FY2004 10K Exhibit 10.13




Exhibit 10.13


HERITAGE BANK OF COMMERCE

                  DEFERRED FEE AGREEMENT

THIS AGREEMENT is made effective as of June 30, 1997 by and between HERITAGE BANK OF COMMERCE
(the "Bank"), and Jack Peckham, (the "Director").

RECITALS

WHEREAS, to encourage the Director to remain a member of the Bank's Board of Directors,
the Bank desires to provide to the Director an opportunity to defer fees and obtain certain benefits
related thereto.

NOW, THEREFORE, in consideration of the services to be rendered by the Director to the Bank in
the future and for other good and valuable consideration, receipt of which is hereby acknowledged,
the parties agree as follows:

AGREEMENT

Article I. Definitions

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

1.1.1 Change in Control The term "Change in Control" shall mean (i) when any
"person", as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended ("Exchange Act") (other than the Employer, a subsidiary thereof or an
employee benefit plan of Employer, including any trustee of such plan acting as trustee) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Employer representing fifty percent (50%) or more of the
combined voting power of the Employer's then outstanding securities, where such person's beneficial
ownership of the Employer's securities was not initiated by the Employer or approved by the
Employer's Board of Directors; or (ii) the occurrence of a transaction requiring shareholder
approval, and involving the sale of all or substantially all of the assets of the Employer or the
merger of the Employer with or into another corporation, where such merger was not initiated by the
Employer and in which Employer is not the surviving entity; or (iii) a change in the composition of
the Board of Directors of the Employer, as a result of which fewer than a majority of the directors
are Incumbent Directors (which "Incumbent Directors" shall mean directors who either (A)
are directors of the Employer as of the date hereof, or (B) are elected, or nominated for election,
to the Board of Directors of the Employer with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened proxy contest relating to
the election of directors to the Employer)); or (iv) any liquidation or dissolution of the
Employer.


1.1.2 Code   The term "Code" shall mean the Internal Revenue Code of 1986, as
amended. References to a Code section shall be deemed to be to that section as it now exists and to
any successor provision.

1.1.3 Distribution Date   The term "Distribution Date" means the earlier of ten
(10) years after the date of this Agreement or upon the Director's Termination of Service as defined
below.

1.1.4. Deferral Account   The term "Deferral Account" means the account
established by the Bank on its books to record the amount of fees deferred by the Director and
interest accrued thereon.

1.1.5 Deferral Period   The term "Deferral Period" means the period of time
beginning with the date of this Agreement and ending with the earlier of the Distribution Date or
the Director's Termination of Service.

1.1.6 Benefit Period   The term "Benefit Period" means the period of time
beginning with the earlier of the Distribution Date or the Director's Termination of Service and
ending with payment in full of the Director's Deferral Account balance.

1.1.7 Election Form   The term "Election Form" means the Form attached as
Exhibit A.

1.1.8 Fees.   The term "Fees" means the total fees payable to the Director.

1.1.9 Termination of Service   The term "Termination of Service" means the
Director's ceasing to be a member of the Bank's Board of Directors for any reason whatsoever.

Article 2. Deferral Election

2.1 Initial Deferral Election The Director shall make an initial deferral election
under this Agreement by completion and delivery to the Bank of the Election Form attached hereto as
Exhibit A. The Election Form shall set forth the amount of Fees to be deferred, the form of benefit
payment and designation of beneficiary. The Election Form shall be delivered to the Bank not later
than June 30, 1997 and effective to defer only those Fees earned for services performed after June
30, 1997.

2.2 Deferred Election Changes The Director may modify the amount of Fees to be deferred
and/or form of benefit payment under Section 2.1 by filing a subsequent signed Election Form with
the Bank within twenty (20) days prior to the end of a calendar year preceding the calendar year in
which the Fees are to be deferred and/or the change in benefit payment is to apply and in each case
by obtaining written approval of the Board of Directors of the Bank. Such modified deferrals and/or
form of benefit payment shall not be effective until the calendar year following the year in which
the subsequent Election Form is received by the Bank.


 

Article 3. Deferral Account


3.1 Deferral Account   The Bank shall establish a Deferral Account on its books for the
Director, and shall credit to the Deferral Account the following amounts:

3.1.1 Deferrals   The Fees deferred by the Director on the first day of the month
following the month in which the Fees were earned.

