pmbcstockappreciationrig






                       PACIFIC MERCANTILE BANCORP                           2019 EQUITY INCENTIVE PLAN                    STOCK APPRECIATION RIGHTS AGREEMENT    This Stock Appreciation Rights Agreement (the “Agreement”) is entered into as of   ###GRANT_DATE### (the “Grant Date”) by and between PACIFIC MERCANTILE   BANCORP, a California corporation (the “Company”), and ###PARTICIPANT_NAME### (the   “Participant”) pursuant to the Company’s 2019 Equity Incentive Plan (the “Plan”).  Unless   otherwise defined in this Agreement, terms with initial capital letters shall have the meanings set   forth in the Plan.          1.    Grant of SAR.  The Company hereby grants to Participant Stock Appreciation   Rights (the “SAR”) with respect to ###TOTAL_AWARDS### shares (the “Shares”) of the   Common Stock of the Company at a purchase price of ###GRANT_PRICE### per Share (the   “Exercise Price”), subject to the terms and conditions set forth herein and the provisions of the   Plan.          2.    Vesting of SAR.                (a)   The right to exercise this SAR shall vest as follows:    ###VEST_SCHEDULE_TABLE###    From and after the date that any installment of the SAR becomes vested, but subject to the   provisions of Paragraph 2(b) hereof, Participant shall be entitled to exercise the vested portion of   this SAR at any time in whole or from time to time in part as the Participant desires.               (b)   No additional SARs shall vest after the date of termination of Participant’s  Continuous Service, but this SAR shall continue to be exercisable in accordance with Section 3  hereof with respect to that number of SARs that have vested as of the date of termination of  Participant’s Continuous Service.         3.    Term of SAR.  Subject to Section 14 hereof, Participant’s right to exercise this   SAR shall terminate upon the first to occur of the following:                (a)   the expiration of ten (10) years from the Grant Date;                (b)   the expiration of three (3) months from the date of termination of   Participant’s Continuous Service if such termination occurs for any reason other than Disability   or death of the Participant, voluntary resignation by the Participant, or termination of the   Participant by the Company for Cause; provided, however, that if Participant dies during such   three-month period the provisions of Section 3(e) below shall apply;                (c)   the expiration of three (3) months from the date of termination of   Participant’s Continuous Service if such termination occurs due to voluntary resignation;     SMRH:4832-2778-6909.2                -1-                                                                                                                            





 






 provided, however, that if Participant dies during such three-month period the provisions of  Section 3(e) below shall apply;               (d)    the expiration of one (1) year from the date of termination of Participant’s  Continuous Service if such termination is due to the Disability of the Participant;                (e)   the expiration of one (1) year from the date of termination of Participant’s   Continuous Service if such termination is due to Participant’s death or if Participant’s death   occurs during either the three-month periods following termination of Participant’s Continuous   Service pursuant to Section 3(b) or 3(c) above, as the case may be;                (f)   the date of termination of Participant’s Continuous Service if such   termination is due to the termination of the Participant by the Company for Cause, as such term   is defined below; or                (g)   upon the consummation of a Change of Control, unless otherwise   provided pursuant to Section 9 below.    Notwithstanding the foregoing, Participant’s right to exercise this SAR may be suspended by the   Committee in accordance with Section 10 hereof.  After such suspension, Participant’s right to   exercise this SAR shall be terminated or reinstated upon a determination that Cause for   termination of the Participant’s Continuous Service does or does not exist, respectively.    For purposes of this Agreement and as used herein, the term “Cause” means, with respect to the   Participant, the occurrence of any of the following: (i) Participant’s personal dishonesty, willful   misconduct, or breach of fiduciary duty involving personal profit, (ii) Participant’s continuing   intentional or habitual failure to perform stated duties, (iii) Participant’s violation of any   law  (other than minor traffic violations or similar misdemeanor offenses not involving moral   turpitude), including but not limited to any state or federal banking or securities law, (iv)   Participant’s willful and intentional violation of the bylaws, rules, policies or resolutions of the   Company or Pacific Mercantile Bank, a California banking corporation, or the rules or   regulations of or any final order issued by the Federal Reserve System, the California   Department of Financial Institutions, or the Federal Deposit Insurance Corporation, (v)   Participant’s material breach of any provision of an employment or independent contractor   agreement with the Company, or (vi) any other act or omission by Participant that could   reasonably be expected to adversely affect the Company’s business, financial condition,   prospects and/or reputation.  In each of the foregoing subclauses (i) through (vi), whether or not   “Cause” exists will be determined in accordance with the Plan.  Participant’s Continuous Service   shall be deemed to have been terminated for Cause if, after Participant’s Continuous Service has   terminated, facts and circumstances are discovered that would have justified a termination of   Participant’s Continuous Service for Cause.          4.    Exercise of SAR.  On or after the vesting of any portion of this SAR in   accordance with the terms of this Agreement or the Plan, and until termination of the right to   exercise this SAR in accordance with this Agreement or the Plan, the portion of this SAR which   has vested may be exercised in whole or in part by the Participant (or, after his or her death, by   the person designated in Section 5 below) in accordance with the following:     SMRH:4832-2778-6909.2                -2-                                                                                                                            





