary the benefit described in
the Split Dollar Agreement and Endorsement attached as Addendum A between the
Company and the Executive.

 

ARTICLE IV

 

Beneficiaries

 

1.             Beneficiary Designations. 
The Executive shall designate a beneficiary by delivering a written
designation to the Company.  The
Executive may revoke or modify the designation at any time by delivering a new
designation.  However, designations will
only be effective if signed by the Executive and delivered to and received by
the Company during the Executive’s lifetime. 
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.  If the Executive dies without a valid
beneficiary designation, all payments shall be made to the personal representative
of the Executive’s estate.

 

2.             Facility of Payment.  If a benefit
is payable to a minor, to a person declared incompetent, or to a person
incapable of handling the disposition of his or her property, the Company may
pay such benefit to the guardian, legal representative or person having the
care or custody of such minor, incapacitated person or incapable person.  The Company may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit.  Such
distribution shall completely discharge the Company from all liability with
respect to such benefit.

 

ARTICLE V

 

General Limitations

 

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
terminates the Executive’s employment for:

 

(a)           Gross negligence or gross neglect of duties; or

 

(b)           Fraud or willful violation of any law or significant
Company policy committed in connection with the Executive’s employment and
resulting in an adverse effect on the Company.

 

2.             Suicide or Misstatement. 
The Company shall not pay any benefit under this Agreement if the
Executive commits suicide within three years after the date of this Agreement.
In addition, the Company shall not pay any benefit under this Agreement if the
Executive has made any material misstatement of fact on an employment
application or resume provided to the Company, or on any application for any
benefits provided by the Company to the Executive.

 

ARTICLE VI

 

Claims and Review
Procedures

 

1.             Claims Procedure.  A Participant
or beneficiary (“claimant”) who has not received benefits under the Plan that
he or she believes should be paid shall make a claim for such benefits as
follows:

 

 

(a)           Initiation — Written Claim. 
The claimant initiates a claim by submitting to the Company a written
claim for the benefits.

 

(b)           Timing of Company Response. 
The Company shall respond to such claimant within 90 days after
receiving the claim.  If the Company
determines that special circumstances require additional time for processing
the claim, the Company 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 Company expects to render its decision.

 

(c)           Notice of Decision.  If the
Company denies part or all of the claim, the Company shall notify the claimant
in writing of such denial.  The Company
shall write the notification in a manner calculated to be understood by the
claimant.  The notification shall set forth:

 

(i)            The specific reasons for the denial,

 

(ii)           A reference to the specific provisions of the Plan on
which the denial is based,

 

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

 

(iv)          An explanation of the Plan’s review procedures and the
time limits applicable to such procedures, and

 

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

 

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

 

(a)           Initiation — Written Request. 
To initiate the review, the claimant, within 60 days after receiving the
Company’s notice of denial, must file with the Company a written request for
review.

 

(b)           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 Company 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.

 

(c)           Considerations on Review. 
In considering the review, the Company 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.

 

(d)           Timing of Company Response. 
The Company shall respond in writing to such claimant within 60 days
after receiving the request for review. 
If the Company determines that special circumstances require additional
time for processing the claim, the Company can extend the response period by an
additional 60 days by notifying the claimant in writing, prior o 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 Company expects to render its
decision.

 

(e)           Notice of Decision.  The Company
shall notify the claimant in writing of its decision on review.  The Company shall write the notification in a
manner calculated to be understood by the claimant.  The notification shall set forth:

 

(i)            The specific reasons for the denial,

 

(ii)           A reference to the specific provisions of the Plan on
which the denial is based,

 

(iii)          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

 

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

 

 

ARTICLE VII

 

Amendments and
Termination

 

This
Agreement may be amended or terminated only by a written agreement signed by
the Company and the Executive.  Provided,
however, unless otherwise agreed to by the Company and the Executive, this
Agreement will automatically terminate upon the Executive’s Termination of
Service prior to the Normal Retirement Age and payment in full by the Company
of any benefits due to the Executive under Sections 2.2, 2.3 or 2.4.

