CHANGE IN CONTROL
AGREEMENT
This AGREEMENT is
made effective as of November 14, 2008, by and among United
Commercial Bank (the “Bank”), a California bank, with
its principal administrative office at 555 Montgomery Street, San
Francisco, California 94111, UCBH Holdings, Inc. (the
“Holding Company”), a corporation organized under the
laws of the State of Delaware which is the holding company of the
Bank (any reference to the Company shall be deemed to include the
Holding Company and the Bank) and Craig S. On
(“Executive”). This Agreement supersedes the Change in
Control Agreement entered into by Executive and the Company on
July 27, 2005.
In consideration
of the contribution and responsibilities of Executive, and upon the
other terms and conditions hereinafter provided, the parties hereto
agree as follows:
The period of this
Agreement shall be deemed to have commenced as of the date first
above written and shall continue for a period of thirty-six
(36) full calendar months thereafter. Commencing on the first
anniversary date of this Agreement and continuing at each
anniversary date thereafter, the board of directors of the Company
(the “Board”) may extend the Agreement for an
additional year. The Board will review the Agreement and
Executive’s performance annually for purposes of determining,
within its sole discretion, whether to extend this Agreement, and
the results thereof shall be included in the minutes of the
Board’s meeting.
(a) For
purposes of this Agreement, a “Change in Control” of
the Company shall mean an event or series of event of a nature that
at such time: (i) any “person” (as the term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) is or becomes the “beneficial owner”
(as determined under Rule 13d of such Act), directly or
indirectly, of voting securities of the Bank or the Holding Company
representing fifty percent (50%) or more of the Bank’s or the
Holding Company’s outstanding voting securities or right to
acquire such securities except for any voting securities of the
Bank purchased by the Holding Company and any voting securities
purchased by any employee benefit plan of the Bank or the Holding
Company, or (ii) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the
Bank or the Holding Company or similar transaction occurs in which
the Bank or the Holding Company is not the resulting
entity.
(b) If a
Change in Control has occurred pursuant to Section 2(a),
Executive shall be entitled to the benefits provided in paragraph
(c) of this Section 2 upon his subsequent termination of
regular employment within thirty-six (36) months following the
Change in Control due to: (i) termination of Executive’s
employment (other than Termination for Cause as defined below) or
(ii) Executive resigns following any material adverse change in or
loss of
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title, office
or significant authority or responsibility (including, without
limitation, Executive ceasing to be Chief Financial Officer of the
Company (or the ultimate parent entity, if any, in the event of any
transaction that results in the Company ceasing to be the ultimate
parent entity), material reduction in base salary or benefits
(excluding bonus) or relocation of his principal place of
employment by more than 25 miles from its location at the time of
the Change in Control (“Change of Duties”). No benefits
shall be provided to the Executive pursuant to this Agreement if
the Executive is terminated for reasons other than those specified
in this paragraph 2(b).
(c) Upon
Executive’s entitlement to benefits pursuant to
Section 2(b), (i) the Company shall pay Executive, or in
the event of his subsequent death or disability, his beneficiaries,
his estate or other representative, as the case may be, a lump sum
cash amount at the time of Executive’s separation from
service (within the meaning of Section 409A of the Code
(“Section 409A”)) equal to three (3) times
the highest annual compensation (defined as base salary and bonus)
due to the Executive for the last three years immediately preceding
the Change in Control or such lesser number of years in the event
that Executive shall been employed by the Company for less than
three years, less all required and applicable withholding; and
(ii) any unvested stock options and related rights and
unvested awards granted to Executive under any stock option and
similar plans shall immediately vest and shall be exercisable
within one (1) year; provided, however, that payment to
Executive of the amount described in Section 2(c)(i) shall be
made on a monthly basis over a period of thirty-six
(36) months in the event Executive becomes entitled to payment
thereof in 2008 to the extent required by Section 409A of the
Internal Revenue Code of 1986 (the “Code”).