3.1.2 Interest   On the last day of each calendar month during the Deferral Period only,
and immediately prior to the payment of any benefits, the Deferral Account will be credited with
interest earned during that month. The applicable interest rate shall be eight percent (8%) per
annum through December 31, 2006 and at the same rate for each year thereafter unless changed prior
to the beginning of each subsequent year by resolution of the Bank's Board of Directors, in its sole
discretion. Interest earned will be calculated by taking the applicable rate of interest multiplied
by the principal balance on the last day of each month, divided by 365 days, multiplied by the
number of days in the month. At the end of each calendar year, the interest earned during the year
will be posted to the account and only then become principal and entitled to future interest
accrual.

3.2 Statement of Accounts   The Bank shall provide to the Director at each regularly
scheduled Board of Directors meeting, a monthly statement setting forth the Deferral Account
balance.

3.3 Unsecured Creditor Status The Deferral Account is solely an accounting device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a trust fund of any
kind and the director has no rights greater than those of a general unsecured creditor of the Bank
for purposes of the payment of benefits under this Agreement. The Director's rights are not subject
in any manner to the anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by the Director or the Director's creditors or beneficiaries.


Article 4. Deferral Benefits

4.1 Termination of Service Benefit Upon the earlier of the Director's Termination
of Service or the Distribution Date, the Bank shall pay to the Director the balance in the Deferral
Account in the manner elected by the Director on the Election Form.

4.2 Change in Control Benefit Upon termination of the Director's service in connection
with and either prior to or following a Change in Control, the Bank shall pay to the Director the
balance in the Deferral Account within thirty (30) days after such occurrence.

4.3 Death During Deferral Period If the Director dies during the Deferral Period, the Bank
shall pay to the Director's beneficiary the balance in the Deferral Account and the amount which
would have been deferred by the Director for the entire ten (10) years from the date of this
Agreement, at the same time and in the same amounts that would have been paid to the Director had
the Director survived.

4.4 Death During Benefit Period If the Director dies after benefit payments have commenced
under this Agreement but before receiving all such payments, the Bank shall pay the remaining
benefits to the Director's beneficiary at the same time and in the same amounts that would have been
paid to the Director had the Director survived.

Article 5. Beneficiaries

5.1 Beneficiary Designations The Director shall designate a beneficiary by filing
a written designation with the Bank in the form attached as Exhibit B. The Director may revoke or
modify the designation at any time by filing a new designation. However, designations will only be
effective if signed by the Director and accepted by the Bank during the Director's lifetime. The
Director's beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Director, or if the Director names a spouse as beneficiary and the marriage is
subsequently dissolved. If the Director dies without a valid beneficiary designation, all payments
shall be made to the Director's surviving spouse, if any, and if none, to the Director's surviving
children and the descendants of any deceased child by right of representation, and if no children or
descendants survive, to the Director's estate.

5.2 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 Bank
may pay such benefit to the guardian, legal representative or person having the care or custody of
such minor, incompetent person or incapable person. The Bank may require proof of incompetency,
minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Bank from all liability with respect to such
benefit.

Article 6. Claims and Review Procedures

6.1 Claims Procedure The Bank shall notify the Director's beneficiary in writing,
within ninety (90) days of his or her written application for benefits, of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Bank determines that the beneficiary is not
eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such
denial, (2) a specific reference to the provisions of the Agreement on which the denial is based,
(3) a description of any additional information or material necessary for the claimant to perfect
his or her claim, and a description of why it is needed, and (5) an explanation of the Agreement's
claims review procedure and other appropriate information as to the steps to be taken if the
beneficiary wishes to have the claim reviewed. If the Bank determines that there are special
circumstances requiring additional time to make a decision, the Bank shall notify the beneficiary of
the special circumstances and the date by which a decision is expected to be made, and may extend
the time for up to an additional ninety (90) day period.

6.2 Review Procedure If the beneficiary is determined by the Bank not to be eligible for
benefits, or if the beneficiary believes that he or she is entitled to greater or different
benefits, the beneficiary shall have the opportunity to have such claim reviewed by the Bank by
filing a petition for review with the Bank within sixty (60) days after receipt of the notice issued
by the Bank. Such petition shall state the specific reasons which the beneficiary believes entitle
him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by
the Bank of the petition, the Bank shall afford the beneficiary (and counsel, if any) an opportunity
to present his or her position to the Bank orally or in writing, and the beneficiary (or counsel)
shall have the right to review the pertinent documents. The Bank shall notify the beneficiary of its
decision in writing within the sixty (60) day period, stating specifically the basis of its
decision, written in a manner calculated to be understood by the beneficiary and the specific
provisions of the Agreement on which the decision is based. If, because of the need for a hearing,
the sixty (60) day period is not sufficient, the decision may be deferred for up to another sixty
(60) day period at the election of the Bank, but notice of this deferral shall be given to the
beneficiary.