 

Notwithstanding
the previous paragraph in this Article 7, the Company may amend or
terminate this Agreement at any time if, pursuant to legislative, judicial or
regulatory action, continuation of the Agreement would (i) cause benefits
to be taxable to the Executive prior to actual receipt, or (ii) result in
significant financial penalties or other significantly detrimental
ramifications to the Company (other than the financial impact of paying the
benefits).

 

ARTICLE VIII

 

Miscellaneous

 

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

 

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.

 

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

 

4.             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.

 

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

 

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

 

7.             Unfunded Arrangement.  The Executive
and beneficiary are general unsecured creditors of the 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.

 

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.             Administration.  The Company
shall have powers which are necessary to administer this Agreement, including
but not limited to:

 

(a)           Interpreting the provisions of the Agreement;

 

(b)           Establishing and revising the method of accounting for
the Agreement;

 

(c)           Maintaining a record of benefit payments; and

 

(d)           Establishing rules and prescribing any forms
necessary or desirable to administer the Agreement.

 

 

10.           Named Fiduciary.  The Company
shall be the named fiduciary and plan administrator under this Agreement.  It may delegate to others certain aspects of
the management and operational responsibilities including the employment of
advisors and the delegation of ministerial duties to qualified individuals.

 

IN
WITNESS WHEREOF, the Executive and the Company have signed this Agreement.

 

 

	
  EXECUTIVE:

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OAK VALLEY COMMUNITY BANK

  

  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  

 

 

BENEFICIARY
DESIGNATION

 

OAK
VALLEY COMMUNITY BANK

SALARY CONTINUATION AGREEMENT

 

I designate the following as beneficiary of any death benefits under
this Agreement:

 

Primary:

 

Contingent:

 

Note:  To name a trust as
beneficiary, please provide the name of the trustee(s) and the exact name
and date of the trust agreement.

 

I understand that I may change these beneficiary designations by filing
a new written designation with the Company. 
I further understand that the designations will be automatically revoked
if the beneficiary predeceases me, or, if I have named my spouse as beneficiary
and our marriage is subsequently dissolved.

 

 

	
  Signature

  
	
  Date

  
	
   

  
	
   

  
	
  Received
  by the Company this                          day
  of                          .

  
	
   

  
	
  By

  
	
   

  
	
  Title

  

 

 

ADDENDUM
A

OAK VALLEY COMMUNITY BANK

SPLIT DOLLAR AGREEMENT

 

THIS
AGREEMENT is made and entered into this                                  ,
by and between OAK VALLEY COMMUNITY BANK, a state-chartered commercial bank
located in Oakdale, California (the “Company”), and                               (the
“Executive”). This Agreement shall append the Split Dollar Endorsement entered
into on                                  ,
by and between the aforementioned parties.

 

INTRODUCTION

 

To
encourage the Executive to remain an employee of the Company, the Company is
willing to divide the death proceeds of a life insurance policy on the
Executive’s life.  The Company will pay
life insurance premiums from its general assets.

 

General Definitions

 

The
following terms shall have the meanings specified:

 

1.             “Insurer” means
each life insurance carrier in which there is a Split Dollar Policy Endorsement
attached to this Agreement.

 

2.             “Policy” means
the specific life insurance policy issued by the Insurer.

 

3.             “Insured” means
the Executive.

 

4.             “Normal Retirement Age”
means the Executive’s sixty-second (62nd)
birthday.

 

5.             “Termination of Employment”
means the Executive ceasing to be employed by the Company for any reason
whatsoever, other than by reason of a leave of absence approved by the Company.

 

ARTICLE I

 

Policy
Ownership/Interests

 

1.             Company Ownership.  The Company
is the sole owner of the Policy and shall have the right to exercise all
incidents of ownership.  The Company
shall be the direct beneficiary of the remaining death proceeds after the
Executive’s interest is paid pursuant to Section 2.2 below.