(d) Upon the
occurrence of a Change in Control followed by Executive’s
termination of employment or resignation (other than Termination
for Cause as defined below), the Company and its successors or
assigns shall cause to be continued life, medical and disability
coverage substantially identical to the coverage maintained by the
Company for the Executive prior to Executive’s termination or
resignation. Such coverage and payments shall cease upon the
expiration of thirty-six (36) full calendar months from the
date of Executive’s separation from service.
(e) As used
in this Section 2, the term “Termination for
Cause” shall mean termination because of an act or acts of
gross misconduct, willful neglect of duties or conviction of a
felony or equivalent violation of law or any other act or failure
to act that materially damages the reputation of the Company as
determined by the Board in its sole discretion after a good faith
investigation. For the purposes of this Section, no act, or the
failure to act, on Executive’s part shall be
“willful” unless done, or omitted to be done, without
reasonable belief that the action or omission was in the best
interests of the Company or its affiliates. Notwithstanding the
foregoing, Executive shall not be deemed to have been Terminated
for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution
duly adopted by the affirmative vote of not less than seventy five
percent (75%) of the members of the Board at a meeting of the Board
called and held for that purpose, finding that in the good faith
opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the relevant
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facts
supporting the Termination for Cause. Executive shall not have the
right to receive compensation or other benefits for any period
after the Date of Termination. The Date of Termination shall be the
date on which the Notice of Termination is delivered to Executive
or, in the event the Company is unable to reasonably locate
Executive, three (3) business days after delivery of such
Notice of Termination to Executive at his last known
address.
(f) Company
expressly acknowledges and agrees that Executive shall have a
contractual right to the full benefits of this Agreement, and
Company and any successor expressly waives any rights it may have
to deny liability for any breach of its contractual commitment
hereunder upon the grounds of lack of consideration, accord and
satisfaction or similar defense. In any dispute arising after a
Change of Control as to whether Executive is entitled to the
benefits of this Agreement and all incentive plans, there shall be
a presumption that the Executive is entitled to such benefits and
the burden of proving otherwise shall be on the Company or any
successor.
(g) All
payments and benefits to be made to Executive hereunder upon
Executive’s termination of employment or resignation that are
subject to Section 409A may only be made upon a
“separation from service” (within the meaning of
Section 409A) of Executive. For purposes of Section 409A,
(i) each payment made under this Agreement shall be treated as a
separate payment; (ii) Executive may not, directly or
indirectly, designate the calendar year of payment; and
(iii) no acceleration of the time and form of payment of any
nonqualified deferred compensation to Executive or any portion
thereof, shall be permitted.
3. CHANGE IN
CONTROL RELATED PROVISIONS
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 3) (the
“Termination Benefits”) would be subject to the excise
tax imposed by Section 4999 of the Code or any corresponding
provisions of state or local tax laws, or any interest or penalties
are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise
Tax”), then Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount
such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Termination Benefits.
(b) Subject
to the provisions of Section 3(c), all determinations required
to be made under this Section 3, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company’s certified
public accounting firm (the “Accounting Firm”), which
shall provide detailed supporting calculations both to the Company
and Executive within fifteen (15) business days of the receipt
of notice from
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Executive that
there has been Termination Benefits, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3, shall be paid by the
Company to Executive within five business (5) days of the
receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In
the event that the Company exhausts its remedies pursuant to
Section 3(c) and Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive
shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten
(10) business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If
the Company notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive
shall:
(i) give
the Company any information reasonably requested by the Company
relating to such claim,
(ii) take
such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Company,
(iii) cooperate
with the Company in good faith in order effectively to contest such
claim, and
(iv) permit
the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 3(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a
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refund or
contest the claim in any permissible manner, and Executive agrees
to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs Executive to pay
such claim and sue for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis and
shall indemnify and hold Executive harmless, on an
after-tax
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