 






            (a)   Delivery to the Company at its principal executive offices of a written  notice of exercise which identifies this Agreement and states the number of SARs then being  exercised (but no fractional SARs may be exercised); and               (b)   Delivery to the Company at its principal executive offices of a check or  cash in the amount reasonably requested by the Company to satisfy the Company’s withholding  obligations under federal, state or other applicable tax laws with respect to the taxable income, if  any, recognized by the Participant in connection with the exercise of this SAR (unless the  Company and Participant shall have made other arrangements for deductions or withholding  from Participant’s wages, bonus or other compensation payable to Participant, or by the  withholding of cash and/or Shares issuable upon exercise of this SAR or the delivery of Shares  owned by the Participant in accordance with Section 5.4 of the Plan, provided such arrangements  satisfy the requirements of applicable tax laws).               (c)   Following exercise of a vested SAR, Participant will receive payment for  the difference between the aggregate Fair Market Value of the Shares with respect to which the  SAR is exercised and their aggregate Exercise Price.  This payment will be made as soon as  reasonably practicable following the SAR exercise and the receipt or retention of applicable  withholding taxes by the Company.  The form of payment will either be in cash and/or Shares in  the discretion of the Company having an aggregate equivalent Fair Market Value.         5.    Death of Participant; No Assignment.  The rights of the Participant under this  Agreement may not be assigned or transferred except by will or by the laws of descent and  distribution, and may be exercised during the lifetime of the Participant only by such  Participant.  Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of this SAR in  contravention of this Agreement or the Plan shall be void and shall have no effect.  If the  Participant’s Continuous Service terminates as a result of his or her death, Participant’s rights  hereunder shall automatically accelerate immediately and Participant’s legal representative, his  or her legatee, or the person who acquired the right to exercise this SAR by reason of the death  of the Participant (individually, a “Successor”) shall succeed to the Participant’s rights and  obligations under this Agreement.  After the death of the Participant, only a Successor may  exercise this SAR.         6.    Disability of Participant. If the Participant’s Continuous Service terminates as a  result of his or her Disability, Participant’s rights hereunder shall automatically accelerate  immediately and Participant or Participant’s Successor, as applicable, shall succeed to the  Participant’s rights and obligations under this Agreement.         7.    Receipt of Plan by Participant.  Participant acknowledges receipt of a copy of  the Plan (and the Plan’s prospectus) and understands that all rights and obligations connected  with this SAR are set forth in this Agreement and in the Plan.         8.    Adjustments Upon Changes in Capital Structure.  If the outstanding Shares are  hereafter increased or decreased or changed into or exchanged for a different number or kind of  shares or other securities of the Company by reason of a stock split, combination of shares,  reclassification, stock dividend or other similar change in the capital structure of the Company,  then appropriate adjustment shall be made by the Committee to the number of Shares subject to    SMRH:4832-2778-6909.2                -3-                                                                                                                          