 

2.             Executive’s Interest.  The Executive
shall have the right to designate the beneficiary of death proceeds of the
Policy in the amount of $880,000.  The
Executive shall also have the right to elect and change settlement options that
may be permitted.  Provided, however, the
Executive, the Executive’s transferee or the Executive’s beneficiary shall have
no rights or interests in the Policy with respect to that portion of the death
proceeds designated in this Section 2.2 if the Executive terminates
employment with the Company prior to Normal Retirement Age.

 

3.             Option to Purchase.  The Company
shall not sell, surrender or transfer ownership of the Policy while this Agreement
is in effect without first giving the Executive or the Executive’s transferee
the option to purchase the Policy for a period of sixty (60) days from written
notice of such intention.  The purchase
price shall be an amount equal to the cash surrender value of the Policy.  This provision shall not impair the right of
the Company to terminate this Agreement.

 

4.             Comparable Coverage.  If the
Executive attains Normal Retirement Age while in the continuous employ of the
Company, the Company shall thereafter maintain the Policy in full force and
effect and in no event shall the Company amend, terminate or otherwise abrogate
the Executive’s interest in the Policy, unless the Company replaces the Policy
with a comparable insurance policy to cover the benefit provided under this
Agreement and executes a new Split Dollar Agreement and Endorsement for said
comparable insurance policy.  The Policy
or any comparable policy shall be subject to the claims of the Company’s
creditors.

 

ARTICLE II

 

Premiums

 

1.             Premium Payment.  The Company
shall pay any premiums due on the Policy.

 

 

2.             Economic Benefit.  The Company
shall determine the economic benefit attributable to the Executive based on the
amount of the current term rate for the Executive’s age multiplied by the aggregate
death benefit payable to the Executive’s beneficiary.  The “current term rate” is the minimum amount
required to be imputed under Revenue Rulings 64-328 and 66-110, or any
subsequent applicable authority.

 

3.             Reimbursement.  At the end of
each Plan Year, the Executive shall reimburse the Company in an amount equal to
the economic benefit.

 

ARTICLE III

 

Assignment

 

The
Executive may assign without consideration his interests in the Policy and in
this Agreement to any person, entity or trust. 
In the event the Executive transfers all of the Executive’s interest in
the Policy, then all of the Executive’s interest in the Policy and in the
Agreement shall be vested in the Executive’s transferee, who shall be
substituted as a party hereunder and the Executive shall have no further
interest in the Policy or in this Agreement.

 

ARTICLE IV

 

Insurer

 

The
Insurer shall be bound only by the terms of the Policy.  Any payments the Insurer makes or actions it
takes in accordance with the Policy shall fully discharge it from all claims,
suits and demands of all entities or persons. 
The Insurer shall not be bound by or be deemed to have notice of the
provisions of this Agreement.

 

ARTICLE V

 

Claims Procedure

 

1.             Claims Procedure.  A Participant
or beneficiary (“claimant”) who has not received benefits under the Plan that
he or she believes should be paid shall make a claim for such benefits as
follows:

 

(a)           Initiation — Written Claim. 
The claimant initiates a claim by submitting to the Company a written
claim for the benefits.

 

(b)           Timing of Company Response. 
The Company shall respond to such claimant within 90 days after
receiving the claim.  If the Company
determines that special circumstances require additional time for processing
the claim, the Company 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 Company expects to render its decision.

 

(c)           Notice of Decision.  If the
Company denies part or all of the claim, the Company shall notify the claimant
in writing of such denial.  The Company
shall write the notification in a manner calculated to be understood by the
claimant.  The notification shall set
forth:

 

(i)            The specific reasons for the denial,

 

(ii)           A reference to the specific provisions of the Plan on
which the denial is based,

 

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

 

(iv)          An explanation of the Plan’s review procedures and the
time limits applicable to such procedures, and

 

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

 

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

 

 

(a)           Initiation — Written Request. 
To initiate the review, the claimant, within 60 days after receiving the
Company’s notice of denial, must file with the Company a written request for
review.