Article 7. Amendment and Termination

The Bank may amend or terminate this Agreement at any time prior to the Director's
Termination of Service by written notice to the Director. In no event shall this Agreement be
terminated without payment to the Director of the balance in the Deferral Account attributable to
the Director's deferrals and interest credited on such amounts.

Article 8. Miscellaneous

8.1 Binding Effect This Agreement shall be binding upon the Director and the Bank,
and their beneficiaries, survivors, executors, administrators and transferees.

8.2 No Guaranty of Employment This Agreement is not a contract for services. It does not
(i) give the Director the right to remain a director of the Bank, (ii) require the Director to
remain a director, (iii) interfere with the shareholders' rights to replace the Director, or (iv)
interfere with the Director's rights to terminate services at any time.

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

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

8.5 Governing Law The Agreement and all rights hereunder shall be governed by the laws of
California, except to the extent preempted by federal law.

8.6 Unfunded Arrangement The Director and beneficiary are general unsecured creditors of
the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise
by the Bank to pay such benefits. The rights to benefits are not subject to any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors or beneficiaries of the Director. Any insurance obtained by the Bank on the
Director's life in connection with this Agreement is a general asset of the Bank to which the
Director and beneficiary have no preferred or secured claim.

IN WITNESS WHEREOF, the Director and a duly authorized Bank officer have signed this Agreement as
of the above written date.


	
HERITAGE BANK OF COMMERCE


By/s/ Richard L. Conniff 

 Chief Operating Officer

Name and Title

	
DIRECTOR

 /s/ Jack Peckham

 Jack Peckham



















EXHIBIT A

TO

DEFERRED FEE AGREEMENT

Deferral Election

I elect to defer fees under my Deferred Fee Agreement with the Heritage Bank of Commerce, as
follows:

Amount of DeferralFrequency of DeferralDuration

[Initial and complete one][Initial One][Initial One]

X       I elect to deferX           Beginning of Year____ This
Year Only

100 % of Fees

____  I elect to defer______  Each fee period X      For ten (10)
year

           $______ of Fees          from the date 

____  I elect not to defer Fees______  End of Year          of the
Agreement


I understand that I may change the amount, frequency and duration of my deferrals by
filing a new election form with Heritage Bank of Commerce and obtaining written approval of the
Board of Directors of the Bank; provided, however, that any subsequent election will not be
effective until the calendar year following the year in which the new election is received by the
Bank.

Form of Benefit

I elect to receive benefits under the Agreement in the following form: 

X        Lump sum

Substantially equal monthly installments for:

_____ thirty-six (36) monthly installments with the amount of each installment determined as of
each installment date by dividing the entire amount in my Deferral Account by the number of
installments then remaining to be paid, with the final installment to be the entire remaining
balance in the Deferral Account.

             sixty (60) monthly installments with the amount of each installment
determined as of each installment date by dividing the entire amount in my Deferral Account by the
number of installments then remaining to be paid, with the final installment to be the entire
remaining balance in the Deferral Account.

_____ one hundred twenty (120) monthly installments with the amount of each installment
determined as of each installment date by dividing the entire amount in my Deferral Account by the
number of installments then remaining to be paid, with the final installment to be the entire
remaining balance in the Deferral Account.

_____ one hundred eighty (180) monthly installments with the amount of each installment
determined as of each installment date by dividing the entire amount in my Deferral Account by the
number of installments then remaining to be paid, with the final installment to be the entire
remaining balance in the Deferral Account.

I understand that I may not change the form of benefit elected, even if I later change the amount
of my deferrals under the Agreement without written approval of the Board of Directors of Heritage
Bank of Commerce.

















EXHIBIT B

TO

DEFERRED FEE AGREEMENT



Beneficiary Designation


 

I designate the following as beneficiary of benefits under the Deferred Fee Agreement payable
following my death:

Primary: Gayanne T. Peckham 


Contingent: John P. Peckham

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




I understand that I y these beneficiary designations by filing a new written designation with
Heritage Bank of Commerce. I further understand that the designations will be automatically revoked
if the beneficiary predeceases me, o if 11 have named my spouse as beneficiary, in the event of the
dissolution of our marriage.

Signature: /s/ Jack Peckham 
Jack Peckham



As of June 30, 1997


Accepted by the Heritage Bank of Commerce as June 30, 1997

HERITAGE BANK OF COMMERCE


By:/s/ Richard L. Conniff

Title:   Chief Operating Officer