 






 the unexercised portion of this SAR and to the Exercise Price per Share, in order to preserve, as   nearly as practical, but not to increase, the benefits of the Participant under this SAR, in   accordance with the provisions of Section 11.1 of the Plan.          9.    Change of Control.                (a)   In the event of a Change of Control, the vesting of this SAR pursuant to   Section 2 above shall automatically accelerate in full upon the occurrence of a Qualifying   Termination if the Qualifying Termination occurs on the date of or within one (1) year following   a Change of Control.  For purposes of this Agreement and as used herein, “Qualifying   Termination” shall mean:                      (i)   Participant’s Continuous Service is terminated by the Company   without Cause.                      (ii)  Participant’s Continuous Service is terminated by Participant   within seventy five (75) days following the initial occurrence of any of the following conditions   which arise without Participant’s consent (and which must initially occur on or after the date of   the Change of Control) and are not remedied by the Company within thirty (30) days following   written notice to the Company of such condition from Participant (and such Participant notice   must be provided to the Company within thirty (30) days of the initial occurrence of the   condition):                            (A)   a material diminution in Participant’s base compensation;                            (B)   a material diminution in Participant’s authority, duties or   responsibilities; or                            (C)   a material change in the geographic location at which   Participant must perform his or her duties.                (b)   Following a Change of Control, this SAR shall terminate on   consummation of the Change of Control if and to the extent not exercised prior thereto, unless:                     (i)   The Company succeeds in obtaining an agreement of the other  parties to the Change of Control transaction, that provides for (i) the continuance of this SAR  and the Plan, subject to any adjustments in the terms of this SAR determined by the Committee  to be necessary to maintain the continued effectiveness of the SAR and to preserve, but not  increase, the economic benefits conferred on the Participant by this SAR Agreement, or (ii) this  SAR to be assumed and the Plan to continue in full force and effect, or (iii) there is issued by  another party to the Change of Control transaction, in exchange for or in substitution of this  SAR, new stock appreciation rights or rights of comparable value covering shares of such  successor corporation or its parent corporation, with appropriate adjustments as to the number  and kind of shares and Exercise Price, in which event the Plan and this SAR, or the new stock  appreciation rights substituted therefor, shall continue in the manner and under the terms so  provided; or     SMRH:4832-2778-6909.2                -4-                                                                                                                            





 






                   (ii)  the Change of Control takes the form of a purchase of newly issued   or outstanding Shares, in which the Company’s corporate structure is left unchanged and there is   no plan or intention to merge or combine the Company with another entity, such that the Change   of Control will have no adverse effect on the SAR or the rights or economic benefits conferred   on the Participant by this Agreement.                (c)   Following a Change of Control and notwithstanding Section 9(b) hereof,   the Company shall not compel the forfeiture of this SAR except in accordance with the Plan.   The Committee shall cause written notice of the proposed transaction to be given to the  Participant not less than fifteen (15) days prior to the anticipated effective date of the proposed  transaction; provided, however, that the failure to give, or any delay in giving, such notice shall  not invalidate or entitle Participant or any other person to delay, the effectiveness of the Change  of Control.         10.   Suspension or Termination of SAR.  If at any time (including after a notice of   exercise has been delivered) it is suspected that Participant has committed an act that gives rise   to the Company’s right to terminate Participant’s Continuous Service for Cause (which includes   a failure to act), the Committee may suspend Participant’s right to exercise any Award (or   vesting or settlement of any Award) including the SAR granted hereunder, pending a   determination of whether there was in fact an act giving rise to Cause.  If it is determined that   Participant has committed an act giving rise to Cause, neither Participant nor Participant’s   Successor shall be entitled to exercise any outstanding Award whatsoever and all of Participant’s   outstanding Awards, including the SAR granted hereunder, shall automatically terminate without   any further action by the Company and without any consideration to Participant.          11.   No Employment Contract Created.  Neither the granting of this SAR nor the   exercise hereof shall be construed as granting to the Participant any right with respect to   continuance of employment by the Company or any of its subsidiaries.  The right of the   Company or any of its subsidiaries to terminate at will the Participant’s employment at any time   (whether by dismissal, discharge or otherwise), with or without Cause, is specifically reserved.          12.   No Rights as Shareholder.  The Participant (or transferee of this SAR by will or   by the laws of descent and distribution) shall have no rights as a shareholder with respect to any  Shares covered by this SAR until the date of the issuance of a stock certificate or certificates to  him or her for such Shares, notwithstanding the exercise of this SAR.          13.   Tax Consequences.  The Participant has reviewed with the Participant’s own tax   advisors the federal, state, local and foreign tax consequences of this investment and the   transactions contemplated by this Agreement.  The Participant is relying solely on such advisors  and not on any statements or representations of the Company or any of its employees or agents.  The Participant understands that the Participant (and not the Company) shall be responsible for  the Participant’s own tax liability that may arise as a result of the transactions contemplated by  this Agreement.     SMRH:4832-2778-6909.2                -5-                                                                                                                            