 

(b)           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 Company 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.

 

(c)           Considerations on Review. 
In considering the review, the Company 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.

 

(d)           Timing of Company Response. 
The Company shall respond in writing to such claimant within 60 days
after receiving the request for review. 
If the Company determines that special circumstances require additional
time for processing the claim, the Company 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 Company expects to render its
decision.

 

(e)           Notice of Decision.  The Company
shall notify the claimant in writing of its decision on review.  The Company shall write the notification in a
manner calculated to be understood by the claimant.  The notification shall set forth:

 

(i)            The specific reasons for the denial,

 

(ii)           A reference to the specific provisions of the Plan on
which the denial is based,

 

(iii)          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

 

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

 

ARTICLE VI

 

Amendments and
Termination

 

This
Agreement may be amended or terminated only by a written agreement signed by
the Company and the Executive.  However,
unless otherwise agreed to by the Company and the Executive, this Agreement
will automatically terminate upon the Executive’s Termination of Employment
prior to Normal Retirement Age.

 

Notwithstanding
the previous paragraph in this Article 7, the Company may amend or
terminate this Agreement at any time if, pursuant to legislative, judicial or
regulatory action, continuation of the Agreement would result in significant
financial penalties or other significantly detrimental ramifications to the
Company (other than the financial impact of paying the benefits).

 

ARTICLE VII

 

Miscellaneous

 

1.             Binding Effect.  This
Agreement shall bind the Executive and the Company, their beneficiaries,
survivors, executors, administrators and transferees, and any Policy
beneficiary.

 

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.

 

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

 

4.             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.

 

 

5.             Notice.  Any notice,
consent or demand required or permitted to be given under the provisions of
this Split Dollar Agreement by one party to another shall be in writing, shall
be signed by the party giving or making the same, and may be given either by
delivering the same to such other party personally, or by mailing the same, by
United States certified mail, postage prepaid, to such party, addressed to his
or her last known address as shown on the records of the Company.  The date of such mailing shall be deemed the
date of such mailed notice, consent or demand.

 

6.             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.

 

7.             Administration.  The Company
shall have powers which are necessary to administer this Agreement, including
but not limited to:

 

(a)           Interpreting the provisions of the Agreement;

 

(b)           Establishing and revising the method of accounting for
the Agreement;

 

(c)           Maintaining a record of benefit payments; and

 

(d)           Establishing rules and prescribing any forms
necessary or desirable to administer the Agreement.

 

8.             Named Fiduciary.  For purposes
of the Employee Retirement Income Security Act of 1974, if applicable, the
Company shall be the named fiduciary and plan administrator under the
Agreement.  The named fiduciary may
delegate to others certain aspects of the management and operation
responsibilities of the plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  OAK VALLEY COMMUNITY BANK

  

  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/

  

 

 

SPLIT
DOLLAR POLICY ENDORSEMENT

OAK VALLEY COMMUNITY BANK

SPLIT DOLLAR AGREEMENT

 

	
  Policy No.

  	
  Insured:

  

 

Insurer:  Jefferson Pilot Life
Insurance Company

 

Supplementing and amending the application for insurance to Insurer on                                    ,
the applicant requests and directs that:

 

BENEFICIARIES

 

1.             OAK VALLEY COMMUNITY BANK, a state-chartered
commercial bank located in Oakdale, California (the “Company”), shall be the
beneficiary of the remaining death proceeds after payment is made pursuant to
Paragraph 2 below.

 

2.             The beneficiary of death proceeds in the amount of $                  shall
be designated by the Insured or the Insured’s transferee, subject to the
provisions of Paragraph 5 below.

 

OWNERSHIP

 

3.             The Owner of the policy shall be the Company.  The Owner shall have all ownership rights in
the Policy except as may be specifically granted to the Insured or the
Insured’s transferee in Paragraph 4 of this endorsement.

 

4.             The Insured or the Insured’s transferee shall have the
right to assign his rights and interests in the Policy with respect to that
portion of the death proceeds designated in Paragraph 2 of this endorsement,
and to exercise all settlement options with respect to such death proceeds.

 

5.             Notwithstanding the provisions of Paragraph 4 above,
the Insured or the Insured’s transferee shall have no rights or interests in
the Policy with respect to that portion of the death proceeds designated in
Paragraph 2 of this endorsement if the Insured ceases to be employed by the
Company prior to the Normal Retirement Age of 62 for any reason whatsoever
(other than by reason of a leave of absence which is approved by the Company),
unless otherwise agreed to by the Company and the Insured.

 

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY

 

Upon the death of the Insured, the interest of any collateral assignee
of the Owner of the Policy designated in Paragraph 3 above shall be limited to
the portion of the proceeds described in Paragraph 1 above.

 

OWNERS AUTHORITY

 

The Insurer is hereby authorized to recognize the Owner’s claim to
rights hereunder without investigating the reason for any action taken by the
Owner, including its statement of the amount of premiums it has paid on the
Policy.  The signature of the Owner shall
be sufficient for the exercise of any rights under this Endorsement and the
receipt of the Owner for any sums received by it shall be a full discharge and
release therefore to the Insurer.

 

Any transferee’s rights shall be subject to this Endorsement.

 

Signed at Oakdale, California, this                  day
of                                  .

 

	
  OAK VALLEY COMMUNITY BANK

  
	
   

  
	
   

  
	
  By

  
	
   

  
	
  Its

  

 

 

The Insured accepts and agrees to the foregoing and, subject to the
rights of the Owner as stated above, designates

 

as primary beneficiary and

 

 

as secondary beneficiary of the portion of the proceeds described in
Paragraph 2 above.

 

Signed at Oakdale, California, this              day
of                                       .

 

	
  THE INSURED:

  
	
   

  
	
   

  	
   

  
	
  /s/

  	
   

  

 

 

SPLIT
DOLLAR POLICY ENDORSEMENT

OAK VALLEY COMMUNITY BANK

SPLIT DOLLAR AGREEMENT

 

Policy No.                                                                                                                                                                                                                                         Insured:

 

Insurer:  West Coast Life
Insurance Company

 

Supplementing and amending the application for insurance to Insurer on
                              ,
the applicant requests and directs that:

 

BENEFICIARIES

 

1.                                       OAK VALLEY COMMUNITY BANK, a
state-chartered commercial bank located in Oakdale, California (the “Company”),
shall be the beneficiary of the remaining death proceeds after payment is made
pursuant to Paragraph 2 below.

 

2.                                       The beneficiary of death proceeds in the
amount of $             shall
be designated by the Insured or the Insured’s transferee, subject to the
provisions of Paragraph 5 below.

 

OWNERSHIP

 

3.                                       The Owner of the policy shall be the Company.  The Owner shall have all ownership rights in
the Policy except as may be specifically granted to the Insured or the Insured’s
transferee in Paragraph 4 of this endorsement.

 

4.                                       The Insured or the Insured’s transferee
shall have the right to assign his rights and interests in the Policy with
respect to that portion of the death proceeds designated in Paragraph 2 of this
endorsement, and to exercise all settlement options with respect to such death
proceeds.

 

5.                                       Notwithstanding the provisions of Paragraph
4 above, the Insured or the Insured’s transferee shall have no rights or
interests in the Policy with respect to that portion of the death proceeds
designated in Paragraph 2 of this endorsement if the Insured ceases to be
employed by the Company prior to the Normal Retirement Age of 62 for any reason
whatsoever (other than by reason of a leave of absence which is approved by the
Company), unless otherwise agreed to by the Company and the Insured.