 






       14.   Clawback Policy. By accepting this Award, the Participant is expressly   acknowledging and agreeing to be bound by the Clawback Policy provisions contained in   Section 10.8 of the Plan.          15.   Interpretation.  This SAR is granted pursuant to the terms of the Plan, and shall   in all respects be interpreted in accordance therewith.  The Committee shall interpret and   construe this SAR and the Plan, and any action, decision, interpretation or determination made in   good faith by the Committee shall be final and binding on the Company and the Participant.          16.   Notices.  Any notice, demand or request required or permitted to be delivered by   either the Company or the Participant pursuant to the terms of this Agreement shall be in writing   and shall be deemed given when delivered personally, deposited with a reputable courier service,   or deposited in the U.S. Mail, First Class with postage prepaid, and addressed to the parties at the   respective addresses, or such other address as a party may request by notifying the other in  writing.          17.   Employment Agreement. If any employment agreement (or other similar written   agreement) exists between Participant and the Company as of the Grant Date and expressly   includes a different definition of “Cause” than as set forth herein, the defined term contained in   the employment agreement (or other similar written agreement) shall govern and shall supersede   the definition of Cause set forth herein.          18.   Rights and Cooperation.  The rights of the Company under this Agreement and   the Plan shall be transferable to any one or more persons or entities, and all covenants and   agreements hereunder shall inure to the benefit of, and be enforceable by the Company’s   successors and assigns. The rights and obligations of the Participant under this Agreement may   only be assigned with the prior written consent of the Company.  The Participant agrees upon   request to execute any further documents or instruments necessary or desirable to carry out the   purposes or intent of this Agreement.          19.   Governing Law.  The validity, construction, interpretation, and effect of this   SAR shall be governed by and determined in accordance with the laws of the State of California.          20.   Severability.  Should any provision or portion of this Agreement be held to be   unenforceable or invalid for any reason, the remaining provisions and portions of this Agreement   shall be unaffected by such holding.          21.   Counterparts.  This Agreement may be executed in two or more counterparts,   each of which shall be deemed an original and all of which together shall be deemed one   instrument.          22.   Acknowledgements.  By signing below, Participant accepts this grant of this   SAR and hereby represents that Participant: (i) agrees to the terms and conditions of the Plan and   this Agreement; (ii) has reviewed the Plan (and the Plan’s prospectus) and this Agreement in   their entirety, and has had an opportunity to obtain the advice of legal counsel and/or   Participant’s tax advisor with respect thereto; (iii) fully understands and accepts all provisions of   the Plan and this Agreement; (iv) agrees to accept as binding, conclusive, and final all of the   Committee’s decisions regarding, and all interpretations of, the Plan and this Agreement; and (v)    SMRH:4832-2778-6909.2                -6-                                                                                                                            





 






agrees to promptly notify the Company in writing upon any change in Participant’s home  address.   IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above  written.   PACIFIC MERCANTILE BANCORP                “PARTICIPANT”                                                         ###PARTICIPANT_NAME###  Signature:                                Signature:      ###PARTICIPANT_NAME###   Print Name:                               Print Name:   Title:      ###GRANT_DATE###                          ###ACCEPTANCE_DATE###           Date:                                     Date:    SMRH:4832-2778-6909.2                -7-