 

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY

 

Upon
the death of the Insured, the interest of any collateral assignee of the Owner
of the Policy designated in Paragraph 3 above shall be limited to the portion
of the proceeds described in Paragraph 1 above.

 

OWNERS AUTHORITY

 

The
Insurer is hereby authorized to recognize the Owner’s claim to rights hereunder
without investigating the reason for any action taken by the Owner, including
its statement of the amount of premiums it has paid on the Policy.  The signature of the Owner shall be sufficient
for the exercise of any rights under this Endorsement and the receipt of the
Owner for any sums received by it shall be a full discharge and release
therefore to the Insurer.

 

Any transferee’s rights shall be subject to this Endorsement.

 

Signed at Oakdale, California, this            day
of                               .

 

 

OAK VALLEY COMMUNITY BANK

 

 

	
  By

  	
  /s/

  	
   

  

 

Its

 

 

The Insured accepts and agrees to the foregoing and, subject to the
rights of the Owner as stated above, designates as primary beneficiary and as
secondary beneficiary of the portion of the proceeds described in Paragraph 2
above.

 

Signed at Oakdale, California, this             day
of                                   .

 

 

THE INSURED:

 

 

	
  /s/

  	
   

  

 

 

OAK
VALLEY COMMUNITY BANK

EXECUTIVE BONUS AGREEMENT

 

THIS
AGREEMENT is adopted this              day
of                      ,
by and between OAK VALLEY COMMUNITY BANK, a state-chartered commercial bank,
located in Oakdale, California (the “Company’), and                      (the
“Executive”).

 

INTRODUCTION

 

To
encourage the Executive to remain an employee of the Company, the Company is
willing to provide to the Executive a bonus opportunity.  The Company will pay the Executive’s bonus
from the Company’s general assets.

 

AGREEMENT

 

The
Executive and the Company agree as follows:

 

Definitions

 

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

 

1.                                       “Bonus” means
only the cash bonus award paid to the Executive during a Plan Year and does not
include any salary.

 

2.                                       “Change of Control”
means the transfer of shares of the Company’s voting common stock such that one
entity or one person acquires (or is deemed to acquire when applying Section 318
of the Code) more than 50 percent of the Company’s outstanding voting common
stock followed within twelve (12) months by the Executive’s Termination of
Employment for reasons other than death, Disability or retirement.

 

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

 

4.                                       “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
Company of the carrier’s or Social Security Administration’s determination upon
the request of the Company

 

5.                                       “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.

 

6.                                       “Normal Retirement Age”
means the Executive’s sixty-second (62nd)
birthday.

 

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

 

8.                                       “Plan Year”
means the calendar year.

 

9.                                       “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.

 

10.                                 “Termination for Cause”
means the Company terminating the Executive’s employment for:

 

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

 

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

 

ARTICLE VIII

 

Bonus Award

 

1.                                       Bonus Award. 
The Company shall pay the Executive a cash Bonus equal to the Executive’s
economic benefit under a separate Split Dollar Agreement, if any, divided by
one minus the Company’s combined marginal income tax rate for the calendar year
immediately preceding such payment.  The
Executive shall have no right to determine or influence such Bonus award.  The Company shall pay such Bonus award prior
to December 31 of each year.

 

 

2.                                       Payment of Bonus Award. 
The Company shall continue to pay the Executive the Bonus Award under
the following circumstances:

 

(a)                                  Upon the Executive attaining Normal
Retirement Age;

 

(b)                                 Upon the Executive’s Disability; or

 

(c)                                  Upon a Change of Control.

 

ARTICLE IX

 

Reimbursement

 

Reimbursement
to Company.  In the event the Company has provided the
Executive any split dollar death benefit under separate agreement, the
Executive shall annually pay to the Company an amount equal to the Executive’s
economic benefit determined under such agreement.

 

ARTICLE X

 

General Limitations

 

The
Company shall not continue to pay any Bonus award under this Agreement under
the following circumstances:

 

(a)                                  Upon the Executive’s Early Termination;

 

(b)                                 Upon the Executive’s death;

 

(c)                                  Upon the Executive’s Termination for
Cause; or

 

(d)                                 Upon the termination of this Agreement.

 

ARTICLE XI

 

Amendments and
Termination

 

This
Agreement may be amended or terminated in the sole discretion of the Company
after written notification of such amendment or termination is provided to the
Executive.

 

ARTICLE XII

 

Miscellaneous

 

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

 

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.

 

3.                                       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.

 

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

 

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

 

6.                                       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.

 

 

7.                                       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.

 

8.                                       Administration. 
The Company shall have powers which are necessary to administer this
Agreement, including but not limited to:

 

(a)                                  Interpreting the provisions of the
Agreement; and

 

(b)                                 Maintaining a record of Bonus award
payments.

 

9.                                       Facility of Payment. 
If the Executive is declared to be incompetent, or incapable of handling
the disposition of his or her property, the Company may pay such benefit to the
duly appointed guardian, legal representative or person having the care or custody
of the Executive. The Company may require proof of incompetence, minority or
guardianship as it may deem appropriate prior to distribution of the
benefit.  Such distribution shall
completely discharge the Company from all liability with respect to such
benefit

 

10.                                 Named Fiduciary. 
The Company shall be the named fiduciary and plan administrator under
this Agreement.  It may delegate to
others certain aspects of the management and operational responsibilities
including the employment of advisors and the delegation of ministerial duties
to qualified individuals.

 

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

 

 

	
  EXECUTIVE:

  	
   

  	
  COMPANY:  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OAK VALLEY COMMUNITY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TitleExhibit 10.2

 

OAK
VALLEY COMMUNITY BANK

FIRST AMENDMENT TO SALARY CONTINUATION AGREEMENT

 

THIS FIRST AMENDMENT TO SALARY CONTINUATION AGREEMENT
is adopted as of February 8, 2010 
by and between Oak Valley Community Bank, a subsidiary of Oak Valley
Bancorp (collectively, the “Company”),
and the undersigned executive officer (the “Executive”).

 

RECITALS

 

WHEREAS, Article 7
of the Salary Continuation Agreement as currently in effect (the “Agreement”) between the Company and
the Executive provides that the Agreement may be amended unilaterally by the
Company if as a result of legislative, judicial or regulatory action
continuation of the Agreement, as written, would result in significant
financial penalties or other significantly detrimental ramifications to the
Company;

 

WHEREAS, the Company has
determined that the standard set forth in Article 7 for unilateral
amendment of the Agreement has been met; and

 

WHEREAS, the Company now
desires to (i) amend Section II of the Split Dollar Agreement that is
attached as Addendum A to the Agreement and eliminate the reimbursement
provision found in Section II (b) of the Agreement, and (ii) eliminate
in its entirety the Executive Bonus Agreement, also attached to Addendum A.

 

AGREEMENT

 

1. Amendment to Section II.(b).
Section II (b) of the Split Dollar Agreement is hereby deleted in its
entirety.

 

2. Executive Bonus
Termination. The Executive Bonus Agreement attached under Addendum A is
hereby terminated and deleted in its entirety, to the extent that such
agreement or any portion thereof was still in effect following the EESA Section 111(B) Modification
Agreements between each such named executive officer and Oak Valley Bancorp
dated as of September 14, 2009.

 

3. Savings Clause.  Any term or provision of the Agreement that would
otherwise violate the EESA Section 111(B) standards as applicable to
the Company and the Executive is hereby cancelled and waived to the fullest
extent as required by law.

 

IN WITNESS
WHEREOF, the Company has adopted this First Amendment as of the date indicated
above.

 

	
  OAK VALLEY COMMUNITY
  BANK

  	
   

  	
  Executive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

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